BHP Gearing Up to Start Drilling for Oil in Mexico's Deep Waters

(Bloomberg) -- BHP Billiton Ltd. is getting closer to drilling its first oil wells in Mexico’s deep waters.

The Australian mining giant, which last year won rights to partner with state-owned Pemex in the Gulf of Mexico’s Trion field, hopes to have a drilling rig contracted this year and to spud two wells in the second half of 2018, Steve Pastor, BHP’s petroleum president, said Monday in an interview in Mexico City. Trion, which Pemex estimates to hold the equivalent of 485 million barrels of crude, could become one of the Gulf’s largest oil-producing areas, he said.

"There are four locations that we’ve identified already as having exploration potential," Pastor said. "It’s a big block that has a number of follow-on exploration opportunities across the rest of the block. Big fields tend to get bigger with time."

BHP is in talks with several international and Mexican contractors about providing the drilling rig and expects to announce a winner before the end of this year, he said.

The company has also qualified to bid in Mexico’s Jan. 31 crude auction for 29 deep-water areas and a joint venture with Pemex at its Nobilis-Maximino field. BHP is looking "very closely" at the geologic formations in Nobilis-Maximino, Pastor said.

BHP also sees development opportunities in Mexico in the "minerals and mining sectors, particularly in terms of copper," Pastor said, adding that talks "are not all that advanced" at this stage.

The country is keeping an eye on Mexico’s 2018 presidential race and feels the country’s energy overhaul will proceed regardless of who is elected next June, Pastor said.

"The direction that Mexico is taking has been tremendously positive, and I hope it will continue,” he said. "I firmly believe that whoever wins will support the progression of the reform."

To contact the reporter on this story: Adam Williams in Mexico City at awilliams111@bloomberg.net. To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Carlos Caminada, Joe Carroll.