Chinese giant’s Gulf of Mexico oil & gas assets changing hands with UK firm’s ‘major step’ into US deepwater plays

London-based energy player INEOS has embarked on a quest to expand its U.S. deepwater oil and gas footprint by inking a deal with CNOOC Energy Holdings U.S.A. Inc., a U.S. subsidiary of CNOOC International (CNOOC), to take over its Gulf of Mexico business. The acquisition is seen as the British player’s third big investment in America over the past three years. 

In line with INEOS Energy’s commitment to a dual-track approach, which is expected to enable it to meet society’s energy needs through the current energy transition and invest in carbon storage, the firm is actively producing and trading oil, gas, power, and carbon credits, as well as investing in liquefied natural gas (LNG), and carbon capture and storage (CCS).

Liu Yongjie, Chairman of CNOOC International, pointed out: “The transaction follows general business principles and aims to further optimize the company’s global asset portfolio. It will close upon obtaining regulatory approvals and satisfaction with the terms of the SPA. During this period, the company will work closely with INEOS Energy to ensure a smooth and orderly transition.”

As a result of its latest portfolio enhancement, which is said to significantly increase INEOS’ global production capacity to over 90,000 barrels of oil equivalent per day, the capital spend on energy assets in the U.S. now exceeds $3 billion, providing “a strong platform for future growth,” in the UK player’s view. The deal adds two premium deepwater assets, Appomattox and Stampede, to the company’s growing portfolio.

Brian Gilvary, Chairman of INEOS Energy, commented: “This is a major step into the Gulf of Mexico, building on our growing energy business. INEOS Energy is all about competing in the energy transition to provide reliable, affordable energy to meet world demand as the population continues to grow. And progressing carbon storage projects.”

Shell operates Appomattox with a 79% working interest, while CNOOC controls the remaining 21%. This asset sits in approximately 7,400 feet (2,255 meters) of water around 80 miles (129 kilometers) southeast of Louisiana in the Gulf of Mexico’s Norphlet formation. On the other hand, the Stampede deepwater oil and gas field is located 115 miles (185 kilometers) south of Fourchon, Louisiana, in the Gulf of Mexico’s Green Canyon blocks 468, 511, and 512.

Discovered in 2005, the field lies in approximately 3,500 feet (1,066.8 meters) of water, with a reservoir depth of 30,000 feet (9,144 meters). Hess has a 25% working interest and is the operator, while Union Oil Company of California, a Chevron subsidiary, Statoil (now Equinor), and Nexen Petroleum Offshore each hold a 25% working interest.

This investment, which follows the 1.4 mtpa liquified natural gas (LNG) deal completed with Sempra in December 2022 and the acquisition of Chesapeake Energy’s oil and gas assets in South Texas in May 2023, includes a portfolio of non-operated assets built around Appomattox and Stampede deepwater early production assets in the Gulf of Mexico alongside several mature assets and supporting business.   

David Bucknall, CEO of INEOS Energy, noted: “The USA is a very attractive place for INEOS Energy to invest. This is our third deal in three years following the 1.4 mtpa LNG deal with Sempra and the acquisition of Chesapeake Energy’s oil and gas assets in South Texas. Total capital spend on energy assets in the USA now exceeds $3 billion, providing a strong platform for future growth.”

INEOS is convinced that CNOOC’s Gulf of Mexico assets and strategic partnerships in U.S. energy projects will further complement its existing onshore portfolio. The company underscored that it demonstrated the feasibility of CO2 storage on March 8, 2023, by capturing CO2 from Belgium and transporting it cross-border for permanent storage in its operated Nini field in the Danish North Sea.

On September 10, 2024, DNV verified that the stored CO2 remains safely and permanently sealed in the Nini West reservoir 1,800 meters below the North Sea seabed, moving the project closer towards commercialization, expected next year.

In addition, INEOS, as the operator, with its partners, Harbour Energy and Nordsøfonden, revealed a final investment decision (FID) was taken on the first commercial phase of ‘Greensand Future’ with storage operations set to begin at the end of 2025/early 2026, paving the way for expected investments of more than $150 million across the Greensand CCS value chain.

“The world remains critically dependent on oil and gas as an energy source as more renewable energy is developed. INEOS will play an important part in this transition focussing on carbon storage projects long term,” emphasized the UK firm.

INEOS is also part of a consortium of 11 companies that support the large-scale deployment of CCS technology in Houston, Texas. According to the firm, the potential storage capacity in the Houston area alone could lead to capturing and safely storing up to 50 million metric tons of CO2 per year by 2030 and about 100 million metric tons by 2040.