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Petrobras Tentatively Approved to Build First U.S. FPSO

The Minerals Management Service (MMS) has granted preliminary approval to Petroleo Brasilerio (Petrobras), Brazil's state-owned oil company, to build the first floating production, storage and offloading (FPSO) facility in the Gulf of Mexico, a company executive said this week.

Petrobras America President Renato Bertani, speaking at the Deloitte 2006 Oil & Gas Conference in Houston, said the FPSO development plans for the Cascade-Chinook deepwater project have been approved. Cascade and Chinook are located in the Walker Ridge section of the Outer Continental Shelf in water 7,800-9,100 feet deep.

"This is an important benchmark," Bertani said. "This will be a new solution for the Gulf of Mexico because this would be the very first FPSO. We are now in a position to move in and bring these challenging fields onstream. We are seeing very positive results, and we expect to be ready for operation by 2009."

The MMS said it has given preliminary approval to the FPSO concept, but the project still requires additional clearances before final approval.

FPSOs produce, store and offload oil into tankers for transport. They are designed to be moved out of the way of approaching storms, which would be an advantage in the Gulf of Mexico. MMS released a final environmental impact statement on the potential use of FPSOs in the Central and Western Gulf of Mexico in February 2001, and a decision to allow FPSOs as a programmatic decision was made by MMS in early 2002. However, it has not yet granted approval of any FPSOs in U.S. waters.

Petrobras said it initially plans to have least two Cascade wells and at least one Chinook well be completed and brought onstream through an FPSO. Subsequent wells and facilities would be designed in accordance with the initial production results.

Petrobras America, Devon Energy Inc. and BHP Billiton discovered the Cascade accumulation in 2002 (see Daily GPI, June 4, 2002). The nearby Chinook discovery was made in 2003. In August, BHP Billiton sold its stake in the discoveries, giving Petrobras and Devon 50-50 stakes in Cascade and giving Petrobras a 75% stake in Chinook (see Daily GPI, Aug. 16). Petrobras also is operator of both blocks.

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