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Petrobras GoM Floater OK'd

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Brazil's state-run energy giant Petroleo Brasileiro S.A. (PBR - Free Report) , or Petrobras S.A., has got the green light for the use of a floating production storage and offloading (“FPSO”) vessel in the Gulf of Mexico (“GoM”) to extract oil and gas from its deepwater Chinook-Cascade project.

The approval by the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement – the first for such a technology in the region – is being hailed as a precursor to the successful exploitation of distant offshore fields.    

FPSO vessels – unlike most offshore producing platforms that take out the oil and gas from the depths of the ocean and transport it onto land through a pipeline – collect the oil, store it in onboard tanks and offload it to tanker shuttles that take the oil to shore.

This helps the oil companies to not only keep pushing their offshore limits but also to move their expensive facilities to safety in case of a hurricane or tropical storm. The use of FPSOs is widespread in offshore Brazil and West Africa.

The FPSO vessel to be used in the Chinook-Cascade project – owned and operated by Oslo-based BW Offshore – has a production capacity of 80,000 barrels of oil per day and 16 million cubic feet of natural gas per day.

The Chinook-Cascade development, each of which has one ready-to-produce well, lies in the GoM’s Walker Ridge area in 8,200 feet of water about 165 miles off Louisiana. Rio de Janeiro-headquartered Petrobras has a 66.67% interest in the Chinook field, with the other partner being French oil major TOTAL SA (TOT - Free Report) . However, the Brazilian group owns 100% of the Cascade field.

Petrobras is the largest integrated energy firm in Brazil and the second-biggest oil company in the world by market value behind ExxonMobil (XOM - Free Report) . The firm’s activities include: exploration, exploitation and production of oil from reservoir wells, shale and other rocks, and in the refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.

Petrobras ADRs currently retain a Zacks #2 Rank, which translates into a short-term Buy rating.

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