Feb. 27, 2010, 12:15AM
Despite recent economic headwinds that forced some rivals to retrench, Petrobras remains on track to launch its biggest project ever in the U.S. in coming months, a senior official with Brazil's state-owned oil company said Friday.
Petrobras, keeping with its original timeline, is set to begin producing oil by mid-2010 from two ultradeep- water fields in the Gulf of Mexico known as Cascade and Chinook, said Cesar Palagi, a Gulf of Mexico asset manager for the company.
“Midyear is a fair statement for what we know today and the challenge that we have ahead of us,” Palagi told reporters after a luncheon speech to the Brazil-Texas Chamber of Commerce at the Westin Galleria Houston.
The Petrobras project is being closely watched because it will be among the first to come on-stream in the emerging Lower Tertiary play, an ancient rock layer under the Gulf of Mexico some 150 miles offshore from Louisiana and Alabama, where the industry has made huge oil discoveries in recent years.
It's likely to follow only Shell's multibillion-dollar Perdido project — capable of 100,000 barrels per day of oil and 200 million cubic feet per day of natural gas — which is slated to start production early this year.
For the project, Petrobras also has secured the first U.S. license to use a Floating Production, Storage and Offloading vessel, or FPSO, to operate in the Gulf of Mexico. The vessel, currently en route to the Gulf from Singapore, has the capacity to produce 80,000 barrels per day of oil, a mark Palagi said the project could hit within two years.
For the project, Petrobras also has secured the first U.S. license to use a Floating Production, Storage and Offloading vessel, or FPSO, to operate in the Gulf of Mexico. The vessel, currently en route to the Gulf from Singapore, has the capacity to produce 80,000 barrels per day of oil, a mark Palagi said the project could hit within two years.
FPSOs, which are more mobile than other production platforms, typically are used in offshore areas without as much infrastructure as the Gulf, but Petrobras will tie into existing subsea pipeline networks to transport natural gas from the fields, Palagi said. The company has said using the FPSO will give it more flexibility in developing the project.
In January, Petrobras exercised an option to acquire the remaining 50 percent of the Cascade field held by Oklahoma City-based Devon Energy Corp. The move came after Devon said last year it would sell its international and Gulf of Mexico assets to reduce debt and refocus on North American onshore gas fields. In Chinook, Petrobras has a 66.7 percent stake, while France's Total holds the remaining 33.3 percent.
Petrobras is operator of both fields and plans to develop them jointly.
Under a first phase of the project, the company will bring on line two wells in Cascade and one in Chinook. How many additional wells will be brought on in a second phase will be based on how things go in the initial phase, Palagi said, noting challenges of operating in 8,000 feet of water and the extreme downhole temperatures and pressures in the region.
Palagi declined to disclose how much Petrobras has invested in the project to date but said “we are very much on budget.”
He noted that the project did not benefit much from lower prices during the economic downturn because equipment was ordered before the recession, when prices were higher.
Petrobras is one of the world's biggest oil companies, with some 2.5 million barrels per day of production and 77,000 employees worldwide.
But while the Cascade-Chinook project is big — the company has roughly 430 contractors and employees in Houston working on Gulf of Mexico projects — the company's focus remains on developing oil and natural gas resources in Brazil.
Petrobras has a capital spending plan of $174 billion over the next five years, nearly $35 billion annually. Only $3 billion a year is earmarked for international projects, with the U.S. being the biggest recipient.
“That will not change,” Palagi said, though the company could boost spending in Brazil.
brett.clanton@chron.com
Source: http://www.chron.com/disp/story.mpl/business/energy/6888427.html
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