BOEM Halts FPSO Permit & Orders A Full Investigation

Petroleo Brasileiro’s U.S. unit said Monday that it must fully investigate a problem encountered in a U.S. Gulf of Mexico oil and gas development before it can announce a start-up date for the project.

On March 23, Petrobras told U.S. regulators that a buoyancy can broke off one of the tubes connecting oil and gas wells at the bottom of the ocean to a floating production vessel in the Cascade/Chinook deepwater project. The buoyancy can is a device that helps keep the tube, known as the riser, at its desired depth. The deepwater field in which this incident took place, called Chinook, is in final commissioning before going into production, and therefore, there was no oil in the riser, Petrobras America spokeswoman Sophie Gates said in an email. No people were injured, Gates said.

Petrobras, Brazil’s state-run oil giant, has formed a committee to find out what caused the incident. “Petrobras will be only able to forecast the beginning of production in the project when this investigation is concluded,” Gates said.

The U.S. agency in charge of offshore drilling, the Bureau of Ocean Energy Management, Regulation and Enforcement, is also conducting an investigation. The Cascade/Chinook project last month received approval from BOEMRE to employ a floating production, storage and offloading vessel in the U.S. Gulf of Mexico for the first time. As opposed to floating production platforms, which collect oil and send it onshore via a pipeline, FPSO vessels offload the crude onto tanker shuttles. That allows oil companies to keep producing crude in areas where pipelines don’t exist, and to move their expensive facilities out of harm’s way if a storm approaches.

When BOEMRE gave the Cascade/Chinook project the green light last month, it said production would begin “in the near future.”

The FPSO vessel is expected to have a production capacity of 80,000 barrels of oil per day and 16 million cubic feet of natural gas per day, according to U.S. regulators. The project is about 165 miles offshore Louisiana, in 8,200 feet of water. Petrobras owns 100% of the Cascade field and 66.67% of the Chinook field. French oil giant Total SA (TOT) owns 33.33% of the Chinook field.

-By Angel Gonzalez, Dow Jones Newswires