Today is for Brazil
The Houston Chronicle reports:
Ask Alberto Guimaraes about his vision for Brazil’s state-run oil company Petrobras in the United States, and he has a list ready:
More oil and gas production in the Gulf of Mexico, more U.S. refining capacity, a bigger role in the domestic biofuels market and possibly even Petrobras-branded gas stations.
It may be just a matter of time before Guimaraes, head of Petrobras’ U.S. arm in Houston, realizes the vision.
The South American oil giant is putting more emphasis than ever on the U.S. as part of an effort to expand its holdings outside Brazil.
Over the next five years, Petrobras plans to invest $4.9 billion in the United States. That’s 10 times the company’s five-year U.S. spending plan a decade ago, and accounts for about a third of what Petrobras will invest outside Brazil from 2008 to 2013.
Most of Petrobras’ upcoming investment is aimed at developing oil fields in deep-water regions of the Gulf of Mexico, where the company has been snapping up acreage in recent years.
In February, the company started producing 20,000 barrels of oil per day at its first deep-water Gulf field, called Cottonwood. By 2013, Petrobras plans to raise output in the Gulf to as much as 150,000 barrels per day, Guimaraes said.
The boost will come largely from the addition of the Cascade and Chinook fields, 180 miles south of the Louisiana coast, where Petrobras expects to begin production by early 2010.
Petrobras, which will be the operator of both fields, owns 50 percent of Cascade and 67 percent of Chinook. Devon Energy, of Oklahoma City, owns the other half of Cascade, while France’s Total owns the rest of Chinook.
In a first for the Gulf, Petrobras will use floating production, storage and offloading, or FPSO, facilities to extract the oil and gas at Cascade and Chinook.
Unlike fixed platforms found in the Gulf today, which can be knocked off base in hurricanes, FPSOs can pull up stakes and move out of harm’s way with short notice. Offshore fields also can be brought online sooner with FPSOs, Guimaraes said.
The technology, a mainstay in Petrobras’ Brazilian operations, could become a model for the rest of the industry in the Gulf.
The company, with partner Astra Holdings, is considering a plan to double the capacity of its 100,000-barrel-per-day U.S. refinery at the Houston Ship Channel. Petrobras owns 50 percent of the facility.
If costs are too high, however, the partners could decide on a less ambitious upgrade that would enable the plant to process heavier crudes, Guimaraes said.
“In my personal view, the only way we could decide not to go for the larger project would be if the costs are really, really much more expensive than the ones that we’ve estimated so far,” Guimaraes said.
Cost estimates for the larger expansion range from $2 billion to $2.4 billion, he said. A final decision on the project is expected by mid-2008.
In coming years, Petrobras aims to keep increasing its U.S. refining capacity, possibly by acquiring other plants, but only if the right opportunities arise, he said.
And Guimaraes said he hopes the company becomes highly involved in biofuels in the U.S.
Brazil is well-known for the development of sugar-cane-based ethanol, which powers many of the cars there. But the U.S. restricts imports of Brazilian ethanol through a 53-cent per gallon tariff.
Guimaraes called for a “phase down” of the tariff, and for the creation of a government and oil industry coalition to study the best ways to incorporate ethanol into U.S. fuels, as well as strategies for ensuring adequate ethanol supplies in the future.
“The ethanol industry in the United States should be a combination of local production, outside exporters bringing to the United States, and eventually an exchange between different markets,” he said. “You have to go in that direction.”
Admittedly this company has a tiny footprint compared to the big guys, but worth watching as the Brazilians work their economy and the global markets.
I think we will find the subsidizing (tariff) of corn as a source for ethanol is unsustainable although currently favored by the candidates. Corn as a source of fuel is for another post. I also wonder if they will provide some sort of real competition for the current monopoly as a spoiler.