*Update 3/27/11. I received the clarification below via email request from Peter Lovie whose article is linked in mine.
The discovery at Cascade was by BHP as operator with Petrobras America and Devon Energy as partners. In 2006 BHP withdrew and Petrobras America became operator and was able to accelerate the plans for development of that block which Devon and Petrobras had been lobbying for in the prior 2 years. In 2009 Devon decided to exit the offshore altogether and Petrobras exercised their preemptive right to buy out Devonâ€™s 50% interest in Cascade and is now 100% owner of Cascade. Chinook is 1/3 Total, 2/3 Petrobras.
Petrobras wanted to use a certain FPSO at that location which I felt was unduly expensive. In early 2006 Devon Energy convinced Petrobras as operator to open up for bids and in July the winning contractor was selected â€“ BW Offshore who delivered the BW Pioneer that is now in GoM.
*Original article begins below.
[Nicely researched by LIO, though I thought Soros dumped his stock last Summer, I’m sure he remains connected through other holdings that maybe LIO can nail down. And she does! -Erick]
On March 17 the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) granted approval for the first-ever Floating, Production Storage and Offloading facility in the Gulf of Mexico, or FPSO. And the winner is…meg-oil giant Brazilian company Petrobras. Per BOEMRE:
The Cascade-Chinook oil and natural gas project, located in the Walker Ridge area of the Gulf, approximately 165 miles offshore Louisiana in 8,200 feet of water, will use an FPSO, the B.W. Pioneer, which is a floating facility that has the capability to process oil and natural gas, store the crude oil in tanks located in the facilityâ€™s hull, and offload the crude to shuttle tankers for transportation to shore. Natural gas processed by the facility will be transported to shore by pipeline. Petrobrasâ€™ FPSO will be equipped with a disconnectable turret-buoy. In the event of a hurricane or tropical storm, the facility is designed to disconnect from the turret-buoy and move off location until the storm has passed.
Below is a picture of an FPSO set, not exactly the one in the GOM, but one can envisioned what the set-up is like. This type of facility is advantageous because no pipelines to shore are needed although according to BOEMRE pipelines will be used to transport the natural gas to shore for the Petrobras unit. This website has an excellent map of all the FPSOs in the world. Although I can’t confirm, my guess is the unit in the Gulf is the Petrobras unit which was most probably put on hold after the BP spill.
Why was Petrobras awarded this approval before American oil or natural gas companies? First coming to mind for many is that favorite whipping boy, George Soros who is a good pal of Obama’s and has a ton of stock in Petrobras. I emailed Mr. Dan Simmons of the Institute for Energy Research and asked the question. His response was:
As I understand it, the Brazilians were the first to apply for a permit for an FPSO. I think they are ahead of the game on that specific technology.
And also, if one notices the Minerals Management Service and the US Coast Guard were all planning and clarifying responsibilities for FPSO’s in February of 2008, well before Obama was in the mix.
Let’s dig a little further into the Soros/Petrobras-US “loan”/Obama “connection.”
Yes, George Soros does have a fairly large amount of stock in Petrobras. In fact, he buys & sells, & buys and sells. Nothing that unusual for a man of his wealth. In August of 2009 he sold almost 22 million shares of common stock, which carries voting rights, and bought 5.8 million preferred which does not carry voting rights, but is paying a 10% dividend. The deep-water operating permit (DWOP) for Petrobras per the BOEMRE article was granted in August of 2009.
And an independent consultant, Peter Lovie, prepared a document The First FPSO in the Gulf of Mexico, the 14 year Journey where he outlines that FPSOs were thought about and in the minds of energy companies well before hurricanes Katrina and Rita, and then became a game-changer:
In 2005, operators for two different deepwater developments contemplated using some form of FPSO, both considering the use of an FPSO in an extended well test or early-production system. Both developments were located fairly close together in GOM deepwater in Walker Ridge, one operated by a supermajor (Chevron)and its partners, the other operated by Petrobras with partners Devon and Total. Each development involved two fields with different partners: the Chevron-operated Jack and St. Malo complex and the Cascade and Chinook complex operated by Petrobras [emphasis mine].
Just at the same time the blogs in August of 2009 and even the New York Times were announcing a “loan” by Mr. Obama in the amount of $2 billion to Petrobras and suspicions were aroused this could be “payback” for Soros. Also, the timing of BOEMRE’s announcement of Petrobras approval for the FPSO came on March 17 of this year, one day before Obama left for Brazil. Probably not the best of judgment in my opinion because it has raised more suspicions.
However, the “loan” was actually made by the Export-Import Bank of the United States and they debunk any connection to Obama. From their statement:
In April 2009, Ex-Im Bank approved a $2 billion preliminary commitment to secure the purchase of U.S. goods and services by Petroleo Brasileiro S.A. (Petrobras), Brazil’s national oil company. The amount of a final commitment may be increased above the $2 billion preliminary amount. Petrobras anticipates that it will invest $174 billion in development over the next five years. Potentially, Petrobras purchases financed by Ex-Im Bank will help create and maintain over 507,000 American jobs.
Just so happens that Hochberg traveled with Obama to Brazil last week when Obama announced his intent to purchase Brazilian oil when folks up here are out of work because of a de facto drill moratorium in the Gulf of Mexico. According to the Brazilian on-line paper Veja (and yes, they are reliable) no part of the loan has even been doled out yet:
During his stay in Brazil for Obama, Hochberg, who was accompanied by U.S. Secretary of Commerce, Gary Locke, emphasized that the Eximbank will provide a loan of 2 billion dollars to import equipment for Petrobras America – line that had been assembled about two years. The first tranche of 300 million dollars, due out sometime next month.
So to sum it up:
- The initial DWOP was issued for Petrobras in August of 2009, the same time blogs were announcing Soros, Petrobras & Obama were in bed with one another.
- August of 2009 Soros trades in Petrobras common stock for preferred.
- Ex-Im US per their website, actually approved the “loan” to Petrobras in April of 2009.
- BOEMRE announces on March 17 of this year, one day before Obama goes to Brazil, Petrobras has received approval for its FPSO.
- None of the money to Petrobras has actually been doled out as of yet.
- The FPSO system in the Gulf was well in the works before Obama ever became president.
There is a certain amount of timing and coincidence which is suspect however after doing more in depth research I have come to the conclusion at least as far as one can reasonably tell at this time, it is just that: timing and coincidence.
Although many would have wished to find a nefarious connection here as a good investigator I need to be “fair and balanced” and if there is one it is extremely well hidden. I will point out that Soros through his Soros Management Fund does own a ton of oil, natural gas and mining stocks not only in US companies but foreign companies as well. He’s very diversified.
However I will say what infuriates me is a perceived betrayal by Obama of the American people with his intent to purchase Brazilian oil.
Related articles: Obama betrays American people with intent to buy oil from Brazil
Crossposted at Conservative Outlooks