Petrobras (NYSE:PBR) announced the start of production from the Chinook Field in the deepwater Gulf of Mexico, providing us with more evidence of the abundant oil and gas resources present in this area.

Discount Brokers Comparison: Your one-stop shop for finding the perfect broker for your investments.

Overview
Petrobras is one of the largest oil and gas companies in the world, with average daily production of 2.55 million barrels of oil equivalent (BOE) per day in July 2012. Although the company's operations are concentrated in Brazil, Petrobras has diversified over the last decade and has operations in 28 countries. The company has budgeted $236.5 billion in capital spending in 2012 and has 980 projects in its portfolio.

Greater Chinook Area
The Greater Chinook Area consists of the Chinook and Cascade Fields, both of which are located in the Walker Ridge area of the deepwater Gulf of Mexico. Petrobras is using a floating, production, storage and offloading platform to handle production from these two oil and gas fields, marking the first use of an FPSO in U.S. waters. The FPSO has capacity to handle production of 80,000 barrels of oil and 17.6 million cubic feet per day.

SEE: Oil And Gas Industry Primer

Chinook Field
BHP Billiton (NYSE:BHP) made the first discovery at the Chinook Field in July 2003, after drilling an unsuccessful well at a shallower depth in 2000. BHP Billiton sold its interests in the Chinook and Cascade Fields in 2006, and Petrobras operates and owns 66.67% of this field. Total SA (NYSE:TOT) is a non-operated partner and holds a 33.33% share. Petrobras reported first production from the Chinook Field in early September 2012 and said that the Chinook #4 well targeted Lower Tertiary formations at the field.

Cascade Field
The Cascade discovery well was drilled in water depths of approximately 8,143 feet and found oil pay in April 2002. Production from the Cascade Field started up in February 2012 and is also producing from Lower Tertiary reservoirs. Petrobras is the operator of the Cascade Field and owns a 100% interest.

BW Pioneer
The BW Pioneer is the first FPSO to be used in the deepwater Gulf of Mexico and was built by BW Offshore, a subsidiary of BW Group. The BW Pioneer is almost 800 feet long and can store 500,000 barrels of oil. The FPSO is moored in 8,200 feet of water and can be disconnected in the event of a storm or other severe weather. Petrobras will operate shuttle tankers that will transport crude oil from the FPSO to refineries in the Gulf Coast. The company felt that this would be safer and less expensive than building a pipeline. Natural gas production at the fields is being transported by pipeline from the FPSO to a larger pipeline system about 54 miles away.

Other Operators
Devon Energy (NYSE:DVN) and Hess Corporation (NYSE:HES) also owned interests in these fields but divested them prior to the start of production.

The Bottom Line
The Gulf of Mexico is blessed with large amounts of oil and gas resources and the industry is slowly developing these assets and bringing them onto production. Projects like Cascade and Chinook will eventually lessen our dependence on foreign sources of energy and bring us a little closer to being energy independent.

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  9. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  10. Stock Analysis

    The 3 Energy Stocks You'll Wish You Bought in 2015

    Learn about the energy sector and the types of companies that operate within the sector. Find out about some of the best-performing energy stocks in 2015.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  5. Unconventional Oil

    A type of petroleum that is produced or obtained through techniques ...
  6. Green collar

    A worker who is employed in an industry in the environmental ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!