First “Jones-Act” purpose-built shuttle-tanker:

an innovative procurement approach for US

GoM Cascade & Chinook fields

Carlos Mastrangelo, Dalmo Barros, Marco Souza

Petrobras America

The presentation may contain forecasts about future events. Such forecasts merely reflect the

expectations of the Company's management. Such terms as "anticipate", "believe", "expect",

"forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous

expressions, are used to identify such forecasts. These predictions evidently involve risks and

uncertainties, whether foreseen or not by the Company. Therefore, the future results of

operations may differ from current expectations, and readers must not base their expectations

exclusively on the information presented herein. The Company is not obliged to update the

presentation/such forecasts in light of new information or future developments. Figures

for 2011 on are estimates or targets.

The United States Securities and Exchange Commission permits oil and gas companies, in their

filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual

production or conclusive formation tests to be economically and legally producible under existing

economic and operating conditions. We use certain terms in this presentation, such as oil and

gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with

the SEC.

CAUTIONARY STATEMENT FOR US INVESTORS

DisclaimerDisclaimerDisclaimerDisclaimer

Ship-based Crude Oil Production Chain

FPSOs

Products

Production + Storage + Offloading

Transportation

Terminals &

Refineries

Shuttles

Outline

• A Rear View Mirror

• A Jones Act Market – Bumps on the Road

• A Design Competition

• A Conversion of a New Build

• A New Old Procedure

• Looking Ahead

Once upon a time: back to 70s

1977 – 1st Offloading in Campos Basin, Brazil

1979 – 1st cargo to a dedicated shuttle-Tanker, North Sea

1980 – 1st purpose build DP Shuttle-Tanker – North Sea

2010 – 1st purpose build Shuttle-Tanker in US

A Rear Mirror View Worldwide & Petrobras’ History

Rear Mirror ViewPetrobras’ Offloading in Numbers

Offloading Operations in Brazilian Waters

1999 - 2006

DP

Tankers

44%Regular

Tankers

56%

• From 1999 - more than 4500 oil off taking operations

• 3 near misses (2 with regular tankers and 1 with DP)

• 3.8 bi bbl exported by ST

Enough to fill it up 320 times

the Reliant Stadium

Pic from the Web

b2006: planning the future.

BRETON SOUND

MAIN PASS S.& E. ADDNS

MAIN PASS

E. AD DN

SOU TH PAS S

E. ADDNCHANDELEUR

CHANDELEURCHANDELEUR SOUND

SOUTH PADRE ISLAND

MIS SIS S IPPI S OUND

SABINE PASS

ADDN.CHANDELEUR SOUND

BRAZOS

MATAGORDA ISLAND

MUSTANG ISLAND

NORTH PADRE ISLAND

HIGH ISLAND

S. ADDN

GALVESTON

GALVESTON

S. ADDN

BRAZOS

S. EXT

E. ADDN

HIGH ISLAND

E. ADDN

HIGH ISLAND

S. ADDN

HIGH ISLAND

ISLAND

SOUTH PADRE

E. ADDN

ISLAND

NORTH PADRE

E. ADDN

MUSTANG ISLAND

PORT ISABEL

CORPUS CHRISTI

S ABINE PA SS

E. ADDN

KEATHLEY CANYON

GARDEN BANKS

ALAMINOS CANYON

EAST BREAKS

WALKER RIDGE

GREEN CANYON

EWING BANK

SIGSBEE ESCARPMENT

MISSISSIPPI CANYON

VIOSCA KNOLL

MOBILE

AMERY TERRACE

S. ADDN

WEST CAMERON

W. ADDNWEST CAMERON

WEST CAMERON

PENSACOLA

LUND SOUTH

LUND

ATWATER VALLEY

S. ADDN

VERMILION

VERMILION

S. ADDN

EAST CAMERON

EAST CAMERON

HENDERSON

LLOYD RIDGE

DE SOTO CANYON

DESTIN DOME

S. ADDN

ISLAND

SOUTH MARSH

ISLAND

SOUTH MARSH

N. ADDN

ISLAND

SOUTH MARSH

FLORIDA PLAIN

SHIP SHOAL

S. ADDN

EUGENE ISLAND

EUGENE ISLAND

SOUTH TIMBALIER

BAY MARCHAND

SOUTH PELTO

S. ADDN

SHIP SHOAL

WEST DELTA

S. ADDN

GRAND ISLE

GRAND ISLE

S. ADDN

SOUTH TIMBALIER

S. ADDNSOUTH PASS

SOUTH PASS

S. ADDN

WEST DELTA

TEXAS

MISSISSIPPI

LOUISIANA

FLORIDAALABAMA

2,400,0002,200,0002,000,0001,800,0001,600,0001,400,0001,200,0001,000,000 3,400,0003,200,0003,000,0002,800,0002,600,000

1,400,0001,200,0001,000,000800,000600,000400,000200,000 3,000,0002,800,0002,600,0002,400,0002,200,0002,000,0001,800,0001,600,000 3,400,0003,200,000

800,000600,000400,000200,000

9,8

00,0

00

9,6

00,0

00

9,4

00,0

00

11,2

00,0

00

11,0

00,0

00

10,8

00,0

00

10,6

00,0

00

10,4

00,0

00

10,2

00,0

00

10,0

00,0

00

10,4

00,0

00

10,2

00,0

00

10,0

00,0

00

9,8

00,0

00

9,6

00,0

00

9,4

00,0

00

11,2

00,0

00

11,0

00,0

00

10,8

00,0

00

10,6

00,0

00

30°00'N

28°00'N

26°00'N

88°00'W90°00'W92°00'W94°00'W96°00'W

Texas

Alabama

Louisiana

Mississippi

Timeline for a Jones Act Shuttle-Tanker

1998 99 00 01 02 03 04 05 06 07

MMS

Starts

evaluation

of FPSOs

in GoM

EIS starts

USCG

involved

5 worldwide

Regulatory

Agencies

involved

Use of FPSO in the

GoM was approved

FPSO can be a

Foreign FlagVessel

Shuttle-Vesselshall comply the

Jones Act

Petrobras

started a study

to use a

Shuttle-Vessel

Contracted

the 1st

Jones Act

Shuttle-

Tanker

The Shuttle-Tanker in US

shall full comply with the Jones Act *

* The Merchant Marine Act of 1920 (The “Jones Act”)

Senator Wesley Livsey Jones (1863-1932),

Republican from the state of Washington

Author of the Jones Act, intended to

protect his state’s trade with Alaska.

Pic from the Web

b

Artistic View

Tandem Offloading Operation

Back to 2006Is the Jones Act Shuttle-Vessel the critical path?

Marketing Evaluation

Conclusion in 2006

• Limits on Americans’ shipyard schedule/availability

• Restrictions on existing tankers for conversion

• Aging of the existing tanker fleet

• Lack of interest due to risks regarding re-use (no foreign Jones Act ST market)

2006 – Conclusion:the Shuttle-Vessel will be the critical path of the Project

Contract Strategy & Technical Spec

Petrobras

Offloading Committee

E&P International Downstream Tanker-Fleet

Outline

• A Rear View Mirror

• A Jones Act Market – Bumps on the Road

• A Design Competition

• A Conversion of a New Build

• An Old New Procedure

• Looking Ahead

Design Competition

1st Step

Identify possible types of vessels

Objective: define which type of vessel could participate

ITBs

ATBs

Conventional Tanker

DP Tanker

New build or conversion

Pic from the Web

Pic from the Web

Pic from the Web

Pic from the Web

Design Competition

2nd Step

Comparative Risk Analysis

Objective: define requirements to keep options with the same level of safety

Hardware Mitigations

Retrievable Hawser & Hose

PLT, CCTV, IG, F&G, EG, Vent, etc

DP System, Thrusters, CPP

International rules & Conventions

(IMO), OCIMF, OPA90, USCG, CS

Green Line (Telemetry)

Limit on vessel aging

BLS & SDS

Humanware Mitigations

SIMOPS

Theoretical & Practical Training

Operation Experience & procedures

Restricted Area for Navigation

Offloading Performance

Tests and Real Simulations

Assist Tug

Design Competition

3rd Step

Comparative Efficiency Evaluation

Objective: to set criteria to compare different proposals

Engineering StudiesPrior to start Design Competition

WAVE [1] [2] [3] [4]

[a] 4,07% 2,28% 0,47% 0,04%

[b] 2,94% 1,68% 0,40% 0,03%

[c] 0,98% 0,59% 0,16% 0,01%

[d] 0,15% 0,09% 0,02% 0,00%

[a] 8,55% 4,51% 1,08% 0,10%

[b] 5,87% 3,24% 0,82% 0,06%

[c] 1,90% 1,09% 0,29% 0,02%

[d] 0,30% 0,17% 0,05% 0,00%

[a] 8,16% 4,45% 1,20% 0,06%

[b] 5,39% 2,89% 0,75% 0,04%

[c] 1,70% 0,89% 0,22% 0,01%

[d] 0,28% 0,15% 0,04% 0,00%

[a] 7,45% 4,02% 1,10% 0,05%

[b] 4,78% 2,42% 0,61% 0,03%

[c] 1,48% 0,71% 0,16% 0,01%

[d] 0,25% 0,12% 0,03% 0,00%

[a] 2,76% 1,21% 0,22% 0,02%

[b] 2,04% 0,93% 0,19% 0,01%

[c] 0,68% 0,31% 0,06% 0,00%

[d] 0,12% 0,05% 0,01% 0,00%

90°

45°

0°

Relative

Direction

CURRENT

180°

135°

Comparative Efficiency Analysis

Example of a Comparative Downtime result

DPST Downtime ST Downtime

% d/y % d/y

Loaded ST 2.36 9 2.96 11

Ballasted ST 1.83 7 2.44 9

X (m)

Y (m

)

-500 -400 -300 -200 -100 0 100 200-300

-250

-200

-150

-100

-50

0

50

100

X (m)

Y (m

)

-100 0 100 200 300 400 500-100

0

100

200

300

400

500

600

Hawser Tension (tonf) - max = 105.1tonf min = 0.0tonf mean = 39.4tonf

5000 5500 6000 6500 7000 7500 8000 8500 9000 95000

50

100

o o

Terms & Conditions &

Technical Specification

• Mandatory Equipment

• Mandatory Performance

• Recommended Requirement

Design Competition PackageDesign Competition Package

Engineering Studies

Functional Spec

Constant iteration

with USCG

Petrobras OffloadingGuidelines

Functional Spec

Regulatory

Framework

• Administration• IMO & OCIMF

• USCG

• CS

BLS connection

23

Thanks APL & Pusnes

Requirements on the ST side

• Flushing requirement

• Amidships Manifold

• CPP

• Thruster

• IG, F&G, EG

• Telemetry / Greenline

• OPA 90

• Max 15 years aging

• COW, Vent System

• Automation & Control

• Cargo Heating, Cranes, etc

AT with minimum 65 t bollard pull

Requirements on the FPSO side

• Pneumatic Line Thrower

• Retrievable Messenger Line

• Retrievable Mooring Hawser

• Retrievable Offloading Hose

• Hose flushing facilities

• Alternate offloading hose

• Telemetry

Thanks to BWO

Telemetry SystemGreen Line

• Chain Stopper Closed

• Hose in Position

• Coupler Claws Closed

• Inboard Valve Open

• Crude Pressure Normal

• Coupler Valve Open

• Cargo Valve

• OESD 1 and 2 not activated

• Hawser tension normal

• Hose reel band brake engaged

• Export Valve open

• DARPS

Green Line = Permit to LoadBreaking Green Line = Shutdown = OESD1

Award the winner

Design Competition evaluation

No

No

Yes

Open Technical Proposal & Qualification

Commercial Proposal is sealed

Apply Equalization Factor as previously defined

Open commercial proposal.Weight proposal

Proposal rejected

Comply with Mandatory

Equipment &Performance ?

Qualification Acceptable?Yes

Outline

• A Rear View Mirror

• A Jones Act Market – Bumps on the Road

• A Design Competition

• A Conversion of a New Build

• An Old New Procedure

• Looking Ahead

Design Competition Winner: OSG

Conversion of a new build

Construction: Aker Shipyard, Philadelphia

OSG had already ordered 12 product tankers at APSI, 2 of them booked to convert into

Shuttle Tankers.

Thanks Aker Shipyard

Conversion: Detyens, in Charleston, South Carolina

• Remove the Fixed Propeller

• Install a CPP

• Install a tunnel in the bow and a Bow Thruster

• Install a 2250KW Generator

• Install a BLS Aker-Pusnes

• Install the telemetry system

Thanks Detyens Shipyard

Constructed in PhiladelphiaConverted in South Carolina

Shuttle-Tanker in Philadelphia

Shuttle-Tanker Launching

Shuttle Tanker Overseas Cascade

BLS

Outline

• A Rear View Mirror

• A Jones Act Market – Bumps on the Road

• A Design Competition

• A Conversion of a New Build

• An Old New Procedure

• Looking Ahead

Safety in Operation Safety Zone – Notice to Mariners

Turret Location:

26° 41’ 46.25“ N

90° 30’ 30.16“ W

Turret Location:

26° 41’ 46.25“ N

90° 30’ 30.16“ W

Overlaid with Tandem Offloading

500 m from Stern500 m from Stern7

28

m R

ad

ius

728

m R

ad

ius

228 m228 m

185 m185 m206.5 m206.5 m 150 m150 m

50 m each50 m each

FP

SO

HA

WS

ER

ST

TE

TH

ER

AT

34

Operational Sectors

Maste

r Bre

tt Ho

us

e

Mas

ter T

od

d C

ran

e

Ch

ief M

ate

Ro

y C

ole

man

Ch

ief M

ate

Jim

Kid

d

Ch

ief E

ngin

eer M

ike S

hark

ey

Ch

ief E

ng

inee

r Pau

l Sm

ith

1S

T A

/E J

oe R

ob

so

n

1S

T A

/E G

reg

Gu

ldjo

rd

1S

T A

/E P

aul R

uss

el

1S

T A

/E E

d M

cIn

tosh

Man B&W 11/9/2009 10/8/2007 10/10/2008 11/9/2009 11/9/2009 11/9/2009

Kongsberg Automation 6/12/2009 6/20/2008

Framo Pumps 10/12/2006 10/20/2009 10/16/2007 10/20/2009 10/20/2009 10/16/2007 10/20/2009 10/20/2009 10/20/2009 10/20/2009

Furuno Bridge Equipment

Familiarization 10/27/2009 10/27/2009 9/26/2008 10/27/2009

Simulator Training MITAGS 1/4/2010 1/4/2010 1/4/2010 1/4/2010

Brazil Shuttle Tanker Onboard Training 11/1/2009 11/1/2009 11/1/2009 11/1/2009

Pusnes BLS TDB TDB TDB TDB TDB TDB TDB TDB TDB TDB

Kongsberg DARPS TDB TDB TDB TDB TDB TDB TDB TDB TDB TDB

Rolls Royce TDB TDB TDB TDB TDB TDB TDB TDB TDB TDB

Green = Training completedRed = Training scheduled Yellow = Dates not determined

Set of Training

• Simulators

• Manufacture training

• Specific offloading equip training

• Hands-on training in Brazil

Thanks to MITAGS

OFFLOADING MANUAL

(PAI DOCUMENT)

Oil Transfer Manual

(BWO DOCUMENT)

Offloading Manual

International Regulation,

CFR (USCG)

Hazids, Hazops,

Engineering StudiesOffloading Guideline

(Petrobras Doc)

M/T OVERSEAS CASCADE OIL TRANSFER MANUAL

(OSG DOCUMENT)

Assistant Tug

(CHOUEST DOCUMENT)

Outline

• A Rear View Mirror

• A Jones Act Market – Bumps on the Road

• A Design Competition

• A Conversion of a New Build

• An Old New Procedure

• Looking Ahead

OSG Overseas Cascade

Delivered April 1st 2010

Contractual delivery window: April 1st to 30th 2010Actual delivery: April 1st 2010

Thanks to OSG

After Delivery

April 30th 2010 the vessel was handed

over to BP to work on the Macondo

Response

Aug 20th 2010 the vessel was

handed over to Petrobras/Brazil, to

operate in Campos Basin as a ST.

Thanks to OSG

Thanks to OSG

ST in operation in

US and in Brazil

Conclusion

Despite challenges and marketing uncertainties, delivery of the 1st Jones Act ST

was made on time, in budget, as contracted, mainly due to a strong collaboration

and commitment among Petrobras America, Petrobras Headquarters, OSG and

partner, putting this part of the project out of the critical path.

STs can be an economically feasible and flexible option for oil export in US.

Petrobras Offloading Committee, under Petrobras America’s coordination, defined a

procurement strategy that was the key of this result.

This approach starts a new oil export mode for E&P development in the US GoM.

Acknowledges : Devon, Total, OSG & USCG

Thanks to Marine Technology Society

Thank YouThank You

First “Jones-Act” purpose-built shuttle-tanker: an innovative procurement approach for US GoM

Carlos Mastrangelo, Dalmo Barros, Marco SouzaPetrobras America