UPDATE 2-US approves first floating deepwater storage in Gulf

* Production/storage vessel can escape from hurricanes

* Vessel can produce 80,000 barrels per day of oil

* Petrobras project in 8,200 feet of Gulf water

(Adds detail, analyst comment, bylines)

By Tom Doggett and Kristen Hays

WASHINGTON/HOUSTON, March 17 (Reuters) - The U.S. Interior
Department said on Thursday it gave final approval for
Petrobras (PETR4.SA) to use the first ever deepwater floating
production storage facility in the Gulf of Mexico.

The facility will be used when the company begins oil and
natural gas production at its Chinook-Cascade project in the
near future, the department said. Petrobras is based in
Brazil.

A Petrobras official who asked not to be identified told
Reuters that production would begin in May.

The floating facility has a daily production capacity of
80,000 barrels of oil and 16 million cubic feet of gas.
It can be disconnected and moved out of the path of a storm,
unlike permanently moored production platforms, preventing
long-term supply disruptions because of storms.

"These regulatory approvals pave the way for safe, new
production of oil and gas resources in the Gulf of Mexico,"
said Michael Bromwich, who heads the department's agency that
oversees offshore drilling.

Such vessels are common for offshore production in other
countries without seabed pipelines to transport oil and gas to
shore, such as West Africa and Brazil. Petrobras has a fleet of
them off Brazil's shores, and Exxon Mobil Corp (XOM.N) uses one
of the largest units in the world at one of its fields in
offshore Angola.

Gulf operators so far have had little use for the units
because the basin has such an extensive pipeline network. Even
companies that operate in deeper waters where that network
doesn't reach have had new pipelines built that hook into an
established system, such as Royal Dutch Shell's (RDSa.L) Perdido
project.

Cascade-Chinook is 165 miles off the Louisiana coastline in
8,200 feet of water, while Perdido is 220 miles south of
Galveston in 8,000 feet of water.

Cascade and Chinook each have one production well that is
ready to produce. Petrobras aimed to drill a second production
well in Cascade last year, but was postponed by the temporary
drilling ban after BP Plc's (BP.L) (BP.N) Macondo well
ruptured.

Matt Pickard, analyst with Quest Offshore, said more of the
units, known as FPSOs, could follow now that Petrobras is the
first to clear the lengthy regulatory hurdle. Regulators
approved Petrobras' development plan three years ago, but final
approval came Thursday.

"We won't see an influx of FPSOs yet, but it's a step in
that direction," Pickard said. "It's always good for operators
to have another option on the table."

The Cascade-Chinook project will use the floating B.W.
Pioneer vessel, which will process the oil and gas, store the
oil in onboard tanks and offload it on to shuttle tankers that
will take the oil to shore. Natural gas processed by the
facility will be moved to shore by a pipeline.

The B.W. Pioneer is one of 16 floating production and
storage vessels owned by BW Offshore.
(Additional reporting by Brian Ellsworth in Brazil;editing by
Sofina Mirza-Reid)