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Chevron refutes Brazilian regulator’s spill report

20th July 2012

ANP’s final report on Chevron’s oil spill last year highlights irregularities and issues recommendations

Chevron refutes Brazilian regulator’s spill report
The agency highlighted 25 irregularities and issued recommendations to Chevron’s Brazilian arm, Chevron Brasil Petróleo Ltda, the field’s operator. Petrobras and Frade Japão Petróleo Ltda both have stakes in the concession.

Brazil’s oil and gas regulator issued a damning report on Thursday about an oil spill last year caused by a major US oil firm.

The Agência Nacional de Petróleo (ANP) released a final report on Thursday on  the spill of an estimated 3,700 barrels of oil which took place 120 km off the coast of Rio de Janeiro in November last year.

The incident occured at the Frade field, in Chevron’s SEDCO 706 platform in operation at the 9-FR-50DP-RJS well. The spill was caused by a pre-salt drilling accident when an artificial pressure increase fractured the rock surrounding a Chevron oil well, according to ANP finds.

Oil from the reservoir entered the well (kick), followed by an eruption of the fluid through the ocean floor (underground blowout).

The agency highlighted 25 irregularities and issued recommendations to Chevron’s Brazilian arm, Chevron Brasil Petróleo Ltda, the field’s operator. Petrobras and Frade Japão Petróleo Ltda both have stakes in the concession.

ANP concluded that Chevron failed to correctly interpret the area’s geology and the fluid dynamics of the reservoir, and that it artificially increased the pressure in the well.

The agency may levy a fine of as much as USD 25m on Chevron. According to Brazilian legislation, no more than approximately USD 1m of penalty may be applied per irregularity.

In March this year, a second oil spill occurred at the Frade field. Chevron Brasil deployed five containment devices to collect the droplets of oil coming out of the seep.

“After the second oil spill, Chevron requested ANP to suspend all its [Chevron’s] operations in Brazil,” an ANP spokesperson told OGT. This was the first time a major oil firm had done so.

“But they are now looking to restart their operations. They have submitted a formal request to resume oil explorations in the Campos Basin. ANP will deliberate on it, although we do not, at the onset, oppose Chevron’s intent,” the ANP spokesperson added. “ANP hopes that Chevron will have the adequate conditions to operate safely.”

“We are still in the process of defining which issues Chevron must address at the Frade field in order to resume operations there,” ANP director Magda Chambriard said during a press conference on Thursday.

In response, a Chevron spokesperson told OGT: “We disagree with the report’s characterization of our safety culture and our technical review of the spill volume remains 2,400 barrels".  “We will review the ANP’s calculations and discuss the findings with the regulator.”

“We are confident that at all times during the Frade incident we acted appropriately and responsibly, consistent with the industry best practices, and within the Plan of Development approved by ANP,” Chevron added.

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