Brazil's ANP Oil Agency OKs Containment Plan For Chevron Well

BRASILIA (Dow Jones Newswires), Nov. 15, 2011

An emergency plan to contain an offshore oil leak at a well operated by the Brazilian unit of U.S. oil company Chevron was approved late Sunday by Brazil's National Petroleum Agency, the agency said Monday.

The Brazilian oil regulator, known as ANP, said Chevron had begun an abandonment operation that would involve injecting mud into the well and capping it with cement. The ANP said it expected the leak would be controlled in the "coming days."

"Chevron put its emergency plan into effect and is entirely responsible for the containment of the leak," ANP said.

The well is located at a depth of 1184 meters in the Frade field of Brazil's offshore Campos Basin. Frade is located about 230 miles northeast of Rio de Janeiro.

ANP said Chevron estimated that the well was leaking at a rate of between 200 and 330 barrels per day, and that between 521 and 882 barrels had reached the surface so far. The leak, first discovered Nov. 8, has produced a stain on the water stretching across an area of 163 square kilometers, the agency said.

The company has dispatched eight ships to the area to help with cleanup, and another 10 ships have been sent from other companies, including Petrobras, Statoil, BP, Repsol YPF and Shell.

Separately, Chevron confirmed its plans to cap and abandon the well.

"Chevron Brasil will continue to monitor the seep lines to evaluate the effect of the plug and abandonment work," the company said. "The company continues to engage resources from Chevron Corporation's global response team and inform and work with government agencies and industry partners in its responses to the matter."

Though reportedly a small leak, the faulty well has raised concerns in Brazil about a repeat of an incident at BP's Deepwater Horizon well in the Gulf of Mexico in 2010 that caused a public-relations disaster and heavy financial losses.

According to local media reports, Brazilian President Dilma Rousseff has demanded a "rigorous investigation into the causes of the [Chevron] accident."

Chevron started production at the Frade field in 2009. Chevron is lead operator of Frade, which holds estimated recoverable reserves of between 200 million and 300 million barrels of oil equivalent, with a 51.7% stake. Petrobras holds 30%, while the Frade Japao Petroleo Ltda. consortium has the remaining 18.3% share.

In September, the Frade field produced 80,425 BOE per day.

Copyright (c) 2011 Dow Jones & Company, Inc.


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