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Chevron's Frade Output to Remain Limited Until Analysis

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HOUSTON - Activity and production at the Frade field, operated by Chevron Corp., offshore Brazil will be limited until the company and regulators gain a complete understanding of the second of two subsea spills that took place there, Brazil's oil regulator said Monday.

In an interview, Magda Chambriard, head of Brazil's National Oil Agency, or ANP, said the first incident, which took place in November 2011, was relatively well understood. But until Chevron provides the regulator with a good analysis of what happened in a subsequent spill in March 2012, "we cannot allow Chevron to inject water" and drill deep in the subsea field, she said. "They can produce whatever they want to without injecting."

For now, Chevron is allowed to drill shallow wells as well as and take core samples and do the seismic work it needs to complete research about the second Frade incident, she said. The company didn't immediately respond to a request for comment.

Ms. Chambriard said the upcoming 11th oil and gas bidding round, which offers offshore leases in the so-called "Equatorial Margin," an offshore area that geologists say could resemble the rich offshore area found in West Africa, has attracted lots of attention. Some 64 companies have submitted bids--including 44 companies that aim for operating leases and 20 companies that want to be partners with operators, she said. "This is very good for us," she added.

Copyright (c) 2012 Dow Jones & Company, Inc.

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