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Oil company receives $28 million fine

23 November 2011

Chevron Corporation has reported that its subsidiary, Chevron Brasil Upstream Frade Ltda., has issued an estimate of total oil volume from ocean floor seep lines in the vicinity of its Frade Field.

Frade Field image courtesy of Chevron
Frade Field image courtesy of Chevron

Chevron Corporation has reported that its subsidiary, Chevron Brasil Upstream Frade Ltda., has issued an estimate of total oil volume from ocean floor seep lines in the vicinity of its Frade Field.

It is believed that approximately 2,400 barrels of oil (in the region of 100,800 gallons) have been emitted to date since seeps were first detected on 9 November 2011. The company notes that this estimate is within the current range of 1,600 to 2,640 barrels provided by Brazil's National Petroleum Agency (ANP).

Brazil's environmental agency has reported that it planned to fine Chevron $28 million, and the country's environment minister said that the company could face further additional fines, depending on the results of an investigation into the spill. 

Chevron has accepted responsibility for the spill, saying it was linked to an exploratory well the company was drilling near the Frade undersea oil field, in water 3,800 feet deep. The company has pumped oil from Frade since 2009, spending $3.6 billion on the project. However, in the process of drilling a new well, the company experienced an unexpected spike in pressure within the well. The increased pressure broke through the well bore, allowing oil to seep into the surrounding seabed. The oil then rose through fissures until it reached the water. Chevron pumped cement into the well bore to seal it. 

In addition, it also mobilised 17 vessels to respond to the spill, including eight ships to recover or disperse the sheen of oil on the ocean surface. 

"Chevron takes full responsibility for this incident," commented George Buck, Chevron's Country Manager for Brazil. "We are committed to deploying resources until the sheen can no longer be detected."

As such, Chevron strongly asserts that its personnel were trained and prepared to address a potential incident of this type and responded immediately from the moment of first notification. The company again notes that its combined efforts greatly diminished the size of the sheen and stopped the source of the seep flow within only four days of first detection. Indeed, cementing operations have taken place as part of its well plugging activities on an appraisal well located in the vicinity of the Frade field offshore Brazil. Chevron also confirms that there has never been any oil flow from the wellhead and current monitoring indicates oil from nearby seep lines on the ocean floor have reduced to infrequent droplets. Chevron continues to work in close partnership with its drilling contractor, Transocean, on well plugging operations. All development well drilling in the field continues to be suspended. 

Chevron has continued to monitor the oil sheen, which has dissipated. Current estimates place the volume of the oil sheen on the ocean surface to be less than 65 barrels. The sheen is located about 120 kilometres offshore and continues to move in a south-easterly direction away from the Brazilian coast.

Chevron continues to co-ordinate and deploy resources to monitor and manage the remaining sheen. The company has been scheduling a fleet of up to 18 vessels on a rotational basis, weather permitting, to control and monitor the sheen.

Full production activities have been maintained at Frade throughout the seep incident. Production operations have been monitored continuously to ensure those facilities are not contributing to the oil sheen. 

Chevron continues to fully inform and work with Brazilian government agencies and industry partners on all aspects of this matter.

The appraisal well was drilled in the vicinity of the Chevron operated Frade project located 370 kilometres offshore north east of Rio de Janeiro, Brazil, in water depths of approximately 1200 metres.

While far smaller than BP's spill last year in the Gulf of Mexico, this spill has strained relations between Chevron and a country with large untapped oil reserves.

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