Chevron Oil Spill Caused by Drilling

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazil’s energy regulator ANP has said that drilling by U.S. oil giant Chevron is behind the oil spill that occurred on November 8th at the company’s Frade project in the Campos Basin approximately 230 miles (370km) to the northeast of the Rio de Janeiro state coastline, which produces the vast majority of Brazil’s oil.

An agreement is required to allow for the proposed 2012 bidding for exploration of Brazil’s massive deepwater pre-salt oil fields, Rio de Janeiro, Brazil, News

Experts say it is unlikely the oil spill will impact plans to exploit reserves in Brazil’s vast deep-water pre-salt oil fields, photo Divulgação Petrobras/ABr.

“What was detected is that with the drilling, there was an increase in pressure and there was a crack in the rock which caused the oil to leak to the surface,” ANP director Filoriano Carvalho told Reuters news agency.

Chevron had previously said the “oil seep” was likely to be from a crack in the seabed and that production would continue as it was unrelated to any leakage, but that it would suspend drilling there as a precaution.

On Monday the company said the slick on the surface was about 163km² (about 63 square miles) and was some 120km (75 miles) from the shore on Monday.

Around 300 barrels a day were being released into the Atlantic at a depth of some 3,800 feet (1.2km), the company added.

Chevron says it has deployed experts from its global response team and that eighteen vessels are now at the scene (including some from other oil companies), all working on minimizing any environmental impact.

Brazil’s president Dilma Rousseff has urged a thorough investigation into the circumstances surrounding the oil spill. Attention to precaution and response planning peaked after the 2010 BP Gulf of Mexico spill.

Frade began production in 2009 and last year was producing an average of 50,000 barrels a day, with the oil field holding a predicted 200-300 million barrels in total.

It is as yet unclear whether the incident will have any impact on operations to tap the vast newly-found reserves, known as “Pre-salt,” which is thought to hold some fifty billion barrels of oil reserves in an area the size of New York State off the Brazilian coastline, and could see Brazil become a major exporter of oil and petroleum products.

Map showing location of Frade Project, using Google Maps

The Frade oil field sits in the Campos Basin, which produces most of Brazil's oil, image by Google Maps.

Jim Kappeler, an American specialist in Brazil’s offshore industry, says he does not believe the incident would affect any policy in Brazil or the “Pre-salt” project, and that suspending drilling was not the answer.

“Stopping drilling and production as they did in the U.S. [with the BP oil spill] will not help the situation. It would just put people out of work, as happened in the States, and then later start drilling again,” the industry expert told The Rio Times.

As for who foots the bill or shoulders the blame for any environmental ramifications, Kappeler believes the most that can be expected is a financial “slap on the wrists” for the company in question.

Chevron has completed eight development wells and four injection wells there since the end of 2010 and is planning to add five more development wells and three more injection wells by the end of 2011.

Chevron – which employs over 700 employees in Brazil – has a 51.7 percent stake in production at Frade, Brazilian oil giant Petrobras has thirty percent, with Frade Japan Petroleum consortium in charge of the remainder.

Increasingly tense political debate has been reignited in recent months over how to distribute royalties among Brazilian states, including non-producing states. Currently only Rio de Janeiro, São Paulo and Espírito Santo states produce oil.