Photo: PETROBRAS NEWS AGENCY

RIO DE JANEIRO (Dow Jones)–Brazil’s lead environmental regulators said late Wednesday that state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, could be sanctioned for an oil spill at a deep-water field.

The Brazilian Institute for the Environment and Renewable Resources, or Ibama, said it had given Petrobras five days to submit a report on its response to the accident, including details on actions required under the emergency plan that was part of the environmental license for the field. Some 160 barrels of oil leaked at the Carioca Nordeste field after a tube carrying crude to the surface ruptured.

“Depending on the information to be presented, the company could receive sanctions,” Ibama said in the statement.

Petrobras was conducting a long-term well test at the Carioca Nordeste field when the accident took place. Ibama said there was no danger of the spilled oil reaching the coast, given the distance to the coast and current ocean conditions. The field sits more than 300 kilometers off the coast in an area known as the Santos Basin, where a cluster of oil discoveries were made that are estimated to hold 50 billion barrels of crude.

–By Jeff Fick, Dow Jones Newswires

Dynamic Producer, image (c) N. Castro

RIO DE JANEIRO (Dow Jones)–Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, said Tuesday that an accident at an ultra-deepwater oil field off Brazil’s coast spilled an estimated 160 barrels of crude into the Atlantic Ocean.

It’s another setback for Brazil’s oil industry, which is gearing up to exploit massive discoveries in some of the most challenging environmental conditions on earth. Industry executives will also be keen to see the official response, given the heavy-handed response to an earlier problem in November at a field operated by Chevron Corp. (CVX).

The latest spill happened at the Carioca Nordeste field, part of a cluster of oil discoveries made more than four miles deep off the coast of Brazil’s Rio de Janeiro and Sao Paulo states. Safety systems aboard the “Dynamic Producer” FPSO, a floating production, storage and offloading vessel conducting a long-duration test, detected the rupture at 0830 local time on Tuesday, Petrobras said.

The safety systems automatically shut down the well, which remains closed and in safe condition, Petrobras said. An investigation into the incident is already under way, the company said.

Brazil’s oil regulator ANP said late Tuesday it designated a team that will start inspecting the ruptured production column on Wednesday. The pre-salt well linked to the column has been closed, containing any leakage, ANP confirmed in a statement.

The oil spilt is unlikely to reach the Sao Paulo coast 250 kilometers away, ANP said, adding that efforts are under way to contain the oil slick.

The accident was reported to oil regulators, Brazil’s Navy and environmental authorities, Petrobras said. The company has already mobilized “all of the resources necessary to collect oil from the sea and residual oil from the upper part of the column.”

In November, some 2,400 to 3,000 barrels of crude spilled into the Atlantic after a problem at Chevron’s Frade field in the Campos Basin. Chevron was heavily criticized by regulators and government officials, and criminal charges may be leveled against company executives. Environmental regulators have already imposed fines of more than $30 million, while a state prosecutor has filed a lawsuit seeking damages in excess of $10 billion from Chevron, its Brazilian unit and rig operator Transocean.

Chevron was also barred from drilling offshore Brazil, although the company continues to produce oil from the Frade field.

Last week, Petrobras’s Transpetro logistics unit also was forced to clean up a beach in southern Brazil after 7.5 barrels of oil spilled during offloading of a tanker ship at a single buoy. Brazil’s National Petroleum Agency, or ANP, is investigating the spill.

Petrobras shares closed trading stable at BRL24.57 on the Sao Paulo stock exchange.

-By Jeff Fick, Dow Jones Newswires, Diana Kinch contributed to this article

Dynamic Producer, Image credit Petroserv

Petrobras announces that at 8:30 A.M. this Tuesday (January 31), a rupture was detected in the production column of FPWSO Dynamic Producer, which is anchored about 300 kilometers off the coast of the State of São Paulo at a site where water depth is 2,140 meters. This vessel platform is undertaking the Extended Well Test (EWT) of Carioca Nordeste, in the Santos Basin pre-salt region.

The well was in production with a continuous monitoring and recording system. After the rupture, the safety system shut the well down automatically. The well is closed and has been secured.

A preliminary estimate indicates 160 barrels of oil may have spilled. There is no possibility the oil will reach the Brazilian coast.

Petrobras set its Emergency Plan into action immediately. All resources needed to collect the oil from the sea and the residual oil from the top of the column have been put into motion.

The Company has officially communicated the incident to the Brazilian Navy, IBAMA and to the National Petroleum Agency (ANP).

The causes of the incident are under investigation.

UPDATE:

Brazil’s offshore oil regulator, ANP, said late Tuesday that it has appointed a team to investigate the rupture on the production column of the FPWSO Dynamic Producer starting Wednesday.

Map of the pre-salt area – Santos and Campos Basins

Dow Jones reports on an oil spill from Petrobras’ Osorio terminal…

RIO DE JANEIRO (Dow Jones)–The transportation arm of Brazilian state-owned energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, said Friday that it has completed clean-up work after an oil spill at its Osorio terminal Rio Grade do Sul state.

The spill occurred Thursday morning while a tanker ship was offloading at a single buoy, a loading buoy that is used as a mooring point and interconnect for loading or offloading oil, natural gas or other liquid-fuel products. The leak was estimated at 1.2 cubic meters of oil, or about 7.5 barrels, Transpetro said. In comparison, the November leak at Chevron’s offshore Frade field was estimated to have spilled between 2,400 and 3,000 barrels of oil into the Atlantic Ocean.

Transpetro said it concluded the removal of oil residues from the Tramandai beach in the early morning hours Friday. No traces of oil remain on the sea surface in the area of the spill, Transpetro said, but contingency teams will remain on site to collect any further oil residues that appear.

The company said it has created an internal commission to investigate the cause of the accident.

-By Jeff Fick, Dow Jones Newswires

Image courtesy Australian Maritime Safety Authority

UPDATE: The MV TYCOON has broken in half on Christmas Island. Read: Grounded Vessel on Christmas Island, Australia Breaks in Two. END UPDATE

Yesterday, the general cargo vessel MV Tycoon broke its moorings in Flying Fish Cove, Christmas Island. Severe weather has caused the vessel to founder today, spilling oil and phosphate very close to shore.

The crew of 15 was recovered with assistance from the Royal Australian Navy and the Australian Federal Police.

Significant damage had been reported to the hull of the vessel. There is pollution evident today, in the form of phosphate in the water and oil on nearby beaches. The weather is currently preventing any pollution response measures from being implemented and may do so for at least the next 24 hours.

Arrangements for the deployment of shoreline response experts from the National Response Team are currently being arranged.

The MV Tycoon is a Panamanian-flagged, 85 metre general cargo ship. The master has reported that there are approximately 102 tonnes of intermediate fuel oil, 11,000 litres of lubricant oil, 32 tonnes of diesel oil and approximately 260 tonnes of phosphate onboard the vessel.

The incident was initially managed by the Christmas Island Harbour Master. In accordance with the National Plan to Combat Pollution of the Sea by Oil and other Noxious and Hazardous Substances (the National Plan), AMSA has sent a pollution response expert to the scene to manage pollution response. AMSA has also sent a marine surveyor to provide expert advice and support to the Harbour Master in managing the ship casualty. They arrived on Christmas Island on a chartered flight at 10:30am AEDST today and are providing technical expert advice on-scene.

Several government agencies are working together in response to this incident including:
• Department of Regional Australia, Local Government, Art and Sport
• Australian Transport Safety Bureau
• Department of Sustainability, Environment, Water, Population and Communities

Image courtesy Australian Maritime Safety Authority

Image courtesy Australian Maritime Safety Authority

A vessel works to clean up oil from last months Frade Oil Spill offshore Brazil

2,400 Barrels Spilled

In November 2011, a deepwater well in the Chevron-operated Frade field offshore Brazil leaked 2,400 barrels of of oil from the seabed.  The leak was halted within 4 days and the oil did not reach the shoreline.  The cause of the Frade spill and the subsequent spill response is still under investigation, however none of the initial factors appear to indicate gross negligence, and from all accounts, the spill response was highly effective and appropriate to avoid significant environmental damage.

Brazilian officials however, are currently demanding billions in environmental damages and fines.   The following is a break down:

• USD $27 million – Initial Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) fine.  Fine for alleged infraction of environmental regulations due to the discharge of oil.
• USD $81 million – Rio State environmental lawsuit.  The suit calls for three things: an order for the company to conduct a broad, two-year effort to monitor, including by satellite, boats and helicopter, its oil production activities in Brazil; an order for the company to finance an environmental audit based on international standards of all its activities in Brazil; and an order for the company to pay $81 million for damages caused by the oil spill.
• USD $5.4 million – Subsequent fine from IBAMA regarding alleged deficiencies in the emergency response plan
• USD $10.8 billion – Federal DA’s lawsuit in Campos regarding environmental damage claims

It’s never a good day whenever oil is spilled into the sea, but this was by no means an environmentally catastrophic disaster.  Can offshore operators expect to see similar fines imposed on Petrobras-operated fields?

Or is this a political tactic to try and get funding for their 2016 Olympics, or perhaps to clean up and repair past environmental disasters such as…

26 Mar 1975, 70,000 Barrels Spilled

On 26 Mar 1975, while entering the Sao Sebastiao terminal at Santos, Brazil, M/T Tarik Ibn Ziyad ran aground spilling an estimated 70,000 barrels of oil into Guanabara Bay.  It was the worst oil spill in Brazilian history. CAUSE: Human Error

January 18, 2000, 8,176 barrels Spilled

8,176 barrels of fuel oil spilled from a Petrobras-operated subsea pipeline into a swamp adjacent to Brazil’s Guanabara Bay.  $28 million dollar fine imposed and over $200m has been invested in the past decade toward environmental and social projects in Guanabara Bay. CAUSE: Negligence and human error

Dead mangrove area in Guanabara Bay 10 years after the oil spill. Photo: Maria Elena Romero/Al Jazeera

July 16, 2000, 34,000 Barrels Spilled

A ruptured expansion joint at Petrobras’ Araucaria refinery caused a 34,000 barrel spill into inland rivers and wetlands within the Brazilian state of Parano.  Pipe flowed for 2 hours before the workers were able to halt the flow of oil.   At least a $56 million fine was imposed. CAUSE: Negligence and human error

Iguacu River Oil Spill

By using Brazil’s current oil spill-to-penalty ratio of $4.5 million per barrel spilled…

What if Petrobras’ BW Pioneer, an FPSO currently operating in the Gulf of Mexico, has an accident?

An aerial view taken on February 5, 2008 120 kms off the coast of Nigeria, south of Lagos, shows the FPSO Bonga (Floating, Production, Storage and Offloading). Far from the Niger Delta and its separatist militants, the 305-meter long ship pumps night and day 225,000 bbls of petrol a day and 150 million cubic feet of gas. AFP PHOTO/ JACQUES LHUILLERY

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSA) Wednesday said it has halted production from the 200,000-barrel-a-day Bonga deepwater oil field, offshore Nigeria, after a pipeline connected to a waiting tanker started leaking.

No force majeure has been declared as a result of the leak, at a field that accounts for around 10% of Nigeria’s total crude production, and traders said the shutdown should be immaterial for West African crude differentials.

“The spill at Bonga is a tiny thing for the market,” a West Africa trader said. “It is just a small operational issue. We believe the pipe will be fixed pretty soon.”

“Early indications show that less than 40,000 barrels of oil have leaked in total,” said Shell in a statement. The Anglo-Dutch major said the incident occurred Tuesday.

Production at Bonga, which lies approximately 120 kilometers off the Nigeria coast, is now in the process of being shut down, Shell said.

An export line linking the field’s floating production, storage and offloading vessel to the tanker has been identified as the likely source of the leak, the company said. It has since been closed and depressurized, halting the flow of oil.

“We are sorry this leak has happened,” said Mutiu Sunmonu, Shell Nigeria chairman. “As soon as we became aware of it, we stopped the flow of oil and mobilized our own resources, as well as industry expertise, to ensure its effects are minimized. It is important to stress that this wasn’t a well-control incident of any sort, and to make clear that no-one has been injured. Our focus now is on a speedy and effective clean-up.”

Nigeria’s Department of Petroleum Resources and the National Oil Spill Detection and Response Agency have been notified of the incident. Shell Nigeria’s Oil Spill Response Procedure and Emergency Response Team have been activated to manage the situation, with spotter planes flying overhead to ascertain the size and direction of any oil slick.

The incident is Shell’s first offshore oil spill in Nigeria, although the company’s operations onshore the West African country have been blamed for decades of pollution.

Shell, the biggest foreign oil producer in Nigeria with a presence in the country dating back to the 1930s, has long faced criticism from environmental and human rights groups concerned about the effect its onshore activities have had on the local ecosystem. Its operations in the Delta region have been beset by sabotage and theft, which the company says is the main cause of the oil pollution in the area.

-By Alexis Flynn, Dow Jones Newswires

Late Monday, government officials had suggested that the company could lose its status as a Class A operator. The Class A designation allows Chevron to operate in deep waters off the coast of Brazil that could potentially hold billions of barrels of untapped crude.

“We have not received any official notice from the appropriate governmental authority regarding our Class A status and we continue to fully inform and work with Brazilian government agencies and industry partners,” spokesman Scott Walker said in an email.

In addition, Chevron already has all necessary approvals and permits for a pre-salt exploration well at the Frade field, where the company and regulators believe between 2,400 barrels and 3,000 barrels of crude leaked into the Atlantic Ocean.

Chevron also reacted to charges made by the country’s leading oil regulator, Brazil’s National Petroleum Agency, or ANP, that it had edited 24-hour video of the seabed where the crude was seeping into the ocean. According to Walker, the size of the video files required the company to cut the video into segments that could be more quickly given to regulators.

“Chevron has not changed any video images,” Walker said.

Chevron also said that all equipment necessary to cement the appraisal well that was the primary source of the leak was in Brazil at the time the ANP approved an emergency well-abandonment plan. ANP President Haroldo Lima said that one specific piece of equipment was not brought into Brazil until Sunday.

“The first plug was set with equipment and material that was in country and under contract to Chevron,” Walker said. “In addition, as a precaution, Chevron mobilized additional equipment from outside the country as a backup contingency measure.”

The two notices could each carry a maximum fine of 50 million Brazilian reais ($28 million), according to the ANP. That would be in addition to the BRL50 million fine already levied by Brazil’s leading environmental regulator. Total fines could reach up to $139 million. Despite the accident and political fallout, Chevron is in Brazil to stay, Walker said.

“Chevron Brasil [the company's local unit] is an important part of Chevron’s worldwide portfolio,” Walker said.

-By Jeff Fick, Dow Jones Newswires

Government of Rio de Janeiro/European Press photo Agency

RIO DE JANEIRO (Dow Jones)–U.S. oil major Chevron Corp. (CVX) faces heavy fines in Brazil after the company accepted responsibility for an oil spill at an offshore field, including the possible loss of a key license that allows Chevron to operate in deep waters that potentially hold billions of barrels of crude, government officials told reporters late Monday.

Brazil’s leading environmental regulator, the Brazilian Institute of the Environment and Renewable Natural Resources, or Ibama, imposed late Monday a 50 million Brazilian reais ($28 million) fine for environmental damages after a drilling incident caused between 2,400 barrels and 3,000 barrels of oil to leak into the Atlantic Ocean near Chevron’s Frade field, according to company and government estimates.

But the penalties could rise dramatically as Chevron confronts a political backlash over the spill, including charges that the company withheld information from regulators. Rio de Janeiro state officials could levy fines of about BRL100 million, while Brazil’s National Petroleum Agency, or ANP, announced two notices of infraction for Chevron that could each carry fines of BRL50 million.

ANP Director Magda Chambriard said during a press conference in Brasilia that Chevron “acted in complete violation of its concession contract and Brazilian law.” According to Chambriard, who visited Houston and accompanied the investigation of the Deepwater Horizon disaster in 2010, Chevron edited 24-hour video images of the seabed. The regulator was forced to travel to the platform to get the full 24-hour video of oil seeping up from the seafloor.

In addition, ANP President Haroldo Lima said that a key piece of equipment needed by Chevron to abandon the well that was the source of the spill did not arrive in Brazil until Sunday. The ANP had approved Chevron’s plan to abandon the well in an urgent review, but under the impression that all the necessary equipment needed to carry out the plan was in place, Lima said.

Given the circumstances, Lima called into question Chevron’s status as an “A” operator under the ANP’s drilling criteria. “A” operators are allowed to explore in ultra-deepwater areas such as the country’s much-ballyhooed pre-salt region. “B” operators are confined to explore shallow-water areas, while “C” operators can explore only on land.

Further complicating matters is Chevron’s request to drill a pre-salt well, which was to be considered by the ANP on Tuesday, Lima said. “Certain prerogatives that the company has as an A operator are going to be better examined,” Lima said. “We can’t anticipate [what will happen], but the recent facts introduce relevant data and the result may not be what the company expected previously.”

-By Jeff Fick, Dow Jones Newswires

In this image taken Nov. 13, 2011 and released by Chevron oil company, ships try to control an oil spill in an offshore field operated by Chevron at the Bacia de Campos, in Rio de Janeiro state, Brazil. (AP Photo/Ibama)

RIO DE JANEIRO (Dow Jones)–The Brazilian unit of major U.S. oil company Chevron Corp. (CVX) takes “full responsibility” for a leaking well bore that left a sheen of crude staining the Atlantic Ocean, a company official said Sunday.

“Any oil on the surface of the ocean is unacceptable to Chevron,” said George Buck, president of Chevron Brasil.

Chevron has plugged the appraisal well that was the primary source of the leaking crude, which traveled to the surface through a hole in the well bore after the rock wall of the well failed, Buck said.

Brazil’s National Petroleum Agency, or ANP, estimated the leak at between 200 and 330 barrels of crude per day, which was “in the ballpark,” Buck said. Another government estimate put the total volume of the spill at 5,000 to 8,000 barrels. Buck said that estimate was also “in the ballpark, perhaps high.”

Chevron has not used any chemical dispersants on the oil slick on the ocean’s surface, using only mechanical dispersion and collection, Buck said. He denied that Chevron was using sand on the sheen.

-By Jeff Fick, Dow Jones Newswires