Chevron Plugs Leaking Well Offshore Brazil

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November 15, 2011

HOUSTON (Dow Jones)–Chevron Corp. (CVX) said Tuesday that it successfully contained the flow from a deep-water appraisal well offshore Brazil suspected to be at the root of an underwater oil leak.

Chevron “can currently advise that well control operations have been successful and that any fluid flow from the well appears to have ceased,” the company said in a statement. The appraisal well was drilled at the Frade field, in Brazil’s offshore Campos Basin, at a depth of 1,184 meters. The field is located some 230 miles northeast of Rio de Janeiro.

The company also said that it has seen a “significant decrease” in the amount of oil seeping from the sea floor around the well. The company will continue to closely watch the area until it permanently shuts down the well with cement “in the coming days.”

The company proceeded with its emergency plan to contain the well after getting approval from Brazilian regulators late Sunday.

Brazil’s National Petroleum Agency said Monday that the well was leaking at a rate of between 200 and 330 barrels per day, and 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 Petroleo Brasileiro SA (PETR4.BR, PBR), Statoil ASA (STL.OS, STO), BP PLC (BP, BP.LN), Repsol YPF (REP.MC, REPYY) and Royal Dutch Shell PLC (RDSA.LN, RDSA, RDSB.LN, RDSB).

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.

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 barrels of oil equivalent per day.

– By Angel Gonzalez, Dow Jones Newswires

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