Chevron Banned From Brazil Drilling as Regulator Probes Leak
Wait, it gets much more worse.
Chevron Corp., the U.S. oil producer operating the $3.6 billion Frade oilfield off the coast of Brazil, was blocked from drilling in the South American country while the government probes a recent spill.
The company needs to pay more attention to safety after its “negligence” contributed to the accident, Brazil’s oil regulator, the Agencia Nacional do Petroleo, said yesterday. The ban will remain in place until the regulator identifies the causes and considers it safe to resume drilling, ANP said.
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Chevron said today in a statement it “has not received any formal notice from” the Brazilian regulator suspending its drilling license, although it “acknowledges” the ANP posted a suspension notice on its website.
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Chevron hopes to continue operating in Brazil, George Buck, the head of Chevron’s Brazil operations, said at a Congressional hearing in Brasilia yesterday.
“Sincere apologies to the Brazilian people and the Brazilian government,” he said.
According to Harald Lima of the National Oil Agency, the $28 million, for having filed "false and misleading reports," could be just the beginning. Just how many fines will be levied will be determined by what the investigation turns up.
In addition, Rio de Janeiro has fined Chevron 20 million real for the damage, plus another punitive 30 million real.
Brazil's Environmental Minister, Izabella Teixiera, says more fines will be forthcoming pending proof of violations to environmental law. Carlos Minc, Rio's environmental secretary, said, ""There will be no impunity in Rio." Citing the company's negligence as having caused the accident, Minc said, "they under-estimated the excessive oil pressure near a crack... This accident could have been avoided."
The state environmental agency, Ibama, claims 5,000 to 8,000 barrels were spilled, while Chevron claims it was only 2,400.
Some estimates set the seep at 200 to 330 barrels per day since November 8, but the energy ministry has a lower estimate of 220 to 230 bbd.
Greenpeace disagrees sharply with those estimates, indicating satellite photos that show a spill ten times that size, and more likely approaching a total of 3,700 barrels per day.
Chevron underestimated the amount of pressure at a reservoir at the Frade project about 230 miles (370 kilometers) northeast of Rio de Janeiro, Buck told reporters on Nov. 20. The well experienced a pressure “kick” at the reservoir, prompting oil to leak to fissures on the ocean floor, he said.
Chevron halted the flow of oil from the “source” at the reservoir on Nov. 13 and reduced the spill to residual seepage, he said. The company will continue to seal the well that caused the spill, the ANP said.
Chevron was fined 50 million reals ($27 million) by Brazilian environmental authorities for the spill, which occurred Nov. 7 off the coast of Rio. The company will be fined for falsifying information to ANP and also for failing to meet a plan to counter the accident, the regulator has said.
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“Here in Brazil laws are stricter than in the United States,” Gabrielli told reporters yesterday in Rio before ANP announced the drilling ban. “The plan continues to be strongly oriented toward accident prevention.”
The ANP also said it rejected Chevron’s request to drill a so-called pre-salt well at the Frade project, where the increased depth makes drilling more risky.
“We’re going to see increasingly draconian measures,” said Brookshire’s Bern. “Operators can’t afford to have any accidents.”
Chevron Named "Most Toxic" Energy Company of 2011
The American oil giant Chevron has been named the "most toxic" energy company of 2011 by AlterNet, a prestigious U.S.-based online magazine that closely tracks environmental issues.
Chevron won the sad award the same week it was caught misleading Brazilian authorities who threatened company officials with prison terms about a burgeoning offshore spill. The toxic designation also came in the same year Chevron lost the largest environmental lawsuit in history over its intentional contamination of what was once pristine rainforest in the Amazon of Ecuador.
The Ecuador contamination decimated indigenous groups and created an outbreak of cancer that has killed or threatens to kill thousands of people, according to evidence presented to an Ecuador court that recently ordered the company to pay $18 billion in damages. Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand.
AlterNet reported that Chevron beat out ExxonMobile and BP, which ranked second and third respectively. Koch Industries and Massey Energy ranked fourth and fifth.
In its eye-opening report -- "The 5 Most Toxic Energy Companies and How They Control Our Politics" -- AlterNet cited Chevron's misconduct in Ecuador as the primary reason it won the award.
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Victims in Ecuador refer to Chevron's catastrophe as the "Amazon Chernobyl" and experts believe the damage dwarfs that caused by BP's recent spill in the Gulf of Mexico. Unlike the BP spill, which was an accident, Chevron designed its system of oil extraction in Ecuador to pollute as a way to lower production costs.
AlterNet also concluded that Chevron has paid $85 million on Washington lobbyists since 1998 to help cover up its wrongdoing. It wrote: "(Chevron) has ... moved quite a large amount of cash through Washington and its business practices have resulted in an incredible loss of life. Much of it just happened out of the country, so many in the U.S. may have missed Chevron's gross abuses."
Chevron's "most toxic" award follows a November 7th spill caused by the company in Brazil that has leaked an estimated 110,000 gallons of pure crude into the Atlantic Ocean.
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Chevron was drilling deeper than it was licensed to by the Brazilian government and had to borrow sonar equipment to try to determine the source of the spill, according to the U.S.-based environmental group Amazon Watch. Carlos Minc, an official in Brazil's Rio province, called the spill an "environmental crime" and said it took Chevron almost ten days to start containing it.
In Ecuador, Chevron has declared open warfare on the country's government by suing it in various courts in a desperate attempt to shift the $18 billion liability to Petroecuador, the state-owned oil company.
The Ecuador judgment, issued after an eight-year trial, also found that Chevron left behind more than 900 unlined waste pits gouged out of the jungle floor that to this day contaminate groundwater and discharge oil sludge into nearby rivers and streams.
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Chevron has been widely mocked for its "We Agree" ad campaign and spends far more money each year buying publicity than it has ever spent cleaning up its toxic legacy in Ecuador, said Karen Hinton, the U.S. spokesperson for the Ecuadorians.
"It is becoming increasingly clear that Chevron under its current CEO John Watson has become the most rogue of energy companies and has fostered an internal culture of impunity when it comes to abuses," Hinton said.
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Hinton said a significant portion of Chevron's lobbying funds were used to try to convince the U.S. government to cut trade preferences for Ecuador in retaliation for letting its citizens press their legal claims against the company. Cutting trade preferences would have cost Ecuador an estimated 300,000 jobs.
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"Anyone familiar with the ongoing battle to bring Chevron to justice in Ecuador knows that the company will do everything it can to protect its profits even at the expense of the planet and human health," wrote Amazon Watch.
Rainforest Action Network, another prominent American environmental group, also blasted Chevron for the Brazil spill and issued a warning to other countries who are thinking about doing business with the American company.
"Countries like Brazil should be cautious about doing business with Chevron considering how long the oil giant has evaded responsibility for its environmental crimes in Ecuador," said Ginger Cassidy, an official with the organization
Transocean: The Name Synonymous With Oil Spills
History seems to be repeating itself. Once again, Transocean is embroiled in an oil-spill mess that threatens to bring repercussions far worse than what the company had to endure after the Gulf of Mexico spill.
This time, it's a leak of almost 3,000 barrels in eight days in the Campos Basin, off the Brazilian coast, from a well operated by Chevron. And Transocean is, yet again, the rig operator. Now, in terms of magnitude, this is much smaller than the Macondo well blowout in the Gulf of Mexico last year, where the spill was about 3,000 barrels of crude oil per day. However, the ramifications for Transocean may be much greater. According to the latest information available, the Brazilian government has already banned the rig maker from operating in the state of Rio de Janeiro and has slapped the company with a $28 million fine.
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Given that offshore drilling is picking up across the globe as onshore reserves are fast getting depleted, exploration and production companies will be wary of employing the services of Transocean. This is where management needs to carefully weigh its options.
Take the Campos Basin alone: More than 80% of Brazil crude oil is produced here. The recent Tupi oil field discovery, which is three times larger, has yet to figure prominently in terms of production. State-owned Petrobras, which is the major operator in both the oil fields, will now think twice before using the services of Transocean. The Gulf of Mexico holds several contracts for the Switzerland-based company as well.
It'll be interesting to see how Transocean reacts to the latest crisis. The best possible way out is to follow Chevron's footsteps and accept full responsibility. Still, that could be far-fetched, given the company's past responses in similar situations.
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