Brazil partially suspends operating injunction against Transocean

[story updated, adding Chevron statement 8th paragraph]

The Brazilian Superior Court partially suspended a preliminary injunction order that required drilling contractor Transocean to stop operating in Brazil within 30 days. Consequently, Transocean can continue operations except at Frade oil field, which was the site of an oil seep in November 2011. Petroleo Brasileiro SA (Petrobras) is a partner with operator Chevron Corp. in Frade field.

Previously, Transocean and Chevron each separately received 30-day notices to halt operations in Brazil stemming from an injunction handed down in July (OGJ Online, Sept. 28, 2012).

Brazil’s National Agency of Petroleum (ANP) appealed the injunction, saying a ban against Transocean from operating its drilling rigs would damage Brazil’s revenues. In response to the 30-day notice, Petrobras filed a writ of mandamus seeking immediate suspension of the injunction.

On Sept. 28, Brazilian Superior Court of Justice President Minister Felix Fischer partially suspended the injunction.

As a result of the partial suspension, Transocean is allowed to continue operating its rigs offshore Brazil except in Frade field. Transocean currently has 10 rigs under contract in Brazil of which 9 are working in other fields.

Transocean said it experienced no interruption of contract revenue from its operations in Brazil which, for the 6 months ended June 30, comprised 11% of its consolidated operating revenues.

The drilling contractor “continues to vigorously pursue all legal avenues to ensure complete resolution of litigation against it in Brazil,” including Frade restrictions, a Transocean spokesman said.

A Chevron spokesman said there was nothing to justify an injunction, which the company will seek to overturn and demonstrate Chevron acted diligently and appropriately at all times.

"Chevron Brasil’s response to the incident was implemented according to the law, industry standards, and in a timely manner," the company said. "Continuous monitoring of the incident area shows no discernible environmental impact to marine life or human health.  No oil has reached Brazil’s coast. We have received no information that anyone was harmed as a result of the incident.”

 The injunction concerns oil seeps from an appraisal well at Frade field in 3,800 ft of water 370 km northeast of Rio de Janeiro. Upon receiving approval from ANP on Nov. 13, 2011, Chevron Brazil immediately began plugging and abandonment activities.

Chevron reported well-control operations significantly reduced oil seeps (OGJ, Nov. 21, 2011, Newsletter).

The operator with 51.74% interest, Chevron started production at Frade field in 2009 (OGJ Online, June 23, 2009). Partners in the field are Petrobras 30%, and Frade Japao Petroleo Ltda., a joint venture of Inpex Corp., Sojitz Corp., and Japan Oil, Gas & Metals Corp. 18.26%.

Seeps reported in 2012

Chevron identified new, small seeps in Frade during March, prompting a comprehensive technical study to better understand the area’s geology. The 2012 seeps were in a separate part of the field from the November 2011 seeps, said a Frade-related page on the company web site.

The sites are 3 km apart on opposite sides of the field and the main Frade fault, Chevron said.

The first incident was related to a pressure kick experienced during the drilling of a development well. The second incident, with a sheen totaling less than 1 bbl, occurred when no drilling was being done.

Oil samples collected from the second seeps and analyzed by the IPEX lab in Brazil and reviewed by Chevron indicate that the oil is not from the Frade production reservoir.

Oil from the March incident had different chemical properties than samples collected from either the November 2011 incident or from other producing wells within Frade field. Further, it does not contain drilling mud that would have indicated it was from the drilling process, Chevron said.

Contact Paula Dittrick at paulad@ogjonline.com.

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