Dismissal of Frade Oil Spill Charges 'Welcomed News'

Drilling contractor Transocean Ltd. welcomed news that a Brazilian court has dismissed charges against the company and employees over the 2011 Frade oil spill offshore Brazil.

Transocean's crew members did exactly what they were trained to do, "acting responsibly, appropriately and quickly while always maintaining safety as their top priority," Transocean spokesperson Guy Cantwell told Rigzone.

Charges were also dismissed against Chevron Corp., according to a Reuters news report.

Chevron was drilling an appraisal well at the Frade field in November 2011 when oil began seeping through seep lines on the ocean floor. Chevron cemented and plugged the well, estimating that between 400 and 650 barrels of oil were spilled. A lawsuit was filed against the two companies by a federal district attorney in Brazil seeking $10.7 billion (BRL 20 billion) in damages and an injunction to halt Chevron's operations in Brazil.

Operations at the field have been suspended since March 2012, when Chevron requested a temporary suspension of production operations after identifying a small new seep at the field. In July of last year, Brazil oil regulatory agency said it had no objections to the company restarting production, Dow Jones Newswires reported.

However, a Brazilian court in August gave both companies 30 days to cease operations in Brazil, according to a Dow Jones newswire report.

The head of Brazil's superior court of justice overturned a lower court ruling that allowed Transocean to continue operations in Brazil, except at the Frade field, Dow Jones Newswires reported in October 2012.

Brazil's National Petroleum Agency (ANP) had appealed the ban on Chevron and Transocean operating in Brazil, saying that forcing the companies to cease operations could cause serious safety problems and great economic harm, according to Dow Jones Newswires reports.

Brazilian state energy company Petroleo Brasileiro SA (Petrobras) also sought to help overturn the ban on Transocean because it would hurt the company's operations.

In September, ANP fined Chevron $17.3 million (35.1 million Brazilian reais) for its role in the offshore oil spill.

Chevron's plan of development for Frade called subsea production wells tied back to a floating production, storage and offloading vessel. Field development cost of the Frade field is estimated at $2.8 billion.

Located offshore Brazil in the northern Campos Basin in 3,722 feet of water, Frade contains heavy oil and natural gas, with recoverable reserves estimated at 200 to 300 million barrels of oil.

Chevron is operator of the field with 51.7 percent interest. Partners include Brazilian state energy company Petrobras with 30 percent and Frade Japao Limitada, a Japanese partnership led by Inpex Corp. with 18.26 percent.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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