RPT-UPDATE 3-Chevron takes full responsibility for Brazil spill

Mon Nov 21, 2011 8:11am EST

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(repeats with no changes to text) (Adds details from company statement)

* Brazil well is plugged but residual oil still seeping

* Chevron underestimated well pressure, got "kick"

* No new oil being emitted

By Jeb Blount and Inae Riveras

Nov 21 (Reuters) - U.S. oil company Chevron (CVX.N) will fully clean up a spill off Brazil's coast, George Buck, the CEO of the local subsidiary said on Sunday, taking responsibility for an accident that has become a major test for one of the world's fastest-growing oil frontiers.

About 18 vessels were supporting well-plugging operations and sheen cleanup, the company said in a later statement, adding that no new oil was being emitted.

Buck said the leak from the undersea well, owned in partnership with Brazil's state-controlled Petrobras (PETR4.SA) and a Japanese consortium, has been plugged.

"Chevron takes full responsibility for this incident," Buck told reporters in Rio de Janeiro. "We will share the lessons learned here in the hope that this sort of incident won't happen again in Brazil or anywhere else in the world."

The spill, one of the largest to hit Brazil's growing offshore oil industry has raised questions about its safety and ability to respond to accidents.

Oil companies in Brazil are testing the limits of drilling as they seek oil at depths as much as 7 kilometers (4.4 miles) below the ocean surface, putting equipment and people under strains often compared with those for space flight.

The stakes are large. Brazilian oil companies expect to produce about 7 million barrels of oil per day by 2020, most of offshore near Rio de Janeiro, an amount that would make Brazil the third largest oil producer after Russia and Saudi Arabia.

Opposition to offshore drilling is growing worldwide in the wake of the estimated 4 million barrel BP Deepwater Horizon spill in the Gulf of Mexico in 2010. Brazil's Federal Police are probing the spill for possible criminal action.

Buck told a news conference that the spill was the result of an underestimate of pressure in the offshore oil reservoir being targeted. At the same time, the company overestimated the strength of undersea rock through which they were drilling.

As a result, high pressure oil was able to leak into the well borehole, overcoming a liquid sealant and well cleaning fluid known as "mud." Because of the low pressure estimate, the mud was mixed "too light" to keep the oil under control.

While the well was immediately shut off, the pressure from the so-called "kick" as oil rushed up through the well mud bore-hole, or outside edge of the well structure, to crack. Oil then seeped through more than 500 meters (1,640 ft) of crevices and porous rock to the seafloor. From there, it bubbled more than a kilometer up to the ocean surface.

Chevron, which experienced the pressure "kick" on Nov. 7, has come under criticism in Brazilian newspapers for failing to provide an immediate explanation for the spill and for a failure to provide a clear estimate of how much oil has leaked into the ocean.

The company, though, says the problem was brought under control within four days despite major transportation, weather, geological and environmental challenges.

"It's an accomplishment to bring something like this under control in four days in deep water," Buck said. "We were 160 kilometers from the coast and 300 kilometers from our base (in Rio de Janeiro)."

At first Chevron did not realize it was responsible for the leak that was discovered on Nov. 8 by workers on a Petrobras platform southeast of the Chevron well-site, he said.

As the blowout preventer worked as designed after the pressure kick, and no oil was leaking from around the well head, Chevron assumed the leak it came from the nearby Petrobras platform or from a Petrobras undersea oil pipeline that runs on the seabed near the leak, Buck said.

Failure of the blow-out preventer was the cause of the Deepwater Horizon disaster.

After searching the ocean floor with remote-controlled submarines -- the depths are too great for human divers -- the leaks were found, Buck said.

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Link to the national oil agency pictures showing seepage:

http:/r.reuters.com/tej25s

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Brazil's petroleum regulator said oil leaked from narrow "millimeter" holes and cracks in the rock in the seabed at a rate of 200 to 330 barrels a day from Nov. 8-15. Buck, who promised an official Chevron estimate of the leak on Monday, said that estimate is probably "in the ballpark," or close to the actual flow.

Ships sent to help break up the spill by Chevron and other oil companies were forced to return to port for four days because of 5 meter to 6 meter waves and more than 30 knot winds, weather considered gale force.

"It was too dangerous for people to work safely," Buck said.

He said an estimate of about 5,000 barrels of oil spilled total may be "a little high" and that they estimate there are about 18 barrels of oil on the ocean surface right now. He also denied local press reports they used dispersants or sand to attack the spill.

"This was a thin sheen, almost impossible to see if you are right on top of it, it was not an oily sludge" he said.

Chevron owns 52 percent of Frade, which is producing about 79,000 barrels of oil and natural gas equivalent per day, and is the fields operator. Petrobras owns 30 percent and a Japanese Group known as Frade Japan owns 18 percent.

Partners in such projects normally share the profits and costs of all operations and Petrobras and Frade Japan approved all work and drilling plans, Buck said.

The well, which is being abandoned, was drilled by Transocean (RIGN.VX) from their Sedco 706 rig. Buck said the problems at the well "had nothing to do with Transocean." (Reporting by Jeb Blount in Rio de Janeiro; Additional reporting by Antonita Devotta in Bangalore; Editing by Marguerita Choy and Michael Urquhart)

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