UPDATE 2-Chevron says Brazil leak unrelated to Frade output

Fri Nov 11, 2011 6:15am IST

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* Regulator says leak one km from Chevron's Frade field

* Company says leaking from seep, unrelated to production (Adds Chevron statement)

Nov 10 (Reuters) - An oil leak near Chevron's Frade field off Brazil's coast, which had temporarily halted work there, is from a natural seep on the seabed and is unrelated to Frade's production, Chevron said on Thursday.

Chevron Corp (CVX.N) said it had notified the appropriate agencies and was working with partners to deploy response vessels to control the sheen and minimize any environmental impact.

"An inspection of the Frade facility found that production activities were unrelated to the sheen and production is continuing," the U.S. oil company said in a statement.

A subsea vehicle deployed by Chevron found the source was a seep, where hydrocarbons naturally escape from underground. Investigations into the sheen's causes were continuing, Chevron said.

ANP, Brazil's oil regulator, has begun its own investigation after earlier reporting oil on the ocean surface about a kilometer (0.6 mile) from the Frade field, which began production in 2009 and averaged 50,000 barrels per day of output in 2010.

After flyovers of the area, Chevron estimated the total volume on the surface at about 60 barrels of oil.

Chevron owns 51.7 percent of Frade, while state-run oil company Petrobras (PETR4.SA) has a 30 percent slice and the remainder belongs to the Frade Japao Petroleo consortium.

The field is about 230 miles (370 km) from the northeast coast of Rio de Janeiro state and its output feeds into a floating production, storage and offloading vessel (FPSO), according to details on Chevron's website.

The company has been drilling to add five more development wells and three injection wells to the project on top of the existing eight development and four injection wells.

The leak is in the Campos Basin, which accounts for the bulk of Brazil's oil output off the coast of Rio de Janeiro state. Brazil's output is expected to leap from about 2 million barrels of crude per day now, once vast reserves lying at depths of about 7 kilometers (4.3 miles) below the seabed come on stream.

The ANP tightened regulations for offshore oil production in the wake of the Gulf of Mexico oil spill in 2010 which dumped millions of barrels of crude into the ocean following an explosion on a drilling rig working for BP (BP.L). (Reporting by Brian Ellsworth, Reese Ewing and Sabrina Lorenzi and Peter Murphy, with additional reporting by Braden Reddall in San Francisco; editing by Sofina Mirza-Reid, Phil Berlowitz)

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