Chevron starts pumping at Brazilian field
Chevron started pumping oil and gas from an offshore field near Brazil. The San Ramon oil giant is the operator at
the $ 3 bn Frade project, which is 230 miles from Rio de Janeiro and about 75 miles off the coast. The oil is under
3,700 feet (more than two-thirds of a mile) of water.
Chevron picked up rights to work in the field through its $ 44 bn acquisition of Texaco, which had tested it in 2001
with two wells. Brazil's Petrobras found the field in 1986 and still has a 30 % interest in it today. Chevron has a
52 % stake.
Getting oil out from such undersea depths is technically tricky, hence the project's great cost. Even early estimates
put it at $ 2.5 bn, but it's ended up costing some $ 3 bn.
Water has to be pumped into the field to keep up pressure in the oil reservoir. Oil at Frade is in shallow deposits
that need long, horizontal wells for extraction. Peak production at the project won't happen until 2011, and will be
about 90,000 bpd.
A floating production, storage and offloading vessel, or FPSO, built in Dubai is used to get the oil and gas. An FPSO
is a ship with tanks for the oil as well as equipment needed to connect to drilling platforms, process their oil and
offload it onto tankers or into a pipeline.
Similar Chevron projects have had big price tags -- $ 2.7 bn for the Tahiti field in the Gulf of Mexico and at least
$ 1 bn for its Agbami field project 70 miles off the coast of Nigeria, for example.
These huge costs are easier to justify when oil prices are high, like they were last summer. But with prices lower
than $ 70 per barrel right now, down from near $ 150 a year ago, even Chevron has had to rethink some of its
expenses. The company is bringing home some expensive expatriate workers from London and elsewhere as one way of
reining in costs.
This is Chevron's first working project in Brazil.
