Brazil Takes More Action Against Chevron

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Source: WSJ (Google title for full article)

Already under fire for an oil leak last month, Chevron Corp.'s deep-water operations in Brazil suffered a fresh blow Thursday when regulators said the company must shut a well unrelated to the leak.

Brazil's oil regulator ordered one of Chevron's 11 producing wells at the Frade oil field off Rio de Janeiro to stop pumping after finding hydrogen sulfide gas in the well. The agency also accused Chevron of failing to inform it about the gas.

The closure underscores a cautious regulatory approach adopted by the government after 2,400 barrels leaked from a different Chevron well under development at the Frade field. The caution is in keeping with a global trend toward tougher scrutiny of deep-water drilling after last year's 4.9 million barrel spill at a BP PLC well in the Gulf of Mexico.

The existence of the gas is not unusual, says Oppenheimer & Co. senior oil-and-gas analyst Fadel Gheit. But with the cause of last month's leak still not fully understood, its presence could raise concerns; pressure from the gas could be dangerous if the geological structures around the Frade wells aren't as strong as once believed.

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