How Brazil is making an example of Chevron

Paul M. Barrett, Peter Millard – Bloomberg Businessweek, 05/10/2012

Last Nov. 7 something went wrong at a deep-sea oil well operated by Chevron (CVX) 230 miles northeast of Rio de Janeiro. As a massive drill bit punctured reservoir N560, roughly 3,500 feet beneath the ocean floor, monitors revealed pressure much higher than technicians expected. The next day a routine flyover of the field, called Frade, in the Campos Basin, revealed oil on the water’s surface.

Chevron dispatched remote-controlled submarines, which found oil seeping through fissures on the sea floor directly above N560. The blowout preventer, a three-story-tall valve assembly, automatically cut off oil flow at the wellhead. This would not become another BP (BP)disaster, in which the blowout preventer notoriously failed. Still, George Buck, president of Chevron’s Brazil subsidiary, ordered the Frade well shut down. Chevron sent 18 vessels in rotation to contain the oil on the surface, and it readied pyramid-shaped steel caps to cover the seepage points. Workers completed the job in just four days. Buck saw the situation as under control. And technically, it was.

A petroleum engineer in his mid-forties, Buck has an MBA and has worked for Chevron for 23 years. He is 6-foot-5, slender, soft-spoken, and earnest to the point of social awkwardness. He arrived in Brazil in 2009, having worked from Alaska to Texas to Indonesia. He lives with his family in Rio’s fashionable Ipanema beach district. He is not a man about town. After three years in Brazil, he speaks little Portuguese, relying heavily on translators. Nevertheless, on the Frade spill, Buck thought he had made himself quite clear. “Chevron takes full responsibility for this incident,” he said at a press conference in Rio on Nov. 21. At a congressional hearing in Brasília two days later, he added, “Sincere apologies to the Brazilian people and the Brazilian government.”

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