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A picture released by Brazil's National Petroleum Agency shows the oil leak on the ocean floor. (AFP/Getty Images)

Chevron's Brazilian Oil Debacle: To Drill Or Not To Drill

by Marcelo Gleiser
Nov 30, 2011

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Marcelo Gleiser

After a few days in Rio de Janeiro, my hometown, I was horrified to see the local headlines saturated with news that Chevron's Frade project, located 230 miles off the northeastern coast of Rio in 3,800 feet of water, had leaked for over 15 days. While Chevron says the leak, which started on November 7, is now contained and that the total amount of the spill was under 2,400 barrels, there have been accusations from Brazilian environmental and regulatory agencies that the company is only telling part of the story. A week ago, the main local newspaper, O Globo, ran this headline: "Chevron lies and may be forbidden from operating in the country." A Brazilian regulator put its own estimate on the spill at as much as 3,000 barrels and, on November 23, banned the company from further drilling, as well as fining Chevron $28 million.

While Chevron says it had engaged 18 ships in the cleanup on a rotation basis, the environmental division of the federal police sent a crew to the region who reported seeing only one. Local authorities have accused the company of overlooking the fact that the oil has moved dangerously close to regional river mouths. Residents have complained of sickness, including dizziness and vomiting.

To add to the drama, the drilling contractor, Transocean, owns the Deepwater Horizon rig that involved in last year's Gulf of Mexico BP oil spill, the largest in U.S. history.

Brazil, the world's seventh-largest economy, is poised to continue its amazing growth in the near future. In the past few years, an estimated 50 billion barrels of oil have been found in very deep waters northeast of Rio, the biggest found in the West in 30 years.

When you fly to Rio nowadays, it's clear that a substantial fraction of the passengers work for the oil business. Meanwhile, Brazil's own giant oil company, the stated-controlled Petrobrás, is the fourth-largest company in the world by market capitalization. Whoever still thinks Brazil is a third-world country should think again. Or come down and take a look.

The new oil reserves, known as "pre-salt," present an extraordinary technical challenge, lying under a salt deposit over one-mile thick. The oil reserves themselves are located over four miles deep. I have nightmares thinking of what could happen to this spectacularly beautiful coast. Since its discovery, one hears a lot of euphoric statements of the economic potential of such discovery and precious little about the enormous environmental dangers of exploiting oil at such depths and under such conditions.

The current Chevron oil spill, I hope, will raise the awareness of both politicians and the population to what could happen if a really bad spill were to occur here.

While much of the world is debating how to move away from oil and fossil fuels, Brazil, with its vast natural resources and the largest hydroelectric power usage in the world (around 90 percent of the country's total usage), seems to be going backwards. I wonder if their dream of becoming the world's fifth-largest economy in a decade is feasible without a deep re-evaluation of its energy policy. Oil is becoming harder and harder to extract here and everywhere. Why is it so hard to get the picture?

You can keep up with more of what Marcelo is thinking on Facebook.

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