Chevron saw its first quarter…

Chevron released an interim production update on Wednesday, showing both oil production and refining in the first two months of the first quarter compared to the previous quarter.  Despite the slight declines, the second largest U.S. oil producer saw Brazil’s petroleum regulators authorize Chevron to resume production in its offshore wells off the coast of Rio de Janeiro, Brazil, where the company spilled more than 100,000 gallons of oil into the ocean in 2011.

In the U.S., Chevron saw net oil equivalent production slide 11,000 barrels per day to 663 million barrels as a consequence of increased maintenance activity in the Gulf of Mexico.  Realized prices for crude oil and liquids rose to $94.07 a barrel on a sequential basis, while natural gas prices fell marginally to $3.06 per million cubic feet, but remain more than 23% above their Q1 2012 values.

Chevron derives most of its exploration and production profits abroad, where it also saw a slight decline in the first two months of Q1 compared to the fourth quarter of 2012.  Net oil equivalent production declined 21,000 barrels of oil per day to 1.96 billion barrels.  Average price realizations for crude and other liquids rose to $10.4.27 per barrel, as they did for natural gas which stood at $6.03 per million cubic feet, which is 2.6% above its price level a year ago.

On the upstream side, Chevron saw maintenance activity affect both their domestic and international operations.  In the U.S., refinery crude-input volume fell 145,000 barrels per day to 557 million barrels per day on maintenance activity at its Pascagoula, Mississippi refinery.  Abroad, refinery crude-input volume ticked down 61,000 barrels per day to 857 million barrels.

Beyond its production update, Chevron made headlines on Wednesday as it once again won permission from Brazilian regulators to drill in their pre-salt fields off the coast of Rio.  Chevron had been banned from producing in the Frade field, and in Brazil in general, after more than 100,000 gallons of crude flowed into the Atlantic Ocean two Novemebers ago.  The Agencia Nacional de Petroleo (ANP), Brazil’s oil regulator, cleared Chevron to produce for one year, allowing it to resume operations on six offshore wells in the area, according to the Miami Herald, which reported the large producer, along with driller Transocean, still face two civil suits seeking $20 billion in damages.

Drilling at ultra-deepwater depths is difficult and dangerous, as BP’s infamous Macondo well accident demonstrated.  Brazilian authorities, and national oil giant Petrobras, had been working with global oil companies in order to tap the coveted assets, in a field that is thought to contain about 8 billion barrels of recoverable oil.


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