Ecuador bears crude legacy of Texaco's thirst for oil

Published by MAC on 2003-12-06

We have posted two articles of late on an historic ongoing court case against Chevron-Texaco in Ecuador - which will hopefully also mark an historic judgment for costs and compensation that will be implemented in the country of incorporation of the company (namely the USA). Although Chevron-Texaco is of course an oil company, the implications of the trial for mining companies are considerable.

The following article covers some new ground, now that Chevron-Texaco has been forced to release internal documents to the court. These make for horrendous reading, even though the LA Times feels it has to end the piece with a disclaimer from the company.

Ecuador bears crude legacy of Texaco's thirst for oil

By T. Christian Miller, Los Angeles Times

6th December 2003

Lago Aagrio, Ecuador - When Texaco contractors showed up at Monica Torres' wood shack in the jungle, they said they had come to clean up the mess they'd left behind.

A pool of black oil sludge sat like a tar pit in her backyard, dumped by the company years before while drilling nearby. Company contractors trundled in a bulldozer, covered the pit with dirt, and told her it was clean.

Today, nearly a decade later, black gunk still oozes from the weed-covered mound when it rains. Water from the family's main source, a nearby stream laced with paisley rainbows of petroleum residue, makes her children vomit. Torres suffers from severe headaches.

"The crude is still there, alive," said Torres, 40, as one of her sons pushed a stick a few inches into the pit to reveal black ooze beneath the dirt. "They just covered it up, and left."

Torres is one of thousands of people who stand to benefit from a multibillion-dollar lawsuit alleging that Texaco's operations between 1972 and 1992 destroyed land, sickened residents and contributed to the demise of indigenous tribes. Oil company officials deny the charges, saying the operations had minimal impact.

The trial, begun this year in Ecuador, has resulted in the release of thousands of pages of previously confidential memos, studies and internal documents that reveal the inner workings of Texaco, now part of San Ramon-based ChevronTexaco Corp., and its majority partner, the Ecuadorian state oil company, Petroecuador.

With U.S. and international oil companies now pushing deeper into Ecuador's virgin rain forest, a review of the documents, new studies and interviews with current and former Texaco executives and Ecuadorian officials form a portrait of how the search for oil can wreak havoc on a remote place and its people.

According to the interviews and documents:

• Texaco dumped waste water directly into streams and jungle instead of using disposal methods safer for the environment and public health that became common in the United States during the 1970s and 1980s. Oil company officials regarded those methods as too costly to implement profitably in Ecuador.
• The Ecuadorian government showed little concern about the environmental impact of Texaco's drilling operations, regularly cutting the budget for environmental programs.
• Texaco issued favorable loans and work contracts, and occasionally withheld oil payments during its volatile and often contentious relationship with the government that was supposed to regulate its operations.

During the 20-year period, Texaco pumped 1.5 billion barrels of oil from Ecuador -- most of it bound for California markets. By the time the company pulled out, environmentalists estimate that Texaco had dumped more than 19 billion gallons of waste and spilled 16.8 million gallons of crude oil, the capacity of an oil tanker 11/2 times the size of the Exxon Valdez.

"Texaco took out the best and left its trash behind," said Mario Melo, who tracks the oil industry for the Center for Economic and Social Rights, a left-leaning think tank with an office in Quito, the capital.

Officials with ChevronTexaco, the product of a merger between Chevron and Texaco in 2001, maintain that their waste disposal techniques at the time were consistent with oil industry practices in other tropical countries including Colombia, Niger and Brazil.

Moreover, as the minority partner, they say that all their operations were controlled and approved by the Ecuadorian government. They dismiss the health claims as unsubstantiated. And they point to a $40 million cleanup effort, completed in 1998 and approved by the government.

"The bottom line is that when we ceased to be the operator, there was minimal impact," said Ricardo Veiga, ChevronTexaco's vice president for Latin American operations.

Current and former Ecuadorian government officials acknowledge that they exercised little control over Texaco or its operations.

Texaco "should have followed the same standards they were following in the United States, but the authorities here were not demanding it," said Pedro Espin, president of Petroecuador and a former Texaco worker. "Texaco did what the authorities asked, the minimum required. Back then, nobody talked about the environment."

The issues are taking on new importance because Ecuador, once again desperate for oil income, appears to be on the verge of a new boom. Companies including Los Angeles-based Occidental Petroleum and Spanish Repsol YPF are taking advantage of a newly opened oil pipeline to drill in untouched sections of the Amazon.

The new ventures face greater scrutiny and tighter regulations than Texaco did. But even the most careful drilling will affect the environment. Roads and pipelines must be built. Oil spills are inevitable. "You can minimize the effect. But there's no human activity that can be done without impacting the environment," said Carlos D'Arlach, Oxy's regional vice president of community relations. "None."

When well-drilling begins, the process produces "drilling muds" that might contain water, oil, heavy metals and chemicals used in drilling. This mud was dumped into unlined pits near the wells. Government studies have shown that in the United States, such muds can contain toxic levels of benzene, a known carcinogen, and lead, which can impede mental development in children.

Once the oil started flowing, the company would hook the well into a pipeline that carried oil, water and gas to one of 22 processing stations. At those stations, another series of dirt pits was used to separate oil from the water.

Once finished, this second type of waste, a brine called "produced water," was dumped into nearby streams. Produced water is considered dangerous primarily because it normally contains high levels of salt that can kill flora and fauna. In the United States, produced water also has been found to have high levels of benzene and arsenic, according to government studies.

By the time Texaco left, there were more than 600 waste pits pock-marking the region. Today, many can still be seen from the air, black scabs in green jungle.

Texaco maintains that its disposal techniques were standard practice at the time.

"Everything we did in Ecuador was consistent with operations in the oil industry around the world," Veiga said.

But by the mid-1980s, large operators mostly had abandoned the use of unlined dirt pits to dispose of drilling mud in the United States. Tougher disposal regulations were prompted by growing concerns about the health and environmental impact of oil waste.

Texaco continued dumping the waste water even after a 1987 study by the U.S. Environmental Protection Agency, considered the most comprehensive ever done, raised concerns about the environmental and public health risks of the practice. The study found widespread environmental damage in cases in the United States where oil producers were pouring waste directly into freshwater streams. And in some cases, the study predicted that small wells that dumped no more than 100 barrels of waste water per day into streams could increase the risk of cancer slightly among local residents. In the Amazon, Texaco was dumping as much as 100,000 barrels of waste water per day -- 1,000 times more.

"That's an obviously bad practice. They would never have done that in the United States," said Michael Economides, co-author of "The Color of Oil," a pro-industry history of the oil business.

Even though Texaco was doing nothing illegal, its actions were still a cause for worry inside the company.

A 1976 internal memo states that the Ecuadorian government wanted the pits drained and covered, because they collapsed in heavy rains and released contaminated water. The memo warned however, that such an action would be "considerably more costly" than simply repairing the breaches. The pits were never drained, although ChevronTexaco officials said in interviews they were repaired promptly.

A Texaco study four years later concluded that the risk of pollution was minimal because the water in the pits was low in salt and had not damaged nearby vegetation.

But environmentalists say Texaco knew its Ecuador operations would not have met standards in the United States and that the company had a responsibility to do more than local laws required. They acknowledge that the environment was not as important an issue in the early 1970s as today but charge that Texaco did not keep up with changes in technology as environmental practices improved.

"The big picture is that we know from experience around the world that it's irresponsible to just dig a hole, dump your waste and walk away," said Judith Kimerling, an environmental law professor who first documented Texaco's practices more than a decade ago. "That's exactly what Texaco did in Ecuador."

Rene Bucaram, a retired Texaco executive who ran operations between 1977 and 1987 and is now the president of an Ecuadorian oil industry group, said that for much of his time as manager, the state oil company wiped out the budget line for environmental operations to save money. Texaco, he said, would follow suit by suspending its 37.5 percent share of the funding required in the consortium deal. In some years, Texaco's budget shows zero for environmental tasks, the memos show.

"Nine out of 12 months, (the government) cut the costs for environmental work," Bucaram said. "I wouldn't say Texaco was sorry to see this happen. I'd be a liar."

For their part, government officials at the time said they were unaware of the environmental damage taking place. Texaco, they said, assured them that it was using the best technology available.

"Call us ignorant, call us ingenious, I accept it. We just didn't know," said retired Gen. Rene Vargas, who headed the nation's energy ministry in the early 1970s and is a plaintiff's witness. "If they had done in the U.S. what they did here, they would have been made prisoners. They knew it was a crime."

The legacy of oil exploration cuts across the "Oriente," the region of Lago Agrio, like a scar.

Texaco's roads slice through the jungle. Settlers used those roads to slash and burn their way into the rain forest to plant crops and raise cattle, encouraged by a government program designed to protect the territory from incursion by Peru. All told, 2.4 million acres of jungle disappeared. Pipelines snake through towns and school yards, in front of churches and health clinics, gathering the oil from hundreds of wells.

Oil drilling turned out to be disastrous for the region's indigenous tribes. Within a few years of its arrival, Texaco had drilled hundreds of wells in territory claimed by the Cofan, Huaorani, and other tribes.

There was no need to pay them for the use of the land, or even consult with them, as is required today. In Ecuador, all oil belongs to the state.

At least one small tribe, the Tetetes who lived near Lago Agrio, simply vanished. Researchers believe they intermarried with settlers and abandoned all traces of their language and culture.

The Huaorani fled deeper into the jungle. The Cofan saw their territory cut into pieces by roads and wells. Hunters complained of the increasing difficulty of finding game. Tribal shamans were confounded by unknown diseases that resisted traditional cures. "The oil was of no benefit to any of us," said Emergildo Criollo, a Cofan leader.

Spanish epidemiologist Miguel San Sebastian examined 985 cases of cancer in the Amazon that had been reported to a central health registry between 1985 and 1998.

That study, published last year, found that people living in counties with oil drilling faced significantly higher risks of cancer, especially stomach, rectum and kidney cancer for men, and cervix and lymph node cancer for women. While some studies have linked petroleum exposure to stomach and rectal cancer, other cancers detected by San Sebastian, such as cervical cancer, have not been linked.

In another study, San Sebastian surveyed 648 women in river communities in the Oriente, and found that women living within three miles of an oil well faced 21/2 times the risk of miscarriage.

"What the studies show is that something is happening there," said San Sebastian, who is a witness for the plaintiff's lawyers in the oil trial. "But it's tough to make the direct link that the oil is causing these cancers."

ChevronTexaco, which has long denied that San Sebastian's work proves a link, got a boost recently from Jack Siemiatycki, a University of Montreal professor of epidemiology who is an authority on environmental causes of cancer.

Siemiatycki, an independent scientist who reviewed San Sebastian's study when it was published in a leading scientific journal, issued a written response criticizing its conclusions of a definitive connection -- although he didn't rule out the possibility. "There's no more than a hint of link (between cancer and oil exposure)," Siemiatycki said in an interview. "I wouldn't bet my mortgage on it, that's for sure."

As for the claims of environmental damage, ChevronTexaco says the Oriente today speaks for itself.

A helicopter ride shows the jungle continues to grow thick and green. There are few zones of withered trees or brown fields. In some abandoned pits, weeds even grow up through the sludge.

When the company prepared to leave in 1992, it paid for two separate environmental audits. A summary of one of them said that during the consortium's two decades of operations, "some activities were potentially noncompliant with Ecuadorian law."

Samples from five rivers determined that the discharge had altered their chemistry to be higher in salt, oil and particulate waste. The summary also noted contamination at 25 percent of the well sites visited, although it characterized the damage as "limited."

ChevronTexaco says that its $40 million cleanup in response to the audits was designed to ensure that there was no "lasting environmental damage."

They cleaned more than 200 pits, draining the water, testing it and then d ischarging it. They covered the pits with earth and, in many cases, planted them with native species. They also donated four injection wells so that Petroecuador, which continues to work in the fields, could reinject produced water instead of dumping it into streams.

Some industry experts said the greenery alone is an indication that Texaco's operations could not have done lasting damage. One of the biggest components of produced water and drilling mud is salt, which kills plants.

"A green plant is a good indicator that there isn't anything bad there," said Lloyd Deuel Jr., a soil chemist who frequently testifies in court for the oil industry. "A lot of the things that would be harmful to humans or animals are toxic to plants, too."

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