The Natural View

This month's column is titled Rigs, Roads and Rainforest and discusses the environmental impacts of seismic exploration in the Amazonian basin of Ecuador.

Dropping out of the clouds on the eastern side of the Andean cordillera past the looming volcanic shape of Cayambe, the Amazonian rainforest of Ecuador, or what is locally termed the Oriente, slowly came into view. It was a gripping moment for me and one that I had been preparing myself for since beginning environmental work relating to the South American oil and gas industry in 1993. My first view was everything I thought it would be - a green expanse of forest stretching to the horizon that upon closer scrutiny showed the underlying ravages of human intervention. The most noticeable effect on the predominantly green landscape are the red threads of roads coiling like an anaconda through the forest. The other is the persistent band of clouds overhead which makes it difficult for analysis of photographic or satellite derived images.

It was a gray rainy day in July and out of the mist emerged the oil town of Coca, similar to any frontier boom town wherever oil and gas development is found throughout the world. I was expecting a vision of dusty streets and oil covered roads which I had read about in an issue of the New Yorker magazine, where Joe Kane wrote about the historical problems resulting from development of the Ecuadorian oil and gas industry.¹

But today the streets were covered with rain and not oil. Coca is the stepping stone to oil and gas development in the Amazonian region. The Ecuadorian government recently concluded land negotiations in the Seventh Bidding Round and the current operators include Maxus (recently purchased by YPF Argentina), Sante Fe Energy, Triton, Arco, Oryx and City Investing. Canadian companies have been interested in acquiring these new leases, but as of yet none have bought in.

Development of oil and gas reserves in Ecuador involves a complexity of issues typical of development pressures facing the Amazonian region of South America. Discovery of petroleum reserves in the Oriente in the late 1960's led to a transformation of the Ecuadorian economy from dependence on a largely agrarian sector to a petroleum resource base. Petroleum has since become the most important source of economic growth, government revenues and foreign exchange earnings. Coupled with growth in the economy is a rapidly expanding national population of 11 million which is expected to double by 2030. As most of this growth is taking place in the Amazonian basin, (5% compared to the national average of 2%), the impacts of human colonization and resultant loss of rain forest habitat is inevitable. The deforestation rate in Ecuador is about 29% and is the highest of all countries in South America.² Concerns over this loss of biodiversity have been expressed in the conservation community as Ecuador contains the greatest number of plant and animal species of any country in the world.

The policy framework governing oil and gas development and settlement in the Amazonian region is fraught with contradictions and conflict brought on by a long standing border dispute with Peru that more recently stems from the Rio de Janeiro Protocol of 1942, which saw large portions of Ecuador's Amazonian lands being ceded to Peru. The response of the Ecuadorian government has been to encourage settlement in the region, thereby leading to a sovereign claim bolstered by the presence of military forces and a permanent civilian population. This dispute remains unsettled to this day as witnessed by the most recent war between Ecuador and Peru which still has not led to a formal peace. The war is placing a tremendous strain on the capacity of the Ecuadorian economy and also taking money away from much needed regional development programs. Over 3 billion dollars were spent by both sides.

Although the rainforests lands of Ecuador are designated as protected lands under the 1981 Law of Forestry and the Conservation of Natural Areas and Wildlife, the government does not enforce property rights to these lands. Therefore while oil companies are given access to blocks of land to develop mineral reserves, it opens up land to development through colonization along access roads.

The governing policy regarding settlement is based on the 1978 Law of Colonization of the Amazon region. This law recognizes the paramount importance of encouraging settlement while allowing at the same time for the preservation of ecologically sensitive zones and to respect the rights of the indigenous peoples. This has led to the development of two large protected areas in the region – Yasuni National Park and Cuyabeno Game Reserve. However, oil and gas development in protected areas is still allowed but strictly regulated. While idealistic in its purpose, the implementation of this law to allow for carefully allowed development while maintaining ecological integrity has not been successful. Although strong in its purpose, the implementation of Ecuadorian law by government administrations has been weak and has led to general public mistrust over government effectiveness not only in environmental issues but cultural issues of economy, employment, health and education.

Compounding this conflict within this policy framework is an ongoing legal dispute in the courts between the Cofan Indians and Texaco, one of the first companies to begin operating in the region in the late 1960's. This lawsuit has resulted in massive publicity over poor environmental operating practices by oil companies in Ecuador over the last 25 years and is documented in a recent book by Judith Kimmerling titled "Amazon Crude". It is also the focus of international environmental activism by conservation groups such as the Rain Forest Action Network. Negotiations regarding clean up of old pits and spills have concluded between Texaco and the Ecuadorian government and the Swiss company Woodward Clyde has been selected to begin cleanup. The widespread reporting of these past problems in the Ecuadorian news media has led to a general public mistrust over the resolve of oil and gas companies to implement approved operating practices in new areas.

Companies wishing to undertake seismic exploration must first complete an environmental impact study that must describe the baseline environmental conditions of the block and identify sensitive environmental and socioeconomic zones. Separate terms of reference have been developed for other phases of petroleum exploration including drilling, development and production. The environmental study must be completed within 6 months of contract signing and approved by the Ministry of Energy and Mines prior to the approval of any seismic program.

The environmental study for seismic acquisition must include the following:

• a description of the natural and cultural environment, involving review of existing information and field programs to collect new data.
• determination of environmentally sensitive areas - including geotechnical hydric, biotic, archaeological, cultural and visual sensitivity.
• determination of special management areas indicating where oil and gas development could be allowed, or should be restricted.
• description of the seismic program including information on heliport and camp locations, movement of personnel, location and width of seismic lines, system and techniques of seismic acquisition, waste management and payment of environmental damages.
• evaluation of environmental impacts.
• presentation of an environmental management plan including environmental operating guidelines, contingency plans, health and safety plans, community development training, monitoring and costs.

One of the biggest problems facing oil and gas companies in the Oriente is how much development should they support. The biggest problem resulting from oil and gas development has been colonization that follows the construction of oil and gas access roads. Land tenure in the Oriente involves plot sizes of 250 m wide by 2 km long. Therefore colonization proceeds in a series of lines back from the road right-of-way. In some cases colonization has reached the sixth line or 12 km back.

Typically colonization involves the cutting down of the original rainforest and planting of cocoa, coffee and other cash crops or the planting of grasses to support cattle. The soils of the rainforest are typically nutrient poor and although there may be a flush of growth following the removal of the forest and its subsequent burning, this is short lived. After two or three years land is abandoned and the cycle of rain forest destruction repeated. Colonial people in the Oriente literally are living a hand to mouth existence with a minimum of health, education and social services.

In addition, there are reserves in the Oriente for indigenous people such as the Cofan and the Huoarani which have also been allocated for petroleum exploration. It was only as recently as 1956 when four missionaries were killed during contact with the Huoarani people in the Oriente after which followed and intensive program of educational programs by missionary groups and the Ecuadorian government. Not only is the integrity of indigenous cultures being threatened by oil and gas development and contact with "the outside world", but the very boundaries of their reserves are being impinged upon by the surrounding colonization following road development.

The situation as described is very complex and difficult to reduce to the one or two pages allowed for this article. In closing, however, I would like to present some of the challenges facing oil and gas development in the Oriente and also how we, in Canada, may learn from these lessons.

• To begin, the resolve of the Ecuadorian government to begin environmental studies in advance of seismic operations is laudable and one where we in Canada could follow. Although terms of reference for these studies have been issued by the Ministry of Energy and Mines, there has yet to be an environmental study approved. The effectiveness of this approach in guiding "sustainable" oil and gas development has yet to be tested. Although approval is granted on an individual basis, companies should be encouraged to share environmental information on a regional basis and be involved in cooperative research programs. Funds should be established for this purpose.
• There is no doubt that, in the past, oil and gas operations in Ecuador have resulted in significant environmental damages. Yet, new technologies such as helicopter seismic programs, sumpless drilling, and reinjection of drill fluids can avoid many of these problems. Companies should be encouraged to develop standardized environmental operating practices which have proved effective in other areas of the world.
• The biggest problem facing oil and gas operators in the Oriente is road development and subsequent colonization. As in environmentally sensitive regions in Canada, oil and gas operators must be allowed to control access in their blocks and prevent colonization. In areas, where other land tenure is involved, such as reserves for indigenous peoples, access control should be co-managed.
• Indigenous peoples must be brought into the development picture at the earliest stage possible and be integrally involved in development decisions, rather than reacting to them.
• Through the Seventh Bidding Round process, and in the the upcoming Eight Round, the Ecuadorian government has been selling large blocks of land to oil and gas operators in the Oriente in order to boost revenues. While each operator is required to submit individual environmental assessments, little consideration has been given by the Ecuadorian government to the overall cumulative effects of oil and gas development on the integrity of the Amazonian rainforest. Our experience in cumulative effects assessment could be helpful in this regard.