Lago Agrio oil field
Encyclopedia
The Lago Agrio oil field is an oil
-rich area in the Ecuador
ian province of Sucumbíos, discovered in the 1960s. The Lago Agrio field is known internationally for the serious ecological problems that oil development has created there, including water pollution
, soil contamination
, deforestation
and cultural upheaval.
Since 1993, lawyers representing local residents have sought to force former well operator Texaco
and its now parent company Chevron Corporation
to clean the area and to provide for the care of those allegedly affected. In February 2011, an Ecuadorian court ordered Chevron to pay $8 billion in compensation, a ruling the company called "illegitimate" and vowed to appeal.
began exploring for oil in northeast Ecuador. The following year it started operating a consortium owned equally by itself and Gulf Oil
, to develop a tract around present-day Nueva Loja
. The consortium struck a gusher in 1967 and began full-scale production in 1972. The Ecuadorian government, through its national oil company CEPE, now Petroecuador
, obtained a 25 percent interest in the consortium in 1974. Gulf sold its interest to CEPE. By 1976, the consortium was majority-owned by the Ecuadorian government. TexPet transferred management of the consortium to Petroecuador in 1990. TexPet's concession expired in 1993, leaving Petroecuador as the sole owner. Petroecudaor continues drilling in the area.
Over a period of 20 years, the Lago Agrio field produced 1.7 Goilbbl of oil with a profit of $25 billion. According to Chevron, 95 percent of the profit from the consortium went to the government.
from its wells into open pits, as was common industry practice at the time, rather than re-injecting the toxic water back underground. According to environmental activists, the produced water was heavy in cancer
-causing polycyclic aromatic hydrocarbons (PAHs) and is responsible for present-day contamination of the regional water supply. They allege that there has been a 150% increase in cancer cases in the community and region. Chevron and its supporters maintain that no causal link between the produced water and cancer has been shown.
, and litigation has continued in Ecuador.
Chevron claims that the company is being unfairly targeted as a deep pocket
. It maintains that responsibility for damage and cleanup now lies with Petroecuador and the government, and contends that much of the present damage comes from Petroecuador's activities since 1990, including spills from a pipeline system built by the consortium that Petroecuador has not maintained.
In 2008, a court-appointed expert issued a report accusing Texaco employees of not only widespread pollution, but deforestation and cultural destruction as well. The report estimated the damages by TexPet between $8 billion and $16 billion dollars, which the expert later increased by $11 billion.
One plaintiffs' lawyer, Cristobal Bonifaz, was dismissed from the litigation in 2006. He went on to file a case against Chevron in 2007 on behalf of new clients who claimed that pollution had given them cancer. The court found that three of the plaintiffs did not have cancer. After dismissing their claims (leaving two claims active), the court imposed a $45,000 fine against Bonifaz for making frivolous claims.
Attorney Pablo Fajardo
, who represents the plaintiffs, and activist Luis Yanza
received the Goldman Environmental Prize
in 2008 for their work in this case. The prize is considered the most prestigious award for environmental protection in the world.
On August 31, 2009, a video surfaced showing an alleged member of Ecuador's ruling party, Alianza PAIS, bribing Judge Juan Núñez, who is the presiding judge in the case. In the video, the judge agreed to rule against Chevron, to deny Chevron's appeals, and also discusses the allocation of the $3 million bribe between himself, the president, and the plaintiffs. The video also shows discussion regarding the awarding of remediation contracts that would result from a ruling against Chevron. The judge was forced to resign. Chevron claims it had no involvement in the videotaping, however in April 2010 it was found that one of the men involved in the filming was a long-time Chevron contractor, who in turn himself was later caught on hidden camera saying he "has enough evidence to ensure a victory by the Amazon communities if Chevron failed to pay him what he was promised". This man was later relocated to the United States with his family at Chevron's expense, where he is also receiving an undisclosed amount of living expenses. The other man involved in filming the video is a convicted drug smuggler.
In February 2011, Chevron sued several people involved in the plaintiff's case, alleging that they made up evidence and tried to manipulate the legal system of Ecuador. Chevron had acquired outtakes of the 2009 documentary Crude which covers part of the case. The outtakes suggest that New York lawyer Steven R. Donziger
, who acted as a spokesman and lobbyist for the plaintiffs, had urged Ecuadorian President Rafael Correa
to issue criminal indictments against two Chevron laywers involved in the settlement negotiations of the late 1990s. The two lawyers were subsequently indicted. When Donziger was ordered to testify about this in a U.S. federal case, he claimed attorney-client privilege
but was rebuked by the judge.
Plaintiffs in the Ecuadorian court case had initially demanded compensation payments of $27 billion. When the court ordered Chevron to pay $8 billion in February 2011, the company vowed to appeal, calling the ruling "illegitimate" and "unenforceable in any court that observes the rule of law", and said that "the United States and international tribunals had already taken steps to bar enforcement of the ruling." Plaintiffs were also planning to appeal, as a recent report put the damages at $113 billion.
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
-rich area in the Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
ian province of Sucumbíos, discovered in the 1960s. The Lago Agrio field is known internationally for the serious ecological problems that oil development has created there, including water pollution
Water pollution
Water pollution is the contamination of water bodies . Water pollution occurs when pollutants are discharged directly or indirectly into water bodies without adequate treatment to remove harmful compounds....
, soil contamination
Soil contamination
Soil contamination or soil pollution is caused by the presence of xenobiotic chemicals or other alteration in the natural soil environment....
, deforestation
Deforestation
Deforestation is the removal of a forest or stand of trees where the land is thereafter converted to a nonforest use. Examples of deforestation include conversion of forestland to farms, ranches, or urban use....
and cultural upheaval.
Since 1993, lawyers representing local residents have sought to force former well operator Texaco
Texaco
Texaco is the name of an American oil retail brand. Its flagship product is its fuel "Texaco with Techron". It also owns the Havoline motor oil brand....
and its now parent company Chevron Corporation
Chevron Corporation
Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,...
to clean the area and to provide for the care of those allegedly affected. In February 2011, an Ecuadorian court ordered Chevron to pay $8 billion in compensation, a ruling the company called "illegitimate" and vowed to appeal.
Development and ownership
In 1964, Texaco Petroleum Company (TexPet)Texaco
Texaco is the name of an American oil retail brand. Its flagship product is its fuel "Texaco with Techron". It also owns the Havoline motor oil brand....
began exploring for oil in northeast Ecuador. The following year it started operating a consortium owned equally by itself and Gulf Oil
Gulf Oil
Gulf Oil was a major global oil company from the 1900s to the 1980s. The eighth-largest American manufacturing company in 1941 and the ninth-largest in 1979, Gulf Oil was one of the so-called Seven Sisters oil companies...
, to develop a tract around present-day Nueva Loja
Nueva Loja
Nueva Loja, is the capital of the province of Sucumbíos in Ecuador. It was founded in the 1960s as a base camp of Texaco. The official population estimate as of 1995 was 19,262 and as of 2009 its population is calculated to be 26,004....
. The consortium struck a gusher in 1967 and began full-scale production in 1972. The Ecuadorian government, through its national oil company CEPE, now Petroecuador
Petroecuador
Petroecuador [Petroleums of Ecuador State Enterprise] is the national oil company of Ecuador. It is a state-owned enterprise, founded on September 26, 1989...
, obtained a 25 percent interest in the consortium in 1974. Gulf sold its interest to CEPE. By 1976, the consortium was majority-owned by the Ecuadorian government. TexPet transferred management of the consortium to Petroecuador in 1990. TexPet's concession expired in 1993, leaving Petroecuador as the sole owner. Petroecudaor continues drilling in the area.
Over a period of 20 years, the Lago Agrio field produced 1.7 Goilbbl of oil with a profit of $25 billion. According to Chevron, 95 percent of the profit from the consortium went to the government.
Pollution
TexPet directed produced waterProduced water
Produced water is a term used in the oil industry to describe water that is produced along with the oil and gas. Oil and gas reservoirs have a natural water layer that lies under the hydrocarbons. Oil reservoirs frequently contain large volumes of water, while gas reservoirs tend to have smaller...
from its wells into open pits, as was common industry practice at the time, rather than re-injecting the toxic water back underground. According to environmental activists, the produced water was heavy in cancer
Cancer
Cancer , known medically as a malignant neoplasm, is a large group of different diseases, all involving unregulated cell growth. In cancer, cells divide and grow uncontrollably, forming malignant tumors, and invade nearby parts of the body. The cancer may also spread to more distant parts of the...
-causing polycyclic aromatic hydrocarbons (PAHs) and is responsible for present-day contamination of the regional water supply. They allege that there has been a 150% increase in cancer cases in the community and region. Chevron and its supporters maintain that no causal link between the produced water and cancer has been shown.
Remediation efforts
In 1995, amid litigation, Texaco agreed to clean a number of waste pits in proportion to its interest in the consortium, at a cost of $40 million. In exchange, the Ecuadorian government released Texaco from further liability. Chevron has used this agreement as its primary defense against the ongoing legal claims, although numerous sources show the remediation efforts to have been largely cosmetic.Litigation
Lawyers for the indigenous residents of the Lago Agrio field sued Texaco in New York in 1993. The 30,000 member class-action lawsuit accused TexPet of discharging produced water into the same water that was used by the locals for fishing, bathing, and drinking. This case was dismissed for improper venueVenue (law)
Venue is the location where a case is heard. In the United States, the venue is either a county or a district or division . Venue deals with locality of a lawsuit--that is, in which locale a lawsuit may be filed or commenced...
, and litigation has continued in Ecuador.
Chevron claims that the company is being unfairly targeted as a deep pocket
Deep pocket
Deep pocket is an American slang term; it usually means "extensive financial wealth or resources". It is usually used in reference to big companies or organizations , although it can be used in reference to individuals .In the context of a lawsuit, the deep pocket is often the target defendant,...
. It maintains that responsibility for damage and cleanup now lies with Petroecuador and the government, and contends that much of the present damage comes from Petroecuador's activities since 1990, including spills from a pipeline system built by the consortium that Petroecuador has not maintained.
In 2008, a court-appointed expert issued a report accusing Texaco employees of not only widespread pollution, but deforestation and cultural destruction as well. The report estimated the damages by TexPet between $8 billion and $16 billion dollars, which the expert later increased by $11 billion.
One plaintiffs' lawyer, Cristobal Bonifaz, was dismissed from the litigation in 2006. He went on to file a case against Chevron in 2007 on behalf of new clients who claimed that pollution had given them cancer. The court found that three of the plaintiffs did not have cancer. After dismissing their claims (leaving two claims active), the court imposed a $45,000 fine against Bonifaz for making frivolous claims.
Attorney Pablo Fajardo
Pablo Fajardo
Pablo Fajardo Mendoza is an Ecuadorian native of Cofán descent, who was raised in extreme poverty. With the help of the Roman Catholic Church, he put himself through law school...
, who represents the plaintiffs, and activist Luis Yanza
Luis Yanza
Luis Yanza is an environmental activist from Ecuador, of Cofán descent. He serves as president of the Frente de Defensa de la Amazonia , an NGO representing the interests of the campesinos and indigenous peoples in Ecuador.-Honors:...
received the Goldman Environmental Prize
Goldman Environmental Prize
The Goldman Environmental Prize is a prize awarded annually to grassroots environmental activists, one from each of the world's six geographic regions: Africa, Asia, Europe, Islands and Island Nations, North America, and South and Central America. The prize includes a no-strings-attached award of...
in 2008 for their work in this case. The prize is considered the most prestigious award for environmental protection in the world.
On August 31, 2009, a video surfaced showing an alleged member of Ecuador's ruling party, Alianza PAIS, bribing Judge Juan Núñez, who is the presiding judge in the case. In the video, the judge agreed to rule against Chevron, to deny Chevron's appeals, and also discusses the allocation of the $3 million bribe between himself, the president, and the plaintiffs. The video also shows discussion regarding the awarding of remediation contracts that would result from a ruling against Chevron. The judge was forced to resign. Chevron claims it had no involvement in the videotaping, however in April 2010 it was found that one of the men involved in the filming was a long-time Chevron contractor, who in turn himself was later caught on hidden camera saying he "has enough evidence to ensure a victory by the Amazon communities if Chevron failed to pay him what he was promised". This man was later relocated to the United States with his family at Chevron's expense, where he is also receiving an undisclosed amount of living expenses. The other man involved in filming the video is a convicted drug smuggler.
In February 2011, Chevron sued several people involved in the plaintiff's case, alleging that they made up evidence and tried to manipulate the legal system of Ecuador. Chevron had acquired outtakes of the 2009 documentary Crude which covers part of the case. The outtakes suggest that New York lawyer Steven R. Donziger
Steven R. Donziger
Steven R. Donziger is an American lawyer, a former public defender who came to prominence for representing the plaintiffs in the Lago Agrio oil field case against the former well operator Texaco, now part of Chevron Corporation...
, who acted as a spokesman and lobbyist for the plaintiffs, had urged Ecuadorian President Rafael Correa
Rafael Correa
Rafael Vicente Correa Delgado born is the President of the Republic of Ecuador and was the president pro tempore of the Union of South American Nations. An economist educated in Ecuador, Belgium and the United States, he was elected President in late 2006 and took office in January 2007...
to issue criminal indictments against two Chevron laywers involved in the settlement negotiations of the late 1990s. The two lawyers were subsequently indicted. When Donziger was ordered to testify about this in a U.S. federal case, he claimed attorney-client privilege
Attorney-client privilege
Attorney–client privilege is a legal concept that protects certain communications between a client and his or her attorney and keeps those communications confidential....
but was rebuked by the judge.
Plaintiffs in the Ecuadorian court case had initially demanded compensation payments of $27 billion. When the court ordered Chevron to pay $8 billion in February 2011, the company vowed to appeal, calling the ruling "illegitimate" and "unenforceable in any court that observes the rule of law", and said that "the United States and international tribunals had already taken steps to bar enforcement of the ruling." Plaintiffs were also planning to appeal, as a recent report put the damages at $113 billion.
External links
- Clean Up Ecuador Campaign (Plaintiffs' site)
- Texaco in Ecuador (Chevron site)
- Rain Forest Jekyll And Hyde? - New York Times, 20 October 2005
- Jungle Law: Politics & Power: vanityfair.com, May 2007