The Lago Agrio oil field is an oil-rich area near the city of Nueva Loja in the province of Sucumbíos, Ecuador. It is located in the Western Oriente Basin. The site's hydrocarbon-bearing formations are the Cretaceous Napo and Hollin formations. Oil was discovered in the area in 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. Located in Cofan territory near the Colombian border, it is one of twelve production areas that developed when Ecuador began to export petroleum.
In 1993, local residents started a class action lawsuit, Aguinda v. Texaco, Inc. to force former well operator Texaco (acquired by Chevron Corporation in 2001) to clean up the area and provide for the care of the 30,000 inhabitants affected by oil contamination. In February 2011, an Ecuadorian court ordered Chevron to pay $8 billion in compensation. The verdict was later confirmed by the Ecuador Supreme Court in 2013, with the amount fixed to $9.5 billion. Despite having previously insisted to move the process from the New York Court to Ecuadorian tribunals and having accepted jurisdiction there, Chevron Corporation has refused to pay the judgement claiming that the decision was "illegitimate and inapplicable". A ruling deeming the Ecuadorian verdict as unenforceable was issued by a United States court in 2014 and by an appeals court two years later. In 2018 the Permanent Court of Arbitration in The Hague ruled in favor of Chevron and said the 2013 Ecuador Supreme Court case was obtained "through fraud, bribery and corruption."
Background Prior to the discovery of oil in the Ecuadorian Amazon, economic activity in the region consisted of commercial and subsistence farming. The indigenous Cofan people grew cacao as a cash crop and traditional methods of cacao cultivation remain in use today. The Shuar of eastern Ecuador cultivated sugarcane, oregano, and tree tomatoes among many other plants used for culinary and medicinal purposes.
In 1965, the Ecuadorian government granted 1.4 million hectares in and around the modern province of Sucumbios to the US-based oil company Texaco with a mandate to find and exploit oil reserves in the region. Texaco, operating as a consortium with Gulf oil company, discovered oil in 1966 or 1967. Subsequently, other oil companies such as Gulf, Occidental, and Repsol entered the Ecuadorian oil market. As of 2021, proven reserves in Ecuador amounted to 8.8 billion barrels, the third largest reserve in South America.
In 1971, the government of Ecuador passed the Hydrocarbons Law which forced foreign oil companies to renegotiate previous concessions and contracts, resulting in some 80% of land held by foreign companies being returned to the Ecuadorian state. The state owned oil company CEPE (Corporación Estatal Petrolera Ecuatoriana) gradually increased its ownership stake in foreign consortia over the course of the later 20th century. Petroecuador, successor of CEPE as Ecuador's state-run oil company, gained full ownership of Texaco's interests in 1992, and the US-based company left the country that same year. Several authors claim the discovery and subsequent exploitation of Ecuador's oil reserves fundamentally changed the economy of the country, shifting a once-agrarian society to an oil-dependent nation.
Over the course of Texaco's presence in Ecuador, 880 waste pools, 18 billion gallons of waste product, 17 million gallons of crude oil, and 49 million cubic feet per day of flared natural gas were intentionally or accidentally deposited in the Ecuadorian Amazon region.
Development and ownership In 1964, Texaco Petroleum Company (TexPet) began exploring for oil in northeast Ecuador, the homelands of the indigenous Cofán people. The following year, it started operating a consortium owned equally by itself and Gulf Oil to develop a tract in the area. Nueva Loja was founded as a base camp of Texaco. The consortium struck oil 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 subsequently sold its interest to CEPE. By 1976, the consortium was majority-owned by the Ecuadorian government. TexPet, however, was still the company responsible for drilling technical operations. TexPet transferred management of the consortium to Petroecuador in 1990. TexPet's concession expired in 1992, leaving Petroecuador as the sole owner. Petroecuador continues drilling in the area.
Over a period of 20 years, the Lago Agrio field produced of oil, with a profit of $25 billion. According to Chevron, 95 percent of the profit from the consortium went to the government. This figure has been harshly contested by the government itself.
Produced oil is transported by the Sistema de Oleoducto Transecuatoriano (SOTE) and Oleoducto de Crudos Pesados (OCP) pipelines to the marine terminal at Balao. Lago Agrio is also connected by the San Miguel–Lago Agrio pipeline. The multiproduct Poliducto pipeline runs from Lago Agrio to Quito.
Pollution, remediation, impact
Pollution
One of the most cited reports on environmental damage to Lago Agrio is Amazon Crude written by Judith Kimerling for the Natural Resources Defence Council. This report, which covers the Oriente region more broadly, includes a prediction that Ecuador's entire oil reserves would have been depleted by 2005 if the 1991 rate of 100 million barrels per year had continued. According to Kimerling's interviews with technical staff, approximately 19.3 billion gallons of produced water, with a petroleum content of 500–5,000 parts per million, were diverted into 880 unlined open pits where the water could reach streams and rivers relied on by local inhabitants for their drinking water, bathing and fishing. The produced water contained polycyclic aromatic hydrocarbons at levels many times higher than permitted in the US, where produced water was typically re-injected underground since at least the 1970s. An additional byproduct of the crude oil extraction was natural gas. Although Texaco had agreed to preserve the supply of natural gas, the Ministry of Energy and Mines estimated that 85%-88% of it was burned into the atmosphere. For each well that was dug, on average, an estimated 4,165 cubic metres of toxic drilling fluid accumulated in an open pit. The majority of the wells were dug in the first few years when Texaco and Gulf had the largest number of shares. Paul C. Lambert quoted a Petroecuador manager as saying "at some points, the rivers are like the sea" referring to the salinity of the water.
Crude oil itself also entered the environment when it was used to clean roads that Texaco had built. Such deliberate spills into jungles and pathways accounted for 650,000 barrels. Texaco's largest pipeline in Lago Agrio, the trans-Ecuadorian pipeline, ejected 16.8 million gallons of crude due to accidents. These include a March 1987 earthquake spilling several million gallons which was considered unnecessarily damaging due to the small number of valves on the pipeline. A May 1989 landslide spilled 210,000 gallons and led to reports of black water in the Napo River as far away as Peru. This occurred in the same month as a 294,000 gallon spill outside of Lago Agrio. Kimerling described a November 1989 leak in the Cuyabeno Wildlife Reserve as the first spill which was met with a Petroecuador-led cleanup even though five other spills had contaminated the same area since 1984. 1,415 oil spills in Ecuador were recorded during the 2000-2008 period when Texaco was no longer involved.
In 1992, Agra began an environmental audit whose findings required consensus from Texaco and Petroecuador representatives. A leaked draft showed that investigators observed contaminants, including chromium 6, cadmium and barium, in all soil samples that were tested and spills near 158 of the 163 visited well sites. In 1993, photojournalist Lou Dematteis travelled to sites that were still being used after Texaco's departure. He recalled that some of the open pits had been set on fire. In 1994, Agra's investigation concluded without releasing a report. Subsequent audits took place in 2003 and 2009 which found that 58 waste pits had been left uncovered. In the majority of covered pits, total petroleum hydrocarbon concentration was several times higher than Ecuador's legal limit which is itself 10 times as high as the limit in the US.
With the discovery of oil in Lago Agrio comes the deforestation of land in order to increase agriculture as Ecuadorian homesteaders move into the area. Between 1972 and 1992, about 350,000 Ecuadorian homesteaders moved to lands traditionally owned by the Cofán, Siona-Secoya, and Huaorani because of the discovery of oil. Scientists did a GIS analysis of the Ecuadorian region to see the districution of oil spills from 1995 to 2015. It was found that the highest frequency of spills occurred near the Sacha and Lago Agrio oil fields, which are located near the Aguarico and Napo river basins. These river basin are the water source of the easternmost parishes in Ecuador. Accidental oil spills from 2001 to 2011 released an estimated 10,000t of crude oil into the Ecuadorian Amazon. The American Petroleum Institute only required minimal standards of oil exploitation before Texaco-Chevron started its operation in Lago Agrio, Ecuador. Chevron ignored the guidelines from the American Petroleum Institute to ensure greater profits. The maturity of oil fields is coupled with a decline in oil quality and an increase in water content used in the total volume of oil extracted. These methods being used require water and chemical re-injection which are energy intensive.
Remediation A full reinjection of produced water into the ground would have cost $5 billion according to environmental advocates. In 1980, Texaco rejected a $4 million proposal to build pits with a concrete barrier and transfer existing waste into them. In 1990, the Petroecuador-Texaco consortium committed to spending $8-$13 million on an environmental cleanup. In 1995, amid litigation, Texaco signed an agreement with the Ecuadorian government to clean 161 waste pits in proportion to its interest in the consortium, at a cost of $40 million. It hired engineering firm Woodward Clyde to oversee the cleaning which in turn contracted a predominantly Ecuadorian workforce. The release certifying that Texaco had met its obligations was issued by the government in 1998. Evidence has been found that the cleanup was incomplete, as the largest part of the area was not restored and the pits Texaco supposedly cleaned up were simply filled with ground on top to hide the toxic wastes. Plastic coverings have also been reported. Activists who criticized the pits for being easily permeable also stated that pipes connecting them to waterways were left in place.
Though having admitted to the dumping of the 19 billion gallons of run-off while drilling for oil in the rainforest, Chevron has maintained that it did so legally and according to industry standards, and has used the 1995 agreement as its primary defense against the ongoing legal claims. However, while the Ecuadorian government released Texaco from further liability, the agreement explicitly applied "without prejudice to the rights possibly held by third parties for the impact caused as a consequence of the operations of the former PETROECUADOR-TEXACO Consortium."