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OCCIDENTAL PETROLEUM CORPORATION
Critique of Report by Judith Kimerling: "Corporate Responsibility in Ecuador: The Many Faces of Oxy"
Los Angeles, California August 27, 2001
TABLE OF CONTENTS
Executive Summary
Introduction
Occidental Did Not Cooperate With the Author
OEPC Environmental Standards are Vague and Lacking in Substance
OEPC Fails to Use Leading-edge Environmental Practices
OEPC Environmental Practices Are Inconsistent with Ecuadorian Law
OEPC Fails to Disclose Environmental Practices and Performance
ISO 14001 Certification is a "Subjective Standard" That Lacks Substance
OEPC Failed to Collect Necessary Baseline Information
OEPC Failed to Monitor the Environmental Impact of Its Operations
Produced Water Re-injection is Unsafe
Occidental's Response
OEPC Development Plans are Deliberately Kept Secret
Local Communities Cannot Impact OEPC's Development Plans
OEPC Causes Secret Expropriation of Indigenous Lands
OEPC Fails to Communicate with Local Communities
OEPC Has No Regard for Safety
Occidental Takes Advantage of Institutional Vacuum to Avoid Responsibility.
Occidental's Response
OEPC Fails to Disclose the "Laguna Spill"
OEPC Has No Standards for Disposing of Liquid Wastes
Miscellaneous Items
Conclusion
APPENDIX I - Occidental's Standard of Care
APPENDIX II - OEPC Environmental Performance Standards
APPENDIX III - OEPC Baseline Mapping
APPENDIX IV - OEPC / Secoya Code of Conduct
Critique of Report by Judith Kimerling:
"Corporate Responsibility in Ecuador: The Many Faces of Oxy"
Executive Summary
Ms. Judith Kimerling's study, "Corporate Responsibility in Ecuador: The Many Faces of Oxy," while purporting to be a scholarly analysis of Occidental's environmental practices in Ecuador, fails to demonstrate adherence to the principles of sound scholarly inquiry. The report contains neither a description of the research methodology nor the sampling and processing techniques employed to collect and verify the accuracy of the data upon which the report is based. The report also fails to provide a set of defined criteria as a basis for evaluating Occidental's performance with respect to technical compliance standards, baseline standards, performance standards for community relations and other performance measures. Many of the references cited in the report are anecdotal and unsubstantiated. The report delves into highly technical aspects of oil exploration and production activities, yet it does not include a single citation from an expert in petroleum engineering or geology who is qualified to assess the technical merits of Occidental's operations. In short, the report does not adhere to basic standards that are an integral and fundamental part of a well-designed academic research project. These glaring deficiencies make it virtually impossible for academic peers, or others, to review the data and assess the interpretation of that data in order to evaluate the merits of the report's conclusions.
For example, a fundamental flaw in the report is the absence of a "best practices" model to serve as a yardstick to assess the merits of the report' s "findings." Apart from what appears to be reliance on information gleaned from random and unstructured interviews with selected local residents residing near Occidental's operations in Ecuador, the report relies primarily on a review of Occidental documents prepared in 1992 and a limited tour of Occidental's facilities in Ecuador. The report contains no evidence that qualified technical experts in oil field operations were consulted to assess Occidental's actual operational performance.
There is no description of any sampling techniques used in selecting indigenous community representatives to be interviewed or questionnaires used to conduct the interviews. There are more than 5,000 indigenous peoples, representing numerous distinct indigenous groups, residing in Block 15 where Occidental's Ecuadorian operations are located.[1] The report indicates that the research related to community issues consisted of random interviews with unspecified numbers of individuals rather than with acknowledged community leadership councils who represent the communities as a whole. The information reported from these interviews appears largely anecdotal. There is no description of a process to validate the accuracy of the information derived from these interviews or representation that the views of all those interviewed were fully and fairly reported.
This critique is organized according to specify issues raised in the report. In each case, a critique is provided to clarify the facts surrounding those issues, provide information that was not reported, or provide a context in which to derive a better understanding of a specific issue. The page numbers of the report referenced in this critique may differ from the version that appears on the Natural Heritage Institute's (NHI) web site. The critique is based on a hard copy of the report NHI provided to Occidental.
Introduction
Ms. Kimerling first contacted Occidental Oil and Gas Corporation (a subsidiary of Occidental Petroleum Corporation) through Dr. Lawrence P. Meriage, Vice President, Executive Services & Public Affairs, about a study she was undertaking of "best environmental practices" by oil companies operating in the Amazon area. Ms. Kimerling informed Dr. Meriage - currently Vice President, Communications and Public Affairs, Occidental Petroleum Corporation - that she had read an article in the April 21, 1997 issue of the Oil & Gas Journal which featured a story about Occidental's oil and gas operations in Ecuador.
Ms. Kimerling informed Dr. Meriage that her research was being funded by a grant from the Research Foundation of The City University of New York, (CUNY) where she was Assistant Professor of Law and Political Science at Queens College and School of Law. Ms. Kimerling indicated that she wanted to include a case study of Occidental's environmental practices in Ecuador as part of a broader study that included Royal Dutch Shell's Camisea natural gas project in Peru. During her initial phone conversation with Dr. Meriage, Ms. Kimerling raised a number of technical questions about Occidental's operations in Ecuador and requested various technical data. Dr. Meriage inquired about Ms. Kimerling's qualifications to evaluate the kind of technical data that she was requesting. Ms. Kimerling said that her background was in law, but that she believed she was fully qualified to assess the technical merits of an oil operation's environmental performance in the Amazon.
Dr. Meriage asked Ms. Kimerling to provide a copy of the research proposal submitted to CUNY on which her research grant was based. Dr. Meriage wanted to review Ms. Kimerling's grant proposal to obtain a clear understanding of the scope of the research and the underlying hypothesis, including baseline data, on which the research was to be conducted. Ms. Kimerling never complied with this request. Moreover, Ms. Kimerling's assertion that she did not have a written proposal raised immediate questions about her credibility. The process of obtaining research grants is highly competitive and universities do not award such grants without comprehensive written proposals detailing the planned research. Occidental routinely assists numerous academic researchers engaged in a wide variety of research projects, and they are typically quite willing to furnish the company with copies of their research proposals.[2]
During several phone conversations discussing her research project, Ms. Kimerling made various references to her "clients" in Ecuador, which appeared to blur the lines between her research and the legal services she was proffering to clients. Dr. Meriage was concerned that Ms. Kimerling was involved in the profit-related work of a lawyer representing a plaintiff rather than as an objective academic researcher. She forwarded two letters from communities in Block 15, representing that these communities asked her to contact Occidental to register certain grievances. This appeared odd because Occidental was at that time engaged in direct contact with the leaders of both of the communities, making it unnecessary for Ms. Kimerling to serve as a courier. Ms. Kimerling's behavior strongly suggested that she was pursuing an agenda of building the framework for profit-motivated legal action against the company. It is fair to say that her actions appeared to be inconsistent with her stated intent of undertaking a study of Occidental' s "best practices."
Ms. Kimerling again contacted Dr. Meriage requesting to meet in California during a Corporate Accountability Program Roundtable in November 1999 sponsored by the Natural Heritage Institute. Dr. Meriage was not available and agreed to send as his representative Mr. Clark Hull, Worldwide Environmental Manager of Occidental Oil and Gas Corporation. Mr. Hull is an environmental specialist, with advanced degrees in the biological sciences, and he served with Occidental's Health, Environment and Safety Group for two decades. By agreement at Mr. Hull's meeting with Ms. Kimerling, Occidental forwarded copies of the Block 15 Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) to Ms. Kimerling.
Despite misgivings about Ms. Kimerling and her proposed study, Dr. Meriage directed Mr. Hull to provide her with basic data which, while publicly available, was not easily accessible. The documents consisted primarily of Occidental's 1992 Environmental Impact Statement for the initial phases of the development of Block 15. After Mr. Hull sent Ms. Kimerling these materials, he never heard from her again. Ms. Kimerling subsequently requested and was granted a tour of Occidental's facilities in Ecuador and met with several staff members. Ms. Kimerling never contacted Dr. Meriage or other Occidental personnel after visiting these facilities to corroborate any of her purported findings.
The following is Occidental's point-by-point response to the report's purported findings:
Occidental Did Not Cooperate With the Author The author claims that Occidental deliberately attempted to block her efforts to obtain information about activities in Block 15. (Kimerling, pp. 13-14, footnote 34)
Occidental's Response Occidental was not obliged to cooperate with Ms. Kimerling at any level. She had no official status, and Occidental was not required to provide her with any support for her project. Occidental's representatives did not have to respond to her phone calls, meet with her, provide a tour of the company' s Ecuador facilities or provide any documentation of any kind. Additional information would have been more readily provided if Ms. Kimerling had demonstrated a modicum of good will. Not only did Ms. Kimerling refuse to provide a copy of her research proposal, but the Occidental staff in Ecuador that arranged for her to tour the company's production facilities described her as rude, abrasive and demanding. In short, Ms. Kimerling's behavior did nothing to win over the very people whose support she sought.
The technical content of a number of the documents Ms. Kimerling sought gave rise to questions about her technical qualifications to assess the performance of a highly complex, technology-driven oil producing facility that is operated by engineers, geologists and geophysicists - most of whom have advanced degrees. One wonders how the dean of the law school at CUNY would react if a petroleum engineer declared his intention to undertake a case study evaluating the performance of the law school and asked for copies of the curriculum and various internal records, some of which were legitimately considered proprietary. Consider further how the dean would likely react if she asked this petroleum engineer for a copy of the research proposal outlining the parameters of the proposed study and none was provided.
OEPC Environmental Standards are Vague and Lacking in Substance The report claims that the contractual conditions allow Occidental Exploration and Production Company (OEPC) of Ecuador to determine its own standards without assurance that these standards protect the environment. (Kimerling, p. 5-7)
Occidental's Response
OEPC has a comprehensive Health, Environment and Safety (HES) management system. Standards of performance, including environmental protection, are well established and routinely audited. The standards are based on Occidental's "Worldwide Standard of Care" concept. (See Appendix I)
The following paragraphs provide a detailed explanation of some the most glaring inaccuracies in the report regarding standards:
. The report includes a number of statements regarding Occidental's failure to apply international standards in Block 15. These statements demonstrate a lack of knowledge of published technical standards developed by numerous global institutions. The most notable of these are: World Health Organization, World Bank, American Petroleum Institute (API), American Society of Mechanical Engineers (ASME), and the London-based International Association of Oil & Gas Producers (IAOGP) - formerly known as the E&P Forum. The standards developed by these and other organizations address environmental technology and practices, equipment specifications, management practices, analytical laboratory quality assurance/quality control (QA/QC) procedures, and a host of other relevant topics. All of these published standards have been developed with the participation of experts from the international academic community and professional organizations and have been subjected to critical peer review. Performance criteria and analytical procedures that Occidental has adopted related to health standards, environmental practices, community programs and safety procedures for use in Block 15 are based on the international standards developed by the organizations cited above. These programs are flexible, not prescriptive, because there are no rigid standards that can be applied to all environments. The environmental issues confronted in the frozen tundra of Western Siberia differ markedly from those encountered in the deserts of Oman or the rain forests of Ecuador. The flexibility built into Occidental's programs addresses those fundamental differences. Ms. Kimerling interprets such flexibility as an absence of standards.
. OEPC's environmental standards are quite specific and inclusive of all performance aspects that are relevant to oil and gas operations in Block 15. The standards are based on those developed by the same organizations identified above. The environmental standards applicable to OEPC's operations are summarized in Appendix I.
. The report's assertion that standards in use today in developing countries are similar to those that were employed in Ecuador some 30 years ago demonstrates a complete lack of knowledge of current practices employed by most, if not all, large US oil and gas companies. (Kimerling, p6.) This claim is totally without merit and raises fundamental questions about the author's technical qualifications. The report incorrectly suggests that technically qualified personnel do not consider the policies, procedures, compliance standards and the technical specifications necessary to operate in sensitive environments when adopting new, lower impact technology and operating practices. Occidental invests considerable amounts of money and worker power in the evaluation and application of state-of-the-art technology in order to remain competitive and meet is obligations as a socially responsible enterprise. Older technologies and practices are often inefficient and more costly compared to current standards and practices. Considerable investment is made in designing environmentally friendly exploration and production systems with a focus on pollution prevention and natural resource conservation.
. For more information on the evolution of practices and the resulting reduction of environmental impacts in the upstream oil and gas industry, please see Environmental Benefits of Advanced Oil and Gas Technology, A. U.S. Department of Energy Report, http://www.fe.doe.gov/oil-gas/environ_rpt/index.html.
OEPC Fails to Use Leading-edge Environmental Practices Report claims that Occidental promotes its operations in Ecuador as a model of leading-edge environmental protection practices, but that practices in the field fall "do not consistently match promises". (Kimerling, p. 2)
Occidental's Response Occidental's environmental practices in Ecuador, which incorporate some of the most advanced techniques and technologies employed in the upstream oil and gas industry, are aimed at attaining four important goals:
(1) Minimize disturbance of surface vegetation
. Occidental makes broad use of 3-dimensional (3-D) seismic technology to reduce substantially the number of drilling pads required for both exploration and development, thereby minimizing the impact of construction activities on the environment. (Seismic surveys are a method of mapping the subsurface by using vibrator trucks or low level explosives to generate underground shock waves recorded by listening devices called geophones. Placing geophones along intersecting grid lines allow computers to produce a 3-D model of subsurface rock formations to identify areas that are most likely to contain hydrocarbons.)
. Occidental relies extensively on directional and horizontal drilling to reduce the number of drill pads needed to fully develop hydrocarbon reserves. This technology allows the exploitation of those reserves by locating drill sites outside environmentally sensitive areas.
. Occidental has used a technique called "cluster drilling," to drill multiple wells from a single drill pad. This also limits the number of "flow lines" or pipelines that transport the production stream to a central processing facility. The pipelines are treated with advanced corrosion protection materials and are buried below ground.
. Occidental uses a central production facility (CPF) to separate the crude oil from the associated effluents, rather than employing the traditional practice of operating separate production facilities for each field. Five separate fields in Block 15 rely on a single processing facility.
. Helicopters are used for many activities in order to reduce the number of roads required. During 2000, the company drilled three exploration wells using "helirigs" (rigs transported by helicopters) to avoid building roads. An operation supported by helicopters is more expensive than a land-based operation, but this technique reduces the environmental impact of drilling operations in remote, ecologically sensitive areas.
(2) Protect against pollution
. All new Occidental development projects are designed to re-inject produced water into confined subsurface reservoirs at a depth of 7,500 feet that have been approved by Government authorities for water disposal.
. All flow lines and pipelines include internal and external protection against corrosion to avoid spills or leaks.
. A sophisticated distributed control system with three-phase fluid metering protects against the loss of fluid from containment areas, unanticipated shutdowns or other accidental releases.
. Occidental has developed an extensive waste-management plan requiring treatment of rainwater runoff and drilling fluids before they are safely injected into subsurface reservoirs.
. Safe disposal of solid wastes is accomplished in a landfill that Occidental designed to meet U.S. EPA standards, including a PVC double-liner and monitoring devices.
. There are no open oil pits at CPF to manage the collection and recovery of oil from wastewater streams. Instead, the CPF is equipped with a cement sump to handle this process.
(3) Operate "invisibly"
. Flow lines and pipelines are buried, not only as a physical safeguard, but also to eliminate the impact on local wildlife as well as the visual impact on local residents.
. Excess gas that is produced as a by-product of the oil is burned in a horizontal smoke-free flare. Unlike conventional vertical flares, the low level smokeless horizontal flare installed in Block 15, which is the only one of its kind in Ecuador, is not visible to nearby communities. Air emissions modeling and monitoring data indicate that the gas flaring process has no adverse effect on employees and the local communities. OEPC currently is evaluating new technology that will allow the elimination of flaring entirely.
(4) Reclaim natural resources
. Techniques for remote digital sensing and mapping are used in the siting of facilities and assessing their impact on the surrounding environment. These digital maps are used proactively to identify potential problem areas during a project's planning phase to minimize, if not avoid, environmental impacts. For example, prior to conducting seismic work, a vegetation map, prepared from environmental studies and digital satellite mapping, identifies sensitive vegetation groups that are then delineated by buffer zones that are avoided during seismic activities.
. Prior to conducting seismic work, detailed maps, prepared from environmental studies and digital satellite mapping, are used to identify sensitive areas. The acquisition of seismic data is planned to obtain the best possible information while avoiding bodies of water and environmentally sensitive areas. After completing a seismic survey, a re-vegetation program is carried out along the seismic lines.
. If an exploration well proves to be a "dry hole" (contains no commercial hydrocarbons), the drilling pad is remediated, restoring the original topography and planting native species to restore the vegetation.
These practices, which reflect the company's commitment to environmental protection, have resulted in the development of a model approach to oil operations in the tropical rainforest. This approach has received consistently favorable evaluations from Ecuadorian and international experts, including the Ecuadorian National Directorate for Natural Areas and Wildlife, which noted, "All the planning, control and management carried out by Occidental in its oilfields is impressive. Likewise, measures adopted for environmental control and industrial safety are truly excellent."
OEPC Environmental Practices Are Inconsistent with Ecuadorian Law
The report claims that OEPC neither respects nor complies with the environment or safety laws of Ecuador and that its environmental management system does not include Ecuadorian compliance standards. OEPC can "pick and choose the standards to apply to its operations without independent oversight." (Kimerling, pp. 8, 16)
Occidental's Response
The report's claims are completely without merit. Several important points demonstrate Occidental's commitment not only to complying with the law, but also to nurturing an internal culture that values a strong sense of social responsibility, including environmental protection.
. Occidental's internal policies to address workers' health, environmental protection and workplace safety were first developed and implemented more than 20 years ago. The current HES policy applies to Occidental Petroleum Corporation and to all of the entities that it controls (including OEPC) and to the activities of each of its business units. It requires each business unit to establish a program covering the functional areas of worker and public safety, industrial hygiene, environment, and process risk management that achieves a consistent standard of care worldwide for people and the environment. One key element of this program, is the requirement for the development of a management system to assure compliance with all applicable health, safety and environmental laws and regulations wherever the business unit operates. The program also mandates a system to verify compliance through self-monitoring programs and regular assessments of company facilities. In every aspect, the HES management system at OEPC meets or exceeds the requirements of Occidental's corporate HES policy.
. With regard to implementation, every Occidental employee (including those at OEPC) is expected to adhere to both the spirit and letter of the HES policy. Employees are expected to take responsibility for HES activities related to their job performance and to report to their supervisor (or through a separate Corporate Compliance system) any potential non-compliance concerns. All employees are eligible for incentive compensation if the operation maintains superior HES performance. The chief executive officer of each Occidental business segment has the direct responsibility for the overall implementation, communication and enforcement of the HES policy and for the development of a program to receive, investigate and resolve any employee claims of policy violations.
. Occidental's system to verify compliance through self-monitoring programs, including the regular assessment of operating facilities, is highly effective. The system is designed to evaluate performance and to identify opportunities for improvement in a proactive manner. Compliance with the company's HES requirements is regularly assessed through multiple review programs at all levels of management. These performance reviews are designed to assess legal compliance as well as adherence with company policies. The review process verifies that the required programmatic elements are in place and assesses the effectiveness of the tools that measure performance and bring about change to continuously improve performance. The review process also is designed to assure that all applicable legal and regulatory requirements have been identified and that management systems and physical controls are in place to maintain compliance.
A detailed evaluation of the health, environment and safety legal compliance assurance program of Occidental's oil and gas segment, which included operations in Ecuador, was conducted in 2000 by an independent third-party, Environmental Resources Management (ERM). ERM found that the program, as implemented, satisfies, meets or exceeds expectations of established HES audit criteria of governmental agencies and recognized non-governmental organizations, as well as the audit practices of comparable companies. The Health, Environment and Safety Committee of Occidental's Board of Directors routinely reviews the audit reports that are produced as part of this review process. The multiple levels of continuous reviews of our management systems and performance in the HES areas have created a culture over the past two decades that calls for a strong commitment from every employee to strive for continuous improvement of the company's HES performance.
. The HES management system for OEPC, which has been certified to ISO 14001 as discussed later in this report, includes a specific requirement that the HES standards for these operations strictly comply with all HES standards encapsulated in Ecuadorian law. Contrary to the report's assertion, OEPC's ISO 14001 system does verify OEPC's compliance with Ecuadorian law.
. In reporting on an interview with Ms. Vicki Hollub, formerly field manager at CPF, the author completely distorts the message Ms. Hollub communicated to her. Ms. Hollub stated that a critical part of OEPC's success in obtaining ISO14001 certification is management's clear commitment to a strong HES program. According to Ms. Hollub, a corporate culture that is committed to strong HES performance will achieve better results than one focused solely on complying with the letter of the law. Ms. Hollub said that, generally speaking, laws can be circumvented if there is a mindset to do so. Therefore, it is important that companies like Occidental embrace strong internal standards for HES performance. The author quoted Ms. Hollub out of context, making it appear as if she, and Occidental, flouted the law. Ms. Hollub clearly told the author "how proud we are of our program in Ecuador" because the certification validated not only management's clear commitment to a strong HES program, but also ISO acknowledged the strong commitment of an environmentally conscious workforce. (Kimerling, p. 11)
. The report contains frequent references to lax enforcement or oversight by Ecuadorian authorities despite the fact that she was told of the formal field inspections of environmental performance that are conducted by governmental officials from Ecuador's National Hydrocarbon Directorate (DNH), Undersecretariate of Environmental Protection (SPA) and Ministry of Environment. No matter how strict the enforcement is, it is worth reinforcing the point that OEPC has been very successful at creating a corporate culture that encourages internal commitment to maintaining compliance and achieving HES goals that surpass external requirements, rather than relying solely on external policing by regulatory agencies.
OEPC Fails to Disclose Environmental Practices and Performance The report claims that Occidental does not disclose "clear and complete" environmental standards under which it operates. (Kimerling, p. 11)
Occidental's Response Occidental's practice in Ecuador has been to provide information to legitimate stakeholders in accordance with its contractual obligations. OEPC environmental standards have been shared with the government ministries, local community leaders, and others. The author's complaint, we would suggest, is that Occidental did not, for the reasons discussed in the introduction, give her all the information she sought.
ISO 14001 Certification is a "Subjective Standard" That Lacks Substance The report belittles the International Organization for Standardization (ISO) environmental standards, known as ISO 14001, and the process resulting in ISO certification because it allegedly meets no "substantive environmental standards," and demonstrates only that the "company's environmental paperwork is in order." (Kimerling, p. 10)
Occidental's Response Occidental was the first company in any industry in Ecuador to receive ISO certification, and one of three companies in all of Latin America. By nearly all accounts, ISO 14001 is the de facto standard for assessing environmental management systems around the world. ISO certification requires the development, implementation, and maintenance of an environmental management system that meets 17 specific criteria. To date, over 27,000 certifications have been awarded to a variety of companies, governmental entities and other organizations. The ISO 14001 standards are the product of a multi-year, multi-party international effort sponsored by the ISO, an international non-governmental organization that promotes the development and implementation of voluntary international standards. ISO is a non-governmental organization consisting of 112 member countries, with the United States represented by the American National Standards Institute (ANSI). ISO was founded in Geneva, Switzerland in 1947. Its mission is to promote international trade by harmonizing international standards for manufacturing, communication, trade, and management systems. Performance standards are developed by ISO technical committees, with drafts of proposed standards reviewed by ISO member countries. Through an iterative process, feedback from the member countries is incorporated into the international standards that are ultimately adopted.
Various European and US government agencies, including the US Environmental Protection Agency (EPA) have acknowledged the ISO 14001 standard as providing a template that organizations can use to build their environmental management programs. The nations that comprise the European Union (EU) have embraced ISO 14001 and formalized its role in the regulatory process throughout the EU. The EPA has not formally declared its intentions regarding adoption of ISO 14001, but there are a number of indicators that suggest the EPA's interest in having ISO 14001 play a significant role in future compliance programs.
First, EPA was very actively involved in the process of developing the ISO standards through their collaboration with the US work group (US/TAG for ISO/TC 207). EPA played an active role in drafting all the key documents in the ISO 14001 series. One of the fundamental themes of ISO 14001, "prevention of pollution," was introduced and developed by EPA representativ es. Currently, EPA is overseeing a series of trial programs that rely on voluntary actions as an alternative to the traditional compliance approaches.
The EPA also has made funds available for state and municipal pilot projects to test the applicability of ISO 14001 to a broad range of environmental activities and issues confronting local governments. Meanwhile, under existing US Department of Justice and federal EPA guidelines, organizations that have implemented ISO 14001 can expect favorable enforcement discretion. This suggests that ISO 14001 is in line with current EPA guidelines. Once the results of various pilot projects are evaluated and documented, the EPA may well become less prescriptive in its approach to regulatory oversight.
OEPC's implementation of ISO 14001, involves a more far-reaching approach to environmental performance and certification than the report alleges. The ISO 14001 certification should be viewed as part of Occidental's comprehensive Health, Environmental and Safety Management System (HESMS). The HESMS is comprised of three core elements. The first element calls for the development of specific performance criteria and the validation of those standards. The second element involves the implementation of a management system and compliance audit, including specific audit guidelines. The third element requires monitoring and measuring environmental performance. In addition, Occidental's HESMS requires the implementation of a "world wide standard of care" in the selection of performance criteria applicable for a given set of environmental and community conditions for exploration and production activities.
The report ignores Occidental's "HESMS," which is an internal document sent to the author by Dr. Meriage, as part of the "case study" regarding the development of "innovative strategies and policy tools to improve corporate social and environmental performance overseas." The report fails even to mention the HEMS and misses an opportunity for "constructive dialogue" of a novel "policy tool," contrary to one of CAP's stated goals. This omission is all the more surprising since HES management systems, especially those that are certified to the ISO 14001 standards, are currently a focus of academic research[3].
The ISO designation for Occidental's Ecuador operations was awarded following an audit by the Norwegian firm Det Norske Veritas (DNV). The report dismisses the significance of the ISO designation and made no effort to contact DNV to validate assertions that ISO 14001 is merely a "private international standard for environmental management systems"."and does not impose any substantive requirements." The report contains no citations from any firm involved in conducting ISO 14001audits and there is no evidence that the ISO office in Geneva was consulted.
The report dismisses ISO 14001, presumably because the process "is conducted by private companies that are hired by the company seeking certification." Companies also hire private accounting firms to audit their financial statements, a legal requirement mandated by the Securities and Exchange Commission. The fact that a company pays for the services of an outside auditor does not compromise or invalidate the results of the audit as the report implies.
OEPC Failed to Collect Necessary Baseline Information The report suggests that OEPC did not perform the appropriate work to document baseline environmental and socio-economic conditions prior to beginning operations in Block 15 and that this failure is responsible for on-going adverse impacts. (Kimerling, p. 20)
Occidental's Response OEPC completed a comprehensive environmental and sociological analysis before production began in 1992, and subsequent monitoring shows that there has been no significant impact on the surrounding environment compared to the baseline data. Recognized for the richness of its biodiversity, Block 15 has several large rivers, two national parks and a nature preserve. Various native communities are dispersed along the banks of the rivers and in the interior. The eastern half of the block has not been broadly impacted by human activity, whereas the western portion has experienced the construction of roads and pipelines and the establishment of commercial enterprises. A substantial amount of this impact was the result of activities by other entities before Occidental began working in the area.
Occidental's operations in the Block include a central production facility connected by underground gathering lines to the well locations. There are no oil derricks or above ground "pumpers." Recovery of the oil comes from submersible electric pumps that are installed in the well bore deep below the surface.
Since work began in the Block, OEPC's comprehensive environmental monitoring program has focused on continuously improving operating practices to minimize the size of the company's footprint in these areas. In 1997, Occidental, in conjunction with its contractor, published a case study of its approach to performing baseline investigations in Ecuador. Frederick Groth of WALSH Environmental Scientists and Engineers, Inc. and Patricio Rivera of OEPC presented the case study at the 6th International Conference & Exhibits on GIS for the OIL &GAS INDUSTRY, September 8-10, 1997 Houston, Texas. They also presented the same material at the Twelfth International Conference and Workshops - Applied Geologic Remote Sensing, November 17-19, 1997 Denver Colorado. The complete case study is available on the Internet at http://www.walshenv.com/papernet/cover.htm. The text of the study is included in Appendix II.
As an extension of these efforts, Occidental formed an alliance in March 2000 with the Biodiversity Research Center of Natural History Museum at the University of Kansas (KU) to survey and document the plant and animal life in environmentally sensitive areas that may require restoration after oil exploration and drilling. This five-year agreement calls for teams of researchers and students from KU to inventory the biodiversity of Occidental 's holdings around the world, beginning with a project in Ecuador.
According to Leonard Kristalka, Director of the Natural History Museum Biodiversity Research Center, "This alliance is a model of innovative collaboration between industry and academia to benefit science, society and the environment. It also is a terrific example of a responsible corporation partnering with the scientific expertise it needs to act in an environmentally responsible manner."
The project in Ecuador, Krishtalka said, would help address a long-standing need for increased knowledge of the animal and plant diversity of tropical areas. Under the agreement, Occidental will cover the cost of research and logistical support in the country being surveyed. The museum and research center will use a grant from the National Science Foundation to pay travel costs and the cost of curation and research at KU.
The collections will be divided between KU and Ecuadorian scientific institutions. Also, Ecuadorian scientists and students will participate in the biodiversity surveys and research to help build that country's biodiversity infrastructure.
The agreement is a second-generation biodiversity alliance between KU and Occidental. Under a previous agreement, executed in 1995, scientists and students from KU and from the Universidad Nacional Mayor in Lima, Peru collected more than 150,000 plant and animal specimens to document the richness of areas of Amazonia that had not previously been surveyed. The research team identified and inventoried nearly 670 species of plants, animals and insects - including five new species of frogs and toads. The team also recorded the first occurrence in that region of various species of lizards, marsupials and bats. Tape recordings captured many of the bird songs and frog calls. Hundreds of tissue samples were collected for DNA analysis. The biodiversity data collected in Peru is being analyzed with new bio-computational tools to model and predict the effect on species of changing habitats and climates.
OEPC Failed to Monitor the Environmental Impact of Its Operations The report claims that OEPC does not monitor the environmental conditions in Block 15 in order to measure the impact of its operations on the environment. Moreover, Occidental is accused of apparently exploiting "confusion and ignorance about intenational standards to reassure government officials, communities and other stakeholders about the quality and control of their operations." (Kimerling, p. 7)
Occidental's Response The report focuses on OEPC's 1992 EIA, which is incorrectly treated as a static document. In fact, more than 50 separate EIAs have been completed since OEPC began working in Block 15, including 25 that have been completed since 1996. These studies involved establishing over 1,000 sampling locations in those areas of Block 15 where work has taken place. A comprehensive biological survey examined the vegetation, fish, reptiles, amphibians, birds, and mammals indigenous to the work sites. More than 30 analytical parameters were applied in analyzing the quality of ground and surface water, soil and air. These various studies required more than 10,000 work-hours from professional contractors, as well as substantial contributions of time and effort by OEPC personnel.
The data related to the various EIAs and tests are provided to Ecuadorian regulatory authorities. Inspectors from various government oversight agencies audit OEPC's records and review the environmental monitoring systems in place. One of these agencies, the INEFAN, specifically monitors the flora and fauna in and around Lake Limoncocha. INEFAN has never reported any findings to suggest that OEPC's operations have damaged the Limoncocha environment.
Moreover, the report disregards the measurement and monitoring requirements spelled out in the EMP which clearly cites in detail all of the parameters with which OEPC is obligated to comply, including the regular monitoring of all impacts of its operations. The EMP complies with Ecuadorian Laws and in many areas exceeds established legal requirements. Moreover, OEPC routinely monitors environmental quality or emissions from operations at dozens of locations within Block 15. For example, during the year 2000 alone, OEPC conducted 74 air, water and soil sampling activities and analyzed over 30 chemical and physical parameters. Of these, only 3 were out of specifications established by the EMP and these have been remediated. The table below contains a list of key items that OEPC regularly monitors in Block 15.
Water Parameters
Soil Parameters
Air Parameters
pH Texture Particulate PM10
Conductivity pH Sulfur dioxide, SO2
Dissolved Solids Organic Material Carbon monoxide
Chloride Nitrogen Nitrogen oxides
Color Potassium Noise
Turbidity Calcium Meteorology
Nitrate Magnesium Wind direction
Nitrite Sodium Wind velocity
Ammonia Conductivity Temperature
Sulfates Phosphorous Humidity
Cyanide Copper Radioactivity (NORM)
Fluoride Zinc
Detergents Manganese
Phenols Sulfur
Biochemical Oxygen Demand Boron
Total Coliform Acid / Base Exchange Capacity
Fecal Coliform Organic Carbon
Total Petroleum Hydrocarbons Total Petroleum Hydrocarbon
Heavy Metals Arsenic
Arsenic Barium
Barium Cadmium
Cadmium Chromium
Copper Silver
Chromium Lead
Mercury Selenium
Silver Iron
Lead Particle Size
Selenium
Zinc
In addition to routine measurement and monitoring activities, OEPC and its contractors have conducted numerous specialized environmental studies. OEPC has provided the results of all the studies to the Ecuadorian government. The following table cites the most significant studies that were performed over a ten-year period.
Title Date
Estudio Ambiental Pozo Jivino No. 1 8/90
Estudio de Impacto y Plan de Manejo Ambiental: Actividades Bloque 15 - Vol I - Estudio de Impacto Ambiental 1/92
Estudio de Impacto y Plan de Manejo Ambiental: Actividades Bloque 15 - Vol II - Plan de Manejo Ambiental 1/92
Establecimiento de Criterios Ambientales para el Diseno de la Construccion con lineas de crudo y gas entre Puerto de Palos y la Plataforma Laguna A 11/92
Declaracion de Impactos y Plan de Manejo Ambiental - Plataforma Jivino B 12/92
Plan de Manejo Ambiental del Campo Unificado Limoncocha 2/93
Manual de Operacion del Relleno Sanitario 3/93
Linea Base Ambiental Especifica para el Area de Influencia del Plan de Desarrollo (Vol I, II, III) 7/93
Declaracion de Impactos y Plan de Manejo Ambiental - Plataforma Jivino D 10/93
Survey of Naturally Occurring Radioactive Materials (NORM) 11/93
Gas Analisis 11/93
Declaracion de Impactos y Plan de Manejo Ambiental - Plataforma del pozo inyector Jivino F-IA-2 11/93
Modelacion del Rio Jivino 8/94
Establecimiento de Criterios Ambientales para via entre las plataformas Laguna B e Itaya 10/94
Declaracion de Impactos y Plan de Manejo Ambiental - Plataforma Laguna B y Via de Acceso 1/95
Estudio de Impacto y Plan de Manejo Ambiental para el Area de Influencia de la Plataforma Indillana 5/95
Estudio de Impacto Plataforma Concordia Informe Final 6/95
Determinacion de Niveles de Radiacion en Muestras de Sedimentos de Petroleo 7/95
Estudio de Linea Base Ambiental Especifica Zona Concordia - Indillana 7/95
Estudio de Impacto y Plan de Manejo Ambiental para las Actividades de Prospeccion Sismica de Desarrollo 10/95
Estudio de Linea Base Ambiental Especifica para el Area de Influencia del Plan de Desarrollo (actualizacion) 12/95
Estudio de Impacto Ambiental en el Area de Influencia del pozo EDEN 3/96
Estudio de Impacto y Plan de Manejo Ambiental para las Actividades de Exploracion Sismica en el Area de Yuturi 4/96
Estudio de Impacto Ambiental: Actividades de Prospeccion Sismica en el Bloque 15, Ecuador (Yanaquincha-San Antonio-Indillana) 5/96
Estudio de Impacto y Plan de Manejo Ambiental para el Oleoducto Indillana - CPF 5/96
Estudio de Impacto y Plan de Manejo Ambiental para las Actividades de Prospeccion Sismica de 3-D en el Bloque 15, Ecuador 6/96
Deteccion del Cambio de Uso de Suelos Mediante Percepcion Remota. Bloque 15 11/96
Estudio de Impacto y Plan de Manejo Ambiental para el Programa Sismico del Area Este, Bloque 15, Ecuador (Panacocha 2D) 11/96
Monitoreo Ambiental Correspondiente al Tercer Ano de Produccion de OEPC en el Bloque 15: Calidad de Agua, Calidad de Aire y Niveles de Ruido (Inf. Final) 2/97
Estudio de Impacto y Plan de Manejo Ambiental de la via entre la plataforma Itaya y al CPF 3/97
Auditoria ambiental de las Actividades de Prospeccion Sismica Desarrolladas por OEPC en las Areas del Parque Nacional Yasuni y Reserva Biologica Limoncocha 4/97
Block 15 EMS, Special Data Base 5/97
Estudio de Impacto y Plan de Manejo Ambiental para el Programa de Sismica 3D en Eden-Yuturi 6/97
Estudio de Impacto y Plan de Manejo Ambiental para el Programa de Sismica 3D en el Complejo Indillana 06/97
Emisiones Atmosfericas provenientes de Fuentes fijas de Combustion en el area de Influencia Especifica del Bloque 15 7/97
Estudio de Impacto y Plan de Manejo Ambiental del Pozo Exploratorio San Antonio 08/97
Block 15 Modeling Project 10/97
OEPC Oil Spill Contingency Plan 12/97
Estudio de Impacto de los Pozos Exploratorios: Cocaya Norte 1, Cocaya Centro 1, Version 1 con Vias 04/98
Estudio de Impacto de los Pozos Exploratorios: Cocaya Norte 1, Cocaya Centro 1, Version 2 Taladro Helitransportable 04/98
Estudio de Impacto del Pozo Exploratorio Tangay 11/98
Programa de Monitoreo Ambiental del Area de Influencia del Bloque 15 04/99
Estudio de Impacto del Pozo Exploratorio Sanisla-1 06/99
Estudio de Impacto del Pozo Exploratorio Sanisla Norte 07/99
Estudio de Impacto y Plan de Manejo Ambiental para el Programa de Sismica 3D del Area Este del Bloque 15 (3D Panacocha) 07/99
Auditoria Ambiental del Campo Unificado Limoncocha, OECP 02/00
Auditoria Ambiental del Campo Indillana 02/00
Estudio de Impacto y Plan de Manejo ambiental del Oleoducto EdenYuturi-Lago Agrio, Bloque 15, Ecuador 10/00
Estudio de Impacto y Plan de Manejo Ambiental de los Pozos de Desarrollo del Campo Yuturi, Bloque 15, Ecuador 11/00
Estudio de Impacto y Plan de Manejo Ambiental para el Programa de Sismica 3D del Campo Unificado Limoncocha, OEPC 12/00
EI&PMA para la Plataforma Itaya "B" 12/00
Alcance EI&PMA Construction Via Acceso y Plataforma Itaya B 02/01
EI&PMA para la Exploracion Sismica 3D Adicional de la Zona Oeste del Bloque 15 04/01
EI & PMA para la Exploracion Sismica 3D Adicional de la Zona Este del Bloque 15 04/01
EI & PMA para la Exploracion Sismica 3D Adicional de la Zona San Francisco del Bloque 15 04/01
EI & PMA para las Plataformas Yanaquincha Oeste y Yanquincha Este del Bloque 15 04/01
EI & PMA para las Plataformas Jivino Norte y Shira del Bloque 15 05/01
Ademdum al EI & PMA para la Exploracion Sismica 3D adicional de la zona Oeste del Bloque 15 05/01
Variantes 7 de julio y Lago Agrio al EI &PMA del Oleoducto Eden - Yuturi-Lago Agrio, Bloque 15 Ecuador 06/01
EI & PMA para la Plataforma Cocha del Bloque 15 06/01
Produced Water Re-injection is Unsafe The report alleges that the practice of re-injecting produced water into subsurface formations is unsafe and a source of concern for local residents. (Kimerling, pp. 26-29)
Occidental's Response The report suggests a lack of knowledge about the safety of injecting produced water back into confined formations deep below the surface. According to the report "injection wells can become fountains of contamination," although no authoritative sources are cited to support this allegation. Nor does she say forthrightly that OEPC's wells are sources of contamination. The report implies that they might be because they "have not been independently audited" " while at the same time maintaining that such operations "cannot be accurately monitored." The report continues with the following statement: "There is also considerable confusion in Ecuador about the scope of Oxy's injection practices." With this sweeping and unsupported statement the report enters the realm of obvious hyperbole. The report does not identify precisely who is confused and whether such confusion is the result of actions taken by the company or a lack of knowledge of industry practices.
An example of the alleged confusion appears in the following passage on page 27: "Residents.consistently report that supernatant [emphasis added] from drilling wastes is discharged into the environment." Here the report alludes to vague references of anecdotal reports from unknown numbers of unknown "residents," ostensibly alleging undocumented transgressions that raise "serious concerns" about Occidental's operations. (See p. 21 below) This technique is employed repeatedly in the report. In this case, the purported offence is the discharge of "supernatants." The report provides no definition or description of the term, leaving the reader to speculate about the meaning of these allegations.
Supernatant is a term used to describe the lightest part of a multi-part mixture after gravity is used to separate oil from produced water and other effluents. Since ALL effluents associated with drilling and production are injected into deep confined reservoirs, as discussed in detail elsewhere in this critique, the report's mention of supernatant discharges is one of a number of examples of the reliance on innuendo when there is a lack of solid documentation.
The practice of using injection wells to dispose of produced water safely is used throughout the world. The injection wells operating in Block 15 return the produced water to the Orteguaza and Tiyuyacu Conglomerate at 7,500-7,800 feet below the surface. These geologic formations comply with the required characteristics for water disposal as established in the Environmental Regulations for the Hydrocarbon Operations in Ecuador. (Decree No. 2982, August 24, 1995, Article 28, Literal g; and Decree No. 1215, February 13, 2001, Article 29, Literal c) This method of disposal ensures protection for fresh water aquifers. Wellhead and casing annulus pressure for the injector wells is continuously monitored through a process called Mechanical Integrity Testing which uses pressure-volume graphic analysis, assessment of formation logging data and pressure leak-off tests to confirm the integrity of the injection wells.
OEPC Development Plans are Deliberately Kept Secret The report claims that local communities cannot obtain certain parts of OEPC 's future development plans that impact their communal lands. (Kimerling, pp. 13, 17)
Occidental's Response Certain parts of development plans represent information that OEPC is bound by government contract to keep confidential. OEPC is a contractor to the government and cannot unilaterally disclose documents that explicitly require governmental authorization. The report's allegations run contrary to Occidental's legal obligation to the government of Ecuador. Moreover, as a third-party-non-resident civilian, the author has no right to access these documents.
The Ecuadorian state - through its Constitution (Art. 84), Environmental Law and its regulations - acknowledges the rights of its citizens to be informed and consulted about plans and projects in their territories. Once prospective development plans are proposed for implementation, these constitutional requirements are rigidly applied. In fact, all agreements reached with the communities include the corresponding information and consultation processes. Complying with the Ecuadorian legislation on this matter can take several weeks for minor projects and several months for larger projects.
Local Communities Cannot Impact OEPC's Development Plans The report claims that OEPC does not consider the potential impacts of its operations when siting new facilities, wells or infrastructure. (Kimerling, pp. 20-24)
Occidental's Response OEPC maintains on-going dialogues with community representatives that have led to many improvements from OEPC's operations that have benefited the communities. These dialogues have identified opportunities for OEPC to provide directly, or to facilitate the delivery by the government, various services to the local communities including education, healthcare and economic (including agricultural) opportunities.
Since Occidental began international oil exploration in 1966, the company has recognized the need to work closely with isolated indigenous groups or poor homesteaders who typically inhabit areas in proximity to it's operations in developing countries. Access to basic services such as health care, education, clean water, sanitation and other essentials that most US residents take for granted are often lacking in these remote regions. Occidental understands the importance of sharing the benefits of oil development with local communities residing near its facilities and conducts its operations accordingly.
Experience has taught the company two things: the necessity of (1) working with local communities (particularly in rural areas) to design programs that improve the quality of life for the residents, and (2) finding creative ways to engage government agencies to sustain these programs after Occidental departs. As a result, Occidental's role has frequently shifted from being a direct service provider to being a catalyst to encourage national governments to provide needed social services to areas that have been ignored.
Occidental's community development initiatives have focused on promoting education and health care and establishing systems of micro-enterprise. This often meant building schools and rural health centers, attacking the causes of infant mortality, infectious diseases, and other threats to human health. Promoting prevention of health problems and providing training to improve family diets, together with educating teachers and health care providers, are cornerstones of Occidental's community development initiatives.
Most communities quickly benefit from such services and identify the need to create systems that will allow them to continue to improve their standard of living after Occidental leaves the area. Helping local communities develop sustainable economic programs and enhanced agricultural production methods creates stability and strengthens regional and local civic institutions.
In 1997, Occidental began a series of internal workshops for its Latin American community relations and environmental staff to share best practices, resolve problems and assess progress. This internal learning experience became the foundation of a worldwide community relations program beginning with the Good Neighbor Policy. This policy, which was adopted in 1997, is the foundation for the company's management program for community relations and has been communicated in three languages to Occidental employees worldwide.
As a matter of public record, Occidental is committed to operating its business in a manner that respects fully the prevailing legal, cultural and social norms of the communities in proximity to our operations. In keeping with this commitment, Occidental adheres to the following principles in all of its operations.
. To uphold the human, cultural and legal rights of our neighbors directly impacted by Occidental's operations, and to support their efforts to maintain the integrity of their customs, values and traditions.
. To assist our neighbors in developing ways to become self-sufficient and to achieve economic sustainability without creating short-term or long-term dependency.
. To be a catalyst in helping our neighbors in identifying needs, priorities and programs and work with appropriate government agencies to assure that these needs are met.
. To safeguard our neighbors from any aspect of our operations that threatens their health, safety or long-term welfare.
. To require that all contractors strictly adhere to Occidental's code of environmental and social conduct.
. To develop methods to resolve potential conflicts in achieving mutually beneficial agreements with our neighbors.
The Good Neighbor Policy represents the core of a comprehensive process to develop appropriate performance standards for each project or facility and to implement guidelines to help each asset manager monitor progress and success. These guidelines and standards are incorporated into Occidental Oil and Gas Corporation's Health, Environment and Safety Management System under the Guidelines for Community Relations.
The implementation guideline for community relations describes a six-step Community Relations Planning Process for local operations managers which is required at all locations before and during an environmental impact assessment. Each operation's community relations program should be developed with the goal of building strong and positive relationships with neighboring communities. It should involve extensive consultation with direct stakeholders and often represents the first stage of a multi-stage agreement in which support from Occidental is related to success at each stage of exploration and development. In many locations, an important goal of negotiating this agreement with local communities and organizations is to ensure that they understand the phased approach: Occidental's support generally will reflect the company's capital commitments to the project. The following activities should be conducted before the EIA process begins:
. Preparation of a stakeholder analysis, identifying key stakeholders and summarizing their potential concerns about and/or interest in Occidental's project.
. Preparation of a stakeholder risk assessment, analyzing the risk of conflict or serious misunderstanding between the company and neighboring communities and the potential impact of such conflict on project performance. The assessment should also address the likelihood that the project might become the focus of attention of other stakeholders.
. Preparation of a stakeholder relations program for non-indigenous community stakeholders.
During preparation of the EIA, the following activities should be undertaken:
. Prepare a socioeconomic baseline study, which includes basic demographic, social and economic data about communities within the area of impact of new projects. Community members should participate in this study.
. Prepare a detailed community needs assessment, based on the socioeconomic baseline study and stakeholder analysis. This will provide a list of high priority projects that can be discussed or negotiated with neighbors in setting priorities for the Community Relations Program.
. Prepare a community relations program, which implements the mitigation strategy for social and cultural impacts identified in the Environmental Management Plan.
During the exploration phase, the program emphasizes training and supporting improvements to local infrastructure, while avoiding long-term commitments that may not be fulfilled if the project does not move forward. At each step in this process, Occidental staff members track key indicators of success. For instance, in a health care project, local residents might be trained to record the number of clinic visits or consultations, infant mortality or incidences of diseases, and other health indicators. For economic projects, tracking focuses on increased household income, improving crop or livestock production and other related activities. These indicators allow Occidental to measure a program's impact in order to redirect resources to meet changing conditions. The performance standards used by Occidental in the Community Relations Program are summarized in the following table.
Key Activities for Development of Community Relations Program Performance Standards
Key Activities Performance Standards Performance Objectives Format Measurement Criteria
Stakeholder Analysis Stakeholder analysis completed before EIA begins. Basis for issues assessment. Report Communities and local organizations identified; structure & priorities detailed. Identify responsible Non-Government Organizations (NGO) & other stakeholders. Includes detailed analysis of potential reaction to OOGC project.
Stakeholder Issues Assessment Stakeholder issues assessment completed before EIA begins. Identify priorities for stakeholder relations. Report Stakeholder analyses complete. Contact & interview responsible stakeholders as appropriate. Must identify & prioritize potential for stakeholder conflict.
Stakeholder Relations Plan Stakeholder plans completed before EIA begins. Allocate resources for stakeholder relations. Set implementation schedule. Define community relations & other stakeholder strategies. Schedule Stakeholder issues assessment complete. Strategic actions identified that minimize or avoid conflicts before critical project milestones. Implementation schedule completed.
Socioeconomic Baseline Study Completed before EIA begins. Includes baseline data to design community projects & monitor impacts Provide baseline social, demographic & economic data required for needs assessment & project evaluation. Report Baseline study includes information on at least 90% of all households as described in Implementation Guidelines Section 4.
Community Needs Assessment Needs assessment completed before community relations plans negotiated. Identify high-priority projects for community development. Broad community participation to increase probability of program success. List Identifies community projects that address or mitigate priority health, education & economic issues described in the socioeconomic baseline study. Approved by local communities.
Market Studies Completed before community relations plan negotiated. Addresses economic projects only. Rank high priority economic projects according to potential success & impact. Provide objective tool to help communities maximize investment strategy. Report Study includes available cost & marketing data to determine whether proposed economic projects will improve household income. Alternatives analysis used to prioritize potential investments.
Community Relations Program Negotiated with communities before oil & gas project begins. Ensure access to private & community land. Primary mitigation strategy to meet EMP. Allow project to proceed on schedule. Report Identify investments in education, health & income projects for OOGC & communities. Timetable for performance & compensation rates established. Budget, investment schedule & evaluation criteria developed before investment begins.
Project Evaluation Evaluation criteria negotiated with communities before investments begin. Allow project managers to measure success and make necessary corrections. Periodic reports & financial audits Socioeconomic baseline & evaluation criteria employed to monitor project impact.
Finally, Occidental's management enforces strict regulations limiting contact with local communities and most other local stakeholders to designated representatives of the company. Such regulations also are included in contracts with outside parties that provide support to operations.
OEPC Causes Secret Expropriation of Indigenous Lands The report asserts that OEPC forces the government (through Petroecuador) to take lands belonging to indigenous communities in a clandestine manner. (Kimerling, pp. 23-26)
Occidental's Response The concept of "eminent domain" in Ecuadorian law, which gives the Ecuadorian State exclusive ownership of the nation's subsurface minerals, including oil reserves, is embodied in the Constitution and the Hydrocarbons Law. Occidental complies fully with the law, which requires the company as a contractor to the national oil company, Petroecuador, to declare eminent domain over lands designated by the state for the development of hydrocarbon. This compulsory process, which requires the company to act as an agent of the government, is encapsulated in the Constitution, the Hydrocarbons Law and the Company's contract with the government. A change in this process would require an amendment to the Constitution and revision of the Hydrocarbons Law by the Ecuadorian congress.
When eminent domain is exercised for hydrocarbon operations, the landowner or settler receives compensation for the surface land, crops and any other possible impacts. The assessment to determine the amount of compensation is performed by a government agency called Direccion Nacional de Avaluos y Catastros (DINAC). The DINAC assessment is a legal requirement of the eminent domain process, but payment of compensation is the responsibility of the private contractor, not the State. Historically, the DINAC's assessments have been quite conservative and generally were below the fair market value of the assets; companies are required to pay at least the amount set by the DINAC. OEPC always has paid compensation based on the fair market value of the assets regardless of the price set by the DINAC. The conservative approach taken by the DINAC appears to be changing based on recent developments where the agency is setting more realistic prices that in some cases exceed the fair market value.
In practice, if an agreement between the landowner and a private company cannot be reached on the amount of compensation, OEPC can deposit the money it has offered to pay with the Ministry of Energy. The landowner has the right to withdraw the deposited funds if he so chooses. If he chooses not to do so, he can file a lawsuit to ask the court to establish a fair market price. While the matter is being adjudicated, the company is permitted to proceed with its work program.
OEPC has always informed local residents and communities about these legal requirements to gain access to the land. Moreover, company representatives have encouraged community leaders to seek the assistance of independent legal counsel prior to negotiating land access rights and compensation. OEPC believes that its role as a contractor for the government of Ecuador does not threaten or affect in any way the independence of the government in making decisions that are in the public's interest.
OEPC Fails to Communicate with Local Communities The report implies throughout that OEPC conceals information from local communities in order to reduce resistance to development plans for Block 15.
Occidental's Response Transparency is an integral feature of OEPC's planning process for new projects. For example, during 2000 Occidental conducted exploration drilling at two sites on land owned by the Secoya indigenous community. Two additional exploration wells and a 3D seismic survey will be performed on Secoya lands before December 31, 2006. This work program is being carried out with the approval of the Secoyas through a multi-stage negotiation process. First, Occidental and the elected Secoya leaders developed and formally ratified a Code of Conduct establishing the ground rules for subsequent negotiations (see Appendix III). Once the Code of Conduct was completed and approved by the community at large, a community assistance agreement was negotiated separately that was tied to the company's planned exploration program on Secoya lands.
Throughout this process the Secoya received legal and technical advice from independent experts chosen by the community with funding provided by Occidental. The Deputy Minister of Energy, an Under-Secretary from the Ministry of Environment, representatives of Petroecuador and two international observers chosen by the Secoya monitored the negotiations. The formal signing ceremony of the Code of Conduct was held in Quito at an auditorium in the office of the Ministry of Public Works that was attended by approximately one-third of the Secoya community, government officials (including the Minister of Energy) and officials of non-governmental organizations (NGOs). The ceremony received broad coverage by the local media. Moreover, this precedent-setting event and the negotiations surrounding it are widely known among the indigenous communities throughout Block 15 and are well documented on independent web sites, yet the report contains no mention of these events.
OEPC recently has concluded agreements with the various communities throughout Block 15, including a 20-year agreement with the El Eden community that is mentioned in the report. (Kimerling, p. 24-25)
OEPC Has No Regard for Safety The report uses the example of a 1997 accidental drowning death of a subcontractor's employee, Mr. Dumas Tello, to convey the impression that Occidental neither obeys the law nor demonstrates a commitment to the safety of its employees. (Kimerling, pp. 8-9)
Occidental's Response The report alleges that the company's response to this incident "raise[s] questions about the value of human life, for at least some of the company's workers, in the operations." The report uses this unfortunate accident to indict OEPC's safety program by suggesting that "it reflects more systemic shortcomings." The report goes on to conclude that this "incident and the company's [Occidental's] response to it also raises questions about the value of human life, for at least some of the company's workers." (Kimerling, p. 9) This statement borders on actionable libel.
First of all, Mr. Tello was not an Occidental employee. He was employed by a subcontractor hired to provide barge services to Occidental; and the vessel on which Mr. Tello worked is not "Oxy's barge" as the report asserts. It is the property of the subcontractor. The report also claims, "Representatives from Oxy reportedly told the Tello's family that there was no proof that he had died, because they did not have a corpse." This is one of many examples in the report of unsubstantiated hearsay repeated as fact. Occidental had no contact with the Tello family. Mr. Tello's employer handled contacts with his family, and Occidental has no knowledge of what the family was told.
The Captain of the Port of San Francisco de Orellana investigated the accident and cited three possible causes: the barge was traveling at excessive speed; the barge captain ignored several warnings; and the barge captain was not properly certified. Occidental was not mentioned in the report.
OEPC is committed to holding contractors and consultants to the same high standards it applies to its own employees. This applied to the barge subcontractor that employed Mr. Tello. Occidental does continue to use the same barge operator, as the report correctly states. That is because there are no other companies operating in the area. Contrary to the author's assertion that Occidental "has not required any changes in the maintenance or operation of the barge," (Kimerling, p. 9) the investigation of the accident by Occidental's safety specialists led to the imposition of new requirements for the sub-contractor.
OEPC's overall contractor injury rates are exceptionally low given the complex nature of the operation. OEPC's contractor injury rate is more than eight times lower that the average injury rate recorded by the U.S. construction industry that operates under US OSHA guidelines. These comparative data clearly demonstrate that OEPC is committed to providing a safe workplace for employees and contractors, and that the company's emphasis on training and prevention is achieving superior results.
The OEPC systems in place to manage safety are robust, world-class, routinely audited and yield superior performance. OEPC's safety record for employees and contractors is exemplary. It is in fact "world class" by any objective standards. Seen in the context of the chart below, Mr. Tello's accidental death is a tragic anomaly. The chart summarizes safety performance (in terms of recordable injury rate, RIR, based on US OSHA standards) beginning in 1994. Over the past five and one half years OEPC employees have accumulated over 2.86 million work hours without a single lost time injury.
Recordable Injury Rate
Year OEPC Contractors US Construction Industry Ave.[4]
1994 2.21 3.59
1995 0.52 1.1
1996 0 1.54
1997 0 0.67
1998 0 0.85
1999 0 1.45
2000 0 0.99
Through Jun 01 0 0.85
Cumulative Ave. 0.36 1.47 1.02
Occidental Takes Advantage of Institutional Vacuum to Avoid Responsibility The report claims that the Occidental "seems [emphasis added] to take advantage of the institutional vacuum" created by Ecuador's inherently flawed political, legal and administrative systems to avoid honoring commitments to local residents, "except for a favored few." In another passage, the report says: "In the community relations arena, Oxy has two faces: it says the right things, but acts otherwise." (Kimerling, p. 31, 29)
Occidental's Response In 1985, Occidental Oil and Gas Corporation signed a Service Contract with the Ecuadorian government for exploration and exploitation of hydrocarbons in Block 15 of the Oriente region of northeastern Ecuador. In 1992 Occidental began developing the Block. In 1996, Occidental reached an agreement with the Ecuadorian government to expand activities into the unexplored areas of Block 15 with a minimum commitment of acquiring 600 kilometers of 2-Dimensional seismic data and drilling three exploration wells before December 31, 2000. Finally, in 1999, the original Service Contract was converted to a Participation Contract that will run through 2019.
At the time Occidental began working in Block 15, local residents surrounding this remote area consisted of approximately 5,000 members of indigenous groups, primarily the Quichua, Shuar and Secoya communities. Living in isolation, these communities experienced high infant mortality rates, severe poverty, and a lack of basic health care facilities and educational opportunities. Before the Indillana oil production complex was built, Occidental established relationships with the six communities near Limoncocha. In early discussions these communities clearly articulated their expectations for long-term employment and other opportunities resulting from company operations in the area.
Occidental needed to address two significant issues related to these expectations of long-term employment. First of all, local residents would need highly specialized training before they could safely perform many of the skilled jobs involved in oil field operations. Secondly, the company believed that it was essential to create sustainable economic opportunities that were not dependent on oil operations. Not only would Occidental's presence be limited by the duration of the contract, but also the company had a limited capacity to absorb local foods or handicrafts. Moreover, Occidental concluded that buying fish, meat or other local forest products from the communities would deplete natural supplies. Occidental's efforts to address these problems, as well as other basic local social issues are described below.
Occidental and community representatives entered into a dialogue that resulted in the establishment of four social development priorities: education, sustainable micro-enterprises, healthcare, and basic infrastructure. Since then, Occidental has helped local communities build 15 primary class rooms, one rural health center, four rural health stations, and the Bilingual Intercultural Institute in Limoncocha (a boarding school for students who complete grammar school in their own villages). The Ministries of Public Health and Education staff these facilities as an essential step in ensuring their long-term survival. A more complete listing is shown below:
Basic Infrastructure Projects Completed Type Amount Community centers 5
All-weather playing fields 3
Playgrounds 3
Communal dining rooms 3
Bridges 3
Rural Clinic 1
Infirmaries/rural health stations 4
Doctors' residence 1
School rooms 15
Boarding school 1
Handicraft shops 2
Nursery 1
Carpentry shop 1
Outboard motor repair shop 1
Coffee processor 1
Experimental farm 1
Sanitary Landfill 1
Latrines 13
Water supply wells 15
Fish farming projects 15
INEFAN forest ranger stations 2
Poultry-breeding projects 2
River piers 2
Hotel 1
Eco-tourism project 2
Total 98
Occidental provides funding for bilingual education for ongoing training of 20 teachers from the Bilingual Intercultural Institute. Study grants provided by Occidental allow them to pursue university-level bilingual correspondence courses in agriculture, engineering and administration. Occidental also awards scholarships to students from local communities to attend the Institute.
In partnership with local communities, Occidental also created adult education training programs in carpentry, agriculture, leadership skills, administration, mechanics, and other subjects for the Limoncocha area. Several Ecuadorian universities and institutes, along with the Ministries of Education, Agriculture, and Social Welfare, provide instructors for these programs. Residents of the Limoncocha communities received approximately 52,000 hours of training through the end of 1999.
The Tarpucmac experimental farm has become the cornerstone for efforts in improving agricultural and livestock-raising methods throughout the region. The introduction of fish farming into local communities provided a significant new source of protein for local residents. Chickens from two commercial poultry farms provide not only another important source of food, but also additional jobs, particularly for women. Occidental's efforts, combined with community participation and support, have resulted in increased economic diversification and the availability of additional, high-nutrition food sources for Limoncocha residents.
Creating small businesses, owned and operated by local residents, helps establish sound, long-term growth in local communities. Occidental encouraged and supported independent enterprise and helped establish the following projects.
Self-Management Project Beneficiaries
Sinchi Huarmicuna Shihua Agricultural Project Indigenous Association of Limoncocha
Rio Jivino Carpentry Shop Rio Jivino Community
Tarpucamac Experimental Farm All the communities in the area of direct influence
Tarpucamac Fish-Farming Project All the communities in the area of direct influence
Ninna Huiarmicuna Agricultural Project Rio Jivino Community
Rio Jivino Handicraft Shop Rio Jivino Community
Limoncocha Handicraft Shop Limoncocha
Dust Control Contract Limoncocha Indigenous Assocation
Yamanunka Fish-Farming Project Yamanunka Community
Pompeya Fish-Farming Project Pompeya Community
Rio Blanco Eco-Tourist Project Santa Elena Community
Outboard Motor Repair Shop Itaya Community
Right-of-way clearing contracts All the communities in the area of direct influence
Total: 13 projects
One of Occidental's most rewarding efforts involves improving health care in Limoncocha. Following a comprehensive assessment of local health issues by Occidental and the Ministry of Health, Occidental helped initiate the establishment of training programs and the construction of one rural health center and four rural clinics that resulted in a significant improvement in health care. The following illustrates some of the results:
. Improved Sanitation: 30-percent of local residents now have latrines, 45 percent use safe water, and 10 percent have access to sanitary waste disposal facilities.
. Trained Health Promoters: "Health Promoters" were trained in each community to provide basic education in preventative health care, maternal/child health, parasite control, etc.
. Health Facilities: Four rural health stations and one rural clinic have been constructed.
. Pre and Post-Natal Care: Regular pre- and post-natal care, including vaccinations, is available in the Limoncocha clinic and local health posts.
. Decreased Infant mortality: The infant mortality rate has been cut by more than 50-percent with improved nutrition and health care. The infant mortality rate declined from 42 deaths per thousand in 1993 to less than 20 deaths per thousand at present.
As exploration begins in areas beyond Limoncocha, Occidental is helping local communities to identify and implement new socio-economic programs aimed at achieving long-term sustainability while minimizing the impact of its operations on the surrounding rainforest.
Occidental has worked with local communities, non-governmental organizations and government agencies to support basic infrastructure and education. The goal is to provide community residents with knowledge, information and skills to help them make informed decisions about activities that will impact their future. Occidental contributed to improving health care in these communities by helping local families enjoy healthier and more productive lives.
OEPC Fails to Disclose the "Laguna Spill" The report categorizes "drums and other containers of chemicals that had been washed into a swamp" as "the Laguna Spill;" she claims the drums and containers are from an Occidental drill site. The report alleges that this incident resulted in the pollution of the swamp and Lake Limoncocha with toxic materials and calls for an investigation. The report conjures up a phantom spill and launches into a disjointed and irrelevant discussion of contaminant levels for drinking water based the US EPA's National Primary Drinking Water Regulations and Occidental's 1992 EIA. (Kimerling, pp. 13, 18-19, 30)
Occidental's Response There was no Laguna spill. This is perhaps the most blatant example of the irresponsible use of anecdotal accounts by anonymous "residents" who allegedly witnessed an unspecified number of containers in a swamp following torrential rains that produced local flooding in the Limoncocha area. The report alleges, without any verifiable evidence, these containers came from an Occidental drill site. There are no eyewitness accounts presented to validate how the alleged containers came to be in the swamp or their point of origin. If containers were in fact observed in the swamp, they need not have come from an Occidental facility. They could have come from adjacent properties operated by other companies. Assuming containers were observed in a swamp, we are not told how many; the report does not specify whether there were two, twenty or two hundred containers. Nor does the report provide a description of the condition of the containers. Significantly, it does not specify whether they were sealed or unsealed, full or empty. It does not point out who determined that the vessels contained chemicals or how that determination was made. It does not stipulate what kinds of chemicals were in the containers. Incredibly, an unknown number of containers of unknown origin, containing unknown volumes of unknown contents observed in a swamp by unnamed sources, are transformed by the author into an Occidental toxic spill.
The report then turns to a discussion of contaminants, specifically heavy metals, in one area in Lake Limoncocha identified in Occidental's 1992 EIA. The report concludes that while these "data in the EIA are too limited to be conclusive, there is no question [emphasis added] that they are significant" indicators that pollution in Lake Limoncocha "was caused by the Laguna Spill." The report asserts that this matter raises "serious questions about Oxy's operations and ethics." The report further alleges that "Oxy's failure to disclose, investigate and remedy the Laguna Spill shows how easy it is for oil companies to hide environmental problems in remote areas, and wrap themselves in a misleading veneer of corporate responsibility and international standards." (Kimerling p. 19)
To call the report's "findings" in this matter intellectually dishonest would be an understatement. The report invents a toxic spill, accuses Occidental of responsibility for the phony event and then questions the company's ethics and behavior for its failure to disclose, investigate and remedy the situation.
If there had been a spill, it would have been reported. In the 16 years of OEPC's operations in Block 15, the company has produced a total of 54.9 million barrels (approximately 2.3 billion gallons) of oil and handled 162.4 million barrels (approximately 6.8 billion gallons) of produced water. Through mid-2001, there have been a total of three spills, the largest of which was the fault of another company.
. On September 3, 1993, a 16-inch gathering line transporting fluids from producing wells to the central production facility was accidentally ruptured by a back hoe operator doing work for another company in the area. Approximately 900 barrels of oil and produced water were released. The spill was contained, most of the liquids recovered, and the impacted surface area was remediated.
. On May 30, 1993, a wash tank at the Jivino A production facility was overfilled releasing between 10 and 15 barrels of fluid which was contained inside the safety dike. All the liquids were recovered.
. On March 29, 2000, approximately six barrels were discharged as the result of a faulty valve. The spill was quickly contained and the liquids were recovered.
None of these spills resulted in the contamination of the surrounding bodies of water, and all were reported to Ecuadorian regulatory authorities.
Contingency planning to deal with potential oil spills is an integral part of OEPC's environmental planning process. The company has developed and implemented an on-line contingency plan to access environmental data required for a timely response in the unlikely event of a major environmental incident like an oil spill. Use of the company's Intranet makes the information available to Occidental's worldwide organization. Reporting formats, contact information, types of equipment and locations are built into the system. A broad range of environmental data is captured as part of the rapid response process, including information on hydrology and types and patterns of vegetation and soil to provide scope and depth to an assessment of the impact of an incident. The information is used not only to respond to incidents, but also is used for preventive purposes. Pipeline and well characteristics, and capacity information are shared throughout the company's operations to solicit input that can be applied to prevent future incidents. Internal and external reporting is an integral part of the system, enabling all parties to view real-time information. The on-line oil spill contingency tool facilitates easy updates, ensuring that everyone has access to current information.
OEPC Has No Standards for Disposing of Liquid Wastes The report implies that "effluents (liquid wastes) are discharged into surface waters" based on the author's flawed interpretation of OEPC's EIA and her lack of understanding of the actual operations. The report questions the "adequacy if the impact assessment in the EIA concludes that environmental considerations by OEPC appear to be "more of an afterthought than an integral part of project planning." (Kimerling, p. 15)
Occidental's Response This implication is absolutely untrue. This project was designed and engineered with built-in safeguards for both environmental and safety performance from the inception of the project. With regard to waste waters that may come in contact with hydrocarbons, OEPC's production facility in Block 15 is a "zero discharge" facility. No effluents, other than treated sanitary wastewater, are released or discharged in surface waters. All water co-produced with hydrocarbons is injected back into deep confined reservoirs. (See page 12 above for a more detailed description of produced water disposal.)
Miscellaneous Items Occidental disagrees with and finds serious fault with many other aspects of the report as cited below.
. The report states: "In 1997, Oxy proposed to re-negotiate its contract with Petroecuador." (Kimerling, p. 3)
Occidental's Response: The Ecuadorian government proposed the contract conversion to reduce its financial exposure in Block 15 and to transfer all risks to OEPC.
. The detailed description of the production facilities is outdated because it is based on the 1992 EIA and EMP. The report also claims that "The platforms and CPF are connected by a network of unpaved roads, most of which were built by Oxy to serve its operations. (Kimerling, p. 3)
Occidental Response: The report does not acknowledge that most of the roads in Block 15 are public roads. OEPC only built approximately 24 kilometers (roughly 14 miles) of roads in Block 15. Current production is 30,000 barrels per day, not 18,000 as the report indicates. One flow line passes under the Napo River, not two as the report says. This single crossing was the subject of a separate EIA. Produced water production is currently running at 110,000 barrels per day, not 65,000 as noted in the report. These discrepancies point out the report's inherent flaw of relying on a nine-year old EIA to assess a dynamic process that must constantly be adapted to changing operating conditions and new technology.
. The report chides OEPC for not providing details of three wells planned in the Secoya-Siona territory. (Kimerling, p. 4)
Occidental's Response: The three wells were drilled in late 2000 with the full approval of the respective indigenous communities following extensive negotiations. All three wells were dry holes. Ecuadorian authorities and representatives of the communities audited the OEPC's remediation of the 11 total acres encompassed by the well sites.
. There are errors in two footnotes on page 5 of the report.
Occidental's Response: There is no contractual provision under 5.5.20.2 as cited in footnote 13. Contractual provision 9.2.10 regarding insurance in footnote 14 meets an Ecuadorian legal requirement. Also in footnote 14, the references to contractual provisions 7.3 and 7.33 are irrelevant in the context to the discussion of insurance because they deal with pipeline tariffs.
. The report does not take note of the fact that regulatory requirements have been enhanced since 1992. The report notes that "confusion between international industry standards and legal norms is reinforced by both the language in the international standards provision's in Oxy's Contract, and by the general discourse in Ecuador about the company 's operations [emphasis added]." (Kimerling, p.7)
Occidental's Response: This is another example of the report relying on outdated data. OEPC's current contract has specific clauses (22.1, 22.1.1, and 22.1.4) regarding compliance with Ecuadorian law, including environmental laws. Clause 5.1.20 deals specifically with environmental protection. Moreover, there is no documentation to substantiate the vague reference to the state of "general discourse in Ecuador about the company's operations." The report never identifies who was engaging in such discourse and the precise nature of the alleged discourse.
. The report contains overtones throughout that imply some transgression on the part of OEPC where none occurred. For example, Occidental representatives interviewed for this report did not simply say or tell what they knew, they "admitted" it. (Kimerling, p. 9, 11)
. The report says that there is no indication that measures were taken "to avoid environmentally sensitive areas" and that the EIA "does not clearly identify the location of 'environmentally sensitive areas' and important wildlife habitats." (Kimerling, p. 12)
Occidental's Response: This is incorrect. Figures 8.1 and 8.2 in the EIA detail environmentally sensitive areas.
. The report notes that two families in Limoncocha had their gardens disrupted by drainage from road construction by OEPC. According to the report, "Oxy refused to pay compensation for the losses, and has not repaired the damage." The report also indicates that "in some cases, residents have relocated their homes" because of road building and other activities. (Kimerling, p. 21)
Occidental's Response: The report again relies on unsubstantiated hearsay. OEPC recognized the drainage problem and repaired it. Contrary to what the report indicates, relocations of houses was done voluntarily by families who wanted to be close to the roads. There have been numerous instances in which families have requested that OEPC alter the route of a proposed road so that their homes would have access to the new road.
. In questioning Occidental's compliance with Ecuadorian law, the report refers to Occidental as having "agreed to pay a fine" to the El Eden community for drainage problems created at an exploratory well site. (Kimerling, p.25)
Occidental's Response: What the company agreed to was the voluntary payment of compensation, not payment of a fine.
. The report asserts that "one well-informed expert, who requested anonymity," [emphasis added] asserted that "Oxy's injection capacity is not sufficient for all of its produced water, and that the company injects only some 70% of its brine, discharging the rest. (Kimerling, p. 27)
Occidental's Response: This anonymous expert is 100% wrong. OEPC injects ALL of its produced water.
. The report, relying again on "anecdotal reports that raise serious concerns," refers to some activities carried out by OEPC "at night," implying that there was something clandestine about these activities. (Kimerling, p. 27)
Occidental's Response: OEPC field operations continue around the clock which is common throughout the industry. Work carried out at night is no different than daytime work for a 24-hour a day operation.
. The report also suggests that OEPC is hiding something from local residents "because the company has fenced off its operations and does not let them into the facilities." (Kimerling p. 27) Occidental's Response: Security and safety issues are a major consideration in the operation of any industrial facility anywhere in the world, including the US. Virtually all such facilities are fenced and are not openly accessible to the public.
Conclusion Contrary to the principles of sound scholarship, the report manipulates spotty and inconclusive data rather than objectively detailing the facts. The author visited Occidental's facilities in Block 15, but offers us no description of what she actually saw. Was the facility run down? Did she witness evidence of contamination at the facility and in the surrounding area? Were pools of oil visible? Did the soil show evidence of oil spills? Did the facility have open pits? Did the vegetation surrounding the facility show signs of being adversely impacted? Was there visible evidence of surface water contamination? Had the author asked those questions and answered them honestly, the answer to all of them would have been an unequivocal "NO." Instead, she focused on a few documents like OEPC's Environmental Management Plan (EMP) which she treated as artifacts frozen in time instead of dynamic instruments that are adapted to new technologies and methodologies that improve performance.
The reality is that this operation has had exemplary performance from both an environmental and community relations standpoint - and this has not been a static situation. No one at Occidental would claim that the operation has been problem free, but we believe that this operation compares favorably with any well-run oil operation anywhere in the world. That does not mean that there is no room for improvement. One of the components of OEPC's management system for health, environment and safety is continuous improvement. OEPC has well defined performance standards. Just because the company justifiably did not share them in detail with the author does not mean that they do not exist or are not rigorously applied. OEPC has a reasonable basis to believe the author would not have written an objective and accurate report regardless of the amount or quality of information provided.
Throughout her report there are complaints that Occidental refused to disclose various documents and cites these refusals as evidence of a lack of transparency on the part of the company. The truth bears repeating once again: If the author had provided a research plan, or even an indication that the investigation would be balanced and objective, Occidental would have been more inclined to provide the documents sought. There is little in this report than does not validate the company's initial misgivings about the author. The report is a condemnation of Occidental's operations and practices in Ecuador. Apart from recognizing Occidental's efforts to limit contact between company employees and indigenous residents (Kimerling, p. 20), the author finds nothing positive that the company has contributed to the residents of Block 15. The report implies that the company has done nothing to protect the environment or work in harmony with the communities. Worse than that, the report suggests that Occidental has been responsible for the willful degradation of the environment and does not value the lives of its employees. The report suggests that there is not a single environmental practice to which the company can point as meeting anyone's performance standards, because Occidental allegedly has no clearly defined standards. The author uses the accidental death of a single subcontractor employee to denigrate OEPC's safety program despite the fact that this is the only such incident in the company's sixteen years of operations in Ecuador. The author never inquired about OEPC's overall safety record which shows that company employees have not suffered a single accident that resulted in lost work time since the beginning of 1996. An undocumented sighting of unspecified containers in a swamp is transformed into a toxic chemical spill.
The report criticizes the company throughout for being "unwilling to commit to a set of clear standards and practices." That statement is utterly false, as evidenced by the numerous standards cited herein. Just because the report alleges a lack of standards does not make it so. When the report does happen across some meritorious Occidental standards, they are dismissed because the "company's ability to implement them is dubious." Or the report suggests that such standards are "a hollow promise," because no environmentally sensitive area "is off-limits to the company." (Kimerling, p. 12)
The fundamental flaws in the report and the persistently negative portrayal of Occidental's Ecuadorian operations validate the company's decision not to provide the additional documents sought by the author. The company had little confidence those documents would be fairly and objectively evaluated.
The treatment of some issues in the report suggests the absence of a review process by peers and others. The style is more journalistic than scholarly, as evidenced by the report's reliance on anonymous, uncorroborated hearsay. Unlike the fruits of carefully documented scholarly research, it would be virtually impossible for peers to replicate this report. None of the standard social science research and statistical sampling and interviewing techniques was applied. The report offers conclusions and opinions on matters such as the ISO process without reference to easily accessible public information. There are no citations of expert opinions to support conclusions relating to technical matters beyond the scope of the author's legal expertise.
APPENDIX I - Occidental's Standard of Care Occidental's HES policy sets minimum performance expectations for its business segments. These principally include the following: 1) compliance with all applicable HES laws and regulations, and 2) correction or discontinuance of any activity with an unacceptable HES risk. The policy also requires that each segment create a program which augments these two expectations in a manner that provides people and the environment a consistent degree of protection from HES risks related to segment business activities, regardless of location (i.e., achieves a consistent Worldwide Standard of Care).
Each segment has the responsibility for setting HES performance expectations and goals. Occidental's policy provides flexibility to do so in a way that meets the demands of the business environment in which each segment operates. There are several ways a segment can meet the standard of care requirement, ranging from prescriptive methods (e.g., by mandating conformance to U.S. laws in all segment operations regardless of location) to those that are more flexible.
The following elements are common to the HES program of each Occidental segment:
. a minimum acceptable HES performance expectation is established which meets the requirements of Occidental's HES policy, that is applicable to all business activities
. HES risks associated with all business activities are identified
. a desired risk profile for each facility/business activity is established based on the Segment-wide performance expectations and goals, and local conditions
. action is taken to achieve the desired risk profile for the facility or business activity
Developing a desired risk profile involves applying the following steps:
. analyze the situation
. prioritize where to take action
. develop potential "protection" tools or methods
. apply appropriate tools or methods
. assess effectiveness and take additional action where appropriate
Application of a risk-based approach to developing an HES management strategy requires careful evaluation of relevant issues at a fundamental level and consideration of those issues along with other Segment business issues. During the investigation, the situation is defined through rigorous, but practical, inquiry and research. Management response options are analyzed in a similar fashion. Screening tools, investigation frameworks and decision logic help the Segment address:
. How are HES management issues relevant to the specific operational context defined? What are the important dimensions of the issues? What are the boundary conditions?
. What potential outcomes (positive / negative, primary / secondary, direct / indirect, certain / contingent) might business activities cause?
. Which of the potential negative outcomes is cause for concern?
. How should potential negative outcomes be prioritized for action?
. What is the threshold of acceptable risk?
. To what extent do these potential outcomes need to be mitigated?
. How can the desired level of risk management be achieved? What tools (programs, equipment, avoidance, monitoring, etc.) are available?
. How will the intended degree of risk management be maintained in the face of changing operations and external factors?
. How do those outside the Segment and OPC view the issues under consideration?
. Are the actions taken sufficient to limit potential future liabilities.
APPENDIX II - OEPC Environmental Performance Standards
TOPIC Performance Standard
Naturally Occurring Radioactive Materials (NORM) NORM Survey/Monitoring Program, Survey Records, handling practices, disposal records and/or containment Records. Labeled containers, posted information for restricted access to storage areas. (ref. API Bulletin E-2).
Contractor visitor HES Programs Written Program established for evaluating & selecting contractors. Monitoring of contractor safety performance. Program as required should meet the intended objective of 29 CFR 1910.119 (h).
Hazardous Materials Emergencies and Safety for Hazardous Waste Management Environmental Regulations for the Hydrocarbon Operations (ERHO). Chapter X, Art.54 A 7;B 8; C9. Requires Waste Management Plan. OEPC also requires Sanitary Landfill Operations Manual.
Pipeline Safety OEPC requires that the pipeline system i.e. shipping pipeline and gathering system to be inspected on regular basis. Documentation such as: Operation Logs, Inspection Reports, Incident Reports, should be kept.
The Mechanical Integrity and Quality Assurance Procedures:
. Identify, evaluate, and determine what equipment and/or process components are critical (i.e. their failure or malfunction could adversely impact the safety of personnel, operations, and/or the environment);
. Ensure equipment and components comply with material specifications and design codes or standards thus providing a measure of safety and reliability;
. Provide a methodology for inspecting, testing and maintaining the equipment and documenting such action.
Environmental Documentation Baseline Study and Environmental Impact study required for each stage of the project. (Exploration, Drilling, Development and Production). Environmental Regulations for Hydrocarbon Operations (ERHO). Articles: 10, 15,26, 46 and Chapter X.
Laboratory QA/QC OEPC requires QA/QC program for laboratories.
Emergency Response & Spill Prevention
Spill Prevention Control and Countermeasure Plan(s) (SPCC) OEPC requires SPCC. It follows API format, with copies available in the field and Quito offices for all hydrocarbon storage surface facilities of over 660 gallons that could contact surface waters in the event of a spill.
Emergency & Spill Response Plan(s) ERHO. Chapter X, Art.54 B 8; C9. Requires Oil spill contingency plans. OEPC also requires Oil Spill Plan, Fire Emergency Plan, all approved by management, updated annually.
Oil Spill Response Training ERHO. Chapter X, Art.54 B 8; C9. Requires oil spill training. OEPC also requires annual training for brigade members.
Crisis Communication Program OEPC requires a written Crisis Management Plan.
Incident Simulation OEPC requires annual HES simulation drills to be conducted.
Water Quality
Surface Water - Point Source Discharge(s) Sewage and produced water discharge are regulated under ERHO. Annex 2. Charts 3 & 4. Although there is no Ecuador standard for monitoring frequency, OEPC monitoring program for sewage discharge and water injection process is done on a monthly basis.
Surface Water - Receiving Body(s) Although there is no Ecuador standard, OEPC has documented baseline water quality and performs monthly and quarterly sampling. Analytical protocol(s) and the monitoring program for receiving water body are documented.
Surface Water - Surface Pit(s) Although there is no standard, most pits in OEPC are to be lined with an impermeable synthetic material.
Facility Drainage System(s) ERHO. Art. 28.c All facilities to have a drainage system that includes oil traps and separators.
Injection Well(s) - Mechanical Integrity Test Although there is no Ecuador standard, most mechanical integrity tests are performed prior to placing well in service.
Air Quality
Emission Inventory Emission Inventory of stationary sources.
Emission Screening Model(s) Emissions screening model for stationary source (Flare).
Visible Emissions Visible emission not to exceed 20 % opacity ERHO Art. 28.
Waste Management Plan
Waste Management Plan ERHO Chapter X, Art.54 A 7;B 8; C9 requires Waste Management Plan. OEPC also requires Sanitary Landfill Operations Manual and Waste Management Plan.
Non-Hazardous Solid Waste ERHO Chapter X, Art.54 A 7;B 8; C9 requires Waste Management Plan. OEPC requires Sanitary Landfill Operations with incineration and recycling.
Polychlorinated Biphenyl's (PCB's) OEPC does not use transformers containing PCBs.
Hazardous Waste ERHI. Chapter X, Art.54 A 7;B 8; C9 requires Waste Management Plan. OEPC
Pits
Pits Drilling Fluid Reserve Most pits in OEPC project are to be lined with synthetic impermeable material.
Produced Water Most pits in OEPC project are to be lined with synthetic impermeable material.
APPENDIX III - OEPC Baseline Mapping USING GIS AND REMOTE SENSING TO EVALUATE PRIMARY AND SECONDARY IMPACTS ASSOCIATED WITH COLONIZATION AND OIL EXPLORATION IN THE AMAZON RAIN FOREST
Frederick H. Groth, WALSH Environmental Scientists and Engineers, Inc. Boulder, Colorado
Patricio Rivera H. Occidental Exploration and Production Company, Quito, Ecuador
Presented at:
6th International Conference & Exhibits on
GIS for the OIL &GAS INDUSTRY, September 8-10, 1997 Houston, Texas, and
Twelfth International Conference and Workshops
Applied Geologic Remote Sensing, November 17-19, 1997 Denver Colorado
ABSTRACT
One of the major impacts of oil and gas exploration and production in the rain forest is deforestation. This deforestation comes from two sources: clearing by oil companies for seismic lines, production platforms, etc. (a primary impact), and clearing for subsistence agriculture by colonists who enter the rain forest along seismic lines, roads, pipelines, etc. (a secondary impact). This deforestation in the Amazon rain forest is a growing environmental concern.
Analysis of LandSat Thematic Mapper imagery with Geographic Information System (GIS) tools has been useful for evaluating changing land use in an oil lease block in eastern Ecuador. OEPC sought to determine what environmental impacts existed in Block 15 prior to 1986, and what impacts have occurred during their tenure. Comparison of old and current LandSat imagery identified areas that have been deforested during their lease period and that could therefore be related to OEPC activities. A buffer area analysis was used to identify deforestation rates associated with different combinations of migratory pathways. The results indicated what percentage of total deforestation was due to a secondary impact related to the oil company in the region.
BACKGROUND
Eastern Ecuador is situated in the upper Amazon basin and is known as the Oriente. Dense, impenetrable tropical rain forest has left the area unexplored and unchanged for hundreds of years. The area is noted for its biodiversity. The Oriente is culturally diverse and is inhabited by peoples that have remained separated from modern society until recent years. Oil exploration has occurred for decades in the Oriente. Exploration and production of oil has been cited as a major influence in the changing landscape and culture in the Oriente.
The influx of agriculture and farming has had a major visible impact on the Oriente. Vast areas of deforestation have resulted as colonists move into the Oriente and establish residency. Oil companies have opened up previously inaccessible areas to settlers by cutting roads, seismic lines, and pipelines. Colonists and native peoples are allowed to clear land for personal use in the Oriente. This clearing of native vegetation has scarred the land, alarmed environmentalists, and raised concerns with oil companies. The Ecuadorian government promotes homesteading in the Oriente as a way to increase agriculture and ranching productivity. Oil companies have been the focus of intense public scrutiny about deforestation and other environmental impacts in the Oriente. While only part of the environmental impacts in the Oriente are due to hydrocarbon exploration activities, the oil companies receive a majority of the blame. To defend themselves the companies need to know what amount of deforestation is due directly to oil exploration and what is related to other influences. There are other questions. Can we predict future deforestation rates and areas prone to deforestation based on historic trends? If areas susceptible to deforestation are identified, what precautions can be taken to prohibit further deforestation?
CASE STUDY (GENERAL AREA)
Block 15 is located in the Oriente and has been operated by Occidental Exploration and Production Company (OEPC) since 1986. The block covers 200,000 square kilometers of rain forest (Figure 1). Major rivers present include the Napo and Aguarico. Native communities exist along the rivers and include the Shuar, Secoya, and Quichua peoples. The block contains two national parks and a nature preserve. The area has been noted for its biodiversity. The eastern half of the block has few human influences and impacts. The western portion of the block has experienced significant human activity. Roads, pipelines, large-scale commercial agriculture, and oil production facilities are present in the western portion of Block 15. In addition, the area adjacent to Block 15 on the northwest has undergone heavy deforestation for agriculture. A large-scale commercial African Palm plantation, not affiliated with OEPC, is also located partially within Block 15.
OEPC has been exploring for and producing oil in Block 15 since 1986 under a 20-year contract with the Ecuadorian government. During exploration, over 1,500 kilometers of seismic data were acquired. OEPC began production in 5 fields in the western portion of the block in 1992. A central production facility and pipelines have been built. Block 15's reserves are estimated at 300-400 million bbl.
PROBLEM IDENTIFICATION
Deforestation along old seismic lines due to colonization many years after seismic programs
PROJECT OBJECTIVES
With so many influences affecting land use change, OEPC wanted to identify how land use has changed and to what extent they were responsible. A historic land use analysis was conducted to meet the following objectives:
Identify amount and location of deforestation that occurred prior to OEPC tenure.
Identify amount and location of deforestation that has occurred during OEPC tenure.
Identify the amount and location of regrowth that has occurred.
Identify the amount and location of areas that were deforested prior to OEPC and are currently deforested.
Identify rates of deforestation.
Identify factors that promote deforestation.
Determine which factors have a greater influence on deforestation and lead to increased deforestation.
Reduce deforestation and minimize environmental impacts by identifying areas prone to deforestation.
METHODS TO IDENTIFY SECONDARY IMPACTS
The area is so vast and inaccessible that a detailed ground survey would have been difficult, time consuming, and expensive. To overcome the lack of historical data, OEPC decided to use historic satellite imagery to evaluate past and current conditions.
Two LandSat Thematic Mapper (TM) data sets were purchased from EOSAT to identify land use. The images were acquired in 1986 and 1995. Both images were imported into TNTmips, a remote sensing and GIS software package. Walsh analyzed both Block 15 and a buffer area around the block. These areas were extracted from both satellite images. The 1986 image was georeferenced to existing CAD and topo maps provided by OEPC. The 1995 image was georeferenced to the 1986 LandSat image and resampled to the same projection and cell size. Visual and numeric analyses were performed on all spectral bands. Histograms of reflected light were generated to identify the distribution of deforested and naturally vegetated areas. Areas of deforestation and agriculture were easily discerned from native vegetation in Band 7 (mid-infrared) of both data sets. The difference was due to the different moisture levels and plant structure of cleared areas versus natural vegetation.
A training set was compiled for both images. This was composed of the range of values that represented deforested or recently cleared areas. The training set was based on the reflective values of mid-infrared Band 7. The range of values was 183 to 255 for the 1986 image and 143 to 255 for the 1995 image. A filter was written in TNTmips Spatial Manipulation Language (SML) to process the images and extract those areas that were in the training set range. The results were processed with a 3x3 filter to remove noise and delineate boundaries. Unique values were assigned to the cell value in each raster. The cell values would be used during the raster addition process.
The commercial palm plantation in Block 15 was separated during this process because it was a unique featu