[R-G] Reconciling Oil and the Environment

[Anthony Fenton]

LATIN AMERICA:  Reconciling Oil and the Environment
By Humberto Márquez*
http://www.ipsnews.net/news.asp?idnews=42052

CARACAS, Apr 19 (Tierramérica) - Years of public scrutiny, ever-newer  
technologies, more government regulations, notions of corporate  
responsibility and the market-driven need for greater efficiency are  
all factors behind improvements in the environmental policies of Latin  
America's petroleum industry.

"Our line makes it incompatible to exploit the underground riches as  
long as above ground people are living in poverty," says Juan Bravo,  
manager of the environmental wing of Venezuela's state-run oil company  
PDVSA in the Orinoco belt in the southeast.

For decades, oil and natural gas exploitation in Venezuela polluted  
fields, rivers, lakes and cities, and fostered the growth of poor  
settlements around the installations where the country’s oil wealth  
was produced.

But since the industry was nationalised in 1976, no fossil fuel deal  
has been approved without including projects for social improvement  
and environmental preservation. In laying a natural gas pipeline  
between northern Colombia and northern Venezuela, PDVSA spent 15  
million of the original 150 million dollar investment on community  
development programmes in the areas the pipeline crossed.

In the Orinoco belt, an area of around 55,000 square kilometres  
holding an estimated 1.2 trillion barrels of extra heavy crude, at  
least one-fifth of which is believed to be recoverable, the PDVSA and  
some 30 foreign corporate partners pump half a million barrels per day.

"To a large degree, the environmental achievements are due to the new  
codes of conduct for global energy companies. They don't enter into  
any deal without seeing the state of the land and without conducting  
environmental hearings," Venezuelan petroleum engineer Diego González  
told Tierramérica.

For example, unlike the conventional oil fields in eastern Venezuela,  
cluttered with thousands of vertical oil pumps, oil is now extracted  
horizontally: when the drill reaches the level of the petroleum  
deposit underground, submergible pumps draw out the crude from various  
points, without altering the surface landscape, González explained.

In Brazil, the state oil giant Petrobras "conducts monitoring projects  
that evaluate the environment before implementing the drilling or  
production efforts," particularly in the Atlantic Campos Basin,  
northeast of Rio de Janeiro, the company said in a written statement  
to Tierramérica.

The studies "identify restrictions for the location of the units  
(drills and pipelines) where there are important ecosystems, like deep- 
water coral reefs, in order to propose alternatives with fewer  
environmental impacts. Furthermore, all effluents are monitored, such  
as the water used in production, sanitation effluents, rubble and  
fluids from drilling," stated Petrobras.

In Ecuador, heavy environmental damage has been caused in the Amazon  
region by ChevronTexaco over a quarter century, which could mean  
compensation payouts of seven to 16 billion dollars, the equivalent of  
the corporation’s annual earnings, according to experts in Ecuador.

The pollution, caused by more than 600 petroleum waste pits, triggered  
the emergence of a vast ecological movement with international support  
to fight oil drilling in the Amazon's Ishpingo, Tambococha and  
Tiputini fields -- in which Brazil's Petrobras is also interested --  
in order to protect areas of the National Yasuní Park.

"Cases like Brazil and Ecuador tend towards efforts to avoid oil  
spills, for which technology is constantly being improved. In part, we  
owe this to the start of production in the North Sea more than 30  
years ago," González told Tierramérica.

In contrast to the large-scale oil exploitations that in Mexico,  
Venezuela, the Persian Gulf or the former Soviet Union preceded  
environmental concerns and legislation, those of Britain and Norway in  
the North Sea started in the 1970s and had to heed strict  
environmental standards.

In addition, to make petroleum production profitable in that area and  
to avoid wasting even one barrel, the companies had to develop safe  
and modern technologies, which regulators in other countries then  
began to require as well.

Oil spills continue to be a headache for companies like the state-run  
Petróleos Mexicanos (Pemex), which faces a serious decline in its oil  
fields and which spends one percent of its 17 billion dollar budget on  
environmental matters.

Of the 24,000 barrels of oil that Pemex spills on average each year,  
one-third are the result of illegal tapping of its pipelines,  
according to the company. Environmental groups identify Pemex as the  
most heavily polluting company in Mexico, responsible for 57 percent  
of the country's environmental emergencies.

In the company's code of conduct, the first item is "to respect and  
improve the environment", and its 155,000 employees are prohibited  
from "considering production more important than ecological balance."

Venezuela's PDVSA drew up management plans for the 28 blocks into  
which the 21,000 square kilometres of the currently exploited portion  
of the Orinoco belt are divided.

New maps and recognition of areas "allow decisions about the best  
sites and routes for the installations, roads or pipelines, but also  
for work as a project with each field, beginning with reforestation to  
capture carbon dioxide (a greenhouse gas), while oil activity  
continues," said PDVSA's Bravo.

González noted that "the storage of crude no longer brings problems,  
because each tank or pump station has to have a walled-in space to  
contain spills equivalent to one-and-a-half times its storage capacity."

But the production of heavy crude in the Orinoco belt to convert it  
into lighter synthetics "generates new environmental problems because  
they have a high content of sulphur and metals, which must be stored  
or transported for sale, but whose markets aren't as easy to reach as  
the oil markets," he said.

The Orinoco belt's daily output is 600,000 barrels -- one-fifth of  
Venezuela’s total -- and each day produces 1,600 tonnes of residual  
sulphur and 14,500 tonnes of petroleum coke.

The coke is an input for the steel industry and is sold within  
Venezuela, while the sulphur derivatives are exported for use in  
fertiliser, agrochemicals, vulcanised rubber, dyes, etc. But storage  
and transport have their own financial and environmental costs.

"If the aspirations of this government are achieved, of producing (in  
the belt) up to four million barrels of crude a day, it would leave  
more than 10,000 tonnes of sulphur and almost 100,000 of coke per  
day," said González.

PDVSA invited companies from Argentina, Brazil, China, India, Iran,  
Russia, Spain and Uruguay to help certify that 236,000 billion barrels  
of crude are extractable, which would mean Venezuela holds the largest  
oil reserves on the planet.

(*Additional reporting by Mario Osava in Brazil, Kintto Lucas in  
Ecuador and Diego Cevallos in Mexico. Originally published by Latin  
American newspapers that are part of the Tierramérica network.  
Tierramérica is a specialised news service produced by IPS with the  
backing of the United Nations Development Programme and the United  
Nations Environment Programme.) (END/2008)