In Ecuador, suit targets state oil operations


On days when the sun is strong, a penetrating odor of oil fills the air in the rural areas of Pacayacu, a town of 11,000 in the Ecuadorian Amazon province of Sucumbíos. “We can’t block the sun with a finger,” says Henry Castro, president of the local government. “The [town] is totally polluted.”

Poverty abounds amid a profusion of oil infrastructure around Pacayacu, which sits in an Amazon crude production zone known as Libertador. The oilfield forms part of a larger hydrocarbon concession area, called Block 57, being exploited by Petroamazonas, Ecuador’s state-owned oil company. At Libertador, Petroamazonas is currently extracting 22,000 barrels of crude daily.

Oil infrastructure in Pacayacu and the surrounding canton of Lago Agrio is extensive. On farms, along roadways and in the rainforest, a visitor sees well sites, pipelines and production stations, where crude is separated from waste liquid, called produced water, that typically comes to the surface with the oil.

The crude is sent by pipeline to the Pacific coast province of Esmeraldas for export abroad, while the produced water, which often contains toxins, is pumped into storage tanks for eventual reinjection deep underground. Deep-well injection of produced water has only been required for a little over 10 years, environmental activists say. The previous practice—dumping produced water into unlined, open-air holding ponds, then burning it or allowing it to overflow—is evident in the presence here of numerous such ponds, which have yet to be remediated and are blamed for ongoing soil and groundwater pollution.

“The hotter it gets, the more intolerable the smell becomes, but we have had to get used to living this way,” says Pacayacu resident Fanny Calero, as she shows journalists a production station called Sushuqui, located in a rural area on the outskirts of town.

She points to an adjacent holding pond that hasn’t been used since the late 1980s but has not been remediated. It lacks a geomembrane to prevent toxins from seeping into the soil and underlying water table—typical of many such ponds here, local environmental organizers say. Says Calero: “It’s that way throughout our [town] because everything is polluted. We don’t have one clean wetland, and we don’t have clean water. We have to collect rainwater, and even that water smells of sulfur. When we collect it we see that an oily film forms on top.”

Calero and 85 other Pacayacu residents filed suit in 2005, alleging that the state oil company in charge of Libertador at the time, Petroecuador, was harming the environment and human health. Attorneys have come to call the case “Little Chevron” on account of certain parallels it bears to the years-long legal battle that plaintiffs from Ecuadorian rainforest communities have waged against the U.S. oil giant Chevron. That litigation involved far more pollution and a US$9.5 billion damage award, which Chevron is refusing to pay on grounds the Ecuadorian proceedings that led to it were illegitimate. But as with “Little Chevron,” the case centered on oilfield pollution in Sucumbíos province (as well as Orellana province) and the resulting toll on the environment and human health—in this case by a Texaco subsidiary that managed oil operations in the region from 1964 to 1990. (Chevron became the defendant after its acquisition of Texaco in 2001.)

The scale of the contamination and economic damages in the real Chevron case sparked world debate on practices employed by foreign multinationals as they tap resources in the developing world. On Sept. 17, 2013, Ecuadorian President Rafael Correa attracted international media attention by dipping his hand in a pit containing oil-drilling waste and vowing, “We will show the world the dirty hand of Chevron.” He launched a “dirty hand of Chevron” campaign that featured visits to oil-contaminated sites in the Ecuadorian Amazon by Hollywood stars including Danny Glover and Mia Farrow, environmentalists such as Alexandra Cousteau and assorted foreign politicians.

With pollution in and around the Libertador field being blamed on state-owned oil operations rather than on a foreign multinational, the Ecuadorian government has shown no such eagerness to spotlight the Little Chevron case. (Texaco never extracted oil from the Libertador field, relinquishing drilling rights to the area and focusing on oil reserves elsewhere in Sucumbíos and Orellana provinces. The oilfield has always been operated by state-owned firms—until three years ago by Petroecuador, and since then by Petroamazonas.)

And unlike plaintiffs in the real Chevron case, the Pacayacu plaintiffs have seen the favorable ruling on their suit reversed in the Ecuadorian courts. On Jan. 13, the country’s Constitutional Court struck down a 2013 ruling by the National Court of Justice that they should be compensated in an amount to be determined by experts. Though the case now goes back to the National Court of Justice, attorneys say the Constitutional Court’s ruling effectively requires the National Court of Justice to decide in Petroecuador’s favor.

Pacayacu residents vow they will take their case to international fora, starting with the Organization of American States. “The [Constitutional Court] judges say Petroecuador couldn’t exercise its right to defend itself, and I would ask: how can it defend itself? What can it argue, given that the pollution is here?”, says Homero Granda, a Pacayacu resident and plaintiff.

Pablo Sarzosa, attorney for the plaintiffs, says Petroecuador got special treatment. “In Pacayacu, there are the same damages, the health impacts, the same water pollution, the same environmental disaster that Texaco caused, but in a smaller area and caused by an Ecuadorian state enterprise,” Sarzosa says. “With its ruling, the Constitutional Court has created a double standard with respect to the trial of public and private businesses that have contaminated the environment. In agreeing with Petroecuador, they are agreeing with Chevron, which argues that in this country there are no legal guarantees in judicial proceedings against businesses.”

While the legal battle has played out, residents of Pacayacu have continued to grapple with the pervasive impacts of oil operations. Some 10 kilometers (6.2 miles) from the Sushuqui production station, two other such stations, called Pichincha 1 and Pichincha 2, sit by an open-air waste pond also abandoned in the late 1980s and lacking a geomembrane. Nearby are two large oil-storage tanks and a pair of flare stacks used to burn natural gas that comes to the surface in the process of oil extraction. A stick dipped into the pond emerges with a dark-black film.

Local residents and environmental activists say that until 10 years ago, the oil-production waste was periodically burned in the ponds or allowed to overflow in heavy rains as a means of disposal. “This [waste] pool is very toxic,” says Sixto Martínez, 61, a farmer who migrated to the Amazon region in 1985 and lives near Pichincha 1. Martínez asserts that in this pond, burning of oil-production waste has continued. “For three years it has been filled with oil; they fill it, and they burn it,” he says. “When they burn it, the flames reach about 50 meters high.”

Asked on Feb. 29 to comment for this article, Petroamazonas had not responded by March 30, when EcoAméricas went to press. But Virgilio Benavides, the Ecuadorian Environment Ministry’s undersecretary of environmental quality, insists all produced water is disposed of through deep-well injection. That, he says, ensures drinking water is unaffected because drinking water is drawn from aquifers that are typically less than 100 meters (330 feet) from the surface, while produced water is injected to depths of around 2,500 meters (8,200 feet).

Residents counter that although deep-well injection is used to dispose of produced water now, unremediated ponds continue to pollute the air with gasses and contaminate the soil and groundwater as toxins leach from them. They say the past practices of state oil operations and the ongoing lack of adequate remediation have taken a public-health toll as well as an environmental one.

Martínez says his wife died of cancer and his children, who range in age from 16 to 36, “are sick with fever and headaches practically all the time from the oil pollution”—as, he says, is he. He adds that he hasn’t had sufficient funds to move his family and can’t sell his farm on account of pollution on the property.

Homes in Pacayacu are very close to oil infrastructure as well as to water sources contaminated by oil-waste and sewage, says Acción Ecológica, a nonprofit here. According to a survey conducted by Acción Ecológica of 586 families in the area, 37% of respondents said they lived within 250 meters of oil infrastructure, 24% said they were 250 to 500 meters away and 32% were 500 meters to two kilometers (1.2 miles) away and only 6% were more than two kilometers distant. Nearly 40% said they lived near an open-air or filled in oil-waste pond. The study, issued in 2014 reported that 22 of 23 water wells tested in Pacayacu in 2010 contained polycyclic aromatic hydrocarbons (PAH).

Oil over the years has been one of Ecuador’s most important economic pillars and one of its greatest economic threats. It has traditionally ranked as the principal export and source of foreign exchange for this nation of 15 million, yet oilfield pollution has done serious harm in Ecuador’s portion of the Amazon, one of the most biodiverse regions of the world. In the 1980s, every oil-production platform had one or two waste ponds for polluted produced water, say petroleum engineers who worked in the region then. The bulk of industry-related environmental damage done in the region has stemmed from spills, intentional dumping of produced water and flaring of gas, all of which collectively has affected soils, water sources, flora, fauna and air quality.

An Environment Ministry action plan examined by EcoAméricas states that in the Ecuadorian Amazon, Sucumbíos ranks as one of the most heavily impacted regions after four decades of oil operations. “In many cases oil extraction has constituted the principal source of contamination, which has generated large socio-environmental impacts,” says the Integral Restoration Plan for the Pacayacu River Micro-watershed, issued by the ministry’s Environmental Restoration Program (PRAS).

Citing information from the state-owned oil company, the plan states that in 2012, the Amazon provinces of Sucumbíos and Orellana contained 2,500 sources of pollution in need of attention, of which 538 had been remediated by 2013. It refers to production stations as pollution sources, saying, “impacts on air quality can be due to gas leaks or pollution [caused by] emissions from [gas] flares and generators, as well as by vehicles and heavy machinery.”

Like many Pacayacu residents, Fanny Calero blames such pollution for myriad family health problems. The mother of five says three of her daughters have been diagnosed with cancer, one with brain cancer, a second with breast cancer and a third with uterine cancer.

The action plan says no epidemiological studies have been done in the region, “so it cannot be stated that the existence of cancer is directly related to oil [industry] activity.” Urging further investigation, it says a survey of 650 heads of family and 30 community leaders found over 50% of Pacayacu residents have experienced, or continue experiencing, illnesses including respiratory and gastrointestinal ailments and skin and nervous conditions.

Benavides, the Environment Ministry official, says 187 pollution sources in Pacayacu have been remediated since 2005 in an effort to reverse oil-industry impacts. He contrasts these clean-up efforts and the deep-well-injection disposal of produced water with the practices prevailing when Texaco was active in the region. Then, he says, “[economic] benefits were favored without establishing all the preventive steps and using all available technology to avoid pollution.”

Henry Castro, the local government leader insists that Pacayacu’s plight remains serious. “We have around 280 [pollution sites] and of those the principal focus of contamination are the open-air ponds where produced water was discharged,” Castro says. “From 80% to 90% of the streams in this area are polluted because the oil wells are situated all over the jurisdiction, and runoff goes into the streams.”

Also affected, Castro says, are the region’s wetlands and two principal rivers, the San Miguel and the Aguarico, where oil spills have taken a toll. He complains clean-up work has been done on only 40 waste ponds and that residents report the ponds are simply being covered up. “It was estimated the remediation of Pacayacu was going to take five to ten years,” Castro says. “But at the pace it’s going, our lives will run out and we still won’t see it happen.”

Petroamazonas this month announced it had hired 242 workers in Pacayacu to bolster clean-up efforts. For his part, Benavides insists that the work is being done right. “The anti-technical practice of simply covering ponds with dirt without remediation was part of the Texaco management,” he says.

- Mercedes Alvaro

Alexandra Almeida
Oil program
Acción Ecológica
Quito, Ecuador
Tel: +(59 32) 321-1103
Virgilio Benavides
Undersecretary of Environmental Quality
Ecuadorian Environment Ministry
Quito, Ecuador
Tel: +(59 32) 398-7600
Fanny Calero
Pacayacu plaintiff
Lago Agrio, Sucumbíos province, Ecuador
Tel: +(59 399) 8413-3537
Henry Castro
Autonomous Decentralized Government of Pacayacu
Pacayacu, Sucumbíos province, Ecuador
Tel: +(59 362) 343-088
Homero Granda
Pacayacu plaintiff
Pacayacu, Sucumbíos province, Ecuador
Pablo Sarzosa
Attorney for Pacayacu plaintiffs
Quito, Ecuador
Tel: +(59 322) 432-161