Can we produce clean oil in the Amazon?
Oil production in the rainforest has come under attack but with modern technology it can be cleaner than alternatives…
The Amazon rainforest is the world’s most important asset in the fight against climate change. It has the potential to act as the planet’s lungs, inhaling C02 and breathing out oxygen. It stores immense amounts of carbon and is the most biodiverse ecosystem we have. As a result, most people – and definitely this magazine – don’t want to see any environmental damage to happen to the Amazon.
But the Amazon biome is such a large area – it is roughly the size of the 48 contiguous US states – that it is unrealistic to expect Latin America to maintain it as an untouched paradise for the benefit of foreigners. Moreover, the millions of people live in low-income communities in the Amazon would benefit from the responsible development of its natural. Unfortunately, recent history is littered with examples of irresponsible mining, logging, farming and energy companies that damaged the Amazon in the pursuit of profits. But over the last few decades a new generation of environmentally-responsible projects have shown it can be done.
Environment & communities
The largest natural gas project in the Amazon is the Peruvian Camisea operation which produces 1.6 billion cubic feet (bcf) per day of natural gas and 90,000 barrels per day (bpd) of liquids, around half of which is liquified petroleum gas (LPG). Yet despite its size and sensitive location, the project has been designed so that its impact on the jungle is minimal, explains Martin Grisolle, General Manager of Hunt Oil Peru, which is part of the Camisea Consortium. “Our main base in the jungle is only accessible by river or by air. And from that base, we send helicopters to our various wells. We are not connected by road, because when you build roads into the jungle you find that illegal miners or loggers invariably follow and cause environmental damage. We transport our natural gas by one pipeline and our NGL by another, which minimises the impact we have on neighbouring communities. Trucking the gas out from there would be a nightmare because we would have a negative impact on so many lives.”
Using helicopters or pipelines to reduce environmental or social impact is a wise approach. But “it’s important to realise that social and environmental concerns often overlap”, says Jorge Vugdelija, Executive President, OCP Ecuador – a 485 km-long pipeline that transports oil from oil wells in the Amazon. “For example, earlier this year our pipeline suffered a rupture. It was caused by a natural disaster, with rocks falling on the pipeline. Despite the fact that it wasn’t our fault, and clearly a force majeure, we took responsibility for fixing the problem. We spoke to Ecuadorians at all levels, from community meetings to the authorities and reassured them that OCP Ecuador would resolve the issue. We hired local workers to help with the clean-up, which was a wonderful way to generate economic development from a negative incident, and I am pleased to report that we are very close to finish the remediation task. Currently we are working in the reforestation of what we call the zero zone, and we are doing it with the help of the team of National Park Rangers.”
The benefit of having an energy company in the area is that it can help Amazonian communities deal with challenges they face. For example, some communities in OCP Ecuador’s footprint have been impacted by a new phenomenon of regressive erosion that has nothing to do with the pipeline. “It has already caused the San Rafael waterfall to disappear and the river level is dropping as the erosion changes the shape and depth of the river bank. It is something that we are monitoring closely and – although it is not our legal responsibility – we will help the villagers cope with the consequences.”
Technology
The general public doesn’t realise the progress that the energy industry has made in environmental sustainability, says Ruth Zambrano, Managing Director for SLB in Peru, Colombia and Ecuador. “Back in the 1970s the way things were done left a poor image of our industry mainly due to using practices that are no longer what the industry uses today. Ecuador is investing in ‘green oil’ and SLB is an example of that. We invest in technologies that are more efficient and emit less CO2. I believe that if European investors are concerned about this, they should put their capital to work in companies that are trying to produce the cleanest oil possible.”
One exciting example of how technology can help is in Ecuador, says Zambrano. “Here in Ecuador, ITT is a controversial oil block because it is in a nature reserve. But now our extended reach directional drilling means that we could access that oil without stepping foot inside the national park. SLB has drilled horizontal wells in Russia that are more than 10 km long, so it could be a great solution for extracting oil from environmentally sensitive places.”
As a global technology company, SLB has various solutions to minimise the impact of energy production on the environment. “We are constantly working to reduce our emissions”, says Zambrano. “For example, in the jungle of Ecuador we are field testing electric vehicles that would allow us to switch our existing fleet of pickups and small busses. We also have six technologies that have been certified under Ecuador’s ‘green dot’ system (Punto Verde Certification).”
Silvana Pastor, VP Administration and Finance, Gente Oil, agrees with Zambrano that technology is the solution. Indeed, Gente Oil has invested in the largest oilfield water treatment plant in Ecuador. “We are very proud of the water treatment plant because it produces clean water that we can reinject into the well with zero environmental risk. That’s especially important because 98% of the liquid that flows from our wells is water.
“As long as an operation is controlled, and constantly using technology to reduce its environmental impact, then why shouldn’t Ecuador produce oil the in the Amazon?”, asks Pastor. “Gente Oil has proved that you can reinject water safely, eliminate flaring and protect local flora and fauna. The world will always need oil. Of course, we can strike a balance with renewable energy but there will always be a need for oil. So, we need to accept that and work on how to prevent oil production from having a negative social or environmental impact.”
Another aspect that is misunderstood is the stringent level of local regulations – especially for large, formal operations like oil and gas companies. “When it comes to the environment, we operate under strict controls”, says Pastor. “We can’t contaminate the rivers, we must limit our noise levels and constantly demonstrate that the flora and fauna isn’t affected by our operation. We have never had a single oil spill in the last ten years and we reforest our working areas with native species of vegetation.”
Those of us sitting in comfortable offices in the UK probably wish the Amazon rainforest could be sealed off and preserved as an idyllic natural paradise. The reality is that humans have sought out Amazon’s riches for thousands of years and, as the world population grows and we fight climate change, pressure on the forest will increase. Investors can help by allocating capital to companies that extract those resources responsibly, while Latin American governments need to clamp down on those that don’t.