The Lago Agrio oil field is an oil-rich area near the city of Nueva Loja in the province of Sucumbíos, Ecuador. It is located in the Western Oriente Basin. The site's hydrocarbon-bearing formations are the Cretaceous Napo and Hollin formations. Oil was discovered in the area in 1960s. The Lago Agrio field is known internationally for the serious ecological problems that oil development has created there, including water pollution, soil contamination, deforestation and cultural upheaval. Located in Cofan territory near the Colombian border, it is one of twelve production areas that developed when Ecuador began to export petroleum.
In 1993, local residents started a class action lawsuit, Aguinda v. Texaco, Inc. to force former well operator Texaco (acquired by Chevron Corporation in 2001) to clean up the area and provide for the care of the 30,000 inhabitants affected by oil contamination. In February 2011, an Ecuadorian court ordered Chevron to pay $8 billion in compensation. The verdict was later confirmed by the Ecuador Supreme Court in 2013, with the amount fixed to $9.5 billion. Despite having previously insisted to move the process from the New York Court to Ecuadorian tribunals and having accepted jurisdiction there, Chevron Corporation has refused to pay the judgement claiming that the decision was “illegitimate and inapplicable”. A ruling deeming the Ecuadorian verdict as unenforceable was issued by a United States court in 2014 and by an appeals court two years later. In 2018 the Permanent Court of Arbitration in The Hague ruled in favor of Chevron and said the 2013 Ecuador Supreme Court case was obtained "through fraud, bribery and corruption."
Development and ownership
In 1964, Texaco Petroleum Company (TexPet) began exploring for oil in northeast Ecuador, in an area which was inhabited by indigenous people. The following year, it started operating a consortium owned equally by itself and Gulf Oil to develop a tract in the area. Nueva Loja was founded as a base camp of Texaco. The consortium struck oil in 1967 and began full-scale production in 1972. The Ecuadorian government, through its national oil company CEPE, now Petroecuador, obtained a 25 percent interest in the consortium in 1974. Gulf subsequently sold its interest to CEPE. By 1976, the consortium was majority-owned by the Ecuadorian government. TexPet, however, was still the company responsible for drilling technical operations. TexPet transferred management of the consortium to Petroecuador in 1990. TexPet's concession expired in 1992, leaving Petroecuador as the sole owner. Petroecuador continues drilling in the area.
Over a period of 20 years, the Lago Agrio field produced of oil, with a profit of $25 billion. According to Chevron, 95 percent of the profit from the consortium went to the government. This figure has been harshly contested by the government itself.
Produced oil is transported by the Sistema de Oleoducto Transecuatoriano (SOTE) and Oleoducto de Crudos Pesados (OCP) pipelines to the marine terminal at Balao. Lago Agrio is also connected by the San Miguel–Lago Agrio pipeline. The multiproduct Poliducto pipeline runs from Lago Agrio to Quito.
Pollution, remediation, impact
Pollution
One of the most cited reports on environmental damage to Lago Agrio is Amazon Crude written by Judith Kimerling for the Natural Resources Defence Council. This report, which covers the Oriente region more broadly, includes a prediction that Ecuador's entire oil reserves would have been depleted by 2005 if the 1991 rate of 100 million barrels per year had continued. According to Kimerling's interviews with technical staff, approximately 19.3 billion gallons of produced water, with a petroleum content of 500–5,000 parts per million, were diverted into 880 unlined open pits where the water could reach streams and rivers relied on by local inhabitants for their drinking water, bathing and fishing. The produced water contained polycyclic aromatic hydrocarbons at levels many times higher than permitted in the US, where produced water was typically re-injected underground since at least the 1970s. An additional byproduct of the crude oil extraction was natural gas. Although Texaco had agreed to preserve the supply of natural gas, the Ministry of Energy and Mines estimated that 85%-88% of it was burned into the atmosphere. For each well that was dug, on average, an estimated 4,165 cubic metres of toxic drilling fluid accumulated in an open pit. The majority of the wells were dug in the first few years when Texaco and Gulf had the largest number of shares. Paul C. Lambert quoted a Petroecuador manager as saying "at some points, the rivers are like the sea" referring to the salinity of the water.