Oil company Perenco accused of ‘1970s-era’ methods in Peru’s Amazon

Plans by Anglo-French oil and gas company Perenco to exploit oil deposits slated to transform Peru’s economy have been slammed as a “1970s-era” project and forecast to cause huge unnecessary environmental damage to the Amazon.

“The proposed 200 km long pipeline will have a 25 metre cleared right-of-way, big enough for a superhighway. There’ll be a permanent road along the entire length,” says Bill Powers, chief engineer at US consultancy E-Tech International, speaking after the April 4th publication of a report he authored on oil industry best practices.
“Perenco is following a 1970s-era project design format that is totally inappropriate for the Peruvian Amazon,” says Powers, an expert on Peru. “The company is not proposing to use current technology to reduce impact.”

E-Tech’s criticism comes at a particularly sensitive time because Perenco is currently seeking approval from the country’s Energy Ministry (MEM) for the next phase of its operations.

MEM has already blocked Perenco once this year and insisted on obtaining the “technical opinion” of Peru’s indigenous affairs department (INDEPA), which declared in late February that the company was totally ignoring the potential impact of its operations on indigenous people “in voluntary isolation”, sometimes called “uncontacted”, living in the region.

INDEPA’s verdict is potentially embarrassing for Perenco because it has repeatedly claimed there is no proof of the existence of these “uncontacted” people, with its Latin American regional manager once comparing them to the Loch Ness monster. “Much talk,”he said, “but never any evidence.”

E-Tech’s report, completed with the assistance of the Center for International Environmental Law, outlines the best practices open to companies in the Amazon. It cites Perenco, operating in an area declared one of the top 200 “priority eco-regions for global conservation” by the WWF, as an example of what not to do.

However, others believe that the way the oil is extracted or transported is a moot point. NGOs such as Survival International and Peru-based indigenous organizations like AIDESEP and ORPIO have been campaigning against the presence of companies on “voluntarily isolated” people’s land and say Perenco shouldn’t be there at all.

“We’ll never give up trying to defend and protect these people,” says ORPIO’s David Freitas Alvarado. “They are part of the cultural patrimony of all humanity.”

The report, Las Mejores Practicas en el Desarrollo de Proyectos Petroleros en la Selva, is particularly critical of Perenco’s failure to use a technique known as “extended reach drilling”, which means it would have to build many more platforms than otherwise necessary.

The report also criticises Perenco for its proposal to build a processing plant and permanent camp away from the banks of any navigable rivers, meaning that a road ultimately stretching 54 kms will have to be cut through the rainforest to facilitate access. This would be in addition to the 200km road alongside the pipeline, which the company has already been given permission to build.

“Building roads is the most common and biggest cause of environmental damage,” E-Tech’s report says. “The impacts are clearing of the forest and vegetation, the interference with natural water drainage patterns, soil erosion and indirect impacts associated with opening up the area to local people or colonists.”

The report compares Perenco’s plans unfavourably to companies in Brazil, Ecuador and elsewhere in Peru, including those involved in the controversial Camisea project, and stresses that the rainforest cleared to build a pipeline should be a strip no more than 13 metres wide. As Powers points out, Perenco intends to almost double that, creating enough room for a “superhighway.”

“Best practice is river and helicopters only, no roads, no permanent encampments or processing facilities beyond a short distance from navigable rivers,” says Powers. “If designed and built using current best practices, the impacts would be one-tenth what they will be with the current design.”

The conclusions reached by E-Tech, a not-for-profit organization based in New Mexico, contrast with Perenco’s claims on its website, where it says it is using “state of the art technologies.”

Perenco refused to comment on E-Tech’s report, but the company’s PR spokesman, Mark Antelme, from Pelham Bell Pottinger, said there is “detailed information” on its website and “very clear statements about how they are working to the highest industry standards, which stand true.”

But according to the International Association of Oil and Gas Producers (OGP), of which Perenco is a member, building roads in the rainforest is the “greatest single cause of environmental impact.”

“The use of helicopters will usually be preferable from an environmental perspective,” says the OGP in its Oil Industry Operating Guideline for Tropical Rainforests published in 1991. “Benefits could include less tree destruction, thus a lower overall environmental impact…and reduced access to site and minimization of forest clearance.” More recently, in September 2011, the US-based National Petroleum Council published a “working document” advocating the use of “extended reach drilling” to limit environmental impact.

Less than two weeks after E-Tech’s report went public, Peru’s state news agency, Andina, announced that Perenco will postpone building its pipeline until 2017. Until then, from 2013, the oil will be transported by Petroperu on barges from Lot 67 down the Napo and Curaray rivers.

“I don’t know what the reason is, but any delay is good news as it means more opportunity to affect the design of the project,” says Powers. “Petroperu wants to establish itself as an environmental leader, and I would guess Perenco would be interested in avoiding the $200-plus million expense of building the pipeline, for now at least.”

The oil deposits which Perenco hope to exploit have been touted as the biggest to be discovered in Peru in 30 years, and large enough to transform Peru’s economy from a net importer of oil to an exporter.

When they were declared commercially-viable in December 2006, before Perenco became involved, Peru’s then president Alan Garcia visited the site and declared it “an historic event for our nation.”

The area where Perenco is operating is known as “Lot 67” and is in Peru’s Loreto region, in the north-east of the country, very close to the border with Ecuador.

In total, there are an estimated fifteen indigenous groups in “voluntary isolation” in Peru, the majority of them in the south-east.