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Ivanhoe’s most recent press release on the progress of the Pungarayacu project, posted March 16, 2010, contradicts the truth from the ground about what is happening with the project and glorifies the HTL drilling technology as having “environmental advantages.”

Ivanhoe states that it is “seeking approval for an additional 20 wells” without specifying where or when these additional wells would go. The contract gives Ivanhoe permission for four wells within the first three years of the contract. Adding wells would require the company to obtain a new environmental license and a new environmental impact study. This is the second press release since January in which Ivanhoe has said they are looking to implement an additional 20 wells, yet there is no knowledge in the ministries of environment in Tena or Quito to confirm this claim. Carlos Espinoza, head engineer for Ivanhoe Energy Ecuador, made a public statement at a meeting in Puerto Napo on March 17, about the 20 additional wells without giving specific information.

According to Ivanhoe’s contract, the first three years are designated to investigate the oil field using only three wells. The second phase is another 3-year pilot phase in which Ivanhoe plans to build the HTL plant. The third phase is 24 years of extracting oil from established sites and further exploring for well sites.

Construction has begun on the second well site in the community of Seibo, near the community of Yutzupino both of which are just outside of Puerto Napo. The home in the photo lies on the property Ivanhoe bought for the second well. Five families will be removed from their homes, which lie on the property Ivanhoe bought for the drilling platform. The company has said they’ll relocate the families, though Ivanhoe representatives have failed to show up to negotiate with the families multiple times.

“They talk and talk but they don’t keep their word. We want them to be a model company and show that they’ll provide us with the services we need,” said one of the homeowners who will lose his home to the Ivanhoe project.

The families waited for Espinoza to show up on March 17, the day he visited Napo, but he never came. This led all five families to travel to Quito to seek out compensation from Ivanhoe. They were told the negotiations were pending until Ivanhoe’s lawsuit against a Yutzupino Kichwa family was settled.

Community relations between the company and local inhabitants have proven to be volatile. Communities have an increasingly negative impression of Ivanhoe, as company representatives have a reputation for failing to show up for meetings with local government officials, such as the mayor of Tena, or communities. The press release states, “Ivanhoe Energy Ecuador is working in close cooperation with local communities, local government and the Ecuadorian federal government to ensure that its development plan is approved and complies with all environmental regulations.” In a meeting in Napo on March 11, townspeople of Napo voted during the meeting to suspend the session with Ivanhoe because Ivanhoe executive Carlos Espinoza failed to be present as promised. Community members highly anticipated his arrival to clarify details about the project, jobs and compensation Ivanhoe would offer to those affected by the project. This was not the first time an Ivanhoe representative failed to appear when promised to the people.

During a visit to Cotundo, where the first Ivanhoe well is already drilling for oil, a local said, “The company said, “although you don’t want us to enter, we’re going to come either way.” Inhabitants of Cotundo and Nueva Esperanza, towns closest to the well, said that the company entered without consulting with the communities. Rather, they only negotiated with the landowners.

In a community meeting in Yutzupino on March 5, community members complained that they hadn’t been educated on what HTL technology entails and wanted to know Ivanhoe’s specific plans for the area. To proceed fairly and legally, Ivanhoe must increase transparency and uphold their word to communicate with communities. Both in Cotundo and Napo there is great frustration on the part of the communities that Ivanhoe simply has not socialized the project as promised.

In the final paragraph of the press release Ivanhoe defends its HTL technology for its “environmental advantages.” The SAGD process required in HTL uses huge quantities of water. Up to 65% of the water from the Athabasca River in Canada was drained because of SAGD process used for oil extraction. In populated regions like Napo province, draining natural sources of water poses a major threat to the way of life of its inhabitants. The steam injection used in HTL process contaminates the water with industrial chemicals so that it is virtually impossible to return the water to the river. The water must be heavily treated in order to recycle it.

The rivers are an essential part of eco-tourism in the region. Even the smallest amount of contaminants in the river could completely alter the way of life. Ivanhoe’s Environmental Impact Assessment (EIA) states that the risk of water contamination is “irrelevant” to the project, despite the fact that the study identifies water as one of the most “vulnerable elements” of industrial activity. Roads, infrastructure and construction materials necessary for the project all impact the ecosystems and the communities near the well.

In addition, the press release states that “the data extracted from the logs and cores on IP-15 are better than we expected.” This is the first of several wells we plan to drill on Block 20 and our understanding of the geology and reservoir characteristics of the Pungarayacu heavy-oil field continues to be expanded.” According to community leaders, Ivanhoe has had difficulty extracting any oil from the IP-15 well and they don’t have the funds to continue with the oil extraction process. There are rumors that Ivanhoe is planning to sell the project to a Chinese company.

Word on the street:
  • The oil extraction process continues in Nueva Esperanza. Communities are frustrated because the company is not employing local inhabitants, but rather bringing in guards and other workers from Quito.
  • Construction has begun on the second well site in Yutzupino/Seibo communities, which are just outside of the town of Napo. Ivanhoe has a lawsuit against one Yutzupino family for unknown reasons.
  • Construction on the second well continued despite archaeological findings.
  • People in the town of Napo continue negotiating for jobs and contracts in the project. Ivanhoe has said that 80% of the jobs needed for the well, both specialized and not-specialized, will go to natives of Napo.


What can you do?

Please show your support for indigenous communities in Napo province by signing a letter to government officials.

Visit this link: http://www.salvalaselva.org/protestaktion.php?id=546

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Replies to This Discussion

Emily

I have signed the protest and posted it.

If there are archeological artifacts as well as environmental issues this should be getting more attention. However, unlike the Copper episode, Oil is the "Black Gold" for Ecuador and there has always been an equally black history surrounding everything involved with it. Getting the Copper Mining stopped was a miracle, but the oil brings in so much more revenue by comparison, and it has the ability to "grease" so many more hands in the slippery slide of greed, that it really is an uphill battle.

On top of that, Ecuador owes the U.S. so much in loans for humanitarian projects that it will never get paid, you can bet there is plenty of political pressure because you can imagine much of this oil is destined for the U.S. There may be some trading of goods either hard or soft so it looks like the U.S. is not involved, and it's always a "shell game" so it doesn't show on the surface.

In all the 40 years I have been involved with Ecuador, she has never taken care of her people, but has always taken care of those who have the money and the power. This is her history. This is a 3rd World Country! So at best you can raise the alarm, but with world economics supposedly being what the media would have everyone believe, it is going to be a chess game the likes of which Bobby Fischer has never played!

You have already witnessed the Ecuadorian governments attitude first hand, as they have taken no stance against Ivanhoe and their obvious disregard of any policy. There may be some token sanctions and/or fines, but that will pretty much be the extreme of it.

I have witnessed first hand how the money gets passed around on some road projects back in the 70's and 80's. All the people who have the authority to stop it are involved as a rule. So there is little fear of exposure. It's just like the local police. You rarely if ever see a patrol car speeding down the road after someone who is going too fast, unless it's Christmas time and they need extra money for presents! I could go on with personal examples but it would only discourage you.

So start looking for four smooth stones for your sling as you come up against a Giant named Ivanhoe! It only takes one to bring them down, but which one? Where is their weakness? Sounds like capital may be an issue. The investor indicated as much in that Ivanhoe does not have the capital to go this alone, so that may be your better "stone" to load in your sling. Cut off or curtail their money, and it could stop them in their tracks. They have no fear of local social issues as they have blatantly demonstrated. Money is another issue.
Emily:
You stated that the 'SAGD process required in HTL requires huge amounts of water' and then you go on to say the Athabasca river was drained of 65% of its water. Water usage is an issue in the Athabasca region because of the demands being made on the water through a concentration of numerous different strip mining and SAGD developments throughout that entire region. I have no idea how many separate operations are underway in the Athabasca area but the combined demand for water is a factor. I was wondering if you could give me some idea of what constitutes a 'huge' amount of water for the SAGD process required in HTL. I have looked through my documentation and cannot find any water demand figures. Would you please let me know so that I might have a better concept of the water requirements of this project? I am also curious to know what percentage of the river's daily flow would be used by the Ivanhoe project since you have previously stated that Ivanhoe was going to drain the river.

You also make the statement that the steam injection of the water contaminates the water with 'industrial chemicals' making it virtually impossible to return to the river. Furthermore you state, 'the water must be heavily treated in order to recycle it'. What industrial chemicals are injected into the water prior to steaming? How would those chemicals, if any, affect the river being that the recycled water is re steamed and re injected into the formation - it is never reintroduced back into the river. Also, it might be of interest to you that when the SAGD water is recycled all that means is that it is run through a simple separator (oil being lighter than water), and then fed back into the formation as steam - the water is recycled again and again. This might be why Ivanhoe stated in its Environmental Impact Assessment (EIA) that the risk of water contamination is “irrelevant” to the project - the water never goes back into the river. You attempt to make this sound as if Ivanhoe doesn't care if it contaminates the river - it is just not a factor.

As far as ‘the word on the street being that Ivanhoe has had difficulty extracting any oil from the IP-15 well’ - The heavy tar like oil won't flow out of the formation - it has to be steamed out which is just now being set up. The cores of the well look exceptional and the steaming test will give them additional information on how the structure will respond to heat. As far as your statement that Ivanhoe does not have the funds to continue with the oil extraction process is false - Ivanhoe will be moving temporary test equipment onto the location and test the well for a few weeks. They have no intention of extended steaming at this point - that will come in phase two. As to the rumors that Ivanhoe is planning to sell the project to a Chinese company - that might be partially true. Ivanhoe is looking for a joint-venture partner to help finance the project and they publicly stated that they have been in negotiations with Asian international oil companies – I guess that might include China.

I could address several other incorrect facts in your post but it seems correct facts are not really of concern. It appears that I’m not the only 'evil' person trying to inject bias into this Pungarayacu project.
Trey -

You are an investor in the company and are actively involved in lobbying the members of this site on their behalf. That's not a bad or "evil" thing in and of itself. But you do have a vested interest in the outcome and this interest informs your contributions.

What's a huge amount of water? One estimate of the water taken from the Athabasca River (for all oil sands usage) is 349 million cubic metres per year, twice the amount of water used by the city of Calgary. I know that the scale of oil sands production in Canada is very different from that in Ecuador and that there is no correlation between water use out of Athabasca and projected demands on the Napo and other rivers in the Tena, but that sounds like an awful lot of water to me.

You make a simple logical error in your arguments. You make the correlation that "all of the water that is used is recycled" with "all of the water that is recovered is recycled." The two statements are not necessarily the same: It is probable that less than 100% of the water that gets injected into the ground as steam gets recovered. In fact, the National Energy Board of Canada (see below) cites the loss ratio at 5-10%. So - the impact on the local water supply is hardly negligible if, in fact, this typical loss factor applies to the HTL/SAGD technology Ivanhoe plans to deploy in Ecuador.

This post suggests that for every barrel of heavy oil recovered, three "barrels of steam" are required. (The closest I can come is that 1000 BTUs is approximately 1 pound of low pressure steam. Not sure how this converts to barrels.) Another source (cited on the National Energy Board of Canada web site) suggests that one barrel of water is required for every four barrels of recovered heavy oil (20% ratio), and that typically only 90-95% of the total amount of water used is recycled.

This suggests that 1000 barrels of water is required for every 4000 barrels of heavy oil recovered and that for every 1000 barrels of water used, between 50 and 100 barrels is not recovered for recycling.

Because the water (steam) comes into direct contact with the oil sands, the water that is not recovered almost certainly is contaminated (with "industrial chemicals"). That is the source of the contaminants - the oil itself. There is no need to inject industrial chemicals into the water before being injected into the ground.

I would like you to point us all to the exact place where Ivanhoe states that "100% of the water that is converted to steam that is injected into the ground gets recovered with the oil and is recycled. This is a 100% completely closed cycle."

Finally, I have to caution everyone here. No flaming. No one is "evil." We can disagree without calling anyone names. We can agree that people are "differently informed" and have different opinions and agendas. Naturally, Trey, your access to information and your position as a shareholder in Ivanhoe informs the opinions you have on the company's technology and prospects - and naturally these are going to be different from Emily's as a member of Amazon Watch.

My goal here is to have an open forum where issues can be discussed. I expect that you will always try to present Ivanhoe's interests in the best possible light. I expect Emily will present the information from her perspective. And that the others here will do likewise. It can't be any different.

What Emily seems to me to be reporting - from her experience on the ground in Ecuador and meeting with people who are directly affected by the project - is that there appears to be a difference between Ivanhoe's official press releases and their behavior and communications in Ecuador.

You (Trey) appear to have no independent information sources in Ecuador, so you can't refute what Emily is reporting about her direct observations there.

Am I misinformed on this point?
My pressing question is: Where did Ivanhoe make a public statement that they are looking to sell part of the project to a Chinese company? When will this happen? How does this change the contract and what are the legal steps Ivanhoe must take to make the transition? How does this affect the contract and the environmental impact study?
Emily: Go back and review their conference calls. This has been a know fact since the project was first proposed. You are using the term 'sell part of the project'. They are not selling - they are looking for a financial partner to joint venture the project. They have never stated that the partner would be the Chinese - that was your word on the ground. I simply added that there are Asian companies (amongst others) interested in the oil produced from the Pungarayacu and that Ivanhoe was talking to these various international oil companies about potential joint venture partnerships - with some being Asian they therefore 'could' be Chinese.

I don't know when this will happen - the company was originally projecting it would happen by the last quarter of 2009 but apparently they are still in negotiations. It doesn't change the contract in any fashion - this was a know fact at the time the contract was negotiated. I would assume it would have no affect on the environmental impact study - any Jt. Venture partner would be involved only in the financing - not the field development itself.

Trey
Clay:

I have no idea how much water the HTL project will use. Emily says 'huge' and I believe she has a copy if the EIA - I was hoping she had sourced an amount since it has been previously stated that Ivanhoe was going to drain the river(s). I suspect that in relation to the actual water flow of the rivers the percentage is not huge but I am curious to know just what that figure might be.

Where in my post did I state that "all of the water that is used is recycled"? I think my statement was that all of the recycled (obviously meaning recovered) water is separated from the oil and re-injected as steam back into the formation - all recovered water is recycled again and again - the point being that any recovered water is never reintroduced back into the river (Emily's concern) to contaminate the river with industrial chemicals. I don't know what the water loss factor is - that depends on the boundaries of the producing formation but I suspect 10% -15% might be a ballpark figure. A typical loss ratio would apply to the Pungarayacu as Ivanhoe's HTL does not affect the down-hole SAGD process. If you are concerned with the re-injected water contaminating the zone of oil I wouldn't stay up at night worrying about it - how do you contaminate a zone of oil with steam that might have a very minute amount of oil in it? Incidentally, most oil/gas fields naturally contain varying amounts of water. Most secondary recovery (think Saudi Arabia and much of the states) utilize water injection to produce oil.

All I am trying to do here is correct some of the misconceptions regarding the process. Note that I did not question Emily on any of the accusations against Ivanhoe and their relations with the local people - that is why I came to this board - she is on sight and I am interested in her opinions. I just don't believe she should be going around making these dramatic claims about a process she doesn't fully understand. We have gone from strip mining to draining the rivers to contaminating the oil zones with oil. I would think this thread would be better served by concerning itself with what is a real threat to the environment and have less of the blown up scare tactics thrown around. As I mentioned before, Ivanhoe and Ecuador are very sensitive to the environmental impact of this project - I believe Ivanhoe will meet or exceed the highest industry standards in this project.

Trey
Trey:

I quote from your original reply to this post:

"Also, it might be of interest to you that when the SAGD water is recycled all that means is that it is run through a simple separator (oil being lighter than water), and then fed back into the formation as steam - the water is recycled again and again. This might be why Ivanhoe stated in its Environmental Impact Assessment (EIA) that the risk of water contamination is “irrelevant” to the project - the water never goes back into the river. You attempt to make this sound as if Ivanhoe doesn't care if it contaminates the river - it is just not a factor.""

I agree - for the water that is recovered. However, it appears that not all of the water is recovered. One estimate is that 5-10% is not.

That's the water we're concerned about. Got it? I don't misunderstand at all. I am not concerned with "re-injected water." I am concerned with the water that does not get recovered. If the Ivanhoe HTL technology does not address the loss factor than we can take the 5-10% (more conservative than your 10-15%) as the working assumption for estimation purposes.

On this page of the Ivanhoe web site, the company states that there are between 4.5 and 20 billion barrels of oil in place. Let's assume a 50% recovery rate of the lowest figure, or 2.25 billion barrels of recovered oil.

Using the only figure available (20% ratio water to recovered oil), the 2.25 billion barrels of oil will require .56 billion barrels of water to extract. With a loss factor of 5%, the amount of water that will not be recovered is equivalent to about 28,000 barrels and at 10% it's about 56,000 barrels. No one has any idea how contaminated that water might be and what the impact the contaminated water might have on local or distant ecosystems.

Now - do you have any hard facts or figures to the contrary?
Clay:

I fail to see why you would be so concerned with the water that is not recovered. The water is trapped in the previous oil bearing sands 1300 feet below the surface. It is not 'contaminated' water - it was only water that was used to steam the formation and might have had a small amount of residual oil (out of the same formation) in it. You say that no one has any idea how contaminated that water might be - Can you tell me how it would get more contaminated than having a small amount of residual oil which ends back up in a formation that has a lot higher residual oil content. How can oil contaminate oil? As I previously mentioned, most oil formations have a certain amount of water - The water has no distant ecosystems impact - its trapped in the oil sands just like all over the world. Those is the hard facts!

If you are insistent that a trace of produced oil will contaminates the residual oil left in the ground then I guess you will just have to stay up at night and worry about it - Sweet Dreams!
Trey:

Again you miss my point. I don't think I have ever insisted that, "a trace of produced oil will contaminates the residual oil left in the ground." I don't give a rat's ass about the oil. I am worried about what happens to the 10-15% (in your estimate) of the water that is not recovered after being injected into the ground.

Please point us to independent research that backs up your claim that there is ZERO groundwater contamination from SAGD operations. We're not talking about recycling the water that is recovered (which, BTW, should be subject to the same 10-15% loss). We're talking about the water that is not recovered.

You claim that it is permanently caught in the oil-bearing strata. And never escapes. Just point us to independent research that shows this.

You've made the assertion that it is safe: it is up to you to PROVE that it is so. It's not up to us to prove you wrong.

That's what we're asking here. Independent proof - not assertions from a shareholder with a vested interest in the process.

:: Clay
Clay:

Oil is found in 'formations' because it gravitates and collects between solid, non-porous rock structure - other wise it would migrate outside of the specific formations is which it is found. Any steam condensates and collects into the pores between the particles of sand that previously held oil. Yes, you could say that it is permanently caught up in the oil-bearing strata.

You want independent proof - look at the worldwide oil industry and its years of operations. Look into the water floods done all over the world. Look at the SAGD projects all over the world. Do some research on your own; the answers are out there if you are truly concerned about all of this - obviously you are not going to take the assertions of this shareholder.

Enough of this absurdness. I'll monitor this site for the next sinister disaster Ivanhoe is going to spring upon the earth.

Trey
Trey:

I HAVE done the research - and I have been testing the limits of yours and laying the groundwork for a larger example on logical fallacies.

What I have been asking all along in this regard is for you to do some of the work and post the links (to non-Ivanhoe sources) so that others can read for themselves. I think I speak for most everyone else here when I say we don't want YOUR assertions. I want you to point us explicitly to places where ChocolateLife members can find the answers that you refer to. Make it easy for people to find the research you want them to read. Otherwise they read Wikipedia and cite Greenpeace as the authoritative source on the subject.

Where did I do my research? My father in law is a gentleman by the name of Brian Skinner. He literally wrote the book used in most freshman geology courses in the US and he is one of the founders of the field of economic geology. Even has a couple of shares of Ivanoe in his retirement account. I asked him about SAGD (though he has Ivanhoe in is retirement account he can't speak about their tech).

But - the issue of Ivanhoe is not just about SAGD, it's colored by a rich history and the tech can't be separated from the very real concerns that the people who live on the lands and will be directly affected by operations have about the way the tech is being implemented.

:: Clay

PS. According to Brian, the water to oil ratio is closer to 5:1 than the 3:1 I was using in my math. Is that a good thing, a bad thing, or does it matter?

PPS. 20 billion barrels are in-place reserves. I haven't read any estimates of what they think is recoverable. Can you provide some guidance?
Clay: I'm covered up right now - so a quick answer.

I want to look into the SAGD water ratio. I would think that the delineation drilling would help define what Ivanhoe estimates to be the ratio - their official estimate might be hard to pin down. I think what we are looking for is a general industry figure at this point.

You are correct that the range of oil in place is estimated to be up to 20 billion barrels. Until Ivanhoe completes their delineation drilling and preliminary cyclic steam stimulation on each well I don't think you will see a figure of what they think is recoverable. That figure may evolve over time as the drilling and testing is performed. Emily mentioned only three wells for the first three years but I believe the 23 well figure for the first phase might be more accurate. It would be hard to delineate the boundaries of the field with only three wells.

That's interesting about your father-in-law. Maybe you could use him as a sounding board for the non-recovered water question. I'm sure he understands SAGD better than I do - I would also like to know if he thinks I have been incorrect with any of my assertions. I will certainly defer to his knowledge in the field of oil. I would be interested on his thoughts regarding SAGD in that regard. As I mentioned before, Ivanhoe is not changing the SAGD portion of the equation - their HTL technology is more about providing on-site energy for steaming and simultaneously upgrading the heavy oil reducing the need for dilutents and capturing a large percentage of the differential price for heavy/light oil, also offering the advantage of lower greenhouse gas emissions on a life-cycle basis.

As to how the tech is used and how it affects the locals - that is why I am interested in Emily's on site perspective.

Later - Trey

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