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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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Clay:

Quoting from the National Energy Board of Canada's Jun 2006 Energy Market Assessment:

"In SAGD operations, 90 to 95 percent of the water used for steam to recover bitumen is reused, but for every cubic metre (6.3 barrels) of bitumen produced, about 0.2 cubic metres (1.3 brrels) of additional groundwater must be used."

So Brian is correct in stating the oil to water ratio is closer to 5:1. Exactly how the Canadian bitumen/tar sands ratio might change when applied to the Pungarayacu's heavy oil classification, I don't know - I would think the ratio should go up but that's a question for a petroleum engineer.

Hope this helps.

Trey

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