Building Stakeholder Consensus For An Oil Pipeline In Lago Agrio, Ecuador

Abstract

Abstract Petroleum companies operating in the Ecuadorian Amazon historically have been faced with strong community opposition to large infrastructure projects, particularly pipelines. Pipelines have been delayed in government permitting, communities have attempted to stop construction, legal actions have been initiated for environmental and community damages during and after construction, and operating pipelines have been sabotaged causing lost production and significant environmental damage from oil spills and significant social impact from contamination or explosions. AEC Ecuador Ltd., a subsidiary of EnCana Corporation (EnCana), and Walsh began evaluating strategies in 2002 for mitigating these costly impediments to permitting, building and operating a crude oil pipeline around the rapidly growing Amazonian city of Lago Agrio. A total of 13 different right-of-way (ROW) alternatives were investigated in the Environmental and Social Impact Assessment process to determine the three best and potentially least controversial routes. The Company encouraged four other petroleum producers to share a single ROW -- a proposal without precedent in Ecuador -- and a decision was made: all committed to use the same ROW to reduce social and environmental impacts from multiple ROWs crossing Lago Agrio. A comprehensive and transparent stakeholder engagement strategy was developed to facilitate community participation and evaluation of the three alternatives. The stakeholders included local, regional and national government; community councils and associations; non-governmental and religious organizations; and individual landowners. Field visits were conducted, technical presentations were provided, formal and informal comments were solicited and workshops were conducted to arrive at a hybrid alternative with micro routing around areas of stakeholder concern. A key strategic decision was made by the Company to maintain transparency throughout consultation process and flexibility in the final design, despite an atmosphere of continuous conflict stemming from another recently constructed pipeline in the city. The affected communities also participated directly in construction monitoring and environmental and social compliance assessment. Due to the high level of community acceptance and proactive environmental approach, the government regulators allowed for a special exemption from the hydrocarbon law to allow multiple pipelines in a single ROW and as consequence, the existing regulation was identified as outdated compared with current international industry practice for ROW. The pipelines in the ROW were constructed in 2003 with no public controversy and have been operating to date without incidents and without any complaint about the stakeholder strategy and methodology. There have been no legal challenges.