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PERU: Substandard Peruvian Gas Pipeline Blamed for Spills

Environmental News Service
March 2nd, 2006

A pipeline crossing the Peruvian Amazon has spilled natural gas liquids four times since it opened 15 months ago because it was shoddily built by unqualified welders using corroded pipes left from other jobs, according to a new technical report by the nonprofit environmental consultancy E-Tech International based in San Diego.

Written by a certified pipeline welding inspector who inspected sections of the Camisea pipelines during the construction phase, the report indicates that the pipeline was laid quickly on difficult terrain to avoid late completion fines that could have totaled $90 million. Nearly 185 kilometers (115 miles) of the pipeline remains at high risk of rupturing, the E-Tech report warns.

pipe

A break in the Camisea pipeline that appeared on December 22, 2004 (Photo courtesy E-Tech)
The pipeline is one of two that carry natural gas and natural gas liquids from the Camisea fields along the Urubamba River 430 kilometers (270 miles) east of the Peruvian capital Lima, to a fractionation plant on the Peruvian coast south of the capital city. The pipelines traverse the rainforest and cross the Andes mountains at an elevation of 4,800 meters above sea level.

The E-Tech report was presented to the project's funder, the Inter-American Development Bank (IDB), at a public consultation at the bank's headquarters in Washington.

Peruvian and international organizations, including the Society for the Protection of Environmental Law, Amazon Watch, World Wildlife Fund-Peru, the Amazon Alliance and Environmental Defense as well as the non-profit environmental consultancy E-Tech International, testified during the daylong meeting at the IDB’s headquarters in Washington, DC on Monday.

The only senior IDB executive to attend was Executive Vice President Ciro de Falco, who stayed for several minutes, delivered a prepared statement, took no questions, and missed the other presentations.

Bank officials failed to explain why previous commitments to prevent spills from the pipeline have not stopped them. In its first 15 months of operation, the pipeline has ruptured four times, with three major spills.

Michael Valqui, program officer for World Wildlife Fund – Peru said, “This annual meeting highlights that key promises and commitments given at the outset of the Camisea project by the government of Peru, IDB and the companies for the most part, have not been realized.”

pipelines

Laying the Camisea pipelines through the Peruvian Andes (Photo courtesy Camisea Project)
The Camisea gas project has been controversial in Peru and at the IDB since breaking ground in 2001. The gas is being extracted in one of the most biodiverse tropical rainforests in the world, home to thousands of indigenous people, including some of the last indigenous groups living in isolation anywhere in the Amazon.

The civil society groups faulted the bank for continuing informal talks with members of the project consortia, including leading shareholder Hunt Oil, based in Texas, over financing deals for future phases of the controversial Camisea project, before resolving the multiple problems of the project’s first phase.

During meeting bank officials indicated they are likely to begin formal due diligence to consider financing the second phase of the Camisea project.

Maria Ramos, southern Peru campaigner for Amazon Watch, said, “The companies again insist there will be no more ruptures, but the last time they promised that, there were four. The world’s most biodverse rainforests and the highly vulnerable indigenous communities that live there are in real jeopardy.”

In addition to Camisea Phase II, the Peruvian government plans 16 new hydrocarbon contracts in the Amazon rainforest.

“It is clear that the Peruvian government does not have the capacity to adequately regulate a project of this massive scale; never mind the 16 new hydrocarbon projects that are slated for Peru’s rainforest regions," she said. "There is little planning or coordination and the Peruvian government is in over its head.”

The groups say Camisea profits are not going to assist the indigenous communities that suffer the consequences of spills and destruction of their rainforest territory. Despite the IDB and Peruvian government’s rhetoric of “development” and “poverty alleviation,” the groups point out, 40 percent of the Camisea royalties paid to the central government have been set aside by Peruvian legislation for arms procurement.

Although Block 88, the first phase of the Camisea project, is already operating, the E-Tech International report’s warnings are timely, the groups said because the pipeline feeder network will soon be expanding to serve other nearby concessions, including Camisea II, which involves many of the same companies and broke ground last month.

Powers

Bill Powers is the chief engineer of E-Tech International and the principal of Powers Engineering, an environmental engineering firm established in San Diego in 1994. (Photo courtesy E-Tech)
Engineer Bill Powers of E-Tech said, “When you have a project of this scale in an area as sensitive as the Peruvian Amazon rainforest, then you need your A-team. Unfortunately, the construction work on this pipeline was hastily done and without adequately qualified supervision."

Peter Kostishak, co-director of the Amazon Alliance, said, “While the IDB talks about ‘benefits that don’t evaporate’, the truth is that the indigenous communities in the Amazon suffer liquid gas spills that don’t evaporate. In return for contamination of their food and drinking water, they receive a miniscule percentage of this energy project’s windfall profits.”

Juan Miguel Cayo, Peru’s vice minister of Energy and Mines, who did attend the meeting, admitted that the poverty of the affected communities, as contrasted with the funds received by local government officials from Camisea, is “immoral.” He said investments in healthcare for affected communities are badly needed.

indigenous

Aendoshari native people who live near the gas extraction site in the Cusco Department (Photo courtesy Camisea Project)
The meeting did provide a glimmer of hope for skeptical environmentalists and indigenous rights advocates. In a response to allegations that it had used corroded pipes left over from other projects, the president of the pipeline consortium Transportadora de Gas del Peru, agreed to open its internal pipeline records, known as the Paybook, to civil society experts.

The groups are now seeking an independent audit of the pipeline and better planning before future work begins.

IDB officials agreed to meet with Peruvian civil society groups to jointly set terms of reference for an independent audit of Camisea, an audit which the bank has the contractual right to initiate.

The E-Tech assessment report states that the most problematic sections of the route are characterized by steep slopes, unstable soils, and difficult working conditions during pipeline construction.

The first preventative step should be the complete restoration of the right-of-way slopes within the areas with highest rainfall and along the steepest slopes, E-Tech advises. Concurrently, an audit of the entire pipeline construction process, including radiographic anaylsis of all welds along the entire pipeline route, conducted by certified radiographic specialists is warranted, the report states.

In addition to corrosion and imperfect welds, problems occurred when the proposed original route in the environmental impact assessment was altered, E-Tech reports. The unauthorized alterations were due to the presence of archaeological zones, to reduce costs, or to avoid wetlands. "This approach subjected low lying areas to landslides and the resultant sedimentation of streams," the report states.

Powers said, "The spills were predictable, and, we believe, there will be more ruptures unless there is a complete examination of pipeline construction process to properly assess pipeline integrity and detailed remedial action measures to assure the damaged areas are fully stabilized and restored.”

The E-Tech report is available online at E-Tech International’s website: www.etechinternational.org



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