Damage Estimate in Ecuador Lawsuit Mounts to $6 Billion

A new study says the environmental cost of Texaco's oil drilling is higher than thought.

By T. Christian Miller, Los Angeles Times
30 October 2003

Bogota, Colombia - Lawyers for about 30,000 Ecuadoreans suing ChevronTexaco Corp. unveiled a new report Wednesday that dramatically upped the total bill for alleged environmental damage as a result of drilling operations to more than $6 billion.

David Russell, an environmental expert hired by the plaintiffs, said that two decades of oil drilling operations had contaminated nearly 1,000 acres of wetlands and more than 120 miles of rivers and streams.

"The only real comparison is Chernobyl," Russell said. "It's a huge area with lots of affected people."

ChevronTexaco, which says it conducted a $40-million cleanup after ceasing operations in 1992, dismissed the five-page report as lacking documentation for its claims.

"There is no validity to the study because there is no study," said Maripat Sexton, a ChevronTexaco spokeswoman. "These costs have no credible, substantiated basis."

The new figure - six times the previous estimate - came as the lawyers also released internal company memos showing that company officials had worried that oil operations may have been sending contaminated water into the Amazon.

After conducting a study, however, company executives concluded that the pollution risk was minimal and the cost too high to prevent possible contamination by installing steel liners in dirt pits that received thousands of gallons of oil waste water each day.

"The current pits are necessary for efficient and economical operations," concluded the internal study, which dates from 1980. "The alternative for using our current pits is to use steel pits at a prohibitive cost."

Plaintiffs in the lawsuit said the memo showed that officials at Texaco, which merged with Chevron to form ChevronTexaco in 2001, were aware that their disposal techniques were potentially dangerous.

"They had a consciousness that there was a major problem," said Steven Donziger, one of the plaintiff's attorneys.

But former Texaco officials involved with the study said it was conducted in order to ensure that the company's operations were environmentally sound. At the time, Texaco dumped water produced as a byproduct of drilling into pits and then into nearby rivers and streams.

"I ordered that study because we wanted to make sure that we were complying with the law," said Rene Bucaram, a former Texaco executive in Ecuador who is now president of a private Ecuadorean oil industry group. "What we did was comply with every law possible."

ChevronTexaco spokeswoman Sexton said that the memos did not tell the full story of Texaco's history in the country. "These documents are taken out of context," she said.

Wednesday marked the last day in the opening phase of the trial, which under Ecuador's court system now passes into the hands of a judge for further investigation. No judgment is expected for the next six months to a year. The suit began in the United States in 1993, but was dismissed last year after a federal appeals court ruled that the case was better tried in Ecuador, where the damage allegedly occurred.

The case is being widely watched by environmental lawyers and oil industry analysts to see whether a court in a foreign country can hold a multinational corporation financially responsible for environmental damage in that nation.

Texaco, which has said the oil drilling operations were not responsible for poisoning people, animals or the environment, pumped more than 1.5 billion barrels of oil out of Ecuador from 1972 to 1992.

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