Camisea Case Study: Working With Environmental Concern

Feb. 22, 1999
On July 16, 1998, Shell Prospecting and Development Peru issued an unexpected announcement. Alongside Mobil, its partner, SPDP was withdrawing from Camisea, Peru, after more than $250 million had been invested in exploration, appraisal drilling, and engineering design over the previous 2 years. Although these two oil giants could not reach an agreement with the Peruvian government, managers involved in the project believe that the work they carried out in the region set a benchmark for
Local participation in the EIA takes place in the Segakiato Native Community school building. Photo courtesy of SPDP and ERM.
On July 16, 1998, Shell Prospecting and Development Peru issued an unexpected announcement. Alongside Mobil, its partner, SPDP was withdrawing from Camisea, Peru, after more than $250 million had been invested in exploration, appraisal drilling, and engineering design over the previous 2 years. Although these two oil giants could not reach an agreement with the Peruvian government, managers involved in the project believe that the work they carried out in the region set a benchmark for environmental practice.

Business ethics are having a growing bearing on how companies operate. In Camisea, SPDP recognized that it must not only function properly in terms of both environment and community but also include interested stakeholders in pursuit of this objective. Here was an opportunity to pioneer a new modus operandum for planning projects and for working in remote, sensitive, and undeveloped regions of the world.

Environmental profile

Attached with the Camisea project came a number of potential risks. In 1994 an initial environmental profile was carried out by environmental consultants Environmental Resources Management (ERM). The document reported that the region lay deep in the Peruvian rainforest, home to an impressive range of flora and fauna, and indigenous populations who could trace their occupation of the area back for thousands of years.

Local sensitivities would need to play a large part in the overall success of the project, and local people and interested parties needed to be consulted and encouraged to play a part in decisions.

Stakeholder consultation

Foremost in the consultation process were stakeholders and other nongovernment organizations (NGOs) with interests in indigenous populations and the rainforest.

In 1995, SPDP assigned ERM the job of identifying exactly who those stakeholders were and where their main interests lay. The companies then contacted the stakeholders and involved them at a number of levels, ranging from face to face meetings and workshops to receiving briefing papers alongside other environmental, social, and project documentation.

SPDP's policy of consultation was up front and open and continued to be so throughout the duration of the project. Block 75, the license area for exploration, had originally included a small piece of the Manu National Park, internationally regarded as being one of the most biologically diverse areas in the world. One of SPDP's first acts was to voluntarily modify the boundary of its concession to exclude Manu-a direct result of the consultation program.

Assessing environmental impact

Hard on the heels of initiating stakeholder consultation came the first environmental impact assessment (EIA), carried out by ERM in 1996.

Project leader and ERM consultant Kevin Murphy describes the task set: "We knew that SPDP's main concern was to maintain the fragile balance in the region both in terms of the physical and biological environments and the lifestyles of the local people, all of which were strongly interconnected. An early decision was made that this drilling operation would be treated as 'offshore.' For example, SPDP wanted to avoid setting in place any roads, even for temporary access, as we knew from experience that this could lead to a number of problems, not least the potential arrival of loggers and unwanted settlers, and we also wanted to minimize contact with local people."

Logistical challenges

The appraisal drilling operation that commenced and continued throughout the next 2 years contained huge logistical challenges. The reservoir, which contains an estimated 11 tcf of natural gas and 600 million bbl of condensate, lies next to a poorly accessible stretch of the Camisea River and is in a region with no roads and seasonal constraints to river navigation. Barges were used to deliver personnel, equipment, and stores to a central supply base on the Urubamba River downstream of the well sites. From here helicopters alone carried whatever was necessary to the drilling sites.

"In the first instance," comments Murphy, "work at a well site was commenced by literally two men being winched straight down from a helicopter into forest to cut out a helipad." A hovercraft was also used in the dry season to access the supply base when river levels ran too low for the barges.

Protecting a population

Hand in hand with conquering transportation problems, SPDP knew the difficulties that could manifest themselves when mixing with indigenous populations.

According to SPDP's Murray Jones, "We were absolutely committed to keeping contact to a bare minimum for a number of reasons. Their health-and ours-was certainly one priority."

To this end SPDP developed a type of health passport issued to all workers before they embarked for Camisea. The passport contained a record of the set of mandatory inoculations required. In addition, if workers showed signs of a heavy cold, flu, or other contagious illness, their trips were postponed.

"We couldn't risk introducing such diseases into the region," says Jones. "It was for the protection of all people and a necessary part of this type of operation. We were determined to learn fully from the past mistakes of others in the region."

In addition to these precautions SPDP workers were restricted to site areas, with only a few people designated as community liaison officers (CLOs). The CLOs continued to both consult and discuss issues arising on a day-to-day basis. Only local native people were recruited for positions such as guides or clearing areas of forest-quickly putting paid to any idea of other settlers from up or downriver or from outside the region arriving on the scene to find work. Potential in-migration was therefore reduced, and payment was in keeping with local lifestyle.

"Local people were paid at the same rates as workers hired outside the region," says Jones. "Emphasis was given to hiring persons from the region in a manner that would not conflict with community or cultural issues. When it came to agreements for our use of community lands, we predicated our discussions with the recognition that any payments were to be in terms of goods or services benefiting the whole community, should be durable, and should add to community sustainability. Key to our philosophy is the balance and order of these communities and to be of practical and positive benefit."

Local training, capacity-building, mother's clubs, school renewal, and community centers are among initiatives set in place and continuing today.

Engineering consortium

With drilling activity under way, SPDP was now ready to start planning the means to extract, process, and export Camisea hydrocarbons. A contractual alliance was formed with an engineering consortium led by Bechtel, and work started in earnest on looking at the development options. As for all the previous drilling work, the same principles of open stakeholder participation, learning more about the region, and incorporating all this into the project planning and decision-making continued to apply. The scale of the project was now much larger. As well as the intensive EIA work being undertaken by ERM, SPDP commissioned other studies running at intervals and often at the same time throughout the project's life.

One of them was a study of people's health in the region, which was led by the Royal Tropical Institute of Amsterdam with direct participation by key Peruvian health agencies. This not only proved useful in terms of providing a health baseline but also identified health issues that could be addressed and improved on the ground in the future.

Another study was a major social diagnostic examination of the region. Begun in 1997, it involved a program of workshops conducted throughout 1998 and into the beginning of 1999. The study involved the cooperation of Region Cusco, the local government authorities, three NGOs, and Pro-Natura, a Brazilian organization.


As well as setting the alliance with the challenge of designing to international standards, an EIA of equal quality was promised-"world class" were the words used in a public scoping report. Achieving this required considerable effort.

"Due to schedule constraints," says ERM's Murphy, "we often ended up sending survey teams into the rainforest at the worst time of year, in terms of personal comfort, to do their work. On top of this the overall level of effort was magnified by the need to properly evaluate different site and route options. The work also presented numerous intellectual challenges and needed innovative approaches to ensure a rigorous assessment.

"All of this was taking place in an environment of almost perpetual and iterative change as the design and project decisions were developed and modified in the light of feedback from the stakeholders and the EIA. Effective communication (with the design teams, with the communities and other stakeholders, and with SPDP) and an approach best described as 'adaptive management' were the keys in rising to these challenges."

Gaining a comprehensive understanding of the physical, biological, and social environments and their interaction and interdependencies was critical to the project's success. The majority of the local communities had been encouraged to settle at their present locations in the Camisea region in the 1950s. Earlier their existence had largely been nomadic for thousands of years-they settled at a location, stayed there for several years, and then moved on as resources became locally depleted.

In the context of small populations ranging over large areas for a long period of time this was naturally a sustainable existence. Now settled, the communities continued to practice their traditional lifestyles; however, their land areas were limited, and their populations were increasing. So nearly 50 years on, the communities were beginning to face problems in terms of diminishing natural resources.

For the Camisea project to be successful it would not be enough to simply protect natural resources from harm. In addition, the communities would need to have access to the know-how that would allow them to most efficiently use and conserve the forest resources. Together with enhancing local infrastructure, dealing with these issues was of concern to SPDP.

"The social capital of local people was foremost in our minds," Jones explains. "We quickly discovered that here were people who could create their own priorities for development, which they stated as economic benefit, health care, education, and training. They recognized that this would require both infrastructure and capacity-building. With this assistance over time they themselves would take it forward."

Smithsonian activities

SPDP has always recognized its responsibility toward the natural environment in this region. In September 1996 the Smithsonian Institute was invited to begin an independent survey of Camisea and the surrounding area both to establish its biodiversity and to monitor the ongoing effects that any SPDP activity might have.

This first phase was followed by a continuing series of investigations that revealed and logged the locally occurring species of plant, insect, and animal life. It also demonstrated a surprisingly low level of disturbance by ongoing drilling activity on the native fauna. All studies were completed and documented by the Smithsonian and placed in the public record.

The findings from all these studies and others, and from the public consultation, were constantly fed into the decision-making, design, and EIA processes. To deal with all these inputs and to ensure the developing projects reflected them required the adaptive management that Murphy describes. Modifications were constantly made from strategic decisions all the way down to minute design detail.

"The effort and commitment required from all those involved in the process (SPDP, the design and EIA teams, the stakeholders, and the local communities) was considerable," says Murphy. "We believe it would have been rewarded by a successful project."

When SPDP's withdrawal was announced last summer, General Manager Alan Hunt said, "We are all greatly disappointed. Over the past 2 years we have all worked hard to overcome the complex technical, environmental, and commercial challenges which would enable the Camisea project to become a reality."

Shutting down

The project is in shut-down mode. All four drill sites have been tidied up. Equipment has been placed on contracted barges and demobilized out of the region. And personnel are gradually leaving.

The supply base itself is dwindling in size, although its final future has not yet been decided. Suitable grasses, shrubs, and plants have been replanted at the site areas. At one well site alone approximately 39 different native species were used for reforestation purposes.

Some 4,000 seedlings were planted.

The long term impact of what has been done can only be positive, believes Jones: "Some of the social programs that we put in place in partnership with regional and national governments and the local people will carry on long after we are gone."

Schemes such as the building of water wells and schools will be complete by March 1999, but longer commitment such as SPDP's scholarship program will span the next few years until every student in the program has finished school. Reflecting on whether the work will be a blueprint for other companies to follow, Jones is cautious: "We are very careful in using terms such as 'blueprint' or 'template' as different regions have different sets of challenges. There are, however, a number of practices that we should put into place no matter what the project.

"Among them is the time for consultation, a real commitment to local interests, and adaptive and flexible management techniques. Our activities in Camisea prove just how positive work in this field can be."

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