Gas From the Rain Forest
Friday, April 21, 2006
Backers of a multibillion-dollar proposal to ship vast stores of liquid natural gas from Peru's Amazonian rain forest to the United States are seeking Bush administration support for international financing, but environmental questions are complicating the bid.
Leading the project is Hunt Oil Co., a private Texas firm whose owner has close ties to President Bush. It is seeking administration backing for as much as $800 million from the District-based Inter-American Development Bank, which has already agreed to consider it. If approved, it would be the largest project the bank has financed in Latin America. In addition, the project's backers say they intend to ask for financial help from the U.S. Export-Import Bank, a federal agency.
The Hunt-led project involves an investment of $2.7 billion to build a pipeline, a gas liquefaction plant, marine terminal and other facilities to export 4.4 million tons of liquid natural gas annually. The bank is required to investigate its environmental impact before voting on it.
The Inter-American bank, however, is already looking into problems with an earlier phase of the project -- two gas pipelines it helped finance in 2003 with a $75 million loan. Hunt Oil has a stake in the consortium operating the lines, which were built by an Argentine company.
The pipelines carry gas 340 miles through the rain forest from Peru's Camisea Field, snaking across the 14,000-foot Andes Mountains to Pisco, a coastal fishing village south of the capital, Lima. One line carrying natural gas then extends on to Lima.
Since December 2004, there have been five leaks in the second natural gas liquids line, spilling thousands of barrels into pristine rivers and killing the fish upon which indigenous communities depend for their livelihood. The latest spill occurred March 4 and led to an explosion and fire that injured two residents.
Under pressure from U.S. and Peruvian environmental groups, the bank last month issued a statement saying it was "deeply concerned" about the pipeline's initial performance. The bank said it would conduct an "expanded review and analysis of the project design and construction" of the pipeline and perform another environmental study of the project.
The project has also been criticized by Ollanta Humala, the leading candidate in Peru's presidential race, who in an April 4 interview with an Argentine newspaper said the pipeline was "like Gruyere cheese, full of holes." He called for a revision of the contract with the pipeline's operators and higher royalty payments to the government.
Environmental groups say the problems with the pipelines illustrate the dangers of conducting such operations in the rain forest. Besides the spills, which the groups contend are the result of shoddy construction and defective materials, environmentalists point to a Peruvian government report that the gas development project is harming the once-isolated indigenous people living near the gas field and along the lines.
The report from the state Office of the People's Defender said 17 deaths among them could be attributed to influenza brought by contact with outside workers. "The diseases contracted by these groups due to contact with the company's workers could be catastrophic," said the report, citing syphilis, influenza, diarrhea and respiratory ailments.
There are about 11,500 indigenous people living either in the gas concession areas or along the pipelines, according to Amazon Alliance, one of the environmental groups opposing the project. Last fall, local residents at one point along the line blockaded the Urubamba River for several weeks to keep company workers out in protest, according to the alliance.
Even as the pressure builds among environmental opponents, a spokeswoman for Dallas-based Hunt Oil said efforts already are underway to gain the Bush administration's support for financing for the next phase.