Montara oil spill disaster

From ToxicLeaks

Corporate overview of Thailand’s PTTEP[edit | edit source]

The PTT Exploration and Production (PTTEP) company is a multinational oil and gas firm based in Bangkok, Thailand. The company was formed in 1985, the same year it began an exploration joint venture partnership in what would later be known as the Sirikit Oil Field, Thailand’s first significant oil discovery. The company today has exploration and production holdings in Canada and Brazil, along with Algeria and Mozambique on the African continent. Yet PTTEP remains focused on Southeast Asian investment with interests in Myanmar, Vietnam, Malaysia, Indonesia and its regional Thailand home.

PTTEP Australasia (AA) is a wholly owned subsidiary of the company, and is operator in the Timor Sea. That includes the 4,765 square kilometer Montara oil field, producing sales of 10,653 BPD in 2017 Q1 under the PTTEP Australia Ashmore Cartier division; the name is a reference to small uninhabited islands in the Timor Sea. Those islands are administered by Australia, which has held the territories since the 1930s, and are known to be rich in biodiversity and critical to birds and marine life. The Ashmore Reef islands, made of coral and sand, are so close to Indonesia that traditional fishermen have used them since the early 1700s. A 1974 MOU between the two countries permits the continued use of the islands, either freely or by permit, for Indonesian fishermen to visit graves there, and use the land and lagoon.

Those fishermen and others were impacted by a massive oil spill on August 21, 2009, when a well head blowout and fire at PTTEP AA’s Montara platform began spewing petroleum into the sea for 74 days.

Montara oil spill disaster[edit | edit source]

PTTEP Australasia acquired the Montara site in 2009, the same year that its failure caused the worst offshore petroleum environmental disaster in Australia’s history. The platform is located 102 kilometers to the east-southeast of Cartier Island, a nearly equidistant 250 kilometers from Indonesia’s Pulau Rote island and about 260 kilometers from the Australian mainland coast. At approximately 5:30 a.m. local time, oil and gas that had first traveled some four kilometers beneath the sea bed belched from the H1 well, resulting in a small release. Two hours later, the force of flow from the well sent oil, gas and fluids through the top of the well, the platform top-deck hatch, the drilling rig – and then into the sea. PTTEP AA estimated initial flow of up to 1,500 BPD, tapering to 400 BPD for an approximate total of 30,000.

Although a number of factors made it impossible to immediately stop the oil flow, the immediate evacuation of 69 platform workers was successful. Relief well drilling began in September, but it was November 1 before the failed H1 well was reached – a development that quickly resulted in a fire that burned for two days until finally, on the fifth attempt, the well was sealed with mud on November 3.

The 2010 Report of the Montara Commission of Inquiry concluded that PTTEP AA Ashmore Cartier “did not observe sensible oilfield practices” and listed a litany of problems. They ranged from failure to follow approved well control practices, to the uncontested source of the leak: a flawed cement casing shoe that had never been pressure tested. At the time of a March 2009 suspension of the H1 well, “not one well control barrier complied with PTTEP AA’s own well construction standards.” While U.S.-based Halliburton served as cement contractor, the commission did not hold the firm liable for complications.

The commission also noted that the relevant Australian authorities offered minimal inspection and oversight before the disaster occurred. “In this case, the regulatory dog did not bark,” the report said.

Environmental impacts and cleanup[edit | edit source]

With the volume of the Montara oil spill estimated to be at least 30,000 BPD in an area known for its sensitive ecosystems, the environmental impacts were closely monitored. The Australian Maritime Safety Authority estimated that a surface area of 90,000 square kilometers was affected by oil and sheen. The spill reached the Ashmore, Cartier and Hibernia reefs, and in October 2009 wax residue was noted in the West Island Lagoon – the same site used by Indonesian fishermen to access fresh water.

Most of the oil stayed within a 35 kilometer range of the initial spill, but the Montara Commission of Inquiry determined that “hydrocarbons did enter Indonesian and Timor Leste waters to a significant degree.” The sheen and weathered oil reached to within 94 kilometers of Palau Roti island, and was seen in both Indonesia’s maritime exclusive economic zone (EEZ) and a Joint Petroleum Development Area established by a 2002 treaty between Indonesia and Australia. None reached Australia’s mainland.

One troubling finding of the commission report is that no data was ever provided on what lay beneath the surface; its authors noted the major shortcoming affecting the ability to assess environmental harm.

The Australian government downplayed the impacts to wildlife and ecosystems, with few documented sightings of oiled birds or dead marine life, while PTTEP AA-funded research denies that any oil ever reached Indonesia. A 2015 report by the Australian Lawyers Alliance, advocating on behalf of affected Indonesian villages, claims otherwise. The extended cleanup never arrived there, and six years after the Montara spill, no remediation was forthcoming. Yet between the oil itself and the toxic dispersants used to try to contain it, Indonesians reported seeing toxins washing into their pearl and seaweed farms, onto their boat hulls, into their trawler nets and onto beaches and coral. Dead seagrasses and mangroves were reported, with village flooding a result. Dead whales washed up, dead fish littered the shores and dolphin pods vanished. Among humans, some reported rashes, odd skin bruising and food poisoning.

Damages have been reported in Timor Leste, on Rote, Semau and Lembata islands, and elsewhere. A fine of $510,000 was imposed on PTTEP AA in 2012, paid to Australian authorities, but the company has not responded to multiple, years-long requests from Indonesia’s government and citizens to pay up.

Seaweed farmers class action suit[edit | edit source]

PTTEP AA’s lack of responsiveness and responsibility resulted in a class-action lawsuit filed on behalf of some 13,000 Indonesian seaweed farmers seeking at least USD$153 million in damages. The lawsuit filed in August 2016 in Australian courts is spearheaded by an Australian lawyer and funded by Harbour Litigation Funding, based in Britain. The company responded to the filing with a statement that reiterated that PTTEP AA had commissioned “the largest independent scientific research program ever undertaken into the Timor Sea environment.” It determined there were no lasting impacts – a similar argument made by Australia where the Ashmore Reef islands are concerned – and there was no oil that ever reached Australian or Indonesian coastlines. The company’s response said that if no lasting impacts on the reefs closest to the Montara well site exist, it is “improbable” that they affected Timor’s coast.

That contradicts the assessment of an Australian fisheries expert who was working as a consultant in Indonesia at the time of the spill and witnessed the impacts, and an American oil spill expert who estimates 20 percent of spilled product ended up in Indonesian waters. In January 2017, a judge denied the PTTEP AA request to have the case dismissed, allowing the lawsuit to proceed. In March 2017, PTTEP issued a new, 32-page “lessons learned” report again flatly stating no oil reached Indonesian shores.

Indonesia’s $2 billion lawsuit[edit | edit source]

In May 2017, after years of fruitless negotiations with PTTEP AA following the 2009 Montara spill, the Government of Indonesia filed a civil lawsuit in Jakarta seeking $2 billion in damages from the Thai company. Indonesia also seeks a ruling that would freeze PTTEP AA assets both in the country and overseas if it fails to pay for damages sought. Indonesia began negotiations with PTTEP in 2010, and met with officials dozens of times in Australia and Singapore, with a Memorandum of Understanding between the company and Indonesia drafted and set for formal signing in August 2011. It never was.

Also in 2011, according to minutes from those meetings, the company planned a corporate social responsibility campaign in Indonesia, and in December 2011 both parties agreed that some product from the Montara H1 well leak had entered Indonesian waters with environmental impacts. But the Thai government is a major shareholder of PTTEP, and the company postponed during Thailand’s leadership transition – one of several delays in a process that ultimately failed to meet the $1.7 billion expectation of Indonesia. The minutes also show that PTTEP’s compensation offers came nowhere near that total.

In response to the suit, PTTEP has suspended all new investment in Indonesia. Jakarta also has appealed to Australia for assistance in negotiating with PTTEP over the years; while the latter has provided all reports and technical assessments to the Indonesian government, they have declined an active role. The 2015 Lawyer’s Alliance report said only one Australian MP has ever gone to see the damage firsthand.

In June 2017, Australian regulatory officials issued an “improvement notice” citation to PTTEP AA for noncompliance at its Montara operation. Ironically, despite the corporate claim of “lessons learned,” recent inspections showed that PTTEP AA’s emergency personnel lacked the knowledge, skills and competency to launch an effective response if an oil spill were to happen at Montara again.