Is There a Greener Side to Drilling for Oil?

Is There a Greener Side to Drilling for Oil?

Deep in the Amazon rainforest, many miles from anywhere, the Brazilian energy giant Petrobras is producing oil and natural gas from an industrial development carved out of the landscape that includes 70 working oil wells, five drilling rigs, an airport, two river ports and lodging for 1,800 workers.

This remote outpost is known as the Urucu Oil Province, and, believe it or not, state-controlled Petrobras says it's an example of "sustainable development."

This is sustainable only if you believe that the oil and gas will last forever, that climate change isn't a worry, and that drilling for fossil fuels in one of the world's most unspoiled and biodiverse regions makes sense.

Here's the surprise, though: Petrobras's Urucu project may not be sustainable in the strictest sense, but it is about as environmentally benign as an oil-drilling project in a rainforest can be. That may be damning with faint praise, but I have to confess that I came to like Urucu after visiting today with a group of reporters on an six-day tour of Brazil.

Urucu has issues, to be sure, but it is generating thousands of jobs, contributing considerable wealth to a developing nation in the form of taxes and royalties, and generating electricity in ways that are cleaner and cheaper than the current alternative.

And, as a company executive told me, Petrobras uses the term sustainable to describe projects that balance economic, environmental and social goals.

"As long as the production lasts, we will keep the environment from being harmed," says Julio Cesar Carvalho Coelho, exploration manager for Petrobras in the Amazon region. "We preserve as much as we can."

This week, I'm visiting Brazil on a trip organized by Apex-Brasil, a government-backed agency that promotes trade and investment. It's financed by Petrobras, Eletrobras and Banco do Brasil. Naturally, they are presenting the country in the most favorable light.

Still, they didn't have to bring us to Urucu at all. They did so partly because it's an epic story: Imagine building a big oil-and-gas plant in a rainforest where the only way to get people and equipment in (at least until the airport was built) was by loading them onto barges and tugging them on a seven-day trip from Manaus, the gateway to the Amazon.

Big oil companies do this kind of thing all the time, of course, whether they are extracting oil from the Canadian tar sands or drilling in deep waters off the Gulf of Mexico. These bold adventures don't always end happily, as we've all learned lately, but anyone who pumps gas into a car should remember that (1) drilling for oil is not a pretty business and (2) we all benefit from projects like Urucu as oil supplies grow.

But the trip organizers also flew us to Urucu because, once there, you can't help but be impressed by the care being taken by Petrobras. Production began at the site in 1988 -- long before anyone was talking about "green business" -- but the company brought in environmental consultants to advise it on how to minimize its footprint. This may be partly because Petrobas is majority-owned by the federal government, and therefore more accountable than a private firm.

In the more than two decades since, the company has built on less than 0.5 percent of the site; the rest is undisturbed. Yes, Petrobras has built 71 kilometers of paved roads, but they are built only when needed. When doing exploratory drilling, for example, Petrobras doesn't build a road to a potential site; it clears a patch of land and brings in equipment by helicopter. If the exploratory work proves disappointing, native plants from a on-site nursery are brought there to restore the forest. The nursery, at last count, had about 200,000 seedlings and more than 85 varieties of orchids. I didn't expect to find that at an oil-and-gas plant.

Orchid seedlings



Walking around the plant was more fun that you might think. Oil fresh from depths of more than 2,000 meters was poured into our hands.

 

 

Marc Gunther at Petrobras's Urucu project in Brazil



We also got the feel of liquid natural gas, which is very cold to the touch and evaporated instantly. We saw a school where workers are taught to read, a recycling facility and the river port where a barge arrives every day with provisions -- ranging from Caterpillar bulldozers to the tapioca and acai sorbet we ate at lunch.

Meanwhile, and most important, the plant is producing lots of energy: 55,700 barrels of oil a day, 10 million cubic meters of natural gas (most of which is immediately injected back into the earth because of insufficient demand) and 1.3 tons of liquid propane gas which is used by Brazilians for cooking.

Oil is shipped by pipeline and boat to a refinery in Manaus. The natural gas travels by a 411-mile-long pipeline that slices through the Amazon and opened in 2009 after three years of very challenging construction. The pipeline was controversial -- critics charged it would pave the way for more development in the rainforest -- but it was built without a road and hasn't spurred development, at least not yet.

Now that the gas is arriving in Manaus, power plants and factories that burn diesel are being converted to natural gas plants because the gas is less expensive and cleaner. Lower energy costs, of course, will drive economic development of the region.

Beyond that, Petrobras is by far the biggest taxpayer in the state of Amazonas, followed, interestingly, by Honda and LG Electronics, which operate factories in a tax-advantaged industrial district of Manaus.

The Urucu story isn't without blemishes, of course. An Amazon river town called Coari collected a fortune in royalties -- 39.7 million reais, or about $22 million dollars last year alone. Corruption arose, and the mayor was recently driven out.

And, of course, burning all that oil and gas generates carbon emission, as do the barges moving up and down the river every day, and the helicopters used to move equipment around.

But until we are all driving electric cars, or powering our houses with wind or solar energy, we're going to need oil and gas. Even, unlikely as it sounds, from the Amazon.

 

GreenBiz.com Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability. Marc maintains a blog at MarcGunther.com. You can follow him on Twitter @marcGunther.