JAKARTA - On May 27, a natural gas
drilling operation in Indonesia's East Java
province got exceptionally messy.
Local
prospector PT Lapindo Brantas was carrying out
routine drilling at the Banjar Panji-1 well
located near the town of Sidoarjo, a site that is
part of a joint operation known as the Brantas
Production Sharing Contract.
Burrowing
through hot rock almost three kilometers deep,
Lapindo's drill string hit something soft.
According to company documents, the resulting
drop-off in pressure caused the crew to lose the
drill bit in the hole when they tried to raise it
up.
The next day, toxic gases and hot mud
began rushing out of the well - a danger sign in
gas prospecting known as a "well kick". Drillers
pumped a mixture of cement and mud back in the
hole in
an
attempt to seal it, which seemed to work, until
huge quantities of effluent began to emerge from
large cracks in the ground nearby. For an entire
month, Lapindo experts tried to stem a seemingly
limitless stream of mud and water gushing from the
ground.
Java is the most densely populated
island in the world, and it didn't take long for
the mucky torrent to affect nearby villagers. In
early June, the 60 degrees centigrade sludge,
increasing in volume by up to 50,000 cubic meters
a day, had blocked a regional highway, flooded
rice paddies and polluted groundwater and
irrigation canals.
The rotten-egg stench
from the mud sickened hundreds of people, who
sought treatment for breathing difficulties at the
local hospital. Doctors first blamed the
villagers' complaints on "stress" and later on the
sulfur dioxide emanating from the well site. By
the end of June, the pungent flows covered a vast
area of more than 120 hectares, turning four
villages into seas of sludge and creating an
ecological disaster that has displaced at least
5,600 people and shut down roads, rail links and
businesses in the affected area.
Indonesia's national environmental
watchdog, Wahli, estimates the costs of the
clean-up could reach more than US$200 million.
Meanwhile, in the town of Sidoarjo, thousands of
the displaced villagers hunker down as best they
can in a large section of a market converted into
a makeshift refugee center. With their crops in
ruins and their workplaces shuttered, they have
been promised a subsistence income of US$30-$70 a
month by Lapindo and are subsisting largely on
handouts.
And still the mud continues to
flow. Around the drilling site, the land has been
transformed from green paddy fields into
inhospitable seas of asphalt-colored muck. Near
its center, a black geyser roars, like an
unearthly scene from a volcanic plateau.
Mired at the center of the muck is the
drilling company, Lapindo. To many Indonesians,
the lines between the cause and effect of the mud
seemed clear: they pointed directly at the
prospector - and down into the almost
three-kilometer deep hole it had dug.
However, in a country where environmental
accidents are depressingly common, and threaten to
increase as prospecting activities expand in the
emerging era of high global commodity prices,
cover-ups are not unheard of. A weak and
notoriously corrupt legal system and the web of
relationships between local businesses and
political elites all too frequently conspire to
ensure that companies are not held responsible for
the pollution they cause. To environmentalists,
the country's rivers, black with industrial waste
or orange-brown from the effects of illegal
logging, are evidence enough of the nation's
patchy regulatory framework.
The scale of
the Sidoarjo disaster and the presence of a
vigorous media make it more difficult for the
authorities to explain the mud away, as they might
have done during the tenure of former president
Suharto. However, old ways die hard, and the story
that is still emerging - like the flows from the
Lapindo well site - indicates justice for the
Lapindo villagers is certainly not a given. It
also highlights the perils multinational companies
can potentially face in Indonesia if they partner
up with irresponsible local firms.
A
natural denial At the start of the
environmental debacle, Lapindo's management blamed
the mud on natural causes rather than the
company's drilling activities. Speaking at a
parliamentary hearing, the company's executives
told legislators that the effects of the May 27
earthquake centered in Yogyakarta, rather than its
drilling, were responsible for the mudflows.
If vibrations from the 6.7-magnitude shake
were powerful enough to kill 5,000 people, they
reasoned, it could also have opened up deep faults
underground, allowing the mud to flow up thousands
of meters. And if Lapindo being in the area was
only a coincidence, the government, not the firm,
should provide compensation to villagers and the
businesses affected by the mud, they said.
Independent experts, however, were quick
to reject the earthquake explanation. The
epicenter of the Yogyakarta quake, at more than
300 kilometers away, was far too distant to affect
the ground in Sidoarjo, where the aftershocks
would have manifested themselves as a dissipated
force, which they likened to a heavy truck passing
over the area. It was far more likely that a
mishap involving the drilling operation was to
blame, they said. Despite that reality check, the
company's earthquake theory was initially given
credence by officials from the government's
upstream oil and gas regulator, BP Migas.
A team of the regulator's experts sent to
investigate the disaster said it could not rule
out the possibility that the earthquake had caused
the mudflows. In a statement seemingly designed to
take the heat off Lapindo, the government
geologists noted it was difficult for prospecting
firms to "predict and plan" for mishaps in
drilling ventures because of the "complex nature
of the country's geology".
To observers,
the situation seemed to be heading in a
depressingly familiar, if not farcical, direction.
The disaster, with its major human and ecological
consequences, was going to be attributed to
natural causes, with the dirt-poor villagers left
to suffer and no one held accountable.
Those suspicions were fueled by the fact
that PT Lapindo Brantas is owned by members of the
politically-connected Bakrie family, one of
Indonesia's richest business dynasties. The
Bakrie's favorite son, former tycoon Aburizal
Bakrie, is currently the government's chief
welfare minister.
Aburizal, who divested
his many business interests upon taking public
office, has been unwilling to be linked to the mud
morass. His refusal to visit the disaster site and
his rather petulant comment when asked what should
be done to stop the mud - "Don't ask me, I'm the
Coordinating Minister for the People's Welfare" -
were widely reported in the Indonesian media.
The muck sticks By the middle of
June, however, a letter from Lapindo's partner
company emerged that seemed to pin the disaster
squarely on the driller. In the correspondence,
dated June 5, PT MedcoEnergi Oil & Gas accused
Lapindo of "gross negligence" in the drilling
because of a serious safety violation.
Lapindo, the partner contended, ignored
its reminder to put a nine-inch thick protective
casing in the well to a depth of 8,500 feet. This,
it says, was "agreed to in the joint operating
agreement" to "anticipate potential hole problems"
in the well, as industry standards require.
The inference was clear. If Lapindo's
drilling encountered difficulties, without the
protective casing, it wouldn't be able to seal the
well off properly. No casing would allow the
surfacing mud and gas to escape out of the
unprotected sides of the well hole and surface
from cracks in the ground - exactly what
apparently happened.
Soon thereafter,
Indonesia's vice president, Jusuf Kalla, announced
that Lapindo and the Bakrie family would begin to
compensate the thousands of people affected by the
mud flows. At the same time, the East Java police
began a criminal investigation into the disaster
and have since detained and questioned Lapindo
staff, including management, as potential
suspects.
If the allegations raised in
MedcoEnergi's letter are true, then at least two
other companies are at risk of being held
accountable for the disaster. Lapindo has a 50%
operating interest in the Banjar Panji-1 well,
with a 32% stake owned by MedcoEnergi, and the
remainder held by Australia's largest oil and gas
prospector, Santos.
Santos has already
reported the Sidoarjo incident to the Australian
Stock Exchange and have assured the bourse that
the project was insured. Yet the public disclosure
of MedcoEnergi's damning letter is likely to make
insurance companies less willing to pay out. This
could mean MedcoEnergy and Santos could also be
held liable for the substantial cleanup costs.
This, of course, depends on how much
MedcoEnergi and Santos knew about Lapindo's
drilling operation and whether they were legally
required to know under the terms of their joint
operating agreement. If Lapindo failed to install
the casing and then deliberately withheld this
information from its drilling partners, as
MedcoEnergi's letter suggests, this scenario would
presumably leave Lapindo, a limited liability
company, solely responsible.
An
independent oil and gas exploration expert told
Asia Times Online that Lapindo most likely
received bulk funding for the drilling operation
as part of a turnkey project. This financial
arrangement could have encouraged the firm to cut
costs by not installing the safety casing, which
the expert believes could have saved Lapindo "up
to a million [US] dollars".
He notes that
while Lapindo has extensive experience drilling
natural gas platforms at sea "down to four or five
thousand feet", the company had never drilled
lower than that - including to depths that would
have required the deeper casing. The expert also
says that the absence of the casing would be a
"very good explanation" for why the drilling team
was unable to block off the mudflows.
While this corner-cutting would have
reduced costs, he says the move would have posed
an "extreme risk" to safety and would be something
"virtually unheard of" in the industry. Geologists
monitoring the drilling work would have been well
aware of the need to install casing in the hole,
he says, and it would have been "highly irregular"
if they did not report this to company management.
Exploring the
regulator Determining whether this actually
occurred depends on the outcome of an
investigation now underway by several agencies -
the police, the government-BP Migas team and the
group of international experts.
BP Migas'
role is also in the spotlight. As the state
watchdog of upstream drilling activities, many
observers are asking what the body did and did not
do to monitor the drill site and prevent the
disaster from occurring.
They also wonder
why geologists from BP Migas initially accepted
Lapindo's claims that the earthquake was
responsible for the mudflows and still seemed
willing to countenance this possibility even after
the MedcoEnergi letter surfaced.
Sonny
Keraf, a lawmaker on a parliamentary special
committee convened to look into the problem, says
the contract-tendering process for the project
should have come under greater scrutiny. Speaking
to Indonesia's Tempo magazine, he speculated that
BP Migas officials may not have followed proper
procedures when monitoring the tendering for the
project, thereby allowing an inexperienced
contractor to win the job. Because of this fact,
do not expect much from any investigation
involving BP Migas officials, he said.
Indonesian environmental law expert, Mas
Achmad Santosa, meanwhile, faults the government
for not getting tougher on the regulator and
Lapindo when the disaster began. He says the
government did not take advantage of its powers to
take strong "administrative sanctions" against the
bodies, including raiding their offices to seize
important documents that could help further
investigations.
"There shouldn't have been
negotiations [between the government and Lapindo]
- all meetings and talking. Coercive enforcement
should have gone hand-in-hand with the criminal
proceedings," Santosa contends. Still, Santosa
believes the Sidoarjo disaster could become an
important test case concerning the enforcement of
relatively new green legislation. It helps, he
says, that this seems to be a clear example of
corporate negligence, and that the government has
become directly involved.
The East Java
Police, Santosa says, are also being supervised by
their national-level counterparts to ensure that
the criminal investigation is not compromised.
Mired in charm But while the
criminal investigation against Lapindo seems
likely to reach the courts, environmentalists
believe that the villagers of Sidoarjo will face
an uphill battle to receive fair compensation in
any civil action filed against the company.
Torry Kuswardono, Wahli's mining and
energy spokesman, says the group is currently
working with regional government and affected
villagers to explore the possibility of filing a
class action against the company. However,
Kuswardono says that the group's experience has
been that poor, rural communities rarely win legal
battles against big companies in Indonesia, where
prosecutors' indictments and judges' verdicts can
often be bought.
It doesn't help that
Lapindo, after initially denying culpability in
the disaster, has now turned on a charm offensive
in the refugee camps, Kuswardono says. The
company's staff has bought the villagers
television sets and their children toys; the local
legislature has been inexplicably quiet about the
affair, he contends.
"You should see the
local market (in Sidoarjo) at the moment, it looks
like a fairground. The villagers are in danger of
falling into some kind of Stockholm syndrome," he
said. Kuwardono believes Wahli will have more
success working with the community in the next few
months - when the focus on the disaster moves from
emergency relief to clean up and recovery. "When
Lapindo goes away and the villagers realize they
have nothing left, then they will get angry," he
says.
Back at the disaster site, the team
of international experts has made some progress in
choking the mud flows at the drill site, with
reports in early July that at least one of the
fissures has been blocked off with the help of a
special machine. Despite this, the mud continues
to flow into the Sidoarjo region and Kuwardono
believes it may continue to do so for months to
come.
It seems only the company at the
center of the disaster, Lapindo, can find a
positive spin on the whole mess. The mud, it
contends, has been tested by a local university
and will be perfect for making house bricks -
something the homeless villagers sheltering in the
Sidoarjo market will no doubt be pleased to hear.
Chris Holm is a Jakarta-based
journalist and editor.
(Copyright 2006
Asia Times Online Ltd. All rights reserved. Please
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