From pages 52, 53, 54 & 55 of Royal Dutch Shell and its sustainability troubles Background report to the Erratum of Shells Annual Report 2010
The report was made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.
A toxic legacy in Curacao
Curacao and its oil refinery
Curacao is an island in the southern Caribbean Sea, off the Venezuelan coast. It is a constituent country of the Kingdom of the Netherlands and has a land area of 444 square kilometres. As of January 2010, its population amounted to around 142,000 people. Prior to 10 October 2010, when the Netherlands Antilles were dissolved, Curacao was administered as the Island Territory of Curacao, one of five island territories of the former Netherlands Antilles.
From 1918 until 1985, Shell owned and operated the Isla oil refinery in Curacao. During this period, the refinery has been one of the most important lifelines of Curacao. For example, in the early fifties it employed more than 12,000 people out of the total island population of 110,000 people. The refinery generated the foreign exchange necessary to finance the imports the island could not produce itself. In the beginning of the eighties, Shell-companies provided for 33% of the island’s Gross National Product. Apart from the refinery, Shell had a local sales company, an oil storage/transshipment company, and a shipping company on the island. Shell was very important to Curacao, and the government of Curacao treated Shell kindly. In 1980, a former director of Shell declared towards a reporter of the Dutch newspaper NRC: The Antillean government? We were that government.
Historically, the Isla refinery formed a link in the Shell-chain of Venezuelan upstream oil production and North American downstream activities. The nationalisation of Shell’s oil production in Venezuela in 1975 and a change in the U.S.-energy policy towards more independence, left the refinery with supply and demand problems. With the exception of 1979 through 1981, the refinery operated at substantial losses during the ten years before 1985. In 1975, the refinery had 2,800 employees. In 1984, there were still only 1,900 employees.
The Isla-refinery, presently still operated, is located along the Schottegat harbour, in the south of Curacao, near the capital city Willemstad. The refinery and harbour are surrounded by residential areas.
In 1985, Shell sold its refinery and other companies/assets in Curacao for the symbolic price of four Netherlands Antillean guilders. The buyers were the legal entities Netherlands Antilles and island territory Curacao. Subsequently, Curacao leased the refinery and terminals to the Venezuelan state-owned petroleum company PDVSA. Since 1985 and ongoing, PDVSA operates the refinery.
Yes, Shell created a mess
The agreement in 1985 between Shell and the Netherlands Antilles and Curacao stated that the buyers had to abstain irrevocably and unconditionally from existing and future claims for pollution or other environmental effects exerted by Shell’s companies in the Netherlands Antilles. During 67 years of operation, Shell created a toxic legacy in Curacao. The refining business has caused massive pollution to air, soil and water.
Several reports describe the pollution:
? The most known pollution comprises the asphalt lake. During World War II, the Isla refinery produced a large quantity of gasoline and aviation fuel for the Allied forces. The market for these light oil products outperformed the market for heavy oil products. Thus, the remainder of the heavy Venezuelan oil (an estimated 1.5 million tonnes of asphalt) was dumped in the Buscabaai next to the refinery. Still, the lake is filled with about one million tonnes of asphalt. According to Shell, during the period 1983-1985 a contractor (Nareco) has scooped 0.5 million tonnes of asphalt for use in the refinery on a financially sound basis for Shell as well the contractor. The contract with the contractor and the asphalt lake were included in the sale by Shell of its Curacao assets in 1985. The estimate in 1985 was that in the next ten years everything would be cleaned up. The asphalt-sand mix at the bottom of the lake would eventually be burned in an incinerator. After Shell left, the clean-up/processing went on for a few years, but was then stopped.
- ? A chemical waste lake at the same location of the asphalt lake, is another heritage from Shell. Especially sulphuric acid used during lubricant manufacture was dumped. Asphalt is also found at this lake because since 1942 Shell also used it as a dump for asphalt. The lake comprises about 34,000 tonnes of chemical waste and is also referred to as the acid tar pond.? At the beginning of 1983, the Dutch governmental agency DCMR also looked at the air pollution and stench caused by the Shell refinery. DCMR dedicated its report to the inhabitants of the residential areas downwind the refinery: Marchena, Wishi, Gasparitu and Rosendaal. The agency wished that they may be freed from the ever-present stench and soot. The amount of residents living downwind of the refinery in 1997 was estimated at almost 17,000345, figures for the period before 1985 could not be found during the course of writing this report. According to the authors, the high sulphur dioxide (SO2) concentrations in residential areas were due to: 1) the processing of Venezuelan crude oil, which has a high sulphur content, 2) the burning of residues emitted through low chimneys and 3) the burning of hydrogen sulfide in the gas flares at the refinery site. The measured SO2-concentrations in residential areas downwind the refinery were found to be four times greater than accepted standards elsewhere in the world, increasing respiratory diseases among the people constantly breathing these concentrations. The authors noted that during the period 1973-1978 the air pollution was even worse. Through the building of higher chimneys and the emittance of less SO2, the concentrations had gone down since that period. The completion of new chimneys during 1983 would further decrease the SO2-concentrations.
- The population downwind of the refinery experienced soot as the biggest nuisance. A combination of soot and SO2 has a greater impact on public health than the two components separately, the authors wrote. Soot was also emitted through the chimneys and the gas flares. Stench was mainly caused by the discharge of process water, leakages, and drain- and venting operations. In general, the authors attributed the environmental impact to a combination of outdated, poorly maintained equipment and insufficient attention by the operating personnel.
- ? In 1992, the Dutch Ministry of Transport, Public Works and Water Management advised the Curacao Ports Authority about the pollution of the Schottegat harbour. The ministry stated that the refinery site was saturated with crude oil, petroleum products, impurities in the crude oil, and substances used in the production process. The groundwater was thought to be severely polluted. Over large areas of the refinery site, a thick scum of oil was assumed to be present on the groundwater. Cruising along the quays of the refinery, a continuous flow of oil from the ground could be seen seeping through the quay structures, especially at the west-side of the Schottegat harbour. The refinery site also comprises ditches and canals, through which oil was expected to seep out.? In 1983, the Dutch governmental agency DCMR conducted an environmental study with regard to the refinery. At the time of ownership change in 1985, also an environmental audit has taken place. According to the Dutch Ministry of Transport, Public Works and Water Management, it could be deduced from these reports that there have been many direct discharges in the Schottegat harbour. These were caused by a large number of oil spills, leaking tanks, and an outdated refinery lacking facilities considered normal in the Netherlands. The discharge of cooling water (about 3,500 m3 per hour) at the west of the Schottegat harbour caused much pollution and stench. The sediment in the western part of the harbour was found to be severly polluted with oil. According to Dutch standards, the sediment sludge should be classified as chemical waste.? Near the Valentijn bay, Shell has contaminated around four hectares of ground due to the dumping of barrels filled with sulphur, catalyst and other toxic substances. Similar waste was also dumped into sea at the south side as well as north side of Curac?ao.
Evaluating the sale, ten years after
In 1996, a documentary on the environmental legacy from Shell’s operations in Curacao was shown on Dutch television. Interviewed were: Ms. Maria Liberia Peters (prime minister of the Netherlands Antilles during the deal in 1985), Mr. Errol Cova (member for Curacao in the negotiation team during 1985), Mr. Bart de Beer (director general affairs Shell Netherlands during 1996), Mr. R. Gonesh (a former technical supervisor for Shell Curacao) and Mr. Edgar Leito (a former environmental chief at Shell Curacao).
The interviewees provide some insight in why the environmental legacy had been included to the deal between Shell, The Netherlands Antilles and Curacao:
? Mr. Cova stated that, during the negotiations, Shell had brought forward that the asphalt lake would be beneficial to Curacao. This was confirmed by others. The discussions during the deal were never about cleaning up pollution, it was about exploitation of the lake. Later on, it turned out that the lake was too polluted, and that it was not economically justified to process it.
? Ms. Peters stated that, during the negotiations, it was thought that cheap fuel could be processed from the lake, while at that time the island used expensive fuel for water production. She also claimed that in 1985 Curacao didn’t really have a choice to make. It could have decided to take legal action against Shell. Then it would have to close down the refinery and defy all social and economic consequences. The other choice was to keep the business going, so that the island could diversify its economy, but obviously with the risk that it might later end up with certain environmental consequences. She also stated that, in order to submit a claim against Shell, the island would have needed millions to hire expensive consultants to quantify the damage. Certainly with the perspective of refinery closure, the country could not afford such expensive consultants.
? According to Mr. Gonesh, the people on the Curacao side of the negotiation table had not kept any records. Shell had however kept records, as a well-documented and bright company. Shell knew what it had put in the ground. It knew about the asphalt lake and the groundwater problems due to oil leaks. Mr. Gonesh took the view that Shell had handled in a criminal way, by transferring the pollution to simpletons which did not have the resources and know-how for a clean-up.
? Mr. De Beer stated that he could hardly imagine that people from Curacao would feel cheated by the deal. In fact, Curacao acquired the main economic engine of the island for free. Curac?ao was very happy with the results of the agreement, according to De Beer. The Dutch government, which advised Curacao, was also very happy with it. Mr. de Beer could not explain why the acid tar lake, which he thought to be originating from about the fifties, was not cleaned up earlier by Shell. According to him, it was envisaged that an incinerator would be built, after processing the asphalt lake. This incinerator could be used to burn the remains of the asphalt lake (the tar sandy mix at the bottom of the lake) and the acid tar.
Shell to be held liable?
The government of Curacao is currently reconsidering the future of the Isla refinery. As of April 2011, the refinery is still causing severe air pollution. In December 2009, the Dutch parliament adopted a resolution, ordering an investigation on the possibilities to recover the costs associated with the remediation of the damage from, among other, Shell. In the same month, the parliament of the Netherlands Antilles adopted a similar resolution, stating that Shell should be held liable for the serious damage caused to the earth and sea bed, groundwater, seawater and inland waters of Curacao. In a civil case, Shell could still be held liable for negligence at the cost of the environment and the health of people.