On March 29, 1967, Texaco struck oil deep in Sucimbios province in the northeast corner of Ecuador. The oil company christened the gusher Lago Agrio No. 1 (Spanish for "Sour Lake") after Texaco's first major oil strike in Texas in 1903. The name would prove to be ironic.
In partnership with Petroecuador, Ecuador's national oil company, Texaco ramped up production at the site, which eventually grew to more than 220,000 barrels a day. From 1972 to 1992, the oil fields of Sucimbios produced more than 1.7 billion barrels of oil -- much of it exported to the U.S. Most of that oil around Lago Agrio No. 1 is gone. But what remains from the oil-boom years is almost incomprehensible pollution.
That environmental legacy includes as many as 16 million gallons of spilled crude -- 50% more than the Exxon Valdez dumped in Prince William Sound, Alaska, in 1989; hundreds of toxic waste pits, many containing the chemical-laden byproducts of drilling; and an estimated 18 billion gallons of waste, or "produced," water, which some tests have shown to contain possibly cancer-causing polycyclic aromatic hydrocarbons at levels many times higher than those permitted in the U.S. All these pollutants were discharged in one of the most sensitive ecosystems in the world -- the Amazon rain forest.
In November 1993, lawyers representing dozens of indigenous residents who live in the Ecuadorean Amazon known as El Oriente filed a class-action suit in U.S. District Court in New York City. The suit, Aguinda vs. Texaco, alleged that the oil company discharged toxic petroleum waste into water used by residents for fishing, bathing and drinking, resulting in personal injury and widespread environmental damage. After 10 years, six motions to dismiss and two trips to the U.S. 2nd Circuit Court of Appeals in Manhattan, Chevron-Texaco -- the two oil giants merged in 2001 -- won. The judges ruled that a U.S. court was the wrong place to hear a suit involving a slender slice of land deep in the Ecuadorean jungle.
But the story wasn't over. The appeals court had conditioned its dismissal of the suit on Chevron-Texaco's willingness to go to trial in Ecuador and abide by whatever decision was rendered there. The company readily complied, possibly figuring that the plaintiffs would drop the matter and go away.
They didn't, and the result could now produce the largest award in the history of environmental litigation.
