Minimizing Liability Through Environmental Audits- Latin America Case Studies

With the privatization of the oil and gas industry in Latin America, oil companies are acquiring existing operations and new acreage. in the lease agreements, oil companies often assume environmental liabilities caused by the previous operators. Most lease agreements, however, allow for a limitation of environmental liabilities if a baseline audit is completed that identifies areas of concern. The differentiation between pre- and post-lease conditions is extremely important so that subsequent remediation costs can be properly allocated to the appropriate responsible parties.

Performing an environmental audit is the manner to establish the baseline conditions. Issues to consider in the audit include: drilling practices, chemical storage and handling, cuttings and drill mud handling, waste discharge, local regulations, ongoing discharges (gas, produced water, industrial and municipal waste), determining the volume of soil contamination and the chemicals involved, and determining surface and groundwater contamination. The audit should include a review of drill records, interviews with knowledgeable former and current employees, a detailed field reconnaissance, collection and analysis of soil and water samples, and a review of current and proposed pending environmental regulations pertaining to the area. To be effective, the audit team must be familiar with the language, terrain, health and safety, and local culture. The audit staff must also be familiar with oil field drilling, production, and overall operations practices.

AAPG Search and Discover Article #91019©1996 AAPG Convention and Exhibition 19-22 May 1996, San Diego, California