Oil Boom in the Ecuadorian Jungle

How Texaco’s gamble to find oil reserves in the Ecuadorian jungle set the stage for a fierce battle in the courts of Manhattan and downfall of a social activist lawyer.

| December 2014

  • Texaco was awarded the right to search for oil on more than 7.5 million acres of Ecuadorian jungle, an area larger than the state of Maryland.
    Photo by Fotolia/estivillml
  • “Law of the Jungle,” by Paul M. Barrett, is the story of a lawyer's decades-long battle with an oil company polluting the Ecuadorian jungle, his victory and his own undoing.
    Cover courtesy Random House

Law of the Jungle (Random House, 2014), by Paul M. Barrett, reveals the story of a lawyer’s obsession with righting the wrongs perpetrated by a major U.S. oil company accused of polluting the Amazonian rainforest over a 30-year period, destroying the lives of poor peasants and indigenous tribe members. In the following excerpt from Chapter 4, “Production,” Barrett gives us the history of Texaco’s beginnings in the Ecuadorian jungle.

In the early 1960s, Texaco Inc. retained ambitions for the Ecuador­ian rain forest long since abandoned by rival oil companies. Stan­dard Oil of New Jersey, a spin-off of the old Rockefeller monopoly, had poked around for decades with little to show for its invest­ment. Shell packed up in 1950, the last of the majors to leave. Since then, the Ecuadorian jungle east of the Andes, known as the Ori­ente, had “remained virtually abandoned,” according to an inter­nal Texaco memo. As far as oil riches were concerned, Ecuadorian president Galo Plaza Lasso famously declared during this period, “el Oriente es un mito,” a myth.

Texaco disagreed. Headquartered in the gleaming Art Deco Chrysler Building in New York City, the company had a defi­ant reputation inherited from its founder, Joseph “Buckskin Joe” Cullinan. A refugee from Standard Oil who struck it rich on the Gulf Coast of Texas at the turn of the twentieth century, Cul­linan started the Texas Company to take advantage of a legendary gusher called Spindletop. Plentiful crude sold for just three cents a barrel; unregulated extraction spewed so much contamination that drinkable water commanded five cents a cup. With financial backing from New York’s Lapham brothers and a steel magnate named John “Bet-a-Million” Gates, Cullinan built a network of pipelines, refineries, and train connections that transported cheap Gulf Coast oil to customers up north. The Texas Company thrived on expanding demand for gasoline to power a new phenomenon called the automobile.

To Cullinan’s great displeasure, his financiers shifted man­agement activities to New York. An Irish immigrant, he lectured that the company’s “attitude and activities were branded with the name Texas and Texas ideals”—but to no avail. Cullinan eventually lost the power struggle and was ousted. In his later years, he flew a skull-and-crossbones flag over the Petroleum Building in Houston “as a warning to privilege and oppression.”

The Texas Company, which changed its name to Texaco in the 1950s, became a creature of New York. An aloof outsider in its own industry, it was the only oil major that did not participate in a trade group called the All-American Wildcatters Association. Rival executives of the good ol’ boy persuasion referred to Texaco as “the meanest company in the world.” The buttoned-down men in the Chrysler Building could afford to be arrogant. By mid-century, they ran the largest oil producer in the United States and claimed to have the rights to more oil in the ground than any competitor.

Texaco management didn’t care that others had given up on Ecuador. The company had discovered crude in southeastern Co­lombia, and there seemed no logical reason why the political de­marcation running invisibly beneath the rain forest canopy should preclude additional finds in northeastern Ecuador. Based on this hope, Texaco representatives signed a contract in March 1964 with the military junta that ruled in Quito. The deal awarded the Amer­ican company the right to search for oil on more than 3.5 million acres, later augmented by an additional 4 million acres. This terri­tory, larger than the state of Maryland, turned out to contain the choicest oil reserves in the Oriente.

Facebook Instagram Twitter