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A Tale of Two Oilfields:

Magwe Sites Highlight Heavy Impacts of Oil Drilling

Images by
Matt Grace
Text by
Matt Grace and Paul Vrieze
JULY 2015, MINHLA TOWNSHIP, Magwe Region - An expanse of green tents and grey mud extends as far as the eye can see at Htankai oilfield, one of many sites located in central Myanmar's crude-rich Magwe Region.

Groups of oil-covered workers toil amid the persistent hum of generators powering their pumps, and there is a buzz of expectation among hundreds of small-scale operators who have joined the “black gold rush” at this former state-run oil field.

Matt Grace/NRGI
In 2013, the Myanma Oil and Gas Enterprise (MOGE) abandoned exploitation and control of the onshore oil site following legal complaints by local residents, who said their land was forcibly seized by MOGE and a private oil company in the 1990s.

After the land was returned, legions of small operators moved in hoping to tap remaining oil sources with unsophisticated drilling technology. As authorities made little effort to enforce supposed drilling restrictions, the area quickly devolved into a lawless free-for-all.

Myanmar has an estimated 3.2 billion barrels of crude and in 2013 President Thein Sein’s quasi-civilian government began issuing licenses for foreign firms to explore the approximately 50 onshore and 50 offshore blocks.

The country’s 2014 candidacy for joining the Extractive Industries Transparency Initiative (EITI) will require the government to cooperate with the private sector and civil society organizations in disclosing details of state revenues gathered from resources such as oil and gas.

CSOs hope that closer cooperation with the government through EITI will also provide an opportunity to reform social and environmental impact policies for resource exploitation. The need for such reforms are evident at Magwe’s anarchic Htankai site and the tightly controlled, state-run Mann oilfield.

Matt Grace/NRGI
 Matt Grace/NRGI
Risky businessOilman U Han Htwe stands out from the crowds in his yellow hard-hat — it's the only article of safety gear I see during my stay in Htankai. He says he has moved from one unregulated oil field to another for years, relying on word of mouth for fresh information. He recently paid to explore two sites in this field.

Gesturing to one of his nearby wells, U Han Htwe explains that the previous team failed to traverse the water layer, which must be penetrated in order to reach the precious oil below. He clearly loves the challenge and seems confident that his team can reap a healthy profit from the site. Including the $500 he paid for drilling rights, he has invested around $4,200 in the project.

Matt Grace/NRGI
Matt Grace/NRGI
On the surface, Htankai's oil business seems fairly open. Private operators can negotiate directly with landowners and prices are based on potential profitability and yield. But working methods in this uncontrolled industry are dangerous and environmentally damaging.

As I watch, men weld together 20-foot-long pipes while nearby fumes seeping up from the oil reservoirs they are tapping ignite in mid-air. Vast areas of the site have been reduced to impassable quagmires of oily sludge. The ecological footprint of the operations continues to grow as new oil drillers arrive.

When I return three days later, U Han Htwe confides that his team — despite the investment and considerable personal risk — has not managed to break through the water layer. Although he remains upbeat, U Han Htwe is under obvious pressure to recoup his investment.

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Matt Grace/NRGI
 Without compensation and under restrictions In contrast with the dangerous above ground private operations in Htankai, the nearby government-run Mann oilfield is a quiet affair. Dozens of old-fashioned rigs silently bob up and down as they pump crude from deep below, while farm workers tend to crops in the surrounding fields. Yet this calm belies the fact that local communities here also suffer from oil drilling operations.

One of MOGE's most productive fields in Myanmar, the Mann oilfield stretches up the Irrawaddy River from the town of Minbu, about 40 miles north of Htankai. When oil was discovered in the area in 1969, 13 villages and the surrounding farmland were absorbed into the Mann oilfield. Since then, an estimated 669 wells have been drilled and more than 120 million barrels of oil have been produced by MOGE and MPRL, a private company that was contracted to operate the site.

Matt Grace/NRGI
Matt Grace/NRGI
Driving north of Minbu I pass the three main entrances to the Mann oilfield property, which also serves as a point of access to villages and farms beyond. Each has an MPRL security guard and local police officer stationed below an array of signs declaring “No Entry” and “Restricted Area.” I eventually enter the property on motorbike on a detour via a dirt track.

There's no obvious pollution or oppressive hum of generators here. Were it not for the signs at every turn informing me that I'm in a heavily controlled area I would have not realized that these ten square miles of farmland are subject to one of the country's highest levels of civil restriction: the Criminal Procedure Code's Article 144. 

In the area I meet with Soe Win who lives in Meh Beh Kone Village, which is situated in the first area to be developed when MOGE began operations. It is now the most heavily drilled village of the 13 within the Mann oilfield perimeter.

The entire area, Soe Win explains, has been classified under Article 144, a designation most commonly used to prevent civilians entering sensitive military or government sites or conflict areas. In civilian zones the law is used to enforce curfews, prevent assemblies, and exert control during civil unrest. 

Soe Win said these restrictions are not tightly enforced in Meh Beh Kone, except for a designation that bars citizens from carrying out construction — even within the boundaries of their own personal property. But Article 144 is also of concern for local villagers as they seek compensation from MOGE and MPRL for land seizures and the negative effects of drilling on their livelihoods.

Soe Win explains that new wells disturb the surrounding farmland for months and can pollute it for years. Above-ground pipes linked to hundreds of wells crisscross the landscape , disrupting ploughing and planting. Despite having six wells on his farmland Soe Win says he has never received any financial or other benefits from oil extraction. Not a single landowner, he said, received compensation for the first 668 oil wells drilled here.

Matt Grace/NRGI
Matt Grace/NRGI
In recent years, local civil society organizations have supported retroactive compensation claims by residents. However, demonstrating land ownership in order to make legal claims is difficult under Myanmar's bureaucratic, confusing ownership registration process, while laws state that all land, ultimately, belongs to the government.

In perhaps a sign of changing times, a villager recently received a reported payment of US$3,100 to compensate for the sinking of well 669.

 Matt Grace/NRGI
 A need for reform Both Magwe oil fields provide starkly different, but equally troubling, illustrations of the need to improve social and environmental impact standards of Myanmar's onshore oil industry.

In Htankai, landowners, operators and workers have a chance to profit from lucrative crude oil production but dangerous conditions and unmitigated pollution overshadow these opportunities. The Mann field has comparatively little environmental impact but residents cannot gain any benefits of oil extraction on their land and are not consulted over its impact.

As I depart Magwe, I can't shake the feeling that a happier medium between these two projects must be possible as Myanmar goes forward with reforming its resource sector.

Matt Grace/NRGI

The UNEARTH project is supported by the Natural Resource Governance Institute and was initiated as part of its Extractive Industries Photo Documentary Project.