Environmental Damage Caused by Cebu Drilling Company

July 24th, 2011

Claim by EPC Munai

Between July 12th and July 16th Cebu Drilling Company willfully and deliberately dumped an estimated 15-20 barrels of contaminated waste oil in Block 8. Between July 12th and July 16th Cebu Drilling Company willfully and deliberately buried solid waste in three areas adjacent to the drilling site for the Sholkara 10-1x.

Specifics
Cebu tried to hide the contaminated waste oil and solids by placing them in the old well sites for the Sholkara G-4, G-5, and G-7 sites. EPC Munai has monitored these sites over the last 4 years and I will attest personally that no oil was present in the Shol G-5 area during my visits in 2007, 2008, & 2009. Moreover, our ecological survey does not indicate the presence of oil in the Shol G-5 area. No other operations have taken place in this area and the company that prepared the well site has too few vehicles to generate the amount of waste oil found at the dump site.

Evidence: Tire marks which indicate the Cebu loader was used to transport the waste oil to the dump site. The tread marks of the Cebu excavator are identical to the tread marks at the dump site. Teeth marks from the excavator match the teeth marks on the solid waste sites. Oil is very fresh waste oil and does not date from the ruptured tank, this tank dates from 1979-1980 and any oil present would have already been bio-degraded. Oil is seeping into the ground leaving visible traces, when exposed fresh earth was uncovered under the oil, indicating a surface spill as opposed to a lateral seep. Road is evident from the Shol 10-1x well site to the Shol G-5 dump site. Contaminated waste oil is likely to have been from the four diesel generators which were serviced prior to start-up.

Risks for EPC Munai:

1. EPC Munai is required by the subsoil law to take on all Soviet era wells on balance. This means that any ecological damage on Block 8 will be placed as the responsibility of EPC Munai. Should an inspection take place, EPC Munai, not Cebu will be held responsible for the recent dumping of oil.
2. If the oil fully seeps into the ground at the dump site, a future inspection may consider this as a toxic site which will require a major expense to EPC Munai to clean up. 3. The environmental authorities may also consider the oil as originating from the Shol-5 well. Even though the leak is 15 meters from the well head the oil may be considered as a griffen (leaking oil along a fault from outside the casing). If this is the case EPC Munai may be required to pull the damaged casing and cement the well, this may prove to be very costly to EPC Munai. 4. In the extreme case, the directors of EPC Munai may be charged with a crime and subject to arrest, court trials, heavy fines, and deportation.

Additional Information
Behind the Cebu Base Camp there is a large amount of recent trash, including vodka bottles. When asked about this the Cebu representative replied We did not do it, it was already here. When I pointed out that our people visited the site 2 months ago he replied; Maybe somebody came at night and dumped it?
When I asked the Cebu Manager about the waste oil he said the same thing we were not here, someone else did it before we got here. When I pointed out the tire marks were identical, he said you did not see us do it, you can not prove we did it. Summary: Both the dumping of waste oil and the large amount of alcohol present are in direct violations of the contract between EPC Munai and Cebu
Drilling Co.

Rubbish and Trash Left by Cebu Behind Camp

Vodka Bottles Left by Cebu Behind Camp

Note: Oil soaked plant indicating a very recent dump of oil

Cebu Excavator Tooth marks

Cebu Contaminated Oil Dump Trying to hide in Old Tank

Waste Oil Placed inside tank

Cebu Loader Tread marks at dump site in Shol G-4

Cebu Excavator Tread marks

Note: Oil is on top of tread mark indicating it was after dumping

Cebu Excavator Tread marks at dump site

Note: Ground was wet from recent rains

Cebu Loader Tread marks

Cebu Excavator tooth marks

Unstained oil islands exposed as oil seeps into ground, evidence of dumping

Sholkara G-5 & G-4 site

Solid waste burial site

Cebu Loader Tread marks

Cebu Loader Tread marks

Cebu Excavator Tread marks in Shol 10-1x

Cebu Excavator Tread marks in Shol 10-1x

Cebu Excavator Tread marks

Note: Fresh soil line indicating tank has been recently moved from location

Puncture mark from Cebu Loader

Note: Fresh soil line indicating tank has been recently moved from location Cebu Excavator Tread marks

Recommended Actions 1. Collect samples of contaminated waste oil as soon as feasible 2. Order Cebu Drilling to stay away from site of criminal waste dumping 3. Send environmental team to site as soon as feasible to make independent assessment and assign cleanup procedures 4. Arrange meeting with Cebu Senior Management soon as independent assessment is complete