Information Entrepreneurship15 September 2012

PT Lapindo Brantas and Sidoarjo MudflowCase Study For Lessons From Flops

Developed by:Fransisca Katherina Rumambi - G1200547CFRUMAMBI001@e.ntu.edu.sgKnowledge Management - WKWSCINanyang Technological University, Singapore

Company Profile

PT Energi Mega Persada Tbk

(50%)

PT Medco Energi Tbk

(32%)

Santos Australia (18%)

Joint Venture

Aburizal BakrieA business tycoon and member of government coalition

PT Lapindo Brantas, TbkAn Indonesian oil and gas exploration company

Problem: What Happened?

PT Lapindo Brantas Banjar Panji I gas

exploration well reached more than 3,000 m

The mud started seeping into the well at a depth of around 1,800

m and cement plugs

The pressurised mud forcing its way to the survey about 180 m

near the well

The unstoppable mudflow started in

Sidoarjo

Company’s failure to install casing around the well to the levels required Indonesian mining regulation DISASTER!

Lack of socialisation

to the community

related to the gas exploration area

Lack of careful planning and

thorough analysis to deal with the risks that might occur in

drilling area

Technical error:

company’s failure to

install a casing

around the well to

the levels required

under Indonesian

mining regulation

Attempts To Stop the Mudflow

Japanese Government offered to build a ‘double cover dam’ to contain the mud

The National Mudflow

Mitigation Team (BPLS)

was dropping thousands

of concrete balls into the

mouth of the mud,

hoping that will reduce

the amount of mud

flowing from the site

The spillway and

pumphouse to pump mud

into the Porong River and

into the sea became out

of order as mud filled it

up, dried, and blocked it

completely

Impacts

• 3,000 patients registered affected by gas hydrogen sulphide (H2S)

• 81% victims suffered from lung problems

• 200 died from poor health

• 60,000 people have been forced from their home

• 3,500 families were displaced

• The mud swamped irrigation channel and drainage.

• The drinking water pipes affected of toxic

• The disposal into the Porong River and the sea affects the river ecosystem and the aquaculture industry

• 42 rice fields, fish and shrimp ponds have been destroyed

• 12 villages – 350 hectares of farm land buried

• 30 factories affected by the mudflow – thousands of people lost their jobs

• Infrastructure has been damaged extensively (toll roads, power transmission systems, gas pipelines, national artery roads) Infrastructure Environment

HealthPeople

Human Rights Case: This Is NOT a Natural Disaster

15 August 2012 – The Indonesian Commission on Human Rights (Komnas HAM) announced that the Lapindo mudflow in Sidoarjo was a human rights violation and PT Lapindo Brantas was responsible for the man-made disaster

PT Lapindo Brantas violated 15 basic rights (right to life, safety, health, housing, employment, education, social security and education) and failed to guarantee victim’s basic rights since 2006 disaster – Police Investigation Under Criminal Code

Lesson Learnt: The Sustainability Principle

SUSTAINABILITYPRACTICE

ExploitativeShort-term Approach

PROFIT

PROFIT

PROFIT

Good Mining Practices

Company’s operation

• Raw material sourcing• The drilling process• Energy consumption• Treatment of wastage

and pollution

Indonesian Mining

Regulations • Legality requirements

• Effluent standards

What Should Have They Done? – What Should They Do Next?

1. To conduct thorough research if it was safe enough to do the gas exploration in the particular drilling area

2. To conform drilling security procedure (Did not install the casing drilling)

3. To conduct appropriate training session for their technical experts (Did not cover the drilling hole)

4. Legal permission in the middle of dense population

1. To provide emergency funding and support to the victim

2. To supply manpower and expertise in efforts to find a solution

3. To reduce the growing social impact from the expanding lake of mud

References

1. Ade Mardiyanti (2010, February 21). Muddying The Truth: A New Documentary Looks At Sidoarjo. Retrieved August 27, 2012 from http://www.thejakartaglobe.com/arts/muddying-the-truth-a-new-documentary-looks-at-sidoarjo/359892

2. Amir Tejo (2010, October 21). Rail Safety Fears After Latest Sidoarjo Cave-in. Retrieved August 25, 2012 from http://www.thejakartaglobe.com/home/rail-safety-fears-after-latest-sidoarjo-cave-in/402592

3. Desy Sagita (2009, May 29). Three Years of Mudflow Misery. Retrieved August 27, 2012 from http://www.thejakartaglobe.com/home/three-years-of-mudflow-misery/278177

4. Farouk Arnaz (2010, May 30). Lapindo Mudflow Case Can Be Reopened: National Police. Retrieved August 26, 2012 from http://www.thejakartaglobe.com/home/lapindo-mudflow-case-can-be-reopened-national-police/521071.

5. Fidelis A. Satriastanti (2010, May 28). After 4 Years of Mud, Sidoarjo Blame Question Lingers. Retrieved August 25, 2012 from http://www.thejakartaglobe.com/indonesia/after-4-years-of-mud-sidoarjo-blame-question-lingers/377582.

6. Fidelis A. Satriastanti (2011). Walhi Contends Corruption In Indonesia Mudflow Aftermath. Retrieved August 27, 2012 from http://www.thejakartaglobe.com/home/walhi-contends-corruption-in-indonesian-mudflow-aftermath/347729.

7. Fidelis A. Satriastanti (2010, April 15), “Great At Work” In Lapindo Mudflow Probe. Retrieved August 27, 2012 from http://www.thejakartaglobe.com/indonesia/graft-at-work-in-lapindo-mudflow-probe/369739.

8. Fidelis A. Satriastanti (2011, May 31). Learning From Lapindo: Five Years On, What Now?. Retrieved August 26, 2012 from http://www.thejakartaglobe.com/blogs/learning-from-lapindo-five-years-on-what-now/444204.

9. PT Lapindo Brantas Tbk (2012). Retrieved August 28, 2012 from http://en.wikipedia.org/wiki/PT_Lapindo_Brantas.10. Sidoarjo Mudflow (2012). Retrieved August 28, 2012 from http://en.wikipedia.org/wiki/Sidoarjo_mud_flow.

Any questions?