OVERSEAS PRIVATE

INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES

CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

ASSESSMENT OF ENVIRONMENTAL IMPACT AND

INDUSTRIAL SAFETY IN DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

Bogotá D.C., Colombia – 2010

 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

EXECUTIVE SUMMARY TABLE OF CONTENTS

A. DESCRIPTION OF THE PROJECT ............................................................................... 1

A.1 CHARACTERISTICS OF THE PROJECT ...................................................................... 2
A.1.1 TECHNICAL DESCRIPTION OF THE PROJECT .......................................................... 2
A.1.2 LOCATION OF THE PROJECT...................................................................................... 3
B. IDENTIFICATION OF THE HOSTS, OPERATORS, AND CONTRACTORS ................. 7
C. ENVIRONMENTAL CONDITIONS BASE LINE .............................................................. 9
C.1 CLIMATIC ASPECTS ..................................................................................................... 9
C.2 SOIL, GEOLOGY, GEOMORPHOLOGY AND GEOTECHNICS .................................... 9
C.3 VEGETATION............................................................................................................... 10
C.4 USE, DEVELOPMENT AND ALLOCATION OF NATURAL RESOURCES.................. 11
D. APPLICABLE ENVIRONMENTAL STANDARDS ......................................................... 13
D.1 AIR QUALITY................................................................................................................ 13
D.2 WATER QUALITY......................................................................................................... 14
D.2.1 DRINKING WATER ...................................................................................................... 14
D.2.2 SURFACE WATER IN PALAGUA LAKE ...................................................................... 15
D.2.3 UNDERGROUND WATER ........................................................................................... 15
D.3 SOIL QUALITY ............................................................................................................. 16
D.4 NOISE........................................................................................................................... 16
E. PROPOSED MITIGATION MEASURES....................................................................... 17
E.1 GUIDELINES FOR THE EVALUATION AND MANAGEMENT RISK FOR OIL AND
GAS DEVELOPMENT ............................................................................................................ 17
E.2 GENERAL GUIDELINES ON ENVIROMENTAL HEALTH AND SAFETY.................... 18
E.3 EMERGENCY AND CONTINGENCY PLAN - GENERAL ............................................ 18
F. NET ENVIRONMENTAL IMPACT ................................................................................ 18
F.1 PHYSICAL-BIOTIC COMPONENT............................................................................... 19
F.2 SOCIO-ECONOMIC AND CULTURAL COMPONENT................................................. 19
F.3 RISK ANALYSIS ........................................................................................................... 19
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

EXECUTIVE SUMMARY

A. DESCRIPTION OF THE PROJECT

The project "DEVELOPMENT WELL DRILLING IN PALAGUA-CAIPAL FIELD" is located in

the municipality of Puerto Boyacá (Boyacá). The project is framed within the concept of
petroleum development extraction in the region, helping to improve the quality of life of the
inhabitants of the municipality of Puerto Boyacá, especially the resident population in the area
adjacent to the Palagua – Caipal Field.

Executive Summary - 1
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

A.1 CHARACTERISTICS OF THE PROJECT

A.1.1 TECHNICAL DESCRIPTION OF THE PROJECT

Figure 1 Drilling Activities Palagua-Caipal Field

UT-IJP became the Palagua field operator in 2001. Since then, various activities such as
rehabilitation of oil wells, drilling, and the application of production technologies have
enhanced the field oil production rates from 2500 barrels of oil per day in 2001 to 5,000
barrels per day in March 2010.

Executive Summary - 2
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

A.1.2 LOCATION OF THE PROJECT

The Palagua production field is located 30 kilometers away from the municipality of Puerto
Boyacá, Boyacá (Department / State), in the basin of the Middle Magdalena Valley, about 7 km
east of the Vasconia Station of Empresa Colombiana de Petroleos, ECOPETROL SA, at a
height of 137 meters above sea level.

CAMPO PALAGUA
PTO BOYACÁ

DPTO DE BOYACÁ
DE L A PA Z

EST. 4
P.I.A
T RO N CA L

EST. 3

EST. 2

ZONA INDUSTRIAL
BAT. 1
PALAGUA

ESTACIÓN
VASCONIA
CIÉNAGA DE PALAGUA

CAMPO TECA
SENDERO

CAMPO COCORNÁ
COCORNA ESTACION
VELAZQUEZ 26
BATALLON BARBULA

ZONA INDUSTRIAL
RIO MAGDALENA
RÍO OMIMEX

AEROPUERTO
PUERTO BOYACÁ

Figure 2 General Location of Palagua – Caipal Field

SPANISH TO ENGLISH TRANSLATION KEY:

Top map: Campo Palagua: Palagua Field

Pto Boyacá: Puerto Boyacá
Dpto. De Boyacá: Department of Boyacá

Bottom map:
* Left hand side: * Right hand side:
Troncal de la Paz: Main road de la Paz Zona Industrial Palagua: Palagua Industrial Area
Estación Vasconia: Vasconia Station Est. #: Station #
Campo Teca: Teca Field PIA: Water Injection Plant
Campo Cocorná: Cocorná Field Bat. #: Battery #
Río Magdalena: Magdalena River Ciénaga de Palagua: Palagua Marsh
Sendero: Path
Estación Velázquez 26: Velázquez Station 26
Batallón Bárbula: Bárbula Battalion
Zona Industrial Omimex: Omimex Industrial Area
− Aeropuerto: Airport

Executive Summary - 3
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

The project involves the drilling of development oil wells of directional type to reach areas of
the site that have not been drained by existing wells. The proposed drilling locations of the
development wells of the Palagua – Caipal Field are listed below:

Table 1 Coordinates of new development wells

Coordinate System: Gauss-Kruger
Bogota
Geographix Project: Palagua (N&E)
Data: Bogota Observatory
# Name Y X Drill Site(s)
1 P-222 1165264 951999 P-220 P-185
2 NWP13 1165588 952284 P-104 P-133
3 C-15 1170095 954093 C-9
4 C-14 1170157 953828 C-9 C-6
5 C-17 1169778 953890 C-6
6 NWP17 1164504 952364 P-27 P-115 P-157
7 P-223 1163920 951544 P-175
8 NWP39 1167136 951798 P-43 P-142 P-46
9 NWP35 1167101 952187 P-142
10 NWP12 1165748 952310 P-104
11 NWP11 1165724 952485 P-133
12 NWP41 1167084 951586 P-43 P-46 P-137 P-40
13 N017W010 1162637 952091.2 P-10 P-1
14 N020W116 1162687 951841 P-196 P-18
15 N021W116 1162887 952041.1 P-201 P-18
16 N034W186 1163853 951309.1 P-206 P-140
17 N045W155 1165336 950991.2 P-210 P-31
18 N116W109 1167286 951840.7 P-142 P-46
19 N143W109 1166736 950691 P-123 P-189
20 N149W145 1167335 950586.3 P-41 P-135
21 N153W145 1168536 950490.9 P-146 P-148
22 N155W145 1168786 950741.2 P-148 P-113
23 N197W155 1166037 951540.6 P-141 P-71
24 N202W062 1164265 952123.4 P-172 P-169
25 N203W062 1164037 952141 P-169 P-52
26 N210W116 1162387 951890.6 P-138 P-201
27 N211W116 1162237 951991.2 P-138 P-202
28 N215W010 1162137 952290.7 P-139 P-138
29 N219W155 1166137 951068.8 P-32 P-95
30 N222W155 1165986 951091.3 P-32 P-212
31 N233W155 1165436 951591.4 P-30 P-29
32 N259W155 1167407 951789.8 P-142 P-46
33 N269W116 1163428 952528.4 P-106 P-13
34 N271WCPL 1170777 954180.6 C-9 C-14
35 N272WCPL 1169766 953883.7 C-6 C-12
36 N275W186 1165227 952326.4 P-82 P-157
37 N284W155 1166474 952431.2 P-49 P-48
38 NWP8 1166235 951760 P-53 P-34
39 NWP31 1163077 952713 P-2 P-203
40 NWP4 1166699 952346 P-49 P-48
(1) Field Data gathered with GPS Garmin map, Origin Coordinates Bogotá

Executive Summary - 4
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

The project involves the drilling of forty (40) (directional) development wells to reach areas of
this site that have not been drained yet by the existing production (drilled) wells. The drilling of
these development oil wells at the Palagua Field requires a series of activities to be undertaken
sequentially in several steps.

The sequential order of activities for the drilling of each one of the wells is as described in the
following table:

Table 2 Activities during drilling

ACTIVITY DESCRIPTION
• According to oilfield and geologic studies.
Selection of the project area • Low environmental impact area.
• Easy execution of civil work according to topography.
Environmental Development Plan - • Drafting of the document and respective management before the
EDP Environmental Authorities (CORPOBOYACÁ and MAVDT)
• Improvement of the road to comply with technical specifications
using motor graders.
Road Improvement
• Stabilization and compacting of the road using road rollers and
compacters.
• Movement of land to re-level the soil.
Terraplain building
• Load-bearing capacity tests.
• Rig, drilling equipment, control equipment and storage of solids,
Equipment transport and installation cementation equipment, electrical recording equipment, electrical
generator, mud pumps, pipelines.
• Drill to the depth where according to the design of the well the
surface casing will set.
• Take out the drilling pipes.
• Cementation of the surface casing.
• Continue drilling to the desired depth.
Drilling • Take electrical records to identify the interval of the productive
formation and the inter-phase level.
• During the whole drilling period the drilling cutting are treated and
dehydrated and the mud residues is treated to recover products
and improve the quality of the liquid waste to be sent to the Water
Injection Plant.
• Dismantling of the equipment used in the operation.
Equipment dismantling • Final disposition of the drilling cuttings.
• Mud Residue disposal.
• Cementation of the casing.
• Seat the shoe to for securing the casing.
Well completion • Open by perforating the productive interval.
• Install the artificial lifting system (PCP Pumping).
• Install pressure control devices.
• Installation and laying of the production lines from the well to the
Connection to existing infrastructure
nearest collector.
Source: UT-IJP

Executive Summary - 5
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

• PRELIMINARY STAGE

This stage locates the area where the project will be executed based on biotic, geological,
social, and stratigraphic criteria. It also includes the development of the Environmental
Mitigation Plan provided in the Environmental Management Report, submitted to the Competent
Environmental Authorities of the Colombian Government.

• IMPROVEMENT ACTIVITIES

This stage of the project includes the improvement of the existing roads for the transportation of
machinery and other equipment required for drilling. It specifies to build well locations strong
enough to bear the load of drilling rig equipment. It also includes construction of perimeter
channels to handle storm water.

• INSTALLATION OF DRILLING EQUIPMENT

At this stage the drilling rig and other equipment are erected and installed, along with installation
of tanks for solid waste management and production tests.

• OPERATION, CLOSURE, AND ABANDONMENT STAGE

This stage involves the drilling activities from the start of the operation to reaching the desired
drilling depth. Then, it is followed by dismantling of the drilling rig to continue the task of
completing the well, connecting the production tubing from the well to the existing infrastructure,
treatment of mud and drill cuttings outside the location, and finally the recovery of the area.

- CONCLUSIONS

According to the field visit, the areas selected for the drilling of the development wells do not
require large movements of earth or forestry management (cutting or removal of species -
forestry), or water sources involving a complex environmental management.

The Oil Field Palagua - Caipal has an extensive road infrastructure both internally and
externally. Regular maintenance is carried out to facilitate access to selected areas. Therefore,
the area does not require construction of new roads since development wells will be drilled from
the existing locations with good access roads.

Executive Summary - 6
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

B. IDENTIFICATION OF THE HOSTS, OPERATORS, AND CONTRACTORS

The Union Temporal (UT–IJP) consists of the following companies:

JOSHI TECHNOLOGIES INTERNATIONAL, Inc.

UT-IJP ISMOCOL DE COLOMBIA S.A

PARKO SERVICES S.A

The companies that are members of the Union Temporal (UT–IJP) will make the
following contributions:

a) JOSHI TECHNOLOGIES INTERNATIONAL, Inc.: Will provide the technology, the

knowledge and the design of the well stimulation, the Work-over, the design and
completion of wells, the geological and oilfield studies, will take part in the management
of oil and gas production activities of the field, will assist with the management of the
project, the engineering, the operation and the supply and management of purchases,
will act as co-operator, will also provide training services, supplies and R&D (research
and development) functions.

b) ISMOCOL DE COLOMBIA S.A.: Will provide logistic and the necessary infrastructure
support for the execution and compliance with the CONTRACT, management of the
project, engineering, operation of the field, the supply and management of purchases,
the building, the services, the relationship with customers and other agencies. Ismocol
has the following ISO certificates:

Standard Valid even Certification

ISO 9001:2000 November 14th 2010 CO231235 by Bureau Veritas
ISO 14001:2004 November 17th 2012 CO231236 by Bureau Veritas
OHSAS 18001:2007 October 13th 2011 CO230762 by Bureau Veritas

Ismocol Activities:
CONSTRUCTION, OPERATION AND MAINTENANCE OF OIL PIPE LINES AND GAS

Executive Summary - 7
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

PIPELINES, COLLECTING LINES AND CONDUCTION IN GENERAL; CONSTRUCTION OF

CIVIL WORKS, ELECTROMECHANICAL, INSTRUMENTATION SET-UPS AND IN GENERAL
ALL THE WORKS OF INFRASTRUCTURE FOR THE AREA OF HYDROCARBONS AND
BESIDES INDUSTRY'S SECTORS; CONSTRUCTION, OPERATION AND MAINTENANCE OF:
OIL FACILITIES, INDUSTRIAL PLANTS, PETROCHEMICAL PLANTS, REFINERIES AND
FACILITIES OF PRODUCTION; CONSTRUCTION OF TANKS; DRILLING EQUIPMENT
SUPPLY OF OIL, GAS AND WATER WELLS AND SERVICE TO WELLS; ADMINISTRATION,
OPERATION AND MAINTENANCE OF OIL FIELDS.

c) PARKO SERVICES S.A: Will provide technical assistance and purchase management
support necessary for the execution and compliance with CONTRACT.

In consideration of clause 4.19 of the CONTRACT UT-IJP is the project operator.

Contractors:

HALLIBURTON
An American company specialized in drilling, cementing, logging and other oil services.

SCHLUMBERGER
An American company specialized in electrical logging and gravel packing.

ISMOCOL DE COLOMBIA
A Colombian company specialized in construction, operation and maintenance of oil pipelines
and gas pipelines and drilling equipment for the supply of oil and gas.

Executive Summary - 8
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

C. ENVIRONMENTAL CONDITIONS BASE LINE

The project is located in the Rural Area Palagua, municipality of Puerto Boyacá, Boyacá
Department, at 137 meters above sea level. The Palagua - Caipal oil field is approximately 7 km
east of the Vasconia Station of the Empresa Colombiana de Petroleos, ECOPETROL SA.

C.1 CLIMATIC ASPECTS

At the Palagua – Caipal oil field the annual average temperature ranges between 26 ° C and
31° C. Rainfall since 1989 holds an average of 2589 mm; the relative humidity in the area of
influence of the wells under study varies throughout the year between 61% and 86%, and cloud
presents an average value of 3 octas.

C.2 SOIL, GEOLOGY, GEOMORPHOLOGY AND GEOTECHNICS

Figures 1 and 2 Rocky outcrops

The ground soils in the area have developed from clay and sandy material. The soil is
characterized as shallow with fluctuating underground water level. In the Palagua – Caipal oil
field, the organic layer is shallow and steep in some areas.

The hydro - geological behavior in the Palagua - Caipal Field is determined by the
geomorphology of the terrain and its lithological composition, which determine the mechanical,
physical, and hydraulic properties of the rock.

Executive Summary - 9
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

In the Palagua – Caipal oil field, there is an outcrop of sedimentary rocks of the Tertiary age to
recent deposits, while in the underground the age of formations ranges from the Tertiary to
Triassic – Jurassic periods.

The production area of the Palagua – Caipal oil field is located in the basin of the Middle
Magdalena River Valley (VMM), in the foothills of the Eastern Cordillera. It is bound on the east
by the faults of the Foothills of the Eastern Cordillera, and to the West by the faults of the
Central Cordillera. The tectonic depression is molded throughout the area, mainly because of
the tertiary period rocks, which present some over-thrusting with vertical dips in the high part,
but in depth they are leaning toward the eastern side.

The project´s area is characterized by having the following geological faults:

• Mesa Formation (Tsm)

• Real Formation (Tmr)
• Colorado Formation (Toc)
• Mugrosa Formation (Tom)
• Esmeralda Formation
• La Paz Formation

C.3 VEGETATION

Figure 3 Overview of existing vegetation in Figure 4 Overview of existing vegetation in

the Project area the Project area

Executive Summary - 10
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

The population of flora is made up of trees and bushes arranged in narrow strips. It should be
noted that the project’s influence on this vegetation is low, because the direct involvement in the
development of the activities does not impact the area. The area involved has no woody
vegetation; it is an area with a covering of weed species and low stubble, or underbrush.

In the area of flooding lowlands (valleys), the vegetation is characterized by strips of fixed and
floating macrophytes, reeds, and some shrub and woody species around the drains. Some
associated species are: Azolla polyrrhiza, Pistia sp., Typha sp., Bidens sp., Eleocharis sp.
However, drilling locations are in the hilltop areas and not in valleys or lowlands.

C.4 USE, DEVELOPMENT AND ALLOCATION OF NATURAL RESOURCES

During the execution of this work, the materials used are the soil resource, land covering
material and water resource.

• Water Resource: All the water required for domestic use and industrial use shall be taken
from PW-1 underground, 85 meter deep water well, located within the administrative area.
The granting of groundwater was established by CORPOBOYACA by Resolution 463 of
June 8, 2005. The estimated average consumption is of 0.3 liters per second.

• Construction Material: The material required for improving drilling locations will be
acquired through commercial agencies located in Puerto Boyacá that have the
corresponding environmental permit granted by the Regional Autonomous Corporation -
CORPOBOYACÁ. Part of the material used will come from the area of former Station No. 3.

• Forest Resource: During the construction of locations, forest resources will not be
affected, since the drilling of new wells will only use existing well locations.

• Dumping: During construction work, debris or refuse will not be generated; therefore,
permit for the disposal of construction materials will not be required.

The wells will be drilled in previously existing locations and there will be no cafeteria for the
employees at the location, hence, additional involvement of natural resources will be minimal.

• Liquid Industrial and Domestic Wastes: These are formed mainly by runoff water
(contaminated and uncontaminated), domestic wastewaters, industrial waters, and oily
residues. Following is a description of each.

- Runoff water. For the management of rainwater at the locations we have perimeter
channels with sediment recollection and drainage structures in order to channel the

Executive Summary - 11
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

waters into the surrounding environment without affecting the current hydrodynamics.
The rainwater that collects in the channels within the location will be lead to the oil trap
and then to the Industrial Waste Water Treatment Plant (PIA) of the field.

- Domestic Waters. Water used in human activity such as bathrooms, kitchens and sinks
is treated in a septic system which includes several tanks and filters. Approximately 150
gallons of domestic waste water is generated daily. This represents a minimum amount
in comparison with the 11,000 barrels per day of produced water for oil wells in the
Palagua-Caipal field.

- Industrial Waters. It is the liquid that comes from the residual mud and water from
separation of cutting and drilling fluids. These waters are directed into the tanks where
coagulant chemicals, flocculants and clarifiers are injected enhancing water separation.
Then water is pumped to a sedimentation tank from where it is collected with the
vacuum truck and then disposed of in the Waste Water Treatement Plant (API) of the
field. The waste water plant injects all the produced water back into the formation from
which it came at a depth of about 4000 ft.

- Residual Waste Oils: They are composed mainly of oil burned in the various engines of
the equipment; these will be stored on location in fifty-five (55) gallon drums, and then
they will be transported to the dump site of the Palagua battery.

- Dumping: All domestic and industrial liquid waste shall be subjected to primary
treatment at the location to subsequently be taken to the separation system at Battery
No.1, and then taken to the Water Treatment plant of the Palagua Field. Therefore, no
dumping permit is required for the drilling of development wells.

• Domestic Solid Waste: It is that produced in the project’s offices as personal hygiene, and
food waste, among others. These wastes are composed of cardboard, glass, food waste,
paper and aluminum. Household waste is taken to the temporary storage site in the
Industrial Area of the Palagua Field, and subsequently collected by Public Companies of
Puerto Boyacá.

• Industrial Solid Waste: It is considered waste such as cuttings from the separation of the
solids control equipment, and also waste or surplus product of the cementing, scrap metal,
wood, filters, packaging and others from the maintenance of machinery and equipment.

Drilling cuttings and waste mud will be removed from the location to be stabilized with lime for
dehydration and will be finally stabilized in the land farming area. The scrap metal will be taken
to the storage yard for such types of waste located at the Palagua Battery. The contaminated
soils will be transported for bioremediation in the land farming area. Oil-infused waste is stored
in the existing collection area (dump site) in the Industrial Area of Palagua Field for subsequent
shipping and incineration in the kilns of Holcim at Nobsa, Boyacá.

Executive Summary - 12
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

D. APPLICABLE ENVIRONMENTAL STANDARDS

With respect to the Environmental Quality standards and guidelines at a national and
international level (Environmental Health and Safety Guidelines from the World Bank for
Onshore Operations), these are environmental management instruments that consist of
parameters and obligations that aim to regulate and protect the public health and environmental
quality. In the Palagua field, UT-IJP performs monitoring activities to measure the quality of the
air, water and soil, to ensure that the company activities have not caused a health risk for the
people that work in the company, or to the community near the project and the environmental
impacts have been mitigated.

D.1 AIR QUALITY

The results obtained in the Palagua-Caipal field were compared with Resolution 601 of April,
2006, (601/2006) fulfilling the standards established by the Ministry of Environment and
Territorial Development (M.A.V.D.T in Spanish) and the Environmental, Health, and Safety
(EHS) Guidelines of the World Bank – used by the International Finance Corporation (IFC).
The conclusions are:

• Out of the four monitoring stations, all of them comply with the annual local air quality
standard and most of the levels reported in the Palagua field are low.

• We comply with Colombian regulations and IFC standards for nitrous oxide, sulphur
dioxide, particulate material higher than 10 microns (PM 10), and ozone levels in the air.

• In general, air quality in the Palagua-Caipal field is good.

Executive Summary - 13
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

D.2 WATER QUALITY

D.2.1 DRINKING WATER

Samples of water used for domestic and industrial consumption were taken from the water
wellhead PW-1 and storage tank outlet and tested by the laboratory ASINAL LTDA.

The following table show the results of the analysis.

Table 3 Physical – Chemical Analysis of water from water well PW-1 (88.5 meter depth)

TECHNIQUE OF
MAXIMUM
ANALYSIS RESULTS AT RESULTS AT
LIMITS
PARAMETERS UNITS AND/OR THE TOP OF THE POINT OF
Decree
EQUIPMENT THE WELL CONSUMPTION
475/98
USED
pH Units pH meter 8.8 8.7 6.5 – 9
Conductivity µS/cm Conductivity meter 212 211 50 - 1000
Total Alkalinity mg CaCO3 / L Metric Title 88 79 100
Total Hardness mg CaCO3 / L Metric Title 16 10 150
Turbidity NTU Nephelometric 1 1.1 <5
Total Solids Mg / L Gravimetric 114 109 < 500
Total Dissolved Solids –
TDS
mg/L Electrometric 111 109 Not Rated
Total Suspended Solids Mg/L Dried Filtration at 105 °c 3 <1 Not Rated
Real Colour, Hazen Hazen Units (Pt-
Units Co)
Colorimeter 5 5 < 15
Chlorides Mg Cl - / L Conductivity meter 5 7 250
Nitrites Mg NO2 - / L Spectrometer UV < 0.01 < 0.01 0.03
Phosphates Mg PO4 -3 / L Spectrometer UV 0.02 0.04 Not Rated
Sulphates mg SO4 -2/ L Spectrometer UV 1 1 250
3500- B S. M. 21 ST
Total Iron mg Fe +++/ L
Editions
0.28 < 0.01 0.3
3 Filtration through
Total Coli forms UFC/100 cm
membrane
0 0 0
3 Filtration through
Escherichia coli. UFC/100 cm
membrane
0 0 0

As the table shows, the well water meets all the environmental guidelines as issued in the
Decree 475 from the Health Ministry on March 10, 1998, as well as those for the International
Finance Corporation (IFC) and the World Health Organization (WHO) Guidelines for Drinking-
Water Quality.

Executive Summary - 14
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

D.2.2 SURFACE WATER IN PALAGUA LAKE

In July 2001, the National Oil Company ECOPETROL handed over the Palagua and Caipal oil
fields to UT-IJP for their operation under an incremental production contract. The field was
operated by Texaco from 1957 onwards. Thus, Ecopetrol and Texaco operated the Palagua
Caipal field from 1957 till 2000.

Prior to taking over the field, UT-IJP conducted an environmental base study. One of the
important conclusions of 2000 Environmental Base line study was that Lake Palagua was
polluted and lacked oxygen in water. To this effect, Ecopetrol took over the responsibility of
correcting the situation. As per the agreement between Ecopetrol and UT-IJP, it is Ecopetrol’s
responsibility to pay for and arrange to remedy environmental damage, if any, prior to the year
2000. The lack of oxygen in the lake water was due to the presence of a plant called “Tarulla.”
Since 2004 and onward, Ecopetrol removes these plants from the lake. This has resulted in an
increase in oxygen in the lake water and fish have returned to the Lake.

Thus, there is a significant improvement in the quality of lake water from the year 2001 to 2010.
Additionally, the Palagua Lake water will not be affected by drilling of the proposed additional 40
wells.

D.2.3 UNDERGROUND WATER

In the year 2000, prior to UT-IJP (Ismocol, Joshi, Parko) taking over the field, Colombian
Environmental Ministry asked Ecopetrol to install ground water monitoring stations and correct
the ground water problems, if any. To comply with the order, Ecopetrol has installed 19
monitoring shallow wells (3 to 4 meters deep) to monitor ground water. Some of the problems
found have been fixed by Ecopetrol over time. In the last 10 years there is a significant
improvement in the ground water quality.

Most of the ground water problems were found near battery No 1, where there was a spill and a
fire in 1996. There are ground water monitoring stations in the Battery No1. Two stations out of
three stations now are free of any hydrocarbons.

Additionally, most of the measurement stations show no damage due to BTEX (benzene,
toluene, ethylbenzene, xylenes) or phenols. In general, due to Ecopetrol’s efforts, the quality of
the underground water has improved significantly in the last 10 years. Additionally, drilling of
the proposed development wells would have no effect on this underground water.

Executive Summary - 15
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

D.3 SOIL QUALITY

Due to previous hydrocarbon operations in the field, the Colombian Petroleum Institute (ICP
from Ecopetrol) provides the technical advice for the land farming of this field. ICP performed a
physic-chemical characterization of the soil.

The soil in the Palagua Field was evaluated according to the legislation in the Louisiana
Administrative Code, Natural Resources, Subsection 1, state-wide Order No. 29b. This norm
contains the requisites for in-situ storage, treatment, and disposal of non-hazardous residues.

The conductivity and concentrations of grease, oil, and metals (silver, arsenic, barium,
cadmium, lead, selenium, zinc and mercury) in the monitored soil in Campo Palagua are below
the permitted limits in the Louisiana norm.

The pH levels in the site samples are slightly outside the range as per the Louisiana norms. In
general, the soil in the area is of an alkaline nature.

D.4 NOISE

The monitoring of environmental noise in the Production Area of PALAGUA FIELD

corresponding to possible noise emission sources during production and operation show:

• Readings from all location points monitored during the daytime measurements in a work
day and during a holiday comply with the maximum limit established in Resolution
627/06 article 17 SECTOR C: restricted medium noise. Only at the water treatment
plant, the value is slightly higher when compared with the IFC guidelines.

• At some of the location points monitored, during the night time noise measurements,
values that exceed the maximum limit established in resolution 627/06 article 17
SECTOR C: (restricted medium noise) and the IFC guidelines are shown. However, this
enhanced noise level is due to the presence of animals in the area.

Executive Summary - 16
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

E. PROPOSED MITIGATION MEASURES

• The measures aimed at prevention, control, mitigation, recovery, and compensation of

impacts that occur during project activities are presented in a series of components and
programs that make up the Proposed Mitigation Actions (PMA). These components and
programs are the result of the analysis of the impact assessment. Accordingly, the
Environmental Management Plan is developed.

E.1 GUIDELINES FOR THE EVALUATION AND MANAGEMENT RISK FOR OIL
AND GAS DEVELOPMENT

The following table contains a summary of the the guidelines of the Environmental, Health and
Safety Program that have been developed.

Table 5 Summary of the Guidelines of the Environmental, Health and Safety Program
DOCUMENT
ENVIRONMENTAL, HEALTH AND SAFETY
PROGRAM REFERENCE
MANAGEMENT GUIDELINES
NUMBER
Assessment and management of risk and potential impacts
6.5.1
of emissions into the air
6.5.2 Wastewater discharge management – Effluents
6.5.3.1 Solid waste management Solid and
6.5.3 Liquid waste management liquid waste
6.5.3.2
management
COMPREHENSIVE Assessment and management of risk and potential impacts
PROGRAM OF 6.5.4
from noise generation
EVALUATION AND
Conformation and stabilization of slopes
MANAGEMENT OF 6.5.5.1 Terrestrial
at the locations
RISKS AND 6.5.5 impact
Environmental revegetation and recovery
SPECIFIC 6.5.5.2 management
of the surrounding area
POTENTIAL
Environmental management of production
IMPACTS OF THE 6.5.6.1
6.5.6 testing Spills
PROJECT
6.5.6.2 Waste management and pollution control
Assessment And Management Risk For Blow Out (Well
6.5.7
Control Policy)
6.5.8 Measures for energy saving and efficient use
6.5.9 Water consumption measures
6.5.10 Water quality

Executive Summary - 17
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

E.2 GENERAL GUIDELINES ON ENVIROMENTAL HEALTH AND SAFETY

The table below contains a summary of the the guidelines of the Environmental Management Program.

Table 6 Summary of Guidelines of the Environmental Management

Number in the
SECTION GUIDELINE OF ENVIROMENTAL MANAGEMENT
document
6.4.1.1 Information and communication guideline
SOCIAL 6.4.1.2 Guideline for hiring local work force
6.4.1
MANAGEMENT 6.4.1.3 Guidelines for education and training of staff of the work staff
6.4.1.4 Archeological information guideline
Guideline on environmental management of production
6.4.2.1 testing
6.4.2.2 Pipeline (flow line) management guideline
ENVIROMENTAL 6.4.2
Guideline of monitoring and tracking to disposition of industrial
6.4.2.3 water and drilling solids
6.4.2.4 Guidelines on waste management
HEALTH AND 6.4.3.1 Signposting guideline (access road, location, flow line)
OCCUPATIONAL 6.4.3
6.4.3.2 Guideline of handling and storage of chemical products
SAFETY
Guideline of control and monitoring to the social management
6.4.4.2 program
HEALTH AND SAFETY Guideline of dump areas, land removal and land-fills
6.4.4 6.4.4.3
OF THE COMMUNITY management at the locations
Guideline of drainage management of access roads and
6.4.4.4 locations
CONSTRUCTION AND 6.4.5.1 Environmental alternatives guideline (abandonment stage)
6.4.5
DECOMMISSIONING 6.4.5.2 Liquid waste management guideline (stage of abandonment)

E.3 EMERGENCY AND CONTINGENCY PLAN - GENERAL

This section establishes the mechanisms and response actions to attend in a timely and effective manner
any partial or total disruption of activities of the project "DEVELOPMENT WELL DRILLING IN
PALAGUA-CAIPAL FIELD." It also seeks to reduce the environmental impact caused to the affected
area. Appropriate measures and equipment are in place in the field to handle emergencies such as fire
and blow out of the wells.

F. NET ENVIRONMENTAL IMPACT

According to the assessment of the different environmental aspects involving the drilling of
development wells, comparing them with the present baseline, these activities do not change
or alter significantly the current environmental conditions of the region.

Executive Summary - 18
 OVERSEAS PRIVATE
INVESTMENT ASSESSMENT OF ENVIRONMENTAL IMPACT JOSHI TECHNOLOGIES
CORPORATION
AND INDUSTRIAL SAFETY IN INTERNATIONAL, INC.
DEVELOPMENT WELLS
PALAGUA – CAIPAL FIELD
PUERTO BOYACA (BOYACA, COLOMBIA)

F.1 PHYSICAL-BIOTIC COMPONENT

The current operation of the Palagua – Caipal oil field does not significantly affect the regional
environmental status; as it is expected that the drilling of development wells does not alter this
situation, which, according to different studies, remains constant or tends to decline. It is
considered that the machinery, equipment, and vehicles used in the area will not generate
emissions in quantities that exceed the values laid down in the regulations.

The noise impact is considered tolerable, and its effects are restricted to the areas of operation.
The duration of the noise is short and the reversibility and recoverability of the initial conditions
of the environment is high.

The effect of drilling activities on bodies of water is insignificant. Although the project includes
drilling of additional wells, the new wells use the existing well locations. Hence, there is no
effect on bodies of water in the area.

The current situation shows that the conditions for the geospheric component of the area will
not be affected significantly, since there are already internal and external access roads that
allow access to the wells.

Additionally, the current tree population will not be affected by the installation of equipment, or
by operation of the development wells.

F.2 SOCIO-ECONOMIC AND CULTURAL COMPONENT

The study area of this project includes the Palagua – Caipal oil field, a rural area of the
municipality of Puerto Boyacá. The proposed development drilling program will not change the
socioeconomic conditions significantly. Only minor change will be generated in the behavior of
the population. The project will improve the general institutional infrastructure of the Palagua –
Caipal area.

F.3 RISK ANALYSIS

The results of the analysis indicate that the risks are not highly significant for the environmental
components. The most important risks to be managed are the management of equipment,
possible gas leaks, product spills, and fire and well bow out.

Executive Summary - 19