Kerr-McGee

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The Kerr-McGee Corporation, founded in 1929, was an energy company involved in the exploration and production of oil and gas. It was also heavily involved in uranium mining and milling in the United States. On June 23, 2006, The Woodlands, Texas based Anadarko Petroleum Corporation agreed to acquire Kerr-McGee in an all-cash transaction totaling $16.5 billion plus the assumption of $2.6 billion in debt. Kerr-McGee shareholders voted to approve the offer on August 10, 2006 and Kerr-McGee ceased to exist as an independent entity. As a result of the takeover, all operations (with the exception of Tronox which was spun off as a separate company in 2005) moved out of Oklahoma.

History[edit]

The company later known as Kerr-McGee was founded in 1929 by Oklahoma businessman-politician Robert S. Kerr (1896-1963). When Dean A. McGee (1904-1989), a former chief geologist for Phillips Petroleum, joined the firm in 1946, it changed its name to Kerr-McGee Oil Industries, Incorporated. The company initially focused mostly on off-shore oil exploration and production, being one of the first companies to use drillships in the Gulf of Mexico,[1] and later one of the first companies to use a Spar type platform in the area.

With the acquisition of the Oryx Energy Company of Dallas, Texas in 1999, Kerr-McGee gained more onshore assets, as well as significant assets in several foreign areas, most notably Algeria and western Kazakhstan. Later acquisitions of HS Resources and Westport Resources Corp. established the base of operations in Denver, Colorado and added large resource areas throughout the Rocky Mountains.[citation needed]

Until 2005, Kerr-McGee had two major divisions: chemical and oil-related. On November 21, 2005, the chemical division of the company, based in Oklahoma City, was sold off by IPO as Tronox, thereby making Oklahoma City home to the administrative side of Kerr-McGee, while all exploration and production management was located in Denver and Houston.[citation needed]

Kerr-McGee Corp. v. Navajo Tribe[edit]

Kerr-McGee v. Navajo Tribe, 471 U.S. 195 (1985), was a case in which the Supreme Court of the United States held that an Indian tribe is not required to obtain the approval of the Secretary of the Interior in order to impose taxes on non-tribal persons or entities doing business on a reservation.

In 1978, the Navajo Tribal Council passed two taxing ordinances.[2] The first was a tax of 3% on leaseholds (such as mineral rights) and the second was a 5% tax on business activity.

Kerr-McGee held substantial mineral rights on the Navajo Nation and filed a lawsuit in the federal district court seeking an injunction to prohibit the tribe from collecting the tax. Kerr-McGee argued that any tax of non-Indians by a tribe required approval by the Secretary of the Interior and the district court agreed, granting the injunction. The tribe appealed to the Ninth Circuit Court of Appeals. The Ninth Circuit overruled the district court, finding no federal statute or regulation required such approval. Kerr-McGee then appealed to the Supreme Court, which granted certiorari and agreed to hear the case.[3][4] The court decided unanimously that the Navajo Nation had the right to tax Kerr-McGee because tribal authority to tax had already been recognized, and because no federal law prohibited exercising tribal sovereignty in enacting a tax.

Locations[edit]

United States[edit]

Main oil and gas operations in the US were the Mid-Continent, Rocky Mountains, onshore Louisiana,and offshore in the Gulf of Mexico. Main offices were located in downtown Denver and the Greenspoint area of Houston.

Corporate headquarters were located in Downtown Oklahoma City. In the 1970s the company had a forest products division, and mineral mining in New Mexico, Arizona, and Idaho, and coal mining in Wyoming and Illinois. Most of the U.S operations were on land owned by the U.S. government (i.e. Bureau of Land Management, National Forest) and the Navajo Indian tribe.[citation needed]

Mainland China[edit]

Kerr-McGee had exploration, development, and production projects in Bohai Bay, China, near Beijing. Additional exploration was planned for the South China Sea. These operations were run primarily from an office in Beijing.

Other locations[edit]

Kerr-McGee and its subsidiaries formerly operated in western Kazakhstan, western Australia, Brazil, Trinidad, Benin, the United Kingdom and several other more minor locations around the world at various times.

Controversy[edit]

Kerr-McGee received international criticism for undertaking exploration for hydrocarbon resources offshore the Moroccan controlled area of the disputed territory of Western Sahara in 2001. In 2003, one of Norway's main private investment funds, Skagen Vekst, sold their €3.6 million stake in the oil company, referring to ethic problems surrounding Kerr-McGee's engagement in Western Sahara.[5] In May 2005, despite the number of growing protests, the company renewed the contract signed with Moroccan authorities until October.[6] In June 2005, the Norwegian government sold the $52.7 million it had invested in the company through the Government Petroleum Fund (one of the biggest investment funds of the world), characterizing Kerr-McGee's contract in Western Sahara as having "particularly serious violations of fundamental ethical norms".[7] That same month, another two Norwegian private investment funds (Storebrand and KLP) sold their participations on Kerr-McGee, €1 million and €1.45 million respectively.[8] On May 2, 2006, the company declared its intention to no longer drill off the coast of the Western Sahara, by not renewing the contract signed with Morocco.[9]

In January 2007 Kerr-McGee was found guilty by a jury of underpaying oil extraction royalty taxes in the amount of US$7.6 million to the U.S. Government.[10] The jury's decision was overturned by U.S. federal judge Phillip Figa of Denver, and the case has been appealed by the original plaintiff, former U.S. Department of the Interior auditor Bobby Maxwell.

The company is also at least partially responsible for large scale perchlorate contamination of land used for a manufacturing facility in Henderson, Nevada.[11]

Karen Silkwood[edit]

It is alleged that Karen Silkwood was negligently or purposefully contaminated with plutonium while working at Kerr-McGee's Cimarron Fuel Fabrication Site and investigating safety violations at the plant. Her activism and November 1974 death were the subject of the 1983 film Silkwood. In a civil suit against Kerr-McGee by the Estate of Karen Silkwood, Judge Frank Theis told the jury, "If you find that the damage to the person or property of Karen Silkwood resulted from the operation of this plant, Kerr-McGee is liable."[12]

The jury rendered its verdict of $505,000 in damages and $10,000,000 in punitive damages. On appeal, the judgment was reduced to $5,000.[13] In 1984, the U.S. Supreme Court restored the original verdict (Silkwood v. Kerr-McGee Corp., 464 U.S. 283 (1984)).[14] The suit was headed for retrial when Kerr-McGee settled out of court in 1986 for $1.38 million, admitting no liability.[12][15] Gerry Spence, the noted trial lawyer from Jackson Hole, Wyoming represented the Karen Silkwood estate in this litigation.

Environmental record[edit]

In May 2007, Kerr-McGee Corp spent $18 million on pollution controls in the first comprehensive settlement under the Clean Air Act that reduced harmful emission and conserved natural gas at production facilities across Utah and Colorado. The settlement addressed violations discovered at several of Kerr-McGee's natural gas compressor stations located on the Uintah and Ouray Indian Reservation near Vernal, Utah, and in the Denver Julesburg Basin near Weld County, Colorado. In addition to implementing pollution controls, the agreement required Kerr-McGee to pay a $200,000 penalty, and spend $250,000 on environmental projects to benefit the areas in which violations occurred.[16] In July 2005, the United States Environmental Protection Agency (EPA) settled with Kerr McGee Chemical in Henderson, Nevada that required the company to pay $55,392 penalty to resolve air permitting violations at its facility that began in 1993. The EPA cited Kerr-McGee for failing to install carbon monoxide emissions controls required under the Clean Air Act when it installed a new open hearth furnace in 1993. The company spent $4.8 million to install proper pollution controls at the facility reducing total carbon monoxide emission by 115 tons per year, an 80% reduction from previous levels.[17]

Nuclear production[edit]

Kerr-McGee was involved in several nuclear endeavors.[18][19][20][21][22][23][24][25][26][27][28][29][30][31][32][33][34][35][36][37][38][39][40][41][42][43][44][45][46][47]

In 1952 Kerr-McGee bought the Navajo Uranium Mining Company, including an interest in a number of mines. It also bought an ore buying station at Shiprock, New Mexico. In 1953 it built a processing plant (called the Shiprock Mill) near the buying station. In 1963 the mines and mill were sold to the Vanadium Corporation of America.[23][24]

Later a partnership with other companies was formed called the Kermac Nuclear Fuels Corporation. In 1957-58 this partnership built a uranium mill near Grants, New Mexico and Ambrosia Lake. In 1983 the mill was taken over by a new Kerr-McGee subsidiary called the Quivira Mining Corporation. Quivira was sold to Rio Algom in 1989.[37][38][46]

From about 1962-1966 Kerr-McGee processed uranium at its oil refinery site in Cushing, Oklahoma. It received licenses in 1962 for processing uranium and thorium, and in 1963 for enriched uranium. In 1966 it stopped production. An attempt was made to move all regulated nuclear material to the company's new Cimarron facility at Crescent, OK. Cleanups were attempted in 1966, 1972, 1979–82, and the 1990s[28][29]

In about 1965 Kerr-McGee started producing uranium fuel at its Cimarron Fuel Fabrication Site. This was located near the Cimarron River and Crescent, Oklahoma. From 1973-1975 it would also produce mixed Plutonium-Uranium Oxide (MOX) 'driver fuel pins' for use in the Fast Flux Test Facility at the Hanford Site in Washington State. The plant shut down in 1976.[18][18][19][20][23]

In the 1968 the company started construction on what would become the Sequoyah Fuels Corporation plant in Gore, Oklahoma. In 1970 the plant started turning yellowcake uranium into uranium hexafluoride. In 1987 it began producing depleted uranium tetrafluoride using depleted uranium hexafluoride as input. In 1988 SFC was sold to General Atomics. In 1993 production ceased.[21][23][25][26][27][40][41]

In 1967 Kerr-McGee bought the American Potash and Chemical Company, which owned the Rare Earths Facility in West Chicago, Illinois. This facility produced thorium, radium, and uranium by acid leaching of monazite sands and other ores. It stopped work in 1973.[22][26][44]

Nuclear corporations, subsidiaries, and spinoffs[edit]

In 1956 Kerr-McGee formed the Kermac Nuclear Fuels Corporation in partnership with Anderson Development Corp, and Pacific Uranium Mines Co. It was active in New Mexico.[23][24][37]

Some time in the 1970s, the Kerr-McGee Nuclear Corporation was formed. In 1983 it split into the Quivira Mining Corporation and Sequoyah Fuels Corporation.[39] Quivira got the Ambrosia Lake, NM mine,[37] while Sequoyah Fuels took over the Sequoyah plant in Gore, OK, as well as the Cimarron plant in Crescent, OK. Sequoyah was sold to General Atomics in 1988.[48] and Quivira was sold to Rio Algom in 1989.[32][38][39][49]

The Cimarron Corporation was a subdivision that took control of the Cimarron plant in 1988.[20] When Tronox was spun off in 2006, it would get ownership of Cimarron Corporation and responsibility for the plant as well.[20]

Kerr-McGee bought the American Potash and Chemical Company in 1967, including its Rare Earths Facility that processed uranium and thorium. AMPOT became Kerr-McGee Chemical Company around 1970 or 1974. In 2005 this became Tronox. Tronox became independent in 2006, a few months before Kerr-McGee was sold to Anadarko Petroleum. Tronox later went bankrupt, blaming in part the environmental liabilities inherited from KMC. In 2009 purchasers of Tronox filed a class action lawsuit against Anadarko for having allegedly misled investors.[20][33][34][35][42][43][44][45][47]

Licenses[edit]

In the US, nuclear companies must get licenses from the Nuclear Regulatory Commission. Kerr-McGee licenses follow:

  • SNM-928 - Cimarron - uranium fuel fabrication
  • SNM-1174 - Cimarron - mixed oxide fuel (MOX) fabrication - ?-1993[20]
  • STA-583 - Rare Earths Facility
  • SMB-664 - Cushing refinery - uranium and thorium. 1962-1966[30]
  • SNM-695 - Cushing refinery - enriched uranium. 1963-1966[30]
  • SNM-1999 - Cushing refinery - cleanup. 1993-2006[29][31]
  • SUB-1010 - Sequoyah[40]

References[edit]

  1. ^ "Kerr-McGee Natural Gas STAR Case Study Series" (PDF). United States Environmental Protection Agency. 
  2. ^ Wilkinson, Charles F. (1996), Home Dance, the Hopi, and Black Mesa Coal: Conquest and Endurance in the American Southwest, 1996 BYU L. R. 449, Brigham Young Univ.
  3. ^ Kerr-McGee v. Navajo Tribe, 471 U.S. 195 (1985).
  4. ^ Kerr-McGee v. Navajo Tribe, 731 F.2d 597 (9th Cir. 1984).
  5. ^ "Divestments from Kerr-McGee over Western Sahara engagement". Afrol News. 2004-12-21. Retrieved 01-10-2010. 
  6. ^ "Kerr-McGee renueva su búsqueda de hidrocarburos en Sáhara Occidental". Afrol News. 06-05-2005. Retrieved 01-10-2010.  (Spanish)
  7. ^ "Recommendation on Exclusion from the Government Petroleum Fund’s Investment Universe of the Company Kerr-McGee Corporation". Ministry of Finance of Norway. 12-04-2005. Retrieved 01-10-2010. 
  8. ^ "Inversoras venden acciones Kerr-McGee por conflicto Sahara". Western Sahara Resources Watch (EFE). 2005-06-30. Retrieved 01-10-2010.  (Spanish)
  9. ^ "Last oil company withdraws from Western Sahara". Afrol News. 02-05-2006. Retrieved 01-10-2010. 
  10. ^ The Royalty Treatment. NOW | PBS
  11. ^ http://ndep.nv.gov/bca/perchlorate05.htm
  12. ^ a b Rashke, Richard L. The Killing of Karen Silkwood: The Story Behind the Kerr-McGee Plutonium Case. 2d ed. Ithaca, N.Y.: Cornell University Press, 2000. ISBN 0-8014-8667-X
  13. ^ "Silkwood Award Is Reversed." Associated Press. December 12, 1981.
  14. ^ "High Court Clears Award in Karen Silkwood Case." New York Times. January 12, 1984.
  15. ^ "Business Digest." New York Times. August 23, 1986.
  16. ^ Kerr-McGee Reaches Major Settlement on Natural Gas Production in Colorado and Utah | Newsroom | United States Environmental Protection Agency|U.S. Environmental Protection Agency
  17. ^ U.S. EPA settles air pollution case with Kerr-McGee in Henderson, Nev. | Newsroom | United States Environmental Protection Agency|U.S. Environmental Protection Agency
  18. ^ a b c "Plutonium Finishing Plant". Hanford / US Govt. Retrieved 2009-1-20. 
  19. ^ a b Lini, D.C. and L. H. Rodgers. "Plutonium Finishing Plant". Hanford / US Govt. Retrieved 2009-1-20. 
  20. ^ a b c d e f "Kerr-McGee - Cimarron". US NRC. April 2009. Retrieved 2009-10-1. 
  21. ^ a b Diamond, Stuart (6 January 1986). "Lethal Acid is Product of Chemical that Leaked". New York Times. 
  22. ^ a b U.S. Environmental Protection Agency (July 2009). "NPL Fact Sheet, KERR-MCGEE (SEWAGE TREATMENT PLANT)". Retrieved 2009-10-2. 
  23. ^ a b c d e O'Dell, Larry. "NUCLEAR POWER". Encyclopedia of Oklahoma History and Culture. Oklahoma Historical Society / Oklahoma State University. Retrieved 2009-10-2. 
  24. ^ a b c "Shiprock Mill Site". Energy Information Administration. 2005-10-09. Retrieved 2009-10-2. 
  25. ^ a b "Sequoyah Fuels Corporation". US NRC. 2009-04-16. Retrieved 2009-10-2. 
  26. ^ a b c "75 F3d 536 General Atomics v. United States Nuclear Regulatory Commission". openjurist.org. 1995-10-17. Retrieved 2009-10-2. 
  27. ^ a b Brugge, Doug, PhD, MS, Jamie L. deLemos, MS, and Cat Bui, BS (September 2007). "The Sequoyah Corporation Fuels Release and the Church Rock Spill: Unpublicized Nuclear Releases in American Indian Communities". American Journal of Public Health (NIH.gov (electronic)) 97 (9): 1595–600. doi:10.2105/AJPH.2006.103044. PMC 1963288. PMID 17666688. 
  28. ^ a b "PUBLIC HEALTH ASSESSMENT KERR-MCGEE REFINERY SITE". Centers for Disease Control. Retrieved 2009-10-1. 
  29. ^ a b c "Kerr-McGee Corporation's Cushing Refinery Site". US NRC. Retrieved 2009-10-2. 
  30. ^ a b c Abelquist, E.W. (July 1997). "FINAL STATUS SURVEY". US NRC / Oak Ridge Institute for Science and Education. Retrieved 2009-10-2. 
  31. ^ a b US NRC. May 18, 2006. Jeff Lux Ltr re: Termination of Special Nuclear Materials License No. SNM-1999, Cushing Refinery Site, Oklahoma. ML060960070. Available at NRC's ADAMS website, http://www.nrc.gov/reading-rm/adams/web-based.html
  32. ^ a b "Design and use of plasma arc cutting equipment". Sequoyah Fuels Corporation / OSTI.gov. 1994. Retrieved 2009-10-2. 
  33. ^ a b anadarko.com August 10, 2006 press release
  34. ^ a b Kerr-McGee Completes Separation of Tronox March 31, 2006
  35. ^ a b January 13, 2009 The Oklahoman via COMTEX
  36. ^ "QUIVIRA MINING COMPANY et al vs. US EPA". 1984-03-02. Retrieved 2009-10-3.  (paraphrased title of law case)
  37. ^ a b c d V. McLemore (February 2007). "Uranium Mining Resources in New Mexico". SME Annual Meeting. Retrieved 2009-10-3. 
  38. ^ a b c "DECISION AND ORDER OF THE DEPARTMENT OF ENERGY". US DOE. 1997-03-13. Retrieved 2009-10-3. 
  39. ^ a b c "Finding of No Significant Impact Related to Amendment of Materials License No. SNM-928, Kerr-McGee Corporation, Cimarron Fuel Fabrication Site, Crescent, Oklahoma". U.S. Environmental Protection Agency. 1999-08-02. Retrieved 2009-10-3. 
  40. ^ a b c "Environmental Impact Statement for the Reclamation of the Sequoyah Fuels Corporation Site in Gore, Oklahoma, Final Report". US NRC. May 2008. Retrieved 2009-10-3. 
  41. ^ a b "CLI-04-02 MEMORANDUM AND ORDER". US NRC. 2004. Retrieved 2009-10-3. 
  42. ^ a b Al Greenwood (May 2009). "Anadarko denies role in bankrupt Tronox fraud lawsuit". ICIS / Reed Business Information Ltd. Retrieved 2009-10-06. 
  43. ^ a b August 2009+PRN20090812 "Shareholder Class Action Filed on Behalf of Purchasers of Tronox, Inc. by the Law Firm of Barroway Topaz Kessler Meltzer & Check, LLP". PRNewswire / Reuters. 2009. Retrieved 2009-10-06. 
  44. ^ a b c "PACIFIC ENGINEERING & PRODUCTION COMPANY OF NEVADA, Plaintiff-Appellee, v. KERR-McGEE CORPORATION". atlaw / US 10th Circuit. 1977. Retrieved 2009-10-06.  551 F.2d 790
  45. ^ a b "Tronox FAQ". Tronox. Retrieved 2009-10-06. 
  46. ^ a b "ATOMIC ENERGY: Uranium Jackpot". Time. 1957-09-30. Retrieved 2009-10-07. 
  47. ^ a b "NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION and THE ADMINISTRATOR OF THE NEW JERSEY SPILL COMPENSATION FUND v TRONOX et al". nj.gov. 2007-06-05. Retrieved 2009-10-07.  (has AMPOT becoming KMCC date as 1974, as opposed to other documents which list the date as 1970)
  48. ^ General Atomics vs NRC, 1995
  49. ^ (technically, GA owned Sequoyah Holding Corporation, which owned Sequoyah Fuels International, which owned Sequoyah Fuels). See General Atomics vs NRC, 1995, footnote 1