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Kerr-McGee

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Kerr-McGee
FormerlyAnderson & Kerr Drilling; Kerlyn Oil Co.; Kerr-McGee Oil Industries Inc.
IndustryEnergy
Founded1929;95 years ago(1929)inOklahoma,United States
FounderRobert S. Kerr
Defunct2006;18 years ago(2006)
FateAcquired byAnadarko Petroleum
Headquarters,
Logo variant.
Kerr-McGee Service Station inPauls Valley, Oklahoma,1982

TheKerr-McGee Corporation,founded in 1929, was an American energy company involved inoil exploration,production ofcrude oil,natural gas,perchlorateanduranium miningand milling in various countries. On June 23, 2006,Anadarko Petroleumacquired Kerr-McGee in an all-cash transaction totalling $16.5 billion plus $2.6 billion in debt and all operations moved from their base inOklahoma,United States. As a result of further acquisitions, most of the former Kerr-McGee is now part ofOccidental Petroleum.

History

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The company later known as Kerr-McGee was founded in 1929 as Anderson & Kerr Drilling Company byOklahomabusinessman-politicianRobert S. Kerr(1896-1963) and oil driller James L. Anderson. WhenDean A. McGee(1904-1989), a former chief geologist forPhillips 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 usedrillshipsin the Gulf of Mexico,[1]and later one of the first companies to use aSpar platformin the area.

With the acquisition of theOryx Energy CompanyofDallas,Texasin 1999, Kerr-McGee gained more onshore assets, as well as significant assets in several foreign areas inAlgeriaand westernKazakhstan.Later acquisitions ofHS ResourcesandWestport Resources Corp.established the base of operations inDenver,Coloradoand added large resource areas throughout theRocky Mountains.[citation needed]

Until 2005, Kerr-McGee had two major divisions: chemical and oil-related. On November 21, 2005, its chemical division, based in Oklahoma City, was sold as anIPO,Tronox,thereby making Oklahoma City home to the administrative side of Kerr-McGee, while exploration and production management was located in Denver and Houston.[citation needed]Through acquisitions, for a time Kerr-McGee marketed products under the Deep Rock, Coast, Power, and Peoples brands in addition to its own. It also marketed Blue Velvet motor oil, a multiviscosity grade with a blue dyed anti-wear additive.

On June 23, 2006,Anadarko Petroleum,based inThe Woodlands, Texas,purchased Kerr-McGee in an all-cash transaction totaling $16.5 billion plus the assumption of $2.6 billion in debt. Kerr-McGee shareholders approved the offer on August 10, 2006, and Kerr-McGee ceased to exist independently. All operations with the exception ofTronoxwhich had been spun off in 2005 moved out ofOklahoma.Within a few years, the top positions at Anadarko had been filled by Kerr-McGee employees and many long-time Anadarko employees had left or been removed from the company, making the merger between Anadarko and Kerr-McGee a "wag the dog" transaction.

Kerr McGee uranium mill nearGrants, New Mexico.
Sulfuric acid plant at Kerr McGee uranium mill.

Kerr-McGee Corp. v. Navajo Tribe

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Kerr-McGee v. Navajo Tribe,471 U.S. 195(1985), was a case in which theSupreme Court of the United Statesheld 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, theNavajo Tribal Councilpassed two tax ordinances.[2]The first was a tax of 3% on leaseholds (such asmineral rights) and the second was a 5% tax on business activity.

Kerr-McGee held substantial mineral rights on theNavajo Nationand filed alawsuitin thefederal district courtseeking aninjunctionto prohibit the tribe from collecting the tax. Kerr-McGee argued that any tax of non-Indians by a tribe required approval by theSecretary of the Interiorand the district court agreed, granting the injunction. The tribe appealed to theNinth 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 grantedcertiorariand 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 exercisingtribal sovereigntyin enacting a tax.

Locations

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United States

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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 inDowntown 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 theU.S. government(i.e.Bureau of Land Management,National Forest) and the Navajo Indian tribe.[citation needed]Kerr-McGee owned apotash operation in Californiafrom 1974 to 1990.

Kerr-McGee Tower,a prominent skyscraper in downtown Oklahoma City, served as Corporate Headquarters.

Mainland China

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

Other locations

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

Controversies

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Exploration in disputed regions of Western Sahara

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Kerr-McGee received international criticism for undertaking exploration for hydrocarbon resources offshore theMoroccancontrolled area of the disputed territory ofWestern Saharain 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 ethical 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, theNorwegiangovernment sold the $52.7 million it had invested in the company through theGovernment 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 (StorebrandandKLP) 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]

Under-payment of royalties to the U.S. government

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On June 14, 2004, Bobby Maxwell, a senior government auditor for the U.S. Department of the Interior's Minerals Management Service ( "MMS" ), filed suit in federal court on behalf of the U.S. Government against Kerr-McGee, under the whistle-blowing provisions of theFalse Claims Act( "FCA" ).[10]In the suit, Mr. Maxwell alleged that, based on the information uncovered during his audit, "Kerr-McGee knowingly made false and/or fraudulent statements on the monthly royalty reports submitted to the MMS and 'understated and underpaid' its federal royalties."[11]In January 2007, after a full trial on the issues, Kerr-McGee was found by a jury to have failed to report earnings, and thus, under-paying royalties due to the U.S. government. The jury award damages in the amount of US$7.6 million. Despite the jury's verdict, however, before entering judgment, the court reconsidered an earlier Motion for Summary Judgement filed by Kerr-McGee and reversed its prior holding, this time determining that the court lacked subject matter jurisdiction to hear the case at all.[12]The case was appealed by Mr. Maxwell, and on September 10, 2008, the 10th Circuit Court of Appeals reversed the ruling of the lower court, remanding it back for further proceedings.[13]On September 16, 2010, U.S. District Court Judge Marcia S. Krieger of Colorado ordered Kerr-McGee to pay treble damages, or almost $23 million. As a whistle-blower under the FCA, Mr. Maxwell would be entitled to twenty-five percent of the amount recovered for the government, or approximately $5.7 million. Per Mr. Maxwell, however, most of the money awarded would go to pay the legal fees associated with his almost-10-year fight to force Kerr-McGee to change its deceptive practices and pay what it owed to the public.[14]

Karen Silkwood

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It is alleged thatKaren Silkwoodwas negligently or purposefully contaminated withplutoniumwhile working at Kerr-McGee'sCimarron Fuel Fabrication Siteand investigating safety violations at the plant. Her activism and November 1974 death were the subject of the 1983 filmSilkwood.In a civil suit against Kerr-McGee by the Estate of Karen Silkwood, JudgeFrank Theistold 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."[15]

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.[16]In 1984, theU.S. Supreme Courtrestored the original verdict (Silkwood v. Kerr-McGee Corp.[broken anchor],464 U.S. 283(1984)).[17]The suit was headed for retrial when Kerr-McGee settled out of court in 1986 for $1.38 million, admitting no liability.[15][18]Gerry Spence,the noted trial lawyer fromJackson Hole, Wyoming,represented the Karen Silkwood estate in this litigation.

Environmental record

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Kerr-McGee is at least partially responsible for large scaleperchloratewater contamination first discovered in the Lower Colorado River in 1997; It stemmed from land used by a facility inHenderson, Nevadawhich was owned and operated by Kerr-McGee Chemical LLC (as of 2011 Tronox LLC), where perchlorate was produced from 1945 until 1998.[19]

In May 2007, Kerr-McGee Corp spent $18 million onpollutioncontrols in the first comprehensivesettlementunder theClean Air Actthat reduced harmful emission and conservednatural gasat production facilities acrossUtahandColorado.The settlement addressed violations discovered at several of Kerr-McGee'snatural gascompressorstations located on theUintah and Ouray Indian ReservationnearVernal, Utah,and in the DenverJulesburgBasin nearWeld County, Colorado.In addition to implementingpollutioncontrols, the agreement required Kerr-McGee to pay a $200,000penalty,and spend $250,000 onenvironmentalprojects to benefit the areas in which violations occurred.[20]In July 2005, theUnited 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 installcarbon monoxideemissions controls required under theClean Air Actwhen it installed a newopen hearth furnacein 1993. The company spent $4.8 million to install properpollution controlsat the facility reducing total carbon monoxide emission by 115tonsper year, an 80% reduction from previous levels.[21]

Nuclear production

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Kerr-McGee was involved in several nuclear endeavors.[22]

In 1952 Kerr-McGee bought theNavajo Uranium Mining Company,including an interest in a number of mines. It also bought an ore buying station atShiprock, New Mexico.In 1953 it built a processing plant (called theShiprock Mill) near the buying station. In 1963 the mines and mill were sold to theVanadium 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 nearGrants, New MexicoandAmbrosia Lake.In 1983 the mill was taken over by a new Kerr-McGee subsidiary called theQuivira Mining Corporation.Quivira was sold to Rio Algom in 1989.[25][26][27]

Kerr-McGee purchased theLakeview Mining CompanyofLake County, Oregonin 1961. The plant was shut down in late 1960 or 1961 and sold toAtlantic Richfieldin 1968.[28][29]

From about 1962-1966 Kerr-McGee processed uranium at its oil refinery site inCushing, Oklahoma.It received licenses in 1962 for processing uranium and thorium, and in 1963 forenriched 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[30] [31][32]

In about 1965 Kerr-McGee started producing uranium fuel at itsCimarron Fuel Fabrication Site.This was located near theCimarron RiverandCrescent, Oklahoma.From 1973 to 1975 it would also producemixed Plutonium-Uranium Oxide (MOX)'driver fuel pins' for use in theFast Flux Test Facilityat theHanford SiteinWashingtonState. The plant shut down in 1976.[33]

In 1967 Kerr-McGee bought theAmerican Potash and Chemical Company,which owned theRare Earths FacilityinWest Chicago, Illinois.This facility producedthorium,radium,anduraniumbyacid leachingofmonazitesands and other ores. It stopped work in 1973.[34][35][36]

In 1968 the company started construction on what would become theSequoyah Fuels Corporationplant inGore, Oklahoma.In 1970 the plant started turningyellowcake uraniumintouranium hexafluoride.In 1987 it began producingdepleteduranium tetrafluorideusingdepleted uranium hexafluorideas input. In 1988 SFC was sold toGeneral Atomics.In late November 1993 production ceased after a stuck valve in the processing plant stuck open and caused an uncontrolled reaction. The uncontrolled reaction resulted in a large visible cloud leaving the plant. Production ceased immediately and the plant operations were suspended to never resume.[37]

Nuclear corporations, subsidiaries, and spinoffs

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In 1956 Kerr-McGee formed theKermac Nuclear Fuels Corporationin partnership with Anderson Development Corp, andPacific Uranium MinesCo. It was active in New Mexico.[23][24][25]

Some time in the 1970s, the Kerr-McGee Nuclear Corporation was formed. In 1983 it split into theQuivira Mining CorporationandSequoyah Fuels Corporation.Quivira got theAmbrosia Lake,NM mine,[25]while Sequoyah Fuels took over the Sequoyah plant inGore, OK,as well as theCimarronplant inCrescent, OK.Sequoyah was sold toGeneral Atomicsin 1988.[38]and Quivira was sold to Rio Algom in 1989.[39][26][40]

The Cimarron Corporation was a subdivision that took control of the Cimarron plant in 1988.[41]WhenTronoxwas spun off in 2006, it would get ownership of Cimarron Corporation and responsibility for the plant as well.[41]

Kerr-McGee bought theAmerican Potash and Chemical Companyin 1967, including itsRare Earths Facilitythat processed uranium and thorium.AMPOTbecameKerr-McGee Chemical Companyaround 1970 or 1974. In 2005 this becameTronox.Tronox became independent in 2006, a few months before Kerr-McGee was sold toAnadarko 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.[42]

Licenses

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

  • SNM-928 - Cimarron - uranium fuel fabrication
  • SNM-1174 - Cimarron - mixed oxide fuel (MOX) fabrication -?-1993[41]
  • STA-583 - Rare Earths Facility
  • SMB-664 - Cushing refinery - uranium and thorium. 1962-1966[43]
  • SNM-695 - Cushing refinery - enriched uranium. 1963-1966[43]
  • SNM-1999 - Cushing refinery - cleanup. 1993-2006[31]
  • SUB-1010 - Sequoyah[44]
  • SUA-1473 - Ambrosia Lake source materials license (currently managed by BHP)[45]

References

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  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 SouthwestArchived2013-11-10 at theWayback Machine,1996 BYU L. R. 449, Brigham Young Univ.
  3. ^Kerr-McGee v. Navajo Tribe,471U.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.Retrieved2010-10-01.
  6. ^"Kerr-McGee renueva su búsqueda de hidrocarburos en Sáhara Occidental"(in Spanish). Afrol News. 2005-05-06. Archived fromthe originalon 2008-10-07.Retrieved2015-01-23.
  7. ^"Recommendation on Exclusion from the Government Petroleum Fund's Investment Universe of the Company Kerr-McGee Corporation".Ministry of Finance of Norway. 2005-04-12.Retrieved2010-10-01.
  8. ^"Inversoras venden acciones Kerr-McGee por conflicto Sahara"(in Spanish). Western Sahara Resources Watch (EFE). 2005-06-30.Retrieved2010-10-01.
  9. ^"Last oil company withdraws from Western Sahara".Afrol News. 2006-05-02.Retrieved2010-10-01.
  10. ^31 U.S.C. § 3729. (See alsoThe Royalty Treatment. NOW | PBS, May 11, 2007, retrieved April 22, 2015.)
  11. ^Maxwell v. Kerr-McGee Oil & Gas Corp.,486 F.Supp.2d 1217, 1221 (D.Colo.2007)
  12. ^Maxwell,486 F.Supp.2d at 1222
  13. ^U.S. ex rel. Maxwell v. Kerr-McGee Oil & Gas Corp.,540 F.3d 1180 (10th Cir.2008)
  14. ^Lichtblau, Eric (2010-09-20)."Oil Company Fined in Royalty Case".The New York Times.ISSN0362-4331.Retrieved2023-02-22.
  15. ^abRashke, Richard L.The Killing of Karen Silkwood: The Story Behind the Kerr-McGee Plutonium Case.2d ed. Ithaca, N.Y.: Cornell University Press, 2000.ISBN0-8014-8667-X
  16. ^"Silkwood Award Is Reversed."Associated Press.December 12, 1981.
  17. ^"High Court Clears Award in Karen Silkwood Case."New York Times.January 12, 1984.
  18. ^"Business Digest."New York Times.August 23, 1986.
  19. ^"Southern Nevada Perchlorate Clean Up Project".Nevada Department of Conservation and Natural Resources. 16 August 2011. Archived fromthe originalon 23 May 2011.Retrieved13 May2014.
  20. ^Kerr-McGee Reaches Major Settlement on Natural Gas Production in Colorado and Utah | Newsroom | United States Environmental Protection Agency|U.S. Environmental Protection Agency
  21. ^U.S. EPA settles air pollution case with Kerr-McGee in Henderson, Nev. | Newsroom | United States Environmental Protection Agency|U.S. Environmental Protection Agency
  22. ^Sources:
  23. ^abO'Dell, Larry."NUCLEAR POWER".Encyclopedia of Oklahoma History and Culture.Oklahoma Historical Society / Oklahoma State University. Archived fromthe originalon 2010-07-27.Retrieved2009-10-02.
  24. ^ab"Shiprock Mill Site".Energy Information Administration. 2005-10-09. Archived fromthe originalon 2009-10-16.Retrieved2009-10-02.
  25. ^abcV. McLemore (February 2007)."Uranium Mining Resources in New Mexico"(PDF).SME Annual Meeting.Retrieved2009-10-03.
  26. ^ab"DECISION AND ORDER OF THE DEPARTMENT OF ENERGY".US DOE.1997-03-13. Archived fromthe originalon 2009-09-02.Retrieved2009-10-03.
  27. ^"ATOMIC ENERGY: Uranium Jackpot".Time.1957-09-30. Archived fromthe originalon October 19, 2011.Retrieved2009-10-07.
  28. ^"OLM- Lakeview Oregon Disposal Site factsheet".lm.doe.gov.November 2018.Retrieved6 July2020.
  29. ^Ho, Clifford K."Lakeview Mill Site".sandia.gov.Retrieved6 July2020.
  30. ^"PUBLIC HEALTH ASSESSMENT KERR-MCGEE REFINERY SITE".Centers for Disease Control.Archived fromthe originalon August 24, 1999.Retrieved2009-10-01.
  31. ^ab"Kerr-McGee Corporation's Cushing Refinery Site".US NRC.Retrieved2009-10-02.
  32. ^Michael Hillesheim and Gail Mosey (November 2013)."Feasibility Study of Economics and Performance of Geothermal Power Generation at the Lakeview Uranium Mill Site in Lakeview, Oregon"(PDF).nrel.gov.Retrieved6 July2020.
  33. ^Sources:
  34. ^U.S. Environmental Protection Agency(July 2009)."NPL Fact Sheet, KERR-MCGEE (SEWAGE TREATMENT PLANT)".Retrieved2009-10-02.
  35. ^Appeals, United States Court of; Circuit, Ninth (1995-10-17)."75 F3d 536 General Atomics v. United States Nuclear Regulatory Commission".openjurist.org. p. 536.Retrieved2009-10-02.
  36. ^"PACIFIC ENGINEERING & PRODUCTION COMPANY OF NEVADA, Plaintiff-Appellee, v. KERR-McGEE CORPORATION".atlaw /US 10th Circuit.1977.Retrieved2009-10-06.
  37. ^Sources:
  38. ^General Atomics vs NRC, 1995
  39. ^Design and use of plasma APC cutting equipment(Report). Sequoyah Fuels Corp., Oklahoma City, OK (United States). 1994-05-01.doi:10.2172/10151409.
  40. ^(technically, GA owned Sequoyah Holding Corporation, which owned Sequoyah Fuels International, which owned Sequoyah Fuels). SeeGeneral Atomics vs NRC, 1995,footnote 1
  41. ^abc"Kerr-McGee - Cimarron".US NRC.April 2009.Retrieved2009-10-01.
  42. ^Sources:
  43. ^abAbelquist, E.W. (July 1997)."FINAL STATUS SURVEY"(PDF).US NRC/Oak Ridge Institute for Science and Education.Archived fromthe original(PDF)on 2009-08-14.Retrieved2009-10-02.
  44. ^"Environmental Impact Statement for the Reclamation of the Sequoyah Fuels Corporation Site in Gore, Oklahoma, Final Report"(PDF).US NRC.May 2008.Retrieved2009-10-03.
  45. ^"Rio Algom - Ambrosia Lake".United States Nuclear Regulatory Commission.