Kerr-McGee

Kerr-McGee

File:Kerr-McGee.svg
Formerly	Anderson & Kerr Drilling; Kerlyn Oil Co.; Kerr-McGee Oil Industries Inc.
Industry	Energy
Founded	1929 (1929) in Oklahoma, United States
Founder	Robert S. Kerr
Defunct	Template:End date and age
Fate	Acquired by Anadarko Petroleum
Headquarters	Oklahoma City, Oklahoma , United States

The Kerr-McGee Corporation, founded in 1929, was a prominent American energy firm engaged in oil exploration, production of crude oil and natural gas, as well as operations in uranium mining, milling, and perchlorate manufacturing across various nations. On June 23, 2006, this company was purchased by Anadarko Petroleum through a cash transaction worth $16.5 billion plus $2.6 billion in debt, resulting in the relocation of its headquarters from Oklahoma. Following this acquisition, the majority of Kerr-McGee’s assets were absorbed into Occidental Petroleum.

History

Originally established as Anderson & Kerr Drilling Company by entrepreneur and politician Robert S. Kerr alongside oil driller James L. Anderson, the enterprise adopted the name Kerr-McGee Oil Industries, Inc. after Dean A. McGee—formerly chief geologist at Phillips Petroleum—joined in 1946. The company’s initial focus was on offshore oil exploration, becoming a pioneer in deploying drillships and Spar platforms within the Gulf of Mexico.

Kerr-McGee expanded its onshore operations and international footprint through the 1999 acquisition of Oryx Energy Company, which included interests in Algeria and western Kazakhstan. Additional purchases of HS Resources and Westport Resources Corp. established a presence in Denver while broadening resource assets throughout the Rocky Mountain region.

Up until 2005, Kerr-McGee managed two primary divisions: one dedicated to chemicals and another to oil-related activities. The chemical segment was separated via an initial public offering as Tronox, headquartered in Oklahoma City, while exploration and production oversight continued from Denver and Houston offices. The company also marketed motor oil under brand names including Deep Rock, Coast, Power, Peoples, and Blue Velvet.

The 2006 takeover by Anadarko Petroleum for $16.5 billion plus $2.6 billion in debt resulted in the termination of Kerr-McGee’s independent business operations except for Tronox. Following the merger, numerous former Kerr-McGee executives assumed senior positions at Anadarko, influencing the company’s leadership structure.

Kerr-McGee Corp. v. Navajo Tribe

The Supreme Court case Kerr-McGee Corp. v. Navajo Tribe, 471 U.S. 195 (1985), confirmed that Indian tribes possess the authority to levy taxes on non-tribal businesses operating within their reservations without requiring approval from the Secretary of the Interior.

In 1978, the Navajo Tribal Council passed two tax ordinances: a 3% tax on leaseholds—including mineral rights—and a 5% tax on business activities.

Kerr-McGee, which held substantial mineral interests on Navajo lands, sought a federal injunction to prevent enforcement of these taxes, contending that tribal taxation over non-Indians necessitated federal consent. While the district court granted an injunction, the Ninth Circuit Court reversed this decision. Ultimately, the Supreme Court unanimously upheld the tribe’s right to impose taxes on Kerr-McGee, affirming tribal sovereignty and noting no conflicting federal statutes prohibited such taxation.

United States

Kerr-McGee's key oil and gas activities were concentrated in the Mid-Continent area, the Rocky Mountains, onshore Louisiana, and the offshore regions of the Gulf of Mexico. The company’s corporate headquarters were situated in Downtown Oklahoma City, with significant office locations also established in Denver and Houston’s Greenspoint district.

During the 1970s, Kerr-McGee expanded its business to include forest products and mineral extraction operations across New Mexico, Arizona, Idaho, Wyoming, and Illinois. The majority of its U.S.-based projects took place on federally managed lands or within Navajo tribal boundaries. Additionally, from 1974 through 1990, the company operated a potash manufacturing plant in California.

Mainland China

Kerr-McGee engaged in exploration, development, and production ventures in Bohai Bay near Beijing, with further exploration initiatives scheduled for the South China Sea. These Chinese operations were primarily directed from the company’s office located in Beijing.

Other locations

The firm and its subsidiaries formerly maintained operations in western Kazakhstan, western Australia, Brazil, Trinidad, Benin, the United Kingdom, as well as various other smaller international sites.

Exploration in disputed areas of Western Sahara

In 2001, Kerr-McGee attracted international condemnation for conducting hydrocarbon exploration off the coast of the Moroccan-administered disputed region of Western Sahara. By 2003, Norway’s private investment fund Skagen Vekst divested its €3.6 million stake due to ethical objections concerning Kerr-McGee’s activities. Despite opposition, the company extended its contract with Moroccan authorities until October 2005. In June of that year, Norway’s Government Petroleum Fund withdrew its $52.7 million investment citing "particularly serious violations of fundamental ethical norms" linked to Western Sahara. Two additional Norwegian private funds—Storebrand and KLP—also divested €1 million and €1.45 million respectively during that month. On May 2, 2006, Kerr-McGee declared it would halt drilling operations off Western Sahara by choosing not to renew its agreement with Morocco.

Underpayment of royalties to the U.S. government

On June 14, 2004, Bobby Maxwell, a senior auditor with the U.S. Department of the Interior’s Minerals Management Service (MMS), initiated a lawsuit under the False Claims Act against Kerr-McGee. Maxwell accused the company of deliberately submitting inaccurate monthly royalty reports to MMS that understated payments owed to the federal government. In January 2007, a jury determined that Kerr-McGee had underpaid royalties and awarded $7.6 million in damages; however, the case was later dismissed due to lack of jurisdiction. Maxwell appealed this decision, and in 2008 the Tenth Circuit Court reversed the dismissal and sent the case back for further proceedings. In 2010, U.S. District Judge Marcia S. Krieger ordered Kerr-McGee to pay triple damages amounting to nearly $23 million. As whistleblower, Maxwell was entitled to approximately $5.7 million, much of which was allocated toward legal expenses incurred during his decade-long effort to ensure accurate royalty payments.

Karen Silkwood

Karen Silkwood worked at Kerr-McGee’s Cimarron Fuel Fabrication Facility and was reportedly exposed to plutonium while investigating safety breaches. Her activism and subsequent death in 1974 inspired the 1983 film Silkwood. In a civil lawsuit brought by her estate, a jury found Kerr-McGee responsible and awarded $505,000 in compensatory damages along with $10 million in punitive damages; however, on appeal, punitive damages were reduced to $5,000. The U.S. Supreme Court reinstated the initial verdict in 1984 (Silkwood v. Kerr-McGee Corp., 464 U.S. 283). Prior to retrial proceedings, Kerr-McGee settled out of court in 1986 for $1.38 million without admitting fault. Renowned trial attorney Gerry Spence represented Silkwood’s estate throughout the legal process.

Environmental record

Kerr-McGee was linked to significant perchlorate contamination in water, first detected in the Lower Colorado River in 1997. The source was traced back to land utilized by a Kerr-McGee Chemical LLC facility (later known as Tronox LLC) in Henderson, Nevada, where perchlorate manufacturing took place from 1945 until 1998.

In May 2007, Kerr-McGee invested $18 million in pollution control measures as part of a comprehensive settlement under the Clean Air Act. This agreement resulted in reduced emissions and improved natural gas efficiency at production locations in Utah and Colorado. The settlement resolved violations at several natural gas compressor stations situated on the Uintah and Ouray Indian Reservation near Vernal, Utah, as well as within the Denver Julesburg Basin. Additionally, Kerr-McGee incurred a $200,000 fine and dedicated $250,000 toward environmental initiatives benefiting impacted communities.

In July 2005, the United States Environmental Protection Agency (EPA) reached a settlement with Kerr-McGee Chemical concerning air permit infractions dating back to 1993. The company had neglected to install mandated carbon monoxide controls when commissioning a new open hearth furnace. As part of the resolution, Kerr-McGee allocated $4.8 million toward pollution abatement technologies, achieving an annual carbon monoxide emission reduction of 115 tons—an 80% decline.

A pivotal 2014 court decision required Anadarko to pay between $5.1 billion and $14.1 billion to address environmental liabilities linked to Kerr-McGee’s deceptive asset transfers in 2005, which left hazardous site cleanup responsibilities unresolved. This ruling stands as one of the most substantial environmental settlements in U.S. bankruptcy and regulatory enforcement history, mandating extensive remediation across numerous contaminated locations nationwide.

Nuclear production

Kerr-McGee pursued various nuclear-related enterprises throughout its history. In 1952, it acquired the Navajo Uranium Mining Company, encompassing multiple mines and an ore purchasing station at Shiprock, New Mexico; subsequently, it constructed the Shiprock Mill in 1953. These holdings were sold to Vanadium Corporation of America in 1963.

The company partnered to establish Kermac Nuclear Fuels Corporation, which built a uranium mill near Grants and Ambrosia Lake, New Mexico during 1957-58. In 1983, Kerr-McGee’s subsidiary Quivira Mining Corporation assumed control of this mill; Quivira was later sold to Rio Algom in 1989.

In 1961, Kerr-McGee acquired Lakeview Mining Company located in Oregon but ceased plant operations that same year, eventually selling the site to Atlantic Richfield in 1968.

Between 1962 and 1966, uranium processing took place at Kerr-McGee’s refinery site in Cushing, Oklahoma under licenses covering uranium, thorium processing, and enriched uranium production. Operations ended in 1966 with cleanup activities continuing into the 1990s.

Around 1965, uranium fuel fabrication commenced at the Cimarron Fuel Fabrication Site near Crescent, Oklahoma. From 1973 to 1975, this facility produced mixed Plutonium-Uranium Oxide (MOX) fuel rods for the Fast Flux Test Facility at the Hanford Site before closing in 1976.

In 1967, Kerr-McGee purchased American Potash and Chemical Company, which operated a Rare Earths Facility in West Chicago, Illinois that manufactured thorium, radium, and uranium until halting production in 1973.

Construction of the Sequoyah Fuels Corporation plant began in Gore, Oklahoma in 1968. By 1970 it was converting yellowcake uranium into uranium hexafluoride; production of depleted uranium tetrafluoride started in 1987. The facility was sold to General Atomics in 1988 but ceased operations suddenly in late 1993 following an uncontrolled chemical reaction caused by a stuck valve; production never resumed thereafter.

These nuclear ventures illustrate Kerr-McGee’s strategic expansion into nuclear fuel manufacturing and processing throughout its corporate timeline.

Nuclear enterprises, affiliates, and spin-offs

In 1956, Kerr-McGee partnered with Anderson Development Corp and Pacific Uranium Mines Co. to create the Kermac Nuclear Fuels Corporation, which operated in New Mexico.

The 1970s saw the formation of Kerr-McGee Nuclear Corporation, which later divided in 1983 into Quivira Mining Corporation and Sequoyah Fuels Corporation. Quivira oversaw operations at the Ambrosia Lake mine, while Sequoyah Fuels managed the Sequoyah facility in Gore, Oklahoma, along with the Cimarron Fuel Fabrication Site located in Crescent. Ownership of Sequoyah transferred to General Atomics in 1988, and Quivira was acquired by Rio Algom in 1989. (Sequoyah was held via Sequoyah Holding Corporation and Sequoyah Fuels International.)

Control of the Cimarron plant shifted to Cimarron Corporation in 1988. Upon its spin-off in 2006, Tronox took over Cimarron Corporation and assumed operational responsibility for the facility.

In 1967, Kerr-McGee purchased the American Potash and Chemical Company, which included a Rare Earths Facility that processed uranium and thorium. By the early 1970s, AMPOT had been renamed Kerr-McGee Chemical Company, eventually evolving into Tronox in 2005. Tronox became an independent entity in 2006 shortly before Kerr-McGee was sold to Anadarko Petroleum. Later, Tronox filed for bankruptcy partly due to environmental liabilities inherited from Kerr-McGee. In 2009, purchasers of Tronox initiated a class-action lawsuit against Anadarko alleging misrepresentation to investors.

Licenses

Within the United States, nuclear enterprises must obtain permits from the Nuclear Regulatory Commission. Kerr-McGee maintained several licenses, including:

• SNM-928 – Uranium fuel fabrication at Cimarron
• SNM-1174 – Mixed oxide fuel (MOX) fabrication at Cimarron (terminated in 1993)
• STA-583 – Rare Earths Facility operations
• SMB-664 – Uranium and thorium processing at Cushing refinery (1962–1966)
• SNM-695 – Enriched uranium processing at Cushing refinery (1963–1966)
• SNM-1999 – Cleanup activities at Cushing refinery (1993–2006)
• SUB-1010 – Sequoyah site operations
• SUA-1473 – Source materials license for Ambrosia Lake (currently under BHP management)

These authorizations illustrate Kerr-McGee’s broad engagement in nuclear fuel production and associated activities, highlighting its diversified energy portfolio alongside adherence to industry regulations.