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Colorado oil and gas regulators notify Kerr McGee of $18.25 million fine for Firestone explosion

Company says it will not contest fines or violations
Posted at 11:21 AM, Mar 12, 2020
and last updated 2020-03-13 04:44:39-04

DENVER – The Colorado Oil and Gas Conservation Commission (COGCC) on Thursday announced it is seeking an $18.25 million penalty against Kerr McGee for the deadly 2017 Firestone home explosion – the largest-ever enforcement penalty sought by the commission.

The penalty against Kerr McGee, which is a subsidiary of Occidental Petroleum, is more than 11 times larger than any other penalty levied by the COGCC, Director Jeff Robbins said in a news conference Thursday morning. The COGCC in 2018 fined Noble Energy $1.6 million for mechanical integrity testing flaws.

The Notice of Alleged Violation (NOAV) and penalty accounts for the deaths of Mark Martinez and Joey Irwin and the injuries to Erin Martinez as an aggravating factor in the fine notice, Robbins said, and increased one of the penalties from $3.6 million to $5.4 million.

The NOAV alleged violations of four COGCC rules regarding a flowline that had been abandoned but was put back into use, but it was severed and leaked methane into the basement of the home, which caused the explosion on April 17, 2017. The notice says that Kerr McGee failed to follow COGCC rules about keeping its properties in good working condition and to protect public health, safety and the environment.

Robbins said the $18.25 million comes because the COGCC is assessing the maximum penalty, for the maximum number of days, it is allowed. He said there was “no discount applied to any of the violations.”

“It is my duty, along with the entire COGCC staff, to ensure that the state of Colorado’s oil and gas operations are conducted in a manner that is protective of the public’s health, safety, welfare, wildlife and the environment as directed by SB 19-181,” Robbins said in a statement. “The COGCC will continue to work to protect every person’s safety in oil and gas operations using our rulemaking process and our enforcement tools.”

Now that the NOAV has been sent, Kerr McGee and Occidental will send an answer to the COGCC, which will be considered at a special hearing on April 6 in Denver.

Robbins said that the COGCC had been working with Kerr McGee during the process to develop a plan to use the penalty money to fund special projects for flowline and air quality monitoring, an aerial survey project, and other emissions-tracking technology.

In a statement, Occidental spokesperson Jennifer Brice said the company would not contest the fines or violations and would be working with the COGCC on the special projects.

“We are mindful of the events of April 17, 2017, every day, and our thoughts continue to be with the families, friends and communities affected by the Firestone tragedy,” Brice said. “We respect the Colorado Oil and Gas Conservation Commission’s (COGCC) role in investigating this tragedy, and we will not contest the fines, nor the violations. Part of the penalty will include a commitment to fund a variety of public projects that aim to strengthen safety and best practices for the industry and for all Coloradans living near oil and gas operations. We will work with COGCC on those projects.”

“Throughout this tragedy, Anadarko cooperated with all local and federal agencies that investigated the accident. In that same cooperative spirit, we will continue to work with the state, listen to our stakeholders and collaborate with the communities around us,” she added.

Occidental acquired Anadarko Petroleum, the former parent company of Kerr McGee, last August.

The state has since implemented into law SB-181, which ordered the COGCC to prioritize public health, safety and the environment in dealing with the oil and gas industry in Colorado. Last November, regulators approved a set of safety measures designed to increase citizen protections in areas surrounding thousands of miles of underground oil and gas pipelines in the state.

Anadarko and the Martinez and Irwin families came to an agreement to resolve claims made against the company in May 2018, though the details of the agreement are confidential. Anadarko also apologized for the explosion.

Robbins said Thursday’s notice came nearly three years after the explosion because the commission got special permission to extend the time period it had to file while the NTSB investigation wrapped up.

Erin Martinez, whom Robbins said had been consulted with regarding the fines, said in a statement Thursday that she hoped the penalty and special projects would further the changes already going into place under SB-181.

“No amount of penalty or fine is ever going to take away our immense pain and suffering nor bring Mark and Joey back. We have to wake up every morning and go to bed every night living with this horrific nightmare. Our lives are forever changed. It is hard to comprehend that the only recourse is a penalty or a fine, how do you put a price on human life? However, legally that is all that can be done,” Martinez said.

“Almost three years later, there is finally some accountability. I am encouraged to see the COGCC enact its new role to protect the public health and today’s action sends a message that Colorado won’t tolerate risky, negligent behavior that endangers our families’ ability to live safely in our own homes,” she added.

“The penalty itself will be used to put practices in place that will hopefully prevent future similar tragedies. The prevention of a future tragedy is a great way to honor both mark and Joey. I appreciate the COGCC hard work and dedication in creating this fine and look forward to seeing the penalty at work in keeping us all safer.”