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Kerr-McGee Reaches Major Settlement on Natural Gas Production in Colorado and Utah

Release Date: 05/17/2007
Contact Information: EPA, Roxanne Smith, (202) 564-4355 / [email protected] ENRD (202) 514-2007, TDD (202) 514-1888 / www.usdoj.gov

(Washington, D.C. - May 17, 2007) Kerr-McGee Corp. will spend $18 million on pollution controls in the first comprehensive settlement under the Clean Air Act that will reduce harmful emissions and conserve natural gas at production facilities across Utah and Colorado. The control measures and operational improvements are expected to reduce annual emissions of air pollutants by more than 2,500 tons in Utah and more than 3,000 tons in Colorado, the Justice Department and the Environmental Protection Agency (EPA) announced today.

Today's settlement, filed in U.S. District Court in Denver, addresses alleged violations discovered at several of Kerr-McGee's natural gas compressor stations located on the Uinta and Ouray Indian Reservation near Vernal, Utah, and in the Denver Julesburg Basin near Weld County, Colo. Kerr-McGee self-disclosed a number of the violations, and has worked cooperatively with federal and state regulators to resolve them. In addition to implementing pollution controls, the agreement requires Kerr-McGee to pay a $200,000 penalty, and spend $250,000 on environmental projects to benefit the areas in which the violations occurred.
"Conserving energy and cutting greenhouse gases is a powerful two-punch combination. This settlement will save enough natural gas to heat 7,200 homes per year and reduces the impact on climate change equivalent to the planting of more than 60,000 trees," said Granta Nakayama, EPA's assistant administrator for Enforcement and Compliance Assurance.

"Today's agreement with Kerr-McGee is the result of a very successful partnership with the state of Colorado," said Matthew J. McKeown, acting assistant attorney general for the Justice Department's Environment and Natural Resources Division. "Kerr-McGee has taken quick action to address environmental violations in a way that will conserve natural gas and have lasting air quality benefits."

"Today's action shows the Department is taking strong action to protect air quality at oil and gas production facilities in the Rocky Mountain West," said Colorado U.S. Attorney Troy Eid. "It also demonstrates that actions to reduce pollution can conserve significant amounts of natural gas in addition to their public health benefits."

Independently, the state of Colorado initiated enforcement actions against Kerr-McGee during the latter half of 2005 alleging a series of violations at the Fort Lupton, Frederick, Dougan, Hudson and Platteville Compressor Stations located in Weld County, Colo. As part of their broader cooperative efforts to reduce oil and gas emissions in the Rocky Mountain Region, in January 2006 Colorado and the EPA agreed to enter into joint settlement discussions with Kerr-McGee regarding the Utah and Colorado allegations.

Kerr-McGee will spend $100,000 and $150,000 respectively on two environmental projects. The money will be used to reduce dust emissions from roads that service oil and gas facilities in Utah, and to identify and retire vehicles that have higher emissions of air pollutants than newer vehicles in Denver. These older, high-emitting vehicles disproportionately contribute to the Denver area's air quality problems.

The total expected annual emission reductions from the pollution controls and environmental projects will be approximately 1,750 tons of nitrogen oxides, 1,156 tons of carbon monoxide, 686 tons of sulfur dioxide, and 2,195 tons of volatile organic compounds. Through these actions, the company will return an estimated 456 million standard cubic feet of natural gas to the marketplace in the first year following implementation of pollution control measures.

Kerr-McGee will also implement the following emissions-reducing activities:

• Install low-emission dehydrators at its new facilities in the Uinta Basin;
• Install emission controls on storage tanks located at the Cottonwood and Ouray facilities in Utah and the Brighton facility in Colorado;
• Install emission controls on 11 compressor engines in the Denver Basin and 25 compressor engines in the Uinta Basin;
• Retrofit high-bleed pneumatic controllers with low-bleed pneumatic controllers at facilities in the Denver and Uinta Basins;
• Install liquid bed sulfur removal when necessary to remove hydrogen sulfide in the Uinta Basin;
• Spend $300,000 to develop an air monitoring program in the Uinta Basin;
• Implement a pilot project that uses a system to gather multi-phase fluids from multiple producing natural gas well sites for collection, separation, and metering at a central facility in the Uinta Basin;
• Conduct a study to increase natural gas recovery and reduce air emissions at five facilities in the Uinta Basin and five facilities in the Denver Basin.