Alabama Explosion

Light from a light pole shows a house near a plume of smoke from a Colonial Pipeline explosion, Monday, Oct. 31, 2016, in Helena, Ala. Colonial Pipeline said in a statement that it has shut down its main pipeline in Alabama after the explosion in a rural part of the state outside Birmingham. (AP Photo/Brynn Anderson)

(Brynn Anderson)

Koch Industries, the privately held multibillion dollar corporation and largest shareholder of the Colonial Pipeline Company, has no liability over Monday's deadly pipeline explosion in Shelby County, Alabama.



The company, based in Wichita, Kansas, owns a little over 28 percent of the Colonial Pipeline Company but is deemed only as an investor along with four other co-owners, a New York energy analyst told AL.com Tuesday. None of the other Colonial owners are responsible for the explosion that killed one and injured at least five.

"The companies that own the Colonial Pipeline Company are a lot like the shareholders of a publicly traded organization, so they aren't going to be held responsible for workplace incidents that happen," Peter Molica, a senior director and analyst of pipelines and midstream energy at Fitch Ratings, one of the country's biggest credit rating companies. "The overall ramifications of the explosion probably won't be known until the investigation is complete, but I'm sure the owners are worried that there is trouble at one of their investments and are looking closely at insurance coverage."

The explosion was reported to have occurred after a piece of human-operated excavation equipment ripped into Line 1, resulting in the "release of gasoline which ignited and caused a fire," according to a press release by the Pipeline and Hazardous Materials Safety Administration (PHMSA), a branch of the Department of Transport.



At the time, Colonial contractors were "working on repairs on Line 1 relating to the Sept. 9 failure and associated release of 6000 barrels of gasoline into a retention pond," said the PHMSA press release. "PHMSA continues to investigate the Oct. 31 incident and the cause of the Sept. 9 failure. If PHMSA determines the operator has violated any Federal pipeline standards, the agency can issue an enforcement action, levy civil penalties, or refer the case for criminal investigation."

Steve Baker, director of communications and public affairs at Colonial told AL.com that the board of directors was following events closely. "Our leadership team is in regular communication with our board, so that they have current information on a timely basis," said Baker. "The highest priority of the entire Colonial family continues to be ensuring the safety of responders, and supporting the personnel and their families who have been impacted by this event. Our thoughts and prayers remain with the family of our colleague who succumbed to his injuries as well as those who continue to receive medical care."

Colonial Pipeline was originally founded by nine oil companies in 1962 but has since been run by a number of different entities over the last 54 years. Along with largest shareholder Koch Industries, Keats Pipeline Investors, a group made up of a large New York investment company and the South Korea National Pension Service, owns 23.44 percent. The Canadian pension fund, known as the Quebec Deposit and Investment fund, owns 16.55 percent, while Dutch Shell and Industry Funds Management own 16.12 percent and 15.80 percent, respectively.

Colonial is a single-asset pipeline company, which exposes it to a greater amount of regulatory, economic, and operating risk than a company with multiple assets, according to a note released by Molica in March this year. The company reported net income of $87.3 million to Federal Energy Regulatory Commission in the third quarter, up 2.2% from the prior year.

Media representatives from Koch Industries and Shell referred AL.com's calls and email requests to the Colonial Pipeline Company's press relations team. The three additional owners did not respond to comment before publication.