HOUSTON — Kern River Holdings Inc., a wholly-owned subsidiary of San Antoniobased All American Oil and Gas Inc., has filed a breach of contract claim against Shell Trading (US) Co., a Houston-based affiliate of Royal Dutch Shell.
The lawsuit, filed in Harris County District Court, alleges that Shell Trading failed to take delivery of crude oil shipments and improperly sought to deny responsibility for service interruptions when the company-owned San Pablo Bay Pipeline suffered a rupture in May of 2016 that spilled more than 20,000 gallons of oil near Tracy, California.
As a result of the rupture, Kern River was forced to store curtailed production from its Bakersfield facility for almost 60 days while the pipeline was down. According to the lawsuit, Shell Trading was obligated by contract to take delivery of crude oil production by truck, and failed to take reasonable steps to mitigate any losses by Kern River due to service interruptions.
The breach of contract claim represents Kern River’s lost revenues, expenses for the storage tanks, and damage resulting from decreased production once service was restored.
Kern River has previously negotiated a business interruption insurance claim
concerning the event with its insurance carrier AIG, which was paid in full. Kern River’s total damage claim against Shell Trading is for $3,306, 348, subject to AIG’s subrogation amount for its insurance payment.
Dave Katz, Esq.
Kern River Holdings