A search by police officers and KPC officials at the compound unearthed an underground tank full of fuel. The occupants of the house fled the scene and were yet to be traced.
Kisumu County Commissioner Hussein Alasow said investigations are ongoing to establish what caused the leakage.
He confirmed that the leakage happened along the pipeline but declined to give full details of the incident.
He said an unknown person connected the pipe from the KPC line to a septic tank in his compound where lots of oil was discovered.
"There is fuel in the septic tank. We are looking for the occupants of the house to establish what happened. We ask the members of the public to keep off this area," said Hussein.
He confirmed it was the third leakage along the line.
"People are so greedy. Some people are attempting to make quick money. We are also worried about the recurrence," he added.
The two-bedroomed house at the centre of the controversy has only a generator, a fire extinguisher, a small mattress and food remains.
Neighbours claimed that a white pickup truck always frequented the compound every evening with drums.