Former Anadarko brass slam company for safety risks, callousness

Six former Anadarko employees have come forward on behalf of investors to describe a culture of corporate callousness that puts profits before safety. The six include the oil and gas giant’s one-time chief lobbyist and spokeswoman, both of whom say Anadarko can’t be trusted to maintain deteriorating wells like the one that caused last year’s fatal home explosion in Firestone.

An amended complaint in a shareholders’ lawsuit filed in U.S. District Court in Houston likens Anadarko’s operations in Colorado to “a ticking time bomb.”

The complaint includes previously unreported interviews with Chris Castilian, Anadarko’s former longtime government relations chief in Colorado, and Robin Olsen, its former spokeswoman in the state. Castilian – who created Coloradans for Responsible Energy Development (CRED) – says that when it comes to safety and corporate responsibility, his former employer has lost its credibility.

“I have no ax to grind. But, you know, people died, and it made everybody reevaluate whether this was the company they thought it was,” he told The Colorado Independent during an interview last week. “It was a different company when I left than when I started, and not one that I wanted to continue risking my personal reputation representing.”

Anadarko is mum about the lawsuit.

“Although we do not comment on specific allegations in pending litigation, the company looks forward to the opportunity to substantively respond through the judicial process when appropriate,” Jennifer Brice, the company’s current spokeswoman, wrote in an email Monday.

What’s wrong with the Wattenberg Field?

The Anadarko Petroleum Corp. is a publicly traded company that drills in Texas, where it’s headquartered, and in the Gulf of Mexico and Colorado.

Weeks after an abandoned flow line from one of its wells caused the Firestone explosion in April 2017, major shareholders filed a federal class-action suit against the company and its chairman, president and CEO Al Walker, Chief Financial Officer Robert Gwin, Chief Administrative Officer Robert Reeves, and Darrell Holleck, a senior company advisor. Edgar v. Anadarko Petroleum Corp. alleges that Anadarko broke federal securities laws by making false and misleading claims about its safety protocols and failing to disclose risks associated with its wells before the deadly blast.

At issue, specifically, is the company’s handling of about 100,000 acres obtained in a 2013 land swap with competitor Noble Energy. Known as the Wattenberg Field of the Denver-Julesburg Basin, the once-rural area primarily in southwest Weld County has experienced massive residential and commercial development since many of the 1,500 oil and gas wells Anadarko obtained in the deal were drilled there decades ago.

The well that caused the Firestone disaster was drilled in 1993 and sat within 170 feet of where the house on Twilight Avenue was built in 2015. Anadarko acquired it in the land swap, but never disconnected and sealed the flow line that ran from the well right up to the house’s foundation. Because of that oversight, the line spewed odorless gas that seeped into the house and ignited when homeowner Mark Martinez and his brother-in-law Joey Irwin were fixing a hot water heater in the basement.

Both died in the blast. Erin Martinez, Mark’s wife and Joey’s sister, was critically burned. Her son escaped injuries by jumping out a window.

The shareholders – in a legal complaint first filed in May 2017 but amended in November – slam the oil and gas giant for ignoring a flow line that came so close and posed such risk to a neighborhood: “Anadarko did not consider safety threats in determining which few wells to remediate, even though many of those wells were located near houses or schools.”

A change in “core values”

The suit refers to Castilian as “FE1” – former employee #1 – rather than by his name. The former Brownstein Hyatt Farber Schreck lawyer and deputy chief of staff to Gov. Bill Owens led Anadarko’s government relations efforts in the Rocky Mountain region for eight years and headed its corporate engagement and strategy efforts for two before leaving the company in November 2016.

He and three other former employees interviewed for this story speak glowingly about the company while it was led for nearly a decade by former chairman and CEO Jim Hackett until his resignation in 2012. All say Hackett built a culture of loyalty and trust within Anadarko’s workforce and fostered a steadfast commitment to the communities where the company operates and to Colorado as a whole.

“The core values they ingrained in us were remarkable,” Castilian said. “But since the Hackett era ended, you saw a transition away from those values. That loyalty, that commitment, those core values exist no more. They’re out the door.” Under the leadership of current CEO Al Walker, he said, those values gave way to a hard drive for profits, alarming safety risks, and a sense of disinterest in the communities where Anadarko operates.

Within about six months of the 2013 land swap, as the complaint cites Castilian saying, top Anadarko executives learned that several hundred wells had deteriorated with age and posed environmental and safety risks far beyond what they had expected. He said the company budgeted tens of millions of dollars to fix them, but drastically reduced the remediation budget after oil and gas prices crashed in the fall of 2014 and winter of 2015. Safety problems were compounded in March 2016 when the company laid off more than 20 percent of its workforce, including as many as 1,000 workers in Colorado, the complaint says. Rather than cutting back oil and gas production here, it asserts, executives ramped it up, expecting a skeleton staff to do more work than had been done when it had fully staffed its crews.

In this context, Castilian said the company didn’t inspect much more than “a tiny proportion” of the wells it acquired from Noble. He said executives were fully aware of the safety risks and made a spreadsheet ranking several hundred wells as risky and problematic. Even then, the complaint alleges, they were intent on keeping wells in production for financial reasons stemming partly from the fact that they lease most of the land on which Anadarko operates in Colorado. Contractually, most of those leases expire if the company isn’t using a well. So, as former employees tell it in the complaint, the company kept faulty wells in production to avoid having to renegotiate leases, presumably at much higher prices.

Castilian attended executive meetings at which these decisions were discussed and said executives overrode workers’ safety concerns by prioritizing repairs on wells and equipment that supported active production over repairing those closest to development. Citing him as a source, the lawsuit says that “A well’s potential safety risks, and whether it was located in a residential area or near a school, played no part in whether it was chosen for remediation.”

“Keep quiet” and “Shovel shit”

Olsen, for her part, was Andarko’s government and public affairs manager for five years starting in 2012.  She handled the company’s communications about crises such as oil spills, fires and injuries – of which, she said, “there were a lot.”

She, too, is not named in the lawsuit, but referred to as “FE2” – former employee #2. The Independent identified her through sources and by the specifics of her job history.  

The lawsuit cites Olsen saying that one single employee was responsible for checking the safety of all of Anadarko’s flow lines in the Wattenberg Field in Weld County when there should have been 12 to 20 safety workers. It also cites her saying that she took environmental and safety concerns to her boss, Vice President for Corporate Communications John Christiansen, about 12 times between late 2016 and early 2017, warning him that there would be problems if the company didn’t address them.

In January 2017, an Anadarko well blew out of control, spilling 28,000 gallons of oil and wastewater near Hudson north of Denver. Executives blamed the spill on workers rather than on their own decisions to cut safety and repair efforts. The suit cites Olsen saying that Anadarko did not inform state regulators about key safety problems that led to the spill.

Also, according to the complaint, Olsen said Christiansen told her to “keep quiet” and that her job “was to shovel shit, and to clean up the messes” the company’s employees made.

Soon after, it notes, she “quit in disgust.” Her last day was March 30, 2017 – two and a half weeks before the Firestone explosion.

Olsen told The Independent that a non-disclosure agreement she signed after a legal dispute with Anadarko binds her from discussing what she told the plaintiffs’ lawyers in the shareholders’ suit and “from speaking ill about the company.”

In an interview Sunday, a former Anadarko safety manager spoke on the condition of anonymity because he now works for a company that does business with Anadarko. He said that he has struggled with anger, guilt, and anxiety since the Firestone blast, constantly wondering where else his crews didn’t have the resources to prevent disaster. He says he prays every night and morning for the Martinez and Irwin families and thinks often about reaching out to Erin Martinez.

“But what would I say? What would I tell (her)? That those tightwads in corporate couldn’t give a shit about the guys who worked on those wells or the people who lived near them?”

“Things are better here, very much so,” he added about his new employer, which he noted heeds his and his colleagues’ advice about safety concerns. “Don’t make it sound like all these companies are like Anadarko.”

“Wrongful acts and omissions”

Firestone wasn’t the company’s first safety debacle. It has paid more than $9 billion in environmental fines and legal settlements, largely for its involvement in the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

In 2015, three years after Hackett left, Anadarko assured investors that it was in compliance with all environmental and safety regulations. A company safety report boasted that Anadarko “[a]pplies state of the art oil, natural gas, and water management to Anadarko tank batteries, facilities and pipeline infrastructure.”

“Anadarko promotes a culture that allows for employee involvement in maintaining a safe work environment while recognizing that environmental incidents are preventable,” it reads. “The teams strive for ZERO incidents. Spills can be prevented by designing and operating equipment and training staff to avoid releases.”

The safety report touted a high-tech operations center in Colorado that it said lets Anadarko monitor wells in the Wattenberg Field in real time to identify and address potential safety problems. But the company wasn’t in fact able to pinpoint problems related to many of its underground flow lines because it didn’t know where they were. To make matters worse, state regulators didn’t require Anadarko to inform developers or the public about the lines’ locations. And the state didn’t impose rules for keeping new development from sprawling up on top of the company’s underground webs of abandoned and deteriorating oil and gas equipment.

The shareholders’ suit says Anadarko’s failure to disclose key information about operations that were at increased risk of explosion allowed it to keep its stock price artificially high. The price fell by nearly five percent a week after the Firestone explosion when fire officials announced that the flow line in question belonged to the company. And shares plummeted 7.7 percent a few weeks later when more details surfaced about the company’s lack of oversight, including that it hadn’t disconnected the flow line from the well head nor sealed it at both ends.

The lead plaintiff in the class-suit is the Philadelphia Ironworkers’ Benefit and Pension Fund, a major holder of Anadarko shares. Also represented are the Employees’ Retirement System of the State of Rhode Island, two individual investors who call themselves the Anadarko Investors Group, and anyone who bought or acquired Anadarko securities between Feb. 17, 2016, and May 2, 2017. The complaint alleges that “Anadarko knew that hundreds of the wells it had acquired in the Land Swap did not comply with a variety of Colorado laws and regulations” and that the company “intentionally violated Colorado law and regulations as a matter of course.”

“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages,” it reads.

The lawsuit seeks damages for investor losses.

When asked for its response to the suit, Anadarko’s Brice wrote, again, that the company doesn’t comment on pending litigation. But, she noted, “[We] appreciate you reaching out to us.”

“I don’t know that I fell on my sword.”

Castilian left Anadarko in November 2016  when he says top executives told him he needed to move to Texas to keep his job. That was five months before Firestone.

When The Independent first contacted him about the information he provided for the shareholders’ lawsuit, he cited his new job heading Great Outdoors Colorado – the quasi-governmental agency tasked with investing state lottery revenues into open space – as reason for “wanting to stay out of news on this.” But, after being told The Indy would write the story with or without him, he agreed two weeks later to speak about his nine years at Anadarko.

He started by saying he still holds “a lot of stock” in the company, and by noting that he is “not a whistleblower.”  

Castilian said he sat through leadership team meetings in which top brass were unabashed about hinging safety efforts on fluctuating energy prices, and unapologetic about spending money that had been earmarked for remediating old wells on oil and gas production instead.

“It wasn’t just me. There were a number of people who knew what the right answer was on safety, but were told it’s not a priority right now,” he said. “It was a precarious situation for all of us. You may be telling your boss or the person who manages your budget or the person who [gives] you day-to-day direction that you don’t agree with him or that the decisions being made are not the right decisions. We all expressed our opinions. We made our concerns known. And then we sort of lived with the outcome.”

“I don’t know that I fell on my sword,” he added.

It was, in fact, Castilian’s job as the public face of the company to smooth over its missteps with public relations efforts.

Chief among Anadarko’s PR tools was its investment – along with Noble Energy – in Coloradans for Responsible Energy Development, the industry spin machine that Castilian created. One of CRED’s goals, he said, was to educate the public about engineering and safety advances in oil and gas development. Another was to “escalate conversations” about the industry when local municipalities were passing anti-fracking measures and U.S. Rep. Jared Polis was supporting two 2014 ballot measures to curb fracking statewide.

“So, the genius behind CRED was to take a very complicated process and boil it down into a 30-second TV ad to make sure the public knew that the people I worked with, these brilliant engineers, were in charge and knew what they were doing and everybody could be confident in the decisions they were making,” Castilian said. “[Anadarko] spent a lot of time and energy and money and reputations of people like me purchasing a social license to operate in Colorado. That social license helped us to beat ballot measures, defeat issues in the legislature, win support from people and communities throughout Colorado.”

Whether because of the power of that social license, the omnipresence of CRED’s TV and radio ads, the displeasure of Gov. John Hickenlooper – a former oil and gas geologist – or all of the above, Polis was persuaded to end his support for the ballot measures on a promise from Hickenlooper to create a task force on oil and gas development in 2014. But Castilian notes that if the Firestone explosion had happened that year, the outcome would have been completely different.

“I don’t think Jared Polis would have backed down, and you’d have either an outright ban on fracking or setbacks. I don’t think the industry would have been able to win that fight.”

And now, post-Firestone?

As Castilian tells it, no amount of TV and radio spots, bus ads and billboards, and Cinco de Mayo and Juneteenth parade sponsorships can buy back Anadarko’s credibility and persuade the public that it can be trusted to keep doing business in Colorado.

“Now they don’t have the standing to say we deserve that social license,” he said. “That bank account is largely dry.”

Photo of the Firestone explosion site taken in May 2017 by Tina Griego