News of more layoffs is trickling out of Alaska’s oil patch as companies try to weather the plunge in crude prices.
ConocoPhillips Alaska said this week it will trim its 1,300-person workforce by “fewer than 25 employees.” The cuts come in addition to recent reports of reductions to ASRC Energy Services contractors working at ConocoPhillips’ Kuparuk field, as well as job losses tied to Hilcorp’s acquisition of some of BP’s Alaska assets in November.
ConocoPhillips Alaska continues to emphasize that all its major projects are on track. And other top Alaska producers — BP, ExxonMobil and Hilcorp — report that their workforce numbers are holding steady.
A state economist said the loss of about 25 employees is small and may not be noticed, but more reductions in the high-paying industry could eventually hurt.
Just how many layoffs have occurred in the oil industry in recent months is uncertain, but they may continue if oil prices remain low.
“It is unknown if there will be further staff reductions, but we are in a volatile market and workforce reductions could continue to affect all areas of our company,” said Natalie Lowman, communications director for ConocoPhillips.
The state’s largest oil and gas producer, ConocoPhillips reported producing 175,000 barrels daily last year.
A spokesperson for Hilcorp, a new North Slope producer employing 500, said it does not plan any layoffs. Last year, the company purchased a portion of BP’s assets on the North Slope, bringing it about 20,000 barrels of daily production.
BP reported late last year that about 200 employees had been hired by Hilcorp in the acquisition, leaving another 275 contractors and employees without jobs. No additional layoffs have occurred at BP since that change, said Dawn Patience, a press officer with BP.
Asked if any of those 275 ultimately found work with Hilcorp, Lori Nelson, Hilcorp’s external affairs manager, said she could not immediately provide an update. The company’s human resources team was traveling and unavailable, and contracted employees are not necessarily tracked by Hilcorp, she said.
ExxonMobil has not made any changes to workforce numbers in Alaska, said Aaron Stryk, media relations adviser for Exxon based in Houston, Texas.
The employee reductions at ConocoPhillips come as the company continues to advance work on several projects, Lowman said. The level of work means less than 2 percent of ConocoPhillips’ Alaska workforce will lose jobs. The cuts were first reported by KTUU.
The employees will receive severance pay, outplacement services, tuition assistance and other benefits, she said.
Neal Fried, economist with the state’s labor department, said there will be a noticeable impact to the Alaska economy if the oil field layoffs continue. Average yearly earnings for oil workers are $130,000, more than double the Alaska average yearly income of $51,000.
Following years of high oil prices, Fried expects that 2014 will show record employment in the oil industry at 14,700 workers. That’s about 600 more than were employed in 2013, which itself was a record year that followed other record years.
But with oil prices now hovering around $50 a barrel — less than half what they were a year ago — the upward trend may not continue this year. “My guess says the further out we get could be more interesting” if oil prices remain low, he said.
At ConocoPhillips Alaska, two new drilling rigs under construction and four oil field projects employing more than 1,000 workers are all on track as before, Lowman said.
The projects include 1H NEWS at Kuparuk, recently approved for funding. First oil production is expected in 2017, with the field ultimately expected to yield up to 8,000 barrels daily and employ about 150 workers at peak construction.
Also advancing is the first project on federal land in the nation’s largest energy reserve. ConocoPhillips has finished a seismic shoot at Greater Moose’s Tooth Unit 1 in northeast Alaska and plans to conduct geotechnical work as engineering continues. A sanctioning date — when the project decides to approve funding or not — has not been set, said Lowman.
This article was written by Alex Demarban from Alaska Dispatch News, Anchorage and was legally licensed through the NewsCred publisher network.