BP cuts Alaska jobs
Company needs to reduce costs in response to the continuing low oil prices
BP plans job cuts in Alaska in response to the falling price of oil. According to an internal BP email to employees, the cuts will result in a 13 percent reduction in employees and agency contractors. All employees will know their employment status by the second quarter of 2016, with the majority of those impacted leaving the company by the middle of 2016, the email says.
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The email says that, currently, cash generated from the company’s Alaska business in insufficient to meet the needs of the company’s Alaska investment, thus requiring the company to borrow funds from the BP Group. The email emphasizes that, while improving the company’s cost base to maintain the long-term viability of the Prudhoe Bay region, the organizational changes will not compromise the safety of people or the oil infrastructure.
On Jan. 12 there were multiple media reports that BP had announced that it would be cutting 4,000 jobs in its worldwide oil exploration and production business in response to falling oil prices. According to the Seeking Alpha website, 600 of the cuts will be in the company’s North Sea operations and the cuts will take place over the next year or two.
“We have recently informed staff that we plan to further reduce numbers in our upstream segment by 2017 as we continue to simplify our business, improve efficiency and reduce costs without of course compromising safety which remains our number one priority,” BP spokeswoman Dawn Patience told Petroleum News in a Jan. 12 email.
Alaska impactsThe dramatic and continuing fall in the price of oil has already impacted the Alaska oil industry. In September ConocoPhillips announced a decision to reduce its workforce by 10 percent, to reduce its operating costs. However, the company is also continuing with capital expenditure on development projects in the National Petroleum Reserve-Alaska, to the west of the Alpine field, and in the Kuparuk River field.
The new job losses at BP come on the heels of job cuts in 2015, as a consequence of the sale to Hilcorp Alaska LLC at the end of 2014 of BP’s interests in the Endicott and Northstar fields, and a 50 percent stake in the Milne Point and Liberty fields. Although a number of BP employees transferred to Hilcorp following the transfer of field ownership, there was a net loss of jobs.
On Jan. 11 the price of Alaska North Slope crude oil on the U.S. West Coast had dropped to $29.76 per barrel. On Jan. 13 world oil prices were hovering just above $30 per barrel, compared with a price in excess of $100 in June 2014. And, with the current glut in oil stocks exceeding world oil demand, there is no end in sight for the oil price rout.
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