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BP laying off 20 percent of Anchorage staff; some positions were temporary Company will shelve offshore Liberty project, focus on existing fields in strategy to make Alaska business cost effective for the long term Kristen Nelson PNA Editor-in-Chief
Following a decision last year to move frontier exploration to Houston and focus on exploration near existing fields, BP Exploration (Alaska) Inc. said Jan. 7 that it is reducing its Anchorage staff by 20 percent to make the company viable in the long term.
BP Exploration (Alaska) spokesman Ronnie Chappell told PNA the company’s focus will be on competitive replacement of production and reserves:
“We didn’t just announce a reduction in force today, we rolled out a strategy for sustaining our business in Alaska over the long term,” he said.
That strategy “involves cost-competitive replacement of production and reserves.
“We will continue to invest in what is one of the largest reserve bases in all of BP. But we’re going to be more selective in the investments that we make,” Chappell said. Liberty not competitive BP’s Liberty project — offshore east of existing development — is being shelved “after a review of the project and a determination that it is not competitive as a Northstar lookalike,” he said.
Chappell said BP will continue to evaluate options for development of the Liberty accumulation, but hasn’t yet identified a competitive option.
The company’s focus will be in and around existing fields, he said. Reserves at Prudhoe Bay, Kuparuk and Milne Point are 7 billion barrels, “about one-third currently competitive.” BP “would like to increase that 30 percent to 40 or 50 percent.”
Chappell said it will take new technology which will lower development costs to increase the amount of those reserves that are economic to produce. “If we can lower drilling costs we can do more in-fill drilling,” expand enhanced oil recovery and move forward with viscous oil development, he said.
BP plans to spend about $700 million in Alaska this year, on a par with last year in existing fields. Cuts will be in Anchorage Chappell said BP has about 1,500 employees in Alaska, about 600 based in Anchorage. The Anchorage staff will be reduced by 20 percent, he said, with 120 employee and 75 contract positions to be cut.
“We will not be reducing the number of operations and maintenance personnel on the North Slope,” he said. “In fact, we expect to see that number increase.”
The contract staff reductions are not in companies which provide managed services in Anchorage, he said, but are BP contract staff, “people who are brought into the organization to respond to an increase in activity and whose positions go away when the activity goes away.”
Managed services are outside the scope of this restructuring, Chappell said, “although we expect they would also be making changes in response to changes in activity level.” Some jobs were temporary Completion of projects is driving some staff reduction.
Northstar is pretty much completed and is moving from construction into operation and maintenance, Chappell said: “So the construction organization for Northstar is going away; those positions being eliminated.”
Last year BP brought a substantial number of people to Alaska to participate in the $100 million project to access natural gas. That project is largely completed and the size of that organization is being reduced to match the work plan for the coming year, which will be focused on working with state, federal, Canadian central and provincial governments to develop “a fiscal and regulatory regime in which that project can move forward,” he said.
The 30-35 exploration jobs lost when responsibility for frontier exploration shifted to Houston are also part of the 120 employee layoffs. Chappell said the company is not providing a specific breakdown of where the jobs are, but he said there will be “reductions in every organization in the company.” Involuntary downsizing Chappell said BP made the staff reduction announcement to employees Jan. 7. He said the company’s plan is for all town-based BP staff to know their status by mid-February, although some may be asked to work past that date.
BP will “try to mitigate changes on employees by offering what we believe are generous severance packages and we will consider the wishes of employees in making staffing decisions; but this will be an involuntary program,” Chappell said.
Staff reduction decisions will be made on a business basis, but people can indicate if they are interested in leaving the company and receiving the severance package, he said, “and where possible we will consider those requests. But it is an involuntary program.” State will push BP exploration Alaska Gov. Tony Knowles said BP’s staff reduction announcement “and a retreat from the development of frontier fields is disappointing for Alaska and disheartening for those employees and contractors directly affected.” The governor said he has offered the assistance of the Department of Labor’s jobs division to assist displaced workers.
He said that while he concurs “with BP’s confidence in existing fields, I disagree with their approach on frontier development.” The governor said he remains “bullish” about the potential for more oil and gas discoveries in Alaska.
He also indicated he is unwilling to have BP sit on unexplored acreage:
“BP remains a significant holder of exploration leases and the state will work with the company to fulfill its commitments that these areas are aggressively explored.”
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