Egan continues Alaska hire fact finding

Juneau senator gathers testimony on Alaskans working Slope jobs from companies, workers; state data shows 1/2 new hires not local

Stefan Milkowski

For Petroleum News

The Senate Labor & Commerce Committee explored the question of Alaska hire at hearings earlier in September in Fairbanks and Anchorage. Driven by Alaska Department of Labor and Workforce Development figures showing that over half of new hires in the industry in the third quarter of 2010 came from out of state and by complaints from Alaskans unable to find jobs, the committee invited producers, support companies, labor leaders and North Slope workers to weigh in.

In an interview Sept. 16, Labor & Commerce Chair Dennis Egan said he heard commitments from some companies, BP in particular, to redouble efforts to hire qualified Alaskans. He also heard complaints from frustrated Alaskans convinced their jobs are going to out-of-state workers.

Despite the hours of testimony, Egan says it’s still unclear if there is a trend away from Alaska hire, and if so, what’s causing it. “We’re fact-finding, we’re gathering information,” he said. Egan’s also pitting hopes on an independent study, requested by the Senate Finance Committee, which will take a closer look at North Slope employment. The Alaska research firm McDowell Group is conducting the $180,000 study, which is due Dec. 1.

Supporters of Gov. Sean Parnell’s HB 110 argue the state’s oil production tax is partly to blame for the large number of unemployed Alaskan oilfield workers. Egan describes his position on the bill as “open,” but says he wants to make sure the state gets something in return if it agrees to lower taxes.

Petroleum News: Now that you’ve held these two hearings, what have you learned about North Slope employment?

Egan: Because we’re in the interim and we can’t make decisions and can’t pass (HB 110) out of committee, we’re in fact-finding mode, to try to find out from people that work on the Slope and from the industry itself, what they’re doing to facilitate Alaska hire, because we were concerned when figures came out from the Alaska Department of Labor from a hearing we had here near the end of the session that Alaska hire was not that good in certain portions of the industry. And there were companies that are working on the Slope (with particularly low Alaska hire numbers). In fact, one has a lot of employees up there and not one of them is Alaskan. We had sent an invitation to this company to provide testimony and we never heard back from them.

We have hired McDowell Group through the Senate Finance Committee, which I also sit on, to (complete) a study on resident hire in Alaska in the oil patch, and that study independently will be done before the end of the year and presented to the Labor & Commerce Committee right after the start of the session.

Petroleum News: What did you hear from the companies?

Egan: In Fairbanks, it was that they were working hard at trying to hire Alaska residents. I think the major commitment we got was from the testimony we received in Anchorage from BP — that they’re going to work harder on their commitment to encourage more Alaska hire and encourage their subcontractors to concentrate on resident hire. When you get residents working in the state, it benefits everyone. People are going home at night and they’re raising families and paying mortgages and paying property taxes and it benefits everyone — instead of a guy flying to someplace in Oklahoma.

There were a couple of people who testified who had ideas like, instead of two weeks on, two weeks off, make it a week on, a week off. That would make it harder for people to get out of Dodge.

I want to make it very clear we’re fact-finding. We’re gathering information. As soon as the session starts in January, we will have further hearings — at least one — and then hopefully make a decision and pass the legislation, HB 110, with our recommendations, to (the Senate Resources Committee) and then ultimately to Senate Finance.

Petroleum News: What did you hear from the workers?

Egan: We had more than one say they’ve lived in Alaska all their lives and now are having real problems getting dispatched to jobs on the Slope. Some testified it was because (companies) were hiring people from out of state at lower salaries. Others were saying (they were) hiring people from out of state because they had commitments, and were non-union, and had worked for these contractors before.

We’re trying to sort all this stuff out, but I think the information that is being gathered by the McDowell Group right now — — statistics for resident hire over the past number of years — will provide us more information, and then we’ll put this stuff all together.

I just want to make it very clear that it’s not an anti-industry thing at all. We’re just trying to get Alaskans hired up there. We were getting a lot of complaints from qualified Alaskans, and then the report from the Alaska Department of Labor on oil industry hiring concerned us a great deal and we decided to look into it.

Petroleum News: One of the testifiers seemed to suggest the third-quarter figure was an anomaly that’s not reflective of the last few years. Is that the case?

Egan: I don’t know. But it’s things like that that the McDowell report is going to specifically look at. From what I hear so far, the Department of Labor is being very cooperative, and industry is being cooperative providing McDowell their needed information.

Petroleum News: Getting right to the point, are Alaskans losing their jobs to non-Alaskans?

Egan: That’s the contention of a lot of Alaskans that testified in Fairbanks and testified in Anchorage as well. In fact, I just had an email from an individual who worked for VECO for more than 15 years and now with the new owners hadn’t been dispatched for a position that he held and was qualified (for) and had done for 15 years. Now he’s been replaced by a worker from out of state.

Petroleum News: What’s your sense of what’s causing companies to hire non-Alaskans?

Egan: I don’t know, and we’re looking at that. One of the contentions is union versus non-union. Another one is wages. There’s all kind of things. Some people are talking about cronyism. I really don’t believe that, don’t want to believe that. But there are a lot of concerned Alaskans in our state that have worked on the Slope and are really having trouble getting dispatched.

I have a friend that is in the Plumbers & Pipefitters union, fully qualified, worked on the Slope for years, and now is having trouble getting dispatched up there, even to do maintenance work.

Petroleum News: Do you get the sense there’s a preference to hire non-union workers?

Egan: The companies don’t think that’s true. But from some of the information we got from individual Alaskans that could possibly be the case. That’s one of the main reasons we conducted those hearings.

And now because of this, we’re getting Alaskans talking to members of the committee saying, ‘Well, you’re doing this for Alaskan workers on the North Slope — don’t forget the fishing industry and the cruise industry and other industries in the state of Alaska that are not very high in Alaska hire.’

I just got back from Ketchikan and I toured Niblack mine. Heatherdale Resources out of Vancouver is doing the exploration on Niblack, and these are geologists and people like that right now, and really specialized drillers, because they’re trying to find ore bodies. But even this company has over 60 percent Alaska hire, because they really are trying to hire Alaskans. When I was there, I saw a guy that I know from Juneau. One of the geologists on site — there are three — graduated from UAA and lives in Anchorage. And that’s a great thing. It’s the attitude — a lot of this — in the company itself.

Egan: We haven’t made any decisions on doing that.

Petroleum News: What can the state do to increase Alaska hire?

Egan: And we are. That’s why we’re collecting testimony from industry and from individuals. I think we’re going to make some good recommendations on how we can better address Alaska hire and what we can do as a state government to help industry, whether we increase training at (University of Alaska campuses) for specific jobs that these people are doing on the Slope, maybe things like that to provide more training, although we have of course appropriated money during the previous session to increase training opportunities at the campuses. UAF was mainly oil industry, some mining. Geology degrees at UAF and UAA, and then at UAS they’re concentrating more on mining.

Petroleum News: Someone testified that the state’s online job center is unwieldy.

Egan: We’ve heard that more than once about how cumbersome it is, and we will be meeting with folks from the Department of Labor to specifically address those concerns. We’ve had emails and letters as well regarding ALEXsys. I got on there and screwed around and I sort of gave up. It can be a lot more user friendly.

Petroleum News: Would you like to see an Alaska hire provision in HB 110?

Egan: We have to be really careful because of the U.S. Constitution. But I think there are different ways that we can encourage Alaska hire to a greater degree than we’re doing now. We’re also looking at the definition of resident. Right now the main thrust is, if you get a (permanent fund dividend), you’re a resident. Well, sometimes that’s not the case.

Petroleum News: You think it might be too strict?

Egan: Strict, or just too broad. We will be looking at some definitions, and I think we’ll have some good recommendations that we can all agree to.

Petroleum News: Some of the testifiers argued the answer is to increase oil production. Do you agree?

Egan: Well, yeah, absolutely. But we’re getting differing opinions on increasing the production talking about throughput and contracts with the majors and then the independents. Pioneer (Natural Resources) was one of the first major independents to be able to get a contract with the owners of the pipeline to get oil into it. There are a lot of different issues that have to be solved there as well, but we’re going to leave that up to the Resources Committee.

I think (the answer) is not just, give everybody a tax break. The oil industry has tax breaks now, as was pointed out in our Senate Finance Committee last year — about $3.2 billion. Do we give them more without any guarantee that they’re going to increase production? I’m open to talking about more tax breaks and incentives, but I think we have to tie it to something. I don’t want to go out there and give more credits to someone and get nothing in return, like hiring Alaskans.

Petroleum News: How do you reconcile the record-high industry employment numbers with the sharp increase in unemployment claims in ’09 and ’10?

Egan: Well, that’s a big issue, and a lot of people claim the reason that’s happening is because of non-residents.

Petroleum News: Do you think that’s what’s happening?

Egan: We have some information that says that. I’m hoping the McDowell study is going to point out a lot of that stuff. They will give us enough information that we can make a decision if something like that is happening. It is a serious concern.

Petroleum News: What impact has ACES had on jobs?

Egan: I’m not on the Resources Committee, and I don’t want to get into that. But personally I think ACES at times is having a negative effect.

Petroleum News: What have you asked McDowell to do?

Egan: They’re going to look at employment numbers of individuals in the oil patch. Their charge is to dig in deeper than the standard statistics released by the Alaska Department of Labor and provide us with statistics about these different firms that are employing 100 percent non-Alaskans and why they’re doing it.

Petroleum News: What’s your next step as committee chair?

Egan: We’re going to get the report and then have McDowell give the report to the committee. Then we expect to come out with some recommendations. And this will be done early in the session. Hopefully the committee will make recommendations and pass the bill on to Senate Resources, the next committee of referral. It’s not our intention to hold the legislation up at all.