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Conoco cuts 2% of Alaska workers; announced projects to continue
ConocoPhillips has instituted a wage freeze and layoffs in an effort to cut internal costs between 2014 and 2016 by $1 billion. Two-thirds of planned cuts come from reductions in external costs, including capturing cost deflation across the value chain and reducing lifting costs globally, Jeff Sheets, ConocoPhillips executive vice president, finance and CFO, said April 8 in the company’s 2015 analyst and investor meeting.
The one-third cut from internal costs includes an implemented salary freeze and headcount reduction programs already under way, he said, along with optimization of business practices and alignment of general and administrative costs with activity levels.
Sheets said the company expects to have operating cost reductions of about $500,000 in 2015.
How is Alaska impacted by cuts in response to the drop in oil prices?
ConocoPhillips Alaska spokeswoman Natalie Lowman told Petroleum News in an email that ConocoPhillips is reducing its worldwide workforce due to “(t)he current challenging economic environment,” but the high level of work in Alaska means that fewer than 2 percent of the company’s Alaska workforce will be impacted.
Lowman said the cuts are “a difficult process, but we care about every employee and will assist those affected with out-placement services and other associated benefits.”
No major project change But, she said, there will be “no change to the major capital projects we have already announced.”
Nabors rigs 9ES and 7ES are still drilling at Kuparuk, she said. New-build rigs the company has ordered, Doyon 142 and Nabors CDR3 are still on order. And work at CD-5 and Drill Site 2S is on schedule.
Lowman said there are some 700 construction jobs on site at CD-5 this winter. This is the new drill site that ConocoPhillips is developing west of the Colville River unit connected to the Alpine main pad by road and bridge. There are also some 200 construction positions at Drill Site 2S, she said. Drill Site 2S is the late 1980’s ARCO discovery in the southwest corner of the unit which ConocoPhillips appraised in 2012 with the Shark Tooth No. 1; the new drill site was sanctioned late last year.
Lowman also noted that ConocoPhillips recently approved viscous oil development 1H NEWS at Kuparuk and has finished a seismic shoot at Greater Mooses Tooth 1 in the National Petroleum Reserve-Alaska and is planning geotechnical work and continuing engineering, “but no decision has been made on timing of the project’s funding approval.”
Between Alpine and Kuparuk, Lowman said, ConocoPhillips has six rigs operating.
- Kristen Nelson
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