BP is going to make further job cuts in Alaska, in response to the low price of oil. In January the company announced a 13 percent job reduction. The company now expects its Alaska workforce to shrink by 17 percent.
“In response to the low price environment, the Prudhoe Bay working interest owners requested a reduction in activity and rigs at Prudhoe Bay,” a company spokesperson has told Petroleum News. “This reduction in activity will add four percent to the original 13 percent estimate reduction of employees and agency contractors.”
BP has previously indicated that at current oil price levels its Alaska operations have been losing money. And, worldwide, the company has been pursuing a vigorous program of cost reduction. With a total BP workforce of 2,100 employees and agency contractors in Alaska, the revised job reduction amount would appear to translate to a loss of around 375 jobs.
The latest news from BP comes on the heels of a March 7 announcement that the company is going to shut down three of its five operational drilling rigs in the Greater Prudhoe Bay unit, an action that would in itself trigger some significant loss of jobs.
Other job losses
There had previously been job losses at BP as a result of the sale of some of the company’s North Slope assets to Hilcorp Alaska LLC at the end of 2014 - some BP employees transferred to Hilcorp but there was a net loss of job positions.
In September ConocoPhillips announced that it was reducing its Alaska workforce by 10 percent, to reduce operational costs. And, prior to the current oil price crisis, Shell had already announced its departure from Alaska, following disappointing exploration drilling results in the Chukchi Sea.
The low oil price is also having a dramatic impact on the state’s revenues. Consequent cuts in state expenditure will presumably result in the loss of some state related jobs. The exact impact of this will depend on the finalization of a state budget that the state Legislature is currently debating.
All of these direct job losses will have a knock-on, indirect impact on the Alaska economy, because the loss of incomes will reduce the amount of money spent on services within the state.
