A retired BP Exploration (Alaska) executive described an important difference between BP and Hilcorp in an interview with Petroleum News after the Aug. 27 announcement that Hilcorp was buying BP’s oil and gas assets in Alaska. The exec, who asked not to be identified, said independent Hilcorp has fewer layers of management than BP - a situation that likely means fewer of BP’s employees will be hired by the independent than would have been the case if another major had purchased the assets.
Where you might have five or six layers of management between a low-level employee and the top executive at BP in Alaska, Hilcorp has two or three layers, he said.
“You’ll see those layers of management drop away when Hilcorp takes over BP’s assets, especially at Prudhoe Bay.”
The upside of having few layers of management, the former BP executive said, is that Hilcorp will invest more on new technology and equipment to extract additional oil from the field.
“That’s what Hilcorp did at the Milne Point field when they took over from BP five years ago - they’ll go after the big prize at Prudhoe, which is viscous oil. … Lower operating costs … will mean more oil for Hilcorp and the other Prudhoe partners (ExxonMobil and ConocoPhillips), but it will also mean more oil down TAPS and more revenues for the state of Alaska.”
Nonetheless, he said, Hilcorp “should not underestimate the complexity of operating the massive Prudhoe Bay field and the value of the institutional knowledge among BP employees, but I don’t think they will. I think they will cherry pick the best people.”
Working closely with employees
When asked about BP versus Hilcorp’s layers of management in a Dec. 20 interview, BP spokeswoman Megan Baldino agreed the organizational structure of the two companies was very different.
But more important, she said, BP is making every effort to assist its staff with the transition, whether they take a job with Hilcorp, do something else or retire.
When the company told employees in late August about the $5.6 million Hilcorp buyout “we promised you’ll know your fate by Dec. 20,” a deadline BP took seriously - and asked Hilcorp to consider as well.
Although the employee situation is “constantly evolving,” Baldino said only 294 of BP’s 1,567 employees are currently on the involuntary severance list. “We’re continuing to work closely with them, and I think a lot of these people will fall out of that category a bit down the road” as they finalize their plans. “It hasn’t been that long” since the announcement was made, she added.
As of Dec. 19, Hilcorp said it has offered positions to more than 800 BP employees, which represents over 80% of all BP’s Alaska employees who applied for a job. Interviews and offers will continue to be made in the coming weeks as the transition continues, Hilcorp said. Hilcorp also said it will effectively triple the numbers of Alaska employees from nearly 500 (managing the company’s Cook Inlet and existing North Slope fields) to around 1,500.
Numbers breakdown
In a Dec. 19 letter to the Alaska Department of Labor and Workforce Development, BP said it understands Hilcorp “anticipates posting an additional 150 roles.”
The company also said that 806 BP employees had received offers from Hilcorp, with 749 accepting offers.
BP said 342 of its employees took voluntary severance packages, 153 will continue with BP in the U.S. and globally, and 29 have resigned.
Those who lose employment will “exit with severance benefits.”
Employees leaving the company will be do so at three different times: the first group on or shortly after Feb. 20; the second group on the day the sale closes and ownership of BP’s Alaska business is transferred to Hilcorp (expected to be after April 30); the third group will support the transition to Hilcorp and will be terminated within six months of the sale closing.
Expats number 153
Included in the individuals in BP’s Alaska numbers as of Aug. 27, were 153 expatriates.
An expat is someone who lives in a country other than their own because they want the job experience or simply the adventure of living elsewhere in the world.
That said, the affected 1,567 individuals are employed by five different BP entities: BP Exploration (Alaska), BP Corporation North America, BP Pipelines North America, and BP America Production Co.
Finally, nearly 90% of Hilcorp ‘s current employees in Alaska are state residents. As of May, approximately 76% of BP’s 1,567 Alaska workers were residents, Baldino said.
