BP plans to cut its Alaska workforce by 17 percent by early next year.
The oil company announced on Monday that it will reduce its staff by 275 employees and full-time contractors to match a “reduced operational footprint” in the state. BP will offer early retirement and severance packages to employees who choose to take a buyout option.
Spokesperson Dawn Patience attributes the layoffs to the sale of four North Slope assets to Hilcorp, a smaller oil company with a growing presence in Alaska. The deal, which was announced in April, includes the Endicott and Northstar fields, along with 50 percent interest in the Milne Point and Liberty fields. BP is transferring 200 field workers to Hilcorp as a result of the agreement, in addition to the 275 support staff they plan to lay off.
Patience describes the 275 positions as “overhead” that is no longer needed with a smaller presence on the North Slope. She says the company intends to focus more on oil production in Prudhoe Bay and development of a natural gas megaproject.
“BP’s operations may be shrinking in Alaska, but we announced $1 billion of additional investment in Prudhoe Bay, and the addition of two rigs –- one this year and one the year after — and those commitments stand,” says Patience.
BP informed Hilcorp of their additional staff cuts on Monday, after they told employees.
Hilcorp spokesperson Lori Nelson says the BP announcement was unexpected because only 250 employees were directly associated with the purchased assets and Hilcorp agreed to absorb most of them.
“The number today was a bit of a surprise, but that’s BP’s decision,” says Nelson.
The layoff announcement arrives less than a month after Alaskans narrowly voted to maintain a capped tax rate on oil production. As one of the three major players on the North Slope, BP contributed nearly $4 million to fight the ballot referendum on Senate Bill 21.
Sen. Bill Wielechowski, an Anchorage Democrat who advocated for repeal of Senate Bill 21, calls the BP’s announcement “disturbing.” He notes it comes just as fellow North Slope producer Exxon is projecting a continued decline in oil production in Alaska.
“We were promised a lot of things during the [Senate Bill 21] debate, and one of the most powerful things was jobs,” says Wielechowski. “And here we are, a couple weeks after the people of Alaska voted on this, thinking they were going to get a lot more jobs [and] thinking they were going to get a lot more production. And we’ve already had sworn testimony by Exxon that we’re getting less production and then we’ve got BP saying they’re laying off hundreds of Alaskans and contractors.”
Wielechowski also finds the timing of BP’s announcement “suspect.”
“Had the referendum passed, they probably would have blamed these layoffs on the referendum passing,” says Wielechowski.
In a press release, Gov. Sean Parnell also stated he “extremely disappointed” by the announcement, and noted that oil and gas employment in the state was otherwise strong with 15,000 working for the industry.