North Slope employment dropped sharply in 2009 but has since rebounded and is now at an all-time high. Industry spending is up, but more money is being spent on maintenance. And the third-quarter 2010 spike in nonresident hire is not likely the start of a trend.
State lawmakers commissioned the study last year during the debate over Gov. Sean Parnell's oil tax proposal, House Bill 110. Supporters of tax cuts pointed to the jump in unemployment claims as a sign of dwindling North Slope investment.
In its study, the McDowell Group steered clear of the tax debate.
But in a presentation to the Senate Labor and Commerce Committee on Jan. 24, McDowell's Jim Calvin suggested the industry's job losses in 2009 were linked to the global economic downturn. "That was all related primarily to the global recession, and everyone just tightened up the pocketbook, including the oil industry," he said.
The $175,000 study relies heavily on published and unpublished data from the state's Department of Labor and Workforce Development and from interviews with nearly two dozen oil producers and support businesses.
'ROLLER COASTER' NUMBERS
Starting in December 2008, the oil industry lost 1,700 jobs statewide, or 14 percent of its total work force, over the course of 12 months, Calvin told the committee. Over the next 12 months, it gained back roughly 1,400 jobs.
The last few years have been a "roller coaster" for industry employment, Calvin said. There was a time in 2009 and 2010 where people weren't sure what was happening -- they heard of people losing their jobs and companies sitting idle, but they also heard job numbers were up, he added. "All that's kind of right. ... It was a very, very dynamic environment."
Overall, Calvin said, the oil industry has been "one of the fastest growing sectors in the economy," adding 5,000 jobs since 2004, about 4,000 of them on the North Slope. Monthly employment on the North Slope was at "all-time highs" in November and December 2011, with more than 9,000 jobs.
DIFFERENT KIND OF WORK
The report attributes the overall increase in employment to new developments -- encouraged by sustained high oil prices -- and extensive investments in aging Prudhoe Bay infrastructure.
While overall industry spending is up in recent years, companies are spending more on maintenance. Conoco Phillips spent roughly the same amount on development expenditures in 2010 as it did in 2005, but almost twice as much on maintenance, according to the report.
Overall, the number of barrels of oil produced on the North Slope per worker has fallen dramatically. In 2000, companies produced an average of 108,000 barrels for each worker. By 2010, that figure had dropped to 28,000 barrels. The McDowell report points to work on Prudhoe Bay infrastructure and to "increasingly labor-intensive and capital-intensive" efforts to produce oil from mature fields.
NONRESIDENT HIRE
In the third quarter of 2010, 56 percent of new workers hired on the North Slope were nonresident, according to the report.
But Calvin said the spike was not likely the start of a trend. Nonresident hire has typically peaked when the industry is growing fast and companies require rapid mobilization or take on short-term projects. A single company bringing 100 workers north for a specialized maintenance job could cause such a spike, he said.
Calvin added that despite widespread anecdotes, nothing in the data suggests residents are losing their jobs to nonresidents. The nonresident hire rate dropped in the fourth quarter of 2010.
In recent years, about 35 percent of North Slope workers were nonresident.
The McDowell report includes a breakdown of nonresident workers by job type, and it lists the nonresident rate for oil producers and service companies.
The report suggests lowering the nonresident rate will be hard -- even companies that want to hire locally struggle to find workers for highly skilled or specialized jobs.
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