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Alaska News

Laid-off oil workers say Alaskans' jobs should be protected over Outsiders'

  • Author: Alex DeMarban
  • Updated: September 28, 2016
  • Published April 24, 2016

In November, Deral Wise was making $3,000 a week as an electrical designer for CH2M Hill working on a North Slope oil field project. Now, he's collecting $376 in weekly unemployment benefits, and looking for work as far away as the Lower 48.

Wise is one of hundreds of casualties who have lost their job in the Alaska oil patch in the last year, a victim of low oil prices that have forced companies to slash projects and personnel to survive.

Wise, 55, is dipping into a retirement account to make ends meet.

But he's not just worried about finances and his family of four. He's also worried about the state economy.

He's sent letters to numerous state lawmakers and the governor, complaining about the lack of Alaskans working in the industry and keeping their jobs.

"For all these Alaskans who are out of work, there is currently a job on the Slope they are qualified to do, but the work is being done by someone who lives in the Lower 48," said Wise, who lives in Fairbanks.

Like a lot of Alaskans, he wonders if in-state oil and gas workers are getting cut faster than their out-of-state counterparts.

There's no evidence that is happening, said Heidi Drygas, commissioner of the Alaska Department of Labor and Workforce Development. Aware of such complaints, she recently asked department officials to sift through data to better understand what's happening. The numbers so far paint an uncertain picture.

What is clear is the department now expects layoffs in the state's oil and gas industry to surpass 2,000 by the end of this year -- coming off record-high employment levels of 14,800 in March 2015.

Keeping more Alaskans employed is one way to soften the hard landing that the state's oil-based economy is facing, Wise said.

Sen. Bill Wielechowski, D-Anchorage, said requiring Alaska-hire preference at private companies is difficult because of court decisions that have invoked the equal protection clause and other constitutional protections.

Wielechowski, an attorney for the International Brotherhood of Electrical Workers 1547 in Alaska, said Democrats and others have tried to find innovative solutions, such as tying Alaska hire requirements to tax credits the state gives to oil companies.

"We say if you want state funds, you have to hire a certain percentage of Alaskans. When you start doing that the courts look a lot more favorably on (residency-hire requirements)," said Wielechowski, a frequent critic of the state's $625 million oil-tax-credit program.

Representatives of the state's three major oil companies said the companies do what they can within the law, including aggressively recruiting Alaskans and Alaska-based contractors.

The representatives said:

• ConocoPhillips' workforce is currently 85 percent Alaskan.

• BP's workforce was 78 percent Alaskan in 2015, and the company offers a premium to Alaska workers to encourage in-state residency.

• Workers who helped build Point Thomson for ExxonMobil, which recently began producing oil, are 80 percent Alaskan.

The overall oil and gas employment numbers -- looking at those large companies and numerous smaller ones -- show far lower Alaskan employment rates.

The percentage of nonresidents working in the sector has grown over the last decade of available figures, from 28 percent in 2004 to 35 percent in 2014, the Alaska Department of Labor and Workforce Development reported in January.

Drygas said in some cases, Alaska's small population means highly skilled workers needed by the oil and gas industry may not be found in Alaska.

"I won't fault an employer for doing what they have to do to fill those positions," she said, but added that the governor is "troubled" by the number of nonresidents working in the oil sector and in other industries. Across all industries combined, nonresident employment grew from 18 percent in 2004 to 21 percent a decade later. In 2014, out-of-state employees earned $2.6 billion.

New numbers from the state labor department suggest that a larger percentage Alaskans are collecting unemployment benefits after losing their job in the oil and gas sector, compared to the overall percentage of Alaskans working in the industry.

But the claims don't give a clear picture of the layoffs. For one thing, not every laid-off worker applies for unemployment benefits.

In February, 1,209 former oil and gas workers collected unemployment checks from the state. Of those, 921, or 76 percent, had Alaska addresses.

In March 2015, when oil and gas employment in Alaska was at record highs, 557 former workers collected unemployment checks. Of those, 441, or 79 percent, were Alaskan.

Phillip Minnette of Eagle River, who lost his job as a roustabout after a Nordic-Calista Service rig was idled in January, said he's now collecting about $400 a week in state unemployment benefits.

Before he was laid off, he'd worked his way up from a cook and was making as much as $92,000 a year doing manual labor on the rig.

He said he's lucky his wife has a good job, with health insurance, because few jobs are available except those paying minimum wage.

"It's hard on both of us," he said. "I lost a damn good job that's hard to replace, especially up here."

He's trying to launch a food-truck business, though the plan involves raising the money to buy a five-ton military truck, including through the crowdfunding website Kickstarter.

"It'd be the ultimate Alaskan food truck," he said.

He'd sell meals and ice during the busy salmon dipnetting season, and at other big events year-round.

Minnette said most of his fellow workers at Nordic-Calista lived in Alaska. But workers who lived out-of-state were everywhere on the Slope, with companies such as BP, CH2M Hill and Parker Drilling, he said.

"We live here, and it's one of most expensive states to live in," he said. "We should definitely get hiring and employment preference, if it's legal."

Wise, who has worked in the Alaska oil industry since the late 1970s, including 20 years on the North Slope, said oil workers used to work one-week stretches, then have a week off, a schedule that encouraged workers to live in Alaska.

Today, employees typically work two-week or three-week rotations, or longer, he said. The longer rotations reduce company costs because it reduces flights between Anchorage and Prudhoe Bay, he said.

But it also makes it more economical for workers living out of state because they spend less money flying to Anchorage, he said.

Over the years, Wise said he's seen more out-of-state workers from all over the place -- California, Alabama, Washington, you name it.

They live in the Lower 48 because it's cheaper, and then recommend others for open jobs, "a good old boy network" that has led to more of out-of-state hiring, he said.

"I know multiple sets of brothers working on the Slope, from places like Louisiana and Arizona," he said.

Many never leave the airport until they reach the North Slope oil fields, so they inject no money into the state's economy, Wise said.

"That's cash our communities need," he said. "We have stores all over Fairbanks that are closing because the economy is bad now."

Last summer, CH2M Hill officials assembled employees and warned them that if work didn't pick up, they'd have to cut workers, Wise said.

The layoffs started not long after that. In December, Wise lost his job.

He said it's tough knowing that a lot of out-of-state workers are still employed.

"The people on the Slope doing this work are living fat city right now, and we're collecting unemployment in a state that's going down," he said of Alaskan workers.

Wise said it's hard to find good engineering jobs now, and his wife has begun picking up more part-time work as a schoolteacher. He has three more months of unemployment checks left.

"We just our tighten our belt, buy what we have to buy. We're eating hamburger, not prime rib," he said.

Drygas said the administration is working to partner with companies in oil and gas and other industries statewide to improve Alaska hire, through such things as training grants and programs that prepare Alaskans for skilled jobs.

She added that oil companies are private industries that make their own hiring decisions, and the state's options are limited by law. Getting companies to employ one-week rotations, for example, would be excessive.

"I don't think the state is interested in micro-managing the policies of industry, but we can certainly influence them," she said.

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