BP report highlights sharp reduction in jobs and taxes amid low prices

Government payments, jobs and spending by BP, the operator of the huge Prudhoe Bay oil field, fell steeply in 2015, the first full year of a prolonged oil price slump and a reduction in the company's Alaska operations.

In the Alaska section of its annual economic report on U.S. operations, BP said Monday that about 16,200 people owed their jobs to the company, divided among direct employees, contractors and other support staff. That's a drop from more than 24,200 jobs in 2014, according to the oil producer's two most recent reports.

Total payments to state, local and federal governments fell even more precipitously, to $263 million from $2.25 billion in 2014. Those payments include taxes and royalties.

The changes come amid the steep drop in oil prices. North Slope oil averaged about $50 a barrel in 2015, roughly half its 2014 price.

The price plunge has had an outsized effect on Alaska's state income because state production taxes are based on net profits. The system allows oil companies to deduct many of their expenses, leaving little room for the state to tax when prices are as low as they have been.

"This is largely reflective of the price environment we're in," said Dawn Patience, press officer for BP Alaska.

BP's sale of some of its Alaska assets to Houston-based Hilcorp in 2014 further reduced BP's North Slope oil production. BP's average daily share of Alaska oil was 107,000 barrels in 2015, down from 127,000 the year before, according to a BP filing with the Securities and Exchange Commission.


Also down: BP spent more than $1.3 billion on vendors in Alaska in 2015, compared to more than $1.6 billion the year before, according to the economic report.

And the company's direct employment in Alaska has fallen to 1,750, down from about 2,000 people in 2014, Patience said.

BP's U.S. Economic Impact Report 2016 is an annual update on the company's activities. With operations from Alaska to the Lower 48 and in deepwater Gulf of Mexico, BP reports that it injected $80 billion into the national economy in 2015. It said it produced 643,000 barrels of "oil equivalent," a term that accounts for oil and natural gas production.

Nationally, the company spent about $20 billion on more than 13,000 vendors. It said it directly employed about 14,000 people and supported 130,000 additional jobs.

BP's reductions in Alaska have come alongside those of other oil companies, including Shell, which last year pulled the plug on its effort to explore the U.S. Arctic Ocean, and ConocoPhillips, which has also announced layoffs to reduce costs.

BP said earlier this year that it will reduce drilling at Prudhoe Bay.

In its new report, the company said that low oil prices and a growing number of liquefied natural gas export projects globally have created challenges for the Alaska LNG project, which combines BP, Exxon Mobil, ConocoPhillips and the state as partners. The state is planning to take over the $55 billion project from lead operator Exxon Mobil, and BP has said it will work with the state to see if a state-led project can be "commercially viable."

BP says the natural gas it holds on the North Slope is its largest undeveloped resource. The report said that despite its difficulties, BP continues to work on the project "in hopes of finding a path forward."

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or