Nearly 150 people will lose their jobs after a CH2M Hill subsidiary lost a North Slope contract to a competitor, sparking fears among union and state officials that the primarily Alaska workforce will be replaced by a large number of Outside employees during a time of economic hardship for the state.
BP issues the contract for oil field services at the Prudhoe Bay fields, and the work was done primarily by members of local unions in Alaska. The new contract is expected to be carried out by non-union workers, according to Ty Hardt, a spokesman for Arctic Slope Regional Corp., the parent company of ASRC Energy Services, which will fulfill the contract.
The BP contract was signed with the Wood Group, an international energy services provider based in the United Kingdom, where BP is also headquartered. ASRC Energy Services, a subsidiary of the Alaska Native-owned corporation, will be the subcontractor.
Hardt could not say Friday what the net gain or loss of jobs would be.
"The size of the projected workforce is currently unknown and will remain so until the exact scope of work is made available to AES by BP," he said in an email.
He said the AES contract requires the company "to use every reasonable effort to recruit and employ Alaska residents for state-based positions. However, ultimately BP must approve all new hires on this contract, so qualifications and experience will certainly be a consideration."
A BP spokesperson did not respond to requests for comment Friday.
CH2M Hill subsidiary Norcon will lose the contract this summer, officials said. The work has long been performed by Alaska unions, according to Bob Hubbard, business manager with Plumbers and Pipefitters United Association Local 375 in Fairbanks.
The union connects wells to pipelines and provides other pipeline-related services. About 45 union members, Alaskans who mostly live in Fairbanks, will lose their jobs, Hubbard said.
Workers with other union locals in Alaska are also being cut as part of the contract change, he said.
"It stinks," he said of the change, adding that the union workers won't be employed in the new contract.
"We are fortunate to have the work we've had with BP," he said.
Under a federal law requiring companies to give notice of large layoff decisions, Norcon reported to the state Monday that it had lost the BP contract. The company said it expected to begin the 147 layoffs in stages starting in July, said Lisa Mielke, an official with a state agency that tries to find new work for Alaskans who lose jobs.
On Friday, Mielke said she had talked with Norcon this week, and reached out to ASRC Energy Services to learn details about the change. She plans to urge AES to employ Alaskans.
More than one-third of the oil and gas jobs in the state are held by nonresidents, a number that has grown in recent years, the state has reported. Those workers fly to North Slope job sites to work extended periods, then return home for extended breaks. Critics say they contribute little to the economy compared to Alaskans who live here.
"Even if we have to find Alaskans for (ASRC Energy Services), we will," Mielke said.
Hit with a long-running economic slump because of low oil prices, Alaska has had its unemployment rate be the highest or second-highest in the United States for more than a year.
The April unemployment rate grew slightly from the month before, to 6.6 percent, the state announced Friday. That compares to 4.4 percent nationally.
CH2M Hill is a Colorado-based engineering company that acquired Norcon when it bought Veco from Bill Allen and his family in 2007, an outcome of a bribery scandal and Allen's guilty plea to federal charges. CH2M Hill said in April 2016 that it employs about 2,000 people in Alaska, many on the North Slope.
Lorrie Crum, with CH2M Hill headquarters in Denver, said on Friday that the company recently invested in the new 452-bed Arctic Oilfield Hotel in Deadhorse. It opened in August 2016 to provide employee housing on the North Slope.
"We're invested in the region, we're invested in the industry and we'll continue to work in the region," Crum said.