Oil company BP announced Thursday that about half of its more than 1,500 Alaska workers won’t be employed by Hilcorp Alaska, the smaller, private company that is buying BP’s oilfield assets in the state for $5.6 billion.
As a result, a large workforce long associated with Alaska’s North Slope oil fields is expected to shrink by hundreds of positions.
BP’s announcement came as it meets requirements under the federal Worker Adjustment and Retraining Notification Act that calls for notice to the state of large layoffs.
In letters sent to state officials on Thursday, BP said 632 of its employees will be losing jobs next year with the deal’s closing, which the oil company expects to happen as early as May, most of them working in Prudhoe Bay and the rest working in Anchorage.
Of the workers at both sites, 342 have volunteered to be “severed," the letters said. All employees losing employment will receive severance packages from BP, the company said.
BP officials disclosed the numbers to reporters during a meeting at its Anchorage headquarters early Thursday.
About 1,000 BP workers applied for jobs with Hilcorp, BP spokeswoman Megan Baldino said. Hilcorp offered jobs to 806 of them, she said. About 750 accepted.
About 150 BP employees will continue to work for BP outside of Alaska. Nearly 30 have resigned, the letters said.
Some employees are choosing to retire after many years with the company, BP officials said.
BP is working with employees to find jobs for those who want them, officials said.
Texas-based Hilcorp said in a statement it plans to add more than 900 employees to its Alaska workforce as part of the acquisition. But not all those jobs will be filled by current BP workers.
The letters indicate BP workers will be leaving the company in three phases.
The first group will be “separated” around Feb. 20. A second group will be separated on the day the sale closes, sometime after April 30. A third group will stay to support the transition to Hilcorp, and will be terminated within six months of the closing.
When approached by a reporter as he headed into BP’s offices early Thursday, David Wilkins, senior vice president with Hilcorp in Alaska, directed questions to the company’s communications office. Wilkins and other Hilcorp officials were not present at BP’s job-numbers presentation.
Hilcorp has worked with BP to thoroughly review workforce needs, the company said in a statement.
The “vast majority” of the BP employees that will be coming over to Hilcorp currently work on the North Slope, the statement said, calling them critical to safe operations.
“Hilcorp is highly focused on hiring locally,” the statement said. “Nearly 90% of our current workforce is Alaskan.”
Many of Hilcorp’s more than 500 existing employees in Alaska “will play a significant role in operating the new assets,” the company’s statement said.
“We continue to carefully evaluate operations involved in the pending transaction and expect to make further adjustments to our workforce to ensure the safe and efficient continuity of all operations,” the statement said.
“We are very excited to continue our growth and investment here,” Jason Rebrook, president of Hilcorp, said in a news release. “For decades the energy industry has been a key driver of the state’s economic growth and has helped create a better quality of life for all Alaskans. Hilcorp is excited to build upon that legacy through innovation and responsible resource development.”
Hilcorp’s statement said it will continue looking for employees: “Interviews and offers will continue to be made in the coming weeks as the transition continues. Further, Hilcorp expects to post over 150 additional positions in the coming months.”
But Hilcorp’s process of offering jobs to BP Alaska employees is complete, said Damian Bilbao, a vice president with BP in Alaska, on Thursday.
Hilcorp, which already has stakes in some North Slope oil fields and in Cook Inlet near Anchorage, will boost its current total Alaska workforce from about 500 employees statewide to about 1,500, the company said.
The numbers indicate Hilcorp will directly employ hundreds fewer workers than BP did for the same amount of North oil production.
If there ultimately is a net loss of hundreds of workers associated with North Slope oil production, that will impact the state’s fragile economy, which is slowly recovering from a recession, economists said.
“This is a big drop there is no doubt about it,” said Mouhcine Guettabi, an economist with the Institute of Social and Economic Research at the University of Alaska Anchorage.
It will take a “very significant bite” out of the state’s modest jobs growth, he said.
Exactly how big the impact will be is uncertain, in part because companies, including Hilcorp, are investing in oil exploration and the development of large discoveries.
The recovery over the last year has been led in part by growth in oil and gas jobs, Guettabi said.
The oil industry supports a large chunk of jobs in Alaska, as the high wages that in-state workers earn are spent at restaurants, shops and other businesses.
Neal Fried, an economist with the state Department of Labor and Workforce Development, said one outcome is that oil and gas employment in Anchorage, where many oilfield workers reside, is “much less likely to grow in 2020.”
“If this wasn’t happening it’d be very easy to predict employment would grow in Anchorage in 2020,” he said. “With this wrinkle I don’t think it will.”
But with overall oilfield activity and investment healthy, it’s possible that statewide employment in the sector could still see growth, he said.
Bill Popp, president of the Anchorage Economic Development Corp., said in the long-term he sees continued growth in the oil and gas patch. He said other oil companies are hiring skilled BP workers, and will continue doing so.
Hilcorp uses more contractors than other companies, and that could push up North Slope job numbers, too.
“We have to be careful about turning this into the end of the world as we know it,” he said. “I don’t think it is.”
Hilcorp began working to buy assets in Alaska in 2011. It already owns portions of some North Slope oil fields that it acquired from BP in 2014, and is the dominant oil and gas producer in the Cook Inlet region near Anchorage.
BP and Hilcorp announced the sale in August. It includes BP’s stake in the giant Prudhoe Bay and other North Slope oil fields, the 800-mile trans-Alaska pipeline that delivers the crude oil, and giant oil tanks in Southcentral Alaska where the crude is placed onto tankers for shipment.
The deal, requiring the approval of regulators, would make Hilcorp a major oil producer in Alaska, boosting its in-state oil production from 12% to 28%, state figures show.
As of Thursday, 294 employees with BP have not yet found new jobs and are on track to receive involuntary severance packages from BP. Of those, 237 are Alaska residents, BP officials said.
Gov. Mike Dunleavy said in a prepared statement he’s glad the oil companies are committed to finding jobs for the affected workers.
"I am optimistic that any Alaskan looking for employment in our growing oil and gas sector will find the right opportunity with the continued growth and investment on the North Slope,” Dunleavy said. “I will continue to monitor and evaluate this transaction and work with both BP and Hilcorp to ensure Alaskans are well advantaged as this deal progresses.”
State Labor department officials are working with BP to find jobs for workers, the statement said.
"Our rapid response services include opportunities for retraining, unemployment insurance services, as well as connecting prospective employees with the employer community,” said Tamika Ledbetter, commissioner for the Labor department.