Oil prices are down and the industry is shrinking. Without a job anymore, Steve Kruse had to do something. So he spent an extra week heli-skiing in British Columbia.
Being a laid-off oil worker isn't always bad. Kruse took a buyout from ConocoPhillips worth 18 months of pay that allowed him to retire early with a comfortable pension.
That's good news for the state and local economies. Like several displaced oil industry workers I talked to, Kruse has no intention of leaving the state and will increase his volunteer work and leisure spending.
As a generation that arrived in the 1980s leaves the workforce, retirements are probably cushioning Alaska's economy amid falling oil prices. A large portion of recent job cuts in the oil industry and state government have not added to jobless rolls, instead moving people from salaries to pensions. Natalie Lowman of ConocoPhillips said about half its recent layoffs were voluntary.
Alaska's late-1980s oil price recession hit rapidly and cost Anchorage 10 percent of its population. This time looks different. I'll cover the numbers and economics of the situation in my next column. Here's what it looks like for three engineers who left major oil companies this fall.
"For people our vintage, it was a pretty good thing," Kruse said. "We were planning on retirement."
Kruse joined Arco in the early 1980s as a chemical engineer and worked many jobs handling North Slope oil.
"We lived through the big build-out of the North Slope. Not day one, but pretty close. That was pretty fun," he said.
When the mid-'80s price crash came, oil companies offered buyouts to older workers, creating advancement opportunities for Kruse and his veteran Arco colleagues, Jack Walker and Steve Gerlek, who are retiring now. But there were fewer late-career oil workers in Alaska back then because the industry was newer, so many younger workers were forced out.
The merger in 2000 that split Arco between BP and ConocoPhillips sent Gerlek to BP, while Kruse and Walker went to ConocoPhillips. Gerlek said that change sweetened his pension, as did retention bonuses.
Kruse called it a Dilbert moment, when he got a retention incentive from ConocoPhillips a month before getting a retirement incentive. Gerlek called it a hat trick, putting together a pension improvement, a retention bonus and a buyout.
As employees with more than 20 years at ConocoPhillips, Kruse and Walker got 60 weeks of pay, plus retirement enhancements that, Kruse said, made the package worth about 18 months of salary. BP would not share its policy but Gerlek said his package was comparable.
For guys in their early 60s or late 50s, with 30 years on the job, retiring was too profitable to pass up. They can go back and work again as consultants on interesting projects — and all three see that as a possibility — but by choice, not necessity.
Staying would be riskier. Kruse said ConocoPhillips could change the severance package. These are smart guys. Having seen the industry go through downturns before, they've learned strategies. It's safest to take a package early in a downturn.
That money will largely be spent in Anchorage, just as their salaries were. The city will benefit too with their skilled volunteer involvement.
For Kruse, Walker and Gerlek, there was never a question of leaving Alaska. They love it here. As younger men, they climbed mountains together while working in their well-paid oil jobs. Kruse and Walker once pledged to ski every month of the year, including a trip to Chile. Kruse is still at it after 351 months.
I reached him earlier this month on a heli-skiing trip in Canada.
"I was going to come down for a week but it's really good conditions, so I'm just going to spend two weeks," he said. "It's kind of an opportunity to cash in."
Besides skiing in retirement, Kruse also plans to travel and camp with his wife, do more work at his church and maybe get involved in helping Chugach State Park.
"I designed my career around living in Alaska," he said.
Jack Walker volunteers to support the engineering program at the University of Alaska Fairbanks. He'd like to help the school finish a new engineering building that the state partially funded but that remains a half-finished shell.
"It's a long-term investment for the state and the university," he said. "I'm not sure if we'll be successful but we're going to try."
Gerlek is leading a project to build a community garden and orchard in Government Hill. He is used to managing big projects — the Point Thomson oil field on the North Slope was his latest — but he feels this small project could mean even more as a legacy, helping people where they live.
Retiring made sense with oil prices down. Gerlek said renewable energy and shale oil technology could mean oil prices will stay down for decades.
"The price of oil is back down to its 100-year average, and I had the good fortune to have my career during the 20 years when it was at this high," he said.
But this success wasn't all luck. These three engineers made good education and career decisions. Their job performance helped them survive the deep layoffs of the 1990s. They saved and invested, paid off mortgages and prepared for the future.
"We have managed our retirement probably better than the state, because it's personal," Gerlek said. "We can look forward to a reasonable retirement. But the state's fortunes — they made more money, but where is all that?"
He answered his own question: "Foolish projects. They had a lot of crazy lost weekends."
As the state government considers deeper budget cuts and as industry cutbacks become more severe — as they already have in Texas and North Dakota — the financial resilience of individuals offers some protection for the rest of us. State and oil industry pension funds and deferred compensation plans are bringing money into an economy where salaries are disappearing.
In my next column, I'll look at how that happened and how much it can help.
Charles Wohlforth's column appears three times weekly. Find him on Facebook at facebook.com/wohlforthadn.