Apache oil company to shut down Alaska operations

A Cook Inlet oil explorer that arrived in Alaska with bold plans six years ago is leaving the state, another victim of collapsed oil prices.

Apache Corp., an independent oil company based in Houston, Texas, said in a statement on Thursday it was closing its office in Alaska, but asserted the impact on the area's economy will be "minimal" because it had already been cutting back.

"We had been scaling back operations with dropping commodity prices over the last year," said a statement from the company sent by Castlen Kennedy, a public affairs official with Apache.

Kennedy did not provide information about the number of Alaska jobs lost in the shutdown. But she said some employees will be relocated to other Apache offices.

Crumbling oil prices over the last year and half have forced the oil and gas industry in Alaska and elsewhere to mothball projects and slash workforces.

Apache said the cuts in Alaska are part of the company's effort to reduce operations globally.

"Due to the current downturn, Apache has had to significantly scale back operations and spending," the statement said. "We recently reduced our spending plans for 2016 by 60 percent from 2015 levels and are focusing our limited dollars on specific international opportunities and strategic testing in North America. Operations we are suspending as a result of the downturn include our Alaskan activities."


A company with global operations, Apache arrived in Alaska in 2010. It was among a rush of Inlet wildcatters eyeing what many called an underexplored basin with lots of potential. The state's generous oil tax credits spurred them on, though the Alaska Legislature is considering ending or curtailing the credit program because of the state's huge budget deficit.

John Hendrix, Apache Alaska's general manager, declared boldly in late 2011 that Apache sought oil and it was going to go all the way to bedrock to get it. With an aggressive seismic program, Hendrix said the company at the time employed 200 people. Later, it pursued a project off the northern end of the Kenai Spur Highway that involved a road extension, and had applied for permits from the U.S. Army Corps of Engineers.

But on Wednesday, Hendrix was calling Alaska lawmakers and Gov. Bill Walker with news the company was leaving Alaska, said Rep. Mike Chenault, R-Nikiski, the House speaker.

The "negative" impact will hurt the Kenai area he represents, said Chenault, who for years has had his own oil-field service company.

"It's just not good news," he said. "If they're not working, contractors aren't working, suppliers aren't working. It's just a feeding frenzy," he said.

He said the company was one of the biggest leaseholders, if not the biggest, in the region. He added that Apache may hold on to some of its more promising leases.

Despite the news, some optimism continues in the Inlet industry.

Bruce Webb, with Furie Operating Alaska, told lawmakers on Tuesday the company was bringing another jack-up rig to the Inlet. It will arrive in Homer next week to drill offshore oil prospects in the Kitchen Lights Unit.

The basin is currently home to one other jack-up rig for offshore oil drilling, the Spartan 151.

Webb said he was responsible for bringing Apache to Alaska after meeting skeptical officials at a trade show and encouraging them to look into the state's tax credit program. He also introduced them to leaseholders like Daniel Donkel, who joined others in selling leases to Apache.

Alaska Dispatch News reporter Nat Herz contributed to this article.

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