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BP to reduce Alaska workforce by 475 early next year

  • Author: Alex DeMarban
  • Updated: September 28, 2016
  • Published September 15, 2014

Oil giant BP will cut close to one-fifth of its Alaska workforce of employees and direct contractors as a result of the sale of a chunk of its Alaska assets to Hilcorp, the company announced Monday.

The reduction consists of 200 individuals, primarily BP employees, who have been offered jobs by Hilcorp, as well as an additional 275 employees and direct contractors who have not been offered positions, said Dawn Patience, a spokeswoman with BP Exploration Alaska.

The reduction will take place early in 2015 and is in line with the assets associated with the sale, a $1.5 billion deal announced in April that is expected to be finalized by the end of the year. "It's 17 percent of the total workforce" of 2,725 employees and direct contractors who work within the organization, Patience said.

Some of the contractors might still find work with Hilcorp. Lori Nelson, manager of external affairs for Hilcorp Alaska, said meetings have begun "with a number of contractors to better understand their capabilities and how they might support us. No final decisions on who or what will be needed have been made."

Gov. Sean Parnell's office said he was surprised at the number of layoffs but confident people would find work with the economy growing and oil and gas jobs at an all-time high of 15,000.

"I'm extremely disappointed in this action," he said in a statement. "No one likes to see jobs reduced, and I am especially concerned about the disruption for families who work in the energy sector."

The news comes less than a month after voters rejected a ballot measure to repeal the oil-tax cut known as Senate Bill 21, legislation introduced by Parnell. BP had said the change to the state's tax structure will bring about increased investment in the oil patch.

Parnell said BP's plans have not changed.

"When I spoke with BP Alaska President Janet Weiss today, she assured me that BP remains on track for the new rigs planned for the North Slope and for new investment promised to Alaskans," he said.

"BP remains committed to increasing BP's activity at Prudhoe Bay as a result of oil tax reform," said a statement from BP. "This includes additional investment of $1 billion over the five years, including BP's two additional drilling rigs, one in 2015 and a second in 2016."

Patience said the employees who have not been offered work with Hilcorp will have the chance to state their preference for early retirement or severance packages. She said the news was announced Monday at a town hall meeting for BP's workforce. The sale of assets to Hilcorp includes all of BP's interests in two fields -- Endicott and Northstar -- and half of BP's interest in two other fields, Milne Point and Liberty.

Liberty, on federal leases 6 miles offshore in the Beaufort Sea, is the only one of those four fields that is not already developed and producing.

Patience said BP has noted since the sale was announced in April that the changes would lead to a restructuring of the company, she said. The timing of the announcement of job cuts was not affected by last month's oil tax cut.

"This entirely is just an effort to tell our employees first and tell them as soon as those decisions were made," she said. "That has no bearing on it. It has to do with the sale of these assets."

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