The impact of plummeting oil prices is finally hitting Alaska’s oilpatch. ConocoPhillips Alaska Inc. said Tuesday it will cut about 10 percent of its 1,200 Alaska employees.
“ConocoPhillips expects approximately 10 percent of its global workforce to be impacted through workforce reductions, with the largest percentage occurring in North America. We expect Alaska to be affected as well in that 10 percent range,” company spokeswoman Natalie Lowman said. “We’ll know more in the next several weeks as we work through our formal process. Our industry is undergoing a dramatic downturn, which has caused us to look at our future workforce needs. As we have assessed the implications of lower prices on our business, we’ve made the difficult decision that workforce reductions will be necessary.”
Crude oil prices have plunged in the last year from more than $100 per barrel for Alaska North Slope oil to less than $50 per barrel in recent days. Prices are edging up again but the outlook is for depressed prices to remain for a period of time, most economists say.
In its second quarter results released Aug. 4, ConocoPhillips posted a loss of $179 million compared to a profit of nearly $2.1 billion during the second quarter of 2014.
Year-to-date total revenue is down from $30.7 billion in the first six months of 2014 to $16.7 billion in the first half of 2015.
Despite the cuts, ConocoPhillips is still working on new North Slope projects that will add production by the end of the year. Two new projects, CD-5 and Drillsite 2S, are now in construction and will be producing by the end of this year. Another new project, I-NEWS, an expansion of the West Sak viscous oil program in the Kuparuk River field, will be producing in early 2017.
“We have taken several significant steps as a company to strengthen our (company-wide) position, including reducing our capital spending and future deepwater exploration program,” Lowman said. “However, the workforce reductions are necessary to become a stronger, more competitive company. We are committed to treating all our employees with respect and fairness during this process,” she said.
