BP is cutting 4,000 jobs worldwide and some of those reductions will be in Alaska.
An intra-company email obtained by the Alaska Journal of Commerce sent to BP Alaska employees Jan. 12 states that the company plans to reduce its total in state workforce by 13 percent.
All employees should know their status by early spring and the majority of layoffs will be conducted by mid-year, according to the email.
BP directly employs about 2,100 people and has another 6,000 contract workers in Alaska, based on the company’s 2015 Alaska Hire report. The 13 percent reduction will come from the company’s direct employees, or about 270 people.
“Today, the cash we generate from our business is not sufficient, meaning we have to borrow from the BP Group to meet our Alaska investment,” the email reads. “Improving our cost base is critical to maintaining our activity level at Prudhoe Bay and the long-term viability of the region.”
In a formal statement BP said it plans to further reduce employee numbers in its upstream division to less than 20,000 — the Gulf of Mexico, Lower 48 onshore and Alaska in the U.S. — to simplify its business, cut cost and improve efficiency.
“To reach this level we will need to reduce our current workforce of BP employees and agency contractors by at least 4,000 additional people,” the company said.
BP’s restructuring comes as the price for Alaska North Slope oil has fallen to near $31 per barrel.
At the same time, North Slope crude production and transportation costs are estimated at $46 per barrel, according to the state’s Fall 2015 Revenue Sources Book.
BP cut 475 Alaska positions in late 2014 when it sold North Slope assets to Hilcorp Energy. About 200 of those employees ultimately transitioned to work for Hilcorp, a Houston-based independent.
ConocoPhillips announced a 10-percent cut to its 1,200-employee Alaska workforce last September in a cost-cutting move.
BP has incurred pre-tax damages upwards of $55 billion related to the massive 2010 explosion and subsequent oil spill from its Deepwater Horizon drilling rig in the Gulf of Mexico, according to the company’s third quarter financial report.
Overall oil and gas industry employment was down 900 jobs statewide in November from a year prior, based on preliminary Labor numbers.
Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at email@example.com.