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BP cutting 20 percent of Anchorage jobs

Posted: Tuesday, January 08, 2002

ANCHORAGE (AP) -- BP Exploration (Alaska) Inc. is cutting about 120 of its employees, or 20 percent of the work force at its headquarters here.

Employees were told at a town hall meeting Monday of the company's decision to change ''the size and shape of the organization,'' BP spokesman Ronnie Chappell said. Most workers will know whether they'll be let go by the middle of February, and the cuts will be made within about three months.

The company has had disappointing luck with recent exploration, and has turned toward drilling for more oil in and around existing fields. In November, BP decided to move the department in charge of exploring for new Alaska fields to Houston, affecting about 35 jobs.

Now, with the completion of development work on the offshore Northstar field and the end of a $100 million three-company study of a possible natural gas pipeline, about five dozen workers won't be needed on those projects.

At the same time BP announced the job cuts, the company said another offshore oil deposit, called Liberty, was being put on the shelf.

''Liberty as a Northstar look-alike project is not competitive at this time,'' Chappell said. Liberty, west of the Endicott field and about six miles offshore, is estimated to hold 120 million barrels of oil, compared with 160 million at Northstar, which began producing at the end of October.

Gov. Tony Knowles said he was disappointed that BP was pulling inward as far as exploration.

''While I concur with BP's confidence in existing fields, I disagree with their approach on frontier development,'' Knowles, a Democrat, said in a statement. ''I remain bullish about Alaska's oil and gas development.''

And from Washington, Republican Sen. Frank Murkowski, who is running to replace Knowles, said he too was disappointed, but he thought that BP's decision to scale back exploration ''may be related to long waits and paperwork associated with the permitting process.''

Beyond the job cuts of its own employees, BP plans to eliminate about 75 of roughly 100 Anchorage contract positions as a result of the focus on what BP calls core areas in and around its existing fields.

And companies that provide managed services, such as accounting, payroll and the like, will be moved out of the BP headquarters to give them a better opportunity to compete for work elsewhere, Chappell said. That will mean ''some of the administrative overhead associated with those services can be borne by companies other that BP,'' he said.

''This is about making our Alaska business sustainable and competitive long-term,'' he said, ''so we can continue to attract the investment required to develop our huge resource base on the North Slope.''

Even with the decline at Prudhoe Bay, BP has the equivalent of roughly 7 billion barrels of oil reserves on the North Slope, about a third of that natural gas.

The cutbacks are essentially limited to Anchorage. Chappell says BP will actually increase its operating and maintenance work force on the North Slope. BP cut back its operating budget on the North Slope by about $100 million last summer, resulting in layoffs at several of its contractors there.

BP expects to keep its North Slope production at the current level of 330,000 barrels daily, Chappell said, and exploration spending on existing fields this year will be about the same as last year. Capital spending on the Alaska operations will total $700 million this year, he said, though that includes a sizable chunk for new tankers.

Alaska's oil companies have seen several rounds of layoffs in Anchorage as oil flow from the North Slope as declined. BP's most recent cutback was in January of 1999, Chappell said.

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