Oil, gas employment hits low

Posted: Wednesday, September 24, 2003

ANCHORAGE - Employment in Alaska's oil and gas industry is at its lowest point in more than a decade, according to a report by the state labor department.

Employment in those industries have fallen from a 1991 peak of 10,700 workers to 8,800 in 2002, according to a report by state Department of Labor and Workforce Development economists Neal Fried and Brigitta Windisch-Cole.

These jobs include oil and gas extraction, drilling, and support activities for operators. It does not include support jobs such as catering and security.

Not surprisingly, the trend follows production levels, oil prices and development activity, the Petroleum News reported.

Alaska North Slope crude oil production peaked in 1988 and oil and gas employment in the state peaked in 1991.

BP Exploration (Alaska) Inc. and others made cuts in 1991-1992 and Arco Alaska Inc., followed suit in 1994-1995.

The combined cuts reduced the industry work force by 1,800 between 1991-1995. Smaller job losses were followed through 1997.

Employment numbers rose in 1998 due to increased North Slope development. But in 1999, two years of low prices caused "near-record employment losses" and caused the workforce to dip below 8,000 for the first time since 1983.

While oil prices have remained high in recent years, there are few new projects under way "and little is on the horizon that would change this pattern in the near term," the report said.

The high-paying jobs that the industries provide are important to the state's economy. Oil and gas employment is about 3 percent of the state's workforce but 7 percent of its payroll, the report shows. The industry's average annual salary of $96,158, compared to the statewide annual wage of $37,101.

The report also compares Alaska's oil and gas industry to other major oil states.

Texas, which produced 412 million barrels of oil in 2002, compared to 359 million for Alaska in that year, had 133,802 employed in the oil and gas industry, compared to 8,761 for Alaska.

California, which produced 258 million barrels in 2002, had 16,441 oil and gas industry employees in 2001, the latest year for which figures were available. Louisiana produced 66.6 million barrels of oil and had 69,009 working in the industry.

"If Alaska's oil fields were not so remote, employment in Alaska's oil patch would be considerably higher. Oil fields now considered marginal or non-economic would be viable in a more populated, less remote environment," the report says.

The state also lacks transportation infrastructure: the 800-mile trans-Alaska oil pipeline and a number of shorter pipelines don't compare to the "thousands of miles" of pipeline in other states.

And there are few oil companies with headquarters or regional offices in Alaska, which "means that much of the employment associated with Alaska production is located elsewhere," the report said.

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