Keeping Oil and Gas Industry Jobs in Alaska
New investment could bring even more opportunities for workers
According to the University of Alaska Institute of Social and Economic Research, a third of Alaska jobs, or approximately 127,000 positions, are dependent in some way on oil production or spending of state oil revenue. Close to 20 percent more jobs, or 60,000 positions, can be traced to the spinoff benefits of oil wealth, resulting in half of Alaska’s jobs being traced to oil development. With numbers like this, it is no wonder that many people, from employers to job recruiters to politicians, are concerned about the future of oil and gas employment in Alaska.
In 2010, the oil and gas industry in the state accounted for 44,800 jobs and just less than $2.65 billion in annual payroll to Alaska; this employment number increased by 2.4 percent in 2011, and preliminary reports by the Alaska Department of Labor and Workforce Development, Research and Analysis Section in January 2013, predicted a 4.6 percent in 2012 and a 2.9 percent increase in 2013.
Still, oil and gas companies and the businesses that support them have reason to be concerned. Within a decade, it is predicted that there will be a major shortage of skilled workers in the energy field with approximately half of the industry’s skilled workers expected to retire. This upcoming workforce scarcity, as well as the desire of some workers to leave the state for jobs in the Lower 48 and overseas as oil production in Alaska trends downward, could signal big problems for a state dependent on oil revenues.
Where the Jobs Are Now
Despite the fact that oil production has trended downward for the last twenty years, oil employment in Alaska has been on the rise, according to the January 2013 Alaska Economic Trends, published by the Alaska Department of Labor and Workforce Development. This increase is credited to the need for more labor to find and extract harder-to-reach oil as well as the drive to produce more oil while prices are high. Additional labor is also required for repair and maintenance of the state’s aging oil and gas facilities.
While some workers do leave for jobs in the Lower 48 in Texas, North Dakota and Utah, as well as in the Gulf of Mexico or overseas, there hasn’t been a major exodus as feared. Still, losing talented workers does take a toll. “Oil exploration by nature is attractive to entrepreneurs; those who are averse to ‘process thinking,’” says Crystal Nygard, managing director, Management Recruiters of Palmer. “We can’t afford to lose good talent or that entrepreneurial pedigree that has made Alaska so great.”
Both oil and gas companies and their support industries are looking for skilled workers. “We are committed to providing jobs for Alaskans and actively recruit Alaskans for all of our open positions,” explains ConocoPhillips Alaska Director of Communications Natalie Lowman. “In the past five years, we have hired more than 350 new employees, only 27 of whom are non-residents. We currently employ more than 1,100 people in Alaska and 88 percent of those employees call Alaska home.”
“Depending on the time of year, we employ between 200 and 500 people in the Alaska region,” says Mona McAleese, general manager and director of business development at ESS Labor Services, which provides support services for oil, gas, and mining companies, including camp and facility services and contract labor. “Because the oil field is getting more technical, we’re seeing the number of blue-collar jobs remain stagnant or slightly increase, mainly in support of existing camps, facilities, and related pump stations. We’re seeing an increase in more technology-related jobs that require more education and training; these positions are increasing because the nature of jobs requiring these skills in increasing.”
Nygard is also seeing an increase in the amount of white-collar positions, which she credits to Alaska’s regulatory culture. MRI Palmer is part of Management and Recruiters International, which specializes in executive recruiting. “There are a tremendous amount of regulations and permitting required before a company can even explore for oil and gas,” she explains. “Even after a company does all that is required, there is still no certainty that blue-collar workers will come in to implement those plans because a company can invest substantial amounts of money and still not get a permit. I would say that the ratio is probably two to one when looking at white-collar versus blue-collar jobs.”
ASRC Energy Services, a subsidiary of Arctic Slope Regional Corporation, provides regulatory and technical services, engineering, fabrication and construction, operations and maintenance support services, response operations, pipeline construction, and drilling support for the oil and gas industry. According to President and CEO Jeff Kinneeveauk, the company has seen an increase in hiring in the past eighteen months in all areas. “Generally, we’ve experienced more demand for blue-collar jobs, such as insulators, pipe fitters, electricians, and mechanics. We provide everything from entry-level craftsmen to general laborers to drilling engineers; in the past three years, we’ve employed 3,400 people in Alaska and 5,000 nationwide.”
Preparing for the Jobs of the Future
Even as oil production declines, there is talk of new projects, which could still include the TransCanada Pipeline, or a smaller pipeline to Southcentral Alaska. And with the Alaska Legislature’s April passage of SB21, which reduces taxes on the oil and gas industry, new investment in the state could also bring new jobs.
“With the recent passage of the ACES tax reform, jobs in the oil and gas industry are expected to increase,” says Tobias Read, president and CEO, Swift Worldwide Resources. “In 2012, we placed between 75 and 100 contract employees; we are expecting an increase this year of between 100 and 150. The ACES tax overhaul increases profitability for oil and gas companies and thus investing in new projects will be more attractive. The result is new projects, a spike in the demand for skilled professionals, and increased salaries paid to these professionals.”
According to Read, his company is looking for people to fill these positions with the mentality to “do whatever it takes.” “Experience is also very important and there is definitely a demand for employees with ten to twenty years of job-specific oil and gas experience,” he says.
“The tax overhaul will allow for investment here that is already going overseas or to the Midwest, and allow us to be more competitive in global market,” agrees Nygard. “I don’t know if it will spur as much job growth as projected, but it will bring capital and drive the conversation that Alaska is in the oil and gas business again.”
Just days after the Alaska Legislature lowered taxes on the oil industry, ConocoPhillips announced plans to invest more heavily on the North Slope, including adding an additional rig to the Kuparuk field, partially funding a new drill site on the Kuparuk River Field, and beginning the regulatory and permitting stage at the Greater Moose’s Tooth unit in the National Petroleum Reserve-Alaska.
“We applaud the Alaska Legislature for passing SB21 and give kudos to ConocoPhillips for stepping up to the plate,” adds Kinneeveauk of the changes already taking place in the industry. “We hope that this encourages other producers to follow their lead and increase investment.”
To prepare future workers, ConocoPhillips invests heavily in employee training. “We currently employ more than one hundred University of Alaska graduates, and in 2011, ConocoPhillips provided internships to fourteen college students who are either studying in the University of Alaska system or are from Alaska but are studying at universities outside the state,” says Lowman. “Since 2000, ConocoPhillips has donated a total of more than $33 million to the University of Alaska system, and in 2011, we established a $500,000 engineering endowment for the University of Alaska Fairbanks College of Engineering and Mines to support education and research.”
The company also provided $85,000 to Ilisagvik College in Barrow, $30,000 to the Alaska Native Science and Engineering Program, and $30,000 to the Alaska Process Industry Careers Consortium, an organization that works to prepare Alaskans for future careers in the oil and gas industry.
Oil and gas companies are not alone in investing in the upcoming workforce, however. “Both the state of Alaska and ESS provide training for future workers; the state afforded a lot of money into training for up-and-coming positions, especially when it started talking about the possibility of a new pipeline,” McAleese says. “Apprenticeship programs and labor unions also invested a lot of money in training. In our company, we’re trying to grow our own as much as we can. We’re bringing people through the ranks to grow into management or other positions.”
ASRC Energy Services partners with companies in the energy industry to provide on-the-job training. “In our Nutaaq program, ASRC shareholders gain valuable experience by job shadowing. We also provide leadership training for our employees,” explains Kinneeveauk. “This goes back to our mission of hiring skilled people and ‘training attitude.’ We are focused on shareholder and employee growth, because we believe that our employees are our biggest asset.”
As more oil and gas workers head for retirement and more projects get under way, it is especially important that all facets of the industry work together to prepare for the future. “We’d much rather be putting people to work here than exporting labor out of Alaska,” says Nygard. “We want to be an importer, not an exporter of jobs.”
Vanessa Orr is the former editor of the Capital City Weekly in Juneau.
Posted: June 1, 2013