Oil Companies Cut Costs, Increase Efficiency, Push Discovery Efforts: Such moves could lead to brighter days for oilfield services companies.

• Author: Stricker, Julie
• Position: OIL & GAS

Late last year, Arctic Slope Regional Corporation announced it would close its Nikiski Fabrication Plant. Operated by subsidiary ASRC Energy Services, the facility's forty workers serviced oil and gas platforms in Cook Inlet, making structural pipe and steel and installing electronics.

Some of the facility's equipment and workers were moved to another fabrication facility in Anchorage or to ASRC's North Slope operations. Others lost their jobs. The consolidation was necessary as plummeting oil prices sent the industry, as well as Alaska's economy, into a tailspin beginning in late 2014. According to a news release from ASRC spokesman Ty Hardt, the company needed to "streamline its operations" in order to remain competitive.

It's a story that has been repeated over and over in Alaska since oil prices took a nosedive from $100-plus per barrel in August 2014. Thousands of workers in the oil fields were laid off and the Alaska economy was decimated. The oil companies are supported by a multitude of companies that provide food, fuel, transportation, engineering, security, bear guards, housekeeping, and dozens of other vital services. Other businesses such as restaurants and hotels are also feeling the repercussions of continued low prices.

More than three years later, oil prices are still hovering in the $50 to $60 per barrel range, with no change expected anytime soon. Oil services companies are in for the long haul, but it's not an easy task in the oil industry's "slower for longer" environment.

The companies are slimming down, says Rebecca Logan, CEO of the Alaska Support Industry Alliance. The alliance is a nonprofit trade industry of more than 500 members that provide more than 50,000 jobs related to the Alaska oil, gas, and mining industries.

As early as 2015, businesses tried to manage by restructuring, looking for efficiencies, or reducing employees' salaries and benefits, but many were forced to lay off workers. According to the Alaska Department of Labor, the oil and gas industry had a workforce of about 11,100 in 2016, well below the monthly average of 14,100 in 2015. A 2017 McDowell Group report estimated that for each job in Alaska's oil industry, there are twenty additional jobs in the Alaska economy connected to the industry.

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