Oil field foils.

• Author: Richardson, Jeffrey
• Position: Oil field support industries.

OIL FIELD FOILS

FOR ALASKA'S OIL FIELD SERvice companies, 1989 began hopefully. The survivors of the oil patch contraction were leaner and meaner, but they were still in business. A variety of strategies had seen them through a depressing decline in oil field work, and there was hope on the near horizon that the large investments needed to squeeze oil out of the declining Prudhoe Bay field would tide businesses over until the Arctic National Wildlife Refuge or other frontier areas were opened.

Then the Exxon Valdez ran aground on Bligh Reef and the skies that had begun to smile on the industry turned dark and stormy. From the somber reflections of company managers and owners, this foul weather countenance has not changed.

With nowhere to go but up or out of business following the recession, many oil field contractors grimly acknowledge that cleaning up after the ill-fated Exxon Valdez was an unexpected economic shot in the arm for 1989. Not only do the firm's managers deplore the tragedy of the spill and its impact on Alaska's pristine maritime province, but they are beginning to perceive the farreaching political implications of Big Oil's tarnished reputation and to feel the effects of an insidious trickle-down factor.

Within weeks of the spill, the first chunk of political debris hit the industry squarely on the head: Changes in the Economic Limit Factor affected tax incentives designed to encourage development of marginal fields. The revised ELF increases severance taxes on the Prudhoe Bay and Kuparuk oil fields, while lowering them on less productive fields.

Angry at what they feel is an industry-wide punishment, oil patch spokesmen also complain that the Exxon Valdez backlash is creating havoc and an adversarial climate in the regulatory arena. The net result is that oil support survival strategies for 1990 are linked more to political considerations than standard business management practices.

Ross Thompson, administrative manager for Peak Oilfield Service Co. of Anchorage, has witnessed many adjustments over the last couple years. He says, "Right now, we're pretty lean. We couldn't get much leaner than we are right now."

Jim Udelhoven, president of Udelhoven Oilfield System Services in Anchorage, fears further shrinkage of the industry itself. "I think further contraction would bring about the demise of some of the contractors. There has to be a certain level of work out there for those companies to keep delivering those services...