Alaska wages and jobs associated with the oil and gas industry slid in 2016, though some contractors that have laid off large numbers of workers expressed optimism that business will rebound thanks to new prospects and more drilling rigs.
Research and consulting firm McDowell Group released the data at the Alaska Oil and Gas Association conference Wednesday in Anchorage. Even with the slight decline, the numbers illustrated the industry's powerful impact on the state's economy.
AOGA paid for the report.
Counting public and private jobs supported by the industry's contracts, taxes and royalties, oil and gas accounted for $6 billion in Alaska wages in 2016, or 35 percent of all wages in Alaska, and 104,000 jobs, or 32 percent of jobs in Alaska.
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That's down from 2013, the previous year studied by the McDowell Group for a similar report. That year, the industry accounted for $6.4 billion in wages, or 38 percent of wages in Alaska, and 111,000 jobs, or 33 percent of jobs in Alaska.
Oil prices began sliding in 2014, leading to reduced spending by the industry.
Expressing greater hope in the future, Kevin Durling, president of Petroleum Equipment and Services, said the number of drilling rigs operating statewide has more than doubled, from a low of four in mid-2016 to nine currently, in part because oil prices have improved.
"We're right in the middle" between the economic downturn and better times, Durling said. His company is a specialty tool provider that relies on rig work.
Durling and other industry executives said they are hopeful that potentially large new projects on the horizon, such as discoveries within or near the National Petroleum Reserve-Alaska, would result in new work.
They spoke with a reporter at the AOGA conference.
The McDowell report is not yet publicly available, but McDowell Group principal Jim Calvin presented a summary Wednesday morning at the conference.
It measured spending by 14 companies, including oil giants BP, ConocoPhillips and ExxonMobil, as well as refiners such as Tesoro Alaska and Alyeska Pipeline Service Co., operator of the trans-Alaska pipeline.
Those companies in 2016 spent $4.6 billion with about 1,000 Alaska contractors, providing critical spending that rippled throughout the economy, resulting in additional jobs and wages, said Calvin. They paid $2.1 billion in taxes and royalties.
McDowell said further negative fallout in wages and jobs associated with industry work is expected, based on data from the Alaska Department of Labor and Workforce Development. Officials with contracting companies said they hope that's wrong.
Scott Hawkins, chief executive of Advanced Supply Chain International, said the new discoveries offer a glimmer of hope.
His company, involved in day-to-day operations in the oil and gas fields, has cut dozens of jobs, leaving about 200 employees, mainly by not filling vacant positions.
Production from new fields in coming years can boost oil production dramatically and help turn things around, he said. But the Alaska Legislature needs to maintain a stable oil-production tax policy to make sure those projects pencil out, he said.
"We're fully capable of shooting ourselves in the foot if we're not careful," said Hawkins, who is considering a run for governor in 2018.
Dale Kissee, president of CONAM Construction Co., said his firm has lost work on the North Slope as companies have put projects on hold. Things don't look much better for 2018, he said.
Durling said the rebound is a slow process. He's seeing it now because he's on the front end of the drilling process.
Durling said he cut about 10 employees during the downturn, leaving about 20, but he's looking to add a position now.
Five drilling rigs are at work on the Kenai Peninsula, helping stabilize the situation there, he said. And while four are operating on the North Slope, plans by Italian oil company Eni could add a fifth rig there later this year, he said.
"I think the industry has hit bottom," Durling said.
But he quickly added that things could worsen if average oil prices drop below $50 a barrel or the Legislature changes the oil production tax in a way that hurts the industry.
Also key is follow-through by President Donald Trump's interior secretary, Ryan Zinke, the keynote speaker at the AOGA conference.
Zinke vowed to take steps that could ease federal restrictions to help boost oil production in the NPRA.
That could lead to increased drilling, too, Durling said.