Share of Alaskans working in state’s oil industry shrinks to lowest in decades

The share of Alaskans working in the state's oil and gas industry fell to new lows in 2016 after seven years of decline, leaving more of the valuable work to out-of-state employees, state data shows.

Nearly two of five workers in the industry lived Outside that year, the last year studied, worrying state officials.

"It's kind of troubling," said Greg Cashen, deputy commissioner at the Department of Labor and Workforce Development.

Alaskans' share of the industry's jobs was rising until 2009, when Alaskans comprised 72 percent of the workforce. But by 2016, they held 63 percent of industry jobs, the agency reported in January.

That's a significant change, said Dan Robinson, the agency's chief of research and analysis.

Alaskans' share of the workforce is the lowest since 1991, the earliest year on records provided by the department.

Robinson said an even smaller percent of Alaskans could be working at the remote North Slope oil fields.

Workers can drive daily to offices in Anchorage where many companies keep state headquarters. But Slope workers commute by plane for multi-week assignments in the field before getting a similarly long break, he said.

The long rotations give people an opportunity to live Outside and fly to Alaska for work.

"They just have the freedom to live anywhere that you and I don't," said Robinson.

The 2016 finding, based on Permanent Fund dividend applications, comes as Alaska posts the nation's highest unemployment rate, 7.3 percent in December.

The nonresident problem extends beyond oil and gas, officials said. Overall, one in five workers commuted to Alaska, especially for seasonal work in fishing and construction or mining and oil field jobs, according to the report.

Alaska's petroleum workforce is a small part of overall employment. But the sector is closely tracked in part because of its large paychecks. Experts say those wages have positive ripple effects on the economy when they're spent at Alaska stores and restaurants. Industry employees average $135,000 a year in income, more than double the statewide number.

In 2016, $526 million flowed to 5,900 petroleum workers who lived Outside, about $89,000 on average. Those numbers include full-time and temporary employees.

Carl Giesler, chief executive of small producer Glacier Oil and Gas, said the nonresident share increased during the boom years after 2009, when oil prices were high, because there weren't enough skilled Alaskans to keep up with growth.

He believes the nonresident share kept growing after the oil price collapse in 2014, sparking thousands of layoffs and a recession, because some contractors left Alaska for Lower 48 opportunities.

For some work, the industry must look Outside for services, he said.

"It's not like (oil companies) don't want to use people from Alaska, but in some cases, they just don't have a choice," he said.

Cathy Giessel, R-Anchorage, said she's not surprised the trend has continued.

Major oil producers have slashed budgets and boosted specialized work during the downturn, including for long-distance horizontal drilling to reach remote targets.

"They are bringing in specialized folks" from Outside for that and other work, she said.

Rep. Geran Tarr, D-Anchorage, said the high-paying jobs offer workers mobility. Some may be choosing to sell houses in Alaska and move to states where the cost of living is lower and economic stability more certain.

"We don't get exit interviews from people leaving Alaska," she said. "It's a problem. Alaskans need these good-paying jobs."

Scott Eickholt, business manager for Alaska Laborers Local 942 in Fairbanks, whose members provide construction and maintenance for Slope fields, blames industry cutbacks.

Prudhoe Bay operator BP is awarding contracts to companies hiring non-union employees, replacing better-compensated union workers, he said.

[Norcon to cut 147 jobs after losing North Slope contract]

The Laborers union has a 12-month residency requirement that's rarely waived, so about 95 percent of members are Alaskans, he said. The union has seen sharp losses in Prudhoe Bay jobs, and some 200 of its best-trained workers await work in the industry, he said.

"We are Alaskans sitting here and watching people from out of state fly over our heads to work jobs that Alaskans should be working," Eickholt said.

The problem of high nonresident rates in the industry has perplexed state leaders for decades, he said. "Now, here we are in a time of struggle without the tools to fix it," he said.

Natalie Lowman, a spokeswoman with ConocoPhillips Alaska, said construction this winter at the Greater Moose's Tooth 1 project on the Slope will require about 700 positions.

"More than 500 of those are union positions through union contractors," she said. "They include teamsters, pipefitters, operators, laborers and IBEW — predominantly from the Fairbanks hall."

Eickholt said he's grateful some laborers will get part of that work, but the union's overall employment numbers will remain well below recent years' numbers.

Lowman said 84 percent of ConocoPhillips Alaska employees live in state. A BP Alaska spokeswoman said 76 percent of its employees live here. Both companies say they encourage their contractors to hire Alaskans.

Kakivik Asset Management and CCI Industrial Services will conduct Prudhoe Bay pipeline inspections as part of a contract with BP starting April 1.

They will employ non-union workers, replacing a mostly union workforce of 261 employed by New Jersey-based Mistras Group.

The companies hire the most qualified candidates, said Sheila Schooner, their spokeswoman. But they prioritize the hiring of Alaskans and Native shareholders of the companies' parent, Bristol Bay Native Corp.

Their Alaska hire rate is 76 percent, she said.

"We think if more Alaskan companies had work in Alaska, there would be more Alaskan residents working in the state," she said.