Support industries feel oil maket contraction

The round tables were fringed with people chatting leisurely and exchanging bits of news, like they were on lunch break. A few feet away, two young men ignored the conversation and clicked away on desktop computers. Yet another group stood on the edges of the room, pacing and waiting, their heads snapping up when the fronts doors opened.

All heads turned as soon as Rachel O’Brien called for session participants, and all rose, shuffling slowly toward the back room of the Peninsula Job Center in unison. As soon as the door closed, the room fell silent.

All the jobhunters had come for an informational session on Hilcorp’s job opportunities. There were limited seats in one session, so those who didn’t make it in time signed up for the second session, held an hour later.

With the downturn in oil prices taking its toll, former oil company employees and related service companies are actively out hunting for work. About 4.2 percent of Alaska’s population worked in oil and gas jobs in 2015, according to an April 2016 report from the Alaska Department of Labor and Workforce Development. The department expects there to be about 1,000 fewer jobs in oil and gas from month to month in 2016 than in 2015, according to the January 2016 job forecast.

The Kenai Peninsula was home to approximately 60 oil and gas-related businesses in 2015, according to the Kenai Peninsula Economic Development District, and many workers who are employed by companies that operate elsewhere in the state.

It’s not just the direct support businesses that are feeling it, either — many other types of businesses, like hotels and restaurants, are feeling the reduction, said Rebecca Logan, the general manager of the Alaska Support Industry Alliance.

“Everybody’s truly a support company for oil gas and mining,” Logan said. “We have drillers, but we also have hotels, graphics companies. … You’d be hard pressed to find a company that isn’t supporting the oil and gas industry in some way.”

The support industries have been hard pressed by the oil industry contraction for more than a year now, and they have been slimming down in an attempt to compensate, Logan said. Many started with benefit and salary reductions before moving to layoffs, but lay off they did — about 2,000 employees to date, Logan said.

There is no booming shale gas marketing in the Lower 48 to run to now, either, she said.

“When this scenario happened before, our companies went to North Dakota and Texas,” Logan said. “There was a lot of work for them there. That is not the case now.”

She said the Alliance has weighed in a number of times to the Legislature about the proposed changes to the oil and gas tax credits in the state, requesting that the Legislature leave the tax credits alone for now. The state’s Oil and Gas Competitiveness Review Board plans to issue a report on the effects of the Cook Inlet tax credits by January 2017, which would provide useful information to the Legislature, Logan said. And even with the additional revenue from reducing the tax credits, the budget deficit remains more than $3 billion, she said.

“Our recommendation is to wait,” Logan said. “Get that Cook Inlet report in place, have a much better understanding of where you are. Don’t react to things to fill a budget gap, but come up with good policy that addresses the needs of the state.”

The Peninsula Job Center in Kenai has seen an increase in traffic in all levels of the oil-related and support positions, said O’Brien, the Gulf Coast/Southwest Regional Manager for the job center.

Every person who comes in looking for work has a unique situation, O’Brien said in an email.

“We look at what other jobs may be available in or outside the local area, if the person is willing to relocate, that matches their personal needs and qualifications,” O’Brien said. “We also look at whether assisting that person with higher education or industry certifications might increase their chances of returning to (the) oilfield or another career field that will come close to replacing their lost income.”

When someone is laid off, the Department of Labor and Workforce Development offers Rapid Response Services, which connects the person to resources and helps them transition back into the workforce. The program is designed to minimize impacts of income loss to the families and individuals, according to the Department of Labor and Workforce Development’s website.

The job center staff will notify the local radio stations, and post flyers in the job centers and throughout the community with information about any upcoming information sessions, as well as send emails to people registered in ALEXsys — the state’s online job bank — who have a valid email address and are receiving unemployment insurance, O’Brien said.

“We work with our local employers very regularly to offer informational sessions such as the one Hilcorp Alaska held here at the Peninsula Job Center this week,” O’Brien said.

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

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