FEBRUARY 2018 Volume 38 Number 2 ISSN 0160-3345 The NORTH SLOPE OIL PATCH Jobs in some of the na on’s largest oil fi elds PAGE 4 By NEAL FRIED BEST ESTIMATES SHOW ONGOING JOB LOSS Clearing up some poten ally confusing data PAGE 9 By DAN ROBINSON GAUGING ALASKA’s ECONOMY PAGE 14 To sign up for a free electronic subscrip on, read past issues online, or purchase a print subscrip on, visit labor.alaska.gov/trends. Contact the editor at (907) 465-6561 or [email protected]. ALASKA DEPARTMENT of LABOR Dan Robinson Sara Whitney Sam Dapcevich and WORKFORCE Chief, Research and Analysis Editor Cover Ar st DEVELOPMENT Bill Walker Governor ON THE COVER: BP’s Lisburne Produc on Center at Prudhoe Bay, photo courtesy of BP Alaska Heidi Drygas ON PAGE 4: Deadhorse, photo by Flickr user Dan Love Commissioner h ps://crea vecommons.org/licenses/by-nc-sa/4.0/legalcode Alaska Economic Trends is a monthly publica on meant to objec vely inform the public about a variety of economic issues in the state. Trends is funded by the Employment and Training Services Division of the Alaska Department of Labor and Workforce Development and is published by the department’s Research and Analysis Sec on. Material in this publica on is public informa on, and with appropriate credit may be reproduced without permission. 2 FEBRUARY 2018 ALASKA ECONOMIC TRENDS Gas project will create thousands of jobs for Alaskans The oil and gas sector is the largest pri- training centers, career and technical vate economic driver in the state, and education providers, registered appren- this month’s edition of Trends examines ticeship programs, and the University of employment in North Slope oil fi elds. Alaska system. We are fortunate to have The Alaska Department of Labor and the only comprehensive pipeline industry Workforce Development has been helping training center in the United States: the generations of Alaskans gain the skills Fairbanks Pipeline Training Center. required to work in this important indus- try, and we are building on that legacy While a fi nal agreement on the Alaska as we prepare Alaskans for thousands of LNG project is not expected until the jobs that will be created by the Alaska end of 2018, construction may begin as LNG project. soon as 2019, and expanding the capacity of Alaska’s existing training programs Heidi Drygas The Alaska LNG project is designed and institutions is critical to ensuring Commissioner to move Alaska’s North Slope gas to maximum Alaskan employment on the tidewater, with offtake points along project. the 807-mile pipeline that will provide natural gas for in-state customers. At the Maximizing Alaska resident hire also pipeline’s terminus in Nikiski, the gas requires we increase the number of will be liquefi ed and shipped by sea to programs helping Alaskan high school Asia. Its construction will create an es- students transition to postsecondary timated 12,000 direct jobs with another education or training, registered ap- 1,000 long-term jobs for the operation of prenticeship, and university programs. the project. The economic impact of this A key component to achieving this will project is also expected to create thou- be increasing the number of qualifi ed ca- sands of indirect jobs. reer and technical education instructors for secondary, postsecondary, and ap- In his state of the state address, Governor prenticeship training. The department’s Bill Walker announced his support for workforce development plan will call for Follow the Alaska a strong project labor agreement, which deeper investment in career and technical Department of will put skilled Alaskans fi rst in line to education to ensure the next generation Labor and Workforce Development on work on the project. One of our missions of Alaskans enter the workforce prepared Facebook (facebook. at the department is to ensure the Alas- for employment on the Alaska LNG proj- com/alaskalabor) kan workforce has the skills and experi- ect and beyond. and Twi er (twi er. ence necessary to build and operate the com/alaskalabor) Alaska LNG project. To meet this goal, The Alaska Department of Labor and for the latest the department is developing a strategic Workforce Development is committed news about jobs, to ensuring the Alaskan workforce has workplace safety, workforce development plan to align ex- and workforce isting resources and amplify the ability the skills and experience required for development. to train Alaskans for high-demand jobs this project. With a strong project labor associated with the project. agreement that puts Alaskans fi rst, and a coordinated effort to align and increase Alaskans are already training for the the capacity of training and education myriad occupations required to construct partners throughout the state, we will and operate the Alaska LNG project. succeed in preparing Alaskans for the Alaska has a robust network of regional thousands of job opportunities that will training centers, joint apprenticeship be created by the Alaska LNG project. ALASKA ECONOMIC TRENDS FEBRUARY 2018 3 THE NNorthorth SlopeSlope OOilil PPatchatch Jobs in some of the na on’s largest oil fi elds By NEAL FRIED Industry makeup of the Slope rudhoe Bay, home to the na on’s largest oil Alaska began producing employment numbers for the fi eld, is what single-handedly transformed Slope in 1986, seven years a er oil began to fl ow down PAlaska into an oil-producing powerhouse and the Trans-Alaska Pipeline and 18 years a er the fi eld’s became the source of the state’s greatest wealth. discovery. (See Exhibit 1.) These numbers include both According to historian Terrance Cole, “The balance direct oil and gas industry jobs and all other employ- sheet of Alaskan history is simple: One Prudhoe Bay ment in the oil patch because in this unique loca on, is worth more in real dollars than everything that has nearly everything is ed to oil and gas ac vity. been dug out, cut down, caught, or killed in Alaska since the beginning Many of those suppor ng jobs are cat- of me.” And yet, it’s a place few The oil industry egorized in professional and business Alaskans ever visit. services and include everything from represents 3 percent engineering and geological fi rms to fa- of Alaska’s employ- cility support services and waste man- Oil-related ac vity has since spread agement and remedia on. The Slope well beyond Prudhoe Bay, and this ment, and two- also has a substan al number of jobs ar cle uses the terms “oil patch” thirds of those jobs in the leisure and hospitality sector, and “the Slope” to refer to the en- are on the Slope. employers that operate the camps and re oil industrial complex in the other facili es that feed and house the area, including Prudhoe Bay and Ku- large workforce. (See Exhibit 2.) paruk but also Moose’s Tooth to the west, Point Thomson to the east, and any other area Two other large categories of oil patch employers are in the North Slope Borough that is touched by oil. construc on and transporta on companies, as there’s plenty to build and maintain as well as thousands of Because this ar cle’s focus is oil and gas-related ac- workers and materials to transport. vity, it excludes employment in the North Slope Bor- ough’s eight Inupiat communi es. For more on those Some industries are notably absent on the Slope. For communi es, see “When The North Slope is Home” example, there’s almost no employment in retail or in the September 2016 edi on of Alaska Economic government. In contrast, these represent over a third Trends. of all jobs statewide. 4 FEBRUARY 2018 ALASKA ECONOMIC TRENDS Prudhoe Bay oil fi eld, photo by Flickr user North Slope Pamela A. Miller Oil Patch The oil patch’s Historical Oil Patch Employment historical ebb and fl ow 1 A , 1986 2017* Over the last 30 years, employment levels have fl uctuated from year to year, some- 14,000 $120 mes considerably. During the fi rst two 12,000 decades, Slope employment reached a $100 high of 6,524 in 1990, two years a er 10,000 oil produc on peaked, then dwindled to $80 4,816 by 1999. (See Exhibit 1.) 8,000 Employment $60 At the me, this waxing and waning 6,000 seemed drama c and vola le, but in $40 hindsight, the bandwidth of oil patch 4,000 employment stayed mostly within a ght Oil prices $20 range of 5,000 to 6,000. 2,000 0 $0 The overarching declining trend that 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017* began in the 1990s was punctuated by periods of recovery, but jobs remained *Based on the fi rst nine months of 2017 Note: Employment numbers include all industries. below the 6,000 mark un l 2003. In the Source: Alaska Department of Labor and Workforce Development, Research and Analysis early 2000s, with produc on declining, it SecƟ on seemed unlikely that Slope employment would ever top 6,000 again. Consequently, the oil in- In 2006, the oil patch resumed adding jobs at a strong dustry’s long-term job outlook was bleak. The 10-year pace. In addi on to the tonic provided by four years industry forecast we published in 2006, for example, of above-average oil prices, maintenance and work predicted no growth from 2004 to 2014. on a number of new fi elds breathed life into the in- dustry, and early that year a sec on of BP’s pipeline Oil produc on was down to less than half its peak in sprung a leak that turned into the largest oil spill in 2006, and the downward trajectory was broadly ac- North Slope history and resulted in millions spent on cepted as permanent with employment levels expect- repairs.