ConocoPhillips to cut global workforce 20-25%; Alaska is affected

ConocoPhillips is making workforce reductions, including in Alaska.

How many employees will be affected is unknown and the company is unable to offer specifics, but sources familiar with the North Slope said the reductions will affect operations staffing.

“We are always looking at how we can be more efficient with the resources we have,” ConocoPhillips said in a statement. “As part of this process, we have informed employees that a 20% to 25% reduction in our global workforce, which includes employees and contractors, is anticipated. The majority of these reductions will take place in 2025.”

“ConocoPhillips Alaska made the decision to accelerate workforce notifications for North Slope employees to allow us to make the necessary changes ahead of our winter construction season,” the company said.

Most of the work on the big Willow construction project is by contractors and employees of those companies would likely be less affected. Willow is in the middle of its development and is scheduled to start operations in 2029.

The company-wide reductions are part of an efficiency drive that has been in the planning stages. Senior managers with ConocoPhillips discussed the plan in concept at the company’s second-quarter call with investor analysts.

There were other reports that ConocoPhillips has been studying the way Hilcorp Energy manages its Alaska operations. Hilcorp is known for its lean staffing and production-focused management that includes incentives for employees.

It’s common for major oil and gas companies to have periodic reorganizations and reductions in staffing. In Alaska, BP reduced staff several times as did ARCO Alaska, which became ConocoPhillips Alaska. Usually companies offer generous severance packages to employees being laid off.

Industry sources who have experienced prior reductions said that after companies cut employees they often wind up hiring contractors to ensure the work gets done. In many cases laid-off employees have gone back to their jobs as contractors but with less benefits.

Sometimes long-time employees approaching retirement welcome and even volunteer to be laid off to get enhanced retirement benefits that might be offered. It is not known what severance incentives ConocoPhillips will be offering, however.

Replacing employees with contractors can have mixed results in actual savings because of the loss of institutional knowledge in ensuring efficient operations.

Over time employees, as opposed to contract workers, are hired again ConocoPhillips is making workforce reductions and in some cases workers are rehired. In the long run it’s unclear whether large reductions really save money, some financial analysts say.

Meanwhile, state and federal regulators, particularly in safety and environmental compliance, watch corporate internal transitions closely out of concern that cost-cutting could reduce the vigilance of companies, or at least become a distraction for employees.