Economy

BP's cost reduction plans threaten Alaska's oil field contractors

BP is seeking major cost reductions from more than 100 of its business partners in Alaska this year, and some companies face losing lucrative contracts with the oil company.

These cuts are looming in Alaska because the London-based oil company is slashing billions of dollars worth of expenses around the globe.

BP runs Prudhoe Bay's vast oil field and most of the other North Slope fields. It spends more than $2 billion annually on its Alaska operations, which employ roughly 2,000 people. BP also hires hundreds of contractors that together employ thousands of workers in the state.

BP's budget cuts aren't as drastic as some in the past — it laid off hundreds of Alaska workers in the 1990s, for example — but the firm's Alaska-based suppliers are worried about shrinking revenue and losing out to bigger firms based outside the state, according to Paul Laird, executive director of the Alaska Support Industry Alliance, a trade group for Alaska oil and mining contractors.

If BP hires fewer Alaska-based contractors, it inevitably means fewer oil dollars circulating in the state's economy, Laird said.

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