Chevron laying off 162 workers from Moon-based unit

Chevron said Thursday it is cutting 162 jobs at its Moon-based Appalachian business unit.
Chevron said Thursday it is cutting 162 jobs at its Moon-based Appalachian business unit.
Photo by AP
David Conti
| Thursday, Jan. 22, 2015, 3:18 p.m.

Chevron Corp.'s decision to cut 162 jobs from its Appalachian natural gas exploration unit in Moon represents the first major layoffs to hit Marcellus shale operations since prices began falling last year.

The layoffs will affect up to 23 percent of the 700 people working for the company in Pennsylvania, where it expects to curtail drilling activity. The layoffs include office and field workers and happen as several major gas producers downsized capital spending plans in the Marcellus and Utica shales because of a 35 percent drop in prices since November.

Chevron spokesman Trip Oliver said Thursday that the cuts are part of restructuring begun in November to become more “efficient.”

“As a part of this restructuring, Chevron is taking steps to streamline its organization and ensure our workforce is the right size for expected activity levels in this region, which are lower than originally anticipated,” he wrote in an email.

The final number of employees who lose their jobs could be smaller if they can find work elsewhere within Chevron, he said.

A security guard at the company's Moon office said operations were closed Thursday and no employees were there, but it would reopen Friday.

Low oil and gas prices continue to drive cutbacks, and Chevron is hit by both, said Brad Heffern, an analyst with RBC Capital Markets in Houston who covers the company.

Oilfield service companies Schlumberger, Halliburton and Baker Hughes have announced global layoffs as oil drilling slows.

“The overarching point is that crude oil prices have been cut in half over the past six to eight weeks and regardless of what you're drilling for ... Chevron's just going to have less money. And as a result, they're going to do less drilling, and as a result, they're going to need less people,” Heffern said.

San Ramon, Calif.-based Chevron, the world's ninth-largest energy company, was the 10th-largest shale gas producer in Pennsylvania with 224 active wells during the first six months of last year, according to the latest records available from the state.

Oliver said Chevron would continue exploring here. The company received 18 state Department of Environmental Protection permits for shale wells in Fayette, Greene and Washington counties since November and started drilling 11, records show.

“Chevron is committed to the tri-state region and considers developing the Marcellus and Utica an important long-term opportunity for our company,” he said. “We will continue to make significant investments in the development of natural gas from shale in this area.”

Chevron in July put on hold its plan to build a regional headquarters on land it bought a year prior near Montour Run Road in Moon. At the time, the company said it was focusing on revenue-generating projects around the globe.

“It's an assumption on my part that this is a temporary thing,” said Marvin Eicher, chair of the Moon supervisors. “We'd hope that they would proceed with their plan to build here and increase the number of employees here.”

Chevron remains committed to a $20 million promise to the Appalachian Partnership Initiative it announced in October, Oliver said. The initiative, in cooperation with the Allegheny Conference on Community Development and other groups, pays to train a new generation of energy sector workers in 27 counties above the Marcellus and Utica shale through school and community college programs.

Officials with the Allegheny Conference could not be reached.

More layoffs in Chevron's Canadian or Texas operations could happen as it faces pressure to finish two $80 billion liquefied natural gas projects in Australia, said Lysle Brinker, an equity research director at Colorado analyst IHS.

“They're not going to be able to cut back spending on those big, monster projects, so they have to find other areas where they can cut spending,” he said.

Other global energy companies have taken a hit since oil prices began collapsing last summer amid a glut of supply and low demand. Chevron posted a $5.6 billion profit in the third quarter of 2014, but its stock price tumbled 20 percent since hitting a high of $134.85 in July. It closed up 76 cents at $108.92 Thursday. The company will release fourth-quarter results Jan. 30.

Fellow Marcellus and Utica producers Range Resources, Antero Resources and Rex Energy have announced 2015 spending reductions of at least 40 percent from last year's capital plans, though Downtown-based EQT Corp. and Houston-based Southwestern Energy said they were increasing spending. All look to increase gas production to power through the low prices until new pipelines to high-demand markets can ease the glut over the next two years.

“It will get better in 2016, (but) it's never going to be the premium market that the Northeast once was,” Heffern said.

Staff writer Katelyn Ferral contributed to this report. David Conti is a staff writer for Trib Total Media. He an be reached at 412-388-5802 or dconti@tribweb.com.

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