2011 Executive Summary

The Alaska Oil and Gas Association (AOGA) contracted with McDowell Group to assess the role of the oil and gas industry in Alaska’s economy and in the economies of the Municipality of Anchorage, the Kenai Peninsula Borough, the Matanuska-Susitna Borough, the Fairbanks North Star Borough, the City of Valdez, and the North Slope Borough. The economic impact analysis conducted for this study was based on detailed expenditure and payroll data provided by “Primary Companies” in Alaska’s oil and gas industry (including production and exploration companies, refineries, and pipeline companies).1Data was also drawn from the Alaska Department of Labor and Workforce Development (ADOLWD), the U.S. Bureau of Economic Analysis, and a variety of other public sources.

The findings of this study are divided into two categories: 1) those reflecting a detailed analysis of the industry’s size and impact on Alaska’s economy, including direct, indirect, and induced impacts; and 2) those reflecting trends in the industry as it is more narrowly defined by the ADOLWD and federal government statistical agencies. This report’s principal aim is to answer questions about the industry’s size and influence on the Alaska economy. Secondarily, the report seeks to provide useful information about trends in the industry as reflected in government statistics that are regularly published and often seen by industry watchers, policy makers, and the general public as a measure of the industry’s health.

Key Statewide Findings Oil and Gas Industry-Related Employment and Payroll

  • Employment and payroll in Alaska’s oil and gas industry in 2010 included direct (Primary Company) impacts of 4,848 jobs and $764 million in payroll. This includes 4,000 jobs and $600 million in annual payroll for Alaska residents.
  • In-state spending by Primary Companies on goods and services, and in-state spending of payroll dollars earned by employees of the Primary Companies creates substantial indirect and induced employment and payroll for Alaska residents. The substantial “multiplier effect” of Primary Company activity in Alaska includes employment with oil support services firms, other businesses that provide goods and services to the industry, and other support sector firms throughout Alaska where industry payroll dollars are spent.
  • Including all direct, indirect, and induced employment and wages, the oil and gas industry in Alaska accounted for 44,800 jobs and just under $2.65 billion in annual payroll to Alaska residents in 2010. To state differently, for each Primary Company direct job, nine jobs are generated in the Alaska economy. For each dollar earned by employees of the Primary Companies, a total of three and a half payroll dollars are generated in Alaska. These numbers do not include jobs and wages in Alaska created by the expenditure of oil-related taxes and royalties paid to state and local government. They also do not include jobs and income related to the Alaska Permanent Fund and savings accounts that exist because of prior years’ oil taxes, royalties, or other oil-related payments.
  • The industry accounted for 13 percent of all private sector employment in Alaska (44,800 jobs out of a total of 336,300 jobs) and 18 percent of all private sector resident earnings ($2.65 billion in payroll out of total of $14.4 billion).
  • The oil and gas industry accounted for approximately 10 percent of all employment in Alaska and 13 percent of all resident earnings.



Trends in Oil and Gas Industry Employment and Payroll  
  • Government-published data, though including only a partial measure of oil and gas industry employment, provides an indication of trends in the industry. According to this data, employment grew steadily from 2003 to 2008, peaking at 13,700 jobs (including resident and non-resident jobs) in December 2008. This employment figure includes jobs with oil and gas “extraction” firms and oil support services companies, but excludes refineries and pipeline employment, as well as much of the industry’s indirect employment and all of the industry’s induced employment.
  • Based on the same published data, industry employment then fell to as low as 12,000 in 2009 where it remained relatively unchanged for several months before gradually increasing to around 13,000 by the end of 2010.3
  • While insufficient data is available for industry-wide quantitative analysis, anecdotal reports and individual companies’ data indicate much of the recent employment increase is connected to higher spending on long-term maintenance and repair of aging infrastructure while spending on development of new projects has been relatively flat.

Nonresident Participation in Alaska Oil and Gas Industry

  • Based on government-published data, nonresident employment in the oil and gas industry has varied only marginally since 2000 and has not shown a clear trend either up or down. The high point for nonresident workers in the industry over that period was 31 percent in 2006 and the low point was 26 percent in 2002. The percentage of nonresident oil and gas workers in 2009 (the most recent year available) was 28 percent.
  • Without exception, increases in the number of nonresident workers in the oil and gas industry over the last decade have corresponded with increases in the number of resident workers in the industry. In other words, more nonresident hire has historically meant more resident hire as well. Similarly, in every year where the number of resident oil and gas workers declined, the number of nonresident workers in the industry also fell.
  • From 2005 to 2009, the number of oil and gas industry workers who were Alaska residents increased from about 8,200 to more than 11,800 – a jump of over 3,600 workers (44 percent). Over that same period the number of workers that were nonresidents rose from about 3,400 to about 4,600 – an increase of about 1,200 workers (35 percent).