Chevron Corp. plans to layoff 162 employees in Pennsylvania as part of a broader move announced late last year to restructure its Appalachian business unit, a company spokesman said Friday.
The cuts account for about one-quarter of its 700 employees currently working within the division. Spokesman Trip Oliver said the layoffs, set to begin in April, are limited to Pennsylvania and will not affect the company's other North American business units.
"As 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 said.
Although the layoffs are the first large job cuts announced in the Appalachian Basin since commodity prices started dropping last year, Chevron said the move has been in the works for several months (see Shale Daily, Nov. 13, 2014). The company's North American upstream operations consist of six business units that extend from the deepwater Gulf of Mexico to Canada. The Appalachian unit was already accounting for a smaller share of production before other service companies and producers began announcing layoffs related to a drop in oil prices.
Through 3Q2014, Chevron's North American production averaged 730,000 boe/d. And while the company increased its production in the Midland and Delaware sub-basins of West Texas through the first nine months of 2014 by 40% and 60%, respectively, its Marcellus assets produced just 500 MMcfe/d during that time (see Shale Daily, Nov. 3, 2014). After the third quarter, company executives also said Chevron's focus has increasingly been shifting from dry gas in the basin to wet gas in southwest Pennsylvania and northern West Virginia.
Oliver said the final number of layoffs in Pennsylvania could be reduced if employees are successfully placed in other positions throughout the company. He said employees and the appropriate government agencies have already been notified of the cuts.