Reacting to depressed crude oil prices that dropped by half in 2014 and have still not recovered, Chevron will reassign or lay off 26 percent of its Central California workforce — about 300 employees — the company announced Wednesday.
Chevron has been reviewing its West Coast operations since January. Its findings became apparent Wednesday: The company will reduce the number of employees based in the San Joaquin Valley Business Unit, headquartered in Bakersfield, by more than one-quarter.
Chevron, the largest oil and gas producer in California, has field and office locations in Kern County (Bakersfield, Kern River, Fellows/Midway-Sunset, Lost Hills, McKittrick), Monterey County (San Ardo), and Fresno County (Coalinga).
Employees in San Joaquin unit take part in “upstream” energy exploration and production. The regional division includes employees of all disciplines, ranging from engineers to business support staff. Chevron officials wouldn’t say how many employees make up that business unit but in 2015, when the company announced layoffs of 3 percent of its staff, it had about 1,500 workers.
Chevron spokeswoman Abby Auffant said the number of employees in the San Joaquin unit is continually changing, noting that the figure dropped since restructuring began in 2017, but she wouldn’t provide a current estimate.
SJVBU employees will have the opportunity to pursue positions at other locations within Chevron during 2018, Auffant said. The exact number of impacted Chevron employees will not be known until the end of 2018, she said.
"No one has been laid off at this time," Auffant said via email.
The staff reduction applies across all SJVBU field and office locations, including those in Kern County, Fresno County and Monterey County.
Ten months ago Chevron initiated a project to improve margins and reduce operating costs to enable a long term, sustainable business, the company said in a news release. The Transformation Project, as it is called, included a review of the organizational structure and internal work processes across all functions of SJVBU, the company said.
The number of employees in the San Joaquin unit has continued to dwindle since Chevron started its restructuring process in January, the company said. The decrease is primarily due to job opportunities that have been available to employees in other Chevron locations, the company added.
"We will continue to encourage employees to post for job opportunities available in other locations throughout Chevron," the company said.
Chevron was not making its representatives available for further comment Wednesday, saying they were busy with meetings on the workforce reduction. The company asked that the media gives its employees "time to soak this info in."
The announcement comes after a difficult year for the oil industry. Chevron posted a $497 million loss in 2016, compared with earnings of more than $4.6 billion in 2015, according to the company’s annual report filed in late February.
Chevron’s United States upstream division, which includes the SJVBU, has lost more money than any other division domestically and internationally in two years, according to the report.
The upstream division posted losses totaling more than $6 billion for two straight years, reports show. That’s a result of declining prices of crude oil, which fell in mid-2014 from almost $110 per barrel to a low of roughly $30 per barrel in 2016. It was trading at $52.04 per barrel Wednesday.
The downstream program, responsible for refining, marketing and chemical manufacturing, has remained profitable.
“Earnings of the company depend mostly on the profitability of its upstream business segment,” the report states.
Those losses “reinforced the need for structural reform,” John Watson, Chevron’s CEO and board chairman, wrote in the report.