How to Survive a Crash

Déjà-vu in Alaska

As the number of layoffs in the industry continues to climb in inverse proportion to falling oil and gas prices, many can’t help but dredge up memories of 1980s oil glut – when thousands lost their jobs.

Now retired, five geologists from the Alaska Division of Geological & Geophysical Surveys (DGGS) – the research arm of the state’s Department of Natural Resources – recall when their budget was slashed by two-thirds, resulting in rampant layoffs that threatened to render their organization obsolete.

Yet their story isn’t lost in thousands just like it. It is one for the books.

“We felt we were contributing an enormous amount to the state by our assessment of state land and resources and their revenue potential for Alaska,” said Thomas E. Smith, former state geologist and former senior geologist at the DGGS during the time of the crunch. “If you accept that premise, then you can see how it was important to preserve the heritage and knowledge and continuity we had.”

Determined to find a way around strict state and union protocols, employees of the DGGS unanimously volunteered to take long stints of unpaid leave for two years to halt layoffs and ultimately save their work from obliteration.

“It was an incredible illustration of a really cohesive organization at that time,” said AAPG member Gil Mull, who worked for the DGGS from 1981 to 2001.

I doubt you would get that sort of unanimity today,” he added. “It was quite extraordinary.”

Friday Night Massacre

When the price of oil dropped to less than $10 a barrel in the mid-1980s, Alaska was the first state to feel it, as an average of 85 percent of its revenue comes from the petroleum industry, according to the Alaska Oil and Gas Association.

The Department of Natural Resources was the primary target for massive layoffs, and the DGGS was the bull’s-eye.

It all started in 1986 when oil prices dropped 46 percent and the DGGS’ budget was slashed from roughly $27 to $7 million. Late that summer, geologists working in the Arctic National Wildlife Refuge were pulled from the field and told they no longer had jobs, recalled Ellie Harris, who worked as a geologic assistant for the DGGS at the time.

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As the number of layoffs in the industry continues to climb in inverse proportion to falling oil and gas prices, many can’t help but dredge up memories of 1980s oil glut – when thousands lost their jobs.

Now retired, five geologists from the Alaska Division of Geological & Geophysical Surveys (DGGS) – the research arm of the state’s Department of Natural Resources – recall when their budget was slashed by two-thirds, resulting in rampant layoffs that threatened to render their organization obsolete.

Yet their story isn’t lost in thousands just like it. It is one for the books.

“We felt we were contributing an enormous amount to the state by our assessment of state land and resources and their revenue potential for Alaska,” said Thomas E. Smith, former state geologist and former senior geologist at the DGGS during the time of the crunch. “If you accept that premise, then you can see how it was important to preserve the heritage and knowledge and continuity we had.”

Determined to find a way around strict state and union protocols, employees of the DGGS unanimously volunteered to take long stints of unpaid leave for two years to halt layoffs and ultimately save their work from obliteration.

“It was an incredible illustration of a really cohesive organization at that time,” said AAPG member Gil Mull, who worked for the DGGS from 1981 to 2001.

I doubt you would get that sort of unanimity today,” he added. “It was quite extraordinary.”

Friday Night Massacre

When the price of oil dropped to less than $10 a barrel in the mid-1980s, Alaska was the first state to feel it, as an average of 85 percent of its revenue comes from the petroleum industry, according to the Alaska Oil and Gas Association.

The Department of Natural Resources was the primary target for massive layoffs, and the DGGS was the bull’s-eye.

It all started in 1986 when oil prices dropped 46 percent and the DGGS’ budget was slashed from roughly $27 to $7 million. Late that summer, geologists working in the Arctic National Wildlife Refuge were pulled from the field and told they no longer had jobs, recalled Ellie Harris, who worked as a geologic assistant for the DGGS at the time.

“I always say we went from 140 people to 40 people with the stroke of a pen overnight,” she said.

Not too long after, a group of roughly nine geologists and geophysicists returned from a tin granite mapping project near Nome Creek. All were laid off as they climbed out of their helicopters one Friday evening, said former AAPG member Gar Pessel, a geologist who served as the DGGS’ section chief for minerals investigations at the time.

Called the “Friday Night Massacre,” the firings awoke Pessel to the fact that the DGGS was rapidly being decimated.

Some believed the commissioner of the Department of Natural Resources, Esther Wunnicke, had a grudge against the DGGS. Others knew that in times of financial crises, research organizations become the most vulnerable.

Speculations aside, “Everybody pulled together and said if we let these cuts continue to go through, we will not have a survey,” Pessel said.

“It shows dedication to the science,” he added. “If you’re immersed in the science, it doesn’t take a genius to figure out what is important.”

A group of senior geologists, including Smith and Pessel, turned into overnight politicians. They mentally mapped a way around state and union roadblocks, which did not sanction seasonal positions and required junior employees and support staff to bear the brunt of layoffs – part of the union’s senior members’ “bumping rights,” Harris recalled.

“The future of the survey was not a bunch of people in their 50s sitting around a table. The future was in the people just beginning their careers – the junior geologists,” Pessel said. “It takes some years for a geologist to acquire the knowledge and experience to be able to really contribute to the science and the needs of the state.”

Where There’s a Will …

The senior geologists presented a plan to a new DGGS director, Robert Forbes, that showed an unwavering solidarity:

The highest-paid geologists offered to take three, four and five-plus months of unpaid leave in 1987 and 1988 to fund the salaries of the junior geologists and clerical staff who faced the chopping block. Employees farther down on the payroll would take less time off, as they couldn’t afford drastic cuts in salary.

To fund mapping projects, the senior geologists planned to appeal to the industry, universities and the U.S. Geological Survey for assistance.

Although all DGGS employees unanimously signed a memorandum of understanding showing their commitment, the Department of Natural Resources and the union “fought us every inch of the way,” Pessel recalled.

“It was a time of scientists getting involved with politics, which made me grit my teeth,” Harris said. “But they saved the agency in doing so.”

With much persistence, Forbes eventually convinced the Department of Natural Resources to find a way to convert full-time permanent positions into part-time permanent positions, in accordance with state and union rules.

Mull was paid by the DGGS for five months of the year and received a special approval to perform non-competing contract work with Atlantic Richfield Company to supplement his income.

Smith, who recalled giving up either three or four months of pay, continued to go to the office every day. In fact, when trying to file for unemployment, he was rejected because instead of looking for another job, he allocated his time working for the DGGS for free.

“Some people were so incredibly involved with the projects they were working on that they kept doing them,” Mull said.

Harris found work at the USGS. To keep her position at the DGGS, however, she returned for one month each year to help compile the first Dalton Highway Visitor Guide.

Despite the salary cuts, all of them managed. “You might remember how it was in college,” Smith said. “You find a way.”

Stretching the Budget

Through sacrifice, the DGGS managed to preserve its core geologists.

A group of companies that included Arco, British Petroleum, Anadarko and others regularly granted amounts as large as $40,000 each to the organization’s research on the North Slope. The grants paid for much of the helicopter contracts and field camp expenses for mapping projects necessary to assess Alaska’s oil and gas inventory for purposes of land-use management, Mull said, clarifying that the information gleaned from such projects was not shared with the grantors prior to its release to the public.

“It’s a waste of the scientists’ talent to chase money,” she said. “It’s not the best use of resources.”

Eventually, as oil prices rose again, the DGGS was free to pursue projects without having to regularly hold its hands out for money.

Avoiding a Sequel

Alaska Gov. Bill Walker recently proposed cutting 329 state jobs and the DGGS’ budget by 18 percent. If the downtrend in oil prices continues, more cuts likely will be made next year.

“This has all the makings of a traumatic time comparable to that of the mid-’80s,” Mull said.

Tom Bundtzen, a former DGGS geologist and owner and president of Pacific Rim Geological Consulting, shares the same concerns, but stresses one major difference between the oil glut decades ago and today’s downturn in the market.

Monetary reserves in several state accounts currently total more than $10 billion,” Bundtzen said. “This should help cushion the impacts of trimming state programs, a necessity during this time of declining oil and gas revenues.

“In contrast,” he continued, “during the late 1980s there were negligible reserves in the state accounts, which necessitated drastic cuts in state programs.”

If times get tougher, would DGGS employees pull together once more in unanimous solidarity?

Current DGGS Director Steve Masterman could not be reached for comment, but if the organization is anything like it was in the 1980s, anything seems possible.

“We were a tight knit group,” Smith said. “We were going to make it work. It was a family. You don’t lay off your family.”

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