By Shariq Khan
May 29 (Reuters) – US pipeline operator Energy Transfer LP will cut about 6% of its workforce next week, highlighting the impact of weak oil and gas prices on the energy business.
Marshall McCrea, commercial director of the Dallas-based company, said in a recorded message to employees that the cuts would start on Monday and would affect about 6% of the company’s employees, according to two people familiar with the recording.
In response to the 45% drop in crude oil prices since the beginning of the year, US oil and gas producers cut or closed the wells, reducing deliveries to pipeline operators. Oil production could decline by up to 2 million barrels a day by December, after nearly 13 million barrels a day in January.
Fuel prices have fallen below the production costs of many companies due to COVID-19-related travel restrictions and global congestion. US energy companies cut spending on new production by an average of a third in 2020, and job cuts are spreading across the industry.
Energy Transfer spokeswoman Vicki Granado declined to comment.
The company, which operates around 90,000 miles of oil and gas pipelines, including the Dakota Access Pipeline and Mariner East, recently employed around 12,800 people, indicating that more than 750 people would be affected.
Energy Transfer executives told investors in early May that they would reduce operating and capital costs by up to $ 650 million this year, with the possibility of further reducing project spending by up to $ 400 million.
The job cuts follow the announcement of Chevron Corp. this week that between 10% and 15% of the workforce should be hired to meet the falling demand and the excess supply of fuel. (Reporting by Shariq Khan in Bangalore; letter from Gary McWilliams; editing by Leslie Adler)