Big oil is getting leaner and leaner

The oil giant’s layoffs, amounting to about 3% of its global workforce, culminate a yearslong push to consolidate offices and thin its ranks as it targets billions of dollars in annual structural costs. Exxon’s head count fell about 19% to 61,000 between the end of 2014 and the end of last year, regulatory filings show.

Chevron, ConocoPhillips and BP earlier this year all announced layoffs that will cut thousands of jobs. The companies have said they expect the moves to yield billions of dollars in savings. Notably, the reductions aren’t expected to affect the volumes of oil and gas that the companies produce.

The job-shedding will further shrink the industry’s rank and file after a yearslong diet of layoffs, attrition and corporate restructuring that has made Big Oil much leaner.

Between the end of 2014 and the end of last year, Chevron’s workforce shrunk by more than 26% to about 45,000 employees. Over the same period, ConocoPhillips reduced total head count by about 38% to around 11,800. BP, on the other hand, has seen its average number of employees increase by more than 7% to 91,000.

All told, the number of U.S. workers in oil-and-gas extraction has dropped by nearly 80,000 since 2015, according to the Bureau of Labor Statistics. Meanwhile, U.S. oil production has climbed 45% to a record of about 13.6 million barrels a day over that same time, according to the Energy Department.

“These companies are clearly the best in terms of the application of technology, the best in terms of intellectual property, intellectual capital," said Ed Hirs, an energy fellow at the University of Houston.

The oil industry’s workforce in the U.S. peaked in size in 2014 just above 200,000, when oil fetched more than $100 a barrel. That year, the Organization of the Petroleum Exporting Countries decided to relinquish its role as a moderating force on crude prices, allowing prices in 2015 and 2016 to plunge to levels low enough to send scores of American drillers into bankruptcy.

U.S. crude prices on Tuesday hovered near $62 a barrel, down from about $80 in mid-January.

The industry’s head count has never come close to making a full recovery, as U.S. shale companies have found ways to pump more oil with fewer people. In the Permian Basin of West Texas and New Mexico, drillers that once spent more than two weeks drilling a well can now drill horizontal wells extending over nearly 2 miles in just four days.

None of Exxon’s job cuts are in the U.S., according to a person familiar with the matter. Almost half the cuts are in Canada, at Imperial Oil, majority-owned by Exxon. The affiliate plans to reduce its workforce by 20% by the end of 2027.

Mass layoffs are rare for Exxon. In 2020, Exxon had said it would cut up to 15% of its global workforce, including 1,900 in the U.S., amid a historic downturn in the world’s oil demand following the onset of the pandemic. That year, it booked a $20 billion annual loss as prices plummeted.

Since 2019, it has cut about $13.5 billion in structural costs by combining offices and trimming jobs, among other measures. On Tuesday, Exxon said consolidating workspaces “drives innovation."

“Our global office network was established decades ago under very different circumstances," an Exxon spokeswoman said by email. “To support the collaboration so critical to our success, we are aligning our global footprint with our operating model and bringing our teams together."

The sector is in a far better financial shape than it was during previous drops in oil prices. Wall Street has demanded that companies pay down debt and return cash to investors in the form of buybacks and dividends, and drillers have healthier balance sheets that can better weather price swings.

But job and budget cuts that target U.S. operations have some worried about potential ripple effects across the rest of the industry. Large players hire drilling and fracking crews, which in turn provide a livelihood to an ecosystem of smaller services providers.

“When Conoco stops spending money and lays off people, there’s a lot of other companies that are impacted by that down the food chain," said Roe Patterson, co-founder of private-equity firm Marauder Capital and the former chief executive of Basic Energy Services, an oil-field services firm that filed for bankruptcy twice in the past 10 years.

Clint Concord, senior vice president of operations at Byrd Oilfield Services, a tubular handling services company, said big fossil-fuel producers want energy service providers like his to use as few as a third as many people on some oil-field jobs, such as installing well casing. Companies like his are replacing a good deal of manual work with robotic tools, he said. “It’s a new era."

Write to Collin Eaton at collin.eaton@wsj.com and Benoît Morenne at benoit.morenne@wsj.com