Texaco Plans to Slash Bureaucracy : 12 Layers of Operations Will Go, Including L.A. Office

Texaco announced a plan Tuesday to streamline its legendary bureaucracy in the U.S. Oil Patch and said it would eliminate 12 of 26 layers of operations, including the Los Angeles office of 135 employes who oversee West Coast oil and gas exploration and production.

The shuffle is expected to cut significantly into the overall employment of Texaco U.S.A., the Houston-based domestic operating arm of the company. A spokesman said much of the job reduction is expected to consist of early retirement or “voluntary” decisions not to accept transfers.

“We do not expect wholesale layoffs,” the spokesman said.

Long derided in the oil industry as a company where nobody could make a decision, Texaco said a major reason for the cutback was to push authority down “as close to the wellhead as possible” and to introduce risk and participative management to the ranks.

The plan divides its U.S. “upstream,” or oil exploration and production, operations into East and West regions with 12 divisions. They supplant 26 headquarter, division, region and district offices, the company said.

The Los Angeles division office in Universal City oversees exploration and production from California to Alaska. Its function moves to Denver, and the 135 employes could be retired, laid off or transferred to Denver, Ventura or Bakersfield, the company said.

Unaffected by Tuesday’s restructuring is the “downstream,” or refining and retail end of Texaco’s business. In California, that includes about 330 employees in Universal City who will continue to oversee the company’s Los Angeles refinery, West Coast service station network and other facilities.

Named to head the Denver-headquartered Western region was Vice President L. Paul Teague. His counterpart in New Orleans is Vice President William F. Wallace III. Both have similar responsibilities already.

Texaco has been trimming its California operations since 1984, when the company’s ill-fated takeover of Getty Oil Co. left it with more than 4,000 employes in the state. It currently has about 3,000.

The domestic reshuffling is the latest implementation of Texaco’s companywide restructuring that stemmed from its bankruptcy in the aftermath of the Getty deal. The bankruptcy resulted from a $10.3-billion jury verdict that Texaco had improperly interfered with a Getty takeover by rival Pennzoil.

Texaco is openly trying to reverse a highly centralized management style that was said to stifle employees and make it an unpopular and distrusted company within the industry. Oilmen accustomed to making deals on a handshake say Texaco management would routinely overrule such informal transactions.

“The idea is to move the decision point as close to the wellhead as possible, so that each division operates as would a successful independent company, making its own operating decisions with minimum review at other management levels while being accountable for its own performance,” said Texaco U.S.A. President James L. Dunlap.

In a statement, Dunlap said the restructuring is to be completed by the end of the year. He said “some relocation and reduction of personnel is expected, but the final effect on employment cannot yet be determined.”