FILE PHOTO: Construction work continues on Sunoco’s Mariner East II natural gas pipeline near Morgantown in Chester County, Pennsylvania, August 1, 2017. REUTERS/Charles Mostoller/File Photo

(Reuters) – U.S. pipeline operator Energy Transfer LP (ET.N) will begin cutting about 6% of its workforce next week, underscoring the spreading impact of weak oil and gas prices on the energy business.

Marshall McCrea, chief commercial officer for the Dallas-based company, said in a recorded message to employees the cuts would begin Monday and affect about 6% of the company’s staff, according to two people familiar with the recording.

U.S. oil and gas producers have curtailed or shut in wells in response to crude prices down 45% since the start of the year, reducing deliveries to pipeline operators. Oil production could decline as much as 2 million barrels per day by December, from nearly 13 million barrels per day in January.

Fuel prices have collapsed to below many firms’ cost of production due to COVID-19-related travel lockdowns and a global glut. U.S. energy companies on average have slashed their 2020 spending on new production by a third, and job cuts are spreading across the industry.

Energy Transfer spokeswoman Vicki Granado declined to comment.

The company, which operates some 90,000 miles of oil and gas pipelines including the Dakota Access Pipeline and Mariner East, recently employed about 12,800 people, suggesting more than 750 staff would be affected.

Energy Transfer executives told investors in early May that it would cut operational and capital expenses by up to $650 million combined this year, with the possibility of up to another $400 million reduction in project spending.

The job cuts follow Chevron Corp’s (CVX.N) disclosure this week that it plans to pare between 10% and 15% of its workforce to deal with falling demand and excess fuel supplies.

Reporting by Shariq Khan in Bangalore; writing by Gary McWilliams; Editing by Leslie Adler

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