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JUNIOR ACHIEVEMENT | ECONOMIC OUTLOOK | WINTER DRILLING | ACA COMPLEXITIES

January 2014

Financial Services Special Section Brick and Mortar Enhanced by Technology Page 54

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Januar y 2014 TABLE OF CONTENTS ABOUT THE COVER An armed Loomis guard and a maximum security vault are industry standards for ﬁnancial security. In a new special section (page 54), we review Alaska ﬁnancial services and learn more about Loomis.

DEPARTMENTS From the Editor. . . ONLINE Inside Alaska Business . . 59 Right Moves . . . . . . . . . . . . . 62 Alaska This Month . . . . . . 64 Events Calendar . . . . . . . . . 67 Market Squares . . . . . . . . . 70 Alaska Trends. . . . . . . . . . . . 71 Ad Index . . . . . . . . . . . . . . . . . 74

ARTICLES

INSURANCE

30 | Complexities of the Affordable Care Act Impacts of healthcare reform on employers By Ron McCurry

HEALTH & MEDICINE 34 | Industrial Repetitive Injuries Working hard to keep incidences down By Vanessa Orr

special section Economic Outlook 6 | 2014 Economic Outlook for Alaska Compiled by Mari Gallion special section Junior Achievement 16 | An Open Invitation from Junior Achievement Alaska Save the Date: Thursday, January 30 Flora Teo and Logan Birch

2014 LAUREATES

Laureate profiles by Mari Gallion 18 | The Helmericks Family

CONSTRUCTION

44 | Taking It Inside: Winter Construction Work Building projects continue despite weather By Dimitra Lavrakas

20 | The Doyle Family 22 | Mr. Wally J. Hickel, Jr. 24 | Mr. Chris von Imhof

TRANSPORTATION

26 | Mr. Martin Pihl

47 | A Year of Transportation Industry Acquisitions Key players in Alaska under new ownership By Dimitra Lavrakas

OIL & GAS

51 | Winter Drilling Plans Anticipated Industrial Activity By Mike Bradner

28 | Past Laureates, Sponsors, Board of Directors special section Financial Services

REAL ESTATE

68 | Statewide Commercial Leasing Sizing up the urban markets By Laurie Evans-Dinneen

and

Volume 30, Number 1 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

EDITORIAL STAFF

Managing Editor Associate Editor Editorial Assistant Art Director Art Production Photo Consultant Photo Contributor

Susan Harrington Mari Gallion Tasha Anderson David Geiger Linda Shogren Chris Arend Judy Patrick

BUSINESS STAFF

OIL & GAS

38 | Oil Industry Mobilization and Demobilization By Tom Anderson

Alaska Business Monthly | January 2014

54 | Mobile Technology Enhances Brick and Mortar Growing the business of money By Tracy Barbour 58 | Loomis Alaskan Heritage Dates Back to 1897 Partnering with business and industry By Tom Merrill and Kent Smith

President VP Sales & Mktg. Senior Account Mgr. Account Mgr. Survey Administrator Accountant & Circulation

Jim Martin Charles Bell Anne Campbell Bill Morris Tasha Anderson Melinda Schwab

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503-2577 (907) 276-4373 Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial email: editor@akbizmag.com Advertising email: materials@akbizmag.com Pacific Northwest Advertising Sales 1-800-770-4373 ALASKA BUSINESS PUBLISHING CO., INC. ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2014, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues of the Power List are $15 each. Single issues of Alaska Business Monthly are $3.95 each; $4.95 for October, and back issues are $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, PO Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change, or update online at www.akbizmag.com. Manuscripts: Send query letter to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Publishing Co., Inc. is prohibited. Address requests for specific permission to Managing Editor, Alaska Business Publishing. Online: Alaska Business Monthly is available at www.akbizmag.com/archives, www. thefreelibrary.com/Alaska+Business+Monthly-p2643 and from Thomson Gale. Microfi lm: Alaska Business Monthly is available on microfi lm from University Microfi lms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

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special section

2014 Economic Outlook

2014 Economic Outlook for Alaska ALASKA

ith much of the country still working to dig out from underneath an economic recession, Alaska’s economy is strong and growing stronger. Alaska’s private sector is growing, and we’re already seeing increased Alaskan job opportunities in response to the More Alaska Production Act. Companies have been announcing billions in new development plans creating new opportunities and jobs for Alaskans. We’ve made historic progress on making affordable energy available to Interior Alaska and on a gas pipeline. Between energy and transportation projects, infrastructure development will continue to spur private investment and economic strength. My administration remains committed to making Alaska a great place to live and work. We’ll continue making smart decisions to bring new money to our state so innovative, hardworking Alaskans can better secure their future and grow Alaska’s economy. Alaskans can grow Alaska’s economy. —Governor Sean Parnell

ALASKA NATIVE CORPORATIONS

t Arctic Slope Regional Corporation, we leave 2013 with a very optimistic outlook. Using our Iñupiaq values as our guide, we have set very aggressive goals for ourselves as a corporation and ﬁnd ourselves with a very strong balance sheet, which positions us for future sustainable growth. I am encouraged by the passage of Senate Bill 21, which has created a new sense of optimism and investment climate for not only North Slope oil producers but also their partners, and strongly believe this new tax structure is a giant step toward reversing the decline in North Slope oil production. As we head into 2014, look for ASRC to play a role in outlining the longterm beneﬁts to Alaskans by keeping SB21 in place.

or the first half of Fiscal Year 2014, I see many positive developments on the horizon. Bristol Bay Native Corporation recently acquired Peak Oilfield Services Company and we are looking forward to the benefits this acquisition will bring to Bristol Bay Native Corporation, its shareholders, and the state of Alaska. As a whole, Alaska’s economy is faring well and the diversity of work that Native corporations provide helps stimulate the economy while increasing its financial strength for the future. Overall, real estate investments are looking up. Alaska continues to be a marketplace where creative and disciplined investment opportunities can be found for those willing to put in the work. Bristol Bay Native Corporation looks forward to more to come.

—Rex Rock, Sr., President and CEO, Arctic Slope Regional Corporation

—Jason Metrokin, President and CEO, Bristol Bay Native Corporation

alista Corporation sees some operational opportunities for 2014. We are successfully widening our economic footprint into a variety of industries. We acquired complementary businesses that perform work outside of federal contracting to stabilize our revenues, like Yukon Equipment in 2010 and STG Incorporated in late 2013. These companies provide core support in building Alaska’s economy and infrastructure. Wind energy projects and other renewable energy efforts are gaining both attention and funding. STG Inc. has in-depth experience in wind projects, having installed approximately 80 percent of all operational utility-scale wind projects in the state. Brice Incorporated recently earned an Excellence in Construction Award for its Eva Creek Wind Farm support. Rural Alaska faces extreme challenges in energy costs. Because the state and federal governments are responsible to support all its citizens, including rural Alaskans, we expect their strong support for energy projects off the road system.

ealaska is proud to be a contributor to a healthy Alaska economy, particularly in our home region of Southeast Alaska. Our wholly owned subsidiary Haa Aaní, LLC is an innovation leader for small business development, whether providing access to financing and technical expertise for entrepreneurs, or building new relationships to revitalize existing industries. Sealaska’s core Native values continue to guide the company as we seek a large scale acquisition in 2014 that is aligned with our Native identity, ideally in the state of Alaska or the Pacific Northwest. But just as important as economic development is for Alaska, so too is the protection of the rights of our first peoples. Recent legal activity on voting and subsistence rights threaten the health of our communities as greatly as any economic challenges. Sealaska remains committed to strengthening our people, culture and homelands in 2014, and beyond.

—Andrew Guy, President and CEO, Calista Corporation

—Chris E. McNeil, Jr., President and CEO, Sealaska

Alaska Business Monthly | January 2014

www.akbizmag.com

oyon continues to operate positively in the state of our national economy. Doyon’s success is due in large part to our forward-thinking board of directors and the hard work of our thousands of Alaska-based employees. Additionally, recent Doyon seismic and drilling operations in Interior Alaska on state and Doyon lands would not have happened without State oil and gas exploration incentive credits. We applaud the action taken by the Legislature in 2013 to extend certain exploration credits for several additional years. Those incentives will be a major factor in Doyon’s forward planning efforts for underexplored Interior basins. —Aaron Schutt, President and CEO , Doyon, Limited

AKCS1425 “State of Alaska - Pioneer” Alaska Business Monthly Jan 2014 T: 8.25" x 10.625", L: 7" x 10", B: 8.5" x 10.875" 300%md CMYK

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ALASKA NATIVE CORPORATIONS

ARCHITECTURE & ENGINEERING

am optimistic about Alaska Native Corporation prospects statewide. Alaska Native Corporations have become substantial economic drivers for Alaska, with consolidated revenues approaching $9 billion in 2012. ANCs operate nationally and globally, but are Alaska companies with profits distributed throughout the state. This year is one of exciting transition for Chugach, as we adopt a new organizational structure to expand our portfolio of businesses. We are adapting the company to drive long-term shareholder value and deliver on our mission of profitability, celebration of our heritage and ownership of our lands. Our federal customers are struggling to regain traction following the recent shutdown and ongoing sequestration. Despite the tough conditions facing our federal business, Chugach is poised for growth. Our financial position is strong and we are looking for quality Alaska businesses who could benefit from a long-term partner because we believe this state will continue to enjoy its long history of steady growth.

he construction industry outlook is for more of the same, with little to any growth. There do not appear to be any new large design projects, at least in the vertical construction portion of the industry. The military and other federal agency work has slowed down, even before sequestration and the furlough. The State Capital Budget is unlikely to be as big as it was last year, which was signiﬁcantly less than recent years. Municipal and School District work consists primarily of small remodel and system upgrade projects that can be accomplished in a summer’s construction season. Private sector development has a few new retail facilities but the work in this area is mainly remodels and additions.

—Gabriel Kompkoff, CEO , Chugach Alaska Corporation

ARCTIC POLICY

aving just seen visiting delegations from Norway and Iceland in Alaska in late 2013, the state continues to expand its activity in the Arctic. The Alaska Arctic Policy Commission will deliver its draft report to the Legislature in January 2014, which will provide the impetus for expanded outreach, public comment and education on the State of Alaska’s Arctic. Alaska’s Arctic regions—the Aleutians, Bering Strait, Northwest Arctic and North Slope—are all working to evaluate and plan for opportunities, leverage individual strengths, and provide a strong voice for local input into decision making. 2014 will bring renewed attention to the Arctic Deep Draft Port, a trans-shipment port, and other maritime and resource development projects. The federal implementation plan for the National Strategy for the Arctic Region will have an impact on Alaska’s Arctic, though the extent remains to be seen. Also, the Arctic Council’s Circumpolar Business Forum may soon prove a good venue for northern industry input. There’s a lot going on around the Arctic, but Alaska is well-positioned to take advantage of best practices, emerging opportunities and the increased attention. —Nils Andreassen, Executive Director, Institute of the North

EMPLOYMENT

ob growth in 2013 was less robust than 2012, suggesting that Alaska’s economy is already feeling the effects of pinched government spending. Modest private sector growth coupled with public sector job losses indicate that 2014’s employment level will be ﬂat with possibilities of decline depending on the severity of cuts across all levels of government. Federal spending is an important economic driver in Alaska, and reductions will likely impact both goods-producing and serviceproviding industries. Dynamic markets for Alaska’s natural resources generate uncertainty about employment growth in the state’s extractive industries. Health care and social services job growth will likely continue, particularly because of Alaska’s aging population. —Caroline Schultz Economist, Alaska Department of Labor, Research & Analysis Section

—Colin Maynard, PE, BBFM

BANKING & FINANCE

laska’s stable economy, healthy housing market, and responsible lending practices have resulted in ﬂat to moderate growth for Alaska banks in 2013. While we continue to face regulatory headwinds with implementation of the Dodd-Frank Act, Alaska’s banks are well positioned to fuel Alaska’s economy in 2014 and beyond by making every good loan we can to businesses and consumers. The Alaska Bankers Association is optimistic about Alaska’s future with the potential for increased oil and gas exploration and production activity on the horizon. The ABA supports SB 21 as a means to grow Alaska’s economy over the long term. —Joe Everhart, President, Wells Fargo Alaska Region, Chairman, Alaska Bankers Association

HIGHER EDUCATION—ALASKA ECONOMY

he underlying value proposition of higher education in Alaska will persist in 2014. Access and affordability will remain guiding principles. State funding of higher education is expected to hold ﬂat at best. Revenue and enrollment growths are expected to be muted. Changes to federal student aid programs and research funding are expected. Strong governance and management leadership will be needed to navigate this period of intensiﬁed change and challenge

in higher education. Let me now turn to the economic forecast for Alaska. The recovery of the United States economy from the Great Recession will continue and broaden across the sectors of the economy. GDP growth is expected to accelerate. Employment growth is expected to be modest. The stock market, represented by the Dow Jones Industrial Average, will chart an upward path. The Alaska economy will remain susceptible, however, to shocks from political uncertainties, soft oil prices, and international market anxieties. Interest rates will rise, the question is when and how we all see a longer-rate increase. This will mean that the cost of debt will rise too. In light of volatility in the economy and politics, it becomes all the more imperative that Alaska should diversity its revenues. I have mentioned this need to diversify revenues via monetizing assets, attracting top human capital and businesses to the state, etc. in a number of my recent articles. There will be pressure on overall state revenues which, in turn, will translate into restrained spending. —Dr. Ashok K. Roy, VP Finance & Admin/CFO, University of Alaska System

Alaska Business Monthly | January 2014

www.akbizmag.com

CONGRESSIONAL DELEGATION

s Alaska continues to make substantial progress in developing our natural resources, I am optimistic that our state’s economic outlook will continue to grow in the coming year. Billions in new investments on our North Slope will once again boost one of our state’s economic lifelines and fill the Trans-Alaska Pipeline to capacity. This means more jobs, higher pay, and a brighter future. Other opportunities present themselves through my work to further limit the federal government’s overbearing and harsh regulations on Alaska businesses and industries. If this year’s successes—our record-setting commercial fishing season, above average tourism numbers, and the announcements of future research and development projects—are any reflection of the future, I’m positive 2014 will be successful. —Don Young, US Representative

laska has fared better than the rest of the country during the downturn, and the Alaskan economy continues to show signs of relative strength. Currently the unemployment rate in Alaska is 6.5 percent compared to 7.3 percent for the rest of the country. Last year, according to NOAA, Alaska accounted for 5.3 billion pounds, or $1.7 billion worth of ﬁsh, leading the nation in both categories. And just recently, Shell announced plans to resume Arctic drilling this summer. All of this is welcome news. There’s still much more to do, though. We’ll need critical investment in transportation infrastructure, particularly ports and roads, to ensure capacity to move Alaska exports. And we’ll need continued investment in career and technical education to ensure the next generation of workers is prepared to participate fully in the Alaska economy. —Mark Begich, US Senator

he coming year holds a great deal of promise for the state. Besides the hope of continued movement on a gas line project for Southcentral, construction will begin on the first oil field in the National Petroleum Reserve-Alaska, CD-5, which should be in production in 2015. We can expect further progress on finding and producing new gas resources on the Kenai, and Shell is planning to return to the Chukchi to continue oil exploration this summer. The next year will also have new challenges for coal and mineral development, but I’m hopeful we’ll see Fort Knox’s access to minerals expanded, movement on an extension of the Greens Creek Mine in Southeast, and progress on rare earth element development at Bokan Mountain. Add to that the fact that we just had a record-breaking commercial salmon season, and there is much to be optimistic about for our Alaskan economic outlook next year and beyond. —Lisa Murkowski, US Senator

CONSTRUCTION

’m relatively optimistic. A renewed conﬁdence in Alaska’s economy, including the political leadership and pent-up demand, are spurring some aggressive levels of private investment. This investment is on the Slope, in mineral properties around the State, and especially visible Anchorage and Fairbanks. Projects from the generous capital budgets and bond issues of the recent past will contribute to this activity. The Civil construction sector will continue to be robust, as DOT advances a number of projects, and addresses a longstanding backlog. This year will see a recovery in defense spending from last year’s low, including Missile Defense at Fort Greely. The market continues to be very competitive in all sectors, and owners are taking advantage of good prices. —John MacKinnon, Executive Director, Associated General Contractors of Alaska

n fiscal year 2014, we expect to execute 378 projects valued at $526.4 million. Much of this workload is attributed to seven Army projects worth $103 million that will provide infrastructure for the Aviation Task Force at Fort Wainwright. An emphasis on missile defense will result in construction of eight projects valued at $90 million at Fort Greely. Under civil works, $23 million in operations and maintenance at ten sites will make up more than half of the program’s budget. Meanwhile, environmental work remains steady with two hundred projects at $115 million. Of that total, the Formerly Used Defense Sites program will address more than fifty properties with $65.4 million. Lastly, we plan to build 107 projects worth $170 million on behalf of US Pacific Command and other United States agencies in Asia, while providing vital facilities to support humanitarian assistance and the Indian Air Force’s newly-acquired C-17 aircraft via the Department of Defense Foreign Military Sales Program. —Col. Christopher D. Lestochi Commander, US Army Corps of Engineers, Alaska District

ENERGY

ositive developments on the horizon for the energy sector include continued investment in new, energyefficient and clean generation. The old equipment has served Alaskans for many decades. Replacement now provides safe and reliable service for years to come. New technology also helps clean the air and conserve precious gas resources in the Cook Inlet. Altogether, Railbelt utilities will have invested about $1 billion. Within the past year, four utilities have built three new plants. This spring, Municipal Light and Power will begin to build what will be one of the world’s most energy efficient plants in Anchorage. As a state, we’re also moving along the edge of technology to help integrate variable fuel sources, such as wind, into the electric grid with battery and fly-wheel technology. And, we’re moving forward with strengthening our interconnectedness through transmission system upgrades. —James M. Posey, General Manager Municipal Light and Power

fforts by residential and commercial consumers to reduce energy use and cost through efficiency measures will increase. Given the new reality of lower state revenues, the state itself will also begin to look seriously at breaking down the Alaska mind-set that prefers grants to loans so that state public buildings begin to utilize loans to finance efficiency retrofits. In the Railbelt, the utilities’ lack of natural gas contracts beyond 2019 will drive efforts to build more renewable energy projects that hedge against the uncertainty and volatility surrounding gas. Pressure from private sector power producers who wish to build projects across the state and sell the electricity to local utilities will likely increase. Finally, more and more people will come to see affordable heating as the biggest energy issue in the state, particularly in rural Alaska. —Chris Rose, Executive Director, Renewable Energy Alaska Project

Alaska Business Monthly | January 2014

www.akbizmag.com

SUPPORT

“Caterpillar® makes a great product, but it’s the support of the local dealer that makes the difference. The bottom line is that N C Machinery product support is what keeps us in business.” Dave Cruz, President, Cruz Construction

Several machines from Cruz Construction’s extensive Cat fleet hard at work in Grayling, AK.

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ECONOMIC DEVELOPMENT

he outlook for Anchorage is steady, modest growth for the next few years. Positives include very low unemployment (4.8 percent through August 2013), good private sector job growth (1,900 year to date through August of 2013), solid building permit growth ($541 million year to date through October 2013), a strong 2013 summer tourism season, steady air cargo volumes (top 5 highest volumes globally) and strong average annual wages ($52,740, up 2.5% in 2012). Headwinds that can or will inhibit growth in the future include growing housing costs for both single family and rentals (21st highest cost nationally), extremely high health care costs (4th highest cost nationally), and most importantly, the rapid decline of North Slope oil production (-184,100 barrels per day, FY2008 to FY2013). Professional and business services, health care, oil and gas, construction and manufacturing continue to be solid performing employment sectors. The only sector seeing signiﬁcant declines is government, down eight hundred jobs as of August 2013. Government losses are split evenly between local education and federal employment.

AN ALASKA MINING PROJECT COMMITTED TO: LOCAL HIRE RESPONSIBLE DEVELOPMENT ENVIRONMENTAL INTEGRITY

—Bill Popp, President & CEO, AEDC

A coffee table photo book of Alaska’s North Slope oil patch.

Rigging cable, Liberty

Project, July 2009

MY FAVORITE SUBJECTS ARE PEOPLE WORKING. TO ME IT DOESN’T MATTER IF THEY ARE EQUIPMENT OPERATORS, TRUCK DRIVERS, MUD MEN, DRILLERS, ROUGHNECKS, GEOLOGISTS, BULL COOKS, MECHANICS OR COMPANY PRESIDENTS — IT’S THE PEOPLE WHO ARE THE MOST INTERESTING TO ME. left Pilebuck Gary Pickus, February 2009 10

AVAILABLE ONLINE NOW

above Eni Petroleum, Spy Island, March

2011

top right Deballasting after barge offload, West Dock, August 2011 bottom right Blaze Anderson, roughneck, Parker Drilling Rig 272, February 2013 next Parker Drilling Rig 272 moving crew, February 2013

135

Order your copy today at judypatrickphotography.com or call (907) 258-4704 In bookstores Spring, 2014 “If you want to really see what the industry looks like in this little-traveled and forbidding part of North America, “Arctic Oil, photographs of Alaska’s North Slope” by Judy Patrick is the best documentary you will find...”

– Kay Cashman, Publisher of Petroleum News.

Alaska Business Monthly | January 2014

FISHING

laska’s 2013 commercial salmon harvest was estimated at $691.1 million, a 20 percent increase over 2012, and the second most valuable harvest on record. Total statewide harvest volume was the highest on record. Southeast harvest values hit $219 million; higher than any other region. Pinks were major contributors to high revenues in Southeast and Prince William Sound, while high prices aided the mediocre sockeye run in Bristol Bay. The halibut fishery closed on November 7, 2013, leaving 5 percent of total quota unharvested. Fishing was reported to be slow in areas around Kodiak, but very good in the Southeast. Politics may threaten the future of Southcentral Alaska’s salmon industry—a ballot initiative to ban commercial set-net fisheries in urban areas is gaining momentum. In spite of the federal government shutdown, Alaska’s Bering Sea red king crab fishery appears on track to harvest its quota in time for the holiday season. —Marcus Hartley, Vice President and Senior Economist, Northern Economics www.akbizmag.com

MINING

espite the softening commodities prices experienced by the mining industry in 2013 and the generally bearish market sentiment that came along with it, I have seen a refreshing resurgence of optimism that always presages the beginning of the end of a down-cycle for the mining industry. Despite bankruptcies, mine closures, negative feasibility studies and the exodus from Alaska of companies large and small, all of which occurred over the last ten months, the unmistakable signs of a 2014 resurgence are at hand. Having personally experienced five of these down cycles, I have learned to pay attention to those small changes that come before the markets turn, including increased web site traffic, an increase in risk-capital stock transactions, flat or rising stock prices, a decrease in the number of large company write-downs, and an increase in the number of companies looking at new acquisition opportunities, the “tire kickers” who feel the markets have bottomed and now is the time to invest.

—Curt Freeman, President Avalon Development Corp.

NONPROFIT CORPORATIONS

he forecast for charitable nonprofits in Alaska will be mixed in 2014. Individual charitable giving should continue to increase due to more nonprofits using best practices to identify, cultivate, approach, solicit and steward donors. Efforts like Pick.Click.Give. have increased the level of awareness of the public on ways to contribute to their favorite charity. With investments growing, foundation giving will increase as should contributions from businesses. However, since many charitable nonprofits rely significantly on government grants and contracts, many will be challenged to adapt to a reduction in federal and state funding. After five decades of growth, the number of nonprofits in Alaska will decline. Most of the decline is a result of organizations with no employees and budgets under $50,000 going out of business. However, due to the volatility of government funding, some larger organizations may also be forced to close. —Dennis McMillan, President and CEO The Foraker Group

TRANSPORTATION

e see clear indications of increased activity in the oil patch and are encouraged by this sign. Scheduled state construction activities are up from last year. Other freight indicators look good yet we remain cautiously optimistic for 2014. —Aves Thompson, Executive Director Alaska Trucking Association

www.akbizmag.com

January 2014 | Alaska Business Monthly

OIL AND GAS

FOR

growth rEgIoNAL ANC CORPORATIONS

laska’s economic future looks more promising than just one year ago. Last year, my members were concerned about continued high taxes on the oil and gas industry in Alaska, and the crippling effect they had on attracting new capital investment to the state’s oil patch, which arguably acts as the lifeblood of Alaska’s economy. This year, with new oil tax reform passed this session, I am happy to say that companies have announced billions of NEW investment into our North Slope ﬁelds. Competitive regimes do work. Over the last year, production in Cook Inlet has increased by over 30 percent thanks in large part to the additional incentives added a few years ago. It truly is an exciting time in the industry. Unfortunately, the cloud hanging over this good news is the referendum (Ballot Measure 1) on tax reform that will appear on the August 2014 ballot. If repealed, Alaska will return to the old, failed tax regime that did nothing to stop the rate of decline in the Trans Alaska Oil Pipeline. That’s why I urge all Alaskans to vote NO on 1 on August 19. —Kara Moriarty, Executive Director Alaska Oil and Gas Association

TOURISM THE CALISTA CORPORATION FAMILY OF COMPANIES

Yulista Management Services, Inc. • Y-Tech Services, Inc. • Yulista Aviation, Inc. Brice Companies • Tunista Services, LLC • Tunista, Inc. • Tunista Construction, LLC Yukon Equipment, Inc. • Brice Environmental • E3 Environmental • Futaris Sequestered Solutions • Chiulista Services, Inc. • Solstice Advertising Calista Real Estate • Calista Heritage Foundation Statistics from Alaska Business Monthly October 2012

Coming January 2014!

2014

ABM’s Power List is an invaluable year-round reference providing current data on more than a thousand companies doing business across Alaska. Be sure to get your copy!

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501 W. Northern Lights Blvd., Anchorage, AK 99503-2577 907-276-4373 • Toll Free 800-770-4373 • akbizmag.com

Alaska Business Monthly | January 2014

he Alaska tourism industry is one of the top three private industry employers in the state. Annually, over 1.8 million visitors come to Alaska, spending $3.72 billion dollars on visitor activities, transportation and related expenses. We expect continued positive growth in visitor numbers and economic beneﬁt nationally and in Alaska. Tourism is a bright spot in our national economy as it sees faster employment rates and growth compared to other industries. The travel industry has generated direct travel employment of 7.7 million. Last year, the travel industry posted a record $50 billion in trade surplus, larger than those generated by other industry sectors. Projections for Alaska’s travel industry is also positive as we beneﬁt from public and private investments including $16 million from the State of Alaska to support a successful tourism marketing campaign, growth in domestic travel and international arrivals, new and expanded air service and cruise ship berths. —Sarah Leonard, President and COO Alaska Travel Industry Association www.akbizmag.com

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special section

Junior Achievement

An Open Invitation from Junior Achievement Alaska

oin us for the 28th Annual Alaska Business Hall of Fame, an event that celebrates the past, present, and future of business in Alaska. In 1987, Junior Achievement began the Alaska Business Hall of Fame to honor outstanding individual leaders of Alaskan business. Since then, the Hall of Fame has become one of the state’s most prestigious events, inducting new Laureates on an annual basis. These individuals are honored for their direct impact toward furthering the success of Alaskan business, support for Junior Achievement’s mission and programs, and demonstrated commitment to the Alaskan economy. This important event is a fundraiser for Junior Achievement, an organization dedicated to providing economic and entrepreneurial education in the great state of Alaska. Since 1973, Junior Achievement has served K-12 students statewide from Barrow to Ketchikan. Junior Achievement serves 8,500 students annually in forty-three Alaskan communities. As demand for the program continues to grow, Junior Achievement partners the business community with educators to prepare young people for a global economy. Through the continued support of corporations and businesses in Alaska, we can continue to reach more students in Alaska. It is our privilege to invite you to attend the 2014 Alaska Business Hall of Fame, presented by Alaska Business Monthly. This year we are honored to induct the Doyle Family, Weaver Brothers; the Helmericks Family, Colville Inc.; Wally J. Hickel Jr., Hickel Investment Company/Hotel Captain Cook; Martin Pihl, Alaska Timber Exchange; and Chris von Imhof, Alyeska Resort—congratulations to you all! The Alaska Business Hall of Fame is annually attended by nearly six hundred guests, including many prior Laureates, leaders from the business community, and supporters of Junior Achievement. We are again pleased to have General Mark

Alaska Business Monthly | January 2014

Save the Date: Thursday, January 30 Hamilton emcee the event along with actual Junior Achievement students. For table reservations, or to inquire about the limited remaining sponsorship opportunities, we encourage you to call Junior Achievement at 907-344-0101 or go online bit. ly/1a55FZg. Tables of ten are $1,500 or individual reservations can be made for $150 per ticket. Junior Achievement of Alaska is a registered 501(c)(3) organization, and the majority of your purchase may be tax deductible. The 2014 Alaska Business Hall of Fame will be held Thursday, January 30, at the Dena’ina Civic & Convention Center in Anchorage. Doors open at 5:30 p.m. for a no-host reception with the formal program and dinner following at 6:30 p.m. From the board, staff, and students of Junior Achievement of Alaska, we wish you the very best in 2014 and we look forward to seeing you on January 30!  Flora Teo, JA President Logan Birch, JA Chair

Flora Teo

Logan Birch www.akbizmag.com

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Junior Achievement—2014 Laureate

2014 Laureate proﬁles were written by Mari Gallion, Associate Editor, Alaska Business Monthly.

The Helmericks Family

hen considering the sparse population of communities located within the Arctic Circle, it is rather rare, even for those who have lived their whole lives in Alaska, for people to say that they have spent time along the North Coast of Alaska outside of work. It’s even more unusual to have lived in a community located within the Arctic Circle. But for one to have lived, fished, worked, and raised a family at the mouth of the Colville River in the northernmost homestead in the United States is a claim that can be made by far fewer still, although it is a claim that can be made by all members of the Helmericks family. In many accounts the late family patriarch, Harmon “Bud” Helmericks, did not mince his words regarding the amount of work and dedication required to live at his compound at the mouth of the Colville River, and the reasons behind certain of his pioneering acts, like flying his singleengine plane Arctic Tern (Alaska’s first Cessna 170) from Alaska to the North Pole using the sun as his navigational tool, are no more vain or complex than, “I wanted to see what was up there.” In 1953, within the three hundred miles that separates the Inupiat villages of Barrow and Kaktovik, at the mouth of the Colville River, only two families lived: the Woods and Helmericks families. With Bud Helmericks doing the flying and the Woods family doing the fishing, they started a business selling fish to people in Barrow. It was called Arctic Tern Fish & Freight Co. Within years, it evolved into a unique hunting guide business. There is no question regarding the validity of the slogan used by Colville Inc., the company that evolved from these early ventures into the North Slope’s oldest service company, “We know the slope… and beyond.” According to the Colville, Inc. website, “Bud established a flourishing commercial fishing operation, became a renowned big-game guide (Alaskan Master Guide No. 4), and continued his adventures as one of the first Alaska Bush pilots. Becoming known for his Arctic knowledge and

experience, Bud became a consultant for Eastman Kodak, Eddie Bauer, and other companies working in cold regions.” During the winters, the Helmericks often traveled, but the cold months at the homestead required that they “mine” driftwood for heat. Although Bud and Martha worked to make sure their children felt important, the lifestyle came with much bigger challenges than those of Alaskan families who lived nearer the population centers. Electricity was a rare luxury, and heat was not taken for granted. The Helmericks children were taught bush skills by their father and schooled by their mother, which often only involved handing them the teacher’s manual and being available to answer questions. Every night ended with a candle-lit dinner complete with a white tablecloth, and the boys were taught to stand until their mother sat down. All three Helmericks boys excelled at living off the land, and all were honored for their individuality and divergent interests. In 1963, ten years after Bud Helmericks had made his experimental flight to the North Pole, oil exploration began in the North Slope. Bud was asked to consult various firms on operations. A year later, exploration was in full swing. In the following years, some drilling crews even staged from the Helmericks’s home. All the Helmericks boys cut their teeth on the oil industry, learning about the most fundamental logistics simply through being the source of what was needed. What started as the family’s fishing and guiding business evolved to become Colville Services, Inc., a small oilfield services operation in Deadhorse that specializes in making deliveries to remote drilling sites in all weather. As written on the Colville, Inc. website, Bud Helmericks “was an industrial guide for northern Alaska’s early oil exploration, starting with guiding Northern Transportation Co.’s barges loaded with Sinclair drilling equipment and supplies from the Mackenzie River across the Arctic Ocean into the Colville River. He also was a consultant for British Petroleum

Alaska Business Monthly | January 2014

Courtesy of Mark Helmericks

By Mari Gallion

Ryan Helmericks and his dad, Mark.

[BP] during its early push into the Prudhoe Bay region.” Colville Services, Inc. was officially born in 1985, when two of the Helmericks brothers realized that they could provide Arctic logistics solutions for situations that stumped industry professionals who were less familiar with what it takes to do business in the Arctic. Their hustle, innovation, practical problem solving ability, and knowledge about Arctic conditions were characteristics that empowered them to stay afloat amongst the bigger industry players, even getting an edge on them in some aspects of support. Today, Colville is headed by Mark Helmericks, one of the three children of Bud and Martha, who has been the sole owner of Colville, Inc. since 2006. He is the first Alaska-born Rhodes Scholar and received his Bachelor of Science in Geology from Harvard and a master’s degree in economics from Oxford. He has come a long way since mining driftwood at the Colville River delta.  www.akbizmag.com

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Junior Achievement—2014 Laureate

The Doyle Family By Mari Gallion

ost residents of Anchorage, Kenai, Fairbanks, and many other Alaska population centers have taken note of the fact that they are sharing the road with ubiquitous light blue trucks; trucks that might belong to Weaver Brothers, Inc. On the Kenai Peninsula, they might belong to Doyle Fuel Service, Inc. Observant Alaskans may occasionally witness one of those light blue trucks, a vintage Kenworth, with “Dream Come True” emblazoned across its doors. That truck, Dream Come True, is also referred to as #1. It is the fi rst truck purchased by James H. (Jim) Doyle, who would later found Doyle’s Fuel Service, Inc. and purchase Weaver Brothers, Inc. Simply owning and driving the truck fulfi lled the ambitions of Doyle’s youth—and as many successful business people, including Doyle, will attest—if you want to be successful in business, do what you love. Doyle’s enthusiasm for his truck, the road, his customers, his employees, and the people of Alaska, combined with an honest heart and good work ethic, has helped to make Doyle’s every venture a screaming success and his brand recognized throughout the state. Doyle grew up on a ranch in Whitehall, Montana. While he knew he didn’t much like ranch life, one day while working in the hay fields, he spied a tractor trailer driving by—and he knew he liked that truck. Driving a truck like the one he saw became his dream. At the age of eleven Doyle was driving the family car around the fields, and by the age of fifteen he was driving a two-ton truck to make deliveries for his father. Doyle’s pioneering spirit combined with a tepid sentiment towards ranch life spurred him on to leave the ranch in Montana in 1957 to seek work in Alaska. Doyle got his first formal Alaska truck driving job serendipitously: He was offered a job as well as a cabin to live in by Ed Estes, a man who stopped to help Doyle fi x a flat tire in Moose Pass. He worked for Estes for five years and credits his learning the business to Estes and his employee, Clyde Smith. 20

Jim and Jimmy Doyle in front of Jim’s ﬁrst semi, circa 1976. Courtesy of Jimmy Doyle

Spending those first few years on the Kenai Peninsula, Doyle gained valuable experience in the trucking industry and got along with all his Alaskan neighbors and co-workers. It was within those years that he bought his first truck and started moonlighting, establishing a business delivering fuel at nights and on weekends. With the growth of the oil industry in the early 1960s, once he had enough business, Doyle sold his pickup and bought his first Kenworth, the truck he named “Dream Come True.” In 1963, he hired his first employee and bought a second fuel truck. Thus began Doyle’s Fuel Service. Doyle has always found the time and energy to give back to the community. He has held positions as Kenai City Councilman, spent two years on the Kenai Peninsula Borough Assembly, devoted himself to Kenai Fire and Rescue, played a role in building Kenai’s first fire station, and held the rank of Assistant Fire Chief for many years. He was also appointed by the borough mayor to the local emergency planning board. Doyle’s readiness for public service may be one of the reasons people are willing to come to his aid as well. In the mid-1970s, one of Doyle’s employees suffered a serious and debilitating accident at work. Doyle was almost forced to sell equipment and lay workers off in order to pay his employee’s medical bills while waiting for a judgment regarding a mixup with Doyle’s workman’s comp policy, which would take some time to straighten out. Rather than leaving their posts, four of Doyle’s employees volunteered to work

Alaska Business Monthly | January 2014

for two months without pay in order to save Doyle’s business. The story of how his crew came together to help everyone involved still brings tears to Doyle’s eyes and is proof that ventures with heart attract team members with heart. In 1978, Doyle purchased Weaver Brothers, Inc. for $500,000 with a handshake deal. He expanded the business to Anchorage and Fairbanks and celebrated his complete ownership of the company within three and a half years. In 1982, Doyle hired his son Jimmy to run the Weaver Brothers Kenai terminal, quickly transferring him to Anchorage. Jimmy is in charge of the Anchorage terminal to this day. Doyle credits his success not only to his own hard work, but to the effort and dedication of his family, employees, and the good people of Alaska. The company motto is, “Family owned and Employee Driven.” Doyle is especially indebted to his son Jimmy, who runs the Anchorage and Fairbanks terminals, and daughter Shari and nephew Kevin Doyle, who work with him in the Kenai terminal. He also has two granddaughters and a daughter-in-law who work in the Anchorage office. He is also appreciative of his wife, Trina, for her enduring support. Today, Weaver Brothers has a large and diverse fleet of vehicles to meet practically any transport need. Additionally, Doyle’s Fuel Service, Inc., although with a lower profile than Weaver Brothers, is still going strong. Doyle stands as living proof that goodness and good business can go hand in hand.  www.akbizmag.com

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Junior Achievement—2014 Laureate

Mr. Wally J. Hickel, Jr. President and CEO of Hickel Investment Company By Mari Gallion

“Dad founded the business and was largely responsible for its early success. When Dad became politically active and was elected governor in 1966, his brother Vernon helped to run the business. The business was run from 1972 on by my brother and me. I was elected chief executive officer in 2008 after my brother retired.” Despite his illustrious family, Hickel Jr. was never spared the often unpleasant character-building component of hard work in his youth. “All six of the sons had regular chores around the house, including mowing a huge yard,” Hickel Jr. says. “Each son wanted to mow the back yard, which was closest to where clippings were disposed, and no one wanted the front yard with all the trees to avoid.” Nor was he spared the indispensable education on every aspect of running a hotel. “During high school I worked part time in the laundry, the bell desk, and the front desk at the Hotel Captain Cook.” After graduating from college in 1972, Hickel Jr. worked as director of sales for the Hotel Captain Cook. In 1974, he interned at the San Francisco Fairmont Hotel to learn all of the facets of hotel operations: from front desk and food and beverage operations to housekeeping. In 1975, he returned to Alaska and

Courtesy of Wally Hickel Jr.

hen Alaskans hear the name “Wally” Hickel, naturally their thoughts default to Walter J. “Wally” Hickel, Sr., the well-known business entrepreneur who served as Governor of Alaska in two separate terms more than ten years apart and served a term as Secretary of the Interior that demonstrated his strength of character as an independent thinker. Some can even still remember all the lyrics to the campaign jingle that preceded his second term in 1990, “Alaska Man,” and how Governor Hickel would cheerfully haunt the halls and establishments of the uniquely Alaskan hotel that he founded: the Hotel Captain Cook. However, now it is his son, Wally J. Hickel Jr., who is the captain of “The Cook,” a role he has carried longer than the lives of the children who were charmed by his father’s commercial. As president and CEO of Hickel Investment Company, Hickel Jr. oversees six properties in the greater Anchorage area, of which Hotel Captain Cook is one. “Dad founded the business and was largely responsible for its early success,” Hickel Jr. says. “When Dad became politically active and was elected governor in 1966, his brother Vernon helped to run the business. The business was run from 1972 on by my brother and me. I was elected chief executive oﬃcer in 2008 after my brother retired.” Hickel Jr. was raised in the Turnagain neighborhood in Anchorage by his father Walter and his mother Ermalee alongside his five brothers. He attended elementary and middle school in west Anchorage and graduated from West High in 1966. The family attended church every Sunday, followed by Sunday breakfast at the Travelers’ Inn of Anchorage.

Wally Hickel Jr.

became the managing director for the Hotel Captain Cook, the Traveler’s Inn in Fairbanks, and the Traveler’s Inn in Anchorage.

Learn by Watching As Hickel Jr. observes, running a successful business requires the eﬀorts of people with various roles and talents, and he credits his parents for giving him examples of two separate skill sets for business success. “I could not help but learn from observing my father as he developed and

“Young people who want to compete in the global economy must be adaptable, must be willing to travel, must acquire language skills, and must learn that our culture is not wholeheartedly shared around the world. Being successful in a global economy means we must be tolerant of cultural standards and norms which are not our own. We must teach our youth open-mindedness and adaptability.” 22

Alaska Business Monthly | January 2014

www.akbizmag.com

grew the investment company bearing his name,” Hickel Jr. says. “Dad was an entrepreneur, more interested in making deals than in operating the day-to-day business of a company. His strength was in recognizing an opportunity and capturing it, then letting others operate the business. Nevertheless, he taught myriad business lessons that his children absorbed just from being with him. Many of these lessons have applied directly to my own career. Mother, on the other hand, taught us self-discipline, organizational skills, and a strong work ethic at home. She was the leader of the pack.”

Global Free Enterprise “Free enterprise is the foundation of our economic system,” Hickel Jr. says, “and is the economic engine that provides the taxes upon which government depends. Free enterprise allows people to experiment with new ideas and create new businesses, or to expand and augment existing businesses with innovation and change. Free enterprise creates the wealth and income upon which our society depends.” But as Hickel Jr. points out, as large as Alaska is, it is not the center of the universe. It serves young people to educate themselves on cultural diversity and learn foreign languages for the sake of doing business. “Young people who want to compete in the global economy must be adaptable, must be willing to travel, must acquire language skills, and must learn that our culture is not wholeheartedly shared around the world,” he says. “Being successful in a global economy means we must be tolerant of cultural standards and norms which are not our own. We must teach our youth open-mindedness and adaptability.” Additionally, he has complimentary ideas for how businesses can inﬂuence what happens on the home front. “The principal thing the business community can oﬀer to young people is the opportunity to work and earn a living,” he says. “In addition to a job, the business community can teach young people how to become responsible, self-reliant citizens and how to make a positive contribution where we live.” Regarding other ways to prepare for the future, Hickel Jr. gives some standard advice: “While it is impossible to completely insulate our youth from economic pitfalls, it is vital that our youth be taught to earn money, save for their needs, and not to spend more than they have earned and saved. Young people also need to learn how to budget for their www.akbizmag.com

wants and needs and how not to waste money frivolously.”

Consistent with His Values Despite having the honor of running a family-owned business on behalf of his mother, his five brothers, and their families, Hickel Jr. sees his greatest accomplishment as a humble one that is accessible to people of much more modest means. “My greatest accomplishment is in raising my children to be responsible citizens and contributors to our community,” he says. He is also “proud of the family tradition of involvement in business and civic

organizations such as the Coast Guard Foundation and numerous local non-profits and charities.” His business is also a vehicle for spreading good will, sharing his wealth as his team expands. “I hope to expand the family business and provide additional opportunities for fellow Alaskans to earn a good living.” All of these actions and values seem to contribute to his ultimate aspiration, “to be remembered as a good person who took good care of his family, his business, and his community and as an individual who was a good citizen.” R

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special section

Junior Achievement—2014 Laureate

Mr. Chris von Imhof By Mari Gallion

Chris Von Imhof

An Impressive Resume Von Imhof’s accomplishments since his job at the Beverly Hilton include his role as Alaska sales manager for Scandinavian Airlines, chairman of the Hawaii Hotel Association, general manager for the Maui Prince Hotel, president of the Alaska Tourism Industry Association, and director of tourism for the State of Alaska—although not necessarily in that order. Most people can glean from this resume that von Imhof lives and breathes travel. But his biggest business accomplishments occurred while he was CEO and managing director of the Alyeska Resort, which provided his instrumental role in turning Alyeska ski resort from a small, struggling local ski hill into a world-class resort.

“The total growth and development over thirty to forty years of building up Alyeska Resort from a little ski area to a yearround destination resort is what I take a lot of pride in,” von Imhof says. “When I semi-retired, the Alaska Legislature gave me a certificate that recognized me for my many years of service in Girdwood at Alyeska. I take pride in getting that recognition for all the things I did at the resort.” The infrastructure at Alyeska started with one lift and a few high-speed rope tows. But now the resort features three chairlifts, a snowmaker, the Hotel Alyeska, the tram, a disc golf course, mountain biking trails, various restaurants, housing, and even opportunities for heliskiing, which gives Alyeska Resort an ad-

Courtesy of Chris von Imhof

hris von Imhof grew up the Bavarian ski resort town of Garmisch-Partrenkirchen in southern Germany. Although he lost both parents before he reached adulthood—his father when he was three and his mother when he was fifteen—he had an “uncle” Hans Killian, his father’s best friend before his father perished in World War II, who owned a special hotel, The Parkhotel Alpenhof, in von Imhof’s town. Killian took von Imhof under his wing and assured his mother that he would bring him up in the industry and teach him everything he knew. “It was very actively involved in sports,” von Imhof recalls of the hotel during his youth. “And I had many times lunched there. I really loved the hotel, seeing the people come and go—and so I decided that was the business I wanted to get involved in. “It was also quite popular with American visitors,” von Imhof says. “At that time the exchange for the dollar to the German mark was very, very favorable—so I wanted to go to America and see what it was like in the land of milk and honey.” Von Imhof went to winter hotel management school for a period of time and then met an American family who sponsored him to come to the United States. Not sure of how long he would stay, von Imhof got a job at the Beverly Hilton hotel in Beverly Hills, thus starting a long and satisfying career in the US hotel and tourism industry.

Alaska Business Monthly | January 2014

vantage over European ski resorts due to helicopter restrictions. Before von Imhof was involved in the management and development of Alyeska, the Alaska tourism industry focused solely on promoting summer tourism, with many tour businesses boarding up for the oﬀ-season. Part of von Imhof’s vision was to facilitate a complete culture shift with the development of Alyeska ski resort— making Alaska a year-round destination. “Just recently, one of the ski publications said Girdwood was the second best ski town in the world,” von Imhof says. “Before Chamonix, and before Cortina. When you started as a little local ski hill with very little infrastructure that never got any recognition—to me, that means a lot.” www.akbizmag.com

Advice from the Pro Although his business has always catered to many of the rich and famous, von Imhof is not a proponent of the idea that an education has to be expensive or produce college degrees in order to be useful, empowering, and valid—as he himself attended trade school. “In many I cases I feel that trade schools are just as important as liberal arts colleges because they really prepare you for a particular profession,” he says, adding that the culinary school is a full-year program and that the state and country could benefit from having more such schools. Von Imhof particularly appreciates apprenticeship programs that allow participants to work while going to school or to earn school credit. “At Alyeska resort we sometimes had kids helping out in areas where you could be underage, or just observing what’s going on,” he says. “This way the students can decide if they would enjoy doing a certain job and make steps towards making it a profession.” Von Imhof feels that internships help promote opportunities and good work ethic for students as well as helping prepare a better workforce for the businesses to choose from. “It’s good for the student, but also good for the business,” he says.

www.akbizmag.com

Also, von Imhof stresses the importance of students learning discipline. “Don’t spend all day on the iPhone and waste a lot of time that you could be more focused on your studies,” is personal advice from von Imhof for those students who want to be successful. An optimal education, however, in von Imhof’s opinion, includes learning a foreign language, whatever it may be, in order to compete in the global economy and exercise the mind—as well as travel, which is von Imhof’s area of expertise. “With the global economy these days, it’s more and more important that you have a chance to see what’s going on in the world,” he says. “I can’t say enough about travel—it’s so essential for expanding your knowledge and getting a good education in this global world. I think for every American it is a great opportunity to maybe go to Europe and vice versa. They come back more enlightened about what’s going on out there and more appreciative of home.” Also, von Imhof believes that sports are “important practice for success in life. Kids see results from trying and repetition. It gives them certain incentives.”

Where He Came From Despite his high, almost legendary level

of success in his field, von Imhof has acquired much of his wisdom and resolve through knowing loss. Not only did he begin his adulthood without parents, but also, eleven years ago he lost his first wife, a Nome-raised beauty pageant winner to whom he was married for thirty-five years and with whom he had three sons. Married once again as of four years ago, von Imhof says he feels “so lucky” for having yet another very happy marriage to a loving wife. He also remembers that his life was likely to be much more humble had it not been for the people who helped him when he needed it. The Parkhotel Alpenhof, where von Imhof got his start, is no longer in existence. Killian’s wife had spent all his money, they had to sell the hotel, and the hotel was torn down rather than remodeled. “It was sad to see that,” von Imhof says, “because I could have helped him later in life when he financially fell on hard times. I really would have loved to return the favor he’d given me.” But although von Imhof was not able to return Killian’s favor, he has provided an important gift to all of Alaska—one that can be appreciated by almost anyone— through building one of the best ski resorts in the world. R

January 2014 | Alaska Business Monthly

special section

Junior Achievement—2014 Laureate

Mr. Martin Pihl By Mari Gallion

any residents of small towns in Southeast, with their lack of access to a road system and distance from resources and conveniences found in a major metropolitan area, say that living in a small coastal community can be a bit like living in a fishbowl: an atmosphere that breeds civic involvement due to the intensified sharing of space. However, for some people, like Martin Pihl, the opportunity to make a positive impact on shared resources becomes more than a hobby; It’s a purpose. “I grew up on a small family farm outside Bothell, Washington,” he says. “My parents were Swedish emigrants who settled in the Pacific Northwest along with other family. The family became

seven children, four boys and three girls—I, the youngest of the boys. Strong Lutherans, two brothers became ministers, one an orthodontist, and me. “Work was a strong ethic of the Pihl family,” he says, “and it always seemed that work led to the next opportunity. Guess who inherited the farm chores as soon as I was able. There was always plenty of work to do on the farm, paper route, grocery store box boy, weeding, and irrigation pipe crew on a large truck garden and delivering produce to market in Seattle.” It was within those humble first years that Pihl met his wife, who still holds a high place in his life story. “It was at Bothell High School that, to my great fortune, I met a dairyman’s daughter Darlene,” he says. “And now, fift y-eight years later, [she is] my best friend and partner in every success we have achieved.” Possibly due in part to his practical upbringing, Pihl sought a practical education, one that was quite certain to ensure an ability to provide for his family. “My start began with having an accounting degree from the School of Business at The University of Washington,” he says, “having passed the CPA examination and working in auditing for Price Waterhouse for six years. Then came an oﬀer from the Treasurer of Ketchikan Pulp Company, a person I greatly admired, to move to Alaska, starting a thirty-two-year career in forest products. That start led to many advances along the way and an opportunity to participate in many ways in the great and growing State of Alaska.” Ketchikan Pulp Mill was the engine of the Ketchikan economy through the latter part of the 20th century and was the main em26

Alaska Business Monthly | January 2014

Courtesy of Martin Pihl

“Work was a strong ethic of the Pihl family, and it always seemed that work led to the next opportunity. Guess who inherited the farm chores as soon as I was able. There was always plenty of work to do on the farm, paper route, grocery store box boy, weeding, and irrigation pipe crew on a large truck garden and delivering produce to market in Seattle.”

Martin Pihl

ployer of residents of Ketchikan residents from 1954 to 1997. It was where Pihl grew as a professional. “My career was a succession of promotions at Ketchikan Pulp,” he says, “the largest forest products company in the great years of the timber industry in Southeast Alaska.” The pulp mill was the result of eﬀorts by the US Forest Service going back to the 1930s and 1940s to establish a timber industry in Southeast Alaska. To put a portion of the vast Tongass to work required the building of pulp mills since so much of the forest was over-mature, which rendered it an ideal product for making paper. Ketchikan Pulp Corporation’s mill was the first large pulp mill built in Alaska, and in time, three sawmills were added to the mill, supporting 2,500 total jobs: 1,300 direct jobs and 1,200 by contractors. Pihl sees his years at Ketchikan Pulp as the time in his life of his greatest accomplishments. “Becoming President of Ketchikan Pulp in January 1987 and on the first of the following month placing all employees on monthly www.akbizmag.com

profit sharing was a measure that brought everyone together,” Pihl says. “That probably led to my receiving the Louisiana Pacific Man of the Year award for 1988.”

Turning the Page Pihl retired from Ketchikan Pulp Mill in 1994, three years before the mill closed in 1997, at which time Ketchikan suﬀered an economic setback as a result. But just as Ketchikan has found new life in tourism after major industries have come and gone, Pihl soldiered on and found a new life in service after his retirement. “As my career has played out, opportunities to serve on boards has been important and rewarding to me,” Pihl says. Currently a member of the Alaska Retirement Management Board, he formerly served as acting executive director for the Alaska Permanent Fund Corporation in 1994-1995. Pihl serves as a director of National Bank of Alaska, on Wells Fargo Bank’s Alaska Statewide Advisory Board, as chairman of the Board of Governors of the Alaska Timber Insurance Exchange, and as a regent for Pacific Lutheran University. He is also currently a member of several advisory boards including Holland America-Westmark-Ketchikan Advisory Board, Ketchikan Ports and Harbors Advisory Board, and Alaska Airlines Southeast Alaska Community Advisory Board. Pihl seems to epitomize the phrase, “retired, but not tired.” Word from the Wise In Pihl’s opinion, the best thing businesses can do for young people is provide employment opportunities, as well as opportunities to become leaders. “Jobs in many ways: full time, part time, summer time, and internships. At Ketchikan Pulp we oﬀered fift y or more college students summer employment,” he says. Pihl understands that even though Alaska is an isolated market, young people need to know how to deal with the world. “Understanding the global economies of the world is a must,” he says. “From developed markets, also understanding how emerging and frontier markets will play out is essential. At the same time here in the United States, manufacturing is expanding greatly based on increased domestic energy supply and reduced dependency on foreign oil.” However, Pihl also knows that being part of a small community provides unique opportunities, as those who recognized his gifts were those who worked closest to him. “Over the course of years there have been a great number of people both with Ketchikan Pulp Corporation and across www.akbizmag.com

Alaska that have added to [my success], from directors of various boards to business and public leaders across the state. To mention one would be Elmer Rasmuson, one of Junior Achievement’s first awardees. Where except in Alaska would you personally know governors, senators, congressmen, and leading business people across the state?” But with all that he has done and all the people he knows, how does Pihl want to be remembered? It is surprisingly simple. “Hopefully as a person that brought people together and found ways to serve now and then,” he says, as well as “a good

husband and father; and to many friends, a good and safe boat captain and guide; and [for my passengers to remember] all the good times on board.” R Mari Gallion is Associate Editor at Alaska Business Monthly.

Congratulations,

Mr.Hickel

F R O M T H E S TA F F AT T H E H O T E L C A P TA I N C O O K

C A P TA I N C O O K . C O M

January 2014 | Alaska Business Monthly

special section

Junior Achievement—Board of Directors, Past Laureates & Statewide Sponsors

ALASKA BUSINESS HALL OF FAME  PAST LAUREATES STATEWIDE BOARD OF DIRECTORS ■ Logan Birch, Arctic Slope Regional Corporation ■ Talitha Birch, Shell Oil ■ Mary Beth Carr, 3M Company ■ Andy Coon, Alaska Communications ■ Dustin Cooper, Delta Constructors ■ Anne Courtright, ExxonMobil ■ Travis Frisk, Wells Fargo ■ Wayne Graham, Alaska Communications ■ Heath Hilyard, SEAGO ■ Mark John, Petro Star Inc. ■ Darla Jones, Anchorage School District ■ Brent Kimball, First National Bank Alaska ■ Kristen Lewis, Alaska National Insurance Company ■ Kurt Martens, Leonard & Martens Wealth Partners ■ Mark Mathis, Arctic IT ■ Ngoni Murandu, NANA Development Corporation ■ Ted Quinn, Capital Ofﬁce Systems ■ Tom Redmond, SolstenXP ■ Jared Schmidt, KeyBank ■ Lara Shogren, Wells Fargo ■ John Sims, Enstar Natural Gas Company ■ Beth Stuart, KPMG LLP ■ Greg Stubbs, Sullivan Arena ■ Dean Thompson, Kempel Huffman and Ellis ■ Derrell Webb, NANA Management Services ■ Rick Whitbeck, Alaska Communications ■ Derrick Yi, ConocoPhillips Alaska, Inc.

JA ADVISORY COMMITTEE ■ Dave Marquez, NANA Development Corporation ■ Mary Olszewski, Wells Fargo ■ Jay Page, First National Bank Alaska ■ Doug Parker, Little Mendelson 28

■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Alaska Business Monthly | January 2014

Don Abel, Jr., 1996 Jacob Adams, 2002 Bill Allen, 1995 Bob & Betty Allen, 2001 Will Anderson, 2012 Eleanor Andrews, 2001 Robert Atwood, 1988 The Bailey Family, 2010 Bernard M. Behrends, 1987 Earl H. Beistline, 1998 Jim Binkley, 1989 Bill Bishop, 1994 Jim Bowles, 2011 Carl Brady, 1990 Carl F. Brady Jr., 2004 Alvin O. Bramstedt, Sr., 1991 Charles H. Brewster, 1999 Brice Family, 2011 W. Brindle, 1993 Margie Brown, 2009 Edith Bullock, 1987 Jim Campbell, 2006 Larry Carr, 1988 Richard Cattanach, 2008 Frank Chapados, 1991 John B. “Jack” Coghill, 2006 Jack J. Conway, 1995 William A. Corbus, 1999 Ron Cosgrave, 2007 D. H. Cuddy, 1993 Bob Dindinger, 2012 Don Donatello, 1995 Ron Duncan, 2007 Oscar & Peggy Dyson, 1992 Ken Eichner, 1990 Andrew Eker, 2009 Mark Eliason, 2013 Carl Erickson, 1999 Arnold G. Espe, 2001 Al Fleetwood, 2005 Conrad Frank, 1999 Clyde Geraghty, 1999 Barnard J. Gottstein, 1989

■ The Green Family, 2012 ■ Robert & Barbara Halcro, 2008 ■ Ernie Hall, 2002 ■ Lloyd Hames, 1998 ■ Carl Heﬂinger, 1999 ■ Michael Heney, 1995 ■ Willie Hensley, 2009 ■ Walter Hickel, Sr., 1988 ■ August Hiebert, 1989 ■ Roy Huhndorf, 1992 ■ Robert Jacobsen, 2006 ■ Jim Jansen, 2009 ■ John Kelsey, 1991 ■ Bruce Kennedy, 2007 ■ Clarence Kramer, 2006 ■ Herbert Lang, 1994 ■ Marc Langland, 2001 ■ Austin Lathrop, 1988 ■ Betsy Lawer, 2007 ■ Pete Leathard, 2003 ■ Dale & Carol Ann Lindsey, 1997 ■ Suzanne (Sue) Linford, 2002 ■ Loren H. Lounsbury, 2002 ■ Zachary Loussac, 1989 ■ Richard Lowell, 2005 ■ Byron Mallott, 2013 ■ Harvey Marlin, 1999 ■ Carl Marrs, 2005 ■ Vern McCorkle, 2010 ■ Harry McDonald, 2011 ■ James A. Messer, 2000 ■ The Miller Family, 2005 ■ Robert Mitchell, 1999 ■ William G. Moran Sr. & William G. Moran Jr., 2004 ■ Rick Mystrom, 2013 ■ Les Nerland, 1987 ■ Matthew Nicolai, 2010 ■ Milt Odom, 1992 ■ Pam Oldow, 1990 ■ Tennys Owens, 2005 ■ E. Al Parrish, 2006

■ Raymond Petersen, 1988 ■ Quinn Brothers, 2011 ■ Elmer Rasmuson, 1987 ■ Edward Rasmuson, 2000 ■ Frank M. Reed, Sr., 2000 ■ Robert Reeve, 1987 ■ David Rose, 2003 ■ Jim Sampson, 2008 ■ Helvi Sandvik, 2006 ■ Grace Berg Schaible, 2004 ■ Leo & Agnes Schlotfeldt, 1993 ■ Orin D. Seybert, 2006 ■ Gov. Bill Shefﬁeld, 2003 ■ Merle (Mudhole) Smith, 1993 ■ Charles Snedden, 1989 ■ Sen. Ted Stevens, 2010 ■ William G. Stroecker, 1997 ■ Bill & Lilian Stolt, 1998 ■ A. C. Swalling, 1987 ■ Cliff Taro, 1992 ■ Walter & Vivian Teeland, 1997 ■ Morris Thompson, 2001 ■ William J. Tobin, 2004 ■ Joseph Usibelli, Sr., 1988 ■ Joseph Usibelli, Jr., 2013 ■ Lowell Wakeﬁeld, 1990 ■ Leo & Beverly Walsh, 1996 ■ Pat Walsh, 2008 ■ Chuck West, 1991 ■ Noel Wien, 1989 ■ Richard A. Wien, 2003 ■ Lew Williams, Jr., 1994 ■ William Ransom Wood, 1996

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JUNIOR ACHIEVEMENT OF ALASKA STATEWIDE SPONSORS Platinum Plus Investors ($10,000 + ) ■ Alaska Business Monthly ■ Alaska Commercial Fishing and Agriculture Bank ■ Alaska Communications Systems ■ Allstate Foundation ■ Arctic Slope Regional Corporation ■ AT&T ■ BP ■ ConocoPhillips Alaska, Inc. ■ Era Alaska ■ ExxonMobil Production Company ■ First National Bank Alaska ■ GCI ■ KeyBank ■ NANA Development Corporation ■ Northern Lights Bingo ■ Odom Corporation ■ Wells Fargo

Platinum Investors ($5,000 + ) ■ Achievement Foundation

■ Alaska Airlines ■ Alaska Commercial Company ■ Alaska Growth Capital, Inc. ■ Alaska National Insurance Company ■ Alyeska Pipeline Service Co. ■ ASRC Energy Services ■ Tom Corkran ■ Eni Petroleum Company, Inc. ■ ENSTAR Natural Gas Company ■ Flint Hills Resources ■ State Farm Insurance ■ USTravel

Gold Investors ($2,500 + ) ■ 3M Foundation, Inc. ■ Alaska USA Federal Credit Union, Financial Center ■ American Multiplex ■ Fred Meyer ■ Harbor Enterprises, Inc. ■ Katmailand, Inc. ■ Lynden ■ NANA Management Services ■ Northrim ■ Shell Oil

40th year of empowering young people to own their economic success

■ STG, Inc. ■ Udelhoven Oilﬁeld System Services, Inc. ■ United Way of Matanuska-Susitna ■ Usibelli Coal Mine, Inc.

■ ■ ■ ■ ■ ■ ■ ■ ■

Silver Investors ($1,000 + ) ■ Alaska USA Federal Credit Union of Juneau ■ Allen Marine, Inc. ■ Anchorage Symphony Orchestra ■ Arctic Information Technology ■ Bagoy’s ■ Beacon Occupational Health and Safety Services Inc. ■ Calais Company, Inc. ■ Capital Ofﬁce Systems ■ Carlile Transportation Systems, Inc. ■ Credit Union 1 ■ Andrew Eker ■ First Alaskans Institute ■ George A. Gates ■ International Aviation Service, Inc. ■ Jim Jansen ■ John C. Hughes Foundation ■ KeyBank - Anchorage

■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Kodiak Lions Club KPMG LLP Steven R. Krohn Stephen Lauper Linda Leary Kristen Lewis David Marquez Tom Marriage Matanuska Valley Federal Credit Union Ngoni Murandu Odom Corporation Pebble Limited Partnership Petro Star Inc. Sealaska Corporation Solsten XP Lance Stevens Elizabeth Stuart Sullivan Arena Taco Bell The Alaska Club The Color Run, LLC United Way of Anchorage Usibelli Foundation Visit Anchorage Brendon Webb

Bronze Investors ($500 + ) ■ Alaska Railroad Corporation ■ Alaska Rubber & Supply, Inc.

■ Alaska USA Federal Credit Union of Kenai ■ Earl Beistline ■ Bill Stroecker Foundation ■ Logan Birch ■ Chena Hot Springs Resort, LLC ■ CIRI ■ Cruz Construction, Inc. ■ Denali Alaskan Federal Credit Union ■ Dimond Center ■ Mark Eliason ■ Federal Express Corporation ■ Steve Hartung ■ Mark W. John ■ Kodiak Area Native Association ■ Kirk C. Leadbetter ■ Scott McMurren ■ Ngoni Murando ■ Tom Redmond ■ Riverboat Discovery ■ Michele Schuh ■ SKW/Eskimos, Inc. ■ SMG of Alaska ■ Carolyn Smith ■ Totem Ocean Trailer Express, Inc. ■ James Udelhoven ■ Mary L. Webb (Olszewski)

Celebrate Junior Achievement’s Business Hall of Fame Laureates Dena’ina Center - January 30, 2014 5:30 p.m. reception, dinner/ceremony 6:30 p.m.

Honorees Walter J. Hickel Jr. – Hickel Investment Company/Hotel Captain Cook Martin Pihl – Alaska Timber Insurance Exchange The Doyle Family – Weaver Brothers The Helmericks Family – Colville Brooks Range Supply

Chris von Imhof – Alyeska Resort

Call Flora Teo at (907) 344-0101 to reserve a table at this prestigious event or go to http://alaska.ja.org for more information www.akbizmag.com

Sponsorship opportunities for the gala induction ceremony on Jan. 30 at the Dena’ina Center. Platinum Sponsorship – $4,000 Gold Sponsorship – $3,000 Silver Sponsorship – $2,500 Table – $1,500 January 2014 | Alaska Business Monthly

INSURANCE

Complexities of the Affordable Care Act Impacts of healthcare reform on employers By Ron McCurry

he Patient Protection and Affordable Care Act (PPACA), often referred to as Obamacare, was signed into law on March 23, 2010. The law’s intention is to overhaul the US healthcare system and affects nearly all taxpayers and employers. The legislation contains a host of tax changes, many of which are both complex and novel. The law will significantly change the way health insurance is sold, purchased, and delivered in the United States. The primary goal of the law is to help millions of Americans obtain health insurance coverage. It is supposed to provide new coverage options, give consumers the tools they need to make informed decisions about their health care coverage, and put in place strong consumer protection. At its core PPACA is broad and complex legislation, and has not been well communicated to employers or individuals who will be impacted. Confusion seems to reign supreme. Employers and individuals would be well advised to seek out advisors and consultants who are well versed in the requirements of the Act.

Although PPACA was signed into law in 2010, only some of the requirements are in place. Other requirements will take effect between 2014 and 2018. The requirements seem to be subject to change and I will predicate what I say with “as we know it today.”

Already in Place As we approach 2014 there are some things employers and individuals should already be doing. For employers: ■ Group plans should have been amended to reﬂect that dependent children can be covered on their parent’s plan up to the age of twenty-six. ■ There can be no pre-existing conditions applied to individuals nineteen and younger. ■ Employers should be distributing the required Summary of Beneﬁts and Coverage (SBC) during annual enrollment and to new hires. ■ Reporting health coverage value on the Form W2.

Alaska Business Monthly | January 2014

■ Managing any required distribution of Medical Loss Ratio refunds (this applies only to fully insured plans). ■ Employers should have changed their Section 125 Flexible Spending Accounts to reﬂect new limits ($2,500 maximum per family). ■ For the tax years beginning after December 31, 2012, employers need to be withholding a 0.9 percent hospital insurance tax, a new component of FICA/Medicare payroll tax. This requirement applies to high-earning workers and self-employed taxpayers making in excess of $250,000 for joint returns, $125,000 for married taxpayers ﬁling separate returns, and $200,000 in all other cases. The additional 0.9 percent HI tax applies only to the employee’s share, not the employer’s share. ■ By July 31, 2013, employers should have calculated and paid the Patient Centered Outcomes Research Institute (PICORI) fees. In 2013 this fee is $1.00 per member covered on your plan. ■ Finally, by October 31, 2013, all employers should have calculated the Minimum Value www.akbizmag.com

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of their health plan (value must exceed 60 percent of the total plan coverage) and distributed the “Notice of Exchange” to all employees, covered and non-covered, full time or part time (it should be noted that the Department of Labor decided to waive penalties for non-distribution). Individuals should be aware of the following: ■ For tax years beginning after December 31, 2012, there is a surtax on unearned income of higher-income individuals. This is a Medicare tax imposed on individuals, estates, and trusts. You should consult your tax advisor if you think this might apply to you. ■ On October 1, 2013, the state and federal exchange (Marketplace) opened for business for individuals to enroll for health care coverage. The State of Alaska opted not to run a state exchange so individuals seeking coverage must go to the federal exchange. As we are all painfully aware, this process is not going exactly as planned. The entire process is confusing and far more complex than simple. Depending on income (a function/multiple of the federal poverty level) some Alaskans may qualify for the federal subsidy (tax credit), many will not. Again, good advice would be to seek out a knowledgeable broker or consultant to

guide you through the process. There will be tax consequences for people not having health insurance coverage in 2014. ■ For tax years beginning after December 31, 2012, there is a higher threshold for deducting medical expenses. The new threshold is 10 percent (rather than 7.5 percent) of adjusted gross income for the tax year.

Complex Consequences All of this, and I have only covered the highlights, is only a warm up! January 1, 2014, is when the ride really begins and the largest part of PPACA will impact all Americans, especially employers. For individuals I will make it easy—you should be enrolled in some form of qualified health plan by March 31, 2014, or face tax consequences. For employers, it becomes much more complex! I am sure some employers were relieved when the Obama Administration announced that some of the PPACA mandates would be pushed out to January 1, 2015. The announcement certainly provides some relief to employers so they can get all of the requirements figured out without fear of a penalty consequence for inadvertently not being in total compliance with the overabundance of PPACA requirements. However, employers need to be aware that not all requirements were pushed out to 2015; it was primarily the penalties for non-compliance.

Leading up to 2014 employers, especially employers with more than fift y full time employees, are faced with making huge decisions regarding their benefit plans: ■ Stay the course—Continue to seek solutions that incrementally offset annual national trend cost increases of 8 to-9 percent. This path has become more difficult due to the impact of cost sharing requirements contained in PPACA. Employees may already shoulder a significant portion of healthcare cost increases. PPACA limits the portion of premium that an employee can be charged to 9.5 percent of the employee’s income. If the employee portion exceeds the 9.5 percent (rules do not apply to the cost of dependent coverage) and the employee decides to go to the Exchange and qualifies for a subsidy, the employers will face a $3,000 penalty for that employee if the employer’s plan does not meet the minimum value standard required by PPACA. ■ Pay and Exit—Employers with fifty or more full time employees may consider just paying applicable penalties under federal law, currently set at $2,000 per employee, and no longer sponsoring healthcare benefits. ■ Play Differently—Our research indicates that a majority of employers are ready to play differently to achieve different health

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Alaska Business Monthly | January 2014

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and cost outcomes. Employers may consider 1) Play by new rules where they continue to sponsor a medical plan, but migrate from a traditional “managed trend” approached to a “house money/house rules” approach that is more requiring of plan participants and integrates a pay-for-performance philosophy into their benefits programs; or 2) Play on a new field where they go from plan sponsor (defined benefit approach) to “coverage facilitator” (managed defined contribution approach). Private and government-run health care exchanges will introduce new strategic options that plan sponsors should evaluate closely.

Changes for 2014 Renewals Some of the PPACA requirements that were not pushed out to 2015 that will impact all plans renewing after January 1, 2014, are as follows: ■ There is a new deﬁnition of full time employee. Employees must be considered eligible if they work thirty or more hours per week. ■ There is a new maximum waiting period for eligibility. The waiting period cannot exceed ninety days—period. ■ There can no longer be any pre-existing conditions applied to anyone, regardless of age. ■ There will be a requirement for auto-

matic enrollment for plans with two hundred or more employees (guidance for this requirement will not come out until sometime in 2014). ■ There are new coverage requirements for “Approved Clinical Trials.” In 2014 employers will need to budget for a bit more. In addition to the PICORI fee, which increases to $2.00 per member in 2014, there will be a couple more fees applied. One of the new fees applied to fully insured as well as self-funded plans is the Transitional Reinsurance Program fee. The US Department of Health and Human Services (HHS) estimates this fee to be $5.25, again per member per month ($63 annually). Employers must submit enrollment data to HHS by November 15, 2014, and the fee must be paid within thirty days of notification from HHS. This fee could be significant. For example, if the plan covers five thousand members, the fee would be $315,000 annually. The other new fee, the Health Insurance Sector Fee, applies only to fully insured plans. The insurance carrier is responsible for this fee, but, rest assured, it will be built into your premium.

Moving Forward Moving forward, in 2015 the SHOP Exchanges are supposed to be fully operational. Limited SHOP’s are open in 2014. SHOPS

are similar to the individual exchange only it is a marketplace for employers to find qualified coverage, especially if the small group employers (defined as having less than fifty full time employees) believe they may qualify for the small group tax credit. In 2016 the SHOP Exchange will be open to employers with up to one hundred employees. In 2017 large employers (more than one hundred employees) may be allowed into the SHOP Exchanges. And finally, in 2018, the “Cadillac” tax comes into play. Believe it or not, this tax will be imposed on employers who offer benefit plans that are “too good.” I cannot even guess what the philosophy is here! This has been a brief review of PPACA, one of the most complex and far reaching laws that we have. I have skipped over far more than I have covered. When the Obama Administration decided to push the penalty phase of the employer mandate out to 2015, it was announced by the Congressional Budget Office that the federal government would lose $30 billion in penalty-driven revenue budgeted for 2014! Please be advised, compliance has become critical. You will not want to be one who is contributing to that $30 billion!  Ron McCurry is the owner of Alaska Employee Beneﬁt Specialists.

What will Obamacare mean for you? Are you as confused about the Affordable Care Act as many others? We’ve made it our mission to help our customers work through the changes resulting from Obamacare: what it means and doesn’t mean, what is included and excluded, and the financial impact involved. In order for you to make informed decisions about your healthcare, you need to know what options are available to you, and what those options will mean to you, as an individual.

Please give us a call at (907) 745-3261 with your questions or concerns, or search for “Affordable Care Act” at www.pippelinsurance.com for an easy-to-understand explanation of what Obamacare might mean for you. 9061 East Frontage Road, Palmer, AK 99645 toll-free (888) 488-7151 phone (907) 745-3261 fax (907) 745-8417 OUR VIRTUAL INSURANCE OFFICE: twitter.com/pippelinsurance facebook.com/pippelinsurance pippelinsurance.com www.akbizmag.com

January 2014 | Alaska Business Monthly

HEALTH & MEDICINE

Industrial Repetitive Injuries Photo courtesy of Fairweather LLC

A worker demonstrating his range of motion and the muscle strength of both shoulders.

Working hard to keep incidences down By Vanessa Orr

ach year, hundreds of thousands of Americans suffer from occupational repetitive stress injuries (RSI) or injuries that are caused on the job. Whether it is low back pain caused by improper lifting, wrist pain caused by an improperly situated keyboard, or neck strain caused by working in cramped conditions, these injuries not only adversely affect employees but also the companies they work for. In calendar year 2012, a total of $276.1 million was paid in workers’ compensation benefits in Alaska; an increase of 5.9 percent over 2011. This may have contributed to Alaska being ranked as the state with the highest workers’ compensation premium rates in the country. According to the US Department of Labor, Occupational Safety and Health Administration (OSHA), repetitive stress injuries comprise more than one hundred different types of job-induced injuries and illnesses resulting from wear and 34

tear on the body. “Basically, in most repetitive injuries you see, the major cause is overexertion caused by excessive forces, vibrating forces, mechanical compression, or sustained or awkward postures,” says physical therapist and ergonomist Laurie Macchello of Beacon Occupational Health & Safety Services. “About 25 percent of compensation indemnity claims involve the lower back,-and carpal tunnel, tendinitis, and nerve impinge-

Alaska Business Monthly | January 2014

ment are the second most common.” Repetitive stress injuries are characterized by chronic pain, swelling, and tenderness in an affected area and at times numbness, tingling, and tissue weakness. Left unchecked, acute RSIs can become chronic conditions resulting in workers’ compensation claims and lost time on the job and can even cause an employee to have to undergo surgery to correct the problem. www.akbizmag.com

“As an occupational medicine physician, I often see patients trying to take care of these injuries on their own, but after several weeks or even a few months of discomfort, they realize that the pain isn’t going to go away,” says Marcel Dionne, MD, MSPH, director of medical services, Fairweather LLC. “They think that they might have a standard muscle strain, or that maybe they hit the muscle on something; quite often, they don’t connect the pain to the task that they are doing. It’s not until they become concerned that that they are getting aches ‘for no apparent reason’ while at work that they come to see me.”

Acute to Chronic “An average person who verbalizes discomfort has usually had that pain for two to three months before they see a therapist,” Macchello says. “Th is can be problematic because now they’ve changed from an acute to a chronic condition. With an acute condition, you can deal with the inflammation, remove the risk factor, and it will rectify the situation. But once a person reaches the chronic stage, the inflammation gets bigger and can begin to compress nerve vessels, causing loss in their range of motion, and joint restriction.”

“An average person who verbalizes discomfort has usually had that pain for two to three months before they see a therapist. This can be problematic because now they’ve changed from an acute to a chronic condition. With an acute condition, you can deal with the inflammation, remove the risk factor, and it will rectify the situation. But once a person reaches the chronic stage, the inflammation gets bigger and can begin to compress nerve vessels, causing loss in their range of motion, and joint restriction.” —Laurie Macchello Physical Therapist and Ergonomist Beacon Occupational Health & Safety Services

According to the Alaska Division of Workers’ Compensation 2012 Annual Report, 12.8 percent of RSIs reported in Alaska are finger injuries, followed by back injuries (11.9 percent); multiple body part injuries (11.5 percent); leg injuries (10.5 percent); shoulder injuries (5.4 percent); hand injuries (5.2 percent); arm injuries (4.8 percent); non-classifiable injuries (4.2 percent); eye injuries (3.9 percent);, and ankle injuries (3.6 percent). As a physical therapist treating a lot of oil and gas industry workers, the most

common RSIs that Macchello sees are back and shoulder injuries. “These injuries are caused by overexertion and high repetition; for example, facility operators who deal with long-winded valves that require more than one hundred repeat turns. That’s only one valve, and these operators check multiple valves multiple times a day,” she says. Injuries are also caused by workers trying to do their jobs in awkward positions. Macchello gives the examples of electri-

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A worker demonstrating proper ergonomic shoveling technique with one step forward, a wide stance, and a longer handled shovel to minimize lower back forces. Photo courtesy of Fairweather LLC

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cians leaning backward to do overhead wiring and corrosion inspectors chipping away at corrosion within pipes, which often results in tendonitis. “In Alaska, a secondary risk factor imposed on everything is the wearing of Arctic gear, which restricts mobility,” she adds. “Workers do not have the full range of motion to squat or reach overhead, and this causes additional problems.”

Recovering from RSIs Whether an RSI is caused by lifting freight incorrectly or sitting at a computer for too many hours, if caught early enough, the prognosis is good. Most individuals can recover completely and avoid re-injury by changing the way they perform repetitive movements and by giving themselves a break from the activities causing them pain. “When I first see a patient, I always ask what kind of work they do, so that I can see if their job tasks are tied into their symptoms,” Dionne says, adding that he will also perform on-site visits to the workplace to determine ergonomic options. “The first line of treatment is to prevent exposure; if you reduce the exposure, you reduce the risk of injury.” Patient education is also important. “For a person with carpal tunnel, for example, you want to teach them how to minimize strain on the wrist by keeping the keyboard at wrist level or applying a gel pad bar under the keyboardDionne says. “I advise them to take breaks periodically to allow their wrists to rest [and] to modify the repetition and duration of the activity in order to allow the injury to heal.” If a person is acutely symptomatic, it is advised that they stand up and take a short break every 20 to 30 minutes; if their condition is not acute, they should change positions every 60 minutes or so. Treatment is tailored to the patient, depending on the type of injury. In the case of lower back injuries, patients may be advised to try stretching and strengthening exercises that can help to tone muscles in the abdomen and lower back. Warm and cold packs can be alternated to promote healing on specific sites, and NSAIDs, such as ibuprofen and naproxen, may be suggested for help with pain and inflammation. “Depending on their risk factors, losing weight is also advised, especially if the person is overweight and has lower back issues,” Dionne says. “And I always advise people to quit smoking, which in addition to all of the other problems it causes, has also been shown to slow down tissue healing.” Some patients may also be referred to a physical therapist to undergo treatments that can include exercise, ultrasound maswww.akbizmag.com

sage, cortisone injections, or corrections in conjunction with ergonomic modifications. “We don’t do ten changes at once, we do it in stages,” Macchello says. “This way, we know what modifications are making a difference in the patient’s level of discomfort. And in every evaluation, we do a lot of education on pacing.”

The Cost of Doing Business Losing a valued employee to injury can be costly, both to the worker and the employer. “It’s definitely not cheap,” Dionne says. “National statistics from the Department of Labor show that more than $20 billion was lost last year from strain in-

juries in terms of lost wages, workers’ lost time, and workers’ compensation claims. To a small company, there may not be that much of a cost, depending on the type of industry they’re in,” he continues. “But if you look at an oil company and the type of physical labor that many of their employees do, it can amount to some expense. That’s why these companies work really hard to keep incidences of injuries down. In the long run, it is a cost savings to them to keep their workforce fit and healthy.”  Vanessa Orr is the former editor of the Capital City Weekly in Juneau.

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January 2014 | Alaska Business Monthly

OIL & GAS

Oil Industry MOBILIZATION and DEMOBILIZATION By Tom Anderson

Photo courtesy of Transocean

The Polar Pioneer harsh-environment semisubmersible rig was ﬁnishing up work for Statoil off the coast of Norway where it will be demobilized. The Polar Pioneer is contracted to be mobilized by Shell to the Chukchi Sea for the summer 2014 drilling season.

croll through any set of accounting books addressing international or domestic petroleum operations and under the heading of “Costs” will be listed the mobilization and demobilization of oil and gas field drilling machinery, equipment, supplies, and personnel. There is no disputing that oil is the driving engine of Alaska’s economy, a truth that can be authenticated by its frequent media coverage and witnessed by the many who fly over Cook Inlet and see the signature flame exhaling from a rig pipe. The drilling part of the oil and gas equation lies with exploration and development drilling, and both require equipment and infrastructure to be set up and then taken down, or in industry parlance, mobilized and demobilized. Exploration drilling refers to drilling in areas where there is some uncertainty about the formations being drilled. Generally, these geologic formations have not been routinely drilled and mapped. This is where the term “wildcat drilling” comes from. Petroleum explorers have a good idea of elements beneath the surface, but drilling has not begun. The value in these wells is in the information they provide the

operators: whether or not there is oil or gas. Exploration drilling can happen onshore and offshore in areas including Cook Inlet, the North Slope, and on the Beaufort and Chukchi Seas. Onshore and offshore rigs are the most prevalent expense and notable equipment brought to and removed from Alaska when it comes to petroleum extraction. Whether to the shallow Beaufort Sea or the deeper Chukchi Sea or other Arctic waterways, international and local petroleum companies expend enormous amounts of time and capital to bring and remove equipment. Baker Hughes has issued its monthly global rig count and analytics since 1944 for the petroleum industry, and as its website confirms, the counts “are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing, and processing hydrocarbons.”

Nabors Alaska Drilling Nabors Alaska Drilling has been performing Arctic exploration drilling in Alaska

Alaska Business Monthly | January 2014

since the early 1960s and operates the largest land drilling rig fleet in the world with approximately five hundred rigs working in twenty-five countries. Nabor’s general manager Dave Hebert delineated that remote exploration drilling in the Arctic requires rigs that are specifically designed to operate in Alaska’s harsh winter conditions. There are two rig designs: large wheeled, self-propelled and truck pulled rigs where each module can weigh as much as 2.8 million pounds or light-weight components style rigs that can be moved by trucks or Tundra Cats. The smaller rigs can be moved in loads as light as forty-five thousand pounds. Larger wheeled rigs require construction of ice roads for transporting across the frozen tundra. Tundra Cats are capable of moving component rigs over the tundra without the need of ice roads. Moving these monstrous units in and out of Alaska illustrates the process and challenges of mobilization and demobilization. Exploration rigs are generally dispatched for mobilization from Nabors’s yards in Deadhorse. The mobilization process varies from days to weeks based on proximity to Deadhorse. Winter explorawww.akbizmag.com

tion work is generally between early January and late April. Insuring that rigs and people are ready and available for the short winter season is no small accomplishment. Each rig can employ as many as fifty Nabors personnel alone, and this does not include all of the operator and service provider personnel required to successfully complete each exploration project. Land rigs like ones Nabors operate can drill exploration wells onshore from ice pads or offshore from manmade ice islands. Nabors has past experience with drilling from operator-provided ice islands in the Beaufort Sea. Ice island drilling can be accomplished in areas that are relatively shallow in depth and close to shore. Most current producing island projects have been within six miles from shore, Hebert noted. In any scenario, it takes massive personnel and planning to mobilize and demobilize operations.. Development drilling is the opposite, as in Prudhoe Bay for example, where many wells have routinely penetrated all formations. The geologists know what they will encounter before they ever put a bit into the ground. They know where to find the oil, so the well is designed for drilling at an appropriate target spot to produce oil. Even so, demobilizing and mobilizing for this type of operation as opposed to explor-

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atory drilling requires complex timing and execution, with companies like Kuukpik, Doyon, and Nabors performing a range of rig installation and operation services.

Fairweather However, there is a lot more being mobilized and demobilized in Alaska’s oil and gas fields than just rigs. Take, for example, remote site airports in Prudhoe Bay. Consider inclement and brutal Arctic weather in conflict with the urgency for safe and adequate airstrips to land a plane filled with personnel, supplies, and equipment or protection from roaming polar bears and wildlife predation in concert with on-site medical services and weather forecasting at a remote summer reclamation site. It’s what reality TV shows are made of— and a very important service provided by Fairweather LLC. Fairweather provides support services to Alaska’s natural resource industry. The company offers a spectrum of remote services such as medical support, meteorological and oceanographic forecasting, and aviation and airstrip support. Mobilizing a remote site airstrip is no small task. The process is typically started in the winter and requires several semitrucks filled with lighting, cords, and other equipment to be driven from Anchor-

age north to the Haul Road and then on ice roads to Prudhoe Bay and adjacent sites. A crew of four or more builds lighting and navigational systems amidst an often temperamental weather environment. “Fairweather has been providing airport support for natural resource development in Alaska for over thirty years and we are most proud of our efficiency and safety record. Our team of professionals works in very harsh environments and does so with the utmost attention to safety and wellbeing of the entire operation, and our safety record attests to it,” says Dave Marinucci, the company’s operations manager for Alaska who has lived in Alaska for thirtyeight years and has been with Fairweather for more than twenty-one years. In April, Fairweather mobilized equipment at a 5,300-foot gravel strip on a frozen lake at Umiat on the Colville River 130 miles south of Prudhoe Bay for Linc Energy. In December, 2012, lighting was required for Apache Drilling across Cook Inlet from Anchorage near Tyonek. Most recently Marinucci mobilized equipment for a 5,000 feet long by about 150 feet wide airstrip, including setting upapproach lights, threshold lights, and a temporary building to house a National Weather Service certified observer.. Severe weather adds to the mix and necessitates

January 2014 | Alaska Business Monthly

Fairweather’s medical staff and paramedics often do doubleduty as guards and spotters for polar bears, like this one at the Oooguruk Island jobsite. Photo by a Fairweather LLC medic

loaders with forks and buckets, snowblowers, and a crew to clean off the strip for a plane to land with personnel and supplies. From conex boxes to transportable structures to dual-generator units, the setup and take-down process is cumbersome and time consuming. Fairweather has finetuned the process so little time is wasted. Speed and efficiency are the goals for logistical services of this nature, with no human or petroleum footprint left upon departure. The process takes approximately seven days and as many as eighteen hours per day with

an electrician leading the project. Lighting of a remote Arctic airstrip includes as much as forty thousand feet of cable with scattered runway and Pulsed Light Approach Slope Indicator arrays. Demobilization is more grueling and time consuming and is a process that requires an equal amount of effort to properly execute. “When it comes to the mobilization and demobilization process of oil and gas exploration and services, Fairweather and its collection of companies provide the support necessary for companies to ex-

plore on the North Slope without having to acquire all the necessary assets,” says Lori Davey, director of business development at Fairweather. “We are particularly proud of the fact Fairweather operates the Deadhorse Aviation Center, which includes two hangars, office space, a medical clinic, airport terminal, and more than twenty acres of lay down yard. This allows new oil and gas companies to come to Alaska where they can have the confidence the support will be here for them.”Fairweather also has a tool services contract with BP. The company provides a mobilization labor pool of fourteen personnel that support BP’s exploration in-field at Prudhoe Bay. Rig componentry can also be brought to Prudhoe by truck and Hercules aircraft. The Fairweather crew logistics includes meeting drilling rigs from drill site to drill site with rig mats and plywood to support haul roads that are frozen in the winter and soft in summer. Rig matting is typically 9 by 30 feet in size and is laid across transport roads so half-million-ton-drill rigs don’t sink while in motion on the trucks. The process involves fork loaders distributing mat after mat along the corridors while other loaders retrieve the mat farthest back to then re-deploy in the front of the line. Slow but methodical, the result is large drilling in-

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January 2014 | Alaska Business Monthly

frastructure being moved without harm to environment or damaging rig equipment. Sometimes when crews are working over the summer, mobilization and demobilization or airstrips and haul roads and weather equipment are not the only aspects of the job to worry about. How about a polar bear added to the mix? Fairweather’s medical staff and paramedics often do double-duty mid-summer to October as polar bear spotters and guards. Trained Fairweather paramedics assist with weather monitoring and polar bears, courtesy of a 12 gauge shotgun with slugs. To date no bears have been injured or killed. Caution and proactive engagement to dissuade a curious Ursus maritimus from entering work sites have been successful. “Fairweather’s medics are cross trained to provide additional support to their field operations so they can fill an additional role when not tending to sick or injured workers. From bear guards to aviation weather support to HSE [Health, Safety, and Environmental] support, we’ve essentially fine-tuned our mobilization-demobilization services for greater operational efficiency while affording our medics a chance to mitigate risks and ensure a safe working environment,” Davey says.

PRL Logistics PRL Logistics provides logistics management, transportation, and support to oil and gas exploration and drilling companies. From the tip of the Aleutians to the Alaska Interior, along the Yukon River, and in development projects across the Arctic, collectively the company has successfully provided services to several hundred sites. Ron Hyde started PRL in 2002 and made it a nimble and flexible company that could move quickly in response to projects. “If you’re going to beat a weather, seasonal, or infrastructural window, you have to be flexible and adaptable in this business,” Hyde says. Hyde grew up in Western Alaska’s Goodnews Bay and in Norton Sound and communities along the Bering Sea coast. His father was a bush pilot and guide, and his family was on the receiving end of the logistical services he now offers rural Alaskan development. He recalls that as a youth in rural Alaska, only one or two barges came a year. Absent roads or a substantive landing strip for air cargo, large items were unavailable. “This business is personal for me, and I was inspired by my youth in remote Alaska,” adds Hyde. While living in the bush had constraints and dependencies on logistics, Hyde’s career evolved as he worked with construction management firms headquartered outside Alaska needing help with plan42

Alaska Business Monthly | January 2014

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ning support and mobilizing large capital projects such as transport, housing, seasonal equipment mobilization, and adapting equipment to Alaska terrain. Hyde advised on design size to fit the Arctic and rural theaters of operation, including barges and plane logistics, which became a benefit to local and national companies attempting to mobilize and demobilize equipment and supplies. PRL Logistics manages transportation activities and logistics. Hyde’s team helps with planning, procurement, and logistics modeling and analysis of projects at the front end for feasibility. He explains that mobilization or demobilization of staﬀing, transportation, and equipment is as critical as any other part of an oil and gas exploration or development project. Safety and environmental impact analysis and feasibility studies are also weaved into the logistical assessment and coordination, particularly before a project begins. Hyde started his company with Vicki Smith and it grew to having 150 employees in ten years. Chances are that anyone working in the field or in the Arctic or at another resource development site was booked and had reservations and travel logistics handled by PRL. Some sites have as many as seven hundred personnel whose transportation must be coordinated from and to Anchorage and then to Deadhorse and Point Thomson via helicopters and fi xed wing charters. Baggage handling, heli-deck attendants, freight management for Exxon Mobil at Point Thomson in-state and out, supplies, parts, groceries, truckable modules, equipment, web-based tracking, ice road and environmental inspections—in total it’s a huge collection of logistical synapses that make mobilization and demobilization cohesive. And like Fairweather and Nabors, PRL emphasizes local hire and subcontracting. “Exxon has adopted a vision which stresses local hire and engaging with local businesses. PRL follows the same paradigm. When you can employ rural Alaskans and utilize their local knowledge, it increases project certainty and reduces risk,” Hyde says. PRL has more than one hundred vendors and subcontractors, and one PRL motto is, “There and back safely.” Another is, “Plan, plan, plan,” and Hyde reinforces the fact that safety matters. “Any transportation used for mobe/demobe is enveloped by our monitoring program, which is extremely regimented, so there are no leaks or failures that aﬀect the environment—and if that did happen, mobilization would be halted,” Hyde says. PRL also manages movement of truckable modules and barging to and from Point www.akbizmag.com

Thompson from Deadhorse and unloading of ships with steel and other infrastructure, as well as via aircraft, truck, barge, and rail. Services also include logistical planning and support in Eastern Russia and Canada. PRL Logistics recently opened an oﬃce in Kenai to handle support for Cook Inlet projects.

Part of the Exploration Equation The bottom line of any petroleum operation in Alaska will inevitably include mobilization and demobilization of infrastructure, supplies, and personnel. Planning and logistics really matter. They are inextricably linked to all development phases including research, exploration,

and the ultimate eﬀort of development and production. Eliminate safety personnel or planning and the environment becomes vulnerable; subtract ice roads, air fields, and weather reporting and planes can’t land with equipment and workers; delay the marine access and transportation of large-scale equipment by ocean and drilling ceases. Peel away the financial and staﬃng costs of petroleum development in Alaska and mobilization and demobilization efforts are at the root of the equation.  Tom Anderson freelances from Alaska.

January 2014 | Alaska Business Monthly

CONSTRUCTION

Taking it Inside: Winter Construction Work

The University of Alaska Anchorage’s School of Engineering construction site in early winter.

Building projects continue despite weather By Dimitra Lavrakas

ands down, the biggest challenge to Alaska contractors is building during the winter months. Alaska Carpenters Local 1281 salutes that with its slogan, “When hell freezes over, we will build it. We are the Frozen Chosen.” Last fall, Anchorage and other parts of Alaska were spared early snowstorms or freezing temperatures, with thirty days in

October hitting 7.4 degrees higher than normal. That’s been a good thing for the large, multi-year projects in Anchorage and Juneau. But by mid-November, winter entered with a cyclone in the Bering Sea, freezing rain in the Kuskokwim Delta, a blizzard along the Arctic Coast packing 50 mph winds, similar blasts in the Brooks Range, and a blanket of snow in Anchorage and

Alaska Business Monthly | January 2014

surrounding areas. Alaska oﬃcially entered its second season: winter construction.

UAA School of Engineering Expands The University of Alaska Anchorage’s School of Engineering prepares students in civil, electrical and mechanical engineering, project management, and geowww.akbizmag.com

matics, which includes surveying and mapping. Its new building, addition, and renovation house all of those disciplines, and they are in high demand in Alaska. The university reports that enrollment in the School of Engineering’s seventeen degree and certificate programs has more than quadrupled since 2000. Certainly, the building requires more room to meet that need. This project, with an estimated cost of $78.25 million and consisting of a new four-story, seventy-five -thousand-square foot laboratory and classroom building, renovation of the existing three-story, forty-thousand-square foot engineering building, and design for a parking structure, is under construction this winter. Livingston Slone, Inc. is the architect/ prime design firm and Neeser Construction, Inc. (NCI) is building it. The project team was aware that the timing of the award of the CM/GC contract to NCI, and the subsequent design collaboration and permitting eﬀort, would mean that much of the structure and building shell would likely be impacted by winter weather. NCI’s Owner and President Jerry Neeser says a little about the nuances of winter construction in Anchorage. “Constructing and maintaining temporary weather protection is a necessity when building in Alaska’s harsh climate,” Neeser says. “Many activities can’t be done in bitter cold temperatures so creating ‘warm’ environments is necessary. This means ‘tenting and heating.’ Plastic envelopes are built to surround various areas, which are then heated. Since the protection is temporary, at times harsh weather and high winds require maintenance on the envelope, such as refastening edges and access points.” Typically forty by one hundred-foot sheets of reinforced Visqueen are tented or draped down the building perimeter. A temporary heating system is set up and maintained day and night that keeps temperatures above freezing and sometimes even nice and toasty. The air within the tent is carefully monitored for any toxicity created by the heat system. Of course more clothing is also needed during the winter and that presents its own set of problems. “More clothing means less mobility and freedom of movement,” Neeser says. “Experience and knowledge of your limitations with cold weather gear is important to realize. Ice and snow means more slip hazards, and job-wide recognition of these increased hazards is necessary.” The limited length of the Alaska construction season dictates that construcwww.akbizmag.com

tion continues regardless of when the snow ﬂies, how hard the wind blows, and when the ice may freeze up. “Regardless of how far along the job is, in Alaska you make the adjustments in temporary weather protection until the complete building envelope is achieved,” Neeser says. A layman might think that the basic needs of continuing a project in a shell would be light, power, heat, and bathrooms, but Neeser says, “From the crew’s perspective, staying hydrated and good nutrition in the cold is important.” Alaska crews are tough, and regularly overcome severe conditions. “With the right ingenuity and imagination, anything is possible,” says Neeser. “‘Can’t’ is not in our vocabulary.” Construction began in May 2013, though the ceremonial groundbreaking ceremony was in mid-September. The new building is scheduled to open in the fall of 2015. That’s two winters to get through.

“C ha me are win

Alaska’s History Safe and all in One Place In Juneau, the State of Alaska is building an addition onto the Alaska State Museum on Whittier Street, just down the hill from the capital building and a few blocks from the state oﬃce building where the State Archives, Historical Library, and Information Services Library are now housed. Funded at $101.45 million, with an additional $37.21 million required for completion, the State of Alaska Library Archives and Museum, or SLAM as it is nicknamed, will add 118,000 square feet of new construction to double the current space for all four services. The architect is Brian Meissner with ECI/Hyer Architecture of Anchorage, and the contractor is PCL Construction Services, Inc., with its Alaska headquarters in Anchorage. According to the company, PCL is a is a group of independent construction companies in Canada, Australia, the Caribbean, and the United States that carry out diverse operations in the civil infrastructure, heavy industrial, and buildings markets. The project was on schedule as it rolled into the winter months, but construction during Juneau’s heavy snowstorms and often rainy and inclement weather is a factor to be faced. SLAM builders and occupants must ensure an economic and safe move from outside to inside, as well as a smooth transition of all the entities the complex will house. “The State Archives, Historical Library, and Information Services Library will remain in their current locations until the January 2014 | Alaska Business Monthly

Rendering courtesy of ECI/Hyer Architecture

The State of Alaska Library Archives and Museum or SLAM as it is nicknamed, was designed by Brian Meissner with ECI/Hyer Architecture of Anchorage and the contractor is PCL Construction Services, Inc.

building is entirely completed,” says Bob Bangheart, deputy director and chief curator of Alaska State Museums. “Our estimated date of taking full ownership is January 2016. These three sections of the Division of Libraries, Archives, and Museums will remain open throughout the process of developing the new facility.

“The Alaska State Museum in Juneau will be closed for a period of twentyfour months. During those twenty-four months museum staﬀ will be developing the new exhibits for the SLAM facility.” The logistics of moving just the museum materials is a huge undertaking, requiring construction of a tunnel. Moving

Alaska Business Monthly | January 2014

collections and archives into new spaces is a delicate procedure—an intricate dance. “The State Museum will close to the public on February 28,” says Bangheart. “We are currently in construction of the new collections vault located adjacent to the existing building. The vault represents approximately one-third of the new facility. Once the vault is completed we will relocate collections from existing permanent storage to new permanent storage.” “A one-hundred-foot connection ‘tunnel,’ two forty-foot conexes with an infill space, will link the two facilities,” says Bangheart. “Ninety percent of the collections will travel through this link. The remainder will be transferred outside to the new facility, as the objects are larger than elevator capacity.” “We will take ownership of the building in January 2016,” says Bangheart. “Relocation of the Archives, Historical Library, and Information Services Library will occur over a period of three months from then. Exhibition installation will occur between January and April. Grand opening of the facility as a whole will take place the first week of May 2016.”  Freelance journalist Dimitra Lavrakas writes from Alaska and the East Coast.

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TRANSPORTATION

A YEAR OF TRANSPORTATION I NDUSTRY ACQUISITIONS

Lynden’s acquisition of Northland Services enables the company to expand services to Western Alaska. Here, the company is delivering cargo to Skagway in Southeast.

Key players in Alaska under new ownership By Dimitra Lavrakas

laska’s transportation industry is undergoing changes in ownership of some of its key players. It all started about a year ago when American Fast Freight (AFF) was acquired by The Resolute Fund II, L.P., an aﬃliate of The Jordan Company, a middle-market private equity firm managing more than $5 billion of committed capital across several industries. The company is headquartered in New York with oﬃces in Chicago and Shanghai. Though AFF is headquartered in Washington state, its business is extensive in Alaska and the company is operating out of a new 30,000 sq. ft., forty-nine door, openbeamed, warehouse with a high pile storage chill/freeze area with the receiving doors in the coolers, the only one of its kind in Alaska. The new facility, designed by Gary Peterson of GPARCH Architects and built by Watterson Construction, became AFF’s Alaska operations base in November 2012.

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“We find that the cultures of family owned businesses are closely aligned with our own. Our goal is to keep Harry and John [McDonald] engaged as long as they want to. There is a huge benefit to our broader organization to have both of them continuing to provide us input and let us know if we are moving in any direction that is not forward and positive.” —Mark Tabbutt Chairman, Saltchuk Resources.

“The AFF team has built a premium asset-light freight forwarding business differentiated by its scale, expertise, and longstanding customer relationships. By consistently providing its customers with the value-added services they demand, AFF has earned its reputation as a leader in its marketplace,” said Brian Higgins, principal, The Jordan Company, at the time of the

acquisition in January 2013. “We look forward to partnering with the AFF leadership team in continuing to build its business, both organically and through acquisition.”

All in the Family In May last year Carlile Transportation Systems, one of the largest trucking and logistics companies in Alaska, was bought

January 2014 | Alaska Business Monthly

by Seattle-based Saltchuk Resources. “We have had consistent intentions in Alaska for over thirty years: find very high quality companies that share our culture and values; get to know their owners and build a trusting relationship that, when the time is right, could lead to a successful transaction; [and] reinvest heavily into the companies we own with a multigenerational time horizon,” says Mark Tabbutt, chairman of Saltchuk Resources. Both companies are family owned and are no strangers to each other, Tabbutt says. “Our growth in Alaska has primarily been through acquiring family businesses,” he says. “Delta Western, Inlet Petroleum, North-

ern Air Cargo, and Carlile were all family owned when we purchased them. We find that the cultures of family owned businesses are closely aligned with our own. Our goal is to keep Harry and John [McDonald] engaged as long as they want to. There is a huge benefit to our broader organization to have both of them continuing to provide us input and let us know if we are moving in any direction that is not forward and positive.” Carlile’s 700 employees will join Saltchuk’s 5,500 employees spread across the country. Tabbutt believes the acquisition will boost the company’s profits within the year. “We expect our overall business will grow by 15 percent in 2013—both in terms of rev-

enue and total assets,” Tabbutt says. “Due to the Carlile acquisition, we expect our business in Alaska to grow 25 percent in 2013.” And they’re looking at Alaskans’ favorite playground—Hawaii. “We believe the state of Hawaii is a great consumer for Alaska LNG,” Tabbutt says. “Hawaii faces the challenges of many island economies in their reliance of burning petroleum to generate electricity, causing high utility costs and hurting their economy. We have been out in the market promoting our abilities to build, own, and operate LNG tankers for our domestic market.” Carlile will become a part of TOTE Logistics, boosting Saltchuk’s presence in cargo consolidation, warehousing, trucking, and other logistics in North America, the company says. Carlile’s terminals serve Alaska from Anchorage, Fairbanks, Kenai, Kodiak, Prudhoe Bay, and Seward, as well as out of state in Seattle; Houston; Blaine, Minnesota; and Edmonton, Alberta, Canada. And the Alaska Arctic will also see Carlile on it’s horizon. “We are building three Arctic class SOLAS ocean tugboats that will support oil and gas exploration in the Arctic,” Tabbutt says.

Crowley’s Southeast Foray Crowley Maritime Corporation acquired family owned oil distribution companies Ketchikan’s Anderes Oil in July and Juneau’s Taku Oil in September. “Anderes and Taku are really Crowley’s foray into the Southeast Alaska market, where we have not operated before,” says Rocky Smith, senior vice president and general manager, petroleum distribution and general manager. The company is always looking for ways to stretch out and improve, and that requires finding and buying companies that would enhance its business. “Be aware that Crowley is buying up things about every month of the year in the world,” says Matt Jackson, vice president, LNG business development. Crowley’s petroleum services group is entering the liquefied natural gas (LNG) market by acquiring Carib Energy LLC. Although Crowley is not looking into converting individual heating oil customers in Ketchikan or Juneau to LNG. “It’s more likely those communities will someday be provided with gas distribution systems like Anchorage has,” Smith says. “Carib is a combined distribution company with a focus on transporting LNG from distribution to its end customers, mostly industrial,” Jackson says. “Our increased market focus in the Caribbean and Central American locations is because, essentially, they have an export license with 48

Alaska Business Monthly | January 2014

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a non-federal trade agreement with any country that has a free trade agreement, like NAFTA or TAFTA, like the Dominican Republic, Panama, eastern Caribbean, or Costa Rica and such. “That means our application license can be used to directly export LNG. Non-free trade countries are pretty much everything else, Bermuda, or the Bahamas. US Territories like the US Virgin Islands and Puerto Rico, where we can transport product out of the Lower 48 with no licensing required.” Carib Energy, founded in 2011, is the first company to receive a small-scale, twenty-five-year, LNG export license from the US Department of Energy for LNG transportation from the United States into Free Trade Agreement countries. Crowley uses forty-foot isolation tanks—also known as isotanks or ISO tank containers, which can safely carry and distribute hazardous liquids or nonhazardous liquids— to transport LNG that can hold it in a steady state for sixty days. “It’s essentially a giant Thermos,” says Jackson. Using LNG over diesel, Jackson says, can save a business or a small community 30 percent daily just on fuel savings. It goes to 50 percent if the customer uses more efficient technology to generate power. “A direct industrial LNG customer could use anywhere from one tank a week to one tank a day, so we’re not talking large amounts of volume,” he says, adding, “Customers can take control of their energy costs.” Like Alaska, electricity generation is expensive in the Caribbean with rates of 25 to 45 cents KWH. “We can cut that 50 percent based on the models we’re using,” Jackson says. “This model is not unique. It was developed in Europe, and it can be transitioned very easily to the Arctic.”

Lynden and Northland Services While many Outside companies are acquiring Alaska assets, Anchorage-based Lynden Inc. is increasing its family of companies in the state’s transportation industry. Lynden most recently acquired Northland Services, a marine transportation company that provides shipping between Seattle, Alaska, and Hawaii. “Northland is a dynamic company with talented people and a great reputation,” Lynden President and CEO Jon Burdick said in a November press release announcing the acquisition. “Its barge capabilities to Hawaii and Western Alaska complement Lynden’s current service oﬀerings and allow us to provide expanded services to our customers. We can now oﬀer integrated service to more Alaska destinations, with more frequency and greater combined capabilities.” www.akbizmag.com

Lynden reaches deeply into the state through its family of companies: Lynden Transport; LTI, Inc.; Alaska West Express; Alaska Marine Lines; Lynden Air Cargo; Lynden International; and now Northalnd Services. In the 1970s, James J. Haagen started Northland Services in partnership with Dunlap Towing of La Conner, Washington, and Campbell Towing of Wrangell. So from the beginning, Northland established an Alaska base. Combining Northland’s barge service from the Pacific Northwest to Hawaii greatly enhances Lynden’s ship and air services to the islands, and Northland’s West-

ern Alaska barge services allows Lynden to access ports all over the state of Alaska. “Lynden provides an ideal situation to better serve our customers, our employees, and the communities where we operate,” Northland President and CEO Larry Stauﬀer said in the November announcement. “We have seen significant growth in our business over the past decade, and bringing two great companies and teams together will help improve and expand service in the communities we serve.”  Freelance journalist Dimitra Lavrakas writes from Alaska and the East Coast.

Northland Services: Consider it done. Since 1977, Northland has provided reliable freight transportation between Seattle, Alaska and Hawaii. With more than 140 sailings annually, Northland delivers cargo to more destinations in the 49th and 50th states than any other marine carrier. Heavy equipment, construction materials, seafood or supplies to remote villages; you name it, Northland delivers. So next time, ship with confidence. Ship with Northland.

January 2014 | Alaska Business Monthly

OIL & GAS

Winter Drilling Plans Anticipating industrial activity By Mike Bradner

il and gas companies are gearing up for the annual winter exploration drilling program on the North Slope. Although things could change, as some companies are still working on permits and drill rig arrangements, the season looks to be a repeat of last year, with fairly vigorous activity. At this stage it looks like Repsol, ConocoPhillips, and Linc Energy, an Australia-based independent, will be drilling. NordAq Energy, an Alaska independent, was hoping to drill a test well, but that will be deferred because of difﬁ culties securing a suitable rig. Colville and Kuparuk Repsol, a major company and the most active explorer on the North Slope, will drill three Alaska North Slope exploration wells again this winter as part of a multi-year program to evaluate the com-

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State of Alaska Department of Natural Resources Division of Oil & Gas Oooguruk Unit Pioneer Natural Resource Alaska Inc. Eni Petroleum US LLC XH, LLC George Alan Joyce, Jr Anadarko Petroleum Corp.

Harrison Bay Harrison

Colville River Unit ConocoPhillips Alaska, Inc. Anadarko Petroleum Corp. Petro-Hunt, LLC XH, LLC Rosewood Resources Inc.

Placer Unit ASRC Exploration, LLC Qugruk Unit Repsol E&P USA Inc. 70 & 148, LLC GMT Exploration Co., LLC

pany’s acreage. Repsol drilled three wells last year and announced that it had found oil in all three of them. Two of the wells planned this winter, designated Q-5 and Q-7, will be in the Colville River delta area east of the producing Alpine

Nikaitchuq Unit ENI Petroleum

71.30% 27.35% 0.57% 0.40% 0.38%

100%

Milne Point Unit BP Exploration (Alaska) Inc. Eni Petroleum US LLC Herbaly Exploration LLC Kerr-McGee Oil & Gas Corp. George Alan Joyce, Jr.

70.00% 22.50% 7.50%

BEAUFORT

97.03% 1.09% 1.02% 0.75% 0.11%

Prudhoe Bay Unit ExxonMobil Alaska Production Inc. 36.40% ConocoPhillips Alaska, Inc. 36.08% BP Exploration (Alaska) Inc. 26.36% Chevron U.S.A. Inc. 1.16%

Dewline Unit UltraStar Exploration LLC

100%

76.64% 22.42% 0.40% 0.31% 0.24%

Northstar Unit BP Exploration (Alaska) Inc. Murphy Exploration (Alaska), Inc.

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Bear Tooth Unit ConocoPhillips Alaska, Inc. Anadarko Petroleum Corp.

Kuparuk River Unit ConocoPhillips Alaska, Inc. 54.02% BP Exploration (Alaska) Inc. 38.30% Chevron USA Inc. 4.95% ExxonMobil Alaska Production Inc. 2.74%

75.38% 24.62% Greater Moose’s Tooth Unit ConocoPhillips Alaska, Inc. Anadarko Petroleum Corp.

78% 22%

Tofkat Unit Ramshorn Investments, Inc. 50% AVCG, LLC 30% Brooks Range Development Corp. 20%

National Petroleum Reserve Alaska

Southern Miluveach Unit Ramshorn Investments, Inc. 61.40% AVCG, LLC 29.78% Brooks Range Development Corp. 8.81%

TRA NS -AL AS KA PIP ELIN

Dalt on

Hw y.

Liberty Unit BP Exploration

Duck Island Unit BP Exploration (Alaska) Inc. ExxonMobil Corp. Chevron USA Inc. Phillips Alaska, Inc. Doyon, Limited NANA Regional Corp., Inc.

State Unit Arctic Fortitude Unit Alaska Crude Corp. James W. White

Federal / State 79.88% 20.12%

Federal Unit

Non-Producing Kachemach Unit Ramshorn Investments, Inc. 50% AVCG, LLC 30% Brooks Range Development Corp. 20%

Beechey Point Unit Ramshorn Investments Inc. 41.33% AVCG, LLC 27.37% Chevron U.S.A. Inc. 11.33% ExxonMobil Oil Corp. 11.33% Brooks Range Development Corp. 8.65% 0

52.68% 24.76% 19.17% 3.05% 0.26% 0.09%

Alaska Business Monthly | January 2014

www.akbizmag.com

field. Those are in the vicinity of wells drilled last year by Repsol where discoveries were made, according to Repsol’s Alaska manager, Bill Hardham. A third well, called “Tuttu-1” is farther east near the Kuparuk River field, which is producing, Hardham says. The two new Colville delta wells will be drilled to gather more information on oil and gas resources near the wells drilled last year, which were designated as Q-1, Q-3, and Q-6, he says. Repsol has not yet announced a decision on the commerciality of those discoveries from last year, although the company said the results of two of them were very encouraging. “We are busy with this and we are working on development scenarios. The wells we’ll drill this year will add to our information” about the area, he says.

North Slope Unit Land king Interest Ownership

ORT

SEA

36.40% 36.08% 26.36% 1.16%

) Inc. laska), Inc.

99.84% 0.16%

Liberty Unit BP Exploration (Alaska) Inc.

nc.

52.68% 24.76% 19.17% 3.05% 0.26% 0.09%

100%

Badami Unit Savant Alaska, LLC ASRC Exploration LLC

State Unit

Point Thomson Unit Exxon Mobil Corp. 46.13% BP Exploration (Alaska) Inc. 27.06% Chevron USA Inc. 11.72% ExxonMobil Oil Corp. 10.63% ConocoPhilips Alaska, Inc. 3.21% Devon Energy Corp. 0.55% Cook Inlet Energy, LLC 0.29% Aubris Resources, LP 0.07% Edward H.Leede 0.07% Trans World Oil & Gas Ltd. 0.07% Pacific Lighting Gas Development Co. 0.03% Samson Offshore, LLC 0.03% Sunlite International Inc. 0.03% Kingdon R.Huges Family Partnership 0.02% Chap-KDL, Ltd. 0.02% Estate of John W.Perry (Susan Jean Searls Collier, Linda Lou Searls Neidert, Jean Alice Searls and John Peery Searls 0.01% Leed & Pine, a Partnership 0.01% Mary Lou Holbrook (The Eastland Oil Co.) 0.01% Peggy D.McConnell (Eastland Property & Minerals) 0.01% Richard Donnelly 0.01% Robert Searls, Jr. Testamentary Trust (Collier/Searls) 0.01% The George A. Donnelly III 1991 Irrevocable Trust 0.00% The Robert R. Donnelly III 1991 Irrevocable Trust 0.00% Jan Donnelly O’Neill, Irrevocable 0.00% Woodbine Petroleum Inc. 0.00%

Arctic National Wildlife Refuge

67.50% 32.50%

NPR-A ConocoPhillips is also planning two exploration wells in the National Petroleum Reserve-Alaska (NPR-A) this winter, although company spokeswoman Natalie Lowman said the projects are not yet fully approved by early winter. It’s also not certain whether one or two rigs would be used in the program. If one rig is used it will be moved to the second location in late spring after the first well is finished. The wells would further test potential resources on leases ConocoPhillips and its minority partner, Anadarko Petroleum Corporation, hold in the northeastern part of NPR-A. ConocoPhillips and Anadarko have done exploration drilling in the area previously and have made discoveries. ConocoPhillips recently announced that one of the deposits found will be developed. The project, now called “GMT-1”, is expected to be producing in late 2017 with construction to start in 2016 and continue through 2017. Production is estimated at thirty thousand barrels per day at peak. Meanwhile, a second nearby project, “GMT-2,” is in the planning stages, but no date has been set for its development.

location on the Colville River on the southeastern border to the NPR-A. Linc moved a Kuukpik Drilling Co. rig to Umiat last winter after building a snow road almost one hundred miles in length and “stacked,” or stored, the rig over the summer following the 2012-2013 winter drilling. While Linc will not need to move the rig again this winter, a substantial supply and support program will still be needed for the work, which is at a remote site. Linc is evaluating the potential for developing a long-known but small oil discovery made by the Navy and the US Geological Survey in test drilling starting in the 1940s and as recently at 1979. Twelve of these “legacy” wells were drilled at Umiat. The oil that was discovered was very light and “sweet,” with an API gravity of 37 (API Gravity is commonly-used index of oil quality), which is very favorable. However, the quantities discovered in the government-sponsored drilling did not justify commercial development, and the government eventually leased the area to private industry. Linc hopes to develop the oil resources using new technologies like horizontal production wells that were not available to early drillers. The company hopes to find enough oil to justify fifty thousand barrels per day of production, which it thinks is possible, and to build a pipeline east to the Trans Alaska Pipeline System across or near lands owned by the state and Arctic Slope Regional Corporation (ASRC) of Barrow. The pipeline, and a road also planned to be built from the Dalton Highway, would enhance exploration in the south North Slope, where discoveries of natural gas have also been made by Anadarko on lands owned by ASRC.

Umiat One other exploration drilling program that is certain for the 2013-2014 winter is a continuation of Linc Energy’s drilling at the Umiat, an old US Navy exploration

Possibilities Brooks Range Petroleum’s plans to drill in areas west of the Kuparuk River field were still uncertain in early winter. The company is looking at several small prospects

Pipeline

Federal / State Unit

Alaska Seaward Boundary

(Outer Continental Shelf Boundary)

Federal Unit Non-Producing Unit

$ Map Location

The company plans are to use three Nabors Alaska Drilling Co. rigs for the winter season. A winter ice road will be constructed to the exploration area from the Kuparuk field roads, which are all-year gravel roads. An ice airstrip and winter camp facility will be built near where the drilling will take place. The exploration in the Colville delta is focused on conventional oil but the Tuttu well further east will evaluate possible viscous oil that ConocoPhillips has also found in its West Sak formation, which is nearby in the Kuparuk field.

Note: Unit boundaries, acreages and land working interest ownership (WIO) percent are subject to change due to formation of new units, contractions, and expansions of unit acreages, termination of unit agreements, and changes in WIO. For simplification, WIO percentages are based on total land ownership in unit or lease and were rounded to two decimal points. Unit and lease ownership may be different than ownership of production. MAP PUBLISHED JULY 2013

20 Miles This map contains data from various sources and DNR holds no responsibility to the accuracy of the data displayed on this map.

www.akbizmag.com

January 2014 | Alaska Business Monthly

in a region between the western boundary of the Kuparuk field and the Colville River, an area southeast of where Repsol is exploring. One discovery, “Mustang,” has already been made and is planned for development. Mustang would produce about fifteen thousand barrels per day at peak. Brooks Range is based in Alaska and is the operational arm of AVCG LLC, a consortium of small, out-of-state independent companies and investors, including Ken Thompson, a retired ARCO Alaska president. While prospects like these may not attract the attention of major companies, they are of interest to small firms like Brooks Range, and there are many prospects like them, Brooks Range CEO Bart Armfield has said.

NordAq Energy Another small company, also Alaskabased, that has now become a big player in North Slope exploration is NordAq Energy, which has been active in Cook Inlet exploration for some time and is now also on the slope. NordAq had hoped to drill two wells this winter but was unable to secure a rig suitable for the project. The company has targeted a shallow water oﬀshore prospect in Smith Bay on state submerged land leases oﬀ the northern boundary of the NPR-A and would also like to drill at a

nearby prospect onshore on a federal lease NordAq holds. NordAq is engaged in a strategic plan to explore a group of NPR-A leases including some with discoveries previously made purchased from another explorer, FEX LLC, that are in the north part of the reserve near the coast. In previous federal lease sales NordAq acquired a group of leases further inland, to the south of the previous FEX leases. The company has thus assembled a “string of pearls” starting in the north with the oﬀshore prospect in Smith Bay and extending south through the FEX discoveries and anchored on the south by the block of inland federal leases. NordAq was very aggressive in bidding in the most recent NPR-A lease sale and the state North Slope sale, both held November 6, 2013. NordAq dominated both sales, acquiring seventeen of the twenty-two federal leases sold by the US Bureau of Land Management in the federal sale and fifty-two of the ninety-two leases sold in the state sale by the state Department of Natural Resources. The new NPR-A lease tracts NordAq has acquired are to the south of its current leases and south of where ConocoPhillips and Anadarko are developing GMT-1 and doing exploration. In the state lease sale, NordAq bid on and won a large block of leases southeast of Prudhoe Bay in an area at the eastern

end of extensive shale formations that are being explored for potential shale oil by another company, Great Bear Petroleum. Great Bear is not drilling this winter but is doing seismic surveys on its leases to assess not only the shale oil potential but also conventional oil. The company previously drilled two wells to assess shale oil.

Referendum Creates Uncertainty One uncertainty aﬀecting all of the companies’ exploration planning is a pending referendum in the 2014 Alaska primary election that would repeal a reduction of state oil production taxes approved by the Legislature earlier this year. The industry supported the passage of the tax bill, Senate Bill 21, and is moving forward with exploration, but the pending vote does create additional uncertainty, Repsol spokeswoman Jan Sieving says. “We are fully supportive of SB21 and have started moving forward with investment decisions, but the referendum now adds to uncertainties. It’s diﬃcult to make billion dollar decisions when we don’t know what the tax structure will be,” Sieving says.  Mike Bradner is publisher of the Alaska Legislative Digest.

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special section

Financial Services

Mobile Technology Enhances Brick and Mortar Growing the business of money By Tracy Barbour

laska has a wide variety of banks, credit unions, and other financial services providers to help businesses get started, grow, and succeed. According to the 2013 Directory of Banks and Financial Institutions, there are more than twenty national and state banks as well as state and federal credit unions operating in Alaska—not to mention alternative institutions that facilitate and fund projects. The following is a synopsis of what’s available.

NATIONAL BANKS First National Bank Alaska Alaskan-owned and -operated since 1922, First National Bank Alaska (FNBA) serves the financial needs of Alaskans with ATMs and thirty branches in eighteen communities throughout the state. It is Alaska’s largest locally-owned bank. Forbes named the bank one of the nation’s Most Trustworthy Companies in 2012 and 2013. With more than $3 billion in assets, FNBA has capital to fund loans, both large and small, for Alaska businesses. In 2013 the bank had about one thousand commercial loans outstanding with a loan portfolio of about $1.28 billion, of which more than $1 billion was in commercial loans, according to Director of Corporate Communications and External Affairs Cheri Gillian. FNBA places a wide range of business banking tools at the fingertips of Alaska’s business owners and managers. For instance, its business online banking is designed to save time, improve cash flow, and streamline cash management procedures in a fully secure environment. The bank’s online cash management service gives business customers twenty-fourhour, real-time access to their accounts. Businesses can view account information, move funds, and check transactions, plus initiate stop payments, wire transfers, and automated clearing house transfers. In addition, the bank’s Trust Department offers a full range of fiduciary services for individuals, businesses, non-profit organizations, Native corporations, and government entities. KeyBank KeyBank is the banking subsidiary of KeyCorp, one of the nation’s largest bank-based 54

financial services companies. With assets of approximately $91 billion, KeyCorp has a presence in twenty-three markets. In Alaska, KeyBank operates seventeen branches in Anchorage and the boroughs of Aleutians, Fairbanks, Juneau, Kenai, Ketchikan, Kodiak Island, and Matanuska-Susitna. Since 1825, KeyBank has focused on helping clients and communities prosper with customized solutions that include investment management, retail and commercial banking, retirement, consumer finance, and investment banking. KeyBank also offers twenty-four-hour account access through the bank’s extensive branch, ATM, and call center networks, mobile banking applications, and Internet-based services. “At KeyBank, we strive every day to help our clients and communities thrive,” says KeyBank President Brian Nerland. “We do so by delivering a combination of smart solutions and superior services and by participating in and supporting the communities in which we do business.” KeyBank demonstrates its commitment to the community and social responsibility through its charitable contributions, volunteerism, and civic leadership. The bank consistently supports programs and initiaBrian Nerland tives that focus on eco- KeyBank Alaska nomic empowerment, President workforce development, financial education, and cultural diversity. KeyBank is the only US national bank among the twenty-five largest to earn eight consecutive “Outstanding” ratings on the Community Reinvestment Act exam from the Office of the Comptroller of the Currency.

Wells Fargo Bank Wells Fargo is a nationwide, diversified, community-based financial services company with $1.4 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than nine thousand stores in thirty-nine states, 12,000 ATMs, and the Internet, as well as offices in more than thirtyfive countries. With more than 265,000 team members, Wells Fargo serves one in three households in the United States. In Alaska, Wells Fargo has 900 team members, forty-nine banking stores. and 120

Alaska Business Monthly | January 2014

ATMs, along with five mortgage and three investment offices. Wells Fargo provides businesses of all sizes with checking and savings products, insurance, retirement planning, payroll services, merchant services, loans, credit cards, and online tips and tools. A preferred Small Business Administration lender in all fifty states, the bank has been the top Small Business Administration lender in Alaska for the last seven years, according to Alaska Region President Joe Everhart. “At Wells Fargo, we have the unique combination of national distribution and local teams who are able to respond to customers and communities quickly, as if we were a fraction of our size,” he says. “We differentiate ourselves by delivering superior value and choice with financial products and services that resonate with customers.” The bank uses a customer-centric approach to match clients with the products that will help them succeed financially. This involves not just selling customers financial products, but getting to know them first and offering the financial solutions that best meet their unique situation and needs. “We believe if we do what’s right for our customers and for Alaska, business results will follow,” Everhart says.

STATE BANKS Northrim Bank and Alaska Pacific Bank Northrim Bank has ten branches in Anchorage, the Matanuska Valley, and Fairbanks, as well as an asset-based lending division in Washington state. The community bank, which serves 70 percent of Alaska’s population, held $1.18 billion in assets as of September 30, 2013. Northrim describes itself as a dynamic institution that offers creative solutions. It offers business checking and savings accounts, credit and debit cards, and a suite of electronic services, as well as products for commercial real estate, residential construction, factoring, and cash management. The bank expands its traditional services through affiliated companies that offer wealth management, investment management, health insurance, life insurance, and mortgage lending services. “With the mission to be Alaska’s most trusted financial institution and a vision to be Alaska’s premier bank and employer of choice, Northrim strives to be active, engaged, and focused on the communities we serve,” says Joe Beedle, president and CEO of Northrim Bank. “We have had a customer-first philosophy from our humble beginnings, with an addedvalue approach to every relationship.” www.akbizmag.com

Recently, Northrim expanded its presence in Alaska when parent company Northrim BanCorp announced on October 22, 2013, that it would acquire Alaska Pacific Bancshares for approximately $14 million. Alaska Pacific Joe Beedle, Northrim Bank Bancshares is the parPresident ent company of Alaska and CEO Pacific Bank. At the time, the federally-chartered savings bank had five branches in Juneau, Ketchikan, and Sitka and offered a wide variety of business and consumer loans. “The merger will allow Southeast Alaskan customers to have a higher lending limit, and Northrim will help strengthen relationships with customers in Southeast, in part, through a great array of financial services provided in part by our affiliates,” Beedle says. The transaction is expected to close in the first quarter of 2014, with the full operation conversion to occur in the third quarter of 2014.

Denali State Bank Fairbanks-based Denali State Bank was founded in 1986 as “Your locally-owned community bank.” The bank currently has five branches, including one in Tok Junction. With eighty-five employees, Denali State Bank offers an array of financial services with an emphasis on business banking and mortgages. “Your locally-owned community bank is proud to support the success of our community by providing a full range of financial products and services to our customers, and all decisions are made right here in Fairbanks,” says President and CEO Steve Lundgren. According to Lundgren, Denali State Bank constantly strives to demonstrate an exceptional and genuine commitment to the community through financial support and civic involvement. The bank currently provides assistance to more than seventy organizations, primarily in the form of hours spent volunteering. “Everyone at the bank is involved, because as a community bank, we are all part of this great community,” Lundgren says. Mt. McKinley Bank Headquartered in Fairbanks, Mt. McKinley Bank has been serving Alaskans since 1965. It is a full-service commercial and retail financial services provider with seventy-nine employees and five locations in Fairbanks, North Pole, and Delta Junction. As of September 30, 2013, the bank’s assets were $340.3 million. Executive Vice President and Chief Operations Officer Patty Mongold says the bank offers local decision making, substantial lending capacity, and customer service standards that are second-to-none. “Our tagline, ‘Rock Solid since 1965,’ is true: We have had strong earnwww.akbizmag.com

ings even through the toughest of economic times,” Mongold says. “We are very involved in our community and have supported numerous nonproﬁts.” Alaska’s roster of state banks also includes First Bank, which serves Ketchikan, Sitka, Juneau, and surrounding areas.

STATE AND FEDERAL CREDIT UNIONS Alaska has more than a half a dozen credit unions operating throughout the state. These member-owned entities are operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to members and the community. Alaska USA Federal Credit Union Alaska USA Federal Credit Union is a member-owned, financial cooperative with $5.3 billion in assets and nearly half a million members worldwide. Alaska USA has been dedicated to providing service, value, and convenience to members for sixty-five years. During that time, its members have benefitted from an on-going value transfer provided through lower loan rates, higher savings rates, and lower fees, according to Senior Vice President Corporate Administration Dan McCue. The credit union has sixty-seven branches throughout Alaska, California, and Washington. It also owns and operates Alaska USA Mortgage Company, Alaska USA Insurance Brokers, Alaska USA Title Agency, and Alaska USA Trust Company. “Even though Alaska USA has expanded in the Lower 48 and serves members all over the world, our employees always provide service with a distinctly Alaskan touch,” McCue says. “This means thinking of members as neighbors and focusing on friendly, helpful, and knowledgeable service every day.” With its expansive branch network, call center, and online services, Alaska USA provides a full menu of financial services to businesses, including business checking, business Visa check cards, purchase cards, loans and lines of credit, commercial insurance, employee benefits plans, and real estate title and escrow services. Members can also leverage the UltraBranch Business Edition to pay bills, send wires, make tax payments, and process payroll online. Credit Union 1 Credit Union 1, Alaska’s lone state credit union, was established in 1952 as the Anchorage Teachers Federal Credit Union. After merging with FedAlaska, Ward Cove, and North Country Federal Credit Union, it emerged as Credit Union 1 in 1995. Today, the resilient entity has fourteen locations statewide, $857 million in assets, seventy-four thousand members, and 325 employees.

Credit Union 1’s key products and services include savings and checking accounts, consumer loans, credit cards, and real estate loans. Recently, it introduced a mobile banking app with Mobile Deposit, allowing checks to be deposited remotely using a smartphone. “Our role within the Alaska communities goes well beyond offering basic ﬁnancial services,” Chief Operating Ofﬁcer Tom Newins says. “We work with local social agencies to raise money and awareness of their services by engaging the credit union, our employees, and our members in events that highlight the importance of their programs.” Serving a diversity of communities around the state, Credit Union 1 focuses on simplifying how members manage their money. Consequently, members can handle many services by telephone and complete their entire loan process online.

Denali Alaskan Federal Credit Union Denali Alaskan Federal Credit Union is Alaska’s third-largest credit union, serving more than fifty-eight thousand members and with assets exceeding $520 million. Headquartered in Anchorage, the credit union operates nineteen branches in Anchorage, Eagle River, Wasilla, Kenai, Fairbanks, and Juneau, as well as an Investment Services department and Denali Alaskan Insurance. Denali Alaskan has the second-largest branch network and secondlargest ATM network among Alaska financial institutions, according to Vice President Corporate Communications and Development Keith Fernandez. Denali Alaskan focuses on going above and beyond to provide for its members’ financial needs. “Indeed, we treat our members as owners of this financial cooperative because they are owners,” Fernandez says. In November 2013, Denali Alaskan rolled out a new Internet banking platform with many added services and benefits, and it’s also introducing online business services. As another enhancement, the credit union is developing a Business Services department that will feature business deposits, merchant services, and other commercial products and services. These services should be rolling out early in 2014. Matanuska Valley Federal Credit Union Established December 7, 1948, Matanuska Valley Federal Credit Union offers a combination of personal financial services, commercial financing, and real estate and mortgage services. Matanuska Valley Federal Credit Union operates ten branches in Palmer, Wasilla, Knik/ Goose Bay, Meadow Lakes, Big Lake, Willow, and Sunshine/Talkeetna. The locally-owned, Palmer-based institution has 139 employees and $393 million in assets.

January 2014 | Alaska Business Monthly

Northern Skies Federal Credit Union Northern Skies Federal Credit Union was originally chartered in 1967 as RAA Federal Credit Union to serve employees of Reeve Aleutian Airways. Today, Northern Skies has grown to a $75-million, full-service credit union with a community charter serving those who live or work within the Municipality of Anchorage. With thirty-one employees, Northern Skies takes pride in providing members with the personalized service they deserve and offers secured and unsecured loans, online/ electronic services, and no/low-cost checking, as well as high-yielding saving and investment products, according to Marketing Director Robyn Middleton. “We feel that we stand apart from other local ﬁnancial institutions because we’re large enough to offer a full range of competitively-priced services but have held strong to our commitment to maintain a ‘family spirit’ in conducting business,” Middleton says. Tongass Federal Credit Union Founded in 1963 by teachers and public employees, Tongass Federal Credit Union is among the state’s smallest credit unions. However, the Ketchikan-based institution fulﬁlls a vital role in the low-income area that it serves, according to CEO and President Susan Fisher.

With forty-two employees and $67 million in assets, TFCU offers small business and mortgage/real estate loans, as well as credit and debit cards and Internet and mobile banking. It operates four branches in Ketchikan, Metlakatla, Klawock, and Thorne Bay. As a Community Development Financial Institution, TFCU uses creative ways to invest in the local area. A prime example is the School Savings Program that it runs with seven hundred students spread across fourteen schools on three islands. “In 2013, they saved more than $63,000, earning 5 percent interest in their accounts,” she says. TFCU also offers a Credit Builder Loan, a Savings Builder Certiﬁcate, and a Volunteer Income Tax Assistance program that prepared 151 income tax returns last spring. Other federal credit unions operating in Alaska include Spirit of Alaska Federal Credit Union of Fairbanks, True North Federal Credit Union of Juneau, City of Fairbanks Federal Credit Union, and Alps Federal Credit Union of Sitka.

Alternative Funding Sources Aside from traditional financial services providers, Alaska has a number of other entities that partner with financial institutions to help businesses meet their financial needs. Alaska Growth Capital provides professional and financial support to small

Alaska Business Monthly | January 2014

business owners and entrepreneurs. Alaska Housing Finance Corporation has products and services that can benefit specific business groups such as house developers and landlords. Alaska Industrial Development and Export Authority oﬀers a number of programs that gives businesses access to long-term financing, including the Loan Participation, Conduit Revenue Bonds, and Project and Infrastructure Development programs. Evergreen Business Capital partners with lenders in Alaska, Washington, Oregon, and northern Idaho to provide SBA 504 loans that businesses can use to purchase, construct, or remodel commercial real estate and equipment at a lower interest rate and with less money down. Throughout the state, Alaskans are served with their banking needs by a variety of financial institutions in an increasingly technologically enhanced manner. While still oﬀering brick and mortar locations, many financial services are safely available online through desktop, laptop, tablet, and mobile applications. 

Former Alaskan Tracy Barbour writes from Tennessee.

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special section

Financial Services

Loomis Alaskan Heritage Dates Back to 1897 Partnering with business and industry

Photos © Loomis

By Tom Merrill and Kent Smith

oomis has more than a century’s worth of Alaskan history and connections to the financial services industry in the state. In 1897, Lee Loomis set out for the Alaska Gold Rush; in 1905, he formed the Cleary Creek Commercial Company, delivering supplies to Alaskan miners and returning with gold via dogsled. Those were the days when armed mushers endured danger and hardship to provide safe transport into and out of the mines. Twenty years later in 1925, Loomis introduced the first armored car west of the Mississippi, known as “Old Number One.” While Loomis’s vehicles no longer resemble “Old Number One,” and the ﬂeet now numbers 3,000, the company’s commitment to safe transport has not changed 58

since those early days, nor has its commitment to the 49th State. Loomis continues to provide service throughout Alaska from two vaulted facilities located in Fairbanks and Anchorage. In addition, like many of the Alaska companies it serves, Loomis operates across the United States and around the world. Loomis, with its veritable Cash Management Services, is the business partner using a service network that aligns with the cash management needs of its retail and commercial clients. The company’s endto-end solution includes comprehensive cash, coin, and check processing services with remote deposit capture and remote cash capture, and virtual and outsourced vault services, along with the company’s

Alaska Business Monthly | January 2014

newest cash management solution called “SafePoint.” SafePoint is in simplest terms “Bringing the Bank to You.” It is a combination of smart safe, armored transportation, cash management, and same day banking by depositing monies into the safe. Loomis is proud of its Alaskan heritage and, since 1897, continues to partner with and enhance the business community and financial services industry in Alaska.  Tom Merrill is a Loomis Cash Management Consultant, contact him at tom.merrill@us.loomis.com. Kent Smith is the Loomis Anchorage Branch Manager, contact him at kent.smith@us.loomis.com, or call 907-433-1801. For those outside of Anchorage, the authors can be contacted toll free at 877-232-2825. www.akbizmag.com

INSIDE ALASKA BUSINESS

Pioneer Natural Resources Company

ioneer Natural Resources Company announced in November that the company entered into a purchase and sale agreement with Caelus Energy Alaska, LLC to sell 100 percent of the equity in Pioneer’s subsidiary, Pioneer Natural Resources Alaska, Inc., for cash proceeds of $550 million, subject to normal closing adjustments. The sale of Pioneer’s Alaska subsidiary is expected to result in a noncash loss of approximately $350 million. The financial and operating results related to Pioneer’s Alaska activities were reﬂected as discontinued operations for the quarter ending December 31, 2013. Net production from the Alaska subsidiary averaged approximately four thousand barrels oil equivalent per day over the first nine months of 2013. Pioneer Natural Resources Company is a large independent oil and gas exploration and production company headquartered in Dallas, Texas, with operations in the United States. Caelus Energy LLC is a privately held diversified international energy group focused on the identification, pursuit, and development of unique opportunities across the energy sector. The company is involved in a wide range of energy projects including conventional and unconventional exploration and production projects and is headquartered in Dallas, Texas.

ASRC Federal Analytical Services, Inc.

he Missile Defense Agency (MDA) recently awarded ASRC Federal Analytical Services, Inc. the Missile Defense Data Center contract to provide comprehensive test product data management services

Compiled by Mari Gallion

across MDA in support of the Ballistic Missile Defense System. The contract has a maximum value of approximately $450 million with a five-year base plus five oneyear options. The ASRC Federal Analytical Services, Inc. team will provide a wide range of data management services to MDA, including data center operations; support of test design, planning, and products; and analysis infrastructure operations for the Ballistic Missile Defense System. Under the Missile Defense Data Center contract, ASRC Federal ASI will support development, sustainment and modernization operations of Ballistic Missile Defense System dedicated test data management and data analysis lab infrastructure; test data transfer network connections; and distributed operations systems and servers. Contract performance is scheduled to begin this month.

University System of Alaska

o grasp the financial health of a great public university, look no further than the 2013 Annual Financial Report of the University System of Alaska. Due to good and smart fiscal management, the total operating expenses of the University increased marginally from the previous fiscal year despite rising fi xed costs and an ambitious agenda. Further, the University’s annual debt service is modest at 2.9% of unrestricted revenues, and its net position grew by 16.6%. Finally, it had clean audits from its independent auditors and also the Oﬃce of Naval Research. The 2013 Annual Financial Report was presented by Vice President for Finance & Administration/ CFO, Dr. Ashok K. Roy, to and was adopted by the Board of Regents on December 13, 2013. The 2013 Annual Financial Report contains lots of useful information, pictures

of students and campuses, some accomplishments, and the financial statements of the University, the UA Foundation, and the Education Trust of Alaska. For those who wish to review the 2013 Annual Financial Report of the University System of Alaska, the link is: http://www. alaska.edu/financial-statements/ (Annual Financial Report - Fiscal Year 2013).

North to Alaska, LLC

rispy Kreme, a global retailer of premium-quality sweet treats, announced that it has signed an agreement with North to Alaska, LLC for the development of four Krispy Kreme shops in Anchorage and the Matanuska Valley over the next three years. Krispy Kreme currently has more than 240 shops in the United States, of which approximately 150 are franchised. Additionally, the Company has over 540 locations in twenty-two countries outside the United States, all of which are franchised. North to Alaska, LLC, based in Anchorage, was founded by operating principal Jack Lewis, who also currently operates Sourdough Mining Company Restaurant, Peanut Farm Sports Grill, McGinley’s Irish Pub, and two Firetap Alehouse locations in Alaska.

United States Department of Agriculture

ederal Department of Agriculture Secretary Tom Vilsack announced the award of eleven grants to help rural Alaska villages finance water system upgrades and improve the quality of life for residents. USDA is providing $27.7 million through the Rural Alaska Village grant program. Awardees and the villages se-

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From critical lifts to platform support, PPM is sufficiently resourced to deliver a wide range of construction services. 620B East Whitney Road I Anchorage, AK 99501 January 2014 | Alaska Business Monthly

INSIDE ALASKA BUSINESS lected for funding, which is contingent upon the recipient meeting the terms of the grant agreement. Alaska Native Tribal Health Consortium received $4,627,920 to improve water and wastewater systems in Kwethluk, $5,338,236 to build a water treatment plant and water storage tank in Lower Kalskag, $1,950,000 to construct a sewage lagoon in Eek, received $790,875 to build a water storage tank in Golovin, $150,000 for project design and to conduct an environmental assessment in Akiachak, and $455,305 to provide technical assistance and training to help up to 20 rural Alaskan communities; Alaska Department of Environmental Conservation received $4,179,525 to construct a water storage tank and water treatment plant in Seldovia, $5,760,000 to build a water and sewer system in Hooper Bay, $3,061,987 to build a water and sewer system in Quinhagak, $1,004,250 to improve water systems in Adak, and $425,000 to provide technical assistance and training through the Remote Maintenance Worker program.

Katmai National Park

atmai National Park’s new film “The Ends of the Earth” has won a Special Jury Award at the Sondrio Festival in Lombardy, Italy. “The Ends of the Earth” premiered in May 2013 at the Bear Tooth Theatre in Anchorage with two sold out screenings, and a version was broadcast in July 2013 on PBS as a national prime time special. The film was also a finalist at the prestigious Jackson Hole Wildlife Film Festival before winning the Special Jury Award at Sondrio. Sondrio is a unique international film festival featuring blue chip natural history films on parks and protected areas worldwide. The Ends of the Earth was written, produced, and directed by John Grabowska of the National Park Service and co-pro-

Compiled by Mari Gallion

duced by Roy Wood, chief of interpretation for Katmai and Aniakchak national parks. Alaska Geographic, a nonprofit partner of the National Parks in Alaska, hosted the premiere of the film in Alaska and a September broadcast of the film on Alaska Public Media. Alaska Geographic is also making the film available through its bookstores. Wood was in Sondrio to present the film and accept the award, having taken time oﬀ and traveled to Italy at his own expense.

Division of Geological & Geophysical Surveys

he state Division of Geological & Geophysical Surveys (DGGS) released airborne geophysical survey data and maps for two subsets of its almost 1,300-square mile Farewell survey, centered approximately 160 miles north–northwest of Anchorage. DGGS completed the data acquisition for these subsets in 2012 and collected additional data for the remaining part of the Farewell survey in summer 2013; these remaining data will be released in 2014. The Farewell survey and its subsets, the 138-square mile Middle Styx, and the 100-square mile Dalzell Creek areas are located in the McGrath mining district. The Farewell survey data is expected to be useful for resource exploration, planning, and public land-use management. Airborne geophysics helps to characterize bedrock types, project geology between sparse outcrops, and identify vegetation-covered, anomalous geophysical signatures that might be associated with lode mineralization. The aeromagnetic, electromagnetic, and radiometric geophysical survey data is available through the DGGS oﬃce, located at 3354 College Road in Fairbanks. Digital files of the data and maps will be available at no cost on the division’s web-

site at dggs.alaska.gov. The data and maps can be found through links provided on the order forms on the website.

Create Alaska

reate Alaska is a new website for Alaskan artists, crafters, vendors, and those that create Alaskan goods to sell their work and for shoppers interested in unique Alaskan goods to discover the rich cultural heritage and pioneering spirit that makes Alaska so extraordinary. Create Alaska oﬀers site visitors from all over the world at all times of day a place to purchase unique Alaskan products while browsing multiple vendors in the convenience of their own homes. Shoppers and vendors can find and sell items such as mukluks, ulus, jewelry, paintings, collectibles, clothing, accessories, wildcrafted skin products, and edible items, all Alaska-made. Those who browse the site-shop.createalaska.com—will also find used rope from Bering Sea vessels now recycled to make door mats and bowls.

General Communication, Inc.

ntelsat SA, the world’s leading provider of satellite services, announced that General Communication, Inc. (GCI) has signed a long term agreement for extended C- and Ku-band capacity on Intelsat’s Horizons 1 and Galaxy 18 satellites. GCI uses Intelsat’s capacity for infrastructure to provide telephone, high speed Internet, and video services to customers across Alaska. In particular, the agreement enables GCI to support broadband services to schools and medical clinics, as well as telemedicine applications for hospitals that are located in underserved areas of Alaska. “We continue to rely on Intelsat for seamless, reliable, and robust coverage

Your Project, Our Responsibility. 24/7 Service

Pacific Pile & Marine has a robust fleet of marine equipment including our recent addition of a 600-Ton 4600 Ringer.

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Alaska Business Monthly | January 2014

From critical lifts to platform support, PPM is sufficiently resourced to deliver a wide range of construction services. 620B East Whitney Road I Anchorage, AK 99501 www.akbizmag.com

INSIDE ALASKA BUSINESS across Alaska, a region that presents very complicated topographic and climatic challenges,” says Jimmy Sipes, GCI VP of Network Services and chief engineer. “Intelsat enables GCI to help close the digital divide in Alaska, bringing much-needed connectivity that supports mission-critical applications in remote communities.”

Era Alaska

he Point Thomson airport is open and ready for business, thanks in part to Era Alaska. Passenger service for Point Thomson personnel began October 1, 2013, and is making transportation much less of a challenge for ExxonMobil and its contractors. The Point Thomson airstrip, operated by ExxonMobil, met Federal Aviation Administration regulations in late September. Currently, ﬂight operations for both fi xed wing aircraft and helicopters have been fully transitioned to the airstrip. ExxonMobil recently recognized engineering, construction, and ﬂight operators, including Era Alaska, for their help in ensuring the airstrip is safe for all aircraft. Teamwork and a commitment to safety has resulted in increased availability for passenger and freight travel directly to the arctic site, positively impacting the work necessary to assist in securing a solid foundation for Point Thomson’s future. The airstrip is part of the Point Thomson Unit, a natural gas field operated by ExxonMobil on behalf of itself, BP, ConocoPhillips, and other minor owners. Completion of the condensate export pipeline connecting Point Thomson to the TransAlaska pipeline is expected this winter.

Tschudi Shipping

schudi Shipping Co., one of Norway’s oldest shipping firms, is exploring the possibility of establishing a transshipment port in Western Alaska.

Compiled by Mari Gallion

Tschudi Shipping Co. is owned and operated by the fourth generation of the Tschudi family and operates shipping, offshore and logistics worldwide with particular focus on east-west cargo ﬂows between Northwest Europe, Central Asia and Russia including logistics in the Norwegian and Russian Arctic. Tschudi wants to establish a location to serve as an intermediate or transshipment site for goods and commodities shipped to and from Scandinavia and Europe via its port facilities in Kirkenes, Norway along Russia’s Northern Sea Route and through the Bering Strait bound for Pacific U.S., Alaska or Far East ports. Felix Tschudi, the CEO of Tschudi Shipping Co. and co-founder of the Centre for High North Logistics, a non-profit research foundation focusing on transportation solutions in the Arctic said in November, “We are pleased that Alaska sees the economic value of this kind of collaboration, and we will be working to study all possibilities and options in the coming months.”

Port Chilkoot Distillery

he first bottles of Southeast Alaskamade spirits have hit store shelves and drinking establishments now that production at the Port Chilkoot Distillery in Haines has begun. Port Chilkoot Distillery recently started production with small batches of bourbon whiskey made from a fermented mash of Washington-grown corn, wheat, and malted barley. The whiskey will stay onsite for maturation in charred oak barrels. “Icy Strait Vodka,” also made from grain, will be the first product to be released. Owners Heather Shade and Sean Copeland built the distillery in one of the original buildings of the historic Fort Seward in Haines. Built in 1904, the building that once housed the Army Fort bakery is now filled with a Kentucky-made, 125-gallon copper pot still and the smells of ferment-

ing whiskey mash and oak barrels. After twelve months of renovations, Shade and Copeland have transformed the building to its original character with plans to add a tasting room and sales area in the future. Because of current Alaska law, Port Chilkoot Distillery spirits can only be sold through liquor licensed establishments and stores. But Shade and Copeland welcome visitors to the distillery to see the historic building and learn about the distillation process

Stan Johnson Company

tan Johnson Company, one of the nation’s premier net lease brokerage firms, has completed the $104 million sale of a four-building, 677,778 square foot office complex in the heart of Anchorage, Alaska to a partnership comprised of institutional investors. The complex is 100 percent leased to ConocoPhillips, who will continue to occupy the complex. David Clary and Daniel Herrold of Stan Johnson Company represented the owner, a privately-held investment and management company. “Anchorage’s office market is tight and the sale of this complex provides the new owners with a sound, long-term investment,” said David Clary, Senior Director, Stan Johnson Company. “The property, known as The ConocoPhillips Complex is a landmark on the Anchorage skyline. It has a long-term lease in place with ConocoPhillips, which is a solid investment grade rated company.” The ConocoPhillips Building was built in 1983 at 700 G Street in downtown Anchorage, Alaska. It is the tallest building in state and sits in the center of the Anchorage skyline. The building is part of a complex, composed of an atrium, connecting with a smaller office towers. The sky-lit atrium is open to the public, and has a small food court, as well as a water fountain. The annual summer Wild Salmon on Parade local art auction is usually held in the atrium. 

• General Contracting • Marine Infrastructure • Design Build

Dutch Harbor - Unalaska, Alaska

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620B East Whitney Road I Anchorage, AK 99501 January 2014 | Alaska Business Monthly

RIGHT MOVES WHPacific, Inc.

Compiled by Mari Gallion Alaska Congressman Don Young

Alaska Congressman Don Young has announced the addition of Matthew Shuckerow to his Washington, D.C. office, who will be responsible for internal and external communications and media relations in his capacity as Press Secretary. Shuckerow is a graduate of A.J. Dimond High School and a 2010 graduate of the University of Nevada, Reno where he studied Journalism.

Northrim Bank Jones

Kramm

Gray Burns

Kack

WHPacific, Inc. announces the following additions and promotions to its corporate management team: Tom Jones, RLA, ASLA, has been appointed Vice President of Development and Facilities. Jones has more than thirty years of industry experience, including all aspects of development projects. Morgan Kramm II, PE, RA, PMP, has been appointed Vice President of Construction/Project Management. Kramm has more than thirty-two years of experience as principal-in-charge and project manager for suppliers and owners. Jason Kack, PLS, has been appointed Vice President of Survey and will lead surveying and scanning services for WHPacific. Kack brings more than thirty-one years of experience in all aspects of surveying operations, safety, technology, leadership and client relationship development. L. Michael Burns, PE, has been appointed Vice President of Energy and will focus on WHPacific’s newly expanding energy services including oil and gas, mining, power/transmission and distribution, pipeline, and renewable. Burns has more than forty years of experience in energy engineering and consulting covering compressor stations, processing plants, and pipeline facilities.

Kiefer

Tammy Gray has been hired as Assistant Vice President, Branch Manager at Northrim Bank’s West Anchorage Branch. Her career in banking has spanned twenty-five years and specialized in business and real estate lending. Brad Kiefer has been Lutan hired as a Vice President, Commercial Lender. Kiefer has an associate degree in Insurance Service and Commercial Lending Diploma from the American Bankers Association. Ligia Lutan has been promoted to Assistant Vice President, Construction Loan Administrative Officer. Lutan holds a Bachelor of Laws from the University of Bucharest.

SEARHC

The SouthEast Alaska Regional Health Consortium (SEARHC) is pleased to welcome Dr. Elliot Bruhl as the new Medical Director at SEARHC Mt. Edgecumbe Hospital in Sitka. Bruhl earned his medical degree from the University of Colorado School of Medicine in Denver and completed his residency at St. Joseph Hospital in Denver.

SEARHC also announces adding three providers to the Ethel Lund Medical Center in Juneau. Dr. Matt Taintor, MD, has made the move from the SEARHC S’áxt’ Hít Mt. Edgecumbe Hospital in Sitka to Ethel Lund Medical center in Juneau. Taintor’s specialties are Pediatrics and Internal Medicine, and he will be filling a six-month vacancy as the clinic’s new Pediatrician. Taintor earned his medical degree from the University of Minnesota where he was inducted into the Alpha Omega Alpha Honor Medical Society, and he completed a combined internal medicine/pediatrics residency at the University of Utah. He also holds undergraduate degrees in psychology and biology from Bethel University in St. Paul, Minnesota. Also hired was Dr. Jessica Porter, whose specialty is Family Medicine. She earned her medical degree from the University of California Davis, where she also did her Family Medicine and Obstetrics residencies. Porter also holds a Bachelor of Science, which she earned at California State, Chico. Dr. Keegan Jackson’s specialty is also Family Medicine and she earned her medical degree from Michigan State University College of Human Medicine in East Lansing, Michigan.

Credit Union 1

Bennett

Bell

Credit Union 1 announces the promotion of Vice President of Branch Operations, Lorraine Bennett, to Senior Vice President of Branch Operations. A thirtyyear industry expert, Bennett has veteran experience with Branch Operations at Credit Union 1. Credit Union 1 also announces the promotion of Community Engagement and Education Manager, Chrissy Bell, to Senior Communications Manager. Bell is a graduate of UAA with a degree in English and holds a Certified Fund Raising Executive designation.

SLED DOGS & SOFAS & MILK

OH MY!

WE’RE OFF TO RURAL ALASKA

Alaska Business Monthly | January 2014

www.akbizmag.com

RIGHT MOVES The Nature Conservancy

Compiled by Mari Gallion serve as President of the National Association of State Foresters (NASF). Maisch has served on the NASF board of directors since 2010 and was most recently the organization’s Vice President. He was elected to his new post, which has a one-year term, at the NASF annual meeting held the last week of September in Virginia.

Bezek Durst Seiser

Davey

James

The Board of Trustees of the Nature Conservancy in Alaska announces the election of three new trustees: Lori Davey, Phil James, and Karen King. Lori Davey is a life-long Alaskan who is originally from Tok. She is Director of Business Development for King Fairweather, LLC. Davey graduated from the University of Alaska Anchorage in 1992 and earned an MBA in 1998. Philip James began volunteering for the Conservancy thirty years ago. James is a former executive with ConAgra, Inc., served as Colorado wildlife commissioner, and is the recipient of the Conservancy’s Lifetime Achievement Volunteer Award. Karen King is President and CEO of Spawn Ideas, Inc. in Anchorage. King serves on the board of advisors for University of Alaska Anchorage’s College of Arts & Sciences and is a former long-time board member of United Way of Anchorage.

Bezek Durst Seiser announces the hire of Caroline Storm to the firms’ team of architects, designers, and planners. Storm received a Bachelor of Architecture in 1998 and a Bachelor of Environmental Studies in 1992 from the University of Waterloo. Additionally, Storm she holds credentials as a LEED AP BD & C green building design professional.

NANA Australia Pty Ltd

The Board of Directors of NANA Australia Pty Ltd is pleased to announce the appointment of Rod Gonzales as CEO of the company. Gonzales holds a BSc in Chemical Engineering and an MSc in Genetics from the University of Alberta. Gonzales

Willersdorf

Bartels

The American Heart Association and its division, the American Stroke Association, announce Kristin Willersdorf as Regional Director for the organization’s Anchorage Division. In addition, Janet Bartels has been promoted to Executive Director for Alaska. Bailey In Fairbanks, Meadow Bailey, APR is the new Development Director.

Alaska Chamber

Alaska Railroad Corporation

The Aleut Corporation

Alaska State Forester and Director of the Division of Forestry Chris Maisch has been appointed to

The American Heart Association

The Alaska Chamber has named Nicole Schuh as Alaska Business Week Program Director. Schuh holds a Bachelor of Science in Advertising and a Master of Science in Recreation from the University of Idaho.

Katherine Gordinier has joined the Aleut Corporation as an Accountant. She’s currently in her last class before she graduates with her MBA. With ten years of experience in accounting, Margaret Sealock has joined the Aleut Corporation as its Senior Accountant. She graduated from the University of Alaska Fairbanks in 2009.

State of Alaska

ident and CEO of the Alaska Railroad. O’Leary earned a bachelor’s degree in accounting from the University of Alaska Fairbanks. Fomer Chief Mechanical Officer Doug Engebretson is now Chief Operating Officer. Engebretson has extensive expertise with the mechanical aspect of train operations.

Sustainable Design Group, LLC

O’Leary

Engebretson

The Alaska Railroad Board of Directors has announced that Bill O’Leary has been named as Pres-

Sustainable Design Group, LLC has hired Ryan King, a recent graduate from Ball State University with a Bachelors of Landscape Architecture and Minors in Sustainability and Classical Cultures.  King

W W W. N AC . A E R O • ( 8 0 0 ) 7 27 - 214 1 • www.akbizmag.com

January 2014 | Alaska Business Monthly

ALASKA THIS MONTH By Tasha Anderson

dining

Kincaid Grill Kincaid Grill Chef Drew Johnson with a Copper River king salmon. Photo courtesy of the Kincaid Grill

or a special dining experience, visit Kincaid Grill, newly renovated inside and out and one of the most highly rated restaurants in Anchorage on TripAdvisor.com and OpenTable.com, says owner Chef Al Levinsohn. “This is something we pay close attention to as our feedback from our guests is what makes us successful,” Levinsohn says. Kincaid Grill is a treat for those both in town and those passing through—since the restaurant’s inception in 2003, it has provided catering services to corporate jets landing at the “crossroads of the world,” as Levinsohn puts it. “We have catered for numerous celebrities… and often cater for the President of Mexico on his travels to and from Asia,” he says. Located at 6700 Jewel Lake Road, the restaurant isn’t just for travelers, although being five minutes from the airport does it make it a convenient stop during a layover in Anchorage or traveling to or from the airport. Whether an in- or out-of-town-guest, a visit is worth any amount of travel: “We often do wine maker’s dinners and are known mostly for our weekly prix fi xe dinners with wine pairings,” Levinsohn says. “September through April Chef Drew [Johnson] creates a unique five course tasting menu weekly, with which we offer a selection of paired wines to accompany each course. This has been very popular for those looking for something exciting over the fall and winter.” In August 2013 Levinsohn announced that Johnson is now his partner. “[Johnson’s] hard work, passion for his craft, and outstanding relations with our guests made my decision to bring him on,” Levinsohn says. Meaning that Johnson will continue serving up Kincaid Grill’s signature dishes for the foreseeable future, including a Copper River king salmon with tomato marmalade, herb crusted halibut, and smoked duck with cherry chipotle mole, along with a stunning desert menu and a wide selection of wines. kincaidgrill.com  64

Alaska Business Monthly | January 2014

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ALASKA THIS MONTH By Mari Gallion

trAVel

EarthSong Lodge

Dog Sledding in Denali National Park with guides from EarthSong Lodge.

ost Alaskans are aware that Denali Village, commonly known as “Glitter Gulch,” is boarded up for the winter season. However, those seeking a truly unique Denali experience can find it year-round at EarthSong Lodge in Healy, which focuses on Denali National Park dog sledding tours in the wintertime. Prior to opening EarthSong Lodge in 1997, owner Jon Nierenberg worked as a park ranger in Denali from 1982 to 1995. “We do everything from day trips to multi-day trips,” day trips that go from 1 to 4 hours, and multi-day trips and expeditions that go up to ten days. And we have the exclusive permit to do dogsled guiding in the park. We’ve been doing that since 1985.” EarthSong Lodge caters to the independent traveler who wishes to more fully experience the nature and traditional activities of Denali. “People like to stay with us because they get a lot more personal attention,” Nierenberg says, adding that they can customize their tours to match their guests’ skills, preparedness, and experience levels.” One of the tours offered highlights a trip along the Stampede Trail to the bus that was written about in John Krakauer’s “Into the Wild.” Traveling by dog sled in winter, according to Nierenberg, offers easier access to the bus than hiking in the summer, when travelers need to mitigate mosquitoes and watch for bears, and are at the mercy of the surrounding water level. Dogsledding to the bus takes only four hours (as opposed to a potential twoday hike in summer), and most every overnight trip includes a stop at the bus. Those who would like to experience dogsledding but are afraid of getting too cold or overspending on gear they will never use again can rest easy: EarthSong Lodge provides the specialized cold weather outer layer of clothing, including cold weather pac boots rated to -80F, cold weather dog mushing oversuit, and overmitts. Expedition guests stay in Arctic Oven tents or cabins along the route. earthsonglodge.com  www.akbizmag.com

Join Alaskan Industry Professionals for the 33rd Annual Alaska Governor’s Safety & Health Conference (GSHC)

“Choosing to Make a Difference” March 4 - 6, 2014 Dena’ina Center Downtown Anchorage

The GSHC is Alaska’s only statewide Safety and Health Conference focused on meeting the frontline safety and health needs of the industries in Alaska. Come network with your peers, see the latest innovations in products and services in an expanded exhibit hall; attend any one of 5 concurrent sessions running; and an amazing lineup scheduled for our 3 General Sessions! We applaud our Alaskan industry leaders and frontline workers choosing to make a difference every day.

For more information visit www.2014gshc.com January 2014 | Alaska Business Monthly

ALASKA THIS MONTH By Mari Gallion

entertAinMent

Date for Diabetes

Date with Diabetes always features some of Alaska’s most eligible and interesting bachelors.

hether your midwinter wish is to “Funds raised in Alaska find and date an interesting and eligible bach- stay in Alaska and allow elor, support a good cause, or the ADA and volunteers simply have a night of light- to provide programs.” hearted fun with friends, —Cyrese Gorrin Date for Diabetes, an annual Manager of fundraising and fundraising event that has special events,American been held in Anchorage for Diabetes Association, Alaska twenty-seven years, is sure to amuse most everybody. “Other ADA markets had a similar event, and we took this auction and gave it an Alaska ﬂair,” says Cyrese Gorrin, manager of fundraising and special events for the American Diabetes Association in Alaska, where all the funds raised will go. “Funds raised in Alaska stay in Alaska and allow the ADA and volunteers to provide programs,” Gorrin says. As a result of this event, “Sixty children with diabetes attend summer camp each summer—ability to pay is not an issue.” The bachelor auction will be held at the Dena’ina Civic and Convention Center in Anchorage on January 24. This ladies only event features some of Alaska’s most interesting and eligible men, each with a date package valued from $500 to $5,000. Also on the auction block are several dateless packages, including items like a fur coat, airline miles, a destination adventure like New Orleans, or a Sonoma Wine Tour. The evening starts at 6:30 p.m. to meet the bachelors and the auction begins at 7:30 p.m. Heavy hors d’oeuvres will be served, there will be a no host bar. “We are at a new location this year so we can now seat four hundred, which is fift y more than in the past,” Gorrin says. “We’re excited to see this event grow.” Guests must be 21 or older to attend. To purchase a ticket ($40) or a table for ten ($400), contact Cyrese Gorrin at cgorrin@diabetes.org, or call 907-272-1424, extension 7140. 

Alaska Business Monthly | January 2014

www.akbizmag.com

EVENTS CALENDAR

Compiled by Tasha Anderson

AnchorAge 1/9-2/2

ketchikAn The Syringa Tree

1/30-2/1

Wearable Art Show

To honor the 20th anniversary of the first free election in South Africa, Cyrano’s Theatre Company starts of its 21st season with the Syringa Tree, a drama in which one actress plays twenty-four different roles, weaving together a story of two families’ destinies spanning four generations. Cyrano’s Theatre, Thursday through Saturday 7 p.m., Sunday 3 p.m. cyranos.org

Artists in the Ketchikan community create wearable art out of duct tape, foam, sequins, wood, milk jugs, etc. The artwork is modeled on the runway to music. This year’s show is titled “Luminescence.” Ted Ferry Civic Center, evening shows at 8 p.m., matinee at 2 p.m. on Saturday. ketchikanarts.org

Black and White Ball

This evening that celebrates Downton Abbey features an Edwardian-themed dinner, wine, live music, and dancing. Attendees wear black, white, or dress up in Downton Abbey costumes. The Bridge, 6 p.m. alaskapublic.org

Silent Film: Modern Times

The Anchorage Symphony celebrates the 100th anniversary of Charlie Chaplin’s classic film Modern Times, in which his iconic character struggles to survive in the industrialized world. Alaska Center for the Performing Arts, 8 p.m. anchoragesymphony.org

14-24

West Side Story

This revival, based on Tony Award-winning librettist Arthur Laurents’ Broadway direction, remains as powerful, poignant and timely as ever. The Bernstein and Sondheim score is considered to be one of Broadway’s finest and features such classics of the American musical theatre as “Something’s Coming,” “Tonight,” “America,” “I Feel Pretty,” and “Somewhere.” Alaska Center for the Performing Arts, various times. anchorageconcerts.org

17-18 Great Alaska Beer & Barley Wine Festival Sample more than four hundred of the finest pale ales, stouts, pilsners, porters, specialty brews, barley wines, Belgian ales, and more from seventy-five of the region’s breweries. The festival also has live music. William A. Egan Civic & Convention Center, 6 p.m. to 10 p.m. auroraproductions.net

17-18

Indigenous World Film Festival

This free festival presents films from around from around the world, including Alaska, Canada, Russia, Nepal, New Zealand, and Taiwan. Alaska Native Heritage Center, various times. alaskanative.net

Wedding Fair

This annual event brings all things wedding to one spot, including the latest gown collections, cake and catering samples, venue information, flower arrangements, cosmetics, and music options. Dena’ina Civic and Convention Center, Noon to 5 p.m. alaskabride.com

FAirbAnks 4-5

Simplistic Elegances Hair & Fashion Extravaganza

This stylish event includes a day of styling and technique from master stylists; a makeup battle; barber competition; a grab bag competition; hair and makeup workshops; and the main event, “Simplistic Elegances,” an extravagant hair fashion show. Westmark Hotel and Conference Center, various times. eventbrite.com/event/9103347357

kodiAk Alpin Hong

Described as “classical piano for the iPod generation,” this talented concert pianist entertains crowds through stunning technique, emotional range, and humor. Gerald C. Wilson Auditorium, 7 p.m. kodiakartscouncil.org

sewArd 18

Polar Bear Jumpoff

Participants dress up in costumes and wacky outfits and then plunge into the near-freezing waters of Resurrection Bay. This event is part of a weekend long festival that includes silent auctions, turkey bowling, a carnival, a seafood buffet, and a parade. Funds raised benefit the American Cancer Society. Seward Small Boat Harbor, various times. sewardchamber.org

sitkA 7

Russian Christmas & Starring

Russian Christmas is celebrated by the old Julian calendar, on January 7, as it is still today in Russia. The week-long Feast of the Nativity celebration features Festal Vigil and Matins, the Divine Liturgy, Great Vespers, A Christmas feast, and nativity “starring,” the Orthodox practice of caroling and sharing the joy of Christmas. St. Michael’s Cathedral, various times. Call 907-747-8120

soldotnA 25-26

Peninsula Winter Games

This family event draws participants from all over the peninsula. Events include a kids carnival, ice bowling, face painting, a scavenger hunt, Native Youth Olympics, and various ice carvings placed around town. Soldotna Sports Center, various times. visitsoldotna.com

tAlkeetnA 25

Backcountry Film Festival

Co-hosted by Hangar Door Cinema and Winter Wildlands Alliance, this film festival celebrates winter non-motorized adventure sports. It will be screened before two outdoor events, Trio Fat Tire Bike Race and the Oosik Classic Ski event. Sheldon Community Arts Hangar, 7 p.m. talkeetnachamber.org

VAldez 18

Melissa Mitchell Band

Inspired by personal experiences and a desire to connect with her audience, Melissa’s music combines powerful lyrics and melodies with a soulful vocal delivery that aims straight for the heart. Valdez Civic Center, 7 p.m. valdezartscouncil.org

JuneAu 1/10-2/2

Rush at Everlasting

This is the world premiere of this play by Alaskan playwright Arlitia Jones. Set in the 1930s, two women make plans to rob a bank—real names and real lives are left behind as each character makes a run at immortality and becoming a legend. Perseverance Theatre in Douglas, 7:30 p.m. perseverancetheatre.org

WorldQuest

WorldQuest is a quiz game play by teams featuring rounds of questions about geography and world affairs. During the game an international buffet is served, and there is a no-host part. There is also a silent auction and a dessert auction; the proceeds from both benefit the Juneau World Affairs Council. Centennial Hall, 6 p.m. jwac.org www.akbizmag.com

January 2014 | Alaska Business Monthly

reAl estAte

Statewide Commercial Leasing Sizing up the urban markets By Laurie Evans-Dinneen

s 2013 faded away like crumpled holiday trimmings and 2014 is the shiny new thing with the lure of promise and resolution, momentum is in the air. The real estate and business experts were polishing reports on trends and patterns for fresh release in January, and business owners and start-ups are making important decisions on expansion or opening, if they will move or close, or remain status quo. Taking stock of commercial leasing inventory across the state at the close of 2013, there is room for growth and change throughout the urban centers. While business may remain ﬂat, there is movement happening, including new construction and retail leasing, and there are exciting new brands coming to Anchorage. To inform the conversation for commercial leasing and to look at availability around the state, there needs to be a mention of Class A, Class B, and Class C space. In brief, Class A buildings represent the highest quality buildings in their market, are well located, have good access, and are professionally managed, thus they attract the highest quality tenants and command the highest rents. Class B buildings are a little older but still maintain quality management and tenants. Class C buildings are older usually more than twenty years old, can include warehouses and older homes, are usually located in less desirable areas, and require extensive renovation. At the start of each year, market researchers and forecasters work to pinpoint their annual advisories and provide a glimpse into the future. Chambers of commerce and the Building Owners and

Photo by Peter Metcalfe

The Sealaska Plaza is currently a “High B” rated space in the center of downtown Juneau.

Managers Association host luncheons with experts at the start of each year. Spotlighting commercial lease markets from Southeast on up through Fairbanks, there are several similarities, but each market is unique. The time-tested adage, “location, location, location” still holds true. Particularly, there are still plenty of tenants who want to be within walking distance of downtown and who want to attract those customers or employees who want to be in thriving city centers. Those who want more parking and amenities look to areas where parking lots exist or can be added. Additionally, most Class A property in Alaska is more Class B+, since there are few true Class A properties outside of Anchorage.

Juneau Juneau is having its share of boom right now, or at least it is not in a bust. Because of its aging and historic downtown, most of its high end leases would be classified as B+. At press time in November, there was approximately 30,000-35,000 square feet of rentable space available in Juneau, says Carlton Smith, broker of Carlton Smith Co. Smith says that patrons determine what they want, and it is most often location driven. Tenants seek the Mendenhall Valley for newer spaces and better parking. It is especially important if the tenants want to be closer to amenities such as shopping on their noon hour. Others might demand

Alaska Business Monthly | January 2014

the downtown because they want to be in the older buildings and a part of the tourism or seasonal market. “Currently, the excitement and buzz on the waterfront is the new development of the Walter Soboleff Center,” Smith says. “There will be three ﬂoors occupied by the Center, and the top ﬂoor of approximately 10,000 square feet will add to the office inventory downtown.” The Center is slated for opening in 2015. John Williams, broker of Juneau Real Estate, says, “I have clients with all classes of office space. In the downtown area, I would say that the low end of the market has sustained the largest vacancy hangover from the 2007-2008 downturn, and hasn’t even yet fully recovered.” Williams went on to say that the upper end of the office market has a somewhat higher than normal vacancy in Juneau. “Usually our space suitable for state or federal leases tends to run under 5 percent vacant, but of late has drifted up to an estimated 7 percent, according to a recent MAI survey I saw,” he says. The popular lease size in Juneau is trending around the 1,000-1,500 square feet. Before 2008, Smith says, the size was closer to 2,000 square feet. “Particularly, the state changed its standard for office space, which is a dramatic recent development,” Smith acknowledges. “The State of Alaska made an adjustment to its office size per state employee, which was reduced by 15 www.akbizmag.com

percent. The state commission reduced the size of workstations to accommodate more common spaces and better lighting.” This could be a big concern for long-standing leaseholders because they will have to work with the state on meeting these standards and renovating office space. Juneau is a bi-modal market—Mendenhall Valley and downtown. Williams states that there is a small amount of space scattered between the two areas which works well for those folks who want to serve both markets from a single location. “If the business/company has ties to state government, the court building, or tourism, downtown is by far the most popular. For businesses more focused on servicing the local population, the Valley offers somewhat less expensive space and much better parking. Leases around the Capitol tend to be the highest in town. Leases in the Valley would top out around $2.50 generally.” Rates at the lower end range from $1.50 to $2. Upper end ranges from $2.20 to roughly $2.65, but there are a few leases for north of $3, Williams notes.

Anchorage Alaska’s biggest city has plenty of new development happening. Most notably, two Class A centers are in the works: JL Properties at International and C Street will

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provide additional retail and office space in 2014, and Cook Inlet Region, Inc.’s (CIRI) Fireweed Business Center will enter the market in 2015. John Opinsky, commercial real estate broker for Frampton and Opinsky, LLC, says that his firm leases primarily Class A and B space. “I would say the Class A vacancy rate is approximately 6 to 7 percent overall; Class B is approximately 8 percent; and frankly, Class C is so broad [as it includes warehouse office space, old houses, and odd retail centers] that I wouldn’t quote it, though it’s probably around 10 to 12 percent.” At this time [November 2013], the Alaska Multiple Listing Service (MLS) lists about forty Class A, thirty-two Cass B, and fourteen Class C properties in Anchorage. For reference, Opinsky says, “Class A is broken down into the newer Class A built in the last five years—think JL Tower, Centerpoint West, [and] 188 West Northern Lights—and existing Class A—think Peterson Tower, Frontier Building, Calais buildings, [and] 420 L Street,where Simon and Seafort’s is located.” Going rates for commercial leasing, Opinsky notes, depends on the rentable square foot (RSF). “[Newer] Class A [is] $3.00 to $3.25 per RSF per month, and it varies depending on the term and tenant improvements provided by the landlord. First generation space that has

never been built out for a tenant will result in the user having to spend additional money above the landlord’s tenant improvement allowance to complete the build out. This can add another 5 to 15 percent to the rental rate when amortized over the lease term.” For existing commercial lease in Anchorage, Opinsky says that Class A is $2.50 to $2.90 per RSF per month —it varies depending on term, tenant improvements, parking, and views. Class B is $1.80 to $2.05 per RSF per month and varies depending on term, tenant improvements, parking, and views. Class C is $0.90 to $1.35 per RSF per month, depending on quality and location. “Landlords typically don’t provide a lot of tenant improvements in this class,” he adds. Plus, tenants want location and parking. “Users with heavier parking requirements that might exceed MOA code (in 2013, three spaces per 1,000 square feet) typically focus on Midtown where parking is more plentiful and usually free. Tenants who want easy walking access to restaurants, shopping, and close proximity to government often prefer the downtown area,” Opinsky adds. Because parking costs in Anchorage rose dramatically after the construction of the new convention center downtown, tenants now incur approximately $0.15 to $0.35 per RSF per month on top of their office space rent. “To counter the effects of the parking

January 2014 | Alaska Business Monthly

increases, many downtown landlords were forced to lower their asking rates so they could remain competitive with Midtown,” Opinsky says.

Palmer-Wasilla Charlene Moss, broker at Charlene Moss Realty, Inc., is a Certified Commercial Investment Member (CCIM). She says they really don’t have any Class A space in the Valley. She leases Class B and Class C space almost equally. The average cost for Class B space is $1.25 per square foot. While lease space is more affordable in the Valley than in Anchorage, locally, tenants are driven more by cost than by location in Wasilla or Palmer. With new life in the Cottonwood Creek Mall, a few new brands, and walk up retail space, the Valley appears to be coming along. “Commercial space is growing in the Palmer Wasilla area,” Moss affirms. Fairbanks In Fairbanks there has been some slight growth, which keeps the commercial lease

market humming along. “Office space has been fairly ﬂat over the past three to five years,” states Chad Roberts, broker of Tom Roberts Reality since 2005, “but two new office buildings, built by lending institutions, have added some Class A space to the private market.” Location is a driving force, too. “We see professional offices in downtown less concerned about price than they are about establishing a professional office presence,” Chad says. As one would expect, some offices want to be near the university or airport because of the business they are in, he says, pointing out that Class A space is driven more by location than price and Class B and Class C space is driven more by price. In their overall assessment of office space, Chad, along with his father, Tom Roberts, who has owned and operated the business since 1986, broke it down by classification. “Most of the Fairbanks Class A downtown office space is fairly full,” Chad says. “Class A being fully served with jani-

torial space, downtown, [and] ADA compliant with parking adjacent or very near the building is renting around $2.10 to $2.50 per square foot.” Handicap access is important to note because it rules out a lot of second story office space. Referring to the Class B office space, Tom says it may not be ADA compliant or the tenant may pay some of the utility costs and parking may be off site and rented from a third party. “There is more of this available on the market,” he says. “Prices can be from $1.35 to $1.75 per square foot.” And, Class C office space is older. “It might be basement space or outlying area stuff,” Tom adds. “Often the tenant pays their own utilities. This type of space can be $0.90 to $1.35.” Both men say that as of November 2013, the majority of the vacant office space in Fairbanks could be considered Class C.  Laurie Evans-Dinneen writes from Anchorage.

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Alaska Business Monthly | January 2014

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ALASKA TRENDS

Gold Production Drops in Alaska and Nationwide

Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development.

Alaska Gold Production 2003-2011 30 25 20

Metric Tons Source:USGS

Alaska

10 5

2011

2010

2009

2008

2007

2006

2005

2004

2003

US Gold Production 2003-2011 300 250 200

Metric Tons Source:USGS 150

100 50

2011

2010

2009

2008

2007

2006

2005

2004

he United States Geological Survey (USGS) reported that gold mining production in the US declined in 2012, and production declined in Alaska in 2011. The USGS operates within the US Department of Interior and is the nation’s largest water, earth, and biological science and civilian mapping agency. The USGS collects, monitors, analyzes, and provides scientific understanding about natural resource conditions, issues, and problems. The diversity of its scientific expertise enables it to carry out large-scale, multi-disciplinary investigations and provide impartial scientific information to resource managers, planners, and other customers. The USGS estimated that the United States was the third largest gold producing country in the world in 2012, trailing only China and Australia. USGS estimates for gold production in 2012 are that the US produced 230 metric tons, China produced 370 metric tons, and Australia produced 250 metric tons. Alaska production estimates for 2012 are not available at this time. The USGS reported that Alaska showed an increase in gold production since 2004, peaking at 28 metric tons in 2010, representing a near doubling of gold production for that period. In 2011, Alaska’s production dropped to 25 metric tons. Nevada was the Nation’s largest gold producing state in 2011, producing 172 metric tons. Alaska’s gold production bested Utah and California, and those states produced the third and fourth highest levels of gold production in the US respectively in 2011. The chart shows the almost doubling of Alaska’s gold production from 2004 to 2010, while gold production fell nationwide from 277 metric tons produced in 2003 to 234 metric tons pro-

2003

By Michael Malone

duced in 2011, signifying a 15.5 percent decline in nationwide gold production for that time period. Rising production costs and falling gold prices may be factors inﬂuencing the recent decline in gold production within Alaska and nationwide. Gold prices have fallen from a high of $1896 per ounce in September 2011 to $1,321 per ounce in September 2013, according to the London Bullion Market Association. 

SOURCE: United States Geological Survey

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ALASKA TRENDS

Indicator

GENERAL Personal Income—Alaska Personal Income—United States Consumer Prices—Anchorage Consumer Prices—United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectorial Distribution—Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Information Telecommunications Financial Activities Professional & Business Svcs Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Svcs & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Unemployment Rate Alaska Anchorage & Mat-Su Fairbanks 72

By Michael Malone

Units

Period

Latest Report Period

Previous Report Period (revised)

US $ US $ 1982-1984 = 100 1982-1984 = 100

2ndQ13 2ndQ13 1st H13 1st H13

36642.31 14006152.358 210.85 232.37

36440.901 13872542.894 206.62 230.34

35976.868 13639238.644 205.22 228.85

0.018 0.027 0.027 0.015

Number Filed Number Filed Number Filed

September September September

41 21 6

47 24 6

58 45 10

-0.293 -0.533 -0.4

Thousands Thousands Thousands Thousands Thousands

September September September September September

331.9 184.4 41.7 40.5 33.5

332.6 184.5 42.1 43.6 36.2

334 183.3 41.6 40.7 33.3

-0.006 0.006 0.002 -0.005 0.006

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September

345.6 51.1 294.5 18.7 18.1 14.8 20.1 12.3 8.2 66.6 6 36.8 6.3 9.9 23.8 6.1 6.1 4 13.6 29.2 47 33.6 36.1 11.9 21.5 11.9 84 15.1 26.7 8.4 42.2 23 3.4

355.7 58.7 297.7 18.9 18.2 14.8 21.6 18.2 14.1 69.2 6.2 37.9 6.4 10.3 25.1 6.5 6.1 4 14.2 29.4 46.7 33.7 40.4 11.6 23 12.2 78.8 15.2 25.5 6.7 38.1 18.7 3.5

349.2 52.2 297 17.8 17.5 14.1 19.1 15.3 11.4 66.8 6.4 36.6 6.3 10.1 23.8 6.2 6.1 4.1 13.4 30.1 46.1 32.8 37.2 10 21.8 11.7 85.6 16.5 27 8.4 42.1 23.5 3.9

-0.010 -0.021 -0.008 0.051 0.034 0.050 0.052 -0.196 -0.281 -0.003 -0.063 0.005 0 -0.020 0 -0.016 0 -0.024 0.015 -0.030 0.020 0.024 -0.030 0.19 -0.014 0.017 -0.019 -0.085 -0.011 0 0.002 -0.021 -0.128

Thousands Thousands Thousands Thousands Thousands

September September September September September

366.05 197.19 46.98 41.28 40.2

364.63 197.19 46.96 43.458 43.275

366.42 195.6 47.48 42.19 40.6

-0.001 0.008 -0.011 -0.022 -0.010

Percent Percent Percent

September September September

6.5 5.1 4.6

6.5 5.3 4.9

7 5.6 5.2

-0.071 -0.089 -0.115

Alaska Business Monthly | January 2014

Year Over Year Change

Year Ago Period

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ALASKA TRENDS

By Michael Malone

Units

Period

Latest Report Period

Previous Report Period (revised)

Percent Percent Percent

September September September

4.7 6 7.3

4.6 5.6 7.2

5.3 6.8 7.8

-0.113 -0.118 -0.064

Millions of Barrels Billions of Cubic Ft. $ per Barrel

September September September

15.33 7.48 110.48

13.27 6.32 110.57

15.062 8.489 111.94

0.018 -0.119 -0.013

Active Rigs Active Rigs $ Per Troy Oz. $ Per Troy Oz. Per Pound

September September September September September

12 1760 1348.8 22.56 0.93

13 1781 1345.05 21.84 0.95

7 1859 1741.93 33.61 0.956

0.714 -0.053 -0.226 -0.329 -0.027

Millions of $ Millions of $ Millions of $

September September September

36.46 15.28 21.18

26.14 15.12 11.02

28.160 19.342 8.819

0.295 -0.210 1.402

Total Deeds Total Deeds

September September

857 247

1063 304

1178* *GeoNorth 452

-0.194 -0.454

VISITOR INDUSTRY Total Air Passenger Traffic—Anchorage Total Air Passenger Traffic—Fairbanks

Thousands Thousands

September September

436.49 89.52

640.65 120.45

409.399 85.342

0.066 0.049

ALASKA PERMANENT FUND Equity Assets Net Income Net Income—Year to Date Marketable Debt Securities Real Estate Investments Preferred and Common Stock

Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

September September September September September September September

47033.7 47906.2 297.9 1411 80.6 29.7 1165.1

45568.7 46222.3 221.9 -513.6 -85.7 -31 -496.6

42272.7 42978 312.9 762 34.5 0.2 585.5

0.113 0.115 -0.048 0.852 1.336 147.5 0.990

BANKING (excludes interstate branches) Total Bank Assets—Alaska Cash & Balances Due Securities Net Loans and Leases Other Real Estate Owned Total Liabilities Total Bank Deposits—Alaska Noninterest-bearing deposits Interest- bearing deposits

Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

2ndQ13 2ndQ13 2ndQ13 2ndQ13 2ndQ13 2ndQ13 2ndQ13 2ndQ13 2ndQ13

2186.18 47.55 133.58 1185.98 6.38 1907.74 1852.29 588.36 1263.92

2163.279 45.147 135.906 1201.038 7.309 1894.698 1837.362 567.538 1269.824

2100.47 55.74 163.91 1153.64 8.21 1832.07 1787.23 527.08 1260.16

0.041 -0.147 -0.185 0.028 -0.223 0.041 0.036 0.116 0.003

FOREIGN TRADE Value of the Dollar In Japanese Yen In Canadian Dollars In British Pounds In European Monetary Unit In Chinese Yuan

Yen Canadian $ Pounds Euro Yuan

September September September September September

99.15 1.04 0.63 0.75 6.16

97.82 1.04 0.65 0.75 6.16

78.202 0.979 0.621 0.778 6.332

0.268 0.062 0.014 -0.036 -0.027

Indicator

Southeast Gulf Coast United States PETROLEUM/MINING Crude Oil Production—Alaska Natural Gas Field Production—Alaska ANS West Cost Average Spot Price Hughes Rig Count Alaska United States Gold Prices Silver Prices Zinc Prices REAL ESTATE Anchorage Building Permit Valuations Total Residential Commercial Deeds of Trust Recorded Anchorage—Recording District Fairbanks—Recording District

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Year Ago Period

Year Over Year Change

January 2014 | Alaska Business Monthly

AdVertisers indeX Alaska Air Transit................................................................64 Alaska Communication Systems (ACS) ....................7 Alaska Executive Search AES .....................................32 Alaska Governor’s Safety & Health Conference 2014 .....................................65 Alaska Tobacco Control Alliance .................................9 Alaska USA Federal Credit Union.............................57 American Marine/PENCO.............................................71 Anchorage Opera ...............................................................66 Arctic Controls ......................................................................51 Arctic Office Products (Machines) .........................69 BDO..............................................................................................15 Beacon OHSS .........................................................................37 BP Exploration (Alaska)...................................................17 Calista Corp. ..........................................................................14 Carlile Transportation Systems.....................................3 Chris Arend Photography ..............................................74 CIRI .............................................................................................. 23 Construction Machinery Industrial LLC.................2 Cruz Construction Inc. .....................................................41

Dino’s Donuts Inc. ..............................................................70 Donlin Gold..............................................................................12 Dowland-Bach Corp. ........................................................ 43 Dynamic Properties - Matt Fink ................................35 Fairweather LLC...................................................................19 First National Bank Alaska .............................................. 5 Fountainhead Hotels.......................................................40 GCI .......................................................................................42, 75 Historic Anchorage Hotel ..............................................65 Hotel Captain Cook ...........................................................27 IMPLUS Footware LLC ................................................... 45 Island Air Express ...............................................................66 Judy Patrick Photography .............................................12 Junior Achievement ..........................................................29 Landye Bennett Blumstein LLP..................................35 Lynden Inc. ..............................................................................53 McKinley Mortgage .......................................................... 56 Medical Park Family Care ............................................. 36 N C Machinery .......................................................................11 NANA Construction LLC............................................... 52

Alaska Business Monthly | January 2014

NCB ............................................................................................. 56 Northern Air Cargo.................................................. 62, 63 Northland Services ...........................................................49 NTCL ..........................................................................................42 Olgoonik Development Corp. .....................................39 Oxford Assaying & Refining Inc. ................................67 Pacific Alaska Freightways ............................................13 Pacific Pile & Marine........................................59, 60, 61 Paramount Supply .............................................................70 Parker, Smith & Feek .........................................................31 Pen Air .......................................................................................48 Personnel Plus ......................................................................64 Pippel Insurance...................................................................33 Stellar Designs Inc..............................................................70 T. Rowe Price ..........................................................................21 Usibelli Coal Mine Inc. ......................................................13 Washington Crane & Hoist .......................................... 25 Watterson Construction ...............................................46 Wells Fargo .............................................................................76

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