July - 2012 - Alaska Business Monthly by Alaska Business

Interior Gold Mines ■ Nonconventional Oil Production ■ G’Day Alaska!

July 2012

sPeciAl sections

Energy & Power Page 30 Mid-Year Economic Outlook Page 92 Telecom & Technology Page 104

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SimplySocial’s Global Launch Founders Valentin Bora, Tyler Arnold and Jeroen Erne harness social media page 112

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There’s plenty to watch in Alaska – America’s Last Frontier. Naturally, we’re proud to be a part of it.

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July 2012 TA BLE OF CONTENTS dePArtments

About the cover

Alaska-based software start-up SimplySocial’s founders, from left, Valentin Bora, Tyler Arnold and Jeroen Erne in Timisoara, Romania. Story begins on page 112. Photo courtesy of SimplySocial

From the Editor. . . . . . . . . . . . . . . . . . . 7 Inside Alaska Business . . . . . . . . . . . 8 Alaska This Month. . . . . . . . . . . . . . 84 Events Calendar . . . . . . . . . . . . . . . . .87 Right Moves . . . . . . . . . . . . . . . . . . . . . 72 Alaska Trends. . . . . . . . . . . . . . . . . . .127 Market Squares. . . . . . . . . . . . . . . . . . 71 Ad Index . . . . . . . . . . . . . . . . . . . . . . . 130

FeAtures

Articles

FINANCIAL SERVICES

OIL & GAS

24 | Six Biggest Lessons Learned by Small Businesses And how to apply them to your business By Bond Stewart

58 | Nonconventional Oil Production The North Slope’s costprohibitive treasure By Mike Bradner

NATIVE BUSINESS

OIL & GAS

Photo by Julie Stricker

Map created by Karl Musser using USGS data.

REGIONAL FOCUS

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VISITOR INDUSTRY

OIL & GAS 74 | G’Day Alaska! International travelers flock to the 49th state By Susan Sommer

LEGAL SPEAK

22 | Hit and Run Supervision Not the best way to reprimand employees By Lynne Curry

68 | Enabling Economic and Environmental Progress The Role of Natural Gas By Rex W. Tillerson

52 | Interior Gold Mines Diverse and prolific economy drivers By Julie Stricker

14 | Kodiak Amazing archipelago By Tracy Barbour

HR MATTERS

64 | Alaska Oil Tax Policy Ships passing in the night? By Bradford G. Keithley

MINING

12 | Karen Rey, Owner Reyven Spirits Inc. By Peg Stomierowski

20 | Business Formation Benefits and Risks LLC most flexible, corporation most protective By Jeff Waller

OIL & GAS

26 | New Alaska Native Corporation Ventures Increasing opportunity by branching out By Paula Cottrell

Photo by Susan Sommer

VIEW FROM THE TOP

VISITOR INDUSTRY

Photo © Judy Patrick

56 | Repsol Rebounds with Confidence Renews drilling commitment despite setback By Vanessa Orr

80 | Meeting in the Last Frontier Conferences have trickle down effect for local economies By K.T. McKee

HEALTH & MEDICINE

88 | Hip/Knee Replacement By K.T. McKee

www.akbizmag.com • Alaska Business Monthly • July 2012

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July 2012 TA BLE OF CONTENTS special section

special section

Energy & Power

2012 Mid-Year Economy

Photo courtesy of STG Inc.

38 | Chikuminuk Dam to Fuel YK Delta Nuvista Light & Electric Cooperative starts long-term project By Dimitra Lavrakas 40 | Initiating Renewables in Rural Alaska Diversifying energy sources to keep the lights on By Rindi White

30 | Clean Energy Business Alaska Invests in renewable power By Zaz Hollander Photo courtesy of Chugach Electric Association

34 | RePower Bainbridge: A Model for Alaska How an island community assures energy independence By Dianne O’Connell and Garon Stephens

46 | Railbelt Utilities Commit $1 Billion Four companies build four new electric plants By Gene Storm

92 | Alaska Economic Outlook Adapting to an evolving economy Compiled by Mari Gallion ■ Architecture & Engineering, By Mikal Hendee ■ Construction: Commercial, By John MacKinnon ■ Construction: Military & Civil Works, By Larry D. McCallister ■ Education, By Carol Comeau ■ Employment, By Dan Robinson ■ Energy, By Meera Kohler ■ Film, By Deborah Schildt ■ Financial Services, By Leslie Ellis ■ Fisheries, By Arni Thomson ■ International Trade, By Greg Wolf ■ Mining, By Curtis J. Freeman ■ Native Corporations, By Jason Metrokin ■ Oil & Gas, By Kara Moriarty ■ Small Business, By Scott Swingle ■ Timber, By Owen Graham ■ Tourism, By Julie Saupe

special section Telecom & Technology 118 | ‘Game On’ Technology Catching up with Last Frontier imaginations By Greg Johnson

Map courtesy of GCI

104 | Industrial IT & Telecommunications Converging fields continue to spark changes By Anne Reed

108 | TERRA Southwest Finding ways to go where no telecom has gone before By Ross Johnston ■ 6

112 | SimplySocial’s Global Launch Entrepreneurs harness social media for business By Mari Gallion 116 | FCC Mandate Concerns Businesses Licensees must narrowband their systems by 2013 or face fines, loss of licenses By Mary Lochner

120 | Why Your Wi-Fi Doesn’t Always Work By Dr. Alex Hills

122 | Alaska Business Monthly’s 2012 Telecom & Technology Directory

www.akbizmag.com • Alaska Business Monthly • July 2012

FROM THE EDITOR Follow us on and

Volume 28, Number 6 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

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

Jim Martin Charles Bell Anne Campbell Bill Morris Tasha Anderson Mary Schreckenghost

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503 (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., PO Box 241288, Anchorage, Alaska 99524; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2012, 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.

Summertime Blues

ho says there’s no cure for the summertime blues? If you’re bored and tired of the gray skies and fickle weather, feast your eyes on this month’s issue of Alaska Business Monthly. There are plenty of stories to keep you reading and informed all month. We’re introducing a new special section this month: Energy & Power. (Begins on page 30.) We’ve included articles on the business of clean energy, a pilot project for efficiency and conservation, an ambitious hydro project in Southwest Alaska, rural energy solutions some communities off the road system are developing, and a look at the four new power plants being built on the Railbelt. Also, back this year is the mid-year economic outlook. Associate Editor Mari Gallion has compiled comments from more than a dozen industry leaders about their most significant focus through the remainder of the year. (See page 92.) To mix things up a bit, we’ve repositioned our Telecom and Technology special section from December to July and brought you half a dozen interesting stories along with a directory of firms engaged in the industry. You’ll find an insightful explanation of industrial IT and telecommunications, an update on TERRA Southwest, an inspiring article about SimplySocial and the multinational entrepreneurs who founded it, the FCC’s narrowbanding mandate, successful emerging high-tech entertainment developers, and a brief on working with Wi-Fi from the Alaskan who built the world’s first Wi-Fi network. The Conventions, Meetings and Corporate Travel special section will appear in December this year, but we’ve included two articles about the visitor industry this month. One is particularly revealing about international travelers (see page 74), the other addresses how local economies benefit from conventions and meetings (see page 80). We’ve also got some nice articles about the oil and gas industry, interior gold mines, banking insights for small businesses, and new ventures for Alaska Native Corporations, along with our regular departments and features. With busy summer schedules and vacation downtime it might take you all month to read everything! If a little reading doesn’t cure your summertime blues, then take a trip. There is the sourdough saying that if you wait for the weather you’ll never do anything in Alaska, so get out and visit all Alaska has to offer. Often, people who don’t live here make it a once in a lifetime trip to come and see the sights. We Alaskans have the opportunity to continuously explore the Great Land. Do it. I know it is almost sacrilege to leave Alaska in the summer, but if you’ve had all the lousy weather you can handle and absolutely must have a hot, sunny break, this might be the year to do it. Book a flight and just go. In a few hours you can be somewhere far away. Alaska Airlines, of course, goes about everywhere you want to be. Then there is Condor if you want to leave the Western hemisphere and be in Germany in less time than you spend at work in a typical day. There is also JetBlue if you want a quick trip to Long Beach in sunny Southern California—five hours in the air, and in less time than it takes to get from one end of Anchorage to the other in the winter or during construction season, you could be checking out the Queen Mary, Catalina Island, the Aquarium of the Pacific, Disneyland or any of the many arts, music and dining experiences nearby. More about JetBlue in an upcoming issue exploring how this seasonal air carrier would like to be here year-round, in the meantime, enjoy July and enjoy another really great issue of Alaska Business Monthly. —Susan Harrington, Managing Editor

www.akbizmag.com • Alaska Business Monthly • July 2012

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INSIDE ALASKA BUSINESS

CRW Engineering Group

he League of American Bicyclists has recognized CRW Engineering Group as a Silver Award Level Bicycle Friendly Business. With the announcement of 67 new BFBs, CRW Engineering Group joins a visionary group of more than 400 local businesses, government agencies and Fortune 500 companies across the United States that are transforming the American workplace. “CRW Engineering Group is at the forefront of a movement to make American businesses more competitive, sustainable and attractive to the best and brightest employees,” said Andy Clarke, president of the League of American Bicyclists. “An investment in bicycling enhances employee health, increases sustainability and improves the bottom line.”

Ted Stevens Anchorage International Airport

he Northeast Chapter of the American Association of Airport Executives announced that Ted Stevens Anchorage International Airport has been awarded the Balchen Post Award for Large Hub Commercial Airports. This is the fifth time ANC has earned the award, which honors airports demonstrating excellence in the performance of ice and snow control. As of April 7, Anchorage had the snowiest winter on record: more than 133 inches during the winter months. According to airport calculations, Airfield Maintenance has moved more than 6 million tons of snow from November 2011 to March 2012 from the runways,

Compiled by Mari Gallion

taxiways and ramps. During a span of 133 days in the winter, 97 days required some degree of snow and ice control.

University of Alaska Fairbanks

he University of Alaska Fairbanks has signed its first major commercial licensing agreement, giving Californiabased SeaSpace exclusive use of SwathViewer, a piece of software developed in 2006 by Dan Stahlke at UAF Geographic Information Network of Alaska. UAF’s Office of Intellectual Property and Commercialization negotiated the contract, which is an important milestone for the university. The office has been developing guidelines for commercializing UAF inventions and has seen a sharp rise in the number of invention disclosures submitted in the new fiscal year. SeaSpace is a global leader in remote sensing and provides remote sensing solutions to a variety of users, ranging from research to military to emergency response. The company will incorporate SwathViewer into their software applications, increasing the value of their current product line and making the technology available to clients worldwide.

Arctic Slope Regional Corp.

fight to the finish paid off for former Alaskan and current Arctic Slope Regional Corp. shareholder Shirley Reilly. On April 16, Reilly edged out the defending champion to win the Boston

• Pile Sockets • Shoring • Rock Anchors • Tie-Backs • Cofferdams • Foundations • Drilling for Large Diameter Cassons ■ 8

Marathon women’s wheelchair race by just one second. It was Reilly’s sixth time competing in the Boston Marathon and set a personal best time of 1:37:36. “We are so proud of Shirley,” said Tara Sweeney, ASRC senior vice president of external affairs. “Her commitment to the sport has been an inspiration, and we just want to congratulate her.” Reilly was a member of the 2004, 2008 and 2012 U.S. Paralympic Teams. Reilly also won the 2012 Los Angeles Marathon in mid-March. She will represent the U.S. in the 2012 Olympic Games in London this summer.

Coldfoot Environmental Services

oldfoot Environmental Services Inc. has been selected as the U.S. Small Business Administration’s 2012 Region 10 Prime Contractor of the Year. The Anchorage based business was nominated by Lucretia Teitzel from the 673rd Contracting Squadron at Joint Base Elmendorf-Richardson. Coldfoot Environmental Services Inc. specializes in environmental, construction, renovation and demolition work, and has provided goods and services to the U.S. Air Force for more than 11 years. Cuauhtemoc “Rod” Rodrigues, owner of Coldfoot, attributes his company’s success to lessons learned while serving in the military. Coldfoot was honored by the SBA in May at the National Small Business Week ceremonies in Washington, D.C., and at the Alaska District’s Small Business Week award luncheon in Anchorage at the Crowne Plaza Hotel in April.

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www.akbizmag.com • Alaska Business Monthly • July 2012

INSIDE ALASKA BUSINESS

SEARHC Behavioral Health Division

he SEARHC Behavioral Health Division hosted a 100th course celebration May 25 for the Gunaanastí Bill Brady Healing Center adult residential substance abuse treatment program in Sitka. “We are thankful for the recovery rates that our clients have experienced and enjoyed, which have averaged 70 percent over the years,” says Stewart Pook, SEARHC Gunaanastí Bill Brady Healing Center/Déilee Hít Safe Harbor House program manager. The Gunaanastí Bill Brady Healing Center hosts six 40-45 day sessions each year, usually in tandem with its companion Déilee Hít Safe Harbor House program for women (which is on its 63rd course). The program uses a variety of treatment methods to help Alaska Native/American Indian adults overcome their addictions to alcohol and drugs. Clients receive individual and group counseling, participate in Alaska Native cultural activities and education, participate in challenge/ ropes course activities, and learn how to use various programs such as Alcoholics Anonymous/12 Steps, Medicine Wheel or REMT (Rational Emotive Behavioral Therapy) for their long-term sobriety. Over the years, the program has helped more than 1,000 clients get fresh starts on their lives.

Mad Dog Graphx

ad Dog Graphx won four honors from the 18th Annual Communicator Awards, a leading international

Compiled by Mari Gallion

awards program recognizing creative excellence for communications professionals for their work in branding and marketing design. In addition, work from Mad Dog has recently been included in four new books by bestselling author David E. Carter, as well as “Letterhead + Logo Design 12” from Rockport Publishers, and the LogoLounge Master Library Series book “Type and Calligraphy.” Mad Dog Graphx won Communicator Awards for annual reports created for Food Bank of Alaska, The Alaska Community Foundation, Anchorage Project Access and also for a promotional piece designed for Pyramid Printing.

Alaska Stock Images

laska Stock Images announced a new strategic distribution partnership with SuperStock, a leading presence in the stock photography market and an international leader in the licensing industry with an expanding collection of more than 8.5 million photographs and illustrations, and direct sales and research teams in the US, UK and Europe. Alaska Stock Images specializes in current and historical photos that personify Alaska, complimented by images from Antarctica and Canada, and contains both royalty-free and rightsmanaged collections from more than 200 photographers. SuperStock CEO Lanny Ziering commented on the recent partnership, “Alaska Stock features an amazing variety of imagery that fits well within our offering of travel and nature photography. We are thrilled to represent their collection.”

KidWind Design Challenge

ure Energy, a team of middleschoolers from the Aurora Borealis Charter School in Kenai, topped the charts at the 2012 KidWind Design Challenge, a statewide competition that tests students’ ability to design a wind turbine that creates the most electricity. The team produced 14,303 milliwatts of electricity, besting the 22 high school and middle school teams that participated in the challenge, and taking first place in the middle school division. Team Turbie, from the Southwest Alaska town of St. Mary’s, won first place in the high school division. Competing against youth throughout the state, students work in teams of four to create a turbine from the ground up. Teams design a base, and then determine the size, shape, material and number of blades to maximize the efficiency of their turbine. Students must also create a multimedia presentation explaining their process and what they learned, which is scored as a part of the completion as well. Team Vertigo from Mt. Edgecumbe High School and The Smarties from Hoonah Middle School received awards for their presentations.

Visit Anchorage

isit Anchorage recognized nine exceptional contributions to the visitor industry and the community as a whole at the 25th annual Seymour Awards Banquet in April. Each Seymour Award recognizes a community leader,

Pacific Pile & Marine, LP (PPM) is seasoned in projects containing complicated logistics, specialized equipment, environmental constraints and long lead time materials.

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www.akbizmag.com • Alaska Business Monthly • July 2012

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INSIDE ALASKA BUSINESS Visit Anchorage member or volunteer who has provided excellence in product and/or service, contributed significantly to the visitor industry and Visit Anchorage’s programs or enhanced Anchorage’s image as a visitor destination. The 2012 award winners include: Mary and Buzz Rohlfing of Bear Square, Member Contribution to the Bureau; SMG/Anchorage Convention Centers, Member Contribution to the Visitor Industry; Oomingmak Musk Ox Producers Co-op, Community Organization; David Green Master Furrier, Member of the Year; Laile Fairbairn, All Alaskan Award; Lt. Governor Mead Treadwell, Meeting Planner of the Year; Holiday Vacations, Tour Operator of the Year; Sandra Knight, Volunteer of the Year. Longtime Visit Anchorage volunteers Doris Carey, Gwen Christianson, Charlotte Gill, Arlene Schillereff and Mary Todd were honored with a new award called the President’s Circle, which recognizes the outstanding service and longevity of some of Visit Anchorage’s most dedicated volunteers. Each has worked in the Visitor Information Centers for more than 25 years.

United Way of Anchorage

he United Way of Anchorage was recently recognized by two international organizations, United Way Worldwide and Charity Navigator, for effectiveness in creating communitywide change in education, and for efficiency, accountability and transparency. United Way Worldwide recognized the United Way of Anchorage as a finalist for the inaugural United Way Common Good Awards at the United

Compiled by Mari Gallion

Way Community Leaders Conference in Nashville, Tenn. United Way of Anchorage, and the many 90% Graduation by 2020 partners, “scored in the top tier of a highly competitive, large pool of national and international candidates that spanned over 11 countries,” said Peter Hahn, vice president of national engagement at United Way Worldwide. United Way of Anchorage also received its third consecutive four-star rating for sound fiscal management from Charity Navigator. The rating is based on strong financial health, accountability and transparency.

University of Alaska Fairbanks

he University of Alaska Fairbanks has announced recipients of the 2012 Emil Usibelli Distinguished Teaching, Research and Public Service Awards. Debendra Das, professor of engineering and mines in the College of Engineering and Mines, received the teaching award; Sergei Avdonin, professor of mathematics and statistics in the College of Natural Science and Mathematics, received the research award; and Kenji Yoshikawa, research professor at the Institute of Northern Engineering, received the service award. Over the years, Das has been recognized for his work as an advisor, including the UAF Carol Feist Outstanding Advisor Award in both 2003-2004 and 2005-2006. In 2006, he received the national Student Section Advisor Award from the American Society of Mechanical Engineers and, in 2007, the ASME Dedicated Service

Award. Das holds a master’s degree in mechanical engineering from Brown University and a doctorate in mechanical engineering from University of Rhode Island. Avdonin’s publication record includes more than 35 peer-reviewed articles since coming to UAF. Prior to that, he authored nearly 70 peer-reviewed articles. Avdonin received his master’s degree in physics and mathematical physics, his doctorate in mathematics and his doctor of science degree in mathematics from St. Petersburg State University in Leningrad. Yoshikawa has created a comprehensive network of close to 200 communities and schools to monitor the state of permafrost across the circumpolar North. Yoshikawa received both his master’s and doctorate degree in environmental science from Hokkaido University.

Alaska Commercial Fishing and Agriculture Bank

he CFAB Scholarship Fund Inc. announced the winners of its 2012 scholarships: Zackary Aspelund, Naknek; Cody Clark, Soldotna; Kari Gilman, Cordova; Shane Hautanen, Anchorage; Eric Hill, Naknek; Amanda Israelson, Yakutat; Angela Johnson, Nelson Lagoon; Katelyn Jane Reeves, Wrangell; and Dylan Spargo, Wasilla. Winners were selected from a wide cross section of Alaska, based on academic merits, and represented an inspiring collection of talent. Each will receive a $2,500 scholarship to be applied to college, trade school, apprenticeship, or vocational-technical school. 

• General Contracting • Marine Infrastructure • Design Build

Dutch Harbor - Unalaska, Alaska

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620B East Whitney Road I Anchorage, AK 99501

www.akbizmag.com • Alaska Business Monthly • July 2012

View from the Top

Compiled By Peg Stomierowski

Karen Rey, Owner Reyven Spirits Inc.

eyven Spirits’ Karen Rey was so inspired by Black Lab Vodka’s product and fundraising programs, she started a new liquor distributorship in Alaska.

Rey, a mother of three and a registered nurse, sets her sights on her personal dream that integrates both business and charity. With the unique business model of Reyven Spirits, Rey is helping to fund medical research that could help save lives, including her daughter’s. STORY WITH BITE: I was introduced to Black Lab Vodka while pheasant hunting in South Dakota two years ago. While the bottle was unique, it was the story behind it that intrigued me.

LEAVING A LEGACY: The couple who started the Black Lab label were long involved with bird hunting and raising Labrador retrievers. As they approached retirement, they wanted to commemorate their stud dog, Gator. So they dedicated a percentage of profits from their label to habitat restoration and conservation efforts, including Ducks Unlimited and Delta Waterfowl. In thinking about this approach, I saw it as an opportunity that could perhaps be replicated here in Alaska. After returning home, I approached two major distributors and was refuted. However, I felt strongly that the image of BLV fit well with the Alaska hunter demographic. It was this belief, combined with a personal mission, that drove me to create my own distribution company, Reyven Spirits. MISSION DRIVEN: I’ve long been involved in fundraising efforts for the Cystic Fibrosis Foundation. My daughter has cystic fibrosis, and I founded and chair Shoot for the Cure, a sporting clays competition held annually in May at Birchwood Recreation and Shooting Park. This event has raised several hundred thousand dollars for cystic fibrosis research. Reyven Spirits is a significant part of my effort to help pump a steady stream of money into finding a cure for cystic fibrosis. To develop a company that could perhaps even employ my daughter motivated me. NICHE MARKET: BLV has found its way into restaurants and liquor stores throughout Anchorage, Wasilla, Soldotna and Homer. BLV has a niche market, with almost a cult following. The corn-based, small-batch specialty spirit is distilled—five times—at the award-winning Bendistillery in Bend, Oregon. While BLV is my only line, other alcohol-based products are in the works, again with plans for a percentage of profits to go to the Cystic Fibrosis Foundation. INSPIRATION TO WIN: My greatest challenge is attaining balance in my life. While by day I work as a sales manager with a medical device company, I’m also deeply involved with fundraising events, and a grown daughter who continues to face significant health issues. Whatever my own pressures, I can put them into perspective with the help of my daughter who experiences trials every day with the effects of CF. She has a favorite quote: “A battle may need to be fought more than once to win it.” That’s my motivation. 

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www.akbizmag.com • Alaska Business Monthly • July 2012

We went smokefree to create a safe environment for our customers. Since we made the change, weâ&#x20AC;&#x2122;ve had some of our best sales ever, and our customers respect us for it. â&#x20AC;&#x201D; Billy Williams Grizzly Pizza and Gifts, Copper Center

Good for health. Great for business. Smokefree policies have been shown to not only improve the health and productivity of employees, but also decrease business costs for insurance, cleaning and maintenance. Research shows that smokefree laws are routinely positive or neutral in their economic impact.*

*Alaska Department of Health and Social Services, Tobacco Prevention and Control in Alaska FY08 Report

Regional Focus

By Tracy Barbour

Amazing archipelago

Lupines growing wild on Kodiak Island.

odiak is a world renowned destination for fishing, hunting, bear viewing and breathtaking scenery. Kodiak Island is the largest island in Alaska, second largest in the United States and is also known as Alaska’s Emerald Isle for its lush green landscape. Geographically situated northeast to southwest the Kodiak archipelago is a 177 mile collection of islands surrounded by Cook Inlet to the north, the Gulf of Alaska to the east, the Pacific Ocean to the south, and Shelikof Strait to the west. The Kodiak Island Borough encompasses the archipelago and stretches across Shelikof Strait to include part of the Alaska Peninsula. The population center is on the eastern side of Kodiak Island, and about half live in the city of Kodiak, along the northeast corner of the island. Most of the

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remaining residents reside in Akhiok, Aleneva, Chiniak, Karluk, Larsen Bay, Old Harbor, Ouzinkie, Port Lions or Womens Bay.

Island Attitude

Kodiak Island has a cohesive, businessfriendly atmosphere, according to Kodiak Island Borough Mayor Jerome Selby. It’s the type of environment that’s pretty easy to launch and maintain a business in—as long as you mind your business P’s and Q’s, he says. “I think there’s a different attitude on an island,” Selby says. “People prefer to buy locally and do business with people they know. Everybody understands that we’re in this together. We all do better if we work together and help each other out.” Local residents help out by encouraging stores to carry certain

products. Members of the business community share ideas to help other businesses improve their products and services. And the Kodiak Chamber of Commerce actively works to make the borough a strong environment for enterprise. Operating a business on Kodiak Island offers inherent advantages. Because it’s an island, Kodiak has a captive audience that represents a potential group of regular customers. If you have a good product or service, you can write your own ticket, Selby says. The key is to know the market and plan accordingly. Overall, the borough has a pretty healthy business community, says Selby, a resident since 1975. “I see stores expanding,” he says. “Folks are being positive and are looking for opportunities to grow and expand their business.”

www.akbizmag.com • Alaska Business Monthly • July 2012

Kodiak Island Borough encompasses much more territory than Kodiak Island, as the map to the right shows. Map created by Karl Musser using USGS data.

City of Kodiak

The City of Kodiak is the transportation, services and retail hub for the Kodiak Island Borough and its surrounding villages and outlying areas. With about 6,900 inhabitants, Kodiak is the eighth-largest city in Alaska in terms of population. By air, it is about an hour south of Anchorage, three hours northwest of Seattle. Kodiak Mayor Pat Branson describes her city as a beautiful place with a wonderful sense of community. It’s the kind of community where people know and care for their neighbors. Kodiak is also a great place to raise a family and operate a business. Real estate values have remained constant. There are excellent health care facilities. And electric costs are stable, thanks to energy-saving wind turbines installed by the Kodiak Electric Association. “They’re rock stars in setting the bar with energy efficiency,” Branson says. “We have three wind turbines, and will get three more this summer. We have the only hydro-powered and windpowered system in the world.” By 2020, Kodiak expects wind and hydro resources to meet 95 percent of its electrical needs. The three 1.5 megawatt wind turbines currently in place on Pillar Mountain are saving 900,000 gallons of diesel fuel. The turbines and power from Terror Lake hydro-electric dam are now producing more than 90 percent of the community’s power.

Fishing Industry Faring Well

Primarily a fishing town, Kodiak has one of the most diverse fisheries in the

state. Kodiak residents participate in at least 27 different fisheries—not counting numerous groundfish fisheries. Kodiak consistently ranks as one of the nation’s top three commercial fishing ports in terms of value of seafood landed. According to the 2011 Kodiak Community Profile and Economic Indicators report by the Kodiak Chamber of Commerce, the 2010 ex-vessel value of all fish coming into Kodiak was $132.3 million, up from $115.5 million in 2009—a 14 percent increase. Volume in 2010 was 313 million pounds, up from 294 million pounds in 2009. Fishing has a significant impact on the city’s overall employment. More than one-third of the jobs in Kodiak are directly involved in the fishing industry, in either the harvesting or processing sectors. According to 2011 Department of Labor study, total estimated fishing workforce was 3,360 (789 active permit holders, 2,571 estimated crew) in 2010. Total gross earning was $118 million for fish harvesting. Kodiak’s processing plants employed nearly 1,600 people and had a combined payroll of more than $68 million in 2010. Some of the largest seasonal employers in the Kodiak Island Borough during 2010 were International Seafood of Alaska, Trident Seafoods, North Pacific Seafood, United States Seafood and Ocean Beauty Seafood. The Kodiak Island Borough is a major exporter of seafood and timber, according to Trevor Brown, executive director of the Kodiak Chamber of Commerce. But it’s difficult to obtain accurate num-

www.akbizmag.com • Alaska Business Monthly • July 2012

15 ■

bers on the value of those exports, he says, because very little product is exported directly from Kodiak. “Most exports go first to another Alaska or Lower 48 port and, therefore, appear in those export figures,” Brown says.

Tourism and Other Industries

Tourism is also a vibrant industry for Kodiak. In fact, the visitor industry has remained steady over the past several years—despite the recession. “A year ago, I think we were one of the few communities that had growth in (tourism) in the state,” Selby says. “Kodiak is such a beautiful place and there are a lot of things you can do here.” Approximately 30,000 visitors come to Kodiak each year, including those from within the state. Interestingly, visitors to Kodiak and other Southwest Alaska destinations stay longer than the average visitor to the state and are more likely to be repeat visitors, according to the Alaska Visitor Statistics Program. Southwest Alaska visitors also typically spend double the amount of money as the average visitor to other parts of Alaska. Branson says she’s noticed that more Alaskans seem to be interested in visiting the area. Kodiak is off the beaten path, and it gives visitors a different view of Alaska. “We have a lot to offer, whether you’re from in state or out of state,” says Branson, who has lived in Kodiak for 35 years. Other significant employers are the U.S. Coast Guard, Kodiak Island Borough School District, the City of Kodiak, Providence Hospital, the State of Alaska, Safeway Inc., Wal-Mart Inc., Kodiak Area Native Association, Kodiak Island Housing Authority, University of Alaska and Ever Green Timber Ltd. The military and government sectors help propel the entire economy of the Kodiak Island Borough. In terms of employment, the U.S. Coast Guard and government entities comprised 35 percent of total employment in 2010, with the state estimating the borough’s average monthly employment to be 6,223, excluding fish harvesting and the Coast Guard. Other key employment sectors are retail/ trade/transportation, accounting for 10 percent; education and health, 9 percent; and professional and business services, 6 percent. ■ 16

Economic Development

With its diversity of sectors, the city of Kodiak has a “pretty stable” economy, according to Branson. A key economic development is a decision by Lockheed Martin Corp. to use the Kodiak Launch Complex (KLC) as its dedicated West Coast launch facility for Athena rocket launches. The company’s decision will enable Alaska Aerospace Corp., the state-owned entity that operates the test site, to move ahead with plans to expand its space launch capabilities. “Alaska Aerospace Corp. is a major player in the Kodiak community,” Branson says. “This solidifies their facility to continue doing what they are doing. They have become a wonderful contributor to scholarships in our community and are a good neighbor.” Selby also expressed positive feelings about the expansion of KLC’s capabilities. Launches at the facility, located about 44 miles south of the city of Kodiak, have a broad impact on the local economy. Many people attend the events, patronizing local hotels, restaurants and retail establishments over the course of several weeks. “Each launch brings about a million dollar shot in the arm for Kodiak’s economy over one month.” KLC currently does a couple of launches a year. With the expansion, there could be twice as many Athena rockets launched from the test site, according to Selby.

Commercial Real Estate

There is not a lot of commercial property available within the city of Kodiak, according to Bob Brodie of Associated Island Brokers, but the market is stable without a lot of turnover. “Many of the commercial businesses in Kodiak are well-established and ongoing,” he says. Most of the commercial development within the urban environment is taking place downtown, he says. There are also many small businesses situated along Mill Bay road. For the most part, Brodie says, Kodiak is fairly built up, with a few vacant lots here and there. For example, there’s an area of available land out by Safeway, near Rezanof Drive and Mill Bay Road. It contains five or six acres that someone could use

to open a big store. There are also commercial spaces of approximately 2,000 square feet to accommodate smaller businesses that are looking to open, expand or relocate in Kodiak. The city has finally sold some lots at Near Island. Now that the lots are in private ownership, it represents a completely new area of town—and a new opportunity for business development. Koniag Inc., the regional Native corporation, for instance, built its new headquarters there. In terms of the multi-family housing segment of commercial real estate, availability is limited. The Kodiak rental market has about a 1 percent vacancy rate. Housing is very tight, partly because of the paucity of developed land. “The Kodiak Island Bureau owns some large tracts of land, but for the most part not near public sewer and water,” Brodie said. “Putting roads into big lots is kind of expensive.” The small size of Kodiak’s commercial real estate market is leading to the creative use of some properties. Some people have bought commercial buildings and placed apartments on the top floor. “Because of the demand for housing, they converted their unused office space into residential space,” Brodie says, adding that Kodiak has a major housing shortage, especially in the area of rentals. Some of the scarcity can be attributed to having an enormous U.S. Coast Guard base just 10 miles away. U.S. Coast Guard Base Kodiak is the largest USCG base in the country. More military members are being assigned to the area, and the Coast Guard has torn down some of its on-base housing over the years, and has about 400 units of family housing, with additional dormstyle housing for single personnel, according to Brodie. Service members who aren’t able to live on base must find housing in the local community. This creates a unique challenge for people relocating to the area. “It’s very hard for people moving here because they don’t have much choice in rental space,” Brodie says.

Infrastructure

Kodiak Island’s infrastructure includes several airport and float plane facilities to serve the region. The Alaska Marine

www.akbizmag.com • Alaska Business Monthly • July 2012

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B E N E F I T S

Kodiak Island Borough Demographics People QuickFacts

Kodiak Island Borough Alaska

Population, 2011 estimate Population, 2010 Population, percent change, 2000 to 2010 Population, 2000 Persons under 5 years, percent, 2010 Persons under 18 years, percent, 2010 Persons 65 years and over, percent, 2010 Female persons, percent, 2010 White persons, percent, 2010 (a) Black persons, percent, 2010 (a) American Indian and Alaska Native persons, percent, 2010 (a) Asian persons, percent, 2010 (a) Native Hawaiian and Other Pacific Islander, percent, 2010 (a) Persons reporting two or more races, percent, 2010 Persons of Hispanic or Latino origin, percent, 2010 (b) White persons not Hispanic, percent, 2010 Living in same house 1 year & over, 2006-2010 Foreign born persons, percent, 2006-2010 Language other than English spoken at home, pct age 5+, 2006-2010 High school graduates, percent of persons age 25+, 2006-2010 Bachelor’s degree or higher, pct of persons age 25+, 2006-2010 Veterans, 2006-2010 Mean travel time to work (minutes), workers age 16+, 2006-2010 Housing units, 2010 Homeownership rate, 2006-2010 Housing units in multi-unit structures, percent, 2006-2010 Median value of owner-occupied housing units, 2006-2010 Households, 2006-2010 Persons per household, 2006-2010 Per capita money income in past 12 months (2010 dollars) 2006-2010 Median household income 2006-2010 Persons below poverty level, percent, 2006-2010 Business QuickFacts

471 4,177 -4.4% 1,467 1,847 F 21.5% F F 8.8% S D D 108,173 $8,274 26,252 17 172,657

19,901 252,882 23.4% 51,137 68,728 1.5% 10.0% 3.1% 0.3% S 25.9% 8,204,030 4,563,605 9,303,387 $13,635 1,851,293 904 11,922,341

Kodiak Island BoroughAlaska

Land area in square miles, 2010 6,549.58 Persons per square mile, 2010 2.1 FIPS Code 150 Metropolitan or Micropolitan Statistical Area: Kodiak, AK Micro Area 1: Includes data not distributed by county. (a) Includes persons reporting only one race. (b) Hispanics may be of any race, so also are included in applicable race categories. D: Suppressed to avoid disclosure of confidential information F: Fewer than 100 firms FN: Footnote on this item for this area in place of data NA: Not available S: Suppressed; does not meet publication standards X: Not applicable Z: Value greater than zero but less than half unit of measure shown Source: U.S. Census Bureau ■ 18

722,718 710,231 13.3% 626,932 7.6% 26.4% 7.7% 48.0% 66.7% 3.3% 14.8% 5.4% 1.0% 7.3% 5.5% 64.1% 78.6% 7.2% 16.5% 90.7% 27.0% 71,798 18.1 306,967 64.7% 24.6% $229,100 248,248 2.68 $30,726 $66,521 9.5%

Kodiak Island BoroughAlaska

Private nonfarm establishments, 2009 Private nonfarm employment, 2009 Private nonfarm employment, percent change 2000-2009 Nonemployer establishments, 2009 Total number of firms, 2007 Black-owned firms, percent, 2007 American Indian- and Alaska Native-owned firms, percent, 2007 Asian-owned firms, percent, 2007 Native Hawaiian and Other Pacific Islander-owned firms, percent, 2007 Hispanic-owned firms, percent, 2007 Women-owned firms, percent, 2007 Manufacturers shipments, 2007 ($1000) Merchant wholesaler sales, 2007 ($1000) Retail sales, 2007 ($1000) Retail sales per capita, 2007 Accommodation and food services sales, 2007 ($1000) Building permits, 2010 Federal spending, 2009 Geography QuickFacts

NA 13,592 -2.3% 13,913 8.5% 28.6% 6.7% 47.0% 55.3% 0.7% 13.2% 19.6% 0.6% 7.6% 7.3% 52.5% 79.1% 16.5% 23.8% 87.7% 21.8% 1,467 13.4 5,303 59.2% 25.9% $182,100 4,409 2.76 $26,413 $60,776 10.9%

570,640.95 1.2 2

Highway System operates ferry service from Seward and Homer to Kodiak, Port Lions and Ouzinkie. Nearly 140 miles of state roads are located on the northeast coast of Kodiak Island. The major highway in the area follows the coastline from Cape Chiniak north, through the City of Kodiak, to Monashka Bay. The City of Kodiak also offers dockage, boat yard and marine services for commercial fishing, cargo, passenger and recreational vessels. It operates two marinas: Saint Paul Harbor, located downtown, and Saint Herman Harbor on Near Island. The harbors can provide protected moorage for 650 vessels up to 150 feet in length. Three deepwater piers provide moorage for large vessels like the state ferry, cruise ships and cargo vessels. Kodiak College, a local branch of the University of Alaska Anchorage, offers some first and second-year general classes, vocational classes and an adult learning center. Saint Herman’s Theological Seminary instructs students of the Russian Orthodox Faith in church leadership. The Kodiak Seafood and Marine Science Center is home to Alaska Sea Grant, which supports coastal communities through research, education and extension; as well as the Marine Advisory Program, part of the University of Alaska Fairbanks School of Fisheries and Ocean Sciences. The Alaska Fish and Game Department has a new building under way that will feature the latest equipment and enhance the department’s ability to conduct scientific research locally, according to Branson. “We’re going to be able to keep Fish and Game employees here instead of seeing them going to Anchorage or other places,” Branson says. Other improvement projects throughout Kodiak Island include road repaving, airport improvements, new senior housing, high school renovations, a new library, park renovations and a new walkway for cruise ship passengers. “All of this is positive for residents and the business industry,” Selby says.  Writer Tracy Barbour owns a marketing company in Tennessee.

www.akbizmag.com • Alaska Business Monthly • July 2012

Legal Speak

By Jeff Waller

Business Formation Benefits and Risks

LLC most ﬂexible, corporation most protective

re your personal assets (house, car and bank accounts) exposed to your business debts and liabilities? The legal separation between the business and its owner is often not considered until the business is in financial trouble or being sued. There are four common types of business formations—sole proprietorship, partnership, corporation and limited liability company—each with benefits and risks.

Sole Proprietorship

A sole proprietorship is the easiest business to form because no official action is required. When you start doing landscaping for hire, or selling cupcakes to local coffee shops, or any other type of enterprise, a sole proprietorship has been formed. In a sole proprietorship, you and your company are one. The company’s profit or loss is the owner’s profit or loss because there is no legal separation between the business and the owner. That means that everything you own could be used to pay the debts of the business, and vice versa.

Partnership

Another common business formation is a partnership. Forming a partnership is as easy as two or more people agreeing to go into business together. Partnerships are attractive because each person can bring their skills to the business. Like a sole proprietorship, no official paperwork is required to form a partnership. However, a partnership can put your personal assets at a greatest risk, even if you have a written agreement limiting the responsibilities of each partner. Any such partnership agreement is only ■ 20

between the partners and does not affect who can sue you and why they can sue you. For example, you may agree in writing that no material purchase can be made without approval from all the partners; however, if Partner A goes out and buys five new trucks in the partnership’s name, the partnership and the partners are obligated to pay for the unauthorized trucks. While Partners B and C could sue Partner A under their partnership agreement, if Partner A is broke, or bankrupt, the other two partners are most likely going to pay for the vehicles. In a partnership, you are at risk for practically anything your partner does.

Corporation

Forming a corporation or an LLC are the best methods to protect your personal assets from business liabilities. The corporation is a type of business formation that has been in existence many years. The LLC is a more recently developed business type, and is the most flexible. A corporation is treated as an individual, separate and distinct from its shareholders. This protects the shareholders from the company’s debts. Think of it this way: if you had one share of GM stock, none of GM’s creditors could sue you and try to take your house for GM’s debts. The corporation is distinct and separate from you. Therefore, the corporation’s debts are not the shareholder’s debts. However, there are certain formal acts required to maintain the corporate status as a separate individual. For example, each year the shareholders meet to elect a board of directors. The directors then appoint officers to run the corporation. The corporation has its

own bank accounts and owns its own property. Failing to maintain these requirements could destroy the separation between the shareholders and the corporation, exposing the shareholder’s personal property.

LLC

Because of the additional requirements and the possible risk associated with failing to comply with all the requirements of a corporation, many businesses are electing to be an LLC, which brings together the best parts of a partnership and a corporation. An LLC is comprised of members, not shareholders; therefore annual shareholder meetings are not required. Formal documents are needed to establish the LLC, similar to a corporation. Members can run the business like a partnership. The members can select how they want the entity to be taxed: as a corporation, partnership, or sole proprietorship. An LLC protects each member’s personal assets from the LLC’s debts and liabilities. However, a member can be liable in a number of ways, including if the member personally injures someone, personally guarantees a debt, or commits fraud or some illegal act. With the great flexibility afforded by an LLC, it is becoming one of the most popular types of business formation used.  The July Legal Speak is Jeff Waller’s last column for Alaska Business Monthly. He is now with the Attorney General’s Office for the State of Alaska. We wish him well.

www.akbizmag.com • Alaska Business Monthly • July 2012

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HR Matters

By Dr. Lynne Curry

Hit a n d Run Supervision Not the best way to reprimand employees

ow many times have you left the scene of a hit and run employee accident? Have you dented any employee fenders this month? What did it cost you? When hit and run supervisors spot problem situations, they race to the scene, take fast action and speed away, not realizing they may have left one or more employee casualties in their wake. If you’re a hit and run supervisor, you’ve probably weathered multiple collisions—including some you afterwards regretted. Unfortunately, even if you later say, “I’m sorry, I shouldn’t have snapped like that,” your apologies rarely erase the dents creasing your employees’ fenders.

Overhaul Your Approach

If you’d like to overhaul your hit and run approach, learn to slow yourself down by coupling your fast “in the moment” reactions with peripheral view decision-making. When you see a trouble situation, ask your employee to meet you in your office or another out-of-earshot location. Then, before you reach a conclusion ask, “What’s going on here?” And listen. If your employee tells you something you overlooked in your initial haste, you save yourself future grief. When you do need to critique an employee, take your foot off the gas before you deliver your comments. Supervisors who take a few moments to think through how they can best deliver negative feedback and don’t leave the scene until their employees both understand and commit to improvement achieve lasting results. Supervisors who instead deliver verdicts and race off can’t count on what they’ll fi nd when they return.

Look in Your Rearview Mirror

Hit and run supervisors often take good behavior for granted yet zero in on problems. If you excel at dishing out criticism but rarely dish out compliments, turn your employee encounters into races won by letting your hardest working employees know you value their consistent good work. Try a few, “Mike, you’ve really ■ 22

gotten the billing situation under control—and I know it wasn’t easy. Great job!” If you want your problem employees to turn the corner, follow up any corrective feedback you give them with rearview mirror work. Have any of the employees you criticized last month taken what you said to heart and improved? If so, follow up with “I’ve noticed your efforts in the last couple weeks. Keep up the good work.”

Stop Yourself Short

Finally, learn to use your sideview mirrors. Hit and run supervisors believe they are right because they say so. They make up their minds based on what they see and rarely ask for or hang around to hear opposing views. If you find this fits you, the next time you catch yourself cutting a conversation short because you don’t want to hear the employee’s view, stop yourself, not your employee, short. Are you tired of collision management? The next time you find yourself racing toward a problem, ease off the gas and ask yourself, “Am I jumping to conclusions? Let me hear what the employee has to say first.” If you want the best results when you correct employees, take the time you need to word your comments so your employees understand what they need to do differently and commit to the improvements. Widen your peripheral vision until you give as much attention on your great employees as you give problematic behavior. And, finally, use both your sideview and rearview mirrors— because you can’t hit and run when you see the whole picture.  Dr. Lynne Curry is a local management/ employee trainer and consultant, owner of The Growth Company Inc., and the author of “Managing Equally and Legally,” “Won By One” and “Solutions.”

www.akbizmag.com • Alaska Business Monthly • July 2012

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Six Biggest Lessons Learned by Small Businesses Growing Optimism According to the latest Wells Fargo/Gallup Small Business Index survey, small business owners are the most optimistic they’ve been since July 2008 and experiencing greater access to credit. Overall improvement in the index was primarily driven by business owners’ future expectations in three of the six components. Financial Situation — Fewer (15 percent versus 21 percent in Q1 2012) expect their company’s financial situation to be very or somewhat poor over the next 12 months Cash Flow — Fewer (18 percent versus 23 percent in Q1 2012) expect their cash flow to be very or somewhat poor Credit Access — Fewer (32 percent versus 38 percent in Q1 2012) expect credit to be very or somewhat difficult to obtain The Q2 Wells Fargo Small Business Index surveyed 603 business owners across all 50 states via telephone in April. Business owners can access more Small Business Index information and an informative selection of videos and articles featuring expert advice and best practices through the Wells Fargo Business Insight Resource Center at wellsfargobusinessinsights.com/ small-business-index. ■ 24

And how to apply them to your business BY BOND STEWART

hances are you have read plenty of advice about how to run a business. It’s easy to find helpful hints and inspiring success stories. But what about the mistakes you should take care to avoid? As a banker I’ve seen well-intentioned, capable small business owners face some of the same challenges in a wide range of fields. To help you learn from their experiences, I’d like to share with you the six biggest lessons these business owners have revealed to us. Each of the six missteps are preventable, from strategic decision-making to everyday banking.

❶

Going it alone. Some entrepreneurs trust only themselves, a partner, or a spouse when facing key decisions. However, it’s best to include at least three other people in your decision-making: an attorney, a CPA, and a financial adviser or banker. This team of advisers should be dedicated to helping you succeed and communicating with each other to accomplish this goal. Without their specialized expertise you may not have the experience you need to understand all your options and choose the right path.

❷

Wearing all the hats. “If you want something done right, you have to do it yourself” may sometimes be true, and for a cash-strapped start-up it’s certainly cheaper. But as your business grows, it’s essential to get help. Responsibilities such as bookkeeping, taxes and payroll take up time you could spend serving

your customers. Even more importantly, getting them wrong can be dangerous. Hiring a professional not only helps prevent errors, but shifts much of the risk to someone else.

❸

Keeping your head down. Focus and dedication are watchwords for the successful entrepreneur. But business owners also need to make time to seek wisdom in the wider world. For example, some business owners may not be aware that there’s a fairly simple way to get their website ranked higher on Internet searches. If you are seeking wisdom every day this is the kind of useful information you will fi nd. Research and planning for the future can seem like secondary concerns, especially when you’re not sure where to go for information. Whether your quest for knowledge includes online research, trade shows, Chamber meetings, or networking with peers, it’s a vital investment to make. Otherwise you risk missing out on ways to improve your business, such as funding opportunities for small businesses or educational resources to help you tackle tomorrow’s challenges.

❹

Running lean on cash. Small businesses need at least three months of cash flow in reserve to be ready for seasonal fluctuations or the inevitable dry spell. It is often difficult to do so, especially if you developed frugal habits when you just were getting started. Making a commitment to put cash away monthly can help, and so can a line of credit. Think

www.akbizmag.com • Alaska Business Monthly • July 2012

of it as a sort of insurance policy: if you don’t make the investment, the results could be devastating.

❺

Avoiding credit applications. Th is mistake is a close cousin to the previous one. Minimizing your debt may be a good goal for your personal life, but most businesses will require some level of borrowing capacity at some point. Applying for credit before you actually need it, and making a point of tapping your credit regularly and repaying promptly, will help you build a solid credit history and a source of ready cash when you do need it. In many cases, if you wait until you actually need credit it can be harder to get.

❻

Combining accounts. Not separating business and personal accounts is a common error. It is an easy mistake to make when you are starting out and want to “keep it simple.” However, comingling your credit cards and bank accounts makes it nearly impossible to get a sense of your business cash flow. It is even worse for doing your taxes, let alone justifying business expenses in case of an audit. Establishing dedicated business accounts lets you start building a credit history in the business name, which can make it easier to secure financing.

Moving Forward

Do any of these sound familiar? To avoid these and other pitfalls, take a long look at the way you work, and make sure you are following business practices that will keep your business headed toward success.  Bond Stewart is Wells Fargo’s Anchorage Business Banking manager. Contact him at 907-265-2014 or bond.stewart@wellsfargo.com.

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www.akbizmag.com • Alaska Business Monthly • July 2012

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nAtive business

New Alaska Native Corporation Ventures

A blade for one of the Fire Island wind turbines is ofﬂoaded at the Port of Anchorage.

Photo courtesy of CIRI

Increasing opportunity by branching out BY PAULA COTTRELL

hen Alaska Native Corporations were formed after Congress passed the Alaska Native Claims Settlement Act of 1971, the new corporations were tasked with providing for their people by engaging in successful business ventures and creating economic opportunities. Over the last 41 years, ANCs have been engaging in businesses as diverse as the communities they serve and using the revenues generated to make a direct positive impact on thousands of Alaska Natives across the state. Remaining competitive in today’s unpredictable economy can be challenging, but these companies have developed ways to not only succeed at business, but to excel and often dominate in business and industry.

■ 26

CIRI’s Big Developments

Cook Inlet Region Inc. has created a well-diversified multi-million dollar portfolio of business and development projects that include traditional and alternative energy and resource development, real estate investment and management, tourism and hospitality management, environmental services, oilfield and construction services, and aerospace defense. In early 2012, CIRI acquired majority interest in Cruz Energy Services LLC and Cruz Marine LLC. These recent acquisitions are important to CIRI’s portfolio of companies, according to CIRI president and CEO, Margie Brown. “The Cruz-CIRI combination brings financial strength, experience and operational excellence, and will help CIRI

sustainably grow its energy interests outside of Alaska.” One local CIRI project that is relying on the expertise of newly acquired Cruz Marine is the Fire Island Wind Project, the first commercial scale wind power generation project located in Cook Inlet on CIRI land just west of Anchorage. The first phase of the project consists of 11 wind turbines that will have a 17.6 megawatt generation capacity and is expected to supply 51,000 megawatt hours of power to Chugach Electric Association annually. Equipment was mobilized to Fire Island and shoreside transmission work was completed earlier this year. Cruz Marine is laying the submarine transmission cable that will carry power from Fire Island to the Chugach Electric

www.akbizmag.com • Alaska Business Monthly • July 2012

substation. According to Jim Jager, CIRI corporate communications director, the project is on schedule and all of the wind turbines are expected to become operational in July with the first power generation happening in September.

Afognak’s New Energy

Community Power Corp., based in Littleton, Colo., is a recently acquired wholly owned subsidiary of Afognak Native Corp., and it is engaged in the growing field of biomass energy. “Afognak’s success in government contracting has allowed us to diversify into exciting new industries in the commercial sector. CPC is an example of our diversification into the renewable energy industry,” says Gerad Godfrey, Afognak’s external relations manager. According to Godfrey, Afognak believes there are many potential promising applications for this technology in rural Alaska and hopes to provide it there in the near future. Community Power Corp’s BioMax Systems convert a variety of “woody” residues to electricity, heat, cooling or synthetic liquids. Under contracts with the U.S. military, BioMax is converting a variety of mixed organic waste streams from military supply and feeding operations, commissaries, encampments, etc. into a variety of energy services. The mini power plants are self-contained modular bioenergy gasification systems that are fully automated and available in power blocks of 25 or 100 kWe and above. In May, the company announced it successfully produced “drop in” diesel and aviation fuels from wood chips and other biomass waste materials with a modular bio-refinery system. This system converts the nitrogen-diluted syngas produced by the BioMax System to the various fuels.

Doyon and Nana Partner

Doyon Remote Facilities and Services, a wholly owned subsidiary of Doyon Ltd., was formed after the purchase of the remote, 215-bed Oliktok Construction Camp Facility on the North Slope. Located within the Kuparuk oil field near Oliktok Point, the full-service camp provides housing and meals for area workers.

Doyon Remote builds and services remote camps and has purchased and relocated several camps out of Canada and around various parts of the state for its clients. The company teams up with Doyon Universal Services (another Doyon Ltd. subsidiary) to provide full services—food service, security, housekeeping—at all of its remote camp locations across Alaska. Mack Miessner, construction manager for Doyon Remote Facilities says, “When you can put a big remote services package together for a client that includes quality housing, cater-

ing and housekeeping, it’s a definite added value.” There is still a huge demand for remote facilities in Alaska, according to Miessner, and currently, Doyon Remote is working on a contract to build several remote camps with NANA Construction LLC, a wholly owned subsidiary of NANA Development Corp., a wholly owned subsidiary of NANA Regional Corp. “Choosing to work with another Alaska Native Corporation on this contract made a lot of sense,” Miessner says. “It’s a partnership that is working well.”

Thank you to our sponsors, donors and volunteers who made the Calista Heritage Foundation Golf Classic 2012 Tournament on June 20 a success! We would like to express our sincere gratitude to the following businesses and individuals who gave generously to help CALISTA HERITAGE FOUNDATION fund our scholarship recipients. PLATINUM Donlin Gold Legislative Consultants in Alaska DIAMOND SES GOLD KeyBank SILVER ConocoPhillips Doyon, Ltd. Lynden Inc. Yulista Holding Company BRONZE Alaska Growth Capital CH2M Hill GCI Kiewit Infrastructure West Co. Morgan Stanley Smith Barney LLC Nordic-Calista Well Services, Inc. Tunista, Inc. CONTRIBUTING Alaska Commercial Company Alaska Interstate Alaska Pension Services Ltd. Construction LLC Aleut Corporation

AT&T Brice Incorporated Charter College Chiulista Services, Inc. Delta Western, Inc. Doyon Drilling, Inc. Food Services of America Guess & Rudd P.C. Konica Minolta Marcia Davis Marsh & McLennan Companies Mayflower Catering Robertson, Monagle & Eastaugh Sramek Hightower Stoel Rives LLP The Wilson Agency Tikigaq Corp. Udelhoven Companies Unum VSP Yukon Equipment, Inc. MONETARY Andrew Guy Christine Klein Cook Inlet Tribal Council CIRI/Fidelity Charitable June McAtee Monica James Norman Resnick Princess Cruises

PRIZE Alaska Native Heritage Center Alaska Telecom/Futaris Allure Day Spa & Hair Design Anchorage Marriott ArXotica AVTEC Body Renew Charter College Chiulista CH2M Hill Cook Inlet Tribal Council Delta Western, Inc. Donlin Gold Embassy Suites GCI Girl Scouts of America Great Originals Hillside Pet Clinic KPMG Marriott Hotels & Resorts Moose Run Golf Course Morgan Stanley Smith Barney LLC Municipal Light and Power Sis’s Cafe Southcentral Foundation Tunista, Inc. UAA Athletic Department U.S. Air Force Reserves Yulista Holding Company

For information on donating to the Calista Heritage Foundation, please visit our office at 301 Calista Court, Suite B, Anchorage, AK 99518, call 907-279-5516, or visit calistaheritage.org

Calista Heritage Foundation Investing in Our Yo u t h

www.akbizmag.com • Alaska Business Monthly • July 2012

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Photo courtesy of Bristol Industries

The railbelt pad at Port MacKenzie is part of a $17.7 million Alaska Railroad Corp. project that Bristol Construction Services LLC is working on this summer.

Drawing on the experience of NANA Construction with building modular buildings, Doyon hired NANA to construct the remote housing at its Fabrication Facility at Big Lake. Once completed, the modules will be taken apart, shipped to their final destination and reassembled upon arrival. “The construction and freighting of the camps will take about 14 weeks to complete for this contract,” Miessner says. Future remote building projects for Doyon include providing man-camps for Doyon Drilling and several other oilfield clients.

Ahtna Renovates Housing

Another company working on projects affected by heavy snowfalls this winter is Ahtna Engineering Services LLC, a wholly owned subsidiary of Ahtna Inc. Crews are currently completing full renovations on several United States Coast Guard housing units in Valdez. “The USCG project involves both interior and exterior construction,” says ■ 28

Photo courtesy of Bristol Industries

Bristol’s Port Project

Bristol Construction Services LLC is a member of the Bristol Alliance of Companies—a wholly owned subsidiary of the Bristol Bay Native Corp. Bristol Construction is currently working on a $17.7 million project designed to improve access to Port MacKenzie. This project includes the first segment of a larger project to connect Port MacKenzie to the mainline of the Alaska Railroad. The Alaska Railroad contracted with Bristol Construction to build approximately five miles of embankment for the new rail link as well as expanding the port’s existing bi-modal bulk facility. Work includes land clearing, facility upgrades and culvert installation as well as the construction of a three-span bridge and the excavation and placement of nearly 4 million cubic yards of materials.

Port MacKenzie access improvement project work being done by Bristol Construction Services LLC.

Dan Graham, project manager for Ahtna Engineering Services. “Interior construction involves selective demolition, carpentry, electrical and mechanical work, asbestos abatement and full renovation of nine USCG housing units.” In addition, Ahtna will be re-siding and installing snow melt heat trace near the eves on seven four-unit housing facilities and three other Coast Guard facilities will have general renovations and new systems installed, according to Graham. Ahtna is averaging a crew of seven Alaskan employees on the project.

“With all of the different trades being utilized on this project, we need some multi-trade talented craftsmen,” Graham says. “Ahtna employs a crew of very experienced and hard-working tradesmen that are being utilized on this project. Our goal is to safely exceed our customers’ expectations while maintaining an enjoyable working environment.” The record setting snowfall in Valdez affected the project start date and continues to impact the project as the snow melts. The interior portion of the project is scheduled to be completed at the

www.akbizmag.com • Alaska Business Monthly • July 2012

Photo courtesy of Yukon Equipment

end of June so they can be ready for immediate occupancy. It is expected the exterior renovations will be completed by the end of September.

Calista’s Heavy Equipment

In August 2010, Alaska’s oldest heavy equipment dealer, Yukon Equipment Inc., was purchased by Calista Corp. With more than 66 years of business experience under their belt, Yukon Equipment has locations in Anchorage, Fairbanks and most recently, Wasilla. “Yukon Equipment’s strength is in helping our customers pick the right type of equipment for each particular job, and then having highly trained personnel employed to keep that equipment operating through and beyond job completion,” says Morry Hollowell, long-time president of Yukon Equipment. “Our customers do the work, but Yukon Equipment helps to insure they have the right equipment on the job, so that they can be successful. When our customers are successful, we are successful.” A heavy hitter in the equipment industry, Yukon is the sole distributor of a number of product lines in Alaska. “Yukon Equipment’s customers come in all sizes and backgrounds,” says Thom Leonard, Calista communications manager. “Whether you are utility contractors, underground contractors, home builders or government entities, Yukon has equipment suited for your project. Yukon Equipment also provides most of the snow removal heavy equipment used at airports throughout Alaska. And this past winter was certainly a whopper with snow levels.”

Snow removal equipment at Yukon Equipment was busy over the winter.

Ever Evolving

As construction, infrastructure and energy opportunities increase across Alaska and the rest of the globe, Alaska Native Corporations will continue to grow by building on decades of experience. For some of these corporations it is not just a matter of bigger investments, it is a matter of smarter business and maximizing opportunities that will allow them to provide for the future of their people through perpetuity.  Paula Cottrell is a writer living in Anchorage.

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special section

Energy & Power

Clean Energy Business Alaska invests in renewable power BY ZAZ HOLLANDER

STG Inc. installing a wind turbine at the Kotzebue wind farm. Photo courtesy of STG Inc.

laska’s Renewable Energy Fund aims to incentivize the growth of clean power in the state built by Big Oil. The Alaska State Legislature created the fund in 2008 to appropriate up to $50 million a year for five years to equalize energy costs around the state and wean rural Alaska from its dependence on expensive diesel. Gov. Sean Parnell signed a 10-year extension of the fund’s authorizing legislation in May. Thanks in large part to the Renewable Energy Fund, Alaska has one of the largest dedicated renewable energy funds in the United States, according to the Clean Energy States Alliance. The amount of Alaska’s fund is second only to the state of California, although New York, New Jersey, Massachusetts and Connecticut also administer substantial clean energy funds and provide additional funding through other programs. Alaska ranks at the top of the list in terms of per capita spending, says Chris Rose, executive director of the Renewable Energy Alaska Project, an Anchoragebased nonprofit with the mission of facilitating renewable energy development. REAP pushed for the creation of the Renewable Energy Fund back in 2007. “It was clear Alaska had a lot of renewable energy resources and we had the need to develop them because our reliance on diesel was becoming less sustainable as the price of diesel went up,” says Rose, who now sits on the fund’s advisory committee. “It was clear we needed some sort of mechanism to jump start the business of renewable energy.”

Putting the Fund to Work

Since 2008, the state has appropriated more than $200 million to 227 projects operated by renewable energy entrepreneurs, utilities, and local and tribal governments, according to the Alaska Energy Authority, which adminis■ 30

www.akbizmag.com • Alaska Business Monthly • July 2012

ters the program. Projects Renewable is still working include everything from “It was clear Alaska had a lot of renewable energy re- with Alaska utility reguwind turbines to tidal sources and we had the need to develop them because lators in hopes of estabpower, solar to hydro, ofa similar program our reliance on diesel was becoming less sustainable as lishing ten in rural communities here. In the meantime, the otherwise dependent on the price of diesel went up,” says Rose, who now sits on Renewable Energy Fund expensive diesel. the fund’s advisory committee. “It was clear we needed serves as an important inSo far, 21 projects have some sort of mechanism to jump start the business of centive to start-up compabeen completed, displacnies developing new teching 3.4 million gallons of renewable energy.” nologies, he says. —Chris Rose diesel and saving com“It’s an interesting time,” Executive Director of the Renewable Energy Alaska Project munities more than $11.2 Johnson says. “I hope the million every year, acpublic can see this.” cording to REAP. between 2010 and 2020. Hydroelectric faUsing the state grant funds, the cilities already account for nearly a quarGood Use of Bad Weather school at Tok developed a biomass- ter of the state’s electricity generation. The business of clean energy—and the fueled heating system that uses black But currently, Alaska’s renewable role played by the Renewable Energy spruce chips from a fire-reduction proj- resources are “underutilized” because Fund—is part of the landscape in Koect to produce power. By heating the the state is still so focused on oil and diak. Kodiak Electric Association opmain school house, the project saves gas production, says Doug Johnson, erates three wind turbines on Pillar the Alaska Gateway School district Alaska business development director Mountain—the largest turbines in the $180,000 a year in heating expenses, for Ocean Renewable Power Co. and a state. Resident can see them from all over town. and another $150,000 a year in lighting former oil industry employee. The Pillar Mountain turbines, tocosts because the school is feeding elecThe company hopes to install the state’s gether with hydroelectric power from tricity back into the grid. first tidal power system in Cook Inlet. “It’s a real success story,” says Karsten “There’s a huge economic impera- the Terror Lake Hydro Project, provide Rodvik, spokesman for the Alaska tive to keep things status quo. The nearly 90 percent of the electricity used Energy Authority. However, making industry is really big in Alaska,” by the cooperative’s 6,000 residential renewables a widespread part of the Johnson says. “Unfortunately, Mother and commercial meters. Using renewstate’s energy picture comes with chal- Nature is not making it like she used able power sources instead of pricey lenges: According to Rodvik, more than to—there is really a finite amount of diesel has saved the utility more than 90 percent of rural Alaska is powered oil and gas ... We’ve got to start think- $5 million since the turbines started by diesel, and integrating an intermit- ing about the future and renewables spinning in 2009. “It’s a win-win. We’ve got a lot of rain tent power source like wind into an ex- clearly are the future.” isting diesel system can be problematic. Ocean Renewable received $2 mil- here. We’ve got a lot of wind here.” says But along with the Renewable Energy lion from the Renewable Energy Fund Darron Scott, the electric cooperative’s Fund, AEA also administers programs last year. The money will help build a CEO. “We take advantage of the natural that fund rural power system upgrades $13 million tidal energy project off Ni- resources in Kodiak. The weather can and replace old, leaking bulk fuel tanks. kiski, scheduled to go on line as early be a little rough here but we work it to While much of rural Alaska contin- as 2014 as a 600 kilowatt demonstration our advantage.” Of the $21 million Kodiak invested on ues to be diesel powered, Rodvik says, project. The company’s Maine base of the Renewable Energy Fund “helps to operations is already making electricity the wind project, $4 million came from balance the energy portfolio” by reduc- with a pilot project in the Bay of Fundy. the state Renewable Energy Fund in 2009. In April, state regulators directed three The wind power contributes 8 pering petroleum dependency. utilities to put electricity onto the grid cent, a relatively small share of the utiliMaking Waves this summer in the first long-term ty’s need. The Terror Lake Hydro Project Alaska’s Renewable Energy Fund is that power-purchase agreements for tidal produces 80 percent of the electricity. much more remarkable for its success energy in the country, according to an Diesel provides the rest. But along with in a state built on the production of oil Associated Press report. power, the turbines are helping to fuel a and gas, which are nonrenewable and Ocean Renewable makes electricity marketing strategy for local businesses. increasingly hard-to-reach resources. from tidal currents by installing powerKodiak fish processor Pacific Seafoods According to the International Energy generation systems that resemble push- powers its operations with turbine outAgency, fossil fuels received $409 billion mower blades in the water. The tides or put. Pacific talks up the use of renewable in subsidies globally in 2010, compared current move the system, which gener- energy on the labels it attaches to the with $66 billion for renewable power. ates electricity that’s sold to the grid. wild salmon and other seafood it sells to Alaska in 2010 established a goal to According to Johnson, In Maine, the environmentally conscious customers generate half the state’s electricity from state’s public utility commission incentiv- like the green-food giant, Whole Foods. renewable energy sources by 2025, and ized tidal energy by giving producers a fa“When we first started, we got tremenincrease energy efficiency by 15 percent vorable rate for their first contract. Ocean dous feedback,” says John Whiddon, gen

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eral manager of the company’s Kodiak operation. “It distinguishes us in a way that just indicates that stewardship and sustainability are actually part of our company core values.”

Clean Power Made Law

Rep. Bill Thomas of Haines was one of the main supporters of the original legislation behind the fund. His district includes Yakutat, a community dependent on diesel with no access to tested renewables such as hydropower or wind, says Kaci Schroeder Hotch, Thomas’ chief of staff. “He was thinking if he could get community grants to get or explore renewables, that might help everyone,” Hotch says. Getting the fund authorized was challenging at first, Rose says. Introduced in 2007, it didn’t actually get signed into law until the next year. “The challenging part was there was less recognition in 2008 that renewable energy had the economic viability that it does,” he says. “We really had to educate lawmakers and the administration that this was not a greenie thing. This was about business and stabilizing electric

rates and heating costs and making our energy costs more predictable and stable.” The program isn’t without criticism. Especially in the early years, concerns arose about delays in processing projects. Separately, there have been criticisms about the slow pace getting money to the communities that need it. AEA representatives told a legislative hearing in March that they increased staffing to process the fund program more effectively. Delays are to some extent built into the program: AEA puts out requests for applications in the summer, reviews the list in the fall, and recommends projects to the Legislature in January. Approved projects don’t get funded until July. In the program’s five years of funding, the state has received $1.2 billion in requests, according to an AEA table. Out of those requests, AEA has recommended a little more than $239 million be funded. Legislators have appropriated a little more than $202.6 million. Some $75.6 million has actually been disbursed, funding 21 projects currently operating. There was little doubt an extension would pass the Legislature and

gain the governor’s approval, but the length of the extension was welcome. “It’s 10 years,” Schroeder Hotch says. “I’ve been here eight years and I’ve never seen a 10-year extension, so we’re pretty pleased.”

Challenges of Rural Energy

The success of the Renewable Energy Fund program doesn’t mean developing renewable energy is easy, given the logistical challenges of building any project in rural Alaska. Just look at the hurdles faced by Anchorage-based STG Inc. STG helped its client, Unalakleet Valley Electric Cooperative, obtain a $4 million grant from the Renewable Energy Fund for a six-turbine wind project. The firm, which helps nonprofit utilities get grant funding, became the first group to have an agreement in place under the fund program. Putting up a half-dozen turbines in windswept Unalakleet was relatively straightforward compared to a project STG just completed: adding turbines to a Kotzebue wind farm. For starters, STG had to revitalize a barge landing that hadn’t been used in

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Bill Morris Advertising Account Manager b_morris@akbizmag.com

The majority of our magazine subscribers are owners, partners, presidents, chairpersons and CEOs of their business. Give Bill a call to see how he can help your marketing plans be a success.

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www.akbizmag.com • Alaska Business Monthly • July 2012

Photo courtesy of STG Inc.

the community for decades, according to Clinton White, business development director for the company. Then they had to do soundings to make sure the barge could handle the loads coming in—including a 250-ton crawler crane. Through the support of the company’s logistics partners, that crane had to be transferred from one barge to another barge eight miles from shore in the middle of Kotzebue Sound. Meanwhile, the frozen ground beneath the turbine foundation presented another challenge. To make sure the ground stays frozen, and stable, STG drove into the ground pile equipped with thermosiphons that “suck heat out of the earth,” White says. Such logistical hurdles are common for the company, which has installed 80 percent of the utility-scale wind systems in Alaska. The wind projects represent only a small segment of STG’s business, which focuses on rural Alaska. The company also works on pile foundations, bulk fuel systems, civil construction, communication networks and power generation. But the small role the projects play in the company’s portfolio belie their

Unalakleet Valley Electric Cooperative’s six-turbine wind project.

importance to the state, White says. It’s an unstable situation when residents of some villages are spending more than half their disposable income to heat and power their homes with fossil fuels, he says. “Our perspective is the biggest

challenges facing rural Alaska are all energy related.”  Zaz Hollander is a journalist living in Palmer.

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special section

Energy & Power

Bainbridge: A Model for Alaska How an island community assures energy independence

he debate about energy—how much, from what, at what cost—has been with us for a while now and is revived every time an oil crisis appears. Each side of the debate—consumers, environmentalists, utility companies, government officials—has a notion of what someone else should be doing (or stop doing) to address the cost, source and availability of energy. The United States Department of Energy Better Buildings Program is working to break this cycle and make energy efficiency and conservation a lasting value in our communities, one house at a time. A small island in Washington state has taken the DOE message to heart: islanders have mobilized to reduce their collective energy and resource use by completing home energy upgrades and installing renewable energy systems to reduce its dependence on a scarce resource. According to the U.S. Department of Labor, the buildings in which we work and live use roughly 40 percent of the energy in the country at a cost of more than $400 billion per year. Through a variety of efficiency improvements (e.g., new lighting, greater insulation, more efficient heating and cooling), proven approaches (clear information, access to financing, energy efficiency investment criteria), and workforce development (contractor training, quality assurance, whole house performance contracting) buildings can be made healthier, more energy efficient, and better places to live ■ 34

Enough similarities exist between Bainbridge Island and Alaska’s rural and Southeast communities to make the RePower concept worth a try in Alaska.

and work while creating jobs and building a stronger economy. The DOE Better Buildings Initiative set out to make commercial and industrial buildings 20 percent more energy efficient by 2020 and accelerate private sector investment in energy efficiency. Grants were awarded to 20 communities located in Maryland, New Hampshire, Georgia, North Carolina, South Carolina, Virginia, Alabama, Florida, Louisiana, Tennessee, U.S. Virgin Islands, Nebraska, Oregon and Washington. The City of Bainbridge Island was one of the grant recipients and immediately went to work to develop its new program: “RePower—A communitywide program dedicated to helping residents save energy, reduce costs, make their homes more comfortable, and create a more sustainable island.” RePower took off fast, and has since extended to the city of Bremerton and all of Kitsap County, Wash., located across the

Graphic courtesy of RePower Bainbridge

BY DIANNE O’CONNELL AND GARON STEPHENS

Puget Sound from Seattle. In May, Alaskans heard a detailed presentation about RePower during the Renewable Energy Alaska Project 2012 Annual Conference. REAP is a coalition of energy stakeholders working to develop renewable energy in Alaska through collaboration, education, training and advocacy. One of the forum speakers was Yvonne Kraus, from Conservation Services Group. Kraus is the Program Manager for RePower Bainbridge, Bremerton and Kitsap as well as the Puget Sound Energy Weatherization Program. From Kraus’ presentation it was evident that many similarities exist in the challenges faced by Bainbridge Islanders and Alaskan communities located on islands and peninsulas. Thus, it is worth examining the island’s approach to energy efficiency and how they were able to see results in so little time, and consider the possibility of similar programs in our Alaska communities.

www.akbizmag.com • Alaska Business Monthly • July 2012

Repower Delivery Model and Goals

About three years ago, the nonprofit Conservation Service Group cowrote a grant application with the City of Bainbridge Island, proposing RePower Bainbridge and Bremerton. CSG received the $4.8 million DOE grant in July 2010, and CSG is now administering and implementing RePower with a number of key partners: The cities of Bainbridge Island and Bremerton, Kitsap County, Washington State University, Puget Sound Energy, Cascade Natural Gas, Positive Energy, Sierra Club, Kitsap Credit Union, Olympic Community College, Earth Advantage and Worksource Kitsap. RePower was launched to the public on March 31, 2011; current grant funding ends July 31, 2013.

“We have developed strong partnerships with community organizations to reach islanders and county residents through multiple avenues, and use both Facebook and Twitter to provide updates on program incentives, benefits, special promotions and progress reporting. We have found a way to make community energy efficiency engaging and fun, and have instilled a sense of island pride around being efficient.” —Yvonne Kraus, Conservation Services Group

The program’s two-year goals for Bainbridge Island are: ■ Complete home energy assessments in at least 4,000 island homes and 100 businesses ■ Complete energy upgrades in 2,000 homes and 25 businesses ■Create up to 65 jobs ■ Reduce approximately 7,000 metric tons of greenhouse gas emissions RePower energy advisers are now auditing homes, making recommendations to property owners and landlords, and training contractors in the techniques, strategies and business opportunities in energy conservation and renewables. So far, their efforts are achieving the stated goals of reducing energy consumption by 15 percent to 20 percent, sometimes even as much as 60 percent. “RePower’s success is partly in its simplicity,” Kraus says. For RePower customers, it’s a threestep process to getting their homes upgraded. To take part in the RePower Program, a homeowner must first sign up for a free 90-minute Home Energy Check Up to identify typical areas of energy loss such as missing or insufficient insulation, gaps, cracks and inefficient equipment. A BPI-certified RePower Energy Advisor will then provide the homeowner with three priority energy upgrade measures for their home.

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Next, RePower connects the and use both Facebook and Energy Links participant to a network of Twitter to provide updates on trained, local contractors. These ■ eere.energy.gov/buildings/betterbuildings program incentives, benefits, contractors must be BPI accred- ■ positiveenergybi.org/repowerbainbridge special promotions and progited and must adhere to RePow- ■ alaskarenewableenergy.org ress reporting. We have found er weatherization specifications a way to make community enin order to participate in the program. smaller, older home,” he says. “When ergy efficiency engaging and fun, and After taking these steps, the par- we audit a home, we try to do three have instilled a sense of island pride ticipant gets paid to save through things: save energy and money, ensure around being efficient.” cash-back incentives, federal and occupant safety, and provide three priSince funding at the federal level is state tax credits, and fi nancing pro- ority upgrade measures that will pro- no longer available upon grant complegrams. RePower links the participant vide the biggest bang for the buck in tion, RePower is also charged with deto regional utility incentives they may reducing energy bills and improving veloping its own sustainability plan and qualify for, and provides an additional occupant comfort.” funding base for the future. incentive to reimburse homeowners RePower does not stop with observaThe message that you could save monwho took action: a $400 RePower Re- tions and recommendations. Instead, ey if you spent $1,000 on a better water ward. RePower also set up an energy it works with general contractors and heater, or $3,000 on a more efficient heat efficiency loan program with a local craftsmen in the techniques and ma- pump, is not always welcome news. As Credit Union to enable homeowners terials needed to cure building defi- the saying goes: “If wishes were horses, to fi nance their Home Energy Up- ciencies and monitors a minimum of then beggars would ride.” Thus, the prograde and take action immediately. 10 percent of all home energy upgrade gram has set aside funds to help hom“Wherever there is a loss of energy, jobs to make sure they get it right. eowners make those acquisitions to ofwe can help people save money,” says “The second secret of our success is fer rebates and incentives in cases where Dan Josephsen, one of the project’s in our community outreach and our energy losses are most critical. four energy advisers. “The biggest use of social networking tools,” Kraus Why Bainbridge? problem most homes have is an air says. “We have developed strong partseal problem (that causes) tremendous nerships with community organiza- Bainbridge Island is known as a comheat leakage. This can be just as preva- tions to reach islanders and county munity of retired persons and profeslent in a large, new home as it is in the residents through multiple avenues, sionals who value unmolested foliage,

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www.akbizmag.com • Alaska Business Monthly • July 2012

Photo courtesy of RePower Bainbridge

Energy adviser Dan Josephsen.

underground power lines and certainly no ugly power grids. Bainbridge is green, despite its own high energy consumption rates and above average number of power outages. In fact, the community was using too much energy for its infrastructure capabilities. The island was using more than the power grid serving it could handle. Two years ago, the island’s only power provider, Puget Sound Energy, informed islanders that it was planning to build a new substation and a new set of power lines to keep up with grow-

ing demand. The islanders decided that there must be a way to avoid the need for new, expensive and controversial new infrastructure by setting a conservation target. The utility agreed, and gave the island two years to prove that it didn’t need more energy, but rather needed to be more efficient with what was available. “The fi rst action we took was to work together with a local nonprofit, PSE, and the city to generate awareness about the island’s energy problem,” Kraus says. “Now, our most interesting and successful social networking tool is our Island Energy Dashboard, coupled with Twitter alerts. Puget Sound Energy has provided Bainbridge Island with a live data feed on total island energy use, divided by substation. The energy consumption is displayed on energy dashboards throughout the community and on our ferries. If collective energy use is nearing system capacity, a Twitter feed alerts islanders and asks them to shut down any unnecessary appliances and equipment to avoid a power outage. Th rough this system alone,

islanders have reduced their peak energy demand by 10MW.”

Coordinated Components

While the components of the RePower program are not new in themselves, they do acquire additional impact when pursued in a coordinated fashion. More efficient use of energy may result in warmer houses in winter, lower utility bills and less drain on the power grid. The steps to achieve these goals will result in better housing stock, increased local employment and additional demand for energy-efficient products. Virtually every component of the RePower agenda could easily find a home in numerous Alaska communities. Similarities between Bainbridge Island and Southeast Alaska that Kraus identified in her REAP presentation—unique culture, separation from the mainland, travel by ferry, oilheated homes, exceed energy capacity— make the program one to model.  Dianne O’Connell and Garon Stephens write from Washington state.

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special section

Energy & Power

Chikuminuk Dam to Fuel YK Delta Nuvista Light & Electric Cooperative starts long-term project BY DIMITRA L AVRAKAS

ike so many rural regions in Alaska energy costs in the Yukon Kuskokwim Delta have threatened villagers’ abilities to stay in their communities and continue to practice subsistence as their primary way of life. At this time, throughout Alaska, alternative forms of energy are being studied, pursued or put into practice to make sure no one is forced to leave—wind in Shishmaref, geothermal in the Aleutians and now hydro in the YK Delta offer that security. It’s an exciting time for the people living in rural Alaska.

Powerful Tesimony

In April, Elaine Brown, director and general manager for Nuvista Light and Electric Cooperative, testified before a U.S. House Natural Resources Subcommittee on Indian and Alaska Native Affairs Oversight Field Hearing on “Federal Laws and Policies Affecting Energy Prices in Rural Alaska and their Effects on Native Villages.” In her presentation, Brown was brief and to the point regarding the dire need for the project: “The YK region of Alaska is a 59,000-square-mile area, includes 56 remote communities, has a population of approximately 30,000 Yupik, Cupik, and Athabascan indigenous Native peoples, and has the largest concentration of rural communities in all of Alaska. YukonKuskokwim residents are largely people of Native descent living a subsistence lifestyle—they earn the lowest U.S. per capita incomes, have triple the level of suicide rates in the entire nation, and have the highest levels of poverty due to the high cost of living and lack of jobs in the region. “Making matters worse, residents of our region have the highest energy costs in the nation at $7 to $12 per gallon for diesel heating fuel, and diesel-generated electricity is delivered at a cost ranging from $0.58 to $1.05 per kilowatt hour. In less than five years, the percentage of ■ 38

income that must be utilized for home heating and electricity has risen from 40 to over 60 percent of total family income. Since 1975, more than 30 reports and studies have been written by various agencies documenting the energy options and needs in the YK Region …” Nuvista hopes to reverse those statistics, Brown said. In 2010, the Association of Village Council Presidents Regional Housing Authority received a grant from the Alaska Energy Authority for a preliminary study on potential hydroelectric projects in Southwest Alaska. Chikuminuk Lake was selected as the prime project. At first it wasn’t seen as economic, but its potential for viability rose with the price of oil. “The Chikuminuk site could provide 100 percent of the projected energy demands for the Lower Kuskokwim Bethel area and electrical power as low as $0.22 per kilowatt hour in cost. The positive impacts of such a locally available source of renewable power on the economy for this region is enormous and positive. We ask the committee`s help in this project and look forward to working with you,” Brown testified. The lake is located in the Wood-Tikchik State Park. However, the state’s Division of Parks and Outdoor Recreation does not have the authority to approve hydroelectric development.

A Hurdle to Overcome

Because the project would require transmission lines across the park from Chikuminuk Lake to Bethel, Browne asked the subcommittee to consider granting that access. The Alaska Native Claims Settlement Act, which originally addressed the land claims in Alaska, failed to provide certain protections that Alaska Native Interest Land Conservation Act corrected to guarantee economic survival of rural

villages, which naturally includes roads and right-of-ways through federal lands. Under Title XI of the ANILCA, the permitting process is “a highly complicated and difficult process, requiring a vote of Congress or passage of federal legislation,” Brown testified. She pointed out to the committee “Our living Native communities are now surrounded by federal lands of some kind.”

The Nitty Gritty

According to the Nuvista website project description, “The proposed facility would consist of a dam and penstock system utilizing the Allen River discharge from Chikuminuk Lake, and would have the following features: a 128-feet high concrete-faced rockfill dam, an un-gated side channel spillway, a 25-foot diameter intake tower with floating surface collector, a 25-foot diameter unlined tunnel with 600-feet pressurized and 175 feet unpressurized, a 25x16-foot gatehouse and gate shaft, a 13-foot diameter penstock that divides into two 9-foot diameter penstocks contained within parallel 14-foot diameter tunnels leading to the powerhouse, a 4-foot diameter in-stream flow pipeline along the base of the dam for use during scheduled or unscheduled plant outages, a 150-foot long by 75-foot wide above-grade steel framed powerhouse, a 75-foot wide by 100-foot long concrete outfall with a fish barrier, a 150x150foot 138 Kilovolt switchyard, a 118-mile long 138-kV single-circuit transmission line supported on X-braced H-style structures extending from the proposed powerhouse to Bethel and appurtenant facilities, which include a 50x100-foot maintenance shop, a fish-handling yard, three 24x60-foot operator living quarters, a float plane dock, a heliport pad and permanent access roads between the float plane dock and powerhouse facilities. The proposed powerhouse would contain two new Francis turbines of 6.7 Megawatts

www.akbizmag.com • Alaska Business Monthly • July 2012

each for a total of 13.4 MW be placed in the powerhouse, and the estimated annual energy production under average water conditions will be 88.7 GW (a gigawatt is equal to one billion watts or 1,000 MW).” “It will provide much of the energy needs of the region,” Brown says. The villages to be served include Bethel and its 13 surrounding communities; Akiachak, Akiak, Kwethluk, Tuluksak, Bethel, Oscarville, Napakiak, Napaskiak, Atmautluak, Kasigluk, Nunapitchuk, Tuntutuliak, Eek and Quinhagak. Power generated has the potential to decrease 5 million gallons of diesel used annually (currently 20 million gallons are used), and to prevent 55,000 tons yearly CO2 emissions from entering into the atmosphere.

Project Phases

In the 2011 legislative fund request, the total project cost is $483.5 million, in 2011 dollars. The Alaska State Legislature appropriated $17.63 million for the first two phases of the project in FY12; $5.88 million for the engineering cost estimate to conduct a detailed feasibility assessment, site reconnaissance, engi-

neering plans, and the Federal Energy Regulatory Commission licensing application, according to the state funding request. In addition, $11.75 million is for preliminary design, comprehensive field investigations, surveys and design specifications. Phases one and two were scheduled from 2012 to 2015. Phase three, $7.83 million, scheduled from 2013 to 2016, is for land jurisdiction reviews and U.S. Department of the Interior land easement acquisitions for electrical transmission lines from the generation site 118 miles to the region demand centers, with DOI expected funding. Phase four, $35.25 million, planned mostly for 2016 o 2018 but continuing through 2021, covers the final designs, permits, modifications and construction oversight. Phase five, $391.7 million, is the actual construction from 2018 to 2021. Funding for phases four and five may potentially come from AEA energy bond sales.

Gathering Information and Financing

Regardless of the stumbling blocks associated with running transmission lines across federal land, the company

is conducting field studies this summer. “This will be a full field season,” Brown says. “This summer there is mapping planned and geotechnical work.” As with most remote projects, little is known about the area. “We’re filling in a lot of gaps. There’s very little information out there,” she says. “We’ll be doing data gathering to set ourselves up for more field studies.” Funding the massive project is also in the planning stages. “We’re looking at grants, loans, U.S. Department of Agriculture funding, the Department of Energy, Alaska Industrial Development and Energy Authority,” she says. “We’re looking at all funding sources.” The company’s mission is “to improve the energy economics in rural Alaska by creating energy generation and transmission infrastructure to serve, connect and enable the region to attain affordable, long-term energy sustainability and self-sufficiency.” Brown is confident Nuvista will attain that goal. “We hope to flip the switch in 10 years,” Brown says. 

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special section

Energy & Power

Initiating Renewables in Rural Alaska

Diversifying energy sources to keep the lights on BY RINDI WHITE

■ 40

Photo courtesy Lester Snoderly

ural Alaska has some of the highest energy costs in the nation, particularly in villages not on a road system or to a major waterway. Turning lights on or charging up a cell phone is often more complicated than simply flipping a switch or plugging in a cord: in some communities, power must be rationed or the whole community will go dark. From building new sources of energy generation—wind, hydro, biomass and heat recovery system—to installing inhome energy monitors, electrical cooperatives and community groups across rural Alaska are working on projects that aim to chip away at the high power costs. “Right now rural communities are entirely dependent on diesel fuel for heat … and power generation,” says Dennis Meiners, a principal at Anchorage alternative energy company Intelligent Energy Systems. Meiners formerly worked for the state-run Alaska Energy Authority and is familiar with energy issues across the state. “They’re completely dependent on fossil fuels for heat and power generation. Those prices have been going up and up and up,” he says.

Workers at the Kwigillingok wind farm pause for a celebratory photo. From left are: Johnny Andrew, Sam Atti, Andrew Kugstun, Ben May, Ben Daniel, Michael Daniel, Brennan Lewis, Willie Mute and James Paul.

Alaska Energy Authority Tasked to Help

That’s where the Alaska Legislature stepped in. Over several years the Legislature has developed a few ways to help rural communities offset high power bills. The Alaska Energy Authority is tasked with helping rural communities lower their energy costs. Its rural power system upgrade and bulk fuel storage programs have helped pay for costly upgrades and its Power Cost

Equalization program directly subsidizes power bills for rural residents across the state. Alaska Energy Authority spokesman Karsten Rodvik says the rural power system upgrade program helps communities replace inefficient power generators with new technology, cutting fuel consumption and often increasing reliability. To date, AEA has spent about $100 million on power system upgrades, he says.

www.akbizmag.com • Alaska Business Monthly • July 2012

“It’s not uncommon to see a 30 percent decrease in fuel consumption after a new powerhouse is completed and installed,” Rodvik says. According to Rodvik, Akiak will get a new $4 million power plant this year. It’s a self-contained powerhouse built to fit on a barge, and holds four 220 kilowatt generators. The upgrade also includes a $200,000 heat recovery system and is expected to save the community 18,000 gallons of fuel each year. A new $3.7 million powerhouse is also being built in Hoonah, and is designed to work with a not-yet-built hydropower project on nearby Gartina Creek. The plant’s $1.2 million heat recovery system is expected to save the community 57,000 gallons of fuel each year. “These are remarkable,” Rodvik says. “It’s the latest generation of diesel technology.”

State Upgrades Rural Diesel Use

Since 2000, more than $204 million has been spent by the state to upgrade community bulk fuel systems. In rural Alaska, where communities must rely on barge or plane shipments of diesel fuel to power community generators, this program replaces old, leaking fuel tanks with new ones. This year, new bulk fuel storage facilities should be installed in Nunam Iqua, Bettles and Aleknagik, Rodvik says. Hoonah is also getting a $3.4 million, 260,000 gallon bulk fuel storage facility, which will replace tanks that were no longer in compliance. The Energy Authority partners with the federal Denali Commission to fund both the bulk fuel storage upgrade program and the rural power system upgrade program. One of the most well-known ways the Energy Authority addresses high fuel costs is through the Power Cost Equalization program. The PCE, as it’s called, helps reduce the cost of power to rural residents by using state money to offset high fuel costs. In 2011, the Energy Authority used $31.8 million to offset high fuel costs across the state. According to a 2011 year-end report from the Energy Authority, more than 77,000 people in 183 communities across the state qualified to participate.

www.akbizmag.com • Alaska Business Monthly • July 2012

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Popular State Grant Program Helps Boost New Projects

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One of the Energy Authority’s most popular programs is a relative newcomer. If Gov. Sean Parnell approves the program’s fift h round of grant funding, the Renewable Energy Fund will have distributed a total of $202 million so far, says Peter Crimp, deputy director of alternative energy and energy efficiency for the Energy Authority. Across the state, 215 projects have received REF funding, Crimp says. Most—131 of them—received preconstruction funding, and 84 are in the construction phase. By 2015, the 84 projects either completed or in construction should offset about 14 million gallons of diesel fuel each year, he says. The state expects communities will save about $35.3 million a year on fuel costs. “There are fairly good economics on these projects. Fairly speaking, these are 20 to 25 year (lifespan) projects,” he says, adding that hydropower projects have about twice that lifespan. “That’s a fairly good rate of return.” The fund underwrites traditional renewable energy projects such as wind and hydro to biomass, as well as biomass and heat recovery projects, which heat community buildings with waste wood or waste heat generated by other sources.

Wind and Hydro Together

The Renewable Energy Fund helped pay for a massive wind project on Kodiak Island, a project some call the fund’s poster child for wind projects. On Pillar Mountain, Kodiak installed three turbines that together produce 4.5 megawatts of wind power in 2009, about 9 percent of the Kodiak Electric Association’s power needs. “That’s a good example of a place that has been very aggressive about marrying wind and hydro together,” Crimp says. About 75 percent of Kodiak Electric Association’s power in 2011 came from its 20-megawatt Terror Lake hydropower project. Alaska Energy Authority is helping KEA pay to add a third turbine, increasing the output to 30 megawatts. The Energy Authority paid $248,000 toward studies and design, and the Legislature last year approved $3.75 million toward the $15 million project cost.

www.akbizmag.com • Alaska Business Monthly • July 2012

KEA also plans to add three more 1.5-megawatt turbines to its Pillar Mountain wind farm, a project the utility hopes to finish this fall. On its website, the utility states that the additional wind and hydro turbines will allow it to provide 98 percent of its power from renewable resources. “Shifting our source of electric energy from diesel to fuel-free renewables not only lowers the cost of power but it also stabilizes the cost of power,” wrote KEA president Darron Scott in a September president’s report posted at the KEA website. “The fewer gallons we need to generate electricity, the less impact volatile fuel prices have on our communities.” Wind power projects are some of the most popular ways to use the Renewable Energy Fund. A list of active projects shows 21 wind projects, more than any other category of project funded. Ten of those were in operation in 2011. Hydropower projects are also popular: 11 hydro projects have been funded, four of which were in operation in 2011. A $7.2 million hydropower project in Atka, at Chuniisax Creek, is scheduled to be online this year, Crimp says. Stud-

ies estimate that project will save the community about $240,000 a year in reduced diesel costs. More popular than hydro projects, at least by Renewable Energy Fund standards, are biomass projects. Fifteen have received Renewable Energy Fund money; three were operating in 2011.

Biomass Gaining Popularity

Biomass projects use wood chips or other combustible materials as a low-cost source of energy. In 2010 the Alaska Gateway School District used Renewable Energy Funds to add a 60-by-90foot metal building next to the Tok School to house an efficient boiler, wood chip pit and other components to heat the school. The project uses waste wood to heat the school. Tok is in an area where hazardous wood becomes a danger during summer fire season. State foresters identified about 30,000 acres of hazardous fuel in the area, enough to fuel the school for hundreds of years. Project supporters have said their dilemma is to either burn the waste wood safely or risk losing private property and en-

Lineman Ed Hall installs ﬁve-foot ladder sections on a transmission line tower leading to Kodiak’s hydroelectric power project, Terror Lake, last August. Photo courtesy of Kodiak Electric Association

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Photo courtesy Martin Leonard

Wasillie Lupie prepares to upgrade electrical elements and system controls of the thermal storage units being installed in Tuntutuliak as part of the Chaninik Wind Group’s plan.

dangering residents and livestock when fires strike. Tok expects to save more than $180,000 a year in diesel costs. “That project has a lot of other benefits; using the local biomass has cleared it for wildfire mitigation, there are cost savings at the school and it stimulates economic development,” Crimp says. Also according to Crimp, Similar projects are in the works around the state, including projects to heat schools in Delta Junction, Kenny Lake, Talkeetna and Thorne Bay. Tanana in 2007 added two Garn wood-burning boilers and uses local firewood or driftwood floating by to heat the community washeteria and other community buildings. A University of Alaska Fairbanks report showed diesel fuel consumption dropped by 30 percent. The community is currently working to expand the project.

Heat Recovery

Heat recovery is also a category of renewable funding that is gaining interest. “Many people think of renewable energy being just energy projects, but when you look at the amount of energy used to heat buildings, about threequarters of it is heat and one-quarter of it is power. The heat is what is eating people alive,” Crimp says. Although about 80 percent of the Renewable Energy Fund grant money has ■ 44

gone for power projects, Crimp says the fund’s governor-appointed advisory committee is encouraging Energy Authority staff to encourage communities to apply for projects to address heating costs.

Learning to Live on 500 Kilowatt Hours

Alaska Village Electric Cooperative is one of the largest retail cooperatives in the nation, serving 56 villages between Kivalina, near Nome, and Old Harbor on Kodiak Island. The cooperative is working with the Association of Village Council Presidents and the Alaska Native Tribal Health Consortium to help 4,200 electrical consumers — some AVEC members and some in other communities—lower their energy bills by giving them more information. The electric cooperative bought a few pallets full of The Energy Detective (or “TED”) monitors to be placed in homes in communities that are participating in the program. A small radio transmitter will be installed in each home’s meter panel. The transmitter sends a radio signal to the monitor, which is plugged into a wall outlet. AVEC president Meera Kohler said the device acts like a small clock, showing what items are currently using power and what it’s costing the homeowner in real time. The devices were being programmed

www.akbizmag.com • Alaska Business Monthly • July 2012

at AVEC’s Anchorage warehouses in May and will be installed this summer. Each device is programmed with communityspecific information, Kohler says. “It’s tied in with the PCE cycles,” Kohler says. “It starts warning you when you get to 400 kilowatt-hours— and when you get to 500, it starts blinking red.” Power Cost Equalization doesn’t apply to energy use over 500 kilowatt hours, so residents pay full rates for anything over that threshold. Kohler says residents have previously been unable to tell when they were approaching the cutoff. Some were unpleasantly surprised to get bills in which more than half was due to overage charges. Kohler says the monitoring devices will belong to the homeowners, and AVEC and other utilities can’t view the readouts. But she believes they will be a great tool for residents. “It might ultimately translate, at least for us, to a very modest decline in diesel used to generate electricity,” she says.

Reducing Diesel Dependence

While AVEC is teaming up with villages in its region to give consumers more knowledge, four communities in Western Alaska are working together in an effort to directly decrease energy costs for their residents. Residents in Kipnuk, Kohngiganak, Kwigillingok and Tuntatuliak teamed up in 2005 to create Chaninik Wind Group and find ways to reduce energy costs. The four communities are connected only by a desire to work together, Chaninik president William Igkurak says. “We are remote, separate, standalone utilities working together to help each other,” he says. The group received money from the federal Department of Energy’s tribal energy fund and from other sources to install five wind turbines in each community, with a goal of displacing 200,000 gallons of diesel fuel each year. The turbines cost each community about $3 million. But Igkurak says it’s not just a matter of getting grant funding and hiring someone to fly out and install the turbines. “I’ve been watching other construction companies come to our community and bring their own people. We’re trying to reverse that trend,” he says.

The Wind Group has been working with Dennis Meiners at Anchoragebased Intelligent Energy Designs. He says about 14 wind technicians have been trained as the turbines are installed. “Each community has (at least) a couple of very competent wind technicians now, who can handle just about anything on this machine,” Meiners says. According to Meiners, the 95 kilowatt turbines were chosen because they’re durable and most repairs can be done by scaling a ladder affi xed to the tower. That makes it easy for local technicians to repair. And they’re efficient—he expects each community to see a 30 percent to 40 percent reduction in the amount of fuel needed to generate power. As part of the project, each community had upgrades to do at their local power plants. Kipnuk, where an outdated power plant was frequently failing, is getting a new power plant, Meiners says. “They’ve had power rationing in the community for probably the last year. Over the wintertime they suffered many, many outages and it became a safety issue,” he said. Meiners says the Wind Group installed turbines with more generating capacity than each community needs right now. The excess power will be routed to electro-thermal storage devices installed in some homes in the community and in a few community buildings. Residents with the storage devices in their homes can use the storage devices to heat their houses, paying a rate of about half the cost of heating with diesel. The storage devices are part of a pilot program, which will help the Wind Group determine the best size and value for future storage devices, he says. “You start to change the economy when the local utility can sell excess kilowatt hours to their customers … at a rate that is significantly less than what they are already paying to heat their house”, Meiners says. “The dollars stay in the community—they go to provide jobs—and it’s reduced the community’s dependence on diesel.”  Rindi White is a writer living in Palmer.

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special section

Energy & Power

Photo courtesy of Chugach Electric Association

Southcentral Power Project steam turbine generator being set to foundation last October.

Railbelt Utilities Commit $1 Billion Four companies build four new electric plants

BY GENE STORM

our electric utilities serving a majority of Alaska’s population and most of the state’s commercial customers in a vast area stretching from Homer to Cantwell have committed more than $1 billion to new power plant construction and efficiency improvements. Some of the new generating capacity will come on line by the end of this year with other construction scheduled for completion two and three years out. Chugach Electric Association, Homer Electric Association, Matanuska Electric Association and Municipal Light ■ 46

and Power collectively serve almost 200,000 metered locations throughout Southcentral Alaska all along the Railbelt. All four utilities are involved in various phases of capital improvements that will see four new plants and improved technology brought to bear on the region’s electricity demands.

Chugach and ML&P

The Southcentral Power Project, a 183 megawatt power plant in the finishing stages of construction, is a joint effort between Chugach and ML&P slated to

begin commercial operations in December of this year. Years of planning beginning in 2004 went into the $369 million project, with Chugach financing 70 percent of the cost and the balance covered by ML&P. An additional $21.8 million for substation upgrades is also scheduled. At the March 2011 groundbreaking for the project, remarks offered by Anchorage Mayor Dan Sullivan and former mayor and now U.S. Sen. Mark Begich struck a common theme. Sullivan noted that, “This new plant is a step in

www.akbizmag.com • Alaska Business Monthly • July 2012

■ 48

Photo courtesy of Homer Electric Association

the right direction as we look to provide reliable service at a reasonable cost for Anchorage’s electrical consumers.” Sen. Begich, whose remarks were presented by a staff member, noted that idea for the plant came about during his tenure as Anchorage mayor. “I am pleased to see this project moving forward as we plan for the energy needs of our communities for years to come,” Begich said. The plant, located on Chugach’s headquarters property in Anchorage, features three natural gas fired turbine/generators and one steam turbine/ generator. Operating the plant in a combined-cycle mode will result in efficiency and fuel savings by using the hot exhaust from the gas turbines to make steam to drive the steam turbine. That will translate to a 25 percent reduction in the natural gas required to produce a kilowatt hour of electricity compared to the best units currently in use by Chugach. The reduced gas consumption rate will translate to more than $20 million savings for the two utilities for the plant’s first full year of operations. The new plant’s combinedcycle operation will also result in a sig-

A new steam turbine will generate power from the exhaust heat of the existing natural gas ﬁred turbine at the Homer Electric Association Nikiski plant.

nificant reduction in nitrogen oxides and carbon monoxide emissions. SNC Lavalin Constructors Inc., the large Montreal-based engineering and construction company, designed and is building the plant. The firm has designed and constructed more than 60,000 megawatts in thermal power

projects worldwide. The project owners purchased combustion turbine and steam turbine generators for the project directly from General Electric, Mitsubishi Power Systems Americas and Innovative Steam Technologies. Chugach is the largest electric utility in Alaska, providing power to

www.akbizmag.com • Alaska Business Monthly • July 2012

more than 81,000 metered customers throughout the Railbelt. ML&P, owned by the Municipality of Anchorage, services almost 32,000 customers in a 20-square-mile area of Anchorage, including the military at Joint Base Elmendorf-Richardson.

Homer Electric Association

utility traces its roots to 1945 when nine Homer residents began working with the Rural Electrification Administration to form what would become Alaska’s fifth rural electric cooperative.

MEA

Farther north, Palmer based MEA has begun preliminary site work on a 170 megawatt generation station located in Eklutna that will have a total price tag of approximately $250 million. As with HEA, Matanuska Electric is making the move to produce more electricity on its own as power sharing contracts with Chugach end.

Photo courtesy of Homer Electric Association

Two HEA power plant projects are under way on the Kenai Peninsula. Central to the approximately $150 million in expenditures is the Nikiski Combined Cycle Conversion Project, the cornerstone of what the 67-year-old electric cooperative is calling Independent Light. It is the plan so named as HEA prepares to produce its own electricity when the existing power supply contract with Chugach Electric expires at the end of 2013. At the groundbreaking for the Nikiski project in April of 2011, HEA Board President Debbie Debnam emphasized the importance of the cooperative producing its own electricity. She noted that studies over several years provided several options, including the production of power locally. “We believe that the decisions made about power production should be made right here on the Kenai Peninsula,” Debnam said. As with the Southcentral Power Project in Anchorage, a new steam turbine will generate power from the exhaust heat of the existing natural gas fired turbine at the Nikiski plant. Plant output will increase 45 percent with no additional natural gas consumption because of the utilization of the waste heat. When completed later this year by

Anchorage-based contractor NORCON Inc. the project will approximately double the plant’s output from 40 megawatts to as much as 80 megawatts. At HEA’s property in Soldotna, the utility is installing a combustion turbine as another element of its Independent Light program. HEA will use the 48 megawatt General Electric LM 600 turbine as a backup source of power. Project completion and plant operation will occur next spring. HEA maintains more than 2,300 miles of power lines in a service area covering some 3,166 square miles. The

Fans for the air cooled condenser at the Homer Electric Association Independent Light project.

www.akbizmag.com • Alaska Business Monthly • July 2012

49 ■

Twenty-two acres of the 70-acre site have been cleared for the new power plant, road upgrades are under way and there is the possibility a railroad spur line will be constructed to serve the delivery plant equipment and supplies. A railroad spur may be especially useful in delivering the components of the 10, 18 cyclinder Wartsila 50DF engine/generators at the heart of the MEA project. Each of the units weighs in at 355 tons. The dual-fuel Wartsila engines operate primarily on natural gas, but in the event of an emergency or disruption in the gas supply, fuel can be switched to diesel. Two diesel storage tanks with a combined capacity of 800,000 gallons of fuel are included in the plans. It was a factor in choosing the Wartsila technology, according to MEA General Manager Joe Griffith. Noting that the MEA member area was the fastest growing in the state, Griffith said, “We are confident that our choice of Wartsila engine/gen sets provides the most reliable and cost-efficient power available while meeting our projected load.” Citing the engine’s capability to switch fuels seamlessly in the event of a

natural disaster such as an earthquake, Griffith added, “That was a huge factor in our decision to go with Wartsila.” Another factor in the decision was the unit’s fuel efficiency and low emission levels. The Wartsila generating sets meet Alaska’s air quality standards for permits specific to the Eklutna site. Eight of the engines were built in South Korea with the fi nal two under construction in Trieste, Italy. Delivery to the Eklutna site is scheduled for fall 2013. Power plant construction begins in spring 2013 with project completion scheduled by year-end 2014. MEA is the prime contractor with assistance from Stanley Consultants, a leader in the electricity consulting and engineering market. The Eklutna Generation Station will transform MEA from primarily a purchaser of electricity produced by others to a producer and distributor in its own right. MEA was the first rural electric co-op established in the Alaska Territory in 1941. It currently serves almost 56,000 customers while maintaining more than 4,000 miles of transmission

and distribution lines in its section of the Railbelt.

ML&P

In Anchorage, ML&P is clearing a site at its George M. Sullivan Plant No. 2 along the Glenn Highway in preparation for a $225 million replacement project projected for completion by the end of 2015. The new equipment will provide 120 megawatts of power with greater fuel efficiency while emitting considerable less pollution than the plant it will replace. An 11 percent savings in natural gas use with a reduction in nitrogen oxides of 97 percent and an 80 percent cut in carbon monoxide emissions will result. Additionally, more of the waste heat will be used in heating the municipal water supply that is located at the same site. ML&P, which marks its 80th year of operation in 2012, serves more than 24,000 residential customers and upwards of 6,200 commercial customers.  Gene Storm, a writer living in Anchorage, has covered Alaska business 41 years.

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mining

Interior Gold Mines Diverse and proliﬁc economy drivers BY JULIE STRICKER Fort Knox stockpile and mill in the Interior.

f you were to look at a map of Interior Alaska, find the largest gold discoveries in the past century and draw a line between them, it would form a 1,200-mile-long, 200-mile-wide arc from an area southwest of McGrath, extending east into Yukon, Canada, and south to British Columbia. Major fault systems border the region on the north and south. In between, in what is known as the Tintina Gold Belt, millions of ounces of gold have been recovered—an astonishing amount. But that’s only the tip of the mother lode. The region includes Pogo, Fort Knox and Nixon Fork mines, as well as the Livengood and Donlin Gold prospects and others in Canada. In the past 20 years alone, millions of ounces of gold have been recovered, more have been discovered and the region remains a prime area for exploration. Many of the mines are in areas that have been actively mined off and on for ■ 52

the past century, but modern geologists are still making new discoveries measuring millions of ounces. It means mining, although long surpassed by government and tourism as a main driver of Interior Alaska’s economy, is still an economic foundation, says Jim Dodson, president of the Fairbanks Economic Development Corp. “You’ve got Pogo to the southeast of us, and Fairbanks Gold just outside of town and hopefully Tower Hill to the north,” Dodson says. “The mines that exist today have a very significant yearround impact on this community. “They’re just the type of jobs that this community needs to carry it through the long winter months when we don’t have tourists and other types of activities,” Dodson says. Mining jobs are among the highest paying in the state, according Neal Fried, an Alaska state labor economist. “They’re right up there behind oil, but not that far behind,” Fried says.

Photo courtesy of Kinross

As of May, the Alaska Department of Natural Resources had received 515 mining applications for the season, according to Jeff Rogers, a Fairbanksbased geologist with DNR. Last year at this time, the agency had received only 372, which was 100 above what the state received overall in 2010. Most of the permits he’s seeing are from people new to the state. Reality television is behind another kind of modern mining boom. Shows such as “Gold Rush Alaska,” “Gold Rush,” “Bering Sea Gold” and “Goldfather” have sparked a modern gold rush to Alaska, Rogers says. “All the oldschool dudes are still around,” he says, “but their numbers pale in comparison to the new people coming in.” Chances are many of the newcomers will never see much gold. Even in the big mines, the gold is the smallest part of the operation. Today’s mines rely on cutting-edge technology and economies of scale to both discover and

www.akbizmag.com • Alaska Business Monthly • July 2012

recover gold that often is visible only through a microscope.

Pogo

Pogo, owned by Sumitomo Metal Mining, is an underground mine located 38 miles northeast of Delta Junction. This summer, it plans to pour its 2 millionth ounce of gold, Shaw said. Pogo has produced more gold on an annual basis since it went into production in 2006 than the massive Fort Knox open pit mine northeast of Fairbanks. Because it’s an underground mine, it generally costs more to produce an ounce of gold, and therefore requires a higher-grade deposit to make it economic, Shaw says. In spring 2012, Pogo announced the discovery of a new deposit that contains at least 1.2 million ounces of gold. East Deep is located outside the main ore body and the find boosts the known reserves by 20 percent, according to a company news release. The find extends the life of the mine about two years, to about 2019, but that could change. Exploration at East Deep is continuing

Photo courtesy of Sumitomo Metals Mining

The Mining Equation

The trick is in figuring out how to get the workers and supplies to the mine, how to extract the gold economically and which milling process will yield the most return. In the calculus of mining, however, location is key. “You have to go where the deposit is,” says Lorna Shaw, external affairs manager for Sumitomo Metal Mining Pogo LLC. “Generally, they’re in a really inconvenient place.” The fact that gold has been trading at more than $1,500 per ounce is a bonus, Rogers says. “When large mines make their plans, they plan for a price of gold that is far less than the actual price of gold. Nobody makes their mining plans for these prices.” The price of gold isn’t the only thing that goes into a mining plan. Despite similarities of vast size and large reserves, Pogo, Fort Knox and Nixon Fork all have mining plans specifically targeted to their locations and ore makeup. “Different deposits do not lead themselves to the same kind of processes,” Shaw says. “Pogo would not be a good above-ground mine.”

Pogo mill facility in a 2011 aerial view.

and Pogo officials are optimistic there is more gold to be found. This summer, workers are upgrading and adding to the man camp at the mine site. Because of its remote location, most workers are housed on site and work shifts that last anywhere from four days to four months, Shaw says. The remoteness is one of the challenges of running Pogo, she says. “Pogo, really, it’s like a small city,” Shaw says. The challenge is making sure everything the workers need on site is there. It’s a three-hour drive to the mine from Fairbanks in the summer, longer in the winter. The main access road to the mine is not open to the public. “We don’t have the opportunity for employees to go home at the end of every shift,” Shaw said. “It’s really a lifestyle choice. Camp life isn’t for everyone.” Consequently, local hire is a challenge, but not because of a lack of qualified workers. About 60 percent of the Pogo workforce was hired locally, but those statistics require an explanation, Shaw says. “One of the challenges is we hire locally whenever we can,” she says. “We will hire people locally in Fairbanks and Delta, but then they are making so much money that they move their families outside to some place like Colorado where it’s cheaper to live. I don’t think that’s a company problem,

a mine problem. That’s a community problem and that’s something we need to work on.”

Fort Knox

For Kinross Gold Corp.’s Fort Knox, its location only 25 miles from Fairbanks is a boon, giving it access to a skilled workforce within commuting distance. The mine began production in 1995 and poured its first bar of gold in 1996. It is a 1,400-foot-deep open pit mine that is traversed by gigantic shovels and ore trucks that can carry from 150 tons to 240 tons per load. Each load may contain only 5 ounces to 7 ounces of gold, requiring a massive operation to stay economic. Fort Knox produced 349,729 ounces of gold in 2010. In 2011, Fort Knox poured its 5 millionth ounce of gold, making it the single largest producer of gold in Alaska history. Continued exploration and gains in technology have already doubled the life span of Fort Knox. Original estimates showed 4.1 million recoverable ounces of gold, which meant the mine was expected to cease operations in 2009. The mine continues to expand its life by identifying more reserves, according to environmental manager Delbert Parr. The mine recently got approval to expand the pit into Phase 8, which adds

www.akbizmag.com • Alaska Business Monthly • July 2012

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Livengood

For Fairbanks residents, however, the biggest gold mining news in the past couple of years is coming out of Livengood, 70 miles north of Fairbanks. “Livengood looks like the next big mine after Kensington (a mine in Southeast Alaska),” Fried says. “With Livengood being within 70 miles of Fairbanks, Fairbanks will be the epi-

Photo by Julie Stricker

1.3 million ounces to its reserves, Parr says. “We’re working on the permitting now,” he says. The additional reserves means Fort Knox will expand its mill site by 280 acres as well as add to its heap leach facility. The mine is currently accelerating the rate of loading to the heap leach, which is permitted for 161 million tons. The expansion will take it to 370 million tons. “Add the new reserves to the current plan—the drills are still turning,” Parr said. The milling facility is expected to run through 2018, and the heap leach will be loaded through 2021, with processing continuing for several years afterward.

The view from Tower Hill over Livengood valley, where gold was discovered in 1914.

center for supplies and manpower.” Gold was first discovered in the Livengood valley in 1914 and optimistic prospectors named a nearby rockytopped hill “Money Knob.” Already, half a million ounces of ore has been mined in Livengood valley, from early drift mining a century ago to small and large hydraulic operations. Miners cut ditches along Money Knob and nearby Tower Hill following their hunch that something larger was out there, but came up empty.

“Those old-timers were good,” Tower Hill Mines general manager Tom Irwin says. “They knew it was there, they just didn’t have the technology to fi nd it.” It took persistence and modern technology to uncover what may be the real mother lode—right underneath Money Knob. International Tower Hill Mines has been exploring the area for the past several years and through 2011 had found approximately 20 million ounces

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Photo by Julie Stricker

concern in making the project pencil out,” he says. On-site energy generation is one possibility, but the most attractive option is a 50-mile line that would link in to Golden Valley Electric Association’s infrastructure just north of Fairbanks. In the end, location is the key. “The burden to make this a mine is on us,” Irwin says. “We have all the right conditions.”

Nixon Fork Mine

Livengood core samples.

of gold, and is still continuing to drill. Any potential mine is still years away as Tower Hill continues its pre-feasibility process, but the outlook is encouraging. According to Irwin, it is a very large, as well as very deep resource. The prospect covers about 50,000 acres and drills on the sides of 1,800-foot Money Knob have reached almost to sea level. “We’re looking at about double the size of Fort Knox,” he says. “These are lowgrade deposits. You need a large operation and economies of scale to make a mine viable.” The prospect has one huge advantage—a paved road that leads directly from Fairbanks to the mine site. The distance to Fairbanks, about 70 miles, is a bit awkward, however. In the winter, the drive may be too long and treacherous to make commuting feasible. Determining whether to build a man camp or rely on a commuter workforce, or some combination, will be a large part of the mining plan, Irwin says. About 1,000 to 1,100 workers will be needed in the construction phase, which will last about 2.5 years, Irwin says. Once operating, the mine will employ about 500 workers. Tower Hill hopes to ramp up production no later than 2018. If 100,000 tons of ore is moved daily, the mine’s expected life span would be about 23 years. Another big part of the operational puzzle at Livengood is energy. Irwin estimates about a third of the total operational cost of the mine will be energy costs. “It’s the biggest overall

The next mine expected to begin production in the Interior is the Nixon Fork Mine, located 300 miles northwest of Anchorage, 32 miles northeast of McGrath. It is accessible only by air. “We are projecting that the Nixon Fork Mine will reach commercial production within the next three months,” said Nina Lafleur, investor relations manager for Fire River Gold Corp., which operates Nixon Fork through its wholly owned subsidiary, Mystery Creek Resources. Nixon Fork was first staked in 1917 and is an underground lode mine that has been in sporadic operation for nearly a century. Mystery Creek Resources began operations in 2011, with a goal of producing 29,000 ounces of gold by the end of 2012, ramping up to 50,000 ounces annually. Its annual production cost is estimated at $950 per ounce in the short term, dropping to $750 per ounce in 2013 and $600 per ounce in 2014. The year-round underground mine produces gold-rich copper concentrate and dore bars with silver as a byproduct. The mine was previously owned by Nevada Goldfields Inc. and St. Andrew Goldfields Ltd. Fire River Gold, based in Vancouver, British Columbia, bought the property in 2009. The mine uses a gravity and flotation milling process. In March 2012, a carbon-in-leach circuit was completed, which will allow Mystery Creek to recover gold from the historic tailings pond, which contains between 7 grams and 8 grams of gold per tonne. Other samples have returned grades from 22 grams to 81 grams of gold per tonne.  Julie Stricker is a writer living near Fairbanks.

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oil & gAs

Repsol Rebounds with Confidence Renews drilling commitment despite setback BY VANESSA ORR

s one of the newer players in Alaska’s oil and gas industry, Repsol E&P USA, headquartered in Houston, Texas, has begun to take a more aggressive position on the Last Frontier in the last half-decade. Following its strategy to incorporate high-quality acreage into its portfolio, the company decided to partner with 70 & 148 LLC, an affiliate of Armstrong Oil & Gas Inc., and GMT Exploration LLC to explore and possibly develop leaseholds held by the two companies on the North Slope of Alaska. The project got off to a somewhat rough start, however, with the company having to deal with a well control incident on its newly drilled well, Qugruk No. 2, on February 15. Still, the company is committed to continuing its work in Alaska, albeit on a slightly slower and smaller scale than originally planned. Originally established as a state oil company in Spain, Repsol became a publicly traded company in the early 1990s known as Hispanoil, which would later become Repsol Exploración, headquartered in Madrid. The company has approximately 36,000 employees worldwide. In March 2011, Repsol committed to a roughly $768 million investment in Alaska, which included amounts paid to its partners

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Two views of the Repsol Kachemach No. 1 ice pad near Nuiqsut with the Nabors 9ES rig. Photos © Judy Patrick

and the cost of exploration over the next several years on its Alaska leases. “Repsol got into some federal offshore leases in the Beaufort and Chukchi Seas three or four years ago, but what really ramped up our investment in Alaska was our partnership with Armstrong Oil & Gas out of Denver in March of 2011,” says Bill Hardham, Alaska operations manager of Repsol. “This partnership includes access to 500,000 acres of oil and gas leases onshore on the North Slope and just offshore in state waters.” According to Hardham, Repsol initially intended to be very aggressive in its exploration plan. “We set out to have a drilling program this winter that would utilize five drilling rigs, drilling up to 15 wells,” he says, adding that some of these wells would consist of sidetracks on existing wells. “But we decided to scale back some as we went through the community engagement process over the summer and the regulatory permitting process.”

In order to address concerns about how such an aggressive program would affect area communities’ lifestyles, Repsol decided instead to utilize four drilling rigs, and to not use more than three at any one time. By the end of the 2011 season, Repsol had accomplished the drilling of two wells; the Kachemach No. 1 and the Qugruk No. 4. “We are just now starting the evaluation process, so it would be premature to comment on anything at this time,” Hardham says of the drilling results.

Treading Lightly on Tundra

Unfortunately, while drilling Q2, the company experienced a well control incident that scaled their drilling program back even more. “By the time we secured the well, we were not able to continue with our other operations because there wasn’t enough time left in the drilling season,” Hardham says. “The incident set us back a year, because we only drill dur-

www.akbizmag.com • Alaska Business Monthly • July 2012

ing the winter. Because we are drilling in an environmentally sensitive area, we have to minimize our impact. When the tundra is not frozen over, it is very sensitive to rigs and heavy equipment, so the best practice is to wait until the area is frozen over and to build our location and roads out of ice. If and when we get to the development point, we’ll go through the permitting process to seek to build gravel roads and pads and have a year-round operation.” After working on the clean-up of Q2 for a number of weeks, Repsol decided on March 14 to plug and abandon the well. The incident, which was the result of a shallow gas pocket encountered at 2,525 feet, caused drilling fluids to be ejected from the well and gas to be released, which was dispersed through a diverter. “At such a shallow depth, a well diverter is used to divert flow to another location to keep people out of harm’s way,” Hardham says, adding that had the well been deeper, it would have been protected by a blow-out preventer. “The well itself only flowed a little more than a day, but we spent the better part of a month securing and cleaning the area, as well as thawing the rig out because we had to cut power to avoid the chance of explosion. Our crew is to be commended for the work that they did: They handled the situation very well, and we are very pleased with the incident response and cleanup. It was a setback for sure, but it hasn’t deterred us—we’re still enthusiastic and looking forward to working in Alaska.”

Next Year’s Plan

Hardham says he does anticipate that Repsol will apply to drill at this same location next season, though not in the same wellbore. The rest of next year’s drilling season will be determined by the results of the wells the company drilled this year. “I can say that we will reapply for two of the wells that we didn’t drill this year: Q1 and Q2,” he says. “We do intend to have a drilling program next year, but we are not certain yet of the final scope of the project.” In addition to meeting with local communities and regulators to understand their concerns before proceeding, Hardham says that the company’s future plans are also contingent on any

changes that may take place in the State of Alaska oil production tax. “This is a very big issue for us—it’s something we’re monitoring very closely and working on through our trade associations,” he says. “It’s an important factor in determining how far we eventually go with our development plans up here.” In April, the CEO of Repsol E&P USA, Ramon Hernan, sent a letter to Gov. Sean Parnell and Alaska legislators stating that there was potential for up to $9 billion in new investments over the next 12 to 15 years if a tax change similar to what Gov. Parnell had sug-

gested in his oil tax bill took place. In late April, however, Gov. Parnell removed his bill from consideration by lawmakers eight days into a special legislative session, effectively ending the discussion this year. As for Repsol’s future in the state, Hardham says the company is continuing to move forward. “Our upper management was here from Madrid recently and is still 100 percent behind the project.”  Vanessa Orr is a writer living in western Pennsylvania.

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oil & gAs

Photo © BP

BP has been testing heavy oil technology at its heavy oil facility on Alaska’s North Slope. Heavy oil is technically and commercially challenged because it is cold and thick like syrup making it difﬁcult to produce.

Nonconventional Oil Production The North Slope’s cost-prohibitive treasure

BY MIKE BRADNER

f the impasse on oil taxes in the 2012 state legislative session had any positives, it is the recognition by lawmakers that much of the large, known oil resource of the North Slope is technically challenged, difficult to produce and not economically viable under the state’s current oil tax system. There is a great deal of potential for new oil on the slope but much of ■ 58

it is unconventional oil, like heavy oil. Meanwhile, the large conventional “light” oil fields of the slope, like the giant Prudhoe Bay and Kuparuk River fields, are declining in production. Not enough new conventional oil is being discovered to replace this and the pace of research and development on unconventional oil is not proceeding quickly enough.

Gov. Sean Parnell and one group of legislators, mainly in the state House, believe the state oil tax should be adjusted to encourage more new oil development. A group of state senators has disagreed with this. Thus, the Legislature has been deadlocked for two years. However, the extensive discussions in Juneau last spring have at least resulted in a consensus around certain

www.akbizmag.com • Alaska Business Monthly • July 2012

key points, and one is that the state tax should create incentives for nonconventional oil. At the end of the 2012 state legislative session that adjourned in midApril and a two-week special session that followed it the state Senate wrestled with a bill that would grant special tax reductions for “new” oil, including unconventional. However, in the end there was a lack of agreement on just how to do it, and the initiative failed. The effort will start again in 2013, but a positive note is that the legislators’ information level is now higher and there is consensus that something should be done, particularly for unconventional oil and gas.

Unconventional Oil and Gas

What are the unconventional oil and gas resources, and how difficult will they be to extract? There are indeed a lot of resources in the ground—tens of billions of barrels—and when it comes to unconventional gas, the estimates are even greater. However, the key question is how much of this can be technically produced, much less economically produced. Those answers aren’t known, and the amount of the state tax is im-

The commercial production of viscous oil has involved a research and technical development program that has been under way since the mid-1980s, and it is still under way. portant in relation to whether the oil can be economically produced. On the North Slope, when unconventional oil is mentioned, heavy oil is what first comes to mind. There is actually no standard industry understanding on what constitutes “heavy” oil, but the general view is that true heavy oil is that which has an American Petroleum Institute gravity of 15 degrees or less. On the North Slope, the large Ugnu heavy oil deposit that overlies the Kuparuk River field and western part of the Prudhoe Bay field falls into this category. There are also large deposits of “viscous” oil on the North Slope, which is called by some “heavy,” so there is at times confusion between the two. Viscous oil is being pro-

duced today, although there are technical problems with its production. There is only test production being done on the true heavy oil, the Ugnu oil. It is not being produced commercially. The West Sak and Shrader Bluff deposits fall into the category of viscous oil. Oil from the Nikaitchuq deposit, an offshore field now being produced by Eni Oil and Gas, is also mostly viscous oil. Viscous oil has an API gravity of around 19 degrees, although this is an average because the actual API can vary among the deposits. For reference, the conventional crude oil in Prudhoe Bay and Kuparuk have API gravities of about 29 degrees, while some North Slope fields have API gravities that are much higher, such as the Alpine and North Star fields that are in the 40 degrees-plus range in API. Generally, API is used as an index of oil quality, (the higher the number, the higher the quality and value) although there are other ways of measuring quality. One attribute of both viscous and heavy oil on the slope is that they are cooler and thicker than conventional oil.

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Extraction Methods and Challenges

The commercial production of viscous oil has involved a research and technical development program that has been under way since the mid1980s, and it is still under way. Arco Alaska, now ConocoPhillips Alaska, began doing research on producing the West Sak viscous oil in the 1980s, and various pilot production projects were done to test different production techniques. There are two major problems, which are also problems with the true heavy oil. The first problem is that sand that breaks off from the loose, unconsolidated shallow rock formations which hold the oil and gets into the well bores. A second problem is low production rates. The sand is a problem because when it flows up the wells it can damage pumps and other production machinery. Low production is a problem because the producing companies need to get more oil out of the ground to cover the capital and operating expenses of the wells. Arco’s initial experiments with West Sak viscous oil involved the installation of screens in the producing wells to catch and hold the sand, preventing it from coming up the wells. The screens worked, but they also impeded the flow of oil, which further reduced the flow rates of the wells which were already low. By the 1990s, BP was working on the problem because the company had meanwhile acquired the Milne Point field, which contains the Schrader Bluff viscous oil deposits—very similar to the West Sak in the Kuparuk field, which is also nearby. Success with viscous oil for either company came later in the 1990s with the advent of “multi-lateral” wells, or the drilling of multiple underground production wells from one well at the surface, that was combined with the technique of drilling long horizontal production wells, or wells drilled laterally through thin sections of reservoir. The advantage of horizontal wells is that much more of the producing formation is exposed to the production well, which has perforations to allow oil to enter the wells from the surrounding rock. When this advantage of much more of a thin producing zone exposed to ■ 60

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the horizontal well is combined with the cost efficiencies of multi-lateral wells (the surface well and infrastructure costs being shared across several underground wells), the economically marginal viscous oil finally became profitable to produce. However, there are still problems with viscous oil. One is that when “waterflood” enhanced production is applied to the thick, viscous oil, when water is injected to push the oil out of the rock, the water can sometimes break through the formation in channels and bypass the oil accumulations. When this “water breakthrough” occurs, the well is essentially ruined. This has been a problem at both West Sak and Shrader Bluff, and ConocoPhillips and BP are still working to resolve it through a combination of fine-tuning strategies in the producing wells and the water injection. The sand is still a problem, but the companies have developed techniques for allowing it to just come up the wells and then extracting the sand and disposing of it. However, this can still cause damage. For example, sand produced from viscous oil wells were flowing through BP’s Prudhoe Bay field pipelines and are believed to have been a factor in corrosion that resulted in oil spills in 2006. The problems of viscous oil are also present in the true heavy oil, except that they are compounded. The oil is thicker and even colder than viscous oil, and more difficult to produce. BP is working with a number of production innovations in the North Slope test wells it is now doing in the Ugnu formation, including one technique adapted from heavy oil production in Canada. The tests are still under way. The first objective is to see if the oil will flow at all and if the quantities of sand that are produced can be handled. So far, the tests are going well and BP is optimistic, but technical success is still uncertain. After that, the economics will have to be considered: whether heavy oil can be produced profitably. One final challenge for both viscous and heavy oil is that these oils will not flow through the Trans Alaska Pipeline System by themselves, and have to be mixed with lighter, conventional oil in order to flow through the pipeline. For

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viscous oil produced today, this is at basically at a one-to-one ratio, meaning one barrel of conventional light oil is needed for every barrel of heavier viscous oil. The ratio for very heavy Ugnu oil may be even greater. What this means is that the production of conventional oil on the North Slope must continue in order for the unconventional heavy oils to be produced and transported. In other words, the economic viability of heavy oil depends on the continued viability of conventional oil production.

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Then there is also shale oil, another type of unconventional oil that has attracted interest in the last two years. This is oil that might be extracted from the large shale rock formations of the North Slope that are the “source” rocks for the large conventional oil fields, particularly the Shublik shale, a very large geologic formation on the slope. Oil is now being extracted from the Bakken Shale formations of North Dakota and the Eagleford Shale of Texas. The question for the North Slope is whether the advanced drilling technology that has allowed oil to be extracted from those shale formations can also be used to produce oil from shale on the North Slope. Basically, this is now at the research stage. Great Bear Petroleum, an independent company, has tackled the questions with the first shale oil test wells being drilled in summer of 2012. One question is whether there is sufficient oil left in the Shublik and other shale formations to allow for shale production. Some geologists believe that since these shales were the source rocks for the large conventional fields, much of the oil may have drained out over the eons to accumulate in fields like Prudhoe Bay. However, the conventional belief, obviously shared by Great Bear, is that large quantities of oil remain in the shale, but only drilling will answer that question. A second uncertainty is whether the North Slope shale rocks are brittle enough to fracture in a way that will allow oil to flow. Shale rock is very tight, and hydraulic fracturing, called “fracking” in the Lower 48, is used to open tiny fissures and allow oil to

www.akbizmag.com • Alaska Business Monthly • July 2012

flow. Geologists really don’t know how brittle the North Slope shale rock is, at least where Great Bear wants to drill, and again only test drilling can answer the question. If these questions are answered to the positive, the final unknown—and a big one—remains: whether shale oil can be produced economically. This is a question because shale oil development will require a great many wells and a lot of surface infrastructure, roads, gravel pads, pipelines and utilities, and the cost of any construction on the North Slope is very high. There are also questions related to environmental effects, such as whether enough water can be found to support fracking, which requires a great deal of water; and whether economical waste disposal can be done. Shale oil has great potential for the North Slope, but its success is far from certain.

Unconventional Gas

Finally, there are sources of unconventional gas on the slope. One is gas that could be extracted from methane hydrates, or frozen crystalline-type structures that form near or at the base of the 2,000-foot-thick permafrost layer that underlies the North Slope. Hydrates hold immense quantities of methane gas. If the methane can be produced, it would be a huge addition to known conventional gas resources of the slope. However, it is likely to be years before it is known whether gas from hydrates is more than a theoretical resource. The U.S. Department of Energy is now working with industry on a longrange program to determine if gas can be technically produced from the hydrates. So far, results of the work are promising. The following question, however, is whether the methane can be produced economically, or at a profit. Recent research tests with North Slope hydrates by both BP and ConocoPhillips have been encouraging, but these are at a very early stage in determining whether methane can be produced technically from hydrates, much less at a profit.  Mike Bradner is the editor and publisher of Bradner’s Alaska Legislative Digest.

www.akbizmag.com • Alaska Business Monthly • July 2012

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oil & gAs

MAP: State of Alaska, DNR, DOG

Alaska Oil Tax Policy

Ships passing in the night? BY BRADFORD G. KEITHLEY Any opinions expressed herin are the author’s own.

laska’s approach to oil and gas taxes has taken a number of twists and turns over the last several years. The latest twist may largely be the result of ships passing in the night.

Background

Shortly following her election in 2006, Gov. Sarah Palin proposed a set of changes to the then-existing tax structure. She termed the package “Alaska’s Clear and Equitable Share,” or “ACES.”ACES changed a previous package of modifications which had been enacted in 2006. Although he supported ACES at the time it was passed, late in his campaign ■ 64

for his own term in 2010 Gov. Parnell began generally to talk about what he then termed as the need for “tweaks” in ACES. Following his election, Parnell proposed a set of changes, which was introduced in the Alaska House of Representatives and subsequently referred to as “HB 110.” After some modifications, the House passed the governor’s proposal in March 2011 by a vote of 22-16. The bill then went to the Senate. The Senate held hearings in various committees on the governor’s proposal for the remainder of the 2011 legislative session and again most of the 2012 legislative session.

Ultimately, during the very final days of the 2012 legislative session, the Senate passed its response to the governor’s proposal as an amendment to HB 276, a bill that started out for a different purpose. The Senate’s response took a different approach to the governor’s original proposal and focused mostly on so-called “new fields,” areas outside the existing socalled “legacy” fields such as Prudhoe, Kuparuk, Alpine, Milne Point and Endicott. The Senate bill provided for potentially significant reductions in taxes assessed on oil produced from the “new fields” — so-called “new oil” — and made limited

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modifications to the tax structure governing the legacy fields. Citing the lack of time remaining in the regular session to consider the Senate’s changes, the House did not take up the Senate’s rewrite of the governor’s proposal, but while in committee the House leadership expressed concern with the bill’s limited focus. Immediately following the end of the 2012 regular session, Parnell called a special session to deal with three issues, one of which was oil tax reform. Echoing the House leadership’s concerns about the limited scope of the Senate’s proposal, the Governor started the special session by offering a new bill, SB 3001 (HB 3001 in the House). Seeking to build on the approach taken by the Senate, the governor’s revised version adopted much of what the Senate had included in its legislation for new fields, but extended it also to the legacy fields. The special session soon imploded after initial committee hearings in the Senate showed a lack of support—even among traditional allies—for the Governor’s revised proposal.

Throughout, the governor argued that tax reform was necessary in order to encourage investment in the development of additional oil. The Senate floor debate and subsequent passage of HB 276 indicated most—and perhaps all—senators ultimately agreed with the governor’s position to some degree. The reaction to SB 3001, however, demonstrated sharp differences over the need for extending tax reform to the legacy fields. Throughout the regular session and into the special session, legislators opposing the Governor’s proposals repeatedly expressed the view that oil from the legacy fields does not require additional incentives to be profitable. Those differences ultimately came to a head during the special session, and likely now will live on into the coming fall election campaign.

The Confusion

In a very real sense, dividing the North Slope oil world into “new fields” and “legacy fields” is a false debate. To its advocates, the purpose of the approach is to provide incentives for the

development of new, previously undeveloped oil, while maintaining the existing tax structure in place for previously developed oil. The theory is that incentives are required to encourage the substantial investments required to develop and produce new oil, while the ongoing investment requirements to maintain the production of previously developed oil are relatively minor and are justified sufficiently by the margins produced under the existing tax structure. The real world problem with this approach on the North Slope is that there are substantial amounts of new undeveloped oil remaining in the so-called legacy fields. This is for a simple reason. In Alaska, oil and gas “units”—the mechanism through which the state administers its oil and gas leases for a number of purposes—are defined by surface geographic boundaries. So, most maps of the North Slope oil patch which depict the various fields are showing the surface boundary of the oil and gas leases that form the unit. From that perspective, the oil appears to be located in

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continuous, deep pools lying underneath the surface of the leased lands. In fact, the oil is not arranged in such a neat manner. Viewed horizontally, there are several entirely different—and unconnected—producing intervals of oil located at different depths within the units, laid down at different geologic times and with vastly different characteristics. Some intervals, such as the Ivishak, which extends across the bottom of the Prudhoe Bay field, contain light oil, are relatively easy to produce through conventional means and have been the source of most of the oil produced from the Prudhoe Bay Unit over the years. Other intervals, however, such as the West Sak/Schrader Bluff, contain more viscous (thicker) oil and, because of the technological challenges that must be overcome and investment which must be made to achieve large scale production, are still near the starting line in terms of development. The closest interval to the surface, the Ugnu, holds significant potential, but because of the even greater

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technological challenges it presents, has not advanced yet significantly beyond the “science experiment” stage. As a result, even within the existing North Slope units, there are both existing fields, such as those producing from the Ivishak and Kuparuk, and new fields, such as those targeting the more challenging and costly West Sak/Schrader Bluff. The potential of these new fields located within the legacy units is impressive. A recent presentation estimates potential oil in place within the West Sak/Schrader Bluff interval at roughly 12 billion barrels, and from the Ugnu at roughly 12 - 18 billion barrels. To put this in perspective, the similar number for the Prudhoe Bay field— mostly from the Ivishak—is 25 billion barrels. In short, in combination the relatively undeveloped zones within the geographical boundaries of the existing North Slope units—the new fields within the legacy units—hold at least as much oil—and may hold more—than the original Prudhoe Bay field itself. Despite this significant potential, HB 276, the version of oil tax reform

that passed the Senate late in the regular session and supposedly targeted new fields, made no provision for the new oil potential located with the existing units. Instead, HB 276 effectively adopted as its definition of a legacy field any field included within the boundary of an existing oil and gas unit. Because the West Sak/Schrader Bluff, Ugnu and other undeveloped intervals are located largely within the geographic boundaries of the existing North Slope units, they were excluded from the incentives contained in HB 276. One of the reasons given by the governor for the extension of those incentives also to the legacy fields in SB 3001, introduced by him at the start of the special session, was to provide similar incentives also to the development of new fields in the existing units. The governor’s bill was similarly imprecise, however. It provided the same incentives both to old and new fields located in the existing units, and provided a reduced set of incentives within the existing units. As a result, even the governor’s revised approach continued

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to discriminate against new fields located within the existing units.

Ships Passing in the Night

So, as of the end of the special session, the Senate was on record as favoring incentives for the development of oil from new fields, but without addressing new fields located within existing units. The governor similarly was on record as favoring incentives for the development of oil from new fields, including new fields located within existing units, but at a lower level for those than for new fields located outside of existing units. The potential prize to the state from zeroing in both sides’ focus on the area located between the two ships—providing equal incentives for the development of new fields located inside of the existing units—is substantial. The estimates of 24 to 30 billion barrels of oil in place contained in the West Sak/Schrader Bluff and Ugnu intervals dwarfs almost all of the estimates for oil in place in the remainder of the North Slope. Moreover, while substantial investment both in technology and equipment

will be required to realize the potential, because the resource lies within the reach of the existing North Slope footprint, it likely can be brought on line more quickly than other potential sources. To be sure, this approach only addresses part of the problem. As the North Slope producers repeatedly have demonstrated, increasing amounts of oil can be recovered even from old fields through continued investment in new technology and techniques. For example, the original estimated recovery factor from the Prudhoe Bay field was 40 percent of the original oil in place (roughly 10 billion barrels). Over time, the recovery factor subsequently has been increased above 50 percent through the investment in and development of new recovery techniques and technology. That represents, even in an old field, the addition of an incremental 2.5 billion barrels of oil. With continued investment, some now estimate the recovery factor ultimately could exceed 60 percent, adding another 2.5-plus billion barrels of production. Reaching this potential may

well require additional targeted changes to the oil tax code, even with respect to old fields. In the meantime, however, focusing on improving the economics for the development of new fields, a goal that all sides appear to agree on—although in different ways—is worth the effort. Sometimes, stepping back from a battle and identifying the areas where both sides are near agreement—despite themselves—reveals new ideas for moving forward. This is one of those times.  Brad Keithley is a Partner and Co-Head of the Oil & Gas Practice at Perkins Coie, LLP. He maintains ofﬁces in both Anchorage and Washington, D.C., and is the publisher of the blog “Thoughts on Alaska Oil & Gas” (http://bgkeithley.com).

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oil & gAs

Enabling Economic and Environmental Progress: The Role of Natural Gas Speech by Rex W. Tillerson, Chairman and CEO, Exxon Mobil Corp., delivered June 5 at the World Gas Conference in Kuala Lumpur, Malaysia

t is a pleasure to once again be in Malaysia and here in the city of Kuala Lumpur. ExxonMobil is grateful for our long and valued relationship with the people and the government of Malaysia. It is appropriate that the 25th World Gas Conference should convene here— where, for more than 40 years, energy has played an essential role in economic growth, opportunity, and trade. Malaysia has been a reliable supplier of new sources of energy to nations across the Asia-Pacific region and, in the process, this trade in energy has created jobs, raised living standards, and brought progress to millions of people. The theme of this year’s conference is the role of natural gas in sustaining future economic growth. I look forward to discussing this question because, thanks to technological innovations pioneered by the energy industry, and the visionary leadership of resourceowning nations such as Malaysia, natural gas holds tremendous potential to transform the global economy. We are living at a historic moment in the evolution of energy markets. How we respond to this moment of opportunity will shape the quality of life for generations to come. Natural gas is quickly becoming a key enabler of economic growth and environmental progress the world over. But to secure the full potential of natural gas in the decades ahead, our industry must continue to invest, innovate, and create new partnerships to meet rising energy demand. In this effort, both industry and government must learn from past successes and setbacks, and we must each fulfill our respective roles and responsibilities within a legal and policy framework that encourages long-term relationships, long-term investments, ■ 68

and long-term technological progress. With these principles in place, we can each do our part to develop natural gas in a safe, efficient, and responsible way—for the economic and environmental benefit of every nation.

Historic Energy Moment

To understand the historic changes taking place in global energy markets, it is useful to recognize the significant progress resulting from our industry’s sustained substantial capital investments and innovation. New technologies are unlocking new sources of energy as never before. Sources of oil and natural gas once dismissed as “uneconomic” or “inaccessible” are rapidly becoming reliable, affordable, and environmentally responsible contributors to the global-energy portfolio. In the oil sector over just the past few decades, significant investment and ingenuity have created technologies that have enabled our industry to recover oil from thousands of meters below sea level, develop billions of barrels of oil from oil sands, and ways to enhance the productivity of existing fields like the Tapis development off the coast of Malaysia. In the natural gas sector, this same pattern of investment, innovation, and partnership is enabling us to unlock new supplies and transform the global economy. It can be seen in the evolutionary changes to the liquefied natural gas trade. In recent decades, LNG has achieved an entirely new scale of prominence as industry innovations and new technologies have expanded and economized every link in the supply chain— from large scale liquefaction, to larger, more efficient transport, to regasification terminals onshore and offshore. The success of the state of Qatar in developing its natural gas resources and bringing them to market epitomizes this transformation. ExxonMobil is among those who worked with Qatar’s industry-leading partners to pioneer new technologies

that enable the large-scale production and transportation of liquefied natural gas. These high-impact technologies now include advanced LNG trains, world-class LNG carriers, and the first offshore LNG-receiving terminal. Yet these developments would not have been possible without Qatari long-term vision, massive industry investment, and—most importantly—a strong and sustained partnership based on mutual respect and mutual benefit. Combined with the exports of Malaysia, Indonesia, and Australia, in just over a decade the world has witnessed the rise of LNG as a critical element in the economic growth and energy security of nations from Asia to Europe. The same vision that has enabled LNG to become a growing mainstay of the global natural gas market is now required to enable unconventional natural gas resources to meet demand in global markets. Technology plays a pivotal role in commercializing unconventional gas, just as it did with LNG. By integrating and refining the proven technologies of hydraulic fracturing, horizontal drilling, and new completion technologies in safe and innovative ways, our industry is able to unlock supplies of natural gas once deemed too economically challenged to develop. To date, North America has been the proving ground for unconventional gas development—and the results have been nothing short of stunning, confirming the enormous potential of this resource. In the United States, ExxonMobil’s subsidiary XTO and others in our industry are safely and successfully developing the shale formations to which access has been provided. With greater access to more acreage, our industry will have the capability to recover enough unconventional natural gas to power the U.S. economy— and Canada’s—for close to a century.

And this is just the beginning

As the men and women in this room know, we have yet to fully apply these breakthrough technologies to nations

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outside North America. In fact, government and industry are still assessing the size of the global endowment of unconventional natural gas—from basins of shale gas and coal-bed methane to tight gas and methane hydrates. Here in Asia, there are promising formations that await detailed study in nations across the continent. There are also potential areas for development outside Asia—in Latin America, Northern Africa, and Europe. According to our projections, over the next three decades, while natural gas supplies from conventional sources will remain the majority of production, unconventionals are likely to grow by more than 400 percent. To put the rise of natural gas in perspective: By the year 2025, we expect natural gas to overtake coal as the second most significant contributor behind oil in meeting global energy needs.

Growing Need for Natural Gas

The growth of natural gas is a positive development for the global economy and environment. For Asia in particular, it will provide tremendous benefits for the peo-

ple and the environment of the world’s most dynamically growing region. As we look to the future, it is clear that our industry faces tremendous challenges. The world will need reliable and affordable supplies of energy on a scale unprecedented in human history. Expanded economic output and nearly 2 billion new consumers by 2040 will mean that global energy demand will likely grow by more than 30 percent. This 30 percent increase by 2040 is more than the current energy demand of Russia, India, and all the nations of Africa, Latin America, the Middle East, and the Caspian region—combined. For the Asia-Pacific region, the need for energy will be even greater, because populations will grow and economies will expand at a much faster rate than in many other parts of the world. In our view, Asia’s economy is likely to triple in size by 2040, and energy demand is projected to grow close to 50 percent. In particular, the Asia-Pacific region has emerged as a strong demand center for both power generation and petrochemicals. Abundant and affordable supplies of natural gas can help meet these needs, providing the electricity,

and chemical feedstocks that facilitate the achievement of higher living standards and industrial competitiveness. The historic shift to natural gas will carry not just economic benefits; it will also provide environmental benefits. Natural gas is cleaner burning than other major, carbon-intensive energy sources, which will help us meet our shared goals for reduced emissions and environmental stewardship. For cities throughout Asia, the increasing use of natural gas in power generation will mean cleaner air and cleaner water for millions of citizens.

Turning Vision into Reality

Of course, to capture these benefits we must continue to expand natural gas supplies. Some market analysts, focused on the short-term and on current prices, worry about oversupply. Some even see an expanding LNG trade as a concern. But for those of us focused on the long term, our concern is making certain the global economy has reliable and affordable supplies of energy for the robust growth in demand ahead. Global demand for natural gas for power generation, as well as other appli-

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cations, is on a significant upward climb. Meeting this demand with new supplies will be a continuing challenge. To meet this challenge, our industry must invest, innovate, and form partnerships that turn vision into reality. We must work to develop and deploy the technologies and capital projects that create flexible and reliable markets—markets built to harness both conventional and unconventional supply sources as well as the LNG trade. Developing unconventional sources around the world will require us to think and work with long-term vision. Here in Asia, we must confirm the size of the endowment and build a policy pathway that that ensures resources are developed in a safe, economically competitive, and environmentally responsible way. Our future success will depend not only on geologic conditions and technological innovations, but on appropriate government policies, effective business partnerships, and disciplined investment. Fortunately, as government and industry leaders consider the growing importance of natural gas and the need for its development, they can study and

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learn from the successes and shortcomings of the North American experience. An important learning from the rapid development in North America is the importance of open communication with government leaders at all levels as well as local communities. Government and industry have a responsibility to ensure we deliver the environmental benefits of natural gas with an unwavering commitment to the integrity of operations at every wellhead and gathering system. Working with government officials, to study the land and environmental impacts where we drill, we design and build wells with safeguards in place to protect groundwater, and we employ rigorous personnel training and management systems to monitor and maintain wells after drilling is complete. Ultimately, we recognize that effective standards and our industry’s commitment to operational integrity, excellence, and accountability are the pillars of responsible development. In this shared effort, governments play an indispensable role in helping set effective standards. But governments must be prudent so as not to stifle development or

the investments in innovation that improve safety and performance. Regulations must strike an appropriate balance between proper risk management and economic viability. Governing or setting policy and regulation based upon the precautionary principle will stifle innovation and investment and bring development to a standstill. I recognize this is, in fact, the objective of some. But, if governments put development of these new sources of energy at a standstill, they will find their economies walking backwards. By maintaining open channels of dialogue between government and industry, we can meet this challenge and establish policy pathways for business to invest and successfully execute long-range projects. The regulatory pathway in every nation should provide certainty and promote understanding between government officials and business leaders. Regulations should provide a clear, efficient, roadmap for how to get things done, not a complex tangle of rules that are used to stop things from getting done. Development is most effective and efficient when government is a source of clarity and certainty in how business can meet safety and environ-

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mental standards while advancing innovative, long-term projects. Governments can also support responsible long-term development by establishing sound and stable legal and tax policies, which are not changed with the whims of the ups and downs of commodity price cycles. With such policies in place, businesses can better evaluate opportunities, plan and invest, maximizing value for all. Sustained investment has created the technologies that have unlocked new supplies of natural gas. Tomorrow’s advancements will be just as dependent on the research-and-development commitments we make today. Finally, only governments can open borders and support free trade and international investment. The energy challenges of the future require significant human and financial capital to succeed. And our industry is most successful when we manage risks together, leveraging the strengths of national and international energy companies for mu-

tual benefit. By supporting trade, opening up access, and allowing the free flow of goods and services, governments help industry find more innovative and efficient ways to bring energy to market. Recent North American experience in unconventional development has reminded the world of the value of competitive and free markets for improving the lives of consumers. The technological breakthroughs that allow for unconventional-gas recovery emanate from investments by business and industry in private markets. They are not the result of government policies that picked winners and losers.Energy policies operate best when they are efficient and marketoriented, steering clear of manipulating outcomes through subsidies, mandates, or distortions in the tax code.

Conclusion

As we look to the future, it is clear that the historic shift taking place can continue. The global move to natural gas

is an evolution in markets that can change lives for the better. A decade ago, few of us could foresee where new natural gas technologies would take us. For this very reason, we must continue to invest and innovate to ensure the safety of operations to further enhance energy efficiency and to improve our environmental stewardship at every level. Such sustained investment takes vision and a fundamental faith in human ingenuity. We know it can be done. I know it can be done. Our own history proves it. We know that when governments establish long-term, market-oriented policies, our industry will respond with the longterm planning, partnerships, and projects that reshape the future for the better. With sound policies in place around the world, we can help nations and peoples achieve their economic, environmental, and energy security goals— and as we do so, we can create opportunity and progress for all. I thank you for your kind attention. 

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RIGHT MOVES

Compiled by Mari Gallion

Albert Einstein Distinguished Educator Fellowship

Scott Kluever, a middle school science teacher from Eagle River will serve as an Albert Einstein Distinguished Congressional Fellow sponsored by the Department of Energy’s Office of Science under the guidance of Dr. Pat Dehmer for the 2012-13 school year. The Program offers teachers with a demonstrated excellence in teaching an opportunity to serve in the national education public policy arenas. Fellows were selected from a nationwide pool of more than 200 applicants.

Optima Public Relations

Sarah Paulus of Paulus Designs has joined Optima Public Relations as design direc tor. Paulus holds an associate degree in graphic design from the Art Institute of Pittsburgh and is scheduled to complete her bachelor’s Paulus degree in web design and interactive media from AIP in 2013.

of operations for Fairbanks International Airport, and Jeremy Worrall, maintenance and operations superintendent for DOT&PF Northern Region.

Credit Union 1

Credit Union 1 welcomes Anna Castillo as the new learning center manager. Castillo has a Bachelor of Science in Occupational Education and Human Services with a specialty in Early Childhood Development from Wayland Baptist University.

Denali State Bank

Joshua Harrod recently joined Denali State Bank as a loan officer and was appointed assistant vice president. Harrod brings almost 10 years of banking experience to Denali State Bank and has occupied various positions in the local financial services sector. Bonnie Roland recently joined Denali State Bank as loan collections manager and was appointed assistant vice president. A longtime Fairbanks resident, Roland has over 10 years of banking experience.

CIRI Alaska Tourism Corp.

Gildersleeve

Alaska Department of Transportation and Public Facilities

DOT&PF is pleased to announce the following employees earned the designation Accredited Airport Executive from the American Association of Airport Executives: Jesse Vanderzanden, Fairbanks International Airport manager, Melissa Osborn, chief

R&M Consultants Inc.

R&M is pleased to announce that the following team members have received professional licensure or certification. Brian Meyers, PLS, passed the professional land surveying exam and was promoted to senior land surveyor. Myers holds a Bachelor of Science in Geomatics from the University of Alaska Anchorage. Ryan Redick, P.E., Kristen Keifer, P.E., and Sadat Aliu, P.E., each passed the Principles and Practice of Engineering Exam, gaining their licenses in Civil Engineering. All three are project engineers in R&M’s Engineering Department. Redick and Aliu each earned a Bachelor of Science in Civil Engineering from the University of Alaska Anchorage. Keifer earned a Bachelor of Science in Civil Engineering from the University of Idaho.

Coffman Engineers

CRW Engineering Group LLC

CRW Engineering announces the hire of Andrew Gildersleeve as their new marketing manager. Gildersleeve received his Bachelor of Arts in Humanities and his JD from Lewis & Clark College in Portland.

Chef Greg Englehardt, where he learned, led and decided that he was destined for Michelin stars. Ramirez has work with leading chefs including Guiseppe Tentori, Perry Hendrix, and Ryan Poli, under whom he mastered his craft.

Laschober

Meyer

Sarah Laschober has been promoted to reservations manager at CATC. Laschober has been with the company for over 5 years, and most recently held the position of assistant reservations manager. Krystal Meyer has joined CATC as assistant reservations manager. As the owner and operator of her own company, Meyer brings management skills and years of airline customer service experience to her position at CATC. Executive Chef Joshua Ramirez has joined Talkeetna Alaskan Lodge for the 2012 season. Ramirez helped to open Glenn’s Diner on the north side of Chicago, and eventually traveled to St. Thomas in the U.S. Virgin Islands to work with

Cof fman Engineers announces the retirement of its long-time General Manager Harold L. Hollis, PE, after 30 years of service with the company. Hollis was a senior vice president and served on the board of directors and as general Hollis manager of Coffman’s Anchorage office for 23 years. He was instrumental in guiding the growth and success of Coffman’s business in Alaska and expanding its services to the Pacific by opening offices in Honolulu and Guam. Hollis intends to remain in Alaska.

Office of Sen. Murkowski

Sen. Lisa Murkowski today announced the names of her first session summer interns who will work in her Washington, D.C., office: Arianna Cocallas, Connor Toohey, Michelle Fernandez and Elizabeth Wheatall of Anchorage; Zachary Veheimer and

OH MY! ■ 72

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RIGHT MOVES

Compiled by Mari Gallion

Elizabeth Whisenhant of Fairbanks; Eva Colberg from Palmer; Bethany Hladick from Unalaska; Ashley Naneng of Bethel and Claressa Ullmayer from Juneau. Sen. Murkowski is also happy to welcome two Alaskan college students to serve as this summer’s intern coordinators: Mari Freitag of Ketchikan and Parker Haymans of Anchorage. Freitag is a senior at the University of Alaska Fairbanks pursing a degree in biochemistry with a minor in political science and justice. Haymans, a double major in political science and Spanish, is a senior at the University of Idaho.

Safety Office that coordinates federal and state highway safety programs. Blumer has held numerous senior level management positions including director of the Division of Personnel and Labor Relations and deputy director for the Child Support Services Division. Probasco formerly worked for the State of Alaska Division of Agriculture and was named a professor of extension emeritus at the University of Alaska. He holds a Doctorate in Education from the University of Minnesota where he also earned his bachelor’s and master’s degrees in agriculture education.

Alaska Miners Association

Rural Energy Enterprises

AMA Board of Directors has appointed Deantha Crockett as the new executive director. For the last seven years Crockett has worked at the Resource Development Council where she was the lead on mining and tourism issues. Crockett is a Crockett graduate of University of Alaska Anchorage, where she majored in political science.

Jason Evans was hired as chief executive officer for Rural Energy Enterprises. He recently served as the president and CEO of Financial Alaska, a business consulting firm. Prior to that, Evans was the vice president at Alaska Growth Capital, a Evans subsidiary of Arctic Slope Regional Corp. Evans holds a bachelor’s degree in organizational management from Alaska Pacific University.

State Government

University of Alaska Southeast

Blumer

Vick

Governor Sean Parnell named Dianne Blumer to serve as commissioner of the Department of Labor and Workforce Development and Peter M. Probasco to the Board of Game. The Department of Transportation and Public Facilities announces the appointment of Joyce Vick as the Governor’s Highway Safety Representative for Alaska. Vick will oversee the Alaska Highway

Blanchard

University of Alaska Southeast announced the appointment of John Blanchard as the new dean of the UAS School of Management. Blanchard holds an MBA from the University of Toledo and a Bachelor of Science from the University of Dayton.

Fairbanks School District

Lori Swanson will serve as the new principal of Two Rivers Elementary at the start of the 2012-2013 school year. Swanson earned a bachelor’s degree from Eastern Oregon University in 2001 as well as a master’s in teacher Education in 2003. She also completed the Initial Administrator Licensure Program at Lewis and Clark College in 2009 and has

been a member of the Association of Supervision and Curriculum Development since 2008.

Usibelli Coal Mine

Usibelli Coal Mine recently announced the promotion of Glen Weaver as vice presidentfinanceandchief financial officer for Usibelli Coal Mine. Weaver attended the University of Alaska Fairbanks, where he graduated Magna Cum Laude with a Bachelor of Weaver Business Administration in-Accounting in 1991. Weaver is a member of the American Institute of Certified Public Accountants, the Alaska Society of Certified Public Accountants and the Alaska Miners Association.

Anchorage Opera

The Anchorage Opera board of directors announced that Kevin Patterson will lead Anchorage Opera in the role of executive director. He has been associated with companies on the national and regional level, including The Lyric Opera of Chicago, Santa Fe Opera, Pittsburgh Opera, Palm Beach Opera, Opera Grand Rapids and Austin Lyric Opera. As an educator Patterson has been a frequent guest lecturer and panelist at the University of Pittsburgh, Carnegie Mellon University, University of Texas at Austin and at Opera America National Conferences.

University of Alaska

Nancy Spink has been selected as the new chief risk officer at University of Alaska. Spink joins UA from the University of Idaho where she was the risk management officer. She holds a Bachelor of Arts in English with an associate degree in Risk Management.

GCI

General Communication, Inc. announced the promotion of Greg Chapados as executive vice president and chief operating officer of GCI. Chapados joined GCI in 2006 as senior vice president and served as lead on several strategic initiatives for the company.

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visitor industrY

International travelers ﬂock to the 49th State

BY SUSAN SOMMER

Harriman Glacier in Prince William Sound is gazed upon by visitors on a sightseeing cruise.

verything Collette Harrison thought she knew about Alaska before she visited from London in the 1990s was what she had seen on “Northern Exposure” and what she had read in her Lonely Planet guidebook. On her long-anticipated visit, she took bus tours, a day cruise and a flightseeing trip, but none of her activities addressed her expectations of coming face-to-face with grizzly bears or exploring Alaska’s rugged wilderness, nor did they bring her into contact with similar charac■ 74

ters to those she had grown to love on “Northern Exposure.” However, today’s international travelers to Alaska have all kinds of resources at their fingertips that can pinpoint the right activities to make their Alaska visit the trip of a lifetime—travel agents who have been here in person on “fam” (familiarization) trips, visitor guides updated annually and, of course, the Internet. “Alaska is definitely somewhere that I would go back to,” said Harrison. “I didn’t even scratch the surface.”

‘Down Under’ Outpaces ‘Across the Pond’

Visitors from the United Kingdom used to be the largest group of overseas travelers to Alaska, but a 2011 survey by the State of Alaska Department of Commerce, Community and Economic Development revealed that Australians have jumped to the top of the list. Jillian Simpson, director of travel trade and international marketing for the Alaska Travel Industry Association, said, “Aussies very much enjoy cruising when they come to Alaska

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69%

Shopping 57%

Cultural activities

52%

Wildlife viewing

45%

City/sightseeing tours

43%

Train

40%

Day cruises 30%

Hiking/nature walk

25%

Flightseeing Tramway/gondola Show/Alaska entertainment

SOURCE: Alaska Visitor Statistics Program VI, Summer 2011

and are drawn to seeing the glaciers.” Kirk Hoessle, chief executive officer of Alaska Wildland Adventures and recent appointee by President Barack Obama to a national advisory board for U.S. travel and tourism, echoes that sentiment. “For all international travelers, glaciers seem to have an added thrill,” he says. International travelers “have a deep appreciation for something Americans sometimes take for granted: wide open spaces and wilderness. Most seem to come from highly urbanized regions with less access to undisturbed ecosystems. They have a great appreciation for public lands and the recreation and wildlife watching opportunities they afford.” Hoessle says his overseas clients are often more adventurous than domestic travelers and are willing to travel off the beaten track to remote corners of Alaska. Wildlife is another major attraction, especially for European visitors. “Bears once existed in Europe and are extremely rare now,” said Hoessle. “Many Americans have seen black bears, for example, but generally when Europeans see a bear, black or brown, it is of-

17% 14%

International visitors’ top 10 activities in Alaska.

ten a first lifetime sighting for them and they are greatly enthused!” According to Simpson, viewing the northern lights is what attracts 99 percent of Japanese visitors to Alaska during winter. The Japanese are the largest

overseas market that time of year. Besides being a popular destination for tourists from Australia and New Zealand, the U.K., Europe and Asia, Alaska also attracts significant numbers from Mexico, Israel and Brazil.

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Photo by Susan Sommer

Wildlife viewing is a favorite activity for overseas visitors to Alaska.

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Market Visibility

ATIA offers its website in English, Japanese, Korean and German. Simpson says they plan to add another foreign language option next year, either Chinese or Spanish. She says the Latin market is emerging and ATIA has been slowly entering it because they “see huge potential.”

■ All visitors ■ International

56% 48% 33% 33%

or th

Fa rN

hw es t So

rio r te In

en hc So

as t

tr al

SOURCE: Alaska Visitor Statistics Program VI, Summer 2011

68%

Brazilian traveler Paula Barbosa, in Alaska this summer for her fourth time visiting family, says it was easy to make arrangements herself online. Hiking and other outdoor activities were high on her list of things to do, and this time she shared her enthusiasm for Alaska with her daughter. Charlene Russey of Charlene’s Express Travel in Anchorage arranges custom tours for both individuals and groups, most of whom come from Malaysia, Hong Kong, China and Taiwan. Her clients include many hobby photographers who love the bear viewing at Katmai, as well as marine trips and land tours. Many want an “all-inclusive” experience, paying one price that includes all transportation, meals and amenities.

Regions visited, all visitors and international visitors.

Three main factors affect Alaska’s international visitor market, says Susan Bell, commissioner of the State’s Department of Commerce, Community and Economic Development: the economic health of a country, access to travel opportunities and the Alaska travel trade marketing presence. According to Bell, a business has to be sure they have a visibility in the market, and provide travel planning tools travelers need to book a trip. Most local entrepreneurs need to be available three to six months in advance of their

tour season in order to capture their share of overseas visitors, who tend to plan and book their Alaska trips earlier than domestic visitors. Bell says the state is increasing its use of social media for marketing to visitors and working on collaborating with other state agencies such as the Alaska Seafood Marketing Institute, Alaska Grown and the Silver Hand program, which helps Alaska Native artists promote their work in the marketplace and enables consumers to identify and purchase authentic Alaska Native art.

GRACE UNDER

PRESSURE

The National Emergency Management Association is made of people who know how to handle a crisis. Hurricane Katrina called many delegates away in the middle of the group’s 2005 meeting in Anchorage, but the event was still a success. So when the time came to pick a place for the group’s 2013 meeting, John Madden, Director of the Alaska Division of Homeland Security & Emergency Services, reminded NEMA: Anchorage can perform in a clutch situation.

John Madden THE MEETING: National Emergency Management Association Emergency Management Policy & Leadership Forum September 8-14, 2013 300 delegates Estimated Economic Impact: $546,600

Congratulations John Madden Visit Anchorage Me eting Champion! Are you a member of a national or international association? Bring your group to Anchorage. Contact Visit Anchorage: meetings@anchorage.net | 907-257-2341

www.Anchorage.net

www.akbizmag.com • Alaska Business Monthly • July 2012

77 ■

International Visitor Facts

In the 2011 report by the state titled “International Visitors to Alaska,” several things stand out. International travelers (not counting Canadians) now make up 10 percent of Alaska’s total visitor market, an increase from the last time the survey was done in 2006. Most of those surveyed were in Alaska for the first time. Nearly all were on vacation as opposed to traveling for business. Last summer 154,100 overseas visitors arrived in Alaska for an average stay of about 10 nights. Korean visitors stayed an average of 7.4 nights, while the average Swiss traveler was in Alaska for about 15 days. Australians and New Zealanders accounted for the largest share (27 percent) of overseas travelers to Alaska, bumping visitors from the United Kingdom to second place at 21 percent. German-speaking Europeans (from Germany, Austria and Switzerland) made up 13 percent of international

■ 78

uates was among Koreans. Thirteen percent of Australians and New Zealanders touring Alaska didn’t finish high school. Most international visitors arrived in Alaska via cruise —Al Koch ship—Southeast was their All Alaska Tours top destination. Air was the second favorite mode of getting here, followed by a small traffic to the Last Frontier. Asian trav- percentage that drove or rode a state ferry. elers as well as those from Mexico and The Australians and U.K. visitors a variety of other countries comprised tended to stick mainly to Southeast the rest. Alaska, since most were traveling by The average age of international visi- cruise ship. The Japanese and Koreans tors to Alaska was 50.7 years. The old- headed for Southcentral, while Germanest international visitors were from the speaking Europeans favored SouthcenU.K. and averaged 59 years old, while tral but also listed Southeast and the the youngest hailed from non-Ger- Interior as frequent destinations. man-speaking European countries at Favorite Activities an average of 43.1 years old. The balance between men and women was Once here, international visitors reported that their activities included about equal. The Swiss tended to be the most (in order of preference) shopping, highly educated of overseas travelers to cultural events, wildlife viewing, Alaska, with nearly half of them hold- city and sightseeing tours, train ing a masters or doctorate degree. The trips, day cruises, hiking, f lightseehighest percentage (58) of college grad- ing, riding a tram or gondola, and

“Over the years we have seen non-stop flights from Europe come and go. Condor has succeeded and has now built the frequency to four flights a week to Alaska, and I am told this is one of the most successful routes in their entire system.”

www.akbizmag.com • Alaska Business Monthly • July 2012

taking in an Alaska show or other entertainment. A breakdown by country, however, showed that although shopping is the top activity for Europeans, Australians and U.K. tourists, Japanese visitors said train rides were their favorite activity, and Korean travelers sought out cultural events more often. Spending by international visitors in Alaska totaled $156 million last summer, not including transportation costs of travel to and from the state and cruise packages. The average per person spent per trip was just over $1,000 once in the state, though a huge gap existed between U.K. visitors at $531 average per person and Japanese visitors at $3,440 average per person. Bus tours ranked highest overall among types of package tours for all overseas visitors, though the Japanese and Koreans were especially fond of them. The Germans and Swiss, however, preferred to rent vehicles to sightsee. Two out of three foreign travelers to Alaska rated the friendliness of residents as what they liked best about visiting here.

The vast majority (92 percent) of international travelers surveyed expressed satisfaction with their trip to Alaska, with two-thirds of them saying they were very satisfied and would be very likely to recommend Alaska to their friends and family. Interestingly, the intention to return to Alaska within the next five years was highest among Japanese and Korean visitors even though they were the least satisfied with their experience. Geography likely plays a role in plans to visit Alaska again. Pacific Rim countries such as Japan and Korea are closer, whereas air travel from the U.K. and Australia takes longer and may involve more stops. Only a handful of international passenger airlines offer overseas travelers options for fl ights to and from Alaska, including Condor, Japan Airlines and Korean Air. Al Koch of All Alaska Tours says, “Over the years we have seen nonstop flights from Europe come and go. Condor has succeeded and has now built the frequency to four flights a week to Alaska, and I am

told this is one of the most successful routes in their entire system.” The State of Alaska and the visitor industry recognize what an important role economics plays in international travel decisions. “The Australian dollar has been very strong in the past few years and the favorable exchange rate has resulted in not only more Aussies traveling to Alaska but also a higher proportion of them (compared to the average visitor) thinking that Alaska has a better value for money compared to other destinations,” says ATIA’s Simpson. The entire report on international travelers, along with one on domestic travel to Alaska, can be found at commerce.alaska.gov. The reports include statistics on visitor volume, trip purpose, transportation modes, length of stay, demographics and other helpful information for existing Alaska businesses and would-be entrepreneurs to meet the needs of the growing force of international travelers.  Susan Sommer is a freelance writer and editor living in Eagle River.

www.akbizmag.com • Alaska Business Monthly • July 2012

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visitor industrY

Meeting in the Last Frontier

Photo by Roy Neese/Visit Anchorage

The USA/Canada Lions Leadership Forum was held in Anchorage Sept. 22-24, 2011 at the Dena’ina Center. Approximately 1,550 Lions Club members participated in the event.

Conferences have trickle down effect for local economies BY K.T. MCKEE

he Outdoor Writers Association of America has been meeting annually for professional conferences all over the country since 1927, but has never ventured to the one state that seems most apropos for their ilk—until this year. During the first week of September, at least 200 writers, photographers, bloggers, television producers, broadcasters and editors will take over the Chena Hot Springs Resort near Fairbanks to explore their craft and the surrounding scene, generating future stories and images for national publications and media outlets for the rest of the year and beyond—and Fairbanks folks couldn’t be more thrilled. “That conference will have an immediate impact on local businesses and tour services here and throughout the state, and will be a huge multiplier down ■ 80

the road because of the media exposure it will generate,” Fairbanks Convention and Visitors Bureau President and Chief Executive Officer Deb Hickok says about the OWAA event Sept. 3-6. “We are very happy they are coming this year.”

Finding the Perfect Fit

For meeting and convention planners at a myriad of local and national organizations, businesses and professional associations, finding the perfect fit between facilities and member desires is a delicate balancing act sometimes years in the making. Whether an organization is seeking a specific geographic backdrop or merely providing a well-rounded mix of locations for its members, Alaska not only tends to rank at the top of outsiders’ bucket list for professional events, but is

also a favorite spot for residents wanting to explore other areas of the state they love, according to meeting planners. “Our members had been asking us for years to have a conference in Alaska since their work is tied so closely to outdoor adventures, but the costs of just getting there made it seem too impractical,” OWAA Executive Director Robin Giner says. “When we finally approached the Fairbanks Convention and Visitors Bureau asking them if they’d be willing to bid on our conference, they worked very hard to come up with an attractive package for us—and we chose Chena because of its rustic nature, as opposed to being in a town.” Giner said that although OWAA conferences usually draw about half of its 1,000 members, they felt it was worth

www.akbizmag.com • Alaska Business Monthly • July 2012

Photo by Roy Neese/Visit Anchorage

the risk of having fewer attendees in order to celebrate its 85th year in style. “We knew this year would call for a very unique experience,” Giner says, adding the return on investment for conference locations can be quite large since her members’ reach through major media outlets such as Field and Stream and outdoors channels can be upwards of 50 million readers and viewers.

A Welcome Economic Jolt

OWAA conference attendees will be spending $250 on conference registration, which only covers meals and conference events—not airfare and lodging at Chena. Most participants will also opt for additional excursions and shopping sprees, putting yet more money into the local economy. The 15th International Congress on Circumpolar Health conference in Fairbanks August 5-10 costs even more: Registration costs $400 for college students and $800 for all other participants. This conference is estimated to draw more than 600 physicians, scientists and scholars from around the world. “Having had one of their first conferences in Fairbanks in 1967, the Circumpolar Health organization is coming full circle this year,” Tina Day from Visions Meeting Management in Anchorage says of the special incentive for Alaska’s largest northern city to host the event again 45 years later. “It will be a real shock to the Fairbanks economy—in a good way.” Conference participants will be staying in three central hotels, have their main banquet at the Antique Car Museum with the popular Inuit band Pamyua and Alaska folk legend Hobo Jim entertaining, and have plenty of chances to explore Fairbanks shops, pubs, and a variety of local mainstays like the Steamboat Discovery—but the impact of these sorts of gatherings on the local economy goes far beyond what we normally think about. “We’re talking about taxi companies, florists, bake shops, print shops, car rental companies, and certainly souvenir shops,” says Helen Renfrew, Director of Meetings and Conventions at the FCVB. “We actually have a formula we use to try to quantify the monetary impact on the local community.” According to Julie Dodds, director of convention sales for Visit Anchorage,

The Aerospace Medical Association meeting was held in Anchorage May 8-12, 2011. Roughly 1,600 delegates attended.

Welcome to

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Your Alaska Destination for Meetings and Events. The place where you can accomplish your agenda, while nurturing your soul.

Ketchikan Visitors Bureau Helping to serve all your event needs.

Art Lives Here

www.meetinalaska.com

www.akbizmag.com • Alaska Business Monthly • July 2012

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the “Estimated Direct Attendee Spending” formula provided by Destination Marketing Association International determines that for a conference lasting about four days, the average person is going to spend about $974 while visiting a city—and that doesn’t even take into account the air fare or conference fees. “And we think these are low estimates,” Dodds says. “We think people spend much more, especially if they come up with companies who take care of their conference expenses. Then they have more personal income to spend. And what’s so great about Alaska is most people want to take some extra time to really see what we have to offer.”

Red Carpet Treatment

That said, to entice larger groups to meet in Anchorage, Juneau, Girdwood and Fairbanks, welcome wagons must stay on their toes to attract as many visitors as possible during the year—especially before and after the busy summer season. This means not only offering the best hotel and meeting accommodations at the lowest rates possible, but also coming up with additional activi-

ties and excursion packages that interest both out-of-state guests and Alaska residents looking for a new adventure. For the Circumpolar Health guests and Outdoor Writers, for example, Fairbanks is pulling out all the stops to make sure they feel as special as possible. “We are known as the Golden Heart City of Alaska and we really prove it every day,” Renfrew says. “One of the things I love about the hospitality industry here is people go above and beyond what’s regularly expected all the time.”

Combining Work and Play

That hospitality certainly made an impression on the Alaska Power Association when it held its 2010 conference in Fairbanks. “We had record attendance of about 210 at that annual meeting,” says Crystal Enkvist, APA’s director of member and public relations. “Fairbanks is a great destination because it’s centrally located on the road system, but far enough north for those in Barrow and Kotzebue to attend. It’s a good hub city. Plus they have nice convention space and are very good at hospitality. But we’re looking forward to being in Juneau this year.”

Hold your next meeting in picturesque Juneau, Alaska and receive 25,000 Alaska Airlines Mileage Plan Miles*. • Daily jet service on Alaska Airlines • Top-notch dining and catering services • 20,000 sq. ft. Centennial Hall Convention Center • Comfortable and affordable lodging and meeting facilities for up to 600 attendees

Not only will you enjoy all of the GLACIERS, WHALES and WILDERNESS Juneau has to offer, but you will also be rewarded with enough Mileage Plan Miles to come back and visit again!

*Call today for mileage program details and your FREE Juneau Meeting Planner Guide

Juneau Convention & Visitors Bureau • 1-800-587-2201 • www.traveljuneau.com ■ 82

www.akbizmag.com • Alaska Business Monthly • July 2012

Although it’s a bit of an off year for conferences in Juneau because meeting rotations are taking groups elsewhere, Juneau Convention and Visitors Bureau Group Sales Manager Ken Hill says they’re pleased to have about 125 APA members in the capital city in early August. Hill says that because of Juneau’s unique proximity to some of Alaska’s most vital coastal resources, it tends to draw groups associated with natural resources, fishing, forestry, mining, and environmental organizations. He says the main attraction for APA this year is a hydropower project at Lake Dorothy through Alaska Light and Power. “There’s a little bit of a misconception about meetings in Juneau,” Hill says. “Ninety percent of our visitors are on a cruise ship and aren’t spending the night here, so we have hotel space available for others. Plus, where else can you have a conference and then do after-hour whale watching without driving for hours? From the hotel or meeting venue, the water is usually within walking distance or, at most, a 10-minute drive.” Hill even helps arrange for groups to have a portion of their meetings at off-

site places such as Glacier Gardens Rainforest Adventure or Orca Point Lodge out of Auk Bay, which is exactly what APA folks will be doing later this summer. “I think our members are excited for the opportunity to see Juneau in the summertime,” Enkvist says. “Many of them have only seen it during the legislative session in the winter.” In Girdwood, meeting planners at Alyeska Resort are helping bring in about 15 percent more business to the area each year as the hotel and ski area are remodeled and upgraded, including a $6 million investment in replacing Chair 4 ski lift. “All of Girdwood benefits when folks come here,” says Sandy Chio, Alyeska’s marketing director. “The resort is a huge part of the community fabric. The Double Musky Inn, Jack Sprat and the Bake Shop do very well when there are conferences and events here. So do the activity outfitters like Alpine Air, snow machine operators and dog sled operators.” Anchorage convention planners say that having the Dena’ina Civic and Convention Center available for events over the last few years has proved to

have a major impact on the business climate there all year long. “The Dena’ina Center is performing even better than anticipated,” Dodds says. “It’s just in time, too, because 15 years after the Egan Center was built, that facility is filled to capacity. With the two centers, we have a lot more options for groups coming into Anchorage.” The Alaska Federation of Natives Convention alone, scheduled for Oct. 18-20, will bring in about 3,500 extra people into town, she says. In September, the National Defense Transportation Association will flood the streets with up to 1,200 people. And in November, there will be 1,800 from the American Indian Science and Engineering Society, she says. “We’re developing a good reputation as a place to hold international meetings,” Dodds says. “A lot of it has to do with the fact that we have good airlift into Anchorage with all the major airlines. Plus, as always, we still have the mystique of being a place where so many people want to come.”  K.T. McKee is a writer living in Wasilla.

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ALASKA THIS MONTH Compiled By Nancy Pounds

dining

Photo by Alison Arians

Farmers Markets Growing Statewide

Shoppers tour the South Anchorage Farmers Market looking for produce, baked goods and ﬂowers to grace their tables.

laskans can count on farmers’ markets to provide everything from fresh local produce to locally-produced flowers for their summer dining and entertaining needs. According to Kristi Krueger from the state Division of Agriculture, nearly 40 farmers markets operate statewide, with five new markets tentatively set to join the Alaska Farmers Market Association. “Typically in July, you can see a plethora of fresh fruits, herbs, flowers and veggies at the markets ranging from broccoli to Swiss chard,” Krueger says. “In August, September and October we start to see the potatoes, carrots, cabbage, onions, beets and other root crops widely available.” Arthur Keyes owns and operates Glacier Valley Farms in Palmer, and participates in the Saturday and Wednesday South Anchorage Farmers Markets, the Spenard Farmers Market and the Eagle River Saturday markets. He also runs a stand at his farm every Saturday from July through September. “Local farmers’ markets support the local economy and provide a revenue source for the small scale producer,” Keyes says. “True entrepreneurship happens all summer at the various markets. It is a lot of work but it is the most rewarding work experience I have ever had.” Visit alaskafarmersmarkets.org for a list of statewide farmers markets. 

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www.akbizmag.com • Alaska Business Monthly • July 2012

ALASKA THIS MONTH Compiled By Nancy Pounds

trAvel

Photo by TSS Photography/Courtesy of Seward Chamber of Commerce

Runners, Fans Flock to Seward

Racers launch off the starting line to begin the Fourth of July traditional Mount Marathon race in Seward.

ven though Seward’s Fourth of July party includes typical patriotic activities—a parade, fireworks and community contests—the famous Mount Marathon race is the main event. The three-mile course, organized by Chamber of Commerce officials, is an epic mountain run, scaling and then descending the 3,022-foot Seward icon. About 350 volunteers are required to staff the race, providing services such as traffic control and setting up mountaintop timing equipment. According to Cindy Clock, executive director of the Seward Chamber of Commerce, about 40,000 people visit Seward, population 2,500, for Independence Day activities. Accommodations for the festival typically sell out in March or April, Clock says. World-class to recreational runners relish the challenge of powering uphill and then beginning a daredevil descent— and the achievement is sweet. Cheers from spectators lining the course bolster competitors to strong finishes, and the sound can be heard up the mountain. “(Racers) say there’s nothing in the world like it,” Clock says. The race was added to the Alaska Sports Hall of Fame last year, although Mount Marathon is already nationally known, she says. Race organizers made some changes earlier this year to allow more new participants a chance to compete. Mount Marathon marks its 85th running this year. For more information on Seward’s Fourth of July celebration, visit seward.com. 

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BEST

Alaska Business News Site

akbizmag.com

ALASKA THIS MONTH Compiled By Nancy Pounds

entertAinment

Anchorage Museum Features Mount McKinley Photo by Scott Darsney/Courtesy of Anchorage Museum

Scan ! here

Make us your home page! Find latest statewide business and industry news. Get government news. Statewide Calendar – Post your event! Read past issues online

FREE! Transportation special section

Hear That Whistle Moan

Easy Now! The railcar transporting Engine 557 connected in Whittier to the two Alaska Railroad engines bringing it on the last leg of the journey home.

Historic steam engine finds its way home

By Dimitra Lavrakas

team engines are just plain romantic. Conjuring up memories of exotic trips on the Orient Express or the Trans-Siberian Railroad, or a quick trip from London to Edinburgh on the now-retired steam engine the Flying Scotsman, the days of steam bring us back to a simpler era when we had the luxury of time to travel at leisure. And train fans are so enamored of those great hunks of steel that they’re referred to as “foamers.” Don’t worry—it’s an affectionate term for those dreamy fanatics who make it their life’s goal of boarding as many trains as possible. “They are so passionate about trains,” says Tim Sullivan, public relations director at the Alaska Railroad Corp.

Sullivan is spearheading the drive to put the railroad’s historic steam Engine No. 557 back on the tracks after its absence from the state.

The Engine’s Lineage

Baldwin Motor Works of Pennsylvania serial number 70480 was built for the U.S. Army Transportation Corps as U.S. No. 3523, eventually becoming No. 3557 after it arrived in Alaska in December 1944. She was one of the dozen S-160 locomotives dedicated to Alaska service in war time. One of the many S-160 locomotives built for the war effort, others were shipped to Europe and Africa. As military operations in the wake of World War II heated up in Alaska, there was an undeniable need to beef up the equipment.

Heavy locomotives were required to haul troops and equipment to key sites to support the various campaigns. That’s where the s-160 was introduced. Known as GI Consolidation or Gypsy Rose Lees, after the famous burlesque stripper, they were “stripped” down for action—in other words, customizable to what was required for use in their divergent destinations. For Alaska service, No. 557 was modified by mounting larger compound air compressors on the front pilot, steam coils were added to the cab to keep it warm in the harsh Alaska winters, and the cab roof was raised and widened to 10 feet so the crew could see back around the tender. A snowplow was attached to clear the tracks. After military service, the majority of these locomotives were transferred

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akbizmag.com ■ 86

The Anchorage Museum features photos and artifacts depicting climbers’ ascents of Mount McKinley as part of the exhibit “The High One: Reaching the Top.”

his month the Anchorage Museum features the work of intrepid pioneers and climbers who have scaled Mount McKinley. “Ascent 20,320: Science on the Slopes of McKinley” depicts the mid-20th century climbs attempted for scientific projects. “The High One: Reaching The Top” exhibit describes past expeditions with gear and artifacts. “Romantic North” features landscape paintings by Sydney Laurence and others who captured enchanting views of Mount McKinley on canvas. Visitors can also expect to see the work of famed photographer Bradford Washburn. These exhibits will run through fall. “We believe these exhibits help out-of-state visitors understand and appreciate Alaska better, but the exhibits also offer Alaskans new knowledge and fresh perspectives on their home state,” says Sarah Henning, Anchorage Museum public relations coordinator. According to Henning, museum officials strive to educate museum visitors year-round about Alaska’s art. However, some summertime exhibits are chosen to appeal to visitors from Outside. “When scheduling temporary exhibitions for summer, we keep the influx of out-of-state visitors in mind,” she says. The museum also offers other permanent exhibits, the planetarium, children’s Imaginarium and restaurant Muse. In summer, the museum docents offer free, guided tours four times daily in the history, art and Alaska Native culture galleries. The museum is open from 9 a.m. to 6 p.m. daily during summer. For more information, visit anchoragemuseum.org. 

www.akbizmag.com • Alaska Business Monthly • July 2012

EVENTS CALENDAR

Compiled By Alaska Business Monthly Staff

Alaska 4

Independence Day

Music, food, activities and entertainment dominate as Alaskans celebrate Independence Day with festivals, parades, picnics, races and other events. Check locally for planned events.

Anchorage 4

July 4th Celebration

Events include a pancake breakfast, parade, reading of the Declaration of Independence, and the Festival on the Parkstrip. Delany Parkstrip, 8 a.m. to 6 p.m. anchoragejuly4thcelebration.com

18-19

Brandi Carlile

Her music has been categorized in several genres, including pop, rock, and folk. $1 from every ticked sold is donated to the Looking Out Foundation. Alaska Center for the Performing Arts, 7:30 p.m. alaskapac.org

Red Green LIVE: Wit and Wisdom Tour

A string of sold out shows in the U.S. and Canada have led to the return of everyone’s favorite lovable and wacky handyman. Alaska Center for the Performing Arts, 7 p.m. alaskapac.org

26-29

Alaska Salsa Festival

Alaska Dance Promotions presents this festival, which includes workshops, performances and nightly party events. Hotel Captain Cook, various times. alaskasalsafestival.com

Cordova Copper River WILD! Salmon Festival

This festival aims to celebrate salmon and promote the health and sustainability of local salmon runs. Experience art, music, road races and educational events in the heart of Prince William Sound, home to wild Copper River Salmon. copperriverwild.org

Eagle River 11-15

Bear Paw Festival

This year’s theme is: It’s a Jungle Out There. Activities include the Bear Paw Grand Parade, a sidewalk sale, quilt show and auction, celebrity jeopardy, classic car show and 5K race. Downtown Eagle River, various times. bearpawfestival.org

Fairbanks 18-21

World Eskimo Indian Olympics

The first World Eskimo Olympics was held in Fairbanks in 1961, and has since become a celebrated annual event. Games include four-man carry, ear pull, high kick and more. Carlson Center, various times. weio.org

18-22

Golden Days

The Fairbanks Chamber of Commerce presents Golden Days with a theme this year of Let the Good Times Roll. The annual festival celebrates the founding of Fairbanks. The free Kick-Off Party under the tent at Pioneer Peak starts the events on Wednesday. Downtown Fairbanks, 5 p.m. fairbankschamber.org

Girdwood 6-8

Girdwood Forest Fair

This year’s event features Alaskan artists, hand-crafted items, exotic foods and entertainers from all over Alaska. Free admission. Girdwood Fairgrounds, various times. girdwoodforestfair.com

Haines 26-29

Southeast Alaska State Fair

Fair Like There’s No Tomorrow and enjoy events that include live music,

Homer 14

Street Fair

Arts, crafts, music, dance, activities for children and festive food are all mixed together to create an atmosphere of fun and celebration. Hazel Avenue, 10 a.m. to 6 p.m. homeralaska.org

Juneau 6-7

Festival of Fun

All proceeds from the games go to each charity running the game. Activities include pie eating contest, popcorn, cotton candy, carnival games, many prizes. Tickets are $1 per game. Nugget Mall, 5:30 p.m. to 7:30 p.m., Friday; 10 a.m. to 5:30 p.m., Saturday. nuggetmalljuneau.com

Ketchikan 13-14 & 20-21

Fish Pirate’s Daughter

Ketchikan’s original musical melodrama is served up with a crab feast for a perfect summer evening. Ted Ferry Civic Center, 7:30 pm. firstcityplayers.org

Palmer

Clare to Clare Benefit Fashion Show

All proceeds go directly to Clare House, an emergency 24-hour shelter for women and children. Includes silent art auction and fashion show. Dena’ina Center, 6:30 p.m. to 10 p.m. clarehousebenefit.org

26-28

logging show, fisherman’s rodeo, fiddle contest, and arts and crafts exhibits. Southeast Alaska State Fairgrounds, various times. seakfair.org

Palmer Pride Picnic

This free picnic is hosted by Palmer businesses and the City of Palmer. Includes Palmer Pride hotdogs, farm fresh veggies, live music, and Citizen of the Year. Palmer Railroad Depot, daylong. palmerchamber.org

Seward 4

Mount Marathon

This annual footrace allegedly began as a wager that one could not run up and down Mount Marathon in less than an hour. Includes Junior’s, Women’s, and Men’s categories. Downtown Seward, 9 a.m., 11:15 a.m., and 3 p.m. sewardchamber.org

Sitka 13-14

Home Skillet Music Festival

Home Skillet Records puts on this summer music festival with an eclectic group of musicians coming from all over the country. Sea Mountain Golf Course, various times. homeskilletfest.com

Soldotna 18-21

Sawfest

Carvers compete in various events, including the quick carve competition. Carvings are auctioned. Other attractions include the only Alaskan Animal Carousel, the Giant Fish, and one of the world’s largest chairs. Mile 91.7, Sterling Highway, various times. townoflivingtrees.com

28-29

Progress Days

Activities include arts and crafts booths, car races, rodeo, parade, Dutch oven cooking competition, and community barbeque. Soldotna Creek Park, events begin 11 a.m. visitsoldotna.com

Valdez 13-14

Fireweed “The Race Across Alaska”

This annual biking event includes different routes covering 50 to 400 miles. Each race begins at Sheep Mountain. Sheep Mountain Lodge, various times. fireweed400.com

Wrangell 25-29

Bearfest

Celebrate the bears of Alaska at this annual event that includes Bear Symposium and Bear Country Workshops, live music, food booths, film festival, salmon bake and regional arts fair. Nolan Center and various locations, 10 a.m. bearfest.net

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heAlth & medicine

Total Joint Replacements Rising Alaskans get new hips and knees BY K.T. MCKEE

■ 88

Xray of the pelvis after a hip replacement. The hip joint is replaced by a prosthetic implant.

istockphotography.com

n the last 10 years, total knee and hip replacement surgeries have more than doubled in this country, according to the American Academy of Orthopaedic Surgeons. Out of a total 48 million surgical procedures performed in the United States in 2009, 676,000 were total knee replacements; 327,000 were total hip replacements, according to the Centers for Disease Control and Prevention. Although no statistics are available for Alaska, the CDC reports that nationally the rates per 10,000 people are 19.2 in those aged 45 to 64 and 40.0 for those aged 65 and over for total knee replacements; and for total hip replacements, 38.2 for those aged 45-64 and 91.9 for those aged 65 and over. While rates are very close between genders for total hip replacements, considerably more women than men undergo total knee replacements, according to the CDC. What’s more, people are having the procedures done earlier in life. “Thirty years ago, it was pretty much dogma that unless you were at least 55 you wouldn’t even be considered for total joint replacement,” says Orthopedic Surgeon John Lapkass of the Anchorage Fracture and Orthopedic Clinic. “The thought of doing surgery on someone in their mid-40s was almost heresy. But over the years, with the advances in materials that allow the new joints to last a lot longer and with younger folks demanding more from their bodies, the demographics are definitely changing.” Alaskans in particular seem to push themselves physically more than others from their teen years to their retirement years and, eventually, parts begin to wear down, Lapkass says. Take Anchorage school nurse Judy Besh, for example. Back in 1977, Besh won the Mount Marathon race and was an All-American cross-country skier for the University of Alaska in 1979. “I’d always been very active,” 55-year-

old Besh said in early May as she recovered from total hip replacement surgery. “Two years ago, it felt like I had a strain in my left groin muscle. It was very debilitating. I couldn’t do much at all. It was hard to walk, but still I didn’t think it was that serious.” Even when her long-time doctor did an MRI and told her it was her hip she still didn’t want to believe it. “I was doing anything I could to avoid surgery,” she said. “But when your hip

bothers you, it throws your walking off and creates all kinds of other problems.”

Hip Replacement Versus Hip Resurfacing

Eight years before, Besh had helped her husband, Don Clary, recover from his own hip surgery. Like her, he had been athletic all his life and began experiencing unexpected pain in his left hip area. He was only 46 at the time and elected to try a method known as “hip resur-

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facing,” a procedure that removes worn cartilage and damaged bone in the cupshaped hip socket, and replaces them by capping the thigh bone (femur) with a cobalt-chrome metal covering while inserting a metal liner in the socket to allow for smooth, pain-free movement after healing. According to the AAOS, “The advantages of hip resurfacing over traditional total hip replacements is an area of controversy among orthopedic surgeons, and a great deal of research is currently being done on this topic.” The AAOS is quick to acknowledge the gray area on this topic: Hip resurfacing may be easier to revise, may decrease risk of hip dislocation, and generally result in a more normal walking pattern and greater range of hip motion. However, many Alaskan doctors are wary of hip resurfacing due to the known disadvantages of the procedure, which include the fact that it is a generally more difficult surgery to perform successfully. According to Lapkass, additional disadvantages not only include femoral neck fractures and general metal wear, but concerns by the Food and Drug Ad-

ministration over potential chromium and cobalt poisoning have lead to recalls and legal action against certain manufacturers and have caused patients to be subjected to periodic blood analysis and monitoring. “Chromium ions are no good,” Lapkass says. “But the real bad actor is cobalt.” Undaunted by the minor disadvantages and unaware of the potential dangers, Clary traveled to Baltimore for the surgery. “The benefit I thought I would find with the resurfacing procedure was that it would take less of my bone away,” says Clary, now 54. “Being only 46, I figured I had another 40 years ahead of me, so I wanted to do what I could to relieve the pain of the arthritis with a more benign surgery than the regular hip replacements.” Clary says that he felt much better after recovering from the surgery. He still had a little discomfort, but he could ride his bike again and was a lot more active than before the surgery. It wasn’t until later that Clary realized that perhaps the resurfacing surgery wasn’t the best choice.

“If I knew then what I know now, I might not have chosen that procedure,” Clary says. “Once I learned about the metal issue, I had my blood checked. The levels were a tad bit elevated, but not anywhere near what others were experiencing.” Clary also noticed that his wife is recovering from her total hip replacement a lot more quickly than he did. “She was out of the hospital in two days and was putting her full weight on her left hip,” he says. “I was on crutches for two months and could only put 20 percent of my weight on it because of problems other patients had with fractures.” Besh and Clary own and run Adam’s Street Bed & Breakfast in Seward in the summer, so Besh timed her surgery so that she could take the last few weeks off from school at Roger’s Park Elementary and be healed in time to hit Seward on Memorial Day Weekend. She’s pleased that her operation will make her hip stronger in the end because her bone will grow into her prosthesis. “The only discomfort I have now is from the swelling,” she says. “I’m almost

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to the point where I don’t even have to use my crutch and it’s only been five days since the surgery. I can’t wait to get back to hiking. I’ve really missed it.”

Transforming Medical Trends

Lapkass’ partner at the Anchorage Facture and Orthopedic Clinic, Orthopedist Doug Prevost, says he’s done more than 1,500 hip replacements throughout his career, and agrees things have changed quite a bit since he first began doing them in 1998. One of the major changes has been in the way the pieces are affi xed to the bone. In the past, cement was used to keep it all together. Over the last 10 years, however, about 98 percent of the procedures performed in the U.S. allow for the bone to grow onto the prosthesis for a more natural adherence—as in Besh’s case. “We also used to make longer incisions and weren’t as careful with the muscles and tendons around the hip,” Prevost says, explaining that now physicians simply move the muscles aside and make very few cuts to tendons. Prevost, Lapkass and Palmer Orthopedic Surgeon Gary Benedetti were all quick to point out, however, that none of them ascribe to the “minimally-invasive” surgery techniques with hips and knees touted by some physicians in the Lower 48. “That’s just a marketing scam,” says Benedetti of Denali Orthopedic Surgery. “There’s no data support for making little incisions. You have to be able to see what you’re doing, especially with knees.” They all agree that with the aid of computers, live X-rays, MRIs, CT scans and other modern devices that assist surgeons, the accuracy of procedures has improved over the years. However, according to Lapkass, there’s no replacement for raw experience. And there’s nothing like seeing a patient who was once crippled by pain and could barely walk breeze through their office door with a grateful smile. “That’s why I love my job so much,” Lapkass says. “I love seeing someone’s quality of life change so much for the better and know I was a part of that.” One of those patients is now wellknown Alaskan avalanche survivor and author Jim Sweeney.

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After his right hip was virtually destroyed in an avalanche at Mt. Johnson in 1989, the carefree daredevil’s life was filled with darkness and dread. “I was like the Hunchback of Notre Dame,” Sweeney, now 56, says of the accident. Lacking health insurance and feeling sorry for himself, Sweeney became more and more of a recluse. “I was a real crybaby,” he says. Joint replacement surgeries can cost anywhere from $35,000 to $90,000, depending on type of surgery, therapy, recovery time, and other variables. Finally, in September, 2010, Lapkass motivated Sweeney, his long-time friend, to get his hip replaced with the help of Anchorage Project Access, an organization that provides free medical services for the uninsured who meet certain income criteria and do not have other public assistance. The transformation was amazing, Lapkass says. “Before the operation, he was limping terribly and was always grumpy,” he says. “It was painful to watch him walk. But now he’s actually pleasant to talk to.

He has a much more positive outlook on the world now.” Sweeney says he can’t thank Lapkass, Project Access and the staff at Providence Hospital enough. “Twenty months ago I hurt all over,” he says. “Now I’m swing dancing and working again. My life is so much better now.” Sweeney chronicled his Alaska Range accident in his book, “Alaska Expedition: Marine Life Solidarity.” He also published a smaller book about his adventures in the Alaska wilderness called “The List.” He says he doubts either of them would have been written if he’d remained in his pre-surgery despair. For Anchorage attorney Joseph Perkins, the transformation toward a renewed body came in pieces. Years of overuse and extra weight led him to first have his right knee replaced by Prevost at age 54 in 2008. A year after that, it was time for the other knee. In 2010, his hip was replaced. Finally, a swimming injury caused his right shoulder joint to need replacing last year.

“The knees took about six months to really heal, but the hip was a lot faster,” he says. “I wanted to make sure I could travel again and walk places and swim again. I started swimming again in December and I was stunned that it didn’t hurt anymore. I feel better in 2012 than I did in 2006.” Benedetti, who is proud of the hip surgeries he’s doing using a speciallydesigned table that makes is easier to use a frontal approach to the hip joint during surgeries, says he too gets a lot of satisfaction in seeing patients smile again. “My patients are broken, but they aren’t sick,” the former military surgeon says. “I know I can fi x them. I did a guy two weeks ago who was barely walking because his hips were so stiff. He walked into our office for his two-week follow-up exam and said he’s now walking two miles without a problem. That’s why we do this job. Watching someone decay isn’t nearly as rewarding.”  K.T. McKee is a writer living in Wasilla.

3 REASONS to choose Anchorage Fracture & Orthopedic Clinic for total joint replacement procedures:

1 2

More fellowship trained physicians than any other orthopedic clinic in Alaska. We do primary joint replacements and revisions. We are Alaska’s joint specialists for hips, knees, shoulders and elbows.

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special section

2012 Mid-Year Economy

Alaska Economic

Mikal Hendee

John MacKinnon

Larry McCallister

Carol Comeau

ArniThomson

Greg Wolf

Curtis J. Freeman

Jason Metrokin

Architecture and Engineering

By Mikal Hendee, Senior Project Engineer Alyeska Pipeline Service Co.

ngineering and architectural fi rms that design public infrastructure are staying busy throughout the end of 2012, but are mostly working on small projects and fi nishing the backlog from previous years. They are hiring mostly entry level engineers for new positions, or middle and senior level engineers to replace those lost from attrition. The oil industry is strong and is recruiting engineers, but for the next year the work appears to be mostly for temporary infrastructure related to exploration work, maintenance work of existing facilities, and construction related engineering for new infrastructure already designed. Many people are optimistic about the potential for Shell’s discovery in the

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Chukchi Sea and the infrastructure development that may follow in a few years. Other than in the oil and gas industry, the immediate demand for engineering and architectural services appears to be relatively flat. Federal spending for projects in Alaska is flat, if not declining. State spending for projects is helping offset the decline in federal spending; however, competition for funding is increasing and projects need to justify the cost/ benefit ratio. Bond packages passed this year in Anchorage and the Mat-Su Borough should provide some demand for engineering and architectural services later in the year. This spring, UA engineering schools, especially the University of Alaska Anchorage, have a record number of graduates. Most of this year’s graduates were able to find jobs after graduation: Civil engineers with private design firms, public agencies, and the construction industry. Geological and mining engineer graduates are being hired in the mining indus-

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Outlook

Adapting to an evolving economy COMPILED BY MARI GALLION

Dan Robinson

Meera Kohler

Deborah Schildt

Leslie Ellis

Kara Moriarty

Scott Swingle

Owen Graham

Julie Saupe

try, and there is an immediate need for mechanical, petroleum and chemical engineers in the oil industry.

Construction: Commercial

By John MacKinnon, Executive Director Associated General Contractors of Alaska

he Alaska economy has been helped considerably by the very generous state capital budgets. In relative terms, our annual construction spending has been flat since 2007 and in today’s economy, flat is good. Most other states have experienced double-digit reductions in construction spending and double-digit construction unemployment. Not only have our elected leaders responded to the need for many construction projects, they also recognize that a decline in the construction economy will significantly impact the overall Alaska economy. The government spending has

been a very real benefit, but the real concern is the relatively low level of private investment. There are some highly visible building projects in Anchorage, but also some high vacancy rates. It will take considerable improvement in the Alaska economy, a healthy investment climate, and growth in nongovernment jobs to absorb the high vacancy levels in commercial and office space. The most significant focus for the construction industry in Alaska continues to be getting the work done, on time, under budget and still complying with the ever increasing burden of regulatory compliance. Tops among these regulations are compliance with the 2010 Consent Decree between the US Department of Justice (remember how Ted Stevens was railroaded?) and the Alaska DOT. The Consent Decree is a court order that resulted from enforcement actions brought by the EPA against DOT for alleged violations of the Clean Water Act.

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The biggest impact of the Consent Decree is the injunctive relief that requires DOT and its contractors to perform enhanced stormwater compliance and recordkeeping, with stipulated penalties (fines) for noncompliance. In 2011, the first construction season under the court ordered rules, Alaskan contractors have absorbed almost $400,000 in penalties for what amounts to paperwork mistakes and clerical errors. It seems like a lot of money—it is a lot of money, but a fraction of what it could have been. The estimated annual cost of complying with EPA stormwater regulations on Alaska construction sites is more than 5 percent of the entire annual highway construction program—more than $20 million a year. The challenge of industry and DOT is to continue the good management record for the next two years and abate most of the requirements of the Consent Decree.

ronmental program. These small dollar construction projects build schools, medical clinics, flood management centers and cyclone shelters. This growing program added more than 35 new construction projects in FY12. The Alaska District is taking on new project management responsibilities between Fiscal Years 2011 and 2015 under the Foreign Military Sales Program. Currently, we are working on the $152 million dollar program for master planning, requirements validation, and design and construction of C-17 aircraft facilities for the Government of India at Hindan Air Force Station, India. The Corps of Engineers has survived for more than 200 years by adapting to changing times. The Alaska District is shifting its workload from large instate military programs to smaller environmental, interagency and international programs.

Construction: Military & Civil Works

By Carol Comeau, Former Superintendent Anchorage School District

By Larry D. McCallister, Program & Projects Mgmt. Chief U.S. Army Corps of Engineers-Alaska District

ith the 2012 construction season well under way in Alaska, the U.S. Army Corps of Engineers is executing 280 projects valued at $515 million. While the Alaska District’s $345 million military construction program is similar in size to last year’s, the future military construction workload will be much smaller. The Fiscal Year 2012 military budget consists of nine projects with the Army receiving seven new facilities and the Air Force allotted two. The Army workload is valued at $286 million with $176 million destined for Joint Base Elmendorf–Richardson (JBER) and $110 million for Fort Wainwright. Air Force contracts worth $59 million are headed to Eielson Air Force Base. The Alaska District’s Civil Works program contains 42 projects valued at $54.2 million. This includes 15 ongoing studies at $2.8 million, 12 construction projects valued at $27.3 million, and 18 operations and maintenance activities at $24.2 million. The district has started a $3 million, three-year Alaska Deep Draft Arctic Ports Study under a feasibility cost share agreement with Alaska DOT. By the end of the year, we plan to identify a handful of potential sites in order to conduct further extensive analysis of the feasibility of constructing ports at the identified sites. Under our operations and maintenance function, the district does maintenance dredging at five harbors annually and at 60 small boat harbors on a rotating basis. This year, besides the five annual projects, we will dredge at Petersburg, Seward, Bethel and the Cook Inlet Navigational Channel. The district’s growth area is the environmental program, which includes 229 projects valued at $116 million this fiscal year. The Formerly Used Defense Sites (FUDS) program is funded this year at $47 million for work at 65 properties; the Army environmental program has $16 million for 91 projects, and the Air Force environmental program has $40 million for 67 projects. The district executes $10 million to $20 million annually in humanitarian assistance in many Southeast Asian countries under the International and Interagency Support envi■ 94

Education

he most significant focus for K-12 education in Alaska, and in the Anchorage School District, is to increase our four year graduation rate from last year’s 72 percent to our community and school district goal of 90 percent by the year 2020. We are full partners with the United Way’s “Anchorage United for Youth” initiative in this effort. Our district’s efforts with our Response to Instruction (RTI) initiative, which utilizes ongoing progress monitoring of instruction and universal screening for all students in our core curriculum, is assisting the ASD in increasing student achievement for all of our students. The ASD continues to add career and technical education/ vocational education courses to increase meaningful engagement for our students as they move through their middle and high school years. The community has responded positively by passing our last two bond proposals. Our mission of “educating all students for success in life” has meaning through our Career and College Ready focus, and a new look at our graduation requirements for future graduating classes. We are focusing our efforts to enhance the instructional program for all students so that they reach their potential, and at a minimum, make a year’s growth academically. This is more important now than ever as the students in the Anchorage School District represent many different cultures and religions: 92 languages are spoken by the ASD student body which is now 54 percent non-white. Anchorage is truly an international city. We know that by collaborating with the United Way’s efforts through their agencies, and those of Alaska Community Share and the Anchorage Schools Foundation, we are leveraging our community’s resources in support of this graduation goal. The Anchorage United for Youth initiative focuses on three prongs: the importance of early learning so that all students enter kindergarten ready to learn, that families have jobs and adequate health care, and that our youth are engaged in meaningful activities (both in and out of school) in a substance-free environment, thus reducing delinquency and crime. Our entire community must invest in the ASD’s students so that all students achieve a high school diploma in four years. This

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investment will insure that Anchorage continues to thrive economically in the future.

Employment

By Dan Robinson, Research and Analysis Chief Alaska Department of Labor & Workforce Development

ur annual jobs forecast, made at the beginning of the year, was for modest growth of 1.2 percent in 2012, or about 3,900 jobs. We forecasted growth in every private sector industry, with health care leading the way as it has for much of the last two decades. Government jobs were expected to remain essentially unchanged overall. Much of the uncertainty heading into 2012 dealt with the question of whether the shaky national economic recovery was gaining traction. The economic indicators that have been announced through the first several months of the year— nearly all of them preliminary and subject to revision—reveal a two-steps forward, one-step back character to the recovery. U.S. job growth has been a mixed bag of stronger than expected growth early in the year, and weaker than expected growth more recently. Unemployment insurance initial claims have inched downward, but not without occasional upward bumps. Economic news from Europe has been good, then bad, then somewhere in between. Taken as a whole, the closest thing to a consensus among economy watchers is that recovering from the national and global recession will be a long, slow process. So what does that have to do with Alaska? Well, not much

except the health of the U.S. and world economies affects oil and gold prices, federal budgets, interest rates, and the willingness of tourists to travel and spend, among other things. And those things are kind of important to Alaska’s job market. Turning to Alaska data, preliminary state job estimates through the first quarter of the year, which are subject to potentially large revisions, show growth roughly in line with the January forecast. Oil and gas numbers have been fairly stable at high levels, health care continues to add jobs, and government appears to have trimmed its workforce slightly. But headed into the summer months, some of the most interesting questions concern construction, tourism, and fishing, and the meaningful numbers for those industries won’t show up until later in the summer. Construction jobs have fallen every year since 2006 and tourism is recovering slowly but surely from the recession years and cruise ship redeployments—some of which have been offset by new entries to the Alaska market. The market for the state’s seafood products is solid and growing, although specific fisheries are famously unpredictable from year to year.

Energy

By Meera Kohler, President & CEO Alaska Village Electric Cooperative Inc.

hy, in the midst of plenty, do Alaska’s rural communities pay the highest energy prices in the nation? Rural Alaskans face truly daunting obstacles. They live in small communities with minimal infrastruc-

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ture and are dependent on fossil fuels for electricity, heat and transportation. Because of their remote locations, they pay at least twice as much for energy as their urban neighbors, yet have per capita incomes of less than half. Ironically, Alaska’s wealth emanates almost exclusively from rural Alaska—crude oil, mining and commercial fisheries being the mainstay. Trillions of cubic feet of natural gas lie untapped in the north. Yet extracting and processing our natural resources is severely hampered by the unavailability of affordable energy. Our rich resources that are extracted are sent to the Lower 48 and abroad for processing and refining, which could be done here, creating thousands of well-compensated jobs. Nowhere else in the country do small communities generate their own power. A population of 700,000 should require one or two power plants to supply all their energy needs — both electricity and heat. Yet in Alaska we have more than 200 power plants. And rural Alaskans are paying, on average, $0.50 a kilowatt hour and $6 per gallon for diesel fuel. Urban Alaskans believe that Power Cost Equalization cures rural Alaska’s high cost power woes. It does not. It covers less than 20 percent of the cost of electricity. And it does nothing for heating costs. It’s time we put our own resources to use for all Alaskans. We must develop power plants on the North Slope, where the gas resource exists. We must build high voltage transmission to deliver that power to the Fairbanks area, to Southcentral and to Northern and Western Alaska. Electricity from clean burning natural gas will provide affordable energy for lights, heat, resource extraction, value-added processing and everything else needed to restore our state’s wealth and vibrancy. A very small subsidy program can deliver the same benefits to communities that simply cannot be connected to the grid. With affordable energy, we will be free from the stranglehold of petroleum fuels. We will free up billions of dollars being spent on energy today and we will reduce Alaska’s greenhouse gas emissions by half or more. Don’t tell us it can’t be done. Join the team that says it can and must be done—today, not tomorrow.

Film

By Deborah Schildt, Production Manager, Piksik LLC

laska’s film future has never looked brighter. As a board member of the Alaskan Film Group, I see steady growth in our membership and hear a mounting excitement at each monthly meeting as Alaskans “see themselves and their talents” on the silver screen, on broadcast television and in print publications. That excitement stems from new opportunities for local hire and local vendor contracts. Alaska is hot—there’s no doubt about it—and the stage seems set for expansion on all film fronts. The state’s recent approval of a 10-year extension on Alaska’s film incentive program can take some of the credit for this growing interest—but the Alaskan film workforce has also played a key role in spreading the word that Alaskan crews are ready to work in front of and behind the camera. Can we grow the workforce fast enough? This spring the state approved funding to several statewide training programs. Alaskans eager to work in the industry ■ 96

are signing up for classes on all levels of instruction. Local unions are also seeing an increase in their memberships. Several feature films are now pre-qualified with the state and in pre-production stages. The Alaskan Film Group is hopeful we’ll be seeing an ever-increasing amount of Alaskans filling those cast and crew lists as our workforce expands. Productions large and small support the main objective of Alaska’s film tax credits: the creation of jobs. We’re not just seeing an increase in local hire, but an increase in salaries as well. The multiplier effect kicks in when incomes earned by the Alaskan workforce and the increased income to in-state suppliers to the industry gets spent and re-spent throughout the state. Bob Crockett, general manager at Piksik LLC, a NANAowned film production service company based in Anchorage reports, “This spring we saw a healthy increase in productions coming north, providing support services for five reality TV shows from February through May. In March and April, we cast and supported a national print and broadcast TV ad for Carhartt that shot in Anchorage, Willow, Hatcher Pass, Homer and Port Graham. Piksik is also seeing interest from several features and commercial productions looking to bring productions north in the coming months, showing us the word is spreading. Alaska is open for the business of film.”

Financial Services

By Leslie Ellis, President, Credit Union 1

he most important thing I’ve learned since entering the financial services industry in 1980 is that the role of a financial institution is far more than being a place to cash checks, deposit money or get a loan. It’s all about the people! It’s about volunteering, teaching and raising money to support causes we can all get behind. It’s about the members who own Credit Union 1, the relationships our employees forge with those members, and the way we have the power to unite everyone to build a stronger Alaska. Credit Union 1 is celebrating its 60th anniversary and is stable, growing and poised for a strong future in the economic sense. But even bigger than that, Credit Union 1 is encouraging those in the community to live for more than just themselves—by living “One for All.” If we invest in our communities, our children and those in need, we strengthen our society and make it possible for future generations to flourish socially and manage their finances sensibly. If we can all agree on this (which is my hope), the financial community will certainly prosper and the outlook will remain bright for Alaska. Without a doubt, our employees are the key our success. By focusing on our “One for All” movement internally first, we have made great leaps in uniting our neighbors, assisting those in need, and most importantly, helping Alaskans achieve their financial goals while focusing on excellent service and value. We took our movement to the next level in 2011 by launching our very own “One for All” Alaska Fund, which raised more than $14,000 in its first year and every penny was distributed to hunger-fighting nonprofit organizations in the communities that we serve. This year, our fund is dedicated to supporting Alaska’s youth and we’re well on our way to exceeding last year’s total. Credit Union 1 employees volunteered more than 3,200 hours last year and so far in 2012, we have spent 900 hours out in our

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communities demonstrating what living “One for All” means. The banking community’s responsibilities extend far beyond helping those that we serve; it’s our task to take the lead, blaze the path and prove our commitment to the stability and future of Alaska by looking past the bottom line and evolving to meet the needs of our members and non-members alike.

Fisheries

By Arni Thomson, President United Fishermen of Alaska

laska’s commercial fisheries include more than 10,000 businesses, from some of the nation’s top seafood corporations to small family operations, all navigating taut regulations to ensure sustainability of resources, and seafood safety for the public. Fluctuations in harvest in specific regions or fisheries are the norm. In spite of the myriad of challenges, a well-crafted fishing business plan is welcome at lending institutions due to an industry track record of growth in overall value the last decade. Alaska’s fishing and seafood industry is well positioned for relatively stable harvest values among the top historical years due to market and product diversification. We expect to continue recent strong years with these considerations: Financing: Alaska Commercial Fishing and Agriculture Bank last fall reduced their variable interest rates by 2 percent on their loans, bringing the range to 5 percent to 6.5 percent. The Alaska State Legislature passed HB 261 to increase the 40th year of empowering young people to own their economic success

loan limit on state fishery permits to $200,000. At least two major Alaska banks are bullish on secured fisheries loans. Global Markets: At the recent Kodiak Comfish Trade Show, UAA ISER Economist Dr. Gunnar Knapp was upbeat about the diversified markets for Alaska seafood. In 2011 China for the first time surpassed Japan in Alaska seafood imports, and now 10 nations import Alaska seafood in excess of $30 million each. While the Japanese market has some challenges, it remains a highly significant seafood trading partner. Harvests ups and downs: A predicted decline in Southeast pink salmon and Cook Inlet and Prince William Sound sockeye may make it difficult to match the 2011 record $600 million statewide salmon harvests, but the overall strength of salmon fisheries should continue. Historically, higher than predicted runs show up in one or more regions and species to balance out the downturns. Similarly, other species strengthen the overall fisheries picture and more than $50 million revenue to the state general fund. A strong uptick in the Bering Sea snow crab harvest should continue to balance an anticipated decline in Bristol Bay king crab, and the high volume groundfish fisheries continue to project steady volume and value. Labor: This spring alarms were raised among Alaska’s processors, especially in remote areas, with the U.S. Commerce Department abruptly shutting off the J-1 Student Visa program for seafood processing. Hat’s off to the Alaska delegation for securing the program through the summer season so labor shortages in remote areas won’t result in delivery delays, or foregone harvests.

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Sustainability certification: ASMI has implemented third party certification for the industry. Confusion may affect some markets but so far Alaska is seen as a leader in this effort, based on positive reactions at the recent International Seafood Show in Brussels.

International Trade

By Greg Wolf, Executive Director World Trade Center Alaska

oming off last year’s record high, the outlook for Alaska’s export industries in the second half of 2012, and for the year as a whole, may prove somewhat challenging as growth slows in some major markets, and prices dip downward for a number of commodities. It is important to note that 2011 was a very strong year for the state’s exporting community. Last year, Alaska’s exports soared to a new all-time high with shipments to overseas markets reaching $5.2 billion, a 26 percent increase over the previous year. 2011 also marked the accession of China to the position of Alaska’s No. 1 export market, surpassing Japan, which had maintained this distinction for several decades, but fell to the No. 2 spot. Exports to the Middle Kingdom totaled $1.5 billion, also a new record. The value of seafood exports, the state’s top export category, grew in 2011 to reach $2.5 billion. Minerals and metals exports also did exceptionally well last year, growing 32 percent and 25 percent respectively. Looking ahead, China, which has been the economic growth locomotive of Asia and Alaska’s fastest growing trade partner, shows signs of slowing somewhat. The most recent forecast by the International Monetary Fund projects GDP growth of approximately 8.5 percent for the country in the current year, versus the more typical 9-10 percent annual growth rate China has experienced for several decades. The ongoing sovereign debt crisis across parts of the Eurozone will likely see strong austerity measures implemented that will result in economic growth being slower in the region than in recent years. Market prices for some of the state’s major mineral and metal exports will likely be flat, or possibly trend lower, following a very robust performance in 2011. For example, gold and silver, while remaining at historically high levels, will be hard pressed to match last year’s performance. The same holds true for zinc. That said, the mining sector is a bright spot for the Alaska economy and a major component of the state’s export picture. Overall, we are projecting continuing strength of Alaska’s export industries, and a solid year for 2012, but making headway against the global doldrums mentioned here present a challenging environment in which to exceed last year’s record performance.

Mining

By Curtis J. Freeman, President Avalon Development Corp.

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ow are things shaping up for Alaska’s mining industry this year?” Although this frequently asked question is usually relatively easy

to answer, this is not so for 2012. To be sure, operating mines like Red Dog, Usibelli, Fort Knox, Pogo, Greens Creek and Kensington are expecting to have a reasonably good year. More advanced exploration projects, like Donlin Creek, Pebble, Ambler, Livengood and Niblack also are undertaking significant programs to advance these projects. In short, capital is there for expansions and improvements at existing mines and advanced exploration projects. Venture capital for expanding resources at less advanced projects is tougher to come by than it was in 2011, but the drills will continue turning at a number of exploration projects across Alaska this year, albeit with reduced budgets compared to 2011. However, exploration capital has virtually dried up for early stage drilling projects or generative exploration programs, regardless of whether that funding is coming from internal cash flow or from external equity markets. Global economic uncertainty is taking its toll on the mining industry, and this process is not likely to abate before year-end. The end result, both in Alaska and elsewhere on the globe, is the same: Most operating companies have reasonable cash flows and healthy treasuries, but are spending progressively less of their treasuries on new project exploration. Junior mining companies, the other major players in the exploration sector, have no cash flow and their treasuries are dwindling with little chance of being replenished from the disinterested venture capital markets. Many of these junior companies are encumbered by significant work commitments as a result of contractual obligations arranged several years ago when the prospects for raising capital seemed limitless. This odd combination of producing companies with strong cash flows and filled treasuries rubbing shoulders with non-producers with good projects but limited cash and limited opportunity to raise more cash creates a perfect storm for mergers and acquisitions. In addition, larger operating companies will be eating smaller operating companies in the big-dog merger and acquisition market. The haves will acquire the have-nots with increasing frequency as time passes. Alaska companies and projects will not be immune to this process.

Native Corporations

By Jason Metrokin, President & CEO Bristol Bay Native Corp.

or Bristol Bay Native Corp., 2012 is a milestone: our 40th year in business. This anniversary finds us celebrating not only our own accomplishments, but the advances made by all Alaska Native Corporations over the last four decades. Such accomplishments have included notable individual financial success, such as BBNC’s own growth to a diversified multibillion-dollar corporation. They also include significant changes and awareness in society, influencing politics, and providing wealth and opportunities for Alaska’s diverse regions and peoples. For the remainder of this year, BBNC’s most significant focus is what it always has been—pursuing our corporate mis-

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sion of “Enriching our Native way of life” by investing in our people, our region and our resources. In 2011, BBNC built a five-year plan to invest in our future. This year, the beginnings of this plan will become evident. BBNC is pursuing new economic and investment opportunities in the Bristol Bay region to help better the lives of shareholders and regional residents. We have committed to dedicating 10 percent of our operating assets to the Bristol Bay region and another 20 percent to diversifying our business lines, primarily investing in Alaska. Our business investments have allowed us to focus on future generations, helping our youth gain the education and training they need to reach their goals. In 2012, BBNC committed to an additional $1.5 million endowment to the BBNC Education Foundation for the next five years. Last year BBNC started an Elder Distribution Program, and this year will establish an Elders Trust to sustain those distributions into the future. We have had a continuous goal to increase shareholder hire; numbers have been stable, but increased wages demonstrate we offer shareholders opportunity for career advancement. Our goal is to double shareholder wages and shareholders in management positions by 2016; hiring of a shareholder development manager will be this year’s first step in that direction. Much has been said recently of the various resources housed in our region, including the minerals in the Pebble mine prospect. Protecting significant renewable resources in the region, such as the salmon fishery, is a priority we will continue to focus on this year. BBNC’s directors and

shareholders have made it clear they will only support resource development on BBNC lands that is consistent with shareholder values; development projects need to meet high standards of fiscal, environmental and social sustainability and protect subsistence culture, practices, clean water and healthy fish. BBNC supports renewable energy programs and both renewable and non-renewable resource development that responsibly allows for shareholders to sustain their way of life. Media outreach to the public will continue the remainder of the year. Our goal is to educate Alaskans on our region and its people through advertisements, as well as our movie “Day in Our Bay,” which is currently being featured throughout the U.S. and Canada at various film festivals.

Oil & Gas

By Kara Moriarty, Executive Director Alaska Oil and Gas Association

he Alaska Oil and Gas Association’s mission is “to foster the long-term viability of the oil and gas industry for the benefit of all Alaskans.” We take that mission seriously, which is why industry representatives have been so vocal about the need for serious changes to Alaska’s oil tax structure. Despite the ongoing debate about whether employment is really up on the North Slope, or how much exploration is occurring here versus in the Lower 48, one cold, hard reality is beyond dispute: Alaska’s oil production continues to decrease at a rate of about 6 percent a year (or 40,000 bar-

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rels per day), which, if left unaddressed, will create statewide economic hardship within just a few years. AOGA has been a strong supporter of oil tax reform that makes producing new oil from ALL North Slope fields attractive to investors. As it stands now, Alaska is uncompetitive and missing out on the production boom currently being enjoyed in parts of the Lower 48 like Texas and North Dakota, despite having billons of barrels of recoverable (but expensive) oil waiting to be extracted and sent through the trans-Alaska oil pipeline. At these record high oil prices, Alaska should be booming, too. Unfortunately, our punitive tax structure creates an environment that forces investors to look elsewhere for new opportunities. This means lost revenue, jobs and economic growth for the entire state. Some have called tax cuts a “giveaway.” We believe reasonable tax reductions that would put Alaska back in the game would be an investment—and a wise one at that. Another critical issue the industry will monitor and inform Alaskans about is the August ballot initiative reestablishing the Alaska Coastal Zone Management Program (ACMP). As written, the 15-page proposed initiative creates an overly broad, far-reaching and duplicative permitting process that places an additional layer of unnecessary regulation that will delay projects, including small and large projects from multiple industries. This ballot measure sends a strong signal that Alaska is not open for business. As such, AOGA will work to make sure Alaskans make an informed decision on the ballot initiative this August. AOGA’s members believe that developing our resources responsibly creates a win-win for industry and Alaska residents. That is why AOGA’s focus for the rest of this year and into the next will continue to center on meaningful tax reform and the ballot initiative. When one sector of the Alaska economy is responsible for more than 90 percent of the state’s revenues it is too important to neglect. Because AOGA believes wholeheartedly in our mission statement, we will continue to inform Alaskans about the importance of the industry to our shared future, as well as why oil tax reform must remain this state’s No. 1 economic priority.

Small Business

By Scott Swingle, Senior Area Manager Small Business Administration

n 2009, many small businesses were in crisis. The credit market had frozen, making it nearly impossible for small businesses to obtain a loan. Administrator Karen Mills assumed leadership of the U.S. Small Business Administration and the agency set a new record for lending to the nation’s small businesses. Thanks to the passage of the Recovery Act, the government guarantee for its flagship 7(a) loan program was increased and a reduction in fees charged to lenders and borrowers was provided. Nationally, SBA was able to bring the lending volumes back, running well above the 2008 levels. And last year set a record, getting more than $30 billion into the hands of small businesses through SBA-guaranteed loans. How does this affect Alaska? At the end of the second quarter for FY2012, the Alaska District Office guaranteed 84 loans totaling $51.2 million. To date, this is the exact number of ■ 100

loans made three years running. The SBA 504 loan program also reflects a consistent number; however, the dollar amount of loans year-to-date compared to last year has doubled to $13 million. (See 7A and 504 charts.) Part of this increase is due to a temporary change in its 504 program authorized until Sept. 27 and allowing small businesses to refinance eligible fi xed assets without requirement of an expansion. This temporary program provides small businesses the opportunity to lock in long-term, stable financing to finance eligible business expenses, as well as protect jobs and hire additional workers. Market research shows a large percentage of outstanding commercial mortgages are set to mature within the next few years, particularly those held by community banks. However, real estate values have declined and even small businesses that are performing well and making their payments on time may find it hard to refinance these loans. They may need to restructure their debt. Comments from the public on the Small Business Jobs Act Tour identified access to working capital as the biggest credit gap in the marketplace. This is even true for businesses with equity in their properties. While access to capital continues to be difficult for small businesses in Alaska, SBA has remained a strong and consistent partner, making a real difference for the small businesses that have received or could receive SBA-backed loans throughout the state. SBA stands ready to provide a helping hand.

7A Loans Year to Date in Alaska Wells Fargo Bank National Association Alaska Growth Capital Bidco Inc. Keybank National Association Alaska Paciﬁc Bank Alaska USA FCU Hanmi Bank Northrim Bank Tongass FCU Borrego Springs Bank, N.A. First Bank Live Oak Banking Co. Mountain West Bank Twin City Bank Unibank

$11,640,500

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7 4

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Timber

By Owen Graham, Executive Director Alaska Forest Association

laska is a big place and both the timber and the economics of harvesting and manufacturing timber products vary a lot from region to region.

www.akbizmag.com • Alaska Business Monthly • July 2012

In Southeast Alaska our operators expect to see some increased demand for export logs in the second half of this year. China will still drive the market for hemlock and we expect good prices from Japan for spruce and yellow cedar logs. Spruce lumber is selling well in Asia markets and cedar lumber is being sold in 40 states. Hemlock lumber prices are down a little from last year, but are expected to be stable through the second half of 2012. The primary issues in Southeast Alaska are an inadequate timber supply and a shortage of trained workers. The timber supply in the region has declined about 90 percent over the last 20 years and until an adequate, reliable timber supply is restored, it will be hard to attract young people to the industry. The Tongass National Forest is the largest national forest in the nation and has the potential to supply enough timber to support thousands of jobs and yet our last remaining mid-size sawmill has only a few months of timber remaining under contract. The largest private landowner in the region, Sealaska, is also facing a timber supply crisis that threatens additional job losses. The mills in Southcentral Alaska are also awaiting a larger, more reliable timber supply. Legislation that would establish the Susitna State Forest and a stable timber supply in this region passed the Alaska State Senate this year but the bill died in the House; reportedly due to election year politics. Next year the state and the industry will try again. Alaska’s interior forests do not have the quality or high-growth rates of the coastal forests, but counterbalancing these drawbacks, the Interior timberlands are much less costly to har-

vest and the relative dryness of the wood makes the fiber more suitable for lumber, wood pellets and firewood. These characteristics, along with the need to address the fire danger in overstocked stands are resulting in increased timber activities in the Interior region. Our congressional delegation is seeking legislation that would resolve the Sealaska timber supply problem, and last year Gov. Parnell established a Timber Task Force to recommend actions that would allow the restoration of a timber supply in Southeast Alaska and also make recommendations for a more friendly business climate for the timber industry statewide. The task force recommendations will be sent to the governor early this summer.

Tourism

By Julie Saupe, President and CEO, Visit Anchorage

laska’s tourism industry is excited about the potential of summer 2012. There are some great early indicators. Cruise capacity increased by about 50,000 passengers this year. Advanced bookings at accommodations across the state are strong. Travel as a whole took a hit during the U.S. recession that began in the fall of 2008, and Alaska wasn’t spared. But since those declines, Alaska tourism has now had three straight years of growth. Anchorage bed taxes, for example, grew nearly 16 percent between 2009 and 2011. The U.S. economic recovery may be slow, but consumer confidence is increasing, unemployment is decreasing and

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Americans are expressing a stronger “intention to travel.” Alaska is poised to see an increase in domestic visitors this summer. Opportunity for growth isn’t limited to North America. For the first time ever, the U.S. has a coordinated overseas marketing program to attract foreign visitors. This new initiative, Brand USA, unveiled its first advertising campaign a few months ago. While only 10 percent of Alaska travelers are international visitors, their impact is worth noting. The average international visitor stays 10.2 days (one day longer than domestic visitors) and spends 8 percent more per person than domestic visitors. They also tend to visit more regions of our state during a trip. International visitor spending in Alaska was more than $156 million last summer. But the marketing push for travel to Alaska starts much closer to home: the state, Alaska’s tourism marketing organizations and private sector businesses spend significant time and resources aggressively marketing Alaska through direct paid advertising and indirect public relations work to maintain a prominence with travel trade, media and consumers. Tourism marketing funding is critical in maintaining this position and capitalizing on the momentum of media interest. During the past several years, Alaska’s tourism marketing funding has increased with support from the state administration and legislative leadership. And while there is conflict within the industry over how these funds are directed, there is no question that these funds help Alaska remain competitive with other destinations and maximize the economic and employment benefits of tourism for Alaska. With continued state funds and the newly funded federal efforts, Alaska’s tourism industry is optimistic that 2012 and 2013 will exceed pre-recession returns to our communities and state.  Mari Gallion is associate editor at Alaska Business Monthly.

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special section

Telecom & Technology

Industrial IT and Telecommunications Converging ﬁelds continue to spark changes BY ANNE REED

he world is changing at an incredible rate. This is truly evident in the fields of information technology and telecommunications. The rate of change has actually created new “laws” in the IT field, including Moore’s Law: “The number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years.” In telecommunications, the rate of change can be observed in the continuous roll out of more advanced wireless technologies—LTE, 4G; 3G; 802.11b, g, and n (Wi-Fi)—to carry data and voice over long distances. As all these changes are occurring, the two fields are converging their technologies. How did this come about? According to industry guru Harry Newton, IT is “a fancy name for data processing, which became management information systems, which became information technology.” IT covers all the equipment, network, processes, procedures and systems used to provide and support information systems both manual and computerized. The general populace most often uses IT to refer to the data processing department in a company. This department employs individuals that understand computers, communications between computers, and sometimes they actually write software. Virtually all electronic IT is currently networked. IT departments today generally control their company’s data telecommunications experience.

Early Industry

Telecommunications began with Alexander Bell’s invention of the telephone in 1876. The science of translating sound into electrical signals, transmit■ 104

ting them and then converting them back to sound is referred to as telephony. Telephony has evolved over time from basic telephone systems to telephony software. Telephone companies have evolved from basic telephone service to offering communication options for telephones (voice mail, conference calling, call forwarding—to name a few), Internet options (Internet access, email, web hosting), and telecommunications services (MPLS, hosted services, TLS, WAN optimization).

are generally defined as “a collection of terminals, links and nodes which connect to enable telecommunication between users of the terminals. Networks may use circuit switching or message switching. Each terminal in the network must have a unique address so messages or connections can be routed to the correct recipients. The collection of addresses in the network is called the address space. The links connect the nodes together and are themselves built upon an underlying transmission network

Telecommunications is generally defined as “the transmission of information over significant distances to communicate. …Telecommunications now also includes the use of electrical devices such as the telegraph, telephone and teleprinter, as well as the use of radio and microwave communications, as well as fiber optics and their associated electronics, plus the use of the orbiting satellites and the Internet.” As the telephone industry offered more services, it incorporated the term telecommunications into its vocabulary to cover the added capabilities. Telecommunications is generally defined as “the transmission of information over significant distances to communicate. …Telecommunications now also includes the use of electrical devices such as the telegraph, telephone and teleprinter, as well as the use of radio and microwave communications, as well as fiber optics and their associated electronics, plus the use of the orbiting satellites and the Internet.” To complicate things further, a telecommunications company is composed of telecommunications networks, which

which physically pushes the message across the link.”

Industrial Convergence

This is where industrial IT and telecommunications begin to converge. In fact there are several areas of convergence. However, we will only touch on four of them: 1) operational, 2) design, 3) products, and 4) organizational. There is at least one area where industrial IT and telecommunications are distinct. As with most companies in the civilized world, telecommunication companies are using more and more computerized equipment. They use it to manage the telephony side of the business as well as the operational side of

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their business. Software is used to manage the complex telecommunications suite of products and to create efficiencies in the normal daily operations. Telephone switches are now totally computerized along with the associated hardware that makes up a central office. Servers that would normally be in IT shops are now in central offices providing Internet services, among other services, to the company’s customers. Sometimes the same piece of hardware (Unix servers) or software (Oracle databases) are used in both areas. The current Open Systems Interconnection design is another example of the convergence of IT and telecom, and the OSI model is self-described as “a prescription of characterizing and standardizing the functions of a communications system in terms of abstraction layers.” There are seven layers to the OSI model with the bottom layer (1) being the physical layer and the top layer (7) being the application layer. These layers are used to move data efficiently, completely (error-free) and confidentially through a telecommunications network involving multiple protocols (different

ways of sending data). It is the universal language of telecommunications. The interesting point, for me, is that at every level, except the physical (1), software/scripting is involved to make the various protocols work. Thereby using information technology to make telecommunications work—convergence at its best. Convergence is also evident in the telecommunications products such as voice over IP (VoIP). VoIP is communicating using packet data for the voice call. Instead of the traditional phone call where the voice is modulated through copper wire, during VoIP, the voice is digitized, made into data packets and sent using Internet protocol (IP) over any available network. The difference is that the IP traffic is handled like any data traffic—through routers, data switches, etc. But, analog voice traffic is handled through telephony switches and regulated by the Federal Communications Commission and, in this state, the Regulatory Commission of Alaska. Another example of a converged product is voice mail where telephony

software can combine with a modem to create an answering service in your computer. A harmonious blend of IT (software) and telecommunications (voice mail). Even the wireless communication options include data, app downloads, voice mail, and long distance.

Perfect Blend

Wireless smartphones are the perfect blend of telecommunications and information technology. Each smartphone is a little computer with associated software. It has all the capabilities of a regular telephone, and it can access the Internet and send and receive data. This telecommunication device is by far the modern growth area for telecommunication companies. Cisco estimates that “(mobile data) traffic in 2012 will grow 2.1-fold (110 percent).” (Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011–2016, 2012) Smartphones are now to the point that they can replace the Dick Tracy 2-Way Wrist TV that was introduced in the 1964 Dick Tracy comic strip. There is also a convergence of industrial IT and telecommunications within the

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organizations themselves. Since IT has historically been in charge of the company’s data, this has evolved to now include the company’s data networks. In most non-telecommunications companies the IT department is responsible for the company’s data networks and probably the telecommunications networks, as well. However, the control of data networks may not be the same inside a telecommunications company. As a result of creating telecommunications products for its customers, a telecommunications company usually has a separate engineering department that handles data transmission. This group is highly educated in data telecom and may have the other IT skills as well. The engineering group and the IT group generally use the distinction of corporate data or public data as the defining line between their responsibilities. IT deals with corporate data, security, and network. Engineering handles the public data, security and network. The last few decades have witnessed incredible change. Information Technology has moved from large mainframes requiring lots of space and large

“Conventional wisdom holds that convergence—the gradual blurring of telecommunications, computers and the Internet—is primarily about technology and the inevitable clash of voice and data networks. But that narrow viewpoint misses the bigger picture … Convergence is about fundamental changes in the way we work—even behave.” —Richard C. Notebaert Chairman and Chief Executive of the Ameritech Corp.

air conditioning units to small servers, smaller workstations, and even smaller smartphones. Telecommunications, especially in Alaska, has evolved from the creation of our statewide 907 area code (established in 1976) to fiber broadband availability in Southwest Alaska (TERRA SW). Through time the two fields have been steadily merging their technologies. This

has created a new way to conduct business, access data, call friends and be entertained. According to Richard C. Notebaert, chairman and chief executive of the Ameritech Corp. quoted in the May 17, 1998, issue of The New York Times: “Conventional wisdom holds that convergence—the gradual blurring of telecommunications, computers and the Internet—is primarily about technology and the inevitable clash of voice and data networks. But that narrow viewpoint misses the bigger picture … Convergence is about fundamental changes in the way we work—even behave.” As both fields—IT and telecommunications—continue to evolve, the emerging technologies will continue to change the way we work, play and live.  Anne Reed is an industrial IT and telecommunications professional. She is the owner of Read Systems in Anchorage.

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www.akbizmag.com • Alaska Business Monthly • July 2012

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special section

Telecom & Technology

TERRA Southwest Finding ways to go where no telecom has gone before

MAP: GCI

BY ROSS JOHNSTON

In June, GCI began offering TERRA-SW communities terrestrial residential Internet services.

or many living in rural and remote regions of the state, the dream of broadband Internet is finally coming true. Thanks to a combination of stimulus grants, technological innovation and a commitment by GCI, the state’s largest telecommunications company, many parts of rural Alaska are being brought up to speed. GCI has recently completed TERRA Southwest, an $88 million broadband project consisting of 400 miles of new fiber optic cable and 13 new micro-

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wave towers connecting 65 communities. The project will service more than 9,000 households and 750 organizations, providing an array of connectivity benefits including increased cell phone service, video conferencing capabilities and beyond. According to GCI Vice President of Corporate Services David Morris, the TERRA project is a symbol of GCI’s long-standing commitment to the state. GCI has positioned itself as the communications provider for the entire

state of Alaska. It is invested in building resources that allow it to serve all of Alaska, and all of Alaska’s telecommunications needs.

Funding Critical

A critical element of realizing the TERRA network was securing the necessary funding. Initially, laying down the comprehensive fiber optic network was fi nancially prohibitive due to the extreme high cost of this infrastructure. Traditionally, fiber optic tech-

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nology is reserved for serving denser, high-volume populations, such as Anchorage, while satellite is reserved for more rural, fragmented communities, because satellite can cover a huge amount of area, while fiber requires a huge investment to physically make all the necessary connections. Thanks to a $44 million grant through the Stimulus Act and a $44 million loan to GCI, the TERRA Southwest project was funded and built in 2011. TERRA Southwest has finally made terrestrial connectivity from Anchorage through Southwest Alaska feasible, bringing this crucial broadband link to rural communities a year before its anticipated completion date.

“What is coming is exciting, what is possible is only beginning to be seen.” —Steve Noonkesser Director of Instruction and Information Systems, Southwest Region Schools

In addition to the existing grants it has already received, the 1996 Telecommunication Act offers an additional incentive for GCI to develop the network farther into outlying communities. The Telecommunications Act provides subsidies for local communities, which can result in substantial savings. For instance, the distance education subsidy is based on the school lunch program. Whatever percentage of compensation a school gets for its school lunch program is the same percentage of subsidy the school receives to acquire telecommunications services. Thus, if the school lunch program qualifies for 50 percent compensation, it would also qualify for a 50 percent subsidy toward telecommunications. Further, the subsidy amount is usually based on what services cost in an urban area such as Anchorage. If GCI were to provide a link to Kotzebue, the retail rate would hypothetically be $15,000 per month for service. Through this program, the school would only have to pay approximately $7,500. A rural school district might not be able to afford $15,000, but it might be able to afford $7,500. This mechanism helps make rural connectivity possible.

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TERRA-SW BROADBAND INTERNET PLANS Monthly Included Usage

Monthly Standalone Price

Monthly Price w/GCI Wireless

512 Kbps down/ 128 Kbps up

3,000 MB

$29.99

$24.99

2 Mbps down / 256 Kbps up

6,000 MB

$64.99

$49.99

2,000 MB

3 Mbps down / 512 Kbps up

12,000 MB

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4 Mbps down / 1 Mbps up

18,000 MB

$114.99

$99.99

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25,000 MB

$164.99

$149.99

2,000 MB

SOURCE: GCI.com

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Satellite Systems

Prior to the development of the new broadband network, most of these rural communities relied on satellites to fulfill all of their telecommunications needs, including phone, television and Internet. The complication with satellite, Morris explains, is capacity and latency. There is only so much data that can be sent through, and it takes time for that data to be received. If someone from Nome wants to know about availability in a hotel in Kotzebue, the signal must first travel up to a satellite located 22,300 miles over the equator. It then comes back down and hits the computer in Kotzebue that says, “Yes, we have a vacancy.” From there, the signal must go back up to the satellite before being sent back down to Nome. Although this type of routing only takes half a second (500 milliseconds) to complete, even this small amount of latency, the amount of time a data packet takes to travel between two points, causes a conflict with most modern communication devices. Modern software applications are built for more complex interactions that require quicker responses, such as those experienced with modern fiber optic terrestrial connections. In addition, this latency can impact the ability to videoconference and even make phone calls due to breaks in service, silence and even echoes. Thanks to the network, these frustrations will soon be a thing of the past for many rural Alaskans.

New Connections

The fiber optic telecommunications network allows rural Alaskans to access information and interact as quickly as most residents do in Anchorage. Since December 2011, GCI has connected all the communities from Anchorage to Grayling including Iliamna, Dillingham and Bethel with its new fiber optic network. The impact of the TERRA project has been significant for these rural communities, especially when it comes to the public education system. Steve Noonkesser, director of instruction and information systems for Southwest Region Schools, has experienced the change firsthand. He describes how the new technology has allowed teachers to integrate learning tools such as videos and other online materials more seamlessly into their lessons. Without the burden of ■ 110

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waiting two to three minutes for videos and lessons to load online, teachers and students can actively engage with the material immediately, which maximizes classroom learning time, he said. Noonkesser expects the broadband improvements to have a positive effect on all community members in the coming months. “What is coming is exciting,” he says. “What is possible is only beginning to be seen.” The next big communications leap is for the terrestrial network to link to Kotzebue and the surrounding villages, and to bring the connection around to the trans-Alaska oil pipeline, where a GCI fiber cable runs from Prudhoe Bay to Anchorage. This development would create what is known in the industry as a “ring,” which means that if there is ever a break in the line, the traffic that was flowing one way can still flow in the other direction to establish a connection. When it comes to telecommunications, Morris states, you want rings—or protected circuits. A couple of years ago, fall floods destroyed a bridge outside of Seward, damaging the fiber cables going across the bridge. If you were a customer of other providers, you were left “high and dry,” Morris says.

and never set up roaming agreements.” If other providers do have roaming agreements, they are limited to Anchorage, Juneau and Fairbanks. These other providers are also fragmented by region, serving in only one region and causing a huge disconnect between regions. This is not the case with GCI. Ultimately, Morris says GCI is in the business of connecting Alaskans, not just with each other, but with the world. Substantial improvements are anticipated across a wide array of sectors, including education, health care and public safety. The network is also ex-

pected to increase job and economic opportunities through network construction and operation. GCI is now working to extend the terrestrial network from Grayling (the most northern community on TERRA Southwest) out to Unalakleet, Ahaktoolik and Nome. The approximately $35 million dollar project, deemed TERRA Northwest, is expected to be completed by the end of 2013.  Writer Ross Johnston owns a marketing company, Fine Point, in Anchorage

Roaming Rural Alaska

GCI customers didn’t experience any interruption in service because GCI has a ring. The signal would travel all the way to Seattle and up a completely different route into Anchorage. Basically, the data traffic reversed itself to fulfill the connection. Until GCI creates this larger ring across Alaska, it has to have satellites in place in the event that there is an outage. However, once this ring is established, there will be big changes in rural Alaska, with the people of rural Alaska gaining much greater access to the rest of the world. Morris states that GCI has by far the most extensive coverage and the most extensive service offering in rural Alaska. Cellular and data throughout rural Alaska is only offered through GCI. “If you have a GCI phone and you fly from White Mountain to Juneau to Anchorage and then to the Lower 48, your cell phone will work the whole way,” Morris says. “No other provider can say that. That is because other providers don’t have rural Alaska on their radar

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special section

Telecom & Technology

SimplySocial’s Global Launch Entrepreneurs harness social media for business

Photo courtesy of SimplySocial

BY MARI GALLION

Alaska-based software start-up SimplySocial’s founders, from left, Tyler Arnold, Jeroen Erne and Valentin Bora in Union Square, Timisoara, Romania.

he ubiquitous nature of social media has made it a juggernaut in the realm of business promotion. With a reported 750 million unique monthly visitors on Facebook, 250 million on Twitter, and 110 million on LinkedIn, what was once touted as an easy way to keep in touch with far-flung relatives and college pals has become the proverbial “low-hanging fruit” for businesses both big and small who wish to reach a large audience. But as many a social media user can attest, the pervasiveness of social media makes it a double-edged sword: If used properly, sites like Facebook and

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Twitter can help a business or an individual build social authority, establishing them as experts in their fields. Used carelessly, however, an off-the-cuff tweet blurted in a moment of frustration can amount to political suicide, a humorous photo can destroy jobs and cyber-friendships and the over-posting of useless or personal information on a Facebook business page can cause a fan to “unlike” your page, stunting your potential to reach many customers through that one connection. Despite the inherent risks of using social media, today’s businesspeople cannot deny its merit—but many busi-

ness professionals are just too busy with deliverables, or they specialize in aspects of business outside of communication, or as many will freely admit, frankly “don’t get” how to maximize their presence through social media. After all, one can be the best interior designer in town (for example), and can compromise their professional reputation by using the wrong homophone (writing “witch” when they meant to write “which”). One doesn’t need to be a linguist in order to decorate a room, but mistakes like these can compromise credibility in the eyes of potential clients. Furthermore, what is an interi-

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or designer going to say? “I got another contract today.” “I went to Taco King for lunch.” Is that really going to maximize exposure, or will it bore an audience to death? And who can help with this? Who specializes in social media? Enter the founding team of SimplySocial (gosimplysocial.com): Tyler Arnold, chief executive officer, from Anchorage; Jerone Erne, chief operating officer, from Zeewolde, Netherlands; and Valentin Bora, chief technology officer, from Timisoara, Romania. Their apparent talents and innovation have attracted the attention—and the investment—of 10 investors, including Nerland Agency CEO Rick Nerland, Swalling & Associates founder Chris Swalling, Wedbush Securities regional manager Allan Johnston and MicroCredit Enterprises guarantor and board member Eric McCallum. It’s easy to see why these young entrepreneurs have been well-received by the business community: All three men are mature, enthusiastic, articulate, knowledgeable and admit that many of their business decisions have been intuitive in nature, prompting them to take the kinds of risks that would seem daunting to those who have gambled and lost. They have each chartered successful businesses on their own, and have garnered a wealth of collective experience from doing business in their various countries, each with its own set of economic climates and circumstances— and as many a businessperson will attest, their youth is a key asset within their field of expertise. So what is it that the men of SimplySocial have created that has these savvy investors all abuzz? In plain terms, these men are software developers and marketers who created an efficient and economical way to capture friends, fans— and ultimately—clients, customers or constituents with their unique system. SimplySocial is “software as a service that provides an easy, step by step strategy on how to be successful with social media,” according to Bora’s blog entry on their website. “Our product is based on a series of simple questions that first asks you some details about your organization, and then helps in creating content (and scheduling it at the right time). Its purpose is to be helpful and provide tips and instructions along the way.”

Who can benefit from using this software? The home page of SimplySocial identifies ways that the software can be of assistance to businesses and enterprises (“A complete social media presence in about 15 minutes a day”), politicians and public figures (“We help politicians and public figures to grow identifiable constituencies”), and advertising agencies (“Our product makes social media profitable”). A quick tour of the website further clarifies the specifics of what the software will do for a business or agency: “Sharing content, creating coupons, and running promotions through social media has never been this easy. We’ll ask you for specific pieces of content—think fill-in-the-blank simplicity—and format it correctly for each social network. We’ll even analyze the best time to upload posts and post them accordingly.” The software acknowledges the diversity of settings in which a client can find themselves throughout the day: “Login with any Internet connection or utilize our mobile app to update SimplySocial while out in the field.” There are even built-in controls for those who fear themselves or their employees falling into the productivity vacuum that can result from spending too much time in social media: “Our application takes you through a linear social media process each day and kicks you out as soon as you’re done. Easy to delegate, hard to mess up.” Upon perusing the site, it becomes apparent that the aptly-named software is simple indeed—simple, and even fun. When asked about their roles in the founding of the business, their refreshing response is redolent of how a youth might describe action figures: “Bora is the technical guy,” Arnold says, “I am very much the sales and marketing guy, and Erne is like the everything in-between guy.” And how many “guys” are working for these big three? Their website features short, catchy bios of six employees as well as clever and relevant descriptions of what they do: “Part-time copywriter Matt Akins strives to inform a consistent experience through writing—whether by editing software copy or drafting a design document. His obsessive minimalism ensures strong impact with few words. Favorite Typeface: Calibri.”

In addition to their personable and competent staff, SimplySocial also features information about their ten investors, and Tim Pearson and Terri Adkisson, their two advisers. An appealing blend of business and pleasure, the “About Us” page on the website seems to clearly say, “We may be fun, but we know what we’re doing and we’re not going to waste your time or money.”

How it All Started

Arnold’s interest in technology and business started when he was in high school. Anchorage School District technology teacher and family friend Andy Holleman recommended a book called “The World is Flat: A Brief History of the Twenty-First Century” by Thomas Friedman. “He gave me this book and said you’ve got to read it,” Arnold says. “This outsourcing globalization thing is a big deal—if you don’t stay competitive, some Indian is going to be eating your lunch.” Like many Alaskans, Arnold’s initial sentiment was that he didn’t want anybody else encroaching on opportunities that were his American birthright. “… but by page 50,” he says, “I began to have a positive outlook towards working globally, and understanding that people overseas just want to be able to make a good enough living to get clean water and food, and that this is good for everybody. By page 100, I began to see opportunity.” For his 16th birthday, Arnold asked his parents for $400 of seed money to start his first technology business doing web development for advertising agencies, outsourcing much of the work to a team in Romania that Arnold had found on an online message board. Meanwhile, Jerone Erne, a partner in an agency called Joy Group in the Netherlands, had clicked on one of Arnold’s banner ads, resulting in his becoming one of Arnold’s first clients. “We had started outsourcing things, and I started to look around for someone who could do specific things for my agency,” Erne says. “I clicked on his banner…He built us a new home page, and we gave him lots of business after that.” After working with Erne, visiting Europe, and traveling with Erne to Romania to meet Bora (touted as the “star technical guru,” of Erne’s past business ventures), the idea for SimplySocial was born.

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“I was fed up with the previous kind of business I was doing with consultancy,” Bora says, “and I wanted to give all our focus to something we could get feedback on and then grow over a longer period of time.” It just so happens that Arnold and Erne wanted the same. After acknowledging their complimentary skill sets and joking about starting a business together, the three agreed to stay alert and to seize the right opportunity to work together, should their chance arise.

The Inspiration

The inspiration for the product that these men were to collaborate on was almost as serendipitous as their meeting. “Through our consultancy work, we saw a lot of websites that would say ‘we want a twitter box or a Facebook integration,’ and it would sit there stagnant, not being used,” Erne says. For Arnold, the need for social media assistance became evermore clear while doing consultant work for Jim’s Equipment Repair in Anchorage. He noticed that the company’s videos of bulldozers and heavy machinery posted to YouTube were getting a very good response. “Apparently there’s a machinist community that is looking in and wants to watch this dozer crawl around,” he says, which is definitely good for business. Yet the process of figuring how to get the heavy equipment videos loaded to YouTube with outdated cameras, computers and difficult soft ware was taking time and energy away from what the employees at Jim’s Equipment Repair did best: heavy equipment repair. “Here’s someone who goes through the hard work of creating content,” Arnold says. “They’ve got a cool story to share, and they’re losing out on it just because of bad software design. You should be rewarded for creating great content, not punished for not knowing what to do with it.” True, a company could hire an employee to manage their social media for them, but in order for them to affectively do so, it would require specialized skills and tons of research, which would amount to an investment of about four hours a week—a huge chunk of time—which in Erne’s words would be “ridiculously expensive.” ■ 114

The three entrepreneurs agreed— businesspeople needed help effectively using social media—so they put their heads together to design a product that would maximize the effectiveness of social media while putting businesspeople in control of content that was of interest to their market.

The Target Market

According to Erne, the market for their product falls into two main categories: Those who are not skilled in social media and those who simply don’t have the time to invest. SimplySocial’s product “makes (social media) more efficient, saves time and gives detailed analytics” to its clients, according to Erne. “The software is of value to each of these groups, but for different reasons,” he says. And Arnold, an American who lives just about as far from Romania as an American resident can get, delights in the reach of his venture: “It’s not every day that you get to talk to an oilfield services company and you get to look at hiring somebody in Romania within an hour of each other. It’s cool.” If you can see the value of using this product for your own business, you may have to wait a while. Although a business can go through a proposal and planning stage at any time, the next contracts are set to execute in January 2013—that is, if there are any openings available. SimplySocial started with 50 licenses, but decided to downscale to 25 in order to pay close attention to their mostly high-end clients, some of whom have specific needs. “Maybe marketing writes all the content and someone in PR responds to all the comments,” Arnold says. “We build the social media infrastructure required for an enterprise (or city/state government) to be successful both internally and online. Some companies want newsletters as well as social media maintenance—we can accommodate that.” Will they add more licenses in January? They are not yet certain, as their priority lies with providing the highest quality product and service.

partner in the business, from being in Alaska. Though supported by many American investors, Bora has been denied a visa three times. “One of the issues we heard from a prominent immigration attorney and one of the big reasons behind our denial is that we supported the Start-Up Visa Act, a piece of legislation in consideration in D.C., which would help people like Bora get a green card if he helped create a business that is creating jobs in the United States,” Erne says. “We’ve been told, since we supported this legislation, that they knew about us and saw it is an attempt to immigrate.” Arnold and Erne are visibly disappointed while describing the circumstances that that prevent a key member of their venture from joining them in the country and state that has supported their burgeoning enterprise. However, Bora, who is participating in the interview from Romania via Skype, remains hopeful about one day coming to Alaska, and seems somewhat amused at his founding a business in a country that won’t even let him in. “You should see the look on the consulate officers’ faces when I say Alaska: ‘Why do you want to go there?’ Something like that, you know. (And I say) why not? I want to meet these nice people and do business there. I’m sold. But for the time being, I’m just going to be here.” Arnold remains ever humble about his status as an American citizen, and grateful for the perspective he has gained through his business and travels. “What I loved most about Friedman’s book is a quote: ‘If you don’t go, you don’t know.’ Had I not gone to the Netherlands, and had I not gone with Erne to Romania, then we wouldn’t be here. Sometimes you just have to take those adventures that at the time might not make the most sense, and you can’t quite see the outcome—but it’s something you do, and it feels good.” 

A Bump in the Road

Though every story has high points and lows, it is SimplySocial’s very enthusiasm for globalization that may be ultimately preventing Bora, an integral

www.akbizmag.com • Alaska Business Monthly • July 2012

Mari Gallion is associate editor at Alaska Business Monthly.

special section

Telecom & Technology

FCC Mandate Concerns Businesses Licensees must narrowband their systems by 2013 or face ﬁnes, loss of license BY MARY LOCHNER

overnment and private users of very high frequency and ultrahigh frequency two-way radio communication systems have until Jan. 1, 2013, to get on the narrowbanding train, or their licenses could get pulled. The requirement affects a wide variety of operations in Alaska, including public safety, resource extraction and transportation. Narrowbanding is the Federal Communication Commission’s term for reducing licensee’s bandwidth usage on the radio frequency spectrum. This is achieved through efficiencies in technology. Under new rules, licensees must reduce their bandwidth use from 25 kilohertz to half that—just 12.5 kHz—by the deadline. The purpose of the new standard is efficiency, according to the FCC’s website: “The migration to 12.5 kHz efficiency technology will require licensees to operate more efficiently, either on narrower channel bandwidths or increased voice paths on existing channels. This will allow creation of additional channels within the same spectrum, thereby supporting more users.”

Expensive Migration

But it’s going to cost public and private dollars to reach the standard in time. The State of Alaska, for one, set aside $5.2 million in the enacted budget for FY 2013 in order to achieve narrowband compliance. The State, which uses the Alaska Land Mobile Radio infrastructure and system, approved funds for narrowbanding in four departments: Health and Social Services ($297,500), Natural Resources ($2.96 million), Public Safety ($1.47 million) and Corrections ($470,000). ALMR is a federal, state and municipal partnership dedicated to: “Provide Alaskan public safety first responders with interoperable communications ■ 116

that are cost effective, reliable and adhere to national standards for public safety land mobile radio,” according to its website (alaskalandmobileradio.org). “ALMR, since it’s been installed is a narrowbanded operation,” says ALMR Operations Manager Del Smith. “But the State of Alaska is narrowbanding a bunch of conventional frequencies around the state for various EMS and some other folks.” Conventional-type two-way radios are those that talk directly to each other, without using radio communications infrastructure, such as signal repeaters in the ALMR. In the private sector, two-way radios are commonly associated with trucking. But they’re also used for a wide variety of applications, including mining, oil and gas, cargo and port operations, and private security as well as transportation. Don Lederhos, owner of radio communications company ARCTiCOM, says some of his clients don’t need new radios to meet the standards; they just need a little reprogramming on the radios they already have—but others have radios so old they really do have to be replaced, he says. Lederhos recommends clients get digital equipment if they have to replace hand-held radios anyway, because, he says, digital is where FCC is ultimately going with licensing requirements. Some of ARCTiCOM’s clients are big enough that they use their own on-site repeaters, Lederhos says, and in that case the FCC narrowbanding mandate affects them in an additional way: It requires repeaters to have a reduced range, down from 100 miles in any direction, to just 20 miles in radius. In a case like that, narrowbanding an entire system is costing one of his clients around $350,000, Lederhos says.

Big Bucks for Small Biz

But for a small business, even several thousand dollars could be a big chunk of change. Dhana Kraus, owner of Big Foot Pumping and Thawing in Fairbanks, says her company is narrowbanding its fleet to the tune of $18,000 this summer. “It’s during our busy time,” Kraus says, “so it’ll mean some down time too.” Big Foot is a subscriber on radio communications company ProComm’s network. “It’s definitely something that impacts our customers and our business,” says ProComm system applications specialist Andrea Gilbert. ProComm recently spent $150,000 upgrading its radio communications infrastructure to meet the narrowbanding mandate, Gilbert says, adding that the company expects to spend several hundred thousand dollars more on narrowbanding. Gilbert says some ProComm customers are facing costs indirectly related to the narrowbanding mandate. Because the FCC will be reviewing two-way radio licenses for VHF and UHF frequencies after the deadline, she says, it’s a good idea to make sure that everything on a company’s license is updated and accurate, so the licensee isn’t hit with violations.

Early Warning

The FCC is warning licensees they could face “admonishment, fines or loss of license,” if they don’t meet the narrowbanding mandate by the deadline—but a number of Alaska licensees, when contacted to interview for this story, said they had never heard of the FCC narrowbanding mandate. In fact, the mandate and deadline was news even to Aves Thompson, president of the Alaska Trucking Association, who said the issue wasn’t really “on the radar” for the trucking industry in Alaska.

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“That is a problem,” Lederhos says. “We’ve sent notices to every one of our customers. But you know how that works. People see it and think, ‘Oh, I’m looking for the bill,’ and they throw everything else away. So a lot of the businesses, nationwide, have not been paying attention to this, and they’re going to get caught at the end of the year with a mad rush.” Gilbert says a report from Washington Radio Reports, a paid-subscription database of FCC licenses, showed there are 740 licenses in Alaska affected by the mandate that have yet to be narrowbanded. A July 2011 press release from the FCC admonishes licensees not to wait until the last minute, comparing procrastinators with motor vehicle drivers who, upon seeing a sign indicating the road will be reduced from two lanes to one up ahead, either “ignore it, press the pedal to the medal and hope for the best,” or “wait until the very last moment and then cut in front of the next car inches before the guard barrier.” But that’s exactly what a number of licensees have done, and some of them have submitted requests for waiver of the deadline. The FCC, in its guidance for waiver applications, promises these “will be subject to a high level of scrutiny.” According to Gilbert, ProComm has been sending notices to its customers about the narrowbanding mandate since 2009. “Even now there’s resistance because it’s such a pain,” she says.

Future T-Band Relief

But a bit of relief from that pain came for some two-way radio communications licensees on April 26 of this year, when the FCC released its decision that some users of UHF frequency are now exempt from having to meet the narrowbanding mandate and deadline. In an odd twist, an obscure section of the Middle Class Tax Relief and Job Creation Act of 2012 signed into law by President Obama on Feb. 22 forced the FCC to take a second look at a portion of the UHF spectrum, which currently ranges from 421-512 megahertz. The act requires that a portion of the UHF spectrum, that ranging from 470-512 MHz, be privatized and open to a system of competitive bidding, within nine years of the act being signed into law. That upper portion of the spectrum will, in the future, no longer be designated as UHF spectrum, but rather, be referred to as the T-Band spectrum. Entities currently operating two-way radio licenses between 470 and 512 MHz would then, by law, be “relocated” to other channels on the spectrum. According to the FCC order waiving mandatory narrowbanding for licensees operating in the future T-Band, not waiving the requirement for these entities “could force many licensees in the band to invest in narrowband systems that may subsequently have to be relocated.” Meanwhile, the order reads, the FCC has instituted a licensing freeze on new applications in the future T-Band. That lets some off the hook. But most licensees won’t be so lucky: they’ll have to pay the costs of narrowbanding or pay the consequences.  Mary Lochner is a journalist living in Eagle River.

FCC Narrowbanding FAQ What is Narrowbanding? Narrowbanding is an effort to ensure more efficient use of the VHF and UHF spectrum by requiring all VHF and UHF Public Safety and Industrial/Business land mobile radio (LMR) systems to migrate to at least 12.5 kHz efficiency technology by January 1, 2013. More specifically, all existing Part 90 radio systems operating in the 150-174 MHz and 421-512 MHz bands have until January 1, 2013 to convert those systems either to a maximum bandwidth of 12.5 kHz or to a technology that provides at least one voice path per 12.5 kHz of bandwidth or equivalent efficiency. What does Equivalent Efficiency mean? Any of the following meet the 12.5 kHz equivalent efficiency requirement: ■ One voice path in a 12.5 kHz channel ■ Two voice paths in a 25 kHz channel ■ Data operations on channels greater than 12.5 KHz must employ data rates greater than 4.8 kbps per 6.25 kHz channel, such as 19.2 kbps per 25 kHz channel Does Narrowbanding require me to change frequencies or obtain new channels? No. Narrowbanding does not require moving to another frequency band or different channels. Licensees stay on the same channel center(s), but reduce the bandwidth of the channel(s) currently used, from 25 kHz to 12.5 kHz and change the emission designator on the license. Alternatively, licensees may stay on the same 25 kHz channel but implement a 12.5 kHz equivalent technology on that channel. If I currently have a license for a 25 kHz channel, will I automatically be entitled to license two 12.5 kHz channels after I Narrowband? No. Your 12.5 kHz channel will remain on the same 25 kHz channel center. Your current 25 kHz channel will not be split into two 12.5 kHz channels. You will need to justify and apply for additional 12.5 kHz channels through a certified frequency coordinator. Will I lose coverage area when I Narrowband? It has been estimated that Narrowband compliance can result in a 3 dB loss in signal strength. However, this rule of thumb is based upon a “plain vanilla” Narrowbanding scenario where a 25 kHz analog system converts to a 12.5 kHz analog system. Consult with a manufacturer and/or consulting engineer for a better estimate of how Narrowbanding will affect your particular system. Are governmental entities other than traditional public safety entities subject to the Narrowbanding mandate? Yes. A partial list of the types of governmental entities that could be subject to the Narrowbanding mandate includes: Public Utilities—both traditional voice and Supervisory Control and Data Acquisition (SCADA) systems; Schools (including school buses); Transportation Departments; Mass Transit Agencies; Community Watches. In addition, licensees should remember to include the following types of radios in their Narrowbanding efforts: Cache Radios— Transportable Systems; Command Post/Communications Vehicles; Mutual Aid Gateways

www.akbizmag.com • Alaska Business Monthly • July 2012

SOURCE: fcc.gov

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Telecom & Technology

‘Game On’ Technology Catching up with Last Frontier imaginations

Photo by Greg Johnson

BY GREG JOHNSON

Successful game developer and “science nerd” David Board in his Stage 2 Studio ofﬁce.

t’s a great time to be a geek as technology catches up to the imaginations of Last Frontier nerds. Free open source computer software and a strong online infrastructure have lowered the geographical hurdles for those pursuing development of hightech entertainment in Alaska. That’s what excites David Board, a self-professed “science nerd” who’s making noise in the independent video game industry with his new creation “Lifeless Planet.” Fresh off a March announcement that he’s signed a deal with London-based publisher Lace Mamba Global for international distribution of the game, Board is hard at work in his Palmer home office creating new ■ 118

worlds and reviving the Cold War on a distant planet.

Game Changers

Free game development software coupled with high-speed telecommunications that allow even the most remote places to connect is a game-changer in the gaming community, Board says. “It’s not only changing things for people here in Alaska, it’s changing industries,” he says of programs like Unity, free open-source software that boasts more than 1 million registered developers. “In the past, you think about the music industry, movies, games, all these big entertainment industries— and they were all kind of ruled by a

handful of very large production companies. Well, media and creative works are now more and more independent and user-driven in that people with a vision can go straight to their market.” For Board, half of the two-man partnership behind Palmer-based Stage 2 Studios, that connection has allowed his business to branch out into all aspects of social media. In addition to “Lifeless Planet,” his first large-scale video game, Stage 2 specializes in building websites, social media content and applications for businesses and nonprofits. In Alaska, people may know Stage 2’s work from watching Credit Union 1’s television commercials or visiting its website, where Board has created an interactive game customers can play.

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“It’s like ‘Sims Alaska’ or something,” Board says. “One of the big concepts that’s catching on right now is called ‘gamification.’ It’s a cool little industry that’s cropped up, and the concept is rather than teach somebody traditionally, try to create it in the form of a game.” It’s a trend being pushed by large, mainstream corporations as well, he says, including turning traditionally boring and easy-to-ignore training videos into interactive games. “That’s why we’re getting more into interactive apps and gaming,” he says. “It used to be gaming was just for kids, that 18- to 25-year-old core male market, and it’s not anymore. For example, nearly everybody has heard of or played Angry Birds.”

Kickstarting Development

Along with making the most of today’s technology, the gaming industry is evolving quickly, especially for independent developers. For many, it begins with an idea, then a posting on the website Kickstarter.com, a bulletin-boardstyle service that allows developers to pitch directly to their audience—gamers. If gamers like what they see, they pledge money to support development. In Stage 2 Studio’s case, “Lifeless Planet” became one of Kickstarter’s most successful projects. Board put his idea out with a goal to raise $8,000 to get the ball rolling. In return, those pledging $25 or more received “Lifeless Planet” merchandise and a chance to be the game’s first guinea pigs as testers. After pledging about $18,000, those Kickstarter investors are now testing the game, providing valuable feedback from a player’s perspective. Board says he uses that input to tweak the game toward its planned launch by the end of 2012. Without software like Unity and grassroots-driven support from Kickstarter, game developers are only limited by imagination, Board says. The examples go far beyond Board’s Palmer office. One of the industry’s groundbreaking makers of indie games, PopCap, has created titles that rival some of the large corporate giants like “Call of Duty” and “Halo” in popularity, like the addictive “Bejeweled 2” smartphone and tablet app and runaway cult hit “Plants vs. Zombies.” “It’s completely making these kinds of things possible that wouldn’t have been before,” he says. “I could never in

Screenshot of “Lifeless Planet” badlands. Image courtesy of Stage 2 Studios/ Lifelessplanet.com

a million years have gone to my current publisher and say, ‘Hey, I’ve got this idea, let’s do it.’ But with Kickstarter, these are all individual donors who say, ‘I want to see that game, I want to play that game.’” “That game” plays on some of the most basic principles gamers look for— adventure, space and a hot, mysterious alien woman. As a third-person adventure puzzle game, the protagonist is an astronaut who travels 20 light years to a distant planet that’s supposed to be teeming with life. Upon landing, however, he discovers the planet devoid of life. But as he explores, he finds evidence that not only had there been life there at one time, others were there before him— Cold War-era Russians. Without giving away the plot, Board says that the Russians aren’t the bad guys, but present a mystery to the player. How did Russians from Earth’s past get there without the ability for interstellar travel? Board describes his idea behind the plot: “What would be the craziest thing he could find there?” “It is based loosely on science where we know there are thousands of other planets out there, and there are a handful of them that can support life,” he says.

Movie Magic

Technology isn’t just making the world smaller for video game developers in Alaska, it’s also helping drive the state’s burgeoning film industry. Spurred by $6.2 million in tax incentives for Outside filmmakers, the film industry accounted for nearly $18 million in wages and other vendor payments in 2011, the Alaska Film Office reports. While promoting Alaska as an ideal location, support services such as CGI special effects could also become more in

demand, says Carolyn Robinson, owner/ executive producer for Anchorage-based SprocketHeads and a past president of the Alaska Film Group’s board of directors. While the demand for locally produced special effects isn’t large yet, many Outside movie producers are surprised when they learn that Mirror Studios has a full Dolby-accredited sound studio in Anchorage, she said. “When these companies learn that, they are just blown away we have a studio of that caliber in Anchorage,” Robinson said. “At SprocketHeads, we also have high-tech editing and high-tech sound.” Moving into special effects is a natural progression, she says, and would boost Alaska even more as a place to make films. “It would absolutely make Alaska more attractive,” she says. “Even with our fabulous scenery and tax incentives, it’s still extremely difficult to get people to film up here. It would help tremendously for all the feature films we’re working on now to come up here and find we have CGI here. That would just be another selling point to bring these big-budget films here.” While many large companies like Disney have their own special effects companies, smaller productions could take advantage of having on-site development they could commission on an asneeded basis, she says, adding, whether it’s on film or in a video game, technology is allowing Alaska to branch out as a global exporter of entertainment. “Technology is not catching up, it has caught up,” Robinson says. “We can create whole new worlds, and I am incredibly excited about that.”  Greg Johnson is a journalist living in Wasilla.

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special section

Telecom & Technology

Why Your Wi-Fi Doesn’t Always Work BY DR. ALEX HILLS

usiness people love Wi-Fi. They can use it for anytime-anywhere Internet access in the home, office or when on the road. It’s easy to see why Wi-Fi has become so popular. But you may have noticed some problems—maybe intermittent connections or slow download speeds. This can happen with any network, but Wi-Fi has its own special challenges. That’s because it depends on radio, sometimes an unreliable medium.

Understanding Wi-Fi

Yet the problems are not insurmountable. I was able to overcome them when I led a Carnegie Mellon University team to build the world’s first large-scale WiFi network. The story is told in my new book, “Wi-Fi and the Bad Boys of Radio.” (See www.dralexhills.com) Wi-Fi equipped devices communicate by radio with base stations called “wireless routers” or “access points” that provide connections to a wired network that, in turn, provides access to the Internet. But the radio signals can be degraded in a variety of ways. First, they become weaker with distance, and obstructions cause even more weakening. There is also the problem of “multipath.” A radio signal can be reflected off walls, furniture, equipment and other objects in the environment. This causes a number of copies of the same signal to arrive at the receiver, each at a different time. And the delayed copies of the signal can corrupt the direct signal, causing more reception difficulties. Another kind of degradation results from “interference” and “noise.” One source of interference is other Wi-Fi networks. Microwave ovens, which emit radio signals, can also interfere. Radio noise occurs in nature but also comes from manmade sources like electrical machinery, automobile engines, and fluorescent lighting. All of these radio problems mean that a Wi-Fi user can have problems that reduce the quality of service. ■ 120

Furthermore, Wi-Fi systems connect to wired networks that are, in turn, connected to the Internet. Connections can be disrupted by problems anywhere along the way. You have a good Internet connection only when radio signals are being clearly received and the wired network is working properly. It’s a chain of radio and wired links, and the weakest link in the chain determines the quality of your connection.

Better Wi-Fi Encounters

How can you make your Wi-Fi experience better? Let’s take the question in two parts. Improving Wi-Fi service: (1) in your office or other company building, and (2) when you’re on the road. At your company location, you should be sure that your IT support staff understands the sometimes strange behavior of Wi-Fi radio signals and that your Wi-Fi network has been built accordingly. If this isn’t the case, you might want to ask an expert to do a “radio audit” to be sure you don’t have interference or other kinds of radio problems.

But, when you’re on the road, you’ll be using Wi-Fi systems that aren’t controlled by your company. So what can you do to improve your Wi-Fi connections while traveling? Try to be aware of the strength of the Wi-Fi signal you’re using. An indication of its strength is given by the number of bars or the number of darkened rings in the Wi-Fi symbol on your laptop or handheld device. Try to connect to the access point that has the strongest signal. Sometimes you can find the access point itself—usually a small box with one or two vertical antennas. If you can do this, try for a “line of sight” signal (one where you can actually see the access point while using your laptop or handheld device), or, if that’s not possible, try to minimize the number of obstructions between your device and the base station. As obstructions go, walls usually cause less signal weakening than floors and ceilings. This means that you’ll probably receive a stronger signal from an access point on the same floor as your hotel room than from an access point on a different floor. Just a little bit of radio knowledge can improve your Wi-Fi experience.  Dr. Alex Hills conceived and built the world’s ﬁrst large Wi-Fi network. He tells the story in his new book, “WiFi and the Bad Boys of Radio.” (www.dralexhills.com) In Alaska, Dr. Hills helped to develop the state’s broadcast and telecommunications systems in the 1970s and 1980s. An inventor with 11 patents, he is a Fellow of the Institute of Electrical and Electronics Engineers, he was Alaska’s 2007 Engineer of the Year, and he owns Alex Hills Associates.

www.akbizmag.com • Alaska Business Monthly • July 2012

maNaged vPN & seCurITy sysTems

maNaged waN servICes

maNaged laN servICes

wI-FI soluTIoNs

IP PhoNe sysTems

IT, NeTwork aNd CommuNICaTIoNs servICes

Taking Care of Your Network So You Can Focus On What’s Important.

Premier Certified

www.B2AK.com • 907.569.2225 • sales@b2network.com • 360 West Benson, Suite 201 • Anchorage

Alaska Business Monthly’s 2012 Telecom & Technology Directory INFORMATION TECHNOLOGY & NETWORK SERVICES Company Company

Top Executive Top Executive

ACB Solutions 551 W. Dimond Blvd. Anchorage, AK 99515 Phone: 907-267-4200 Fax: 907-267-4243

Russell Ball, Owner

Alaska Communications 600 Telephone Ave. Anchorage, AK 99503 Phone: 907-297-3000 Fax: 907-297-3052

Anand Vadapalli, Pres./CEO

Alaska Data Technologies 211 H St., Suite 1 Anchorage, AK 99501 Phone: 907-278-8470 Fax: 907-276-8470

Marshel Reed, CEO

Alaska Telecom Inc. (Futaris) 301 Calista Ct., Suite B Anchorage, AK 99518 Phone: 907-344-1223 Fax: 907-344-1612

Daniel Boone, Pres.

Alaskalink 12000 Wagner St. Anchorage, AK 99516 Phone: 830-3578 Fax: 345-5012

Ryan Stencel, Owner

Allied GIS Inc. 8600 Spendlove Dr. Anchorage, AK 99516 Phone: 907-333-2750 Fax: 907-333-2751

Gail Morrison, Pres.

Apokrisis LLC 700 W. 41st Ave., Suite 205 Anchorage, AK 99503 Phone: 907-250-4454 Fax: 866-890-5369

Kristen Lindsey, Managing Partner

Applied Microsystems Corp. 3909 Arctic Blvd., Suite 201 Anchorage, AK 99503 Phone: 907-261-8300 Fax: 907-562-8507

Ross Toole, Pres.

Arctic Information Technology 375 W. 36th Ave., Suite 300 Anchorage, AK 99503 Phone: 907-261-9500 Fax: 907-261-9591

Steve Dike, Pres.

AT&T 505 E. Bluff Dr. Anchorage, AK 99501 Phone: 800-478-9000

Shawn Uschmann, Dir. Sales

B2 Networks LLC 360 W. Benson Blvd., Suite 201 Anchorage, AK 99503 Phone: 907-569-2225 Fax: 907-569-2220

Thomas Bohn, CEO

Borealis Broadband 2550 Denali St., Suite 512 Anchorage, AK 99503 Phone: 907-563-3278 Fax: 907-337-4695

Horst Poepperl, CEO

AK AK Estab. Estab. Empls. Empls.

Services Business Activity

1986

ACB Solutions is a local technology service provider offering managed IT solutions. This includes consulting, network evaluations, network design services, procurement, implementation and long-term maintenance. We also offer computer training in Microsoft Office, Autodesk Adobe, QuickBooks & more.

1999

832

Alaska Communications is a leading provider of high-speed wireless, mobile broadband, Internet, local, long-distance and advanced data solutions to consumers and businesses across Alaska.Through corporate donations and employee volunteer work, we believe in giving back to help build a better Alaska.

1989

Computer service and repair, network administration and integration, UPS field service for Eaton Powerware.

1981

Alaska Telecom is a technology company that provides Satellite Communication Networks, Broadcasting Services, and Managed IT Services to enterprise and government entities. Our services include engineering, network design & implementation, construction & installation, and project & site management

2000

Project and operations management and consulting.

2002

GIS, mapping for: oil and gas industry, spill response, environmental, land ownership, permitting, utility, programming, application development, software sales, training, CMMS, asset and facility management software/implementation, ESRI Business Partner, Adapx and VUEWork software resellers.

2004

We offer comprehensive Internet services including website design and development, search engine optimization, Internet marketing strategy, social media marketing, online advertising, e-mail marketing, pay-per-click advertising, Web analytics, social media, Web consultation and content copywriting.

1987

Hardware and software sales, networking assessment/design/management/integration, Web development, Web business applications, data protection and backup, power and cooling sales, content management services, eWorX Managed Services. Member of 1NService, a network of technology service providers.

1998

AIT provides business software, hardware, IT support, & technical training. Accounting software (ERP), CRM Management, retail systems (RMS), network infrastructure design, installation, security, flat-rate IT services, cloud solutions, SharePoint sites, data backup & recovery, & relocation services.

1876

530

Connecting people with their world everywhere they live and work, and doing it better than anyone else. Solutions include mobility, data, voice, cloud services, application management and managed security.

2002

IT and network services that span the IT lifecycle with quality project management, from the preparation-planning phase, through implementation-deployment and operationsmaintenance. Specializing in IP Video, IP Phone, Unified Communications, VPN, Security, Managed WAN and LAN services.

1997

Borealis Broadband owns and operates a completely independent wireless broadband network in Anchorage and in rural areas. Our network delivers professional quality, highly reliable symmetric Internet service to business and residential customers.

Bowhead Innovative Products & Solutions Steve Darner, Pres. 6700 Arctic Spur Rd. Anchorage, AK 99518 ukpikak.com Phone: 907-375-6600 Fax: 907-375-6680

2006

System integration, product acquisition from OEMs, Integrators, VARs, Telecoms, and Distributors. We work to identify, evaluate, and add new products and services to our overall offerings in order to satisfy the full range of IT and telecom needs.

Business Application Developers 2826 W. James T. Cir. Wasilla, AK 99645 Phone: 907-373-7773 Fax: 907-373-7773

1990

Requirements analysis, database design, data architecture. Software programming, service, documentation and support.

■ 122

dispatch@akcbsolutions.com www.akcbsolutions.com

letsbetteralaska@acsalaska.com alaskacommunications.com

marshel@alaskadatatech.com www.alaskadatatech.com

contact@alaskatelecom.com www.alaskatelecom.com

rmstencel@aol.com

gmorrison@alliedgis.com www.alliedgis.com

info@apokrisis.com www.apokrisis.com

info@amicro.biz www.amicro.biz

info@arcticit.com arcticit.com

@ATTCustomerCare www.att.com, facebook.com/ATT

sales@b2ak.com www.b2ak.com

info@borealisbroadband.net www.borealisbroadband.net

Kenneth Farmer, Pres. badinc@mtaonline.net www.badinc.net

www.akbizmag.com • Alaska Business Monthly • July 2012

Alaska Business Monthly’s 2012 Telecom & Technology Directory INFORMATION TECHNOLOGY & NETWORK SERVICES

Company Company

Top Executive Top Executive

Cloud49 PO Box 112250 Anchorage, AK 99511 Phone: 855-256-8349

Nathaniel Gates, Pres.

Compu-Doc 2140 E. Wolverine Cir. Wasilla, AK 99654 Phone: 907-376-8285

Mark Chryson, Owner

DenaliTek Inc. 1600 A St., Suite 105 Anchorage, AK 99501 Phone: 907-865-3100

Todd Clark, Pres.

Design-PT Inc. 430 W. Seventh St., Suite 202 Anchorage, AK 99501 Phone: 907-222-6133 Fax: 907-222-5448

Orion Matthews, CEO

DSI, Inc. 6041 Mackay St., Suite 101 Anchorage, AK 99518 Phone: 907-276-2444 Fax: 907-258-4439

Noel Janda, Pres.

Duffy Infodesign 208 Seventh Ave. Fairbanks, AK 99701 Phone: 907-474-8133

Annie Duffy, Owner/Principle

GCI 2550 Denali St., Suite 1000 Anchorage, AK 99503 Phone: 907-265-5600 Fax: 907-868-5676

Ron Duncan, CEO

Government Computer Sales Inc. 794 University Ave., Suite 108 Fairbanks, AK 99709 Phone: 907-474-8306 Fax: 907-474-8307

John Powers, CEO

Hispeed Gear 610 Attla Way #2 Kenai, AK 99611 Phone: 888-283-5136 Fax: 907-283-4713

Mary Daly, Pres.

International Data Systems Inc. PO Box 242681 Anchorage, AK 99524 Phone: 907-349-0190 Fax: 907-349-1997

Maria Grigoryeva, CEO

Jeffus & Williams Co. Inc. PO Box 32417 Juneau, AK 99803 Phone: 907-523-2400 Fax: 907-523-2468

Wade McKeown, Pres.

Lewis & Lewis Computer Store 405 E. Fireweed Ln. Anchorage, AK 99503 Phone: 907-743-1600 Fax: 907-274-1221

Philip Fontana, Pres.

MTA Inc. 1740 S. Chugach St. Palmer, AK 99645 Phone: 907-745-3211 Fax: 907-761-2481

Greg Berberich, CEO

OTC PO Box 1711 Girdwood, AK 99587 Phone: 907-382-0456

Kelvin Doyle Yvette Galbraith, Owner

PangoMedia Inc. PO Box 240133 Anchorage, AK 99524 Phone: 907-868-8092 Fax: 907-563-2264

Craig Fisher, CEO

ProComm Alaska LLC 2100 E. 63rd Ave. Anchorage, AK 99507 Phone: 800-478-9191 Fax: 907-261-2663

Gary Peters, Pres./CEO

AK AK Estab. Estab. Empls. Empls. 5

Cloud49 is the premiere provider of enterprise class Infrastructure as a Service (IaaS) and Software as a Service (SaaS) solutions for organizations of all sizes.

1995

Antivirus, Internet/Web connectivity, network installation, service and support, software, training, upgrades, Web design, Web hosting, wireless networking, disaster recovery, hardware, network design and remote access.

1991

Local information technology company providing computer and network support, telephone systems and unified communications, storage, virtualization and cloud.

1995

We build happier and healthier communities through the application of technology. To do so, we provide networking support, application development and integration, website development, and IT consulting for nonprofits.

2007

Avaya, Nortel, NEC, Alcatel-Lucent, Proxim and Ceregan. IT Infrastructure including VOIP Telephones, GPON - Fiber to the desk, LAN/WAN. Engineering, design, installation, service, sales and leasing. PBX, IP telephony, call centers, call accounting, local area networks, fiber optics and microwave.

2002

E-commerce solutions, programming, service and support, Web design, Web hosting, graphic design, and print publication design.

info@cloud49.com www.cloud49.com

mark@web-ak.com www.web-ak.com

info@denalitek.com www.denalitek.com

www.facebook.com/designpt www.design-pt.com

noel.janda@dsi-ak.com www.dsi-ak.com

info@duffyinfodesign.com www.duffyinfodesign.com 1979

www.gci.com

1,709 Integrated communications provider offering facilities-based local and long distance telephone services, Internet and video services, statewide wireless service, data, telehealth and more.

1989

Virtualization Services, Dell, VMWare, Commvault, Microsoft, Wyse, HP Imaging, Data Center specialist, Enterprise Applications, Disaster Recovery and Business Continuity planning and remediation, Lifecycle Technology Partner- 1000Õs of technology products and software

1998

An Alaskan owned hardware and service technology company that provides outsource support to individuals, small business and enterprise organizations. We support clients in Kenai, Soldotna, Homer, Seward, Anchorage and Juneau. At HiSpeed, We Speak Geek so you donÕt have to. TOSHIBA, HP, KIP and more.

2002

Computer technology consulting, software/hardware providers, network building, Citrix, managed care, IBM, Symantec, Watchguard.

1984

VoIP and traditional telephony, Cat 5E and 6 data cabling, fiber install and splicing, network design, switch and router installation, network security. Offices in Juneau and Sitka.

1987

Lewis & Lewis is a full-service IT company, specializing in HP and Xerox printing products and services.

1953

300

Communications cooperative offering 3G wireless, high-def. TV w/ video-on-demand, high-speed Internet, local and long-distance, IT business support, directory and TV advertising and community content.

2007

Website design, Internet marketing, mobile apps and Google search engine. Based in Girdwood, Alaska providing custom service and consulting to clients in-state and abroad.

1997

Custom software and database programming, web interface development, information technology consulting, buy-build analysis, systems analysis and integration, business intelligence and reporting services, IT staff augmentation.

2000

Motorola two-way radio dealer offering the complete line of products. Motorola Premier Service Partner, offering the latest two-way radio technologies to public safety, State and local governments, mining, construction and oilfield service companies. Also offering iCom, VertexStandard and BK radios.

info@gcsit.com www.gcsit.com

hispeed@hispeedgear.com www.hispeedgear.com

tdanysh@international-data.net www.international-data.net

service@jeffuswilliams.com www.jeffuswilliams.com

info@lewisandlewis.com www.lewisandlewis.com

www.mtasolutions.com

otcweb@gmail.com www.otcwebdesign.com

pangoinfo@pangomedia.com www.pangomedia.com

sales@procommak.com www.procommak.com

Services Business Activity

2010

www.akbizmag.com • Alaska Business Monthly • July 2012

123 ■

Alaska Business Monthly’s 2012 Telecom & Technology Directory INFORMATION TECHNOLOGY & NETWORK SERVICES Company Company

Top Executive Top Executive

Resource Data Inc. 1205 E. Int'l Airport Rd., Suite 100 Anchorage, AK 99518 Phone: 907-563-8100 Fax: 907-561-0159

Jim Rogers, Pres.

SimplySocial Inc. 2830 Seafarer Lp. Anchorage, AK 99516 Phone: 907-227-9541

Tyler Arnold, CEO

Software North LLC 2230 E. 52nd Ave. Anchorage, AK 99507 Phone: 907-561-4412 Fax: 907-561-5412

Donald Anderson, Gen. Mgr.

Sundog Media 5033 Sillary Cir. Anchorage, AK 99508 Phone: 907-338-1847 Fax: 866-521-0355

Joe Law, Owner

Talking Circle Media 5630 B St. Anchorage, AK 99518 Phone: 907-245-3209 Fax: 907-245-3339

Jonathan Butzke, Owner

TecPro Ltd. 816 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-348-1800 Fax: 907-348-1830

Cynthia Saunders, Pres.

TelAlaska 201 E. 56th Ave. Anchorage, AK 99518 Phone: 907-563-2003 Fax: 907-565-5539

Brenda Shepard, Pres./CEO

Tex R Us LLC 2525 Blueberry Rd., Suite 206 Anchorage, AK 99503 Phone: 907-248-3978 Fax: 907-563-2948

Andrew Zhelayer, Gen. Mgr.

Tongass Business Center 618 Dock St. Ketchikan, AK 99901 Phone: 907-225-9015 Fax: 907-225-9014

Marvin Davis, Pres.

Weston Technology Solutions 139 E. 51st Ave., Suite 200 Anchorage, AK 99503 Phone: 907-375-8324 Fax: 907-375-8325

Greg Freeman, VP

AK AK Estab. Estab. Empls. Empls.

Services Business Activity

1986

120

2011

SimplySocial helps in building stories and building trust. Our unique software coaches you through the complexities of maintaining a social media presence. Create valuable content, respond to your audience, and grow an online fan base with our easy, yet efficient, tool.

1978

Disaster planning, network design, network security, programming, software, training, Web design and Web hosting.

1996

A friendly group of people designing and managing brilliant websites. The Sundog team specializes in website design, management, hosting and domain management for Alaskan businesses and professionals.

1989

Video production, live video webcast, conference A/V, Internet video and website design. A/V equipment rentals.

1997

TecPro offers electrical contracting services, UL Listed Industrial Controls integration, and video security integration services. Specialities include SCADA & PLC design, fabrication, installation, and programming.

1968

100

TelAlaska is a full service telecommunications company serving 25 rural communities and providing advanced network services to urban markets.

1999

Antivirus, data communications, disaster recovery, E-commerce solutions, Internet/Web connectivity, leasing/renting, network design, network installation, network security, network upgrades, relocation services and remote access.

1983

Business supply, Sharp digital equipment, installation, Internet/Web connectivity, network design, network installation, network security, network upgrades, relocation services, remote access, service and support, software and business solutions.

1994

Weston offers unlimited business hours support for a single flat monthly fee. Ideal for businesses with 10 or more computers. Call or visit our website at www.Westontech.com.

info@resdat.com www.resdat.com

contact@gosimplysocial.com www.GoSimplySocial.com

info@softwarenorth.com www.softwarenorth.com

info@sundogmedia.com sundogmedia.com

info@talkingcirclemedia.com www.talkingcirclemedia.com

info@tecpro.com TecPro.com

customerservice@telalaska.com www.telalaska.com

info@texrus.com www.texrus.com

orders@tbcenter.com www.tbcenter.com

weston@weston-tech.com www.weston-tech.com

Custom software development, system integration, business process analysis, web and mobile application development, network services and GIS.

TELECOMMUNICATIONS Company Company

Top Executive Top Executive

Alaska Communications 600 Telephone Ave. Anchorage, AK 99503 Phone: 907-297-3000 Fax: 907-297-3052

Anand Vadapalli, Pres./CEO

Alaska Power & Telephone PO Box 459 Skagway, AK 99840 Phone: 907-983-2202 Fax: 907-983-2903

Robert Grimm, Pres.

Alaska Telecom Inc. (Futaris) 301 Calista Ct., Suite B Anchorage, AK 99518 Phone: 907-344-1223 Fax: 907-344-1612

Daniel Boone, Pres.

Applied Microsystems Corp. 3909 Arctic Blvd., Suite 201 Anchorage, AK 99503 Phone: 907-261-8300 Fax: 907-562-8507

Ross Toole, Pres.

Business Activity Services

1999

832

1957

Telephone service provider (local and long-distance), broadband DSL, WiFi, networking, key system sales and support, Southeast Alaska Microwave Network (SAMN) providing regional access for voice and data.

1981

1987

1979

Telecommunications service cooperative providing local, long-distance, wireless and Internet access services to residents, government and industry throughout the North Slope region of Alaska.

letsbetteralaska@acsalaska.com alaskacommunications.com

skagway@aptalaska.com www.aptalaska.com

contact@alaskatelecom.com www.alaskatelecom.com

info@amicro.biz www.amicro.biz

Arctic Slope Telephone Association Coop. Stephen L. Merriam, CEO/Gen. Mgr. 4300 B St., Suite 501 Anchorage, AK 99503 info@astac.net Phone: 907-563-3989 Fax: 907-563-1932 www.astac.net

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AK Estab. Empls. Empls. Estab.

www.akbizmag.com • Alaska Business Monthly • July 2012

Alaska Business Monthly’s 2012 Telecom & Technology Directory TELECOMMUNICATIONS Company Company

Top Executive Top Executive

AT&T 505 E. Bluff Dr. Anchorage, AK 99501 Phone: 800-478-9000

Shawn Uschmann, Dir. Sales

Borealis Broadband 2550 Denali St., Suite 512 Anchorage, AK 99503 Phone: 907-563-3278 Fax: 907-337-4695

Horst Poepperl, CEO

AK AK Estab. Estab. Empls. Empls.

Services Business Activity

1876

530

1997

Bowhead Innovative Products & Solutions Steve Darner, Pres. 6700 Arctic Spur Rd. Anchorage, AK 99518 ukpikak.com Phone: 907-375-6600 Fax: 907-375-6680

2006

Cordova Telephone Cooperative PO Box 459 Cordova, AK 99574 Phone: 907-424-2345 Fax: 907-424-2344

Paul Kelly, Gen. Mgr./CEO

1978

Local exchange carrier, ISP provider and DSL service.

DenaliTek Inc. 1600 A St., Suite 105 Anchorage, AK 99501 Phone: 907-865-3100

Todd Clark, Pres.

1991

Local information technology company providing computer and network support, telephone systems and unified communications, storage, virtualization and cloud.

Design-PT Inc. 430 W. Seventh St., Suite 202 Anchorage, AK 99501 Phone: 907-222-6133 Fax: 907-222-5448

Orion Matthews, CEO

1995

DSI, Inc. 6041 Mackay St., Suite 101 Anchorage, AK 99518 Phone: 907-276-2444 Fax: 907-258-4439

Noel Janda, Pres.

2007

GCI 2550 Denali St., Suite 1000 Anchorage, AK 99503 Phone: 907-265-5600 Fax: 907-868-5676

Ron Duncan, CEO

Inmarsat 804 NW 200th Seattle, WA 98177 Phone: 206-633-5888 Fax: 206-237-9100

Dave Brengelmann, Dir.

International Data Systems Inc. PO Box 242681 Anchorage, AK 99524 Phone: 907-349-0190 Fax: 907-349-1997

Maria Grigoryeva, CEO

Microcom 129 W. 53rd Ave. Anchorage, AK 99518-2353 Phone: 907-264-3474 Fax: 348-0426

Sandra Blinstrubas, Pres.

MTA Inc. 1740 S. Chugach St. Palmer, AK 99645 Phone: 907-745-3211 Fax: 907-761-2481

Greg Berberich, CEO

TelAlaska 201 E. 56th Ave. Anchorage, AK 99518 Phone: 907-563-2003 Fax: 907-565-5539

Brenda Shepard, Pres./CEO

@ATTCustomerCare www.att.com, facebook.com/ATT

info@borealisbroadband.net www.borealisbroadband.net

jacque@ctcak.net www.ctcak.net

info@denalitek.com www.denalitek.com

www.facebook.com/designpt www.design-pt.com

noel.janda@dsi-ak.com www.dsi-ak.com 1979

www.gci.com

1,709 Integrated communications provider offering facilities-based local and long distance telephone services, Internet and video services, statewide wireless service, data, telehealth and more.

1993

Global satellite telephone service including voice, text, and Internet.

2002

Computer technology consulting, software/hardware providers, network building, Citrix, managed care, IBM, Symantec, Watchguard.

1984

Satellite Communications. Satellite delivered television, Internet, phone, and data service.

1953

300

1968

100

TelAlaska is a full service telecommunications company serving 25 rural communities and providing advanced network services to urban markets.

maritime.orders@inmarsat.com inmarsat.com

tdanysh@international-data.net www.international-data.net

www.microcom.tv

www.mtasolutions.com

customerservice@telalaska.com www.telalaska.com

WEBSITE DESIGN

Company Company

Top Executive Top Executive

Alaskalink 12000 Wagner St. Anchorage, AK 99516 Phone: 830-3578 Fax: 345-5012

Ryan Stencel, Owner

Apokrisis LLC 700 W. 41st Ave., Suite 205 Anchorage, AK 99503 Phone: 907-250-4454 Fax: 866-890-5369

Kristen Lindsey, Managing Partner

AK AK Estab. Estab. Empls. Empls.

Services Business Activity

2000

Project and operations management and consulting.

2004

rmstencel@aol.com

info@apokrisis.com www.apokrisis.com

www.akbizmag.com • Alaska Business Monthly • July 2012

125 ■

Alaska Business Monthly’s 2012 Telecom & Technology Directory WEBSITE DESIGN Company Company

Top Executive Top Executive

Applied Microsystems Corp. 3909 Arctic Blvd., Suite 201 Anchorage, AK 99503 Phone: 907-261-8300 Fax: 907-562-8507

Ross Toole, Pres.

Compu-Doc 2140 E. Wolverine Cir. Wasilla, AK 99654 Phone: 907-376-8285

Mark Chryson, Owner

Design-PT Inc. 430 W. Seventh St., Suite 202 Anchorage, AK 99501 Phone: 907-222-6133 Fax: 907-222-5448

Orion Matthews, CEO

Duffy Infodesign 208 Seventh Ave. Fairbanks, AK 99701 Phone: 907-474-8133

Annie Duffy, Owner/Principle

Hispeed Gear 610 Attla Way #2 Kenai, AK 99611 Phone: 888-283-5136 Fax: 907-283-4713

Mary Daly, Pres.

Nerland Agency Worldwide Partners 808 E St. Anchorage, AK 99501 Phone: 907-274-9553 Fax: 907-274-9990

Karen King, CEO/Pres.

Northwest Strategies 431 W. Seventh Ave., Suite 101 Anchorage, AK 99501 Phone: 907-563-4881 Fax: 907-562-2570

Tim Woolston, Pres.

OTC PO Box 1711 Girdwood, AK 99587 Phone: 907-382-0456

Kelvin Doyle Yvette Galbraith, Owner

Resource Data Inc. 1205 E. Int'l Airport Rd., Suite 100 Anchorage, AK 99518 Phone: 907-563-8100 Fax: 907-561-0159

Jim Rogers, Pres.

Software North LLC 2230 E. 52nd Ave. Anchorage, AK 99507 Phone: 907-561-4412 Fax: 907-561-5412

Donald N. Anderson, Gen. Mgr.

Solstice Advertising 3700 Woodland Dr., Suite 300 Anchorage, AK 99517 Phone: 907-258-5411 Fax: 907-258-5412

Lincoln Garrick, Pres.

Sundog Media 5033 Sillary Cir. Anchorage, AK 99508 Phone: 907-338-1847 Fax: 866-521-0355

Joe Law, Owner

Talking Circle Media 5630 B St. Anchorage, AK 99518 Phone: 907-245-3209 Fax: 907-245-3339

Jonathan Butzke, Owner

Tex R Us LLC 2525 Blueberry Rd., Suite 206 Anchorage, AK 99503 Phone: 907-248-3978 Fax: 907-563-2948

Andrew Zhelayer, Gen. Mgr.

Walsh Sheppard 111 W. Ninth Ave. Anchorage, AK 99501 Phone: 907-338-3567 Fax: 907-338-3857

Pat Walsh, CEO

Weston Technology Solutions 139 E. 51st Ave., Suite 200 Anchorage, AK 99503 Phone: 907-375-8324 Fax: 907-375-8325

Greg Freeman, VP

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AK AK Estab. Estab. Empls. Empls. 8

1995

2002

E-commerce solutions, programming, service and support, Web design, Web hosting, graphic design, and print publication design.

1998

1975

Globally connected agency with strong Alaska roots, skilled at communications strategy, brand development, advertising, media planning and buying, public relations, Web and interactive design, experiential and social media.

1987

A progressive strategic marketing and communications company providing business consulting, branding, alternative marketing solutions, sponsorship, event marketing, retail corporate advertising, crisis communication, issue management, collateral developm

2007

Website design, Internet marketing, mobile apps and Google search engine. Based in Girdwood, Alaska providing custom service and consulting to clients in-state and abroad.

1986

120

Custom software development, system integration, business process analysis, web and mobile application development, network services and GIS.

1978

Disaster planning, network design, network security, programming, software, training, Web design and Web hosting.

1997

Solstice is a full-service advertising & public relations agency providing a complete suite of communications offerings. From broadcast & radio to print, Web, mobile & social media, Solstice does it all: strategy, media planning, research, copy writing, graphic design, interactive & production.

1996

1989

Video production, live video webcast, conference A/V, Internet video and website design. A/V equipment rentals.

1999

1983

Full service marketing communications firm specialized in strategic branding with 29 years experience serving clients in diverse industries such as construction, health care, government contracting, telecommunications, energy, banking and finance, hospitality, retail, non-profit, and transportation.

1994

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1987

www.akbizmag.com • Alaska Business Monthly • July 2012

ALASKA TRENDS

By Paul Davidson

Visitor Volume Slides

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

Interest in Alaska remains high

laska has long enjoyed a romantic allure that has benAlaska Summer Visitor Volume efited its economy though 2000-2012 (in Thousands) visitors and new residents. Between 2002 and 2011 the Alaskan popula- 1,800 tion shows robust growth of 12.45 1,600 percent, 4.19 percentage points greater than the United States as a 1,400 whole during that period, accord- 1,200 ing to the U.S. Census Bureau. Visitor research, including 1,000 visitor volume between 2002 and 800 Visitor Volume 2011, is recorded for the state by 600 the McDowell Group and North400 ern Economics Inc. Summer visitor volume shows 22.1 percent 200 growth from 2002 to 2011. Ju0 neau, Ketchikan and Anchorage, in that order, are the most visited places in Alaska for 2011. Recent Alaska visitor volume saw a peak in the summer of 2007 with 1.71 million visitors and a decline by 2011 of 9.18 per- since 2007, interest in Alaska has not. The number of realcent to 1.56 million visitors. This decline coincides and ity TV shows increased from one in 2007 to six in 2010. could be associated with the U.S. economic problems be- Visitor Volume has increased from 2010 to 2011 and may ginning in 2008 and increased fuel prices. continue to do so this year, according to the State of Alaska People love Alaska. While visitor volume has declined Office of Tourism Development.  Source: State of Alaska Department of Labor and Workforce Development: labor.alaska.gov/research

ALASKA TRENDS HAS BEEN BROUGHT TO YOU THIS MONTH COURTESY OF AMERICAN MARINE/PENCO

www.akbizmag.com • Alaska Business Monthly • July 2012

127 ■

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 Truck Transportation Information Telecommunications Financial Activities Professional & Business Services Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Services & 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

■ 128

By Paul Davidson Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

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

4th Q11 4th Q11 2nd H11 2nd H11

33,342 13,137,224 202.58 226.28

33,043 13,033,756 200.28 223.60

31,760 12,701,052 195.455 218.576

4.98% 3.43% 3.64% 3.52%

Number Filed Number Filed Number Filed

March March March

88 67 12

77 57 10

116 89 20

-24.14% -24.72% -40.00%

Thousands Thousands Thousands Thousands Thousands

March March March March March

336.35 186.59 43.54 35.13 35.82

334.54 186.46 43.11 34.56 35.17

331.14 184.32 42.79 35.27 34.16

1.57% 1.24% 1.76% -0.40% 4.85%

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 Thousands

March March March March March March March March March March March March March March March March March March March March March March March March March March March March March March March March March March

319.9 39.7 280.2 16.1 15.8 13.2 11.4 12.2 8.9 60.3 6.0 33.6 6.1 9.4 20.7 5.5 6.3 4.1 4.1 14.6 27.2 46.2 32.0 28.9 6.1 18.5 10.9 85.8 16.1 26.5 8.6 43.2 25.7 3.7

317.2 39.0 278.2 16.1 15.8 13.5 11.5 11.4 8.5 59.5 6.0 33.4 6.2 9.5 20.1 5.3 3.0 6.3 4.1 14.7 27.2 46.1 32.2 28.3 5.8 18.6 10.6 85.5 16.0 26.4 8.6 43.1 25.6 3.7

317.4 41.0 276.4 15.7 15.4 12.9 12.8 12.5 9.0 60.9 6.0 33.9 5.9 9.7 21.0 5.5 3.3 6.4 4.2 15.1 25.4 43.2 31.2 29.4 6.3 19.1 11.3 84.7 16.6 26.4 8.6 41.7 24.8 3.7

0.79% -3.17% 1.37% 2.55% 2.60% 2.33% -10.94% -2.40% -1.11% -0.99% 0.00% -0.88% 3.39% -3.09% -1.43% 0.00% 90.91% -35.94% -2.38% -3.31% 7.09% 6.94% 2.56% -1.70% -3.17% -3.14% -3.54% 1.30% -3.01% 0.38% 0.00% 3.60% 3.63% 0.00%

Thousands Thousands Thousands Thousands Thousands

March March March March March

365.12 200.21 46.91 38.30 39.45

363.36 199.97 46.47 37.85 38.89

361.09 198.91 46.17 38.60 38.07

1.12% 0.65% 1.60% -0.77% 3.62%

Percent Percent

March March

7.9 6.8

8.3 7.3

-4.82% -6.85%

www.akbizmag.com • Alaska Business Monthly • July 2012

ALASKA TRENDS

By Paul Davidson Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

Percent Percent Percent Percent

March March March March

7.2 8.3 9.2 8.4

7.2 8.7 9.6 8.7

7.3 8.6 10.3 9.2

-1.37% -3.49% -10.68% -8.70%

Millions of Barrels Billions of Cubic Ft. $ per Barrel

March March March

17.59 9.61 122.68

16.88 9.03 119.65

18.94 11.43 115.34

-7.12% -15.89% 6.36%

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

March March March March March

7 1979 1,674.41 32.95 1.00

10 1965 1,742.86 34.14 1.03

6 1720 1,423.00 35.81 1.17

16.67% 15.06% 17.67% -7.99% -14.68%

Millions of $ Millions of $ Millions of $

March March March

51.34 9.22 42.12

59.57 6.26 53.31

34.81 10.92 23.89

47.48% -15.57% 76.31%

Total Deeds

March

1040

923

672

54.76%

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

Thousands Thousands

March March

361.36 70.96

299.21 59.70

297.13 64.88

21.62% 9.36%

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 $

March March March March March March March

41,525.10 42,142.00 198.3 1,339.7 (75.8) 1.10 147.3

41,256.90 41,873.10 201.6 1,111.3 21.4 25.00 813.1

39,933.60 40,351.20 262.3 $200.4 1.1 -2.5 8.4

3.99% 4.44% -24.40% 568.51% -6990.91% 144.00% 1653.57%

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 $

4th Q11 4th Q11 4th Q11 4th Q11 4th Q11 4th Q11 4th Q11 4th Q11 4th Q11

2,088.25 46.12 151.97 1,119.55 6.26 1,827.29 1,783.65 550.20 1,233.44

2,105.62 49.64 156.23 1,097.05 7.05 1,847.06 1,800.05 543.72 1,256.33

2,078.40 29.07 156.42 1,150.21 15.06 1,832.10 1,786.15 470.20 1,315.95

0.47% 58.64% -2.84% -2.67% -58.41% -0.26% -0.14% 17.02% -6.27%

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

March March March March March

82.42 0.99 0.63 0.76 6.32

78.39 1.00 0.63 0.76 6.30

81.63 0.98 0.62 0.71 6.57

0.97% 1.34% 1.93% 6.60% -3.84%

Indicator

Fairbanks 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

Previous Report Period (revised)

www.akbizmag.com • Alaska Business Monthly • July 2012

129 ■

Advertisers Index Alaska Air Transit...........................................85 AK Commercial Co./ North West Co..........................................59 Alaska Fracture & Orthopedic Clinic....91 Alaska Housing Finance Corp...............131 Alaska Regional Hospital .........................89 Alaska Rubber.................................................. 67 Alaska State Chamber of Commerce..............................................95 Alaska USA Federal Credit Union.......23 Ameresco.............................................................32 American Fast Freight.................................65 American Marine / PENCO...................127 Anchorage Sand & Gravel........................42 Arctic Controls.................................................62 Arctic Office Products (Machines)..102 Arctic Slope Telephone Association... 109 AT&T Alaska........................................................11 Azimuth Adventure Photography.......36 B2 Networks...................................................121 Bell Tech................................................................33 Bering Shai Rock & Gravel.......................49 Calista Corp..............................................43, 45 Calista Heritage Foundation..................27

■ 130

Canadian Mat Systems Inc......................70 Capture the Fun Alaska LLC....................71 Caring For Women.......................................90 Carlile Transportation Systems............ 21 Chris Arend Photography......................130 Ciri Alaska Tourism....................................... 76 Cloud49.............................................................107 Construction Machinery Industrial LLC................................................2 Crowley..............................................................103 Cruz Contruction, Inc.................................50 Design Alaska...................................................45 Dowland-Bach Corp.....................................35 Dynamic Properties......................................55 ERA Helicopters...............................................61 Fairbanks Convention and Visitors Bureau...............................78 Fairweather LLC.............................................29 First National Bank Alaska..........................5 Futaris................................................................ 106 GCI......................................................19, 63, 105, Goldbelt Hotel Juneau ...............................75 Golder Associates Inc................................. 57 Granite Construction.................................44

Great Originals............................................ 109 Homer Electric Association....................43 Judy Patrick Photography.......................60 Juneau Convention & Visitors Bureau....................................82 Junior Achievement.....................................97 Kendall Ford Wasilla.................................101 Ketchikan Visitors Bureau.......................81 Land’s End Resort..........................................82 Linc Energy.........................................................39 Lynden Inc..........................................................115 Matanuska Susitna Borough..................47 Microcom............................................................111 Millennium Hotel...........................................84 MT Housing Inc...............................................66 Mt Roberts Tramway...................................85 Municipal Light & Power...........................42 N C Machinery..................................................51 NALCO Energy Servivces.........................62 NCB.........................................................................25 Northern Air Cargo..............................72, 73 NTCL . ....................................................................63 PacArctic Logistics.........................................61 Pacific Alaska Freightways.......................15

Pacific Pile & Marine.......................8, 9, 10 Paramount Supply..........................................71 Parker, Smith & Feek.....................................17 Pen Air................................................................102 Personnel Plus.................................................84 Procomm Alaska..........................................110 Rosie’s Delivery...............................................62 Seekins Ford Lincoln Fleet......................60 Seward Chamber and CVB......................79 Shoreside Petroleum...................................25 Span Alaska Consolidators......................99 Stellar Designs Inc..........................................71 STG Inc................................................................. 48 Taiga Ventures...................................................55 The Growth Company................................62 The Tatitlek Corporation..........................54 Tobacco Prevention Control....................13 UMIAQ..................................................................69 Valdez CVB.........................................................83 Visit Anchorage............................................... 77 Washington Crane & Hoist.......................37 Waste Management..................................... 41 Wells Fargo.......................................................132 XTO Energy...........................................................3

www.akbizmag.com • Alaska Business Monthly • July 2012

Smokin’ Deal “

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