Alaska Business Monthly-July 2014 by Alaska Business

MID-YEAR ECONOMIC OUTLOOK | ARCTIC ENERGY SOLUTIONS | PRIVATE CONSTRUCTION TELECOM & TECH SPECIAL SECTION | STAY AT HOME WORKERS | VISITOR HOT SPOTS

July 2014

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O’Leary Moves Alaska Railroad Forward Page 64

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July 2014 TAB LE

CONTENTS

ABOUT THE COVER

DEPARTMENTS

With Alaska-born Bill O’Leary as CEO, the Alaska-owned railway moves forward. This month, we oﬀer an in-depth look at the Alaska Railroad Corporation and the man in charge. Story begins on page 64.

From the Editor . . . . . . . . . . . . . . . . . . . . . . .7 Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Right Moves . . . . . . . . . . . . . . . . . . . . . . . 102 Inside Alaska Business . . . . . . . . . . . . . . 104 Alaska This Month . . . . . . . . . . . . . . . . . 107 Events Calendar . . . . . . . . . . . . . . . . . . . . 109 What’s Next . . . . . . . . . . . . . . . . . . . . . . . 110 Market Squares . . . . . . . . . . . . . . . . . . . . 110 Alaska Trends . . . . . . . . . . . . . . . . . . . . . . 111 Ad Index. . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Cover photo by Chris Arend Photography

ARTICLES Stillpoint Lodge in Halibut Cove.

PUBLIC POLICY

8 | Voter Registration It’s not automatic, but it’s easy By Susan Harrington

Photo by Beka Thoning

special section Mid-Year Economic Outlook 10 | Mid-Year Economic Outlook ‘The Great Alaska Comeback’ Compiled by Russ Slaten

INSURANCE

VISITORS INDUSTRY

22 | Special Circumstances Insurance Protection beyond normal policy coverage By Tracy Barbour

30 | Alaska Hotspots for Travelers Destinations and opportunities By Tasha Anderson

FINANCIAL SERVICES

HEALTH & MEDICINE

34 | US Small Business Administration Loan Programs Supporting business startup and growth By Tracy Barbour

26 | Alaska Telehealth Taking Hold Telemedicine technology expands healthcare delivery By Will Swagel

38 | Subsidiary Acquisitions Provide Growth Alaska Native Corporation investment considerations By Russ Slaten 44 | Investing In Alaska Communities Helping entrepreneurs promotes economic development By Russ Slaten

ENERGY

©Elekta

46 | Alaska Center for Energy and Power’s Arctic Solutions Integrating traditional and alternative energy into power grids By Julie Stricker

Leksell Gamma Knife Perfextion.

29 | Gamma Knife Treatment Available in Alaska: Taking brain surgery to the next level By Will Swagel 4

ALASKA NATIVE CORPORATIONS

Alaska Business Monthly | July 2014

Marc Mueller-Stoﬀels, a research assistant professor at the University of Alaska Fairbanks and the program director for Alaska Center for Energy and Power Power Systems Integration program. © UAF photo by Todd Paris

www.akbizmag.com

TRUST & INVESTMENT MANAGEMENT SERVICES

LIVE FOR TODAY. PLAN FOR THE FUTURE.

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July 2014 TAB LE

CONTENTS

ARTICLES

OIL & GAS

52 | Alaska Legislature PostSession Update SB21 authorizes natural gas negotiations By Mike Bradner

60 | National Petroleum Reserve-Alaska Activity Small discoveries and infrastructure expansion By Mike Bradner

70 Valdez specializes in oversize freight, like this silo.

TRANSPORTATION

CONSTRUCTION

70 | Northernmost Ice-Free Ports Valdez, Whittier, and Seward are top three in North America By Julie Stricker

72 | Private Construction Outlook A look at projects across Alaska By Julie Stricker 74 | Private Construction Keeps Industry Busy Projects across Anchorage and beyond Compiled by Susan Harrington

special section

Telecom & Technology 84 | Telecommunications Grow in the Last Frontier Expanded services, programs, and community involvement By Tasha Anderson

90 | One Gigabit Service Deployment Planned GCI continues investments in Anchorage and Statewide By Vanessa Orr

92 | GCI Continues TERRA Build-Out in Northwest Alaska By Vanessa Orr

KPU Local TV’s Michelle O’Brien and Jacob Schwartz.

88 | Ketchikan’s KPU Local Television Goes National Diversification key to electric, water, and telecom utility success By Will Swagel Alaska Business Monthly | July 2014

64 | Alaska Railroad Moves Forward O’Leary optimistic for growth By Rindi White

58 | Alaska Stand-Alone Pipeline Moves Along AGDC’s in-state gas pipeline backup plan By Mike Bradner

Catching sockeye salmon on a Bristol Bay drift gillnet boat.

80 | Bristol Bay’s New Player Silver Bay Seafoods opens major salmon processing plant By Wesley Loy 82 | Fishmeal Plant to Help Clean Up Bristol Bay By Wesley Loy

HR MATTERS 94 | Investing in Technology: Update on SimplySocial Alaska investors support Alaska-grown transplant By Shehla Anjum 96 | Alaska Business Monthly’s 2014 Telecom & Technology Directory

101 | Stay-At-Home Workers Connecting offices with technology By Kevin M. Dee

Correction

In the May issue, we erroneously referred to the Skagway Port as the northernmost ice free port in North America. It is not. The Port of Valdez is the northernmost ice free port in North America. www.akbizmag.com

FROM THE EDITOR Follow us on and

Volume 30, Number 7 Published by Alaska Business Publishing Co. Anchorage, Alaska Jim Martin, Publisher 1989~2014

EDITORIAL STAFF

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

Susan Harrington Russ Slaten Tasha Anderson David Geiger Linda Shogren Chris Arend Judy Patrick

BUSINESS STAFF

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

Billie Martin Jason Martin Charles Bell Anne Campbell Bill Morris Tasha Anderson Melinda Schwab

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

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Danger Warning! A

I failed my ﬁre drill

fter rushing to Over the Rainbow to get a last minute birthday gift for a neighbor’s party that started in half an hour, I returned home twenty minutes later to find the ground level floor of my home full of smoke. Like an idiot I ventured in and began looking for the source of the smoke. First though, I walked through and opened the back door to air out the place because of the floating, layered haze of black smoke. It smelled like an electrical fire. Then I ran frantically upstairs and down searching for flames. As the smoke was clearing I isolated the source to the washing machine and dialed 911. The emergency operator transferred me to the Anchorage Fire Department dispatch, and as she was getting details, she asked me if I was in the house. I was. She told me to go outside immediately and not to go back inside. I did. Soon, all the neighbors were outside too. In just a couple of minutes I heard the sirens as the firefighters headed to my house from Station 9. The Anchorage Fire Department showed up in force almost immediately. Two ladder trucks, a tanker, an emergency vehicle, and an Anchorage Police Department cruiser delighted and fascinated all the neighbor kids, while worrying all the parents and adults. Several firemen went methodically from room to room upstairs and down and found nothing but my messy house. After determining my washing machine motor burned up and that no fire had spread into the walls, they departed just as quickly as they showed up. I was left with a great sense of relief that my home wasn’t on fire—also much gratitude that the fire department showed up so fast and that they were thorough, courteous, and professional. After they left I started wondering why I didn’t hear a smoke alarm when I came home to a house full of smoke. Turns out my carbon monoxide monitor was not a smoke alarm combo as I thought, and no smoke alarm existed on the ground floor. I’ve since corrected that, picked up a couple of fire extinguishers, and installed extra smoke alarms to supplement the ones in the bedrooms upstairs. I feel very fortunate there was no fire and I’m glad it turned out to be a drill, but not everybody gets the luxury of an unexpected fire drill before something bad happens. It brings home a fact the Anchorage Fire Department shares on its website: “Alaska has the highest number of fire incidents and fire fatalities per capita in the nation.” The department has a “Fire Stoppers” program to knock Alaska off the top of the list, and the program is detailed online at muni.org/ departments/fire where there is a wealth of fire prevention information. Everyone should do their own fire drill. Every month. And everyone should read the July issue of Alaska Business Monthly. The team has put together another really great magazine. Enjoy! —Susan Harrington, Managing Editor July 2014 | Alaska Business Monthly

PUBLIC POLICY

It’s not automatic, but it’s easy By Susan Harrington

Getting Out the Vote The first step in getting out the vote is getting eligible voters registered. To find many ways to register to vote in Alaska, go online to elections.alaska. gov and click on the Voter Registration Information tab found on the home page upper left menu. The Alaska Division of Elections website has comprehensive information as well as forms and links to enable registration for any eligible voter. According to the Alaska Division of Elections, “To register to vote in Alaska you must be a US Citizen, a resident of Alaska, and at least 18 years old or will be 18 years old within 90 days of completing this application.” Voter Deadlines July 20 is thirty days before the August 19 Primary Election. It is the deadline that has to be met in order to register and be able to vote in the primary. The deadline to register for the November 4 General Election is October 5. For those registered voters wanting to update or change their voter registration, the deadlines are the same for both the Primary and General elections—July 20 and October 5. Voter Education Businesses are increasingly encouraging employees to vote and educating 8

Alaska Business Monthly | July 2014

their employees about candidates and issues that could impact their jobs in positive and negative ways. Many such activities are regulated and reportable. Employers that provide employees with voter registration information and that encourage employees to register and vote are not under the regulated or reportable election activity disclosure requirements. However, certain other activities are. Title 15 ELECTIONS of the Alaska Statutes details rules of the law. Section 15.13 spells it out: (b) Except as otherwise provided, this chapter applies to contributions, expenditures, and communications made for the purpose of influencing the outcome of a ballot proposition or question as well as those made to influence the nomination or election of a candidate. The regulations for following the rules are found in Alaska Administrative Code, Title 2, Chapter 50, and contain campaign disclosure, lobbying, legislative and public official financial disclosure, procedures, and definitions. The Alaska Public Offices Commission will also answer questions about the rules and regulations.

Voter Registration Register and vote. Voting is the basis for our free society, for our democracy, for our way of life. It is our voice in governance. It is the mechanism for citizens to participate in majority rule. It is our constitutional right. We’ve included a sidebar regarding Primary Election ballots because although every registered voter is allowed one vote, there are three ballots. 

Alaska’s Primary Structure

laska law allows a political party to select who may participate in their party’s primary. Parties may expand or limit who may participate in their Primary Election by submitting a written notice with a copy of their pre-cleared by-laws to the Director of Elections no later than September 1 of the year prior to the year in which a Primary Election is to be held. Based on political party bylaws submitted to the Division of Elections, there are three ballot choices: ■ Alaska Democratic Party, Alaska Libertarian Party and Alaskan Independence Party Candidate with Ballot Measures ballot—Any registered voter may vote this ballot ■ Alaska Republican Party Candidate with Ballot Measures ballot—Voters registered as Republican, Nonpartisan or Undeclared may vote this ballot ■ The Ballot Measures Only ballot—Any registered voter may vote this ballot The political party aﬃliation listed on a voter’s registration record thirty days prior to the election determines which primary ballot type a voter is eligible to vote.  www.akbizmag.com

Source: State of Alaska Division of Elections

ouldn’t it be wild if, when anyone in the United States turned eighteen, they were automatically registered to vote? It’s a ridiculous idea, full of holes, and probably impossible to implement, but at least it is relatively easy to register to vote in Alaska. As of May 3, the most recent available data at press time, there were 487,556 registered voters in Alaska. With currently available population statistics, that leaves more than 35,000 Alaskans who are eligible to vote but haven’t registered.

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special section

Mid-Year Economic Outlook

Mid-Year Economic Outlook ‘The Great Alaska Comeback’ Compiled By Russ Slaten ALASKA

laska’s economy is strong and getting stronger. With the More Alaska Production Act, we are seeing billions of new dollars in new investments, more rigs on the North Slope, over one thousand new jobs at Point Thomson, increased traﬃc on the Dalton Highway, and more pipe being shipped north on the Alaska Railroad. The Great Alaska Comeback is underway. With that ﬁrm foundation, we are making real progress on a gas pipeline and diversifying Alaska’s economic base.

—Governor Sean Parnell

BANKING & FINANCIAL SERVICES

laska’s economic outlook will depend on the voters in our state learning the facts about Alaska’s economy. The more each Alaskan understands what drives our economy, the better prepared they will be to positively support our state’s economy in the years to come, building a lifestyle they can enjoy and providing jobs for future generations. On August 19 it will be informed Alaskans who make a diﬀerence when they exercise their right to vote on ballot measure one. Learn the facts, join the conversation, and vote.

—Betsy Lawer, President, First National Bank Alaska

he economy in the State of Alaska is stable and stands to benefit from a number of public and private construction and infrastructure projects under consideration and underway in 2014—likewise with the banking business. Though banking, in general, reflects the strength of our state’s economy, headwinds are being imposed by costly new regulatory requirements. What’s more, banks can expect increased competition from non-bank financial institutions that are not similarly regulated. Record low long-term interest rates rose slightly in 2013 and are expected to remain steady until year-end. Expected short and long-term interest rate hikes in 2015 may increase deposits and offset the possible slowdown of loan demand. Meanwhile, employment in the financial sector grew modestly in 2013 and is expected to slightly increase or remain flat through 2014.

expect the second half of 2014 to remain stable and positive for the Alaska economy. Home prices are rising slightly on account of a stable job market and steady per capita income gains. We have seen a multibillion dollar investment by the oil industry after the state tax structure was modiﬁed last year. Not changing this system through voter initiative later this year will be an important signal to energy companies that Alaska is a safe place to invest their long-term capital. Oil investment, coupled with large state and federal government capital budgets, has led to strong construction spending levels that are outpacing 2013. The tourism sector has posted its fourth consecutive year of increased visitors. Alaska is approaching 2 million visitors a year, who are reported to spend nearly $4 billion annually in the state.

—Mark Edwards, Bank Economist Northrim Bank

laska’s banks continue to maintain a strong capital position as we work with Alaska businesses to fuel Alaska’s economy, making every good loan we can to businesses and consumers. The Alaska Bankers Association is optimistic about Alaska’s future with the potential for increased oil and gas exploration and production activity. The ABA supports SB21 as a means to grow Alaska’s economy over the long term.

—Joe Everhart, Alaska Regional President Wells Fargo

—Brian Nerland, Alaska Market President, KeyBank

Alaska Business Monthly | July 2014

www.akbizmag.com

ALASKA NATIVE CORPORATIONS

hile there have been many challenges to overcome in recent years, Bristol Bay Native Corporation continues to have record earnings due to our diversified portfolio of operations and assets. Our recent acquisition of Peak Oilfield Service Company has broadened our already successful oilfield service segment. With an increase of independent oilfield company exploration and a renewed focus from major oil companies, BBNC believes the sector is poised for growth. Tourism is coming off a very strong year with more to come. BBNC has fared well in real estate development in the Anchorage market where timing and the right partners makes all the difference. We believe Alaska is a great place to invest if you are assertive and disciplined. We have a competitive marketplace with more investors looking to our State for growth opportunities every quarter.

—Jason Metrokin, President & CEO Bristol Bay Native Corporation

alista Corporation continues to build a strong foundation for our region and shareholders and descendants through our business activities, corporate involvement, and succession planning. As anticipated, federal sequestration placed pressure on ANCs in 2013, but we are looking forward to strong revenue forecasts for 2014. The SBA 8(a) program plays an important role in our success, but with continued attacks on the program, we are succeeding on our work to diversify our revenue base. Calista’s internship and scholarship programs are growing and provide students with the knowledge and ﬁnancial means to further their education and gain employment. In the region, we look toward energy solutions and infrastructure improvements. This year, we will see several rural airport improvement projects and the ﬁrst steps toward a Yukon-Kuskokwim Corridor.

e are cautiously optimistic about current growth trends. We see the broader US economy improving, which has driven a very active investment climate. Since adopting a new organizational structure at the beginning of this year, Chugach is well-positioned to support sustainable growth strategies and deliver strong returns to shareholders. Alaska’s stable economy and steady growth present an opportunity to expand our portfolio of companies and invest in local businesses and industries. We believe many businesses across the state share our commitment to providing quality products and services with integrity and could beneﬁt from a long-term partnership with Chugach. We would like to see the state’s current business environment remain healthy to support local businesses and jobs and a strong Alaska economy.

—Gabriel Kompkoff, CEO Chugach Alaska Corporation

IRI believes the outlook for the Anchorage economy is strong and our confidence is reflected in the investments the company is making. CIRI anticipates the oil and gas industry in Alaska to remain an economic driver, and in late 2013, CIRI and two other partners acquired the ConocoPhillips Office Complex, including Alaska’s tallest office building. CIRI has also embarked on the development of a new eight-story office tower in Midtown Anchorage. The building will be part of the Fireweed Business Center located at the intersection of Fireweed Lane and the New Seward Highway. Demand for commercial real estate, particularly Class A office space, is strong, and CIRI expects this trend to continue into the foreseeable future.

—Sophie Minich, President & CEO Cook Inlet Region, Inc.

—Andrew Guy, President & CEO Calista Corporation

ARCHITECTURE & ENGINEERING

t appears that engineering ﬁrms that design public transportation infrastructure will have another busy summer, as several projects go into construction this summer and the Alaska DOT&PF capitalizes on Highway Safety Improvement Funding to get new design projects started. There is some uncertainty in federal funding of future transportation projects due to the www.akbizmag.com

projected insolvency of the Highway Trust Fund; however, funding for transportation infrastructure projects tends to receive bipartisan support and solutions to this issue are optimistically expected to be forthcoming. State funding for transportation infrastructure projects is expected to be ﬂat as these projects compete with other immediate needs for state funding. Work in other areas of engineering appears to be ﬂat or slowly increasing.

—Jeanne M. Bowie, PE, PhD, PTOE Kinney Engineering, LLC (2014 Engineer of the Year) July 2014 | Alaska Business Monthly

ARCTIC POLICY

here will be continued eﬀort to ﬁnalize the Alaska Arctic Policy and Implementation Plan, led by the Alaska Arctic Policy Commission, as well as federal intent to move forward with the National Strategy for the Arctic Region Implementation Plan. These, the expected IMO Polar Code release and Arctic Council work on

CONSTRUCTION: COMMERCIAL

continue to be optimistic. Conﬁdence in our elected leadership and a renewed conﬁdence in Alaska’s economy, as a result of the passage of the new production oil tax in 2013, are spurring some aggressive levels of private investment in the oil sector. This is resulting in a climate of optimism and higher private spending in the residential and commercial sectors, especially visible in Anchorage and Fairbanks. If SB21 is repealed in the August primary election, this robust market will quickly head south. The Civil construction sector will continue to be robust, as DOT advances a number of projects and addresses a longstanding backlog. The construction market continues to be very competitive in all sectors, and owners are taking advantage of good prices.

s we enter the heart of construction season in Alaska, we are executing 281 projects valued at $364.7 million. Contract competition is as robust as ever with the construction industry’s elevated interest in our business opportunities so far this ﬁscal year. Looking forward, we expect most of our workload to remain in line with original projections. Our environmental cleanup program is an exception with growth anticipated through the end of the year. Meanwhile, we are developing adaptable solutions for smaller projects to improve value for our existing and potential client base. Lastly, we are establishing the capability to assist federal customers in a more direct manner to meet energy sustainability and conservation requirements.

—Colonel Christopher D. Lestochi, Commander US Army Corps of Engineers, Alaska District

TRANSPORTATION

TA members are generally busy and having a pretty good year. They have a sense of optimism for the second half of 2014 and on into 2015 provided that Ballot Proposition One is defeated and the oil and gas tax reforms stay in place.

—Aves Thompson, Executive Director Alaska Trucking Association

CONGRESSIONAL DELEGATION

his administration has plenty of new federal regulations it would like to impose, from carbon emission limits—which would greatly harm coal production—to wetland and refuge development rules. That worries me, but I also believe if we can avoid crippling new regulations, there is no reason Alaska’s economic outlook should be anything but bright. With reasonable permitting decisions, Shell is poised to proceed with exploratory oil drilling next summer in the Chukchi Sea. State tax policy has prompted billions of dollars of new investment at Prudhoe Bay and, if the 12

—Nils Andreassen, Executive Director Institute of the North

CONSTRUCTION: MILITARY & CIVIL WORKS

—John MacKinnon Executive Director Associated General Contractors of Alaska

an Arctic Economic Council, will have implications for Alaska’s future economy. That said, I’m watching three indicators for Alaska economic development, as it relates to an increasingly busy Arctic—1) materials from Alaska shipped through the Northern Sea Route, 2) oﬀshore development plans announced, and 3) clarity on what will happen with a deep draft port in the Bering Straits region.

Alaska Business Monthly | July 2014

courts allow it, development of the CD-5 satellite oil ﬁeld in NPR-A should be able to move forward in a timely manner. North Slope producers seem more determined than ever to push for construction of an Alaska gas line, and prospects for new Cook Inlet gas and oil discoveries are more promising than they have been in years. There might even be suﬃcient gas on the horizon to permit the Agrium fertilizer plant’s reopening, allowing some Nikiski plant LNG exports to resume. Finally, federal agencies seem open to permitting expansion of the Fort Knox mine, while Greens Creek tailing expansion has already been approved. Our future is indeed bright, as long as new federal regulations don’t unnecessarily darken the horizon.

—Lisa Murkowski, US Senator www.akbizmag.com

CONGRESSIONAL DELEGATION

s summer quickly approaches, I look forward to the successful days ahead for our state’s many vital industries, including oil and gas development, fisheries, mining, and tourism. While Alaska continues to make great strides in the fight against over-reaching federal policies, we must stand strong against threats to our economic and social well-being and federal policies that lock up our lands, destabilize our marketplace, and burden our small businesses. Through a unified effort, Alaska can continue to make progress in achieving a better and brighter future.

— Don Young, US Representative

ur economy— the nation’s and Alaska’s—is getting back on track after facing the worst economic crisis since the Great Depression just a few years ago. When I entered the Senate in 2009, America was losing eight hundred thousand jobs a month, new housing starts were at record lows, and the national deﬁcit hit a record $1.4 trillion. Today, the national jobless rate dropped to 6.3 percent, the stock market is above sixteen thousand, and housing starts and consumer conﬁdence are at six-year highs. Today, Alaska is poised for prosperity with new oil and gas development on federal lands and waters, new military investments in our state, and rapid growth in sectors such as health care and tourism. I’ll continue to use my key Senate positions to cut unnecessary federal spending while making sure Alaska’s ample resources are available for development and our state’s business climate is stable to encourage investment.

ES E R T M L PA O T S E L P BIG AP

K R O W T E N R U O RS

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—Mark Begich, US Senator

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July 2014 | Alaska Business Monthly

FISHERIES

s Alaska’s top private-sector employer, the seafood industry, directly employs more than sixty-three thousand workers per year. The seafood industry includes permit holders, crewmembers, processing workforce, hatchery operators, and tenders. Currently, 74 percent of active commercial fishing permit holders are Alaska residents who bring in over $640 billion in earnings. With so many Alaskans dependent on fishing for their livelihood, seafood is vitally important to the economy of the state. Alaska is dependent on sustainable harvest of our natural resources, including seafood. The seafood industry’s success is subject to fluctuations in market demand and available resource. However, one of the primary issues facing the seafood industry is regulatory uncertainty. Each year, the seafood industry is subject to decisions made by the Board of Fisheries, North Pacific Fishery Management Council, Alaska State Legislature, and additional regulatory bodies. This year, the seafood industry is also facing a court case and potential ballot initiative to eliminate set net fishing in Cook Inlet. Using a ballot initiative to reallocate resources is an action that pits Alaskans against Alaskans and creates regulatory instability for the seafood industry.

—Julianne Curry, Executive Director United Fishermen of Alaska

eafood is Alaska’s largest private sector employer and the state’s largest export. It is a good time to be in the fish business in Alaska. While there certainly are market challenges with wild capture fisheries in such a remote and high cost location, there is also a very strong demand for Alaska seafood products around the world. The reputation we have built of having the highest quality, most delicious seafood harvested sustainably from the world’s cleanest waters is the envy of seafood exporting countries around the world. If Alaska were a country, we would be a top seven seafood exporter in terms of value. Fluctuations in wild fish populations and global economic factors make every year an interesting one. Last year’s record run of pink salmon has offered opportunities to introduce new markets to an affordable wild salmon option. Continuing efforts to diversify markets and product forms for all seafood species, including byproducts, will be key to continued growth of the seafood sector of Alaska’s economy.

—Tyson Fick, Communications Director Alaska Seafood Marketing Institute

JOBS

ur annual employment forecast for 2014, which was released in January, was for negligible growth of 0.4 percent, which is about 1,500 new jobs. This lackluster pace is largely a result of pinched federal spending, which has put downward pressure on local governments, federal civilian employment, and militaryrelated construction. Private sector employers will likely continue adding jobs at a conservative rate, while government employment will continue to show losses.

—Caroline Schultz, Economist Alaska Department of Labor and Workforce Development, Research & Analysis Section

Alaska Business Monthly | July 2014

HEALTH AND MEDICINE

ealth care in Alaska is evolving in a manner similar to certain areas across the Lower 48, though generally the rate of change is slower and limited to larger population centers such as Anchorage. Health care aﬀordability remains an overwhelming concern, whether government, employers, or patients. Purchase of health insurance by Alaskans through the federally operated health insurance exchange is slower than forecasts predicted. Care utilization levels among exchange enrollees remain modest, and it’s too early to predict what this means for utilization in the second half of 2014. Nationally, insurers predict high single-digit rate increases for insurance exchange enrollees in 2015. Consumer-facing technologies, including wearable gadgets and phone apps, are proliferating at a rapid pace. The impact these technologies may have on health care access and aﬀordability is still too early to predict.

—Bruce Lamoureux Senior VP/CEO Providence Health & Services Alaska

s a newcomer to Anchorage (and Alaska), I am optimistic about the economy in my new hometown. The demand for services continues to be steady; however, as we’ve seen over the past few years, the costs of healthcare may be causing a delay in addressing health issues that create higher costs for patients and local employers down the road. As a hospital, we are working on creative strategies to help mitigate those costs by supporting health and wellness and helping people understand how to make informed decisions around their health management goals.

—Julie Taylor, CEO Alaska Regional Hospital www.akbizmag.com

MINING

—Curt Freeman, President Avalon Development Corporation

www.akbizmag.com

INSURANCE

nchorage businesses began 2014 feeling very conﬁdent about the Anchorage and Alaska economy, according to the AEDC Business Conﬁdence Index survey. Most of the businesses I talk to share this view and I think the outlook for the rest of 2014 will show they were right.

—Lon Wilson, President & CEO The Wilson Agency

Comunity s ’ a Ba k Business las LOANS n

T RUS T E D

«fo cuse d o n«

ACHIEVE MORE

E XPE RTS

EXPLORATION transportation

«solid« solid«

RESOURCES

INTEGRITY

UNDERSTAND ALASKA’S ECONOMY

SUPPLY CHAIN oil & gas

prosper

lthough mineral investment in Alaska is expected to remain depressed for the remainder of 2014, Alaska’s operating mines continue to do well despite softening of metal prices over the last year. Record-setting, world-wide production of metals such as gold, silver, and copper coupled with the two-year hiatus in mineral exploration have resulted in a distinct lack of new discoveries and advanced projects that can feed the growing global demand for minerals. With mine production far in excess of the exploration sector’s ability to replace that production, a return to more aggressive exploration is only a matter of time. Alaska has started to feel the front-end of this sea change, with a distinct increase in the number of projects being reviewed for acquisition, some of which will result in outright sales or joint venture agreements. However, initial exploration spending for the bulk of these new arrangements will not be felt until 2015. Alaska’s unquestioned mineral potential is its single strongest drawing card, followed by its pro-development government, experienced labor force, and settled First Nations issues. Weighing in on the negative side of the scale are the State’s general lack of access/infrastructure, the exit of Anglo American and Rio Tinto from the Pebble project, and the EPA’s shenanigans in the Bristol Bay watershed. In summary, for the second half of 2014 look for continued strong performances from the State’s operating mines, limited expenditures from the exploration sector, and ground preparations for new acquisitions that will likely not be felt until 2015.

Mark Edwards

Vice President, Commercial Loan Unit Manager & Bank Economist

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ECONOMIC DEVELOPMENT

he remainder of 2014 should show continued moderate economic growth in Alaska. In Anchorage, the job picture should remain solid with moderate growth and low unemployment, even in the face of job losses in the government sector.

—Bill Popp President & CEO, Anchorage Economic Development Corporation

uneau is looking at a stable second half to 2014. The tourism and seafood industries are expected to do as well as last year, or better. There are several construction projects this summer to keep Juneau’s economy humming. The price of gold and silver is down from the historical highs, but well above long-term averages—which should keep our two producing mines in Juneau near the top of the list of private sector employers. We expect some lower spending at the local government level. The expected larger PFD will help us through the slower months of the late fall and early winter.

—Brian Holst Executive Director, Juneau Economic Development Council

think the economy will be similar to what it is now. MEA’s construction of our new EGS power plant has contributed over $100 million to the economy in Southcentral Alaska. While that will be winding down, some state projects will oﬀset the loss of local spending. MEA continues to see increased demand for electricity and we anticipate further load growth in our long-range plan. Current improvements to electric infrastructure will pave the way for future economic development throughout the Railbelt.

—Joe Griffith, General Manager Matanuska Electric Association

he outlook is good for clean energy in Alaska over the next several months. The Alaska Legislature recently appropriated more than $22 million dollars for the Renewable Energy Fund and more than $46 million for the state’s energy efficiency programs. The Legislature also extended the state’s Emerging Energy Technology Fund for five more years. Additionally, many analysts are predicting that new federal carbon pollution rules expected this summer from the EPA will drive billions of dollars in investment of renewable energy and energy efficiency across the country.

—Chris Rose, Executive Director Renewable Energy Alaska Project

INTERNATIONAL TRADE

As 2014 advances, we appear on track for an uptick in the value of Alaska’s overseas exports. Q1 results were up about 15 percent over the same period last year. China, Alaska’s number one trading partner, continues to lead the way for the state’s export industries. Year-on-year growth as of this writing is up 24 percent. The Japan and Korea markets are also showing improvement this year. Overall, we expect the year to end up with exports once again reaching the $5 billion level, approaching the all-time record of $5.2 reached in 2011. Exports continue to be a growth sector for the Alaskan economy and a major source of high-paying jobs throughout the state.

—Greg Wolf, Executive Director World Trade Center Alaska

EDUCATION

he second half should see modest GDP growth; consumer spending and confidence stable; uptake in employment; borrowing costs stable; low inflation; thaw in business spending; the ability of Alaskans to affordably heat and buy their homes will remain problematic; and Alaska’s oil production will remain at 8 percent of the nation’s domestic oil 16

Alaska Business Monthly | July 2014

ENERGY

supply. Proposition 1 impacts are considerable either way. For the University of Alaska System, I see federal budget pressures on Pell Grants; revenue pressures; and heightened competition for students, donors, and government funds. Improving student outcomes while reducing the overall cost of operations will remain an overarching theme for the University.

—Dr. Ashok K. Roy, Vice President for Finance & Administration/CFO, University of Alaska System www.akbizmag.com

ECONOMY

laska’s economy continues the slow and steady growth trend seen over the last couple of years. Current positive drivers for the state’s economy include increased oil and gas spending resulting from the More Alaska Production Act, the large capital budgets passed by the legislature over the last half decade, strong prices for most salmon species and halibut, the expansion of the retail sector in Anchorage and Fairbanks, and expectations for a strong tourism season. Relative economic laggards include the shrinking government sector, the hard rock mining sub-sector, and the professional services sector (partially related to The Pebble Partnership’s pull back). The health sector, which has been major driver in recent years, looks to be in a consolidation period after several years of very strong growth. While long-term demographic trends should drive a return to growth in that sector, future gains may be tempered by patients and employers looking for less expensive treatment options out-of-state. Overall, we continue to expect employment growth this year to be around 1 percent with a bias towards the upside given the fact that half of the capital funds allocated by the legislature in recent years remain unspent and the rejuvenation of oil and gas spending in the state. The state funds provide a buﬀer against other negative shocks in the economy. However, as the state spending may not be sustainable at current levels, these funds and their eﬀect on the economy have the potential to create a false sense of security.

—Marcus Hartley, President Northern Economics, Inc.

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OIL & GAS

t BP, we’re excited about the future of oil and gas development in Alaska. We’re reinvesting more than we did previously, an increase of 60 percent from previous years under ACES. Thanks to tax reform, Alaska is now on course for increased investment and production and even the possibility of LNG.

—Janet Weiss, President BP (Exploration) Alaska, Inc. AKA BP Alaska

e are in the fortunate position of knowing that certain aspects of the oil and gas industry will improve in the second half of 2014. Just this April, the State of Alaska Department of Revenue adjusted its forecast for daily oil production upward by 13,600 barrels per day because of increased activity on the North Slope. With billions of dollars of new investment on the North Slope and in Cook Inlet creating additional jobs across the state, we expect the outlook for the industry—and the Alaskans who rely on the revenues it provides—to continue to improve. The only barrier to this progress will be the repeal of oil tax reform which, if passed,

TOURISM

necdotal reports suggest that the upcoming summer tourism season in Fairbanks will be stable with little to no growth. Primarily due to changes in some cruise land tour patterns, downtown Fairbanks businesses will likely see increases. In 2013, the ﬁve-month summer period accounted for about 64 percent of the hotel/motel tax collections. But summer revenues have not yet, nor are they likely this summer, recovered to the peak summer of 2008. However, we anticipate that the 2014 year-end hotel/motel tax receipts will again, as in 2012 and 2013, exceed 2008 revenues due to the growth of winter tourism.

—Deb Hickok, President & CEO Explore Fairbanks

jeopardizes all this hard-won progress. AOGA is a strong supporter of Vote No on 1 for just that reason: we need to keep Alaska’s economy moving in the right direction.

—Kara Moriarty, President & CEO Alaska Oil and Gas Association

e expect to stay on track to execute our $1.7 billion capital budget. We will be focusing on infrastructure renewal projects, increased drilling, and the CD-5 project. We expect to continue to progress major projects such as Kuparuk Drill Site 2S, GMT-1 in the National Petroleum Reserve-Alaska, and the 1H Northeast West Sak viscous oil development and will be seeking approval for these projects in the latter half of the year. These new development projects represent about $2 billion of investment and could add 40,000 barrels per day in 2018 to help oﬀset declining TAPS throughput. The passage of SB21, the More Alaska Production Act, has improved the investment climate and hence the economic outlook for the state. Voting no on Ballot Measure 1 is critical to the long-term health of Alaska’s economy.

hile I can’t speak to the Alaska economy as a whole, I believe that in Juneau, the second half of 2014 will see visitor volume, spending, and hotel occupancy continue to grow. Lower airfares should drive more independent travel, and folks are feeling very positive about the summer season so far. Later in the year, the city switches gears to more arts and cultural activities, and Eaglecrest Ski Area is a great draw for locals and visitors alike. All of these things make me optimistic about the visitor industry throughout the remainder of 2014.

Alaska Business Monthly | July 2014

—Nancy Woizeschke President & CEO, Juneau Convention & Visitors Bureau

—Trond-Erik Johansen, President ConocoPhillips Alaska

TIMBER

strong demand for Alaska logs and lumber will continue throughout 2014. Two Alaska companies are shipping logs to China from several sites in Southeast Alaska, and both companies are also sending sawlogs to the Viking Sawmill in Klawock, Alaska. These logs are an important supplement to the timber that Viking harvests from state and federal lands in Southeast Alaska. Viking reports a strong, ongoing demand for its lumber, and if adequate timber was available, the mill would add a second shift to double its production. Timber in the Interior of Alaska is becoming increasingly important for both biomass and for a few small sawmills in that region, and the planned State Forests in Susitna and Copper River could provide a reliable timber supply for future expansion of the sawmills in the Southcentral region.

—Owen Graham, Executive Director Alaska Forest Association www.akbizmag.com

REAL ESTATE

s a state, Alaska’s commercial real estate market is stable and shows signs of increased activity in the future. City-wide, Anchorage is currently facing a low inventory rate of commercial properties available for lease and purchase. Low inventory often leads to an increase in development, which means jobs and more money ﬂowing within the community.

—Chad Graham, Graham Commercial Real Estate Consultants, Inc.

y prediction for the last six months of the year is that inventory will continue to be tight in all markets. Prices will continue to go up due to the shortage. We are probably turning from a buyers’ market to more of one that is balanced. Buyers will not get all the concessions that they are used to, and we will most likely see interest rates start to creep up.

—Paddy Coan, President Alaska Association of Realtors

NONPROFIT ORGANIZATIONS

istorically, much of Rasmuson Foundation’s funding has been committed to nonprofit capital projects, usually in partnership with other funders. We have seen a steady shift in applications from new construction to renovations and building improvements. This seems to reflect that many organizations are uncertain about their ability to raise matching funds from government and the private sector, and they’re concerned about future levels of operating support. The absence of federal earmarks, elimination of Denali Commission funding for clinics and community centers, and substantial reduction in Alaska’s allocation of USDA community facility funding all play into this. Applications for small equipment and building projects have increased dramatically. Increasingly, Alaska funders are collaborating to look upstream to address system changes that will improve Alaskans’ quality of life, focusing on issues like the acute housing shortage, domestic violence and child abuse/neglect, excessive use of alcohol, and educational achievement. We spend more and more of our time and resources working to influence the investment of public funds in strategies that have proven outcomes and demonstrate efficient use of resources.

—Diane Kaplan, President & CEO Rasmuson Foundation

www.akbizmag.com

July 2014 | Alaska Business Monthly

gOOd jObs are hard to come by. I worked hard to get this job, “ and I work even harder to keep it. Supporters of ballot measure 1 can bring my job to a screeching halt. eric WiemaN, prOject maNager

”

Vote NO on 1!  One third of all Alaska jobs

are directly related to the oil and gas industry.

 Most Alaskans don’t know

90% of our tax revenue comes from oil.

TOURISM

e anticipate another strong summer visitor season, resulting in increased statewide economic growth. Alaska continues to be the destination of choice for visitors from both domestic and international markets. Between October 2012 and September 2013, Alaska welcomed 1.96 million visitors who accounted for $1.8 billion in spending. Visitor industry-related employment reached thirty-nine thousand jobs, representing nine percent of statewide employment. With new and increased air access and continued strong relationships with cruise, ferry, and highway partners, Alaska is more accessible than ever. The Alaska Travel Industry Association and our members look forward to another great summer season of welcoming visitors, supporting tourism businesses, and growing our state’s economy.

—Sarah Leonard, President & CEO Alaska Travel Industry Association

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Alaska Business Monthly | July 2014

e’re oﬀ to an excellent start this summer. We had a strong spring convention season before starting the summer. National groups including the Seismological Society of America, the National Association of Counties, and the National Association of State Legislatures each met in the city in late April and early May. Generally, a positive economy nationwide translates into a positive outlook for tourism. Through April, Anchorage hotel occupancy was up year-to-date, and hotel room tax collections for Q1 were up as well. This summer, we anticipate more than a million people will visit Anchorage. We’ve heard a lot of positive outlook from tourism businesses here in Anchorage in terms of bookings in advance of the summer season. 2013 was one of the best—if not the best—years for tourism in Anchorage. We are optimistic about 2014 for leisure and convention business. We’re looking ahead to a strong fall convention schedule as well. —Julie Saupe, President & CEO Visit Anchorage www.akbizmag.com

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INSURANCE

Special Circumstances Insurance Protection beyond normal policy coverage By Tracy Barbour

usinesses purchase various types of commercial insurance to protect themselves against potential losses from unforeseen circumstances. Beyond government-mandated workers’ compensation insurance, companies typically opt for liability coverage (for their premises and operations) and property coverage (for structures and the contents). But there are often potential perils that fall outside the norm and require “special circumstance” insurance to protect a company’s interests. What constitutes special circumstances varies from business to business, according to Lori Wing-Heier, CIC, CRM, director of the Alaska Division of Insurance. “What would be considered special would be a highly unusual activity or something that a normal policy would not provide,” she explains. A prime example of this would be earthquake insurance, which is a popular option in Alaska. Special policies are also used to cover certain contingencies. For instance, a company that is totally dependent on receiving its product through the trans-Alaska oil pipeline might buy coverage that is dependent upon the pipeline going down. Likewise, a 5th Avenue Mall retailer could buy contingency insurance in case something happened to the shopping center’s major stores. Alaska companies that frequently charter aircraft may have what’s known as aviation exposure. To cover this special circumstance, they can purchase non-owned aviation insurance that would be an umbrella on the owner’s insurance. In the event of a claim, the policy would pay in excess of the owner’s coverage.

Alaska Business Monthly | July 2014

“There’s not enough of it done on a national level to let you put the spread of the risk inside a box. Because it’s not a common industry, it’s very difficult for companies to actuarially plan for the type of risks and losses around those exposures.”

—Josh Korver Owner and President, The Insurance Center

Or a small paint store could purchase environmental insurance to cover potential risks associated with handling paint products, cleaning solvents, and other chemicals. A situation doesn’t have to be overly bizarre to warrant special coverage, according to Josh Korver, owner and president of The Insurance Center in Anchorage. For Korver, special circumstance insurance denotes coverage that is simply out of the ordinary. For example, a special policy might be required for a new contractor without an established track record. As a managing general agency, Korver’s firm finds carriers or companies that are willing to insure a hard-to-place risk client, such as a new contractor. “He needs a company that will take a chance on him even though he’s starting a new business,” Korver says. “We’re happy to help.”

What Makes a Circumstance Special? The insurance business revolves around anticipating and controlling risks, Korver says. And major national insurance companies tend to specialize in risks that fit in a certain box. They strive to set a premium to cover all the losses and payments of a particular group— and make a small profit for the compa-

ny. “The more data you have, the more accurate you can be with it,” he says. “The smaller the group you’re dealing with, the less data you have.” And the less data that’s available, the harder it is to obtain standard liability coverage. That’s why fishing derbies, races, and other special events—which tend to have unusual exposures (potential for losses)—require special insurance to cover their risk. Oil industryrelated risks are also very difficult for standard companies to write, Korver says. “There’s not enough of it done on a national level to let you put the spread of the risk inside a box,” he says. “Because it’s not a common industry, it’s very difficult for companies to actuarially plan for the type of risks and losses around those exposures.” However, every commercial risk is “special” on some level because each business has its own challenges and exposure, says Chris Pobieglo, president of Business Insurance Associates. He feels that purchasing insurance should be a byproduct of the business developing a strategy for how it wants to manage risk. “It’s important to note that many special situations or extraordinary risks may be better addressed by strategies other than transferring risk through insurance,” Pobieglo explains. www.akbizmag.com

For instance, if a special policy isn’t available, or if coverage is too expensive, the business could modify its internal processes to minimize exposure. This could include enhancing training or safety and other programs to repress losses. Pobieglo has noticed some interesting trends unfolding in the area of special circumstance insurance. For instance, he has been serving more clients in the motion picture and film industry. Over the last three years, his firm has written several film completion bonds, as well as insurance coverage for stunts. Recently, the company insured three stunts for a movie being shot in Seward.

Where to Purchase Special Coverage Alaska businesses that are in the market for special coverage can look to two main sources: independent insurance agents that sell products from a variety of insurance carriers and managing general agents that act as wholesalers. Business Insurance Associates, for example, is an independent commercial insurance and surety brokerage

licensed in seventeen states. The Anchorage-based firm offers the full gamut of commercial liability products. “We go directly to the insurance companies and have their underwriter quote it,” Pobieglo says. Sometimes Business In- Huntley surance Associates arranges coverage for clients through wholesale brokers, which have access to hundreds of other markets or companies with different products. In all cases, the goal is to help clients manage their risk rather than simply make a transaction, Pobieglo says. “The main thing we try to do is take a risk-management point of view and build a relationship based on that,” he says. Alaska Insurance Solutions is another independent agency that often relies on obtaining coverage through managing general agents. “Many independent agents have to go to the managing agents because we don’t have the volume to go directly to the carrier,” explains Khrista Huntley, president of Palmer-based Alaska Insurance Solu-

tions. “In this case, the managing general agent is what we call the underwriter.” Alaska Insurance Solutions specializes in hard-toplace risk, with the majority of its business coming from remote operations, mining operations, and new ventures without an established record of insurance. Huntley often works with business owners who have been turned down for insurance, which creates some exciting challenges. “I enjoy helping people get what they need and seeing them flourish. It’s the best thing about doing my job,” Huntley says. Juneau-based Shattuck & Grummett is another independent agent that helps clients insure situations outside the average building and liability coverage. The company writes a variety of special policies, including coverage for property in remote areas, equipment being transported over water, specialty consultant coverage that requires professional liability, and special events staged over a few days. “We advocate for our clients and will

Our People Our Community Amazing things happen when people give back. Employees to vendors, Fort Knox always teams with skilled, dedicated, community-minded people. Michelle Maynor, mother of two, local roller derby star, owner of Interior Graphics & Printing, and one of Fort Knox’s vendors, is pure gold. More than 30 years ago, Michelle moved to Alaska. She takes pride in creating collateral, signage, and engineering prints for our operation, and being a behind-the-scenes member of the Fort Knox family. She says, “Fort Knox cares about the success of Fairbanks, as well as their employees. That kind of attitude has a ripple effect throughout the community, and it’s the kind of thing that makes Fairbanks such an amazing place.” Michelle believes in the philosophy of giving back. It could be volunteering at the Food Bank, the Arctic Winter Games, coaching, or fueling the Fairbanks Roller Girls’ fire. If it has to do with Fairbanks, Michelle is there. She says, “I like that I get to help people every day.” We like how she rolls.

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July 2014 | Alaska Business Monthly

evaluate what they do for for special policies can vary business and what is being widely, depending on how required of them for insurfar the risk can be spread, ance based on the contract according to Korver. Policies insurance requirements and such as liability insurance for give recommendations from some of the businesses writthat conversation,” says Ownten through The Insurance er and Vice President John Center can run thousands of Grummett. “You never know Grummett dollars and up to six figures. what kind of risk [client] may At Shattuck & Grummett walk through the door or call looking Insurance, special insurance costs can for coverage. That is what makes this range anywhere from a $350 minimum business so exciting and fun.” premium to a $5,000 minimum premiThe Insurance Center is a managing um, depending on the exposure. For exagency with contracts for placements ample, pollution policies for large tank with large insurance companies, which farms can fetch a much higher minimakes it a go-to resource for insurance mum premium, according to Grumagents needing help providing special mett. coverage for clients. The agency doesn’t As another example, the coverage sell insurance products directly to the Business Insurance Associates provided public, but acts as an intermediary be- for the three movie stunts cost the client tween agents and carriers available to a couple thousand dollars, according to provide the insurance coverage. Pobieglo, who adds that Alaska companies are using creative methods to conCosts and Other Important trol their insurance costs. One example Considerations is “wrap up” programs, which are Premiums for special circumstances owner-controlled insurance programs insurance are normally based on the usually used for $50-million-plus projlevel or risk and business volume. Cost ects. Under the wrap-up programs, the

general contractor purchases insurance to cover the entire project. This not only lowers the overall cost of coverage, but ensures that all subcontractors working on the project are adequately covered. As another cost-saving measure, some of Alaska’s larger private employers—particularly oil and gas companies—and boroughs are electing to selfinsure portions of their risk to control costs. With this type of risk management technique, a certain amount of money is set aside to compensate for potential future losses. Claims are paid directly from an account set up by the business rather than through an insurance provider. The bottom line is that businesses have a diversity of exposures and requirements that impact their insurance costs. Wing-Heier advises business owners to have an open discussion about their coverage needs with their agent or broker. 

Former Alaskan Tracy Barbour writes from Tennessee.

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

Rigging cable, Liberty

Project, July 2009

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

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above Eni Petroleum, Spy Island, March

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

135

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Alaska Business Monthly | July 2014

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HEALTH & MEDICINE

Alaska Telehealth Taking Hold

By Will Swagel

ne could argue that some very significant technological advances in telehealth in Bush Alaska started with kids’ earaches. Same as everywhere, kids in Alaska Bush communities suffer from earaches from time to time. Depending on severity, the problem could be solved with a round or two of antibiotics. Or it might require the intervention of an otolaryngologist—an Ear, Nose, and Throat doctor (ENT). A physical exam could indicate the proper course of treatment, but conducting an exam can be a problem when the ENT is in Anchorage and the young patients hail from hundreds of villages spread across thousands of square miles. Travel is expensive for sick child and guardian both and may disrupt the whole family for days or more. Today, that same child can be examined much closer to home by a medical clini26

Alaska Business Monthly | July 2014

Telemedicine technology expands healthcare delivery

cian and high resolution images of the inside of the ear sent to the ENT along a secure network. Specialists can also hook up a video link to consult with the patient and the local clinician together. The child may be able to receive treatment in the village. These capabilities are part of a telehealth revolution taking hold in the Bush. Videoconferencing, electronic medical records, the forwarding of secure diagnostic images and notes between providers, and home monitoring of patients with chronic conditions are four main ways this revolution is taking shape.

Store-and-Forward The Alaska Federal Health Care Access Network (AFHCAN) is a federally-funded program that offers a system of secure and encrypted text and data transfer between medical providers. This is not just regular email—there are strict regulations governing the communication of medical information, such as the

requirements of the Health Insurance Portability and Accountability Act. Rachel Lescher, a pediatric endocrinologist at the Alaska Native Medical Center (ANMC) in Anchorage, says store-andforward allows providers throughout the state to consult with her efficiently. The remote providers can send their questions, along with the child’s medical history, lab results, high-resolution images, and other pertinent information to Lescher in Anchorage. Lescher can then assess all the information and respond to the remote provider. “It’s very much the same as a telephone consult,” says Lescher, “but it has even more information.” It was AFHCAN that lured Garrett Spargo to Alaska and the Alaska Native Tribal Health Consortium, where he now works. The Consortium, along with Southcentral Foundation, manages ANMC. Besides his work with AFHCAN, Spargo is the director of the National www.akbizmag.com

Telehealth Technology Assessment Resource Center, which helps medical providers evaluate equipment and software. “It’s particularly difficult for a nurse or a clinician who has decided to do telemedicine to sit down and look over a bunch of product sheets and know what to buy,” Spargo says. As a federally-funded project, the National Telehealth Technology Assessment Resource Center cannot recommend one manufacturer’s device over another’s, Spargo says, but the organization can help providers identify the range of products that can fit their specific needs. “We help guide them through the process and teach them how to do their own assessments,” Spargo says. That range of products is impressive and growing continually. Rural clinics often choose from elaborate carts that feature a variety of telehealth monitoring and transmission devices. But some newer devices interface with more common electronics like PCs and smartphones.

Videoconferencing What most people think of as telemedicine is the image of a patient talking to

www.akbizmag.com

“We are seeing patients all over the state, and being able to do that by video is more convenient for the patient, helps improve their healthcare, and also lowers healthcare costs.”

—Rachel Lescher, Pediatric Endocrinologist, ANMC

their doctor on a video screen. But this in not just regular Skype—the transmissions can include high-resolution closeups and require high levels of security. Lescher says she has been using video consults, mostly for follow-up visits. “[In endocrinology], there are some physical exam things you have to do in person, but a lot of it is education or discussing symptoms or lab reviews,” she says. “Specialties are ideally suited [for video consults],” Lescher adds. “We are seeing patients all over the state, and being able to do that by video is more convenient for the patient, helps improve their healthcare, and also lowers healthcare costs.” A further benefit occurs when the patient’s local provider can sit in on the consult. This not only keeps all the providers similarly informed but can help patients feel like they are part of their medical team. John Kokesh, MD, an ENT/Otolaryngol-

ogist specialist and the director of surgical services at ANMC, has been a proponent for and developer of AFHCAN since its onset. He says that while the benefits of telehealth are great, they do require more training for people who are using it. Alaska already has problems with recruiting professionals to the Bush and with managing frequent turnover. Medical care may be in the hands of clinical health aides with limited training. “[The health aides are] the first line of defense,” Kokesh says. “If somebody is in a snowmobile accident, they are going to have to take care of them. When [telehealth] works the best, it can empower them because they have a way to get the additional help they need to take care of something they weren’t sure of. We all have times that we think we’re doing the right thing. It’s really nice if someone could say to us, ‘I have been doing that for

July 2014 | Alaska Business Monthly

twenty-five years and you’re doing fine.’ A lot of the work we do is exactly that.”

Good Bones On the telehealth front, Alaska is blessed with a large population of Alaska Natives, veterans, and other federal beneficiaries and has many government facilities. Health clinics, schools, and government offices often have Internet connections not available to the average village resident. And the village health clinic or school is a lot closer to home than Anchorage is. Steve Constantine, the director of GCI’s Medical & Video Services division, was a hospital CIO before he came to GCI in 2000 to focus on improving connectivity to the Bush. GCI offers a service called ConnectMD, a secure medical-only network that rides on top of their regular infrastructure and offers connections all over the state. “When I came here, the state really didn’t have the infrastructure to deliver broadband services in most of rural Alaska,” Constantine says. “In the past fourteen years, that’s essentially all changed.” Certainly GCI’s TERRA network could be considered a game changer. TERRA

is a combination of fiber and microwave build-out that starts around Anchor Point, runs through Dillingham, and then goes to Bethel. Plans are set to connect Kotzebue with the Fairbanks hub. “We want to ring the state with a terrestrial platform,” says Constantine.

Connecting with Home Health The Veterans Administration (VA) estimates there are about seventy-four thousand veterans in Alaska and about thirty thousand of them are enrolled in the Alaska VA Healthcare System, says Ric Epperson, VA’s rural health program manager, based in Anchorage. About 230 of those veterans in various parts of the state are enrolled in a voluntary program that allows them to monitor their medical conditions and report the results through a countertop device about the size of a small toaster oven. Veterans use the device to monitor chronic conditions, such as hypertension, and behavioral health issues, such as tobacco cessation. VA has also been using videoconferencing and store-and-forward technology to connect Alaska veterans to providers as far afield as Florida. The agency suffers from a

shortage of providers nationwide and even more acutely in Alaska. Telemedicine is helping deal with that shortage. “We have a [VA] provider in Denver, we have a [VA] provider in Florida, and we are [also] working on an agreement with the Boise VA for a medical provider [to assess Alaska vets],” says Brian Laufer, DO, the VA’s associate chief of staff for clinical informatics and a primary care physician at the Alaska VA Healthcare System in Anchorage. Laufer has been involved with AFHCAN since its inception in the 1990s. Epperson says the VA has been partnering with tribal health programs all around the state to provide more and better healthcare choices for Alaska veterans living in the Bush. Asked if telehealth has been wholeheartedly embraced by the VA, Laufer notes that his informatics staff started with one person in 1998 and went to four people in 2005—his department now has nineteen people.  Alaskan author and journalist Will Swagel writes from Sitka.

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Gamma Knife Treatment Available in Alaska: Taking brain surgery to the next level

By Will Swagel

hile Alaska telehealth may allow providers to practice medicine in places they could not before, technological advances are also allowing providers to perform treatments in ways they never could before. One such advance is the Gamma Knife— a complicated device that allows doctors to destroy tumors deep in the brain as an outpatient procedure. It’s not a knife at all but a way to perform intracranial radio surgery. The Gamma Knife works by focusing 192 thin beams of radiation—each one in itself too harmless to damage skin, brain tissue, or bone. But when the beams are all concentrated at one precise point, their cumulative energy is enough to destroy the tumor. Located on the Alaska Regional Hospital campus within the Anchorage Radiation Therapy Center, the Alaska Gamma Knife Center oﬀers innovative technology solutions. Medical Director Stephen Settle, MD, says he has been performing Gamma

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Knife procedures in Anchorage since December of last year. Settle was recruited from the MD Anderson Medical Center in Houston. He is a cancer researcher and is Board Certiﬁed in Radiation Oncology by the American Board of Radiology. Settle is also a member of the American Society for Therapeutic Radiology and Oncology, American College of Radiology, Sigma Xi – The Scientiﬁc Research Society, Society for Neuro-Oncology, and the Tinsely Randolph Harrison Society of Physician-Scientists in Medicine. Settle says the Gamma Knife can be used to ablate malignant tumors that have moved into brain tissue from lung or breast cancer, for instance, as well as for treating tumors that have originated in the brain. The device can also be used to treat benign tumors that may cause problems such as hearing loss. “The Gamma Knife allows us to go in and do a surgical strike against these tumors without ever having to open up the skull and do a conventional craniotomy,” Settle says.

The device can be used for nerve surgery, such as the treatment of trigeminal neuralgia, which Settle can cause extreme burning pain in the face and can be triggered by ordinary activities like combing hair or putting on makeup. A Gamma Knife patient is ﬁtted with a head frame, which—after a dose of anesthetic—is pinned lightly to the skull. The patient is given a ﬁne-cut MRI to identify the tumor’s location. The patient is then placed on a table and into the Gamma Knife device, which looks similar to an MRI. The Gamma Knife part of the procedure can take from twenty minutes to several hours. Amazingly, the patient then goes home. “There’s no time in the hospital whatsoever,” Settle says. He uses a state-of-theart Leksell Perfexion Gamma Knife. “It’s a quantum leap in Gamma Knife technology that really allows us to take brain tumor treatment to the next level.” 

July 2014 | Alaska Business Monthly

VISITORS INDUSTRY

Alaska Hotspots for Travelers Destinations and opportunities By Tasha Anderson

o travelers from Outside, Alaska might be seen as one giant unique travel experience—and it is. But what’s amazing about travel in Alaska is that it’s not all the same unique experience; it’s a collection of varied unique experiences which results in a lifetime’s worth of travel opportunities. Even people who have lived here their entire lives have a list of hotspots for travel—the ferries they haven’t taken, the cities they haven’t seen, the roads they haven’t traveled, and the places they’d like to go. “I try to knock off something on my bucket list every summer, and I’ve lived here since 1970, but there’s still so much more to experience,” says Dee Buchanon, Director of Marketing for CIRI Alaska Tourism Corporation. For those who like to travel in comfort, here are a few destinations both Alaskan and Outside travelers will want to take advantage of.

Stillpoint Lodge Stillpoint Lodge is located in Halibut Cove, which is surrounded by Kachemak State park, directly across Kachemak Bay from Homer. Stillpoint operates primarily as a spiritual and artistic retreat. Beka Thoning, who manages the Lodge with her husband Lucas, says “The original intent [of owners Jan and Jim Thurston] was to create a space where creativity and nature and spirituality could all comingle.” The lodge itself also immerses guests in the surrounding environment. “It was built with an intention to be inte30

Alaska Business Monthly | July 2014

Photo by Beka Thoning

Stillpoint Lodge as seen from a kayak in Kachemak Bay.

grated with nature as much as possible. A lot of the materials that the lodge is made out of are either recycled or rescued materials… The main activity floor, where we do the art classes and our yoga classes, is actually rescued off an old barge,” Thoning says. Guests stay in cabins that accommodate two, meaning at full capacity Stillpoint can sleep up to twenty-two guests, retaining a sense of remoteness even when the entire Lodge is rented out for a retreat. “Because it is such a nice, small, intimate space, you really get that sense of cohesiveness of the group, and team building is effortless,” Thoning says. As an aid to meditation and reflection, Stillpoint has built a traditional labyrinth. “That’s a walking meditation space. Some of our retreat leaders choose to use that intentionally during a retreat, but our guests also just choose to do that on their own.” Additionally, Stillpoint has created places to connect with the outdoors throughout the property. “We do have a couple of spots as well where people can just sit and be quiet or have a nice, intimate conversation with a friend or a loved one. We try to create little spaces and pockets of privacy to get people out in nature in interesting little places to be alone,” Thoning says.

But Stillpoint isn’t all about being still. Thoning says, “We have the largest kayak fleet in Halibut Cove, we do a lot of kayaking,” including kayaking with inflatable rafts in Kachemak Bay State Park on a glacial lake. Stillpoint is one of only three businesses in Halibut Cove with a license to offer the unique kayaking experience, Thoning says. “Quite often people will come, attend a retreat, and then stay an extra day to do that trip, and that really rounds out people’s stay.”

Waterfall Resort “It’s really the great fishing that makes [Waterfall Resort] such an extraordinary experience, and seeing a tradition that goes back over one hundred years really gives guests that sense of continuity,” says Geoff Stevens, director of marketing for The Waterfall Group, which runs the resort. Waterfall Resort was originally a cannery built in 1912 that was converted into a fishing resort in 1982. Stevens says, “The reason the cannery was founded there in the first place was because of the local legends of the fish that people were catching there.” He explains that rocky underground topography combined with an upwelling curwww.akbizmag.com

rent (water that is brought up from the depths of the ocean) creates a nutrient rich environment that supports small fish like herring. These fish, in turn, attract sports fish such as salmon and halibut, “which is why this particular little corner of Alaska is so famous for the sheer variety of sports fish that can be caught there. There’s over twenty different species that anglers catch in this region,” Stevens says. Access is by seaplane from Ketchikan to Prince of Wales Island where the resort is located on fifty-two acres of land surrounded by the Tongass National Forest. In addition to world-class fishing, guests have access to view whales, bears, eagles, otters, puffins, and more wildlife. A boardwalk from the main resort area travels up a creek “to an observation platform where you can watch salmon jump up the creek and [appear to] try to dodge black bears as the bears try to get a meal.” This creek is also the location of a pink salmon run every year, as they travel up to spawn at the base of the waterfall that is the resort’s namesake. The resort will process fish that guests catch. Also, fishing is its own reward, literally, as they sponsor a King of Kings Salmon Tournament every season with prizes ranging from all expense stays at the resort the following year to fully-paid international Princess cruises. “It’s really exciting and people really compete for it,” Stevens says. Since its conversion from a cannery, Waterfall Resort has hosted over 50,000 guests, in some cases third-generation fishers who come back year after year.

Talkeetna Alaska Lodge The Talkeetna Alaska Lodge is a blend of traditional Alaska and the modern amenities that make travel in Alaska both exhilarating and relaxing. The lodge has comfortable rooms, Wi-Fi access, restaurants that have won Wine Spectator awards for years, and fine onsite cuisine, as well as a business center with complimentary access to computers and printers for those who need to conduct business while traveling. The lodge is conveniently located just outside of Talkeetna. Buchanon says, “We’re set a little bit outside of town, more in a forested setting, with great views. So we have access to town but the experience of being out in the Alaska experience.” www.akbizmag.com

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Aerial view of Waterfall Resort on Prince of Wales Island.

Alaska Business Monthly | July 2014 www.akbizmag.com

In addition, the lodge’s location is perfect for a long view of Mount McKinley. “What you see from our deck is Denali, at a distance, with the three peaks and the Alaska Range,” she says. In fact, the land was selected specifically for a lodge, not found to accommodate one. During a ribbon cutting ceremony, Margie Brown, former president and CEO of CIRI, said, “We bushwhacked our way up this hill and it was at this spot that we saw Denali, and at that moment we knew this land would be a prime location for a lodge with trails for visitors to be able to explore Alaska at its finest.”

“That’s when we have plated meals with the island chef. Weather permitting, we go out and build a fire and roast marshmallows and tell stories of the day. It’s really quite an experience to stay at that lodge and just listen to the water lap on the rocks and be out on an island and yet have all the comforts of home.” Interaction with the Chef doesn’t end with dinner. New this year, guests are being invited into the kitchen to learn a little more about wild Alaska salmon and ways to prepare it. Guests at the lodge also have access to kayaking, and can go on short, half-day, evening, or all day tours.

Kenai Fjords Wilderness Lodge The Kenai Fjords Wilderness Lodge is comprised of eight cabins, which can each accommodate four guests, and the Wilderness lodge building. Guests looking for a remote, quiet location would be hard pressed to find a better alternative. The Kenai Fjords Wilderness Lodge requires passage by boat, and access to the part of Fox Island which houses the cabins and lodge is only granted to guests and staff. “When the boat pulls away, only the lodge guests are there,” Buchanon says.

Seward Windsong Lodge “I love the fact that [staying at the Seward Windsong Loge] puts you that close to a famous coastal town [Seward], where you can go fishing and you can go view glaciers and wildlife in Kenai Fjords National Park just by getting on a boat, but at the same time, you have that removed feeling of being in the woods and in a forested setting,” Buchanon says. The Seward Windsong Lodge sits in the Resurrection River valley on the road to Exit Glacier.

The location is ideally situated for those who are interested in spending time in Seward or visiting Exit Glacier, which has been receding for more than one hundred years. Guests can take trails and explore the glacier on their own, but Buchanon recommends the guided tours, led by naturalists. One of the unique features of this lodge, at least in Alaska, is the fantastic access for guests who have physical restrictions. One of the trails leading to a viewing point for Exit Glacier is wheelchair accessible. Additionally, the entire property is “kind of set up like a campus,” Buchanon says, “so we have a paved trail that goes around the property from building to building. It’s very easy for people to walk or have wheelchair accessibility from building to building for that.” Seward is, itself, a great attraction— another one of many statewide hotspots for travelers.  Tasha Anderson is the Editorial Assistant at Alaska Business Monthly.

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July 2014 | Alaska Business Monthly

FINANCIAL SERVICES

Alaska Sprouts Owner S.J. Klein (left) and Wells Fargo Business Relationship Manager Shin Suzuki.

US Small Business Administration Loan Programs Supporting business startup and growth By Tracy Barbour

his summer, Alaska Sprouts is moving into a freshly-remodeled, seven thousand-square-foot facility, thanks to special financing from the US Small Business Administration (SBA). The SBA 7(a) Loan Program allowed the business—which sells sprouts, micro greens, tofu, and mature plants like basil and romaine—to purchase a warehouse with long-term financing and a minimum 10 percent down. The loan will enable Alaska Sprouts to double its

Alaska Business Monthly | July 2014

square footage, cultivate new customers, and increase the size of its payroll. The 7(a) loan was the ideal financing to facilitate the expansion of the five-yearold Anchorage business, according to owner S.J. Klein. “We’re at a point where to keep growing the business, I needed to make some investments,” Klein explains. “It made more sense for us to purchase.” It also made sense to go with the SBA loan program and Wells Fargo, says Klein, who shopped around to find the best op-

tion for his business. “The SBA program seemed to be more responsive to the needs of small businesses,” he says. “I ended up with Wells Fargo because they were able to work with me in a timely fashion.” Klein’s 7(a) loan is among several programs the SBA offers to provide small businesses with access to favorable financing to support their business endeavors. The 7(a) loan, one of the SBA’s most utilized programs, caters to a broad segment of borrowers seeking funds to www.akbizmag.com

SBA 7(a) Loan Program Under the 7(a) Loan Program, the SBA does not provide loans. Instead, it guarantees loans that are made by participating lending institutions, which means taxpayer funds are only used in cases where borrowers default. This reduces the risk to the lender but not to the borrower, who remains obligated for the full debt, even in the event of default. The SBA loan guaranty helps to incentivize the loan for the lender, says Sam Dickey, deputy district director of the SBA’s Anchorage office. SBA loan guaranties range from 50 to 90 percent of the loan value. Its Express Loan program, for instance, provides a 50 percent guaranty, requiring borrowers to have an equal amount of skin in the game. The typical guaranty with 7(a) loans is around 75 percent, Dickey says. The SBA’s loan guaranty program also ensures that borrowers get a fair deal,

start, acquire, maintain, and expand a small business. SBA also offers Certified Development Company (CDC)/504 loans as a financing alternative, primarily for the purchase of real estate.

S.J. Klein with some sprouts.

Dickey says. “We don’t dictate an interest rate on a loan, but what we do is put a cap on what that interest rate will be,” he says. The specific terms of SBA 7(a) loans are negotiated between a borrower and an SBA-approved lender, subject to the requirements of SBA. However, under the general guidelines of the program, the

maximum loan amount is $5 million. The maximum loan maturity is set at twenty-five years for real estate, up to ten years for equipment (depending on the useful life of the equipment), and generally up to seven years for working capital. Dickey views the 7(a) Loan Program as a win-win for borrowers, lenders, and

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July 2014 | Alaska Business Monthly

Northern Smiles Orthodontics. Courtesy of Northern Smiles Orthodontics

Alaska as a whole. Borrowers can receive the benefit of longer-term financing with less money out of pocket, which means they can retain more funds to operate their business. Lenders can lower their risk, leverage their funding more effectively, and even Harty sell off a portion of the loan to the secondary market. For Alaska, there is the broader advantage of SBA’s loan programs. “Anything that benefits small businesses and makes them stronger will have the effect of making the economy more stable,” Dickey says. Wells Fargo Business Relationship Manager Shin Suzuki appreciates the opportunities provided by the SBA and its 7(a) program. “The SBA is a great partner with the bank,” Suzuki says. “It helps the local business to focus on growth, instead of tracking down the actual capital to inject into the new project.” In addition to allowing lenders to diversity risk, the 7(a) Loan Program guaranty enables lenders to offer borrowers longer terms than conventional commercial financing and with a lower down payment. Suzuki says Wells Fargo normally likes to see borrowers make a 25 percent 36

Alaska Business Monthly | July 2014

CDC/504 Loan Program down payment when making real estate acquisitions. How- The SBA’s CDC/504 Loan Program proever, coming up with this vides small businesses with long-term amount can be a challenge for financing to acquire fixed assets for exsome businesses, particularly pansion or modernization. These assets if they are in a growth phase. are commonly land and buildings and This, in part, is what makes equipment. CDC/504 loans, Dickey says, are very the 7(a) program so attractive popular in Alaska because they allow to many borrowers. But 7(a) loans do require lenders to leverage their money more efa longer processing time because of fectively, just as the 7(a) Loan Program the SBA guidelines that must be met. does. For borrowers, the 504 Loan ProKlein’s loan for Alaska Sprouts, for ex- gram can offer lower fees than the 7(a) ample, took about four months to com- program and often a lower down payplete, from the application submission ment of 10 percent. to the funding time. The standard conThe 504 Loan Program is a partnership ventional business loans, in compari- between a conventional lender, a CDC actson, can take about sixty days to close, ing on behalf of the SBA, and the business owner. Financing for a 504 project generaccording to Suzuki. Jim Harty, Wells Fargo Alaska SBA ally includes a loan secured from a privatebusiness development officer, says the sector lender with a senior lien covering repayment guaranty with 7(a) loans en- up to 50 percent of the project cost, a loan secured from a CDC (backed ables the bank to reach a little by the SBA) with a junior lien further and be comfortable covering up to 40 percent of the taking a little bit more risk total cost, and a contribution with borrowers. “It allows us from the borrower of at least 10 to offer financing to a group percent equity. “The borrower of small business owners who may not be able to get a conhas two loans: one from the bank and one from the CDC, ventional loan that would be conducive to what they are which is typically a fixed-rate loan,” Dickey says. trying to accomplish,” he says. Steadman www.akbizmag.com

Above: Dental chairs in Northern Smiles Orthodontics. Left: Northern Smiles Orthodontics owner Dr. Devin Johnson.

with the loan adjusting every five years without a balloon payment. Photos courtesy of Northern Smiles Orthodontics

CDCs are nonprofit corporations, which are certified and regulated by the SBA, that work with participating lenders to provide financing to small businesses. There are approximately 270 CDCs nationwide, each covering a specific geographic area. Evergreen Business Capital, which is headquartered in Seattle, serves as an intermediary for the SBA 504 Loan Program in Alaska. Evergreen manages the application and loan process so lenders and borrowers don’t have to, and it remains a partner through the life of the loan, according to Barbara Gill, a vice president and senior loan officer based in Palmer. “Our experience and knowledge enable us to simplify what is typically a complex process, and we take pride in our unparalleled service,” Gill says. That’s what happened when Evergreen facilitated a 504 loan transaction with First National Bank Alaska and Northwww.akbizmag.com

ern Smiles Orthodontics. The loan allowed the company to purchase a condo unit it had been renting in a Class A building in South Anchorage. Under the traditional route, Northern Smiles Orthodontics would have needed to put down 25 percent, plus the cost of an appraisal, title insurance, and other fees, according to Chad Steadman, a vice president with First National’s Corporate Lending Division. But with the 504 loan, the business owner only had to provide 10 percent of the total transaction. “That is a huge advantage because they were able to save money for their existing business to grow it, plus it doesn’t hurt their balance sheet,” Steadman says. The business received a fixed interest rate with up to a twenty-year amortization on the SBA-guaranteed 40 percent of the loan. The 50 percent funded by First National is also for a fixed rate,

504 Loan Expedites Business Owner’s Purchase For Northern Smiles Orthodontics’ owner, Dr. Devin Johnson, the biggest advantages of the 504 loan were the low down payment and the ability to move into ownership sooner than anticipated. Johnson began renting the unit three years ago with the option to buy it during the first five years. The 504 loan put him ahead of schedule—and with less money down. “We were able to get in with 10 percent down and get into the real estate earlier,” he says. Johnson feels that he had a positive experience working with the SBA, Evergreen, and First National on the 504 loan. “Chad was fantastic and kept us informed,” Klein says. “Having a personal relationship with a banker made the process go more smoothly.”  Writer Tracy Barbour is a former Alaskan. July 2014 | Alaska Business Monthly

ALASKA NATIVE CORPORATIONS

Subsidiary Acquisitions Provide Growth Alaska Native Corporation investment considerations By Russ Slaten

laska Native Corporations (ANCs) make up the highestgrossing revenues among companies based in the Last Frontier and owned by Alaskans. ANCs encompassed twenty-two of the Top 49ers in the October 2013 issue of Alaska Business Monthly. The twenty-two corporations collectively grossed over $11.6 billion in 2012, providing more than seventeen thousand jobs in Alaska and nearly sixty thousand jobs worldwide.

Alaska Business Monthly | July 2014

Arctic Slope Regional Corporation (ASRC), along with its subsidiaries, is the largest Alaskan-owned company, employing more than ten thousand people worldwide. ASRC has most recently seen a growth in its numbers after the acquisition of Little Red Services, Inc., a service company on the North Slope, in May. Even as Little Red Services becomes part of ASRC, it still operates separate from ASRCâ&#x20AC;&#x2122;s organically grown company, ASRC Energy

Services, in order to protect the brand and management structure. Dave Gillespie, CEO of Aleut Corporation, says Aleut Corp. tries not to disrupt an organization more than necessary when acquiring a new subsidiary. And in order to find the right companies, Gillespie has a few considerations. â&#x20AC;&#x153;We have three rules. First, we look for businesses that are related to, but are different than, what we already have so that one plus one equals three. www.akbizmag.com

Arcticom employee Travis Conants changes out a connecter on the ALMR RX antenna at Dot Lake. Photo courtesy of BSNC

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Second, we look for businesses that are the same, but have different customers. And third, we look for businesses that have nothing to do with anything, but are too good to pass up. An example of this is Patrick Mechanical in Fairbanks,” Gillespie says. Fairbanks-based Patrick Mechanical, one of eight Aleut Corporation subsidiaries, is a mechanical contracting firm with several projects spanning the Fairbanks North Star Borough. www.akbizmag.com

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July 2014 | Alaska Business Monthly

Photo courtesy of BSNC

Arcticom at the Ester Dome site.

Photo courtesy of BSNC

Services, displaying ongoing success and a promising future, Schubert says.

Bering Straits acquired Arcticom, a full services land mobile company, last year.

SBA Programs Eleven of the eighteen Bering Straits’ wholly owned subsidiaries participate in or have graduated from the US Small Business Administration 8(a) Program. Two subsidiaries participate in the Small Business Association HUBZone Program. The 8(a) Business Development Program—common amongst ANCs as a starting point for subsidiaries—is a program geared toward helping socially and economically disadvantaged firms with becoming competitive in the federal contracting market. The 40

Alaska Business Monthly | July 2014

HUBZone Program, or the Historically Underutilized Business Zone Program, provides federal contracting opportunities for economically distressed communities based on various census data. “A significant amount of Bering Straits’ gross revenue is derived from government contract work. It’s over 90 percent,” says Bering Straits Native Corporation President and CEO Gail Schubert. The two most recently created Bering Straits subsidiaries are Global Management Services and Global Technical

Assessing Acquisitions Arcticom, previously used by Bering Straits as a subcontractor on various operations, was acquired in October 2013. Arcticom is based in Anchorage and is a licensed Motorola dealer for Alaska. It is a full services land mobile radio systems maintenance company that leases communications towers and sells, repairs, and maintains communications equipment. Bering Straits Native Corporation says it acquired Arcticom as part of a greater effort to diversify Bering Straits’ revenue sources. Bering Straits says it considers the purchase price and a company’s profitability, among other factors, before acquisition. “When looking at acquiring a business we consider, ‘what type of business line is it, how could it best benefit Bering Straits, and is it a company that we’ve already grown organically and can complement or is this a new market niche?’ So some of that goes into the strategic planning,” says Bering Straits Native Corporation VP of Business Development Richard Foster. Bering Straits looks at fellow Alaska Native Corporations in order to explore a new market niche and prevent too much overlap, Foster says. “All of our brother and sister [ANCs] provide base operations support, and it becomes a price shootout when we go after a base operations support contract. It leaves the company squeezing profit margins down and conceding rates. So typically what I like to do, especially in acquiring a company, is look to see where the competition isn’t,” Foster says. Bering Straits aims to incorporate a diverse business portfolio with lines www.akbizmag.com

into administrative and technical support, IT, construction, and logistics, among others. Foster describes the goal as giving multiple tentacles to the parent corporation in order to succeed as a company. “And that’s basically the model amongst ANCs, as one business line may be slow, the other business line may be picking up, so it’s cyclical,” Foster says. “You may see a lot of base operations support contracts coming out within a six month period and then nothing for the rest of the year, so then you either target IT, logistics, construction, or renovations.” Before considering whether to acquire a new company, Bristol Bay Native Corporation (BBNC), looks at its asset allocation, how it fits in its business line strategy, and how well it performs. “Sixty-five percent of our overall assets are focused on our subsidiary operations, 25 percent in passive investments, and the rest are corporate assets,” says BBNC Senior Vice President and Chief Operating Officer Scott Torrison. “Our four main business lines are industrial services, government ser-

vices, construction, and petroleum distribution. So before we even start considering something, we’re proactively thinking whether this is the type of business that we want to be targeting.” Peak Oilfield Service Company is BBNC’s latest acquisition, fully signed on in November 2013. Peak provides an assortment of services including ice road construction, rig moving, rig support, and overland transportation, along with maintenance and operations throughout the oil and gas industry. Peak operates on the North Slope, Kenai, Palmer, Valdez, and in the Lower 48. Torrison says it fits into BBNC’s goal of a subsidiary with a strong customer base, strong and reliable revenue, and solid leadership. “When we acquire a company, rather than a fixer-upper, we are looking for something that is well established, that we can bring in and connect with BBNC, so it becomes part of the BBNC family,” Torrison says.

Overcoming Challenges In the case of most acquisitions, challenges will arise in adapting a subsid-

iary to match the operations of a parent corporation. The approach to management, compensation, and efficiency are some of the prime concerns on both sides of the aisle. BBNC brought in $1.96 billion in gross revenues for 2012, with more than 3,600 employees worldwide. A stable company that matches or complements the business line and structure of BBNC is a key factor in finding the right company to add to the mix, Torrison says. “[Both companies] should be stable as people come over so they feel, ‘OK, we have a new owner, it’s a good thing for us,’ instead of wondering what it means to them. That’s important in any acquisition; the people part,” Torrison says. As BBNC considers acquiring a new subsidiary, it undergoes a thorough due diligence stage, Torrison says. Management from both companies meet on certain terms of the acquisition, and due diligence comes parallel to the negotiations, in order for the parent company to become versed in all the strengths and weaknesses of a company. BBNC tries to learn the style and policies of the company leadership and

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Recent In-State Acquisitions By Russ Slaten ■ Arctic Slope Regional Corporation acquired Little Red Services, Inc. in May. Operating in Alaska for over thirty years, Little Red Services provides “hot oil” and other well services on the North Slope. Crews assist producers in increased well ﬂow output, assist with well work-over, and overall assistance in well production.

acquisition of STG, Incorporated in September 2013. STG held a twenty-year history of operating in Alaska before the acquisition. STG installed about 80 percent of the utility-scale wind projects in the state. In addition, STG provides services in diesel power generation projects, bulk fuel systems, and other renewable energy projects.

■ Bristol Bay Native Corporation signed an agreement with Nabors Alaska Services Corp., to acquire 100 percent ownership in its subsidiary, Peak Oilﬁeld Service Company in November 2013. Peak is a support services company with capabilities that allow it to support the needs of its customers located primarily on the North Slope, Cook Inlet, Valdez, and North Dakota.

■ Doyon, Limited acquired Arctic Information Technology, Inc., or AIT, on December 14, 2012. Anchorage-based AIT has provided technical services for customers throughout Alaska and the Lower 48 since 2003. The Microsoft Gold Certiﬁed Partner provides information technology infrastructure and business solutions and has received numerous industry awards.

■ Bering Straits Native Corporation acquired Anchorage-based Arcticom on October 23, 2013. Arcticom is a full-service land mobile radio system maintenance company. It is the only Motorola dealer for Alaska and leases communications towers and sells, repairs, and maintains communications equipment.

■ Koniag, Inc. acquired Anderson Construction in November 2012. Anderson Construction began operating in Kodiak over thirty-three years ago, and has been involved in many of Kodiak Island’s large civil constriction projects. Projects include the Pillar Mountain wind turbines and the Terror Lake Hydro project.

■ Bering Straits purchased Alaska Gold Company, LLC from NovaGold Resources, Inc. in November 2012. Negotiations began between Bering Straits and NovaGold to include the reclamation of the Rock Creek Mine, but ﬁnalized to include the purchase of Alaska Gold Company and its assets in the Nome area. ■ Calista Corporation ﬁnalized the discover their plans for the future. The company strategy, financial and legal standing, and possible issues that may become a real problem all play a large role in the decision making process. Overall, Torrison says, the comprehensive factor is whether the company will be a good fit. “We don’t just buy to add on to get bigger, we’re looking to acquire or startup companies that fit within our strat42

Alaska Business Monthly | July 2014

■ The Aleut Corporation acquired Patrick Mechanical, Inc. on September 30, 2011. Fairbanks-based Patrick Mechanical is a contracting company specializing in the engineering, design, and construction of complex piping and HVAC systems. Its customers include Eielson Air Force Base, Fort Greely, Fort Wainwright, Doyon Utilities, University of Alaska Fairbanks, Fairbanks Memorial Hospital, and many general contractors that work in Alaska.  egy so that we can progress our strategy down the road,” Torrison says.

Equal Vision Chugach Alaska Corporation reported earning $709 million gross revenue for 2012 in the October 2013 issue of Alaska Business Monthly. Chugach, with twenty wholly owned subsidiaries, looks for companies that can pro-

“Central to Chugach’s acquisition evaluation criteria is ensuring that clear vision and values, quality management, and profitability already exist.” —Gabriel Kompkoff CEO, Chugach Alaska Corporation

vide quality products and services and benefit from a long-term partnership with Chugach, says Gabriel Kompkoff, Chugach Alaska Corporation CEO. “Central to Chugach’s acquisition evaluation criteria is ensuring that clear vision and values, quality management, and profitability already exist,” Kompkoff says. “As with the transition of any new acquisition, our approach is not to interfere with the positive qualities that these businesses have already established, but rather to support and empower the company’s leaders to continue growing a successful business with Chugach’s support.” Chugach’s growth strategy does not only include acquisitions; they are simply a part of it. Like many ANCs, Chugach incorporates organicallygrown companies and acquisitions in its goal to strengthen the corporation in support of its vision. Chugach’s most recent acquisition was in June 2012, when it purchased Hawaii-based service company Heide & Cook (H&C). “When H&C was struggling to recover financially following the Great Recession, we realized the company would benefit from Chugach’s financial support, but we were also confident that its quality leadership team and reputation for integrity would be a perfect addition to the Chugach family of companies,” Kompkoff says. After the experience with H&C, Kompkoff says giving the company the power to make decisions was the best foot forward. “Our relationship with H&C has reinforced our strategic growth vision, in which we see ourselves as partners and owners of companies whose visionary leaders are empowered to grow their businesses autonomously.”  Russ Slaten is the Associate Editor for Alaska Business Monthly. www.akbizmag.com

ALASKA NATIVE CORPORATIONS

Investing In Alaska Communities Helping entrepreneurs promotes economic development By Russ Slaten

he Alaska Native population stood at 138,312 people in Alaska, according to 2010 US Census data. Alaska’s total population was 710,231, making the Alaska Native demographic equal to 19.4 percent of the state’s total population. Among all US cities with a population of one-hundred thousand or more in 2010, the greatest proportion of American Indians and Alaska Natives was in Anchorage, according to the US Census Bureau. In rural Alaska that proportion increases, and in most regions of the state, Alaska Native Corporations (ANCs) have programs to support the community and its growth.

North Slope Marketplace The highly successful Arctic Slope Regional Corporation (ASRC), headquartered in Barrow, has tripled its shareholder base since its formation from 3,700 original enrollees to nearly 11,000 today. One way for ASRC to boost the economy in the region, especially for its shareholders, is the North Slope Marketplace. Alaska Growth Capital Project Manager Elizabeth Rexford says a small boost of start-up capital helps to create meaningful jobs and remove development obstacles tied to lack of access to commercial capital. “ASRC’s mission is to actively manage our businesses, our lands and resources, our investments, and our relationships to enhance Iñupiaq cultural and economic freedom—with continuity, responsibility, and integrity,” Rexford says. “The North Slope Marketplace program is an extension of these values, in that our shareholders who are working to create jobs and start their own small businesses have access to a business grant program and loan programs as needed.” Founded in 2009, ASRC shareholders compete in the North Slope Marketplace to promote local economic development. Shareholders compete as entrepreneurs 44

Alaska Business Monthly | July 2014

for seed money to start a business or further develop an existing one. Shareholders are awarded grants worth up to $25,000 each. ASRC sponsors the competition, and Alaska Growth Capital, an ASRC wholly owned subsidiary, manages North Slope Marketplace.

Recent Winners Tommi Lynn Ahmaogak won an award worth $25,000 in 2013 to start a restaurant in her community, the village of Wainwright on Alaska’s north coast. Ahmaogak is converting her general store, Tom and Jerry’s, into a late-night eatery open from 11 a.m. to 11 p.m. “I was only going to start off small by just making pizzas, but with the [North Slope] Marketplace I’m able to start up the whole thing,” Ahmaogak says. Ahmaogak used the grant to cover business insurance, equipment, and shipping costs. Equipment covered a griddle, fryers, coolers, vents, a refrigerator, pizza oven, microwave, and more. She will serve traditional American diner food, including pizzas, burgers, sandwiches, and nachos, giving locals a quick bite option from traditional foods. “I feel good about it. The community is behind me 100 percent,” Ahmaogak says. “They’re the ones that encouraged me to go for the [North Slope] Marketplace and open up my own place. So I applied, and I was approved, and the community is happy. They say they can’t wait for it to open.” Alaska Growth Capital’s latest winner is Jacquelyn Nayakik of Barrow. She was announced as the North Slope Marketplace recipient in April. Nayakik owns and operates Manuluuraq Designs in Barrow, specializing in apparel prints and Iñupiaq arts and crafts. The $25,000 grant will be used to purchase new equipment and inventory to increase production. Nayakik says she hopes to decrease prices on apparel prints in order to save residents money

and to add two new employees as the business grows in the future.

Ongoing Support Alaska Growth Capital continues to work with grant winners by providing ongoing support as needed, says Rexford. They plan workshops and conduct follow-up with winners to help prevent and address potential problems and needs. “In 2013, the North Slope Marketplace committee chose nine winners out of a total of approximately fortyseven applicants. About seven full-time jobs and eight part-time jobs are estimated to be created with the deployment of $150,000 of 2013 Marketplace grant funds,” Rexford says. “Since 2009, North Slope Marketplace has awarded funds to various other lines of business, ranging from the film industry to restaurants, general convenience stores, arts and crafts, satellite installation, transportation, and tourism.” More Business Assistance Several regional corporations have entrepreneurial support programs of their own. For example, Chugach Alaska provides its entrepreneurially-minded folks with the Shareholder Business Assistance Program, or SBAP. “Through the program, shareholders and descendants can earn individual grants up to $5,000 for their entrepreneurial endeavors, such as the start-up or expansion of a small business” says Vice President of Shareholder Development Millie Johnson. Since its inception in 2003, SBAP has awarded a total of $273,000 to grant recipients with small businesses from the food service, plumbing, safety, tourism, and communications industries, John son says. Russ Slaten is the Associate Editor for Alaska Business Monthly. www.akbizmag.com

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The Alaska Center for Energy and Power has established the Alaska Hydrokinetic Research Center in Nenana to test turbine technology under realistic Alaska river conditions.

Integrating traditional and alternative energy into power grids By Julie Stricker

Alaska Business Monthly | July 2014

“The problem was when you add a lot of renewable power into these small micro-grids, the variability in these resources really drives the diesel very hard. If that’s not managed well, you might have poor power quality or you might damage your diesel.”

n spring 2013, a stubborn ice jam on the Yukon River sent floodwaters surging into the small community of Galena, virtually wiping out the village. About half the homes in Galena, population 470, were deemed uninhabitable. Roads and power lines were washed out, the diesel power station was damaged, and residents lost freezers full of subsistence foods such as meat and berries, which spoiled after days without power. Galena’s power grid is typical of those throughout much of rural Alaska. The village is not on any road system—the only access is by plane, boat, or snowmobile. Its grid is also small and isolated.

—Marc Mueller-Stoffels Program Director, Alaska Center for Energy and Power Power Systems Integration program

In rebuilding, Galena residents decided to make a big push toward using solar power, but mixing traditional power generation with renewable power solutions

can cause problems if it’s not managed correctly. That’s where the Alaska Center for Energy and Power’s (ACEP) Power Systems Integration program came in. www.akbizmag.com

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“Alaska’s got a lot of unique needs, and that’s where the high cost of energy makes alternatives competitive. These are all developing technologies we hope will be deployed in Alaska sometime. The goal is to get it to the point sometime where we can turn the diesel off in these communities.”

Dual System Power Grid Marc Mueller-Stoffels, a research assistant professor at the University of Alaska Fairbanks and the program director for Power Systems Integration, worked with Galena officials to help design an efficient dual-system power grid. “The city was pretty gung-ho,” Mueller-Stoffels says, noting the city already had about 30 kilowatts of solar panels installed. “The problem was when you add a lot of renewable power into these small micro-grids, the variability in these resources really drives the diesel very hard. If that’s not managed well, you might have poor power quality or you might damage your diesel.” Mueller-Stoffels says one problem was that the power station had lost its automation, and workers had to keep turning the diesel on and off by hand. They had no communication between the power station and the photovoltaic cells, which don’t turn off automatically when they reach critical levels. “If you don’t have control over your solar array, the diesels have to be able to buffer the changes,” he says. “Solar can lose 80 percent of its power input if, say,

—Brent Sheets Research Director, Alaska Center for Energy and Power

a cloud rolls over it. At that point, the diesel has to ramp up.” At the same time, a village doesn’t want to run a diesel engine that’s too big for its needs. Mueller-Stoffel says he ran some equations based on the community’s energy needs and current output. “I made some recommendations gauging how much PV they could add to the grid,” Mueller-Stoffels says. “In the case of Galena, that comes out to about 130 kilowatts total.” His report also noted that the power grid overall was fairly weak and included recommendations on what needed to be done so they could add another

advanced control system to integrate the solar system with the power house. Based on his report, the city decided to move conservatively and add 75 kilowatts instead of 100 kilowatts.

Integrated Grid Systems Helping Alaska’s remote villages efficiently manage their energy needs, increase the use of alternative energies, and reduce the need for diesel is at the core of the ACEP’s mission. The Power Systems Integration lab is set up to emulate any one of the power stations in Alaska’s three hundred rural communities, says ACEP Research Director Brent Sheets. Companies

July 2014 | Alaska Business Monthly

For example, the state has invested heavily in wind turbines, which are now located in villages all over the state. ACEP is also working with partners to test in-river hydrokinetic turbines; geothermal energy potential at Pilgrim Hot Springs on the Seward Peninsula near Nome; coal-to-liquids technology; biomass energy; small modular nuclear reactors; and advanced energy storage. “These are all developing technologies we hope will be deployed in Alaska sometime,” Sheets says. “The goal is to get it to the point sometime where we can turn the diesel off in these communities.”

Water churns as the Alaska Hydrokinetic Research Center team perform a test of turbine technology under realistic Alaska river conditions.

that are developing new technologies can use the lab to test hardware and software components in an integrated grid system. “Our argument is that it’s a lot better when using a new or untried technology to use our lab to see how we can emulate that village’s utility,” Sheets says. “Then you’re not really putting the utility at risk or the utility’s customers at risk.” The lab includes generator sets of varying outputs, a wind turbine simu48

lator, electric thermal storage, and programs that simulate actual village or industrial loads. It can accommodate next-generation batteries and flywheels. If there’s a good side to rural Alaska’s stratospheric energy costs, it’s that they level the playing floor for developing alternatives, which can be costly. “Alaska’s got a lot of unique needs, and that’s where the high cost of energy makes alternatives competitive,” Sheets says.

Reducing Energy Costs Part of ACEP’s goal is to reduce energy costs in the villages, which are several times the cost of energy in urban areas. For example, in Allakaket, a village of about 125 on the Koyukuk River in Interior Alaska, a gallon of gasoline in 2012 cost about $7, according to the Alaska Energy Data Gateway. The residential electric rate was 98 cents per kilowatt-hour. In Anchorage, diesel cost $3.83 per gallon, and the residential electric rate was 14 cents per kilowatt-hour. ACEP calls itself a “gateway for energy related activity at the University of Alaska.” It also works with a variety of partners, both government and corporate, to develop and test promising technologies that would not only apply in Alaska but elsewhere as well. One technology that holds promise for Alaska’s communities, which are almost all situated along rivers, is hydrokinetic turbines. The turbines extract energy directly from moving water without using a dam or diversion channel. ACEP has been testing one system in the Yukon River at Eagle and Ruby. Another prototype, The RivGen Power System developed by Ocean Renewable Power Company of Maine, will be tested in the Kvichak River near Igiugig this summer. In order to help companies test turbine systems without having to go off the road system, ACEP has established the Alaska Hydrokinetic Research Center in Nenana. The center is set up to test turbine technology under realistic Alaska river conditions, which often include heavy sediment loads and ice. ACEP has completed baseline fish stock studies at the site and come up with a system to divert surface debris, such as tree

Alaska Business Monthly | July 2014 www.akbizmag.com

limbs, which is a major problem on Alaska rivers, ACEP notes. It is also working to develop a system to divert underwater debris.

Fluctuating Power One pitfall of alternative energy systems that rely on wind, water, or solar power is that they tend to fluctuate. Mueller-Stoffels is working with an outside company to test a high-efficiency, lightweight flywheel that is designed to provide more stability in wind-diesel systems. Flywheels are rotating mechanical devices that are used to store energy. “The flywheel injects or absorbs power to smooth it out and keep the power level even,” he says. Another project coming to the lab via the Alaska Energy Authority is a liquid metal battery, he says. The battery prototype is made by Ambri, a company based in Massachusetts that is commercializing the technology invented at the Massachusetts Institute of Technology. “If it works, it might be able to produce much cheaper energy storage,” Mueller-Stoffel says. “Economical and transportable storage is really the Holy Grail. You do need significant storage if you want to turn your diesel off.”

In wind-diesel hybrids, for instance, the system needs to be able to bridge about fifteen minutes, the time it would take to gently bring the diesel back online, he says. “The problem up to now is energy storage is horribly expensive,” he says. “You can easily add another 20 to 30 cents of cost to your kilowatt hour. You have to be able to produce power cheaper than you would off diesel, or you’re not winning.” In rainy Southeast Alaska, in particular, many communities rely on hydropower to generate electricity, at costs comparable to those in Anchorage. Anchorage and the Mat-Su are powered primarily by Cook Inlet natural gas, augmented by wind turbines at Fire Island, hydro from Bradley Lake, and the state’s first methane power plant at the JBER Landfill Gas Waste to Energy Plant next to the Anchorage Municipal Landfill. ACEP Energy Technology Facility tests diesel generator systems for efficiency; ways to re-use waste heat; and bio-fuels, synthetic fuels, and fuel additives under rural Alaska conditions.

Potential Energy Source Natural gas is widely used to power opera-

tions on Alaska’s North Slope, and plans are still progressing to build an eight hundred-mile natural gas pipeline from the Slope through the Interior to a processing plant in Nikiski. If built, the pipeline would mostly transport gas for export to Asia, but it would also provide natural gas to Interior Alaska communities which rely on coal and diesel-powered electricity. ConocoPhillips Alaska spokeswoman Natalie Lowman says the company re-injects the natural gas into oil wells to help boost production as well as using it in daily operations. Renewable energy sources aren’t an option for North Slope hydrocarbon production, she says. However, the company tries to conserve energy wherever possible. Another potential energy source, methane hydrate, is also found on the North Slope in abundance, and it holds great promise for future development, Sheets says. “It’s a tremendous energy source in the future,” he says. “I think the country should really look forward to developing the resource. There are a lot of countries around the world investing in it, especially Japan.”

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Natural gas is composed primarily of methane. Methane hydrate is the gas trapped under pressure in ice and large pockets of it are located under Alaska’s North Slope. It looks like ice but burns like a candle when warmed or depressurized. Frozen, it’s not commercially viable, but the US Department of Energy and state of Alaska are working together to explore ways to one day bring methane hydrate to market where it could be used if there is a shortage of other fossil fuels. One problem is figuring out how to successfully extract the methane without disrupting the ice far below the surface. In 2011-12, the Department of Energy (DOE) teamed up with ConocoPhillips in a $29 million project to drill a well into a bed of methane hydrate. They injected carbon dioxide and nitrogen, reduced the pressure, and successfully extracted 1 million cubic feet of gas over thirty days. Japan Oil, Gas & Metals National Corporation, which has been studying gas hydrates off the Japan coast, was also involved. It was a preliminary, scientifically controlled experiment, DOE officials said. The data from the project are still under study. However, this spring, energy officials announced they are looking for research proposals into ways to economically extract the gas from Alaska’s North Slope. About $20 million in federal funding over two years is anticipated for the studies, which could lead to further research opportunities. DOE also wants further research into other potential deposits of methane hydrate offshore the Lower 48 states. Methane hydrate is also found in abundance beneath the Gulf of Mexico. A federal study in 2008 suggests that the energy potential in methane hydrates may exceed that of all other fossil fuels. Some critics say burning methane will only speed up global warming. While ConocoPhillips was involved in the drilling and the extraction process, Lowman notes that the company does not have a methane hydrate program. “Any potential for commercial production of natural gas from methane hydrate deposits is still far, far in the future,” Lowman says. 

Julie Stricker is a journalist living near Fairbanks. 50

Alaska Business Monthly | July 2014

www.akbizmag.com

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ALASKA LEGISLATURE POST-SESSION UPDATE SB21 authorizes natural gas negotiations

By Mike Bradner

he state Legislature’s signature natural resources accomplishment in its 2014 session was approval of Senate Bill 138 (SB138), a bill authorizing Governor Sean Parnell to begin negotiations for the state’s ﬁnancial participation in a large North Slope natural gas pipeline and liqueﬁed natural gas, or LNG, project. 52

Alaska Business Monthly | July 2014

The negotiations are with major oil companies who are North Slope producers and TransCanada Corporation, an independent pipeline company. They would be the state’s partners. The governor signed the bill May 13. By June the state administration was to have signed several key agreements with the producers and TransCanada, including approval to move ahead with a $435 million Pre-Front End Engineering and Design for the giant project. The project overall is estimated to cost $45 billion to $65

billion, but the “pre-FEED” work getting underway this summer will also deliver an updated cost estimate. That will come in late 2015, state officials have said. By 2015, negotiations are also expected to be complete on a Participation Agreement with the producer companies and TransCanada as well as a Precedent Agreement, or preliminary agreement, for the state to ship state-owned gas through pipeline capacity owned by TransCanada. State legislators will have to approve those, and a special seswww.akbizmag.com

BusinessPROFILE

Little Red Services, Inc.

Photos courtesy of Greg Cook and Little Red Services Greg Cook, veteran of Afghanistan and Iraq Wars with captured enemy weapon, now a valued employee at a LRS hot oil truck.

VOTE NO ON 1

ith August 19 quickly approaching and the looming issue of Referendum 1, we need to mobilize the voters who understand the importance of maintaining the More Alaska Production Act (SB21). People who desire to act on behalf of Alaska’s future and preserve opportunities for the next generation need to register to vote by July 19. A Vote No On One is essential to give our state an economic future that is sustainable for decades to come. Often times our voter turn-out is low, and we express concern about the outcome of an election or a ballot measure. In the past several months we have seen the opportunities increase at LRS because of tax reform, and this has generated new jobs. We have had the privilege

to hire several Post-911 veterans who have served our country with distinction and valor. We owe these veterans for their service, and the best way to repay them is exercising our right of self-determination by voting. To leave this important decision to others is not acceptable, and every vote will count. If you are uncertain about facts of the More Alaska Production Act and its positive impact on our economy, you are encouraged to seek information from state and local resources. Keep Alaska Competitive and Vote No On One offer the following websites that have factual information available to Alaskans: www.keepalaskacompetitive.com www.votenoonone.com

Little Red Services, Inc. Doug Smith, President & CEO dsmith@lrs-ak.com 3700 Centerpoint Drive, Suite 1300 Anchorage, AK 99503 907-349-2931 littleredservices.com Paid for by Little Red Services, Inc., 3700 Centerpoint Drive, Suite 1300, Anchorage, AK 99503. Douglas L. Smith, President and CEO, is the principal officer of Little Red Services, Inc. Douglas L. Smith, President and CEO of Little Red Services, Inc., approved this advertisement. –

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Alaska Business Monthly | July 2014

sion of the Legislature will likely be called in late 2015 to review the agreements, state Commissioner of Natural Resources Joe Balash has said. If the pre-FEED cost estimates are within an acceptable range, the companies and the state will decide whether or not to proceed to the full Front-End Engineering and Design, which will produce a more definitive cost estimate and set the stage for a possible Final Investment Decision in 2019. That would be the approval for construction. Legislative approval is required at several stages, including the contract to ship the state’s gas with TransCanada, the “Firm Transportation Agreement.” That is important because it is a multibillion-dollar, long-term financial commitment by the state that is binding.

Structure of the Deal Basically, the deal involves the state becoming a 25 percent partner in the project, investing in and owning a share of the large North Slope gas treatment plant, the eight hundred-mile pipeline, and the LNG plant now planned at Nikiski, near Kenai, sufficient to ship and process the state’s “in-kind” share of gas production. That will be about 25 percent. Under SB138 the state will commit to take its royalty gas in-kind, or in the form of gas, for an extended period. The production tax will also be taken in the form of gas. As a part of SB138, the Legislature has agreed to convert the state gas production tax, previously 35 percent of net profits, to a flat 13 percent tax on gross revenues and to provide for the gas tax revenue taken in kind. There is already authority for the state to take its gas royalty in kind, so the 13 percent tax share plus the 12.5 percent royalty share brings the state’s total share of production up to roughly 25 percent. In the preliminary agreement with the producers and TransCanada, reached last fall through the “Heads of Agreement,” the state would invest in and own a 25 percent share of the pipeline and plants, to be equal to its share of gas production. Under this arrangement, the state will in essence ship its own 25 percent share of gas and process it into LNG. The three producing companies will pursue similar plans, owning shares of www.akbizmag.com

the pipeline and plants sufficient to ship their own shares of gas. The concept behind this is that producers, and the state, will earn revenues not just from sales of natural gas (as LNG) but also profits earned as an equity investor in the pipeline and facilities. Similar arrangements exist for the trans-Alaska oil pipeline, or Trans Alaska Pipeline System (TAPS), where the same companies, as oil producers, own a share of TAPS equal to their production. Had the state become an equity owner in TAPS and shipped its own royalty oil, a lengthy series of disputes over royalty values and pipeline tariffs would have been either prevented or minimized. As for the gas pipeline, the same producers have always maintained that it is important for them to own a share of the gas transportation system equal to their share of gas.

State Partnership is Important to Producers Having the state, and through the state TransCanada, as partners in onefourth of the project is important to the producers, the companies have said,

because it would leave the producers obligated to finance, and assume the risk, for only three-fourths of the project. This best aligns the risk-reward balance, the producers have said, because as pipeline owners they would be relieved of the obligation of having to finance the extra capacity in the project to ship the state’s royalty gas, whether it is taken in-value or in-kind. Another very important aspect of having the state take its royalty and tax share in kind is that it would prevent disputes over royalty and tax values if the royalty were taken “in value,” or in cash. Huge disputes erupted over these issues with in-value oil royalties and oil taxes in the 1970s and 1980s. The producers say that avoiding these with gas is fundamental to their pursuit of a gas project. A lot of attention in Alaska has focused on the producers’ request for stable terms on production taxes, but stable terms on royalty administration is just as important.

TransCanada Relationship There is one other important aspect

A lot of attention in Alaska has focused on the producers’ request for stable terms on production taxes, but stable terms on royalty administration is just as important. with the state’s gas project ownership: the relationship with TransCanada. Owning the full 25 percent of the project will be a big financial bite for the state. It would require the state to pay $108 million as its share of the $435 million in pre-FEED work; $450 million for its share of the $1.8 billion FEED work; and finally, $13.2 billion of $52.8 billion in construction costs, assuming that is what the final cost is. To reduce the burden, a decision was made for the state to partner with TransCanada on its 25 percent share of the pipeline and the gas liquefaction plant on the North Slope. The state would still own its full 25 percent of the LNG plant through the state-owned

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July 2014 | Alaska Business Monthly

This is a very complicated project and the Legislature’s lengthy and detailed review of SB138 this spring, which only sets the framework of the deal, is just a foretaste of the much more focused review that will be needed of the final agreements in 2015. Alaska Gasline Development Corporation, or AGDC. The advantage of this arrangement, a kind of subcontract of part of the state’s ownership, is that TransCanada will agree to finance (and own) the 25 percent share of the gas plant and pipeline. The state does retain an option to buy back 40 percent of this, however. That decision will have to be made in 2016. If the state opts not to do this, TransCanada is left with 100 percent of the gas plant and pipeline, and the state’s sole obligation would be to finance its 25 percent share of the LNG plant. This would include $6.7 billion for construction on the LNG plant after 2019, but the obligation would also require the state to pay $43 million for the preFEED work in 2014 and 2015 and $180 million for the FEED study that would begin after 2016.

If the 40 percent option for TransCanada’s share is exercised, the state’s share of FEED costs would increase $360 million, and its share of construction would be $9.3 billion. Although the state would earn less by sharing the ownership of the gas treatment plant and pipeline with TransCanada, the state would have the advantage of having an experienced pipeline company as a partner, and the state’s gross revenues from the venture are still estimated at near $4 billion a year after 2024. Those are estimated gross revenues, and of those, the state would have to pay TransCanada for processing and transporting the state’s gas to the LNG plant, as well as the state’s own debt service on bonds sold to finance the investment in the LNG plant. Even with those costs deducted, the state could still net $2 billion or more per year.

Critical Voices Absent The prospect that the state’s share frontend money, which could be $400 million for the pre-FEED and FEED, could be down the drain if the project does not proceed after 2019 haunted legislators last spring. It is, after all, a highrisk venture that faces stiff competition from competitors. This would also be on top of $300-million plus spent by the state with TransCanada on the AGIA contract (the Alaska Gasline Inducement Act) for a major gas project. When the AGIA payment of $300

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million is added to the $400 million appropriated last year for continued work on a smaller “in-state” gas line (an alternative if the big project fails to go), with the possible $400 million state share of the pre-FEED and FEED, the Legislature will have approved $1.1 billion for gas projects with no guarantees that any molecules of gas will actually flow. Legislators decided to take the gamble anyway this spring. There were critics; Senate Minority Leader Anchorage Democrat Senator Hollis French felt the decision on certain aspects was rushed. An option recommended by Roger Marks, a consultant to the Legislature and former state revenue economist, was for the state to delay its actual cash commitment until after the producers and TransCanada decide the project is actually a “go.” That would be in 2019. This would have been one way of avoiding risking the $400 million in preFEED and FEED expenditures prior to 2019. The advice was turned aside by the lawmakers. The state administration urged legislators not to do this. State Natural Resources Commissioner Joe Balash

argued that, by delaying its final commitment to 2019, the state would not be “in the loop” on critical decisions to be made before 2019 that would affect the state, such as certain arrangements for in-state gas delivery; however, these issues were not discussed in detail by legislators. Another recommendation by Marks was also disregarded. He suggested that, if there were concerns by legislators about the terms of the TransCanada relationship, which there were, the state could delay that part of the decision to gain more time to work out the issues. Marks recommended going ahead with the part of the bill approving an agreement with the producers but delaying only the TransCanada agreement, which was separate. Representatives of the producer companies privately said such an arrangement could have been accommodated. However, there were no explanations given on why lawmakers disregarded Mark’s advice on taking more time with TransCanada, even though influential legislative leaders, such as House Rules Chair Representative Craig Johnson, an

Anchorage Republican, had expressed deep reservations about the deal with the pipeline company. Former Governor Frank Murkowski, now retired, also entered the fray last spring, lobbying legislators against the TransCanada agreement. Murkowski feels the state is giving up too much in having the pipeline company as a partner and that certain terms of the agreement are to the state’s disadvantage. Marks at least had a chance to air his concerns by the time the bill got to the state House, but another consultant that raised critical questions about the terms of SB138, Rick Harper, a retired oil industry executive, was never asked to testify by a legislative committee, although Harper’s report was made available. The picture this paints is that most legislators had access to the views of only certain of the consultants and not criticisms raised by others who had been hired.  Mike Bradner is publisher of the Alaska Legislative Digest.

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July 2014 | Alaska Business Monthly

OIL & GAS

Alaska Stand-Alone Pipeline Moves Along AGDC’s in-state gas pipeline backup plan By Mike Bradner

laskans are intently watching the planning for a large forty-two-inch natural gas pipeline and liquefied natural gas (LNG) project, but there is also a smaller pipeline moving along in the shadow of the giant project. This is the state of Alaska’s own “in-state” gas pipeline being pursued as a backup in case the large industryled project flops, which has happened before. The Alaska Stand-Alone Alaska Pipeline, or ASAP, is being planned by the Alaska Gasline Development Corporation (AGDC) a state corporation that is also the state entity that would own part of the large gas project if that moves forward. The smaller ASAP is looked on as insurance, offering Alaskans the security that they will be able to get North Slope gas one way or another. There are similarities between the two projects and huge differences. Both follow roughly the same route parallel to the TAPS line from the North Slope to Interior Alaska and then branching off to Southcentral Alaska on a route generally parallel to the Parks Highway and the Alaska Railroad. Both are also about the same length—the big pipeline would be 800 miles long and end in Nikiski, the site of the proposed LNG plant, while the smaller state pipeline would be 737 miles long and terminate at a junction with the ENSTAR Natural Gas pipeline system in the Matanuska-Susitna Borough. The small pipeline isn’t exactly small. While its cost is estimated at $7.5 billion to $8 billion, much less than the $45 billion to $65 billion for the big project, it is still a mega-project and would be one the largest US energy projects in years, according to Dan Fauske, CEO of AGDC. The ASAP plan now is to use a thirty-inch diameter pipe that would operate at a lower pressure and transport mainly “lean” gas, mostly methane, with no natural gas liquids entrained in the gas. A key advantage of the low-pressure, lean gas operating mode is that gas can be taken from the pipeline by communities with relatively little processing, Fauske says. A previous plan for the ASAP pipeline was to operate at higher pressures and to carry natural gas liquids, but this would have required expensive “straddle” plants at take-off points to remove the natural gas liquids from gas to be used locally, he says.

Alaska Business Monthly | July 2014

One major difference between the two projects is that the big pipeline serves a large LNG plant with most of the gas being exported as LNG, while the small pipeline is intended, for now, to serve Alaska communities and industry. The large pipeline would carry up to 4.5 billion cubic feet daily while the small stateled project would move 500 million cubic feet per day, at least as the plan now stands. A lot of work is underway on both projects. On the small pipeline, a Draft Supplemental Environmental Impact Statement is to be published this summer, with the US Army Corps of Engineers as lead agency. An EIS had previously been done for AGDC’s earlier project of a twenty-four-inch, high-pressure pipeline, but when the state corporation changed the plan to a thirty-inch pipeline, among other changes, by mutual agreement with the Corps a new supplemental analysis was launched to include the changes. This summer AGDC will also submit new information on updated costs as a part of its tariff filing with the Regulatory Commission of Alaska. “We expect to have our Total Installed Cost completed by July,” says Miles Baker, AGDC’s external affairs manager. “That is an essential component of the Recourse Tariff package we will be filing with the RCA. That filing is still slated for late September.” The current cost estimate is two years old and is due to be updated. The new estimate will include the changes in project design, such as the thirty-inch pipe. A significant summer field season is underway for AGDC in 2014. Four hundred to six hundred boreholes will be drilled in a geotechnical program, and about 270 streams will be surveyed for a waterways plan. Also, 128 potential material sites will be surveyed to narrow a list of sites. Cultural and wetlands surveys will also continue, aimed at narrowing data gaps. Approximately $70 million has been spent to date, and a $320 million balance remains for the ASAP project from $400 million appropriated to AGDC by the Legislature last year. So far, AGDC is sticking with its planned schedule for a 2015 “open season” for potential gas shippers, a 2016 project “sanction,” or approval, and a start of construction in 2017. However, that schedule will depend on

progress being made on the big gas project. Obviously only one of the two projects will be done, and AGDC’s managers say developments in the next twelve to eighteen months will be critical. There are still uncertainties for the big project, so AGDC will have to adjust its plan at each stage of the bigger project. For example, the pre-Front End Engineering and Design, or pre-FEED, study is now underway on the big project and will be completed in 2015, with a new cost estimate. If the big project appears to be viable, based on the pre-FEED, it may not be practical for AGDC to hold its open season. In the event that happens, the ASAP project may simply go on hold, remaining ready for implementation if the big project does ultimately fail. Similar decisions will have to be made at each stage of the big project until 2019, when the Final Investment Decision is made. Meanwhile, care is being taken to ensure that the work AGDC is doing is not duplicative of what the big project planners are doing and to ensure that as much of AGDC’s work as possible can be also used by the big project. Another effort is being made to coordinate the required “community outreach” efforts for both projects so that they do not result in community teams stumbling into each other in small communities. To prevent this, the environmental and land planning teams for both projects are now holding coordination sessions. Finally, although AGDC has re-scoped its project to use thirty-inch instead of twentyfour-inch pipe, its plan is still to ship 500 million cubic feet per day, although the large pipe size, with added compression, could move much more gas. There was a restriction on AGDC to move only 500,000 cubic feet per day, but that limit goes away as soon as new agreements between the state and TransCanada Corp. are signed this summer as a part of the large gas project partnership. The limit was imposed as a part of the state’s previous agreement with TransCanada under the Alaska Gasline Inducement Act, or AGIA.  Mike Bradner is a publisher of the Alaska Economic Report and Alaska Legislative Digest. www.akbizmag.com

OIL & GAS

National Petroleum Reserve-Alaska Activity Small discoveries and infrastructure expansion By Mike Bradner

t has been ninety-one years since President Warren Harding created what is now the National Petroleum ReserveAlaska (NPR-A), a 23-million-acre federal enclave on the western North Slope that is the size of many US states. Originally it was Naval Petroleum Reserve No. 4. Harding created the reserve as a potential source of fuel for the US Navy at the recommendation of US government geologists, who had investigated oil seeps and believed the region had the potential for larger discoveries. There were no confirmed oil resources at the time, however. The US Geological Survey estimated in 2011 that the reserve could hold 500 million barrels of undiscovered oil that could be produced at an oil price of $90 per barrel and 18 trillion cubic feet of natural gas that could be produced at prices of $8 per thousand cubic feet. While those resources might be in NPR-A, finding them has proven elusive.

Exploration History Between 1944 and 1981, the federal government drilled and then abandoned a number of wells in the reserve. In the early years the exploration was led by the US Navy and its contractors, and fortyfive shallow core tests and thirty-six exploration wells were drilled between 1945 and 1952 under management of the Navy. Despite these efforts, there were no commercial discoveries of oil and gas during the Navy’s years as landowner. The Navy has been able to get ample fuel from other sources, however, and in 1976 Congress transferred the reserve from the Navy to the US Department of the Interior and changed its name to the National Petroleum Reserve-Alaska. With the Interior Department as the new owner and the US Bureau of Land Management (BLM) as land manager, a second exploration program began, directed by US Geological Survey and with Husky Oil hired as a contractor. Six deep tests were drilled by Husky, but again there were no discoveries. President Ronald Reagan dropped the government-led exploration of NPR-A in the 60

Alaska Business Monthly | July 2014

1980s, developing a conventional federal oil and gas leasing program so that exploration would be led by private companies. Leasing has been underway since. The most active area of interest by industry has been in the northeast part of NPR-A where the geology is considered more attractive for oil. BLM now conducts an annual lease sale, typically in November, with the sale typically coordinated with the state of Alaska’s annual “area-wide” lease sale in the stateowned central North Slope region, east of the federal reserve. In recent years the sales have been held on the same day so that companies could bid on acreage along the boundary between the reserve and state lands where prospects might straddle the border. The regularity of BLM’s annual leasing is praised, but the federal government is also criticized by both industry and the state for withholding from its lease sales several areas along the northeast coast that are the most prospective for discoveries, particularly the area around the large Teshekpuk Lake. Unfortunately, the geologic prospects in these areas are also prime habitat for waterfowl nesting. While industry has argued that exploration and development can be done in ways that will not affect wildlife, and in fact exploration is done only in winter when there are no birds, the Interior Department has so far declined to offer the acreage for lease.

Modest Success In the early years of NPR-A exploration the government drilled mostly dry holes, but there were still some modest successes. None were commercial, however, in the conventional sense at least, until recent years. A small natural gas field was found by the Navy near Barrow at the furthermost northern tip of the reserve, and gas production wells were ultimately drilled there to supply federal installations there, such as a Distant Early Warning radar site and the Naval Arctic Research Laboratory that then existed. The gas field was eventually to supply the Iñupiat community of Barrow. It

was ultimately taken over by the North Slope Borough, the regional municipality, which invested in further exploration and development and added to the gas reserves. There are now gas resources sufficient to supply Barrow for decades, meeting local needs for heating and power generation at a very reasonable cost. At the far southeast border of the reserve, near the Colville River, a small oil deposit was found at Umiat. An all-year gravel airfield and a base camp with facilities were built by the Navy to support exploration in the region. These facilities have been used over the years to support periodic oil and gas exploration as well as scientific research. The airport is now owned and maintained by the state of Alaska, and the camp facilities are owned by Barrow’s Native village corporation, UIC. Most recently Linc Energy, an Australian company, has been drilling at Umiat to evaluate the old Navy discovery for possible commercial production. Linc has operated exploration programs at Umiat for two years and hopes eventually to produce oil that would be shipped to the Trans Alaska Pipeline System by a ninety-nine-mile pipeline that would be built. Meanwhile, in more recent years, there have been encouraging discoveries in exploration drilling led by ConocoPhillips and Anadarko Petroleum Corporation in the northeast part of the reserve. The industry began focusing on the area after the discovery and development of the Alpine field on the Colville River delta just to the east on state lands. ConocoPhillips and Anadarko, which are also the owners of the Alpine field, have been the most active explorers in the NPR-A and eventually made two discoveries in the northeast part of the reserve. One of these, in the Greater Mooses Tooth Unit called GMT-1, is planned for development. The second discovery, a few miles farther west, could eventually become GMT-2. Another company, FEX LLC, a subsidiary of Canada-based Talisman Energy, had also explored on leases in the www.akbizmag.com

northeast and made discoveries. FEX has since sold the leases to NordAq Energy, an Alaska-based firm, which is planning further exploration.

Current Activity The most important current activity in the NPR-A, however, is ConocoPhillips’ development of its CD-5 drillsite, which is near the Colville River and adjacent to the Alpine oil field on state lands. Construction is now underway at CD-5, and the project is expected to begin producing oil near the end of 2015, with an expected peak production of sixteen thousand barrels per day. Anadarko is ConocoPhillips’ partner in CD-5. Construction of CD-5 began last winter, and it is one of two large North Slope projects now underway, the other being construction of ExxonMobil’s Point Thomson project east of Prudhoe Bay. About $400 million will be spent this year on CD-5 construction of a total cost of $1 billion. About six hundred workers were employed this year, mostly in the winterspring construction season, and an equal number will be working there next winter. Three small bridges for CD-5 are now complete, as well as gravel placement for the final larger bridge, which will be fin-

ished by early 2015. Drilling of production wells will also start in early 2015. Although CD-5 is located in the federal petroleum reserve and will be the first commercial oil project in the reserve, the subsurface mineral rights are held by Arctic Slope Regional Corporation (ASRC), of Barrow. ASRC will receive the production royalties instead of the federal government and will share 70 percent of those with other Alaska Native Corporations under terms of the 1971 Native Claims Settlement Act. The state of Alaska will meanwhile receive production tax revenue from CD-5 as well as from other developments in NPR-A.

Greater Mooses Tooth A decision by ConocoPhillips’ board will be made in December on whether to proceed with GMT-1, assuming that various government approvals for the project are received. BLM expects to have a Final Supplemental Environmental Impact Statement competed by September and a Record of Decision, or ROD, for the project about thirty days later. The ROD will clear the path for other federal agencies to issue permits, such as the US Army Corps of Engineers’ Section

404 permit on wetlands. Public comments on the draft Supplemental Environmental Impact Statement closed April 22. However, the outcome of a referendum in the Alaska August primary election that could repeal the Legislature’s 2013 reform of the state oil production tax could influence the decision by ConocoPhilips’ board. Assuming board approval is given, ConocoPhillips’s schedule for GMT-1, according to the company’s construction plan submitted to BLM, calls for ordering long lead-time items such as steel late this year and to begin construction in early 2016 of the eight-mile gravel road and a twelve-acre gravel production pad, along with bridge piers for two stream crossings. The construction plan calls for the installation of vertical support members for pipelines and construction of the pipelines, along with power systems and production facilities in early 2017. Drilling of production wells would begin in the second quarter of 2017 with first production later that year. The plan also calls for a bundle of four pipelines to serve GMT-1. This includes a twenty-inch pipeline to carry fluids from the site, a mixture of crude oil, gas, and water, to the CD-5 pad from where it will be shipped

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July 2014 | Alaska Business Monthly

on to oil and gas processing facilities in the Alpine field. The processed sales-quality crude oil would be shipped from the Alpine field to the Trans Alaska Pipeline System through the existing Alpine field pipeline. GMT-1’s pipeline bundle also includes a fourteen-inch pipeline to transport water—either seawater or produced reservoir water—for pressure maintenance along with two six-inch pipelines, one to carry natural gas from the Alpine field for pressure maintenance and a second to carry a miscible injectant, a mixture of natural gas liquids, for enhanced oil recovery. GMT-1 is expected to produce about thirty thousand barrels per day at peak, with a cost estimated at $900 million. The initial development calls for thirty-three wells. About four hundred construction workers will be employed at peak, ConocoPhillips has said. Both GMT-1 and CD-5 will ship unprocessed production, the mixture of oil, gas, and water, to the Alpine field production facilities. ConocoPhillips and Anadarko have also drilled exploration wells to test for the possibility of further development in the GMT-1 area. Two wells were drilled last winter: the “Rendezvous 3” test to assess the potential for a future GMT-2

Alaska Business Monthly | July 2014

west of GMT-1 and “Flat Top,” a well near GMT-1 that was drilled to evaluate acreage at that site for future expansion.

Western NPR-A Development There could eventually be developments farther to the west. The discoveries made by FEX in 2007 on the leases now owned by NordAq were encouraging but were never fully evaluated by FEX. The company drilled three exploration wells in the winter season of 2007 and reported encountering oil and gas in all three. One well was not considered a commercial discovery, but two of the wells found over 225 feet of hydrocarbon-bearing sandstone rock, which was very encouraging. Preliminary evaluations indicated a deposit possibly holding over 400 million barrels of oil. FEX was unable to do further tests, however, particularly a production test, and its owner, Talisman, eventually decided to drop the Alaska leases to focus on other opportunities. NordAq, the new owner, is bullish on the area and has also bid on and acquired additional NPR-A leases in recent BLM lease sales. The company also holds acreage in adjacent state-owned offshore leases. Although there has yet to be a very large discovery so far in the reserve, the

pattern that is developing is one of a series of small discoveries and an incremental expansion of industry infrastructure, pipelines, and most important, a road, westward from the Alpine field. These projects have not escaped controversy. The decision to develop GMT1 and possibly GMT-2 with a road is a change from earlier “roadless” policies of the companies and government agencies. Alpine, for example, has no road connecting it with the Kuparuk and Prudhoe Bay fields further east and is reached by ice road only during winter. But now year-around access by road is considered important for safety because equipment and people can be moved quickly to the sites if there is an emergency. However, conservation organizations have objected to gravel being placed for permanent roads because of the effects on wetlands and habitat for waterfowl and wildlife. What concerns these organizations is the east-west routing of the road which tends to interrupt the southnorth flow of water through wetlands.  Mike Bradner is publisher of the Alaska Legislative Digest.

www.akbizmag.com

AGENDA July

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Alaska Snow Symposium

July 16—UAA Lucy Cuddy Hall, Anchorage: A one-day trade show for the snow and ice management industry brought to Alaska by the Snowfighters Institute. alaskasnowsymposium.com

National Conference of Earthquake Engineering

July 20-26—Dena’ina Civic and Convention Center, Anchorage: This conference is comprised of the 2014 EERI (Earthquake Engineering Research Institute) Annual Meeting and the NEES (Network for Earthquake Engineering Simulation) Quake Summit, as well as the 10th Anniversary of NEES, the 50th Anniversary of the 1964 Alaska Earthquake and Tsunami, and an undergraduate seismic design competition. eeri.org, 10ncee.org

NLGA Annual Meeting

July 23-25—The Hotel Alyeska, Girdwood: Annual meeting of the National Lieutenant Governors Association. nlga.us

August

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CSG West & CSG National Joint Annual Conference

August 9-13—Anchorage: The annual conference for the Council of State Governments National and West. The conference is an opportunity to work across borders to enhance knowledge and exchange ideas through policy forums on high priority public policy issues; network; and discover Alaska’s innovations through policy tours. csg.org

Compiled By Tasha Anderson

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September

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Alaska Oil & Gas Congress

September 15-18—Anchorage: This comprehensive four day conference is the place to meet the players, forge new relationships, and get the information you need to capitalize on changes taking place in Alaska. This year is the 10th anniversary event and planning is already underway to make it a memorable and valuable experience. alaskaoilandgascongress.com

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September 23-25—Westmark Hotel, Fairbanks: A three day event offering a large variety of technical sessions covering new and ongoing energy projects in Alaska, as well as new technologies and needs for Alaska’s remote communities. akruralenergy.org

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Rural Energy Conference

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September 30-October 2—Anchorage: Events include keynote speakers and training sessions. alaskahousing-homeless.org/conference

Alaska Community Transit/Department of Transportation Conference

September 30-October 2—Millennium Alaskan Hotel, Anchorage: This annual conference addresses transportation information and issues around the state. act-dot.com

Arctic/Cold Regions Oil Pipeline Conference

September—Dena’ina Center, Anchorage: This conference will consist of presentations addressing the unique challenges associated with the construction and operation of pipelines in the Alaskan Arctic/Cold Regions.

Alaska Fire Conference

September 22-27—Kenai: Includes training, workshops, lectures, and a firefighter competition. alaskafireconference.com

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October

IEA World Congress of Epidemiology

August 17-21—Dena’ina Civic and Convention Center, Anchorage: The theme for this year’s congress is “Global Epidemiology in a Changing Environment: The Circumpolar Perspective.” The congress is an opportunity to visit with and listen to prominent researchers in epidemiology and public health. ieaweb.org

Alaska Coalition on Housing and Homelessness Conference

Alaska Business Monthly’s Top 49ers Luncheon

October 1—Dena’ina Center, Anchorage: Come honor the top ranked Alaska companies by revenue at our annual luncheon. Contact: Melinda Schwab, 907-276-4373 accounts@akbizmag.com, akbizmag.com

ACS Convention

October 2-5—Hilton Anchorage, Anchorage: This annual convention is an opportunity to complete up to twenty-four CEUs over the three day event in all required course topics, as well as special events such as meet and greets and receptions. alaskachiropracticsociety.com

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Alaska Travel Industry Association Convention

October 6-10—Westmark Fairbanks Hotel & Conference Center: The 2014 “Good as Gold” ATIA convention is for Alaska’s tourism industry leaders with delegates from tour operators, wholesalers, Alaska vendors, destination marketing organizations and elected officials. alaskatia.org

All-Alaska Medical Conference

October 9-11—Sheraton Anchorage Hotel and Spa, Anchorage: A continuing medical education conference put on by the Alaska Academy of Physicians Assistants, providing up to 25 CMEs. akapa.org

Alaska Chapter of the American Fisheries Society Annual Meeting

October 20-24—Centennial Hall, Juneau: The theme of the 41st annual meeting is “Bridging disciplines to solve today’s challenges in resource management.”. afs-alaska.org

Alaska Chamber Annual Fall Conference & Policy Forum

October 20-22—Girdwood: The state’s premier business conference. This year’s topics include healthcare reform and implementation, worker’s comp reform, grassroots advocacy, small business workshops, etc. alaskachamber.com

Alaska Federation of Natives Annual Convention

October 23-25—Anchorage: Annual gathering of Alaska Native peoples to discuss current news and events on a state, national and international level. nativefederation.org

November

Museums Alaska/Alaska Historical Society Joint Annual Conference

October 1-4—Seward: The 2014 theme is “Milestones: Interpreting events that change the course of communities,” exploring the opportunities and challenges museums face in commemorating community milestones such as the Great Alaska Earthquake or the Exxon-Valdez Oil Spill. resbayhistorical.org

AAHPA Annual Conference

October 13-17—Ketchikan: This is the annual conference of the Alaska Association of Harbormasters & Port Administrators. alaskaharbors.org

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Associated General Contractors of Alaska Annual Conference

November 12-15—Anchorage: AGC of Alaska is a non-profit construction trade association dedicated to improving the professional standards of the construction industry. agcak.org

Transcending Adversity: 2014 Alaska Child Maltreatment Conference

November 17— Hilton Anchorage, Anchorage: The annual conference of the Alaska Children’s Alliance, a not-for-profit 501(c)3 dedicated to improving community responses to child maltreatment. alaska.nationalchildrensalliance.org

AMMA Annual Business Meeting

November 17-18—Anchorage: The Alaska Municipal Management Association (AMMA) is a professional organization of municipal managers and administrators in Alaska; its purpose is to increase the proficiency of municipal managers and aid in the improvement of municipal administration in Alaska. alaskamanagers.org

Annual Local Government Conference

November 17-20—Anchorage: Joint conference of the Alaska Municipal League and the Alaska Conference of Mayors. akml.org

RDC Annual Conference: Alaska Resources

November 19-20—The conference provides timely updates on projects and prospects, addresses key issues and challenges and considers the implications of state and federal policies on Alaska oil and gas, mining and other resource development sectors. akrdc.org

July 2014 | Alaska Business Monthly

TRANSPORTATION

Alaska Railroad Moves Forward O’Leary optimistic for growth By Rindi White

t’s been a long season of change for the state-owned Alaska Railroad Corporation, and it’s not over yet. But with a new CEO at the helm and increased interest in a few of the railroad’s services, there are glimmers of hope on the horizon. The Alaska Railroad is a smaller entity today than it was six years ago. Three rounds of layoffs have left the company nearly one third smaller than in 2008. While the corporation has seen declines among several freight customers, the biggest hit has been from its historically largest customer, the North Pole refinery. “We’ve reorganized, we’ve gone through significant restructuring, and that’s just the people side of the house. We’ve also taken an immense amount of cost out of our non-personnel cost, to the extent we can,” says Alaska Railroad CEO Bill O’Leary.

Alaska Business Monthly | July 2014

“We have a renewed, aggressive focus on revenue generation right now. We’re not going to be able to cut our way out of the situation we find ourselves in right now. If there is a mantra I’m trying to push right now, it’s that we’re going to grow our way out of this situation,” O’Leary says.

An Alaska-Owned Railway with an Alaska-Born CEO Bill O’Leary was born and raised in Fairbanks. He went to high school there and graduated from the University of Alaska Fairbanks with a degree in accounting. He has been at the Alaska Railroad since 2001 and CEO since November, but his connections to the railroad go deeper. From its very beginning, the Alaska Railroad has been a public entity.

Owned by the federal government from its early days, the State of Alaska bought the railroad in 1985 for $22.3 million. Throughout its history, the railroad has been a key figure in Alaska’s development, from supporting the war effort in World War II to helping build the transAlaska oil pipeline in the 1970s. Although it’s owned by the state, the railroad doesn’t receive operational funding from the state. It relies instead on revenue from passenger service, freight hauling, and real estate, primarily. As the owner of the railroad, the state has the ability to conduct financial or performance audits. O’Leary helped write some of those early audits when he was fresh out of college and working for the Alaska Legislative Budget and Audit Committee. “At that particular time, the railroad was of interest to the Legislature. It was www.akbizmag.com

Alaskan Railroad CEO Bill O’Leary’s mantra is for growth, and he is optimistic about the corporation’s future. © Chris Arend Photography

relatively soon after the transfer [of ownership] to the state, so the railroad was still kind of figuring out its place in the world, not only within the state government but also in general,” O’Leary says. The committee presented reports to the railroad suggesting ways to make it run efficiently. Whether those recommendations were followed or not (some were, some weren’t), it was a unique way to get to know the railroad, O’Leary says. He spent a lot of time evaluating many aspects of operations, from procurement practices to real estate activities. After ten years at Legislative Budget and Audit, he moved to the financial controller position at the Alaska International Airport System. That’s the umbrella agency that oversees the Anchorage and Fairbanks International www.akbizmag.com

airports. O’Leary spent three years there before taking the chief financial officer position at the railroad under then-CEO Pat Gamble. Gamble stepped down from the job in 2010, and O’Leary was interim CEO for about six months while the board of directors conducted a national search for a new leader. O’Leary applied for the job, but Alaska Railroad Corporation board members said he wasn’t ready for the role yet. “We did feel there were some areas Bill needed more experience in,” says longtime board member John Binkley. The board hired Christopher Aadnesen, whose resume included time as the assistant general manager of Union Pacific Railroad, CEO of Estonian Railways in Europe, and founder of the first privately run railroad in Mexico. But Binkley says Aadnesen didn’t plan a long-term career in Alaska. The board, whose long-time goal has been to hire an Alaskan from within the corporation to lead it, saw an opportunity. “We made a strategic decision to work with Mr. Aadnesen to get Bill a greater depth within the organization,” he says. O’Leary became chief operating officer, with a bevy of new roles: head of rail transportation, engineering, mechanical, safety, labor relations, marketing, customer service, and grant administration. In the three years Aadnesen was at the railroad, O’Leary was immersed in leadership training. When Aadnesen announced his retirement last year, Alaska Railroad Board Chair Linda Leary says the decision was an easy one to make. “We have someone who has a strong financial background, as well as his experience on the operational side and having grown up in the company,” Leary says. “The key is the financial side, to kind of guide us through the tough times like we have right now. And he’s well-respected, by not only the employees but other business leaders in the community and by the Legislature.” “Being the CEO is really about leadership, and Bill is a great leader,” Binkley says. “For a corporation to be successJuly 2014 | Alaska Business Monthly

ful, there are thousands of decisions that need to be made every day by all of the employees of the organization. And for an organization to be successful, those cumulative decisions have to be correct. For success, the CEO needs to be clear about the direction the organization is headed, give the employees the tools to do their jobs, and inspire confidence in them to make them confident enough to make good decisions.”

Losing Customers and Employees Inspiring confidence and satisfaction among Alaska Railroad workers is something the board is focused on right now. Losing workers—especially one third of the employee pool—is hard on an organization. The Alaska Railroad is among the state’s largest employers. O’Leary says the number of employees is around 600 year-round, with another 150 or so added for summer activities. Those are today’s numbers, down from the peak of around 1,000 workers in 2008. The primary reason for the layoffs is the declining production—and now full closure—of the Flint Hills refinery in North Pole. “That has been our largest customer, and it’s really been the backbone of our freight service between Anchorage and Fairbanks,” O’Leary says. The refinery grew rapidly in the late 1990s and early 2000s, he says. Production peaked between 2003 and 2004. At that time the cargo division of the Anchorage airport was also growing, and Flint Hills supplied much of the jet fuel for those planes. The company was also exporting naphtha to Japan. Naphtha is a refined fuel often used to make lighter fluid, fuel for camp stoves, and many other applications from high-octane gasoline to cleaning solvents. “It was growing a lot and we had meetings with [Flint Hills officials] about expansion,” O’Leary says. Two fuel-carrying trains were moving round-trip between Anchorage and Fairbanks each day at the peak of operations, sometimes with a third train to transport non-fuel cargo. But the high didn’t last. In 2005 and 2006, O’Leary says the volume of refined product began dropping, partly due to economic in-state refining issues and partly due to the looming world66

wide recession, which brought a significant drop in air-cargo traffic. By last year, the railroad was moving about one-seventh the volume of refined product being moved in 2003 and 2004. Even at one-seventh its volume, O’Leary says Flint Hills was still the railroad’s largest customer. The Alaska Railroad is still sorting out what its freight lineup will look like as the refinery finalizes its shutdown process. The number of trains running between Anchorage and Fairbanks declined from two daily, to one per day, to the fiveday-a-week service being offered today. Exported coal shipments have also slowed. Usibelli Coal Mine, operating at Healy, ships coal north to the Interior military bases and south for export to Chile, Korea, Japan, and elsewhere. Local coal shipments, O’Leary says, have held steady while prices on the export market have dropped. The drop happened more recently—in 2011 and 2012 Alaska Railroad moved more than a million metric tons of coal, but O’Leary estimates the railroad will move about half that this year. Are more layoffs likely? O’Leary says the corporation is in a position where, if it cuts significantly more people, it will be harming the railroad’s ability to do its work safely and effectively. Now, he says, it’s time to turn the focus toward finding new sources of revenue. “We’ve got our three overall lines of business—freight, passenger, and real estate activities. Each one of those is really focused on, ‘What do we have right now, what can we grow from right now, and what new opportunities are out there?’” O’Leary says. It’s also time to heal, he says. Alaska Railroad workers tend to be enthusiastic about their jobs and their love of railroading, but even a love of the industry can be obscured when layoffs loom. O’Leary says he wants to help everyone at the railroad get ready to move forward. “I want to get us out of the level of volatility that we have had and really prepare the organization for whatever is coming, whether it be a big gas line or expanding passenger service. I want to look inward to the organization and just make sure… that this is a place where people want to work,” he says. “Alaska has a big future ahead of it and we want to be an integral part of it, here.”

Growing a New Future One of the most obvious ways to increase revenue is by tapping into the railroad’s roughly thirty-six thousand acres of land owned along the Railbelt. While much of the land is used by the railroad, O’Leary says there are significant holdings in Anchorage, Seward, and Fairbanks that might be better used for revenue generation. The Alaska Railroad and the Municipality of Anchorage have been talking about using the railroad’s Ship Creek land, which extends to the public use dock, for decades. The municipality recently went through a new visioning process in which it considered three ideas for the property: as an extension of the Anchorage downtown, with a winter garden/market hall as a centerpiece; tapping the area’s recreational and economic features; or focusing on the waterfront features, which could include a transit center that will increase pedestrian use of the area. The big questions, O’Leary says, are how to get the project from studies to reality and who pays for what. O’Leary says there are plots of land in Seward and Fairbanks that are potential revenue sources. Expect to see movement in those areas, he says. “Real estate is kind of ‘watch this space’ right now—hopefully in a year it’ll look different,” he says. On the freight end, there are some positive trends to report. Rail barge traffic is up by 15 to 20 percent over last year, he says. Most of the increase is directly related to ramped-up production activities on the oil field, correlating with Senate Bill 21 oil tax revisions that passed during the 2013 Legislature, O’Leary says. Barge traffic is a niche activity for the railroad. It allows companies in Alaska to have things like bridge beams or pipe made in the Lower 48. The goods can then be shipped from any city connected to a railway in either Prince Rupert, in British Columbia, or Seattle and loaded on a rail barge for shipment to Whittier. The loaded cars roll off the barge in Whittier and are taken by rail to their Alaska destination. “We certainly saw an impact from SB21. We’ve had full barges, which we have not experienced in recent years here. It’s been a good thing and generally bodes well for the Alaska economy,” O’Leary says.

Alaska Business Monthly | July 2014 www.akbizmag.com

He says he hopes to increase freight use by increasing its marketing efforts. And although Flint Hills’ shutdown means shipments from the North Pole refinery will stop, Interior Alaska customers will still need refined fuel. “[The Flint Hills shutdown] has really, in our mind, put the Interior fuel market and a number of markets into a state of flux. That’s going to be clarified in time,” O’Leary says. “The real question is: How much of that demand is going to be met by individuals using the Alaska Railroad?” He says the company is taking a proactive approach; meeting with users to let them know the railroad can meet that demand.

PTC, the Railroad’s Albatross An ongoing effort to meet a new federal mandate for railways that have passenger services is making the Alaska Railroad’s difficult financial situation even more problematic. Positive Train Control, or PTC, is technology designed to stop a train before human error causes an accident or derailment. The requirement was passed by Congress in 2008 with the stipulation that the equipment be in place by the end of 2015. Non-compliant railroads could face fines or limitations on passenger service. O’Leary jokingly calls it “the mother of all unfunded mandates” because the federal law requiring the new technology did not include funding. For Alaska, the cost to install the necessary equipment is estimated at $150 million, or roughly a year’s annual operating budget for the railroad. To date, O’Leary says, the railroad has put about $65 million of its own and federal money toward the project and the State of Alaska has allocated $34 million as well. About $55 million more is needed to complete the project, plus an additional $5 million to $7 million a year to maintain it. Passenger Service, a Love Story While freight is the railroad’s largest source of revenue, passenger service, some would say, is where its heart is. It’s also a bright spot in the railroad’s future. According to a McDowell Group, Inc. study of the economic impact of Alaska Railroad Passenger services, www.akbizmag.com

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an estimated 373,700 non-residents traveled in Alaska by rail in 2012, spending about $100 million in the Railbelt. More than 40,000 Alaskans also traveled by rail. Passenger services account for 17 percent of the railroad’s annual revenue and nearly two thousand jobs associated directly with the Alaska Railroad and with cruise lines, package tour operators, excursion providers, and other visitor-industry partners. The McDowell Group study estimated $50 million in labor income related to the railroad’s passenger services. And thanks to some projects in the works, O’Leary says those numbers might grow. New this year, he says, the Alaska Railroad is offering direct-to-Denali trips. Typically, the Denali Star, with cruise ship coaches and baggage cars, leaves Anchorage at 8:15 a.m. every morning bound eventually for Fairbanks. Starting this year, Holland American and Princess Cruise Line passenger coaches and baggage will travel on a separate train departing at 9:15 a.m. and stop in Denali.

Positive Notes in Railroad’s Future Other positive notes include the Northern Rail Extension, which would connect the Alaska Railroad to Delta Junction. The first phase of the project is done and a ribbon-cutting event is planned for this summer. The $180 million initial phase installed a vehicle bridge over the Tanana River—the longest bridge in the state—to allow military access to a huge year-round training area called the Joint Pacific Area Range Complex, or JPARC, used by the Army and Air Force. Future phases will extend rail from Eielson Air

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Force Base to Delta Junction, an eightymile project. The $272.5 million, 32-mile rail extension connecting the Mat-Su Borough’s Port MacKenzie to the Alaska Railroad rail system is another positive note in the railroad’s future. The project is a partnership with the Mat-Su Borough and would allow bulk resource storage at the port, as well as providing room for transport and processing facilities. It includes the longest rail car loop in the state and provides Interior shippers a shorter route to tidewater. That project is underway and is estimated to be complete in 2017. Ultimately, O’Leary says he’s looking forward to the future, with all the challenges it might bring. “We’ve got a really great group of employees that are really dedicated to the railroad. That’s going to work for us,” he says. “It’s going to take some work for us to grow our way out of this thing, but… come back in a year.”  Rindi White is a freelance journalist living in Palmer.

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Passengers can easily travel on to Fairbanks if they choose to, but this offers a more direct connection for cruise ship passengers, he says. It’s a feature the visitor industry is excited about, which could mean more passengers for the railroad. O’Leary says he’s also excited about continued growth on the Fairbanks end. While Southcentral has had several themed trains—the ski train, a Christmas train to Seward, and others—Fairbanks will likely have some new local train opportunities to consider in the future.

Alaska Business Monthly | July 2014

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TRANSPORTATION

Northernmost Ice-Free Ports © Gary Minish

Valdez, Whittier, and Seward are top three in North America By Julie Stricker Editor’s Note: In an article about ports and harbors in the May issue, Skagway claimed to be the northernmost ice-free port in North America; however, at 59.29° N, it is not in the top three. The ports of Valdez, Whittier, and Seward in Southcentral Alaska take those positions.

he Port of Anchorage is the lifeline for the state of Alaska. Ninety percent of the state’s cargo destined for 80 percent of the population passes through the port every year. But the port is nestled in the upper reaches of Cook Inlet, which has some of the world’s most extreme tides and can become ice-choked and dangerous during the state’s long winters. Fortunately, Southcentral Alaska boasts three other major ports in Seward, Whittier, and Valdez—all ice-free—that provide links to the Alaska Railroad and Interior Alaska year-round. These ports, with infrastructure dating back to the aftermath of the 1964 Good Friday Earthquake, are home to fishing fleets, cruise ships, and pleasure boats, as well as cargo shipments.

Valdez

“In the summer, our harbor is just packed, and we’re at the point that we can’t get any more boats in it,” says Diane Kinney, Valdez Port and Harbor director. “We have a 511 slip harbor, and we’ll sometimes have twice as many boats here.” Kinney says the US Army Corps of Engineers is planning to dredge a basin for a new harbor and put in breakwaters just south of the current harbor. Once that is done, the city will start putting in new docks. Valdez, at latitude 61.13° N, is the northernmost ice-free port in the United States—and North America. It is located at the head of a scenic deep-water fjord and is where the terminus 70

Alaska Business Monthly | July 2014

of the trans-Alaska oil pipeline is located. “It makes an ideal port for the pipeline,” Kinney says. “It’s an ice-free port, so we can get the tankers in and out year round. We also have a US Coast Guard unit here. We have everything set up for the tankers to make it easy for them to travel in and out of the port.” Alyeska Pipeline Service Company, the consortium of companies that oversees the pipeline, has its own facilities across the bay from the city of 3,100. Valdez has its own freight and municipal docks, which support thriving fishing and tourism industries. Valdez was established during the Klondike Gold Rush as the jumping-off point of the All-American route to the gold fields over the glaciers. Valdez languished until the Richardson Highway was built and is now a key supply route to Interior Alaska. Ships carrying freight bound for Interior Alaska or the North Slope can dock at Valdez’s container terminal, which has a seven hundred-foot floating dock and is located about five miles from the city center, Kinney says. “The freight comes in on the dock and it goes right onto the Richardson Highway without having to go through town,” she says. Although it has yet to be used, Valdez also has a foreign trade zone area available. The small boat harbor is the heart of Valdez. The John Thomas Kelsey Municipal Dock is a six hundred-foot wood wharf that accommodates fishing vessels, tour boats, and pleasure boats. The city recently fixed up the plaza and added restrooms in hopes of enticing cruise ships back to the community, Kinney says. So far, that hasn’t happened, but the facilities are a good gathering point for its Richardson Highway Rendezvous music festival and Fourth of July events.

“The small boat harbor really helps with tourism too,” Kinney says. “Valdez is beautiful. I think that’s one thing that everybody noticed. With the water and the mountains, it’s just one of the most beautiful places in Alaska.” It is also a gateway to Prince William Sound, which offers access to glaciers, stunning scenery, and great fishing. “A lot of people come down here to fish,” she says. “It’s just a great place to come and get out on the water. For folks from Fairbanks, it’s the closest place to get down and into the Sound.”

Whittier

At the western end of the Sound, and slightly south of Valdez, latitude 60.77° N, is the town and port of Whittier. The tiny town, population 218, sits at the end of Passage Canal and is a major destination for visitors to Prince William Sound. Whittier’s deepwater port is a major destination for cruise ships, such as Princess Cruises, which has its own facilities. A spur of the Alaska Railroad reaches to Whittier, where cargo is oﬄoaded, and a ferry terminal for the Alaska Marine Highway system, according to harbormaster Sue Miller. Land access to Whittier is through the Anton Anderson Memorial Tunnel, a mixed use railroad and vehicle access. When the tunnel opened to vehicle traffic in 2000, it brought thousands of additional recreational boaters to use the harbor, mostly from Anchorage and the Matanuska-Susitna Borough. The harbor has a small hoist for fishing boats and a boat lift that maxes out at twenty-five tons. The small boat harbor contains about 350 slips and is filled to capacity. Whittier’s website notes it has a few slips that are availwww.akbizmag.com

Left: Valdez Small Boat Harbor. Right: Valdez Container Harbor. able in the off-season, “but generally, except for our overnight guests, we are chock-full.” The waitlist for moorage is estimated to be five to seven years. “Always we are maxed out,” Miller says. “We are hoping to be able to rebuild this harbor.”

Julie Stricker is a journalist living near Fairbanks. www.akbizmag.com

Seward

A few miles and a less than a degree latitude south of Whittier lies the town of Seward, at 60.07° N and situated at the head of Resurrection Bay. Seward is the southern terminus of the Alaska Railroad, which earlier this year released a wide-ranging master plan for improvements and additions to its facilities. The railroad ships more than 1 million tons of coal from the Usibelli Coal Mine to its facilities in Seward, where it is loaded onto boats for delivery in Asia and South America. Its master plan notes vessel traffic in Seward has outgrown available dock space, and freight berths are also limited. As far as city facilities, Seward harbormaster Mack Funk is also looking at major expansion in the near future. The Seward Alaska Marine Industrial Center, located six miles from the city on the eastern side of Resurrection Bay, is in the middle of a major expansion. “We just got $27 million in state money to enclose the harbor over there,” Funk says. The rock and other materials are ready, they’re just waiting on permits, he says. The Small Boat Harbor is home to cruise ships, fishing vessels, and many recreational boats. Seward is ranked as one of the top sailing destinations in the world, but its port facilities were built more than fifty years ago. “We just finished the replacements for one of our docks, D-Float,” Funk says. “We were able to get a state grant to match with our local funds. Right now, I’m working on a grant application to replace the rest of our harbor, which was built right after the 1964 earthquake.” About fift y cruise ships anchor in Seward annually, Funk says, and the harbor is the jumping off place for tours of Kenai Fjords National Park. Resurrection Bay’s year-round ice-free status and connection to the railroad and highway systems are also important draws. “If Anchorage has a problem, which they sometimes do in the winter, then those companies can unload their barge freight here in Seward,” Funk says. “They sort of have Seward on standby.” 

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July 2014 | Alaska Business Monthly

CONSTRUCTION

Priva te k Cons loo Privat e Con Const tru Outlook ructio ction Construction uct ction n Out Constru str Outlo Private ok Outlo ate Priv A look at projects across Alaska By Julie Stricker

or 2014, Alaska’s big construction projects are happening in the oilfields. The passage of SB21, which instituted a flat 35 percent tax structure on oil companies and included credits as an incentive to increase production, almost immediately resulted in the major oil companies announcing plans to increase capital investment on the North Slope. In its annual construction spending forecast, the Construction Industry Progress Fund and the Associated General Contractors of Alaska predicted an 18 percent increase in construction spending in 2014, about $9.2 billion. Oil and gas makes up more than half of that total, with private construction spending up 24 percent. Overall spending in the oil and gas segment is expected to climb 33 percent, according to the Construction Industry Progress Fund report, which was compiled by the University of Alaska’s Institute of Social and Economic Research and underwritten by Northrim Bank.

Source: ConocoPhillips Alaska

Mining With the decline in gold prices, no major projects are on the docket at Fort Knox, says Anna Atchison, community and government affairs manager. Work is continuing on the heap leach facility at the gold mine

twenty-five miles northeast of Fairbanks, and some exploration projects are underway. At Sumitomo’s Pogo Gold Mine, eighty-five miles southeast of Fairbanks, work continues to develop the newly discovered East Deep ore body. The mine is planning to spend about $10 million on exploration this year, says public affairs director Lorna Shaw, and another $30 million to $40 million on capital projects. Work is also continuing on the Bokan rare earth prospect near Ketchikan and the NovaCopper project near the upper Kobuk River, but spending is expected to fall on large-scale projects such as Livengood, Pebble, and Donlin Creek. Donlin Creek, a world-class gold prospect in southwest Alaska, filed paperwork in May for the right of way to build a $1 billion, 315-mile natural gas pipeline from Cook Inlet to the mine site near Crooked Creek. The application is currently under review.

Utilities Several major utility projects are in the works along the Railbelt in 2014, worth a

CD5 Construction Project

D5, an extension of the Alpine field, will consist of a new production drill site approximately six miles west of the existing Alpine central facilities, with 15 initial wells (and a potential for more wells depending on the results of the initial drilling program). Access to the site is via a new gravel road from the existing Alpine road system and includes four bridges over channels of the Colville River. Flow lines will transport the production from CD5 to Alpine for processing. The 2014 construction effort is underway and on schedule. The 6-mile gravel access road and CD5 gravel pad have been installed, the L9323 Bridge has been completed, the Nigliagvik and L9341 Bridges are almost complete, and the Nigliq Channel Bridge foundations and abutments are complete. Work planned for this summer includes the Alpine Central Facility and CD4 tie-in, finish work on the Nigliagvik and L9341 Bridges, and summer gravel seasoning. In October 2014 we plan to begin the Nigliq Bridge launch. Looking toward winter 2015, we are planning for cross country pipeline and power line installation; completion of the Nigliq Channel

The report, however, was issued before BP Alaska announced the sale of interests in four of its North Slope fields to Hilcorp. The sale, announced in April, transferred all of BP’s interests in the Endicott and Northstar fields to Hilcorp, as well as half its interests in Liberty and Milne Point. BP has said it plans to focus its attention on the core Prudhoe Bay fields and a potential natural gas pipeline from the North Slope to Southcentral Alaska. It had previously announced plans to increase its capital spending by several billion dollars over the next five years. Other projects are still in the works, however. One example is the work by ConocoPhillips at CD5 near the Alpine field.

Alaska Business Monthly | July 2014

Bridge; and the installation, commissioning and start-up of CD5 drill site facilities. ■ Jobs created: Approximately 600 jobs during peak construction over the next winter season (and during the 2014 winter season), plus hundreds more support jobs during construction. In addition to the construction jobs, many additional jobs in design and fabrication will occur over the life of the project. ■ Approximate cost to develop: $1.1 billion, including drilling (gross) ■ Peak production: Approximately 16,000 BOPD (gross) ■ Engineering and design contractors: NanaWorleyParsons (facilities engineering and design); PND Engineers (bridges and bridge pipeline supports); Michael Baker Jr. (pipelines); and Dryden and LaRue (power and ﬁber optic cables). ■ Bridge construction contractors: Four total bridges are being built by two groups. The Nigliq Channel Bridge (spanning 1,405 feet) and L9323 bridge (250 feet) are being built by a joint venture team led by PCL Civil Constructors Inc. and includes CH2M Hill

and Ruskin Construction LTD. North Slope heavy civil contractor Nanuq/AFC Inc. is constructing two additional bridges for the project: the Nigliagvik Channel Bridge (355 feet), and the L9341 Bridge (420 feet). Nanuq is a subsidiary of the Kuukpik Corporation of Nuiqsut, Alaska. ■ Bridge foundation piling was fabricated at CH2M Hill’s south Anchorage facility. The only available supplier for the large diameter casing and piling was based in Korea. The bridge superstructure was fabricated in Washington State, as it was too large to be accommodated in the local fabrication shops. All of the line pipe will be provided by U.S. Steel, and all pipe and module fabrication will occur in Alaska. ■ Labor unions on job: International Union of Operating Engineers Local 302; Laborers Local 341; Iron Workers Local 751; Piledrivers, Bridge, Dock Builders & Divers Local 2520; Carpenters Local 1281; Teamsters Local 959. ■ Additions to Alpine: Two new wings were added to the Alpine camp to accommodate construction, one for oﬃce space and one for sleeping dorms. 

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total of $851 million in private and public monies. Matanuska Electric Association is planning to complete construction this year on its 170-megawatt, natural gas fired Eklutna Generation Station. Power generation is scheduled to begin January 1, 2015. Anchorage Municipal Light and Power broke ground in April for a 120-megawatt plant in northeast Anchorage that will replace the aging George M. Sullivan Plant. Quanta Services was awarded the contract for plant construction, which is expected to be completed in 2016. In the Interior, Golden Valley Electric Association, which took over the 50-megawatt Healy Clean Coal Plant, is planning upgrades including new emissions systems. It is expected to go online in 2015. Several small hydro projects are also on tap around the state, including the 6.5-megawatt Allison Creek project in Valdez and the expansion of the Blue Lake hydro project in Sitka, which is expected to increase electric output by 27 percent.

Interior Alaska It’s shaping up to be a fairly quiet construction season in Interior Alaska. The Alaska Department of Labor and Workforce Development notes that Fair-

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banks’ construction industry lost about one hundred jobs in 2013 and doesn’t expect much improvement in 2014. Most construction projects are infrastructure-related, such as road projects, instead of verticals. No large housing projects are planned for 2014. However, a new hotel and new retail outlets are planned. REI opened a store in Fairbanks in May and a couple of small eateries—an Asian fusion restaurant and a hoagie restaurant—also opened in east Fairbanks. Verizon is also opening a store nearby. Walgreen’s, the nation’s largest drug store chain, announced it would build two stores in the city. One will be located on the west side of town on the site of the longvacant Castle Restaurant, and the other on the Old Steese Highway on the east side of town. Walgreen’s zoning permit noted the store on the east side will be 17,178 square feet with a total cost of $3 million. No details were available for the west Fairbanks store. An Auto Zone outlet is also planned for the west Fairbanks site. Candlewood Suites is planning to build a four-story, 60,000-square-foot hotel in east Fairbanks this summer. The 103-room facility is designed for both short-term and long-term visitors. No firm construction plans have been made public to date.

Holland America Line, which bought McKinley Chalet Hotel near the entrance to Denali National Park, planned extensive upgrades to the property, as well as renovations to Westmark hotels in Fairbanks, Skagway, and Whitehorse, Yukon Territory. In the city of Fairbanks, a total of twenty-one commercial building permits had been issued through the end of April, worth a total of $3.7 million.

Southeast Alaska Juneau’s tight housing market has been a concern for city officials for years. It was alleviated somewhat in 2014 with the addition of fift y new apartments in early 2014. Twenty-eight of the apartments are part of the Island Hills project, which, when completed later this year, will cost a total of $7 million and contain sixty apartments. The builder of the River Park complex, which contains twenty-three units, has also received permits to build a fifteen-condo waterfront complex in Auke Bay this year. Several other single-family homes and duplexes received construction permits.  Julie Stricker is a journalist living near Fairbanks.

July 2014 | Alaska Business Monthly

CONSTRUCTION

Private Construction Keeps Industry Busy Projects across Anchorage and beyond

Compiled by Susan Harrington

The Gallo Center.

mer and is expected to be completed by September 1. The owner, Abraham Gallo, opted to build out of pocket instead of financing the multi-million dollar project, which is more than forty thousand square feet. Several of the twenty units are already leased out and plan to open in September. More tenants are currently under negotiations to occupy the remaining units. Anchorage-based Marathon Construction is the general contractor. Chad Graham, agent and owner of Graham Commercial Real Estate Consultants, says Gallo Center is the second mall he’s developed with Gallo in the last three years—the Bella Vista Center on Old Seward Highway near Dimond Boulevard opened to full occupancy when it was completed.

■ Going south on Old Seward, between Klatt Road and Huffman Road, dirt work was well underway in early June for construction of a multi-unit storage facility.

JL Properties oﬃce building on C Street and International Airport Road.

nchorage has a busy construction season going. Much of it is public funded infrastructure such as roads and schools. However, there are many private projects across the city and in the area. The four-story office building at the corner of C Street and International Airport Road was getting glass installed

Alaska Business Monthly | July 2014

in late May. JL Properties is developing the 100,000 square-foot project. General contractor Davis Constructors and Engineers, Inc. expects completion in October. ■ The Gallo Center, located at 131 West Dimond Boulevard across from Costco, is a strip mall multi-unit retail and business center. Construction began last sum-

■ The Legislative Information Office Building Remodel at 716 West 4th Avenue in downtown Anchorage began construction in December 2013 and is slated for completion this December. Pfeffer Development, LLC is the developer on the sixty-four thousand-squarefoot project, with kpb architects and design-builder Criterion General, Inc. rounding out the team. ■ Also off Old Seward, The Islamic Community Center, acting as owner www.akbizmag.com

chitects, it adds an assembly hall, vestibule, hallway, restrooms, mechanical space, a library, and parking lots. Wells Fargo Commercial helped finance the $680,000 project.

The Islamic Community Center.

and general contractor, is continuing work on its mosque located at 80th Avenue and Spring Street. Construction of the core and shell began in 2010 on the seventy-thousand square-foot lot.

Alaska’s addition was completed this spring by general contractor H. Watt & Scott, Inc. The Midtown project is an addition to the 2309 D Street existing facility. Designed by 61 North Ar-

■ Construction began last June and was completed this spring in time for the grand opening in early May of the Special Olympics Alaska Sports, Health and Wellness Center on Mountain View Drive. Total project costs for land, design, engineering, construction, fixtures, and furnishings topped $7 million. Watterson Construction was the general contractor. The Alaska

■ The Wat Alaska Yanna Vararam Buddhist Temple Meditation Center of

■ At Old Seward and 72nd Avenue, Whalen Construction expected to start construction the second week of June on a $3.22 million, three story, twenty-six thousand-square-foot building for the Motorcycle Shop, which has outgrown its Dowling Road store where it has been located for the last forty years. Construction is expected to be complete in November. The Wat Alaska Yanna Vararam Buddhist Temple Meditation Center of Alaska.

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July 2014 | Alaska Business Monthly

The Special Olympics Alaska Sports, Health and Wellness Center.

Special Olympics campus now sits on about two and half acres and has a new twenty thousand-square-foot facility. It’s lauded as a great success because of the extra energy and community support from the Mountain View neighborhood, says Special Olympics Alaska President and CEO Jim Balamaci. The center will serve thousands of Alaskan athletes and volunteers and revitalizes and beautifies Mountain View, he adds. ■ New eateries include a Sears Mall renovation that is underway for the $1.6 million BurgerFi franchise entry into Alaska. A new Chili’s recently opened at

the Dimond Mall after remodeling the northwest corner next to Olive Garden. Hard Rock Café transformed 13,600 square feet at the corner of Fourth Avenue and E Street over the winter for its much-anticipated opening this summer. General contractor Kelley Construction, Inc. recently completed Anchorage’s first Texas Roadhouse at the Tikahtnu Commons. The restaurant held a grand opening and is planning construction at a South Anchorage site. ■ Bass Pro Shops was finishing up its eighty thousand-square-foot Outpost in Glenn Square off the Glenn Highway

Orthopedic Physicians Anchorage.

and Mountain View Drive with a grand opening scheduled July 9 at 6 p.m. ■ Three Bears latest store, its eighth in Alaska, is off the North Birchwood exit of the Glenn Highway. General contractor Criterion General built the fifty thousand-square-foot combination grocery store and warehouse with sporting goods, household items, pet supplies, and other merchandise meant to serve Eklutna and Chugiak-Eagle River area residents.

U-Med District Construction is perennial throughout the U-Med District. PCL Construction started in March on a $14.5 million, 160,000-square-foot, five-story parking garage on the Alaska Native Tribal Health Consortium Anchorage Campus directly north of the main hospital. In June the ground work was completed and PCL was prepping floors and putting up columns and walls on the project that is expected to be done by next summer with parking for six hundred vehicles.

Bass Pro Shops Outpost. 76

Alaska Business Monthly | July 2014

■ Construction is underway at 3801 Lake Otis Parkway in the Orthopedic Physicians Anchorage (OPA) medical office building. Pfeffer Development, www.akbizmag.com

Walgreen’s at the corner of Lake Otis Parkway and Tudor Road.

LLC is the developer and Neeser Construction is the general contractor for the Architects Alaska designed multifaceted expansion project. OPA will have more clinical space and is adding two elevators, one for patients and another for service. OPA will occupy the second and third floors. Renovations will provide space for the Alaska Spine Institute surgery center on the first floor. OPA physicians have a large ownership interest in ASI, so moving that center adds more convenience for patients and physicians. Other improvements in the building include two large covered patient drop-off and pick-up areas for getting into the building during inclement weather. The project also expands the rheumatology department to a four-chair infusion suite, something OPA says is a badly needed service in Alaska. A dedicated space for the acute orthopedic injury walk-in clinic is being created as well. The project adds 6,200 square feet on the east and north ends of the 60,000-square-foot medical office building in the U-Med District. In planning for two years, construction began earlier this year and is scheduled for completion in February or March 2015. OPA CEO Rick Watson says the expansion will “significantly improve services for orthopedic patients in Alaska. Our goal is to help patients have a really fine experience. Our mission is to provide the best musculoskeletal care in North America. We want to be a world class provider of orthopedic services— not just in outcomes, but also in controlling costs.” ■ Also in the U-Med district, nearby at the northeast corner of Tudor Road and Lake Otis Parkway, Robertson & www.akbizmag.com

Olson Construction, Inc. is the general contractor on a Walgreen’s store. The 14,820-square-foot project is Robertson & Olson’s first endeavor in Alaska. Construction work got underway in April and is expected to be complete around September 1 with an opening later in the fall. Robertson & Olson Project Manager Jason DeBaugh says the company brought a crew of one to the state out of Camis, Washington. They are using local construction workers on the project. “There are a lot of great skilled tradespeople in Alaska, it’s a great market, and we’re excited to be a part of it,” he says. In June they had between 40 and 50 Alaskans working, and they expected to have 200 to 250 roll through the project by the time construction is finished. ■ Providence Alaska Medical Center expects more phases of the $150 million project started in 2011 across its Anchorage campus in the heart of the U-Med District to be completed this year by Davis Constructors and Engineers, Inc. ■ Another Pfeffer Development, LLC project is the new First National Bank Alaska U-Med Branch and Medical Office Building at 3650 Piper Street at the intersection of Piper and Providence.

Design-builder Criterion General, Inc. began construction in March on the 20,000 square foot building. First National will occupy 6,300 square feet and a medical office tenant will occupy the remaining space. The architect on the project is kpb architects. A December completion date is planned.

Community Wellness & Affordable Housing ■ Body Renew is building a new fitness center off Old Seward at Lingon Berry Court to meet the growing demand in South Anchorage. BC Excavating was driving piles in late May on the project financed by Alaska USA Federal Credit Union. ■ Anchorage Community YMCA on Lake Otis Parkway broke ground June 4 and began construction on an expansion project that includes a new locker room and second story health and wellness center. The new facility is going up behind the existing building, which will be remodeled and get a face lift. The eight thousand-square-foot, $4.8 million project has an anticipated completion date of April 2015. The first floor includes locker rooms and family special needs changing rooms. The second floor features a July 2014 | Alaska Business Monthly

partial walking track, and the YMCA will be adding a gymnasium that will be sectioned off in the future. In June, a drainage project was nearly finished along with parking lot upgrades and landscaping. The old locker room will be remodeled into program and wellness space with a multipurpose room after the new locker room is completed. The two buildings will be connected. Watterson Construction is the general contractor; the architect is Bettisworth North.

Trailside Heights aﬀordable housing development solar array is tied into the grid to defray owner expenses of energy related to common areas. The array will be doubled this summer as the project continues into Phases 2 and 3. Photos © Russ Slaten

Alaska Business Monthly | July 2014

■ Farther down Lake Otis Parkway beyond Abbott Road, Lime Solar is doubling the solar array at Trailside Heights by adding 160 solar panels to Phase 3, bringing it to 78 kW total. The 320 panels will generate power for building-wide needs to help defray energy expenses for the community buildings and common areas, but not the individual units. Tied to the grid, the panels will generate more power than needed some months, creating a credit from Chugach Electric for use in not so sunny months when not enough power is generated. The affordable housing project, financed by Alaska

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Housing Finance Corporation (AHFC), utilizes some funding from the low income housing tax credit program and awards extra points in the scoring criteria for including alternative energy in the project plans submitted by developers competing for the limited affordable housing project funds each year. ■ Two other affordable housing developments set to include Lime Solar arrays in Anchorage are a $5.4 million three-building, eighteen-unit complex off San Roberto Avenue and a $23.9 million, fourteen-building, seventyunit development off Mountain View Drive. These eighty-eight units are one and two bedroom rentals intended for working families. Ownership is a fourway public-private partnership that includes the new AHFC subsidiary Alaska Corporation for Affordable Housing, Cook Inlet Housing Authority, Trapline LLC, and V2 LLC. Construction is slated to begin in August and completion will be staged through 2015. The solar power at the San Roberto property is expected to supply 10 percent of the total hot water and electrical energy demand. These projects will utilize photovoltaic and solar thermal technology. Lime Solar will install an 80 kW array at the Mountain View Drive project. ■ Outside of Anchorage, AHFC’s new policy of extra points for alternative energy has spurred development of a $10 million-plus, forty-unit housing development and geothermal project on Vista Drive in Douglas aimed to ease the affordable housing shortage in Juneau. The geothermal project pulls heat out of the ground and uses heat pump compressors to circulate fluid underground, drawing the warmth out of the ground and using that warmth to heat water for hydronic baseboard heating in the individual rental units. The system is intended to supplement energy under normal conditions as the only electricity will be in using the pumps. Bicknell, Inc., a local Southeast construction company owned by Spike Bicknell, is the general contractor on the project.  Susan Harrington is the Managing Editor of Alaska Business Monthly. www.akbizmag.com

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CONSTRUCTION

Bristol Bay’s New Player Silver Bay Seafoods opens major salmon processing plant By Wesley Loy © US Coast Guard

Most Bristol Bay processing plants are old and weathered.

ristol Bay in Southwest Alaska is the state’s biggest and most valuable commercial salmon fishery, with millions of prime sockeye returning each summer to spawn. The fishery, which lasts only a few intense weeks and peaks around the Fourth of July, attracts thousands of fishermen intent on scoring big catches. With so much money swimming in, it’s no wonder you see bay boats with names like Lucrative and Net Profit. Supporting the fishery is a vital infrastructure of processing plants to clean and pack the catch. Like fishing, processing is a competitive and risky business. Over its epic history, the Bristol Bay fishery has seen plenty of processors both thrive and sink. This year brings another upstart processor to the bay. And it might be one of the boldest launches ever. The company is Silver Bay Seafoods LLC, based in Sitka. It’s a fast-rising, fishermen-owned outfit generating serious buzz, especially among gillnetters hoping Silver Bay’s entry will force all processors to pay higher dockside, or ex-vessel, prices for sockeye.

New Processing Plant Silver Bay has built and opened a new processing plant on cannery row in the 80

Alaska Business Monthly | July 2014

village of Naknek. The fifty-three thousand-square-foot facility is expected to employ up to 330 people at peak season. Silver Bay acted as its own general contractor on the plant, while local company Paug-Vik built two bunkhouses. The project, including land and buildings, cost $37 million, says Rob Zuanich, a Silver Bay managing member. Some say the new plant is the largest, by processing capacity, in Bristol Bay. Zuanich says he’s not sure about that. But it’s clear Silver Bay aims to make quite a splash. The plant is designed to handle roughly four hundred thousand salmon per day and will produce mainly a frozen, headed-and-gutted product. The plant won’t can salmon, as some other processors do in addition to freezing. The company will count on a loyal fleet of drift gillnetters to feed a plant they themselves own. Prior to construction, Silver Bay invited fishermen to invest in the Naknek venture at $25,000 per share. About two hundred permit holders bought in, Zuanich says. Established processors aren’t keen on making room for newcomers. Although sockeye runs into Bristol Bay usually are prodigious, they’re limited. And markets in Japan, the United States, and Europe are tough.

How will Silver Bay fare against battle-tested processors such as Alaska General, Icicle, North Pacific, Ocean Beauty, Peter Pan, and Trident? Zuanich isn’t inclined to talk smack. He says only: “Silver Bay is a vision of fishermen.”

Processor Relations Bristol Bay fishermen have always had an uneasy relationship with processors. Many believe the companies underpay for salmon. In 2003, fishermen forced the processors into a lengthy civil trial on price-fixing allegations. The jury promptly rejected the claim. Gunnar Knapp is a University of Alaska Anchorage fisheries economist and a longtime observer of Alaska fisheries and world salmon markets. “Clearly a major new buyer will make fish buying in Bristol Bay more competitive, at least initially,” Knapp says. “There is a very long history of processors entering and leaving Bristol Bay,” he adds. “Over the longer term, I’d be surprised if a new processor brought any fundamental changes to the Bristol Bay business. Regardless of how they started, people in the processing business tend to start thinking and acting like processors once they’re in the business. They face the same markets, costs, and risks.” www.akbizmag.com

In recent years, Bristol Bay ex-vessel prices have surged, and talk is fishermen could go home this season with a base payment of $2 a pound. The last time prices topped $2 was in 1988. The catch forecast is relatively small at 16.9 million sockeye. The record catch was 44.3 million in 1995. Both these factors—high costs for raw fish and a weak sockeye run— could dampen Silver Bay’s debut. Robin Samuelsen, a fisherman and Dillingham resident, heads the Bristol Bay Economic Development Corporation, which owns a 50 percent stake in Ocean Beauty. Even though Samuelsen is Ocean Beauty’s board chairman, he welcomes Silver Bay. Speaking at an April fisheries workshop in Naknek, Samuelsen called Silver Bay a “very, very aggressive company” that will compete on prices and might recruit fishermen away from other processors. “They stole some of our fishermen in Southeast Alaska,” he said.

Remote Challenges Samuelsen noted Bristol Bay had many more processors before the industry, beginning in the 1990s, fell into depression because of the rise of foreign fish farms coupled with poor salmon runs. “We definitely need more processors,” he said. Silver Bay isn’t the first Alaska processor built with fishermen owners, but the company could be special in terms of its rapid growth. Silver Bay began in 2007 with one plant in Sitka. It has since established plants in Craig and Valdez and is planning a new plant to pack squid in Ventura, California. Most of Bristol Bay’s fish plants are old and weathered. Defunct canneries decay into the tundra. While the Alaska salmon industry has recovered nicely from its depression, processing at Bristol Bay remains challenging. It’s a remote location that demands careful logistics and a high risk tolerance. Silver Bay’s gleaming new plant stands as perhaps the ultimate gamble for the young company.  Wesley Loy is an Anchorage-based journalist. www.akbizmag.com

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Fishmeal Plant to Help Clean Up Bristol Bay B

By Wesley Loy

ristol Bay processors work to safely convert scores of raw salmon into canned, frozen, and fresh products for consumption around the world. That’s the bright side of the industry. The ugly side is the millions of pounds of fish heads, fins, guts, and bones left over after the salmon go through the processing line. Past practice has been to grind up the offal and then pipe it into waters away from the processing plant. Tides, to some degree, sweep it away. Regulators, however, appear to be growing less tolerant of this dumping. They say it can result in ecologically harmful underwater waste piles. Now the bay’s largest salmon processor, Trident Seafoods Corporation, is developing a new waste disposal system that promises to substantially reduce discharges. It’s a fishmeal plant to be built near the company’s cannery complex in Naknek. Fishmeal is a commodity made from offal or low-value fish. It’s used as aquaculture and livestock feed and as fertilizer. Fishmeal plants also can render other products such as fish oil. The Naknek plant will have the capacity to process more than 30 million pounds of waste annually. It will be operational by June 2015, Trident’s Joe Plesha told the US Environmental Protection Agency in March. Trident is building the plant as part of a 2011 settlement with EPA resolving alleged Clean Water Act violations at company processing plants around the state.

Trident agreed to pay a $2.5 million fine and spend more than $30 million to improve waste disposal. The fishmeal plant is designed so it can be expanded to possibly accommodate waste from other processing companies, Plesha said. “Meal plants are generally more economically efficient the greater the volume of product that is delivered to the plant,” he said. Fishmeal plants exist elsewhere in Alaska. One has long operated at Kodiak, for example. Salmon is the mainstay industry for the Bristol Bay Borough and Naknek. But even there, the idea of a fishmeal factory spawned significant opposition. The main worry: noxious odors. Some wanted Trident to build the plant out of town, but the company said that would be impractical. Modern fishmeal plants can operate without creating a nuisance, Trident said. To verify, two people traveled on behalf of the borough’s planning and zoning commission to “sniff around” an operating fishmeal plant in Newport, Oregon. They came back with no significant odors to report. The commission granted a permit for the Naknek plant, with certain stipulations attached. The plant will have air scrubbers to remove odors. The fishmeal plant should yield multiple benefits, including a few jobs and tax revenue for the borough. Trident will have tons of salmon byproduct to sell, and the volume of waste going into the Naknek  River will be much reduced.

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special section

Telecom & Technology

Telecommunications Grow in the Last Frontier

A telecommunications worker splices ﬁber optic cable.

Expanded services, programs, and community involvement By Tasha Anderson

echnology is growing and expanding universally throughout the industry. Alaska is no exception. Some advances are even more obvious here because many areas of Alaska are remote and lack infrastructure taken for granted elsewhere—roads, power lines, technicians that can travel by car instead of boat—so any advance in technology is momentous, like suddenly having cell phone coverage where none existed before.

AT&T Expanded cell phone coverage is an area in which AT&T has invested significantly recently and plans to do more in the future. According to President for AT&T Alaska Bob Bass, 4G LTE, “the latest and greatest in data speed that you can get,” has been expanded to Ketchikan, Seward, Soldotna, Fairbanks, Juneau, and Kodiak. 84

Alaska Business Monthly | July 2014

“Over the last three years we’ve spent, on wireless and wiring networks, a little over $200 million in Alaska. We see ourselves on the same pace moving forward. We’re constantly expanding out to areas where we don’t currently have anything, [and] more and more fiber is being laid.”

— Bob Bass President, AT&T Alaska

“The LTE experience on a wireless device is incredible,” Bass says. “I’ve been out in Alyeska [resort at Girdwood] the last couple days… I took the tram to the top, and [the wireless service] was smoking.” Alaska is on par with the rest of the United States when it comes to how mobile and wireless devices have become a reality of everyday life. “It used to be that

your wireless device, you could just make voice calls with it,” Bass says. Mobile devices now allow people not only to perform different tasks, but to do many of them simultaneously—if, of course, the service is available to accommodate it. “Over the last three years we’ve spent, on wireless and wiring networks, a little over $200 million in Alaska. We see ourselves on the same pace moving www.akbizmag.com

forward,” Bass says. “We’re constantly expanding out to areas where we don’t currently have anything, [and] more and more fiber is being laid.” In an effort to save customers money, AT&T has been offering mobile share plans, which Bass reports are doing well. “Families look for ways to use their dollars more effectively and efficiently; it’s one thing that consumers have really adopted.” Bass is proud of the fact that, when it comes to AT&T, Alaska isn’t an exception to anything. “The same plans, products, and services that are available in Anchorage are available in Jacksonville, Florida—whatever is available here is available there and vice versa.” Looking forward, Bass is particularly excited about Voice Over LTE, or HD Voice, which is a feature available on the new Samsung Galaxy S4 Mini. “I’ve listened in on the calls where we’re using HD Voice, and it’s amazing how clear it is,” Bass says. In addition, AT&T is looking closely at “wearables,” which are worn devices that report data to a mobile device. A current example is the many fitness tracking and monitoring devices currently on the market that can monitor heart rates, calories, miles biked, or footsteps taken. Bass says AT&T is looking to expand wearable options to further help people manage their time, find services, and save money. “From AT&T’s perspective it’s about meeting [and exceeding] consumer demand,” Bass says. “We want to move where we think the puck is going to go versus where the puck is now.”

Verizon Verizon is also on the cusp of a major expansion into Alaska, specifically that it will soon have a physical retail presence here, with planned locations in Anchorage, Fairbanks, Juneau, and the Mat-Su Valley. Scott Charlston, who handles public relations for Verizon in the Pacific Northwest and Alaska, says that those retail locations will launch this fall. “We’re hiring; we’ve had a job fair in Fairbanks and in Anchorage, and we will continue hiring and training new employees to prepare for store launch.” But Verizon’s presence isn’t new in Alaska. Verizon is already providwww.akbizmag.com

ing a unique data collection service to the Alaska trucking industry using its Networkfleet solution from Ketchikan to Prudhoe Bay. Their first customer, Alaska Industrial Trucking, in three short months has seen the benefits of the service, with savings in fuel costs, efficiency, maintenance costs, and an ability to increase load count. Jeff Day, co-owner of Alaska Industrial Trucking, reports: “We’ve seen a reduction of at least 8.5 to 12 percent in fuel costs. Because of the ability to track our loads, we’ve increased our

load count quarterly by 16 percent.” Additionally, “I would say it’s brought our maintenance costs down 2 or 3 percent. If there’s an issue with the truck, [Networkfleet] will notify you by email that there’s an issue.” Anyone familiar with road conditions in Alaska knows the value of being able to plan to have a part available by regular shipping methods instead of scrambling to get one as soon as possible—which, in remote parts, is often not soon enough. “It’s helped out on the down time tremendously, which increases the number

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“Verizon is bringing global innovation and smart technology solutions to make Alaskan businesses more eﬃcient, to increase monitoring of remote locations, better manage transportation and ﬂeet tracking and even predict when a vehicle’s brakes or engine parts are about to fail.” —Demian Voiles VP for Alaska, Verizon Wireless

of loads you can haul,” Day says. Networkfleet has also reduced their liability burden, he says, as concrete data can show that drivers involved in accidents were driving, shifting, breaking, and responding appropriately to weather and road conditions. “I would say [Networkfleet] probably is the premier system in Alaska for trucking companies to give them some invaluable information,” he says. “It’s a very expandable system which has gone a long ways not only in reduction of liability but aiding in growth.” Chris Ransom, director of Sales Engineering for Verizon Networkfleet, explains that a device is installed in a truck that then gathers and reports data. In remote areas of the state where there’s no network coverage, the data is reported through GPS or satellite sys-

tems, so there are no coverage gaps. “All of that data comes back into our datacenter in San Diego, which then allows customers to access their fleet data from Networkfleet.com,” Ransom says. Customers who use Networkfleet access the data online, so no proprietary software needs to be purchased or installed. “Verizon is bringing global innovation and smart technology solutions to make Alaskan businesses more efficient, to increase monitoring of remote locations, better manage transportation and fleet tracking and even predict when a vehicle’s brakes or engine parts are about to fail,” says Verizon Wireless VP for Alaska Demian Voiles.

Alaska Communications Alaska Communications CFO Wayne Graham says, “The telecommunica-

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Alaska Business Monthly | July 2014

tions industry is focused on serving two diverse customer segments. First, businesses that want reliable, flexible and robust communication to run their business. Second, consumers who want to stay connected with richer and richer content in their homes or on the go.” Alaska Communications is expanding services available in Alaska to meet both of these segments. Linda Leary, senior vice president of Sales for Alaska Communications, says one major project involves updating the physical infrastructure of the network. “Just a few years ago, copper wire provided sufficient speeds, but as needs have changed, it’s been replaced with fiber,” Leary says. “During this project, we are replacing copper wire with fiber between central offices and nodes [infield equipment that provides data and voice services], enhancing old nodes with newer technologies, and adding nodes to the network. An example of this is work we are doing for the Anchorage School District, providing fiber connections to ninety-five schools.” The upgrades will result in faster 1 GB internet available to business. Alaska Communications is also expanding services through acquisition, most recently of TekMate, acquired in February of this year. “We know our customers prefer focusing on their business and leveraging a local, reliable, trustworthy partner to solve their communications and IT challenges. With this acquisition, we advanced the level of service we can provide, and that our customers and all Alaska businesses need and deserve,” Leary says. As an example, the “ConstantlyOn” IT services allows companies to have all the services of a twenty-four-hour help desk on weekends and year-round for a flat rate. In order to aid Alaska small business, Alaska Communications has developed Small Business Bundles, which give customers Internet, voice, and IT services with no up-front costs. “The www.akbizmag.com

Small Business Bundle also includes secure Internet access, web-accessible voicemail, a dedicated fax or credit card transaction line, and in and out of state long distance calling,” Leary says.

Community Involvement Telecommunications are deeply entrenched in every aspect of daily life, and so it follows that these telecom companies are involved in the Alaska community. Alaska Communications’ Summer of Heroes program, now in its fourth year, which partners with Boys & Girls Clubs-Alaska, recognizes outstanding youth in the community and rewards them with a $1,500 scholarship in a ceremony at the Alaska State Fair. Alaska Communications also supports employee volunteerism through the Employee Volunteer Grant program, “where Alaska Communications will contribute up to $250 to any eligible nonprofit at which employees volunteer twenty or more hours per calendar year,” Leary says. “Education is really an important area for AT&T,” Bass says. AT&T works with the Alaska Schools Activity Association and has the AT&T Aspire program, which provides grants to schools and organizations that promote high school graduation. AT&T has also focused on their “It Can Wait” campaign in Alaska, which discourages drivers from texting and driving and promotes road safety. Verizon recently provided training for teachers at Central Middle School of Science in Anchorage to help them use technology in every aspect of classroom education. The Verizon Foundation donated funds for both the initial training, as well as $50,000 for additional training over the next two years. “As we prepare to launch retail locations and voice service in the state,” Voiles says, “we’ve deepened our commitment to hiring Alaskans and supporting a variety of causes ranging from STEM education in Anchorage and Fairbanks to healthcare, energy management, and domestic violence.” 

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Tasha Anderson is the Editorial Assistant for Alaska Business Monthly. www.akbizmag.com

July 2014 | Alaska Business Monthly

special section

Telecom & Technology

Ketchikan’s KPU Local Television Goes National Diversiﬁcation key to electric, water, and telecom utility success

By Will Swagel

board F/V Aleutian Ballad, Ketchikan Public Utilities’ Local TV cameraman Jacob Schwartz— taking a break from shooting—gets to pick among chunks of king crab so large they’re jokingly being dubbed “Alaskan hot dogs.” The Aleutian Ballad is a former Bering Sea crabbing vessel featured on early seasons of “The Deadliest Catch.” The boat has been retrofitted to carry tourists to the calmer crabbing grounds off Annette Island in Southeast Alaska. There, the crew will drop some pots and haul some up, just like in the show. The Aleutian Ballad is a popular attraction with tourists visiting Alaska’s First City, but Schwartz’s main focus was shooting footage for an episode of “Celebrity Chef” —a show on KPU Local TV about Ketchikan cooks and their signature dishes. Besides king crab boiled in seawater and shrimp stewed in spices, this episode of “Celebrity Chef” included brie-and-crab-filled croissants, fashioned into the body and arms of a crab. Schwartz is local, too, and graduated from Ketchikan High School in 2001. He is not unfamiliar with Southeast 88

Alaska Business Monthly | July 2014

KPU Local TV cameraman Jacob Schwartz ﬁlming at the Annual CHARR King Salmon Derby in Ketchikan.

Alaska’s bountiful seafood, but even he was impressed. “[And] I’ve done every single fun thing to do in Ketchikan,” Schwartz says. KPU Local TV airs about ten locallyproduced episodic shows like “Celebrity Chef.” There’s also plenty of more meatand-potatoes local access television fare such as school music concerts, city council meetings, and sporting events. But KPU Local TV’s producers sometimes give these offerings a new spin by shooting with multiple cameras and live-streaming some sports games on the Internet or by shooting aerials from a GoPro camera attached to the skid of a helicopter. It’s local TV on steroids.

Stars are Born Michelle O’Brien is both the producer and host of many of KPU Local TV’s episodic shows. After years in advertising and sales, she came to KPU five years ago from Tallahassee, Florida, to sell phone systems—one of a new team brought in to KPU to revitalize the company’s sales and marketing division. Ketchikan Public Utilities is cityowned and provides electrical service,

water, and telecommunications services. The Telecommunications Division provides television, Internet, and voice services via fiber-to-the-home—connecting Ketchikan customer’s homes to the Seattle “cloud” via seven hundred miles of KPU-owned terrestrial and undersea fiber optic cable. “In 2009, KPU Telecommunications was struggling,” O’Brien says. “Our job was to build a sales-focused organization.” Long-time Alaskan telecom executive Ed Cushing was leading the KPU sales team and looking for ways to set KPU Local TV apart from competing TV services. One day, O’Brien showed Cushing some tapes of local shows that her friends had produced back in Florida. She remembered that Cushing said, “You know what? We need to be doing that here.” “And for much of the last five years, our focus has been on local television,” O’Brien says. The station’s ability to produce shows received an enormous boost in 2012 when they received an Alaska Department of Labor grant to prepare Alaskans for jobs in the television and film industry. The $40,000 grant to KPU, www.akbizmag.com

called The Alaska Cast & Crew Advancement Program, funded two years of training that has already borne fruit. “We have trained more than fift y people to date,” O’Brien said in May. “We have given them a lot of work. We have six of them as stringers for local productions on a part-time basis. Last weekend, we had four events [where] filming [occurred] simultaneously.” “Celebrity Chef” is shot in O’Brien’s kitchen on a shoestring budget. Even so, O’Brien received three calls the previous week from people wanting to get on the show. “It quickly became very apparent that there was this dynamic —people really liked to see themselves on TV,” O’Brien says. “They like to see their friends on TV. And they like to compare the way they look on TV compared to the way their friends look on TV.” Her very first KPU-TV show was shown in 2009 for the “Live in Ketchikan” show—this episode was a tonguein-cheek look at the difficulty of finding parking in downtown Ketchikan. The video was immediately popular and now is one of 189 that KPU Local TV has placed on YouTube. Two other popular KPU Local TV shows available on YouTube are Liquid City Sessions (music) and Hometown Heroes (biography and history).

Northern Exposure In the five years that KPU-TV has been putting Ketchikan people and locales on television, Alaska has cemented its reputation as a superb locale for manand- woman-against-nature reality shows. When NatGeo (National Geographic) TV came to Ketchikan to film an episode of “Doomsday Preppers,” both O’Brien and Schwartz signed on as production assistants. Schwartz shot some of the background footage known as the “B Roll” used in that show, and both he and O’Brien received on-screen credit. Schwartz has also shot footage for Animal Planet and other national channels, but considers the “Preppers” work “the feather in his cap” so far. National production firms looking for skilled and equipped people in Alaska is a growing trend, O’Brien says. KPU-TV is burnishing its reputation as a “go-to” source. www.akbizmag.com

“Production companies such as E Entertainment, Discovery Channel, and NatGeo started calling,” says O’Brien. “They had called the Chamber of Commerce and the Arts Council and were looking for people with these kinds of skills. We were able to handle the requests at first, but the volume kept growing and growing. We applied for the [Department of Labor] grant, hoping to fill the void.” O’Brien says she keeps a list of people with various skills, so when she gets a call, she knows who’s available and when. She believes having people and equipment ready to go makes producers more likely to choose Ketchikan as a location. “Finding local people who have been properly trained is immensely difficult in Alaska,” O’Brien says. “We know the right people, we know where to go. [Producers] can do it a lot quicker and more efficiently using local folks.”

Next Generation O’Brien says two young people who took the training and worked for the station are now off at film school. That number is sure to rise—about a dozen Ketchikan High School students participate in the school’s Media Production class. Bill Whicker, the technology coordinator for the school district, says he has been seeing a definite uptick in the quality of work the students are doing. Both the district and KPU share equipment, and visiting professionals provide training for both groups. Students have been live-streaming sporting events, for example, filming with both stationary and mobile cameras and staying in touch with the student-director through microphones. During last year’s Christmas Classic basketball tournament, students and adults shot twenty-two games over three days, streaming the action and recording the games for distribution. “We’re getting kids real world experience in those things,” says Whicker. “And I think we got a couple of kids hooked! Right now we have camera one, camera two, we have a director, but as we go and try to improve our productions, we’ll add to those [other] skills that hopefully kids can transfer into a real-life position, maybe on one of those [national] shows.”

KPU Local TV cameraman Jacob Schwartz ﬁlms Lynn Quan in “Ketchikan’s Top Chef,” an annual community event. Funds raised go to the winner’s favorite charity.

One promising graduate is Joron Whitton, who took the Media Production class as a senior, and graduated from Ketchikan High School in 2011. A parttime cameraman, Whitton now works about thirty hours a month filming for KPU Local TV. He’ll take as much work as he can to supplement a sideline selling deer calls made from antlers. And he’s waiting for his chance to get a credit on one of those national reality shows. Schwartz and his camera are so ubiquitous, he’s known around Ketchikan as “Jacob-the-Camera-Dude.” O’Brien has experience on both sides of the camera. She appeared on the TV reality show “Trading Spouses” as one of the spouses and lived with a vegetarian family in their RV. Trading Tallahassee for Ketchikan is “the best thing our family has ever done,” she says, even if it means a film crew camped out in her kitchen. “The entire island is our studio,” O’Brien says. “On any given day, we might be hanging out of a helicopter or scuba diving or on the back of a fishing boat. I plan the shows and host them, but the entire town is the star of the show.”  Alaskan author and journalist Will Swagel writes from Sitka.

July 2014 | Alaska Business Monthly

special section

Telecom & Technology

Photos courtesy of GCI

ONE GIGABIT SERVICE DEPLOYMENT PLANNED GCI continues investments in Anchorage and Statewide By Vanessa Orr

uild it and they will come. In the case of Alaska’s first one gigabit service for consumers, this not only means customers but also applications that haven’t even been invented yet. In December 2013, GCI announced plans to deploy Alaska’s first 1 GB (gigabit) consumer Internet service, fiber re:D, in Anchorage by 2015. One gigabit is equal to 1,000 MB (megabits), which would enable customers to download a 2.2 GB HD movie in 18 seconds, versus an average US speed of 30 minutes. A 4 GB console game will download in 33 seconds instead of 55 minutes, and an Ultra HD movie of 50 GB will take 7 minutes versus 11.5 hours. According to Ron Duncan, GCI president and CEO, the company decided to make this groundbreaking technological move in response to an initiative by the Federal Communications Commis-

Alaska Business Monthly | July 2014

sion, whose chairman issued a national challenge to make gigabit Internet service speeds available in every state by 2015. Currently, about a dozen cities in the United States offer residential gigabit Internet service. “Since our founding, GCI has invested well in excess of $2 billion in Alaska’s communications infrastructure, and we continue to lead the market in technological innovation,” said Duncan in a press release. “We’re focused on ‘What’s next?’ to benefit Alaskans.”

Pushing the Envelope As users become more Internet savvy and more devices are created that connect to the Internet, the demand for faster speeds increases. “It seems that consumers have an insatiable appetite for quicker speeds,” says Duncan Whitney, GCI’s vice president of

product management and development. “Google and other providers in the Lower 48 have really prodded the industry forward, with some users already enjoying the early deployment of gigabit service. “We’ve always prided ourselves on being the first to market new services in Alaska, especially since many areas of the state are, geographically speaking, separate from the rest of world, which makes it much more technology-dependent than metropolitan areas in the Lower 48,” Whitney adds. “Not only will this service give customers more speed but it will prod the creation of applications that aren’t even in existence today because the speeds are not available; it pushes the whole envelope forward.” This is not the first time that GCI has taken the lead in providing the most advanced technology available to its www.akbizmag.com

Above: GCI technicians run a systems diagnostic test. Left: GCI technician loads a server in the cloud network.

“In 2013, we made the announcement that re:D would increase from 50 Mbps [megabits per second] to 100 Mbps. In March, we doubled speeds again to 200 Mbps, and there will be other upgrades this year before we launch 1 GB service in 2015.”

—Duncan Whitney Vice President of Product Management and Development, GCI

customers. GCI was the first Alaska carrier to provide single-hop satellite long distance calling; the first to provide high-speed Internet service; the first to construct redundant high capacity fiber cable networks between Alaska and the Lower 48; and the first to provide terrestrial broadband service in rural Alaska. Since announcing the deployment of 1 GB service in December, the company has already upgraded its existing premier re:D (pronounced ‘red’) broadband service to provide customers with www.akbizmag.com

more speed. “In 2013, we made the announcement that re:D would increase from 50 Mbps [megabits per second] to 100 Mbps,” says Whitney. “In March, we doubled speeds again to 200 Mbps, and there will be other upgrades this year before we launch 1 GB service in 2015.”

More Speed, Less Money As GCI increased the speed of its re:D service, it rather surprisingly decreased its price. “All of the upgrades have been and will continue to be free; in fact, in July 2014 | Alaska Business Monthly

GCI Continues TERRA Build-Out in Northwest Alaska

By Vanessa Orr

hile Alaska’s more “metropolitan” cities are taking advantage of faster-speed Internet through GCI’s re:D and fiber re:D systems, residents living in the state’s more remote communities are benefitting from the expansion of the company’s TERRA network. In 2011, United Utilities, Inc., a wholly owned subsidiary of GCI, began building TERRA-Southwest, the first segment of the TERRA network, with the goal of providing terrestrial broadband service to connect western Alaska to the Internet gateway in Anchorage. Now complete, TERRA Southwest includes four hundred miles of new fiber optic cable and thirteen new microwave towers connecting sixty-five communities. GCI began Phase 1 of TERRA-Northwest to extend the service to Unalakleet and Shaktoolik in 2012 and in 2013 extended TERRA to Nome (Phase 2). Phase 3 will extend TERRA to Kotzebue by the end of 2014. “Historically, rural Alaska depended on satellite communication for long-distance phone calls and access to the Internet,” explains Duncan Whitney, GCI’s vice president of product management and development. “There was a very high cost for this from a capacity perspective, and it did not produce a good customer experience. The round-trip time to each station—to the satellite and back—added a half-second delay, so on something like a Skype video conference, it was very frustrating. The audio and video didn’t always sync up, and there were not any applications written to deal with this extra delay.” To solve this problem, GCI created a hybrid fiber microwave network that connects into microwave towers on mountains and hilltops throughout northwest and southwest Alaska. “This allows communities to connect terrestrially rather than using satellite to get data and broadband services,” explains Whitney. “This increases the top speed to 6 MB, compared to 256 KB on satellite. “Even the smallest of communities has access to this service now; even if there are only five customers in the area,” he adds. In fourth quarter 2014, GCI will complete Phase 3 of the project, which will extend service from Shaktoolik to Kotzebue via five remote microwave sites. “Our long-term aspiration is to get this microwave system linked back into our fiber system up north,” says Whitney. “This would increase reliability and provide another route if an outage happens in one area, which currently can require customers to go back on the satellite until the system is repaired.” This advancement is particularly important to schools, government, and health care facilities that can now communicate more quickly and accurately with the rest of the world. “This type of high-speed connection will enable health care providers in more rural areas to hold high-definition video conferences with medical experts in Anchorage, saving them the cost of having to medevac a patient down to Anchorage for care,” says Whitney. While this terrestrially based service will not be as fast as 1 GB service, it will be far superior to what rural communities have been using. “Right now, it is not feasible from a technological perspective to do one gigabit service in these areas because we would need to place fiber to all of the different communities,” says Whitney. “There are a number of issues with deploying fiber in remote areas of Alaska, including permitting and tremendous physical challenges. It was quite a process to get the microwave towers built; trying to lay fiber across the tundra or go through the National Wildlife Refuge— we couldn’t recoup those costs. The microwave system does not have the capabilities of fiber, but it is much better than satellite.”

Alaska Business Monthly | July 2014

December we dropped the price $25 per month from $199 to $174,” says Whitney. “As a publicly traded company, we need to return a profit, but the nature and cost of new technology is coming down over time, which enables us to offer this service at a lower price. The re:D service is not at the lower end of our product offerings, but we’re finding that more customers are willing to move to this higher-end package because with increased speeds, it has a higher value. We’ve definitely seen evidence of that since re:D has been launched.” According to Whitney, the company is able to increase speeds as a result of advancements in technology, including the fact that they have moved from a DOCSIS 2 system to a DOCSIS 3 system, which creates additional channels of capacity. DOCSIS, or Data Over Cable Service Interface Specification, is a cable industry standard for delivering high speed data services over cable TV networks efficiently. The company is also extending its fiber optic network closer to customer homes. “Basically, this is like going from a single lane road to a thirty-two-lane highway,” says Whitney. “It creates bigger ‘pipes’ for individual Internet access. “Customers used to have a single desktop or one or two laptops; now each home may have numerous computers, tablets, cellphones, Internet cable boxes, Roku streaming players—it’s not unusual to have ten or more devices accessing the Internet at the same time,” he continues. “With older, slower speeds, customers would self-congest their connection; a person would go to stream a Netflix movie in HD and not have enough capacity to do that and other uses. But now, with 200 Mbps service, it removes the customer connection from being the bottleneck.”

Customers Prioritize Deployment Customers in Anchorage who want even more speed can visit gci.com/getfibered to request to be among the first neighborhoods to receive 1 GB service next year. The company launched the microsite in December 2013, so customers could take part in prioritizing the 1 GB build-out. Existing GCI Internet customers can provide their address and receive monthly updates on how their area stands against other areas of town in the race for 1 GB service. “There is a map on the site that currently shows about six to eight large areas of town, but we will be narrowing that down to smaller neighborhoods in the next couple of months,” says Whitney. “The areas that show the highest level of interest will be the neighborhoods and customers who are upgraded first.” While Anchorage is the obvious launching point for 1 GB service, Whitney says that other areas of the state are in line for the upgrade as well. “We will spend in excess of $200 million over the next several years to bring one-gig service to Anchorage and other markets,” he says. Currently, 200 Mbps re:D service is available in Anchorage, the Mat-Su Valley, Fairbanks, Juneau, Kenai, Ketchikan, Sitka, and Soldotna. In addition to fast download and upload speeds, re:D also includes the most broadband data usage ever offered by the company, with 500,000 MB per month.  Vanessa Orr is the former editor of the Capital City Weekly in Juneau. www.akbizmag.com

Telecom & Technology

Investing in Technology: Update on SimplySocial

Arnold

Erne

Bora

Photo courtesy of SimplySocial

special section

Alaska investors support Alaska-grown transplant By Shehla Anjum

e describes himself as “just a boy from Alaska figuring out how to take steps forward in the world.” And, boy, is he stepping out. Anchorage born and raised entrepreneur Tyler Arnold, twenty-one, now lives and works in the fast moving world of high tech in San Francisco, trying to build up SimplySocial, his newest venture launched in May 2012. Arnold is a stranger to neither entrepreneurship nor the high tech industry. He started his first company, Tyler Systems, in 2009 when he was only sixteen and a junior in high school. That firm converted mockup designs for websites, created by advertising agencies and other companies, into working websites. It also provided some of the initial resources for SimplySocial, Arnold says. Arnold’s experience in finding investors willing to put their money—and faith—in his businesses dates back to when he was trying to set up Tyler Systems. Anchorage businessman Allan Johnston, a supporter, mentor, and investor, remembers how the precocious sixteen-year-old contacted him. “Out of the dark I got an unsolicited email from a teenager I didn’t know, introduced by ‘mutual friend’ whose name I didn’t recognize. It was an interesting introduction and I became curious,” Johnston says. After meeting Arnold and seeing his business plan, Johnston was fascinated both by his chutzpah and by his precocity and invested in Tyler Systems and lobbied other business colleagues to invest. The financing provided by those “angel investors” helped Arnold initially and later when he began thinking about SimplySocial. What impressed Johnston most was how Arnold recognized that he needed help. He had no knowledge of finance or business. “He had the wisdom to know that he needed help. Most people who 94

Alaska Business Monthly | July 2014

form companies don’t get that kind of wisdom until they are on their third business, or about forty years old.”

The Knack Arnold, it appears, has a knack for impressing people with his intelligence, his drive, and his ideas. Anchorage businessman Rick Nerland was still making up his mind about investing in Tyler Systems when he saw Arnold’s presentation at an Anchorage conference on entrepreneurship organized by the Federal Reserve Bank of San Francisco. “Rick was impressed with Tyler and his ideas and believed the venture was a good one, but he was not convinced. That presentation helped him make up his mind,” Johnston says. As the business grew it also became international. Arnold began using Romanian software coders and even contracted with some as far afield as Pakistan. He also relied extensively on the Internet using email, text messages, Skype, and phone calls to communicate both with those who worked for him and with his clients. Arnold graduated from high school early, in December 2009. He decided not to attend college and instead chose to work on expanding his business, getting new clients, and making changes. He also spent considerable time on the road traveling to Timisoara, Romania, where Valentin Bora, one of the technical people Arnold worked with, lived. Arnold soon met Jeroen Erne from the Netherlands, who joined the team in support of Tyler Systems clients. Partners in Development By 2011 Arnold, Bora, and Erne formed a partnership and began developing SimplySocial and the software at the core of that business. Arnold describes his new business as a tool to help companies

maintain a presence on social media sites such as Facebook, Twitter, and LinkedIn. He wanted to help companies get rid of their intimidation about using social media and show them that they needed to spend only fifteen minutes daily to ensure an up-to-date presence on various sites. The effort to introduce SimplySocial included raising more capital. Allan Johnston again saw the potential. He and a group of eight other local investors gave Arnold the financial support he needed for travel and to develop the tools for the new business. From October 2011 until the introduction of SimplySocial in May 2012, Arnold spent most of his time in Romania working with Bora and Erne. It’s typical for entrepreneurs to move from one business model to another, evolving and building on the success of the previous one, according to Johnston. He was not surprised when Arnold came to him with his new idea, which was SimplySocial, in 2011. The venture launched with help from the nine investors from Alaska, who also advised Arnold. “I had some very strong mentors such as Allan, and I got some very good advice from my angel investors in Alaska, who were willing to take a chance on a young entrepreneur,” Arnold says. The months since the SimplySocial launch have been busy. He was mostly away from Alaska in Europe and San Francisco. “I spent the last six months of 2013 in Timisoara but traveled almost weekly to Amsterdam and Munich to serve clients and drum up business,” Arnold says. He also traveled to Silicon Valley to seek capital. www.akbizmag.com

Out of Alaska After spending time in the San Francisco area, Arnold became convinced that it was time to move his company out of Alaska and into the world. “The Bay Area is known as a place where everyone can come to grow their startup and test their ideas. There are a lot of people here that have built technology businesses [and failed as well],” he says. He relishes the chance “to learn and to get a ‘first look’” at the latest products being developed. During his stays in Europe last year, Arnold and his team worked on SimplySocial 2.0, tweaking the initial version based on lessons learned from its year in use. They released 2.0 in December 2013. The new version allows a company to get organized and increase its visibility. “A social media strategy, or even valuable marketing ideas, can be lost in emails, meetings, and forgotten follow-ups. Those are all lost opportunities. Our software helps by allowing our customers to plan social media campaigns, collaborate on content, get compliance [or other reports] engaged, and get contributors involved.” Most of SimplySocial’s customers have been advertising agencies and public relations firms who want to manage social media content for their customers. But the company is also competing with some big names such as SalesForce and Oracle that also have robust media offerings, Arnold says. SimplySocial’s advantage lies in its reasonable pricing and its target market of mid-sized companies. “It costs only $3,600 per year and allows a company to have one ‘moderator’ and as many ‘contributors’ as it wants,” according to Arnold. The moderators are those individuals in a company who are responsible for coordinating and approving the content that will go on various media sites. The contributors are other employees of a company who provide information about their work or that of their section. A lot of other companies also offer social media software, but most of it is designed for use by marketing departments. SimplySocial’s value, Arnold says, is in how it is tailored to getting the whole organization involved in maintaining a presence on sites such as Facebook, Twitter, or LinkedIn. To attract more clients, SimplySocial offers a free thirty-day trial. About half of the companies that signed on for the free trial have purchased the new version, although this ratio is always changing. www.akbizmag.com

Five Years Later It has been five years since Arnold started Tyler Systems, which he ran as a one-person operation using the latest communications technology and resources available. He stayed in Alaska for the start of the next venture, but worked with his team in Romania and with Erne in Amsterdam. Today SimplySocial maintains an office in Timisoara with up to eight contractors. Bora is still in Timisoara, but Erne now lives in Bali, Indonesia. Arnold is now in San Francisco. So far SimplySocial is covering expenses and plowing back its revenues into the business. The international makeup of the company continues. The newest addition is French-born Kahlil Beatty, who works with Arnold in San Francisco. Beatty was hired as a social media consultant and is responsible for finding new clients and walking them through the services SimplySocial offers. “We are focusing on advertising and marketing companies, and we are targeting athletic departments within universities. Some large universities have several teams, and we feel they could manage their social media content more efficiently with our software,” Beatty says. Growing List of Investors The number of investors in SimplySocial has also grown. Nearly 50 percent of the investors are still Alaskans, but 40 percent are now from the Silicon Valley, and about 10 percent are international. Among the new investors is Douglas Grobbe of Amsterdam, who was an executive with the Dutch bank ABN Amro, which operates in fifteen countries. A Korean group has invested in SimplySocial, as well as David Yarnold, who is chief executive of ServiceMax, a private soft ware company. Another new area of development for SimplySocial is video. The firm developed a video animation team in Romania, which produced a video to show potential clients how SimplySocial 2.0 works. Arnold says the video was so successful that several clients have asked the company to develop videos for their use. It’s not unlikely that video production might be the next addition to services that SimplySocial offers, Arnold says. In fact, the company’s next step might lead to its becoming a “middle-market media company, where we are not only working for other companies to manage their

social media presence through the use of our software, but we could also be providing some of the creative services.” SimplySocial also recently began a new “analytics offering.” Those who sign up will receive a personalized report from a “dedicated SimplySocial account manager with insights a machine would miss. “The reports would show companies how well their content is performing. Instead of just giving them the raw numbers behind their social media performance, we go a step further and provide actionable advice to our clients about how they can improve the quality of their social media content,” Arnold says. Arnold grew up in Alaska and started his first company here. Today, he is no longer in Alaska. His future lies in Silicon Valley, with its venture capitalists and its technological edge. It is the place to be for those who want to make it in the world of high tech. Johnston sees nothing unusual in this and considers it as a natural progression. “The first time I met Tyler, I saw in him the need to feed his curiosity. For all practical purposes, Tyler is getting his ‘walkabout’ experience. He didn’t go to college, but Alaska’s parochial environment cannot quench his thirst. He needs the folks in Silicon Valley to help him in his search for knowledge.” Alaska was a critical part of his business, says Arnold, and he is grateful for the strong mentors who helped him and for the investors who took a chance and supported his travels and explorations in the business world. “The people in Alaska were the building blocks of my life as an entrepreneur, and without them none of this would even be close to possible. I think some seeds fall on rocks and some fall on fertile soil, and Alaska is definitely fertile soil for us. “Even now, I get advice on a weekly basis from mentors in Alaska and it continues to be incredibly helpful,” Arnold says. Is SimplySocial a success? “I think when you’re looking at a startup, you’re creating something from nothing, and failure is the default outcome. In that sense, your goal should be to develop many positive relationships and learn as much as you can in as short a time as possible. Looking back at all the great mentorship and the lessons I’ve learned, I do consider it a success.”  Writer Shehla Anjum is based in Anchorage. July 2014 | Alaska Business Monthly

ALASKA BUSINESS MONTHLYâ&#x20AC;&#x2122;S

2014 TELECOM & TECHNOLOGY DIRECTORY

INFORMATION TECHNOLOGY 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

Alaskalink 12000 Wagner St. Anchorage, AK 99516 Phone: 907-830-3578 Fax: 907-345-5012

Ryan Stencel, Owner

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

Gail Morrison, Pres/Sr GIS Analyst

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

Kristen Lindsey, Mng. 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.

Arcticom 310 E. 76th Unit B Anchorage, AK 99518 Phone: 907-276-0023 Fax: 907-276-1913

Richard Foster, President

B2 Networks LLC 4600 Debarr Rd., Suite 150 Anchorage, AK 99508 Phone: 907-569-2225 Fax: 907-569-2220

Thomas Bohn, CEO

Bowhead Communications Services 6700 Arctic Spur Rd. Anchorage, AK 99518 Phone: 907-375-6600 Fax: 907-375-6680

Steve Darner, Pres.

AK AK Estab. Estab. Empls. Empls.

Services Services

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.

2000

Project and operations management, policy, and consulting.

2002

GIS/mapping for oil & gas industry, spill response, environmental, land ownership, permitting, utility, programming, web services, ArcGIS Online, Google Earth Pro, mobile apps, app dev., software sales, training, CMMS, asset & facility mgmt. software, ESRI Business Partner & Adapx software resellers

2003

We offer comprehensive Internet marketing 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

Full-Service managed IT provider & outsourcing partner with over 20 years serving Alaska Business. Private cloud, hosting, secure off-site backup and data replication services. Hardware/software sales & integration. PCI compliance. Network security & remote access management. VOIP sales, installation & management.

1998

A Doyon Government Group Company providing Alaska businesses with accounting & finance software, customer relationship management, retail & POS systems, SharePoint sites, network infrastructure design & installation, flat-rate IT services, cloud computing, IT security, data backup & recovery, & technical training.

1999

Motorola two-way communication sales and service. Satellite telephone sales, service and rental. Portable repeater rental and sales.

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.

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.

dispatch@acbsolutions.net acbsolutions.net

rmstencel@aol.com

gmorrison@alliedgis.com alliedgis.com

info@apokrisis.com apokrisis.com

info@amicro.com amicro.com

info@arcticit.com arcticit.com

bhellenga@beringstraits.com

sales@b2ak.com b2ak.com

marketing@bowheadsupport.com bowheadcommunications.com

Alaska Business Monthly | July 2014

www.akbizmag.com

GETTING THE FLEET TO ITS DESTINATION FASTER

HELPS ALASKA BREATHE A LITTLE EASIER. {P OWE RFUL A NSWE RS }

Technology that can help reduce operational expenses can help businesses be more efficient. The innovative minds at Verizon have teamed up with some of the smartest companies around to create solutions that help businesses make informed management decisions. It starts with our Fleet Management solutions. By leveraging the Verizon 4G LTE network, along with satellite-enabled devices and a fleet management dashboard, businesses can optimize travel routes to the North Slope to improve vehicle and driver performance—regardless of the size or type of their fleet. This gives them the ability to do more business while cutting fuel costs. Alaska’s new technology leader is here, and here to stay. 907.777.9800 | verizonwireless.com/alaska Coverage not available everywhere. 4G LTE is available in more than 500 markets in the U.S. Network details & coverage maps at vzw.com. © 2014 Verizon Wireless.

ALASKA BUSINESS MONTHLYâ&#x20AC;&#x2122;S 2014 TELECOM & TECHNOLOGY DIRECTORY

INFORMATION TECHNOLOGY Company Company

Top Executive Top Executive

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

Kenneth Farmer, Pres.

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

Nathaniel Gates, CEO

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, President

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

Noel Janda, Director

Expert Approach, Inc. 11723 Old Glenn Hwy., Suite 206 Eagle River, AK 99577 Phone: 907-726-5333

LD Herrera, Pres./CEO

Frigid North Co. 3309 Spenard Rd. Anchorage, AK 99503 Phone: 907-561-4633 Fax: 907-563-0836

Tom McGrath, Owner

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

Samuel Morales, President

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

John Powers, CEO

Integrated Logic, LLC PO Box 2121 Palmer, AK 99545 Phone: 907-745-5115 Fax: 888-827-9105

Chris Johnson, CEO

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

Jessy Strebel, CEO

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

Philip Fontana, President

Network Business Systems 3000 C St., Suite 210 Anchorage, AK 99503 Phone: 907-272-2888 Fax: 907-272-7117

Jones Rygh, Owner

NorthWest Data Solutions 2425 Leary Bay Cir. Anchorage, AK 99515 Phone: 907-227-1676

Christoper Howell, CEO

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

Craig Fisher, CEO

Resource Data, Inc. 560 E 34th Ave., Suite 100 Anchorage, AK 99503 Phone: 907-563-8100 Fax: 907-561-0159

Jim Rogers, President

SanComp IT Services LLC 15835 Noble Point Dr. Anchorage, AK 99511 Phone: 907-317-1922 Fax: 877-335-6403

Sanjay Talwar, VP Tech.

AK AK Estab. Estab. Empls. Empls. 1990

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

2010

Cloud49 is the premiere provider cloud computing solutions including hybrid cloud storage and pay as you go virtual servers. Cloud49 sells through a network of trusted service providers. Although Cloud49's roots are in Alaska, they have since added locations in Seattle, Los Angeles, and Austin.

1995

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

1991

IT Managed Services Provider. We believe every technology experience must be business driven, well planned and predictable; the actual costs should match the budget. We leverage 3 specific services to meet our vision: Flat-Fee Support, Design & Project Planning and long-term Technology Management Planning.

2007

Alcatel-Lucent, Nortel, Avaya, NEC, Proxim and Ceregan. IT Infrastructure including VoIP Telephones, GPON fiber to the desk, LAN/WAN. Engineering, Design, Installation, Service, Sales and Leasing. PBX, IP Telephoney, Call Centers, Call Accounting, Local Area Newks, Microwave, Cabling, Fiber Optics and Wind Energy

2011

We provide high level web development for our government and commercial clients. Our creations typically involve a high degree of functionality, complexity, and integration with other systems. Through our expertise with user interfaces and data manipulation, we use today's technologies to build tomorrow's solutions. > 95% of work done in AK.

1979

Cabling service; data communications; hardware; network design, installation, security & upgrades; remote access; service & support; wireless networking; wire & cable; premises telecom products; batteries; computer networking products; antennas & tower products; electronic test equipment; tools & accessories.

1981

Futaris is a technology company providing Satellite Communications, Broadcasting Services, LMR, Managed IT and Data Security Services to enterprise and government entities. Futaris is nationally certified as a HITRUST CFS Assessor organization and is the only such assessor in the state of Alaska.

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- 1000ÂŁs of technology products and software.

2008

Integrated Logic, LLC is a digital network solutions company serving medium & enterprise businesses, education, healthcare & the public sector in Alaska & beyond. We employ roughly two dozen individuals & offer a broad range of technology products & services, empowering our clients to meet their strategic business & IT goals.

2001

International Data Systems, Inc. is a technical resource company. We have several areas of expertise: visualization, managed IT services, a supplier of reliable hardware and software, training. We will be your IT specialist at the fraction of the cost of maintaining an in-house staff.

1987

Lewis & Lewis is a full-service provider of HP, Lexmark, and Xerox printers, supplies, and services.

1987

The only woman owned and operated Alaskan IT company dedicated to helping Alaskan companies solve business challenges by leveraging technology. Serving clients for over 27 years, NBS offers Cloud Services, Managed Services, Technical Services, Network & Project Management Staffing, and Hardware/Software Procurement.

2003

Web development, custom software and database development. Aviation safety management systems. Temporary staffing of professional software engineers.

1997

Enterprise level software engineering and database programming, information technology consulting, buy-build analysis, systems analysis and integration, business intelligence and reporting services, IT staff augmentation.

1986

120

We use technology to solve complex business problems in many sectors including oil & gas, utilities & government. Services: project management, business analysis, SharePoint, network support, system integration, software development, web and mobile development, and GIS. Offices in Anchorage, Juneau & Fairbanks.

2010

IT consulting, software implementation & dev., systems integration; Application analysis, upgrades & support, database conversion, new database development & data manipulation networking; ASP .NET, C/C++, HTML, JavaScript, XML, C Shell & VB.net; SQL servers, Oracle, & Informix; Healthcare data analysis. Websites.

badinc@mtaonline.net badinc.net

info@cloud49.com cloud49.com

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

info@denalitek.com denalitek.com

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

linkedin.com/in/ldherrera expertapproach.com

frigid@gci.net frigidnorth.com

sales@futaris.com futaris.com

info@gcsit.com gcsit.com

info@integratedlogicllc.com integratedlogicllc.com

info@international-data.net international-data.net

info@lewisandlewis.com lewisandlewis.com

info@nbsys.com nbsys.com

sales@nwds-ak.com nwds-ak.com

pangoinfo@pangomedia.com pangomedia.com

info@resdat.com resdat.com

Sanjay@SanComp.com SanComp.com

Alaska Business Monthly | July 2014

Services Services

www.akbizmag.com

Company Company

Top Executive Top Executive

Skurla's POS Solutions 1317 W. Northern Lights Blvd., Suite 1 Anchorage, AK 99503 Phone: 907-243-2683 Fax: 907-248-2466

Lynn Skurla, Owner/Gen. Mgr.

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

Joe Law, Founder

SunGard Availability Services 800 Fifth Ave., Suite 4100 Seattle, WA 98104 Phone: 425-495-7079

Don Wright, Strategic Accounts Exec.

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

Jonathan Butzke, Owner

Tech Connect, Inc. 432 E. Pioneer Ave., Suite C Homer, AK 99603 Phone: 907-235-5248 Fax: 907-235-6157

Craig Forrest, President

TecPro Ltd. 816 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-348-1800 Fax: 855-348-1830

Cynthia Saunders, Pres.

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

A. Lani Davis, Chairwoman

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 Services

1976

Alaska's Retail/Hospitality IT and Point of Sale Specialists: restaurant/bar systems, retail/ grocery/inventory systems, Mobile & iPad Solutions, cash registers, scales, POS security cameras, credit & gift cards.

1996

Anchorage Alaska's Website Design Studio. Small businesses, non-profits, native corporations & companies just like yours count on our Sundog team to meet website design, management, hosting & domain management needs. Alaskan & family owned since 1996, we are a friendly group of people designing & managing brilliant websites.

1978

SunGard Availability Services is your partner in IT availability and business continuity. With more than 30 years of disaster recovery expertise, supporting complex hybrid IT environments, we partner with organizations of all sizes to provide solutions backed by service level agreements to meet specific business requirements and objectives.

1989

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

1989

Antivirus, disaster recovery, hardware, installation, Internet/Web connectivity, network installation, network upgrades, service and support, software, upgrades and wireless networking. Custom computers. Radio Shack Dealer.

1997

TecPro offers electrical contracting services, UL Listed industrial control system integration, and security integration services (video, access, alarm). Specialties include SCADA and PLC design, fabrication, installation, and programming.

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 Weston-tech.com.

facebook.com/Skurlas skurlas.com

info@sundogmedia.com sundogmedia.com

don.wright@sungard.com sungardas.com

info@talkingcirclemedia.com talkingcirclemedia.com

techcon@acsalaska.net techconnectinc.net

info@tecpro.com TecPro.com

orderdesk@tbcenter.com tbcenter.com, facebook/tbcenter

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

TELECOM MEDIA Company Company

Top Executive Top Executive

Alaskalink 12000 Wagner St. Anchorage, AK 99516 Phone: 907-830-3578 Fax: 907-345-5012

Ryan Stencel, Owner

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

Kristen Lindsey, Mng. Partner

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

Expert Approach, Inc. 11723 Old Glenn Hwy., Suite 206 Eagle River, AK 99577 Phone: 907-726-5333

LD Herrera, Pres./CEO

Immersive Video Solutions 907 E. Dowling Rd., Suite 14 Anchorage, AK 99518 Phone: 907-279-4000 Fax: 907-274-4000

Kenn Kadow, President

NorthWest Data Solutions 2425 Leary Bay Cir. Anchorage, AK 99515 Phone: 907-227-1676

Christoper M Howell, CEO

Northwest Strategies 441 W. Fifth Ave., Suite 500 Anchorage, AK 99501 Phone: 907-563-4881 Fax: 907-562-2570

Timothy Woolston, CEO

www.akbizmag.com

AK AK Estab. Estab. Empls. Empls.

Services Services

2000

Project and operations management, policy, and consulting.

2003

1987

1995

2011

rmstencel@aol.com

info@apokrisis.com apokrisis.com

info@amicro.com amicro.com

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

linkedin.com/in/ldherrera expertapproach.com 2005

12-25 Geo-spatial mapping using 360 degree HD video camerias and LiDAR technologies.

info@immersivevideosolutions.com immersivevideosolutions.com 2003

Web development, custom software and database development. Aviation safety management systems. Temporary staffing of professional software engineers.

1987

NWS is a full-service advertising and public relations firm that produces and implements multi-media campaigns promoting statewide businesses in some of Alaska's largest industries, including natural resources, tourism, transportation, healthcare, and retail.

sales@nwds-ak.com nwds-ak.com

chris@nwstrat.com nwstrat.com

July 2014 | Alaska Business Monthly

ALASKA BUSINESS MONTHLYâ&#x20AC;&#x2122;S 2014 TELECOM & TECHNOLOGY DIRECTORY

INFORMATION TECHNOLOGY

ALASKA BUSINESS MONTHLYâ&#x20AC;&#x2122;S 2014 TELECOM & TECHNOLOGY DIRECTORY

TELECOM MEDIA Company Company

Top Executive Top Executive

Optima Public Relations PO Box 101134 Anchorage, AK 99510-1134 Phone: 907-440-9661 Fax: 907-376-9615

Tom Anderson, Manager Parter

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

Lincoln Garrick, Pres.

Spawn Ideas 808 E St. Anchorage, AK 99501 Phone: 907-274-9553 Fax: 907-274-9990

Karen King, CEO/Pres.

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

Joe Law, Founder

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

Jonathan Butzke, Owner

AK AK Estab. Estab. Empls. Empls.

Services Services

2011

Optima specializes in graphic/website design, audio/TV production & media relations, infusing modern & dynamic imaging & communications with award-winning design. Our clients include corporations, cooperatives, trade associations & non-profits, governments & political candidates. Offices in Wasilla & Anch.

1997

Full-service communication agency providing a complete suite of offerings, from strategy & research to production, digital design & media. We are a wholly owned Calista Corp company with 3 unique specialties: rural Alaska, brand champion & government reputation management expertise. Bright Clients-Bright Ideas

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. Named one of Outside Magazine's "Best Places to Work 2013" and Top Ad Agency in Alaska by AdWeek.

1996

1989

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

info@optimapublicrelations.com optimapublicrelations.com

info@solsticeadvertising.com solsticeadvertising.com

facebook.com/spawnalaska spawnak.com

info@sundogmedia.com sundogmedia.com

info@talkingcirclemedia.com talkingcirclemedia.com

TELECOM PROVIDERS 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./CEO

AK AK Estab. Estab. Empls. Empls.

Services Services

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.

1957

100

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. facebook.com/alaskapowerandtelephone.

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 astac.net

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.

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

Bob Bass, Pres.-Alaska

1876

531

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.

Bowhead Communications Services 6700 Arctic Spur Rd. Anchorage, AK 99518 Phone: 907-375-6600 Fax: 907-375-6680

Steve Darner, Pres.

2006

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

Samuel Morales, President

1981

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

Ron Duncan, CEO

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

Greg Berberich, CEO

Rocket Satellite Corp. 13131 Elmhurst Cir. Anchorage, AK 99515 Phone: 907-222-3474 Fax: 970-563-5564

Ronald Saculla, President

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

Brenda Shepard, Pres./CEO

Verizon Alaska 188 W. Northern Lights Blvd., Suite 901 Anchorage, AK 99503 Phone: 907-777-9800

Demian Voiles, VP Verizon Alaska

100

letsbetteralaska@acsalaska.com alaskacommunications.com

aptalaska.com

@ATTCustomerCare att.com, facebook.com/ATT

marketing@bowheadsupport.com bowheadcommunications.com

sales@futaris.com futaris.com 1979

1900 Integrated communications provider offering facilities-based local and long distance telephone services, Internet and TV services, statewide wireless service, data, video conferencing, tele-health, enterprise network design and IT professional services support.

1953

297

1983

Rocket Satellite, Inc. designs and installs custom entertainment systems specializing in Home Theater and Multi-room Audio/Video, Lighting Control Systems, Home Automation and Satellite TV and offers the best service for DirecTV, Dish TV, and Excede Internet service throughout South Central Alaska.

1968

TelAlaska is a full service telecommunications company serving 25 rural communities and providing advanced network services to urban markets. Services include local, long distance and cellular telephone service; advanced data services; cable modem, DSL and wireless Internet service; and cable TV.

2010

Verizon Wireless operates the nation's largest 4G LTE network and largest, most reliable 3G network. The company serves 98.9 million retail customers, including 93.2 million retail postpaid customers. In Alaska, Verizon is building an all 4G LTE network from the ground up- the first of its kind anywhere in the nation.

facebook.com/gciak gci.com

facebook.com/MatanuskaTelephone mtasolutions.com

rocky.saculla@222dish.com 222dish.com

customerservice@telalaska.com telalaska.com

alaska@vzw.com verizonwireless.com/alaska

Alaska Business Monthly | July 2014

Alaskan owned, non-profit cooperative delivering advanced communications products including wireless, high-definition digital television with video-on-demand & local community content, high-speed Internet, local & long-distance, online directory, IT business support, directory & television advertisi

www.akbizmag.com

HR Matters

By Kevin M. Dee

Stay-At-Home Workers Connecting oﬃces with technology

echnology makes huge differences in most of our lives and facilitates business on a global scale. Today’s workers now have many choices as to where and how they work, especially when it comes to office-related professions. “There’s an app for that” has become true for just about anything you can think of, and if you think of something new, someone is waiting to make it into an app. Even farmers today can program their tractors to plow the “back forty” and relax from home, watching remotely as the tractor does its job. The technological evolution in the workplace brings increased stress and a blurring of the lines between work and personal life. We need to find balance between being connected to our work worlds and living our “real lives.”

Always at the Office Working from home means you are always at the office, no matter where you are. Your phone is your office and can access so much information that we are in danger of losing our critical thinking skills. Home offices are more comfy and come with many more distractions and temptations. You can work in your pajamas at home or take a laptop and hang out at a coffee shop while sipping lattes, munching on muffins, and still wearing pajamas. The office, which used to be a social connecting place, is becoming less and less the place where we come to think and connect with coworkers and colleagues. We can now use LinkedIn or Facebook, Twitter or Facetime, instead of actually talking to a real person. One client commented that they can get more done in three hours at home than a whole day at the office, without boring meetings, social chatting, and people popping by. Technology makes this all possible and then some. Today geowww.akbizmag.com

graphic proximity is not a necessity for many businesses and workers as long as they are connected by technology.

Questions to Ask Some people working from home have made it work for them, but before you ask to work from home, you may want to ask yourself these questions: ■ Is your job something that can, at this time, be considered for working at home? How? ■ Are you a self-starter and would you be able to keep up with your work products or would you give in to watching Mad Men or Game of Thrones reruns and scrambling last minute to get things done? ■ How are you going to maintain the relationships (people, not machine) critical to you and your team’s success? Especially when we understand that body language is sometimes more than 90 percent of communication. ■ How will you sort out all the dayto-day barrage of information that now will only come to you in emails? At the oﬃce you could walk down the hall, or you would likely know its importance before you even got the email. ■ How will you keep up with what occurs at meetings you no longer attend? ■ Do you have the self-discipline to balance a healthy lifestyle with high productivity? If you can give thoughtful answers to most of these questions, you are ready to consider working from home.

Transformative Revolution We are in the midst of a transformative

revolution where offices are more and more seen as inhibiting places, where cubicles and fluorescent lighting are unpleasant relics of a bygone era. Yes, they were and still are places to come together to share in work and struggles and do good things, but now there is an app for that. The new workplace is anywhere there is broadband access or free Wi-Fi and electrical power. Perhaps articles such as this can be composed by dictating into an iPhone while walking the beach in Homer. Then it can be finished by laptop on the house porch while Sandhill Cranes dance below in the yard. Working from home isn’t straight forward for the company and comes with demands for change that can be difficult. People will need to be paid based on completion of work products versus how many hours they put in at the office. “Many employers say they offer telecommuting and flexible work hours to employees, but in fact are cutting back on time for child leave or to care for an ill parent,” wrote Tara Siegel Bernard in The New York Times. Quality standards and face-to-face time will have to be more orchestrated, and we will all have to learn new ways of living and working so there is balance instead of overwhelm. At least at the office we could shut it all off for the most part when we left.  Kevin M. Dee has a master’s degree from Vanderbilt University and is the president of KMD Services & Consulting. He has more than twenty-eight years of experience providing leadership development, organizational development, and human resource services in Alaska and internationally. Contact him at mail@kmdconsulting.biz. July 2014 | Alaska Business Monthly

101

RIGHT MOVES Anchorage 5th Avenue Mall

Kari Skinner, a born and raised Alaskan, is the new Director of Marketing and Business Development at the Anchorage 5th Avenue Mall. Skinner brings several years of business, marketing, and customer service experience to her new role.Previously, Skinner was a marketing Skinner manager at Overstock.com for three and a half years and an information manager at Nordstrom Fashion Place in Murray, Utah.

UMIAQ

Compiled by Russ Slaten for the Environmental Department. Buckner has a background in environmental management, regulatory compliance, and permitting, including assisting in preparation of National Pollution Discharge Elimination System individual and general permits and the development of complementary Storm Water Pollution Prevention Plans.

US Office of Indian Energy

Givey Kochanowski joins the US Office of Indian Energy in Anchorage as the new program manager for Alaska. Kochanowski comes from the General Services Administration, where he served as the Customer Service Director and worked with Alaska Native Tribes and villages.Stationed at the Denali Commission office, Kochanowski is responsible for the support and delivery of Department of Energy technical assistance, capacity building, energy education, and outreach to all Alaska tribal entities.

Steve Ribuffo is the new Port Director. Just before joining the Municipality, Ribuffo retired as a Colonel after thirty years of active duty with the US Air Force. He served as Deputy Director at the Port since August 2007 and briefly as Interim Port Director in 2012. Sharen Walsh accepted the position as Deputy Port Director. Walsh is a lifelong Alaskan and a registered professional civil engineer. She has over thirtyeight years of private and public sector experience in engineering and construction. She has worked for the Municipality since 2007 and since 2010 has served as Deputy Director of Development Services and as the Municipal Building Official.

First National Bank Alaska

USTravel

Jorgensen

Green

Lawrence Jorgensen, AIA, joins UMIAQ’s Design Division as an Architect in the Anchorage office. He is a lifelong Alaskan with over twenty years of professional experience in architecture. Jorgensen has recently completed work on the Barrow Replacement Hospital as Buckner the on-site Project Engineer/Project Manager. He earned his degree at Washington State University and became licensed in Alaska in 2005. In response to UMIAQ’s new Municipal Services Division, Erika Green has been hired as a Senior Planner for the new Municipal Services Division. With twelve years of professional planning experience in local and state government land use planning, policy, and community development, Green has extensive experience working with Tribes and Alaska Native populations. LeAnn Buckner has been hired as a Staff Scientist

USTravel announces the promotion of Elizabeth Nerland to Director of Marketing. In this key role, Nerland provides strategic leadership for business growth and brand development for USTravel Companies and oversees marketing programs, content devel- Nerland opment, public relations initiatives, and advertising strategy. Nerland has been with USTravel since March 2012. She touts over ten years of experience in marketing and corporate communication and holds a master’s degree from the University of Alaska Anchorage as well as bachelor’s degrees in Marketing and Corporate Communications from Duquesne University in Pittsburgh, Pennsylvania.

Municipality of Anchorage

Rich Wilson, Director of the Port of Anchorage since 2012, has retired. Wilson previously served as the Development Director at the Ted Stevens International Airport from 1996 to 2010. He also previously served as the City Manager of the cities of Saint George and Cordova. He began his Alaska public service career serving as the Executive Assistant to the Anchorage City Manager from 1974-1976.

Fowlis

Kaltschnee

New Branch Managers are at the helm of three First National Bank Alaska branches after the bank’s Board of Directors announced promotions and appointments. Syl Fowlis was appointed Branch Manager at the Federal Branch in downtown Moyer Anchorage. Originally from Gambia, Fowlis has worked in banking for more than a decade with roles as a Teller, Personal Banker, Business Development Officer, and Branch Manager. Bill Kaltschnee is the Branch Manager at the South Center Branch in midtown Anchorage. Kaltschnee’s spent more than nineteen years working in Anchorage’s financial industry, including the last three at First National. Karlyn Moyer is the Branch Manager at the Muldoon Branch in East Anchorage. An Air Force veteran, Moyer previously held the same position at the Federal Branch and first joined First National in 1997.

SLED DOGS & SOFAS & MILK

OH MY!

WE’RE OFF TO RURAL ALASKA

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RIGHT MOVES Afognak Native Corporation

The Afognak Native Corporation announces its new President and CEO Gregory Hambright. He served as Senior Vice President of Technical Services for Afognak’s largest wholly owned subsidiary, Alutiiq, LLC, while working in its Huntsville, Alabama- Hambright based corporate office. Before joining Alutiiq in 2004, Hambright served in senior and executive positions with Teledyne Industries, Intergraph Corporation, and ManTech Corporation. He also served as Chief Engineer on two US Space Shuttle Missions and as a Fixed Wing Aviator in the US Navy. Hambright holds a bachelor’s degree in accounting and an MBA with a concentration in computer science. He also holds US patents in diffractive optics.

Bering Straits Native Corporation

Compiled by Russ Slaten helping oversee BSNC’s charitable giving efforts. She earned a bachelor’s degree in Political Science from Columbia University in New York City. She is a member of the Alaska Native Heritage Center’s Development Committee.

Chugach Alaska Corporation

Melanie Osborne joins Chugach Alaska Corporation as its new Corporate General Counsel. Osborne will be responsible for providing legal guidance to Chugach’s board of directors and executive leadership team and legal oversight across the Osborne entire Chugach family of companies. Prior to joining Chugach, Osborne was Vice President and Deputy General Counsel at NANA Development Corporation, advising on matters involving corporate governance, contracts, employment law, compliance, and litigation. Osborne holds a law degree from the University of Washington and a bachelor’s degree in justice and psychology from the University of Alaska Anchorage.

Key Bank

and delivering service to large commercial clients throughout Alaska. Murry joined KeyBank in 2009, following twelve years of commercial banking in Milwaukee, Wisconsin. Murry was recognized recently for outstanding performance by being named to KeyBank’s 2013 Signature Circle.

ANTHC

Alaska Native Tribal Health Consortium Associate Engineer Lieutenant Max Goggin-Kehm was named the 2014 Ian K. Burgess Young Public Health Service Commissioned Corps Engineer of the Year for his energy efficiency upgrades and emergency response work with rural Goggin-Kehm Alaska water and sewer systems. This award recognizes US Public Health Service engineer officers that have demonstrated exemplary work. In the past year, Goggin-Kehm managed teams of plumbers, electricians, and local laborers and executed projects in Chevak and Savoonga while also supporting emergency response efforts following flooding in Kotlik, all of which improved sanitation facilities and services for more than 2,500 Alaskans.

WHPacific, Inc.

Schubert

Aarons

Bering Straits Native Corporation (BSNC) President & CEO Gail Schubert received the Unsung Hero Award from the Northwest Indian Bar Association. The annual award honors an attorney for outstanding contributions toward improving the legal and political landscape of Pacific Northwest Indian Country. Schubert is known for her leadership and service to the Alaska Native community. She is Treasurer of the Alaska Federation of Natives, Chair of the Alaska Retirement Management Board, and Vice Chair of the Akeela Treatment Services Board, the Alaska Native Justice Center, and the ANCSA Regional Association. BSNC also announced the promotion of BSNC shareholder Miriam Aarons to Corporate Communications Director. In her new role, Aarons is responsible for brand management, public relations, coordinating media communications, and

Hamilton

Murry

Eric Hamilton joins KeyBank in Juneau as business banking relationship manager and assistant Vice President. In his new role, he is responsible for business development and customer service delivery in Southeast Alaska. He brings more than five years of experience in banking and insurance. Hamilton holds a bachelor’s degree in business administration from Concordia University in Portland, Oregon. Joseph Murry has been promoted to Senior Relationship Manager with KeyBank. In his new role, he is responsible for developing new business

WHPacific, Inc. announced the addition of Alan Quesnel, PE, as Electrical Engineer to the company’s Anchorage office. He was recently honored by being inducted into the Society of American Military Engineers Academy of Fellows for his outstanding service and dedication to Quesnel the organization as a board member. Quesnel will be working for WHPacific on electrical metering and relaying for village power plants in the North Slope Borough and the wind diesel wind turbine project in Buckland. He has more than thirty-three years of experience in electrical engineering and recently retired from the Department of Defense. Quesnel holds a bachelor’s degree in engineering from the University of Portland. 

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INSIDE ALASKA BUSINESS

GripAll

ripAll, a Fairbanks-based manufacturer of peel and stick traction products XtremeGrip and LavaGrip, announced in May its plans with Alaska Industrial Hardware (AIH) to stock the anti-slip adhesives in the chain of hardware stores. In addition to the instore availability, the arrangement also makes GripAll products available for purchase through AIH’s website. With eight AIH locations throughout Alaska, the arrangement is the largest in-state retail distribution arrangement to date for the Fairbanks manufacturer, whose traction products were originally developed for use in Alaska’s oil and gas industry. Maintaining strong ties to the 49th state remains a focus for GripAll, and the AIH stocking plan is an exciting opportunity for both companies.

Anchorage 5th Avenue Mall

nchorage 5th Avenue Mall announced two new tenants at the property in April: Buckle, a denim destination and specialty retailer, and LUSH Handmade Cosmetics, the first location in the state of Alaska for both companies. The two retailers will be added to the robust line-up of stores the property has added in the past year including Michael Kors, Sephora, and Starbucks. In addition to new retailers moving in, there has been a lot of movement at the property. Hallmark, Journeys, Hot Topic, and Wet Seal have all relocated. The mall also extended its Saturday hours in May, remaining

Compiled by Russ Slaten

open until 9 p.m. to stay consistent with the restaurants and department stores that currently stay open later than the mall.

Alaska USA

laska USA Federal Credit Union has contributed $41,000 to support nonprofit organizations as part of its annual grant program. This year, the credit union granted funds to fortyfour organizations in the communities Alaska USA serves. Since its inception nearly twenty years ago, the credit union has given over $675,000 through the grant program. To be eligible for a grant, organizations must provide services directly to individuals, be within Alaska USA’s field of membership, and be tax exempt under Section 501(c)(3) of the Internal Revenue Code for at least three years.

GeoNorth has tasking capabilities for the Airbus Defense and Space satellite constellations of SPOT 5 & 6, Pleiades 1A & 1B, and the SAR satellites TerreSAR-X and TanDEM-X. Given the unique requirements set forth by NOAA for this particular application, GeoNorth will deploy the capabilities of the Pleiades constellation, providing the ability to acquire 50cm high resolution multispectral imagery. As Pleiades 1A & 1B operate as a true constellation, GeoNorth felt this to be the most effective sensor for rapidly acquiring imagery in the client’s specified area of interest. GeoNorth owns and operates its own optical and radar satellite Direct Receiving Station located in Fairbanks, giving the firm the ability to task these satellites, collect the imagery, and downlink the acquisitions directly to their company-owned facility for processing, distribution, and archival.

GeoNorth

eoNorth, one of the nation’s premier Information Technology solutions providers—wholly owned subsidiary of The Tatitlek Corporation—headquartered in Anchorage, has been awarded a new contract by the US Department of Commerce, National Oceanic and Atmospheric Administration (NOAA) for satellite imagery collections over the Philippines Islands. Through a publically competitive process, and in support of the NOAA Pacific Islands Fisheries Science Center, NOAA has awarded GeoNorth a contract to provide remote sensing images to quantify the number and density of payaos in the Philippines.

Black Gold Oilﬁeld Services

airbanks-based Black Gold Oilfield Services opened its newest lodge in April located on the North Slope in Deadhorse, serving workers in the Prudhoe Bay oilfield. The lodge features 224 single occupancy rooms near the intersection of the Dalton Highway and East Lake Colleen Drive, in close proximity of the Prudhoe Bay oilfields and the Deadhorse Airport. Lodge guests are offered such amenities as pillow top mattresses, fitness and gaming center, twenty-four-hour snack room, free laundry facilities, and three daily meals prepared by Black Gold’s catering team.

Your Project, Our Responsibility. 24/7 Service Pacific Pile & Marine has a robust fleet of marine equipment including our recent addition of a 600-Ton 4600 Ringer.

www.pacificpile.com I (907) 276-3878 276-3873 104

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

INSIDE ALASKA BUSINESS

GCI

eneral Communication, Inc. (GCI) expanded 3G wireless services to Bethel in May with cell tower upgrades completed by Alaska Wireless Network. Extended coverage to nine nearby villages is expected later this year. GCI successfully secured the $2.2 million in federal funding for the project from the Federal Communications Commission. GCI wireless customers in the region with 3G or LTE capable devices will experience immediate benefits at no additional cost. The network upgrade provides customers improved data speeds, audio and video streaming, and mobile web browsing. Nearby villages to be upgraded to 3G services later this year include Tuluksak, Akiak, Akiachak, Kwethluk, Atmautluak, Kasigluk, Nunapitchuk, Napaskiak, and Napakiak.

House of Bread Anchorage

he US Small Business Administration announced that Ginna and John Baldiviez, owners of House of Bread Anchorage, were named the 2014 Alaskan Small Business Persons of the Year and were honored as one of the nation’s top state small business winners in Washington DC in May for the National Small Business Week Awards celebration. Winners are selected based on their staying power, growth in number of employees, increase in sales and/ or unit volume, financial strength, innovation, response to adversity, and community contributions.

Compiled by Russ Slaten

House of Bread Anchorage is one of eight bakery/café stores connected with the House of Bread franchise based out of San Luis Obispo, California. It opened three years ago in South Anchorage. Since 1990, the Baldiviez’s have made their mark on the Alaskan economy. It started with John and his partners opening the doors to Ditomaso’s, a local produce wholesaler. It continued with John and Ginna operating The Mangy Moose Bed and Breakfast. They also promoted healthy eating options by creating The Alaska Carrot Company, the first local produce production facility. These days they continue their journey with more healthy options found in the simple, all-natural ingredients of the House of Bread Anchorage.

Alaska Trust Company

laska Trust Company and Alaska USA Trust Company (AUTC) jointly announced in April that they have entered into a letter of intent whereby Alaska Trust Company will acquire all the outstanding stock of AUTC from AUTC’s parent company, Alaska USA Federal Credit Union. The transaction is subject to the negotiation of a definitive stock purchase agreement, approval by the Alaska Division of Banking and Securities, and approval by the respective boards of directors. The parties are targeting a closing and effective date of July 31, 2014.

USI Insurance Services

SI Insurance Services, the third largest privately held insurance broker and the tenth largest insurance broker overall in the United States,

completed the acquisition of certain offices of Wells Fargo Insurance Services USA, Inc. in May. The former Wells Fargo Insurance office located in Anchorage is now officially a USI office and will operate as part of a regional network of USI offices known as USI Northwest. The office will continue to be staffed by the same teams, and there will be no changes to existing policies, products, or other aspects of existing client relationships. Clients will now have access to an expanded selection of employee benefit and commercial insurance resources and services in addition to retirement plan and private client services.

Anchorage School District

he inaugural “Drive for Perfect Attendance” program finished out a stellar year by awarding a brand new Jeep Patriot to one high school student with perfect attendance and fifty thousand Alaska Airlines Miles each to four runners up in May. The campaign was a partnership by Lithia Chrysler Jeep Dodge of South Anchorage and GCI, Pizza Hut Alaska, the Alaska Aces, Alaska Fighting Championship, and Anchorage School Business Partnerships. The winner of the Jeep Patriot, donated by Lithia Chrysler Jeep Dodge of South Anchorage, was Justus Easley, a senior from SAVE High School. The other finalists, who each took home fift y thousand Alaska Airlines Miles donated by GCI, included Dylan Denter from Eagle River High School, Chong Her from Bartlett High School, Bryan Kirby from South High School, and

Your Project, Our Responsibility. 24/7 Service

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

www.pacificpile.com I (907) 276-3878 276-3873 www.akbizmag.com

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

105

INSIDE ALASKA BUSINESS Jemuel Prince from East High School. Additionally, Pizza Hut Alaska awarded Personal Pan Pizzas to all 4,735 ASD high school students who had attendance of 95 percent or better this school year, while the Aces and AFC donated five hundred tickets each to their events throughout the year. The idea behind Drive for Perfect Attendance originated from Lithia Chrysler Jeep Dodge of South Anchorage General Manager Troy Jarvis after speaking with Jeannie Mackie, school board president at the time. With a rough concept in hand, Jarvis partnered with GCI and Pizza Hut of Alaska because both companies have a strong history of supporting education in Alaska.

NC Machinery

C Machinery announced in May that they acquired the expanded Cat Mining equipment distribution and support business for its territories from Caterpillar Global Mining LLC. NC Machinery is the authorized Cat dealer in Alaska and western/central Washington. NC Machinery assumed responsibility for the sales, marketing, and product support of the expanded Cat mining products, which include draglines, unit rig mining trucks, room and pillar and longwall equipment, electric rope and hydraulic shovels, highwall miners, drills, belt systems, and various other lines of support equipment. Caterpillar announced similar transactions with other dealers over the last several months. Caterpillar continues to hold discussions with other Cat dealers that have mining activity in their territories and will continue to operate

Compiled by Russ Slaten

the former Bucyrus distribution business until the transitions have occurred in a given territory.

Regional Supply LLC

egional Supply LLC, one of the largest digital print and plastic supply wholesalers in the Western United States, announced in May that it acquired the assets of Image Control Systems of Alaska, based in Anchorage. Since 2003, Image Control Systems has distributed graphic arts supplies and services for the offset printing, digital printing, wide format inkjet, and fine art markets. With the new transition to Regional Supply, principal Bob Christoffers will continue to manage operations for the division in Anchorage. Founded in Salt Lake City in 1946, Regional Supply specializes in wholesale supply to wide format digital printers, screen printers, electric and vinyl sign makers and installers, and a large variety of plastics users.

Stantec

orth American design firm Stantec will grow its presence in the Alaskan and Pacific Northwest markets by acquiring USKH, Inc. Headquartered in Anchorage, USKH is a 130-person multidiscipline design firm founded in 1972 with offices in Alaska, Washington, and Montana. The transaction was expected to be closed by press time. Serving a diverse base of public and private clients, USKH provides fullyintegrated architectural, landscape architecture, engineering, environmental, planning, and surveying services. Among the firm’s community-driven

design projects are the Denali Princess Wilderness Lodge in Alaska’s Denali National Park, the Eielson AFB Fitness Center, and the City of Plummer Wastewater Treatment Plant in Idaho. USKH’s regional clients include the State of Alaska Department of Transportation and Public Facilities, Municipality of Anchorage, Pangborn Memorial Airport, City of Kodiak, University of Alaska Fairbanks, Kenai Peninsula Borough, and Fairbanks Gold Mining, Inc., among others. Stantec currently has nearly 6,000 employees working across 140 offices in the United States. The acquisition of USKH, combined with Stantec’s intended acquisition of Dallas, Texas-based SHW Group, announced in May, represents the addition of more than 400 people to the firm’s US operations.

Marsh Creek LLC

arsh Creek LLC was selected in May as the US Small Business Administration’s 2014 Region 10 Prime Contractor of the Year. The Anchoragebased business is jointly owned by Kaktovik Iñupiat Corporation and Solsten SP, Inc. Marsh Creek was nominated for their exemplary work under a contract for the removal of 2,440 tons of contaminated soil from a remote location in the foothills of the Brooks Range in the National Petroleum Reserve-Alaska more than one hundred miles from the nearest road system. Their ability to deliver an onsite ELAP-Certified laboratory saved the USACE over $100,000 in rush laboratory fees and air charters and eliminated potential site works delays of $60,000 per day. 

• General Contracting • Marine Infrastructure • Design Build

Dutch Harbor - Unalaska, Alaska

www.pacificpile.com I (907) 276-3873 106

Alaska Business Monthly | July 2014

620B East Whitney Road I Anchorage, AK 99501 www.akbizmag.com

ALASKA THIS MONTH By Tasha Anderson

TRAVEL

Photos courtesy of Alaska Zipline Adventures

Alaska Zipline Adventures

Above: Davey Anderson ziplining. Right: Guests zipline from highest platform, one hundred feet in the air.

“

laska Zipline Adventures is a small, ecocertified, independent tour company,” says Gin Anderson, who owns the company with her husband, Davy. Alaska Zipline Adventures, located on Douglas Island, was established in 2005 by the couple. “The old growth rainforest of Southeast Alaska was a beautiful setting for a canopy tour, and Eaglecrest Ski Area needed summertime supplemental income; it was the perfect fit,” Anderson says. Since then, Alaska Zipline Adventures has done well. “We were voted the ‘best thrill’ in Alaska by National Geographic Traveler Magazine, and we were really proud to be rated the #1 shore excursion in Juneau on TripAdvisor for 2013,” she says. Alaska Zipline Adventures is certainly unique. “After navigating along seven ziplines and a suspension bridge, everyone gets to embrace their inner lumberjack and try their hand at axe throwing to top off their journey,” Anderson says, an opportunity to experience an authentic aspect of a Southeast Alaska lifestyle. Plus, the friendly, enthusiastic staff makes a huge difference: “Our guides are what really make the tour experience special for our guests. We look for the most friendly people we can find to share their love of the outdoors and Alaska’s natural beauty with our visitors.” Anderson and her husband found themselves in Juneau “seeking adventure” and certainly found it; now they share their “passion for the outdoors with people from all over the world… Our goal is to encourage people to live more adventurously while offering them a memorable experience.” alaskazip.com 

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ALASKA THIS MONTH By Tasha Anderson

ENTERTAINMENT

Photo by Tom Ganner

Southeast Alaska State Fair

Diana Lapham of Haines competes in the Power Saw Bucking contest at the 2013 Southeast Alaska State Fair Logging Show.

“

he Southeast Alaska State Fair reflects the culture and people of Southeast Alaska,” says Director Jessica Edwards. “This is a place where we catch fish, harvest timber, hike mountains, and take energy from long summer days. Our events, contests, and attractions reflect Southeast Alaska—the logging show, the fisherman’s rodeo, the Wearable Art show, Tlingit carving demonstrations, puppet theater, a full day of events and contests with concerts far into the night—all of these are uniquely reflective of the people, lifestyles, and art forms in our region.” That’s the short list of what takes place at the fair; it also includes several races; fair Grand Parade; Lovable Dog contest; Southeast’s Got Talent contest; horseshoe, disc golf, and volleyball tournaments; fiddle and singer/songwriter contest; Kids’ Stage free crafts and games; vendors; and live music. Edwards says there will be a few new contests and activities this year, including a sand wrestling competition. Music guests at the fair are Split Lip Rayfield, Vagabond Swing, Elephant Revival, Skagway Aerial Company, Ukulele Russ Band, Juneau Jumpers, Hot Toddies, Shiver Twins, North Country Cajun Club, George Kuhar, Windy Valley Boys, and many others. It’s difficult for Edwards to pin down one “must-see” event: “The Logging Show is a must-see, as is the Wearable Art show, the Fisherman’s Rodeo, Geppetto’s Junkyard puppet shows, the talent show—the fair is truly a blast all four days, with so much to see and do. I wouldn’t miss a single day.” She continues, “Rich in experiences and activities, sights, and sounds, [the fair is] worth traveling for. And admission is inexpensive—forty dollars for a four-day pass, which includes all evening concerts.” The fair takes place July 31 through August 3 at the fairgrounds in Haines. seakfair.org 

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EVENTS CALENDAR 4

Compiled By Tasha Anderson

STATE-WIDE

Independence Day

Across the state, Alaska celebrates Independence Day. Check with local chambers of commerce and visitors bureaus for more information.

ANCHORAGE

Salmon Daze Celebration

Wild salmon is one of Alaska’s most valuable resources, and this festival celebrates the tasty fish with face painting, a fish pond, smoked salmon contest, and live music and performances. Anchorage Museum courtyard, Noon to 6 p.m. anchoragedowntown.org

Salmon Bake

This is the summer fundraiser for the Alaska Aviation Museum. It includes low fly-bys over the lake, a live band, live and silent auctions, door prizes, and of course, delicious salmon to eat. Anchorage Aviation Museum, 3 p.m. to 6 p.m. alaskaairmuseum.org/salmon-bake

26-27

Arctic Thunder

The biannual Arctic Thunder Open House features performances by the US Air Force Thunderbirds Aerial Demonstration Team. The pilots perform approximately forty maneuvers in a demonstration. The entire show, including the beginning ground ceremony, lasts about one hour. Joint Base Elmendorf-Richardson, 9 a.m. to 5 p.m. www.jber.af.mil/arcticthunder/

18-19

CORDOVA

Copper River Wild!

Cordova celebrates all things salmon over this weekend. Events include the Salmon Jam music festival, Taste of Cordova salmon cook-off, a local arts and crafts fair, live music, various runs/walks, a salmon barbeque, and activities for children. Mt. Eyak Ski Hill (unless otherwise indicated), various times. copperriverwild.org

9-13

EAGLE RIVER

Bear Paw Festival

This festival celebrates the people who have built Alaska and those who continue to help it grow. Events include a carnival, bear sculptures, skating competition, picnic, parade, quilters show, barbeques, classic car show, bull riding and barrel racing, live entertainment, food, and more. Various locations and times. bearpawfestival.org

13-27

FAIRBANKS

Fairbanks Summer Arts Festival

The goal of the festival is to enrich lives, through study and performance, by engaging participants’ spirits, intellect, and energy. It offers one hour, one day, and one week workshops. Various locations and times. fsaf.org

16-19

World Eskimo-Indian Olympics

These traditional games display the preparedness needed for survival, requiring strength, agility, and endurance, including the seal hop, four man carry, ear weight, ear pull, high kick, one-hand reach, and nalukataq, or blanket toss. Carlson Center, various times. weio.org

16-20

Golden Days

This year’s theme is “The Gold & the Beautiful,” and the annual festival will include a kick-off party, duck race, parade, senior luncheon, comedy night, jail, street fair, and more. fairbankschamber.org/goldendays/

11-13

FUNNY RIVER

Funny River Bluegrass Festival

This festival is a collection of bluegrass musicians and enthusiasts from across the state and includes food and other vendors. Funny River, starts 3 p.m. Friday. facebook.com/FunnyRiverBluegrass www.akbizmag.com

4-6

GIRDWOOD

Girdwood Forest Fair

This family fair features Alaskan artists, hand-crafted items, exotic foods, and live entertainers from around the state, with the Forest Fair parade on Saturday at 10:00 a.m. Girdwood Fairgrounds, various times. girdwoodforestfair.com

12-13

HOMER

Concert on the Lawn

Sponsored by KBBI, this concert brings together talented musicians from home and beyond for a community weekend in support of public radio. The concern also includes food and craft vendors. Karen Hornaday Park, all day. kbbi.org/content/concert-on-the-lawn

PALMER

Color Festival

With roots in ancient India, Color Festival is a joyful reminder to cast away bad feelings and throw worries to the wind. Join the throngs of people laughing, playing, dancing, eating, and filling the sky with clouds of bright color. The festival includes live music, dance, and yoga instruction. Alaska State Fairgrounds Purple Gate, 11 a.m. colorfestival.com/locations/Anchorage

Palmer Pride Picnic

This free picnic celebrates pride in downtown Palmer and is hosted by Palmer businesses and the City of Palmer. It includes Palmer Pride hotdogs, fresh vegetables, live music, and a citizen of the year presentation. Palmer Railroad Depot, 4 p.m. to 6 p.m. palmerchamber.org

SEWARD

Mount Marathon Race

This annual foot race is a 1.5 mile challenge up Mount Marathon and back. Registration is closed by July, except for the July 3 Auction & Raffle, but spectators can enjoy the race finish and the awards ceremony at the AVTEC gymnasium at 6 p.m. Downtown Seward; junior race starts 9:30 a.m.; women’s at 11:15 a.m. and 11:20 a.m.; men’s at 3 p.m. and 3:05 p.m. mmr.seward.com

26-27

SOLDOTNA

Soldotna Progress Days

This is the largest event of the year for the Soldotna community and includes a parade, family activities, a Dutch oven competition, and community picnic. Soldotna Little League Fields, various times. visitsoldotna.com/

TALKEETNA

Moose on Parade

Local businesses decorate wooden moose, which are on display throughout town. After a parade at noon, the moose are sold at an auction. Village Park, afternoon. alaskavisit.com

23-27

WRANGELL

Bearfest

This festival is a celebration of the bears of Alaska. This year’s special guest is Ray Troll, an Alaskan artist from Ketchikan. Events include street games, a salmon bake, bear symposium and workshops, live music, a marathon, photo contest, story tellers, an arts fair, and more. Various locations and times. alaskabearfest.org

7/30-8/3

VALDEZ

Valdez Gold Rush Days

Celebrate the past, present, and future of Valdez with proceeds donated to various local charities. Events include a film festival, fish fry, triathlon, parade, Build a Boat/Hope it Floats, fashion show, cupcake war, and more. Various times and locations. valdezgoldrushdays.org July 2014 | Alaska Business Monthly

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■ ML&P’s New Plant Under Construction ■ The Efficiency Factor in the Energy Equation

What’s Next

August in Alaska Business Monthly ENVIRONMENTAL SERVICES SPECIAL SECTION ■ ■ ■ ■

Contamination Mitigation on Native Lands: A look at the scope of work. NPR-A Legacy Well Cleanup: What is and isn’t being done. Recycle, Reuse, Recover: Getting down to the business of sustainability Environmental Service Firms & Recyclers Directory

ENERGY & POWER SPECIAL SECTION ■ Railbelt Electricity Projects Status Check ■ Update on Commercial Wind Farms

FEATURE ARTICLES

■ Construction: Alaska review of funded vertical and horizontal public projects. ■ Economic Reform: Shaping public policy by getting out the vote. ■ Financial Services: Surety Bonds & Financing: Determining project cost ceilings. ■ Natural Resources: Sustainable Development: Logging second growth Tongass. ■ Oil & Gas: Marine Services: Diving Offshore in Alaska and the Arctic. ■ Oil & Gas: Industry insights for filling the pipeline. ■ Oil & Gas: Fuel Supplies: Post Flint Hills. ■ Oil & Gas: Heavy Oil: Revisiting North Slope Projects. ■ Telecom & Tech: Worksite Communications: Latest, greatest, best practices. ■ Transportation: Transporting Hazardous Waste: What’s involved and where does it go? ■ Transportation: Tugging Along: What the mighty tug boats accomplish. ■ Visitor Industry: Unique Adventures Zipping Across Alaska ■ From the Editor | Inside Alaska Business | View from the Top | Right Moves Agenda | Legal Speak | Alaska This Month & Calendar | Alaska Trends

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ALASKA TRENDS

Alaska Broadband Access Lags Nation

By Amy Miller 24%

Healthcare Services—% Technology Intensive—%

32% 14% 24%

Agriculture, Mining,

31% hen it comes to broadband, Alaskans 35% Construction, Utilities—% are among the least connected Amer25% Manufacturing—% icans, according to several federal 36% and state surveys of broadband availability. The Wholesale Trade, Transportation, 22% 40% and Warehousing—% state’s vast size and widely dispersed population explain this gap—the infrastructure needed to 28% Retail Trade, Recreation, 32% Food, and Lodging—% provide improved access and faster broadband is expensive, not to mention technically chalProfessional and 17% 21% Financial Services—% U.S. ESTIMATE lenging to build. ALASKA However, access to broadband is widely rec29% All Other Businesses—% 27% ognized as a key economic driver no matter where one lives. A 2011 Business Technology Assessment study in Alaska found that businesses with broadband access report $200,000 more in median “Blueprint for Alaska’s Broadband Future.” The goal established earnings per year than businesses that are not using broadband. by the task force is that every Alaska household will have access The study was conducted by Connect Alaska, a statewide public- to 100 Mbps download and upload capacity by 2020. This goal private partnership working on broadband expansion under a mirrors a standard established in the Federal Communications federal grant administered by the Alaska Department of Com- Commission’s National Broadband Plan for at least 100 million merce, Community, and Economic Development. Considering US households to have access to 100 Mbps upload/download that median self-reported revenues for businesses with broad- by 2020. The national plan noted that Alaska currently has the band were $300,000, the gap between those with broadband and fewest households with this level of access of any state in the nation. The Alaska Broadband Task Force’s blueprint document without is significant. The study found that 70 percent of Alaska businesses sub- describes a variety of ways the state can meet this goal, includscribe to broadband service. But Alaska business owners pay ing establishing standards for public-private infrastructuremore for slower speeds than their counterparts elsewhere in the development partnerships and maximizing Alaska’s share of country. The median monthly broadband charge in Alaska in Universal Service Fund monies available through the FCC. The 2011 was $76.11 at a median advertised download speed of 2.6 full report includes a much more comprehensive set of strateMbps (megabits per second); this compares to a national average gies, and is available for download via www.alaska.edu/oit/ of $68.32 per month for 4.9 Mbps. The state and national data bbtaskforce/homepage.html. on prices and speeds comes from Connected Nation, a national nonprofit working to improve access to broadband nationwide. Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development. In August 2013, the Alaska Broadband Task Force released its

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ALASKA TRENDS

Indicator

GENERAL Personal Income—Alaska Personal Income—United States Consumer Prices—Anchorage Consumer Prices—United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectorial Distribution—Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Information Telecommunications Financial Activities Professional & Business Svcs Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Svcs & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Unemployment Rate Alaska Anchorage & Mat-Su Fairbanks 112

By Amy Miller Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

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

4thQ13 4thQ13 2nd H13 2nd H13

37,179 14,251,060 213.91 233.55

36,923 14,173,058 210.85 232.37

36,649 14,055,505 206.61 230.34

1.45% 1.39% 3.53% 1.39%

Number Filed Number Filed Number Filed

March March March

48 22 9

28 15 4

48 36 9

0.00% -38.89% 0.00%

Thousands Thousands Thousands Thousands Thousands

March March March March March

336.79 188.57 42.51 34.39 36.33

334.32 187.29 42.39 33.88 35.86

334.26 187.66 42.43 34.55 35.09

0.76% 0.48% 0.19% -0.46% 3.53%

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

324.8 45.7 279.1 17.5 17.2 14.3 14.1 14.1 10.6 61.1 6.4 35.2 6.3 9.7 19.7 5.7 6.2 4.0 11.6 28.6 47.5 33.9 29.7 6.0 19.3 11.3 83.1 14.6 26.8 8.6 41.7 23.6 3.5

322.3 45.5 276.8 17.2 17.0 14.2 14.2 14.1 10.5 60.8 6.4 34.9 6.4 9.7 19.5 5.5 6.2 4.1 11.7 28.1 47.5 33.7 28.6 5.9 18.6 11.1 82.8 14.5 26.6 8.6 41.7 23.8 3.5

324.2 44.2 280.0 17.3 17.1 14.2 13.8 13.1 9.6 60.1 6.5 33.9 5.9 9.3 19.7 5.5 6.0 4.0 11.8 29.3 47.1 33.4 29.8 6.4 19.1 11.6 84.3 15.5 26.8 8.7 42.0 24.3 3.5

0.19% 3.39% -0.32% 1.16% 0.58% 0.70% 2.17% 7.63% 10.42% 1.66% -1.54% 3.83% 6.78% 4.30% 0.00% 3.64% 3.33% 0.00% -1.69% -2.39% 0.85% 1.50% -0.34% -6.25% 1.05% -2.59% -1.42% -5.81% 0.00% -1.15% -0.71% -2.88% 0.00%

Thousands Thousands Thousands Thousands Thousands

March March March March March

363.82 201.08 45.37 37.49 39.69

362.08 200.26 45.34 37.27 39.09

359.35 199.27 45.22 37.32 38.26

1.24% 0.91% 0.33% 0.46% 3.74%

Percent Percent Percent

March March March

7.4 6.2 6.3

7.7 6.3 6.6

7.0 5.8 6.2

5.71% 6.90% 1.61%

Alaska Business Monthly | July 2014 www.akbizmag.com

ALASKA TRENDS

By Amy Miller Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

Percent Percent Percent

March March March

8.3 8.5 6.8

8.9 8.9 7.0

7.4 8.3 7.6

12.16% 2.41% -10.53%

Millions of Barrels Billions of Cubic Ft. $ per Barrel

March March March

16.43 8.29 107.91

14.42 7.64 106.30

16.52 9.66 108.93

-0.55% -14.22% -0.94%

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

March March March March March

13 1803 1336.32 20.74 2.01

13 1769 1300.97 20.83 2.04

9 1756 1,591.94 28.80 0.93

44.44% 2.68% -16.06% -27.98% 116.99%

Millions of $ Millions of $ Millions of $

March March March

65.6 13.3 27.8

61.7 8.53 28.84

44.67 9.96 34.71

46.87% 33.58% -19.91%

Total Deeds Total Deeds

March March

554 160

467 135

1110*GeoNorth 277

-50.09% -42.24%

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

Thousands Thousands

March March

374.32 94.82

299.94 71.27

356.57 77.42

4.98% 22.48%

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

50399.3 51109.3 806.1 288.9 -17.3 13.4 5.0

50052.5 50689.1 256 1399.3 68.8 4.5 1060.5

45509.6 46676.9 606.4 2261 -3.3 9.0 323.3

10.74% 9.50% 32.93% -87.22% 424.24% 48.89% -98.45%

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 $

4thQ13 4thQ13 4thQ13 4thQ13 4thQ13 4thQ13 4thQ13 4thQ13 4thQ13

5,394.16 141.17 1,753.74 2,543.77 17.58 4,656.83 4,046.21 1,623.39 2,422.82

5,432.27 281.86 1,666.44 2,478.91 17.22 4,697.47 4,086.89 1,693.48 2,393.41

5,219.35 171.34 287.89 1,377.40 21.17 4,482.37 3,936.18 1,558.47 2,377.41

3.35% -17.61% 509.17% 84.68% -16.96% 3.89% 2.80% 4.17% 1.91%

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

102.27 1.11 0.60 0.72 6.14

102.13 1.11 0.60 0.73 6.11

94.70 1.02 0.66 0.77 6.28

7.99% 8.37% -9.47% -6.57% -2.15%

Indicator

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

Notes: 1. Source of Anchorage Deeds of trust (GeoNorth) is cited in the data field. 2. Banking data has been updated to include Alaska State Banks and Alaska’s sole federally chartered, Alaska-based bank, First National Bank Alaska

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113

ADVERTISERS INDEX AE Solutions.................................... 54 Alaska Air Cargo..............................13 Alaska Executive Search AES......91 Alaska Railroad.................................67 Alaska USA Federal Credit Union.33 Alaska USA Insurance Brokers....35 American Fast Freight................... 69 American Marine/PENCO...........111 Arctic Controls................................50 Arctic Office Products (Machines)................................... 62 Arctos.................................................55 Associated Builders & Contractors - AK Chapter.....110 AT&T ....................................................9 Beacon OHSS..................................28 Bering Air.......................................107 Brand Energy & Infrastructure....59 Calista Corp./Futaris..................... 85 Carlile Transportation Systems.. 115 CCI Industrial....................................57

114

Chris Arend Photography............114 Construction Machinery Industrial LLC................................2 Crowley..............................................51 CRW Engineering Group...............77 Dan Tech Services.......................... 87 Delta Rental Services.....................79 Donlin Gold......................................86 Doyon Limited................................. 45 EDC Inc..............................................81 F. Robert Bell & Associates.......... 49 Fairweather LLC..............................19 First National Bank Alaska..............5 GCI ........................................... 50, 116 Global Diving & Salvage Inc.........56 Golder Associates Inc....................50 Island Air Express........................ 108 Judy Patrick Photography............24 Kakivik Asset Management..........61 Kinross Ft. Knox............................. 23 Landâ&#x20AC;&#x2122;s End Resort...........................32

Landye Bennett Blumstein LLP...31 Little Red Services Inc...................53 Lynden Inc. ...................................3, 71 McKinley Princess Lodge - HAP Alaska............................................31 MFCP - Motion Flow Control Products Inc................................82 Microcom..........................................93 N C Machinery................................ 83 NANA Regional Corp.................... 43 NCB.....................................................39 North Slope Telecom Inc...............55 Northern Air Cargo............ 102, 103 Northrim Bank.................................15 Nu Flow Alaska............................... 54 Olgoonik Development Corp...... 47 Oxford Assaying & Refining Inc.............................. 108 Pacific Alaska Freightways............65 Pacific Pile & Marine...104, 105, 106 Paramount Supply........................110

Parker, Smith & Feek..................... 25 Peak Oilfield Service Co. ............ 20 Pen Air...............................................68 Personnel Plus...............................107 Procomm Alaska............................. 87 Quality Asphalt Paving (QAP).....82 Ravn ALASKA..................................17 RIM Architects.................................39 Ritchie Brothers Auctioneers (America) Inc........75 Scan Office.......................................27 SeaTac Marine Services.................67 Seekins Ford Lincoln Fleet............81 Stellar Designs Inc........................110 Ukpeagvik Inupiat Corp.................41 UMIAQ.............................................. 49 Unit Company..................................79 Verizon ............................................. 97 Washington Crane & Hoist.......... 29 Watterson Construction Co.........73 Wells Fargo ......................................21

Alaska Business Monthly | July 2014 www.akbizmag.com