November-2012-Alaska Business Monthly by Alaska Business

Susitna-Watana Hydro Project â&#x2013; Depreciate, Defer & Deduct

November 2012

$3.95

Millrock Resources Inc. management team, from left, Philip St. George, Chief Exploration Officer; Sarah Whicker, Chief Operating Officer; Larry Cooper, Chief Financial Officer; Gregory Beischer, President and Chief Executive Officer.

Millrock Resources

PROJECT GENERATORS SPECIAL SECTIONS Mining Page 96 Building Alaska Page 72

AHFC makes housing. You make them homes.

Opening Doors for Alaskans

Toll-Free 1-800-478-2432 | 907-338-6100 | www.ahfc.us

November 2012 TABLE OF CONTENTS

About the coVer

dePArtments

The mining industry is highlighted in a special section each November, this year it begins on page 96. The management team of Millrock Resources Inc. is featured on the cover. These Alaskans use an innovative business model for their mineral exploration company, their story begins on page 112.

From the Editor. . . . . . . . . . . . . . . . . . . . . . . . . 7 Inside Alaska Business . . . . . . . . . . . . . . . . . 8 Right Moves . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Alaska This Month . . . . . . . . . . . . . . . . . 138 Events Calendar . . . . . . . . . . . . . . . . . . . . .141 Market Squares . . . . . . . . . . . . . . . . . . . . 142 Alaska Trends. . . . . . . . . . . . . . . . . . . . . . . 143 Ad Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

FeAtures

Cover photo by Judy Patrick Photography.

Articles

VIEW FROM THE TOP

HEALTH & MEDICINE

24 | Open Wide Opportunities rife in Alaska dentistry By Susan Sommer

OIL & GAS

FINANCIAL SERVICES

28 | Depreciate, Defer & Deduct End of year tax planning By Joette Storm

ENERGY 12 | Bill Shaishnikoff, President Bering Shai Rock & Gravel LLC By Peg Stomierowski

36 | Susitina-Watana Hydro Project Studies 600 more Railbelt megawatts from proposed $4.76 billion dam By Rindi White

14 | Sitka Beautiful and historic, stable and steady By Tracy Barbour

HR MATTERS CRW Engineering Group LLC

Mekoryuk

Lynne Curry

LEGAL SPEAK

32 | Alaska’s Small Claims Court An appropriate option for resolving many everyday legal disputes Renea I. Saade By Renea I. Saade

■ 4

60 | Alaska’s OCS Exploring the offshore cycle By Mike Bradner

ENVIRONMENTAL SERVICES

REGIONAL FOCUS

20 | Virtual Teams Supervising and surviving By Lynne Curry

54 | Royal Dutch Shell Moving forward with Arctic drilling projects By Vanessa Orr

40 | The Evolution of Environmental Engineering Today’s environmental engineer wears many hats By Michele White

TELECOM & TECHNOLOGY

45 | IT Security: Who needs IT? By Michele White

TRANSPORTATION

49 | Local Air Carriers One company’s flights across Alaska By Nicole A. Bonham Colby

64 64 | Port Adak The gateway to oil development in the Arctic By Paula Cottrell 66 | The Time is Now for LNG Gas line wranglers saddle up for another go-round By Mari Gallion 69 | No More NPR-A compromise was made 32 years ago By Phil Cochrane 70 | Alaska Oil Policy Out of alignment Commentary by Bradford G. Keithley

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

Maybe it’s time to think about a

�nancial blueprint for your

BUSINESS

Pam Wentz Vice President Johansen Branch Manager

Tom Zimmerman Universal Welding & Fabrication, Inc.

The building industry in Alaska faces challenges like no other in the country. From extreme weather to daunting logistics, it takes a special kind of focus, commitment and drive to build in the Last Frontier. ¶ When you’re on the go 16 hours a day, seven days a week, it’s easy to overlook details like cash management, payroll, working capital and expansion. And that’s where First National Bank Alaska can make a real diﬀerence. ¶ From a complete array of cash management tools and expertise, to fast, local decisions on loans, our friendly, experienced Alaska business specialists can help you activate a successful business strategy. Stop by one of our convenient local branches, or simply visit FNBAlaska.com.

November 2012 TA BLE OF CONTENTS Articles

special section

ENERGY

89 | The Bait-and-Switch on Alaskan Energy By U.S. Senator Lisa Murkowski

LEADERSHIP

Mining

128

90 | Alan J. Krause ‘Building a better world’ By Susan Harrington, Managing Editor

OPINION

93 | Ratify the Law of the Sea Treaty Implications for Alaska and why there’s no time to lose By Sourabh Gupta and Dr. Ashok K. Roy Photo courtesy of UAS School of Mine Training

special section

A student from an entry level mine laborer class carrying pipe into the mine lab at the AJ Mine.

Building Alaska

72 | 2012 ABM Contractor of the Year: Cornerstone General Contractors ‘Leading construction in the Last Frontier’ By Rindi White 76 | Alaska Scientific Detection Laboratory Crime lab extraordinaire By Greg Johnson 80 | Construction at the University of Alaska Deferred maintenance, capital construction projects drive growth for Alaska By Rachel Voris 84 | 21st Century Innovations in Heavy Construction in Alaska The phases of innovation in resource production By Tasha Anderson ■ 6

96 | Fueling the Flames of Controversy The EPA weighs in on Pebble By Paula Cottrell

124 | Above the Rest: Natural Resources and Mining Setting the standard for safety in Alaska By Paula Cottrell

98 | Mining An important force in Alaska economy By Mike Satre

128 | Training Alaskan Miners Operators participate in recruiting and selecting students By Will Swagel

102 | Alaska 2012 Mining Industry Review By Curtis J. Freeman 112 | Millrock Resources Inc. Project generators By Zaz Hollander 118 | Mining Exploration Activity Moving toward final permitting By Julie Stricker

Deantha Crockett

132 | Crockett Gets the Job Done New AMA executive director already tested in fire By Mary Lochner

136 | Alaska Business Monthly’s 2012 Mining Directory

CORRECTION In the article “Native Corporations ‘Pass the Torch’: Rising leaders of the new generation” beginning on page 94 of the September issue, the number of CIRI shareholders was noted incorrectly. There were 6,278 original Cook Inlet Region Inc. shareholders. In the article “It’s Complicated: Getting LTL freight to and from Alaska” beginning on page 74 of the October issue, Carlile Transportation Systems Anchorage Terminal Operations Manager’s name was spelled wrong. We apologize to Jon Van Treeck. Also, Carlile brings a full trailer of LTL freight from Anchorage to Valdez Tuesday through Saturday, not Monday through Friday. In the article “Strategies to Prepare Alaska for the Economic Marathon” on page 58 of the October issue, the University of Alaska generates $5.60 in research revenue for every dollar of state investment, not $5.60 million as stated in the article.

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

FROM THE EDITOR Follow us on and

Volume 28, Number 9 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

EDITORIAL STAFF

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

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

BUSINESS STAFF

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

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

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503-2577 (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, ©2012, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues of the Power List are $15 each. Single issues of Alaska Business Monthly are $3.95 each; $4.95 for October, and back issues are $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, PO Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change, or update online at www.akbizmag.com. Manuscripts: Send query letter to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Publishing Co., Inc. is prohibited. Address requests for specific permission to Managing Editor, Alaska Business Publishing. Online: Alaska Business Monthly is available at www.akbizmag.com/archives, www. thefreelibrary.com/Alaska+Business+Monthly-p2643 and from Thomson Gale. Microfi lm: Alaska Business Monthly is available on microfi lm from University Microfi lms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

The Big Issue L

et’s just call November the big issue month. The magazine is once again a big issue and it is packed with articles about a number of big issues—many concerning energy and resource development. You’ll have to read them all. Another big issue for November is the general election. I won’t even try to tell you how many big issues are connected to that, although there is one item on the ballot I’d like share more information about and that is “Bonding Proposition A: State General Obligation Transportation Project Bonds.” When you go vote on Tuesday, Nov. 6—and you must go vote on Tuesday, Nov. 6—the only thing you’ll see about it is this: Bonding Proposition A Shall the State of Alaska issue its general obligation bonds in the principal amount of not more than $453,499,200 for the purpose of paying the cost of state transportation projects What you won’t see is the list of projects you’ll be voting for, so here they are: Department of Commerce, Community, and Economic Development. The amount of $195,400,000 is appropriated from the 2012 state transportation project fund to be awarded as grants under AS 37.05.315 or AS 37.05.316, as applicable, to recipients for projects as follows: Project

Amount

Anchorage: Port of Anchorage Expansion Bethel: Harbor Dredging Bristol Bay Borough: Port of Bristol Bay Expansion and Pile Dock Replacement Emmonak: Port Improvements Haines Borough: Boat Harbor Upgrades Hooper Bay: Boat Harbor Kodiak: Pier III Replacement Kotzebue: Cape Blossom Road and Deep Water Port Matanuska: Susitna Borough – Bogard Road Extension East Matanuska: Susitna Borough – Port Mackenzie Rail Extension Nenana: Totchaket Resource Development Corridor Access Newtok Traditional Council: Mertarvik Evacuation Road Construction Nome: Port Design and Construction Sand Point: Sand Point Road Rehabilitation Seward: Marine Industrial Center Expansion Sitka: Sawmill Cove Industrial Park Dock St. George: Harbor Reconstruction Togiak: Waterfront Transit Facility

$50,000,000 4,000,000 7,000,000 3,000,000 15,000,000 1,000,000 15,000,000 10,000,000 13,500,000 30,000,000 6,500,000 4,100,000 10,000,000 2,500,000 10,000,000 7,500,000 3,000,000 3,300,000

Department of Transportation and Public Facilities. The amount of $254,500,000 is appropriated from the 2012 state transportation project fund to be allocated among the following projects in the amounts listed subject to reallocation between projects in accordance with AS 37.07.080(e): Project

Amount

Anchorage: Glenn Highway, Hiland Road to Artillery Road Reconstruction Anchorage: Glenn Highway/Muldoon Road Interchange Reconstruction Anchorage: New Seward Highway/36th Avenue Reconstruction Anchorage: New Seward Highway, MP 75-90 Bridge Repairs Anchorage: O’Malley Road Reconstruction Elliott Highway, MP 108-120 Reconstruction Fairbanks: Old Steese Highway to McGrath Road Reconstruction and Extension Fairbanks: Wendell Street Bridge Replacement Juneau: Glacier Highway, MP 4-6 Improvements Juneau: Mendenhall Loop Improvements Kenai: Kenai Spur Road Rehabilitation Ketchikan: Shelter Cove Road Construction and Improvements Mat-Su: Fairview Loop Reconstruction Mat-Su: Knik Goose Bay Road Reconstruction North Pole: Plack Road Improvements Platinum Airport Runway Extension Richardson Highway: Ruby Creek Bridge Replacement Sitka: Katlian Bay Road Construction

$35,000,000 15,000,000 26,000,000 10,000,000 15,000,000 6,500,000 24,000,000 14,400,000 5,500,000 6,000,000 20,000,000 19,000,000 10,000,000 15,000,000 5,000,000 3,100,000 11,000,000 14,000,000

We’ve got another really great magazine this month, enjoy! —Susan Harrington, Managing Editor

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

7■

INSIDE ALASKA BUSINESS

Lasher Sport

nchorage-based Lasher Sport is one of 12 small businesses that will receive grants of $250,000 each through Mission: Small BusinessSM, a grant program designed to increase awareness of the important role small businesses play in local communities. Supported by the U.S. Chamber of Commerce, nearly 70,000 small businesses registered and 3.1 million consumers showed their support by voting for their favorite small businesses. Participating small businesses from across the country were evaluated based upon their applications, which were required to demonstrate a feasible growth plan, creativity, overall passion for their business, and the potential to make a positive impact within the local community.

Alaska Fishing Industry Relief Mission

he Alaska Fishing Industry Relief Mission is delivering aid to help fishing fleets of northeastern Japan affected by last year’s tsunamis. The Alaska seafood industry, led by major contributors UniSea and American Seafoods, initiated the relief fund shortly after the March 2011 tsunami devastated the fishing communities of northern Japan. Seattle-based Unisea, American Seafoods and Glacier Fish Co. inspired donations from their vessel, plant and office employees and then matched them, effectively doubling the industry’s grassroots fundraising efforts. More than 180 fishing and processing in-

Compiled by Mari Gallion

dustry participants donated more than $375,000 with the purpose of helping the affected fishing industry of northeastern Japan rebuild its fishing and processing infrastructure.

Alaska Railroad Corp.

he inaugural Colonel Frederick Mears Award for Excellence was awarded to a team of Alaska Railroad Corp. employees and an Alaskan architectural firm for their work on revitalizing the historic freight shed in Ship Creek, located at 155 West First Avenue in Anchorage. The Mears Award recognizes people and projects that move the Alaska Railroad forward and contribute to the greater good of Alaska and Railbelt communities. Employees from ARRC real estate and facilities, and finance departments that were recognized include Vice President Real Estate and Facilities Jim Kubitz, Facilities Director Paul Farnsworth, Leasing Manager Andy Donovan and Corporate Finance Manager Barbara Amy. The Mears Award was also presented to ECI/Hyer Architecture and Interiors for its work to maintain the building’s historic nature while ensuring renovation met the high environmental standards established by Leadership in Energy and Environmental Design criteria.

Icelandair

celandair will begin nonstop service between Reykjavik, Iceland, and Anchorage in summer 2013. With twice weekly flights between May and September, the announcement means

Anchorage will have additional connections to continental Europe and the United Kingdom as well. Through their hub at Keflavik International Airport, Icelandair currently flies to 21 cities in 14 European countries, including Great Britain, Germany, Norway, Finland and Sweden. Anchorage is the 10th North American city served through Keflavik by Icelandair. The airline is an existing code share partner with both Alaska Airlines and JetBlue. Alaska Airlines mileage plan members and Icelandair Saga Club members can earn and redeem miles on this new flight. The inaugural flight is scheduled for May 15, 2013.

Providence Maternity Center

he new Providence Maternity Center in Anchorage began opening this fall, providing mothers and families with the highest level maternity care available, complemented by the comforts of home. The Maternity Center is opening in phases, starting with the Mother-Baby Unit in October. Each mother-baby room includes private bathroom with shower, babybathing sink, a couch that converts to a guest bed, an in-room refrigerator, cable TV, flat-screen TV, DVD player, free Wi-Fi access and a scenic view from most rooms. When complete, the Maternity Center is expected to be the first Leadership in Energy and Environmental Design-certified hospital building in Alaska. LEED certification means the

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 ■ 8

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 • Alaska Business Monthly • November 2012

INSIDE ALASKA BUSINESS

Compiled by Mari Gallion

building is built and certified using methods such as sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.

agement, web design and development, mobile application and graphic design services. The company also has remote locations in the Pacific Northwest, Idaho, Florida and on the East Coast.

Alaska Computer Support

Era Alaska

laska Computer Support has moved to new quarters from its former location to 750 East Fireweed Lane, Suite 104, Anchorage, in the Anchor Building. The company specializes in assisting small- to mediumsized businesses and nonprofits with all things computer. Michael Wheeler, owner of AKCS, designed the move so the company’s clients would have minimum network downtime—only two evening hours on August 29. Alaska Computer Support was founded in 1998, and was called Where2Be.com for several years.

GeoNorth

eoNorth, a wholly owned subsidiary of The Tatitlek Corp., has recently been awarded professional IT services contracts by Strathcona County, Alberta, Canada; and the City of Corvallis, Oregon. These services contracts place GeoNorth on “PreQualified Service Provider Lists,” or task order contracts, for Strathcona and Corvallis Geographic Information Systems Services as the needs arise within each client’s geographic information systems departments. GeoNorth LLC, established in 1994 and located in Anchorage, is an information technology solutions provider specializing in GIS, AutoCAD product and consulting services, database man-

he Kenai Peninsula Tourism Marketing Council presented Era Alaska with the Outstanding Support Business in Tourism award as part of the Kenai Peninsula’s Industry Appreciation Day. Era Alaska has offered service on the Kenai Peninsula for more than 30 years. The airline is particularly busy during fishing season, flying upward of 10,000 passengers a month to and from the Kenai. The Peninsula’s Industry Appreciation Day was established more than 20 years ago to recognize the industries that make the Kenai Peninsula a great place to live and work. Each year, outstanding individuals and businesses in the oil, gas, fishing and tourism industries are honored for their dedication to excellence and community. Era Alaska is the largest regional airline based in the state, offering daily passenger and cargo services to nearly 100 communities across Alaska. All flights operated on Bombardier Dash 8 aircraft feature full in-flight cabin service.

AT&T

T&T has turned on its 4G LTE network in Anchorage, bringing customers the latest generation of wireless network technology. AT&T is the first and only network providing customers in Anchorage with the fast speeds of LTE.

AT&T is the only U.S. service provider to deploy two compatible 4G technologies to deliver more speed to more customers. Benefits of AT&T 4G LTE include faster speeds, LTE-compatible devices, faster response time due to lower latency, and efficient use of the wireless spectrum. AT&T’s innovation and investment has resulted in the nation’s largest 4G network, covering 275 million people with ultra-fast speeds and a more consistent user experience than was previously available.

Municipality of Anchorage

he Municipality of Anchorage has deployed a comprehensive surveillance system at the Anchorage Downtown Bus Transit Center. The Anchorage Department of Public Transportation is using cameras from MOBOTIX and appliances from Pivot3 to hasten police investigations, increase operational efficiency and maintain video for compliance and investigations. The downtown transit center, the main cog in a 14-route bus system that attracts about 3,000 riders per day, installed 29 cameras and appliances that allow it to store 24 days of video to quickly tap into recorded footage if an incident occurs. The focus on video to enhance safety is part of an effort to change Anchorage’s collective attitude toward public transportation and increase ridership. The video system is also being considered for purposes beyond security to help the department track rider counts and gauge the timing and efficiency of its busses.

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

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 • Alaska Business Monthly • November 2012

9■

INSIDE ALASKA BUSINESS

Petro Marine Services

etro Marine Services has completed a new, state of the industry marine fuel facility at its 613 Katlian Street location in Sitka. Designed specifically for the diverse marine community in Sitka, boats will have easy access to more than 700 feet of service moorage with nearly two dozen fuel dispensers, including three high-flow diesel stations for larger-capacity boats and convenient dockside water stations. In addition, lube oils, spill response and a host of other marine products will be available at the newly completed onsite store and adjacent on-shore warehouse. Located mid-channel, the new marina takes advantage of recycled products for composite rub rails and decking material. New technology light emitting diode (LED) luminaries are used for lighting the float and reducing power consumption and waste.

Davis Block and Concrete

avid Block and Concrete has relocated their business from Soldotna to its new gravel pit location on Kalifornsky Beach road in Kenai. The new 38,000-square-foot block production facility sits on an 80-acre aggregate quarry off of Ciechankski Road. Nearby, a new corporate office and showroom includes an outdoor patio show space. Davis Block and Concrete produces concrete masonry units, retaining wall block, ready mixed concrete and precast products while also mining all aggregate onsite. Current projects the company is supplying include the UAA Career Center in Soldotna and North

Compiled by Mari Gallion

Muldoon Sam’s Club, and the company recently completed the supply of concrete for the Fire Island Wind project.

Anchorage Chamber Of Commerce

nchorage Chamber of Commerce announces the winners of the 55th Annual Anchorage Chamber Gold Pan Awards. Recipients were chosen based on their above-and-beyond level of commitment to Anchorage, both on a business and community service level. Honorees included Ron Duncan, GCI for Entrepreneurial Excellence; Era Alaska for Business Excellence; Nerland Agency for Distinguished Community Service (Individual, Small Business/Organization); Alaska Communications for Distinguished Community Service (Large Business/Organization); Dan Newman, KTUU Channel 2 for Anchorage Chamber Volunteer of the Year.

Design Pics Inc.

esign Pics Inc., headquartered in Edmonton, Canada, announces the acquisition of Alaska Stock, an Anchorage-based photo agency, effective Oct. 1. The agency was originally founded in 1990 by Alaska photographer Jeff Schultz. Starting with just 15 photographers, the agency now has over 80,000 images in its collection and represents over 150 photographers. Jeff Schultz states, “I am very pleased and excited to have Alaska Stock acquired by someone like Rick Carlson and Design Pics which has such a robust and automated distribution system, as well as the integrity and honesty the stock photography business needs.”

Design Pics was founded by Rick Carlson in 2001. The company initially produced and distributed royalty free imagery through a worldwide network of marketing partners and expanded into the rights managed marketplace with the Irish Image Collection, Axiom Photographic (travel imagery), First Light and Pacific Stock (Hawaii and Pacific Rim photos). Design Pics also has three rights managed collections developed with its own contributing photographers. Design Pics President Rick Carlson states that, “I pursued Alaska Stock because of the stunning photography that it offers and the fact that it complemented so well our earlier acquisitions of truly unique collections.”

Golden Valley Electric Association

olden Valley Electric Association is pleased to announce that it has entered into a natural gas supply contract with North Slope gas producer and Prudhoe Bay Unit operator, BP Exploration (Alaska) Inc. Under the contract, GVEA may purchase up to 23 billion cubic feet of natural gas each year for 20 years. Beyond meeting GVEA’s needs for electrical generation, the volume of natural gas available to GVEA under the contract is sufficient to meet both the immediate and long-term needs of Interior Alaska residents and businesses. This historic gas contract enables GVEA, as the aggregator, to supply enough natural gas to meet the needs of nearly 100,000 Interior residents for electrical generation and space heating. 

• General Contracting • Marine Infrastructure • Design Build

Dutch Harbor - Unalaska, Alaska

www.pacificpile.com I (907) 276-3873 ■ 10

620B East Whitney Road I Anchorage, AK 99501

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

mobile communications wherever you need it AT&T Remote Mobility Zone – critical communications for dark zones and disaster situations When your organization needs cellular and Internet service and none is available, the AT&T Remote Mobility Zone can get you connected typically in less than 30 minutes. It’s a highly portable cellular communications site – like a cell tower in a suitcase – that links onto the AT&T cellular network. att.com/armz 1-800-955-9556

© 2012 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other AT&T marks contained herein are trademarks of AT&T Intellectual Property and/ or AT&T affiliated companies. All other marks contained herein are the property of their respective owners. This document is not an offer, commitment, representation or warranty by AT&T and is subject to change.

View from the Top

Compiled By Peg Stomierowski

Bill Shaishnikoff, President Bering Shai Rock & Gravel LLC

ill Shaishnikoff, as he tells it, pulled in his commercial fishing lines and traded riding the waves for manning a dump truck after almost losing his nine lives out on the Bering Sea. He started Bering Shai Construction in Unalaska/Dutch Harbor in 2004, and in 2011 changed the name to Bering Shai Rock & Gravel LLC. With his wife Diane and their sons Steven and Blaine, he began clearing and developing their waterfront property and selling rock. “Our first employees were our sons,” he reflects. “They started with shovels in their hands, and are now proficient operators. They run our crushers, excavators, graders, dozers and dump trucks and are now our foremen.” The firm today owns six dump trucks and has been busy leasing equipment for a major municipal repaving project, crushing 15,000 tons of hot rock. MAKING A MARK: Having roots in Unalaska/Dutch Harbor and the Aleutians has helped. While breaking into the rock market here, we strove to be always on time and deliver more than expected. While DBE (Disadvantaged Business Enterprise) status under the Small Business Administration has provided opportunities, being so remote from most state projects has limited our participation. But we are strategically located to provide rock products in the region and in Western Alaska. MANAGING EROSION: In the face of climate change, it has become clear that erosion is hurting coastal villages. Our quarry produces armor stone, rip rap and crushed rock products that can be loaded directly onto barges and delivered to hard-hit western coastal communities. GROWING PAINS: They were severe. Banks generally don’t lend to an upstart until there has been owner sweat equity of no less than two years. Our response was, okay, we’ll see you then. We continued to build the business on our own, and pretty much own everything outright. Only our desire to be independent, never giving in to adversity, has gotten us through. Now the bank is far more willing to lend. While we appreciate this, it would have been nice in the beginning when we most needed it. STAYING GROUNDED: Being so determined to succeed has taken a toll, so we strive to stop, relax and reflect. We have learned to live in faith and in the now, not in yesterday or amid anxieties about tomorrow. This realization has been primary in overcoming stress and our own high business expectations—that, and returning to our family and community events, which are most therapeutic. BOTTOM LINE: Had we known more about upstart financing, things would have been easier. Knowing what I know now, I’d take my business idea and build a business plan with a professional plan writer. This tells the banker you are serious. The SBA not only helps in writing an acceptable plan, it offers low-interest loans that can be guaranteed. Another good source of financing in Alaska is the Community Development Financial Institutions Fund (CDFI), as they favor startups. ADVICE TO NEW VENTURES: Chart your own course and be willing to adjust, never veering from the main goal. Don’t worry what they say; it is more important what you think. 

■ 12

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

B US I N ESS

PROF ILE

Personnel Plus Employment Agency Inc.

Your Employment Connection

s president of Personnel Plus for the last 23 years, Cindy Schebler has seen a lot of changes in the way businesses operate and fill their staffing needs. Email has replaced phone calls and the personal touch isn’t as common as it used to be—a trend Schebler finds somewhat disturbing. “Personnel Plus has built its reputation on maintaining close relationships with our clients,” Schebler says. “My world used to revolve around my telephone—either talking to clients about their employment needs or recruiting employees. Now I get emails with job descriptions.” Personnel Plus, a company that specializes in temporary and permanent employee placement, still believes in maintaining those relationships with their clients. “We are the personal side of your employment connection,” explains Schebler. THE RIGHT FIT With offices in Anchorage and Fair Fairbanks, Personnel Plus accomplishes this mission by taking the time to get to know not only prospective employees, but the business practices of their clients as well. “If we understand the environment of the company we are making a placement for, it is easier to screen for an applicant that will be the right fit,” Schebler says. Screening potential employees at Personnel Plus is much more than perusing resumes. Prospective employees go through a rigorous pre-employment screening process with an employment counselor that includes reference and background checks, qualification testing and a personal interview. “During our interviews, we look for things that can’t be found on a resume, which is nothing more than an

Cindy Schebler, President & CEO of Personnel Plus Employment Agency Inc.

advertisement,” Schebler says. “This is a time when our employment counselors can judge their appearance, personality and work ethic so we can find the best possible match for both the client and the employee. That is our ultimate goal.” CREAM OF THE CROP Of the approximately 300 people who apply to the agency each month, only about 60 to 70 will make the cut. Candidates are screened heavily so Personnel Plus can remain confident they are sending the “cream of the crop” to their clients, and not just a warm body. “A company is only as good as its assets and at Personnel Plus, our people are our greatest asset,” adds Schebler. When recruiting for executive, technical and specialized positions, SchePAID

A D V E R T I S E M E N T

bler and the employment counselors at Personnel Plus embrace the advances in communications technology. “When I’m searching for a person with a par particular skill set to fill a position, I often use the Internet and Skype to conduct long-distance interviews with prospective employees when necessary. But in these instances, I use the Internet to enhance the human connection instead of eliminating it,” Schebler says. At Personnel Plus, customer ser service does not end once an employee is placed with a client. Not only do employment counselors routinely check back with employers and employees to ensure a symbiotic placement has been made, they assist their clients with navigating the hurdles of legal hiring practices and human resources long af after placements have been made. “One thing that will never change at Personnel Plus is our commitment to our clients,” Schebler says. “That’s how we have operated for the last 20 years and that’s how we will operate for the next 20 years.”

For more information contact: Personnel Plus Employment Agency Inc. 3335 Arctic Blvd., Suite 200 Anchorage, AK 99503 www.perplus.com (907) 563-7587 phone (907) 561-7158 fax

Regional Focus

By Tracy Barbour

Sitka Beautiful and historic, stable and steady BY TRACY BARBOUR

A commercial ﬁshing troller returns to Sitka Harbor with Mt. Edgecumbe in the background at sunset.

he city and borough of Sitka are nestled on the outer coast of Alaska’s famous Inside Passage. Stretching across portions of the Baranof and Japonski islands, they occupy the heart of our nation’s largest national forest: the Tongass National Forest. Home to about 9,000 residents, Sitka is the fourth-largest city by population in Alaska and the largest city by area in the United States. It’s four times the size of Rhode Island, but not nearly as accessible. There are only two ways to get to Sitka—by air and sea. Or as Sitka

■ 14

Mayor Cheryl Westover puts it, “You either have to have wings or fins to get here.” Sitka has a rich Native heritage and Russian history that’s accented by its role as a former capital city. The town was founded in 1799 and served as the capital of Russian America until 1867, when the United States purchased Alaska from the Russians and made it the state’s first capital city. Sitka continued to reign as Alaska’s principal city until Juneau became the state capital in 1906. In its early days, Sitka was the busiest

seaport on North America’s west coast. Gold mining and fish canning accelerated its growth. Today, the link to the past is evident in Sitka, which is home to Alaska’s oldest national park: the Sitka National Historical Park. The city has more than 20 buildings and sites on the National Register of Historic Places. Prime examples are the Russian Bishop’s House, St. Peter’s Episcopal Church and St. Michael’s Cathedral. The Sitka Chamber of Commerce proclaims Sitka is “the most beautiful and historic city in Alaska.”

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

Industries

Sitka has a small and very seasonal economy driven by various industries. First and foremost, Sitka is a port community that thrives on seafood harvesting and processing. It ranked as one of the top 20 seafood ports for pounds landed in the U.S. in 2010, with 74.6 million pounds— worth $62.2 million dollars, according to Mali Abrahamson, an Alaska Department of Labor economist who specializes in the Southeast economic region. The city’s economy is also strongly supported by healthcare, education and

Fueling the companies that fuel our economy. Anchorage • Cordova • Seward • Whittier 344.4571

424.3264

Biodiesel Now Available.

224.8040 472.2314 www.shoresidepetroleum.com

Quality Fuels and Lubricants

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

15 ■

government. Some of the area’s largest employers are the Southeast Alaska Regional Health Consortium, the Sitka School District and the City of Sitka. “The local Native health center as well as the health and education sectors provide stability and boost average wages while drawing funds into the economy from state and federal sources,” Abrahamson says.

Graying Workforce

In addition to the seafood, government and health care industries, the city’s economy is fueled by tourism, retail and a mixture of visitor-related services. Unfortunately, Sitka’s tourism industry is way down. In 2008, the city had 289,000 cruise ship passengers. This year, that number’s down to 110,000 to 120,000. The decline can be attributed to a combination of things: strained economies worldwide, Sitka’s out-of-the-way location, the fact that it doesn’t have a waterfront downtown to accommodate cruise ships and the emergence of Icy Strait Point, a competing port in Hoonah operated by Huna Totem Corp. The reduction in cruise ship passengers has negatively impacted revenues for the city. Between 2009 and 2011, the retail sector dropped $25 million in gross business sales. But Sitka is addressing the issue from various angles. Halibut Point Marine Services LLC has installed a cruise ship dock about five miles north of town. The city and borough are upgrading local signage and facilities to better meet the needs of cruise ship passengers. In addition, the city has launched an advertising campaign to attract independent travelers. “That doesn’t fill the void of losing the cruise ship passengers,” Westover says. “But when independent travelers come to town, they spend several days to a week, staying in hotels and eating in restaurants.” Abrahamson points out that Sitka’s industrial organization and mix has been remarkably unchanged for many years. The timber slump of the 1980s and the subsequent pulp mill closure in 1993 shifted the economy away from higher-paying, year-round federal forestry and timber jobs to an economy once again reliant on ■ 16

seafood. Since 2002, trade and transportation employment has shrunk slightly while manufacturing (mostly seafood related) has grown slightly, with only a net gain of 50 jobs, according to Abrahamson. In July, 5.2 percent marked the unemployment rate, which is consistently below the statewide average throughout the year. There were slightly more than 4,300 annualized jobs reported under “covered employment” in 2011, with the lowest reported in January (3,770) and the highest in August (4,890). Abrahamson says Sitka’s population and employment trends in the last decade have shown little upward or downward trends, and have been mostly flat since 2000. There’s also a typical “graying of the fleet” in the borough’s workforce, with more workers approaching retirement age.

in better shape for our grandchildren,” Westover says.

Infrastructure

Not surprisingly, Sitka has the largest small boat harbor system in Alaska. It is also home to Sitka Rocky Gutierrez Airport—which recently expanded its runway—the Southeast Alaska Regional Healthcare Consortium, a U.S. Coast Guard air station and the port and facilities for the 225-foot USCGC Maple. Related to education, Sitka operates a branch of the University of Alaska Southeast. Westover considers the local campus to be an important asset because it helps educate and retrain adults for the workforce. In addition to offering regular courses, it allows adults to receive training in welding, construction and other viable trades. Sitka also

Although much of Sitka’s land is owned by the federal government, the city has adequate space to support commercial enterprises. Economic Development

Westover says Sitka is an impressive community with scenic beauty, caring people and a small-town atmosphere. “It’s a great place to raise kids,” she says. “Parents can feel comfortable with their kids going out on a bike ride.” The city’s high quality of life is also a major part of what makes it a viable place to conduct business, says Garry White, executive director of the Sitka Economic Development Association. Access to transportation and plenty of outdoor recreation help to attract commercial enterprises. Sitka also has low tax rates: 6 mils property tax, and a sales tax as low as 5 percent in the winter. As another benefit, Sitka is primarily powered by hydroelectric generation. This gives members of the business and residential communities access to fairly low monthly electrical rates—starting at $0.0755 and $0.08 for the first 1,000 kilowatt hours, commercial and residential respectively. The upfront costs for implementing hydropower tend to be higher than some of the other renewable energies, but it’s cheaper in the long run. “Once you get your (hydropower) project built and paid for, it will leave our state

has the Mt. Edgecumbe High School, a state-run boarding school. To enhance Sitka’s infrastructure, the state is revamping two of its main roads: Halibut Point and Sawmill Creek. Blue Lake Dam is also undergoing improvements. Built in the 1950s, the dam is being expanded by 80 feet to enhance its electrical capacity. “We have to burn diesel whenever the lake doesn’t produce enough hydroelectric,” Westover says.

Variety of Businesses Opening

Sitka is a place that offers ample business opportunities. New businesses exemplify the diversity in the city’s entrepreneurial spirit. One young couple recently started a brewery, while another couple launched a popular business that draws sea salt out of water. Farmers’ markets are also cropping up around town. “Our growing time is a lot shorter, but we are seeing a lot of greenhouses,” White says. The city is also seeing new life being breathed into the campus of Sheldon Jackson College, which closed in 2007. Parts of the facility are being used for a fine arts camp, green research

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

Alaska USA Better for your business Take advantage of customized solutions, fewer fees, and local service. n n n n n n

Checking, loans, and depository services Online account management Business Visa速 Check Card Insurance, bonds, and employee benefits Retirement services Investment management*

Find out what Alaska USA can do for your business. 563-4567 | (800) 525-9094 | alaskausa.org

Federally insured by NCUA

* Investment services provided by Alaska USA Trust Company. Alaska USA Trust Company products are not federally insured and are not obligations of, or guaranteed by, Alaska USA Federal Credit Union or any other affiliated entity. These products involve investment risks that include possible loss of principal.

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

Sitka City and Borough

Alaska

8,952 8,881 0.8% 8,881 7.0% 23.0% 11.9% 49.3% 66.7% 0.8% 17.1% 6.0% 0.4% 9.0% 5.0% 64.0% 80.3% 7.3% 11.6% 92.3% 29.2% 920 10.1 4,125 55.9% 24.4% $309,800 3,729 2.36 $29,982 $62,024 7.0%

722,718 710,231 1.8% 710,231 7.5% 26.1% 8.1% 48.1% 67.9% 3.6% 14.9% 5.6% 1.1% 7.0% 5.8% 63.7% 78.6% 7.2% 16.5% 90.7% 27.0% 71,798 18.1 311,201 64.7% 24.6% $229,100 248,248 2.68 $30,726 $66,521 9.5%

Sitka City and Borough

Alaska

380 3,095 8.5 1,258 1,938 F 12.8% F F S 16.3% 0 D 94,916 $10,875 27,072 12

19,985 254,734 24.3 53,284 68,728 1.5% 10.0% 3.1% 0.3% S 25.9% 8,204,030 4,563,605 9,303,387 $13,635 1,851,293 877

Private nonfarm establishments, 2010 Private nonfarm employment, 2010 Private nonfarm employment, percent change, 2000-2010 Nonemployer establishments, 2010 Total number of firms, 2007 Black-owned firms, percent, 2007 American Indian- and Alaska Native-owned firms, percent, 2007 Asian-owned firms, percent, 2007 Native Hawaiian and Other Pacific Islander-owned firms, percent, 2007 Hispanic-owned firms, percent, 2007 Women-owned firms, percent, 2007 Manufacturers shipments, 2007 ($1000) Merchant wholesaler sales, 2007 ($1000) Retail sales, 2007 ($1,000) Retail sales per capita, 2007 Accommodation and food services sales, 2007 ($1000) Building permits, 2011 Geography QuickFacts

Sitka City and Borough

Alaska

2,870.34 3.1 220 None

570,640.95 1.2 2

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

and hatchery work. Innovation is also transforming the old pulp mill site, where Silver Bay Seafoods has installed fish processing facilities. “It’s increased our raw fish tax by almost a half million dollars and added 25 to 30 jobs year round and several hundred jobs in the summer,” Westover says. “The state and federal government put millions of dollars into the infrastructure. Now we have a really strong operational seafood plant.”

Commercial Real Estate

Sitka has a balanced commercial real estate market, according to Nancy Davis, owner/broker of Davis Realty. Davis, a 50-year resident, describes the market as being stable. Commercial market conditions, however, all depend on what’s happening with the tourism industry, she says. Some local merchants have suffered from the city’s decline in cruise ship passengers. “There are a few empty buildings downtown that are taking a little longer to lease,” Davis says. “When the tourism industry was high, you wanted to be downtown if you were a tourism-related business. Now that it’s down, fewer people have said they want to be in that business.” There are two components to Sitka’s commercial real estate market. One element is the downtown area that doesn’t shut down outside the peak visitor season. It serves the entire population, not just cruise ship passengers and other tourists. The other part of the commercial market involves areas outside of downtown and includes trailer parks and other non-tourist- related businesses. Although much of Sitka’s land is owned by the federal government, the city has adequate space to support commercial enterprises, says Davis, who currently serves on the Alaska Real Estate Commission and has been involved in economic development for the past 45 years. She is also the past president and a current board member of SEDA. For example, there are a few places available along the city’s main artery, Lincoln Street, to accommodate retail businesses. Some of those spaces are 2,000 or 3,000 square feet and even larger. These historic buildings have retained their original

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

charm and reflect the city’s deep Native and Russian roots. In September, at press time, there were seven commercial real estate properties on the market in Sitka. “Most commercial properties sell quickly—often without even being listed,” Davis says. In the industrial area, Davis has a listing with retail space on the bottom and housing upstairs. She also has a medical facility near the local hospital that could be revamped into housing or office space. Sitka’s commercial real estate market seems to be moving toward multiple-use buildings, according to Davis. “One of the trends I’m seeing in the downtown area is that some of the buildings are putting apartments or office spaces on the second floor, instead of using it all for retail,” she says. “I think as the economy changes, people who own commercial buildings have to change with the times.”

Future Opportunities

On the horizon, Sitka is looking at exporting its alpine water to combat water shortages around the globe. The city has a contract with True Alaska Bottling Co., which is planning to distribute water to the Middle East, Asia, Africa and Mexico, according to White. White says the city and borough of Sitka have the rights to 9.5 billion gallons of water. With the current price of water at 1 cent per gallon, this could generate $95 million for the community. That is, whenever the water distribution deal becomes finalized. “Transportation is the key, and that’s the hard part,” White says. Westover admits that a key challenge of operating a business in Sitka is its location. The city is a long way from markets and suppliers, but the Alaska Marine Highway’s daily ferry service to Juneau during the summertime helps by providing quick access to big-box stores such as Costco, Home Depot, Fred Meyer and WalMart. “It’s been good for the community,” she says.  Writer Tracy Barbour owns a marketing company in Tennessee.

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

19 ■

HR Matters

By Dr. Lynne Curry

Virtual Teams Supervising and surviving BY LYNNE CURRY ■ As a manager, how can I supervise employees at remote locations—particularly when I never see them? ■ If I work remotely, how do I make sure I stay on my supervisor’s radar for promotional opportunities? ■ Which managers can handle and which employees can thrive in virtual team situations?

anagers in many Alaska companies oversee subsidiary operations in the Lower 48, managing employees they rarely or never meet face-to-face. Managers and employees in other organizations coordinate—sight unseen—with employees and co-workers from Barrow to Ketchikan and Unalaska to Glennallen. What does it take to effectively handle this challenge?

Managing Virtual Teams

If you manage employees you never meet face-to-face, you may feel disconnected from them and they from you. In the same way radio can’t replace television, email and phone conversations offer a weak substitute for the understanding and connection created when two individuals interact in person. Whenever you can, arrange video interactions through Skype or other cloud computing video conferencing. Because you can’t wander down the hallway or onto the site and see your employees working, learn to manage by results. Set specific, easily understood, challenging and attainable goals for each employee—and follow up with regular communication. Ask your employees to give you streamlined ■ 20

but regular work updates. Provide constructive and motivating feedback early and often so your employees don’t feel they’re playing handball without a wall. Because virtual employees lack a company home base, keep these remote workers in the loop on the latest departmental and company news via newsletters and frequent emails. To avoid work derailment, make sure your employees have the tools they need to work remotely, such as personal digital devices, high-speed Internet connections and laptop computers with virtual private network connectivity. Virtual private networks also give you effective ways to assess your employee’s contributions so you can accurately recognize and reward positive individual performance. If you supervise both virtual and office-based employees, be careful not to use two sets of performance standards as that can lead to allegations of unequal treatment and legal headaches. Standards that measure job performance such as call volume, customer satisfaction ratings, work orders completed and projects completed on deadline can help managers fairly assess employees, whether they are based in the office or the cloud.

Tips for the Team

Virtual team members risk out-of-sight, out-of-mind stature, impacting them during performance and salary reviews. If you want to stay a positive face on your manager’s radar, provide frequent status updates on key projects and look for opportunities to interact with your manager and co-workers. Furthermore, because virtual team members might misinterpret ambiguously worded assignments and waste considerable time, early proactive communication with

managers is essential when tasks need clarification. Assessing which managers can handle virtual supervision and which employees thrive in virtual work requires a certain skill-set. Clearly, not every manager can effectively manage virtual employees. Successful managers possess strong written and oral communication skills and realize managing virtual teams requires concentrated effort. Employees who like regimented schedules or need detailed instruction before moving forward tend to flounder in virtual work settings. While independent employees who enjoy showing initiative and who possess self-reliance, self-motivation and good communication skills thrive in virtual situations, Lone Wolves generally fail. Those known as Lone Wolves tend to keep concerns to themselves and prefer struggling for days when a simple phone call might give them the answer. With all these challenges, why do Alaska employers so often choose virtual work options? It’s our reality, whether we’re supervising employees across Alaska or subsidiaries in the Lower 48. Furthermore, organizations that allow employees to “go virtual” due to their personal needs retain valuable employees.  Lynne Curry, Ph.D., SPHR and owner of the Alaska-based management consulting ﬁrm, The Growth Company Inc. consults with companies, individuals and boards of directors to create real solutions to real workplace challenges.

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

RIGHT MOVES

Compiled by Mari Gallion

Alaska State Chamber of Commerce

Doyon Ltd.

Alaska Fairbanks and holds a Master of Liberal Arts degree from Harvard University.

Alaska Energy Authority

Former State Senator Gene Therriault will join AEA’s management team as deputy director for statewide energy policy development. He formerly served as vice president of resource development and external affairs at Golden Valley Electric Association in Fairbanks. Brooks Makinster

Cramer

The Alaska State Chamber of Commerce recently named Ryan Makinster as communications and events director and Al Cramer as membership representative. Makinster holds a Bachelor’s degree in communications from the Edward R. Murrow School of Communications at Washington State University. Cramer holds a Bachelor of Arts in History from the University of Notre Dame, and a Master of Science in Systems Management from the University of Southern California.

University of the Arctic

University of Alaska Fairbanks vice chancellor for administrative services Pat Pitney has been appointed to serve as the finance vice president for the University of the Arctic. Pitney will lead the UArctic finance office, while continuing her work at UAF. Pitney has a bachelor’s degree in engineering physics from Murray State University and an MBA from UAF.

Carlile Transportation Systems Inc.

Chuck Oeleis has been hired as director of sales for Carlile Transportation Systems Inc. He is a graduate of Western Oregon University with a degree in business management and a minor in marketing. Krisha Loescher was promoted to director of human resources. Loescher has a bachelor’s degree in communications and has been in the transportation industry for 14 years. Lisa Marquiss has been promoted to corporate director of safety and regulatory compliance. Marquiss has been employed with Carlile for 24 years.

Woodson

Doyon Ltd. welcomed Kelly Brooks as the corporation’s new vice president of finance, and Richard “RC” Woodson as Doyon’s new director of IT. Brooks has worked at Doyon for more than 12 years and holds a Bachelor of Science in Finance from Millikin University and an MBA from Webster University. Woodson, who holds an MBA in Information Technology Management, served for 22 years as a logistics systems manager in the U.S. Air Force.

Granite Construction Co.

Granite Construction Co. is pleased to announce Matt Hampton has been promoted to plants manager for the Alaska Region. Hampton brings with him 15 years of experience in the construction materials industry. He is a graduate of Virginia Polytechnic Institute and State University with a Bachelor of Science in Mining and Minerals Engineering.

AT&T

International Tower Hill Mines

International Tower Hill Mines Ltd. announces that Thomas E. Irwin has been promoted to the positions of ITH vice president of Alaska and president of Tower Hill Mines Inc., the U.S. operating subsidiary. Irwin has more than 35 years experience in the natural resource industry constructing, optimizing, operating and permitting major mining projects in Alaska. He also served for six years as commissioner of the Alaska Department of Natural Resources. The company has also appointed Karl Hanneman to the position of Alaska general manager. Hanneman has more than 30 years of Alaska-based mining industry experience.

Sen. Mark Begich

U.S. Sen. Mark Begich announced the hiring of lifelong Alaskan Amy Miller as his new press secretary. Miller graduated from Western State College of Colorado with a bachelor’s degree in English and a minor in journalism.

EHS-Alaska Inc.

Paul Rieland has joined AT&T as an account manager in the business sales group in Anchorage. He has more than 20 years of marketing and sales experience in Alaska.

Martin K. Schwan, project manager for EHS-Alaska, Inc. has been certified by the U.S. Environmental Protection Agency as a lead risk assessor and lead inspector. This certification allows him to conduct sampling pursuant to EPA’s new lead-based paint renovation, repair and painting program rule. Reiland

The Foraker Group

Jonella Larson White has been hired as Foraker’s rural specialist. Larson White’s educational background is in rural development and community planning. She is a graduate of the University of

Girl Scouts of Alaska

Girl Scouts of Alaska announces the appointment of Dr. Suzanne R. Perles as chief executive officer. Perles received a degree in economics from Princeton University, earned an MBA from Harvard, and was the first female Rhodes Scholar from Alaska, earning her doctorate from Oxford University in economics.

OH MY! ■ 22

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

RIGHT MOVES Bean’s Café

Jernstrom

Lyznicki

Katherine Jernstrom has been promoted to community outreach director for Bean’s Café. She is a recent graduate of Leadership Anchorage and a current MPA student at UAA. Laura Lyznicki joins Bean’s Cafe as event and Lepley volunteer coordinator. She holds a degree in sociology from Illinois State University where she focused on motivating social change. Lesley Lepley has been hired as the new development associate. Lepley graduated from East High School and went on to attend the University of Alaska Anchorage as a UA Scholar and has since earned a Bachelor of Arts in English Literature and an MBA.

University of Alaska

Allan Morotti, who has served as interim dean of the School of Education since July 2011, has been named to the permanent position. He has an associate degree from San Joaquin Delta College, a bachelor’s degree from California State University at Hayward, graduate education licensure work at St. Mary’s College, and a master’s degree and a doctorate from the University of Oregon, Eugene. UAF alumnus and artist Todd Sherman has been selected as the dean of the College of Liberal Arts. During his 25-year career, he has completed multiple permanent installations at public facilities in the Fairbanks area. He earned a bachelor’s degree from UAF in 1979 and an MFA from the Pratt Institute in New York in 1985.

Compiled by Mari Gallion Volcanologist and UAF professor emeritus John Eichelberger will serve as the dean of UAF’s graduate school. Eichelberger has bachelor’s and master’s degrees from Massachusetts Institute of Technology and a doctorate from Stanford University. Donald Smith was announced as the new chief of the statewide office of human resources. Smith has accumulated more than 30 years of working experience in human resources and employee relations in both government and private business. Dana Thomas will be the new vice president of academic affairs. Thomas served as vice provost and accreditation liaison officer for the University of Alaska Fairbanks. Thomas is an alumnus of the UAF biology program and later earned a master’s and Ph.D. in statistics.

Arctic Winter Games Team Alaska

Tim Dillon, city manager of Seldovia, has been nominated as president of the Arctic Winter Games Team Alaska board. Shawn Maltby, general manager for the Anchorage Bucs, has accepted the position of co-director and chef de mission. Kathleen Rehm has accepted the position of codirector and director of outreach.

First National Bank Alaska

Allen Turner was recently appointed Haines branch manager by First National Bank Alaska’s board of directors. He brings with him more than 30 years of experience in the financial industry. Melissa Schutter was recently promoted to operations supervisor of First National Bank Alaska’s Seward branch.

Institute of the North

The Institute of the North is pleased to announce the election of three new members to its board of directors: Matt Ganley, vice president of resources and external affairs at Bering Straits Native Corp.; Brad Keithley, partner and co-head of the oil and gas practice at Perkins Coie; and Karen Matthias, Alaska economic and political consultant at Matthias Consulting.

Alaska DCCED

Roberta Graham has been named assistant commissioner for the Department of Commerce,

Community, and Economic Development. She serves on the board of trustees at Alaska Pacific University and is a senior fellow at the Institute of the North.

Denali Alaskan FCU

Candy Wierzelewski has been promoted to Retail Sales Branch Manager at Denali Alaskan Federal Credit Union’s Juneau branch. Wierzelewski began working in the financial industry in 1996, joining Denali Alaskan as a branch sales supervisor in December 2011.

Wierzelewski

Millennium Alaskan Hotel Anchorage

The Millennium Alaskan Hotel Anchorage welcomes Carol C. Fraser as its new general manager. Fraser’s impressive 20-year career brings outstanding expertise in Alaskan hotel management and destination marketing that will enhance her role in continually developing the hotel’s ties to the community and elevating its profile in the industry.

GCI

GCI Industrial Telecom welcomes Phil Gerdes Jr., Doug Statts and Scott Lefebvre. They join the Industrial Telecom team to provide professional telecom project engineering services, including the supporting projects in the North Slope, Chukchi, Beaufort and Cook Inlet theaters of operations. Gerdes has more than 25 years of comprehensive Alaskan telecom engineering experience with focus including offshore VSAT, microwave radio systems and two-way radio systems. Statts has more than 20 years of similar Arctic industrial telecom experiences with specialty in two-way design and installation, international VSAT support and stabilized shipboard satellite earth stations. Lefebvre has more than 10 years of VoIP and network engineering, implementation and operations experience. He has been with GCI for 12 years in various engineering roles. 

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

23 ■

heAlth & medicine

Open Wide W

hiskey, cloves or carrying a potato in your pocket—these plus the dreaded pair of pliers have all been traditional, but less than ideal ways to treat a toothache. Luckily, most Alaskans today can visit a dentist for modern oral care and skip the toothache altogether. Oral health, of course, begins at home by flossing and brushing regularly, eating a healthy diet and monitoring the mouth and jaw for any changes. According to the American Dental Association, “Infections in the mouth may be associated with heart disease, stroke, diabetes, pneumonia and other health problems.” But there’s no substitute for regular professional dental care. Besides dealing with familiar dental issues such as cavities, gum disease, crowns and bridges and cosmetic procedures such as whitening, Alaska’s dental professionals can also help identify serious medical problems such as sleep apnea, drug abuse, eating disorders and oral cancer. More than 800 dentists are licensed in Alaska, as are almost 600 dental hygienists. About 1,150 dental assistants are employed across the state. Currently, 26 dental health aide therapists are certified in Alaska and focus on Alaska Native populations in rural communities. Two-thirds of Alaska’s adults see a dentist annually according to a state report; that’s better than the national average. About the same percentage have access to a fluoridated community water system, which the ADA wholeheartedly supports as “safe, effective and necessary in preventing tooth decay.” There is, however, a gap between urban and rural oral health in the state, and while education and outreach efforts as well as a relatively new dental aide program have helped shrink the gap,

■ 24

many of Alaska’s villagers still struggle to achieve healthy teeth and gums.

Bridging the Gap

A program that has emerged in recent years to serve rural Alaskans is the use of dental health aide therapists, or DHATs. This is the first program of its kind in the nation. The model is based on a similar successful program in New Zealand to where Alaska’s first DHAT students traveled in order to train and learn about the program. In 2007, training moved in-state, and is now offered through the Alaska Native Tribal Health Consortium. An intense two-year cur-

Opportunities rife in Alaska dentistry BY SUSAN SOMMER The program has garnered some criticism, however, including from the American Dental Association and the Alaska Dental Society. Despite a shortage of dentists in rural areas of the state, these organizations hold the position that only licensed dentists should be doing tooth extractions and other procedures that have the potential for serious complications. Two years of training, they say, is not enough. Mary Williard, education director of ANTHC’s dental health aide therapist program, counters negative assessments of the program that targets underserved populations: “About 20 states

The Alaska Dental Society is in the early stages of looking at a program to address access to underserved populations in urban areas. Though the organization doesn’t have a formal outreach or education program, Executive Director Jim Towle says it does support opportunities statewide to make a positive impact. riculum teaches basic preventive and restorative oral care skills as well as outreach and education methods to help community members prevent tooth loss and other common conditions. The program is certified under the federal Community Health Aide program. Dental health aide therapists perform about 80 percent of the work that a dentist would do. DHATs live and work in the communities they serve, most of which had previously been without regular dental services or which only received a visit from an itinerant dentist perhaps once a year. A major benefit of the DHAT initiative has been the availability of basic dental care for many more of Alaska’s rural residents, as well as job opportunities for those living in far-flung villages with few employment opportunities.

are now looking at changing their state dental practice acts to allow for some form of dental therapy or mid-level dental provider.” The performance of the Alaska DHAT model is one of the main reasons. Membership Chair of the Alaska State Dental Hygienists’ Association, Royann Royer, says that in recent years significant resources have been allocated to improve dental health in the rural population. “The major hub clinics are being remodeled and enlarged. Many small rural dental clinics have been built with funding provided by the Denali Commission and Rasmuson Foundation. Dental treatment is provided at these village health centers. Portable equipment is used in areas where there is not a clinic and often set up in the school.”

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

Despite these advances, says Shannon Almeda, president of ASDHA, dental hygienists could be used in more productive ways. “Expanding dental hygiene practice settings, reimbursing directly for services delivered and/or removing restrictive supervision requirements would allow greater access to care,” she notes. Almeda thinks dental hygienists should be integrated more fully into the health care workforce to provide a broader array of services to meet the needs of all Alaskans. “Legislators and policy makers, as well as other health care entities,” she says, “must recognize and support this expanded role for dental hygienists. The profession itself must embrace change, focus on growth and development and plan for its future as well as the future oral health needs of the public.”

Outreach & Patient Education

“The trend in Alaska,” says Valerie Truncali, president-elect of ASDHA, “is to reduce the prevalence of dental disease by increasing access to care and providing oral hygiene and diet education.” The individual members and organizations that make up the Alaska Dental Action Coalition, she says, are “at the forefront of these goals.” One member of the coalition, the State of Alaska Department of Health and Social Services, maintains an oral health program that focuses on statewide dental issues, community water fluoridation, developing policy recommendations and providing advocacy and a dental sealant program for youth that are among high-risk populations for dental problems—typically low income and rural residents. The Alaska Oral Health Plan notes that low rates of dental decay in Alaska Native populations in the first half of the 20th century began to climb once soda, which is high in refined sugar and carbohydrates as well as being acidic, was added to a traditional diet of healthy, wild foods. The report says that high dental decay rates have persisted over several generations and that improving the situation requires not only better access and affordability of dental care, but changes in diet and oral care at home. The Alaska Dental Society is in the early stages of looking at a program to address access to underserved populations

in urban areas. Though the organization doesn’t have a formal outreach or education program, Executive Director Jim Towle says it does support opportunities statewide to make a positive impact; for example, it has provided free toothbrushes to children at sponsored Halloween events in Anchorage as well as donated to regional festivals that focus on cultural health. The ADS also responds to numerous requests each year from teachers and other community leaders asking for a dental professional to come speak to their class or make a community presentation on good oral health. They often call on ASDHA to help. ASDHA itself donated time and supplies to many organizations throughout the past year such as Programs for Infants and Children Inc., RurAL CAP’s Homeward Bound, UAA Dental Days, Kenai Peninsula Girl Scouts, statewide community health fairs and programs for elementary and preschools.

What’s New in Alaska Dentistry?

Richard Crosby, an Anchorage dentist, says that although remote Alaska dental care will continue to be a challenge, the “quality of care in city centers as well as the access is right on the mark.” Advances in dental technology have made treatments faster and more comfortable. Crosby says that lasers and digital X-rays improve a dentist’s ability to detect decay with less radiation to patients than in years past. Advanced materials allow dentists to fix teeth to be stronger than ever before, and also with aesthetics in mind. New bone grafting techniques and 3D X-rays improve the quality and predictability of dental implants. Easier implant treatments also allow dentists to improve dentures for patients that have struggled with a poor fit for years. Additionally, “Computerized injections make painful shots a thing of the past,” Crosby says.

Training Programs

Alaska has no accredited dental education programs to become a dentist, neither a DDS (Doctor of Dental Surgery) nor DMD (Doctor of Dental Medicine). The University of Alaska Anchorage has both two- and four-year degree programs to become a dental hygienist. These programs prepare graduates to

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

25 ■

Stay Healthy this Winter Anchorage

Bethel

Fairbanks Senior Health Fair Nov. 9, 7:30 a.m. to 11 a.m. Sponsored by the Host Lions Club and the North Star Council on Aging, this fair is open to everybody. The Senior Center is at 1424 Moore Street, off Wilbur Street and next to the Pioneer Home. Join us for free health screenings, low cost blood draws and a dozen exhibitors presenting fun health, safety and resource information.

Attend a health fair

University Center Mall Community Health Fair Nov. 17, 8 a.m. to 12 p.m. Sponsored by the Alaska Nurse Practitioner’s Association. Expect lots of exhibitors teaching health and safety topics. 27 test Chemistry/Hematology Profile $45—includes CMP, CBC and Lipids; TSH $30; PSA $25; Vitamin D $50; A1C $25; and the new ABO/RH Blood Typing $20. Bethel Community Health Fair Nov. 10, 8 a.m. to 1 p.m. The Fair will be held at the Yupiit Piciryarait Cultural Center. This fair is sponsored by the KuC, UAA School of Nursing. Dozens of health and safety education exhibits as well as free medical screenings and high quality, low cost blood tests, which include: 27 test Chemistry/Hematology Profile $45—includes CMP, CBC and Lipids; TSH $30; PSA $25; Vitamin D $50; A1C $25; and the new ABO/RH Blood Typing $20. Blood Draw ends at noon. Drink lots of water and fast 10 to 12 hours for the chemistry test.

Cooper Landing

Cooper Landing Community School Health Fair Nov. 17, 9 a.m. to 1 p.m. Sponsored by and held at Cooper Landing Community Schools, 19030 Bean Creek Rd. Free health education and health screenings. High quality, low cost blood tests: 27 test Chemistry/Hematology Profile $45—includes CMP, CBC and Lipids; TSH $30; PSA $25; Vitamin D $50; A1C $25; and the new ABO/RH Blood Typing $20. Be sure to fast for the Chemistry/Hemotology test—10 to 12 hours is recommended. Drink lost of water. Take your normal medications and if diabetic, fasting is not recommended. take the National and Western Regional Examining Boards for licensure, which are required to practice in Alaska. Hygienists must take continuing education credits to renew their license; ASDHA offers members and non-members opportunities for continuing education several times a year. Training programs to become a dental assistant are offered through the University of Alaska at both the Fairbanks and Anchorage campuses. ■ 26

Fairbanks

Fairbanks Credit Union 1 Community Health Fair Nov. 8, 7:30 a.m. to 10:30 a.m. Everyone is invited to the Credit Union 1 branch located at 1453 University Ave, for free screenings and low cost blood draws. Please fast for 12 hours for the Chem Panel, ($45)—no need to fast for the other tests, but everyone should drink lots of water. Diabetics should not fast and all medications should be taken.

Kenai

Kenai Peninsula College Health Fair Nov. 3, 8 a.m. to 12 p.m. Kenai Peninsula College is hosting a second fair this year, giving the community a second opportunity for high quality, low cost blood tests: 27 test Chemistry/Hematology Profi le $45—includes CMP, CBC and Lipids; TSH $30; PSA $25; Vitamin D $50; A1C $25; and the new ABO/RH Blood Typing $20, along with free health education and health screenings.

Nome

Nome Health Fair Nov. 17, 8:30 a.m. to 2 p.m. Come join the Wizard of Oz themed “Wonderful World of Wellness” at the Nome Health Fair. Sponsored by NSHC CAMP Department and held Friday and Saturday at the Nome Rec Center. Friday is all Health Education between 10 a.m. and 2 p.m. and again between 4:30 p.m. and 6:30 p.m. Saturday Health Education continues and our blood draw for adults will be held from 8:30 a.m. to 2 p.m. Please join us for a fun fi lled and wonderfully educational event.

Alaska’s pioneering spirit has encouraged the likes of Leonie von Zesch, the first woman to be licensed as a dentist in the Territory of Alaska in the early 1900s and who was recently added to the Alaska Women’s Hall of Fame; Anchorage endodontist Douglas Luiten, who last year performed a root canal on one of the Alaska Zoo’s Siberian tigers; and the young dental health aide therapists and their mentors now

building a new framework for oral care in remote communities. As dental care in Alaska expands, one piece of advice, offered freely by dental professionals, remains constant: “You don’t have to floss all your teeth, just the ones you want to keep.”  Susan Sommer is a freelance writer and editor living in Eagle River.

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

FinAnciAl serVices

Depreciate, Defer & Deduct ■ 28

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

End of year tax planning BY JOETTE STORM

epreciate, defer and deduct—if you are a professional or business owner thinking about taxes and what you can do in the last two months of the year, those are terms to keep in mind. Current tax law provides some pro-taxpayer options for chiseling away at taxable income. It’s not a bad idea to make an appointment with an accountant or tax preparer now to scope out ways to reduce your tax bill. Local CPA John A. Letourneau, president of Thomas, Head and Griesen, PC, has been providing tax planning since the early 1980s, primarily to individuals with annual incomes upwards of $250,000. He also offers planning for estates and trusts. Before meeting with clients, he advises them to “assemble information about their 2012 economic position and what they anticipate for the end of the year,” and to include the 2011 tax return for comparison. He asks clients about any economic decisions they are considering, what their goals are, and how they view Congressional actions that will occur in 2013. This year, with all of the weather disasters, any economic loss because of power outages or wind damage should be included in the overall calculation of taxable income. However, if a business owner receives insurance payments under a business interruption policy, the payments must be reported as revenue. “Alternatively, if the policy provides for payments based on loss of use, there may be an argument for deferral of the insurance proceeds,” Letourneau says. It depends upon the individual circumstances, of course. To the extent that a business incurs an economic loss because of the damage or destruction of property, that loss is calculated as the lesser of two amounts: the difference in the fair market value of the property before and after the damage, and the tax basis in the property. If the item damaged has previously been depreciated, it cannot be considered as a loss.

others only start to take effect in 2013. Depreciation under Code Section 179 offers some attractive opportunities for expensing business property. Kevin Van Nortwick leads the tax department at Mikunda, Cottrell and Co. Inc. He counsels hundreds of corporate and business clients. Right now one of the provisions he focuses on for those clients has to do with expensing new or used

equipment purchased this year. Tax Code Section 179 allows a business to expense new or used equipment, certain vehicles, furniture, or off the shelf software that is either acquired with cash or financed, up to a total of $139,000 in value. It is not available for 100 percent of the assets. “There is a dollar for dollar phase out of the deduction if your total asset acquisitions for the year exceed $560,000,”

Trust funds and wealth management aren’t just for old, rich guys.

Let us help protect your family’s f inancial future. Alaska Trust Company helped write the state’s trust laws, which are some of the best in the country. That’s why across Alaska families just like yours are taking advantage of our company’s trust funds and financial management services.

Continuous Change

Tax law is continually changing: Some provisions will expire this year, while

www.alaskatrust.com

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

29 ■

he advises. “The deduction can only offset net income so it cannot be used to create a net tax loss. “Keep in mind that in 2013 this dollar limit will drop to $25,000 and will phase out on a dollar for dollar basis if total asset acquisition exceeds $200,000,” Van Nortwick says. There is a bonus depreciation rule also set to expire this year. It permits a 50 percent expense of new equipment that has a tax life of 20 years or less. There is no limit on how much new equipment can be expensed under this provision. In some circumstances, even leasehold improvements may qualify under this rule. “If your business is considering an office remodel, now may be a good time to get that done,” Van Nortwick says. “What it boils down to is that for an eligible business, Section 179 can provide a substantial benefit in 2012 because it allows a 100 percent deduction of an asset’s cost for both new and used property.” Deferring compensation by delaying billing until the New Year or stashing funds in retirement accounts is a time honored way to reduce taxable income.

“Also, if the business owner’s cash flow is strong and the owners are interested in deferring more than the amounts they can contribute to a 401K/Profit Sharing plan, I would suggest they talk with their pension consultants about establishing a Cash Balance Plan before the end of the year.” —Kevin Van Nortwick Mikunda, Cottrell and Co. Inc.

Expiring Tax Cuts

However, the Bush era tax cuts are set to expire at the end of this year. Thus, individual tax rates will increase in 2013 unless Congress takes action to extend those provisions when it returns to Washington, D.C., after the election. “If your business is a flow-through entity such as an S corporation or partnership/LLC, you might consider taking the opposite approach and accelerating income into 2012 while deferring deductions to 2013,” Van Nortwick says. He advises professional firms to structure their operation before year end to take advantage of Code Section 199, or the “domestic production activities deduction.”

Under this section, 9 percent of the lesser of net income derived from qualified production activities or taxable net income is allowed as a tax write off, he says. “It is limited to 50 percent of W-2 wages paid by the taxpayer that are allocable to the domestic production revenue.” Traditional manufacturers usually take advantage of this deduction, but it also applies to businesses in the fields of construction, engineering and architecture, among others. “While it generally cannot reduce net income below zero, it is a great deduction to target if you have the right type of business,” Van Nortwick says. Letourneau encourages his clients to use retirement funds as a method of providing for the future while deferring income from wages. “I’m a big fan of Roth Investment Accounts,” Letourneau says. “For many years, it was a challenge to contribute large sums to Roth IRAs and there were some prohibitions to establishing those accounts. Today if a client has other savings, anticipates having income of $250,000 or more, and is under 50 with the ability to pay the tax now, it is probably a good idea.” Investment income earned in a Roth IRA will not be subject to the new 3.8 percent Medicare tax on net investment income. Tax credits are another avenue to explore when scoping out end of year actions. While the Residential Alternative Energy Credits expired in 2011, the Energy Efficient Commercial Buildings deduction under IRC Section 179(D) is still available through 2017.

Tax Credits

The Internal Revenue Service’s David Tucker says employers who want to offer health care insurance should check out the Small Business Health Care Credit authorized in the Affordable Care Act. ■ 30

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

A business that pays at least half of the premiums for employee health insurance under a qualifying arrangement could be eligible for the credit. Tucker says business owners who want to check if they qualify will find a step-by-step guide on the Small Business Health Care Tax Credit page of the IRS website. The scenarios even show examples of typical tax savings. “Some businesses and tax-exempt organizations that are already locked into health insurance plans and contributions may not have had the opportunity to make needed adjustments in 2010 or 2011. They can still make the necessary changes to their plans to claim the credit on 2012 returns or in years beyond,” he says. “And they can claim the credit for 2010 through 2012 and two additional years beginning in 2014.” An example he offers is an employer paying $50,000 toward the workers’ health care premiums. The employer qualifies for a 15 percent credit, and can save $7,500 per year. There are similar examples at: http://www.irs.gov/uac/ Small-Business-Health-Care-Tax-Credit-for-Small-Employers. Van Nortwick says employers should examine their fringe benefit plans to take advantage of Health Savings Accounts. Such plans allow saving dollars on a pre-tax basis to fund health care costs in the future. “Also, if the business owner’s cash flow is strong and the owners are interested in deferring more than the amounts they can contribute to a 401K/Profit Sharing plan, I would suggest they talk with their pension consultants about establishing a Cash Balance Plan before the end of the year,” he says. A Cash Balance Plan allows the employer to devote substantial dollars to a pooled pension fund for salaried or hourly workers, and can enhance retirement savings for those workers. If a business needs to add staff, the Hire a Heroes Act of 2011 provides a credit of up to $9,600 for employing disabled vets who have been out of work for six months or more. Hiring any veteran who has been out of work for four weeks to six months can earn a credit of up to $2,400. Additional credits may also be available for hir

ing veterans under a range of circumstances. The Work Opportunity credit relates to hiring workers from disadvantaged or disabled populations, including ex-felons. Education credits such as the American Opportunity credit cover the first $2,000 of tuition and related costs and 25 percent of the next $2,000 of expenses. The maximum credit per student is $2,500 per year and is good for the first four years of post-secondary education. The Lifetime Learning credit applies to graduate level classes. It is limited to

20 percent of the first $10,000 of qualified tuition and fees. Van Nortwick cautions such credits may have income-based phase outs so they should be verified with a tax advisor. For information on these credits and more, the IRS offers considerable help starting with their extensive website, hard copy publications and a separate toll free phone number just for small businesses: 800-829-4933.  Joette Storm is a writer living in Anchorage.

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

31 ■

Legal Speak

By Renea I. Saade

Alaska’s Small Claims Court An appropriate option for resolving many everyday legal disputes

ccount receivables collecting dust? Unable to resolve a dispute over a security deposit? Need to collect a personal loan? Filing a claim in Alaska’s Small Claims Court System may be a solution. Many businesses and individuals figure the legal system is not available to them if their dispute does not involve a large amount of money. It is no secret that in many cases, the cost of filing a lawsuit—and hiring an attorney—can outweigh the benefit of pursuing the action. But that is typically not the case if the claim is filed in small claims court. While there are some limitations on the types of cases that may be filed and the relief that can be granted by the court, small claims provides a simplified court process for most controversies involving $10,000 or less. Because of the less formal nature of the proceedings, lawyers are usually not needed, although they are allowed. Additionally, unlike in other courts, a corporate entity can be represented by an officer of the entity.

Faster, Less Expensive

Filing in small claims court also requires a smaller fi ling fee and results in an earlier trial date. The fi ling fee for a small claims case is at most $75 versus $90 or more in other courts. Small claims cases go to trial within 4 to 12 weeks, whereas a case fi led in other courts takes at least 6 to 10 months to go to trial. The small claims court system also offers a free mediation service that allows the parties to meet with a neutral facilitator—usually an attorney, law clerk or community volunteer—before trial begins to candidly and confidentially explore whether the parties can resolve the dispute on their own. While media■ 32

tion is available in other courts, it is not usually free of charge. To begin a case, the party that seeks court relief—the plaintiff—must file a document called a complaint, which outlines who is seeking relief, what relief is sought and against whom—the defendant or defendants.

Most trials take no more than an hour, so parties must plan to present their evidence in a concise manner. Once the complaint is filed with the court, it must be served upon the defendant either by certified mail or via a process server. The defendant then has 20 days to respond—or 40 days if served outside the United States—by filing/serving a document called an answer to address the allegations in the complaint, assert any defenses and/or assert any counterclaims. Each party must then appear either in person or by phone on the trial date set by the court.

Going to Trial

At trial, each party is given an opportunity to present evidence under the direction of a judge. Most trials take no more than an hour, so parties must plan to present their evidence in a concise manner. If a party fails to appear for trial or otherwise participate in the case, a default and/or default judgment can be entered against that party without a full trial. Usually, the judge does not decide the case at the conclusion of the trial but instead will take the case under advisement and thereafter mail a written decision to the parties.

If a party believes the court misapplied the law or reached a decision not supported by the evidence presented, the party may appeal the decision and seek review by the superior court. Any notice of appeal must be filed within 30 days from the date the judgment is mailed to the parties. If a judgment is not appealed, it becomes final and the party entitled to the judgment may then take steps to enforce it. The appellate and collection processes are governed by court rules. There are multiple resources available at local courthouses to help businesses with small claims cases, including pre-printed forms, mediation information and more. Forms and other small claims information are available online as well at courts.alaska.gov and dced. state.ak.us. When weighing options, businesses and individuals may find that Alaska’s Small Claims Court is an appropriate option for resolving many everyday legal disputes. 

Renea I. Saade is a partner in the law ﬁrm of Stoel Rives LLP (stoel.com). Saade assists companies with contract disputes and employment law matters. She volunteers as a mediator at Anchorage’s Small Claims Court. Contact her at risaade@stoel.com or 907-263-8412. Please note that the foregoing is provided for educational purposes and is not an adequate substitute for legal advice.

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

AGENDA

Compiled By Tasha Anderson

November 2012

■

ASBDC Seminar: Pursuing Government Contracting

■

November 1, 1:30 p.m. to 3 p.m.—Alaska Small Business Development Center Office, Anchorage: Workshops are designed to help new and established small businesses improve business practices. Preregistration required. aksbdc.org or 907-274-7232

American Indian Science and Engineering Society National Conference: Adaptability November 1-3—Dena’ina and Egan Centers, Anchorage: Annual conference includes professional development, networking opportunities, student presentations, career fair, awards, and traditional events. Contact: Sheryl Wilkeson aises.org, 505-765-1052 x 108. or Sheryl@aises.org

AASB 59th Annual Conference & Youth Leader Institute

■

November 1-4—Hotel Captain Cook, Anchorage: The theme for this years conference is: Local Education, Global Citizen. Event includes keynote speakers Sven Haakanson and Rhonda Kite, various education clinics and a resolution session that gives the association its direction. Registration required. http://aasb.org/

Alaska Miners Association Annual Convention and Trade Show November 5-11, 8 a.m. to 5 p.m.—Sheraton Hotel, Anchorage: Convention includes luncheons, banquets, keynote speakers and short courses on Mining 101, Geophysics for Geologists, Integrated Exploration. Registration required. alaskaminers.org

■

Associated General Contractors of Alaska Annual Conference November 7-10—Hotel Captain Cook, Anchorage: The Parker Smith and Feek Management Symposium speaker for 2012 is Ron Black, who has a lifetime of experience guiding individuals and companies to enhance leadership skills and improve business practices. agcak.org

■

U.S. and Canada Northern Oil and Gas Research Forum November 13-15—Hilton Hotel, Anchorage: The forum provides an opportunity to discuss current technical, scientific, and engineering research and future directions for northern oil and gas activities. Contact: John Payne 907-271-3431, northslope.org or jpayne@blm.gov

Renewable Energy Alaska Project Forum: The Power of Water- Tidal and Hydrokinetic Energy in Alaska November 14, 6 p.m. to 8 p.m.—Anchorage Museum Auditorium, Anchorage: Free monthly forum. Speakers: Doug Johnson, director of business development, Ocean Renewable Power Co.; Jerome B. Johnson, research professor, Alaska Center for Energy and Power. Contact: Katie Marquette alaskarenewableenergy.org or katie@realaska.org

■

ASBCD Seminar: Exporting—Is Your Company Ready? November 14, 9 a.m. to 11 a.m.—Alaska Small Business Development Center Office, Anchorage: Workshops are designed to help new and established small businesses improve business practices. Pre-registration required. aksbdc.org or 907-274-7232

Resource Development Council’s Annual Conference: Alaska Resources November 14-15—Dena’ina Civic & Convention Center, Anchorage: 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. It also features the latest forecasts and updates on Alaska’s main industries and how companies are navigating the current economic environment. akrdc.org

■

November 21, 9 a.m. to 11 a.m.—Alaska Small Business Development Center Office, Anchorage: Workshops are designed to help new and established small businesses improve business practices. Pre-registration required. aksbdc.org or 907-274-7232

■

ASBCD Seminar: Healthcare Reform—The Impact on Our Small Business November 29, 2 p.m. to 4 p.m.—Alaska Small Business Development Center Office, Anchorage: Workshops are designed to help new and established small businesses improve business practices. Pre-registration required. aksbdc.org or 907-274-7232

ASBDC Seminar: What You Should Know About Credit Card Services December 6, 2 p.m. to 4 p.m.—Alaska Small Business Development Center Office, Anchorage: Workshops are designed to help new and established small businesses improve business practices. Pre-registration required. aksbdc.org or 907-274-7232

8th Annual Alaska-China Business Conference December 11, 8 a.m. to 4 p.m.—Hotel Captain Cook, Anchorage: Among the speakers are U.S. and Chinese government officials, local businesspeople with reports “from the trenches,” academic faculty members presenting their research. Registration required. wtcak.org or info@wtcak.org

Renewable Energy Alaska Project Forum: Energy Policy for Alaskans December 12, 6 p.m. to 8 p.m.—Anchorage Museum Auditorium, Anchorage: Free monthly forum. Speakers: Chris Rose, Executive Director, Renewable Energy Alaska Project. Contact: Katie Marquette alaskarenewableenergy.org or katie@realaska.org

ASBCD Seminar: 40 Years of Lessons in Principled Leadership December 12, 1:30 p.m. to 4:30 p.m.— Alaska Small Business Development Center Office, Anchorage: Workshops are designed to help new and established small businesses improve business practices. Pre-registration required. aksbdc.org or 907-274-7232

January 2013

ASBCD Seminar: Methods and Channels to Exporting

December 2012

■

Statewide Economic Forecast Luncheon Series January 2013 (Dates TBA)—Fairbanks, Anchorage, Juneau: This is an opportunity to gain a statewide perspective on the prospects in 2013 for Alaska’s major industries, state and federal government spending, and how this will affect communities and jobs, as well as how international relationships will affect Alaska. www.wtcak.org

Renewable Energy Alaska Project Forum: Lessons from Iceland—Energy Policy From Our Arctic Neighbors January 9, 2013—Anchorage Museum Auditorium, Anchorage: Free monthly forum. Speakers: Nils Andreassen, Executive Director, Institute of the North. Contact: Katie Marquette alaskarenewableenergy.org or katie@realaska.org

Junior Achievement of Alaska’s 27th Annual Alaska Business Hall of Fame January 24, 2013, 5:30 p.m. to 8:30 p.m.—Dena’ina Civic & Convention Center, Anchorage: Four new Alaskans will be inducted and recognized with this prestigious award. Attended by over 400 business representations, the program consists of a networking reception, dinner and awards ceremony. ja-alaska.org/hof/

Send business happenings to Tasha at surveys@akbizmag.com at least two months prior to event. ■ 34

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

ALASKA IS OUR HOME

Carlile operates across the United States and Canada but our roots are planted firmly in Alaska – and that’s why we’re strong supporters of responsible resource development. Hard work and a dedication to growing our oil and gas, mining, fishing and construction industries has been at the core of Carlile’s business model since inception, ensuring these industries are backed by a transportation company that appreciates all our great state has to offer.

solutions finder.

www.carlile.biz l 1.800.478.1853 ALASKA I HAWAII I UNITED STATES I CANADA

energY

Susitina-Watana Hydro Project Studies

Photos courtesy of Alaska Energy Authority

Aerial view of the proposed site for the Susitna-Watana Hydroelectric Dam. ■ 36

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

600 more Railbelt megawatts from proposed $4.76 billion dam BY RINDI WHITE

his was a summer of studying for the state-owned Susitna-Watana Hydro project. The State of Alaska could open a massive hydroelectric dam on the Susitna River, just below Watana Creek and about 90 river miles upstream of Talkeetna in 2024, if the project is ultimately built. The dam could supply Railbelt communities—those between Fairbanks and Homer—with 600 megawatts of power-producing capacity, about half the power needed each year. The dam would be one of the largest state-built projects in Alaska and, although the project estimate and other aspects may change as the details come into focus, the cost is now estimated at $4.76 billion. What’s proposed is a 750-foot dam backed by a reservoir that would stretch 41 miles north and would be two miles wide at its widest point. According to the state, the project would include three generating units and it could tie into the Railbelt Intertie, which carries power from Fairbanks to Homer. The project could have significant impacts on the Susitna River, a major sportfishing river, and on the surrounding area, which is prime habitat for moose, caribou, sheep, bears and bald eagles. The river upstream of the dam is also a major supplier of fresh water to Cook Inlet. And like much of the rest of the state, the dam is in an area prone to earthquakes. Supporters say the impact on local wildlife and fishing will be negligible. Animals will have two years to move to new territory, longtime supporter Bob Penney says, and he believes the dam will even out the flow of the Susitna River, bringing stability to a sometimes-raging waterway and adding a new fishery at the reservoir. Penney is the chairman of SHURE, or Susitna Hydro Unlock Renewable Energy, a nonprofit registered to promote the hydro project. He’s pushed the project since its first iteration in the 1970s and says he’ll continue to do so until it’s built. “I probably won’t still be alive when it’s built but I want to be active until it does get built,” Penney says.

A Second Push for the Project

Penney worked on the project decades ago, when it was first envisioned. That version of the project halted in the 1980s when the state’s income grew shaky and oil prices plummeted. An initial Federal Energy Regulatory Commission application was withdrawn in 1986. Instead, legislators agreed to fund two other projects—a four-dam pool of hydroelectric projects serving Southeast Alaska and power-cost equalization, a program that subsidizes high electrical costs in rural Alaska. Now, Penney says, Southcentral Alaska is facing an energy crisis because most residents rely on natural gas for heat and power, and inexpensive natural gas stores are dwindling. The new iteration of the project was started in 2010, after legislators agreed they wanted 50 percent of electrical power in Alaska to come from renewable resources by 2025. A study of Railbelt energy options included large hydro as a means to reach this goal. The Alaska Energy Authority studied the Susitna and Chakachamna hydro projects and found Susitna to be the best choice for the region. Open houses followed and in 2011 the Legislature authorized AEA to begin study and design on a new Susitna-Watana Hydro project. Alaska Energy Authority Public Outreach Liaison Emily Ford says the project gained traction because bringing less-expensive, more abundant energy sources to Alaskans remains a high priority for Gov. Sean Parnell. Part of Ford’s role, and the role of the Alaska Energy Authority, will be to keep the project moving even as the political climate changes—and with a project that might take until 2024 to design and build, there’s no doubt change is on the way. But Ford says AEA would keep plugging along on the project, “providing solid answers to questions and keeping the process moving.”

First, More Studies

But many steps precede construction. Alaska Energy Authority public outreach liaison Emily Ford says the next several

years will be spent obtaining a FERC license to build the dam. That means completing a lot of studies to show if building the dam is even feasible and, if built, how it might affect the surrounding environment and nearby communities. Ford says 18 studies were conducted this summer and some multi-year studies began. About 80 people were in the field for just these 18 studies, she says. And since there’s no road to the proposed dam site, almost all travel was done by helicopter. A lot of information must be gathered, ranging among extensive salmon data to caribou tracking to in-depth information about how ice forms on the river to how water quality varies through the year. Ford says the work begun this year is just the tip of the iceberg. “It’s a six-year process with frequent check-in points,” Ford says of the path to get federal permission to build the project. “The licensing process is really about a balance between the need for power and environmental concerns. We are committed to a robust environmental program and evaluating salmon as an important resource,” she says. Ford says the state is using FERC’s Integrated Licensing Process, which means a lot of work is done at the beginning of the process in hopes of addressing all major concerns before the project gets to a decision point. She says AEA filed a proposed study plan with FERC, which outlined the more than 58 studies planned for the project. The state is currently taking comments on the study plan. Penney pointed out that many studies have already been done on the project. “At that time we had a position, and nobody ever challenged it, that the Susitna hydroelectric site is the most environmentally acceptable site anywhere under the American flag,” Penney says. That claim is being tested. Alaska Energy Authority is working to update the stack of studies that were conducted in the 1980s and to collect new relevant data where it’s needed. “2012 has been spent synthesizing data,” Ford says. “Sometimes data was collected in formats that aren’t usable now.”

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

37 ■

Energy for Alaska's Future We're finding answers and taking action. Golden Valley Electric Association is committed to Eva Creek Wind finding solutions while meeting climate change goals, keeping costs down and maintaining reliable electric service. We're taking action today to find short and long-term solutions for the energy needs of Alaskans.

PO Box 71249, Fairbanks AK 99707 • (907) 452-1151 • www.gvea.com

Celebrating 80 years —

We're investing nearly $460 million now through 2017 in advanced, energy-efficient technology and renewable hydroelectric energy to provide our customers with safe, reliable and affordable power into the next generation.

No Geotechnical Surprises

In addition to the studies Ford references, engineering firm MWH Global had crews in the field gathering geotechnical data at the proposed dam site and where foundations for the dam, powerhouse and other structures would go. Chris Brown, vice president and Alaska regional manager for MWH, says the season was productive. “We got the information we needed. We have been doing modeling studies that show how the operation of this project, once built, would be integrated into the larger utility system and how it would work to the benefit of the users,” he says. Based on the data gathered, Brown says MWH will be putting finer points on conceptual designs and feasibility studies. An interim feasibility report should be ready by year-end, with the final feasibility report scheduled for completion at the end of 2013. He says the interim document will show AEA— and state legislators who will be asked to fund the project—what technical issues exist, whether there are gaps in data, and various ways to approach the project. “The interim feasibility report should lay out and give people a pretty good idea of the technical obstacles, and the smart engineers should be able to look at that and say ‘here’s how we’re going to tackle these,’” Brown says. It will then be up to Alaska Energy Authority and state legislators to decide if the project should move forward, he says.

Funding & Customers Needed

Service with Energy ■ 38

The state has $75 million in funding to use through 2013 to pay for project studies and other needs. But that funding will not carry the project through the study phase, Ford says. AEA will be asking for continued funding to carry it through the licensing phase. In the meantime, the agency is continuing to meet with stakeholders such as Chugach Electric Association and Matanuska Electric Association, two large potential customers for some of the electricity to be generated by the dam. Phil Steyer, director of governmental and corporate communications for Chugach Electric, says Chugach “supports the efforts of the Energy Authority to investigate the project and move it forward.” The utility is engaged with the state as it moves through the licensing process but

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

has not made—or been asked to make— any firm commitments to the project. Joe Griffith, general manager of Matanuska Electric, says his utility is in the same position—supporting the project and watching it eagerly. Even though both utilities are working to build new generation plants, Griffith says it’s important to have a diverse energy portfolio. “You can’t build one single large generator anywhere. If anything goes wrong, the whole Railbelt goes black and that is unacceptable,” Griffith says. While Griffith says hydroelectric projects could be costly, in Alaska they’ve paid off. The state-built Bradley Lake hydroelectric project opened in 1991 near Homer has a generating capacity of 120 megawatts. Griffith says at the time the project was being built, utilities were hesitant to participate, fearing the project would be too costly. “Today it’s the second lowest cost project in Alaska. The only one that beats it is Eklutna (power plant), which the feds gave us,” Griffith says. Ford says AEA plans to continue working with utilities and other project

Counting ﬁsh in the Upper Susitna River for the SusitnaWatana Hydro Project. Photo courtesy of Alaska Energy Authority

stakeholders. It’s far too early to set a rate, she says, but “our cost per kilowatt hour should be competitive with other sources of energy.” In July, the University of Alaska Anchorage Institute of Social and Economic Research released a study that estimated power from the new dam could cost nearly 40 cents per kilowatthour, almost double the estimated cost for natural gas-fueled power generation. But Ford says the estimates assume the dam is utility-owned, not state-

owned. The research paper by Steve Colt estimates a 6 percent interest rate on a $5 billion project. “We can issue debt at rates much lower than the private sector,” Ford says. Ford says AEA will likely ask the state to issue bonds to pay for the construction cost. The bonds could then be repaid through the sale of the generated power.  Rindi White is a writer living in Palmer.

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

39 ■

enVironmentAl serVices

Today’s environmental engineer wears many hats BY MICHELE WHITE Photo courtesy of MWH Global

MWH Global completed a remedial investigation for Joint Base Elmendorf-Richardson at the Nike Site Summit.

nce upon a time the person known as the environmental engineer made sure water was safe to drink and wastewater and sewage was safely disposed of. “In academia...it was where chemistry and engineering came together,” says Stewart Osgood, president of DOWL HKM, a civil engineering firm with 19 offices in six states, headquartered in Anchorage. It is no longer that simple. Today’s environmental engineer is part negotiator with government regulators, part community relations specialist meeting with scores of citizens and part designer. The work is generally categorized into two areas of professional services: a future impact side—assessing and documenting the environmental impact of development projects, and a clean-up side— designing remediation systems for society’s messes. Within those boundaries, there are multiple specialties, services and disciplines that govern them. ■ 40

For future impact work, the federal legislation known as the National Environmental Policy Act requires any project utilizing federal funds to address whether or not there will be environmental impacts caused by the project. The type of environmental documentation—and its details—corresponds to the size and the scope of the project. “If you’re building a pipeline from Alaska to Louisiana, it’s obviously a huge project with significant impact,” says John Hargesheimer, president of NORTECH Inc. in Fairbanks. “You would have to do a full-blown EIS (Environmental Impact Statement).” Each project has a designated federal agency, which takes the lead on the project and is responsible for compliance with NEPA. For example, the U.S. Army Corps of Engineers is responsible for any projects involving wetlands. However, a project can touch several different agencies. Each agency develops its own manual for how to ac-

complish NEPA compliance. The environmental professional will follow the criteria in those manuals and ensure that each agency involved concurs with their assessment in the environmental documentation before a project begins.

Potential Impacts

“Because of the emphasis now on the regulatory climate,” Osgood says, “permitting and environmental documentation are now a big part of our work that falls under the heading environmental services. There’s probably not an engineering component to that, or very little, but it’s the environmental services features that are very important to get projects constructed.” It is that service that is one of DOWL HKM’s strengths, Osgood says. Once the firm has been awarded a contract for a project, a team of engineers conducts public outreach and meetings, and the community relations specialist work begins.

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

CRW Engineering Group LLC worked on the Quinhagak water and sewer project in rural Alaska. Photo courtesy of CRW Engineering Group LLC

“We want to get out there and initiate meetings with the public and talk about what the goals of the project are and collect some input from both the regulatory agencies and the general public,” says Kristen Hansen, environmental services manager for DOWL HKM. Then, the engineers study the proposed project and its environmental impact. “So, whether it’s wetlands delinea-

tion, that project would require some sort of archeological investigation,” she says. “Maybe there are fish surveys or wildlife surveys.” From there, the environmental specialists document the potential impacts and the engineers can change the design in response. Meanwhile, they continue to collect more input from the public and the agencies through public meetings.

One project was the design of the extension of Elmore Road from Tudor Road to Abbott Road in Anchorage. “That was a Department of Transportation project and it required an extensive environmental document,” Osgood says. “Typically, what happens is that the environmental phase and permitting phase of the project run concurrently with the engineering because there’s a yin and a yang that needs to go back and forth.” For that project, Osgood says more than 300 people voiced concerns, including sizes of the bridges, the presence of a trail, concerns about fish passage, air quality impacts during construction—and noise, both during construction and post construction. Some of the concerns could be solved by doing more studies or changing the design to leave a smaller footprint of the roadway. “We go through these processes and try to have these two different areas, engineering and the environmental documentation and permitting work together to come up with the ‘best solution,’” he says, adding that NEPA does not require that the agency choose an alternative that has no impact.

Anne Campbell Advertising Account Manager anne@akbizmag.com

Businesses need to keep their name in front of their customers. Anne will work with you on an affordable marketing plan that is the perfect fit for your company’s needs and budget.

(907) 276-4373 or cell (907) 223-8134

www.akbizmag.com

■ 42

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

Clean Water

On the clean-up side of environmental engineering, projects include designing remediation systems to clean ground water, to clean surface water to make it acceptable for drinking and to clean wastewater to release it back into the environment. Engineers at MWH have designed ongoing ground water treatment systems for numerous sites in Anchorage. “We have teams that take samples to monitor progression of clean up and to maintain and operate the systems,” says Chris Brown, Alaska regional manager for MWH, an environmental engineering firm with offices in 35 countries. “We install monitoring wells to sample the water. As the site is remediated, you can monitor the contaminants as they go away and that’s how you know you’ve cleaned up the site.” In Alaska, MWH was part of the original project that brought water from Eklutna Lake to the Anchorage Water and Wastewater Utility treatment plant. Over time, treatment plants need upgrades. And as a community grows, conveyance pipes need to be laid to take water to a new subdivision. “There is all this utility infrastructure that has to be serviced: pipelines and water transmission mains and sewage collection systems,” Brown says. “All the stuff that is outside the fence line of the treatment plants that needs to be maintained and upgraded and expanded as housing expands, as a community grows. In order to do that, it all has to be designed.” CRW Engineering Group is another civil engineering firm that designs water and wastewater systems for municipalities and rural communities. “We do a lot of work with rural Alaska communities,” says D. Michael Rabe, managing principal for CRW Engineering Group. “But no matter where the project is, we want to build a strong relationship with the community. It’s really the central aim of our process— how to align our engineering expertise with a solution the whole community can get behind.” For projects in rural Alaska, the Alaska Department of Environmental Conservation is often the lead regulatory agency. Working within the

regulatory framework doesn’t mean losing sight of local goals—the project should benefit the community’s job force by hiring locally during construction, Rabe says, and provide an end product that is easy for the community to operate and maintain. This often requires spending time working with the community to develop solutions that incorporate a local understanding of issues and conditions. Once a way forward is decided upon, specialists work together to turn the consensus-based design into reality. The specialist include planners, land

surveyors, architects and a variety of engineers to provide civil, structural, mechanical, geotechnical and electrical engineering services. “Alaska engineering problems often require uniquely Alaskan solutions,” Rabe says. “That’s why we team with specialists that understand the changing climate of Arctic engineering and know what works and what doesn’t. That equates to a clearer understanding of the project and helps us guide community leaders as they make really important decisions for the future of the community.”

Our ColorQube printer may not look good on the runway,

Model: ColorQube 9303

Model: Jessica Kazmierczak, Miss Alaska USA 2012

but it will make your reports and bottom-line more eye-catching • ColorQube reduces waste by 90% • ColorQube reduces color costs by 60% The Xerox ColorQube uses solid state ink which is more efficient and more economical than other printers/copiers. Time to rethink ink. 8 out of the 10 highest grossing corporations in Alaska use AES for their network printers. Alaska Enterprise Solutions is Alaska’s Professional Xerox Sales Agency.

Call AES now 907.561.5100 aesalaska.com

Authorized Sales Agent

XEROX® and XEROX and ColorQube® are trademarks of Xerox Corporation in the United States and/or other countries.

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

43 ■

Industrial Hygiene

NORTECH’s niche in environmental engineering is industrial hygiene. It is a crossover between the physical sciences and medical sciences. Hargesheimer says the general public is growing more concerned about what they’re exposed to at home and at work. An industrial hygienist, he says, understands how chemicals in the workplace or the living space impact human health and productivity. “There are really two levels of that,” Hargesheimer says. “One is the OSHA 40-hour-per-week level, the worker health and safety issue—but the other aspect of human health and environment is everyday 24/7 life: indoor air quality in your home, in your office space and how you interact with your own environment.” One of NORTECH’s most contentious projects involves a naturally occurring mineral, five state agencies, the Centers for Disease Control, and the Alaska State Legislature. In the rural village of Ambler, all of the gravel contains naturally occurring asbestos. All of the public projects

■ 44

in Ambler came to a screeching halt, according to Hargesheimer, because they required gravel. “NANA Regional Corporation, who owns the gravel, realized they (could be) liable if they sold the gravel containing asbestos to the state or to the public project,” Hargesheimer says. So the Alaska Department of Transportation and Public Facilities hired him and University of Alaska Fairbanks Professor Dr. Bob Perkins, he says, while NANA pushed the Legislature to pass legislation allowing the company to sell the gravel and releasing it from legal liability. “We basically said it was bigger than the Alaska DOT and there are as many as five state agencies that have a stake in this issue,” Hargesheimer says. “We recommended that the governor’s office needed to orchestrate a statewide program because each agency doesn’t have the mandate.” On May 5, House Bill 258 was signed into law. It “tasks the Department of Transportation and Public Facilities with substantial involvement and approval authority over the use of natu-

rally occurring asbestos on DOT&PF projects and ‘third party’ projects.” “The whole solution is education,” he says. “Ambler is a perfect example in the sense that education all throughout the industry and community, starting with ADOT&PF and the design engineers being willing to use the product.” He says the effects of naturally occurring asbestos can be mitigated by watering the roads, avoiding breathing invisible dust, and putting dust covers —such as asphalt—on the gravel roads and surfaces. What used to be simply defined now includes a suite of services for sustainable living and many hats for the environmental engineer. But, the purpose— if not the process—is still simple. “When you get down to it, that’s how we view environmental engineering” says Peter Beardsley, principal and Fairbanks technical manager for NORTECH. “It’s trying to help people live in the environment that they’re in.”  Michele White writes from Anchorage.

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

telecom & technologY

Photo by La Vie Imagery

DigitalSecurus CEO Glen Klinkhart.

IT Security: Who needs IT?

BY MICHELE WHITE

he identity of a client or customer is worth a dollar when a crook steals it on the web—that’s what law enforcement officials say. “A ‘FULL’ (that is) your name, date of birth, your mom’s maiden name, address, all the information you need to open credit in your name, goes on the black market for $0.10 and up to $1,” says FBI Special Agent Clark Harshbarger, whose primary duty is computer intrusions. So, what about a client list, a restaurant’s secret recipes, an employee payroll account? Customers’ credit card information or patients’ records? In the Information Technology world, these are vital assets to business owners and customers alike that are vulnerable to

criminal activity. If an IT person turns off the firewall and forgets to turn it back on, or if a company’s employees play games on the Internet at work, a business risks compromising these assets—and the potential headaches that follow are incalculable. “I think the business owner needs to know that every single piece of media storage device that they have within their business has the capability of holding (assets) and if they don’t secure devices or secure how they’re used there’s going to be a price to pay,” says Sgt. Mike Courturier, Anchorage Police Department’s Cyber Crimes Unit supervisor. “Their product information is going to go out the door in the wrong hands and that could be a criminal is-

sue or a civil issue. On either side of that, the possibilities are wide ranging.” APD started the Cyber Crimes Unit in 2003 as an investigative laboratory that is wholly devoted to investigating the use of media and the Internet to commit crimes. While the majority of the crimes the detectives investigate are sex crimes against children and the distribution of child pornography, many of those crimes are committed in the workplace on an employer’s computer. Because of the pervasiveness of criminals using the Internet and electronic media to commit crimes, the lines are blurred between APD’s Cyber Crimes Unit and other units in the police department that investigate those crimes.

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

45 ■

Partner with ASTAC and save. ASTAC makes it more affordable than ever to stay connected to your business customers. • New reduced monthly business line charges

• Brand new customized plans will help you save

• Call 1-800-478-6409 for a sales executive who will create a plan tailored for your company

www.astac.net

■ 46

“As of the last couple of years, nearly every unit at APD has figured out their crime has involved some sort of computer or digital media,” says Detective Mark Thomas, Cyber Crimes Unit, “so we assist in the investigation of nearly every homicide, fraud, drug case and robbery.” In fact, cyber crimes are the number three priority for the FBI, after terrorism and counter intelligence, says Harshbarger. He says that through a variety of activities, an intruder tries to convert virtual intrusion to currency. Credit card systems and computer systems that hold private and proprietary information are the targets. Here’s how credit card information is often at risk. There are Congressional regulations for credit card equipment. Many small businesses do not have the technical savvy to protect that credit card information so they often contract with a firm to make their systems compliant with regulations. But, compliant and secure are two different things. “(The contracted firm may) install remote access software on the system because they don’t want to have to fly to Alaska to fix the system,” says Harshbarger. “So they install a back door for them to get into the system.” An intruder can use that same door to steal information. Law enforcement officials and IT experts agree that businesses that mix their day-to-day functions with seemingly innocuous activities like reading email and browsing the Internet also may open the door for intruders. A common example is when an accountant for a business is using social media on the same system that he or she uses to do accounting work, leaving that system open for a cyber attack. A hacker can then add another name to the company’s payroll and siphon thousands of dollars or more from the account before the intrusion is detected. Harshbarger says that it’s not the social media networking sites that are the culprit, or because people use those sites. “It’s because hundreds of millions of people are using them, so, as a bad guy, I’m going to write my exploits and target the users there because that’s where I can get the most people to fall for it,” he says. Those exploits often come in the form of games and third party applications, he says—on computers, tablets and on smartphones—if the app is developed

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

by someone with criminal intentions. The app then becomes a tool to grab all the personal data the app has access to. So, who needs IT security? The experts say all businesses in every industry do.

IT Security Comes in Layers

A first step is to separate the vital functions of the business from everything else. “Get a computer that you use for accounting and access to your financial information and nothing else,” says Brian Hay, assistant professor, computer science at the University of Alaska Fairbanks and lab director for the Advanced Systems Security Education and Research Training Center. “Separating that critical function from users who browse the web, download content from the Internet, check email. All of those functions are good vectors of attack.” Sometimes the threat to IT security is less obvious. “Whether a business is an active target of an adversary or an unfortunate byproduct, IT systems are compromised or degraded,” says Hay. “Then everyone across the spectrum from small to big businesses needs to understand what their assets are,

what the threats to those assets are, and how they can most effectively provide some appropriate level of protection.” Hay says there is not a one-stop solution for every business. It is a risk management exercise and there are many ways to manage risk. Knowing what your assets are and what your priorities are directs how a business goes about securing their information technology. For example, if a business is a web store, a lost Internet connection means thousands of dollars in lost revenue. “Redundancy may be sufficient for one company,” says Hay. “If my goal is to keep my web store up and running at all times, then redundancy is my first component of my security plan because I want to make sure my site is available.” To prevent proprietary loss through employees, both law enforcement and IT security experts recommend that business owners have clear policies and procedures for hiring and firing—and very controlled access to their networks, both when employees are new and when they’re getting ready to leave employment. “In the olden days, (a rogue employee) had to spend all weekend at the

photo copy machine and walk out with big buckets,” says Glen Klinkart, chief executive officer of Digital Securus, an IT security consulting firm. “A 64-gigabyte USB stick can take an entire company’s full secrets, your special sauce recipes, and in 10 minutes, they’re out the door with everything.”

Hackers for Hire

Digital Securus’ approach on the prevention side is to scan a client’s network, find its vulnerabilities and make security recommendations. They start with checking for open doors into the network. “You can have guards at every door of your network, you can have firewalls and anti-virus and everything but somebody leaves their window open, and that’s how (the intruder) got in,” says Klinkhart, a retired APD detective who founded the firm after creating the Cyber Crimes Unit at APD. To help in detecting abnormalities, the consultants took their combined law enforcement and networking experience and developed a security tool called DarkForest, to help them with assessments. It is a compact set of hardware

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

47 ■

Photo by La Vie Imagery

DigitalSecurus Network Security Analyst Matthew Krueger.

and software which is installed into a client’s network to monitor activity. “It’s your nosy neighbor,” says Matthew Krueger, security analyst, Digital Securus. For some of their corporate and medical clients who have large networks, Digital Securus consultants look more closely at the network and give a more specific assessment over a four-week process. “We come in when there’s a specific security need,” says Klinkhart. “We come in quietly and nobody even knows we’re there.” Indeed, Digital Securus is housed in an unmarked building, behind steel bolted doors with programmable locks and protected with surveillance cameras—characteristic of the surreptitious nature of their work. On the recovery side, if a business has been a victim of external hacking or insider theft, the consultants respond to the incident, conduct a forensic analysis and plug the security holes. They extract electronic clues from the network to determine if data was stolen and if it is still being taken remotely. “We analyze that data and that data becomes behavior—and that behavior tells us what somebody’s intent was or ■ 48

what they were doing,” Klinkhart says. Digital Securus often partners with DenaliTEK, a company that provides entire network management solutions, including security. “It’s truly a partnership,” says Todd Clark, president of DenaliTEK. “They’re not providing the holistic managed services solution and we’re not providing the forensics, so we actually find ourselves collaborating a lot.” DenaliTEK uses a package of products, including anti-virus, anti-spam and anti-malware programs, as well as a firewall in combination with weekly and monthly inspections and upgrades to make sure the whole security system is configured properly. “Even with the best security implementation in terms of what products they might buy, over time, it becomes less secure because of new threats,” says Clark. “Part of the service has to be to keep it tuned up in terms of security on a regular basis.” DenaliTEK’s consultants’ regular inspections are often to protect the clients from themselves. One of the most common threats starts innocently: an in-house IT employee may disable a firewall while troubleshooting with a

third-party vendor’s technical support, forgetting to turn it back on. “The fire is put out, the software is working right, they never get around to figuring out why the anti-virus solution was causing a problem,” Clark says. “It takes extra effort to make them work cohesively.”

Emerging IT First Responders

In response to the growing and changing IT security threats, the University of Alaska Fairbanks developed a program to train the next generation of IT Security experts. Hay says his students are learning the tools, the skills and the adversary mindset they need to take to the workforce to help secure Alaska’s businesses, infrastructure and connectivity. This emerging group of IT first responders could provide another level of IT security—insurance for the future. “It’s particularly important in Alaska—because of the geographic isolation,” Hays says. “We have communities that are really, really dependant on network connectivity.”  Michele White writes from Anchorage.

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

trAnsPortAtion

Polar Bear with a blood stained snout leaning on “Designated Bear Viewing Area” fence in Kaktovik.

Local Air Carriers One company’s ﬂights across Alaska

BY NICOLE A. BONHAM COLBY

aximizing logistics in an innovative fashion typical of Alaska’s history of legendary air operators, Bald Mountain Air Service accomplished a recent interview with Alaska Business Monthly with unique flare, scheduling its key executives to take time between flight schedules and call in from geographically varied positions across the region. While the teleconference itself may have challenged its participants’ planning skills—and perhaps the state’s communications infrastructure—the exercise proved to be a successful example of how Alaska’s small air operators think beyond the norm to set their

product apart in a highly competitive and nimble marketplace. On that autumn day, Gary D. Porter, vice president and director of operations for Homer-based Bald Mountain Air Service dialed in from Deadhorse. Eric Lee, chief pilot and director of safety, called from the airfield in Barrow, where he had a few minutes between flights. Kathy Day, whose firm handles the company’s public relations, coordinated the complicated teleconference from Anchorage for this Southeastbased reporter. It was a conversation that literally spanned Alaska’s breadth. Alaska’s geography and scattered populace has long made air opera-

tions support a complex, challenging and financially risky business to contemplate. For those entrepreneurs and adventure-minded business folk who make flying passengers and cargo across the 49th State their career and passion, their secret to success lies in establishing a niche—whether geographically or in terms of targeted service provided. A second important factor, in contrary fashion, is at the same time diversifying their client base to weather the ups and downs typical of those industries that utilize rural air support—whether they are oil and gas exploration companies or bear-viewing cruise ship tourists.

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

49 ■

Flying High

Bald Mountain Air Service is only one example of rural-based air operators providing transportation in Alaska. The list of such air carriers spans the alphabet—from Air Arctic operating out of Fairbanks and providing air charter service throughout the Alaskan Arctic region to larger, scheduled air taxi companies like Promech Air of Ketchikan, family custom-flightseeing operations like Seawind Aviation of southern Southeast, and bear-watching excursions by air charter service Southeast Aviation, and dozens of others statewide. For small air operators, the competition is stiff. The terrain is challenging. The customer base fluctuates from external economic influences often generated a continent away. So how do these small and mid-sized companies manage to stay, pardon the pun, aloft? For Bald Mountain Air Service, it was an expansion plan that diversified the company’s clientele and operations landscape, taking it from a small charter service to now providing custom air-transport solutions using a fleet of single- and

“It just wouldn’t support the investment. We went from a $350,000 airplane to a million-dollar airplane, so we had to defer the cost of that.” —Gary D. Porter Vice President and Director of Operations, Bald Mountain Air Service

twin-turbine-powered DeHavilland Otters—and serving an area including Alaska, Canada and the Lower 48. The company specifically targets science research operations: natural resource exploration, including oil and gas; tourism; and point-to-point airport service. From cargo and passenger transport to aerial survey work, the small company includes among its clients the Alaska Volcanic Observatory, Anadarko Petroleum Corp., Chevron Corp., the National Science Foundation and U.S. Bureau of Land Management. Bald Mountain Air Service has widened its delivery service to include wheel, float and ski-based aircraft and is categorized as both womanowned and Alaska Native owned. “We’re multifaceted,” says 40-year bush pilot Gary Porter, who co-owns the company with his wife, Jeanne, who is president and chief executive officer and

is responsible for the daily supervision of operations. Both are life-long, multigenerational Alaskans. Jeanne’s maternal heritage lies in the Inupiat Eskimo culture. Gary’s family came from eastern Canada to Southeast in the 1800s for the Klondike Gold Rush, and stayed in Skagway working on the railways. They later moved to the Interior, providing guide services. To survive, the company relies now on three primary prongs: tourism, including traditional bear watching excursions and polar bear tours; summertime oil and gas exploration for large oil companies; and primary medical evacuation contracts.

To Grow or Not To Grow

When faced with a critical decision and milestone as to whether to expand or remain small in scope, the company considered the reliability and safety of

Rock solid service. When it comes to supporting the mining industry, no one understands your cargo needs better than Alaska Air Cargo. We know you count on reliable, on-time shipping for supplies and equipment, and we get you what you need when you need it.

TRUSTED TO DELIVER

THE #1 ON-TIME AIRLINE IN NORTH AMERICA*

A valued cargo team member since 1982, Doug has three decades of experience supporting industry in Alaska.

■ 50

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

*2010, 2011 FLIGHTSTATS.COM

Explore our services at alaskacargo.com.

Bringing

Alaskans Together “ Delivering you on time, so you can deliver on time.

“

transitioning to turbine-engined aircraft as a primary determiner. The aircraft are safer and more reliable for the company’s tourism client base, Gary Porter says. Yet the cost required Bald Mountain to look beyond just tourism. “The cost of that (fleet improvement) couldn’t be justified just with a short tourism season,” Gary Porter says. “It just wouldn’t support the investment. We went from a $350,000 airplane to a million-dollar airplane, so we had to defer the cost of that.” The North Slope was the obvious place to expand, he says. Helping make that decision was the fact that company employees were familiar with the North Slope’s oil and gas and exploration sectors. Similar to tourism, however, the oil, gas and mineral exploration business does not always provide a consistent operations planning schedule. Chief Pilot Eric Lee, who joined the company in 2002 after piloting for several domestic and international airlines, says the primary operational challenges for a small air operation with Bald Mountain’s contract-style operations structure are: first, recruiting qualified professionals and second, adjusting to the rapid changes of the oil and gas industry. Gary Porter agrees. “Alaska historically has fits and starts in the oil and gas industry,” Porter says. “The challenge (for support providers like air transport) is that oil and gas companies tend to react fairly quickly to changes in the market. As soon as the price of oil drops below some sort of benchmark…then they retract some of their exploration. The challenge is to suffer through the down periods, and… to be prepared for the surge in interest (when business rebounds).” By using a streamlined fleet and “commonality in aircraft,” Porter says the company has modified its operations structure to focus on its three prongs of service: tourism, exploration support and medical evacuation. Beyond such focus on specific niche contracts, the company also works to recruit the correct type of employee whose lifestyle accommodates the periods of high and low activity. “It requires a specialized set of pilots and mechanics,” he says. The employees know they will have three or four months of extreme high demand, with time off during the shoulder seasons of the contract structure. “A lot of the guys

(from where you are to just about anywhere in Alaska)

Bringing Alaskans Together

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

flyera.com

51 ■

are cross-trained (on the various aircraft)…to even it out. Some of the folks that we hire like that lifestyle—it gives them an extended period of time to be off work for a couple of months,” Porter says.

Polar Plunge

To complement traditional point-topoint air taxi and charter services, small air operators in Alaska traditionally look to tourists. Whether it is delivery to a U.S. Forest Service cabin in Southeast, a bear-viewing tour, a glacier excursion, or a flightseeing daytrip over fjords and glaciers, the small operator has found a solid industry in showing visitors the grandeur of Alaska’s landscape and wildlife. For Bald Mountain Air Service, the latest brochure addition is polar bear viewing on Barton Island. “Part of our diversification….is tourism,” says Lee. “One of the options that has opened up just now is that we’ve decided to offer polar bear tours.” The operational months for polar bear viewing are the autumn months of September and October. The Homer-based company offers a polar bear viewing tour between Anchorage and Kaktovik on the

Beaufort Sea Coast in the Alaskan Arctic. The flight from Anchorage aboard the King Air turboprop plane lasts two hours each direction. Travelers spend four to six hours on the ground in the village of Kaktovik, where a Native guide explains the history of the village—a primary trade center for the Inupiat. Visitors enjoy dinner in the village and have the opportunity to view polar bears nearby. The concept of bear viewing excursions in Alaska is as old and proven as the state’s visitor industry itself. However, polar bear viewing is a different animal. In contemporary times, it has been the focus of tourism operators farther east on the continent. Areas such as Churchill in Manitoba, Canada, have built a successful winter, destination-tourism industry based on polar bear viewing. For Lee, Porter and others at Bald Mountain Air Service, Alaska offers the pristine environment and ease of accessibility for similarly prime polar bear watching. In September, chief pilot Lee said the prime season for viewing polar bears was under way. “For Alaska this is a great opportunity,” he added. “Not only is it a really cool polar bear tour,” chimes in Kathy Day from An-

chorage as the four-way teleconference winds to an end, “but a great way to see the subsistence lifestyle.”

Complex Recipe

Much like that conversation that connected Deadhorse to Barrow to Anchorage to Southeast, the concept of successful air operations in Alaska is a complicated business that requires innovation and flexibility, operators say. Whether it be the tiny Ketchikan-based flightseeing operator serving up tours of Misty Fjords National Monument to cruiseship visitors, or the on-call MedEvac contractor awaiting the midnight-hour phone call from the hospital, Alaska’s aviation entrepreneurs are blending up a unique mix of clientele, niche seasonal services and flexible operations in order to succeed. “We’re diversified,” summarizes Porter—a sentiment that Lee echoed before each signed off to continue their respective air operations ongoing that day at the tip top of the state.  Nicole A. Bonham Colby writes from Ketchikan.

Advertise directly to your customers

Bill Morris Advertising Account Manager b_morris@akbizmag.com

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

(907) 276-4373 or cell (907) 268-0052

www.akbizmag.com

■ 52

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

oil & gAs

Royal Dutch Shell

Photo courtesy of Offshore Systems Inc.

Shell’s drillship the Kulluk on its way to the Beaufort Sea.

Moving forward with Arctic drilling projects BY VANESSA ORR

or more than six years, Royal Dutch Shell has been attempting to advance its plans to drill for oil from offshore drilling rigs in the Beaufort and Chukchi seas. On Aug. 30 the company learned these plans could finally move forward, opening the door for Shell to make history in Alaska once again. Despite the Obama Administration’s ruling, however, the company is not rushing headlong into Alaska’s waters, choosing instead to take a steadied and measured approach to the task before them. “We can’t use our frustration about how long the project took to get off the ground as an excuse not to take a closer look at the end game,” says Curtis Smith, Shell Alaska External Affairs. “We have dusted off our plans again and again and made sure that our applications and our pro■ 54

cesses are right; these efforts have shown themselves in the approval of our permits, and ultimately, in this approval to move our drilling program forward. We can lament the fact that it took so long to get here, but that time was well spent.”

Preparing to Drill

Since 1918, when Shell geologists first took a look at the state’s oil possibilities, the company has always had an interest in the 49th state. Though it pulled its operations from Alaska for a short period of time between 1998 and 2005, the milestones that it established remain a large part of the state’s oil and gas legacy. “We have a 60-year history in Alaska, which includes building the first two offshore platforms in Cook Inlet and drilling the majority of wells in the

Beaufort and Chukchi Seas in the 1980s and early 1990s,” says Smith. “We’ve made history here before and we’re looking forward to doing it again.” “That we were finally able to drill in the Alaska offshore this summer is a major milestone achieved and a strong signal that responsible development can take place in the Arctic. In the months ahead we look forward to operating safely and responsibly, putting Americans to work and adding to Shell’s long, successful history of drilling offshore Alaska,” says Pete Slaiby, Shell Alaska vice president. Despite delays on both projects, Smith says the company is excited about finally getting started. “Even though we’re getting a late start, we can accomplish a lot in the Chukchi Sea,” he says. “Just how far we get depends on how long

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

Photo courtesy of Royal Dutch Shell

“To get any drilling done will be a major success, given that it’s taken six years to get to this point,” he adds. “If we can get to the hydrocarbon zone, we can get a better data picture. This site has the potential to be a game changer for Shell, Alaska and a nation that is looking for a new domestic source of energy.”

Reaching the Resource

The Arctic Challenger, which is being retroﬁtted to serve as an oil spill containment barge.

it takes to build and excavate the mud line cellar, and how long it takes to put in the casing and cement from the top hole to the 1,400 foot level.” Before Shell can drill past the 1,400 foot level, its oil spill containment barge, the Arctic Challenger, must be certified by the U.S. Coast Guard and arrive on-site from its current location in Bellingham, Wash. The company had hoped to finish the barge by August 15, but complications, including disagree-

■ 56

ments over how best to install a fire suppression system, delayed that deadline. “This is the first vessel of its kind that has ever been built, and we want to make sure that we get it right,” says Smith of the retrofitted barge. “While it’s unfortunate we could not complete this portion of our tool kit in time to sail it to Alaska in 2012, the drilling we did complete this summer will allow for total depth drilling in 2013 when the Arctic Challenger joins our rigs in Alaska.”

According to U.S. Geological Survey numbers, there are approximately 25 billion barrels of recoverable oil in the Beaufort and Chukchi seas combined. To put this in perspective, in the last 35 years, 17 billion barrels of oil have moved through the trans-Alaska oil pipeline. “We have an excellent idea of what the resources are, because we’ve drilled this prospect before,” says Smith. “We have three years of 3-D seismic and when we combine these results with the core samples we have, we like what we see; we like it a lot. “Of course, there’s still some truth to the old saying—you may like a lease on paper, but you don’t love it until you drill it,” he adds.

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

Shell plans to use traditional drilling techniques at its offshore locations. “Offshore drilling has evolved over the decades, and we’re using technologies that are consistently repeatable and proven,” says Smith. “Twenty years ago, companies were only able to drill to 400 feet in the Gulf of Mexico; then it became 1,000 feet, which was a real ‘ooh-and-ahh’ moment. Then it became 5,000 feet, which marked a continental shift in the level of technology and expertise used. “We’re now able to drill to 10,000 feet in the Gulf of Mexico, which is considered ‘ultra-deep,’” he continues. “That has raised the bar and changed the game as a result of the expertise we can now bring to jobs. We’re drilling wells all over the world in this same way.” While drilling technology has remained consistent, planning for barriers and contingencies in the Arctic requires a completely different mindset, according to Smith. In order to avoid ice scouring and gouging, Shell is building its blow-out preventer below the sea floor. “If we have to leave the well because of approaching ice, we need to

A Shell capping stack like the one that stopped the Deepwater Horizon blowout in the Gulf of Mexico. Photo courtesy of Royal Dutch Shell

make sure that it is not compromised by the ice keel,” he explains. “We’re also bringing a pre-fabricated capping stack that is modeled after the one that stopped the most prolific offshore blow-out in the history of North America, the Deepwater Horizon incident,” he adds. “We have modified it and it is ready; but we plan on never having to use it.” Because of both sites’ remoteness, Shell

has to plan for every scenario that could happen. “One of the things that is unique to these projects is that we have to bring everything we need with us, including our contingency plans,” says Smith. “There is no red phone to call out here; no rangers over the hill to help us out. We have to be prepared to help ourselves.” To this end, Shell has created its own on-site oil spill response fleet complete

Transportation Solutions For Your Business!

Interior Alaska’s Fleet Headquarters SERVING ALASKA BUSINESS FOR 36 YEARS! Complete Line of Ford Vehicles in Stock

1625 Seekins Ford Dr. Fairbanks, Alaska 99701 (907) 459-4055 fleetsales@seekins.com

SEEKINS.COM www.akbizmag.com • Alaska Business Monthly • November 2012

1000 Lake Colleen Rd. Prudhoe Bay, Alaska 99734 (907) 659-2770 57 ■

with trained emergency personnel and Arctic-tested booms. “The response time from any other organization will simply be too slow,” says Smith. “This fleet has no other job than to wait for a worst-case scenario and be ready to respond.”

Sharing the Seas

While one of the largest concerns among North Slope Borough residents was Shell’s ability to respond to an oil spill, there were other worries as well, including the oil company’s effect on Native lifestyles. “One local concern included the fall whale hunt, so we volunteered to stop our operations in the Beaufort Sea while the hunt takes place,” says Smith. “While these days are hugely valuable to us because there is such a short window in which to work, we believe in the importance of co-existing with local Native organizations, and that means not competing for the same open water. The Kulluk has to anchor well away from our Beaufort Sea prospect, because there is a whaling blackout,” explains Smith. “When the Alaska Whaling Commission determines that this whaling season is over, we can begin to drill.

■ 58

“We also agreed to capture our mud and cuttings in the Beaufort Sea because whales can smell, and Native hunters feared that a new substance in the water column might drive the whales away from the hunting grounds,” he adds. “There is a tremendous cost to Shell to do this, but we believe that it’s worth it.” Shell has spent years in the area collecting baseline science information in order to determine things like where its pipeline should go, hydrology trends, marine mammal migration patterns and how to operate helicopters in the area without disturbing caribou hunters. According to Smith, the company has even gone so far as to create the largest, non-military acoustic listening program ever attempted in the history of North America. This vast database is of interest not only to Shell, but to the local population as well. In addition to sharing scientific results with stakeholders in the region, Shell also agreed to pursue scientific inquiries that were important to those who live in the area. To this end, the company committed to investing $5 million a year toward a joint Shell-North Slope Borough science program that relies on an advi-

sory board to direct scientific pursuits. The company is also investing in jobs, employing roughly 200 Shell employees in the state and indirectly employing 2,000 others, including 50 contractors and members of a dozen Alaska Native village and regional corporations. In the last six years, Shell has spent more than $4.5 billion on its Chukchi and Beaufort seas projects, a figure that will continue to grow now that drilling is under way. While the past six years have been anything but easy, it has had its benefits, according to Smith. “The time that we’ve spent here has positively manifested itself in our relationship with our stakeholders,” he says. “When we first re-entered Alaska, quite a number of people were monolithic in their thinking about drilling offshore. But we have seen a noticeable shift in the relationship; people are giving Shell a chance to prove itself. The burden of proof is now on Shell, as it should be, to do these projects safely and responsibly. And we look forward to taking that next step.”  Vanessa Orr is a writer living in western Pennsylvania.

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

AlAskA’s MArine industriAl Hub

AlAskA ship & DRYDock The largest shipbuilding and repair facility in Alaska just got better. Ketchikan Shipyard’s new state-of-the-art assembly hall and production center operated by ASD has put Alaska’s first city on the map as one of the most modern shipbuilding, modernization and repair resources in North America. ASD’s skilled workforce offers superior quality and Alaska tough results for vessels up to 500 feet.

907.225.7199

A k s H i p. c o M

i n f o @ A k s H i p. c o M

oil & gAs

Alaska’s OCS

Photo by Judy Patrick

Exploring the offshore cycle

The Northstar well is on a gravel island in 40 feet of water in the Beaufort Sea.

BY MIKE BRADNER

laska’s oil production is declining. Can exploration in the Outer Continental Shelf bail us out? It might. But we’ve thought that before. Exploration in the OCF off Alaska’s Arctic shores holds the promise of large oil and gas discoveries, much larger than the modest prospects the industry sees onshore. Oil from the OCS could indeed increase the flow through the transAlaska oil pipeline, it’s hoped, keeping that vital transportation system in business. Offshore development could also spawn a new offshore support industry for Alaska, creating thousands of jobs. It’s an enticing prospect, and not far-fetched. But for Alaskans who have lived in the state for a few years, there is something vaguely familiar about it all. It should be familiar. We’ve seen OCS exploration before in the Arctic and elsewhere off Alaska’s coasts, includ-

■ 60

ing in the Arctic, drillships, icebreakers and oil spill response barges. Almost two decades ago there were extensive environmental surveys and studies of bowhead whales, including reactions of whales to drill ships, just like studies under way today. There were also companies planning OCS wells in the Chukchi Sea—Chevron and Texaco—that had to delay planned drilling because of government restrictions, again just like today. At that time, however, the problem was State of Alaska—not federal—restrictions on drilling that had been extended to the OCS. Then, like now, it was Royal Dutch Shell that took the lead in both the Beaufort and Chukchi seas, although other companies, including Unocal, Sohio, Amoco and Arco Alaska, were active. There was activity across the Beaufort Sea. Chevron had partnered with

Conoco on one prospect in the eastern Beaufort Sea and another in the western Beaufort. The company had asked exceptions to state prohibitions on drilling during the spring and fall whaling seasons, and also for certain changes to strict state oil spill requirements. Arco was active in the Arctic OCS waters too, planning drilling for itself and Shell, Amoco and Unocal on the Fireweed prospect in the western Beaufort, off the National Petroleum Reserve-Alaska, and in the eastern Beaufort where the company drilled its Stinson well near Camden Bay. Amoco was also active, with its Gallahad well in the eastern Beaufort.

Arctic OCS History

There is a lot of the history in the Arctic OCS that is almost eerie in its similarity to the present: OCS Lease

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

Sale 71 in the Beaufort Sea in 1982 netted more than $2 billion in bids by industry, with about half of this by one company, Sohio. Most of the money was spent to acquire rights on a large prospect over which there was great confidence. In 2008, the Chukchi Sea OCS Sale 193 was to net $2.66 billion in high bids to the federal government, with Shell bidding the bulk of it. Shell’s objective was to regain leases on the Burger prospect, which it drilled in 1991 but then later relinquished the leases. The Beaufort Sea prospect that enticed Sohio in 1982 was Mukluk, a large geological formation on OCS leases in Harrison Bay north of the Colville River delta on the North Slope. Unfortunately, in 1983 Sohio was to drill the most expensive dry hole in the history of the petroleum industry at Mukluk. Let’s hope the similarities between Sohio and Mukluk and Shell and it’s drilling at its top prospect in the Chukchi Sea, Burger, don’t go that far. There are reasons why Shell’s outcome is likely to be different than Sohio’s, mainly that new and advanced seismic technology is available—but seasoned oilmen say one never really knows until the drill bit penetrates the promising oil formation. Now—for Shell—that won’t be until 2013. Alaskans have actually seen a lot of OCS activity off all its coasts although most of it was years ago, and a list of the companies that were drilling read like a who’s who of the U.S. industry in those days. The most OCS leasing has been in the Beaufort Sea, with 10 lease sales held in the region since leasing there began in 1979. The first Alaska OCS sale was in 1976 in the Gulf of Alaska, OCS Sale 39. Shell, Exxon, Texaco, Gulf Oil and Arco drilled in the gulf in 1977 and 1978, and Arco drilled again in 1983. There were OCS sales in other areas off southern and western Alaska coasts, and in the north, the Beaufort and Chukchi seas. There were also sales in the remote Navarin Basin in the Bering Sea, about 250 miles from the Alaska coast, where Amoco drilled five wells, Exxon drilled two and Arco drilled one. Following an OCS sale in Norton Sound near Nome, Exxon drilled five wells and Arco drilled one test.

A New Era in Remote Site Access

Flying is our passion, Safety is our mission 907 550 8600 • erahelicopters.com

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

61 ■

The results of all this drilling were not promising. Usually, a handful of exploration wells won’t write off such large areas, but the drilling was also very expensive. The end result is that the companies were not interested in pursuing further prospects in those areas, at least not at that time.

North Aleutian Shelf

There were also lease sales in OCS waters off the Bristol Bay region of Southwest Alaska, which the government called the North Aleutian Shelf. The North Aleutian Shelf OCS area, off Bristol Bay, is generally considered more prospective than the other OCS areas. Many geologists see the area as very similar in its geology to Cook Inlet, where many oil and gas discoveries have been made (but is still, in fact, considered underexplored). Bristol Bay is also a major salmon fishery, however. When the lease sale was held there, the fishing industry as well as the State of Alaska put up such opposition to leasing that the federal government cancelled and repurchased the leases. The sale has been proposed again from time to time on periodic federal leasing schedules (the Department of the Interior lays out a five-year OCS leasing schedule), but has always been postponed.

Arctic OCS Success

There was more drilling success in the Arctic OCS areas, in both the Beaufort and Chukchi Seas. Thirty-four exploration wells were drilled with discoveries in the Beaufort, and Shell led much of that exploration. One of Shell’s finds in the Beaufort was even developed, although that was in more recent years. In that instance the well Shell drilled was called Seal Island. Amerada Hess Corp. drilled a well it called Northstar on the same formation, but on stateowned leases. This is now the Northstar field that was developed in 2001 and is now owned and produced by BP. The field is about six miles offshore the Prudhoe Bay oilfield and straddles the boundary between state-owned and federal OCS submerged lands. The Seal Island and Northstar wells resulted in a modest discovery that was too expensive to develop with technology of the 1980s. Both com■ 62

Alaskans who remember Mukluk do wonder about the parallels with Shell’s current program, however. Huge amounts of money are similarly being spent and Shell is very optimistic, and seemingly very confident, about chances of success. panies sold their leases several years later to BP, which employed new ideas in construction and renamed the field Northstar. Since part of Northstar lies on federal OCS leases the amount of Northstar’s production allocated to those leases is the first OCS production from Alaska waters. Other companies were also drilling in the Beaufort Sea, and also finding oil. Unocal was an early leader in Arctic offshore drilling and drilled the first well with an artificial island in 1975 followed by a second island, and well, in 1976. Unocal later used a drillship on OCS leases near the Camden Bay area east of Prudhoe and found oil. The company named the discovery Hammerhead, but it was not large enough, and too far from shore, to develop (Shell now plans to drill its adjacent Sivilliq prospect in 2013). Arco Alaska drilled a well named Kuvlum in the same area and found oil. Again the discovery was not large enough to develop. The very costly 1983 Mukluk dry hole at Harrison Bay was to put a chill on deepwater offshore OCS exploration in Alaska for many years. Low oil prices, which affected companies’ exploration budgets, didn’t help, but Mukluk cast a long shadow. The Alaska OCS, at least in deeper waters, had gained a reputation where industry explorers proposed projects only at the peril of their careers. Companies did continue on a more cautious path, however, drilling prospects nearer shore that were not as exposed to the heavy, moving Arctic icepack, and where any discoveries could be reached with relatively short pipelines from shore. One of these, besides Seal Island, is Liberty, a discovery made in shallow waters about five miles offshore and northeast of Prudhoe Bay. Liberty is protected from the heavy, moving offshore icepack by offshore natural barrier islands—there is only “shore-fast” stable ice that forms around the island. Interestingly, it is in a pocket

of OCS lands like a doughnut hole more than three miles off the Alaska coast and three miles from the offshore barrier island, which established a pocket of state-owned submerged lands. Liberty is a confirmed oil find and BP has considered developing the field a number of ways, including building an artificial gravel island connected to shore by a subsea buried pipeline, as the company did at Northstar, and also by drilling extended-reach horizontal production wells from shore. If that path were pursued the well would be a record-setter in terms of lateral “reach” from the onshore drill rig, more than eight miles. The Liberty development plan is not yet resolved. Northstar, mentioned previously, was developed about six miles north of Prudhoe with an artificial gravel island built in about 40 feet of water, with a pipeline to shore. Unlike the Liberty location, which is east of Northstar and behind a string of offshore barrier islands, Northstar is exposed and has no protection from the moving ice. Its design has withstood the forces of the ice as well as intense summer storm waves over more than 10 years, however. That proves the point that structures can be designed, with gravel in shallower waters and potentially concrete and steel in deeper waters, that can withstand ice.

Alaskan OCS Cycle

Interestingly, as much as it chilled exploration in the deeper water Arctic OCS, Mukluk was actually a technical success in the sense that everything the geologists had predicted was there— the large geologic reservoir trap and a “cap” rock over the top, the sandstone rocks that had the right porosity and permeability for oil to flow, if it was there. Unfortunately the reservoir held water. The oil had once been there, but it had leaked out. In doing an analysis, geologists later concluded that the seismic surveys, which used the best

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

technology available at the time, had missed a small hole in the top of the cap rock which ordinarily would have trapped the oil. It was enough to let the oil leak out, though. People have always wondered where the Mukluk oil went, because it did go somewhere. Alaskans who remember Mukluk do wonder about the parallels with Shell’s current program, however. Huge amounts of money are similarly being spent and Shell is very optimistic, and seemingly very confident, about chances of success. There is always worry, however, that when the drill bits finally reach down the target depths in the Chukchi and Beaufort seas the results won’t match expectations, and that the bad-luck cycle of the Alaskan OCS may begin once again. One big reason why the outcome for Shell may be different this time is that, unlike Mukluk, Shell knows there is oil and gas in the Burger reservoir because Shell found it there when the company first drilled the prospect two decades ago. Shell drilled three prospects in 1990 and 1991. One was Burger, its top prospect in 2012, and the others were Klondike and Popcorn. Klondike was actually completed in the summer of 1990, but only the “top holes” or upper parts of the wells on Burger and Popcorn could be done that year before bad weather forced a halt to operations in mid-October. The wells were completed the next summer. The well results were private, but a subsequent analysis by the U.S. Minerals Management Service that was made public showed the well made a very substantial natural gas discovery with some indications of oil. Shell’s drillship on that earlier project was the Canmar drillship “Explorer 2.” It is this promising 1991 discovery that Shell is hoping to prove up in 2013, when it resumes drilling in the Chukchi Sea. There are similar hopes for the Beaufort Sea, on the prospect there discovered in the 1980s. These wells may usher in a whole new industry for Alaska, if they are successful. If not, it will be just another cycle for the OCS off Alaska’s shores.  Mike Bradner is publisher of Alaska Legislative Digest.

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

63 ■

oil & gAs

Port Adak The gateway to oil development in the Arctic BY PAULA COTTRELL

n an effort to revitalize the fledging community of Adak, Aleut Enterprise and Aleut Real Estate, subsidiaries of the Aleut Corporation, joined forces with Offshore Systems, Inc. in June to reopen the former Adak military base to provide logistics support for offshore drilling operations in the Arctic. The Adak Army Base and Adak Naval Operating Base were constructed during World War II to provide counteroffensive support against the Japanese invasion of Kiska and Attu Islands. After the war ended, the U.S. Navy and Coast Guard developed the facilities to support military personnel that were stationed in the area during the decades to follow. At its peak, the base was home to anywhere from 5,000 to 7,000 servicemen and their families. After the threat of the cold war was over, the base downsized in 1994 and

officially closed in 1997. In the following years, the island would become a virtual ghost town with the closures of family housing, schools, recreational facilities and restaurants, including the most western McDonalds in the United States. According to the U.S. Census Bureau, in 2010, the population of Adak had dropped to 326 people. In 2004, the Aleut Corp. purchased Adak’s base facilities under a land transfer agreement with the U.S. Department of the Interior and the U.S. Navy and Department of Defense. Until the recent partnership with OSI, it was unclear how the local Alaska Native Corporation and its subsidiaries planned to breathe life into their new investment. Speculation of planned civilian development for Adak by the Alaska Native Corporation was centered around fuel sales and small-scale fish process-

ing with far reaching plans, including development of the area to support air cargo trans-shipment between Europe, Asia and the West Coast; a Sea-based Xband radar site; and the possibility of a large-scale prison. When Arctic offshore oil exploration began gaining traction over the last few years with companies like Shell, Conoco Phillips and Statoil positioning themselves to begin development of the Outer Continental Shelf, OSI and the Aleut Corp. teamed up when they saw an opportunity to provide oilfield and logistics services that would support those efforts.

Building a Gateway to the Arctic

OSI and the Aleut Corporation envisioned creating a logistical gateway—in Adak—to Arctic drilling, similar to the way Port Fourchon serves as the gate-

■ 64

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

way for oil exploration and drilling in the Gulf of Mexico. “With tax advantages favoring oil exploration in Alaska, it is necessary to look ahead and see how we can facilitate this growth in a meaningful way,” says Rick Wilson, business manager for OSI. Currently, the Port of Dutch Harbor in Unalaska is home to much of the shipping activity in the Aleutian Islands. Located 450 miles west of Dutch Harbor, Adak is only an additional 165 nautical miles for vessels making the journey from the Arctic. “Adak is in a prime location to support offshore drilling operations in the Arctic,” Wilson says. “There is significant infrastructure already in place that allows us to provide immediate services to our clients.” The Port of Adak has 2,750 lineal feet of deep draft berthing space and is ice free year-round. Pier side services include fueling, electrical power, crane support and fresh water. Adak’s modern fueling system is OPA 90 compliant and has a high capacity for loading and unloading at 7,000 gallons per minute. Underground distillate storage facilities can store 465,000 barrels of fuel with an additional 37,000 barrels of additional tank space available for contingency use. Housing, administrative space and other facilities are available for immediate occupancy, according to Wilson. Accommodations that once housed thousands of military personnel are being refurbished to feature spacious, fully furnished two-bedroom, two-and-a-half bath units with garages, telephone, cable television and Wi-Fi access. The facility is capable of housing 300 people immediately with availability for hundreds more upon request. There is an abundance of office space and administrative buildings available as well as a machine shop, a local store and restaurants. The small-town population of Adak creates a natural security environment, but that is heightened by an onsite harbor master and the Transportation Security Administration’s Transportation Worker Identification Card requirements. Perhaps the biggest advantage Adak has over its neighboring port in Dutch Harbor is the expanded airport and unrivaled indoor and outdoor storage capabilities located in close proximity to the harbor.

The Adak Airport is operated by the Alaska Department of Transportation and Public Facilities and features two large paved runways that are 7,790 feet and 7,605 feet long—almost twice the length of Dutch Harbor’s 3,900foot runway. By easily accommodating 737 and larger aircrafts and with non-stop service from Anchorage and Seattle, the airport provides for more reliable air travel. Freight is more easily moved in and out of Adak by carriers such as Northern Air Cargo and Lynden Air Cargo, which require a minimum of 5,000 feet of runway to operate. These limits restrict large air cargo transport to Dutch Harbor. With 150,000 square feet of hanger storage space and 400,000 square feet of warehouse space, staging of equipment and materials won’t be a problem. “Adak has over 100 acres of flat paved real estate that is easily accessible for storing pipe and equipment which will be needed during the construction phase of OCS sub-sea pipelines and associated facilities,” Wilson says. Located in the hilly areas around Unalaska, this is something Dutch Harbor will never be able to offer. “Dutch Harbor has certainly earned its name as the leading shipping hub in the Aleutians, but by expanding westward to Adak, the total capabilities of what can be offered between the two ports can’t be ignored,” Wilson says. Some of those advantages may seem small, but they add up when a business is trying to poise itself as an oil support and marine cargo transshipment hub. “Converting the military installation into a commercial site is necessary to revitalize growth in the area,” Wilson says. “As marine traffic continues to increase over the Arctic Circle as it is expected to do with decreasing ice, more services will be necessary to support those operations as well.” By no means is the Aleut Corp. trying to disregard Dutch Harbor by investing in Adak. According to Rudy Tsukada, president of Aleut Enterprises, Adak development is not intended to compete with Unalaska/Dutch Harbor since the parent company has shareholders living in both communities. Instead, it is seen as an opportunity to expand support for offshore oil and shipping traffic in both areas.

OSI also is committed to expanding its Dutch Harbor facilities and business operations. “We have no intention of diverting work from Dutch Harbor to Adak,” says Joey Willis, executive vice president of OSI. “Rather, by teaming with the Aleut Corporation in developing Adak, we are responding to the demand for additional OCS infrastructure as development in the Arctic increases. Adak is the ideal option and will keep the work in Alaska.”

All Eyes on Shell

While many oil companies have their sights on developing oilfields in the Arctic, Royal Dutch Shell has most publicly lead the charge by conquering a five-year battle to secure the proper permitting so the company could begin its drilling program this year. For the Aleut Corp., teaming up with OSI was a necessary component to ensuring the successful development of an oilfield support facility at Adak, according to David Gillespie, chief executive officer for Aleut Corp. “OSI has a relationship with Shell that we don’t have,” he says, admitting that gaining acceptance as an oil company contractor isn’t easy. As any contractor who has been working with Shell for the last five years can tell you, there has been and will continue to be a lot of “wait and see.” “It’s a Shell game,” Wilson says. “We are watching what they are doing and standing ready to assist them any way we can. Our plans include phasing in services as they are needed, but it is really up to the customer to decide when they are ready.” Shell has not said for sure whether their winter plans include demobing in Alaska or the Gulf of Mexico, but Gillespie says he is hopeful that some of the 30 vessels currently working for Shell will overwinter in Adak. The uncertainty of oil exploration in the Arctic makes it risky for companies to commit too far into the future, but with the solid backing of the Aleut Corp. and the oilfield experience of OSI, Port Adak is sure to play a major part in the future of offshore drilling operations in Alaska and the Arctic.  Paula Cottrell is an Alaskan author.

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

65 ■

oil & gAs

Nikiski LNG plant.

The Time is Now for LNG Gas line wranglers saddle up for another go-round

BY MARI GALLION

n the wall of the Alaska State Capital building in Juneau hangs the front page of an Anchorage Times newspaper whose headline reads, “Farewell, Mr. Alaska: Bill Eagan dies.” On the lower right hand corner of the page appears a much smaller headline: “Gas line firm seeks clearances.” The article goes on to detail how one Anchorage-based company had filed a request with the federal government for a right-of-way over federal land, and had submitted the required applications to the Bureau of Land Management to build a pipeline for Alaska natural gas. The article continues with details about the proposed route, size of pipeline (36inch), cost of building the pipeline (es■ 66

timated at $14.3 billion, including inflation and finance charges), and plans to sell the gas to Japan, Korea and Taiwan. The newspaper is dated May 7, 1984. Twenty-eight years later, on Sept. 13, the first day of the Alaska LNG Summit in Valdez—a conference focused on harnessing Alaska gas for domestic use, economic growth and global opportunities—a panel that includes the mayors of several Alaska towns discusses the critical need for natural gas in rural Alaska. According to Kathie Wasserman, executive director of the Alaska Municipal League, rural Alaskans spend up to 47 percent of their incomes on heating alone. The current heating options of wood and diesel are expensive and scarce.

Bethel Mayor Dr. Joseph Klejka talks about how monthly heating bills of $500 (and up to $800 for some) are common in Bethel. As a result, multiple families are crowding together—literally shoulder to shoulder—into smaller houses in order to stay warm. Unalaska Mayor Shirley Marquardt adds that families that have lived in Western Alaska for generations— families who wish to stay in their towns—are moving to communities like Wasilla where they have a chance to live a life not consumed with the price of staying warm. According to Wasilla Mayor Verne Rupright, this exodus to these population centers creates a different kind of

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

overcrowding problem in that these communities do not have infrastructure to handle the population boom. One would think that Alaska, the richest (in natural resources), largest and most sparsely populated state in the U.S. would be able to avoid these problems of overcrowding—yet Alaska has residential overcrowding in its larger communities as well as its rural areas, largely because of the price of heating. To add more fuel to the proverbial fire, Alaska has plentiful natural gas on the North Slope, though it is stranded. Each year, 380 million gallons of diesel (for heating) are consumed statewide, according to Wasserman. As Valdez Mayor Dave Cobb pointed out in his opening remarks, Valdez already has existing infrastructure, low ambient temperatures that are beneficial to operations, close proximity to Asian markets, and an existing deepwater ice-free port—all components that make Valdez an ideal site for an LNG terminal. Then there is Hawaii: According to Barbara Laflin Treat, program manager for Hawaii Gas LNG Program, Hawaii is currently 100 percent dependent on foreign oil. Although Hawaii would not be one of the larger markets for Alaska LNG, to supply Hawaii with Alaska LNG would cut its dependency on foreign oil from 100 percent to 55 percent. Whispers of indignation circulate amongst the conference attendees: “Why have we let this go for so long? How did we let things get this bad in our own back yard when the solution to our problem is right here in our own state?” Finally, “How much worse are we going to let things get for Alaska residents—as well as our fellow Americans—before we get off the dime and do something?”

order to address local and national energy crises, but also because if we don’t do so soon, we will lose our opportunity to get contracts with international markets, a key component in the viability of any natural gas pipeline project. Although Bob Gibb, associate director for Navigant Consulting, admits that regulatory requirements for any project are a tough thing to come by, he says that he is not having any trouble with his clients coming up with the necessary money to secure their desired share of the available natural gas. “The money is there. There are folks out

there who are ready to do it,” he says. “They want 20-year deals.” At this time, other LNG companies— including Kitimat LNG in Canada—are signing 20-year contracts to supply LNG to Japan and other foreign markets. According to Bill Walker, these foreign markets “need a commitment now or they will go elsewhere.” Unlike many of those early-bird suppliers, Alaska has the good stuff, and lots of it. According to Myers, Alaska has in excess of “35 trillion cubic feet of North Slope gas—and that’s conventional gas,” meaning it is traditionally more practi-

ASIA Buyers Ready to Commit

According to several speakers at the LNG Summit, including (but not limited to) Bill Walker of the Alaska Gasline Port Authority; Octavio Simoes, president of Sempra LNG; and Dr. Mark Myers, vice chancellor of research at the University of Alaska Fairbanks and former director of the U.S. Geological Survey; not only is it imperative that we get Alaska natural gas to market in

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

67 ■

cal and easy to extract than unconventional gas, which is also plentiful. Furthermore, according to Myers, Alaska LNG is extremely clean, which is what Japan needs; however, according to Myers, “Canada is much more aggressive.” Walker points out that despite Alaska’s superiority in price, quality and proximity, Kitimat LNG is currently signing contracts to supply these markets simply because they are ready to commit. Ten days after the conference, Walker told how the Alaska Gasline Port Authority has been working with major buyers from Korea, Thailand and Indonesia. “These companies stated an interest in purchasing 2.8 billion cubic feet of natural gas at the wellhead,” he says. “In short, Asia is hungry for our gas in volume sufficient to build a pipeline.”

■BUILD A BULLET LINE: This option garners criticism because it would limit Alaska’s LNG throughput while requiring all the permits and environmental assessments, time delays—and almost the expense—of a larger pipeline, and would almost certainly prevent Alaska from building a larger pipeline for a decade or two. Richards says that there is a growing sentiment among Alaskans that this is option doesn’t solve our problems, doesn’t provide cheap energy in-state, and doesn’t provide revenues to offset the state from future declines in oil production and revenue sharing therefrom. Richards says, “I would actually (consider) a bullet line as a less favorable option than ‘do nothing.’”

What’s the Hold-Up?

■ PRODUCER PIPELINE: In this option, a pipeline will be funded and built by the North Slope lessees, BP, ExxonMobil and ConocoPhillips. This option requires Alaska to wait indefinitely for the oil companies to verify fiscal certainty and allow them to fund and build the pipeline.

According to many of the conference speakers, including Simoes, Myers and Walker, the inability to act now seems to be the result of the state’s adherence to the idea that we need to wait for the big oil companies to “bless” the project with their standard of feasibility. Yet according to Walker, the producers’ priority lies with making money rather than in solving Alaska’s social and environmental challenges, bolstering Alaska’s economy, helping our foreign neighbors or even making practical use of our known resources. “At this time, their focus is on oil, not gas, “ Walker says, “and with the big three, who can get their oil and gas from anywhere in the world, why would it be so important to them that it come from Alaska?” The general consensus at the LNG Conference is that Alaska must take control of its own destiny and authorize the construction of a pipeline on its own terms. Craig Richards, an oil and gas attorney in practice with Bill Walker, set out four options: ■ DO NOTHING: Richards refers to this option as the “highest probability outcome.” “It’s been the outcome for 35 years,” he says. Richard admonishes that “it’s going to require a fundamental change for something ‘different than nothing’ to happen.” ■ 68

■STATE CONTROL: To take control away from the producers, and for the State of Alaska to step into the owner role of securing long-term gas contracts, building and owning the infrastructure to take North Slope gas to Hawaii, world markets and other areas of Alaska now.

Feeling the Heat

At the LNG Summit, Kurt Gibson, director of the state gas Pipeline Project Office, said the producers were currently in the concept selection phase of what he calls a “stage-gated process” for getting the pipeline built. In the concept selection phase, the producers identify what they have eliminated as options and describe a narrow range of options for moving forward into what’s known as the pre-engineering phase. As Gibson had anticipated, ExxonMobil, ConocoPhillips, BP and TransCanada have recently moved from the concept selection to the pre-engineering phase of the project. On Oct. 1, the producers submitted several documents outlining a project timeline to the office of Gov. Sean Par-

nell, including cost estimates for various stages of pipeline development, and new details regarding project components including a liquefaction facility, gas production and storage, a large-diameter pipeline and a gas treatment plant. Meanwhile, the Parnell administration has conducted outreach to foreign markets, including Korea and Japan. However, the question of whether the submitted cost ranges of $45 billion to $65 billion will result in any action by the producers and TransCanada—after all, the article posted on the wall of the state’s capital clearly shows that in Alaska’s history, this isn’t our first natural gas pipeline rodeo: riders have been thrown from this project for decades, and the prevailing sentiment of the conference attendees was that the State of Alaska should be ready with a back-up plan. “They’re going to make a decision that’s in their best interest, and there’s nothing wrong with that—we are fortunate to have large companies in the North Slope and that’s great,” Walker says. “But for them to make the decision about when this goes to market— and where it goes to market, and which market—is not working.” In the time since the Alaska LNG Summit 2012, Walker’s language has grown stronger with the mounting urgency to act quickly and decisively to change the course of Alaska’s economic and social fate: “It will be telling whether, over the next few months, those leaseholders and Gov. Sean Parnell will align with the market and move forward with a project, or whether they will continue to beat the tired refrain that the state must provide steep fiscal concessions to BP, ExxonMobil and ConocoPhillips before Alaskans are allowed to heat their homes with affordable energy and secure their fi nancial futures.” 

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

Mari Gallion is associate editor at Alaska Business Monthly.

oil & gAs

No More NPR-A compromise was made 32 years ago

BY PHIL COCHRANE

am troubled. The United States Department of Interior has issued a proposed management plan that effectively locks up about half of the National Petroleum Reserve-Alaska from development. The announcement was heralded in a federal news release as a compromise between development and conservation. In reality, it was just a wholesale land grab. Apart from the obvious contradiction of stopping oil and gas activity in an area set aside specifically for the purpose of oil and gas development, this decision makes no sense to me. That’s why what troubles me most is not the announcement itself, but the reaction to it. Oh, I know that many leading Alaskans spoke out against DOI’s final proposed plan. The arguments were strong and made sense. However, if you spend some time looking at the various statements, news releases and media coverage, you’ll see there was something missing—a serious conversation about the Alaska National Interest Lands Conservation Act (16 USC 3213) and how this action runs counter to it. ANILCA was signed into law in 1980 and set aside 106 million acres of federal lands in Alaska for conservation. Added to the already protected existing spaces, over 148 million acres of federal land was declared off limits to development. Long-time Alaskans will tell you that the full impact of ANILCA on resource development is still not known—and, to this day, many still oppose the legislation. My purpose here is not to debate the merits of ANILCA. However, ANILCA is the law of the land and we must abide by it. We also need to understand that it did more than just lock-up federal lands. There are many good resources to help us understand ANILCA—probably the best is RDC’s “Who Owns Alaska?” It describes the history and impacts of the legislation on Alaska and resource development. It’s a must read. In my opinion, the most important parts of the law are Section 101 (d): the purposes section—and Section 1326—commonly referred to as the “No More” clause. In section 101, Congress says ANILCA represents a proper balance between conservation and development, and no more land would be withdrawn for conservation purposes by the federal government. Section 1326 puts some teeth in the legislation and says the Federal Administration cannot withdraw more land for conservation without Congressional approval. Don’t take my word for it. Here is exactly what it says: “SEC. 1326. (a) No future executive branch action which withdraws more than five thousand acres, in the aggregate, of public lands within the State of Alaska shall be effective except by compliance with this subsection. To the extent authorized by existing law, the President or the Secretary may withdraw public lands in the State of Alaska exceeding five thousand acres in the aggregate, which withdrawal shall

not become effective until notice is provided in the Federal Register and to both Houses of Congress. Such withdrawal shall terminate unless Congress passes a joint resolution of approval within one year after the notice of such withdrawal has been submitted to Congress. (b) No further studies of Federal lands in the State of Alaska for the single purpose of considering the establishment of a conservation system unit, national recreation area, national conservation area, or for related or similar purposes shall be conducted unless authorized by this Act or further Act of Congress. All of this brings me back to the debate over the DOI proposal for NPR-A. If ANILCA says no more conservation land is needed, how then can DOI propose to add more conservation land? Why is it Congress’ carefully crafted “proper balance” appears to be set aside by administrative fiat? Now do you understand why I am troubled? This should have Alaskans standing on our chairs, waving our arms and demanding an explanation. ANILCA prescribes the rules of the game. Alaska is playing by them. How is it that the federal government apparently doesn’t have to? Surely this was not Congress’ intent. As Alaskans and as leaders in the responsible development of Alaska’s resources, we need to stand up and take on this fight. We need to draw a line in the sand. Every time the federal government takes an action that we believe is inconsistent with ANILCA, we must stand up and demand answers. Our elected leaders need to do the same. If we don’t, this won’t end. Think of the initiatives waiting in the wings today that could be next—ocean spatial planning and the ANWR Comprehensive Conservation Plan are just two examples. George Santayana famously said: “Those who cannot remember the past are condemned to repeat it.” It’s time we all take a refresher course on ANILCA or expect to see more land grabs dressed up as “compromises.” The compromise was made 32 years ago.  Phil Cochrane serves as the president of the Resource Development Council for Alaska. He is the vice president of external affairs at BP Exploration (Alaska) Inc. Cochrane is an accomplished professional communicator with diverse experience in leadership, crisis communications and issues management. He leads a team of dedicated individuals responsible for managing BP’s external relationships, government relations, public affairs, media relations, community giving and corporate reputation in Alaska. He also led BP’s external response in the state of Florida during the Deep Water Horizon accident in 2010.

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

69 ■

oil & gAs

Alaska Oil Policy Out of alignment COMMENTARY BY BRADFORD G. KEITHLEY Any opinions expressed herein are the author’s own.

s Alaska finishes this year’s election cycle and starts looking toward the coming legislative session there are several steps which are needed to restore Alaska as an attractive location for oil investment. One of these steps, upon which the Legislature has focused for the last two sessions, will be in the spotlight in the coming legislative session as well: the current level of oil taxes. While an important part of the overall puzzle, oil tax reform alone may not be sufficient to overcome the inertia that has settled into Alaska’s oil and gas industry. Alaska also is out of alignment with maximizing the development of its oil resources in other significant respects. As a result, fully realigning Alaska’s interests with maximizing the development of its oil resources likely will require more steps than simply tax reform.

Background

In order to appreciate Alaska’s challenge in increasing future oil development it is important first to understand Alaska’s current approach. In many respects, it is similar to back seat driving—and sometimes just about as successful. Under the leases entered into between the producers and the state, the producers make all of the investments and bear all of the expenses necessary to develop the lease and produce oil and gas. Because the costs of development are born entirely by the producer, the lease understandably provides that the producer generally is entitled to determine the pace and amount of the investment. As a result, Alaska is at risk when, due to market and competitive factors, ■ 70

opportunities elsewhere provide a better return on investment. In those instances, the producers have retained the right to defer investments in Alaska in order to pursue other opportunities. Deferral is exactly what has happened to Alaska over the last few years. For various reasons, Alaska has become a less attractive investment opportunity over the last several years. Some of the causes are self-inflicted. For example, by some estimates, the 2007 passage of Alaska’s Clear and

decline in investment and stimulate development. In reality, however, Alaska’s application of the tools has made matters worse.

Tools

The two primary tools that Alaska has used to attempt to reverse the decline in industry investment have been tax credits and direct regulatory intervention. Most realize that ACES significantly increased oil taxes. What fewer realize is that another component of ACES cre-

Yet despite the lower potential, ACES creates a signiﬁcant tax credit designed to encourage investment in areas outside of existing units, and effectively penalizes investments inside the existing units. Equitable Share, or ACES, increased oil taxes on Alaska producers by over 400 percent. That change materially reduced the competitiveness of investments in Alaska compared with those in other parts of the world. Other factors are external and beyond Alaska’s control. For example, substantial advances in drilling and production technology have made investments in shale formations elsewhere in the United States and—increasingly—the world, more economically attractive than they were previously. Also, the opening of vast new parts of the world to private investment—such as large parts of Africa, Central Asia and Russia, and even the Alaska OCS—have significantly increased the range and number of investment opportunities available to producers. In the past few years, Alaska has attempted to use two tools to reverse the

ated incentives for certain types of investment through the use of tax credits. Through the use of special tax credits, ACES subsidizes the cost of exploration activities in areas outside of existing North Slope oil and gas units. The credits may fund up to 60 percent of the costs of such activities. The credits come at a significant cost, however. In order to provide the money to fund the credits, ACES assesses higher tax rates from production within the existing North Slope units than would otherwise be necessary. The result is that the incentives for further investment and development in the existing units are depressed at the same time the tax credit system attempts to stimulate investment outside of the units. The problem with this approach is that there are significantly more undeveloped resources remaining inside the existing North Slope units than have

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

tinued pressing for Point Thomson development because of the proceeding’s high political profile. Beginning with this coming legislative session, the state should revise its approach to better align its actions with maximizing development opportunities. Alaska is not the only government Point Thomson project and esti- which owns oil and gas resources. mates that, before completion, it will When faced with similar issues— spend billions more. At the same declining investment and productime, investment in the development tion—other similarly situated govof the oil available in other existing ernments have elected to co-invest alongside industry in the developNorth Slope units has declined. In the absence of developing a ment of their resources. Done in the right way, co-investmajor gas market, the maximum production anticipated from Point ment directly aligns the economic Thomson is 10,000 barrels of liquids interests of the producers and the per day, which is significantly small- state in the development of the state’s er than other potential opportuni- resources at a level not possible under ties available in the existing units Alaska’s current back seat approach. and a minor offset to the anticipated Using common information and with net loss of 50,000 barrels per day of the same objective, both entities foproduction projected by the state be- cus on developing the opportunities offering the greatest opportunity for tween 2011 and 2015. It is doubtful that Point Thomson economic returns and production. Co-investment already has been was the most productive use of the used successfully in Alaska. On investment dollars it has required. a smaller scale, Anchorage’s Municipal Light & Power has invested The Problem & Direct Regulatory alongside producers in the developa Potential Solution Intervention The second tool that Alaska has used in The fundamental problem that creates ment of the Beluga Gas Field, located an effort to spur development is direct these results is the state’s lack of per- in Cook Inlet. The result has been a regulatory intervention. The Point Thom- spective. State government does not shared focus on maximizing develson dispute is a good example. There, in view oil development in terms of ob- opment of the field, which has prov2006, the state instituted legal proceed- taining the biggest return—in terms of en critical to meeting Southcentral’s ings to terminate the Point Thomson production and revenues—on the in- gas supply needs. The co-investment model may be leases because, in the state’s opinion, the vestments being made. Instead, under owners, led by Exxon, had not taken ad- the current approach, state government a good model for Alaska to apply on a broader scale. It certainly is one equate steps to develop them. views these issues politically. While many saw the state’s efforts For example, the Legislature cre- worth investigating further in an efto terminate the Point Thomson ated the ACES tax credit scheme fort better to improve Alaska’s align leases through other lenses, the pro- largely because it wanted to encour- ment with its objectives. ceedings essentially were an effort age the development of independent by the state to punish the owners for oil companies on the North Slope, to Bradford G. failing to invest in a specific project. counter the perceived weight of the Keithley is a The result was a settlement, with the existing producers. Partner and Coowners agreeing to pursue the develThe state pursued the Point ThomHead of the Oil opment of the leases. son lease termination proceedings & Gas Practice Like the tax credits, however, the initially because it wanted to jump at Perkins effort has created unintended con- start the development of Point ThomCoie, LLP. He sequences. The effect essentially son’s gas resources at a time when it maintains has been to focus investment in one appeared there might be a market for ofﬁces in both project on the North Slope, likely at gas in the Lower 48. When that marAnchorage and Washington, D.C., the expense of others offering sig- ket disappeared—and the producers and is the publisher of the blog nificantly greater potential. started limiting their own, discreAs operator, Exxon already has tionary investments in gas related “Thoughts on Alaska Oil & Gas” spent in excess of $1 billion on the projects—the state nevertheless con- (bgkeithley.com). been identified outside. Indeed, the areas within the existing units hold at least as much remaining oil in place— and may hold more—than the original Prudhoe Bay field. On the other hand, the potential of the areas outside of the existing units is largely speculative, and to the extent it has been estimated, represents a significantly smaller potential than that remaining inside the existing units. The estimated potential oil in place of the shale oil play currently being pursued by Great Bear Petroleum, for example, is roughly one-tenth the size of that known to remain in undeveloped intervals located inside the existing North Slope units. Yet despite the lower potential, ACES creates a significant tax credit designed to encourage investment in areas outside of existing units, and effectively penalizes investments inside the existing units. Responding to this bias, a not insubstantial portion of the investment made recently on the North Slope has been in areas outside of the existing units, away from the larger known resources, exactly the reverse of the result needed if the objective is to maximize production.

Beginning with this coming legislative session, the state should revise its approach to better align its actions with maximizing development opportunities.

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

71 ■

special section

Building Alaska

2012 ABM Contractor of the Year: Cornerstone General Contractors ‘Leading construction in the Last Frontier’

BY RINDI WHITE

ornerstone General Contractors is behind some of the most prominent buildings in Anchorage. The company, which next year will celebrate 20 years of building in Alaska, built the new Health Sciences Building on the University of Alaska Anchorage campus, as well as the ConocoPhillips Integrated Sciences Building, UAA/ APU Consortium Library and residence halls. Cornerstone is working on another major university project—the UAA Seawolf Sports Arena under construction. Cornerstone’s work extends beyond the university campus. Under a joint venture with a partner contractor, they built the Veterans Administration Outpatient Clinic in Anchorage, expanded the

South Peninsula Hospital in Homer, and built Eklutna Estates, a 59-unit senior living facility for Cook Inlet Housing Authority in Anchorage. Cornerstone was also the general contractor for the state-owned Alaska Culinary Academy in Seward at AVTEC, Alaska’s Institute of Technology. “Not only have they worked a lot for UAA, but they’ve had projects with Providence and APU and the Army Corps of Engineers. I think they’ve got a pretty good reputation for doing what they say they’re going to, and for getting things done,” says Stan Vanover, senior project manager for the Facilities Planning and Construction Department at the University of Alaska Anchorage. Named Alaska Business Monthly magazine’s 2012 Contractor of the Year, Cornerstone enjoys a good reputation for

Cornerstone employee Chris Crabtree looks on while employee Jason Wallace, roped in, works on the side of the UAA Seawolf Arena.

collaborative projects that give owners more bang for their construction buck. “They do things a little differently,” says Shawn Holdridge, project manager for Cook Inlet Housing Authority. “They’re about building relationships.” Holdridge says Cornerstone recently returned to the 93,000-square-foot Eklutna Estates project after the facility had been open for two years to repair some flooring. Many contractors provide a one-year wear warranty, he says, but Cornerstone did the work even though it was no longer under warranty. “That’s important for clients, especially nonprofits like ours,” Holdridge says. Customer satisfaction and viewing the building process as a partnership are ideals the company was founded on, says Joe Jolley, a Cornerstone vice president and one of Cornerstone’s five owner/partners. He says Cornerstone is always working to improve. “The construction industry is a competitive business. You’re really only as

Photo courtesy Hook LLC.

■ 72

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

good as your last project. We’re looking at being here for the long haul and part of that demands continuous improvement,” Jolley says.

Building Better Together

C. John Eng and Jaysen E. Mathiesen founded Cornerstone in 1993. Cornerstone was an early adopter of the collaborative building approach, in which the project owner selects the architect, general manager early in the planning and design process to hammer out design details and help the owner get the best value for their money. Traditionally, an owner goes to an architect, who draws up complete building plans, and then hands them to a general contractor. Jolley says the collaborative approach has made his work more enjoyable and leads to a more creative outcome. “We’ve got a great mix of people with different backgrounds. Some studied construction management and engineering in college or graduate school and others came up through the trades. When you get all those people in the room together and on the same side, you get some interesting ideas,” Jolley says. Over the years the company has grown and taken on larger and more complex jobs. The company now employs about 30 salaried people yearround and up to 100 craftsmen at any one time, bringing in between $30 million and $40 million in revenue each year. It’s not the largest contractor in Anchorage and it doesn’t rank at the top of the list in yearly revenue. That’s by choice. “We’re pretty selective about the projects we do. It’s about taking on projects that we know we can do well,” Jolley says.

out, she says. AVTEC officials wanted a 13,000-square-foot building, but thought they would have to start smaller and add on, due to funding limitations. Cornerstone’s early input in the design process helped AVTEC get the larger building from the start. “It gave us an additional classroom, which was really vital,” Mahoney says.

When the project was nearing completion, Cornerstone returned some of the project money, allowing the state to buy the culinary equipment needed for instruction. That assistance allowed the state to open

There’s cold. And there’s Alaska cold. they don’t call it the Great Land for nothing. everything is greater here: the temperature drops, the storms, the winds, the ice, the tidal changes. that’s why our orca class vessels are specially built to withstand the worst that nature can throw at us between tacoma and anchorage. meeting the unique demands of alaska is only part of our business.

Choosing Success

meeting yours is everything else.

Photo Credit: Frank Flavin

Being selective has led to satisfied customers and repeat clients. Kim Mahoney, project manager for the Alaska Department of Transportation and Public Facilities, worked with Cornerstone on the Alaska Culinary Academy building. She says she looks forward to working with them more in the future. “They were fantastic to work with. We achieved good value on the project because of the solutions they proposed,” Mahoney says. Two things about the project stood

the academy in fall 2010 instead of having to wait another funding cycle. Vanover, who is UAA’s project manager on the $109 million UAA Seawolf Sports Arena, says the company has helped build the Anchorage campus, and done so with an eye to the future. “The last five projects Cornerstone has done for us have all been signature projects—literally hundreds of thousands of our students will be going through those doors over the next few decades,” Vanover says. “They know that these are buildings they want to

www.totemocean.com 800.426.0074

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

73 ■

“Commitment to Quality Through Pride of Employee Ownership.” Photo courtesy Hook LLC.

The Superior Group is committed to becoming the best mechanical and electrical contractor in Alaska... to do this we pledge to meet and exceed our customers’ requirements every time by providing services of the highest quality.

Superior Plumbing and Heating 349.6572 Alaska Sheet Metal 279.6009 Haakenson Electric 346.3043 Superior Mechanical Service 349.6550 Support Services of Alaska 278.8212 ©Ken Graham Photography

907.344.5011

www.superiorpnh.com • P.O. Box 230387 • Anchorage, Alaska 99523

■ 74

Cornerstone employee Chris Callahan works on the forms for the UAA Seawolf Arena.

be able to send their kids to and their grandkids to in future generations.” Mark Palmatier, Cornerstone’s senior project manager for UAA’s Health Sciences Building, Integrated Science Building and the ongoing Seawolf Sports Arena project, said the three buildings are complex structures that tested Cornerstone’s mettle in different ways. The $104 million, 130,000-squarefoot Integrated Sciences Building houses both a planetarium and a vivarium—a lab where small animals can be studied, including animals hibernating in temperatures as low as negative 40 degrees Fahrenheit. It has a solid frame that prevents structural vibration so laboratory microscopes remain still, Palmatier says. Achieving that result meant pouring half the building in solid concrete. One of the largest challenges, Palmatier says, was a matter of timing. “The Integrated Sciences Building alone had over $10 million worth of additions without extensions to the project schedule and we still opened on time. That makes it a unique success,” he says. The 196,000-square-foot UAA Seawolf Sports Arena poses unique challenges of its own. One of the biggest challenges, Palmatier says, is the large open spans designed to ac-

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

AVTEC culinary facility exterior (left) and interior (right).

commodate games. Huge tresses are needed to support the 250-foot-wide open space that makes up the dome, which is 90 feet above the arena floor. Palmatier says most of the structure will be built down into the ground. In an area with a high water table, building downward has meant pumping out groundwater during construction and installing a dewatering system to ensure the building stays dry. Learning from Mistakes

Jolley and Palmatier say one important tool Cornerstone uses is a “lessons learned” meeting on major projects. Palmatier says with both the Health Sciences and Integrated Sciences buildings there were two meetings; one with just Cornerstone workers and a second with university user groups, maintenance officials and others involved in the project. The meetings were aimed at solving or troubleshooting problems, he says.

“Maybe something concerning one person is just as simple as adjusting an actuator. In another building it was a matter of rearranging furniture. Sometimes it’s a simple fix, sometimes it’s not,” he says. But by the end of the process, everyone has had a chance to review things that worked—and didn’t— and Cornerstone has better ideas for the next project.

“It’s no secret that people are either choosing not to enter or are even exiting the construction industry,” Jolley says. “When we were trying to figure out where to find new employees, it was kind of a natural thing to start talking about adding interns.” “Hands down, our employees are the most important thing at Cornerstone. When we get first look at an intern and see if they have potential—I think we really cultivate a strong employee,” Palmatier says. Giving Back to the Community

For several years Cornerstone employees have volunteered time and labor to support local nonprofit organizations like the Booth Memorial Home for Salvation Army of Alaska, Anchorage Police Department Employees Association, and Habitat for Humanity. Now, Jolley says, the company is going a step further.

“Working with Habitat for Humanity, we’ve initiated a contractors’ consortium,” he says. “We’re getting construction industry companies to make a donation every year, with the goal being an annual collective gift of $100,000.” That’s enough to build one Habitat House, he says. This is the consortium’s inaugural year but it’s been well received so far, Jolley says. In four months they’ve raised more than $50,000. Jolley says the conInvesting in the Future Not only does Cornerstone work on sortium underlines the company’s UAA projects, the company also re- commitment to constant improvecruits UAA Construction Management ment and community involvement. “We’re always trying to find new students as interns. Palmatier says the internships have fostered relationships and better ways of doing what we with students who have since become do,” Jolley says. “That’s what building for the future is all about.”  full-time employees. Jolley says the internship program is a way of ensuring Cornerstone’s Rindi White writes from Palmer. future success.

Delivering Your Construction Needs

Meeting project deadlines is crucial. With PAF’s shipping resources and state-of-the-art tracking system, your construction materials will always make it to the job site on time.

AnchorAge | FAirbAnks kenAi | kodiAk | FiFe

1-800-426-9940 www.pafak.com

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

75 ■

special section

Building Alaska

Alaska Scientific Detection Laboratory Crime lab extraordinaire BY GREG JOHNSON

■ 76

Photos © Ken Graham Photography.com

or nearly 17 years, Bonnie Craig was a statistic. The 18-year-old University of Alaska Anchorage student was found dead Sept. 28, 1994, facedown in McHugh Creek south of Anchorage. Her rape and murder quickly became front-page news, and nearly as quickly, the case went cold. Investigators painstakingly interviewed dozens of people with hopes of catching a break. When that didn’t work, they turned to an emerging crime investigation tool called DNA profiling. As the years passed, a few leads would pop up, but nothing substantial. “When that crime occurred, we eliminated something like 75 people through (DNA) profiling,” says Orin Dym, forensic laboratory manager for the Alaska Scientific Laboratory in Anchorage. “If they had anything on a suspect, they were run.” In fact, one of those DNA samples taken in 1998 provided a potential hit, but that person was ruled out as a suspect. In 2000, the state lab put Craig’s DNA into the national database. It wasn’t until 2006, though, that investigators would catch a genetic break. That’s when a DNA profile from Ken-

Neeser Construction Inc. was selected in 2008 for the multi-year crime lab project, shown here in the early stages of construction.

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

neth Dion was put into the national database by New Hampshire officials after he was convicted for committing a string of armed robberies there. The criminal justice system finally found closure for Craig and her family June 15, 2011, when Dion was convicted for killing and raping the young woman. That day would not have come without DNA evidence and breakthroughs in criminal investigation techniques at the disposal of forensic scientists, Dym says. In Alaska, all that work goes through his lab.

Dym’s Lab

That facility, the new Alaska Scientific Detection Laboratory at 4805 Dr. Martin Luther King Jr. Ave. in Anchorage, is a spacious 84,000-square-foot, threestory building built by Neeser Construction Inc. that houses a staff of 44, and cost $87.5 million to build. “That includes design, site prep work, every chair, every light bulb, telephones on the desks, computers,” Dym says, pointing out the construction and furnishing came in about $5 million under the facility’s original $92 million budget.

Now settling into the lab—the official move happened in June—it’s becoming clear that the real benefit of the complex is being realized in more efficiencies in the science of processing evidence. Dym calls this the “decompression effect,” where the lab now has more than four times the space of its previous location, a 19,200-square-foot building at 5500 Tudor Rd. in Anchorage. “This last month is a great example,” he said during a September tour of the building. “We developed a bit of a controlled substance backlog. Typical monthly output for my controlled substances unit is around 100 cases. This last month when we were up and running, they knocked out 170 cases. That’s where decompression really makes a difference.” In the DNA lab, for example, the old building had limited space and could only have two technicians working on specific tests at a time, Dym says. That meant he could never have all his people working on DNA sampling at the same time. “Now we can,” he says. “I can walk into the DNA lab and my analysts can all be working their cases without hav-

ing to take turns on equipment. I have the capacity for everybody to be working and doing their jobs without having to stage when everybody’s going to be working and where.” In addition to DNA, the facility includes spacious laboratories for latent print analysis, blood alcohol analysis, controlled substances analysis and the state’s breath alcohol program monitoring. There’s also a full firing range and high-tech tool shop for firearms and toll mark analysis. The entire third floor is dedicated to the building’s mechanical plant, which is where a large piece of the state appropriation was spent, Dym says. That’s because heating and ventilating a criminal laboratory has to be done a specific way. While it’s OK to recirculate air in an office or administrative space, a crime lab has to have fresh air cycled through constantly. “Laboratory air is 100 percent exchanged,” he says. “It’s 100 percent in and out, and we do that up to 12 times an hour.” Even that process is aided through technology. Each lab has active air

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

77 ■

Photos © Ken Graham Photography.com

The crime lab project was a construction manager/general contractor model in which Neeser participated in the design process with Livingston Slone architects and McLaren, Wilson and Lawrie Inc. forensic design specialists.

monitor modules in its exhaust stacks that can tell the building if more or less clean air is needed. “There are periods through the day where activity is lower than others, so how do you save money there?” Dym says. “You provide some intelligence in using the air in the laboratories. We’ll monitor this over the next five years, because the question then becomes are we saving enough energy to make back the money of the cost of the system.” That’s also the idea behind other features throughout the building, like motion sensors that will turn on lights in areas that are being used and turn them off if no activity is detected after a short while. Because of this and other energy-efficient building techniques available today that weren’t when the old lab was built in the mid-1980s, the new lab can operate for only a little bit more than the previous one, Dym says. Of his $6.5 million annual budget, the only operational increases are for one more maintenance person and about another $250,000 for utilities. While that’s about 2.5 times more than utilities cost at the old lab, the new lab serves more than four times the space. “On one side, we did increase the operating budget from the state, and I recognize that,” Dym says. “I look at that and say a lot went into making sure that as energy costs continue to escalate over the next 20 years, we have the most to extract the most.” ■ 78

New Firing Range

Nobody has a longer history with the state crime lab than Bob Shem, a 26year veteran firearms and tool marking specialist. “I was one of the original hires when they built the first lab,” he says, admitting he had mixed emotions leaving for the new digs. “It was like burying a loved one and I didn’t like the idea of leaving. But once I got here, it didn’t take long to mourn the loss. This place is pretty sweet.” Now, he has separate areas for firearms and tool marking analysis. The firing range is insulated and has a safe backdrop of about 36 inches of rubber behind it in case of stray bullets. “That’s a lot better than stacking a bunch of telephone books back there like we used to,” Dym says. While the scientists at the lab aren’t concerned with proving anyone’s guilt or innocence, the work itself can provide some exciting and satisfying moments, Shem says. One memorable case he worked on led to the 1990 second-degree murder convictions of Raymon Cheely and Doug Gustafson. They were the driver and front seat passenger in a car from which a gun was fired at another motorist at the Muldoon exit on the Glenn Highway. The bullet killed a passenger in the car. Although a weapon was never found, Shem helped put together the science that showed how and where the sus-

pects’ car had to have been and from what angle the shot had to have come to hit the victim. “The suspects were a bunch of bad actors,” he says. “They broke into Alaska Railroad places and stole sticks of dynamite. They ordered some assault rifles from a small gun dealer. They went up to Eklutna and shot up some abandoned cars there, and on the way back they got cut off in traffic. So, they sped up to chase the vehicle and the guy cracked a shot off and killed the passenger.” They didn’t know someone had been hit and killed until the news broke the next day, Shem says. The case was helped by a third man in the suspects’ vehicle who testified against Cheely and Gustafson. “He tried to throw his buddies a bone,” Shem says. He tried to claim that the gun went off accidentally and that they were about 200 yards from the other car. “I did the firearms stuff for that case,” he says. “They had a cartridge case found at the scene and I worked on the trajectory with the car. Well, when we did the trajectory on the vehicle, we found it was only about seven yards away.” Many may recognize Cheely and Gustafson from a connected case. After they were convicted for the shooting, they conspired with Gustafson’s pregnant sister to construct a mail bomb that killed the witness’ father and severely injured his stepmother.

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

By the fall of 2011 the crime lab was fully enclosed, allowing winter work by Neeser and subcontractors, including Udelhoven Oilﬁeld Systems Services, General Mechanical Inc., Megawatt Electric LLC, Siemens Building Technologies and Saxton-Bradley Inc.

Determining guilt or innocence isn’t a consideration at the crime lab, Dym says. “The crime laboratory has a unique position in that it’s the one entity in the criminal justice system that actually speaks for the evidence,” he says. “It doesn’t speak for the prosecutors, the defense attorneys. I’m not here to

do what you want, I’m here to do what’s needed, and there’s a very big difference between those two things.” He uses an analogy from the popular board game “Clue” to explain the lab’s place in the criminal justice system. “We are looking at what’s probative, and it’s really not that different from

the game,” he says. “Professor Plumb, with the monkey wrench killed Col. Mustard in the library.” 

Alaskan journalist Greg Johnson writes from Wasilla.

WORLD CLASS SERVICE. LOCAL KNOWLEDGE.

Cook Inlet Tug and Barge is the premier provider of ship assist services in Cook Inlet, Alaska. Our knowledgable employees combined with our powerful Ice Class Tugs ensure that we get the job done safely and on time for our customers. Need assistance? Give us a call today.

(907) 277-7611 Harbor Tanker & Barge Escort/Assist

cookinlettug.com

Construction Support Port Expansion Dredging Support LNG Support Equipment Delivery & Supply

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

79 ■

Building Alaska

special section

Workers stand ready to place the ﬁnal steel beam in the Life Sciences Facility Aug. 12, 2011. The beam, painted in UAF’s school colors, is adorned with the U.S. and Alaska ﬂags, signatures of the iron-worker crew, and a tree meant to bring good luck and future growth.

Construction at the University of Alaska Deferred maintenance, capital construction projects drive growth for Alaska

BY R ACHEL VORIS

he mood was dismal at the Construction Specification Institute (CSI) meeting earlier this spring as the news went out across the room that there were few construction jobs ahead. The group, composed of different representatives throughout the state, works on construction standards, documents and project delivery. John Faunce, a representative from the University of Alaska, sat in the room alongside other representatives, including U.S. Army Corps of Engineers personnel and delegates from the State of Alaska Department of Trans-

■ 80

portation and Public Facilities listening to reports given by the delegates about upcoming projects. Faunce watched, and it seemed report after report carried the weight of bad news as many of the groups were facing significant shortfalls in funding, which meant fewer projects on the horizon. At last, the university brought good news that many were eager to hear. The university unveiled a series of projects, all in various phases, which promised work for contractors and designers. Faunce delivered hope for a job sector that was in need of revitalization.

According to Faunce, director of facilities planning and construction for the University of Alaska Anchorage, firms were very interested in the work, not only because of the quantity of the projects but even more because the university brought one of the few positive outlooks for the day.

The Need for Work

There are an abundance of projects being completed on the UA system’s 16 campuses, many of which will considerably reduce the university’s deferred maintenance backlog from $750 mil-

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

This summer work was completed for the UAA aviation parking project. The project will provide increased parking at the campus. Photo by John Faunce

lion toward its $360 million goal. UA hopes to reach this goal by 2018 using funds allocated specifically for deferred maintenance through continued support by the state Legislature. Alaska Gov. Sean Parnell and the Legislature approved $100 million in funding in each of the next five consecutive years to go toward statewide maintenance and renewal projects. The university’s cut of the $100 million was $37.5 million. The rest of the money was designated for other state facilities, including buildings, roads, airports and ferries. Parnell began the five-year program in budget year 2011. The budget passed in April was the third in the governor’s five-year commitment to the deferred maintenance reduction program. Parnell understands the need to maintain buildings based on his committee experience within the senate, according to Regent Kirk Wickersham, secretary of the University of Alaska Board of Regents and board facilities committee member. Wickersham has been on the board since 2007 and is a retired attorney and real estate broker in Anchorage. “All governors in recent years have been very supportive of the university’s capital projects,” Wickersham explains. “Governor Parnell has been very supportive and we have been able to count on $37.5 million in the governor’s budget, which has been very helpful in working towards reducing the backlog of deferred maintenance projects.”

Without a stable funding commitment, planning for major deferred maintenance construction projects systemwide is nearly impossible, according to Faunce. The university receives two kinds of funding for construction projects, he says: capital funding for new construction projects, such as the new University of Alaska Anchorage Sports Arena or the two new engineering buildings currently being designed at UAA and the University of Alaska Fairbanks, and deferred maintenance funding. New projects are easier than deferred maintenance work to plan for since new multiyear capital projects are presented to the Legislature and their funding is approved in phases before construction begins. However, unlike new project funding, deferred maintenance funding has been unpredictable from year to year. “Prior to the state’s five year deferred maintenance funding commitment, we did not have a reliable stream of funding,” Faunce says. “Some years there was no money to spend on these projects and other years there was enough money. Planning was impossible.” Adding to the university’s $37.5 million allocated toward maintenance and renewal projects, the university received receipt authority from the state to issue $50 million in bonds. The last time the state issued bonds to this extent for the same purpose was in the 1990s. After that there were years with little to no deferred maintenance

funding, Wickersham says. Combining all of these revenue sources means that many projects can be planned and completed, even if they aren’t considered an immediate priority. Though these sources of funding do not yet reduce the huge maintenance backlog to a level that keeps emergency response manageable, the predictable deferred maintenance money over the past three years has made a difference and offers hope for achieving the university’s sustainment funding plan. And just as Faunce witnessed at the CSI meeting, that hope reverberated through other job sectors too.

Background

The construction sector has been rebuilding since the housing recession hit Alaska the hardest in 2009, after reaching a peak in 2005. As reported by the Alaska Department of Labor and Workforce Development, years of uninterrupted job growth were halted that year, costing substantial numbers of construction jobs in the private sectors. Recessions aren’t new to this industry. The rise and fall that came with the building of the Trans-Alaska Oil Pipeline brought in hoards of workers, but when oil prices dropped, so did job opportunities. Many companies moved out of Alaska and not all have returned, according to Keith Gerken, director of facilities services at the University of Alaska Southeast. Gerken has spent 40

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

81 ■

a deferred maintenance deficit almost too deep to overcome.

Photo by Keith Gerken

A History of Building Need

Auke Lake Way is the core road that runs through the middle of the Juneau campus at the University of Alaska Southeast. The road is being reconstructed due to failed pavement and drainage and will be turned into a pedestrian route with a new vehicle roundabout as pictured.

years with the industry and has seen this cycle play out before. The last three years have brought life back into the construction sector, according to Associate Vice Chancellor for Facilities Services at UAF Scott Bell. He says many contractors he has spoken to have been grateful for all the work. “They are appreciative of the fact that we have some big projects going on right now,” Bell says. “The borough has some other projects going on, but the university is a major player in driving the work.” Rob Spiller, job sponsor for Kiewit Building Group, says the work has made a difference for Kiewit, which has been involved with many university projects, most recently the electrical upgrades and utilidor project at UAF. Spiller spoke about the significance of the work for Kiewit but also the work for the construction sector as a whole. Spiller has been in the industry for 24 years—20 of those with Kiewit. The projects from the university have made an impact, Spiller says. Work from the university is good for contractors since there are many sectors that have had to cut spending, including the military and private sectors. The overall workload has been reduced making staying in business challenging for everyone, especially smaller construction firms. The reduction of work has meant that the university has had more bidders for projects at lower prices. More competition has been vying for the same amount of work, which has benefited the univer■ 82

sity in that it requires companies like Kiewit to strive to do things better. For Kiewit, the competition is important. Spiller says the competition is good because it can keep them busy if they are awarded projects, and furthermore, it challenges them to work the hardest and be the best within the marketplace to provide the best value to the university. “The work is appreciated,” Spiller says. “We understand there is only so much money the university can afford to spend, especially within a tight economy it can be harder for money to be allocated; but it is definitely appreciated.” One of Kiewit’s projects, the UAF utilidor project, involves increasing steam capacity for West Ridge and the new Life Sciences Facility. The project involves constructing a new utilidor and housing steam piping from existing utilidors. This work is considered an expansion and renovation project, as is much of the other university work, and can be considerably harder to work on compared to new construction. “Any retrofit or renovation of existing projects of existing facilities is more difficult than straight construction because you’re dealing with an existing structure. A lot of facilities were not designed for future use or expansion, making it more difficult to renovate, but not necessarily more expensive,” Spiller says. Regardless of the level of difficulty, the deferred maintenance work has mutually benefited contractors and the university, which before this was facing

The university that started in Fairbanks has planted campus seeds all over the state, but most went without necessary updates for 30 years. There is a certain level of continual care required to keep buildings properly maintained after they are built, Gerken says. Many buildings can get by for a few years with little maintenance after being built, but the UA system has a total of 400 buildings, creating a total worth of more than $1.9 billion. The annual depreciation of the buildings is $56 million and the average building age is 30 years old. Some major deferred maintenance projects include renovation of the UAA Allied Health Science Building, UAA Beatrice McDonald Building renewal and complete renovation, UAA Science Building renovation, UAA MAC Housing renewal, Prince William Sound Community College Wellness Center renovation and campus renewal (funded by GO bonds), and UAA Kodiak College Vocational Technology and Warehouse Facility renovation. UAA major capital projects that are new projects funded directly by the Legislature and other sources slated for the next three years include the building of a new sports arena, Engineering and Industry Building, Kenai campus student housing and technical center, and the new Mat-Su Valley Center for Arts and Learning. Improvement projects for the University of Alaska Fairbanks are vast and span various needs, according to the UAF master plan. UAF was unable to increase research levels, a central aim of the university, due to limited facilities, which led to the development and creation of the life sciences and engineering facilities—UAF’s major capital projects. UAF major deferred maintenance projects include critical electrical distribution renewal throughout the campus, a utilities steam capacity expansion in the West Ridge of campus, and the Kuskokwim Campus Center for Alaska Native Health Research Health Clinic and gymnasium renovation. UAS construction will include the Auke Lake Way reconstruction, which

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

The Funding Process

The Board of Regents of the university goes through a request process for capital funding and maintenance funding. For new projects, Wickersham says the board requests a direct appropriation from the Legislature and occasionally requests receipt authority to independently raise additional funds. Those funds enable the university to issue and sell bonds in financial markets and use the proceeds of the bonds to do the new construction projects. Wickersham echoed the sentiments of university facilities directors regarding renewal and repurposing construction, saying: “This has made all the difference, to make this multi-year commitment so we could plan, so that we could be more efficient, so that we could make that $37.5 million go further.” The potential implications of this funding for the state of Alaska are promising. “These are good jobs, Little Davis-Bacon Jobs, so they pay full

Photo by Keith Gerken

is the core road that goes through the middle of the Juneau campus. The reconstruction will transform the road to become a pedestrian route. New freshmen housing is currently in design phase. The first construction phase will add about 60 beds, which will solve convenience issues for students on campus and move freshmen closer to the center of campus. The UAS Sitka campus will be remodeled to create more space for lectures and enhance other student resources. The university’s new fiscal year began on July 1. As outlined in the Capital Budget Distribution Plans, the UAA main campus was designated $9 million in deferred maintenance funds and a little under $2 million for its eight community campuses. UAA received $58 million in state appropriated capital funds, mostly going toward the engineering building construction and renovation. UAF main and community campuses received about $23.5 million for maintenance and renewal funding, and $46.3 million in capital funds towards their new engineering building. UAS received about $3.5 million toward maintenance and renewal, $4 million in capital funds for new projects, and $2.2 million in receipt authority.

The trash and recycling collection facility at the UAS Auke Bay campus apartment complex was constructed this summer.

union scale and there are a lot of them,” Wickersham says. The Davis-Bacon Act was established in 1931 by the federal government and requires all federal government contracts over $2,000 to pay workers at least prevailing wage rates and benefits for similar local work. Several states developed their own rules for state contracted public works projects called Little Davis-Bacon Jobs. Employees working in construction put their wages back into the economy—they buy groceries, use health care, and have housing and vehicles. “The multiplier effect of an in-state resident union scale construction worker is pretty high and reverberates through the economy in a pretty spectacular fashion,” Wickersham says.

The Future of UA

Wickersham says he is hopeful and believes the work won’t stop in two years when the governor’s maintenance and renewal commitment closes. He says he trusts that UA President Patrick Gamble will continue to be a good steward with the facilities by taking care of needs as they arise and lowering the annual cost of upkeep. By managing the investments from the state, the president will be able to take the university further. UA campuses continue to modernize, and the demand for graduates in several areas continues to increase. With those increases, there is a demand for properly retrofitted as well as specialized new facilities.

“University campus life is competitive,” says Gary Johnson, director of the division of design and construction for UAF. “If we don’t stay competitive with other universities in terms of facilities, we can’t draw the best professors and we cannot draw students. We must try to stay at the cutting edge of what we do here, so we can be the best.” Wickersham says he believes the work will continue to help the university, but on a broader scope. This investment will echo in the economy now and in the future, especially through the new engineering facilities that will help feed into one of the highest job demand areas in Alaska. “When you’re using science facilities that we built in the 1970s and you upgrade to facilities that were built in 2009 and above, you’re serving students and their future employers at a level that is simply impossible without those kind of investments.” The university growth has potential to work full circle, stimulating the economy and other job sectors, but the true goal remains—educating students, the future of Alaska.  Rachel Voris is a writer, editor and teacher. She moved to Alaska from Colorado in July and is working at the University of Alaska in the Ofﬁce of Public Affairs. Voris previously worked as a middle school teacher and as a reporter.

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

83 ■

special section

Building Alaska

Photo courtesy of Mowat Construction Company

Mowat Construction Company at work on the Million Dollar Bridge rehabilitation project.

21st Century Innovations in Heavy Construction in Alaska The Phases of Innovation in Resource Production BY TASHA ANDERSON

laska is a tough place to build, especially for heavy construction. Infrastructure, especially in remote areas, needs to be able to stand with minimal regular maintenance. The cost of building large scale, rural structures is astronomical, and expensive maintenance costs that depend on the transportation of materials or an abundance of man-hours may take a project from expensive to impractical. The environment is key to Alaskans—we are proud of the resources we have, we’re proud of the beautiful land that holds them, and we believe strongly in using intelligent methods to use our resources while preserving our state. Furthermore, safety is a constant issue, especially when the closest medical facility may be a two-hour helicopter flight, ■ 84

and no helicopter is available. Alaska’s industries are known for their attention to safety, which isn’t surprising when one works in an environment where routine injuries are transformed by cold and isolation into life-threatening ones. It’s no surprise that Alaska’s contractors, engineers, architects, planners and workers do all they can to improve heavy construction practices to save costs, protect the environment and increase safety.

Phase One: Get There

In some cases, Alaskans and other Arctic occupants have managed to use the challenges of the far north as tools, such as allowing the bitter cold to help them build roads. Ice roads have been a means by which the mining and oil and gas industries have stretched towards

resources responsibly for decades. Yet these seemingly simple roads are constantly being improved. The amount of water, snow or ice needed to build these roads can be staggering. One mile of road can require up to 1 million gallons of water. Alaska Interstate Construction LLC invented snowbirds, the “most efficient method of offshore ice road construction in the Arctic today,” according to their website. These machines drill through the sea ice and pump water to the surface of the intended road. Layer by layer, the water freezes until the road achieves sufficient thickness; this eliminates the need for water, snow or ice chips to be transported in from surrounding areas, and of course, if and when the ice melts, it’s already right where it belongs.

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

Cruz Construction, as stated on their website, “has years of experience in all types of heavy construction projects in remote Alaskan locations” and an entire fleet of tundra-approved, lowground-pressure vehicles, which aid them in both transportation and construction. One such type of vehicle, a Rolligon, is absolutely essential to building tundra-safe ice roads. Wet, marshy tundra is hardly impacted by any type of ice road, but tussock tundra is highly affected by certain types of ice roads and takes years to recover when damaged. The Alaska Department of Natural Resources, in the report “Recommended Methods of Ice Road Construction Based on Analysis of Disturbance to Vegetation and Active Layer” by Laurence C. Byrne and Gary Schultz, recommends the “pre-packing and side casting water from a Rolligon” method, which not only reduces and almost eliminates tundra damage, but extends the tundra travel season and allows construction companies to start ice road construction before the department opens the tundra for other methods of ice road construction. The

Mowat Construction Company digging out of the snow during Phase I Million Dollar Bridge project. Photo courtesy of Mowat Construction Company

department’s “take home message” is “pre-pack, pre-pack, pre-pack.” After construction there is a road made of ice, which many may recognize as a lessthan-ideal road condition. As technology and methods have advanced to protect the tundra, they’ve advanced to protect the ice road and other northern drivers as well. Specifically, ice roads tend to blend in with the snow and non-road ice that surrounds them. Installing guardrails or

extra wide shoulders is more costly and destructive than beneficial, and something as simple as neon painted sticks or flags would be lost in a storm or wiped out entirely if a vehicle were to hit one. Pexco LLC, a plastic designer and fabricator based in Georgia, describes a “custom-engineered post that is able to withstand the harsh elements and will rebound when struck,” which they call the “Dalton Delineator” in a corporate case

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

85 ■

Photo courtesy of Pexco

Dalton Delineators return to their installed position after any impact. They were designed and manufactured by Pexco for the Dalton Highway, or the Haul Road.

study titled “Improving Safety on the 6th Most Dangerous Road in the World.” The delineators were not only made to be highly visible and to rebound when struck, but materials “for both the arm and coupler were chosen for their UV-stability and most especially for their cold temperature impact.” In addition, the delineator arms on one side of the road are green, while on the other side they’re white, allowing drivers to orient themselves “even in the most blinding snowstorms.” At the request of and in partnership with the Alaska Department of Transportation and Public Facilities, these specific delineators were conceptualized 2009 and installed in 2011 by Granite Construction over 200 miles of the Dalton Highway at a cost of approximately $2.5 million, but similar devices are often installed on the side of temporary ice roads and then removed in spring with other ice-road debris when the road is broken up.

Phase Two: Continue to Get There

An Alaska Native Village Corporation Supporting Our Shareholders Through a Tradition of Excellence

561 East 36th Avenue | Anchorage, Alaska 99503 | Phone: (907) 278-4000 | Fax: (907) 278-4050 | www.tatitlek.com

■ 86

Ice roads may offer even more opportunity for innovation as Arctic ice thins and dissipates, and the world looks north for transportation routes and previously inaccessible resources, but Alaska isn’t all ice and snow. We also have earthquakes. In particular, the 1964 Good Friday earthquake devastated state infrastructure, including the Miles Glacier Bridge, originally constructed in 1910 across the Copper River 50 miles from Cordova to haul copper from Kennecott Mine and fondly nicknamed the Million Dollar Bridge. The earthquake caused one of the four spans of bridge to collapse into the river. In the

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

1970s a ramp was installed from the last pier to the collapsed span, the pier was reinforced and a false bent was placed under the damaged span. A 1995 flood destroyed the false bent and made it clear that an eventual washout of debris was inevitable. The options were to remove the bridge, wait for it to collapse and then clean up the river, or fix it. The decision was made to fix it. T.Y. Lin International Group was selected for design and engineering, and has completed Phase I and II. Mowat Construction Co. was selected as the construction contractor on Phase 1: Rehabilitation and Seismic Retrofit in 2004 and 2005. According to the company’s website, the $16.9 million project included “constructing temporary lifting bents, raising the fallen span while supporting the adjacent span, removing and replacing the damaged members in two of the truss spans, removing the failed pier, constructing foundation piles for a new footing and pier wall, providing seismic enhancements, and replacing the damaged bridge deck and rail. An alternate foundation design was required to overcome the horrendous subsurface soils that included a boulder field. Six foot diameter open-ended piles were oscillated through the boulders. Additional bracing on the existing structure was required to withstand the windloading during jacking. Jacking bents were designed and erected to withstand loadings in excess of 600 tons vertical and 560 tons lateral (for ice impact). Work progressed through two Cordova winters with over 30 feet of snow, winds reaching 100 mph, and -20° F temperatures.” T.Y. Lin International Group was to design and engineer the bridge to withstand future earthquakes. Phase II construction includes replacing existing bearings with Friction Pendulum seismic isolation bearings, conceptualized by Dr. Victor Zayas. These concave spherical bearings will be placed at each support point, allowing the structure to sway with a gentle pendulum motion during an earthquake. Thus, the ground can move and shift without the structure taking any damage. Additional funding of $11.465 million was requested for Phase II of construction to reinforce Piers 1 and 2, and to make the seismic retrofits.

Phase Three: Keep it Clean

These roads and bridges are not built, or repaired, on a lark. Roads and bridg

es in Alaska lead to people or resources, and with almost a square mile of land for each Alaskan, more often they lead to resources. Resources require wells, for exploration or for resource drilling. In the report “Innovative Design Provides Cost-Effective Temporary Waste Impoundment,” Weston Solutions discusses their solution to the problem of temporary waste storage sites, or impoundments. Drilling wells produces waste which is often contaminated during the drilling process. Such waste is stored on or near the site until it can be hauled en masse to a permanent disposal site. It’s vital that while being temporarily stored none of the contaminants are transferred to clean soil or above- or underground water sources. This transference is prevented by lining the site with a material that is impermeable to the waste or waste contaminants. In order to deposit, test or eventually remove the waste material, heavy equipment must have access to the waste site without damaging the protective lining. Weston Solutions’ report describes previous attempts to address this issue, and their solution to the problem. “Previous solutions to avoid such damage consisted of installing a layer of rig mats, timbers, concrete or steel on top of the geomembrane liner; the cost of materials, labor and equipment-intensive installation make these very solutions very expensive. “Thinking innovatively to ensure a design that meets all requirements, WESTON researched alternative options used in different industries to protect geomembrane liners from damage and discovered a technology called EnviroGrid. EnviroGrid is a high-density plastic formed into a honeycombed design that is supported by sand and gravel and provides a protective surface between the primary geomembrane liner and the heavy equipment. It is used in Alaska to build and stabilize remote airstrips and roads, but this (Linc Energy’s LEA No. 1 natural gas well drill site along the Knik Arm near Point MacKenzie) was Alaska’s first project in which EnviroGrid was used in a waste impoundment.” In addition, this method of protecting the liner was most cost effective, with EnviroGrid costing approximately $1 per square foot.

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

87 ■

Phase Four: Get it to Market

Northern Industrial Training is all about

SAFETY ...and so much more

NIT offers extensive HSE training courses in addition to corporate services.

Online Training and Records Keeping

Weekly scheduled courses available for: NSTC PEC/Premier Thinking Driver And Many More

Of course the point of roads, bridges and site maintenance is all for the final product, whether it be oil or gas, zinc or coal, copper or gold. The final product must be transported to ports or refinement facilities. On offshore rigs, oil and gas are not stored on site, but need to be transported away as they are drilled, either by ship or through a pipeline. BP needed innovative solutions for its Northstar pipeline project, calling on the knowledge and expertise of AIC LLC and INTECSEA to build, plan, and execute the project. Duane DeGeer of INTECSEA explains: “The Arctic remains among the high-cost production areas in the world because the unique environment magnifies the complex problems that must be analyzed and solved when planning a grassroots field development in the region. Not only is inordinate advanced planning required; the designs of facilities, installation strategies and methods, and maintenance and operating programs must be developed on essentially a project-by-project basis.” For this particular project, AIC developed the method of using extended reach backhoes on floats to install the first six miles of Arctic subsea pipeline. INTECSEA used new methods to analyze optimal pipeline depth, as discussed by DeGeer in his article “Meeting the challenges of Arctic offshore pipelines and subsea systems,” taking into account ice gouging or scour, the process of sea ice scraping against the sea bed; strudel scour, a powerful jet of downward water that can erode the sea floor; permafrost thaw settlement and frost heave; and upheaval buckling potential, which is the result of different installation and production temperatures, to name a few. With the subsea pipeline laid at the correct depth, among a countless number of other steps, oil could flow from the offshore site to the trans-Alaska oil pipeline. Perhaps it’s fortunate that Alaska presents every opportunity with a challenge. It pushes Alaskans and companies building Alaska to look to the future with an awareness of developing technologies and a history of adaptation. Alaska only seems to benefit from its ornery nature.  Tasha Anderson is the Editorial Assistant at Alaska Business Monthly.

■ 88

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

energY

The Bait-and-Switch on Alaska Energy BY U.S. SENATOR LISA MURKOWSKI

n alliance of environmental activists and Democratic politicians has spent decades blocking the efforts of Alaskans to access the rich energy resources of our state. When Alaskans wanted to open the 1002 area of ANWR to exploration and production, opponents of progress stymied our efforts with fearmongering and obstructionism. In so doing, they frequently pointed to the National Petroleum Reserve-Alaska in the northwest corner of the state as a preferable location for drilling. Th is, they argued, would protect the coastal plain of ANWR. But now that the focus has actually swung to the NPR-A, this same obstructionist alliance is supporting a plan to greatly restrict oil and gas exploration in the petroleum reserve. This is a classic bait-and-switch. If opponents simply don’t want Alaska to produce any energy, they should be honest enough to say so. A land management plan billed by the Interior Department as “opening” half of NPR-A would actually close oil and gas activity in half the Reserve. It would also make it very difficult to construct the pipelines and other infrastructure necessary to get oil from the Chukchi and Beaufort seas to the transAlaska oil pipeline. The environmental community is even trying to rename the petroleum reserve as the “Western Arctic Reserve.” The name itself declares their intention to wage war against responsible resource development in Alaska. If there is one thing that should offend us all, it is America’s dependence on the Organization of Petroleum Exporting Countries. We import 4.5 million barrels of oil from OPEC each and every day. Our own continent, however, has been blessed with vast oil and natural gas resources that if responsibly developed could free ourselves from

relying on imports from countries such as Saudi Arabia, Venezuela, Libya, Iraq and other familiar hotspots. According to the Energy Information Administration, the United States has 220 billion barrels of technically recoverable oil and condensates. Other estimates range far higher. The Mexican government estimates its own technically recoverable resources to be 31 billion barrels, while Canada boasts some 175 billion barrels in proven reserves alone. Alaska will necessarily play a large role in this energy revolution. NPR-A holds nearly 900 million barrels of oil, along with over 50 trillion cubic feet of natural gas, according to the U.S. Geological Survey. The Chukchi and Beaufort seas may hold an additional 23 billion barrels of oil. Unfortunately, much of the state’s resource bounty is locked up by its federal overseers. The benefits of permitting Alaska to access its potential should be obvious. North Dakota, for instance, boasts an unemployment rate of just 3 percent. Wyoming’s is just 5.7 percent. The budget situations in these states, which have benefited from the energy boom, is good. North Dakota actually has $1 billion surplus. Oil and gas production creates thousands of jobs and fuels economic growth. Progress in the energy sector spills over into other areas of the economy as well. Th is is because equipment must be purchased, shipments must be transported, and workers must be fed. The result is a powerful multiplier effect. The World Economic Forum estimates up to four additional jobs can be created for every position in the deepwater or unconventional oil sectors. Oil and gas production also provides a revenue stream for both state and federal treasuries that can be used to help address budget deficits.

The failure of the federal government to pursue a truly “all-of-the-above” approach to energy policy, however, is hindering the nation’s ability to climb out of this recession. Over the last four years, while permitting for oil and gas has been dramatically restricted, the national debt has risen by more than $5.4 trillion and high unemployment rates persist around the country. In the meantime, our reliance on imports persists. There is nothing noble about forcing oil production overseas where the environmental standards are weaker while blocking it here at home. Self-sufficiency is an integral part of the American pioneering spirit. It is certainly central to the Alaskan character. A durable, realistic form of energy independence is within our grasp if only we approach it with common sense. But too often decisions by the current administration, like the proposed management plan for the National Petroleum Reserve-Alaska, hobble American energy production and stop progress. Alaskans don’t need the federal government to protect them from themselves. We need reasonable access to the resources of our state to support a vibrant and growing economy that can support future generations. The bait-and-switch is wrong for Alaska and wrong for America.  U.S. Senator Lisa Murkowski is Alaska’s senior senator and the ranking Republican on the Senate Energy and Natural Resources Committee and the Senate Interior and Environment Appropriations Subcommittee.

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

89 ■

LEADERSHIP

Courtesy of the Panama Canal Authority

Construction on the Atlantic side of the Third Set of Locks of the Panama Canal Expansion. Inset: Aerial view of the Atlantic side of the Third Set of Locks project of the Panama Canal Expansion. Rendering is for artistic purposes only.

Alan J. Krause ‘Building a better world’

BY SUSAN HARRINGTON, MANAGING EDITOR

year ago, Alan J. Krause was appointed president and chief executive officer of MWH Global, a multinational construction, management and engineering firm ranked internationally at the top of the wet infrastructure sector. He’s a remarkable man, a native Alaskan who hails from Mount McKinley National Park—or McKinley Park as it was called—well before the 1980 namechange to Denali National Park. He almost became a geologist. His journey from humble beginnings to leading the pack is an inspiring story. His father came to Alaska in 1944 to work on the railroad, a strategic

■ 90

transportation link for the Army during World War II, and worked as a section agent at McKinley Park Station. His mother came from Minnesota one summer to Glacier Bay National Park, taking a trip up to McKinley Park, where she first met her husband-to-be. Krause’s parents met, married and started their family all at McKinley Park. The family lived upstairs in the apartment above the station house, though Krause was born in Anchorage at the old Providence Hospital in 1954. As a child Krause lived up and down the Railbelt: McKinley, Curry—south of McKinley through Palmer, then

Anchorage, where he graduated from Dimond High School, and recently attended his 40 year reunion. “It was a lot different then,” he says. Having been completely rebuilt, the current building bears no resemblance to the high school Krause attended. Krause went outside for college to earn a degree in geology and came home during the summers to work. He was halfway through school to be a geologist the summer of his junior year when something happened that changed the course of his life. “I came very close to having a short life,” he says. He’d been dropped off in the field by a helicopter and was alone in the

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

Courtesy of the Panama Canal Authority

Construction on the Paciﬁc side of the Third Set of Locks of the Panama Canal Expansion. Inset: Paciﬁc entrance of the Third Set of Locks project of the Panama Canal Expansion. Rendering is for artistic purposes only.

Wrangell Mountains, taking stream samples for Cities Service Minerals Corp. when he was treed by three grizzly bears. He thought he would be dead within 10 minutes, but the helicopter showed up before then, rescuing him. “I immediately decided not to be a geologist,” he says.

Change of Plans

Krause became a geotechnical engineer instead. He returned to school after the grizzly encounter, completed his Bachelor of Science in Geology, and fi nished up with a master’s degree in geological engineering from the University of Nevada Mackay School of Mines. He later attended Harvard University and completed the Owner/ President Management Program at Harvard Business School. After college, Krause returned to Alaska and worked in the industry several years. He eventually formed his own natural resources company,

TerraMatrix, which he later merged with Montgomery Watson in 1997; four years later, another merger, this time with Chicago-based Harza Engineering Co.—forming MWH Global in 2001. Now, the company he leads is in 35 countries on six continents and he has racked up 30 years in the industry. Not only did Krause stay on through all the mergers—he rose to the top at MWH, holding many executive positions, including president of the natural resources, industry and infrastructure sector. He became president and chief operating officer in 2008. When Krause succeeded Robert B. Uhler as CEO last November, Uhler said: “I am really pleased that Alan has been appointed to this new role to further grow and guide MWH in serving our clients and employees around the world. Over the past 14 years, Alan has held roles within MWH that have proven his leadership and strategic skills. Through

his ability to bridge cultural differences, help solve environmental and engineering-related issues, and seamlessly integrate companies following a merger or acquisition, Alan has demonstrated his wide knowledge of our clients and employees as well as our company’s direction. I am confident in Alan’s ability to take MWH to a new level.” MWH Global is a privately held firm, employee owned—and it is large, specializing in wet infrastructure. Krause says MWH is tightly aligned with water and energy, environmental engineering, energy storage and development. “Energy related to © MWH Global water is a sweet spot,” Krause says. Alan Krause

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

91 ■

The Tekeze Dam and Hydropower Project.

Water & Energy

Both Krause and MWH have a long history in Alaska doing water and energy projects, including the municipal business of water and wastewater work for Anchorage and Fairbanks, the Department of Defense, the mining industry, and a lot of hydro power. MWH has been in Alaska more than 30 years, the Anchorage office specializes in water infrastructure, renewable energy and fossil fuels. The company’s involvement in hydro power projects is found around the world, some of the largest projects include China’s Three Gorges, Pakistan’s GhaziBarotha, Venezuela’s Caruachi, Iceland’s Kárahnjúkar and Ethiopia’s Tekeze. The biggest project the firm is working on now is in Panama, where MWH is lead designer on the Third Set of Locks Project of the Panama Canal, a project Krause says will change global trade. ■ 92

The closest project the firm is working on now is in his boyhood backyard and has brought Krause full circle back to Alaska—the Susitna-Watana Hydro Project, which he says is exciting for the local context, cold regions engineering and year-round work for several years. He prefers hydro to wind and solar when it comes to renewable energy. The question he posed is: how to capture wind and solar and store it? Hydro power projects store water as potential energy, and when the water is in motion it becomes kinetic energy—the stored water is used as a battery. “There is no net loss of water in hydro,” Krause says. “Alaska has a lot of potential hydro—6,000 megawatts of untapped potential.” British Columbia is similar to Alaska, and 86.3 percent of B.C. power is generated from renewable resources, almost all of which is hydroelectric power. He

says Alaska is a great laboratory, plus it has high energy prices—so it’s a greater environment for experimenting. What is Krause’s goal for the global giant that is MWH? “To me, MWH is a world leader in water and energy— water infrastructure. To have growth we employ people, not products. We’re interested in growth,” he says. “Alaska is going to play a big part in it, with its limitless potential and opportunities.” Though he admits he is nervous about the global economy, citing Europe and the volatile spikes in commodities in South America, Krause is optimistic about the future. “We’re smart, pragmatic and want to get things done. Bullish. We aspire to do really great work.” His recommendations for success: “Be a leader in what you do. Attract the best talent you can fi nd. If you manage those you’ll be successful in any environment.” 

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

resource deVeloPment

Ratify the Law of the Sea Treaty Implications for Alaska and why there’s no time to lose BY SOURABH GUPTA AND DR. ASHOK K. ROY The views expressed herein are the authors’ own and not those of Samuel International and/or the University of Alaska.

n August 2007, a Russian expedition led by its most famous polar explorer, Artur Chilingarov, planted a Russian flag in a capsule on the Arctic seabed directly underneath the North Pole. The Arctic is Russian, Chilingarov bellowed. “We must prove the North Pole is an extension of the Russian coastal shelf.” Indeed, in 2001, the Russian Federation had made a vast territorial claim to almost one-half of the Arctic sea-bed in its submission to a 21-member United Nations scientific body called the Commission on the Limits of the Continental Shelf. Unfazed by Moscow, the United States and fellow Arctic states criticized the extent of the Russian claim, particularly the attempt to declare an underwater mountain—known as Lomonosov Ridge, that runs through the central Arctic Ocean Basin—as an extension of the Russian landmass. As per the U.S. interpretation, the Lomonosov Ridge “is an oceanic part of the Arctic basin and not a natural component of the continental margins of either Russia or of any state.” The flag that Chilingarov planted in 2007 had in fact been planted on the Lomonosov Ridge, beneath the North Pole. The U.N. body has since advised the Russians to revise their submission with regard to the central Arctic Ocean Basin. Nevertheless, submissions by Canada and Denmark—due in 2013 and 2014 respectively—are also expected to claim portions of the Lomonosov Ridge as extensions of their own national landmasses.

Race for Turf

Clearly, a scramble for territory is under way in the Arctic. Furthermore, this scramble is likely to be accentuated in the years ahead by a confluence of factors: the vast natural and hydrocarbon resources of the region and the unprecedented rate of Arctic ice-melt that is opening this previously inaccessible region to commercial shipping as well as natural resource devel

opment. Even non-Arctic states are entering the fray. China, India and Japan have all expressed interest in becoming “permanent observers” to the Arctic Council, an inter-governmental forum consisting of the eight Arctic littorals—and in midAugust, China’s polar icebreaker, Xuelong, became the first ever Chinese ship to traverse these waters. As per a July 2008 U.S. Geological Survey study, the total undiscovered conventional oil and gas resources in the Arctic is estimated to be of the order of 90 billion barrels of oil, 1.7 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids. Almost one-fourth of the world’s undiscovered oil and gas resources are expected to lie in the Arctic—almost all of it offshore. If the scale of potential resource riches is gargantuan, the window for its responsible exploitation is widening by the day. As per the Arctic Council’s “Arctic Climate Impact Assessment,” climate change in the region is estimated to be twice as intense as elsewhere on the planet. Latest evidence from the University of Colorado’s National Snow and Ice Data Center suggests that the Arctic ice cover has shrunk to 1.58 million square miles, the smallest it’s been since satellite measurements began in 1979. Emblematic of this window afforded by the accelerated rate of polar ice-melt is the number of ships that have begun to use the Northern Sea Route, a sea line of communication running along the Russian Arctic coast from Murmansk on the Barents Sea to the Bering Strait in the Russian Far East. As Arctic sea lanes have become navigable during the summer months, commercial transit through these waters has increased. In 2010, only four ships used the Northern Sea Route; in 2011, as many as 34 ships used the route; and by Sept. 10, 22 ships had used the route, with more expected through November. While the Europe-Asia ship traffic running through the Suez Canal and the Straits of Malacca is

likely to be dented only marginally in the years ahead, the numbers of ships plying the Northern Sea Route can in contrast be expected to rise exponentially. If the commercial opportunities in the years and decades ahead in the Arctic are immense, so is the complexity of some of the region’s interstate frictions. Control over a number of land features and bodies of water in the Arctic is currently disputed, including the Northern Sea Route, claimed by Russia as internal waters; the Northwest Passage, claimed by Canada as internal waters; the Beaufort Sea, disputed between Canada and the U.S.; the Lomonosov Ridge and its planted Russian flag, disputed by Denmark, Canada and the United States. As the changing climate opens the Arctic to greater navigational and commercial penetration, the lack of predictability of national jurisdictional rights and security of property rights is likely to significantly limit the scope of responsible commercial exploitation of the region’s overlapping and common resources. Worse, it might also tempt acts of unilateralism by the oil companies operating in the region as they prepare to prospect for resource riches in contested Arctic maritime zones. A similar “race to the resources” in the South China Sea has already led to an alarming rise in interstate tensions. Without predictability of tenure a similar fate might befall the Arctic Ocean region.

Peaceful Negotiations

Hence, the key question going forward is this: Can the “race to the resources” be transformed into an orderly, peaceful and positive-sum commercial race that is consonant with the principles and best practices of international law, or will it degenerate into an exercise of raw power politics and struggle that will bring neither the security nor the stability to enable the responsible commercial exploitation of this resource rich corner of the planet?

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

93 ■

Map: © The Arctic Institute | Center for Circumpolar Security Studies | thearcticinstitute.org

If it is to be the former—with all the commercial benefits that could accrue to Alaska and the United States, the U.S. Senate will need to firmly throw its weight behind a body of international law which, among other things, facilitates orderly and peaceful development: the U.N. Convention on the Law of the Sea Treaty. Alone among the major western states and the various Arctic littorals, the U.S. is a non-signatory to this vital treaty. An ■ 94

opening in this regard will likely present itself this November when the treaty is placed on the Senate floor for ratification. The U.N. Convention on the Law of the Sea Treaty is a globally agreed legal framework for the management of the world’s oceans. Navigational freedoms, including the freedom of movement of warships through the high seas, international straits and archipelagic waters, are deeply embedded in the Law of the Sea Treaty.

Crucially, insofar as claims to maritime territory and rights to development of seabed resources are concerned, the treaty provides for a technical body of experts— the Commission on the Limits of the Continental Shelf—to assess and verify the competing claims of various states. Provision for law-based dispute settlement of conflicting claims is also provide for, as well as a framework for joint and cooperative development of such contested zones

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

years ahead. Indeed, non-membership in the Law of the Sea Treaty will likely preclude Washington from even obtaining a formal hearing on this matter.

Is Resistance Reasonable?

in the interim. Apart from the U.S., all other Arctic Council members have ratified the Law of the Sea Treaty. With Canada due to submit its continental shelf submission next year to the Commission on the Limits of the Continental Shelf, the overlap of a Commission-endorsed Canadian territorial and resource baseline with that of a presumed American one will surely pose a delicate political and commercial dilemma in the

So why has the U.S. Senate not ratified the Law of the Sea Treaty as of press time? Aside from misplaced fears of navigations roadblocks placed in the path of the U.S. Navy, the reason is twofold. First, that treaty constitutes an unacceptable encroachment on U.S. sovereignty. By way of this argument, opponents insist the treaty empowers an international organization—the International Seabed Authority —to regulate U.S. deep-seabed mining companies in international waters and thereupon redistributes the royalties from such to developing and landlocked nations rather than to the U.S. Treasury. Secondly, via the Law of the Sea Treaty’s mandatory technology transfer provisions, the U.S. would be complicit in an exercise of “massive global welfare,” what some view to be a form of global collectivism doled out by unelected international bureaucrats. Neither objection holds water. In 1994, the offending part of the treaty was renegotiated to accommodate the U.S. objections. The technology transfer provisions have been voided, the International Seabed Authority structure altered so as to seat the U.S. permanently on its governing council, and a permanent—and exclusive—veto authority granted to the U.S. with regard to determination and distribution of seabed mining royalties. As one of the foremost legal luminaries on the law of the seas, John Norton Moore has observed, “The renegotiated International Seabed Authority … provides property rights for U.S. firms to develop deep-sea mining sites that require security of tenure before they can justify the large investments required.” All the conditions deemed essential for accession by President Ronald Reagan in 1982 were in fact met in the 1994 renegotiation. Furthermore, as currently written, ratification of the treaty will extend the U.S. economic and resource jurisdiction into the oceans by an area larger than the entire land territory of the United States. The secure property and commercial development rights over this vast space will be doubly valuable to both the Alaska and national economies. On Sept. 28, 1945, by way of the “United States Presidential Proclamation on the

Continental Shelf,” President Harry Truman unilaterally arrogated a domestic maritime space much beyond the then generally accepted three nautical mile territorial sea limit. The Truman Proclamation was a seminal moment in the development of the continental shelf concept. Almost seven decades later, the time has arrived for the U.S. to legally recoup its rightfully due access to its share of the Arctic’s treasure trove of resources, including that at the outer limits of the Alaska continental shelf. Will the U.S. Senate set partisanship aside and square the circle that Mr. Truman had himself begun to draw many decades earlier? And in voting so, will it also deliver an equally weighty blow in favor of orderly and peaceful development of the ocean’s vast resource endowment?  Sourabh Gupta is a Senior Research Associate at Samuels International Associates Inc., a strategic international trade and political advisory firm based in Washington, D.C. He holds master’s degrees in international security studies and international relations from the Walsh School of Foreign Service at Georgetown University and the Maxwell School at Syracuse University, respectively. He is currently a 2012 East Asia Forum Distinguished Fellow. Dr. Ashok K. Roy is the Vice President for Finance & Administration/ Chief Financial Officer for the University of Alaska system. Dr. Roy has significant experience, at senior management levels, at three other large universities, local government, and in the private sector. Dr. Roy was educated in the USA and India, and holds six university degrees and five professional certifications. He has authored 66 publications in academic and trade journals.

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

95 ■

special section

Mining

Fueling the Flames of Controversy The EPA weighs in on Pebble BY PAULA COTTRELL

he Pebble Project is without a doubt one of the most controversial mineral exploration projects in Alaska. But when commercial fishing interests and Alaska Native groups from western Alaska petitioned the United States Environmental Protection Agency to exercise its veto authority under Section 404(c) of the Clean Water Act on the proposed Pebble Project, it caused several people to question whether everyone was jumping the gun.

The Authority of Section 404(c)

The Clean Water Act authorizes the U.S. Army Corps of Engineers or an approved state to issue permits for discharges of dredged or fill material at specified sites in waters of the United States. Section 404c, however, authorizes the EPA to restrict, prohibit, deny or withdraw the use of an area as a disposal site for dredged or fill material if the discharge will have unacceptable adverse effects on municipal water supplies, shellfish beds and fishery areas, wildlife or recreational areas. Generally, Section 404(c) actions are initiated in response to unresolved Corps of Engineers permit applications. According to Corps permit data, it is estimated they process approximately 60,000 permit actions each year. Since 1972, the EPA has judiciously used its veto authority only 13 times, but in that ■ 96

time, they have never tried to veto a project that had yet to apply for a permit with the Corps of Engineers. “The EPA didn’t come up with this idea on their own,” says Rick Rogers, executive director of the Resource Development Council of Alaska. “There were a group of tribes and other interests that petitioned the EPA to do the assessment and the EPA went along with it. There was a lot of pressure for them to do so.”

Initial Draft Report

In May 2012, the EPA released a draft report of the Bristol Bay Watershed Assessment after conducting an 11-month study of the area that covers more than 20,000 square miles in Bristol Bay, Alaska—an area that is home to one of the most lucrative commercial salmon fishing operations in the state. Opponents of the Pebble Project fear than any mining operations in the area will upset the delicate ecological balance that is required to ensure the fishing industry remains sustainable. “It’s too early to judge the Pebble Project because all of the information is not in,” says Rogers. “Pebble has spent over 5 years and $120 million evaluating if a mining operation is environmentally feasible and they still don’t believe they have all of the information they feel they need to begin the permitting process. The premature assessment by the

EPA is like putting the cart before the horse.” Mike Heatwole, vice president of public affairs for Pebble Partnership, says he just wants a fair shake at the process. “Instead of saying they are hearing everyone’s concerns about the project and will use their authority to address them once it goes to permitting, the EPA rushed through an assessment that is based on hypothetical and worst case scenarios,” he explains. “The mining plan they used to base their assessment on would never be permitted under today’s environmental regulations.” Given that state and federal environmental regulations are very stringent— the Corps of Engineers and Alaska’s permitting systems require rigorous environmental review and must meet EPA-approved water quality standards—it would seem that any credible assessment would have to be based on facts and not on an assumption of what the mining project could look like. Or, as the Alaska State Chamber of Commerce put it in a letter to the EPA in April, “The watershed assessment is premature given that no project has been proposed and any assessment will be based on the imagination of those conducting the assessment.”

The Comment Period

After the publication of the draft assessment, a 60-day comment period began.

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

The first public meeting was held in Seattle—two weeks after the release of the report. Two public meetings were subsequently held in Anchorage, but many people and organizations feel that there hasn’t been enough time to evaluate the merits of the EPA assessment. “This is the largest watershed assessment that is being pushed through in the shortest amount of time,” says Heatwole. “We aren’t sure what the rush is all about. There is no application, no mine plan and no timeline.” Ten of the 13 Alaska Native regional corporations as well as village corporations and tribal governments petitioned the EPA to extend the public comment period, as well as many trade and professional organizations, including the Alaska Oil and Gas Association, Alaska Trucking Association, Associated General Contractors of Alaska, Council of Alaska Producers, Consumer Energy Alliance Alaska, National Mining Association, Resource Development Council and Western Business Roundtable. Those requests were denied by the EPA.

cesses and permits as well as the Alaska Constitution. Additionally, “EPA’s broad and unreasonable assertion of regulatory authority to conduct the assessment based on a general statutory provision upsets the property rights of the State and other third parties,” Geraghty wrote in a letter to the EPA. For the Pebble Partnership, the preemptive veto doesn’t just block their ability to get a wetlands permit. “This is a great concern not just for our project, but for the broader resource community,” Heatwole says. “The bigger picture is that the EPA may go down the path to get a tool to stop development projects, not just in Alaska, but across the country.” The Alaska Oil and Gas Association, an organization that has a policy of only weighing in on oil and gas industry legislation, has expressed concerns about the Bristol Bay Watershed Assessment as well. “The way the EPA is proceeding with the preemptive veto is precedence setting for the permitting process in our industry,” says Kara

her concern about the unintended consequences for other development should the EPA decide to take such action. “Specifically, I remain concerned that an attempt to preemptively veto the Pebble Project would have the practical effect of halting any development in the Bristol Bay area that might generate dredge or fill material. It remains unclear to me how dredge or fill material from a mining operation might be substantively different from dredge or fill material generated from any other form of development.”

Not Final…Yet

The EPA contends that the Bristol Bay Watershed Assessment does not constitute “final agency action;” however, the State of Alaska contends that it “renders conclusions that mark the consummation of agency action on specific issues and impacts, and that these conclusions are not subject to appeal and will have essentially binding effect on third party interest and future regulatory reviews, including EPA’s consideration of Sec-

“Clearly there are a lot of issues that need to be addressed, but the benefits to employment and our economy could be huge. If Pebble can develop in a responsible way so as to not affect the fisheries in Bristol Bay, then we should strive to have our cake and eat it, too.” —Rick Rogers Executive Director of the Resource Development Council of Alaska

In early August, a peer review panel convened and found the report to be insufficient and several agencies—from the State of Alaska to the Alaska Miners Association—have challenged the accuracy and validity of the assessment. “By holding the comment period in the middle of Bristol Bay’s fishing season when residents could not attend or comment, the EPA showed an insensitivity to Alaskans and illustrated that they weren’t serious about what the public had to say,” Heatwole says.

Far Reaching Implications

Many question whether the EPA is over-reaching its authority. According to Alaska’s Attorney General, Michael Geraghty, the EPA not only lacks the authority to conduct the Bristol Bay Watershed Assessment, the report disregards federal and Alaska laws, pro

Moriarty, executive director of AOGA. “That is why we are weighing in—it can have such broad implications for future development in Alaska.” Navigating the current permitting process is challenging enough, just ask Royal Dutch Shell. It took five years for Shell to get an air permit issued so the company could begin exploratory drilling operations in the Arctic. “The permitting system itself has to be rock solid because you can pretty much guarantee that it will be litigated,” says Moriarty. “Being sued by environmental groups comes with the territory of resource development, which is why it is important for the permitting process to be thorough. Once issued, a permit should stand up to any legal action taken against it.” In a letter addressed to the EPA in April, Senator Lisa Murkowski cited

tion 404(c) action in response to the pending petition.” While the report may not be in its final form, it is already structuring public opinion. “We support a fair hearing for Pebble,” Rogers says. “Clearly there are a lot of issues that need to be addressed, but the benefits to employment and our economy could be huge. If Pebble can develop in a responsible way so as to not affect the fisheries in Bristol Bay, then we should strive to have our cake and eat it, too.” “Often these issues are pitted against one another, yet we have successfully managed mineral, oil and gas resources in Alaska and we still have renewable fisheries that are the envy of the world,” Rogers adds. “We can do it. We just have to be smart about it.”  Paula Cottrell is an Alaskan author.

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

97 ■

Photos by Judy Patrick Photography

special section

Mining

Mining An important force in Alaska economy BY MIKE SATRE Pour: Pogo mine reﬁnery operators pour molten gold from the 2,300 degree induction furnace into the molds. The heavy weight of the gold settles it in the molds while the lighter impurities, called slag, ﬂow over top down into the slag pot.

laska is steeped in mining tradition; however, it is only recently that the industry has shown its true potential. There are now seven large mines which produced $3.8 billion in gross mineral value in 2011. In addition, at least 30 projects spent more than $1 million in an effort to find and develop the next large mine in the state. The impact on the Alaskan economy has been significant as these mines and projects employed more than 4,500 people at an average annual wage of $100,000. In addition, more than $500 million in goods and services were purchased from Alaskan businesses in support of mining activities. As operations continue to fund exploration and expansions, the future of Alaskan mining certainly looks very bright indeed.

■ 98

Producing Mines

At the Teck Red Dog mine in the northwest, a significant milestone was attained this year when the last ore from the Main Pit was extracted and operations are now solely in the Aqqaluk Pit. In partnership with NANA Regional Corporation Inc., Red Dog remains one of the largest zinc mines in the world and exploration continues to ensure mining will benefit the region for generations to come. At the Kinross Fort Knox gold mine outside of Fairbanks, production continues to increase from the heap leach facility and nine additional trucks, each with a payload of 250 tons, have been purchased to achieve targeted production. In July, the Sumitomo Pogo Mine near Delta Junction hit a milestone of 2 mil-

LEARN MORE Council of Alaska Producers PO Box 33499 Juneau, AK 99803 907-957-2149 mining.info@alaskaproducers.org alaskaproducers.org lion ounces of gold produced since opening in 2006. Recent exploration success has added at least another million ounces to Sumitomo’s Pogo Mine plan. Closer to McGrath, the Nixon Fork gold mine, re-started in 2011, continues to optimize its facilities in order to achieve full production. In the Railbelt, the Usibelli Coal Mine continues to build on its record breaking performance in 2011 when

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

they exported more than 1 million tons. Usibelli is now preparing plans to mine the Jumbo Deposit, which will allow operations for decades to come. In Southeast, the Coeur Alaska Kensington Gold Mine spent the first half of 2012 finishing several infrastructure projects, including commissioning of the underground paste plant, allowing them to attain full production. Nearby, the Hecla Greens Creek Mine, the second largest silver mine in North America, focused on the Environmental Impact Statement process for expansion of the tailings facility, which allows at

least 30 years of production if they continue to find ore.

Large Metal Projects

While the status of the producing mines is impressive, there are several large metal projects worth mentioning. At the International Tower Hill Mines Livengood project north of Fairbanks, work continues on advancing the project timeline and moving to a definitive feasibility study for this gold project. At the Donlin Gold project on the Kuskokwim, a joint venture of Barrick and NovaGold, work has now started on permitting activities. Infrastructure re-

quirements for this mine are substantial and include a gas pipeline from Cook Inlet to provide power for the project. Farther north towards Kotzebue, NovaGold has completed the spinoff of NovaCopper, which is now partnering with NANA developing the Upper Kobuk Mineral Project. In Southeast Alaska, Heatherdale Resources’ Niblack project is increasing its copper-zinc resource base through underground and surface drilling while evaluating possibilities for minimizing power needs on-site. Nearby, at Bokan Mountain, Ucore Rare Metals is focused on development of its rare earth deposit to meet the strategic demand for metals like dysprosium and neodymium. Finally, in Southwest Alaska, efforts by the Pebble Partnership to move its copper-gold project towards permitting are overshadowed by controversy. Regardless, the project continues to invest millions of dollars in studying the area where the mine will be proposed. These studies ensure that when permitting applications are filed, Alaska will be evaluating a modern, world class mine with the appropriate protection and mitigation measures required to maintain sustainability of our world class fisheries.

Bottom Line

Alaska’s portfolio of producing mines and large projects is impressive and we will continue to benefit from their investments. While challenges like minimal statewide infrastructure, development of local workforces, and outdated perceptions of mining legacy issues remain; the modern mining industry is dedicated to safe, responsible, sustainable operations and ensuring that Alaska’s bountiful resources are not put into conflict. By doing so the industry will be able to build upon its long traditions and seize a bright future.  Mike Satre is the Executive Director of the Council of Alaska Producers, the statewide, nonproﬁt trade association for Alaska’s large metal mining industry. He serves as a spokesman for the industry and helps represent the views of Alaska’s large metal mining companies before the Alaska Legislature, key regulatory agencies and the general public. ■ 100

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

FORWARD THINKING

portmackenzie.com

at Port MacKenzie

How will you deliver to your markets? ©Ken Graham Photography.com

Too big to fit through the Panama Canal, the vessel “JP Azure” easily tied up at Port MacKenzie in June 2010, the deepest draft vessel ever in Upper Cook Inlet.

Port Mac—Alaska’s future for resource exports

special section

Mining

Photo courtesy of NANA Regional Corporation Inc.

The Red Dog Mine in northwest Alaska.

Alaska 2012 Mining Industry Review BY CURTIS J. FREEMAN

he global economic uncertainties that have affected the world’s economies hit Alaska full force in 2012, causing widespread budget reductions and outright cancellations on a number of Alaskan mineral projects. The operating mines and major development projects continued with minimal impacts however the early to midstage exploration projects took it square in the chin. However, Alaska had its fair

■ 102

share of bright spots over the course of the year. As always, space is so limited, my apologies to those industry players active in 2012 that do not appear below.

WESTERN ALASKA

Teck Resources Limited and partner NANA Regional Corp. announced year-end 2011 and first half 2012 results from its Red Dog mine. During the 2011 the mine produced 572,200

tonnes of zinc in concentrate. Zinc ore grade was 19.1% and mill recoveries were up slightly to 81.5%. The mine also produced 84,000 tonnes of lead in concentrate. Lead ore grade was 4.9% while mill recoveries were 45.9%. The mine posted a $496 million operating profit for the year, down significantly from the $524 million profit in the year previous. The higher costs resulted from producing less oxidized ore from

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

the near-surface portions of the Aqqaluk deposit. During 2011 the mine paid partner NANA Development Inc. and the State of Alaska royalties of $129 million. First-half 2012 results include 257,900 tonnes of zinc in concentrate at a grade of 18.3%. Zinc mill recoveries were 83.1%. The mine also produced 46,800 tonnes of lead at a grade of 4.8%. Lead mill recoveries were 57%%. The mine posted a $110 million operating profit for the first half of 2012. The company plans to ship 1,000,000 tonnes of zinc concentrate and 163,000 tonnes of lead concentrate in 2012. Zazu Metals Corp. announced 2011 drilling results and its 2012 exploration plans for the Lik base metal project. Significant results from 2011 drilling include hole DDH 210 returned 16.8 meters grading 3.02% lead, 11.2% zinc and 70.1 grams per tonne (gpt) silver and hole 215 which intersected 50.3 meters grading 3.5% lead, 11.4% zinc and 86.4 gpt silver. The 2012 work includes a series of environmental, infrastructure, engineering and mineral processing studies. Lik South contain an Indicated Mineral Resource of 18.74 million tonnes grading 8.08% zinc, 2.62% lead and 52.8 gpt silver; plus an Inferred Mineral Resource of 1.23 million tonnes grading 6.80% zinc, 2.12% lead and 35 gpt silver, at a 5% cut off grade. Lik North contains an additional 5.18 million tonnes of Inferred Resource grading 9.65% zinc, 3.25% lead and 51 gpt silver at a 7% cut off grade. Fire River Gold Corp. announced an update on its Nixon Fork Mine. Significant recent accomplishments include mining and processing of 25,875 tonnes of ore grading approximately 15.5 gpt gold (12,875 ounces of gold). In addition the mine produced about 175 tonnes of copper-gold concentrate. The company had 14,000 tonnes of broken ore stockpile grading 22 gpt gold outside its newly commissioned 250 ton-per-day mill. The company also reported drilling results from the new 3550 Zone, the down dip extension of the previously mined Hi Grade Recreation Zone. Significant results include hole N11U-226 which returned 3.4 meters grading 93.8 gpt gold, 94.3 gpt silver and 5.8% copper and hole N11U-228 which returned ■ 104

7.6 meters grading 32.8 gpt gold, 64.6 gpt silver and 2.7% copper. Using a 10 gpt gold cutoff, indicated resources now stand at 129,060 tonnes grading 24.9 gpt gold (103,438 ounces) and inferred resources are 53,980 tonnes grading 28.0 gpt gold (48,545 ounces). Freegold Ventures Limited announced updated resources at its Vinasale gold project under option from Doyon Ltd. Revised inferred resources now stand at 49.3 million tonnes averaging 1.09 gpt gold for 1,735,000 ounces of gold utilizing a cutoff value of 0.5 gpt gold. Drilling in 2012 (13 holes, 3,425 meters) also indicated that gold mineralization in the widely spaced Northeast zone may contain additional resources. NovaGold Resources Inc. and partner Barrick Gold Corporation commenced the long-awaited permitting process for their Donlin Creek gold deposit. The $37.2 million 2012 budget followed approval of their recently completed feasibility study. The study indicates that the mine would produce 1.5 million ounces of gold per year in its first five years at a cash cost of $409 per ounce, and an average of 1.1 million ounces of gold per year at a cash cost of $585 per ounce over a 27-year mine life. The study was based on reserves of 33.8 million ounces at an average grade of 2.09 gpt gold. The capital cost was estimated at $6.7 billion, including $834 million for a natural gas pipeline and nearly $1 billion in contingencies. The resultant after-tax net present value using $1,200 per ounce gold price was $547 million using a 5% discount rate. The economic analysis is based on a mill producing 53,500 tonne-per-day from an open pit with a stripping ratio of 5.5 to 1. Average life-of-mine recovery is estimated at 89%. Operating costs are estimated at $5.91 and $38.13 per tonne mined and milled, respectively. Current measured and indicated resources are 39.007 million ounces grading 2.24 gpt gold and an additional inferred resource of 5.993 million ounces grading 2.02 gpt gold. Northern Dynasty Minerals and partner Anglo American plc have approved a 2012 budget of approximately US$107 million at the Pebble copper-goldmolybdenum project. Their objective is

to initiate permitting under the NEPA process toward the end of 2012. Significant activities planned for 2012 include engineering studies to complete a Project Description in 2012 and finalize a Prefeasibility Study in 2013, continued environmental baseline monitoring studies focused on surface and groundwater hydrology, water quality and fisheries resources, additional exploration, geotechnical, geo-hydrology and metallurgical drilling and stakeholder engagement and public affairs programming. The partner’s efforts on the project have been largely overshadowed by the war of word being waged over on the Environmental Protection Agency’s (EPA) draft watershed study published earlier this year. The company, the State of Alaska’s Attorney General and many other contend the report was rushed, inadequate and in conflict with State and federal laws and unlawfully extinguishes Alaska’s and the mining claim owner’s mineral rights. Redstar Gold Corp. announced 2011 results from surface sampling and drilling along with 2012 plans at its Unga project in Alaska. Surface sample results from 2011 at the Sitka vein returned 13.2 gpt gold and 398 gpt silver over 2 meters includes quartz vein material which assayed 94.7 gpt gold and 1840 gpt silver. Significant results from the 2011 drilling on the Shumagin vein system include 0.61 meters grading 16.75 gpt gold and 20.2 gpt silver in hole 11SH001, 21 meters grading 4.02 gpt gold and 5.4 gpt silver in hole 11SH007, 30 meters grading 2.141 gpt gold and 6.2 gpt silver including 0.9 meters grading 43.1 gpt gold and 37.2 gpt silver in hole 11SH009 and 29.65 meters grading 14.977 gpt gold and 11.5 gpt silver including 1.65 meters grading 246.419 gpt gold and 136.8 gpt silver in hole 11SH010. No exploration was reported from the project in 2012. Full Metal Minerals Ltd. and partner Antofagasta Minerals S.A. announced commencement of its 2012 core drilling program at the Pyramid copper project. Significant results from 2011 include hole PY11-016 which intersected 155.94 meters averaging 0.71% copper, 0.179 gpt gold and 0.018% molybdenum. Significant 2012 results include 42.0

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

When Shell Oil needed ice-class oil spill response barges to work in some of the world’s most extreme working environments – the Beaufort and Chukchi Seas – they called Crowley. Our management team engineered, constructed and outfitted the three barges that will support this important off-shore operation. Shell Project: On time. On budget. Turnkey. You can count on Crowley.

meters grading 1.01% copper, 0.165 gpt gold and 0.009% molybdenum in hole PY12-019 and 344.0 meters averaging 0.11% copper, 0.036% molybdenum, and 0.035 gpt gold in hole PY12-018.

Assay results are pending for at least 10 additional holes completed in 2012.

INTERIOR ALASKA

Kinross Gold announced year end 2011 and first half 2012 results from the Fort Knox mine. For 2011 the mine produced 289,794 ounces of gold at a cost of $691 per ounce. During 2011 Phase 8 drilling was completed, a 0.7 million ounce

upgrade was added to year-end mineral resources, 985 meters of drilling in nine holes were completed on the Gil-Sourdough project and in-pit drilling at Fort Knox totaled 24,625 meters. At year end, the mine had proven and probable reserves of 314,669 tonnes grading 0.43 gpt gold (4,303,000 ounces), additional measured and indicated resources of 112,098,000 tonnes grading 0.40 gpt gold (1,426,000 ounces), and additional inferred resources 22,180,000 tonnes grading 0.41 gpt gold (295,000 ounces). During the first half of 2012 the mine produced 133,668 ounces of gold at a

cost of $805 per ounce. The mill and heap leach processed over 17 million tonnes of ore grading 0.48 gpt gold. Recovery in the mill averaged 85%. Gold recovery on the heap leach pad was not released. Phase 8 expansion and definition drilling at the Gil prospect continued during 2012. Freegold Ventures Limited continued its resource drilling activities at its Golden Summit project. Approximately 35,000 meters of drilling was concentrated on the Dolphin deposit and the adjacent Cleary Hill mine prospect. At a 0.35 gpt gold cut-off grade, the Dolphin deposit resource includes indicated resources of 14,480,000 tonnes grading 0.66 gpt gold (316,000 ounces) and an inferred resource of 50,460,000 tonnes grading 0.61 gpt gold (991,000 ounces). Significant drill results from Dolphin include 20.9 meters grading 34.69 gpt gold in hole GSDL1210, 136.7 meters grading 1.57 gpt gold in hole GSDL1213 and 207.4 meters grading 1.00 gpt gold in hole GSDC 11-38. At the adjacent Cleary Hill mine prospect, significant drill results include 102.7 meters grading 1.12 gpt gold in hole CL12-01 and 129.7 meters grading 0.83 gpt gold in hole CL12-02. A revised mineral resource is planned for the 4th quarter of 2012. Sumitomo Metal Mining, in late July 2012, announced the pouring of its 2 millionth ounce of gold at its Pogo mine. The mill processes approximately 2,500 tons of ore per day and in 2011 the mine produced 325,708 ounces of gold grading 0.392 opt gold. Mill recovery was approximately 89%. Earlier in the year the company announced that a new gold deposit was identified as part of the 79,672 feet of exploration drilling conducted on the project during 2011. The new East Deep deposit is located northeast of the main Liese deposit and contains approximately 1.283 million ounces of gold. The East Deep deposit (E1 orebody) was identified 1,000 feet northeast of the Liese gold deposit. Year-end 2011 resources, including the East Deep deposit, total 13.594 million tons grading 12.5 gpt gold (4.973 million ounces). In addition, drilling continued in 2012 to explore the extension of the East Deep

â&#x2013; 106

www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ November 2012

deposit and development of new access drives to the E1 orebody is planned. Gold production for 2012 is expected to be similar to 2011. International Tower Hill Mines Ltd. announced 2011 and 2012 results from its Livengood project. Based on the close-spaced infill holes, a new internal resource estimate calculated for three areas of the deposit have been verified within 1% of the same tonnage, grade and contained ounces of gold as those wider-spaced holes used to calculate the May 2011 resource. Results included hole MK-RC-531 which intercepted 17.27 gpt gold over 4.6 meters in the Sunshine Zone, hole MK-RC-522 which intercepted 8.0 gpt gold over 4.6 meters in the Core Zone and hole MK-RC-537 which intercepted 8.7 gpt gold over 3.1 meters in the Tower Zone. Other significant drill results include 76.2 meters grading 1.56 gpt gold in hole MK-RC-522, 74.68 meters grading 1.31 gpt gold in hole MK-RC-523, 30.48 meters grading 3.34 gpt gold in hole MKRC-531 and 51.81 meters grading 1.00 gpt gold in hole MK-RC-549.

lower sulfur coal than the current operations. The company has been working on permits for about 10 years and expects the new seam to produce 8090 million tons of coal over the next 30 years. The Seward Coal Terminal loaded over one million metric tons of coal, a first in its 26-year history. Coal exports in 2012 are expected to exceed those shipped in 2011. Corvus Gold and joint venture partner Ocean Park Ventures Corp. announced the discovery of the Jolly Green zone at its Golden Range pros-

pect on its Chisna project. Gold values from 2011 sampling at Jolly Green ranged from 1 to 126.5 gpt. At its Notch prospect, a total of seven holes (1,674 meters) and four trenches (104 meters) were completed in 2011. Significant drill results included 15.8 meters at 3.2 gpt gold in drill hole GR-11-09 and 17 meters at 2 gpt gold in hole GR-11-15. No exploration was reported from the project in 2012. Rhyolite Resources Ltd. reported results from its 14-hole 2011 drill program on the Paxson gold project. Sig-

Full Metal Zinc announced the 2011 drilling results from its 3,509 meter core drilling program from the Fortymile silver-lead-zinc property. Drilling at LWM extended the strike length of mineralization to the southwest to 970 meters and extended downdip mineralization to the northeast. Highlights include hole LWM11-88 which intersected 1.90 meters of 0.16% lead, 14.75% zinc and 10 gpt silver, as well as 1.97 meters grading 0.53% lead, 22.19% zinc and 55.1 gpt silver. The 2012 exploration program is focused on developing drill targets near the LWM zone using soil sampling, trenching and mapping. Results from this work are pending.

ALASKA RANGE

Usibelli Coal announced that it had received permits from the Alaska Dept. of Natural Resources to allow the company to begin activities at its planned Jumbo Dome mine, about 6 miles from its current operation at the Two Bull Ridge mine. The planned operation will tap coal from the same seam as currently being mined but with

www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ November 2012

107 â&#x2013;

nificant results from the Shalosky zone include hole WG11-03 which returned 1.01 gpt gold over 100.1 meters and hole WG11-12 which returned 1.64 gpt gold over 70.1 meters. Significant results from the Low zone included hole WG11-05 which returned 3.2 gpt gold over 2.4 meters and an additional 1.9 gram of gold per tonne over 27.4 meters and hole WG11-06 which returned 4.03 gpt gold over 5.5 meters. No exploration was reported from the project in 2012. Heatherdale Resources Ltd. announced results from its 2011 explo-

ration drilling program at the Delta volcanogenic massive sulfide project. Significant results include hole 2011153 which intersected 75.7 feet grading 0.42% copper, 2.91% zinc, 1.07% lead, 0.99 gpt gold and 44 gpt silver and hole 2011-154 which intersected 43.9 feet grading 0.56% copper, 5.21% zinc, 2.36% lead, 1.56 gpt gold and 85 gpt silver. No exploration was reported from the project in 2012. Kiska Metals Corporation announced final 2011 drill results from its Whistler project. The company completed

Assisting owners, board of directors, managers and employees since 1978. — SERVICES OFFERED —

Training Facilitation Strategic planning

Coaching Mediation Client surveys

360 Reviews Investigations Team-building

If your employees can break it,The Growth Company can fix it! 711 H Street Suite 440, Anchorage, Alaska • Ph (907) 276-4769 Fax (907) 276-4774

www.TheGrowthCompany.com

Email: Info@thegrowthcompany.com

9,537 meters of core drilling in 26 holes on the project in 2011. Significant results from the Island Mountain prospect include hole IM11-034 which averaged 1.37 gpt gold, 54.19 gpt silver and 0.04% copper over 100 meters and hole IM11-037, which averaged 1.00 gpt gold, 0.28 gpt silver and 0.02% copper over 79 meters. No field exploration was reported from the project in 2012 however the company announced plans to conduct preliminary metallurgical and engineering studies as well as geologic reinterpretation work in late 2012 – early 2013. Millrock Resources and partner Teck American Inc. announced 2011 results and the commencement of 2012 exploration at its Estelle project. Significant 2011 results from Oxide Ridge include 450.68 meters grading 0.38 gpt gold including 365.27 meters which returned 0.43 gpt gold. Significant results from the Shoeshine prospect include hole SE-002 which intersected 241.8 meters averaging 0.24 gpt gold. The $1.8 million 2012 drilling program will include seven holes totaling up to 1,500 meters of drilling. Results are pending. Corvus Gold Inc. and partner Westmountain Index Advisors Inc. announced 2011 results and 2012 plans for its Terra property. Significant 2011 drill results from the Ben Vein include hole WGC-33-11 which intersected 0.84 meters grading 7.42 gpt gold and 69.39 gpt silver and hole WGC-34B-11 which intersected 3.4 meters grading 11.6 gpt gold and 106.5 gpt silver a. Planned 2012 work will includes installation of the on-site bulk sample gold mill and commencement of gold production, 1,200 meters of core drilling along the Ben Vein, completion of a resource update in late 2012, and initial surface work on the Camp Creek Midway porphyry target.

NORTHERN ALASKA

NovaGold Resources Inc. (now NovaCopper Inc.) and NANA Regional Corporation Inc. announced 2011 and initial 2012 drilling results from the Bornite deposit on their Upper Kobuk project. Significant 2011 results from the Bornite zone include hole RC11-181 which intersected 17.6 meters grading ■ 108

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

8.4% copper, hole RC11-182 which intersected 93.2 meters averaging 2.1% copper and hole RC11-194 which intersected 110.6 meters grading 2.6% copper. Hole RC11-187 in the South Reef prospect returned 178 meters grading 4.01% copper including 34.7 meters grading 12.03% copper. For 2012, the partners put four drills to work on a $16.5 million, 15-18,000 meter drill program targeting the South Reef, Ruby Creek and Sunshine zones. Significant results from the South Reef zone in2012 include 57.4 meters averaging 3.0% copper, 142.0 meters averaging 2.4% copper and 103.4 meters, averaging 2.0% copper. The partners also announced their first industry compliant resources estimates at Bornite. At a 0.5% copper cutoff grade, the Ruby Creek Zone contains Indicated Resources of 6.8 million tonnes at 1.19% copper or 178.7 million pounds of contained copper. In addition, at a 0.5% copper cutoff grade, the Ruby Creek Zone contains Inferred Resources of 47 million tonnes of 0.84% copper or 883.2 million pounds of contained copper. The partners hope to have a

second resource estimate on the South Reef zone in the first quarter of 2013. Andover Ventures Inc. announced final 2011 and initial 2012 results from drill holes at its Sun volcanogenic massive sulfide project. Significant 2011 results include hole 11-28 which returned 10.01 meters grading 2.56% copper, 0.81% lead, 4.47% zinc, 63.8 gpt silver and 0.22 gpt gold. Initial results from its 2012 drill program include hole 12-33 which returned 7 meters grading 2.31% copper, 3.03% lead, 8.55% zinc, 142.8 gpt silver and 0.509 gpt gold hole, and hole 12-29 which returned 6.2 meters grading 2.73% copper, 1.27% lead, 6.54% zinc, 116.4 gpt silver and 0.396 gpt gold. Goldrich Mining Company entered into a joint-venture with NyacAU, LLC to bring Goldrich’s Chandalar placer gold properties into production. Commercial production is anticipated to begin by June 2013, although limited production could begin before the end of the 2012 summer season. Targeted production rate is 10,000 ounces per

year for 25 years. The company also reported 2011 lode exploration results from a 25-hole, 4,404-meter program. Significant results include 1.5 meters grading 6.57 gpt gold in Hole LS110063 on the Aurora prospect and 2.1 meters grading 6.02 gpt gold in Hole LS11-0041 on Rock Glacier prospect. No lode exploration was reported from the project in 2012.

SOUTHEAST ALASKA

Hecla Mining announced year-end 2011 and first-half 2012 production results from the Greens Creek mine. For 2011 the mine produced 6,498,337 ounces of silver, 56,818 ounces of gold, 21,055 tons of lead and 66,050 tons of zinc at an average grade of 11.5 opt silver and a total cash cost per ounce of silver produced of negative $1.29. During the first half of 2012 the mine produced 2,693,797 ounces of silver, 25,909 ounces of gold, 9,727 tons of lead and 32,016 tons of zinc at an average grade of 10.26 gpt silver and a total cash cost per ounce of silver of $1.63. On the exploration front, highlights include 0.39 opt gold, 14.83 opt silver, 10.5% lead and 22.4% zinc over

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

109 ■

58.4 feet from the Southwest Bench, 16.8 feet grading 32 opt silver, 0.02 opt gold, 8.1% lead and 4% zinc from the 200 South zone, 19.8 feet grading 26.1 opt silver, 0.02 opt gold, 11.5% lead and 6.6% zinc from the 9a zone, and 6.9% lead and 6.4 feet grading 0.21 opt gold, 18.5 opt silver, 4.1% zinc, and 1.7% lead from the Gallagher zone. Year-end 2011 resource estimates included proven and probable reserves of 11,681,800 tons grading 12.6 opt silver, 0.064 opt gold, 5.0% lead and 7.2% zinc. The mine also contains 445,900 tons of mineralized material grading 5.9 opt silver, 0.109 opt gold, 3.0% lead and 7.0% zinc and 4,416,700 tons of other resources grading 11.9 opt silver, 0.093 opt gold, 2.3% lead and 5.7% zinc. Coeur d’Alene Mines announced 2011 and first-half 2012 production results from its Kensington gold mine. For 2011 the mine produced 88,420 ounces of gold at an average cash cost of $1,088 per ounce from ore grading 0.23 opt. Reduced production wad due to capital improvements and 27,800 feet of definition drilling in late 2011. The mine returned to full scale production during the first quarter of 2012 and produced 7,444 ounces of gold at a cash cost of $2,709 per ounce and total production costs of $3,598 per ounce. The mill processed only 43,936 tons of ore averaging 0.18 opt gold during the quarter. During the second quarter of 2012 the mine produced 21,572 ounces of gold at a cash and total cost of $924 and $1,799 per ounce, respectively. During the second quarter, the mill processed 97,794 tons of ore grading 0.23 opt gold. Mill recoveries averaged 94.2%. Current mine resources include proven and probable reserves of 6.0 million tons grading 0.22 opt gold (1.3 million ounces). Kensington is expected to produce 82,600 – 86,500 ounces of gold in 2012. Grande Portage Resources Ltd. announced 2011 results and 2012 plans for its Herbert Glacier gold project. Significant drilling results from the 2011 program included hole 11D-1 which returned 3.05 meters averaging 2.314 opt gold and 3.1 opt silver, hole 11I-4 which encountered 0.95 meters grading 2.16 opt gold and 2.72 opt sil■ 110

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

ver and hole 11F-3 which intercepted a brecciated quartz vein averaging of 11.53 gpt gold over 3.52 meters. The 2012 seventy-hole, 12,000 meter drill program will include deeper drilling on 25 meter spacings in order to convert inferred ounces to a higher confidence category and 3,000 meters of relatively shallow drilling on 4 of the 5 principle veins. Current inferred resources include 1.57 million tonnes grading 4.86 gpt gold using a 2 gpt gold cut-off (245,145 ounces). Ucore Rare Metals Inc. announced its final drilling results from 2011 and outlined results of a series of mineral beneficiation tests conducted on its Bokan Mountain rare earth element deposit. The 34-hole, 10,112 meter 2011 drill program included hole LM11-127 which returned 1.56 meters grading 1.60% LREE and 1.47% HREE and an additional 1.76 meters grading 1.37% LREE and 0.70% HREE and hole LM11-129 which returned 2.76 meters grading 1.07% LREE and 0.55% HREE and an additional 1.86 meters grading 1.57% LREE and 0.64% HREE. Mineral beneficiation tests included X-ray sorting tests that indicated recovery of minerals containing 97% of the rare earth elements. Total recovery of metals ranged from 85-90% using a sulfuric acid-baking and water leaching recovery. Purification tests indicated that over 99% of detrimental contaminant elements can be removed from prior to creation of a final concentrate. The studies represent one of the final components required for the release of a comprehensive Preliminary Economic Assessment due out shortly.

gpt silver. Lookout zone indicated resources have increased to 5,638,000 tonnes grading 0.95% copper, 1.73% zinc, 1.75 gpt gold and 29.52 gpt silver while inferred resources now stand at 2,370,000 tonnes grading 0.73% copper, 1.17% zinc, 1.42 gpt gold and 21.63 gpt silver. At the Trio zone, inferred resources are 1,023,000 tonnes grading 1.00% copper, 1.56% zinc, 1.11 gpt gold and 16.56 gpt silver. The 15,000foot 2012 exploration program will be staged from surface sites to test areas that could not be efficiently tested from underground workings. 

Curtis J. Freeman, CPG #6901, is head of Avalon Development Corp., PO Box 80268, Fairbanks, AK 99708. Phone: 907-457-5159. Fax 907-455-8069. He can also be contacted by email at avalon@alaska.net or found online at avalonalaska.com.

Heatherdale Resources Ltd., in early 2012, completed acquisition of all of the outstanding common shares of Niblack Mineral Development Inc. to acquire 100% control of the Niblack volcanogenic massive sulfide deposit. The company also announced 2011 drilling results and details of its planned 2012 exploration program. Significant 2011 results include hole U131which returned 26.8 feet grading 4.66% copper, 13.57 gpt gold, 15.26% zinc and 302 gpt silver and hole U132 which returned 44.6 feet grading 2.54% copper, 5.54 gpt gold, 10.96 zinc and 126

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

111 ■

special section

Mining

PROJECT GENERATORS

Millrock Resources Inc. management team, from left, Philip St. George, Chief Exploration Officer; Sarah Whicker, Chief Operating Officer; Larry Cooper, Chief Financial Officer; Gregory Beischer, President and Chief Executive Officer.

BY ZAZ HOLLANDER

espite tough economic times for the industry, Millrock Resources Inc. rode high gold prices to what executives call a banner year in 2012. This year, Millrock is spending about $11 million on mineral exploration— all but $1 million of it coming from major mining partners, such as Teck American Inc., Kinross Gold Corp. and Vale. Teck and Kinross are global mining companies active in Alaska. Vale is a giant, diversified miner headquartered in Brazil. Formed in 2007, Millrock brings two strengths to the state’s gold rush: a de-

■ 112

votion to the project generative-joint venture business model and an experienced team of Alaskans who decided to headquarter in Anchorage and leverage capital from around the world rather than set up shop in Canada like most junior mining companies. “We started the company with the belief in the strong geological potential of Alaska and the fact it’s underexplored compared to other geological jurisdictions,” says Sarah Whicker, Millrock’s chief operating officer. “We’re looking for those massive, world-class deposits that aren’t as easy to find elsewhere in the world now.”

Millrock also likes Alaska’s relatively safe investment climate, Whicker says. Most junior mining companies rely on selling stock to raise venture capital for the purpose of handling the costly, high-risk exploration phase of mining. This dilutes share price. Millrock is also publicly traded, but its project generative-joint venture strategy lowers that kind of fiscal risk since its major investors become big mining companies. Millrock puts its geological knowhow to work on large packages of land to explore for deposits of copper-gold porphyries and pluton-related gold ore bodies. Typically, the company stakes

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

Photo by Judy Patrick Photography

Millrock Resources Inc.

RELIABILITY AND EXPERTISE Global Drilling Services

DEDICATED TO OUR CLIENTS’ SUCCESS Boart Longyear offers a full range of drilling services utilizing innovative technologies, experienced drillers, global safety standards and a focus on reliability and complete customer satisfaction.

www.BoartLongyear.com • ASX: BLY

We excel in various drilling methods including: Reverse Circulation Conventional Air Conventional Mud Flooded Reverse Surface Coring Underground Coring Geothermal

Directional Pump Services CBM Percussive Monitor & Water Well Sonic

Alaska Earth Sciences Comprehensive Geologic Services

p p p p p p p p p p p p

Geologic Consulting Geologic Staffing Geological Engineering Reporting (including 43-101) Logistics/Operation Coordination Remote Site Management GIS Services Permitting Assistance Community Engagement Claims Staking Claims Administration Equipment Rental

Dedicated to responsible development of Alaska’s resources.

11401 Olive Lane Anchorage, Alaska 907-522-4664 www.alaskaearthsciences.com

Architects · Engineers · Surveyors

Meet all your design needs in one place. Save time. Save money.

Fairbank s: 907.452.1241 Anchorage: 907. 276.1241 w w w. d e s i g n a l a s k a . c o m

■ 114

claims on state lands. The company has accessed mineral rights through agreements with Alaska Native Corporations. Millrock identifies prospects with potential early. Then it farms out the cost of front-end exploration to capital-rich mining companies that meet funding obligations in option-to-jointventure agreements. The upside: Millrock is off the hook for the millions of dollars needed to advance the project in its early stages. The downside: Millrock gives up a majority interest in the project once a partner exercises its option to joint venture and—if a major deposit is discovered—Millrock must share production revenues.

The Personalities

Bering Straits Native Corp. and Millrock made an exploration agreement on three separate blocks of land totaling nearly 250 square miles in 2008. Millrock is targeting gold in source rocks for placer deposits mined since the early 1900s. “I like their business plan, I like their model—the project generator model. It’s a good one for a junior to be involved in,” says Matt Ganley, Bering Straits’ vice president for resources and government affairs. “The big selling point—I’ll be honest with you—is the personalities involved.” Two venerable Alaska geologists formed Millrock Resources Inc. five years ago to plumb the state’s underdeveloped mineral resources. Greg Beischer and Phil St. George took Millrock public in 2007. The next year, subsidiary Millrock Exploration Corp., exploring only in Alaska and Arizona, was created. Beischer, the company’s president and chief executive officer, spent seven years working for Bristol Bay Native Corp. on oil, gas and mineral resources. He came to Alaska in 1995 with Inco Ltd. but stayed when Inco left. St. George, the company’s chief exploration officer, has been working in Alaska since his 20’s when he discovered the Pebble deposit as a geologist for what was then Teck-Cominco; the Pebble Project is now jointly owned by Northern Dynasty Minerals and Anglo American. As exploration vice president with NovaGold Resources Alaska

Inc., he was involved in major discoveries at the Donlin Creek deposit, now known as Donlin Gold. The pair brought in Whicker in 2008. Whicker grew up in rural villages in Southeast and Southwest Alaska and has an environmental background. She served as a business and sustainable development consultant for junior mining companies in Vancouver, British Columbia. She also was the president and business development manager of Kirkness Diamond Drilling in Nevada. In an unprecedented move for a junior mining company, Millrock hired an Anchorage-based chief financial officer, Larry Cooper, about a year ago. He spent 27 years with National Bank of Alaska and Wells Fargo Bank as a senior vice president and manager of commercial banking before becoming a consultant to Millrock and other companies, including several Alaska Native Corporations. Today, Millrock executives say they pride themselves on a commitment to responsible resource development. The company emphasizes its ability to infuse funds into rural communities through a goal to obtain services locally and provide training. “We like to take more of a local approach to make sure we’re maximizing opportunities in communities,” Whicker says. For example, a longtime Alaska guide takes clients sheep hunting near one of Millrock’s projects, Beischer says. The company has developed a regional communication plan with the guide and other land users to ensure Millrock’s activities don’t disrupt the wilderness experience for others. “You have to inform yourself and make sure you know those people are out there so you don’t get crosswise with them,” he says.

Project Generator

Millrock is working in 11 project areas throughout Alaska. As of September, state records show Millrock Alaska LLC had 3,650 active claims on 573,320 acres. Millrock also has 280 state claims on 17,920 acres under option from other claim owners. In addition to their state claims, Millrock has the exploration agreement with Bering Straits Native Corp. covering some 89,499 acres.

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

AUDN Location: The AUDN project is located in the northern portion of the Alaska Peninsula, 31 miles southwest of Igiugig. Target: Copper-gold porphyry. Partner: Vale BERING STRAITS Location: Millrock has made an exploration agreement with Bering Straits Native Corp. (BSNC) on three discrete blocks of land (named Bluff, Council and Ungalik) totaling 245 square miles on the south side of the Seward Peninsula. Millrock dropped the Ungalik prospect at the end of the 2008 exploration season. Target: Source rocks for placer deposits that have been mined since the early 1900’s. Partner: Millrock entered into an Option to Joint Venture agreement with Valdez Gold, Inc. (now Ryan Gold) on the Bluff project, as well as an exploration agreement with Kinross Gold Corp. on the Council project. Ryan Gold subsequently optioned out of the Bluff project.

CRISTO Location: The current Cristo group comprises 328 Alaska state claims covering approximately 82 square miles located approximately 87 miles northwest of Anchorage in the Rainy Pass district. Target: A large intrusion-related gold or porphyry copper-gold deposit. Partner: Millrock is currently seeking a partner. ESTELLE Location: The Estelle gold project is located in the Yentna and McGrath Mining Districts about 105 miles northwest of Anchorage in the Alaska Range and totals roughly 62 miles. Target: Large, intrusion-related gold deposit. Partner: Teck American Inc. FORTYMILE Location: Millrock holds three claim blocks covering 35 square miles in the historic Fortymile mining district, one of the oldest in Alaska. The claim groups are near the towns of Chicken and

Boundary, which are on the Taylor Highway, approximately 62 miles northeast of Tok. Target: A historic mining region where more than 300,000 ounces of placer gold production has been recorded. Partner: Millrock is currently seeking a partner.

Grath Mining Districts about 105 miles northwest of Anchorage in the Alaska Range. Target: Copper-gold porphyry. Partner: Millrock is currently seeking a partner. STELLAR Location: The Stellar project is located in the Valdez Creek Mining District about 186 miles north of Anchorage in the Central Alaska Range. Target: The Stellar project includes a documented gold-copper skarn occurring within a larger area considered favorable for the occurrence of a mineralized porphyry system. Partner: Millrock is currently seeking a partner.

DISTIN Location: Located approximately 87 miles northwest of Anchorage in the Rainy Pass district. Target: Intrusive-related gold deposit. Partner: Millrock is currently seeking a partner. HUMBLE Location: The Humble claims are located approximately 50 miles northeast of Dillingham and cover approximately 91 square miles. Target: Porphyry copper-gold deposit. Partner: Kinross Gold Corp.

UNCLE SAM Location: The Uncle Sam property, totaling 12 square miles, is located in the Big Delta B-5 and Big Delta C-5 USGS Quadrangles in east central Alaska. Target: Intrusive-related gold deposits. Partner: Crescent Resources Corp.

RENEGADE Location: The Renegade project is located in the Yentna and Mc-

ALASKA’S PREMIER EQUIPMENT DEALER AND RENTAL COMPANY Parts, Sales & Service – Equipment Specialists since 1954

Selling Your Company? Matthew Fink Commercial Properties Business Specialist 23+ Years Experience

Let Craig Taylor move your mountains with a Komatsu high performance excavator.

craigtaylorequipment.com

• • • •

Value Assessment Consultation Packaging Results

(907) 261-7620 fink@alaska.net

3111 ‘C’ Street, Suite 100 Anchorage, Alaska 99503

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

115 ■

Portable Tent Camps Expediting Services All Seasons

operations@taigaventures.com

Baroid Drilling Mud Johnson Screens PVC Pacto Waterless Toilets

2700 S. Cushman Fairbanks. AK 99701 (907) 452-6631 • Fax: (907) 451-8632

www.taigaventures.com

Airport Business Park 2000 W. Int’l Airport Rd., #D-2 Anchorage, AK 99502 (907) 245-3123

M I S S I O N :

We personally commit to the success of all clients, employees and shareholders. V I S I O N :

We will be the leader in providing crea�ve solu�ons that make a diﬀerence. Anchorage 700 G Street, Suite 500 Tel: 907.562.3366 Fairbanks 3504 Industrial Avenue, Suite 125 Tel: 907.374.0303

■ 116

Juneau 217 2nd Street, Suite 207 Tel: 907.463.4915

Millrock Alaska LLC is a wholly owned U.S. subsidiary that holds mineral rights on behalf of Millrock Resources Inc., a Canadian company that can’t technically hold mineral rights. Millrock Exploration Corp. is a wholly owned U.S. subsidiary that operates exploration programs on behalf of Millrock Resources Inc. and Millrock Alaska LLC. Millrock is one of the more active junior exploration companies in the state, according to the Alaska Department of Natural Resources. “As such, they are an important part of Alaska’s mineral industry, generating prospects and furthering property development toward possible future mining,” Bill Cole, with the Division of Mining, Land & Water, wrote in an email. Many junior exploration companies follow the project generative-joint venture business model to a degree, Cole says. They pick up properties, do some amount of work on them, then try to bring in larger companies with more capital. Basically, that’s what Northern Dynasty did with the huge deposit at Pebble. The difference is whether a company diversifies its efforts over a large number of properties rather than focusing on one or two concentrated efforts. Millrock executives say their strict adherence to the model, bringing in partners early, and maximization of its benefits is a distinguishing characteristic. Millrock is one of about 1,800 junior exploration or mining companies listed publicly, according to Beischer. Of that number, probably 15 or so use the model exclusively. Of that, he says, only two operate in Alaska: Millrock and Vancouver, British Columbia-based Full Metal Minerals. The model allows Millrock to get in with relatively little capital outlay, and also provides flexibility if the deposit doesn’t pan out. “It gives us options,” Whicker says. “Once we reach the joint-venture stage, we don’t have to necessarily enter into it, which may be the best thing to do if the property hasn’t shown promise. Alternatively, we have a solid partner on a more advanced prospect. Sometimes, a partner may walk away from a perfectly good prospect they have advanced and we can market it to an-

other company. All of these options are available to us.” Plenty of companies might raise venture capital to explore. Millrock takes it one step further, Beischer says. The company takes revenues and generates numerous projects, then partners with majors to fund earlystage exploration work. “It’s taking a small amount of venture capital and leveraging it to make more capital to invest in looking for these deposits,” he says. “This is a very high-risk business. It’s very often millions may be spent but companies won’t find anything.”

Returning to the Market

Financial markets in Canada are major centers for mining venture capital. Money flows in and out of those markets from around the world. Simply put, what Millrock does is access that capital and spend it in Alaska searching for gold, copper and other valuable deposits, Beischer says. “We realized you don’t have to be a resident in Canada or even headquartered in Canada to access those venture-capital markets,” he says, “so we started a company in Anchorage.” Millrock is a public company, listed on the stock exchange in Canada and the over-the-counter OTCQX exchange in New York. Despite a difficult economic climate for juniors, Millrock hasn’t gone to the stock market to raise significant capital since 2009, though they did a strategic financing sale in 2010 to get some “strong hands into the game”—influential investors likely to hold onto stock longer than the average investor because they believe in the company’s long-term goals and its ability to pull them off, Whicker says. Now Millrock executives expect to go back to the market within six months. This year’s expenses are around $3 million against $1.82 million in income, mostly from management fees and option cash payments associated with various partnerships. Millrock is trading at 30 cents a share, so selling stocks to generate cash dilutes existing shareholders. Beischer says Millrock tries to limit that as much as possible. Still, he says, Millrock “managed to stretch this out a long way. Normally companies like ours have to go back to the

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

market almost every year. We do generate some revenue. With most exploration companies, cash only flows one way.”

Nature of the Business

The Bering Straits package is a good example of Millrock’s operations. Millrock makes annual cash payments to Bering Straits and payments in Millrock shares. It also makes donations to scholarship foundations. The Native corporation gets a net smelter royalty of up to 5 percent if any gold makes it to production. The arrangement gives Millrock the option to lease the lands for mining. Millrock entered into an exploration agreement with Kinross on the Council project on the Seward Peninsula about 60 miles northeast of Nome. For the Council project, Millrock put together a multi-owner land package and made an agreement with Kinross for the whole package, including the Bering Straits land. A representative of Kinross wasn’t available for an interview. The option agreement can continue from year to year. “Sometimes partners elect not to go forward if we haven’t found encouraging results, but ultimately if we discover something of interest, the project will mature to a joint venture,” Beischer says. “It’s an option to form a joint venture with Millrock. Typically we give up the majority.” A typical split, he says, is 60-40. As far as prospects for the Bering Straits package, Millrock has drilled 25 shallow holes on Native-owned lands. The company knows there’s gold in the bedrock: those early placer mines are a clear sign. It’s just a question of how much, and how easy it would be to recover. Any gold is still a long way from being a proven economic resource. The company’s agreement with the Native corporation ends this year, Ganley says. Bering Straits is waiting to see Millrock’s reports from this year. If exploration has yielded some results that need more defining, Millrock will probably renew the agreement, he says. If not, they’ll be done with this particular project. “That’s the nature of the business,” Ganley says. “We like the business.”  Zaz Hollander is a journalist living in Palmer.

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

117 ■

special section

Mining

Photo by Thom Leonard / Calista Corp.

Aerial view of the exploration camp at Donlin Gold, one of the largest undeveloped gold deposits in the world. The Donlin Gold project has recently progressed to the permitting stage.

Mining Exploration Activity Moving toward ﬁnal permitting

BY JULIE STRICKER

iewing Alaska from a geologist’s perspective, there is certainly “gold in them thar hills,” as well as copper and silver and a host of other valuable metals. There are also bears, mosquitoes, crummy weather and miles and miles of hills, mountains and muskeg that contain little to no mineral deposits. Separating the areas that have abundant minerals from those with few, while avoiding the hazards of exploration in Alaska, has attracted legions of prospectors for decades—and 2012 was no exception. The prizes can be significant. Despite well more than a century of active mining and exploration in the 49th State, geologists are still finding world-class deposits of gold, copper, silver, coal and a host of other minerals. ■ 118

For example, the Pebble prospect located in Southwest Alaska about 200 miles from Anchorage contains one of the largest concentrations of copper, gold, molybdenum and silver in the world. It wasn’t discovered until the mid1980s. Other significant mineral deposits are thought to lie in the Alaska Range, around Nome and in the Ambler region of Northwest Alaska. Exploration is ongoing around known mineral areas, such as Livengood and Pogo Mine in Interior Alaska. And then there’s the newest gold rush, hundreds of would-be prospectors spurred along by a combination of reality television and high gold prices. Applications for placer, section and hard rock exploration have nearly doubled in the past two years, according Jeff Rogers, a Fairbanks-based geologist with the

Alaska Department of Natural Resources. “We’ve been busy, busy beavers,” Rogers says of the past few months. “With all the paper pushing and field visits, we didn’t sleep much.” All of Alaska’s mining districts saw a rise in the number of applicants and in general activity, says Rogers, who saw more than his share of bears, mosquitoes and bad weather this summer. A lot of the activity occurred in Nome, where people flocked to find their fortune on Nome’s fabled beaches, chronicled in TV shows like “Bering Sea Gold.” “Nome went nuts,” Rogers says. The Fortymile region was also busy. Rogers says that while some people were clearly out to make money, more were in it just for the thrill of finding gold. Rogers said he doesn’t see much of a change for 2013, as long as metals prices

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

remain high. If anything, the craziness in Nome might calm down. “A lot of people suffered” in 2012, he says. “The weather was bad. The barge was late. The ocean really isn’t carpeted in gold. This summer had to be a reality check for a lot of people.” It’s not just gold driving exploration in Alaska. The Alaska Division of Geological and Geophysical Surveys within the Department of Natural Resources is in the middle of a three-year, $3 million effort to map mineral deposits in Alaska. Geologists are working on a detailed map of strategic minerals, including rare earth elements that are increasingly used in high-tech manufacturing. In 2012, the survey concentrated on the Moran area in the Ray Mountains north of Fairbanks. Mineral exploration in 2011 alone accounted for $300 million in spending, according to a study commissioned by the Alaska Miners Association and the Council of Alaska Producers. That figure is up 13 percent from 2010. Alaska’s geology and current high mineral prices are two of the reasons

Up to 300 feet of core might be logged per geologist daily at the core shack for the Pebble Partnership, which recently reached a drilling milestone of 1 million feet of core. Photo courtesy of the Pebble Limited Partnership

exploration activity has remained active in the state, according to Tom Crafford, large mine coordinator for the Alaska Department of Natural Resources. “Any exploration geologist would tell you that Alaska is underexplored relative to other localities,” Crafford says. “Despite the fact that there’s been exploration going on here for decades, the intensity of that exploration is not the same as it’s been in some places, like Nevada.” Alaska lacks roads and “there’s a certain seasonality to exploration here,” he says. Alaska is historically a mining-

friendly state, but that doesn’t mean sweetheart deals for the industry, Crafford says. “You have to have a fair and balanced approach to the regulation of the natural resources industry,” Crafford says. “I think what we have are fair regulations. We do try to strike a balance between appropriate protection and facilitation of the development of Alaska’s resources.” About 75 mining prospects were on the table in 2012, as well as 200 or so smaller-scale gold mining operations, according to the 2011 mining study. Peb-

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

119 ■

ble and International Tower Hills’ Livengood Gold Project north of Fairbanks are the two big advanced exploration projects in the state, easily dwarfing the other projects in scale. Work on each in 2012 focused on preparing for feasibility and mine-design studies as they move toward the formal permitting process.

Livengood

The Livengood project is located on 50,000 acres just off the Elliott Highway 70 miles north of Fairbanks. The area was first mined in 1914 and has yielded 500,000 ounces of gold in the past century. But Tower Hill Mines, the Alaska subsidiary of International Tower Hill, is betting there’s more, much more, gold to be found. It’s moving forward with exploration and planning for a potential future mine. Exploration in Livengood has uncovered 20 million ounces of gold, most located under or near the aptly named Money Knob. Drilling in summer 2012 also identified high-grade prospects away from Money Knob, according to an Aug. 21 news release. The results are promising, Jeff Pon-

■ 120

tius, ITH interim CEO said in a news release. “It is clear that the Livengood gold system is a district scale gold discovery with significant future potential.” The company announced it was planning to move directly to a feasibility study as a cost-effective step toward permitting the mine. “We remain on schedule to complete the feasibility study in the first half of 2013,” says Tom Irwin, president of Tower Hills Mines and a vice president of the parent company. “Overall, I am pleased with our progress as a company, and especially the team we have assembled.” Irwin is a former commissioner of Alaska’s Department of Natural Resources and has spent 35 years in the natural resources industry. He says the on-site geotechnical, infrastructure and condemnation drilling data has been collected to support the engineering and geotechnical studies and design. Tower Hill continued its environmental baseline data collection for a fourth season, which will be evaluated and incorporated into the project design. Meanwhile, metallurgical optimization studies, and the geotechnical and en-

gineering studies are progressing, he says.

Pebble

The Pebble project is also in advanced exploration stages, but it faces some daunting opposition. London-based Anglo American and Canadian company Northern Dynasty Minerals each own 50 percent of the mineral leases on the project. In 2007, they created Pebble Limited Partnership to design, permit, build and operate the mine. Pebble Partnership is based in Anchorage. Its CEO is John Shively, a former NANA Regional Corp. leader who helped negotiate agreements with what was then Teck Cominco to develop the giant Red Dog lead-zinc mine in northwest Alaska in the 1980s. He later served as Natural Resources commissioner during Gov. Tony Knowles’ two terms. In September, Pebble officials announced that workers had drilled 1 million feet of core samples as they try to understand the scope of one of the largest polymetallic deposits in North America. “We have a pretty good idea of the potential volume of ore of the prospect,” Shively says, “but how it is situated

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

throughout the prospect is still not totally understood until we mine it.” Everything about the proposed Pebble mine is supersized. Pebble is estimated to hold 80.6 billion pounds of copper, 5.6 billion pounds of molybdenum (used as a steel alloy to increase strength and heat resistance) and 107.4 million ounces of gold. The gold alone is a big draw considering that, in September, gold prices were hovering around $1,750 an ounce. The prospect also includes commercial quantities of silver and other metals. A full-fledged mine at Pebble would cost between $6 billion and $8 billion and would be one of the largest privately financed projects in the United States, Shively says. The project encompasses four separate pieces, any one of which is a major undertaking in itself, says communications manager Nance Larsen. First, there’s the processing plant and the mine itself. The ore lies in two fairly distinct bodies. In Pebble West, the ore lies relatively close to the surface and would likely require an

In addition to traditional rotation drills, the Pebble Partnership is also using sonic drill technology at the Pebble Deposit, which advances the drill using vibrations.

open pit mine. In Pebble East, the ore is richer but buried more deeply and could be extracted through underground mining. Then there’s the infrastructure. Pebble is 200 miles southwest of Anchorage, hundreds of miles from the nearest road or utility plant, and 70 miles from Cook Inlet. The facilities would require more than 500 megawatts of electricity and a transportation corridor that could include a road and up to four pipelines, Shively says. One pipeline would bring the ore concentrate to the port in a slurry, where it would be dewatered and loaded. A second pipeline would return the water from the slurry to the mining operation. A third would provide diesel to power the equipment and a fourth may be needed carry natural gas, depending on whether power is generated at the site. Lastly, Pebble needs port facilities. Shively says the project has no specific timeline on when mining is likely to begin. The project is considered to be in an advanced exploration phase. “It is very complicated, so we con-

Photo courtesy of the Pebble Limited Partnership

Where the road ends…

Our Work Begins

Our crews have decades of experience, and the skilled manpower to take on any task. With our tundra-approved vehicles, we can get your drill rig and project materials to any remote location, and build ice pads and ice roads. And our range of logistics support – hauling fuel and freight – has been broadened with the addition of our new marine services division.

cruzconstruct.com

Main Office (907) 746-3144 North Slope (907) 659-2866

From start to finish, we are a partner who can deliver what you need.

Anywhere you need it. Any season of the year.

tundra transport • rig moves • rig support • remote camps • ice roads • ice pads • well site trailer units • marine services

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

121 ■

“There’s no doubt in my mind that it’s going to be developed some day, it’s a $300 billion to $500 billion asset. It’s on state land, so the people own it.” —John Shively CEO, Pebble Partnership

tinue to look at options both that can make the project more economically efficient and increase environmental protections,” Shively says. Pebble, which is located on state land, could pay tens of millions of dollars annually in taxes to the state. Although no projects have been set, Shively says a mining operation at Pebble would require 2,000 workers during construction and employ up to 1,000 workers during an estimated mine life of 25 or more years. The deposit as a whole, depending on the rate of mining, could last 70 to 100 years. The very size and scope of the deposit, coupled with its location near the headwaters of major streams that feed into salmon-

■ 122

rich Bristol Bay 120 miles to the southwest, have generated enormous controversy. Environmentalists say the mine has the potential to wipe out entire salmon streams and degrade the fisheries’ ecosystem for decades. Fisheries are an economic and cultural lifeline in Bristol Bay, providing 14,000 full and part-time jobs worth nearly half a billion dollars annually. Pebble officials say they will build a safe, environmentally secure facility that will not harm salmon. The Pebble Partnership has spent more than $125 million on environmental studies to date. The mine’s fate is still cloudy, but Shively is confident it will be built, ideally under his watch. “There’s no doubt in my mind that it’s going to be developed some day,” Shively says. “It’s a $300 billion to $500 billion asset. It’s on state land, so the people own it.”

World Class Gold Deposits

Donlin Gold, a joint operation by NovaGold Resources and Barrick Gold in Southwest Alaska, announced it was entering the permitting stage. If built as envisioned, Donlin Gold would be one of the largest gold mines in the world and could cost $7

billion. Nearly 45 million ounces of relatively high-grade gold have been found at the site, making it one of the largest undeveloped gold deposits in the world. Pogo Gold Mine, an operating underground mine 38 miles northeast of Delta Junction, reached a production milestone and announced a major gold discovery this summer, according to Pogo external affairs manager Lorna Shaw. The mine, owned and operated by Sumitomo Metal Mining, poured its 2 millionth ounce of gold in 2012. Pogo has produced more gold on an annual basis than Fort Knox, a huge open-pit mine 25 miles northeast of Fairbanks, Shaw says. The East Deep deposit was discovered in 2011 and contains approximately 2 million ounces of gold, Shaw says. Added to Pogo’s current 2.6 million ounces of gold reserves, East Deep has the potential to significantly lengthen the life of the mine. The calculated discovery cost per ounce for the known resource of East Deep is an unprecedented $4.80 per ounce, Shaw says. By comparison, the average industry unit discovery cost is running $30 to $40 per ounce. Much of the work in 2012 involved determining the extent of the East Deep deposit

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

and working in areas “within eye sight of the mill” in order to most effectively use the mine’s existing infrastructure in expansion efforts. The four areas of emphasis are all within a mile of the main site. The exploration efforts are expected to continue through November 2012, Shaw says.

Ambler District Copper

NovaCopper, a spinoff of NovaGold and NANA Regional Corporation Inc., has been exploring significant copper/gold deposits in the Ambler mining district in Northwest Alaska. NovaCopper announced in September that drilling in the South Reef portion of its Bornite property turned up “significant” results. Rick Van Nieuwenhuyse, NovaCopper’s president and chief executive officer, was quoted in a press release saying: “South Reef has the potential to become another world-class copper deposit.” NovaCopper’s nearby Arctic deposit has revealed even higher grades of copper, he says. “These deposits are unfolding in a way that makes the Ambler district one of the most exciting copper plays in the world,” Van Nieuwenhuyse says.

Other Exploration Activity

219,000 ounces of gold at a grade of 0.176 ounces per ton and 66.9 million pounds of copper graded at 2.69 percent. In partnership with Vale Exploration Canada, Millrock is exploring the AUDN project, a porphyry copper-gold deposit southwest of Pebble.

Junior mining companies, such as Vancouver-based Millrock Resources, have been active in early exploration efforts on a number of projects. Millrock Resources’ business model is as a project developer. Generally working as a joint venture with a major mining firm, Millrock seeks out promising gold and copper projects to develop. It lists 12 projects of interest in Alaska and four in Arizona. In 2012, Millrock focused on three projects in Alaska, with earlier-stage exploration work on others. In July, Millrock began drilling its Estelle Gold Project, a joint venture between Millrock and Teck American Inc., located abut 100 miles northwest of Anchorage, in the Yentna and McGrath mining districts. It also began work on its Council project on the Seward Peninsula, a joint project with Kinross Gold. Millrock also is working with Kinross on the Humble project in Southwest Alaska. In September, Millrock announced a new copper-gold project named Stellar, north of the Denali Highway about 40 miles west of Paxson. Earlier exploration in the area suggested a resource of nearly

Southeast Activity

In Southeast Alaska, exploration is ongoing at Niblack, a copper, zinc, gold and silver prospect on Prince of Wales Island southwest of Ketchikan. Niblack Mining Corp. is proposing a small-scale underground mine with access by boat only. It is owned by Heatherdale Resources, a Vancouver-based junior mining company. Heatherdale says Niblack has $1.4 billion worth of resources. Nearby, Ucore Rare Metals is exploring Bokan Mountain for what it calls the largest rare earth deposit in the United States. It has found significant uranium deposits, as well as yttrium, zirconium, beryllium and niobium.  Julie Stricker is a writer living near Fairbanks.

Natural resources continue to be the cornerstone for Alaska’s economic development and diversification. AIC is proud to provide our Alaska-based construction expertise to the resource development industries.

ALASKA I N T E R S TAT E CONSTRUCTION

AICLLC.COM

301 W. NORTHERN LIGHTS BLVD., STE. 600

ANCHORAGE, AK 99503

T: 907-562-2792 F: 907-562-4179

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

123 ■

special section

Mining

Above the Rest: Natural Resources and Mining Setting the standard for safety in Alaska BY PAULA COTTRELL

ccording the United States Department of Labor Bureau of Labor Statistics, Alaska is one of the most dangerous places to work. Occupational injuries and illness in all industry sectors of the state exceed those of everywhere else in the country, with the exception of one—natural resources and mining. With mines located in the most remote areas of Alaska, this is no small feat. Low incident rates can be directly attributed to the safety culture of not just

■ 124

any one company, but to the industry as a whole. “In addition to safety being a corporate value, mine workers in Alaska employ a standard of safety individually,” says Deantha Crockett, executive director of the Alaska Miners Association. “They take pride in operating safely and reaching safety milestones within their company, therefore they share these values among their coworkers and achieve safety standards together. Safety practices are one area that—no matter what type of mine

is being operated—can and is being shared across many different Alaskan mines and individuals,” she adds.

Safety Professionals

Companies across Alaska are answering the call to higher safety standards by employing top professionals in their field. Certified safety professionals and industrial hygienists bring a specialized insight to not only safety planning, but program implantation on the jobsite as well.

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

Fort Knox First things first. At Fort Knox, our priorities are simple. Our people. Our community. Our environment. We invest in our people, so they are trained to do the best job possible. We support our community with charitable s First g in h T t s ir F donations, volunteer hours and local purchases. We adhere to the toughest standards to protect water and air quality. These are our priorities. Because at Fort Knox, itâ&#x20AC;&#x2122;s about putting first things first.

Fairbanks Gold Mining Inc. A Kinross company

kinross.com r top priorities

At Fort Knox, ou

are simple. ironment.

“Due to the high standards in the industry set by the State of Alaska and federal agencies, it’s necessary to have effective safety programs in place that will mitigate any injuries on the jobsite before they happen,” says Chris Tillman, Fairweather site health and safety officer for the Tower Hill Mines Livengood project. “Taking it further and ensuring that the standards set in the company’s safety plan are carried out on the jobsite is critical to managing a successful health and safety program.” According to Tillman, a safe and healthy work environment at Tower Hill Mines is a top priority. “Our site-specific safety and health plan provides important tools and training to enable employees to establish and then maintain a safe working

■ 126

environment,” he says. Some aspects of the program include training and employee orientation, hazard identification and assessment, site control measures, site-specific task training, occupational safety and health controls as well as emergency response and contingency procedures. “Tower Hill Mines will continue to evaluate and improve its safety programs. We are committed to providing the proper training and tools for a safe and healthy work environment and require that our employees be committed to that mindset,” says Tillman. Tillman is employed by Fairweather LLC and serves not only as a safety profession at Livengood, he is also an Alaska State Certified EMT-III, providing medical support to the project. Fairweather, which has a long history

of supporting the mining industry in Alaska, has a unique approach to serving mining camps, cross utilizing its staff to promote efficiency and cost effectiveness, according to Sherron Perry, founding owner of Fairweather. The concept allows the safety professionals who interact with employees on a daily basis and set the tone for safety in the field to respond immediately to emergencies and provide care in accordance with their physician directed guidelines. Fairweather medical and safety personnel also function as certified bear guards, site and field inspectors, drug and alcohol program facilitators, weather observers and instructors in everything from first aid and CPR to snowmachine and ATV operations. “This unified approach provides for an effectiveness that can make the dif-

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

ference between a bad outcome leading to disability and a good outcome resulting in a no-lost time incident. The goal is to reduce incidence of injury, decrease recordable incidents and enhance workforce wellness, safety and productivity,” says Perry.

High Level of Care

To provide the high level of care expected in the mining industry, Fairweather employs Alaska licensed physician assistants, paramedics and EMT III’s to provide remote onsite medical care. “These professionals can assist health and safety teams with the management of on-the job injuries while fully understanding OSHA/MSHA related aggressive first aid concepts,” says Jim Lipinski, Fairweather’s health team manager. Alaska’s remote geographic and weather challenges can often result in delayed transport scenarios, demanding an on-site presence of medical care. “Remote camps with both small and large populations may have either a fi xed medical facility or an easily transportable clinic set. These medi-

cal sets feature a comprehensive, standardized design and are aligned with the level of professional supporting the site,” says Lipinski. “All sets are designed to provide routine health care from minor injuries to critical care of a sick or injured employee.” As operator of the Fairweather Deadhorse Medical Clinic located in the Deadhorse Aviation Center, Fairweather is able to provide state-of-the-art medical services for mining, oil and gas companies that operate in the Arctic regions of Alaska. “This clinic is aligned as an air medical evacuation facility, providing care from emergency triage to stabilization of a patient for air ambulance transport,” adds Lipinski. The clinic is staffed 24 hours a day, 365 days of the year with physician assistants and paramedics. The medical program at Fairweather is managed by Lipinski, who is a licensed physician assistant with a master’s degree in occupational medicine. Lipinski has worked throughout remote Alaska and knows the medical challenges firsthand. “Remote work camps present obstacles for providers

and patients who are far away from hospitals and family. It takes a dedicated provider to work at these remote locations and be responsible for the health and wellbeing of a work crew,” explains Lipinski. As someone who is responsible for the recruiting and training of his remote staff, he knows it takes just the right personality and work ethic for someone to be successful in remote environments. “The key to a remote medical program’s success is hiring the best people who are able to perform well in nontraditional medical settings. Our professionals integrate with the workforce and make a difference as they ensure that all health and emergency response issues are addressed,” adds Lipinski. It is this kind of commitment from the medical, health and safety professionals serving the industry that will ensure natural resource and mining employees maintain their status as the safest workers in Alaska.  Paula Cottrell is an Alaskan author.

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

127 ■

special section

Mining

Training Alaskan Miners Operators participate in recruiting and selecting students BY WILL SWAGEL

Photo courtesy of UAS School of Mine Training

Students on a scissor lift “barring down” loose rock with scaling bars.

s the price of gold and other commodities rises and falls, so do employment opportunities in the mining industries in Alaska. While commodity prices are off recent highs, global development continues to drive strong demands for the metals and other minerals needed for manufacturing and construction. Entry-level jobs in large underground or surface mines tend to pay family-level wages and provide full benefits. For more than 30 years a partnership between mine operators, the state and federal government and the University of Alaska has provided pre-employment certification and training so those coveted jobs—as often as possible—are filled by Alaskans. “The Alaska Department of Labor is saying that—with all the new mines opening up (in Alaska)—we’ll need a couple of thousand miners and 3,000 engineers and support staff over the next three years,” says Mike Bell, director of the UAS Center for Mine Training in Juneau. Bell says that

■ 128

across the border in British Columbia and the Yukon, mine operators are expected to need up to another 13,000 workers.

Rigorous Process

The enduring image of a miner on the Last Frontier may be Prospector Bill panning for gold nuggets, but today’s Alaskan miner is an operator of expensive, computer-assisted equipment who must adhere to stringent safety and environmental regulations. Training for such skilled workers is a costly investment and Bell describes a system where every student who graduates in offered a job. First, mine operators are canvassed for their needs. “All training is on demand,” says Bell. He says the mine operators participate in every aspect of recruiting and selecting students for the training program. “We ask them, ‘if we were going to train, how many people could you hire?’” says Bell. The Alaska Department of Labor and Workforce Development will then do an advertising campaign, which

will generally lead to 150 to 200 applicants. Of those applicants about 25 are interviewed further. Twelve to 15 applicants will make the final cut. These students will spend the first week of the five-week course on safety issues, and then the rest of the training is about working in the mine. Students take classes, work on high-tech simulators of mining equipment, and—in the case of those studying for jobs in underground mining—spend time working at a training facility in the Alaska-Juneau (or A-J) Mine. “They go underground into the mine and learn to move rock and how to work in mud and how unpleasant the job can be,” says Bell, a former miner himself. Small slip-ups, such as tardiness, can result in being cut from the program. Nearly all students make it through, however. “In the end, the mines come in and offer them contracts,” says Bell. “And every one gets hired.” Bell says one of the most rewarding things about his job is seeing a person

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

who had been having financial difficulties given the chance of a much more secure future. Bell says his trainees generally earn more than $70,000 in their first year. “So they go from being unemployed (to taking) a five week course—and (then they get) a $72,000-a-year job,” Bell says. “And the next year, they make $80,000 plus!”

Skilled Miners Needed

“Mining is an occupation that requires high levels of skill, and those high levels of skill nowadays are really being advanced by the technology,” says Dennis Steffy of the Mining and Petroleum Training Service. “All of our (mining) equipment is covered with computers,” Steff y says. “It requires a strong degree of self-confidence, (and) obviously some mechanical ability; and a 12-hour shift is a 12-hour shift.” For more than 30 years, MAPTS has offered workers in Alaska resource industries a broad spectrum of training opportunities in Alaska: occupational, environmental, health and safety training. It is a partner organization with the UAS Center for Mine Training. MAPTS has offices in Anchorage, Juneau and Soldotna and offers training at other sites throughout Alaska. Steff y is a pioneer in technical training in Alaska. In 1969 he became the head of the Department of Applied Sciences at Kenai Community College. In 1979 he was tasked by University of Alaska to take his training expertise statewide. MAPTS was the result and Steff y was named its first—and still only—director. The U.S. Department of Labor authorized the new organization to offer mine safety and health certification to the miners of Alaska the same year. “We were formed because there were needs of students of industry that were not being met,” Steff y says. “Our charge was to meet those needs in any way possible.” Steff y says mining in the state at the time was mostly performed by placer miners with small operations. First-time ever environmental regulations and a stubbornly low price of gold led to the abandonment of many mines. A move to re-open Juneau’s A-J Mine—the same used for miner training—succumbed to low gold prices and local opposition. But it’s a whole new ballgame now, with the price of gold and other precious metals reaching historically high levels as a hedge

A trainer—from an old class—showing students in an entry level mine laborer class how to run a jack-leg drill in the UAS Center for Mine Training mine lab at the AJ Mine. Photo courtesy of UAS School of Mine Training

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

129 ■

Photo courtesy of UAS School of Mine Training

Bokan can help the U.S. with its national security/rare earth problems, and operations at other sites should come later, Steff y says. He credited the state government with aiding the project by helping to identify possible sites for mills to process ore. “The Alaska mining industry has the best safety record in the country,” Steff y says. “It’s gratifying to see that Alaska (mine operators) are increasing mining employment considerably and still maintaining the best safety record going—especially the major mines have a commitment to safety that I’m really proud of.”

New Alaska Miners

John Ballard in the foreground is a Mining and Petroleum Training Service trainer. He is training a student on a simulated haul truck on the mine training simulator.

against uncertainty in “paper” markets. Resources needed by high tech manufacturing—especially rare earth elements— are in great demand. China already controls much of the world’s supply and some worry the U.S. could be shut out.

■ 130

Steff y says he sees growth in the number of mines—and mining jobs— with the discovery of about a dozen rare earth element deposits in Alaska. These include the Bokan Mountain Mine on Prince of Wales Island, near Ketchikan.

Not all Alaska mines work underground. Steff y says the next project for MAPTS is to develop a training facility for surface mining with the same hands-on features as the underground training now offered in Juneau—classroom work, practice on simulators and then practicing on real machines in real-life conditions. “Surface and underground mining are very different things,” Steff y says. “Different machines, different ideas,

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

different processes. In the next few years we want to develop a comparable center that will focus on surface mining.” Juneau is a good candidate for the underground mining center because of the underground hard-rock mining operations that are located in Southeast Alaska. The surface mining center will more likely be located closer to surface mines, such as Livengood near Fairbanks. “It has to be where the employers want it to be,” Steff y says, adding that those employers like to hire from the region when they can. During Steffy’s 33-year tenure, MAPTS has provided training to more than 100,000 students. He says they serve about 3,000 students per year in various programs. Demand for training or certification has been up 18 to 20 percent of late. At the Juneau training center, they’re even looking for future miners among high school students. With a $300,000 grant to UAS from the Hecla Greens Creek Mine, Mike Bell was able to establish a training course that earned students college and high school credits: “Introduction to Mining Operations.” The Juneau high school students attend classes after school two nights a week and then during two weeks in the summer when they spend time with real miners at a real mine. They call it “The Hecla Greens Creek Academy.” The 10 high school students who completed the first Academy were all offered summer internships at the mine, Bell says. Five of his young students received scholarships to pay for training as diesel mechanics. In fact, finding trained diesel mechanics for mining equipment has become so difficult that some of Bell’s adult students were paid wages to attend classes. Most adult students get their training free, and some may qualify for help with other expenses. Mike Bell is proud of the leg-up the program offers all his students. “We have a unique opportunity (at the center) in Juneau,” he says. “We have a mine, we have a school and its facilities. We have the (equipment) simulators and we have this partnership directing students to us. So it all works pretty darn well.”  Will Swagel is an author living in Sitka.

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

131 ■

special section

Mining

Crockett Gets the Job Done New AMA executive director already tested in ﬁre BY MARY LOCHNER

eantha Crockett grew up with Alaska resource development. Her mother, Marilyn Crockett, was director of the Alaska Oil and Gas Association, and her dad ran a transportation company. When Permanent Fund Dividend time came around, the family put the money into college savings accounts, except for

Deantha Crockett

■ 132

Pebble Limited Partnership Chief Executive Officer John Shively was president of the board at RDC at the time. “We had a position open and the executive director came to me and said: ‘We should probably be advertising this position, but I want to hire Deantha. And I said, ‘Hire Deantha.’” Shively says. “She turned out to be a really outstanding employee, and got experience in a vari“I recognize the importance of what ety of different issues around the state, resource development does for our particularly mining.” Crockett worked as state.” an RDC project coor—Deantha Crockett dinator for eight years Alaska Miners Association Executive Director starting in 2005. Her main focus areas were $50 each child was allowed to spend. mining and tourism. Both industries sufCrockett’s mother would be sure to fered political onslaughts during her tenimpress upon her children that the ure. dividend is a benefit from Alaska’s oil In 2006, voters approved the Cruise and gas industry. Ship Bed Tax. “The oil industry literally put food on “It drove the costs up and made it so my table and sent me to college,” Crock- the cruise companies took their ships ett says. “I recognize the importance of out of Alaska and sent them somewhat resource development does for where else,” Crockett says. In response our state.” to that initiative, she started the Alaska Crockett, the new executive direc- Alliance for Cruise Travel, or Alaska tor of the Alaska Miners Association ACT. Under the new organization, she since June 1, has spent her adult life brought the cruise ship industry and working for resource development in the businesses that depend on it under the state. As a political science ma- one umbrella, and actively fought for a jor at University of Alaska Anchor- reduction in the new tax. After a lot of age, she spent two years interning at outreach and hard work, Alaska ACT the Resource Development Council achieved the compromise it was lookfor its annual conference in Novem- ing for when the Alaska Legislature ber. As a volunteer helping with the passed a bill to reduce the head tax by conference’s scheduling and logistics, $11.50 per person in 2010. she made a strong impression on the “It got ships to return to Alaska,” Crockcouncil. After she graduated college, ett says, and Alaska ACT, the organizashe was the council’s fi rst pick for a tion she founded, is still around today. new project coordinator. Deantha also led the RDC’s efforts

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

“When she takes on a job, she does it, she’s a very hard worker.” —John Shively CEO Pebble Partnership

on fighting Ballot Measure 4 in 2008, which proponents says would have barred any new mines larger than 640 acres from going forward if they would adversely impact the health of people or salmon. The proponents of the measure hoped to shut down the Pebble Mine project before it got off the ground. A legal opinion from the State of Alaska Division of Legal and Research Services says the wording of the bill was unclear, and that its vague language meant it could apply to expansions on existing mines, as well. Proponents of the measure framed it as the “Clean Water Initiative.” Crockett led the RDC’s efforts in supporting a successful campaign in opposition to the measure, called “Alaskans Against the Mining Shutdown.” Ballot Measure 4 was defeated by a wide margin, 57 percent against to 43 percent in favor. “When she takes on a job, she does it,” Shively says. “She’s a very hard worker. And I think she doesn’t really get thrown by surprises. If something comes down the road that’s different or unexpected, she just deals with it.” Crockett says she doesn’t have much talent for resting on her laurels. “I like for things to get done,” she says. “Almost to a fault; I get very irritated when things are talked about and talked about but don’t actually get done.” Her first test in fire as the new executive director at AMA came with Ballot Measure 2, which proponents touted as a restoration of Alaska’s Coastal Management Program. “When she took the job, I don’t think that was something that she necessarily thought would consume her life the way it did,” Shively says. “But it became a very important issue for the mining industry and so she put a huge amount of effort into the ‘Vote No’ campaign.” Crockett says she was already well familiar with Coastal Management Program issues, having worked on a proposed program at the RDC.

“Everyone worked long, hard hours with the Legislature to try to make this perfect program so it wouldn’t go away in 2011, and at the end of the day, the Legislature couldn’t agree on the terms and it failed,” she says. “And suddenly this concept of a Coastline Management Program came flying back with a totally different program than the one we were trying to save and keep going previously. It was a slap in the face to the Legislature and the people who worked so hard on it, because the ballot measure was such a bad bill for everyone in Alaska.” Shively says Crockett was instrumental in getting the AMA to support the “Vote No” campaign. “As a new executive director, she persuaded the Miners Association to commit $150,000 to that campaign, which I suspect is more than they’ve ever contributed to any campaign. And then she was willing to make sure the investment was worth it.” Crockett says it wasn’t just the big mining projects in the state she was thinking about it when she worked to fight Ballot Measure 2. It was AMA’s small-mining members, the mom-and-pop operations, who couldn’t afford to fight the measure or deal with its consequences. “I felt we really needed to do this, to defend our members and what’s at stake for them,” she says. Crockett’s a fighter, but she’s got a soft side, too. “I cannot stand to hurt someone’s feelings,” she admits. “So I’m very careful and deliberate. Sometimes you have to do hard things or say hard things, and I’m very careful with how I go about them, because I cannot stand to hurt somebody or make them feel bad.” Shively says it’s Crockett’s gift for working with people that’s helped propel her career. She says she has an unusual ability that helps in that regard. “I’m very good at remembering the names and details of people,” she says. “If I haven’t seen them in 10 years, I still remember that last conversation I had with them.” When asked what she likes to do in her leisure time, Crockett laughed and says, “My leisure time is usually taking a nap, and it’s wonderful.” But she also likes to travel, especially to her winter home in Texas, she says. And she

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

133 ■

“The stars are almost aligned for the mining industry to boom in Alaska, but unfortunately, we’ve got organized opposition against our projects.” —Deantha Crockett Alaska Miners Association Executive Director

loves the Big Outdoors – going hiking and fishing. Her family is very tightknit, she says, and they often meet up for family gatherings at their cabin in Big Lake. In the winter they’ll do a lot of snowmachining, and in summer it’s boating and water sports.

Crockett says it’s a good time for the mining industry in Alaska. “The stars are almost aligned for the mining industry to boom in Alaska,” she says. “But unfortunately, we’ve got organized opposition against our projects.”

She says changing public perception about the mining industry as a whole is going to be one of the AMA’s most significant challenges in the coming years. “We’re constantly attacked (by people) saying (that) our industry hurts the earth and pollutes, our industry is unsafe, foreign companies come in and take what they want and leave,” she says. “It’s not true. We are safe. We have a great environmental record. So just dealing with public perception about our industry is huge. There’s a very well-fi nanced and outspoken opposition to Pebble that has put our entire industry under a microscope, and that opposition is unnecessary at this point in my opinion. There’s not a mine. But we’re dealing with an opposition to our industry on things before they even start.” Crockett says it’s important to educate the public about what the mining industry’s track record really is, and to help them better understand the permitting process. At the same time, she says, Alaska’s mining industry has to deal with federal agencies that overstep their authority. “We’re having to fight the EPA on regulations that are unreasonable or don’t make any sense at all, that are not workable for our projects,” she says. “It’s a big challenge for the AMA.” That, and dealing with federal agencies that overreach their authority, she says. Additionally, she says, AMA’s members are dealing with the same problems of high energy prices that are affecting many Alaskans throughout the state. It’s a lot to take on, but Crockett is up for the challenge. “She was a great choice for the AMA,” Shively says.  Mary Lochner is a journalist living in Eagle River.

■ 134

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

SUPPORT

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

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

Industry-Leading Customer Service In Washington: 800-562-4735 In Alaska: 800-478-7000

ABM’s 2012 Mining Directory MINING Company Company

Top Executive Top Executive

Anchorage Sand & Gravel 1040 O'Malley Rd. Anchorage, AK 99515 Phone: 907-349-3333 Fax: 907-344-2844

Dale Morman, Pres.

Andover Mining Corp. 999 W. Hastings St., Suite 890 Vancouver, BC V6C 2W2 Phone: 604-682-2168 Fax: 604-682-2169

Gordon Blankstein, CEO/Chairman

Avalon Development Corp. PO Box 80268 Fairbanks, AK 99709 Phone: 907-457-5159 Fax: 907-455-8069

Curt Freeman, Owner/Pres.

Bering Shai Rock & Gravel PO Box 196 Unalaska, AK 99685 Phone: 907-581-1409 Fax: 907-581-3409

Diane Shaishnikoff, Owner/Office Mgr.

Coeur Alaska Inc. 3031 Clinton Dr., Suite 202 Juneau, AK 99801 Phone: 907-523-3300 Fax: 907-523-3330

Wayne Zigarlick, VP/General Manager

Constantine Metal Resources Ltd. 800 W. Pender St., Suite 320 Vancouver, BC V6C 2V6 Phone: 604-629-2348 Fax: 604-608-3878

J. Macveigh, Pres./CEO

Donlin Gold 4720 Business Park Blvd., Suite G-25 Anchorage, AK 99503 Phone: 907-273-0200 Fax: 907-273-0201

Stan Foo, General Manager

FreeGold Ventures Limited 700 W. Georgia St., Suite 888 Vancouver, BC V7Y 1G5 Phone: 604-662-7307 Fax: 604-662-3791

Kristina Walcott, Pres./CE0

Full Metal Minerals Ltd. 409 Granville St., Suite 1500 Vancouver, BC V6C 1T2 Phone: 604-484-7855 Fax: 604-484-7155

Michael Williams, Pres./Director

Full Metal Zinc Ltd. 409 Granville St., Suite 1500 Vancouver, BC V6C 1T2 Phone: 604-484-7855 Fax: 604-484-7155

Steve Hayes, Pres./CEO

Kennecott Exploration 224 N. 2200 W. Salt Lake City, UT 84116 Phone: 801-238-2400 Fax: 801-238-2430

Russ Franklin, Expl. Mgr. Copper

Kinross Fort Knox PO Box 73726 Fairbanks, AK 99707 Phone: 907-488-4653 Fax: 907-490-2290

Dan Snodgress, VP/Gen. Mgr.

■ 136

AK Estab. Empls. Empls. Estab.

Activity| Recent Projects Mining DistrictBusiness | Commodity

1938

100

Mining District: Matanuska-Susitna Borough Commodity: Sand, Gravel Recent Projects: AS&G supplies aggregates for private work as well as the D.O.T., Municipality and D.O.D.

2006

Mining District: Ambler Mineral Belt Commodity: Precious and Base Metals - Silver, Copper, Lead, Zinc, Gold Recent Projects: 2012 drill program on SUN property in Ambler Mineral Belt Alaska followed by National Instrument 43-101 and PEA.

1985

Mining District: Multiple Commodity: Precious Metals, Base Metals, Platinum Group Metals, Rare Earth Metals Recent Projects: Golden Summit, Vinasale, Rob, Tetlin, Duke Island.

2004

Mining District: Aleutian Chain Commodity: Spec rock, Rip Rap, Armor Stone Recent Projects: City of Unalaska road repaving project; crushed all material for hot mix asphalt, provide storage, truck broker for end dump trucks and provide grader, loaders and other equipment leases for project. Mile 5 Captains Bay Rd.

1987

300

2006

Mining District: Haines Commodity: Base Metals, Copper, Zinc, Gold, Silver Recent Projects: The 100% owned Palmer VMS deposit discovery is located in coastal Alaska and hosts a NI43-101 compliant 4.12 million tonne inferred resource grading 2.01% copper, 4.79% zinc, 0.30 g/t gold and 31 g/t silver (using an NSR cut-off of US$75/t) that is open to expansion.

2008

Mining District: Aniak Mining District Commodity: Gold Recent Projects: Began permitting July 2012.

1985

Mining District: Fairbanks,Goodpaster, and McGrath Commodity: Gold Recent Projects: Golden Summit Project - 20,000 metre drill program in progress. Vinsale Gold Project - 3,500 metre drill program completed in 2012.

2003

Mining District: Multiple Commodity: Copper, Gold Recent Projects: The Pyramid Project with joint venture partner Antofagasta Minerals (49%/51%) recently completed the third drill season at the 37,296 hectare Pyramid Porphyry project in the Alaskan peninsula. The copper-gold-molybdenum system is only 8 kilometres from tidewater.

2011

Mining District: Forty Mile Commodity: Zinc, Lead, Silver Recent Projects: Forty Mile project encompasses numerous zinc-lead-silver targets plus prospective gold and copper showings. Exploration at LWM and Fish has resulted in the discovery of a previously unknown mineral district containing multiple occurrences of massive to disseminated sphalerite and galena mineralization over a 14 km trend.

1914

Mining District: Statewide Commodity: Base Metals, Precious Metals Recent Projects: Kennecott's most recent exploration is early-stage copper exploration in southwest Alaska.

1992

560

Mining District: Fairbanks Commodity: Gold

anchsand@anchsand.com www.anchsand.com

info@andoverventures.com www.andovermining.com

avalon@alaska.net www.avalonalaska.com

Dianeshai@hotmail.com www.beringshairock.com

jtrigg@coeur.com www.KensingtonGold.com

info@constantinemetals.com constantinemetals.com

info@donlingold.com www.donlingold.com

ir@freegoldventures.com freegoldventures.com

info@fullmetalminerals.com www.fullmetalminerals.com

info@fullmetalzinc.com www.fullmetalzinc.com

www.riotinto.com

Mining District: Juneau Commodity: Gold Recent Projects: Coeur Alaska recently completed several projects to improve longterm operational efficiency and consistency, including the underground paste backfill plant, advancing underground development, and construction of a new administrative building, warehouse, worker dormitory and expanded kitchen and dining facilities.

info@kinross.com www.kinross.com

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

ABM’s 2012 Mining Directory MINING

Company Company

Top Executive Top Executive

Kiska Metals Corp. 510 Burrard St., Suite 575 Vancouver, BC V6C 3A8 Phone: 604-669-6660 Fax: 604-669-0898

Jason Weber, Pres./CEO

Liberty Star Uranium & Metal Corporation 5610 E. Sutler Ln. Tucson, AZ 85712 Phone: 520-425-1433

James Briscoe , CEO/Chf.Geologist

Millrock Resources Inc. PO Box 200867 Anchorage, AK 99520 Phone: 907-677-7479 Fax: 907-677-3599

Greg Beischer, Pres./CEO

Nova Copper 200 Granville St., Suite 2300 Vancouver , BC V6C 1S4 Phone: 604-638-8088 Fax: 604-669-6272

Rick Van Nieuwenhuyse, Pres./CEO

NOVAGOLD 200 Granville St., Suite 2300 Vancouver, BC V6C 1S4 Phone: 604-669-6227 Fax: 604-669-6272

Greg Lang, Pres./CEO

Oxford Assaying & Refining Corp. 3406 Arctic Blvd. Anchorage, AK 99503 Phone: 907-561-5237 Fax: 907-563-8547

Toni Goodrich, VP

PacRim Coal LP 1007 W. Third Ave., Suite 304 Anchorage, AK 99501 Phone: 907-276-6868 Fax: 907-276-2395

Dan Graham, Chuitna Proj. Mgr.

Pebble Limited Partnership 3201 C St., Suite 604 Anchorage, AK 99503 Phone: 907-339-2600 Fax: 907-339-2601

John Shively, CEO

Pure Nickel Inc. 95 Wellington St. W. Toronto, ON M5J 2N7 Phone: 416-644-0066 Fax: 416-644-0069

David McPherson, Pres./CEO

Sumitomo Metal Mining Pogo LLC PO Box 145 Delta Junction, AK 99737 Phone: 907-895-2841 Fax: 907-895-2866

AK Estab. Empls. Empls. Estab.

Activity| Recent Projects Mining DistrictBusiness | Commodity

1998

Mining District: Goodpaster River Commodity: Gold, Copper, Silver Recent Projects: In 2011 an aggressive drill program of 30,300 metres to advance these discoveries was completed.

2003

Mining District: Iliamna Commodity: Copper, Gold, Uranium, Molybdenum, Others Recent Projects: Big Chunk super project southwest Alaska drilling program for porphyry copper, gold, molybdenum, silver, zinc and other metals. View 2010 NI 43 101 compliant report on website.

2008

Mining District: Alaska, Arizona Commodity: Base Metals, Gold, Precious Metals Recent Projects: Estelle - Teck JV, Council and Humble - Kinross Options to JV, AUDN Designated project - Vale, San Jose/Dry Mountain and Monsoon Options to JV - Inmet, Strategic Alliance - Altius, Uncle Sam - Crescent, AVAILABLE - AK: Bluff, Napoleon/ 40Mile, Cristo/Kahiltna, Stellar and more regional concepts., AVAILABLE - AZ: Galiuro.

2012

Mining District: Ambler Commodity: Copper Recent Projects: Focused on exploring and developing the high grade Ambler mining district, one of the richest and most prospective copper districts located in one of the safest geopolitical jurisdictions in the world. Our vision is to develop the Ambler mining district into a premier North American copper producer.

1998

Mining District: Kuskokwim Gold Belt, Nome Mining District Commodity: Gold, Placer Gold, Precious Metals, Base Metals Recent Projects: NOVAGOLD has commenced permitting on its flagship asset, the 50%-owned Donlin Gold project in Alaska. With a production profile of over 1M oz/year over the 27 year mine life, Donlin is poised to be a significant producer.

1980

Mining District: Alaska Commodity: Gold, Silver Recent Projects: We are Alaska's only local refiner of precious metals. We have worked with many mining projects around the state to ensure they are getting the highest return possible on their placer gold.

1980

Mining District: Beluga Commodity: Coal Recent Projects: PacRim Coal, LP has been continuing to work on the permitting process for the Chuitna Coal project.

2007

Mining District: Southwest Alaska - Iliamna Commodity: Copper, Molybdenum, Gold Recent Projects: Currently in advanced exploration.

1995

Mining District: Eastern Alaska Commodity: Base Metals, Gold, Precious Metals Recent Projects: Man Alaska, Salt Chuck.

Toshihito Toyoshima, Pres.

2005

330

Mining District: Goodpaster Commodity: Gold Recent Projects: Poured 2 millionth ounce of gold in 2012.

Teck Alaska-Red Dog Mine 3105 Lakeshore Dr., Bldg. A, Suite 101 Anchorage, AK 99517 Phone: 907-266-4567 Fax: 888-900-1179

Henri Letient, General Manager

1989

550

Mining District: Noatak Commodity: Base Metals, Lead, Zinc Recent Projects: Mining.

Usibelli Coal Mine Inc. 100 Cushman St., Suite 210 Fairbanks, AK 99701 Phone: 907-452-2625 Fax: 907-451-6543

Joseph Usibelli Jr., Pres.

1943

144

Mining District: Healy Commodity: Coal Recent Projects: UCM produces approximately 2 million tons of ultra low sulfur subbituminous coal in Healy, Alaska. Half of the coal is delivered to 6 power plants in Alaska and the remaining product is exported to Pacific Rim destinations. UCM has identified 700 million tons of coal on current leases in Healy.

info@kiskametals.com www.kiskametals.com

info@libertystaruranium.com libertystaruranium.com

info@millrockresources.com www.millrockresources.com

info@novacopper.com www.novacopper.com/index.asp

info@novagold.com www.novagold.com

facebook.com/oxfordmetals www.oxfordmetals.com

www.chuitnacoalproject.com

receptionist@pebblepartnership.com www.pebblepartnership.com

info@purenickel.com www.purenickel.com

reddog.info@teck.com www.reddogalaska.com

info@usibelli.com www.usibelli.com

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

137 ■

ALASKA THIS MONTH Compiled By Nancy Pounds

dining

Laurie Constantino Dishes Up Cooking Inspiration

Photo by Scott McMurran

Laurie Constantino, cookbook author and website writer, produces her version of a red pepper and tapenade tart.

laska foodies can look to a locally written website for restaurant deals, recipes, tips and inspiration. Laurie Constantino, cookbook author and blogger, also flavors the site with cooking how-tos, product reviews and interviews with other Alaska cooks. “A primary goal of LaurieConstantino.com is to help build community between Alaska food writers and enthusiasts,” she says. “I love interviewing Alaskans involved in the food industry; everyone has an interesting story to tell. Developing and testing recipes, and making them easy to follow, is my passion and the website allows a great platform for sharing recipes.” Constantino traces her love of Mediterranean cooking back 30 years when she met her husband, Steven, a Greek-American, in Bethel where she served as the district attorney. She learned Greek cooking from spending time with her in-laws in Limnos, a rural Greek island. Today, she and her husband split time between Anchorage and their family home in Limnos. Her book, “Tastes Like Home: Mediterranean Cooking in Alaska,” was published in 2007, and Constantino started a website that year using a blog service template to market the book. In early 2011, she launched a new website, Laurie Constantino: Recipes and Resources for Food Lovers, to provide a broader range of information, a “single-site voice for food in Alaska,” she says. Constantino enjoys responding to readers’ cooking questions and testing food products, recipes and cooking equipment. The site’s twitter feed, which lists current restaurant specials, is popular with readers. For home cooks, the site provides easy-to-follow directions for recipes, which are listed by ethnicity, ingredient and meal course. “Alaska home cooks can use the various indices to find delicious recipes for whatever food is in the refrigerator or was impulse bought at a farmer’s market,” Constantino says.  (laurieconstantino.com)

■ 138

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

ALASKA THIS MONTH Compiled By Nancy Pounds

trAVel

Photo courtesy of Murder Mystery USA Inc.

Mystery Action Unfolds in Homer

Crime scene evidence.

laska mystery fans can test their skills while participating in an interactive Murder Mystery Weekend on the Kenai Peninsula. Murder Mystery Weekend is set for Nov. 9-11 at Land’s End Resort on the Homer Spit. The event is run by Murder Mystery USA Inc., which produces similar events nationwide, as well as murder mystery dinner theater, team-building and corporate events. The three-day, two-night interactive event includes an appetizer reception Friday night; breakfast, lunch, appetizers and dinner on Saturday; and brunch on Sunday. Saturday’s schedule allows for free time to visit favorite Homer spots. Actors perform the murderous scenario and provide clues for event participants to help solve the crime. Detective Lt. Sonny Zukow will be the main character at the Homer show this year. Keith O’Leary, executive producer for Murder Mystery USA Inc., will direct and host the Homer event. O’Leary and Margo Morrision have produced live mystery productions since 1985. “We have been doing Murder Mystery Weekends once or twice a year at Land’s End in Homer for the past 15 years,” O’Leary says. “Out of the 35-plus hotel properties we work with around the country, Land’s End is one of my favorite locations.” According to O’Leary, event planners chose Land’s End Resort because of the hotel’s interesting location and dining offerings. About 60 to 70 people typically participate in the murder mystery weekends, including many couples, he says, noting that for the Homer event about 90 percent of participants come from Alaska with the rest traveling from the Lower 48.  (murdermystery.com)

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

139 ■

ALASKA THIS MONTH Compiled By Nancy Pounds

entertAinment

Photos courtesy of Anchorage Symphony Orchestra

Symphony Performance Features Cyrano’s Actors’ Interlude

Elmar Oliveira will be the featured violinist with Anchorage Symphony Orchestra’s performance of Felix Mendelssohn’s Violin Concerto.

he Anchorage Symphony Orchestra will perform major pieces from composers Felix Mendelssohn and Anton Bruckner for this month’s classic concert, “Epic Evening.” The concert begins at 8 p.m. Nov. 10 at the Alaska Center for the Performing Arts Atwood Concert Hall. Elmar Oliveira will be the featured Oliveira guest violinist. He will accompany the symphony’s performance of Mendelssohn’s Violin Concerto. Oliveira previously performed in Alaska at the Sitka Music Festival in September. “These are two very epic pieces,” says Jennifer Cargile, ASO’s director of marketing and public relations. The Mendelssohn Violin Concerto is upbeat and is considered a significant piece for symphony violinists to play, Cargile says. Actors from Cyrano’s Off Center Playhouse in Anchorage will perform a scene from Alaska playwright Dick Reichman’s play, “Bruckner’s Last Finale.” Although the symphony will perform Bruckner’s most famous piece, “Symphony No. 7,” the scene will depict the eccentric composer, Cargile says. She also hopes the actors’ performance will help audience members connect with the Austrian composer’s music. Music Director Randall Craig Fleischer will lead symphony members in their first performance of Bruckner’s “Symphony No. 7,” according to ASO officials.  (anchoragesymphony.org)

■ 140

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

EVENTS CALENDAR

Compiled By Alaska Business Monthly Staff

AnchorAge 13-14

Steve Martin and the Steep Canyon Rangers

Comedian Steve Martin pairs up with the Steep Canyon Rangers for this combination bluegrass and comedy entertainment event. Alaska Center for the Performing Arts, 8 p.m. myalaskacenter.com

On the Wings of Eagles

Guest speaker Leslie Fried, Alaska Jewish Museum curator, tells the story of Operation Magic Carpet and the Alaska pilots who flew refugees over enemy territory to safety in Israel. This event is part of the Cook Inlet Historical Society’s monthly lecture series. Anchorage Museum at Rasmuson Center, 7:30 p.m. anchoragemuseum.org

17-18

Christmas Arts & Crafts Emporium

This event is a showcase for Alaskan artists and crafters to display and sell their products during the holiday season. Dena’ina Civic and Convention Center, 10 a.m. to 6 p.m. Saturday and 11 a.m. to 5 p.m. Sunday. anchoragemarkets.com

20-24

Carrs/Safeway Great Alaska Shootout

This college basketball event includes both a women’s tournament, on Tuesday, and men’s, running from Wednesday through Saturday. Sullivan Arena, various times. goseawolves.com

Holiday Tree Lighting Ceremony

Hosted by AT&T Alaska and the Anchorage Downtown Partnership, this annual event includes musical guests, free hot cocoa and cookies, a costumed character parade, and a meetand-greet with Santa at 6:30 p.m. Town Square Park, 5:30 p.m. anchoragedowntown.org

23-25

The Nutcracker Ballet

Featuring the Cincinatti Ballet as well as local dancers and musicians, this collaborative event is a community tradition for more than 20 years. Marching toy soldiers, waltzing snowflakes, mischievous mice and Tchaikovsky’s enormously popular score are quintessential hallmarks of the holidays. Alaska Center for the Performing Arts, 2 p.m. and 7:30 p.m. alaskapac.centertix.net

FAirbAnks 7-10

Athabascan Fiddlers Festival

The 30th Annual Athabascan Fiddlers Festival is an annual gathering of Native musicians for a musical celebration. Chief David Salmon Tribal Hall in Fairbanks. Contact: 907-388-5651, or find The Athabascan Fiddlers Association on facebook.com

9-11

Fairbanks Holiday Marketplace

This annual marketplace is a one-stop Christmas shopping extravaganza for Fairbanks and the surrounding areas. Shop hand-made soaps, beaded earrings, imported wool sweaters, and more. Last year the show had more than 175 vendors. Free parking. Carlson Center, 12 p.m. to 8 p.m. Friday; 10 a.m. to 7 p.m. Saturday; 11 a.m. to 5 p.m. Sunday. fairbanksevents.com

26-27

Wookie Spiel

This year the annual Rookie Spiel is “Star Wars” themed. It generally has 32 teams of four; teams consist of mixed rookie and experience curlers, with age ranges generally from 10 to 70. The event focuses on fun and learning the sport of curling, with commemorative shirts, meals and prizes. Registration required. Fairbanks Curling Club, various times. curlfairbanks.org

hAines 14-18

Alaska Bald Eagle Festival

This event, sponsored by the American Bald Eagle Foundation, celebrates the peak of the winter gathering of eagles. Events include

educational seminars, tours, photography and carving workshops, guest speakers and family events. American Bald Eagle Foundation Building, various times. baldeagles.org

Lighting of the Library Fundraiser

Sponsored by the Friends of Haines Borough Library, this event raises money for the library. Events include music, food, kids’ art project and the lighting of the tree. Haines Library, 7 p.m. haineslibrary.org

homer 24

Stocking Stuffer Party

This even includes holiday shopping, cookie decorating, graham cracker houses, a giant Christmas stocking, raffle, pictures with Santa and other activities for children. Pratt Museum, 1 p.m. to 4 p.m. homeralaska.org

JuneAu 11/9-12-9

Oklahoma!

The Perseverance Theater presents its rendition of the Rogers and Hammerstein classic. Perseverance Theatre, 7:30 p.m. perseverancetheatre.org

23-25

Alaska-Juneau Public Market

This Christmas gift show features 150 to 175 vendors from around Alaska. Items for sale include Native handicrafts, handmade soaps, knives, garments, wild berry products and toys. Centennial Hall and Juneau Arts & Culture Center, various times. metcomalaska.com

sitkA 10

Solstice in China Town

This is the annual fund-raising event of the Alaska Raptor Center, Alaska’s foremost bald eagle hospital and education center. See what fortune awaits when you open your fortune cookie. Alaska Raptor Center, 5:30 p.m. alaskaraptor.org

9-11

Artisans Market

This event opens with a gala Friday night that includes free wine and hors d’oeuvres, continues with food through Saturday and Sunday, and features 100 percent Alaskan-made handcrafts. Harrigan Centennial Hall, 4 p.m. to 9 p.m. Friday; 10 a.m. to 6 p.m. Saturday; 10 a.m. to 5 p.m. Sunday. travelsitka.com

tAlkeetnA 10

Craft Bazaar

This annual holiday craft bazaar is hosted by the Upper Susitna Seniors. Upper Susitna Senior Center, 10 a.m. to 4 p.m. talkeetnachamber.org

Motorized Parade Of Lights

This bright and colorful parade of lit vehicles ranges from Subarus to the local fleet of garbage trucks and snow plow equipment. Register your vehicle to be part of the parade, or enjoy it from the sidelines as it goes by twice, as is the custom in Talkeetna. Registration: Swiss Alaska Inn, 6 p.m. Parade: Main Street, 6:30 p.m. to 7:15 p.m. talkeetnachamber.org

VAldez 6

The Deadly Gentlemen

Sponsored by the Valdez Arts Council, this bluegrass group performs, as they call it, epic folk and grasscore. They will be playing selections from their new CD “Carry Me to Home,” which is mostly reinventions of traditional songs. Valdez Arts Council Building, 7 p.m. valdezartscouncil.org

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

141 ■

www.greenstarinc.org

Congratulations to our newest awarded Green Star business, Pebble Limited Partnership!

Alaska’s Premier Photobooth Rental Company

color or

black +white photos

akphotobooth.com info@akphotobooth.com Real Classic Photobooths Customized for corporate holiday parties, events, meetings, or charity sponsorships

Join our email list! Just send your email address by text message: Text ABM to 22828 to get started

Alaska

PHOTOBOOTH COMPANY

N o. 907.865.9141 • 907.479.0010 Anchorage • Fairbanks • Girdwood • �e Valley

Coming January 2013! ABM’s Power List is an invaluable year-round reference providing current data on more than a thousand companies doing business across Alaska. Be sure to get your copy! 501 W. Northern Lights Blvd., Anchorage, AK 99503-2577 907-276-4373 • Toll Free 800-770-4373 • akbizmag.com ■ 142

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

ALASKA TRENDS

By Paul Davidson

Alaska and U.S. Manufacturing Employment

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

71 19 79 19 87 19 95 20 03 20 11

anufacturing is defined in the North Manufacturing Employment American Industry 1939-2011 Classification System as the mechanical, physical, or chemi- 25 cal transformation of materials into new products. The scale of the manufacturing sector rang- 20 es from large industrial factories to small in-house bakeries. 15 The latest data shows an unemployment rate of 7.3 percent for U.S. (Millions) the manufacturing sector as of 10 Alaska (Thousands) August. Roughly 69 percent of Alaska’s manufacturing sec5 tor consists of fish processing. Manufacturing employment in Alaska makes up approxi0 mately 3.7 percent of the state’s yearly employment; this ratio is 58.67 percent less than that of the greater United States during the same period. the dataset. The last decade shows the largest decline in The chart shows seasonally adjusted manufactur- manufacturing on this record. Manufacturing employing employment for the U.S. in millions, and Alaska ment in Alaska shows an earlier decline than the greater in thousands, from 1939 to 2011. U.S. manufacturing U.S. with less decline and some increases over the past boomed during WWII and shows significant flux over few years.  Source: U.S. Bureau of Labor Statistics

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

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

143 ■

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 Services Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Services & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Unemployment Rate Alaska Anchorage & Mat-Su Fairbanks

■ 144

By Paul Davidson

Units

Period

Latest Report Period

Previous Report Period (revised)

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

1st Q12 1st Q12 1st Q12 1st Q12

33,808 13,194,047 205.22 228.85

33,474 13,084,207 202.58 226.28

32,413 12,915,008 200.28 223.60

4.09% 2.89% 2.47% 2.35%

Number Filed Number Filed Number Filed

July July July

77 54 12

54 36 12

85 65 13

0.00% 3.85% -29.41%

Thousands Thousands Thousands Thousands Thousands

July July July July July

349.05 183.53 43.64 42.22 40.56

346.33 186.04 43.75 39.95 39.30

349.60 185.66 44.79 42.04 39.48

5.76% -0.44% 2.15% 21.29% 20.50%

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

July July July July July July July July July July July July July July July July July July July July July July July July July July July July July July July July July

351.0 54.1 296.9 17.4 16.9 13.5 16.0 20.7 19.3 69.2 6.9 37.5 6.5 10.8 24.8 6.5 6.5 4.1 15.7 29.0 46.2 32.5 40.0 10.5 23.0 11.1 79.2 17.0 24.7 5.8 37.5 18.9 4.5

349.6 48.7 300.9 17.2 16.7 13.4 15.3 16.2 12.6 68.2 6.4 37.1 6.5 10.6 24.7 6.5 6.5 4.2 15.5 29.8 46.4 32.4 38.8 9.6 23.0 11.5 84.2 16.9 25.0 6.3 42.3 23.8 4.1

355.3 61.0 294.3 17.4 16.7 13.6 19.1 25.0 17.7 69.3 6.7 37.9 6.6 10.3 24.8 6.4 6.6 4.5 15.0 28.3 42.4 31.7 41.3 8.3 24.5 11.6 79.1 17.7 24.9 6.0 36.4 17.8 3.9

-0.96% -8.77% 0.61% 4.82% 4.32% 1.50% -12.09% -15.51% -6.76% 0.73% 2.99% 0.00% -1.52% 6.93% 1.22% 3.17% 0.00% -2.38% 3.29% -0.68% 4.76% 2.52% -0.99% -7.08% 0.00% -0.89% -0.75% -5.56% -0.80% -3.33% 1.63% 3.85% 9.76%

Thousands Thousands Thousands Thousands Thousands

July July July July July

376.35 196.73 46.74 44.96 43.82

374.91 199.75 46.97 42.82 42.75

375.28 198.37 47.70 44.59 42.60

0.34% -0.39% -0.58% 2.09% 0.66%

Percent Percent Percent

July July July

7.3 6.7 6.6

7.6 6.9 6.9

6.8 6.4 6.7

7.35% 4.69% 8.20%

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

Year Ago Period

Year Over Year Change

ALASKA TRENDS

By Paul Davidson

Units

Period

Latest Report Period

Previous Report Period (revised)

Percent Percent Percent

July July July

6.1 7.4 8.6

6.7 8.1 8.4

5.7 7.3 9.3

7.02% 4.23% -7.53%

Millions of Barrels Billions of Cubic Ft. $ per Barrel

July July July

12.87 8.93 103.75

14.79 8.71 98.06

14.04 8.54 114.47

-24.78% -22.64% -6.60%

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

July July July July July

6 1944 1,593.35 27.43 0.93

7 1972 1,596.16 28.05 0.93

6 1900 1,570.67 37.92 1.19

-14.29% 13.15% 5.43% -10.87% -24.89%

Millions of $ Millions of $ Millions of $

July July July

30.62 16.94 13.68

34.50 17.33 17.17

32.00 11.63 20.37

-24.58% 243.12% -61.64%

Total Deeds

July

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

Thousands Thousands

July July

624.58 119.08

544.28 101.27

655.57 107.51

-4.73% 10.76%

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 $

July July July July July July July

40,856.70 41,648.00 64.5 464.6 140.5 32.40 173.9

40,333.10 41,708.30 (45.7) 826.9 24.7 51.50 732.9

40,137.50 40,705.80 287.0 (67.0) 132.9 0.2 (339.3)

1.78% 0.06% -96.99% -93.18% -40.31% -91.97% -96.01%

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 $

1st Q12 1st Q12 1st Q12 1st Q12 1st Q12 1st Q12 1st Q12 1st Q12 1st Q12

2,085.52 38.36 138.30 1,124.51 7.98 1,820.76 1,775.89 509.26 1,266.63

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

2,050.03 51.85 158.58 1,098.51 6.21 1,796.24 1,758.69 643.96 1,114.74

-0.64% -12.03% -11.01% 0.05% -35.51% -1.57% -1.87% -3.63% -1.15%

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

July July July July July

79.06 1.01 0.64 0.81 6.32

79.24 1.03 0.64 0.80 6.32

79.44 0.96 0.62 0.70 6.45

-4.29% 2.66% 3.31% 10.88% -3.98%

Indicator

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

Year Ago Period

1074

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

Year Over Year Change

70.48%

145 ■

AdVertisers indeX AES Alaska Executive Search ....................... 133 Alaska Air Cargo .....................................................50 Alaska Air Transit ..................................................138 Alaska Dreams Inc................................................127 Alaska Earth Sciences ........................................114 Alaska Enterprise Solutions.............................43 Alaska Housing Finance Corp. ..........................3 Alaska Interstate Construction LLC ........123 Alaska Rubber ...................................................... 120 Alaska Ship & Drydock .......................................59 Alaska Tobacco Control Alliance ................ 21 Alaska Trust Co. .......................................................29 Alaska USA Federal Credit Union.................17 American Hyperbaric Center ........................131 American Marine / PENCO............................143 Arctic Controls .........................................................63 Arctic Office Products (Machines) .............46 Arctic Slope Telephone Association ..........46 AT&T ................................................................................11 Bering Shai Rock & Gravel ...............................63 Boart Longyear........................................................113 Capture the Fun Alaska LLC .........................142 Carlile Transportation Systems......................35 Central Environmental Inc. ............................. 41 Chris Arend Photography ..............................146 Construction Machinery Industrial LLC........................................................2

■ 146

Cook Inlet Tug & Barge Inc. ..............................79 Craig Taylor Equipment .....................................115 Crowley.......................................................................105 Cruz Contruction Inc. ........................................121 Design Alaska ..........................................................114 Donlin Gold ................................................................117 Dowland-Bach Corp. .........................................107 Dynamic Properties .............................................115 EDC Inc. .........................................................................42 ERA Alaska ...................................................................51 ERA Helicopters .......................................................61 ESS Support Services / ESS Labor Services......................................110 Fairweather LLC ................................................ 100 First National Bank Alaska ..................................5 GCI ....................................................................33, 47, 61 Golden Valley Electric Association.............38 Golder Associates Inc. ......................................... 67 Granite Construction ...........................................85 Green Star Inc. .......................................................142 IMPLUS Footcare LLC .........................................25 JENNMAR ..................................................................111 Judy Patrick Photography .............................110 Kendall Ford Wasilla ..........................................122 Kinross Fort Knox.................................................125 Last Frontier Air Ventures ..............................139 Leemar Manufacturing Inc............................... 77

Lynden Inc. ..................................................................27 Matanuska Susitna Borough ........................101 Microcom ................................................................. 106 Mowat Construction Co. ...................................87 MT Housing Inc. ....................................................130 Municipal Light & Power....................................38 N C Machinery ........................................................135 NALCO Energy Services ................................108 NCB .................................................................................30 Northern Air Cargo ......................................22, 23 Northern Industrial Training..........................88 Northrim Bank ...........................................................31 NTCL ..............................................................................131 Offshore Systems Inc............................................55 Olgoonik Development Corp. ........................56 Orica Alaska...............................................................117 Oxford Assaying & Refining Inc. ............... 109 Pacific Alaska Freightways................................75 Pacific Pile & Marine ................................8, 9, 10 Pacific Rim Media / Smart Phone Creative...............................142 Paramount Supply...............................................142 Parker, Smith & Feek...........................................147 Pebble Partnership .............................................103 PenAir .............................................................................52 Personnel Plus ................................................13, 138 PND Engineers Inc. ................................................86

Polar Supply Co .................................................... 126 Procomm Alaska ....................................................134 Resource Development Council....................53 RSA Engineering Inc. ...........................................88 Seekins Ford Lincoln Fleet................................ 57 SGS..................................................................................119 Shoreside Petroleum .............................................15 Sitka Convention & Visitors Bureau ...........15 State of Alaska DNR Dam Safety Program ......................129 Stellar Designs Inc. ..............................................142 STG Inc. .........................................................................44 Taiga Ventures ........................................................116 Teck Alaska Inc. ........................................................99 The Growth Company .....................................108 The Historic Anchorage Hotel .....................139 The Superior Group ..............................................74 The Tatitlek Corp. ...................................................86 Totem Ocean Trailer Express...........................73 Tutka LLC ......................................................................74 UMIAQ ...........................................................................58 URS Corp. ...................................................................116 Usibelli Coal Mine Inc. .....................................108 Washington Crane & Hoist ..............................39 Waste Management ..............................................19 Wells Fargo ..............................................................148 WHPacific ....................................................................63

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

Working Shoulder To Shoulder With You

Different by choice. Unique by tradition. INSURANCE

•

SURETY

•

EMPLOYEE

Parker, Smith & Feek is proud to be National Underwriter’s Agency of the Year. 4000 Old Seward Hwy., Suite 200 | Anchorage, AK 99503 | 907.562.2225

BENEFITS

with 26 years in Alaska

2233 112th Avenue NE | Bellevue, WA 98004 | 425.709.3600

www.psfinc.com

Bike frames I know. It’s managing my cash flow that could use some fine tuning.

Support from America’s #1 Small Business Lender As a small business owner, you’re important to your community. You’re also important to us. So if your business ever needs financial support or guidance, we’ll be ready to talk. Wells Fargo offers a range of solutions to improve your cash flow, manage expenses, and even find the resources you need to help you grow. As the #1 small business lender for the last ten years*, we’re committed to helping you find customized solutions that can help your business succeed. To learn more, start a conversation with us today. Stop by, call 1-800-35-WELLS, or visit wellsfargo.com/biz.