Alaska Business Monthly September 2015 by Alaska Business

Telecom | Housing | Energy | Arctic Infrastructure | Tugs & Barges

September 2015

$3.95

Alaska’s Budget Crisis:

MYTH or REALITY? ALASKA LNG PIPELINE Planning the Route & the Logistics Involved SPECIAL SECTIONS

Aaron Schutt

DOYON LIMITED

Rural-raised Native leader with Alaska’s future in mind

Alaska Native Business Building Alaska

September 2015 TAB LE

DEPARTMENTS From the Editor �� 7 Right Moves ��132 Inside Alaska Business ��134 Agenda ��137 Alaska This Month ��138 Events Calendar ��141 Alaska Trends ��142 Ad Index �� 146

CONTENTS ABOUT THE COVER Doyon, Limited President and CEO Aaron Schutt is featured on the cover of the September issue of Alaska Business Monthly, our annual Alaska Native issue (special section begins on page 46). Schutt was raised in rural Alaska and has Alaska’s future in mind (story begins on page 66). Cover photo: © Chris Arend Photography Cover design: David Geiger

ARTICLES Port of Nome expansion construction underway over the summer.

Iconic Alaskans 8 | Jimmy Stotts By Shehla Anjum

Courtesy of TelAlaska

Telecom crews laying fiber optic cable to Seward.

Expanded in Digital Edition

Telecom & Technology 12 | Remote, Rural Alaska Telecom Providers enhance services for communities and worksites By Tracy Barbour

Insurance

16 | Small Employer Health Benefits Options Evolving with the Affordable Care Act By Tracy Barbour

Business Basics

22 | Proper Planning Prevents Predictably Poor Performance The six P’s of business exit and succession planning process By Mel B. Bannon

Economy

24 | Alaska’s Budget Crisis: Myth or Reality? Alaska’s emerging fiscal and economic opportunities By Natasha Von Imhof

78 HR Matters

34 | Real Leadership By Kevin M. Dee

THE ALASK A COUNCIL ON

Economic Education Education

35 | Why Economic Education is Important to Alaska Children and Young Adults By Daniel McCue

Energy

36 | Energy Efficiency in Rural Alaska Innovations, cutting costs, weatherizing, and using less By Rindi White

Economy

42 | A Model for Alaska’s Road to Economic Growth: Boutique Steps By Dr. Ashok K. Roy and Dr. Shiva Hullavarad

Arctic Ideas

78 | Infrastructure for Alaska’s Northern Latitudes By Rindi White 84 | Arctic Energy Needs Better Batteries Wind and sun supplement diesel and fuel oil By Mike Bradner

Transportation

88 | Alaska Tugs & Barges Delivering to Alaskans rain or shine By Tom Anderson

Alaska Business Monthly | September 2015 www.akbizmag.com

September 2015 TAB LE

special section

Building Alaska

Alaska Native Business

Russ Slaten for Alaska Business Monthly

120 Neeser Construction working on the new UAA parking structure.

112 | Alaskan Architects: Building for Community By Kirsten Swann 116 | Anchorage Housing Addressing Anchorage’s housing problems can build Alaska business By Tasha Anderson

CONTENTS

46 | Alaska Native Regional Corporations Thriving ANCSA companies amassing billions, employing thousands By Julie Stricker

66 | Aaron Schutt and Doyon, Limited Rural-raised Native leader with Alaska’s future in mind By Russ Slaten

52 | Corporate Governance Challenges Alaska Native Corporations and their Boards By Sharon Guenther Lind and Han Donker

70 | Developing Meaningful Relationships with Residents in Arctic Development By Susan Bell

Expanded in Digital Edition 54 | Emerging Alaska Native Artists Featuring contemporary artwork and business models By Shehla Anjum

120 | Statewide Construction Project Roundup By Russ Slaten

58 | ANSEP Middle School and High School Academies Preparing Alaska’s future engineers By Russ Slaten

130 | King Cove’s Road: Deadly Environmentalism For an Alaska town, the price of a wildlife refuge is paid in human lives By Ian Tuttle

60 | Village START Grants for Energy Efficiency By Julie Stricker

71 | The Case for Tribal Lands in Trust Giving back to rural Alaska communities By Mark Begich 72 | 2015 Alaska Native Regional Corporation Directory 75 | 2015 Alaska Native Village Corporation Directory

DIGITAL EXCLUSIVE Crowley in Alaska Dedicated to creating lifelong opportunities for Alaska Natives By Jenifer Kimble

ARTICLES Fairbanks Pipeline Training Center welding booth.

Oil & Gas

96 | Alaska Native Corporation Industry Activity Subsidiaries thrive providing oil and gas support services By Mike Bradner 100 | Alaska LNG Pipeline Building a Choreography of Coordinated Steps By Larry Persily

Expanded in Digital Edition 104 | Training the Next Wave of Oil and Gas Industry Workers Private, public, and partnering organizations build workforce By Kirsten Swann 6

104 108 | Alaska LNG Reviews Pipeline Route with Government Agencies Finding the best path from the North Slope to Nikiski By Larry Persily

Correction In the August article “Shell’s Arctic Response Plan” it was incorrectly stated that Alaska Clean Seas new members pay an initiation fee of $500,000, with annual dues of $50,000. Alaska Clean Seas is a cooperative organization with various membership levels.

Alaska Business Monthly | September 2015 www.akbizmag.com

FROM THE EDITOR

Alaska Native Impacts

Volume 31, Number 9 Published by Alaska Business Publishing Co. Anchorage, Alaska Jim Martin, Publisher 1989~2014

EDITORIAL STAFF

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

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

BUSINESS STAFF

President Billie Martin Vice President & Jason Martin General Mgr. VP Sales & Mktg. Charles Bell Senior Account Mgr. Anne Tompkins Senior Account Mgr. Bill Morris Account Mgr. Janis J. Plume Accountant & Ana Lavagnino Circulation 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 ALASKA BUSINESS PUBLISHING CO., INC. ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2014, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues of the Power List are $15 each. Single issues of Alaska Business Monthly are $3.95 each; $4.95 for October, and back issues are $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, PO Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change, or update online at www.akbizmag.com. Manuscripts: Send query letter to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Publishing Co., Inc. is prohibited. Address requests for specific permission to Managing Editor, Alaska Business Publishing. Online: Alaska Business Monthly is available at www.akbizmag.com/Digital-Archives, www.thefreelibrary.com/Alaska+Business+Monthly-p2643 and from Thomson Gale. Microfilm: Alaska Business Monthly is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

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laska Native Corporations continue to grow, as is evidenced in our annual Alaska Native Business special section. Figures reported by the regional corporations this year indicate these twelve companies owned by 119,092 shareholders had 2014 gross revenues of more than $8.6 billion, an increase of $138 million over 2013 gross revenues. Employees reported this year were 16,936 in Alaska—46,193 worldwide including those Alaska employees, an increase of 1,224 employees in Alaska—2,462 worldwide. Those jobs are spread across Alaska, the United States, and many countries of the world. And these are just the figures for the ANCSA regional corporations. Additionally and collectively many village corporations and Alaska Native-owned businesses provide thousands more jobs and generate billions more in revenues each year. In fact, some village corporations rival some of the regional corporations in terms of jobs and revenue. Check back next month when we reveal the 2015 Top 49ers to see the latest on that. Last year’s Top 49ers included seven village corporations that reported $2.5 billion in gross revenues with 1,210 employees in Alaska, 17,813 worldwide. And those are just the companies included in the Top 49 Alaskan-owned and operated companies ranked by gross revenue. Alaska Native companies have a huge impact. Alaska Native tribes also have a huge impact, an impact Alaska Business Monthly will be covering in more detail in future issues. Alaska has 229 federally recognized tribes. The United States has three main governing bodies: federal government, state government, and tribal government. There have been clashes among the three, and I suppose these will continue; however, last December the US Department of the Interior announced a final rule for accepting land into trust for federally recognized Alaska tribes. Accepting land into trust for federally recognized Alaska tribes should advance tribal self-governance and tribal sovereignty. The ability to do this has taken decades and Part 151 of Subchapter H, Chapter I, of Title 25 of the Code of Federal Regulations details the process in about 3,200 words, which if a tribe holds title to the land it wants placed in trust, it first needs to write a letter: §151.9 Requests for approval of acquisitions. An individual Indian or tribe desiring to acquire land in trust status shall file a written request for approval of such acquisition with the Secretary. The request need not be in any special form but shall set out the identity of the parties, a description of the land to be acquired, and other information which would show that the acquisition comes within the terms of this part.

I’m sure that it is not that simple of a process, and neither is publishing Alaska Business Monthly every month. The team at Alaska Business Monthly has put together another really great magazine. Enjoy! —Susan Harrington, Managing Editor September 2015 | Alaska Business Monthly

ICONIC ALASKANS

Jimmy Stotts

By Shehla Anjum

e is an Alaskan leader that few know. His name is James (Jimmy) Stotts. An Iñupiat from Barrow, he is the president of Inuit Circumpolar Council (ICC) Alaska. For several decades he has worked out of the limelight advocating for his people, trying to focus state, national, and international attention on issues, such as food security, that are of concern to the Inuit. In a long career Stotts, sixty-seven, has worked at the Weather Bureau (today’s National Weather Service) and at both Barrow’s village corporation Ukpeaġvik Iñupiat Corporation (UIC) and the regional Arctic Slope Regional Corporation (ASRC). He served five years on the North Slope Borough Assembly, the last two as assembly president. He has worked with many leaders at state and national levels and brings up the concerns of the Inuit of the circumpolar region in international forums, like the Arctic Council and the United Nations. One organization—ICC—has been a constant in Stotts’ life. He was present at the ICC’s first meeting in Barrow in 1977, served on its executive board, and worked for ICC Greenland and ICC Alaska, where 8

he is now president. The ICC is one of the Arctic Council’s six permanent participants, indigenous nongovernmental organizations given official recognition. Stotts, a vice chair on the ICC’s executive council, regularly meets with the senior officials of the Arctic Council. The Arctic Council is the eight-nation international body of Arctic nations established to coordinate policies. The ICC was created when Eben Hopson, the North Slope Borough’s first mayor, realized that changes in the Arctic could adversely affect the Inuit. He wanted an organization to represent all Inuit—from Greenland, Canada, the United States, and the then-USSR—and urged Inuit leaders to create the ICC.

Iñupiat Origins

Stotts is Iñupiat through his mother Mary Brower, whose mother Mary Asiangatak, an Iñupiat, was the second wife of Charles D. Brower, who established a trading post in Barrow in 1884 and lived there until his death in 1945. His father Harry Stotts, from Montana, came to Alaska after World War II as a weather observer, working in dif-

ferent Alaska communities. A two-month posting in Barrow stretched to two years, and when Harry Stotts left he had a wife and a son—Jimmy. After a few years in the Lower 48 his father went to work for the Weather Bureau at remote Arctic military bases in Greenland and northern Canada. “The bases had no family quarters and my mother packed up my younger brother Dale and me to go live with my Aunt Maria Ahgeak and her family in Barrow,” says Stotts. He was then eight. Barrow had no airport then. Planes landed at the Naval Arctic Research Laboratory, and people rode a “CAT train” into town. On the way into Barrow the Stotts’ “CAT train” stopped at Igluqpauraq, the Brower family’s big house in Browerville, a part of Barrow. “A bunch of my cousins, aunts, and uncles waited for us. But cousins our age barely spoke English and Dale and I spoke no Iñupiat.” The language barrier fell quickly. “Fortunately we got there in the spring and had all summer to play with our cousins. We could speak Iñupiat before school started,” Stotts says. Barrow was different than California,

Alaska Business Monthly | September 2015 www.akbizmag.com

where they had lived, Stotts recalls: “We had no electricity and no telephones. There were no snowmachines and more dogs than people. I went to bed at night to the sound of dogs howling.” Life was slower and revolved around hunting and whaling. “We ate meat at breakfast, lunch, and dinner. When Aunt Maria made a stew of dried fruits, apples, prunes—that was like heaven for us,” Stotts recalls. Stotts and his cousin Joe shared a chore—to take the family’s dog team to fetch glacial ice to melt for drinking. On his father’s return from the Arctic, the family moved to several other Alaska communities until his father got his coveted job—to run the Weather Bureau’s Barrow office. Stotts was thirteen and a few months from leaving for high school at Mount Edgecumbe in Sitka. By the time Stotts graduated from Mount Edgecumbe High School in 1965, Barrow had started to change. Snowmachines arrived and dog teams were gone, and education was becoming prevalent, as were office jobs. At Mount Edgecumbe High School, Stotts’ schoolmates included other future Native leaders, including Edward Itta, former mayor of the North Slope Borough, and Marie Greene, who recently retired as president/CEO of NANA Regional Corporation.

Leadership Qualities

Itta notes Stotts’ leadership qualities and his ability to get along with people. “He was super intelligent, curious, and confident, and people naturally gravitated toward him. We played basketball together and he was never aggressive, played fair, and was a good team player,” Itta says. Stotts studied hard and was serious about his education but also enjoyed other activities. Greene remembers all that as well as a different side. “He was a lot of fun to be around. He was a good dancing partner and we danced the twist, the monkey, and the chicken scratch at parties.” At seventeen, Stotts enrolled at the University of Alaska Fairbanks but dropped out after two years. He got married and went to work for the Weather Bureau in Bethel and Nome for five years and then in Anchorage. “The bureau thought I was a candidate for an administrative job and sent me to the Anchorage headquarters for two years,” Stotts says. His family had grown to include four children, but Stotts was determined to finish his education. He enrolled at the University of Alaska Anchorage full-time and worked full-time. He received a Bachelor of Arts in Business in 1974. The National Weather Service (formerly Weather Bureau) job ended within a few www.akbizmag.com

months after graduation. “I felt stagnated. ANCSA had passed. Native people had created new village and regional corporations. I wanted to put my degree to work for my own people. UIC advertised for a manager. I applied for the job and got it.” Stotts moved back to Barrow in late 1974. His return coincided with a period of tumult with cultural, social, and economic changes that followed the recent formation of ASRC, UIC, and the North Slope Borough. The corporations were selecting their lands and setting up new ventures with their share of the land claims money. The borough was planning a rapid and massive building program, paid for by property tax revenues from the new oil industry facilities at Prudhoe Bay. In a small town such as Barrow the people who worked in one of the corporations or the borough often also held seats on the corporate boards and the borough assembly, which often led to conflicts of interest. UIC had ASRC and borough officials on its board and before long Stotts became embroiled in political battles with both the borough and ASRC. What rankled him most was how the top staff of the corporations and the borough were from outside the region. Stotts acknowledges the need for such people at the inception of those organizations. “I knew we needed good talent and we had hired those people at the start. But many Inuit were also coming back. They should have been involved in running the corporation. The control should have been kept at home.” Among those returnees was Stotts. He was “one of the first college graduates from the North Slope. Jimmy saw how those non-Iñupiat in charge of the corporations thought we were not intelligent enough to switch off our hunter hat and take on the business corporate hat,” says Ronald Brower, who is Stotts’ first cousin and a close friend. Although younger than most leaders who had led the recent fights for land claims, Stotts was respected for his political acumen and his business skills.

Early Sign

One early sign of that trust came when Brower was a foreman and Stotts was a superintendent on a project to construct new homes in the village of Atqasuk, south of Barrow. “We had lots of problems with the crew and Jimmy ended up firing some of them,” Brower says. Among those fired was Mayor Eben Hopson’s brother Sam, who complained to his brother. The mayor summoned Stotts to Barrow, heard his version of events, and approved the firings. “Jimmy handled that

Jimmy Stotts at the Inuit Circumpolar Council Alaska office in Anchorage.

situation in his usual calm, proficient way. He was, and is, confident and decisive. He does his work quietly and doesn’t boast about it,” Brower says. After a few years with UIC, Stotts joined ASRC and soon afterward won a seat on the borough assembly. His five years (19781983) on the assembly coincided with the era when the borough’s capital budgets soared to hundreds of millions of dollars for projects such as the Barrow Utilidor and the Barrow High School. Many companies, including ASRC, bid on those projects. Stotts, then chairman of the borough assembly and treasurer of ASRC, felt uneasy about the situation. “I felt a conflict of interest and I was the only one to acknowledge that conflict. I wanted ASRC to get some of the spending going in those days by the borough.” His discomfort about voting on projects that ASRC was interested in led him to resign a year before his second assembly term ended. It was in Barrow that Stotts’ began his sustained connection with the ICC, when he became part of the team that planned its first meeting in 1977. Dalee Sambo Dorough, an associate professor in the University of Alaska Anchorage political science department, met Stotts when ICC was only an idea. “He was there at the start and has been involved since then. Many others who were at the first ICC conference in 1977 didn’t participate regularly later. But Jimmy never let go of his passion,” Sambo Dorough says. In those early years, Stotts traveled to

September 2015 | Alaska Business Monthly

Jimmy Stotts is the ICC leader for Alaska.

meetings with other ICC members, often to Greenland. Since then he has lived in Greenland, several times, since the mid1980s. He first spent one year there for an ASRC joint-venture with the government of Greenland that had subcontracted with Atlantic Richfield, which was then exploring for oil in eastern Greenland. He left ASRC in 1989 and moved to Nuuk, Greenland, to work with ICC Greenland as its environmental projects coordinator. After a few years, Stotts returned to Alaska, rejoined ASRC, and worked until retiring in 2002. For a few years he did nothing, but often traveled back to Greenland with his wife Karoline, who is from there.

Short Retirement

In 2007 Stotts was sixty, bored, and not ready to sit at home and indulge in his hobby of crafting wood furniture; he began looking for something meaningful. He found it at ICC Alaska. “I knew ICC Alaska’s executive director had quit and it was having funding and leadership problems. It had no office or staff, and 10

an employee at the borough’s Anchorage office took care of its mail,” Stotts says. Edward Itta, who became the borough’s mayor in 2005, knew of ICC Alaska’s troubles. And when they worsened by 2008, he took action. “I got funding from our assembly. We advertised for an executive director and I hoped Jimmy would apply.” Stotts did and took over as ICC Alaska’s executive director in 2008. He put together a staff and gradually brought stability to the organization. ICC Alaska nearly failed because its members gradually lost interest, and the borough, its main source of funding, cut back. It lost connections to its other members—like NANA (Kotzebue), AVCP (Bethel), and Bering Straits (Nome)—which perceived ICC Alaska as a “North Slope” thing, Stotts says. “What we did was simple. My staff and I went out and reconnected with our members, we started a newsletter to keep our members informed about issues and meetings, and we began twice-a-year visits to Bethel, Nome, Barrow, and Kotzebue, the hubs for ICC Alaska’s members.” Stotts main focus, since then, has been the Arctic Council, and he heads the ICC’s delegation to it. One issue of paramount importance to all Inuit is food security and for their ability to hunt, fish, and whale as they have for generations. People of the Arctic are concerned about the effect of climate change on important species and habitat. They also worry about increasing interest by other nations, such as India and China, in resources such as oil and gas and fisheries and the conflicts that arise from that. Marie Greene, retired president and CEO of NANA Regional Corporation, appreciates Stotts’ efforts regarding food security. “Jimmy understands that food security is a strong component of our lives. Before he brought up the food security issue at the ICC, he came to our region and met our hunters to get a better understanding of that issue on the local level,” Greene says. For Inuit the issues of food security and protection of the land and the seas are linked. The Arctic Council’s various working groups—Protection of the Arctic Marine Environment, Sustainable Development Working Group—recommend preventative and control measures. Stotts has a special interest in such groups. His presence at the high-level Arctic Council meetings is important according to two people who also attend such meetings as well as those of the working groups. Nils Andreassen, executive director of the Institute of the North, says Stotts is a “champion for ICC and its priorities and perspectives at the international level and also a very skillful negotiator and a diplomat.”

Because of Stott’s efforts, there has been “a lot of conversation recently about food security and traditional knowledge, two important priorities for ICC. There is now a move toward incorporating traditional knowledge at Arctic Council level,” according to Andreassen.

Diplomatic Skills

Julie Gourley, a US State Department foreign affairs officer and the US Senior Arctic Official to the Arctic Council, compliments Stotts’ diplomatic skills as he negotiates with a diverse group of nations, some with no indigenous population. “Jimmy understands the role of the permanent participants and respects the role of the nation states. He is persuasive, articulate, and effective in how he presents issues,” she says. The increasing interest in Arctic resource development led to the recent creation of the Arctic Economic Council, which communicates between the Arctic Council and the wider circumpolar business community. “Indigenous people are caught in the middle, but I think that responsible development is possible. Our corporations are businesses but they also have a social responsibility to their shareholders, which is a little broader than other businesses,” Stotts says. As his work with the both ICC and the Arctic Council continues, Stotts expresses optimism about both. “The indigenous permanent participants help the Arctic Council set the terms for the next one hundred years for work in the Arctic, to set broad policy and the rules and regulations to implement that policy.” That work has already led to agreements, such as Arctic search and rescue and a Polar Code for marine transportation. “Now we are working to establish marine protected areas and a regional seas agreement,” according to Stotts. Stotts knows that times have changed; he has seen many changes in his life, and he is both realistic and nostalgic. He knows that life is different now for many Inuit, who desire the comforts of life like everyone else. While “airports, roads, hospitals, and clinics have made our lives easier, much has also been lost,” he says, including “culture, language, and identity.” He wants to continue working on issues that affect Inuit. “I feel good about my contribution to help my people I think I have made a positive contribution. I am still contributing by my involvement and by helping the next generation get ready.” R Writer Shehla Anjum is based in Anchorage.

Alaska Business Monthly | September 2015 www.akbizmag.com

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TELECOM & TECHNOLOGY

Remote, Rural Alaska Telecom Providers enhance services for communities and worksites By Tracy Barbour

n Alaska’s Bush and rural areas, telecommunications services provide an important link to the rest of the state— and world. That connection keeps steadily improving, thanks to enhancements that providers are making to increase the accessibility and quality of their services to remote communities and worksites from the North Slope to Unalaska/Dutch Harbor.

GCI Making Strides with 3G and TERRA Upgrades As the largest Alaska-based and –operated, integrated telecommunications provider, GCI offers an array of wireless, voice, data, and video services throughout the state. GCI customers in the Bush and rural areas have access to many of the same services that are available in Alaska’s larger cities, from cable television, voice, and wireless to high-speed Internet and video. “We can offer urban-quality service in almost any part of the state,” says Craig Mollerstuen, vice president of United Utilities, Inc. (UUI). A wholly-owned subsidiary of GCI, Anchorage-based UUI serves customers primarily in the Yukon Delta area. GCI also supplies telecom services to residential customers in rural areas—which indirectly helps businesses attract and retain high-value employees. “GCI has made the commitment to get into as many communities as we can and provide as many services as we can,” Mollerstuen says. Currently, GCI is upgrading its network to improve services in rural Alaska. For example, the company is deploying 3G wireless data service in twenty-eight communities, ranging from Alakanuk to the village of Upper Kalskag. The 3G upgrade is being supported by a Tribal Mobility Fund Phase 1 award from the FCC (Federal Communications Commission). As part of the award, GCI will deploy 3G and 4G wireless services to a total of forty-eight rural Alaska communities by 2018. The company is also increasing the backbone capacity of TERRA, its terrestrial broadband network, from Levelock to Bethel by deploying new microwave radio technology. TERRA is a hybrid fiber optic-microwave system that removes the restrictions of satellite and gives private, public, nonprofit, and individual users unlimited access to critical bandwidth. The network also affords busi12

nesses an opportunity to expand their geographic reach outside the confines of their remote location, according to Rebecca Markley, project manager IV, TERRA. “It’s giving them the opportunity to post their business on the Web and increase their coverage area from local to worldwide,” Markley says. Perhaps the biggest qualitative change from TERRA is the always-on and highspeed nature of the Internet. While city dwellers tend to take this technology for granted, many rural residents have been amazed by it. According to Mollerstuen, some of the feedback GCI has been getting is: “‘It’s fast,’ and ‘It’s like being in town.’” The TERRA network enables GCI to serve approximately seventy communities and forty-three thousand people in the western part of the state. “It has allowed us the ability to vastly improve our wireless network in rural Alaska,” says David Morris, GCI spokesperson. “We have a vision for rural Alaska,” he says. “We put our money where our mouth is, and we will continue to do that.” But implementing technology is one issue; keeping it serviced is another. In Bush and rural Alaska, repair situations can involve multiple plane hops and service outages that can last for days—not hours. Consequently, GCI is diligently working to reduce the time it takes to complete repairs for its customers, according to Morris. Safety is another key area of concern for GCI. In fact, it’s one of the core values at its GCI Industrial Telecom division, which recently achieved more than 2.5 million hours (13.5 years) since its last lost time accident and more than 1.2 million hours (3.5 years) since its last recordable safety incident. The company provides dedicated operations and maintenance remote project support and communication services. Its team of field technicians, tower climbers, engineers, and project managers are exposed to some of the harshest work environments on the North Slope and in remote Alaska. “Because ‘safety matters’ our team is focused on the proper pre-work procedures and is trained on how to recognize, analyze, and reduce hazards in advance of work task,” explains Business Development Manager Mark V. Johnson. The safety committee at GCI Industrial Telecom works hard to represent each of its

locations and ensure current processes are reviewed and current topics are discussed, Johnson says. And all employees are empowered to stop a project if or when a safety issue is identified. “Our commitment to our staff and their families to provide a safe work place is recognized by our clients and partners, which ultimately means more business,” he says. “More [safe] business is good for everyone.”

Alaska Communications Promotes Fast, Secure Broadband Billing itself as the only Alaska-based carrier that’s Ethernet 2.0 Certified, Alaska Communications strives to provide the ultimate in reliability and security. “We continue to invest in our network to provide customers with reliable, secure broadband services across the state,” says President and CEO Anand Vadapalli. “We’re proud to offer a full range of solutions, from basic networking to fully managed IT services and everything in between, and strive to be Alaska’s partner in broadband and IT managed solutions.” Earlier this year, the company partnered with Quintillion Holdings to acquire a fiber optic network from ConocoPhillips on the North Slope. (Alaska Communications’ service area is west of Deadhorse, where most new development in oil and gas is occurring.) Previously, this area was served only by microwave and satellite communications. With a new fiber network on the Slope, Alaska’s oil and gas leaders can use the latest technology applications to operate at greater efficiency, Vadapalli says. Alaska Communications also signed a multi-year service agreement to supply ConocoPhillips with fast, secure broadband service. “We are pleased to support our state’s economy by providing oil and gas customers and the many people and companies that support them with increased access to broadband on the North Slope,” Vadapalli says. “We’re boosting connectivity to oil and gas fields, with units that include Kuparuk River, Colville River, Milne Point, Prudhoe Bay, and Oooguruk, allowing producers to increase efficiency and reduce operating costs.” In addition, Alaska Communications is supporting the state’s healthcare providers by increasing access to quality care for residents in the Chugach region through the

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provision of advanced communications and managed IT services. For example, the company has helped Chugachmiut, a tribal consortium serving Native communities with health and social services, by providing wide area network services and faster Internet to its locations in Prince William Sound, Lower Cook Inlet, and Resurrection Bay. “Faster, more reliable connectivity and the Internet mean Chugachmiut can improve access to healthcare by virtually connecting its clinics with its regional mid-level clinic in Seward and the Anchorage-based Alaska Native Medical Center in real time,” Vadapalli says. Chugachmiut’s healthcare providers also have faster access to applications such as electronic health records and other telemedicine technology. Alaska Communications provides the same opportunities to the Kodiak Area Native Association, a tribal health nonprofit with a presence in Kodiak and six surrounding Alaska Native villages. The availability of a private medical network that connects its clinics to each other, as well as fast, reliable Internet, gives the Kodiak Area Native Association timely access to medical records and other electronic health records. In its work with the Kodiak Area Native Association, Chugachmiut, and others, Alaska Communications says it has seen—and responded to—a shift in a focus toward real-time telehealth services in rural Alaska. “We’re able to help healthcare providers in many parts of our state provide electronic health records in real time, improving efficiency and access to quality care,” Vadapalli says.

ing services in a way that allow customers to pay only for what they use, Peters says. “We’re saving Bush communities up to 40 percent of the previous cost—and providing a much higher level of feed,” she says. “We’ve seen a 100 percent increase in speed for less money.” The faster speed makes a vast difference in rural Alaska, where many communities only recently gained access to streaming video. In the past, it may have taken a business twenty minutes to download a video file that now takes seconds. ProComm is also enabling Alaska’s remote communities and worksites to take advantage of two-way radio over IP (Internet

protocol) to talk to people almost anywhere in the state. And its private broadband networks are providing businesses, law enforcement, and other users with faster access to information. “It’s exciting to have these services in rural Alaska,” Peters says. In addition, ProComm is using satellite technology to help businesses track their assets more easily and inexpensively. For instance, the company can install tiny tracking devices in a fleet of vehicles and set up an Internet portal where customers can manage their property. The technology enhances employee productivity and safety because it automates recording different information

ProComm Alaska Enhancing Delivery of Services ProComm Alaska, which specializes in two-way radio products, installation support, maintenance, and repair services statewide, is also striving to make telecom technology more accessible to remote parts of the state. The company offers satellite and point-to-point broadband services that help customers maximize productivity and save money. With point-to-point broadband, the company can take a dial tone and transmit it wirelessly to multiple locations. For example, if a village has Internet service at one hub, ProComm can extend the service to another location for virtually the same cost, according to General Manager Linda Peters. This type of broadband connection, Peters says, is a valuable asset to municipalities— particularly those with tight budgets. “Recently, we had a city in Alaska where we saved them about $40,000 a month,” Peters says. “That frees up resources for other services.” A significant part of the savings is due to packaging. Traditionally, some satellite providers sold services in larger amounts than clients may have needed. Now they’re packagwww.akbizmag.com

September 2015 | Alaska Business Monthly

about the vehicle, leaving drivers free to focus on the road, their cargo, and other responsibilities. “The main point is to be able to use technology to advance your life and make what you do easier and safer,” Peters says.

TelAlaska Upgrading Technology and Products TelAlaska, Inc. is a family of companies that has been providing telecommunication products and services throughout the state since 1968. Companies under its corporate umbrella include Interior Telephone, Mukluk Telephone, TelAlaska Long Distance, Eyecom Cable, and TelAlaska Networks. With a coverage area that includes Seward, Nome, Galena, and Unalaska/Dutch Harbor, these providers deliver landline, cellular, and long distance phone service; advanced data services; wireless internet, DSL, and cable modem Internet services; and cable television service. Based in Anchorage, TelAlaska has substantial experience providing telecommunications services in rural Alaska. But every day brings new challenges, which are often solved with out-of-the-box thinking, according to President Dave Goggins. “It’s always an exciting adventure because there’s always a twist,” he says. Jason Louvier, vice president of operations, says TelAlaska is constantly thinking about

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what its customers want and how it can provide them with a high level of service. However, planning and designing for the future has been challenging, with the shifting regulatory environment and high cost of “middle mile” connectivity. Most of the communities serviced by TelAlaska are connected to the world via satellite. However, TelAlaska is progressing with implementing new fiber optic networks to support higher broadband speeds. “We are also leveraging existing copper infrastructure by placing fiber to remote broadband equipment located closer to our customers,” Louvier says. “New towers and more antennas are also being constructed to extend coverage to mobile users.” TelAlaska is also focused on servicing its customers, according to Louvier. Doing so requires constant upgrades to technology and product offerings. However, due to the locations where TelAlaska provides service, there is a very short construction season, which poses numerous challenges to managing long-range programs. “Our mission at TelAlaska is ‘Of Course You Can,’ and we always keep that in mind as we stay resolute and accept these challenges as part of providing telecommunication products and services throughout Alaska,” he says. In its effort to enhance services, TelAlaska is working closely with other rural telecom providers and the Alaska Telephone Association to provide the FCC with real-life data about the difficulties and higher cost of providing telecommunications services in Alaska. “The FCC is in the midst of revising telecom policy and long-term cost recovery mechanisms, which has created uncertainty in the investment markets and our ability to obtain funding for future build-outs of advanced service opportunities,” Louvier says. He adds: “We have had success in our efforts to educate the FCC on our harsh environment, shorter construction seasons, and the need for terrestrial middle mile. By creating cost-recovery stability and certainty, businesses such as TelAlaska can invest for the future of our customers knowing we will receive a reasonable return on this investment.”

Arctic Slope Telephone Association Investing Heavily in Its Network With headquarters in Anchorage, the Arctic Slope Telephone Association Cooperative (ASTAC) offers a wide range of communications services to customers throughout the North Slope Borough. The member-owned cooperative’s designated service area is a roadless, remote Arctic area of more than ninety-thousand square miles. ASTAC provides wireless services in Barrow, Wainwright, Atqasuk, Anaktuvuk Pass, Nuiqsut, Kaktovik, Point Hope, and

Point Lay, as well as at the petroleum industry and production complex at DeadhorsePrudhoe Bay. “We are a full-service cellular company providing both fixed and mobile wireless voice and data solutions, including equipment sales and service,” says Director of Operations Jens Laipenieks. In addition to delivering wireless services, ASTAC offers local and long distance service, Internet, and data services. It also operates a 700 MHz wireless network (licensed spectrum) available for nomadic data applications, providing extended coverage off the wired network. “For the past thirty-seven years ASTAC has served the North Slope of Alaska, and we understand what it takes to keep things working. We have experienced staff based out of Deadhorse and Barrow 24/7,” Laipenieks says. ASTAC is investing heavily in its network. The cooperative is actively upgrading its infrastructure to support the evolving needs of its customers. For example, ASTAC is upgrading legacy local switches to IP, replacing copper cables with fiber optic, enhancing access equipment, and transitioning to 3G/4G, according to Laipenieks. With the upgrade of its local switches, ASTAC will enhance its business voice service offerings with the rollout of IP Centrex, or hosted PBX services, Laipenieks says. “This will allow our customers to enjoy advanced business features and capabilities without the capital outlay and operating expense of owning a phone system,” he explains. “Because it works over the Internet, employees can seamlessly work from anywhere they have a connection.” Earlier this year, ASTAC entered into a strategic agreement with AT&T to upgrade the wireless networks in its villages and in the Deadhorse/Prudhoe Bay region. The arrangement allows ASTAC to move toward a modern 3G/4G network with enhanced features and faster data speeds. “This evolution will take a few years to reach all our markets, but will be a great improvement over the existing 2G network,” Laipenieks says. The Arctic Slope is on the verge of a transformational change with respect to communications. And with the arrival of Quintillion Networks’ subsea fiber optic network in late 2016, much of the North Slope will no longer be dependent on inferior, expensive satellite backhaul, Laipenieks says. “The new fiber network will deliver higher quality and greater speed at a lower cost to users,” he says. “ASTAC has partnered with Quintillion Networks to support their fiber landings and will be launching new products and services leveraging the Quintillion bandwidth.” R Tracy Barbour is a former Alaskan.

Alaska Business Monthly | September 2015 www.akbizmag.com

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INSURANCE

Small Employer Health Benefits Options Evolving with the Affordable Care Act By Tracy Barbour

he health insurance landscape is constantly evolving under the federal law designed to ensure that Americans have access to quality, affordable healthcare. Rule changes, rising costs, shifting trends, and other factors are converging to uniquely shape the health benefits options of small employers in Alaska and everywhere else. The Patient Protection and Affordable Care Act, often called the Affordable Care Act (ACA) and “Obamacare,” was signed into law 2010, with its implementation taking place in stages. As the healthcare reforms unfold, it’s important for employers to understand the ACA and the options that are available to their company and employees. “It’s evolving and dynamic—and it’s changing so quickly,” says Northrim Benefits Group President Joshua Weinstein.

Obligations for Employers

Employers’ responsibilities vary primarily according to size under the ACA. Currently, large companies—those with fifty or more full-time equivalent (FTE) employees— must provide affordable minimum essential health insurance. In general, eligible employer-sponsored plans—such as group health insurance and self-insured plans— qualify as minimal essential coverage. The ACA defines an FTE as a person who has worked an average thirty hours per week during the previous calendar year—including time paid for vacation and leave. Large employers who fail to provide adequate coverage for employees and their dependents will have to pay an Employer Shared Responsibility (“play-or-pay”) tax penalty. Small employers, those with fewer than fifty FTE, are not required to provide health insurance coverage. However, those that do so with fewer than twenty-six employees can claim a tax credit for up to 50 percent of premium costs. As a significant development, the size of the small group market will be expanding from one to fifty employees to one to one hundred employees next year. The ACA defines a small employer as one with up to one hundred employees, but the law has allowed states to use a definition of up to fifty 16

“It’s evolving and dynamic— and it’s changing so quickly.”

—Joshua Weinstein Group President, Northrim Benefits

employees until the end of 2015. As a result, most states have characterized a small employer as one with up to fifty employees. However, that will change on January 1, 2016, when the ACA will require all states to classify their small group market as up to one hundred employees. So why is this significant? It’s important because the ACA imposes certain rules on employers in the small group market. For example, small group plans must cover ten essential health benefits: outpatient care, emergency room, inpatient care, maternity and newborn care, mental health and substance use disorder services, prescription drug coverage, rehabilitative and habilitative services, laboratory services, preventive and wellness services, and pediatric services. Grandfathered plans—those already in place before the ACA became law on March 23, 2010—are exempted from certain provisions of the law and may not comply with ACA requirements for essential minimum coverage. Insurance carriers are applying different approaches to grandfathered plans. Moda Health, for example, doesn’t offer any noncompliant grandfathered plans, according to Alaska General Manager Jason Gootee. Premera Blue Cross Blue Shield of Alaska says it intends to offer grandfathered non-ACA plans indefinitely. “Our rationale is to maximize the choices available to consumers in Alaska,” President Jim Grazko explains. Small group plans under the ACA are also required to provide coverage for certain expenses and be classified as bronze, silver, gold, or platinum. And no rate increases for medical history can be applied to small group health plans. Also, small group plans must use adjusted community rates, which means each employee will be charged a different rate which can only vary by age, family size, geographic location, and tobacco usage. The reclassification of the small group

market will also significantly impact companies with fifty-one to one hundred employees. These employers have generally been bound by large group market regulations, and that will all change in 2016. Most of their health plans won’t meet the benefit and rating requirements that apply to the small group market. And barring any modifications or delays in the regulations, these health plans will likely have to be discontinued. Some businesses with fifty-one to one hundred employees will be charged higher overall premiums because of these changes. Consequently, some of these employers may choose to change their renewal date to December 1 or December 15 to delay the impact of the changes until the end of 2016. On the other hand, some employers in this segment may be covering a group of employees with higher than average medical costs and may see a decrease in overall premiums. In this case, they may welcome the change. Incidentally, grandfathered health plans won’t be affected by the reclassification. Gootee says the brunt of the reclassification will be felt mainly by the employers in the fifty-one to one hundred segment. “In some cases, there will be better coverage, and some employers will get higher costs,” he says. “It’s hard to tell who’s going to be affected more.”

Exchange Caters to Individuals

Employees who don’t have health insurance through an employer or other source can obtain coverage—with or without a broker—through the Federally Facilitated Marketplace, also called the Marketplace or Exchange. Alaska’s Exchange/Marketplace offers an assortment of qualified individual health insurance plans from two carriers: Premera Blue Cross Blue Shield Alaska and Moda Health. Individuals and families who purchase “metallic” plans through the Exchange may be eligible for tax credits or subsidies. During enrollment this year, nearly twenty-one thousand individuals signed up for qualified plans in Alaska’s federally-run Exchange, despite the average 31 percent increase in marketplace premiums. That’s about 24 percent of the residents who were

Alaska Business Monthly | September 2015 www.akbizmag.com

eligible, compared to only 15 percent of the eligible residents for 2014. Some of the enrollment gains generated by the Exchange may have been a byproduct of employer frustration. There have been quite a few employers who analyzed the overall costs, thrown up their hands, and told people to just go through the Exchange, Gootee says. The surge in enrollment doesn’t surprise David Kaufman of Alaska Employee Benefit Specialists. Depending on income, the premium subsidies were very generous, he says. “Most of the individuals I worked with received not only premium assistance but also cost-sharing assistance. It’s hard to not want no-cost or low-cost coverage.” Thanks to the Supreme Court’s June 25 decision in King vs. Burwell, about nineteen thousand Alaskans can continue receiving subsidies when they buy insurance through the Exchanges. According to Alaska’s Division of Insurance, 89 percent of Alaskans who purchased health insurance for the 2015 plan year through the Exchange are receiving subsidies.

Small Group Employer Options

Small employers that elect to provide coverage have the option to purchase insurance through the federal Small Business Health Options Program (SHOP). And in the pro-

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cess, they may qualify for federal tax credits. The idea behind SHOP, Kaufman says, was to develop competition and, as a result, let competitive free-market forces reduce cost. But SHOP actually decreased competition, as there are currently only two carriers (Premera and Moda Health) willing to participate. “A small group employer has more options off SHOP than on,” he says. “Often, these nonSHOP plans are more cost-efficient.” Another failure of SHOP in Alaska is the tax credit incentive, Kaufman says. To qualify for the credit, an employer must have fewer than twenty-five FTE averaging less than $50,000 in annual salary. “Our experience has been that most Alaska groups fail to qualify,” Kaufman says. “At last count, I believe there are fewer than one hundred employees covered by SHOP plans in Alaska.” Weinstein expressed similar thoughts about SHOP. Going through SHOP is a lot of work because people will have to go through Healthcare.gov and navigate through all the government bureaucracy, he says. The only advantage of going to a SHOP plan is the tax credit, but qualifying standards are fairly rigorous. For the maximum 50 percent credit, the business has to have fewer than ten employees with annual average wages of less than $25,000 (excluding owners) and can only have the credit for two years. “It is

inherently flawed,” Weinstein says. Weinstein adds, “If you are a smaller, lower-wage employer, SHOP might work for you.” Regardless where employees purchase their insurance coverage, there soon will be fewer options available in Alaska. Three carriers in the individual market—Aetna, Assurant, and State Farm—have decided to leave the state. The loss of these companies is understandable, according to Grazko. Because of its size and geography, Alaska has a comparatively volatile individual insurance market and high healthcare costs compared to other states, which could make it challenging for carriers to successfully operate in that market, he says. And the high cost of care in Alaska also creates upward pressure on healthcare coverage offered by employers.

Network Access Varies

Access to healthcare in Alaska is evolving, and carriers are developing new approaches to network development and reimbursement strategies. In terms of providers, Kaufman says Alaska is very under supplied, and this is reflected in wait times, cost, and access. “The national trends of retirements in the medical community are troublesome,” he says. “My fear is that, ultimately, this will be one of the biggest issues we face in healthcare—a short-

September 2015 | Alaska Business Monthly

“As a result, more and more insurers are beginning to offer their insured members benefit and financial incentives to use providers in the Seattle area, where there are extensive providers available in the key specialty areas.”

—Eric Deeg Vice President of Employee Benefits, USI

age of doctors. We have seen it for years in Alaska in our Medicare population. Few doctors are taking new Medicare patients.” This will trickle down into the nonMedicare population as more and more doctors retire or restrict their practices. Carriers in Alaska have done a lot of work to grow their networks, but specialty care is still a major problem, he says. To address this problem, his firm integrates Centers of Excellence programs—designed to provide quality care while saving money—with a medical travel benefit. Eric Deeg, vice president of Employee Benefits for USI, feels that most Preferred Provider Organization (PPO) networks have a sufficient number of primary care providers. But they often have difficulty contracting with certain specialty physicians in Alaska. “As a result, more and

more insurers are beginning to offer their insured members benefit and financial incentives to use providers in the Seattle area, where there are extensive providers available in the key specialty areas,” he says. Moda Health feels there are ample doctors, specialists, and hospitals in its network. In Anchorage, for instance, it has competitive contracts with both Alaska Regional Hospital and Providence Hospital. And it uses a slightly different approach that includes treating every provider in Alaska as if they were in its network. Moda Health also works with a separate network called Beech Street to broaden access even further. At Premera, there may be shortages within some specialty areas at certain times, Grazko says. But, he says, the company has the largest provider network in the state, with more than 2,900 physicians and practitioners, and

is constantly growing its network to enable employers to meet the healthcare needs of their workers. Premera members can also take advantage of medical travel benefits and seek care from any of Premera’s network providers in the Lower 48.

Premera Focusing on Improving Simplicity, Ease, and Access With a local office in Anchorage and customers in both the individual and employer markets, Premera is one of the largest insurers serving Alaskans. “In June of 2014, we had nearly 6,900 individual members on ACA metallic plans,” Grazko says. “We are committed to this market and finding a sustainable solution for all Alaskans in the individual market.” Recently, Premera revamped the options in its plan portfolio. The idea was to simplify the options and reduce the overall number of plans to make the shopping experience easier. Currently, Premera has approximately fifty different options, which will be pared down to twenty-five starting in January 2016. Premera’s bronze, silver, and gold plans vary by deductibles, premiums, and other factors. In terms of popularity, the plan with the most groups enrolled is the Premera Blue Cross Balance Plus Silver 2000. Currently, for small groups (one to fifty on

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payroll), Premera offers a full suite of metallic plans consistent with ACA standards. For Merit groups (fifty-one to ninety-nine on payroll), the company features Heritage Select and Heritage Plus plans that range up to ACA allowable cost share limits. And for Experience Rated groups (large group one hundred-plus enrolled), there are a range of Heritage Select and Plus plans available, as well as customized solutions. These plans are consistent with ACA standards and suited to individual customer needs. All Premera plans include an embedded wellness program, as well as features like telehealth and medical travel support. In 2016, Premera’s small group “metallic” plans will expand from one to fifty one to one hundred. In the small group market, Premera has been focusing on simplification, ease of use and access, and bringing costs down. As a result, the company recently implemented a new maternity program, began contracting with Alaska Innovative Medicine to reduce waste and improve healthcare delivery, and enhanced its wellness program. In January, Premera will roll out some new high-deductible health plans that are compliant with HSA rules. A built-in funding arrangement will also be part of the benefit. Customers will be able to go online and use their bank account to pay for their medical care tax free, making it easier to reimburse the provider. “It’s more streamlined than it’s ever been before,” Grazko says.

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Moda Health

Moda Health, like Premera, offers a variety of metallic plans. Currently, it has about forty plans: fourteen bronze, twenty silver, and six gold. The silver plans, by far, are the most popular, according to Gootee. The majority of Moda Health’s plans are PPO options, which allow employers to save money by using in-network contractors and high-deductible, consumer-driven plans. The company’s Value PPO plans, which have higher copayments and maximum out-of-pocket expenses, result in lower premiums for employers. Its Beneficial PPO plans are more suitable for employer groups seeking to lower premium costs through higher deductibles and office-visit copayment limitations. Gootee says there’s been a lot of uncertainty in the market with carriers pulling out, but Moda Health is very committed to Alaska. In fact, the company is embarking on a significant expansion in the state. In September, Moda Health is opening a medical customer service unit with fourteen employees in Anchorage. “We view Alaska as a land of opportunity, and we are here for the long haul,” he says. www.akbizmag.com

SUPPORTING WHAT MATTERS At Northrim Bank, giving back to the community is part of who we are. Sometimes support is financial. Often times a volunteer effort — like when we teach financial literacy at local shelters and schools. Every year we give to the people and organizations that strengthen our community. Learn more at northrim.com.

September 2015 | Alaska Business Monthly

Health Insurance Trends

As the healthcare scene continues to transform, a number of trends are evident throughout Alaska. For example, the ACA is forcing a cost shift to employees and out-of-pocket costs are increasing to keep rates down, Kaufman says. And now there are greater incentives to look at a self-insured or alternate funded plan, or at a minimum some sort of shared-risk arrangement where a group can share in a return of premium in a good claims year. Kaufman is also seeing the increased use of voluntary benefits, such as letting employees purchase dental or vision benefits on a pre-tax payroll deduction basis. Another tactic is the “employee choice” approach, where multiple medical plans are offered. Providing a choice of plans allows employees to elect coverage that best fits them. In turn, it improves employee satisfaction and can save on premiums. Employers understand that they need to offer an attractive plan to recruit and retain the best workforce, and they are searching for ACA-complaint solutions, Kaufman says. He adds: “My view is that employers are cautiously optimistic that the worst is behind us. I have seen an increase in small groups who had not previously offered benefits add coverage. I expect that trend to continue.” Deeg feels that more and more businesses are implementing wellness programs to help

lower the risks in their group plans, with the hope of achieving long-term cost controls. “However, should the ACA continue to task employers with reporting and compliance requirements, we may see employers begin to shift from employer-sponsored group health plans to helping their employees find coverage through the Exchange,” he says. “With health insurance costs for employers exceeding $10,000 per employee, and the ACA play-or-pay penalty for not offering qualified group coverage at $2,000 per employee, it becomes an alternative some employers are considering,” he explains. Deeg is also seeing an increased number of employers with fewer than one hundred employees looking at self-funded health plans, incentives to improve health in the plan coverage and cost-sharing, and more high-deductible health plans with HSAs to increase consumerism and create better cost control. “The next three to five years will be a very critical time for healthcare and health insurance in Alaska and the entire country,” Deeg says. “I am hopeful there will be some positive changes to the ACA to make it more manageable for both individuals and employers.” Like his colleagues, Weinstein has noticed Alaska employers trending toward higher deductibles, medical travel/tourism, HSAs, and a more simplified approach to

administration. Concierge medicine (care provided for a flat monthly rate), telemedicine, and network PPO plans are also becoming more prevalent. In addition, there’s a unique breed of employers that are testing the line of what’s considered an ACA-compliant plan by offering preventative-only or skinny plans. However, employees should be aware that preventative-only plans may not be fully compliant with the ACA. Also, some employers may be scaling back their health benefit offerings or increasing workers’ deductibles and copays to position themselves to avoid paying the “Cadillac” excise tax set to start in 2018. The employer-sponsored tax targets highcost, benefit-rich health plans with minimal deductibles and little cost sharing for employees. “About half of our plans up here will be Cadillac plans,” Weinstein says. “It will be a big deal.” Everybody wants to get a handle on the cost issue, Gootee says. “I think in the next three to five years, you will see more and more innovation come to the market here,” he says. “I think you will see some pretty notable changes.” R Tracy Barbour is a former Alaskan.

Alaska Business Monthly | September 2015 www.akbizmag.com

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BUSINESS BASICS

Proper Planning Prevents Predictably Poor Performance The six P’s of business exit and succession planning process By Mel B. Bannon

xiting a business while also ensuring the succession of management and control is a process, not an event. There comes a point in the lifecycle of any business when the owner no longer wants to, or is able to, manage the firm. Since the timing of retirement, death, or a disability is difficult to predict, it’s prudent to have a succession or transfer plan in place now to protect the value of your business, safeguard your personal financial wellbeing, and provide your business with leadership during a transition period. However, as the old saying goes, “We don’t know what we don’t know.” Whatever vague or preconceived ideas we may have of how and when we might exit our business, the fact remains that there are many different options, exit paths, and potential values that should be explored in order to determine the most optimal exit strategy. We often find that what the business owner wants to do is in fact not compatible with the actual situation.

Know Your Options

An exit strategy is not the same as the sale of a business. Since there are a number of potential methods for exiting a business, it all begins with knowing the options available to you. Regardless of the path you take, you will want to free yourself from the business but also protect your valued employees as well as your business and personal wealth. Owners can establish the strategy that best meets their goals and protects their wealth once they follow the steps needed to determine the course they should set with their planning. Let’s look at how you can protect your wealth by understanding the exit planning process in order to build and execute a customized exit strategy plan.

Establish Exit Goals—Measure Your Financial and Mental Readiness Are you financially prepared for an exit from your business? If your personal wealth outside the business is not enough to take care of you in retirement, how can you retire? This is called the “Value Gap.” This situation is fairly common and leads to developing a plan to “monetize” your business value for your own financial security. The sooner you identify your value gap, the easier it will be to find and execute solutions to plugging the value gap. 22

Are you mentally prepared for an exit from your business? Being mentally prepared to leave your business may be the largest challenge that you face. If you are not mentally ready today to depart, it does not mean you should put off planning for your exit—in fact, just the opposite is true. Far too often business owners procrastinate planning because “I’m not ready.” By the time they are ready, frequently one or more potential exit paths have closed—a missed opportunity. The mental shift that needs to take place is learning to look at the business from the investment perspective in the market place, rather than the perspective of a job with perks—and this takes time, education, and attention.

Identify the Type Exiting Owner You Most Resemble—4 Types of Exiting Owners  Get-me-out-right-away-at-the-highestprice: This owner will be mentally ready, but not financially prepared.  Well-off-but-choose-to-work: This owner will be financially secure personally, but still enjoys working in the day-to-day business environment.  Stay-and-grow-the-business: This owner will not yet have achieved financial independence and still enjoys working and building the business. Statistics indicate that as many as 80 percent of business owners fall into this category.  Rich-and-ready-to-go: This owner will have achieved personal financial independence and is ready to move on to other things in his/her life. Learn Your Exit Option and Understand the Value of the Option You Choose  Internal Exit Paths: family transfer, management buy-out, employee stock ownership plan.  External Exit Path: private equity group recap, outright sale. Each exit path creates differing potential business values for a transfer. Taxation upon these transactions also can differ significantly, so understanding and balancing your value need with the exit path values on an after-tax basis is critical in choosing the optimal option for you.

Execute Your Exit Strategy Plan to Achieve Your Goals and Protect Your Wealth Business owners value privacy and often adopt a do-it-yourself philosophy which can extend to the business exit process. They might know a little about the technical and related aspects of a business transfer, including accounting, taxation, estate planning, insurance planning, legal documentation, and financial advisory services. But knowing a little bit about something can be dangerous; it can lead to a false sense of control and confidence, as well as indefinite procrastination. Why go it alone? When you consider how much wealth is at stake, it makes much more sense to create a professional advisory team, with an exit specialist managing the planning process. A good team consists of a number of players, each contributing to the overall execution of the exit strategy. Typically, some of the following would be included: Attorney; Accountant; Financial Advisor; Insurance Advisor; Merger & Acquisition Advisor; Valuation Advisor. As stated previously, exit planning is a process, not an event. Obtaining the right information, in a timely manner to make the best decisions with regard to your exit strategy, takes time. Remember the Six Ps—proper planning prevents predictably poor performance, and by becoming engaged in the planning process early, with a business exit planning specialist to partner with you throughout the process, you will be able to exit your business on your terms—when you want, transferred to whom you want, while protecting your own financial independence. R Mel B. Bannon, CLU, ChFC, RFC is a registered representative of Lincoln Financial Advisors and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.

Alaska Business Monthly | September 2015 www.akbizmag.com

ECONOMY

Alaska’s Budget Crisis: Myth or Reality? Alaska’s emerging fiscal and economic opportunities By Natasha Von Imhof Charts courtesy Gunnar Knapp, ISER, unless otherwise noted

here are many people who are well aware of the magnitude of our fiscal crisis and are trying to engage the public to help develop a path through this financial quagmire. However, I fear these leaders may be afflicted with what my grandfather used to call “Cassandraism.” This is to describe the fate of Cassandra, daughter of the king of Troy. She was granted the spirit of prophecy but got crosswise with the Greek god Apollo. The latter could not take away her gift, but ordained that her prophecies would never be believed. For many, it’s difficult to accept that hard times are ahead when the past was so rosy. In the last decade, Alaska State general fund spending grew from $2.1 billion in FY2004 to $4.4 billion in FY2014, a 109 percent increase. To put it in perspective, inflation increased only 30 percent during that same time, and population increased just 11 percent.1 Alaska has been very fortunate to hold vast reserves of oil, which has contributed to unprecedented levels of revenue and spending on a plethora of public service programs and capital investments. Oil revenues started pouring into Alaska’s coffers in the mid- late 1970s after the Trans Alaska Pipeline System was completed May, 1977. In a few short years, the state treasury was facing a $1 billion budget surplus, which spurred two events. First, Alaska voters approved a constitutional amendment establishing the Permanent Fund. Second, Governor Jay Hammond eliminated the state income tax in September 1980. Since then, Alaska is the only state in the union that does not collect either a state sales tax or levies an individual income tax. Instead, every Alaskan receives a payment each year from the $54 billion Alaska Permanent Fund. On top of that, the per capita spending is higher than any other state in the union; the state of Alaska spends about $16,000 per resident. The average for the United States is about $5,300 per resident.2 In a nut shell, oil revenue has allowed Alaskans to grow accustomed to a certain level of amenities, conveniences, and infrastructure, without paying as much personally as typically seen in other states. For Alaska communi-

ties that don’t pay local property taxes or municipal sales taxes, this is particularly evident. Plutus, the God of Wealth in ancient Greek religion, can be identified as the one bearing the cornucopia—horn of plenty. Thanks to oil revenue, Alaskans have been able to enjoy our own “horn of plenty” since the pipeline days.

Many Prophesize Future Oil Prices

There has been much speculation that the price of oil will rebound sooner rather

than later. Some say if we just hang on until then, we will be okay. Unfortunately, it is extremely difficult to project future oil prices, as we can see in the slide below. For the last decade, the future price estimates are just that, estimates. We can’t assume that the 2015-plus price projections are right either. Future prices could be lower. But that doesn’t stop people from trying to emulate Cassandra and predict the future. The Wall Street Journal published an

1. Revenue Sources Book. Fall 2014. http://dor.alaska.gov/Portals/5/Docs/PressReleases/RSB%20Fall%202014%20highres%20page.pdf 2. Per capital Spending in Alaska. http://kff.org/other/state-indicator/per-capita-state-spending/

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article in May 2015 that states the Organization of the Petroleum Exporting Countries (OPEC) doesn’t see oil prices consistently trading at $100 per barrel again in the next decade. In fact, OPEC’s most optimistic scenario pegs oil at $76 a barrel in 2025.3 Rex Tillerson, the Chairman and CEO of Exxon Mobil, recently spoke at the 2015 IHS CERAWeek (IHS Cambridge Energy Research Associates) this past April. Tillerson muses that the 2015 price decline is due to several factors coming together. First, demand is weakening in Europe; second, China’s demand was overestimated; and lastly, there has been a significant influx in supply from North America shale oil. “The freight train of North American shale tight oil just kept on delivering.”4 He went on to add, “This is going to be with us for a while. People need to settle in for a different price environment for the next couple of years.”

Both a Fiscal Problem and a Political Problem No state government likes to downsize. On a good day it’s difficult. On a bad day, it’s devastating. But considering our current fiscal predicament, trying to maintain the same level of spending as previous years

without making any material changes in behavior will drain Alaska’s reserves much faster than necessary and cause for much greater heartache down the road. Spending too much now limits options and flexibility later on. What if as a state, we eventually decide to invest in an All Alaska gas-line? We might not have the money to do so if we continue to allocate our savings towards operations. Targeted investments can sometimes provide the economic stimulus to jumpstart the economy. But, buyer beware, it all depends on the type of investment. A good investment has upfront costs, but ultimately should provide superior benefits such as improved efficiency and increased productivity, which could translate to cost savings or increased revenue opportunities. For example, the Alaska Industrial Development and Export Authority is investing $54 million in Pentex Alaska Natural Gas Company LLC to facilitate the transition to natural gas in and around Fairbanks. This can help lower energy costs considerably for interior residents, improve air quality, and potentially save the Fairbanks Northstar Borough $1.8 million a year in operating costs.5 Medicaid expansion is an investment as

well. Yes, expanding Medicaid can help the state’s economy by pumping millions of federal money into Alaska, similar to road projects. But many investments have hidden costs that sometimes offset and negate the benefits. Right now Alaska pays more for healthcare than any other state in the union. Why? It’s due to low population, high transportation costs, geographic isolation, and extraordinary high cost differentials for specialized medical procedures. The convergence of all these factors is unique to Alaska and therefore makes state to state comparison difficult when trying to evaluate the costs and benefits of a Medicaid expansion here in the 49th state. Federal money also only covers the service rendered. There are other supporting costs that are not covered such as claims processing. The Independent Audit Report dated December 2014 given to the Alaska State Legislative Budget and Audit Committee gave a qualified opinion on Governmental Activities pertaining to the Medicaid claims processing information system. The report states, “The new Medicaid system contained pervasive, significant defects.”6 Expansion can add millions of dollars of costs to an already strained and ineffective system.

3. OPEC Article in Wall Street Journal http://www.oilandgas360.com/opec-sees-oil-price-below-100-a-barrel-in-the-next-decade/ 4. CERA Week. Rex Tillerson Interview. http://ceraweek.com/2015/ 5. Fairbanks Northstar Journal. http://www.adn.com/article/20150518/fairbanks-energy-plan-hits-milestone-state-ponders-54-million-investment

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The Health and Social Services Department is the highest cost driver in our state with a $2.5 billion annual budget. Of that, Medicaid spending is $1.3 billion for FY2013. Any increases in this department will take money from other valuable areas such as education and public safety. That is why in this environment with falling revenues, Medicaid expansion should be examined for its fiscal impact and opportunity cost, rather than being used as a political and emotional hot button.

Production Tax Liability and Credits Used Against Tax Liability ($ millions)

Shoulda, Woulda, Coulda

There has been much written recently comparing Senate Bill 21 (SB21), or the More Alaska Production Act, passed in 2013 with the tax structure it replaced, ACES (Alaska’s Clear and Equitable Share, 2007-2013) I spoke with Gunnar Knapp, President of University of Alaska Institute of Social and Economic Research. He reminded me, “There are four ways the state receives taxes from oil companies: production tax, royalty income, petroleum income tax, and petroleum property tax. Both ACES and SB21 dealt with production taxes only.” Knapp went on to explain that all oil tax revenue has fallen for FY2015, and would have regardless what the tax structure was. It’s the drop in the price of oil that has affected the production tax revenue, not the tax structure or tax rate itself. To understand why oil revenues dropped so much, one has to look at different kinds of revenues separately (slide below). Historically, most oil revenues have been both production taxes (red) and royalties (blue). Royalties are a fixed share of wellhead value (usually 12.5 percent). But there has been a 42 percent drop in oil wellhead value since 2012, which translates to a 45 percent drop in royalty income. On the production side, the oil production tax in either ACES or SB21 is a tax on profits, which in simple terms is income minus costs.

This (above slide) shows that the total tax liability has been falling steadily since 2012 (two years before SB21 went into effect), due to dwindling production, and more recently, decreased income due to the drop in oil prices. The base tax rate is calculated the same way under SB21 as it was in ACES. But the tax base is so low now, that even hypothetically with a 100 percent tax rate, the state still couldn’t recoup the loss. We are better off in 2015 with SB21 in this price environment than we would have been with ACES because the nominal tax rate for SB21 is a flat rate of 35 percent, while ACES was a sliding rate that fell as low as 25 percent at prices below $85 per barrel.

Moving Down the List… Oil Tax Credits Oil tax credits can be simplified into three categories:  Production Credits: Stabilize the net tax system over a wide spectrum of prices to incentivize additional investments in

Unrestricted General Fund Oil Revenues

North Slope legacy fields which also generates additional production in a relatively short time frame.  Exploration Credits: These credits are generally for exploration activities such as seismic work that identifies new opportunities for eventual new production.  Cook Inlet Recovery Act: To encourage investment for subsurface intangibledrilling expenditures and well activity in Cook Inlet. The purpose of all of the Alaska Petroleum tax credits is to attract new investment, more production, and in some cases, new entrant companies to the state. From an economic perspective, what matters is not how the credits compare with current production tax revenues. What matters is how much they do or don’t increase future revenues, as in five years-plus. North Slope credits have the most impact at low prices. This is why we see an inverse relationship during this past year between revenues generated and credits paid. At low oil prices, credits incentivize oil companies to continue to invest and do business in Alaska when the economic and fiscal environment is less than ideal. At current prices of oil, the state of Alaska is exhibiting some delayed gratification now, in exchange for continued employment for its citizens and potentially receiving more in production taxes in the future. In the aggregate, all the different state oil revenues are providing Alaska about $2 billion a year. Roger Marks, a former state petroleum economist, writes, “The credits do not work in a vacuum. The entire oil fiscal scheme needs to be viewed as an integrated system, especially in view of the high amount of royalties received at low prices. As a result, the fiscal system is functional and competitive across a broad spectrum of prices.”7

6. Legislative Audit on Medicaid costs. http://doa.alaska.gov/dof/reports/resource/fy14/Opinion.pdf 7. Roger Marks article http://www.adn.com/article/20150425/alaska-oil-tax-credits-are-working-they-should-low-prices

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Production Tax Credits and Credits Purchased by the State ($ millions)

Total OIl Revenue Received Compared to Tax Credits Paid (in billions)

8 7 6

Total revenue Tax credits

6.10

Source: Alaska Department of Revenue, Fall 2014 Revenue Sources Book.

5 4

2.96

3 2

2.53

1.48

1.37

1.20

FY 2014

FY 2015

FY 2016

1 0

Source: Alaska Department of Revenue

We Have Three Choices

Note 2015 & 2016 are projections.

People can debate the credits until the cows come home, but to be fair, we have to have patience and give them time to work. And it appears they are—Cook Inlet production is up 80 percent since 2010. Caelus Energy is developing a new field called Nuna, which is slated to produce twenty thousand barrels of oil per day by 2017. BP plans to complete 522 total well jobs in 2015 at Prudhoe Bay as compared to 355 well jobs in 2012.

At this point, we as Alaskans, have three choices:  Raise revenues from new sources  Tap into the state’s various savings accounts  Cut spending A practical solution will most likely involve all three working in tandem.

Starting from the top: How do we raise revenue? We could increase taxes on other industries such as mining, tourism, and fishing. While this could be an additional revenue

source, it’s important to manage our expectations and understand that these industries don’t have the same scale as oil and could only contribute modest increases to state revenue. But for fun, economist Scott Goldsmith did walk down that rabbit-hole and asked himself, just how much would we need from tourism, mining, and seafood to close that $3.5 billion gap? He came up with a financial comparison to replace $7.5 billion in petroleum revenue with taxes on other resources: Gold would have to be $10,000 an ounce; salmon would have to be $50 a pound; and every tourist would have to pay the state a $5,000 tax for visiting Alaska. We could reinstitute a state income tax and/or a state sales tax. In 2010, John Boucher of the state budget office and former Alaska Department of Revenue Deputy Commissioner Larry Persily put numbers next to those two options.8

State Income Tax

There are three options for calculating personal income tax liability:  Federal adjusted gross income. A percentage of total income with few (no) deductions.

8. Potential new (or improved) revenue sources. Boucher and Persily. Jun 2010. http://www.alaskabudget.com/wp-content/uploads/Boucher-Persily-June-2010.pdf

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 Federal taxable income. A percentage of income after all deductions.  Federal tax liability. A percentage of total federal income taxes owed. Common sense assumptions most often land on the $400 million to $500 million figure for potential revenue generated by a state income tax.

Annual Revenue to the state

% Adjusted Gross Income

% Federal Taxable Income

% Net Federal Tax Liability

$250 million

1.4%

1.9%

10.4%

$300 million

1.7%

2.3%

12.5%

$350 million

2.0%

2.7%

14.6%

$400 million

2.2%

3.1%

16.6%

$500 million

2.8%

3.8%

20.8%

$750 million

4.2%

5.7%

31.2%

$1 billion

5.6%

7.7%

41.6%

State Sales Tax The estimated income received from a state sales tax is relatively low considering the com-

plexity of managing a state tax on top of the rules in more than one hundred municipalities that already have a local sales tax. In addition, a state tax would impose a competitive

burden on local sales in those municipalities that have their own sales tax, possibly damaging the local economy. The estimates are: $150 million a year for every 1 percent in a statewide sales tax on retail goods and services sold in Alaska, assuming no exemptions. $115 million a year for every 1 percent in a statewide sales tax if food, shelter, and healthcare were exempted. A state sales tax and/or state income tax helps. But it doesn’t close the deficit gap which remains at almost $3.5 billion at today’s spending levels and low oil prices. But there is an obvious solution that some people are reluctant to discuss. The Permanent Fund has been earning billions of dollars in realized earnings each year. Since 1983, we have been drawing from the earnings reserve to pay for dividends and inflation proofing. But some money was held back and retained in the Earnings Reserve. What was the Permanent Fund created for? We can look back at the nine volumes of the original Trustee Papers, accessible to the public on the Permanent Fund Corporation website.9 Volume 5 provides a written account of a speech given by the first Chairman of the Board of Trustees, Elmer Rasmuson, in 1993. Rasmuson writes, “In truth, the Permanent Fund began, chiefly, with a ‘negative goal,’ to place a part of the one-time oil wealth beyond the reach of day to day government spending.” So far, that objective has been met. It has saved billions which would otherwise have been dissipated. Rasmuson goes on to describe how the board first met in 1980 and during that year, the trustees developed a long term policy to reinvest a portion of the annual earnings to pay for dividends, as well as to inflation proof the fund. Any excess earnings above that are available to spend on anything the Legislature appropriates. Rest assured the original trustees did provide some guidance to the legislature regarding the original intent for those earnings. We look to Volume 3 of the Trustee Papers, a testimony by JJ Brecht given to the Senate State Affairs Committee in 1989 for further clarification. This following statement could have easily been written today as it was twenty-six years ago. “Most proposals for use of fund earnings have been met with suspicion and warnings against ‘raiding The Fund’. This highly charged environment has led to hesitancy and inaction by Alaska’s leaders. The central question has gone unanswered: For what are we saving the money?” In this same paper, Brecht offers several recommendations for the fund, including using the Permanent Fund earnings as a 9. Permanent Fund Corporation Trustee Papers. http://www.apfc.org/home/Content/publications/ reportArchive.cfm

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Permanent Fund Statutory Net Income

Uses of Permanent Fund Earnings

counter cyclical force in the Alaska economy. “Earnings from the Permanent Fund can and should help level the peaks and valleys of the Alaska traditional boom and bust economic cycles.”10 The recommendation was not without its fair warning, “We must stop thinking of the Fund as the panacea for all our ills. The Alaska legislature must appropriate funds for sane and reasonable levels of government and promote a stable economic environment in which we can live.”

it doesn’t close the gap entirely if our state continues to spend at historic levels. So, our second option is to continue to look for ways to reduce government spending. Here is the math so far:

Sane and Reasonable Spending

But as the original permanent fund corporation trustee said, it makes the most sense to tap the earnings reserve if we are maintaining a “sane and reasonable” level of Government. Even if we draw upon the Permanent Fund earnings reserves, 10. Volume 3 of Permanent Fund Corporation Trustee Papers http://www.apfc.org/_amiReportsArchive/1989_TP3.pdf

In millions

2015 Unrestricted General Fund Revenue 2015

$ 2,216

State income tax

$ 450

State Sales tax at 1 percent

$ 150

Permanent Fund Earnings Reserve

$ 1,500

Subtotal

$ 4,316

Proposed 2015 Budget

$ 5,000

Budget Deficit

$ (684)

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Without a line by line analysis of the state budget, it’s difficult to recommend specific budget reductions. To help with this effort, Common Wealth North has recommended to the state to engage in management reviews to help identify redundancies and inefficiencies, as well as help draft appropriate performance measures to gauge program effectiveness. Alaska’s budget process could also benefit from a study of what other states have learned as they cut their budgets in the last few years of budget constraints.11

The More Things Change, the More They Stay the Same Mnemosyne was the Titan goddess of memory. If she were a real person, I could picture her rolling her eyes and saying, “Come on people!! We’ve been down this road several times before. 1986, 1990, and again in 1999 oil prices fell, the state went into a tizzy, convened various roundtables to discuss ways to diversify revenue and reduce spending, yet not much has changed because prices rebounded and the crises was averted.” Yes, but Mnemosyne, this time it’s different. Why? Oil production in Alaska is significantly lower, shale oil technology has over-

saturated supply thus driving down prices, and Alaska’s budget has grown well above inflation. However, if there is any consolation, Alaska is not alone in its struggle to pass a balanced budget. As late as June 2015, twenty five states had not passed budgets. Clearly, our challenges are far from unique, and budget disagreements will continue as long as we engage in a democratic form of government. It comes with the territory.11a

2018 and Beyond

But the real story is what might the state look like in 2018 and beyond? What could happen to private sector jobs if oil prices hover at $60 a barrel for an extended period? According to Kara Moriarty, president of the Alaska Oil and Gas Association, Alaska is not seeing the industry cutbacks that are occurring elsewhere. Many investments have already been made in Alaska, and those investments tend to be much bigger and more long-term. In other locations like the state of Louisiana or Alberta, Canada, well rigs are being dismantled quickly because they are considered short term investments in mobile infrastructure versus long term investments in entire fields, like we have here in Alaska.

For example, several companies currently operating in Alaska, such as Conoco Philips, Exxon Mobil, Brooks Range Petroleum, Caelus Energy, Repsol, and Great Bear Petroleum, to name a few, have made significant capital investments in fields all across the North Slope, with much of the work occurring before the downturn in prices. To shut down the projects now would add considerable expense. The good news is, looking at the significant reduction in oil and gas activities in the continental United States and Canada, and the continued investments here in Alaska, we are definitely still in the game. It appears that the business economy is healthy in Alaska. The government sector, not so much. But it’s better than the other way around as its businesses that pay taxes and keep our state afloat. Even if we instituted an income tax, people need jobs to earn income in order to pay taxes. The global fluctuation in oil prices is something we need to live with like all other states and countries with a large oil and gas economy, but there are things Alaska can do to help mitigate the uncertainty. Staying competitive as an industry and having a stable fiscal environment at a

11. Common Wealth North February 2015 Study on Alaska Budget http://www.commonwealthnorth.org/index.cfm?fa=documents_overview&doctype=54 (11a) 25 states have not passed a budget. http://www.adn.com/article/20150607/states-confront-wide-budget-gaps-even-after-years-recovery

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range of oil prices is key. Those are the two elements that both the industry and legislature can control.

Solutions Stable Tax Structure: If given a choice, businesses generally prefer to invest in environments that are predictable and dependable. A company can only properly manage their after-tax cash flow if they know what they can afford to invest in infrastructure and labor. When governments frequently change tax structures, it sends a message to potential investors that politics, rather than economics, is the driving force behind policy and regulation. This is generally a red flag for business looking to expand into new markets because the regulation risk is too high. Worker Productivity and Flexibility: It is in the state’s best interest to keep workers properly trained and employed. One challenge is that labor contracts negotiate compensation packages that are tied to inflation. Over time, the larger challenge tends to be work rules and annual budget cycles that prohibit, or severely limit, the development and implementation of productivity improvements and innovation. An article in the May 2 edition of The Economist does an analysis on worker wage and productivity, “Making a market less flexible raises the risk that an economic downturn will cause mass layoffs.” The article goes on to say, a more flexible job environment actually creates more jobs, though job sharing, project based jobs, as well as can accommodate population transiency.12 The state can contribute towards flexible work environments by negotiating state labor contracts that allow for things such as job sharing, job mobility, workplace innovation, cross training, flexible schedules, and manager discretion regarding seniority, as well as fund training centers to keep job skills up to date. Increase the Pie: While natural gas is not as profitable as oil production, it is a respectable source of revenue diversification. John Boucher and Larry Persily published an analysis a few years ago on the potential of a natural gas pipeline. “Adding up production taxes, royalties, corporate income taxes and property taxes, a North Slope gas line could produce between $1.2 billion and $1.5 billion a year for the state treasury, assuming the gas is worth $2 per thousand

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12. Economist Article http://www.economist.com/news/ briefing/21650086-salaries-rich-countries-arestagnating-even-growth-returns-and-politiciansare-paying

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cubic feet after production and transportation costs.” In addition, there is estimated to be about 47.8 billion barrels of “mean technically recoverable oil” on the North Slope in areas including the ANWR Coastal Plain and the Coleville Canning area. If these areas were open for drilling, the state could benefit greatly from additional tax and royalty revenue through increased oil production.

Fiscal Crossroads

Alaska is the only state in the union that does not collect either a state sales tax or levies an individual income tax. Instead, revenue from oil production and royalty taxes has been the dominant revenue source for nearly forty years, to such an extent that our state has a $54 billion Permanent Fund account, a $13 billion Constitutional Budget Reserve account, and the highest per-capita spending in the union. Due to a significant increase in oil supply, and a slightly weaker demand, oil prices are expected to stay low for the foreseeable future. While Alaska may be insulated from some of the global downsizing because of the nature of our long-term investments in fields versus in mobile infrastructure, our state should be prepared to define “a new normal” for revenue and spending. Landye_Schmidt_AKBusMon_2013_Layout 1

The bottom line is, we have a very large state budget and no way to pay for all of it. At this point, we as Alaskans, have three choices:  Raise revenues from new sources  Tap into the state’s various savings accounts  Cut spending A practical solution will most likely involve all three working in tandem. Our state is at a fiscal crossroads, and it’s worth discussing all our options such as a state income tax, state sales tax, or using some of the Permanent Fund Earnings Reserve to help balance the state budget. While spending the Constitutional Budget Reserve is a quick fix, this limits our future options and may cause us to spend our Constitutional Budget Reserve quicker than necessary. We will always need the Constitutional Budget Reserve to act as a shock absorber during the inevitable period of low oil prices. Draining it removes that measure of financial security. Regardless, it will be important to engage in community conversations where everyone collectively discusses the magnitude of our budget challenges in order to help prioritize spending and decrease the state budget, as well as explore new sources of revenue. 12/20/12 11:00 AM Page 1

In addition to revenue and expenses, there are other non-cash ways to help address and mitigate our fiscal challenges. They might include negotiating more worker flexibility in public contracts, management reviews for state departments and programs, and finding ways to “increase the pie” through opening up new oilfields and streamlined permitting. The recent drop in oil prices has only accelerated the existing problems the state of Alaska has been facing for a while, which is our dependence on a single source of revenue, as well as an unsustainable annual state budget. Alaska needs to shake its “Cassandraism” and begin to believe that the prophecy of lower state spending in the future will most certainly come to pass. Our budget woes are not a myth, but unfortunately, very real. R Natasha Von Imhof is a lifelong Alaskan who takes an active interest in Alaska politics and hopes to help shape policy to secure our state’s economic future.

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HR Matters

By Kevin M. Dee

REAL LEADERSHIP I

was listening to the radio the other day. A panel of notable Alaskan folks told the audience what they thought would happen in Alaska over time. All of them were actually quite positive about our long-term future. They postulated based on their experiences and backgrounds quite elegantly, giving corroborating facts and information as much as time allowed. As I listened I felt more and more as though I was listening to a group of life raft passengers telling me we should see land soon or that rescue would be coming any day now. I felt frustrated and when asking myself why, I realized that everything that I heard was, at this point in time, speculation and opinion. What was missing was the vision of where we want to be as a state and the plan to achieve it. In other words, there was no defining how we would achieve any of this. Never mind the obstacles that are staring us in the face. There was a lack of leadership in this discussion. Unfortunately, this is also true in many organizations. How many times have you heard supposed leaders or managers get up and announce a new initiative or plan, tell you how it will help you and then walk away? You are left befuddled—with something you did not ask for, don’t trust, and when you try 34

it, doesn’t work. There seems to me a gap between leaders and real leadership. When it comes to real leadership several things occur, whether in government or private business. It has to do with getting everyone possible engaged so that their voices are heard and they know that what they think matters. It has to do with what people value in their lives—like family, making a difference, financial security, and so on. It has everything to do with aligning those values and what is important to people and translating those things into actions. It takes real leaders to initiate real leadership. Real leadership engages people and inspires a shared vision of the future through communication, inclusion, and touching on shared aspirations. Real leadership is an experience of integrity in action. Real leaders are individuals easily noticed when they walk into a room. Their integrity and the ways in which they walk their talk and live in their values shows up when they enter a room and it sets them apart. It takes real leaders to begin the process of real leadership and it all begins with an inspiring vision. An inspiring vision can transform people and groups and lead to accomplishments we never thought possible. Such a vision allows us all to see how we can participate in its

accomplishment even though we might not know the exact details on how to get it done. An inspiring vision, whether for the state of Alaska or for your organization, prepares everyone for change and helps overcome the natural resistance to it. It is the vision that determines the mission and what it will take to achieve it. To achieve an inspiring vision, do not go behind closed doors or to Mount Olympus to wait for a lightning bolt of inspiration. Instead talk with and listen to what people want and what is important to them. Being inclusive and listening garners support for a common inspiring vision. Even in the most diverse of groups, common ground exists. Find it and build on it. With a clear and inspiring vision, real leadership then enrolls and engages everyone that can help achieve the mission. People who are in these types of organizations are empowered to move forward with change if that will assist in achieving the mission and the vision. It’s like the Stone Soup parable where everyone brings something to the table to make the soup. I am not saying that with real leadership everything will magically happen and all obstacles will dissolve. In fact, I am saying the opposite. Obstacles and hardships will be there and we will endure and overcome them. It is the commitment to the mission and shared vision that gives us the energy to do just that. It is that spirit of a shared vision despite our differences that holds us together through all hardship. This is where trust must be built. Lots of folks make promises. They tell you they will do something, yet you can almost tell as the words leave their mouths that it will likely never happen. Real leaders do not. They commit to a course of action and will do what it takes to accomplish it. Follow-through is everything. Without it, trust is lost. No matter the hardship or obstacle before us, we as Alaskans weather the storm and keep on going. We survive and thrive. We just need some real leadership to rally us together. R Kevin M. Dee has a master’s degree from Vanderbilt University and is the president of KMD Services & Consulting. He has more than twenty-eight years of experience providing leadership development, organizational development, and human resource services in Alaska and internationally. Contact him at mail@kmdconsulting.biz.

Alaska Business Monthly | September 2015 www.akbizmag.com

EDUCATION

Why Economic Education is Important to Alaska Children and Young Adults By Daniel McCue

hen children and youth have a better understanding of economics, they can make informed choices and function in a changing world economy. Youth who understand economics when they graduate are more prepared to shape their own futures and that of their communities. Economics curriculum also enhances learning in math, technology, and social studies, all while teaching and reinforcing important skills in critical thinking, decision making, research, cooperation, and communication. The Alaska Council on Economic Education was formed in 1977 as an Alaska nonprofit with the mission of creating a partnership of leaders in business, economics, and education devoted to advancing the economic way of thinking so an informed public understands economics, shapes their future, and advocates sound personal, local, and national economic policies.

Primary Strategy

The council’s primary strategy is to train K-12 teachers in ways to incorporate economic education into their classrooms. Through continuing education courses, K-12 teachers have been able to identify ways to introduce these lesson plans into their classrooms from elementary to high school. Every teacher who receives training in turn can reach hundreds or even thousands of students over the course of their teaching career. This means more of Alaska’s young people can graduate with economic literacy, a crucial tool for success in life. The Alaska Council is part of a national network of state councils on economic education, with member organizations in all fifty states. The Alaska Council maintains a strong partnership with the University of Alaska Anchorage’s College of Business and Public Policy, through its Center for Economic Education (CEE). CEE’s primary focus is teacher training. The teacher, above all, is the single most important asset in any educational program. The Center and its partners, including the Alaska Council, engage in many activities to support economics teaching, including the following:  CEE offers teacher-training activities for teachers to increase their knowledge of basic economic concepts and to familiarize them with methods, strategies, and resources to teach economics. www.akbizmag.com

 CEE consults with schools, educational agencies, and community groups for needs assessments, curriculum development, course content, resources materials, and teaching strategies.  CEE develops curriculum materials to help teachers make economics relevant to the needs of their students.

Statewide Curriculum

The Council works to improve economic education by producing and distributing curriculum to teachers throughout Alaska. The Alaska Council developed an online teacher portal at akcee.org to make it easier for teachers to access curriculum and other information to assist them in teaching economic principles. The portal provides easy access to hundreds of Alaska-specific curriculum lesson plans developed by Alaska teachers or through the National Council on Economic Education. Each lesson plan and its content are thoroughly reviewed prior to being uploaded. These adaptable lesson plans incorporate economic and financial literacy concepts to enhance learning in all subject areas, such as social studies, science, and math. The council actively publishes new lessons plans throughout the year from teacher training sessions and the on-going interaction and support of dedicated teachers.

Active Role

Also, the Alaska Council plays an active role in organizing, teaching, and developing ongoing programs by working closely with UAA’s CEE:  The Spring Economic Forum focuses on an economic issue of importance to Alaskans by bringing in guest speakers for the benefit of fifty to one hundred participating teachers. This year’s topic was about economic challenges facing our state due to lower oil prices.  The council assists school districts by developing training courses for district development sessions. AKnomics was developed for this purpose and it is being used by the Anchorage and MatanuskaSusitna school districts.  The council prepares Highly Qualified Teachers to take and pass the Economics Highly Qualified Praxis Test.  The Stock Market Game is an online simulation game utilized by the council

that allows students in upper elementary to high school to trade on the New York and American Stock Exchange using imaginary funds in competition with other schools.

Economic Issues

The world economy will continue to impact Alaska and the United States by creating new economic challenges and opportunities. Educating our students on economics and financial literacy will help better prepare them to understand the impact of future issues. Alaska is known for its natural resources. Developing these resources has required Alaska voters to weigh in on topics like oil production taxes and mining development. A good understanding of economic principles will provide a good baseline to understand the impact and tradeoffs of key issues. The council is committed to promoting economic education in Alaska through its teachers and their students. The Alaska Council on Economic Education is a 501(c)(3) nonprofit organization and all donations are tax deductible. The organization relies on the support of the business community and individual contributors dedicated to promoting economic education in Alaska. Primary supporters are BP, ConocoPhillips, and ExxonMobil. The council’s long-time success is directly attributed to its active partnership with UAA’s Center for Economic Development, its financial supporters, active support and involvement of the individual school districts, and a committed board of directors. R

Daniel McCue is Senior Vice President Corporate Administration at Alaska USA Federal Credit Union and joined the board of directors of the Alaska Council of Economic Education in 2011, where he is currently serving as Board Chairman. For more information about the Alaska Council on Economic Education or how to get involved, contact McCue at d.mccue@alaskausa.org.

September 2015 | Alaska Business Monthly

ENERGY

Energy Efficiency in Rural Alaska Innovations, cutting costs, weatherizing, and using less By Rindi White

ne in five rural Alaska households spends almost half their income to heat and power their home, more than five times what Anchorage residents pay. There’s no single solution, but many groups have different approaches to the problem and, together, a patchwork quilt of solutions is emerging. Heat and power are the two top utility costs. For most residents, that spells a reliance on costly diesel fuel and heating fuel. One of the top priorities identified in Commonwealth North’s 2012 report “Energy for a Sustainable Alaska” is to mitigate the high cost of diesel by reducing diesel consumption through efficiency measures and diesel alternatives that make fiscal sense. Alaska Housing Finance Corporation (AHFC) is a leader in energy efficiency projects. Since 2008, the organization has made improvements in 16,500 homes across Alaska, both urban and rural. CEO Bryan Butcher and John Anderson, director of AHFC’s research and rural development office, say those homeowners are seeing a reduction in heating and power costs of about 30 percent, although some residents see as much as a 50 percent reduction. In the Kotzebue area, Kotzebue Electric Association has nineteen wind turbines spinning to help offset their yearly use of diesel fuel. Contractor STG, Inc. is installing three more turbines, one in Deering and two in Buckland, this year. Alaska Village Electric Cooperative serves about 30 percent of the residents in rural Alaska. The cooperative is a leader in energy efficiency measures and has taken another approach to increasing efficiency: building small-scale energy grids connecting two or more communities at a time. In many cases, running a low-voltage transmission line between two communities allows the cooperative to retire older, inefficient diesel generators in one of the two communities. Alaska Village Electric Cooperative (AVEC) three years ago, used grant funding to supply consumers with “energy detectives” that, when 36

“There weren’t really any other models to look at, we had to design our own foundations. We were the first wind project anywhere to utilize freeze-back pilings in permafrost. A lot of it was learning how to deal with our environment.”

—Brad Reeve General Manager, Kotzebue Electric Association

attached to the electrical panel in a house, help consumers know how much energy their home is using. The company got a grant last year to perform energy audits at rural Alaska businesses, in hopes of helping business owners find ways to reduce energy costs. In a 2015 outlook, AVEC president Meera Kohler says lower oil prices should spell lower fuel costs, but she plans to continue to press the state for a long-term solution that will benefit rural Alaskans. “We will continue to press for significant changes in how the state develops an energy plan for the entire state. We will continue to press for fair and equitable treatment of all Alaskans,” she wrote.

In Kotzebue, Innovation Wins

Kotzebue Electric Association (KEA) was the first organization to bring utility-grade wind turbines to Alaska. That was back in 1997, in the early days of wind-diesel integration. “It was kind of before wind was cool,” says KEA general manager Brad Reeve. The interest in wind was formed when it appeared the state-run Power Cost Equalization program, which uses state funding to subsidize the high cost of energy for rural Alaskans, was in jeopardy. Reeve says he and the KEA board of directors needed to find ways to reduce power costs in case the equalization program went away. They participated in a National Rural Electric Cooperative Association-funded electric research grant in 1992 to study wind power possibilities. The study was done and the results looked favorable, he says. The cooperative moved forward, learning a lot about turbines and turbine in-

stallation in cold climates in the process. “There weren’t really any other models to look at,” Reeve says. “We had to design our own foundations. We were the first wind project anywhere to utilize freeze-back pilings in permafrost. A lot of it was learning how to deal with our environment.” Today, the electric association runs nineteen wind turbines in its service territory. Wind provides about 20 percent of KEA’s power and has saved about 250,000 gallons of diesel a year. But storage is an ever-present issue. What happens when wind power is generated at night, when the need for power is low? Reeve says instead of counting that power as a loss, KEA contracted with the hospital to route the excess wind power there to serve the heating needs of the local hospital. The utility is working on another contract to use the excess wind to heat an apartment building. The association also heats the city water supply in winter, and Reeve says it’s working on a project to turn excess diesel stack heat into power. It’s in its sixteenth year of using the heated water from its diesel generators to make ice used by commercial fish processors in the area to keep fish cool while it’s flown out to be processed. “That saves us a little bit of money,” Reeve says. The ice machine makes up to twelve tons of flake ice per day. “It keeps our radiator from spinning. That reduction saves about three thousand gallons of fuel in the summer,” he says. This year, the association is branching out to install one wind turbine and install and run two more in other communities.

Alaska Business Monthly | September 2015 www.akbizmag.com

In Buckland, KEA manages and runs the electric utility, which is separate from KEA. Reeve says his organization does everything from maintenance to billing, and recently his crew oversaw the installation of two 100 kilowatt Northwind turbines. The turbines have been commissioned, Reeve says, but they won’t be fully integrated until this fall. “They can’t run free until some other equipment is placed in the plant,” Reeve says. An updated control system is one of the primary pieces of equipment needed, he says. The new equipment was expected to be in place by the end of August. In Deering, the community will be running the new Northwind 100 kilowatt turbine being installed, but KEA was asked to help with project management during the installation process and to oversee the wind turbine in the long term. “They want us to help operate the wind turbine and to maintain and handle that aspect,” Reeve says. The project is being funded by a $10.5 million grant from Alaska Energy Authority’s Renewable Energy Fund and with cooperation from the Northwest Arctic Borough.

A Broad Approach on Cutting Costs Alaska Village Electric Cooperative is always

on the lookout for ways to reduce energy costs. The cooperative added five new communities in the last few years, including the western Alaska hub, Bethel, in an effort to spread fixed costs over more kilowatt-hour sales. The cooperative runs the largest fleet of wind turbines in the state, thirty-four, and will be seeing a boost in utilization of four turbines this summer when a project that includes a transmission line between Emmonak and Alakanuk and upgrades to the Emmonak power plant and fuel tank farm is finished. AVEC also handles much of its own shipping of fuel to communities it serves. The utility constructed two sets of tugs and barges and contracted with Vitus Marine to operate them, reducing the cost of fuel transportation by about twenty cents per gallon, according to AVEC’s 2015 update to members. One of AVEC’s core efforts, however, is to connect communities where possible. Aggregating the load makes power generation more efficient, Kohler says. Having a larger load also makes renewable energy projects like wind or hydropower more feasible. The big focus this season is completing a $14 million multi-phase project to update the power plant at Emmonak, install a new tank farm, and connect the community to nearby Alakanuk. Emmonak has just over 800 residents

and Alakanuk nearly 725 residents. In 2011, AVEC built a ten-mile intertie between the two communities and installed four wind turbines between the two communities. But the turbines couldn’t be fully utilized until the power plant had been upgraded with a compatible operating system. Unfortunately a fire was sparked at the power plant this spring that damaged one of the newer generators. The intertie was helpful, Kohler says. After changing around the feeders, AVEC was able to send power from Alakanuk back to Emmonak to help while the power plant at Emmonak was repaired. The power plant upgrade project will allow electricity to flow between the two communities permanently. It should also provide more stability simply due to its physical location, Kohler says. “Both the Alakanuk and the Emmonak power plants were in flood plains and both have suffered flood damage in past years,” Kohler says. “So we have erosion and breakup happening. We had to do something. So we took the system out of the floodplain and built it up. The Alakanuk power plant will be decommissioned, with a single back-up generator remaining.” As part of the project, the fuel storage tanks and power plant were moved out of reach of future flooding, Kohler says. It was

Alaska Business Monthly | September 2015 www.akbizmag.com

funded with a combination of money from the Denali Commission and AVEC’s capital fund. The 2011 wind and intertie project were paid for primarily through the state’s Renewable Energy Grant Program. Kohler says she estimates the new diesel plant and full use of the four wind turbines will offset diesel usage by 15 to 20 percent in the two communities, or about sixty thousand to eighty thousand gallons of diesel each year. AVEC’s popular Energy Detective program, introduced three years ago, is helping individual homeowners better understand how energy is used in their home. The device connects to the main line coming into the house at the panel, then consumers can turn off all circuit breakers and turn them back on, one by one, to understand the power usage in each area of the house. “It also tells you when you’re sitting in your house and there are no lights on, the only thing there is the phantom load,” and how much that load is, Kohler says. The utility pre-programs the monitors with each community’s retail rate for power when they send them out, so consumers can see at a glance how much they pay to power different items. In 2014, the cooperative got a $200,000 Rural Business Enterprise grant from the federal Rural Utilities Service, which it used to

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perform commercial energy audits. Over the course of the year, forty-two audits on commercial buildings were completed, Kohler says. The reports were recently delivered to building owners and operators, she says. It will be up to the building owners to make changes if they wish to and seven have already begun implementing recommendations. AVEC and KEA are addressing energy efficiency on the power side, but Kohler points out that power is only a small slice of the rural Alaska energy pie. “The biggest consumption of energy comes through the heating system, not electricity,” she says.

Efficiency by Another Name: Weatherization That’s where Alaska Housing Finance Corporation (AHFC) comes in. The public corporation has, since 2008, operated the state’s largest weatherization program. A sister program, its Home Energy Rebate program, reimburses homeowners up to $10,000 in energy improvements. “This year, seventeen agencies are funding $25 million in work [through the Weatherization Program], a little more than two thousand units this year,” says John Anderson, AHFC’s director of research and rural development. Through

the Home Energy Rebate program an average of one hundred homes a week in Alaska either have their first energy home inspection or a post-inspection conducted after energy improvements have been made. The units Anderson refers to are houses on which energy work has been done. AHFC president Bryan Butcher says the energy-related funds, which come from a mix of state general fund money and federal funding, are distributed regionally. “Of the $350 million we’ve received since 2008, over 50 percent of those funds have been spent in non-road-connected rural Alaska,” Anderson says. Due to the remote nature of the rural homes helped through the project, the costper-unit is higher. Weatherization work that can be done in urban Alaska for $11,000 takes about $30,000 in rural Alaska. As to how the work happens, AHFC relies on its fourteen partner agencies, from the Aleutian Housing Authority to the Tlingit-Haida Regional Housing Authority, to determine which homes qualify for funding in each region. “We rely on the agencies to perform their analysis based on the knowledge of their communities and their regions and to select the communities in most dire need. They get the clients signed up and then are

September 2015 | Alaska Business Monthly

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prioritized based on need,” Anderson says. The weatherization is income-based, and families with children, seniors, or family members with disabilities rank higher on the list. Anderson says the program doesn’t do flashy, fancy renovations. It’s mostly about the biggest bang for the buck. “We’re going in and doing attic work and crawlspace work, life-safety measures on the home to make sure it’s operating properly; we do a clean-and-tune for heating systems— sometimes we replace them, but that’s not a goal—and sometimes it’s windows and doors. It’s a variety of things,” Anderson says. Sometimes the life-safety measures are the most immediate need. “We’ve found in a couple of homes that the house was so unsafe because of carbon monoxide leaking from appliances that we’ve had to do immediate life-safety measures,” Anderson says. Robbin Bolding, a mom on disability who lives in a trailer in Anchorage, says RuralCAP did an assessment in June at the home she had lived in for a year. She’d been having headaches frequently, and the assessor found a hot water tank was leaking gas. The hot water heater was immediately replaced and her headaches are gone. She’s thankful, she says, and hopeful that there will be funding available to complete the list of repairs for her home, which includes replacing windows and other items. AHFC has done work in more than two hundred communities around the state. Anderson anticipates eighteen thousand homes will have received AHFC weatherization work by March 2015. Butcher says the program kicked off in 2008 when the state was flush with oil money due to the high price of oil. Thengovernor Sarah Palin and her administration elected to use some of the excess money to establish a program to offset the higherthan-ever energy costs for rural Alaskans. “They chose to put $300 million in [the weatherization and home rebate programs] that first year,” Butcher says. Over the next seven years, the funding has naturally declined as oil revenue has decreased. This year, the corporation received $7.1 million for the two programs. “That was a little more than we used to get before 2008. It’s definitely less than it has been,” Butcher says. “It speaks to the priorities that Governor [Bill] Walker and the legislators have, that in a year when so many things were cut and reduced in the state capital budget, they saw this as a priority.” R Rindi White is a freelance journalist living in Palmer.

Alaska Business Monthly | September 2015 www.akbizmag.com

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ECONOMY

A Model for Alaska’s Road to Economic Growth: Boutique Steps

The opinions expressed herein are those of the authors alone and not of the University of Alaska System or Alaska Business Monthly.

“It is not the strongest of the species that survives, or the most intelligent; it is the one most capable of change.” —Charles Darwin “Insanity is doing the same thing over and over again and expecting different results.” —Albert Einstein

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Iditarod Tyonek Poorman Tatitlek Petersville Unalakleet Flat Hope Talkeetna Whittier Pitkas Point Scammon Bay Naked IslandCordovaEyak Holy Cross Skagway Stebbins Pilot Station Nikiski Paimiut Klukwan Saint Michael Marshall Johnston Point Kenai Moose Pass Cape Yakataga Hooper Bay Chefornak Haines Chevak Salamatof Yukon/Alaska Fiber Option 1 Russian Mission Cantwell Eek Cooper Landing Tonsina Crooked Creek Georgetown McCarthy Kasilof Chitina Kotlik Yakutat Kipnuk Willow Sutton Ohogamiut Paxson HamiltonRed Devil Kongiganak Clam Gulch Chenega Bay Port Alsworth Yukon/Alaska Fiber Options 2 and 3 Aniak Palmer Kwigillingok Seward Ophir Emmonak Sleetmute Napamiute Medfra Middleton Island Susitna Alakanuk Ninilchik Upper KalskagChuathbaluk Grayling Knik Takotna Nikolai Quinhagak Nondalton Sheldon Point McGrath Chisto Lime Village Newtok Valdez Juneau Pedro Bay Anchor Point Nikolaevsk Anvik Shageluk Tuluksak Tatalina Koliganek Iliamna Anchorage Newhalen Kasigluk Homer TERRA NW Phase 2 Sparrevohn AFS Akiak Iditarod Tyonek Cone Mountain Tatitlek Tununak Kachemak GulkanaGakona Petersville Flat Bethel Hope Hoonah Kokhanok Mekoryuk Umkumiute Napakiak Elfin Cove Kwethluk Ekwok Talkeetna Whittier Nanwalek TERRA NW PhaseAleknagik 3 Pitkas Point Igiugig Holy Cross Scammon Bay Naked IslandCordovaEyak Nightmute Napaskiak Tazlina Arctic Cable Nelchina Platinum Port GrahamPortlock Pilot Station Togiak Pelican Paimiut Tenakee Springs Copper Ce Nikiski Levelock Tuntutuliak Marshall Johnston Point Kenai Manokotak Moose Pass Cape Yakataga Hooper BayChevak Chefornak Angoon Salamatof Yukon/Alaska Fiber Option 1 Russian Mission Eek Cooper Landing Portage Creek Crooked Creek Georgetown Tonsina Clark's PointEkuk Kasilof Ya Kipnuk Red Devil Willow Sutton Ohogamiut Kongiganak Naknek Clam Gulch South Naknek Chenega Bay Port Alsworth Yukon/Alaska Fiber Options 2 and 3 Aniak Sleetmute Palmer Kwigillingok Seward King Salmon Napamiute Kupreanof Kake Middleton Island Susitna Ninilchik Upper KalskagChuathbaluk Knik Quinhagak Petersburg Nondalton Sitka Wrangell Lime Village Newtok Valdez Nikolaevsk Hyder Tuluksak Koliganek Egegik Iliamna Pedro Bay Anchor Point Anchorage Kasigluk Newhalen Homer TERRA NW Phase 2 Sparrevohn AFS Akiak Tyonek Cone Mountain Tatitlek Point Baker Tununak Kachemak Bethel Afognak Hope Port Protection Mekoryuk Umkumiute Napakiak Kwethluk Kokhanok Nanwalek TERRA NW PhaseOuzinkie 3 Kodiak Aleknagik Ekwok Napaskiak Igiugig Coffman CoveWhittier Naked IslandCordovaEyak Nightmute Port Alexander Platinum Port GrahamPortlock Togiak Uganik Edna Bay Naukati Nikiski Thorne Bay Levelock Tuntutuliak Chiniak Uyak Johnston Point Pilot PointUgashik Kenai Manokotak Moose Pass Karluk Chefornak Larsen Bay Salamatof Cooper LandingKetchikan Portage Creek Eek Narrow Cape Clark's PointEkuk Hollis Klawock Kasilof Kipnuk Craig Kongiganak Metlakatla Clam Gulch Naknek South Naknek Chenega Bay Port Alsworth Ayakulik Old Harbor Kwigillingok Seward King Salmon Hydaburg Middleton Island Ninilchik Port Heiden Quinhagak Nondalton Akhiok Kaguyak Pedro Bay Anchor Point Nikolaevsk Koliganek Egegik Prince Rupert NewhalenIliamna Saint Paul Homer Cone Mountain Kachemak Afognak Kokhanok Nanwalek Aleknagik Ekwok Chignik LakeChignik Igiugig OuzinkieKodiak Platinum Port GrahamPortlock Togiak Nelson LagoonPort Moller Uganik ChiniakLevelock Pilot PointUgashik Manokotak Saint George KarlukUyak Ivanof BayPerryville Larsen Bay Portage Creek Narrow Cape Clark's PointEkuk South NaknekNaknek Ayakulik Old Harbor King Salmon Port Heiden Sand Point Cold Bay Akhiok Unga King CoveBelkofski Kaguyak Egegik False Pass Saint Paul

Tununak Mekoryuk Umkumiute Nightmute

SOURCE: Alaska Broadband Task Force

By Dr. Ashok K. Roy and Dr. Shiva Hullavarad

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Alaska Business Monthly | September 2015 www.akbizmag.com Fort Glenn

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he purpose of our article is to provide a measure of the daring of an idea, install a new idea, and subvert some old ones—not by giving people vertigo but by clarifying and lengthening our perspectives and intellectual discourse. In general, Alaska’s economic characteristics are similar to that of small islands: remoteness; economic activities less diversified and more specialized from a narrow range of markets and resources; high transport costs; etc. The result of these characteristics is that Alaska’s “capacity of transformation,” using former MIT Professor Charles Kindleberger’s terminology, appears to be limited. Alaska’s small domestic market, now coupled with low oil prices, further limits the options

 The US produces about 62% of its oil needs (Note: Oil has to make it to refineries to be useful.)  Coal provides 34% of electricity and is declining quickly  Natural gas provides 30% of electricity  Nuclear power provides 20% of electricity  Hydropower provides 7% of electricity  There are more than 63,000 shale oil wells in the United States  Wind power and solar are surging

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available for economic development. Petroleum, the federal government, and the basic sector (mining, fishing, timber, and tourism) drive Alaska’s economy, and 97 percent of Alaska’s jobs are evenly distributed among these groups. For a variety of reasons, federal spending relative to population in Alaska is the highest in the nation, and oil revenues average 90 percent of Alaska’s unrestricted general fund revenues making Alaska über dependent on oil revenues to fund state government. In recent months, Alaska’s oil revenues have fallen precipitously, and according to the latest (2015) US government landmark Annual Energy Outlook released at the Center for Strategic & International Studies conference in Washington, the US Energy Information Administration, which prepared the outlook, thinks oil prices will stay below $80 per barrel through 2020. Turning to the basic sector: tourism is seasonal and mining and fishing are extractive, and with no viable processing and refining plant infrastructure in place, they do not exhibit much potential for growth. By way of setting the canvas on the national energy scene with which Alaska’s economic well-being is inextricably intertwined:

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That brings us to the fundamental question of how are we going to support our state and what are possible future revenue sources? From time to time, there have been discussions on the urgent need to diversify Alaska’s revenue sources: having an income tax and sales tax, the Permanent Fund earning reserves/earnings, etc. In our article titled Strategies to Prepare Alaska for the Economic Marathon in the October 2012 edition of the Alaska Business Monthly, we had enunciated ten steps for long-term stability in the global ecosystem. Thus far, Alaska has relied more on a product-based economy rather than a service-based economy. So, the question becomes what should we now do to reinvent ourselves to thrive and not just survive? The Midas touch may well lie in taking a number of boutique steps. Economists have still to come up with a comprehensive answer to why and how economies grow. Focus has shifted from capital and labor to higher productivity and human capital embodied in knowledge. MIT Economist Cesar Hidalgo now argues that Hyder

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September 2015 | Alaska Business Monthly

economies grow if they are good at making information. This notion got us thinking that funding higher broadband penetration in Alaska could be worth looking into.

Higher Broadband Penetration

In August 2013, the Statewide Broadband Task Force developed an excellent and comprehensive report titled “A Blueprint for Alaska’s Broadband Future.” In this report, it opined that, based on the 2011 census, a 1 percent increase in broadband adoption could result in a ripple effect of $67.7 million to Alaska’s economy. That is huge. There appears to be a direct correlation between GDP growth and broadband penetration according to studies of the countries in the Organization for Economic Cooperation and Development by ITU, Cambridge Econometrics, and others. In fact, the Federal Communications Commission opines that “like electricity a century ago, broadband is a foundation for economic growth, job creation, global competitiveness, and a better way of life. It is changing how we educate children, deliver healthcare, manage energy, ensure public safety, engage government, and access, organize, and disseminate knowledge.” We feel that with the Arctic opening (increased traffic; access to resources; increased potential for conflicts; need for increased research and education networks) and new

pathways (Arctic Fibre connecting Canada with the UK; the Russian Optical TransArctic Submarine Cable System connecting Japan to London; Quintillion Networks with exclusive rights for connecting fiber landings into Alaska), now is the best time for Alaska to band together various entities to unleash the power and potential benefits (driving down rates to less than 5 percent of monthly income; improve rural connectivity to fiber-optic transport networks to at least 90 percent; data centers; telecommunications; commerce) of high broadband penetration to the current levels seen in medium penetration countries (Germany, France, Japan, Belgium, UK, Australia, Canada, Luxemburg). In order to address these challenges, we must develop a strategic plan for broadband deployment that includes creating a comprehensive business proposal to broadband providers. Such a plan, for example, could demonstrate to broadband providers that deployment is a sound business decision that would benefit both the providers and the community. This strategic planning process may include the following elements and strategies:  Educating the community about the potential benefits of broadband service.  Creating partnerships among community organizations and institutions that might benefit from broadband deployment.

 Systematic assessment and prioritization of the community’s needs for broadband service.  Aggregating demand within the community to make the service profitable for broadband providers. Participants may include individual consumers, businesses, educational institutions, healthcare facilities, and government agencies.  Identifying an anchor tenant with adequate demand to spur infrastructure investment in broadband.

Also, the Statewide Broadband Task Force Report looked at various approaches to its cost calculations (such as, Broadband Technology Opportunities Program, the Australian National Broadband Plan, and the public policy framework) and settled on the public policy framework which defines targets but does not address the investment amount-estimated at over $1 billion—especially as the federal support (Universal Service Fund) is declining for service providers in Alaska. Given the robust size of the investment ($1 billion +) the Statewide Broadband Task Force considered and identified several funding options via loan programs (within AIDEA) and grant programs.

Proposed Funding Model

The model we propose is similar to the model in which six South Dakota Sioux tribes have decided to pool wind power resources to create the largest utility-grade wind in-

Alaska Business Monthly | September 2015 www.akbizmag.com

stallation in the nation, funding the project through $1.8 billion in bonds issued through a multi-tribal power authority. In December, 2014, Moody’s Investors Service lowered Alaska’s credit “outlook” from stable to negative while Standard & Poor also raised a “red” flag. Nonetheless, at the time of writing, Alaska enjoys high credit ratings for both General Obligation and Revenue Bonds:  Moody’s: AAA for General Obligation, and A1 for Revenue  S & P : AAA for General Obligation  Fitch: AAA for General Obligation, and A+ for Revenue

Perhaps the state with its high credit ratings can leverage with the local governments, Alaska Native Corporations, rural utilities services, the private sector, and other stakeholders to pool resources to fund higher broadband penetration via issuance of bonds as bond rates are at historic lows and are the most cost-effective type of funding available. Granted there will be an annual debt service obligation, but the revenues generated from the resultant multiplier economic development should be able to absorb it. Also, greater flexibility can be provided to the rural utilities services to provide additional financing solutions (guarantees, grants, or a combination) to advance higher broadband penetration. Some other boutique steps also need to be concurrently taken. Alaska should use more of its geographical advantages (e.g., international airport in Anchorage, location in the Arctic) rather than geology. Furthermore, the University of Alaska and the hospitals in the state should be deliberately perceived as “anchor” institutions. In this direction, the example that comes to mind is the route taken by the town of Gary, Indiana, which has used the University of Notre Dame and the Methodist hospital there to reinvent itself. Finally, Alaska should aggressively pursue federal funds via the “Strong Cities, Strong Communities” initiative for Fairbanks and other towns and also aggressively seek grants to encourage investment in public transportation from the special program run by the US Department of Transportation. The global economy’s operating system is being rewritten with four trends: greater urbanization; challenges of an aging population; accelerating technological changes; and greater global connections via trade, finance, and data. We believe that Alaska should take a quantum step to address the last two of these trends by leveraging its current high credit rating (and, hence, lower borrowing costs) and make the investment in higher broadband penetration. In coda, economic success is often a byproduct experienced by people who are aiming for something else. But it comes. R www.akbizmag.com

Dr. Ashok K. Roy is the Vice President for Finance & Administration/ CFO at the University of Alaska System. He is also an Associate Professor of Business Administration at UAF. Roy has worked at three other universities, private sector, and government. Roy holds six university degrees and five professional certifications and has authored more

than eighty-nine publications. Dr. Shiva Hullavarad is the Manager of Compliance, Information, and Records Systems at the University of Alaska System. He holds four university degrees and professional certifications and has authored more than seventy-five publications.

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September 2015 | Alaska Business Monthly

special section

Alaska Native Business

Alaska Native Regional Corporations Thriving ANCSA companies amassing billions, employing thousands

Michelle Anderson

Matt Fagnani

Rex A. Rock Sr.

Gail R. Schubert

Ahtna Corporation

The Aleut Corporation

Arctic Slope Regional Corporation

Bering Straits Native Corporation

Andrew Guy

Gabriel Kompkoff

Sophie Minich

Bristol Bay Native Corporation

Calista Corporation

Chugach Alaska Corporation

Cook Inlet Region, Inc.

Aaron Schutt

Elizabeth Perry

Wayne Westlake

Anthony Mallott

Doyon, Limited

Koniag, Inc.

NANA Regional Corporation

Sealaska, Inc.

President

Jason Metrokin President & CEO

President & CEO 46

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CEO

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President & CEO

Alaska Business Monthly | September 2015 www.akbizmag.com

By Julie Stricker

ith climate change creating new opportunities in the Arctic, Alaska’s Native corporations are making sure they have a say in any future development. They are involved in forums such as the Arctic Economic Council; working together in partnerships such as the Iñuit Arctic Business Alliance; and partnering directly with Outside corporations doing business in Alaska. The corporations were created in 1971 under the Alaska Native Claims Settlement Act (ANCSA), which divided 44 million acres and $962.5 million between twelve Alaska-based regional corporations and more than two hundred village corporations. A thirteenth corporation was later created for Alaska Natives living outside the state. The corporations were tasked with dual mandates: create profitable businesses and support shareholders’ cultural, educational, and social needs. In the four decades since ANCSA, the corporations have become an economic powerhouse in Alaska. In 2014 they amassed billions in revenue and employed thousands of Alaskans, as well as thousands of others around the world.

Ahtna Corporation

Ahtna recorded its third straight profit in fiscal year 2014, three years after a major corporate restructuring, which has put it in position for future opportunities to expand, President and Interim CEO Michelle Anderson told shareholders. The corporation’s headquarters are in Glennallen, with offices in Anchorage. Its thirteen subsidiaries are in construction, environmental, engineering, facilities management, government contracting, professional support services, real estate, and oil and gas and employ more than 1,500 worldwide. All subsidiaries except Ahtna Development Corporation are under the umbrella of Ahtna Netiye’, an Ahtna Athabascan word meaning “our strength.” Overall 2014 revenues were $185 million with a net income of $5.2 million. Dividend payouts were third highest in corporate history. Ahtna has 1,903 shareholders, nearly half of whom were born after 1971. The corporation also provides job training and education for shareholders. A quarter of its Alaska-based workforce was made up of Ahtna shareholders, who earned a combined $7.2 million in wages. It also paid out more than $60,000 in elder dividends. In 2014, Ahtna actively explored its oil and gas potential, leasing forty-four thousand acres near Tolsona for seismic testing. www.akbizmag.com

The corporation will seek reimbursement for the testing from the state of Alaska through New Frontier Basin tax credits. Overall, Ahtna expects the testing, which was positive, to cost less than $500,000 net. While 2014 overall was successful, one project generated substantial losses. Ahtna Environmental, Inc.’s Rock Creek project has lost $4 million since it began—$700,000 in 2014. The corporation conducted an audit of the project, resulting in major management changes. Despite the loss, Ahtna Environmental remained one of Ahtna’s most profitable subsidiaries in 2014, with $1.6 million in net income. Also in 2014, Ahtna established its Settlement Trust to provide future tax-free dividends to shareholders. The corporation contributed $3.4 million to the trust early in 2015 and will continue to contribute 10 percent of its net income to the trust until the balance reaches $10 million. In addition, Ahtna provides more than $500,000 annually to the Ahtna Heritage Foundation, which oversees scholarship programs for Ahtna shareholders. The corporation is also actively working to protect wildlife populations.

The Aleut Corporation

The Aleut Corporation welcomed Matt Fagnani as its CEO in 2014. Fagnani has more than twenty-five years of experience in Alaska with Native corporations, resource, oil and gas, and government industries. The corporation, with a land base along Alaska’s Aleutian Islands and offices in Anchorage, gets the bulk of its income through government contracting, with subsidiaries in telecommunications, environmental remediation, fuel sales, and real estate management. It has 3,383 shareholders. Revenues in 2014 totaled $120.3 million, $96 million of which came from operations and maintenance contracts. Another $10.8 million came from bulk fuel sales. The Aleut Corporation announced dividends of $4 per share as well as a $500 elder payout. Overall, the corporation has paid $34.3 million in dividends and $5.3 million in elder benefits since its inception, President Thomas Mack said in a message to shareholders. Mack also was invited to be a member of the Arctic Economic Council. The Aleut Corporation and the Aleutian Pribilof Island Community Development Association sponsor Aleutian Marketplace. They are looking for innovative business ideas from residents in the twelve communities in the region. The winners in 2014 included ideas for pollock fish franks and a hydroponic greenhouse. The Aleut Foundation awarded 207 scholarships valued at $708,000 in 2014.

The Aleut Corporation also finally received their quota of 38.3 million pounds of pollock that was allotted to them in 2004, only to be sidelined by fishing restrictions due to declining Steller sea lion populations in the western Aleutians. The corporation also owns the fish processing facility on Adak.

Arctic Slope Regional Corporation Barrow-based Arctic Slope Regional Corporation (ASRC) remains the largest Alaska-owned business, with more than $2.6 billion in revenue in 2014. More than one-third of ASRC’s revenues come from its petroleum refining and marketing subsidiaries. Other subsidiaries are in energy support services, industrial services, construction, and resource development. It has more than eleven thousand employees worldwide, nearly five thousand in Alaska. ASRC has twelve thousand shareholders with a land base on Alaska’s North Slope. Climate change and the start of offshore oil drilling directly affect North Slope residents. ASRC is partnering with six North Slope village corporations to create Arctic Iñupiat Offshore. The joint venture with Shell Gulf of Mexico will allow it to acquire an interest in Shell’s Chukchi Sea offshore leases. Rex Rock Sr., ASRC president and CEO, will serve as president for Arctic Iñupiat Offshore. “Our region has always been a leader in strategic partnerships that provide meaningful benefits to our shareholders, to our people,” Rock says in a release announcing the venture. In July 2015, ASRC announced it had acquired Texas-based Arctic Pipe Inspection, with operations in Houston, Texas, and Deadhorse. The company provides electromagnetic, ultrasonic, weld-line, and mill inspection services to oil and gas producers. Arctic Slope is also a partner in the Iñuit Arctic Business Alliance, which also includes NANA Regional Corporation and Bering Straits Native Corporation. The three corporations straddle the Arctic Circle and will be directly affected by increased shipping and other activities in the Arctic. Together, the corporations own 9.3 million acres of Arctic real estate and represent more than 31,900 shareholders. The alliance’s mission is “to provide a unified voice, collective vision, guidelines, and venue for doing business in the Arctic.” Bering Straits Native Corporation

Nome-based Bering Straits Native Corporation marked its tenth consecutive year of operating profits in 2014. President and

September 2015 | Alaska Business Monthly

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CEO Gail Schubert says the milestone is the result of management’s decision to focus on government contracts, which provide 90 percent of Bering Straits’ gross revenues. “Because of our success, we are now able to consider making investments outside of the government contracts arena,” Schubert says in a note to shareholders. Bering Straits’ gross revenues increased $62 million in fiscal year 2014 to $304 million, and its operating revenues increased by $2 million, to $6.5 million, due to decreased expenses and higher profits. Shareholders received a record-high dividend, with a total payout of about $1.9 million. Another $420,000 was distributed to elders. Bering Straits’ also awarded a total of $198,050 in scholarships to shareholders and descendants. Bering Straits has 7,200 shareholders. Bering Straits is actively pursuing to have land at Point Spencer, also called Port Clarence, transferred to the corporation under ANCSA rules. The corporation is interested because of the opportunity for jobs and economic development in the Bering Straits region. However, the corporation notes increased marine activity could have negative effects on the environment and shareholders’ subsistence activities. The corporation’s board of directors formed the Arctic Development Committee to oversee development and other interests in the region. Schubert was one of three Alaskans selected to participate in the Arctic Economic Council.

Bristol Bay Native Corporation

2014 was a “robust year” for Bristol Bay Native Corporation (BBNC). The corporation with a land base around Bristol Bay in Southwest Alaska reported $1.7 billion in overall revenue. Net income was $49 million. The corporation’s revenues come from its investment portfolio, natural resources, and subsidiaries operating in petroleum distribution, construction, government services, oilfield and industrial services, and tourism. More than 60 percent of BBNC’s ten thousand shareholders are under the age of forty, and the corporation is focusing on ways to create opportunities for shareholders, both in jobs and education. The company acquired Peak Oilfield Service Company, an established company with a strong cash flow and more than eight hundred full-time employees in Alaska. It was BBNC’s largest acquisition, and allowed the company to boost its local workforce and increase shareholder hires. The corporation established a holding company, Bristol Bay Industrial, to consolidate its oilfield service companies (Peak,

Alaska Business Monthly | September 2015 www.akbizmag.com

Kakivik, and CCI Industrial). Mark Nelson was named president and CEO of Bristol Bay Industrial. In 2014, Rio Tinto pulled out of Pebble Mine and gifted a portion of its shares to the BBNC Education Foundation, the sale of which generated $6.48 million to the endowment fund, nearly doubling it. The fund provided scholarships for 157 shareholders. The corporation also owns smaller local businesses, such as Mission Lodge, a flyout fishing retreat, which had 100 percent occupancy in 2013, employs shareholders, and gives visitors a taste of the region’s Native culture. BBNC has set aside $35 million to explore further investments in the region.

Calista Corporation

Calista Corporation enjoyed a successful year in 2014. The Bethel-based corporation notched $401.9 million in revenue, its second highest. Net income was $32.7 million. The bulk of Calista’s revenues come through government contracting, but outgoing board Chairman Willie Kasayulie notes Calista’s 2013 investment in STG, Inc. boosted construction earnings, helping diversify its portfolio. The company has thirty-five subsidiaries in fields such as military defense contracting, construction, communications, real estate, environmental and natural resource development, and information technology and media services. “The decisions we make and the successes we have all with the same goal in mind, to provide the highest level of benefit to our shareholders,” Kasayulie says in a news release. “Combining dividends, scholarships, donations, and more, but excluding payroll, total benefits to shareholders and descendants in 2014 exceeded $7.5 million.” Calista, with a land base in the YukonKuskokwim Delta the size of New York State, has thirteen thousand shareholders. However, in July, they voted to allow socalled “after-borns,” descendants of the original shareholders born after the original December 18, 1971, enrollment deadline, to become shareholders. That process will begin in 2017 and could more than triple shareholder numbers to between thirtyeight thousand and forty-three thousand. For the first time, Calista distributed two dividends in one calendar year, for a total distribution of $6.27 million. Another $630,000 was distributed through the Elders’ Benefit Program. Nonprofit Calista Education and Culture distributed more than $344,000 to more than four hundred students. Calista notes the cost of heating fuel in the region, the state’s poorest, is seven www.akbizmag.com

September 2015 | Alaska Business Monthly

times the national average. It has been assessing the potential for alternative energy projects in its fifty-six communities, such as wind and geothermal. The corporation also owns the subsurface rights to the Donlin Gold prospect. Margaret Pohjola was named to replace Kasayulie, who served three consecutive terms as chairman, the maximum allowed. She is the first woman to head Calista’s board.

Chugach Alaska Corporation

A few years ago, Chugach Alaska Corporation started looking at ways to diversity its business platform, which was heavily invested in government contracts. In 2014, after several years of declining revenue, the corporation showed modest gains, according to CEO Gabriel Kompkoff. The corporation garnered $625 million in revenue, a gain of $16 million over 2013. “We remain profitable, and our financial success has helped us deliver on our commitment to generating sustainable shareholder value,” Kompkoff says. In 2014, Chugach Alaska distributed $8.9 million in dividends and elder distributions; $830,000 in scholarships; and $315,000 for intern and apprenticeship programs. The corporation’s land base is the Prince William Sound region, where it maintains the Nuuciq Spirit Camp. Chugach Alaska has 2,600 shareholders. The corporation’s government division celebrated several “milestone large, competitive federal government contract wins,” which position it for a strong year. “Although we anticipate ongoing challenges within the federal contracting area, these contracts represent significant strides in the division’s growth,” Kompkoff says. The corporation’s commercial division has acquired several businesses, including Hawaii refrigeration company Oahu Sales; Kenai-based oil and gas services company All American Oilfield Associates; and its wholly-owned subsidiary All American Oilfield Equipment. Chugach acquired a minority stake in Geneva Woods Pharmacy and invested in a landfill gas-to-energy fund and in wireless spectrum. “We’re also exploring thoughtful investment opportunities, including several lands projects within our region,” Kompkoff says. “Each of these moves opens the door to new opportunities for Chugach, and their impact will continue to reach far into our future.”

Cook Inlet Region, Inc.

Anchorage-based Cook Inlet Region, Inc. (CIRI) posted a strong showing in fiscal year 2014, with $304.4 million in revenue 50

and $48.2 million in net income. The corporation has interests in energy, oilfield and construction services, real estate, tourism, and government services. It is owned by 8,597 shareholders of Athabascan, Iñupiat, Yup’ik, Alutiiq, and Aleut heritage. In 2014, CIRI oversaw the successful construction of the Fireweed Business Center in Anchorage and progress at its Tikahtnu Commons, which is nearly built out well ahead of expectations, according to President and CEO Sophie Minich. CIRI sold its interest in the Hyatt Lost Pines Resort and Spa near Austin, Texas, as well as Alaska Interstate Construction. CIRI owns 1.3 million acres of subsurface land, much of which is being leased to oil and gas companies. After a legal battle over royalties owed by Buccaneer Energy from the Kenai Loop field, CIRI was able settle with AIX Energy, which bought the bankrupt Buccaneer’s assets. “We are now working closely with AIX, and I am confident of a more cooperative relationship in the future,” Minich says in a message to shareholders. The corporation’s wind farm on Fire Island produced nearly 50,000 megawatt hours of electricity in 2014, and CIRI’s investments in wind energy in eastern Washington and the Midwest also performed well. Its government contracting and tourism segments also had a strong year. One of CIRI’s North Wind Group companies received a competitive contract for nuclear cleanup at the Energy Technology Engineering Center in California, “the largest Department of Energy prime contract awarded to a small business owner last year.” Subsidiary Weldin Construction LLC also won a major five-year contract at Joint Base Elmendorf-Richardson. CIRI recently moved out of its longtime home on C Street and into new offices in the Fireweed Business Center. “All of us, employees and shareholders, will miss the building that has been CIRI’s home for nearly forty years,” Minich says. “As we say goodbye though, we also take an exciting step forward to CIRI’s future.”

Doyon, Limited

Doyon, Limited continued to see tremendous growth in 2014. The Fairbanks-based corporation with 19,700 shareholders ended the fiscal year with its highest operations income as well as highest shareholder wages in its history. Total revenues exceeded $362.8 million, with a net income of $48.5 million. Shareholder wages have risen 30 percent in the past four years, 9 percent in 2014 alone. Doyon’s primary businesses are in the

oil and gas industry, government contracting, and tourism. It employs nearly 2,800 people around the world, 1,700 of whom are in Alaska. Doyon was one of a group of six Alaska Native corporations that successfully fought legislation that would repeal state oil tax reforms enacted under Senate Bill 21 in 2013. Doyon backed the Senate Bill 21 reforms, saying it encouraged investment in the oil and gas industry, one of Doyon’s main business lines. In July 2014, Doyon and ConocoPhillips announced a joint venture to build a $100 million rotary drilling rig. The rig, called Doyon 142, is expected to go online in spring 2016. It is the eighth rig in subsidiary Doyon Drilling, Inc.’s fleet. Doyon also conducted seismic testing for oil and gas in the Nenana Basin in 2014, following up on encouraging results from the well drilled in 2013. Doyon plans to drill a third well in summer 2016. Doyon is the largest private landowner in Alaska and 75 percent of its shareholders live in the region. The corporation distributed dividends to shareholders for the twenty-eighth consecutive year, paying a total of $9.1 million.

Koniag, Inc.

Kodiak-based Koniag, Inc. serves 3,854 Alutiiq shareholders from the Kodiak Island region. 2014 was a strong year for Koniag, which saw gross revenue grow to $211.5 million over $202.6 in 2013 from its sixteen subsidiaries. Contracting and sales revenue was $203.7 million with another $6 million coming from natural resources. It also has subsidiaries in the marine construction, natural resources, oilfield service, real estate, and technical services. While most of the corporation’s revenue comes from government sources, it has been looking to its home base for business opportunities. Koniag’s Kodiak Brown Bear Center is located on Camp Island in the middle of Karluk Lake. It is a short boat ride from outstanding brown bear habitat and offers Koniag the opportunity to share its culture with visitors and create employment opportunities for shareholders. Another business, Karluk River Cabins, offers the same opportunity for Koniag to meet its dual roles of profitability and stewardship.

NANA Regional Corporation

In 2014, NANA Regional Corporation welcomed a new president and CEO, Wayne Westlake, who took over from Marie Greene, who retired after twenty-two years with the company.

Alaska Business Monthly | September 2015 www.akbizmag.com

NANA’s profit arm, NANA Development Corporation, saw its gross revenues dip slightly in 2014, tallying $1.6 billion down from $1.7 billion in 2013. It includes subsidiaries in engineering and construction, natural resources, oilfield services, government services, real estate and hotel development, information technology, and telecommunications. It employs more than fifteen thousand people around the world. The corporation, based in Kotzebue, is owned by 13,800 shareholders of Iñupiaq descent. The region is rich in mineral wealth. Shareholder hire has always been of prime importance to NANA, and many shareholders work for Red Dog zinc mine, from which NANA also receives royalties. Over its lifespan, Red Dog has paid more than $1 billion in royalties to NANA. In turn, NANA paid $608 million to the other Alaska corporations under the ANCSA revenue-sharing provisions and $199 million in dividends to its shareholders. In December, NANA paid a total of $9.4 million in dividends in addition to a $1,000 per person distribution to elders. NANA is also working closely with NovaCopper, which is exploring mineral potential in the Upper Kobuk region. NovaCopper embarked on a $5.5 million exploration program in 2015.

NANA also negotiated an agreement with Vitus Energy to lower fuel costs for its Nullaġvik Hotel and corporate offices that allows it to pass savings on to shareholders.

Sealaska, Inc.

Sealaska, Inc. officials say 2014 was “a year of transformation” for the Juneau-based corporation. After suffering a $35 million loss in 2013, Sealaska realized a profit of $14.9 million in 2014, despite lower overall revenue. In 2014, Sealaska’s overall revenue was $121.5 million, down from $165 million in 2013. The corporation is continuing to streamline its holdings, selling some companies, such as Security Alliance, and holding down administrative and general costs. The corporation’s significant investment assets put it in sound financial condition and it continues to look for investments that align with its core values. It is actively seeking companies with strong cash flow, located in Alaska or the Northwest United States, that offer shareholder employment prospects and align with company values. Sealaska has twenty-two thousand shareholders of Tlingit, Haida, and Tsimshian heritage with roots in Southeast Alaska. Sealaska won a major victory in 2014 when Congress approved the final acreage

due to the corporation under ANCSA. The lands bill will convey about 70,000 acres to Sealaska, which will allow it to continue its timber program. It also returned many sacred sites, which Sealaska will manage with local tribes. Congress also set aside 150,000 acres of the Tongass National Forest as conservation lands. Sealaska is also exploring potential mining prospects on southern Prince of Wales Island that contain gold, silver, lead, zinc, copper, and rare earth minerals. Its subsidiary Haa Aaní LCC continues to look for business opportunities in the region that directly benefit shareholders. In 2014, Sealaska paid out $9.6 million to shareholders and village corporations. It also contributed $525,000 to Sealaska Heritage Institute for scholarships.

13th Regional Corporation

The 13th Regional Corporation was created for Alaska Natives living outside the state in 1971. Headquartered in Washington state, it has been inactive since 2008. R

Julie Stricker is a journalist living near Fairbanks.

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September 2015 | Alaska Business Monthly

special section

Alaska Native Business

Corporate Governance Challenges Alaska Native Corporations and their Boards By Sharon Guenther Lind and Han Donker

n 1971, ANCSA (Alaska Native Claims Settlement Act) was ratified to resolve long-standing indigenous land claims and to nurture economic development for Alaska Natives with the creation of the Alaska Native Corporation. The Act created more than two hundred village corporations and twelve regional corporations within Alaska. In 2013, the twelve ANCSA regional corporations, with more than one hundred thousand shareholders, generated close to $9 billion revenues, and they are among the top employers in Alaska. Regional and village corporations have chosen a variety of different organizational and corporate governance structures in terms of board operations, executive and board compensation, board elections, and shareholder involvement.

Community Values

A portion of global society is beginning to realize that economic success should not always be measured by Western standards: other standards are being explored and embraced, including community values and beliefs. The Western model is referred to as the shareholder approach to business governance. Native people embrace a different set of values: a commitment to tradition, heritage, culture, and respect for the environment; communal and individual ownership; and sharing and group recognition rather than individual rewards. The cultural fit and values play a major role in the success of the economic development in Alaska Native communities. Native people have organized collaborative societies and worked together in order to share the wealth of their community. In many ways, Native people are the first “cooperators.” Individualism and freedom of action are important values but are “tempered by community pressure enforcing solidarity and conformity to norms and goals of the cultural group.” 52

Establishment of these organizations required an understanding of the corporate world, ANCSA, and both state and federal law—a huge learning curve encountered by the early boards of these Alaska Native Corporations. Building a corporation from the ground up can be daunting; add to that the complex and unique components of ANCSA and it is easy to see the many challenges of these boards.

Diversity, Independency, and Ownership Structure Even today, boards are facing challenges with respect to board diversity, independency, and ownership structure. What happens when the pool for the selection of a board consists of individuals who are all shareholders, typically from the same ethnicity, who perhaps speak the same language, have similar traditions and customs, and, oftentimes, have similar belief systems? Additionally these board members will have family members who are shareholders and most likely will have relatives and friends sitting with them at the boardroom table. Also, today’s Alaska Native Corporations have shareholder preferential hiring practices so they could use hiring preferences to meet the needs of shareholders, their spouses, and their children. Board independency and board diversity are crucial elements of corporate governance practices. Homogenous boards with a lack of independency can create problematic situations in any organization. Another interesting issue with respect to corporate governance is the ownership structure of regional and village corporations. Shares held by Alaska Natives in their regional and village corporations cannot be sold or traded. An interesting question specifically for Alaska Native Corporations is how Native shareholder ownership will evolve over the next years and what will be the impact of different classes of ownership as these corporations explore options, such as open enrollment.

Variety with Connections

In spite of all of these challenges, Alaska Native Corporations have thrived for more than forty years. These organizations have seen a variety of individuals in the boardroom over the years, each with a variety of skillsets and backgrounds but all with some type of connection. Today’s Alaska Native Corporation board members have many resources at their disposal. Improved communication channels, technological advancements, board training, and information accessibility are making stronger, better equipped ANC board members. Today’s director has a wealth of organizational boardroom history to lean on and a myriad of reference guides that define effective boardroom conduct. R

Sharon Guenther Lind teaches in the area of Alaska Native Business Management at the University of Alaska Anchorage. This fall she is teaching Alaska Native Corporation Business Management and Intro to Alaska Native Business. She is running for the board of directors of the Aleut Corporation again this fall. Han Donker is a Professor of Accounting at the University of Alaska Anchorage and editor-in-chief of the International Journal of Corporate Governance.

Alaska Business Monthly | September 2015 www.akbizmag.com

special section

Alaska Native Business

Emerging D Alaska Native Artists

Alaska Native artists are using new business models to market their contemporary work; from left, Jerrod Galanin, Elizabeth Ellis, Holly Nordlum, and Ryan Romer.

Featuring contemporary artwork and business models By Shehla Anjum

o not confuse Alaska Native art with cheap, imitation “Native art” made overseas and sold in gift shops catering to tourists. Today’s contemporary Alaska Native artists create original and stunning art, equal in creativity to anything found in art centers such as New York or London. Some of these original works sell in the thousands of dollars, but artists also make affordable, original art. Their works retain many traditional elements in a contemporary style, both fresh and inventive. The art often goes beyond beauty or startling imagery to include thought-provoking elements. This is also art with a purpose: To draw attention to many problems—alcoholism, diabetes, fetal alcohol syndrome—that confront Alaska Natives. Four such emerging Alaska Native artists are Jerrod Galanin, Tlingit/Unangan from Sitka; Holly Nordlum, Iñupiat from Kotzebue; Elizabeth Ellis, Alutiiq, from Anchorage; and Ryan Romer, Yup’ik/Athabascan from Bethel. Their works are collected by museums and private individuals and are available in galleries in Anchorage, Juneau, and Sitka. In a sign of changing times, most of them

also market their works through websites and use social media, such as Facebook and Instagram, to promote new work or upcoming shows. Three of the artists profiled, Nordlum, Ellis, and Romer, also belong to “Diaspora,” a group of contemporary Alaska Native artists.

Jerrod Galanin

Jerrod Galanin’s talents are rooted in an artistic family, which includes his father David, brother Nicholas, uncle William Burkhart, and great-grandfather George Benson, a well-known carver of totem poles. In 2014, the three Galanins—the two brothers and their father—each received an artist award from the Rasmuson Foundation. Most of Galanin’s work is making jewelry in copper, silver, or gold; but he also collaborates with his brother Nicholas on installations and conceptual art. Last year, the Frye Art Museum in Seattle displayed “Modicum,” their controversial piece about the deaths of minority victims by law enforcement officers. In the installation a mannequin in black riot gear, crouched underneath an array of disposable coffee cups that dripped red paint. The

Alaska Business Monthly | September 2015 www.akbizmag.com

“Trickster Steals the Light” copper cuff (left) and “Fire Raven” copper pendant with trade beads, both by Jerrod Galanin in 2015.

name of a minority victim was inscribed on each cup. The work made many viewers uneasy, Galanin says, but also fostered discussion about the reasoning and issues behind it. The Frye Museum is considering purchasing the piece for its permanent collection, he says. “I was born to be an artist,” says Galanin, who received no formal training. “I learned from mentors, who are my family—my dad, my uncle Will Burkhart, and my brother Nick.” He made his first piece of jewelry—a copper bracelet—in 1995, the year he graduated from high school. For several years afterward he worked mostly as a shipwright and carpenter, making only a few pieces of art each year. In 2010, feeling more settled and getting older, Galanin decided to be a full-time artist. “I felt an artistic yearning to devote more time to my art. I have to create every day.” He created between ten and twenty pieces the first few years. Each piece is original and embellished with traditional Tlingit motif and designs, such as the raven, humming birds feeding from salmonberry flower, and spawning coho with eggs. Galanin also makes pieces, such as bracelets or pendants, with fish skin or animal hide, and some incorporate beaded designs. Working in metals is enjoyable, Galanin says, especially copper which adapts to the chemistry of the person wearing it. “I love the warmth of copper and how its color changes and it attains warm, beautiful patinas with time.” Galanin likes to learn new methods and recently worked in brass and learned Mokume-gane, a Japanese metalworking procedure that is both costly and time consuming. But the procedure of laminating several layers of metals such as silver and copper results in a distinctive layered pattern. His jewelry sells well. “There is strong demand for it, especially the bracelets, and I www.akbizmag.com

work hard to keep up with demand,” Galanin says. He is among the few artists able to make a living from art, which is his full-time job. With such high demand, Galanin faces no challenge in selling his work through galleries in Anchorage, Juneau, and Sitka. He regularly posts photos of his creations on his artist page on Facebook. Online sales will start in coming months through his website (jerrodgalanin.com).

Elizabeth Ellis

An artist who creates work on canvas, snowboards, and skateboards, Elizabeth Ellis’ love of art began in elementary school. “I always wanted to be an artist and took every art class that was offered through high school.” Her mother, a self-taught painter, also inspired her. Ellis, the first in her family to attend college, got a BA in art from the University of Alaska Anchorage in 2011. “After graduation I hit the ground running and started meeting artists, many in the

Alaska Native artist community.” A couple of years later Ellis collaborated on a show with the Yup’ik/Iñupiaq artist Drew Michael. For their “Aggravated Organizms” show, Ellis and Michael created three-by-five-foot masks, which Michael carved and Ellis painted. Ten masks of contemporary abstract design represented the top ten diseases that affect Native Alaskans and others. Ellis’ use of bright paint to depict diseases such as arthritis, HIV, or diabetes showed the insidious diseases with a light touch. The Rasmuson Foundation funded the show for travel to several Alaska communities. Ellis started out painting on canvas with acrylic paints, drawing inspiration from the Alaska landscape and her Alutiiq heritage. She studied Alaska Native books for insights about designs, colors, and people and visited ancestral places such as Old Chenega to understand her history and to make drawings and photographs for use in her paintings. An avid snowboarder, Ellis lives in Indian, south of Anchorage, with her firefighter husband and young son. In 2012 the love of snowboarding moved her art in a new and unusual direction. She carved designs on used or discarded snowboards, skateboards, and surfboards and then painted around the carved areas. “The snowboards became a big hit with the mountain community,” she says. Ellis’ solo show, “Sidewayz” in November 2014, paid homage to that culture. Collectors in Alaska and the Lower 48 own the ten pieces created so far. Ellis pursues art solely for the love of it. But she works part-time to save money for a studio in her home and to convert an Airstream Argosy motor home into a mobile art studio. “I will install gallery lighting,

“Turnagain” board art by Elizabeth Ellis. © Elizabeth Ellis

September 2015 | Alaska Business Monthly

“Cousin Kim” is a tribute piece by Holly Mititquq Nordlum.

Holly Mititquq Nordlum

She is, says Holly Nordlum, “the Native artist who is also a freelance graphic designer.” Like the work of several other Alaska Native artists, Nordlum’s is also grounded in the realities and problems of her people. But she approaches her work differently, usually deciding on the medium for a piece based on what she wants to convey, Nordlum says. That desire, to find the right medium for the message, led Nordlum to use beer bottle caps for art about alcoholism and the related fetal alcohol syndrome. One haunting portrait, with more than 3,500 caps in various colors, portrays Kim, her cousin, who died at age thirty-eight from liver failure brought on by alcohol. Another, in the same medium, shows her adoptive brother Drey, who was born with fetal alcohol syndrome. Nordlum strives to convey serious messages through esthetically pleasing works. “I want people to react to my work. I want them to confront their failure to talk about 56

such issues. Some people were offended by my use of bottle caps, but I think it was the appropriate medium for what I was trying to show.” She holds a BFA in graphic design and photography from the University of Alaska Anchorage and owns Naniq Design. She has clients among many organizations. The business provides a source of income and the opportunity to pursue her art. “I wanted to do only art, but knew that it would be hard to support myself and my sons from it. My business gives me the freedom to make art that I want.” She creates prints (silk screen, wood block, or linoleum), paints (oils, acrylic, and gel medium), and sculpts. Her art is mostly abstract with figurative elements. One challenge she has as an artist is figuring out how to sell her work and how to create a market. She says she learned a lot about how to get people excited about her work from other Alaska Native artists, such the Iñupiat artist Sonya Kelliher-Combs and Nicholas Galanin, who successfully market their works. Nordlum uses her website (naniqdesign. com) for her business and uses Facebook to show her new work and to tell people about new shows. Her work is getting noticed. The Anchorage Museum recently bought one of her paintings, and earlier this year the Sitka Historical Society and Museum acquired a piece. Nordlum’s work is available at galleries in Anchorage.

Ryan Romer

As a child, Ryan Romer drew on any surface he could find. “I drew on paper, inside books, walls, catalogs, and even photos.” His interest in photography began while working on the yearbook during high school in Bethel. Romer didn’t go on to college. Instead he worked various jobs in fishing and construction. He was thirty when he became serious about art. “I had all these ideas about art and I figured that I needed to step out of my old world and learn.” He enrolled at the University of Alaska Anchorage and received a BFA in printmaking in 2008. Along with printmaking, Romer also paints in gouache and acrylic. His canvases tend to run large, in sizes of two-by-fourfoot, three-by-five-foot, and four-by-sixfoot. His work portrays the changing social patterns and what is going on in Alaska, especially within the Native community, Romer says. The art is replete with both abstract images and those that evoke the spiritual side of Romer’s culture. His work “Lone Traveler” is a bright acrylic of a human form in a kayak near a tangle of berry

hang art on the wall, and take it on the road for ‘pop-up’ art shows,” Ellis says. Her Argosy will be rolling down the road in a year or two for First Friday events in Anchorage and other communities. Ellis’ art is in galleries and she publicizes new work and upcoming shows on Facebook. Her new Instagram account exposed her work to a broader audience. She has Instagram followers from all over, including Australia and Hawaii. Ellis plans to do swap art shows in both places. In September, she had a solo show at Alaska Pacific University.

“Lone Traveler” acrylic by Ryan Romer.

bushes and lupines. The painting is abstract but with traditional motifs embedded within. Few artists still work in black and white photography, but Romer has an interesting portfolio of prints. His photos from rural settings are often imbued with a wry sense of humor, such as one of a barber’s chair under a meat or fish drying shelter titled “Cut and Dry.” The Pratt Museum in Homer and the Southern Graphics Council International, a printmaking collective, both own Romer’s works. This summer, Romer made a dozen works for this year’s Santa Fe Indian Market in New Mexico. The market is considered the largest Native American art show and draws up to one hundred thousand people every year. Romer markets his work thorough his web page (ryanromer.com), thorough word of mouth, and through gallery shows. Since receiving his degree, Romer has participated in several group exhibitions and one solo show at the Alaska Native Arts Foundation. But making a living from art is a “gruesome challenge” he says, and he works part-time in art galleries to supplement his income. However, he sees the potential of the work that he and his fellow artists create. “Alaskans are now more mature about art, and they appreciate the value. Anchorage has a dynamic art community of collectors and artists.” R Writer Shehla Anjum is based in Anchorage.

Alaska Business Monthly | September 2015 www.akbizmag.com

special section

Alaska Native Business

Preparing Alaska’s future engineers By Russ Slaten

n a state that faces some of the highest education costs and lowest performance scores in the nation, one program is building a pipeline to prepare students for some of the most demanding industries in Alaska. The Alaska Native Science & Engineering Program (ANSEP) at the University of Alaska Anchorage is designed to prepare and support Alaska Native students from middle school through graduate school and build a career path to succeed in the science, technology, engineering, and math (STEM) fields. Ninety-five percent of students that participate in the ANSEP high school-level Acceleration Academy advance one level in math or science each summer, according to the Urban Institute. “The very best Acceleration Academy students are selected and can begin working with our industry partners immediately after they graduate from high school through the Summer Bridge component,” says Herb Schroeder, the founder and Vice Provost of ANSEP. “I call it career visioning—students have a real opportunity to see what it’s like to work in the oil and gas industry or to work in a conservation career with a federal or state agency.”

Rough Start

Schroeder is not only the founder and Vice Provost of ANSEP but also a professor of engineering at the University of Alaska Anchorage. When he started the program in 1995, Schroeder was working for the US government to discover better solutions for rural sanitation to replace honey buckets. He says in his work in rural Alaska he had never met an Alaska Native engineer. “Engineers were non-Native from outside the state, and there were serious communication problems between the people that lived in the communities and the engineers. So since I was an engineering professor at the university I said—naively—I’ll just make some Native engineers, before I really understood the issues,” Schroeder says. He started by arranging funding from Alyeska Pipeline Service Company to offer scholarships to Alaska Natives. Schroeder says he saw blowback from the engineering department, but even after he pushed back 58

and saw some of the program’s first students, he realized they were not academically and socially prepared for the university. “Academically I’d say they were like eighth graders, so they had a long way to go before they could ever take a college-level course,” Schroeder says. Schroeder set out to find the root of the problem by reaching out to the districts responsible for teaching the students in Alaska’s rural communities. The administrators had a similar negative view on teaching science and math courses to its students, Schroeder says, telling him the students were incapable of grasping the material. Schroeder says he decided to talk to the students directly. A friend of Schroeder’s in Kotzebue helped identify a group of students that would be successful in college, and Schroeder says he brought computers and the components to build them when he met the students in Kotzebue. “I told the kids that I was going to show them how to build these computers, teach them how to use them, and they could even keep them as long as they took chemistry, physics, and trigonometry in high school,” Schroeder says. To this day ANSEP’s Middle School Academy and high school-level Acceleration Academy students have had the opportunity to build and earn their own computers. But Schroeder’s first group of students in Kotzebue said they couldn’t earn their computer because those science and math classes weren’t offered in their district at the time. He told the students to ask their principal to offer those classes in order for them to be prepared for college. Even after the school began offering the necessary classes for an engineering degree, Schroeder’s idea to make Alaska Native engineers was still an uphill battle. “There was a disconnect in the grades that students earned and the knowledge that they acquired when they took those classes all across the state, which even applies to Anchorage and major districts around the state,” Schroeder says. “A student could get an A or B in Algebra 2, but when we tested them for correct placement they would be in Pre-Algebra. We said, ‘Oh boy, what do we do?’ And that’s how the Acceleration Academy was born.”

Acceleration Academy

Schroeder says the most cost-effective way to prepare Alaska students for the STEM field was to bring those students into Anchorage, have university professors provide them with

ANSEP Middle School and High School Academies

Tehya Tucker working with her Acceleration Academy group on a structural engineering exercise.

the courses, and let the students earn university credit at the same time they earned high school credit. Fast forward to today: ANSEP’s Acceleration Academy offers two five-week sessions at the University of Alaska Anchorage. The sessions offer Intermediate Algebra to differential equations and sciences courses that span biology, chemistry, and geology, all while feeding and housing the students at the dorms to give students the feeling of being in college. Michael Ulroan, ANSEP Acceleration Academy regional director, says each ANSEP academy is unique and spans the realm of STEM activities from building biomaterials and unmanned aerial vehicles (UAV) to outbreak response and carbon fiber training sessions. One of this year’s Acceleration Academy team-based activities saw students building a structure out of PVC piping and fiberboard such that it could withstand an earthquake, since Alaska is prone to earthquakes. This year’s UAV activity saw ANSEP students assemble the UAV from parts, program it to fly, and then design a mechanism for the UAV to pick up an object and undergo a mock search and rescue mission. Students spent five afternoons over three weeks under the direction of UAA engineering professors in the process. They attempted computerbased simulations before finally testing their UAV and flying skills in a timed, point-based exercise. Organizers say this exercise has real world applications in gathering data in the field, but in this setting is used as a way to spark interest in science and engineering. “They’re set free to design what they want, but they are given rules and guidelines. So we want them to be creative and challenged. That’s what these STEM activities are meant to be,” Ulroan says.

Alaska Business Monthly | September 2015 www.akbizmag.com

Acceleration Academy students testing their skills in a timed, point-based UAV exercise. Russ Slaten for Alaska Business Monthly

Tehya Tucker, a senior in high school from Nome, began the program after she finished her seventh grade year in 2011. She started in the Middle School Academy, which involved building a computer and career explorations, and then moved on to the Acceleration Academy to take her math requirements for high school and college. Tucker says it made a clearer path to college and a career. “[The ANSEP academies] made me realize how important it is to stay in my classes and get ahead,” Tucker says. “I’m a straight A student now, and I don’t think I would have been if I didn’t start in middle school, because I didn’t know where I would go in my future. But after I joined this program I have an idea of what I want to be, and it’s more set in stone. I’m thinking to go into electrical engineering.” Beyond preparing her academically, Tucker says ANSEP has prepared her socially for a professional career. “I was really shy when I was younger and didn’t like talking to or in front of people, but this has pushed me to do those things and be comfortable with it, and I’ve actually grown to enjoy it,” Tucker says. “I can do a presentation without stuttering, I’ve become more confident, and I’ve become a bigger part of my high school because of my confidence and because I know where I want to go.”

Middle School Academy

As ANSEP has progressed since its inception, it has continued to accept students at a younger and younger age. The Middle School Academy now offers a two-week college campus experience and STEM activities to current students in fifth through eighth grades. “At Middle School Academy we are not only introducing students to the STEM field and getting them excited about their education, we are also getting them out of their comfort zone and on to an actual college campus, so they can see their future here and start planning for it,” says Josephine Mattison, Middle School director for the Middle School Academy. “Additionally we’re giving them an attainable goal. All of the students in this session have agreed to complete Algebra I before high www.akbizmag.com

school, which will get them on an accelerated track to come to the university prepared.” Rabbit Creek Elementary sixth grader Renon Racy-Shields participated in one of two, twelve-day Middle School Academies which benefited more than one hundred Anchorage School District students representing more than forty schools. RacyShields says he gained the most from the computer build activity. “I personally like building the computer because it’s hands-on, and it’s me actually building it, and it makes me feel better to know that I’m building something, I’m not destroying it,” Racy-Shields says. Mattison says the computer build task began at the high school level, but after ANSEP established the Middle School Academy in 2010, they introduced the computer build activity to prepare middle school students for high school and start students on the right track. “We are at 1,800 students strong this year and plan to grow even further,” Ulroan says. ANSEP’s goal is to have more than 4,000 students from middle school to PhD to be involved in part of the ANSEP education pipeline by 2020. ANSEP is geared toward Alaska Native students, but is open to students throughout Alaska. It’s demographic is 80 percent Alaska Native and 20 percent non-Native. Ulroan says students who started ANSEP with the Middle School Academy and returned to participate in Acceleration Academy will be graduating from high school with many of the academic requirements for a university-level science or engineering degree even before they start their freshman year of college. Ulroan says, “They have come back and participated each and every year and advanced in their academic levels through their own community support and ANSEP, and we want that to be the norm.” R Russ Slaten is an Associate Editor at Alaska Business Monthly. September 2015 | Alaska Business Monthly

Alaska Native Business

special section

The Minto Village Council received a START grant which provided officials with the technical knowledge they needed to make their community center, Lakeview Lodge, more energy efficient.

Village START Grants for Energy Efficiency By Julie Stricker

into is a small Alaska Native village with a population of about 210 located 125 miles northwest of Fairbanks. The community hub is the twelvethousand-square-foot Lakeview Lodge, where school and senior lunch programs, community meetings, and village council operations are held. 60

In the summer, temperatures in Minto can reach the nineties, and it is not uncommon to see winter temperatures dive to sixty below zero. Village officials struggled to meet the $75,000 annual fuel and electricity costs for the Lakeview Lodge, which was built more than thirty years ago with little attention to energy efficiency.

It’s a problem seen in many other rural Alaska communities, many of which are dealing with outdated facilities built in the 1960s, ‘70s, and ‘80s, when fuel prices were a fraction of today’s, says Jodi Fondy, program manager for the Denali Commission. Electricity and fuel costs are among the highest in the nation and some village residents say they

Alaska Business Monthly | September 2015 www.akbizmag.com

“Most electrification in Alaska happened about forty or fifty years ago. Back then, the grid was designed so that it could handle it if a person needed to burn a lightbulb all day. Now everything is electronic.”

—Givey Kochanowski Alaska Program Manager US DOE Office of Indian Energy

often have to choose between putting food on the table or turning on the lights. Climate change has resulted in unpredictable snowfall, low river conditions, and other problems. The greatest energy needs in rural Alaska are “lower cost, greater efficiency, [and] more dependable operations strategies,” Fondy says. A program administered by the US Department of Energy (DOE) Office of Indian Energy is helping some Alaska Native communities work through their energy issues and find solutions. The Strategic Technical Assistance Response Team (START) provides technical assistance to help Alaska Native villages reduce their reliance on diesel fuel and reduce energy costs. The program is a “means to an end,” says Givey Kochanowski, Alaska program manager for the US DOE Office of Indian Energy, opening the door to new funding sources and community opportunities. “Energy is a backbone and enabler of the community,” Kochanowski says. “Most people see energy as a tool, but it’s also economic freedom and gives them choices for economic development.” In some cases, the original electric grid from the 1960s is still in place, Kochanowski says. “Most electrification in Alaska happened about forty or fifty years ago,” he says. “Back then, the grid was designed so that it could handle it if a person needed to burn a lightbulb all day. Now everything is electronic.” Communities whose projects are approved under START get about forty hours of expert help for their specific programs, Kochanowski says. Three rounds of selections have been made, with sixteen Alaska communities benefiting since the program’s inception in 2012. The work has ranged from community energy planning to specific projects, such as Minto’s Lakeview Lodge upgrades. www.akbizmag.com

September 2015 | Alaska Business Monthly

Minto’s Project

Although the Minto village council initially sought funding to build a new community building, they decided with Tanana Chiefs Conference Rural Energy Coordinator David Pelunis-Messier to upgrade the existing structure. With the assistance of START energy experts, Minto officials identified ways to make the Lakeview Lodge more energy efficient and looked at the potential for biomass and solar projects. A grant from the Alaska Energy Authority allowed Minto officials to install a more efficient boiler that would also heat the clinic next door. Through START, Minto was also eligible for a DOE Tribal Energy Grant of up to $250,000 for energy efficiency and renewable energy projects. The community also received a $100,000 Alaska Capital Improvement Project grant. With all of these in hand, Minto started a phased upgrade to the lodge in 2014, including weatherization, sealing, new doors and windows, and plumbing repairs. When it’s done, Pelunis-Messier says the community should see at least a 30 percent improvement in energy efficiency. For Minto and another ten Alaska communities projects like the Lakeview Lodge improvements begin with the START program, says Kochanowski.

Kochanowski is the sole Alaska employee of the DOE Office of Indian Energy, which focuses on government-to-government solutions with coordinated, interagency support for tribal energy needs and projects. More than half of the agency’s work is with the 229 federally recognized tribes in Alaska, as well as Native corporations and inter-tribal organizations, he says. The office also supports economic development and resource development, with its interests tied closely to those of the state of Alaska. “The major difference between the state and the federal focus is the state is trying to reduce the cost of energy; ours is to reduce the cost of producing energy,” Kochanowski says. Alaska START is a competitive technical assistance program with four major goals:

1 2 3

Reducing the cost of energy for rural Alaska consumers and communities Reducing the use of energy for rural Alaska consumers and communities

Increasing local capacity, energy efficiency, and conservation through training and education

Increasing renewable energy deployment and financing opportunities for communities and utilities

“The program is a three- to five-year look at a community’s needs,” Kochanowski says. “It’s a holistic community plan effort.” As much as possible, the DOE works with other agencies to identify grant and other funding potential. The Denali Commission is an important partner because it has the ability to fund non-tribal entities, says Joel Neimeyer, federal co-chair. Because the communities who apply for help through the START program are selfmotivated, “The START communities have a long track record of success,” Kochanowski says. “They’re more energy independent and resilient. We entirely operate on self-determination; the communities have to come to us,” he says. In addition, projects must be strong and bankable. They are selected based on their ability to:  Demonstrate achievable energy or cost savings  Implement renewable energy or energy efficiency projects  Develop an energy roadmap and establish an energy goal  Ensure commitment from community leadership

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 Participate in technical assistance, training, or workshops sponsored by DOE or other agencies

ceived energy education and utility management training. They also began exploring the feasibility of community scale solar energy.

 Identify a local climate action energy champion

The Native Village of Kwinhagak in Southwest Alaska was seeing recurring housing and fuel shortages, with more than forty condemned houses and inadequate fuel storage capacity for winter. In spring, frequent small shipments of fuel had to be flown in until the ice broke and lower-cost fuel could be barged in. The community sought to reduce fuel consumption so it could end the higher-cost shipments. Under START, the village installed a heat recovery system from the diesel generator to heat a new sewer and water system (a $660,000 grant from the Alaska Energy Authority was used to complete the heat recovery system). Ultraefficient housing was constructed and more efficient use of excess electricity from wind turbines was introduced. These measures achieved a substantial reduction of fuel use.

START Projects

To date, projects in sixteen Alaska communities or entities have been selected under the START program: Venetie, Kake, Teller, Kwinhagak, Arctic Village, Yakutat, Shishmaref, Minto, Koyukuk, Kongiganak, and Chugachmiut Regional Corporation, as well as Shungnak, Kwethluk, Kokhanok, Huslia, and Hoonah, which were selected this summer. Here are some examples of how the START program is being used in Alaska: Arctic Village, a remote community 140 miles north of the Arctic Circle, faced challenges complying with Alaska’s Power Cost Equalization program and residents faced electricity costs of $0.90 per kilowatt hour and heating oil prices of $12 per gallon in 2012. The village was entirely dependent on diesel for electricity generation. After START, the village improved its utility management and was reinstated to the Power Cost Equalization program in January 2013, reducing its residential electric rates by half. The diesel generators were repaired and residents re-

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Teller, in western Alaska, lacked fuel storage capacity and energy-efficient housing. Although several energy-producing options were available, the village had numerous institutions involved in making decisions. Under START, Teller created a Community Energy Committee for ongoing energy planning and identified options for a Nor-

ton Sound Economic Development Council Community Energy Fund grant to improve energy efficiency and reduce consumption. It also identified needed repairs at the local health clinic, re-establishing water and sewer services. It is positioned for further projects to reduce fuel use and improve efficiency. Kake in Southeast Alaska was dependent on a diesel generator to operate a local energy-intensive commercial fish processing operation, which limited local economic development. The diesel system was also outdated and inefficient. Under START, the community prioritized potential options for reducing diesel use, such as a heat recovery system, and new energy options, such as solar and biomass. Kake relocated a wind tower closer to the village’s transmission lines and installed a 5.8 kilowatt solar photovoltaic system. It is looking at hydropower opportunities. All these steps have reduced Kake’s diesel fuel demand and the community is in position to seek funding for additional projects that would increase potential energy generation and further economic development. Venetie in north-central Alaska also had limited fuel storage facilities, limited utility management capacity, old diesel generators that needed repair, inefficient housing, and high fuel cost and demand. The tribal-

September 2015 | Alaska Business Monthly

owned electric facility was losing money. Under START, the village was reinstated to the Power Cost Equalization program, reducing residential electricity bills by 60 percent. START experts provided utility management training and developed an improved utility rate structure. They helped repair and upgrade village diesel generators and looked at biomass alternatives. Chugachmiut, based in Port Graham, is the health and social services provider for seven tribes in Southcentral Alaska. The corporation plans to build an energy-efficient biomass plant, using local wood, to generate power for community buildings in the Native Village of Port Graham. The plant will replace a community-scale hot water distribution system.

Communities Selected in 2015

Hoonah, in Southeast Alaska, wants to create a Community Energy Strategic Plan that will help reduce energy costs and consumption and create opportunities to increase economic development. It is looking at potential geothermal and hydropower energy, as well as an expansion of the Hoonah Intertie. Huslia in Interior Alaska is looking for ways to reduce the high cost of energy, which would make the community more

“We have revamped the strategic energy planning documents. There’s a heavy focus on community input and laying out the priorities in the community. The program is intended to be more of a technical assistance program, assisting with the strategic energy plan. It’s looking at the systems they have in place, the feasibility of incorporating renewables.”

—Jodi Fondy Program Manager, Denali Commission

sustainable. In addition, reduced water levels in the Koyukuk River have made it difficult for fuel barges to reach the village. It seeks to halve its imported diesel by 2030 and is looking at biomass and solar alternative energy prospects. The village has applied for a $499,000 Alaska Energy Authority grant for the “Huslia Water System and Clinic Biomass Boiler Project,” which is in the final design and permitting phase. Kokhanok in Southwest Alaska wants to improve its wind-diesel generation system. The turbines have been in place since 2010 but have not saved the twenty thousand gallons of fuel annually that was expected. Since 2013, the turbines have barely operated and the integration controls with the

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diesel system need to be retrofitted. Kwethluk in Southwest Alaska is seeking upgrades to an outmoded and inadequate electrical grid. The village is getting new sewer and water systems, but the electrical system at the school frequently overloads, despite conservation efforts. Shungnak in Northwest Alaska is interested in exploring alternative energy sources and is seeking help to develop an energy plan. The most immediate challenge is the extremely high cost of diesel fuel delivery. In recent years, low winter snowfalls mean barges can’t make it up the river to the village, so fuel is delivered by air.

Parameter Adjustments

Since the program is still relatively new, managers are adjusting the parameters, Fondy says. The program was originally envisioned as a one-year process, but the timeline has been extended to three years. “We have revamped the strategic energy planning documents,” she says. “There’s a heavy focus on community input and laying out the priorities in the community. The program is intended to be more of a technical assistance program, assisting with the strategic energy plan. It’s looking at the systems they have in place, the feasibility of incorporating renewables.” Neimeyer, of the Denali Commission, says the real value of START is the community engagement process. Part of that is gathering the data each community needs and making sure the decision-makers have access to it. “Our hope and goal involving START is so that it allows for communities to actually do it themselves,” he says. “Lessons have been learned about data gathering, about how to manage data, how to get it to all these different owners. The communities often don’t own or have access to this energy data, but they’re still making decisions. That’s a very important component.” R Julie Stricker is a journalist living near Fairbanks.

Alaska Business Monthly | September 2015 www.akbizmag.com

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special section

Alaska Native Business

Aaron Schutt and Doyon, Limited Rural-raised Native leader with Alaska’s future in mind By Russ Slaten

“

e’re a very rural state. Other than the Anchorage area, the rest of the state is rural, and it has so many unique perspectives in all parts of Alaska. Large or small, the communities are all in special places and are special to the people that live there. I understand that because that’s the way I grew up,” says Doyon, Limited President and CEO Aaron Schutt. “I have an awful lot of respect for people that choose to reside in our rural communities.” Schutt grew up in the small Alaska community of Tok, nearly two hundred miles southeast of Fairbanks and at the junction of the Alaska Highway and the Richardson Highway. Schutt holds a JD from Stanford Law School, a master’s in civil engineering from Stanford University, and a bachelor’s in civil engineering from Washington State University. After completing his degrees in the Lower 48, he returned to live in Anchorage and practiced law from 2000 to 2006. He says his rural upbringing armed him with everything he needed to succeed Outside. “I call Tok God’s country,” Schutt says. “There are so many things in rural Alaska that you can’t replicate anywhere else. Growing up there led to many opportunities for hunting and fishing and being in the outdoors.” Schutt says the connection to the land helped build a bond to his people and the Alaska Native way of life. He became president and CEO of Doyon in 2011 with much support from those around him. 66

Aaron Schutt, President/CEO of Doyon, Limited.

Young Native Leader

“[Schutt] is everything the ancestors and the elders have asked for all of our lives growing up,” says Orie Williams, current Doyon Board Chairman and president and CEO at the time Schutt joined the company. “The goal was always to get the young people engaged, get them educated, and hopefully they would come back and work for our tribal and ANCSA [Alaska Native Claims Settlement Act] corporations and bring that knowledge and education with them. He epitomizes that.” Schutt has been with Doyon since 2006, starting as the company’s chief operating officer, overseeing Doyon’s subsidiary operations in Alaska and across the Lower 48. Norm Phillips Jr. took over as president and CEO as Williams retired and moved over to the Doyon Board of Directors. After Phillips retired from the company, Schutt took over as president and CEO. Williams recruited Schutt for his leadership potential, and he says Schutt has lived up to the expectation. “I’ve had the privilege and honor to watch [Schutt] grow and mature and build a fantastic team around him, and he has increased Doyon’s profits and shareholder equity substantially,” Williams says. “We couldn’t have a better leader and a better educator than a young man who understands tradition and culture along with business and professionalism. He lives in both worlds. He’s a great subsistence hunter and fisher and he can articulate a clear

response to any question we ask him. He’s steeped in family, culture, and business.” Many Alaska Native Corporations incorporate government contracting, and Doyon is not different. Two of Doyon’s main lines of business lie in government work and oilfield services. Williams says Schutt is prepared to see beyond the Native corporation and see what’s important for Alaska. “He understands the depression the state is in right now budget-wise. He knows the impacts on Alaskans, not just Doyon shareholders and our villages. He understands the impacts of the whole state, so he’s our leader, but definitely a state leader also,” Williams says. Beyond Doyon, Schutt serves on the Rasmuson Foundation board of directors, helping to guide the Rasmuson Foundation’s investments in the state. Along with Schutt’s knowledge and high esteem for Alaska, a previous associate of Schutt’s says he has always highly regarded Athabascan cultural values, the root of Doyon’s values. Jim Johnsen, recently named president of the Univseristy of Alaska, started working with Schutt in 2008 when he was the COO of the Doyon family of companies. Johnsen worked as the senior vice president of administration at Doyon for three years before shifting over to Alaska Communications as senior vice president of human resources and process transformation in 2012. “Athabascan values are critically important at Doyon, and they’re real,” says Johnsen. “I’m

Alaska Business Monthly | September 2015 www.akbizmag.com

not Athabascan or Alaska Native, but I’ll sign up for those values any day. Alaska Native Corporations are special in that they are rooted in Alaska, and they aren’t going to leave.”

Shareholder Hire

Like many Alaska Native corporations, Doyon promotes shareholder hire. In doing so, Doyon sees shareholder employment as a much more calculated business strategy than simply mandating managers to hire shareholders. Johnsen worked with Schutt in his vision to target shareholders at a young age. Finding the right shareholders for the company’s future is part of a continuum, Johnsen says. Schutt and Johnsen built a pipeline that connected education with shareholders already working for the company. “We had to think long-term and think about it from the time that shareholders are young through the time that they are done with whatever education they need to succeed,” Johnsen says. “We came up with career paths—a bit of a marketing campaign in the schools—where the young shareholders could see a career path card, almost like baseball cards, where it shows a picture of a successful shareholder and the path that he or she took to be successful. It was a great initiative to present to young people so they can see there’s a future, and they see their people succeeding.” Doyon offers many career opportunities including scholarships, career exploration presentations, roustabout and Doyon leadership training programs, and a Doyon talent bank. “Shareholders are our owners and we try to help them out economically and professionally. We do a lot of training and a lot development, and we have our mandates on hire and promotion,” Schutt says. “We should pay more than $40 million in shareholder wages in 2015. We’re well on pace to hit that mark, which shows rapid growth in that along with the number of Doyon shareholder hires.”

the North Slope since 1982. Doyon Drilling is Doyon’s longest held, current subsidiary. Doyon Drilling has a seven rig fleet in Alaska, and Schutt says it’s the premiere Arctic driller for land drilling. “A lot of our most successful businesses are on the oilfield, and instead of chasing things like Bakken shale or other discoveries, we’ve chosen to grow our business in an area in which we understand the market, clients, conditions, and we have specialized equipment, and so we feel like we’ve had a great opportunity here in the state to continue to grow,” Schutt says. “In some of our market segments we’ve saturated our market share, so we’ve realized that oil and gas

and contracting activities outside of Alaska are the next step, but for the last five to seven years that was a wonderful strategy for us.” ConocoPhillips awarded Doyon Drilling a five-year, $100 million contract for the new Doyon 142 rig, Schutt says. Doyon Drilling is currently building the new rotary drill rig expected to begin operations in February 2016. Thanks to Doyon Drilling, the oil and gas market is the parent company’s largest market. Doyon has six separate subsidiaries providing oilfield services in drilling operations, security, remote camp services, engineering, and pipeline construction. Doyon’s second major business line is government contracting, with subsidiary Doyon

Business Portfolio

Doyon as an Alaska Native regional corporation with nineteen thousand shareholders is in business for the long haul, Schutt says. Like every business, profits are important, but so are shareholder dividends and commitments to enhance the lives of Doyon shareholders. “Our company has a governance structure with a board that’s not as flexible as independent entrepreneurs who can make decisions rapidly with their own money; we have constituents that are a little different. It serves us well in the long-term to be more patient and careful with what we do.” Doyon’s flagship company is Doyon Drilling, Inc. with the bulk of it’s operations on www.akbizmag.com

September 2015 | Alaska Business Monthly

Government Group managing projects that incorporate other entities running the gamut of construction, security, information technology, utility services, and logistics. Doyon’s third line of business is tourism. Doyon Tourism operates two properties in the Denali National Park area: backcountry lodge Kantishna Roadhouse and tour company Kantishna Wilderness Trails.

Future Growth

As Doyon has built its family of companies one segment at a time, its prospects for the future continue to grow, namely through mineral exploration of its own resources and through strategic acquisitions. To follow Doyon’s goal of calculated and steady growth, Schutt says, “Doyon is disciplined in the business lines and markets we enter. We try to grow existing businesses further before we add new service lines.” Doyon’s latest acquisition was Anchorage-based Arctic Information Technology in 2013. Under the Doyon Government Group, Arctic Information Technology offers IT solutions and technical support to government agencies, commercial businesses, and nonprofit organizations. “Before Arctic IT we didn’t really have an IT business presence, and the design on that acquisition was to move into that space,” Schutt says. “We consider acquisi-

Aaron Schutt wearing his Athabaskan beaded slippers. © Chris Arend Photography

tions all the time, especially if they fit Doyon by adding to our current portfolio.” As one of the nation’s largest private landowners with 12 million acres in the Interior, Doyon has initiated exploration programs to uncover mineral potential in its own lands. At one of the most promising sites located in the Nenana Basin west of Fairbanks, Schutt says Doyon will continue its next phase of its oil and gas exploration program. Doyon has already drilled two exploration wells in the Nenana Basin with promising, yet not economic, results. Doyon plans to drill a third well next summer after a follow up of very encouraging results from a 3D seismic program shot in the fall of 2014. As Doyon looks toward an economic

discovery of natural gas at the Nenana Basin, Schutt says one challenge is the need to educate policymakers and legislators on the options for finding a viable gas supply for the Interior. “People tend to think of current or past solutions,” Schutt says. “Gas by truck or the big pipeline from the North Slope may be viable solutions, but we want to continue to educate people that there is at least one other potential solution—which may be the most economical solution—which is our gas when we find it.” R Russ Slaten is an Associate Editor at Alaska Business Monthly.

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Alaska Native Business

Developing Meaningful Relationships with Residents in Arctic Development

By Susan Bell

s we promote development of the Arctic—and its myriad energy resources—it is imperative that local residents have meaningful opportunities to participate in and benefit from development. Traditionally, living in the Arctic required well-honed survival skills and significant cooperation with family and community members. This is still true today. Many Alaskans maintain traditional ways of gathering food and their culture.

Particular Resilience

People living in the Arctic have demonstrated a particular resilience, despite abrupt or intrusive changes in national sovereignty, technologies, national defense strategies, introduction of diseases, and more. In the last century, many Arctic communities have experienced dramatic losses in population, cultural traditions, language, and access to traditional lands. Yet, many Alaskans have seen significant improvements in economic opportunity and quality of life. The Red Dog Mine, recently celebrating twenty-five years of operations, is an excellent model of how to work effectively in an Arctic environment and ensure residents have opportunity. The zinc, lead, and silver mine is located in the DeLong Mountains about ninety miles north of Kotzebue and about fifty-five miles from the Chukchi Sea. Located on property owned by NANA Regional Corporation, the mine represents unique relationships between private landowners, developers, and state government. The deposit was discovered in the late 1960s. Construction began in 1986 and production commenced in 1989. Much coordination was required at local, state, and federal levels to achieve mine operations. Importantly, development of this mine generated profound changes in the region. The Northwest Arctic Borough was incorporated in 1986, two years before mine production. The mine provides the tax base to support schools, public safety, and other public services in the region.

Regional Growth

A world-class deposit, Red Dog was also the most capital-intensive mining project in Alaska. The state of Alaska, through AIDEA (Alaska Industrial Development and Export Authority), constructed a fifty-mile access road and port in exchange for guaranteed repayment over the life of the mine. Mining activity takes place year round. Ore concentrates are stored until shipments can be made during the ice-free summer months. 70

Much of rural Alaska has experienced steady outmigration. Not this region. In 1980, the Northwest Arctic Borough had about 4,800 people; by 2014 it had grown more than 60 percent. In contrast, the population of the neighboring Yukon-Koyukuk Census Area declined 28 percent during the same period. School enrollment in the Northwest Arctic Borough grew 33 percent since 1980; the Yukon-Koyukuk area experienced a 36 percent decline. These numbers illustrate stark differences in economic opportunity for residents. The financial impacts of the mine are highlighted in a socioeconomic study recently completed by McDowell Group. In 2013, 610 people were directly employed by the mine operator or on-site contractors. The average annual wage was $99,000 per employee, generating 40 percent of all private sector wages in the borough. Nearly 80 percent of Red Dog employees reside in Alaska. The operation spent $143 million with approximately eighty Alaska vendors in 2013. Red Dog paid nearly $28 million in state taxes plus another $29 million in fees to AIDEA. Red Dog also paid $11 million to the Northwest Arctic Borough; this represented nearly 90 percent of all general fund revenue to the borough. Nearly $220,000 in university and vocational education scholarships were awarded by Teck in 2013. Additionally, more than sixty-five nonprofit organizations benefitted from charitable donations. In 2013 NANA received $143 million in net proceeds from Red Dog. The corporation has received more than $1 billion since 1990, of which $617 million has been shared with other Alaska Native corporations according to the unique revenue sharing provisions of the Alaska Native Claims Settlement Act.

company experienced in northern mining operations, that understood the importance of partnerships and community relationships. Employment training has been a cornerstone of the mine’s ability to attract and retain local residents. Initially the state and tribes pooled training funds and coordinated with NANA on the selection of trainees and programs. A well-trained and stable workforce also has benefits for the mine operator including lower recruitment costs, stronger community relations, and improved safety. NANA’s subsidiaries have a major role in Red Dog operations. NANA Lynden Logistics provides transportation and logistics support for the mine including trucking concentrates to the port. NANA Management Services provides meals and lodging for mine employees. Other subsidiaries working for Red Dog include NANA Oilfield Services, NANA Construction, WHPacific, NANA WorleyParsons, and Nullaġvik Hotel. Engaging local residents and communities in the development process takes time, but is essential. Importantly, the process needs to begin before the permits are applied for. It is not a box to check in the process. Rather, it is an opportunity to think creatively about how to bring benefits to all parties. Considerations include environmental stewardship and cultural respect. As with any meaningful relationship, you need to establish trust and focus on long-term success. A commitment to the land, the people, and the culture is a critical and important balance to the urgency that is often created by development projects. There is much potential in the Arctic. It is our responsibility to unlock that promise in a manner that benefits local residents, investors, and future generations. R

Resident Participation

McDowell Group principal Susan Bell recently returned to the firm after serving as the Commissioner of the Alaska Department of Commerce, Community, and Economic Development. As Commissioner, she served as a board member for Alaska Energy Authority, Alaska Gasline Development Corporation, and Alaska Industrial Development and Export Authority. She also served as the State Co-Chair for the Denali Commission. Originally from Nome, Susan lives in Juneau with her husband Bob and three Labrador retrievers.

Equally impressive are the ongoing efforts to ensure that regional residents participate in these economic and social gains. NANA, as the owner of the resource, was a critical driver, innovator, and enforcer of this principle. Traditional values are reflected in Red Dog operations. Very early in the project, a subsistence committee was established to guide actions related to subsistence food gathering, environment, and culture. This group is consulted frequently and is among the first to be notified if there is an accident or issue related to the mine. Illustrating the close coordination between subsistence activity and mine operations, the ore shipping season does not commence until the marine mammal harvest is complete. I have been told that much care was taken by NANA in choosing their development partner. Cominco was selected (now Teck), a Canadian

Alaska Business Monthly | September 2015 www.akbizmag.com

Alaska Native Business

special section

The Case for Tribal Lands in Trust Giving back to rural Alaska communities By Mark Begich

laska Native Corporations have become powerhouses of our state’s economy, generating billions of dollars and providing thousands of jobs for Alaskans. In 2013, according to the ANCSA CEO Association, Alaska Native Corporations accounted for more than 70 percent of the total revenue of the top 49 Alaskanowned companies. They also provide more than 40,000 jobs across the United States with an annual payroll of $2.2 billion. However, for all the strides that Alaska Native for-profit and nonprofit corporations have made in the last four decades since ANCSA passed, tribal governments have lagged behind in taking part in the growth of Alaska’s economy. I have always believed that we should implement policies that ensure Alaska tribes are self-determined and can adequately address public safety, economic development, and other priorities on tribal lands. Until the Akiachak court decision in 2013, Alaska tribes had been barred from taking land-into-trust—meaning, the United States federal government taking land into “trust status” to hold and protect it for federally recognized tribes. Moving tribal lands into trust not only gives tribes control and use of the land, but also gives tribes control over important aspects like public safety and economic development. Many reservations in the Lower 48 are considered “trust” land. However, Alaska tribes had been excluded from this opportunity due to a regulation in the Department of Interior that barred the Secretary from taking land into trust status for tribes. The Native American Rights Fund, on behalf of the Akiachak Native Community and other plaintiffs, successfully argued that treating Alaska tribes different from tribes in the Lower 48 violated the Indian Reorganization Act—which barred the federal government from discriminatwww.akbizmag.com

ing among Native American tribes. Every court has agreed with the Alaska tribes and the Native American Rights Fund. During my time in the Senate, I was proud that after repeated pressure, the Obama Administration removed key regulatory barriers that blocked the Secretary of the Interior from taking land into trust for Alaska tribes. This progress has been hailed as an important step forward because allowing Alaska tribes to take land into trust gives tribal communities the control they need to protect and care for their communities while having a positive impact on the Alaska economy as a whole. Adequate public safety—which many of our rural communities are lacking—is a basic requirement for a productive workforce. I believe the solution is to give the authority and responsibility for public safety back to our rural communities. Trust lands will enhance tribal regulation over alcohol and drug issues in rural Alaska and will enable tribal courts to better protect their communities. Securing land also provides tribes with space for enhanced services such as healthcare for veterans and elder care—something tribes have already proven they excel at. During my time in the Senate, we pushed the Veterans Affairs Department to allow the Alaska Native Tribal Health Care system to serve rural veterans directly. When the VA finally relented, the Native health corporations began to serve veterans all over Alaska with top-notch care, eliminating the need for expensive trips to Anchorage or Seattle for many veterans. We should allow our tribes and their citizens to continue and enhance their innovative systems for quality care. In addition to the significant benefit of public safety and community well-being, the ability to take lands into trust will also provide a meaningful economic impact for Alaska’s tribes. While many of Alaska’s valuable

natural resources are located in rural Alaska, it is often urban Alaska that benefits most from our state’s resource economy. Trust lands will not only give tribes a larger say in how their traditional homelands are developed, but also the ability to ensure that renewable subsistence resources are protected. Land into Trust is not something to be feared, but rather something we should all embrace as a step in the right direction. I support and am mindful of the unique land status in Alaska with our ANCSA corporations and understand that some have concerns about how this impacts their overall purpose and goals. I believe that there is a path forward to make this work for everyone. We must continue to support policies and progress that ensure Alaska’s tribes are self-determined and have the resources they need to protect and provide for their communities. What is good for Alaska’s First Peoples is good for all of Alaska. R Mark Begich served in the United States Senate from 2008-2014. Defying party labels and utilizing his business background, Begich broke down bureaucratic barriers and was known as an effective advocate for Native American interests in Congress. He is currently the President and CEO of Northern Compass Group where he continues to work on critical Alaska issues including Native and tribal rights among many others. Contact him at mark@northerncompassgroup.com.

September 2015 | Alaska Business Monthly

2015 ALASKA NATIVE REGIONAL CORPORATION DIRECTORY

285

Alaska Employees:

1,209

Shareholders:

1,903 1.55 million acres

Acres:

Ahtna, Inc. Michelle Anderson, President PO Box 649 Glennallen, AK 99588 Phone: 907-822-3476 Fax: 907-822-3495 news@ahtna.net ahtna-inc.com

Worldwide Employees:

AHTNA Inc.

2014 Gross Revenue:

$185,000,000

2013 Gross Revenue:

$200,000,000

Services: Construction and Environmental, Facilities Management, Engineering, Government Contracting, Profession Support Services and Real Estate, Oil and Gas.

Alaska Employees:

190

Worldwide Employees:

760 3,838

Shareholders:

Aleut Corporation

1.577 million acres*

Acres:

Matt Fagnani, CEO

2014 Gross Revenue:

$120,307,293

4000 Old Seward Hwy., Suite 300, Anchorage, AK 99503 Phone: 907-561-4300 | Fax: 907-563-4328 info@aleutcorp.com | aleutcorp.com

2013 Gross Revenue:

$116,260,627

Aleut Corp.

Revenue Sources: Operations and Maintenance Contracts, $95,960,892; Fuel Sales, $10,803,834; Rental Properties, $3,149,322; Natural Resource, $5,172,295; Investment income, $1,029,832; Earnings, 2,415,634; Other, $1,775,484.

Alaska Employees:

Arctic Slope Regional Corporation Rex A. Rock Sr., President/CEO

Arctic Slope

Regional Corp. PO Box 129 Barrow, AK 99723 Phone: 907-852-8633 | Fax: 907-852-5733 twitter.com/ASRC_AK | asrc.com

Bering Straits Native Corporation Gail R. Schubert, President/CEO 4600 DeBarr Rd., Suite 200 Anchorage, AK 99508 Phone: 907-563-3788 Fax: 907-563-2742 media@beringstraits.com beringstraits.com

Bering Straits Native Corp.

4,988

Worldwide Employees:

11,115

Shareholders:

12,000

Acres:

Approximately 5 million

2014 Gross Revenue:

$2,663,540,000

2013 Gross Revenue:

$2,525,615,000

Revenue Sources: Petroleum Refining and Marketing 36%; Government Services 30%; Energy Support Services 23%; Industrial Services 5%; Construction 5%; Other 1% Services: ASRC is the largest Alaskan-owned and operated company, employing approximately 10,000 people worldwide. The company has six

Alaska Employees:

407

Worldwide Employees:

1,204

Shareholders:

7,200

Acres:

2,225,000

2014 Gross Revenue:

$304,000,000

2013 Gross Revenue:

$242,000,000

Revenue Sources: General Construction; Investment Income; Aerospace Support Services; Information Technology/Communications; Property Management and Leasing; Facilities Maintenance; Administrative Support; Supply and Logistics Support; Textile Fabrication; Security; Base Operations Support. Services: The company actively pursues responsible economic development in our region. Through its

Current Significant Endeavors: Established Ahtna Peoples’ Settlement Trust, Proposed Wildlife Co-Management Plan, 10year high Shareholder Equity.

SUBSIDIARIES Ahtna Netiye’ Ahtna Development Corp. Ahtna Facility Services, Inc. Ahtna Enterprises Corp. Ahtna Contractors LLC Koht’aene Enterprises Co. LLC Ahtna Support & Training Services LLC Ahtna Technical Services, Inc. Ahtna Government Services Corp. Ahtna Construction & Primary Product Ahtna Design Build, Inc. Ahtna Professional Services, Inc. Ahtna Environmental, Inc. Ahtna Technologies, Inc. AKHI, LLC

Services: Federal contracting; O&M; instrumentation for oil and gas industry; mechanical contracting; laboratory analysis, field testing, land remediation; commercial and residential real estate; fuel sales and storage; oil well testing services; and information technology. Current Significant Endeavors: Port of Adak development.

SUBSIDIARIES  Aleut Enterprises LLC, Anchorage, Alaska Aleut Management Services, Colorado Springs, Colorado Aleut Real Estate LLC, Anchorage, Alaska Alaska Instrument LLC, Anchorage, Alaska C&H Testing LLC Bakersfield, California Patrick Mechanical ARS International *1.5 Million subsurface acres & 77,000 surface acres

major business segments: petroleum refining and marketing, energy support services, industrial services, construction, government services and resource development. Current Significant Endeavors: ASRC’s partnership with six North Slope village corporations to create Arctic Iñupiat Offshore, LLC (AIO) will create long-term benefits for its shareholders. AIO’s agreement with Shell in 2014 is a first of its kind and allows the Corporation a seat at the table as development decisions are made.

SUBSIDIARIES ASRC Energy Services, Inc. ASRC Federal Holding Company, LLC ASRC Construction Holding Company Eskimos, Inc. Tundra Tours, Inc. Petro Star, Inc. Alaska Growth Capital Little Red Services Inc. Petrochem Inc. Arctic Pipe Inspection, Inc.

subsidiaries, BSNC serves the federal government and commercial customers throughout the Bering Strait region, Alaska, the United States, and the world. Current Significant Endeavors: BSNC is seeking conveyance under ANCSA of certain lands at Port Clarence, strategically located on the Bering Strait. We believe that Arctic development should directly benefit Arctic communities and are committed to responsible development in our region.

SUBSIDIARIES Inuit Services Inc. Bering Straits Aerospace Services LLC Bering Straits Logistics Services LLC Bering Straits Information Technology LLC Bering Straits Technical Services LLC Bering Straits Aki LLC Eagle Eye Electric LLC Ayak LLC Global Support Services LLC Global Management Services LLC Iyabak Construction LLC Global Asset Technologies LLC Global Precision Systems LLC Bering Straits Development Co. Global Technical Services LLC Golden Glacier, Inc. 4600 Debarr LLC

Alaska Business Monthly | September 2015 www.akbizmag.com

1,236

Worldwide Employees:

4,348

Shareholders: Acres:

BBNC Jason Metrokin, President/CEO 111 W. 16th Ave., Suite 400 Anchorage, AK 99501 Phone: 907-278-3602 Fax: 907-276-3924 info@bbnc.net | bbnc.net

Bristol Bay Native Corp.

Calista Corporation Andrew Guy, President/CEO 5015 Business Park Blvd, Suite 3000 Anchorage, AK 99503 Calista Corp. Phone: 907-275-2800 Fax: 907-275-2919 calista@calistacorp.com calistacorp.com

Gabriel Kompkoff, CEO 3800 Centerpoint Dr., Suite 1200 Anchorage, AK 99503-4396 Phone: 907-563-8866 Chugach Alaska Corp. Fax: 907-563-8402 communications@chugach.com chugach.com

Cook Inlet Region, Inc.

3 million

2014 Gross Revenue:

$1,736,084,000

2013 Gross Revenue:

$1,835,894,000

Revenue Sources: Petroleum distribution: $811,253,000; Oilfield and industrial services: $257,826,000; Construction: $414,033,000; Government services: $228,720,000; Tourism: $1,861,000; Investment earnings: $11,442,000; Natural Resources: $10,186,000; Other revenue: $763,000.

Alaska Employees: Worldwide Employees: Shareholders: Acres: 2014 Gross Revenue: 2013 Gross Revenue:

400 1,500 13,000 6,500,000 $401,900,000 $368,914,000

Revenue Sources: Contracting and Professional Services; Construction Services; Environmental Services; Marine Services; Rental and Property Management; Marketing/PR Agency; Camp Services and Catering; Communications; Calista Region Resources; Other Region Resources Services: Contracting and Professional Services; Construction Services; Environmental

Alaska Employees: Worldwide Employees: Shareholders: Acres: 2014 Gross Revenue: 2013 Gross Revenue:

Chugach Alaska Corporation

10,000

600 5,000 2,600 1 million acres* $625,000,000 $609,000,000

Services: Wide-ranging services for federal and commercial clients including facilities management and maintenance, construction, technical and IT, oil and gas and education services. Current Significant Endeavors: Chugach is diversifying its business through strategic acquisitions, recently acquiring a portion of O&G services provider All American Oilfield Associates and its subsidiary All American

Alaska Employees:

1270

Worldwide Employees:

2083

Shareholders:

8,597

Acres: Approximately 1.3 million acres of subsurface estate

Sophie Minich, President/CEO

2014 Gross Revenue:

$304,421,000

PO Box 93330 Anchorage, AK 99509-3330 Phone: 907-274-8638 Fax: 907-263-5183 info@ciri.com ciri.com

2013 Gross Revenue:

$214,930,000

www.akbizmag.com

Cook Inlet Region Inc.

Revenue Sources: Real Estate, Oilfield and Construction Services, Land and Natural Resources, Energy and Infrastructure, Environmental Services, Tourism and Hospitality, Government Services and Private Equity. (See 2014

Services: Construction, Government Services, Oilfield and Industrial Services, Petroleum Distribution, and Tourism. Current Significant Endeavors: BBNC has recently established a holding company—Bristol Bay Industrial (BBI)—to consolidate its oilfield services companies (Peak, Kakivik & CCI Industrial), and to provide a platform for efficiency and future growth. BBNC has named Mark D. Nelson, former AES COO, as the President & CEO of BBI.

SUBSIDIARIES

Bristol Bay Resource Solutions LLC Eagle Group STS-Glacier Group SpecPro Group Vista Group Business Resource Solutions, LLC Bristol Alliance CCI Alliance SES Group PetroCard, Inc. Bristol Bay Mission Lodge, LLC Bristol Bay Industrial Kakivik Asset Management Peak Oilfield Service Company CCI Industrial Services

Services; Marine Services; Rental and Property Management; Marketing/PR Agency; Camp Services and Catering; Communications Current Significant Endeavors: Continue expanding and stabilizing revenue base through organic growth and acquisitions.

SUBSIDIARIES Ookichista Drilling Services, Inc Yulista Aviation, Inc. Yulista Management Services, Inc. Y-Tech Services, Inc. Chiulista Services, Inc. Brice Incorporated Tunista, Inc. Tunista Construction, LLC Tunista Services, LLC Yukon Equipment, Inc. Futaris Solstice Advertising Sequestered Solutions Brice Construction Brice Marine Brice Equipment Calista Real Estate Aulukista, LLC Yulista Tactical Services, LLC E3 Environmental, LLC Qagan Lands, LLC Calista Education & Culture

Oilfield Equipment; and a minority equity position in pharmaceutical care provider Geneva Woods Pharmacy.

SUBSIDIARIES Chugach Alaska Services, LLC Chugach Federal Solutions, Inc. Chugach Government Services, Inc. Chugach Industries, Inc. Chugach Information Technology, Inc. Chugach McKinley, Inc. Chugach Management Services, Inc. Chugach Support Services, Inc. Chugach World Services, Inc. Defense Base Services, Inc. Wolf Creek Federal Services, Inc. Chugach Education Services, Inc. Heide & Cook, LLC Chugach Systems Integration, LLC Chugach Commercial Holdings, LLC Chugach Construction Services, LLC Chugach Government Solutions, LLC Chugach Training & Education Services, LLC All American Oilfield, LLC All American Oilfield Equipment, LLC Chugach Professional Oilfield Services, Inc. *The Chugach region comprises 1 million acres in Southcentral Alaska, entitled to 928,000 acres of which 378,000 acres are full fee entitlement and 550,000 acres of subsurface estate.

Business Report, Letter from Our President for additional details.) Services: CIRI’s financial expertise spans diverse business sectors, including real estate, oilfield and construction services. land and natural resources, energy and infrastructure, environmental services, tourism and hospitality, government services and private equity investments. Current Significant Endeavors: Will submit.

SUBSIDIARIES CIRI Land Development Co. (CLDC) North Wind Group Fire Island Wind LLC Cruz Energy Services LLC Cruz Marine LLC Weldin Construction LLC Silver Mountain Construction LLC CIRI Services Corporation CIRI Alaska Tourism Corp. PTP Management ANC R&D

September 2015 | Alaska Business Monthly

2015 ALASKA NATIVE REGIONAL CORPORATION DIRECTORY

Alaska Employees:

2015 ALASKA NATIVE REGIONAL CORPORATION DIRECTORY

1,722

Alaska Employees: Worldwide Employees: Acres:

2,787 19,700

Shareholders:

12.5 million acres

Doyon, Limited

2014 Gross Revenue:

$227,689,617

Aaron Schutt, President/CEO

2013 Gross Revenue:

$318,552,461

1 Doyon Pl., Suite 300 Fairbanks, AK 99701-2941 Phone: 907-459-2000 Fax: 907-459-2060 info@doyon.com doyon.com

Revenue Sources: Oilfield Services, Government Contracting, Lands & Natural Resources, Tourism Services: Doyon’s primary businesses are the oil field sector (drilling, security, facilities management, pipeline construction, and

Doyon Ltd.

Alaska Employees: Worldwide Employees: Shareholders: Acres:

Koniag, Inc. Elizabeth Perry, Ph.D., CEO 194 Alimaq Dr. Kodiak, AK 99615 Phone: 907-486-2530 Fax: 907-486-3325 facebook.com/KoniagInc koniag.com

Koniag Inc.

NANA Regional Corporation, Inc. Wayne Westlake, President/CEO PO Box 49 NANA Regional Kotzebue, AK 99503 Corp. Phone: 907-442-3301 Fax: 907- 442-4161 news@nana.com | nana.com/regional

SUBSIDIARIES Doyon Transitional, Inc. Doyon Oil Field Services, Inc. Doyon Government Contracting, Inc. Doyon Natural Resources Development Corporation

59 649 3,854 1.095 million*

2014 Gross Revenue:

$211,493,000

2013 Gross Revenue:

$202,616,000

Revenue Sources: For Fiscal Year ending March 31, 2014: contracting and sales revenue $203,662,000; Lease income $752,000; Natural Resources Revenue $6,000,000; Equity in earnings of affiliates $26,000; Interest Income $518,000; Other $535,000 Services: Government Contracting, ANCSA natural resource development and management, Commercial real estate investment, Control systems and alloy

Alaska Employees:

5,726

Worldwide Employees:

15,282

Shareholders:

13,800

Acres:

2.2 million

2014 Gross Revenue:

$1,600,000,000

2013 Gross Revenue:

$1,700,000,000

Revenue Sources: Sources are: Natural resources, marketable securities and business units. Services: Responsible natural resource development as well as oil and gas, federal and commercial services to a wide array of industries.

Alaska Employees: Worldwide Employees: Shareholders: Acres:

53 256 22,600 365,000

Sealaska

2014 Gross Revenue:

$121,540,000

Anthony Mallott, President/CEO

2013 Gross Revenue:

$164,950,000

One Sealaska Plaza, Suite 400 Juneau, AK 99801-1276 Phone: 907-586-1512 Fax: 907-463-3897 webmaster@sealaska.com sealaska.com

Revenue Sources: Forest products; Construction aggregates; General construction and design build; Mariculture; Seafood processing; Renewable energy; Information technology services; Environmental remediation and services; Security services.

Sealaska Corp.

engineering) and federal government contracting (privatized utilities, construction, and IT). Current Significant Endeavors: Doyon is excited to launce the next phase of its oil and gas exploration program in the Interior’s Nenana Basin. Included in this phase is the drilling of a third well in summer 2016, a follow up of very encouraging results from the well drilled in 2013 and the 3D seismic program from Fall 2014.

distribution, Information Sciences, Database Engineering,

SUBSIDIARIES Angayak Construction Enterprises, Inc. Clarus Technologies, LLC Digitized Schematic Solutions, LLC Frontier Systems Integrator, LLC Koniag Development Company, LLC Koniag Services, Inc. Professional Computing Resources, Inc. XMCO, Inc. Dowland-Bach Corporation Koniag Information Security Services, LLC Granite Cove Quarry, LLC Koniag Technology Solutions, Inc. Nunat Holdings, LLC Near Island Building, LLC Karluk Wilderness Adventures, Inc. (dba Kodiak Brown Bear Center, and dba Karluk River Cabins) PacArctic, LLC Open Systems Technology, DE, LLC 2320 Post Road, LLC *105,000 surface & 990,000 subsurface

SUBSIDIARIES Affigent, LLC Akima Construction Services, LLC Akima Facilities Management, LLC Akima Global Services, LLC Akima Infrastructure Services, LLC Akima Intra-Data, LLC Akima Logistics Services, LLC Akima Support Operations Akima Technical Solutions, LLC Akima, LLC Cazador, LLC Five Rivers Services, LLC GIS Oilfield Contractors Ikun , LLC Ki, LLC Kisaq, LLC Lynxnet, LLC Nakuuruq Solutions, LLC NANA Australia, Pty. Ltd. NANA Oilfield Services, Inc NANA Pacific NANA Services, LLC NANA WorleyParsons, LLC NANA/Lynden Logistics, LLC NIQI, LLC NMS Paa River Construction, LLC Pegasus Aviation Services, LLC Piksik, LLC Portico Services, LLC Qivliq Federal Group SAVA Workforce Solutions, LLC Synteras, LLC Talu, LLC TKC Global Solutions, LLC Truestone, LLC Tuuq Drilling, LLC TUVA, LLC WHPacific, Inc. Wolverine Services, LLC

Services: Environmental services, security services, timber sales, information technology. Current Significant Endeavors: Sealaska’s vision is that we are an Alaskan Native enterprise of excellence built on our cultural values. Sealaska’s purpose is to strengthen Tlingit, Haida, Tsimshian people, culture and homelands, utilizing our Values in Action to increase profitability and build Alaska Native capacity.

SUBSIDIARIES Sealaska Timber Corporation Alaska Coastal Aggregates Sealaska Environmental Services Managed Business Solutions Sealaska Constructors Security Alliance Haa Aani, LLC Synergy Systems

Alaska Business Monthly | September 2015 www.akbizmag.com

2015 ALASKA NATIVE VILLAGE CORPORATION DIRECTORY

Village Corporations by Region Ahtna, Incorporated Community Name Cantwell Chistochina Chitina Copper Center Gakona Gulkana Little Lake Louise Lower Tonsina Mentasta Lake Nabesna Slana Tazlina Twin Lake

Corporation Name Yedetena Na Corp. Yedetena Na Corp. Chitina Native Corp. Kluti-Kaa Corp. Gakona Corp. Sta-Keh Corp. Little Lake Louise, Inc. Lower Tonsina, Inc. Mentasta, Inc. Nabesna Native Group, Inc. Slana Native Corp. Tazlina, Inc. Twin Lake Native Group, Inc.

Aleut Corporation Community Name Akutan Atka Belkofski False Pass King Cove Nelson Lagoon Nikolski Pauloff Harbor Sand Point St. Paul St. George Unalaska Unga

Corporation Name Akutan Corp. Atxam Corp. Belkofski Corp. Isanotski Corp. King Cove Corp. Nelson Lagoon Corp. Chaluka Corp. Sanak Corp. Shumagin Corp. Tanadgusix Corp. St. George Tanaq Corp. Ounalashka Corp. Unga Corp.

Arctic Slope Regional Corp. Community Name Anaktuvuk Pass Atqasuk Barrow Kaktovik Nuiqsut Point Hope Point Lay Wainwright

Corporation Name Nunamiut Corp. Atqasuk Corp. Ukpeaġvik Iñupiat Corp. Kaktovik Iñupiat Corp. Kuukpik Corp. Tikigaq Corp. Cully Corp., Inc. Olgoonik Corp.

Bering Straits Native Corp. Community Name Brevig Mission Council Elim King Island Koyuk Mary’s Igloo Nome Shaktoolik Shishmaref Solomon St. Lawrence St. Michael Stebbins Teller Unalakleet Wales White Mountain

Corporation Name Brevig Mission Native Corp. Council Native Corp. Elim Native Corp. King Island Native Corp. Koyuk Native Corp. Mary’s Igloo Native Corp. Sitnasuak Native Corp. Shaktoolik Native Corp. Shishmaref Native Corp. Solomon Native Corp. Elim Native Corp. St. Michael Native Corp. Stebbins Native Corp. Teller Native Corp. Unalakleet Native Corp. Wales Native Corp. White Mountain Native Corp.

Bristol Bay Native Corporation Community Name Aleknagik Chignik Chignik Lagoon Chignik Lake Clark’s Point Dillingham www.akbizmag.com

Corporation Name Aleknagik Natives Limited Far West, Inc. Chignik Lagoon Native Corp. Chignik River Limited Saguyak, Inc. Choggiung Limited

Becharof Corp Choggiung Limited Ekwok Natives Limited Igiugig Native Corp. Iliamna Natives Limited Bay View, Inc. Alaska Peninsula Corp. Koliganek Natives Limited Levelock Natives Limited Manokotak Natives Limited Paug-Vik, Inc., Limited Alaska Peninsula Corp. Stuyahok Limited Kijik Corp. Olsonville Inc. Pedro Bay Corp. Oceanside Corp. Pilot Point Native Corp. Tanalian, Inc. Alaska Peninsula Corp. Choggiung Limited Savonski Corp. Alaska Peninsula Corp. Togiak Natives Limited Twin Hills Native Corp. Alaska Peninsula Corp.

Egegik Ekuk Ekwok Igiugig Iliamna Ivanof Bay Kokhanok Koliganek Levelock Manokotak Naknek Newhalen New Stuyahok Nondalton Olsonville Pedro Bay Perryville Pilot Point Port Alsworth Port Heiden Portage Creek Savonski South Naknek Togiak Twin Hills Ugashik

Calista Corporation Community Name Akiachak Akiak Alakanuk Andreafsky Aniak Atmautluak Bethel Bill Moore’s Slough Chefornak Chevak Chuloonawick Crooked Creek Eek Emmonak Georgetown Gold Creek/Susitna Goodnews Bay Hamilton Haycock Hooper Bay Kalskag Kasigluk Kipnuk Kongiganak Kotlik Kwethluk Kwigillingok Lime Village Lower Kalskag Marshall Mekoryuk Mt. Village Nagamut Napaimute Napakiak Napaskiak Newtok Nightmute Nunapitchuk Nunivak Ohogamiut Oscarville Paimiut

Corporation Name Akiachak Limited Kokarmiut Corp. Alakanuk Native Corp. Nerklikmute Native Corp. Kuskokwim Corp. (FF-014813) Atmautluak Limited Bethel Native Corp. Kongnikilnomuit Yuita Corp. Chefarnrmute, Inc. Chevak Co. Chuloonawick Corp. Kuskokwin Corp. (FF-014990) Iqfijouaq Co. Emmonak Corp. Kuskokwim Corp. (FF-014860) Gold Creek/Susitna Native Assoc. Kuitsarak, Inc. Nunapiglluraq Corp. Haycock Native Group Corp. Sea Lion Corp. Kuskokwim Corp. (FF-014817) Kasigluk, Inc. Kugkaktilk Limited Qemirtalek Coast Corp. Kotlik Yupik Corp. Kwethluk, Inc. Kwik, Inc. Lime Village Co. Kuskokwim Corp (FF-014888) Maserculig, Inc. Nima Corp. Azachorok, Inc. Nagamut Limited Kuskokwim Corp. (FF-014900) Napakiak Corp. Napaskiak, Inc. Newtok Native Corp., Inc. Chinuruk, Inc. Nunapitchuk Limited Nima Corp Ohog, Inc. Oscarville Native Corp. Paimiut Corp.

September 2015 | Alaska Business Monthly

2015 ALASKA NATIVE VILLAGE CORPORATION DIRECTORY

Pilot Station, Inc. Pitka’s Point Native Corp. Arvig, Inc. Qanirtuuq, Inc. Kuskokwim Corp. (FF-014924) Kuskokwim Corp. (FF-014926) Kuskokwim Corp. (FF-014927) Askinuk Corp. Swan Lake Corp. Kuskokwim Corp. (FF-014936) St. Mary’s Native Corp. Kuskokwim Corp. (FF-014941) Nunakauiak Yupik Corp. Tulkisarmute, Inc. Tuntutuliak Land Limited Tununrmiut Rinit Corp. Chinuruk, Inc.

Pilot Station Pitka’s Point Platinum Quinhagak Red Devil Russian Mission K Russian Mission Y Scammon Bay Sheldon Point Sleetmute St. Mary’s Stoney River Toksook Bay Tuluksak Tuntutuliak Tununak Umkumiute

Chugach Alaska Corporation Community Name Chenega English Bay Eyak Icy Bay Port Graham Tatitlek

Corporation Name Chenega Corp. English Bay Corp. Eyak Corp. Chugach Natives, Inc. Port Graham Corp. Tatitlek Corp.

Cook Inlet Region, Incorporated Community Name Alexander Creek Caswell Chickaloon Eklutna Golovin Kenai Knik Montana Creek Ninilchik Point Possession Salamatof Seldovia Tyonek

Corporation Name Alexander Creek, Inc. Caswell Native Assoc., Inc. Chickaloon Moose Creek Native Assoc. Eklutna, Inc. Golovin Native Corp. Kenai Native Assoc., Inc. Knikatnu, Inc. Montana Creek Native Assoc. Ninilchik Natives Assoc., Inc. Point Possession, Inc. Salamatof Native Assoc., Inc. Seldovia Native Assoc., Inc. Tyonek Native Corp.

Doyon, Limited Community Name Alatna Allakaket Anvik Beaver Birch Creek Birch Creek/Kantishna Canyon Village Chalkyitsik Chicken Circle Deacons Landing Dot Lake Eagle Evansville Flat Ft. Yukon Galena Grayling Grouse Creek Healy Lake Holy Cross Hughes Huslia Kaltag Kokrines Koyukuk Manly Hot Springs McGrath Medfra Minchumina 76

Corporation Name K’oyitl’ots’na Limited K’oyitl’ots’na Limited Ingalik, Inc. Beaver Kwit’Chin Corp. Tihteet’aii, Inc. Neechootaalichaagat Corp. Kian Tr’ee Corp. Chalkyitsik Native Corp. Forty-Mile, Inc. Danzhit Hanlaii Corp. Deacons Landing, Inc. Dot Lake Native Corp. Hungwitchin Corp. Evansville, Inc. Doratoi, Inc. Gwitchyaazhee Corp. Gana-a ‘Yoo Limited Hee-yea Lingde Corp. Grouse Creek Corp. Mendas Cha-ag Native Corp. Delocheet, Inc. K’oyitl’ots’ina Limited K’oyitl’ots’ina Limited Gana-a’yoo Limited Kokrines, Inc. Gana-a’yoo Limited Bean Ridge Corp. MTNT Limited Medfra Native Council, Inc. Minchumina Natives, Inc.

Minto Nenana Nikolai Northway Nulato Rampart Ruby Shageluk Stevens Village Takotna Tanacross Tanana Telida Tetlin Venetie Wiseman

Seth-de-ya-ah Corp. Toghotthele Corp. MTNT Limited Northway Natives, Inc. Gana-a’yoo Limited Baan-o-yeel kon Corp. Dineega Corp. Zho-Tsa, Inc. Dinyea Corp. MTNT Limited Tanacross, Inc. Tozitna Limited MTNT Limited Tetlin Native Corp. Venetie Indian Corp. Wisenak, Inc.

Koniag, Incorporated Community Name Afognak Akhiok Anton Larsen Bay Ayakulik Bells Flat Kaguyak Karluk Kodiak Larsen Bay Litnik Litnik Old Harbor Ouzinkie Port Lions Port Williams Uganik Uganik Uyak Woody Island

Corporation Name Afognak Native Corp. Natives of Akhiok, Inc. Anton Larsen Inc. Ayakulik, Inc. Bells Flats Native Group, Inc. Kaguyak, Inc. Karluk Native Corp. Natives of Kodiak, Inc. Nu-Nachk Pit, Inc. Litnik, Inc. Litnik Native Group, Inc. Old Harbor Natvie Corp. Ouzinkie Native Corp. Afognak Native Corp. Shuyak, Inc. Uganik Native Group, Inc. Uganik Natives, Inc. Uyak Natives, Inc. Leisnoi, Inc.

NANA Regional Corporation Community Name Ambler Buckland Deering Kiana Kivalina Kobuk Kotzebue Noatak Noorvik Selawik Shungnak

Corporation Name Ivaisaapaagmit Corp. Buckland Nunachiak Corp. Deering Ipnatchiak Corp. Katyaak Corp. Kivalins Sinuakmeut Koovukmeut, Inc. Kikiktagruk Inupiat Corp. Noatak Napaaktukmeur Corp. Putoo Corp. Akuliuk, Inc. Isingnakmeut

Sealaska Corporation Community Name Angoon Craig Hoonah Hydaburg Juneau (4 Cities) Kake Kasaan Klawock Klukwan Knight Island Saxman Sitka Yakutat

Corporation Name Kootznoowoo, Inc. Shaan Seet, Inc. Huna Totem Corp. Haida Corp. Goldbelt, Inc. Kake Tribal Corp. Kavilco, Inc. Klawock Heenya Corp. Klukwan, Inc. Ganawas Corp. Cape Fox Corp. Shee Atika, Inc. Yak-tat Kwaan, Inc.

SOURCE: Alaska Department of Natural Resources/Mining, Land & Water/ Alaska Native Region – Village – Corporation Index (http://dnr.alaska.gov/mlw/trails/17b/corpindex.cfm) DISCLAIMER: Alaska Business Monthly made minor edits to the list mostly spelling corrections.

Alaska Business Monthly | September 2015 www.akbizmag.com

ARCTIC IDEAS

Infrastructure for Alaska’s Northern Latitudes By Rindi White

Port of Nome expansion construction is in full swing with more upgrades to come. © Joy Baker/Courtesy of City of Nome

Alaska Business Monthly | September 2015 www.akbizmag.com

etween offshore oil drilling, studies of Arctic sea ice, and use of new northern shipping lanes, Arctic Alaska is a hopping place these days. Like any region seeing a spike in traffic, needs arise related to the influx of users. What are the needs and how are they being addressed?

Expanding Infrastructure to Meet Current and Future Needs While AIDEA (Alaska Industrial Development and Export Authority) stands ready to assist in a range of ways, the US Army Corps of Engineers is working on helping

one key piece of Arctic infrastructure be built: a deep draft Arctic port. The Corps’ Alaska District held a conference in 2008, attended by more than 125 representatives from local, state, and federal government offices; private transportation businesses; and tribal entities to discuss the future of Alaska’s ports and harbors. In 2010, the Corps held a second conference to update stakeholders on the progress made enhancing marine infrastructure in the state. One of the needs identified at that conference was for deepdraft capability. In 2013, the Corps released the Alaska Deep-Draft Arctic Port System

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September 2015 | Alaska Business Monthly

study that evaluated fourteen sites along western and northern Alaska shores. “We had to choose one to really get started on, so we established some criteria for looking at each of those,” says Lorraine Cordova, US Army Corps of EngineersAlaska District economics team leader and project manager for the deep-draft Arctic port study. “The Nome and Port Clarence sites were considered for initial investigation. Nome really bubbled up to the top… because they have the upland support.” Cordova is referring to existing infrastructure, from grocery stores to hotels. Port Clarence, a former LORAN, or longrange navigation station, lacks upland support. The Corps says there would be many other benefits to the region, the state, and to Nome. “Enhancing port infrastructure—including deep-draft port facilities currently unavailable north of Unalaska/Dutch Harbor—would meet the state’s goal of encouraging economic development in remote areas. It would provide local and regional economic development opportunities (resource extraction, tourism, research); decrease Arctic region operating costs; provide protected dockage to support offshore oil and gas endeavors, fishing fleet, and reABM print advessels; 072715.pdfand 1 7/27/2015 source extraction provide8:44:41 ves-AM

sel repair and maintenance support,” states the Alaska Deep-Draft Arctic Port System study released in February. The deeper port would allow Nome to better accommodate the vessels currently using the area, Cordova says, and could significantly expand its role as a staging area for drilling in the Chukchi and Beaufort seas. “This will allow the fuel tanker to come in to Nome more fully loaded and will allow the offshore resupply vessels to come into Nome,” she says. The Corps is working to address the comments gathered during its draft review of the proposed development of a deep-draft Arctic port in Nome, Cordova says. A final review is needed, and then the development proposal can be sent to Washington, D.C. Corps leaders for final review. Cordova says she expects a meeting with senior Corps officials will happen in November. The Assistant Secretary of the Army for Civil Works could sign the plan by spring 2016, she says. From there it would be sent to Congress for authorization and funding. Creating a deep-draft port at Nome is no small feat. The $211 million plan includes building a 2,150-foot causeway extension at the end of Nome’s existing causeway, as well as a 450-foot dock and dredging the

protected area and its entrance channel to 28 feet. The state of Alaska and the City of Nome are sponsors on the project development, and the Corps proposes to partner with its sponsors on construction as well. Total costs would be nearly split between the Corps and the sponsors, with the Corps paying an estimated $97 million, mostly in just construction costs, and the sponsors paying $113.5 million, an estimate that includes docks, mooring dolphins, utilities, and security gates as well as lands, easements, right-of-ways, and relocations. As the owners, the sponsors would be responsible for the estimated $244,000 in annual operations and maintenance costs.

Safety Is Job One

With more activity in Arctic waters and development planned for the outer continental shelf, rescue and oil spill response are two topics of major concern among Arctic stakeholders, says Nils Andreassen, director of the Institute of the North. The Institute is a nonprofit organization created by former governor Walter Hickel, who believed Alaskans need to build a foundation to sustain Arctic communities and drive development. Andreassen says the group’s role is that of a convener,

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bringing subject matter experts, community leaders, and others together to identify gaps and opportunities and to make recommendations or policies relevant to Arctic issues. “The list is long,” Andreassen says of the Arctic infrastructure needs. “I think a good starting point is the need to manage or mitigate risk. That’s really a driving force across the Arctic.” Andreassen says all eight Arctic nations have signed agreements guaranteeing a minimum level of response if an oil spill happens in the Arctic. The eight Arctic nations have varying levels of capacity to respond, Andreassen says. Just how a response happens in Alaska is still up in the air. The state lacks significant port infrastructure in the north, although the US Army Corps of Engineers is working on a plan to create a new port at Nome. But Andreassen says broader logistics are needed all along the coast, as far south as the Pacific Northwest, and perhaps in more than one place along the western shore of the state. “I think the challenge is how to develop all those assets without them competing with each other,” he says. “The big unknown is the federal government and the resources they’re willing to commit to the region.”

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Other infrastructure needed is more basic—charting and hydrography. Many of the areas being uncovered haven’t been adequately charted, and some charts are in desperate need of updating, as Royal Dutch Shell found when the icebreaker Fennica hit an uncharted obstacle on its way out of Dutch Harbor heading to the company’s Chukchi Sea drilling location. The National Oceanic and Atmospheric Administration later reported a previously uncharted shoal in the Fennica’s path of travel, although the US Coast Guard had not in July announced whether the shoal was what caused damage to the Fennica. “One of the responsibilities of the United States is to provide good charting,” Andreassen says.

Ready to Assist for Offshore Success Later this month, James Hemsath and Mark Davis of AIDEA will be talking to attendees of the Alaska Oil and Gas Congress about offshore infrastructure support activities. Hemsath, AIDEA’s director of project development and asset management, says AIDEA stands ready to help make offshore oil development a success. But it’s too early to say exactly what that help will look like.

AIDEA was recently part owner of the jack-up drilling rig Endeavor – Spirit of Independence. AIDEA partnered with Ezion Holdings Limited and Teras Investments Pte, Ltd., a subsidiary of Ezion, to purchase the rig after AIDEA’s board approved the project in 2011. AIDEA says it invested about $24 million in the rig before selling its ownership stake for $25.7 million in November 2014. “The sale was warranted due to the inability to obtain long-term charter [drilling] contracts for the rig in Alaska,” AIDEA states on its website. “While that investment did not evolve for the long term, the fact is we created a critical infrastructure. Having that infrastructure there enhanced oil production in the [Cook] Inlet,” Hemsath says. Would AIDEA participate in the purchase of another drilling rig? It might, Hemsath says. The range of potential participation by the state’s development arm is pretty broad, he says. AIDEA may be a useful partner to offshore developers by way of its financing. “One of the powers of AIDEA, especially in the project development group, is our ability to take a patient view toward capital,” Hemsath says. “We may not need to get paid back as soon as other people will be. We may suspend our payments during the

September 2015 | Alaska Business Monthly

“We need to understand where we are and how we take advantage of our location, where is the strength of our location from a logistics position, and what infrastructure is critically missing,”

—James Hemsath Alaska Industrial Development and Export Authority

offseason when there is not actual charter work being done.” Or the agency might participate in other ways. How does developed oil get to market? Would pipelines from the field to the trans-Alaska oil pipeline help? What are the natural dockage points for rigs during the off-season? Where is the staging area? From where does drill rig support come? “We own infrastructure, if you will, in terms of the Red Dog port and road. So, with the Chukchi Sea and related development, is there an ability to take minor materials to that area [from Red Dog]? Can supplies be shipped up and barged there?” Hemsath asks. Can the AIDEA-owned Ketchikan Shipyard, operated by Vigor Marine, be used as a maintenance and repair spot for rigs and the fleet that serves them? These are all questions Hemsath says he

and Davis hope to raise at the September 21-24 Oil and Gas Congress in Anchorage. “We need to understand where we are and how we take advantage of our location, where is the strength of our location from a logistics position, and what infrastructure is critically missing,” Hemsath says. “Let’s have that discussion, let’s find a way to identify those things,” he says. “Let’s look for those strengths and opportunities, to make this business competitive and to make this business as safe and as environmentally appropriate as it can be.”

How Do We Get There From Here? Fixing the Road Transportation routes are a key need for any area, and this year a number of weather-related phenomena conspired to cut off one of the primary transportation links to the Arctic—the Dalton Highway.

The Dalton Highway begins just north of Fairbanks and ends 414 miles later at Deadhorse. It crosses several rivers along the way, including the Sagavanirktok, or Sag, River. It was that river that caused most of the flooding problems this spring and early summer, although flooding damage also happened along the Kuparuk and Colville rivers. “There were icing events on the Dalton [this spring], then flooding events when all that ice melted quickly in May,” says Michael Lund, construction manager for the Northern Region Alaska Department of Transportation and Public Facilities. Traffic on the Dalton, the only road leading to the oil fields and the primary supply chain for the employee housing, hotels, and other services in Deadhorse, was stopped for stretches of time, at one point for eighteen days, while the road was temporarily repaired. Lund says on June 15 Cruz Construction, the contractor doing the temporary repair work, handed the project over to Brice, Inc., the Fairbanks-based civil construction contractor that was chosen to complete the permanent repairs. Traffic is mostly open through the flood zone, roughly between Mile 397 and Mile 414, although it was down to one lane for a one-mile stretch of

Alaska Business Monthly | September 2015 www.akbizmag.com

that route in July. Lund anticipated a full opening of the road in July, but says there may be construction related delays through the summer.

Enlarging a Planned Project

Some of the construction work was already planned, Lund says. With the flooding, the project simply got larger. “We had work planned for this summer that was already going to include a grade raise for thermal and structural stability of the roadway in preparation for paving it in the future,” he says. “Milepost 397 to 414 are part of a larger project that extends down to Mile 362 that will get awarded and constructed over the next five or six years.” “There’s a large push to get as much work done as possible… in an effort to protect the roadway in case flooding occurs next spring,” Lund says. In July, Lund says, crews were developing material sites—gravel pits at key points along the road—so work can be done more easily. Brice, Inc. crews were also fixing any remaining flooding damage, he says. Once everything is staged, the crew will get to work on repairs, he says. Workers will be on the project twenty-four hours a day, a nod to the importance of the route. A lot of the work will be raising the road, he says.

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“There’s a large push to get as much work done as possible… in an effort to protect the roadway in case flooding occurs next spring.”

—Michael Lund Construction Manager, Northern Region Alaska Department of Transportation and Public Facilities

“The whole area up there is flat,” he says. “On the surrounding tundra, you can see for miles. The road is the highest thing out there. The original road is 2.5 to 3 feet above the surrounding ground. It’s a relatively low road.” Before flooding happened, Lund says the Alaska Department of Transportation and Public Facilities planned to raise the road to about 7 feet high. After flooding, Lund says, the plan altered to include raising the road to about 10 feet for eight miles. The project includes laying insulation board in the roadway to prevent permafrost thaw. The work planned before flooding was a two-year, $26.7 million project. The Alaska Department of Transportation and Public Facilities extended the project four miles to the south to address flooding problems and added a section where the road grade was raised higher than initially planned. With the add-ons, the project jumped by

$17.1 million to a total project cost of $43.8 million. Governor Bill Walker declared the area a disaster in April and again in May, which opened the doors to more federal funding for the project, Lund says, so the federal government will mostly pay for the repairs and upgrades. “This is the largest project happening in the northern region this year,” Lund says. It’s anyone’s guess whether more flooding will happen next year or in the near future. The events of this spring were an anomaly, he says. “I have heard that this happened once before, but it was a minor-capacity flooding event,” Lund says. “There has been absolutely nothing ever even close to a tenth of this scale.” R Rindi White is a freelance journalist living in Palmer.

September 2015 | Alaska Business Monthly

ARCTIC IDEAS

Arctic Energy Needs Better Batteries Wind and sun supplement diesel and fuel oil

t’s windy in the Arctic, particularly in coastal areas, and in summer it’s light around the clock. Yet small villages pay sky-high costs for fuel transported hundreds of miles by barge, and sometimes even flown in. Yet the wind—and sun in summer—are inexhaustible energy By Mike Bradner sources, and free. Why can’t they be used?

Alaska Business Monthly | September 2015 www.akbizmag.com

Kotzebue is one Arctic community using wind power to reduce the amount of diesel needed to generate electricity and provide power for the community. ÂŠ Kevin G. Smith / AlaskaStock.com

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It’s an obvious question that has occupied community leaders in Alaska’s remote Arctic villages for years, and their concerns have been passed up the chain to state officials who are working to figure out the technical challenges. But as with many things, the problem is more complex than it appears. Many of the problems arise because of the small sizes of remote villages, typically several hundred people in size, and the micro-size of the local power grid, according to Sean Skaling, renewable resource program director at the Alaska Energy Authority.

Renewable Challenges

The big challenge with wind, and with wind projects anywhere, is the intermittent nature of the resource and what to do when the wind suddenly dies, Skaling says. Diesel-powered generators must be kept on standby with the engines on idle, ready to quickly ramp up. The diesels can’t be completely shut off, at least for now, because with the current state of technology in remote villages they can’t be fired up in time to offset a quick loss of wind. Without having diesel-fired power ready almost instantaneously, and seconds matter, the local grid can crash, causing a blackout. That’s not good news for a small village in winter.

Diesel engines on idle still burn fuel, so until a safe strategy is found for a complete “diesel off” plan, the prospect that wind power can substantially reduce the use of fuel oil, and the costs, are not as attractive as many would like, Skaling says. As for solar, and that 24-hour sunshine during Arctic summers, the issue is that the reverse is true in winter, when it’s dark much of the day. However, winter is when maximum power is needed in a village. During summer, when the sun shines a lot, local power demand is lower. Despite these problems, Skaling says there are actually some advantages for wind and even solar in remote communities, even in the Arctic. For one thing, in cold temperatures the air is denser, which means it packs more weight and can generate more power than air moving through wind turbines in a warmer climate, he says. Even solar has some unexpected advantages, as shown by experiments with solar power on buildings in villages in the Northwest Arctic region. Even on short winter days some power can be generated for a few hours when the sun is up. Interestingly, a lot of power can be obtained from sun being reflected off snow, Skaling says. This happens when the solar panel is positioned almost vertically to receive sunlight at

“Thirty to 50 percent [for wind penetration] is a nice target.”

—Sean Skaling Renewable Resource Program Director Alaska Energy Authority

a low angle, the sun being low in the sky. The “snow bounce,” or light reflected off snow, can amount to as much as 30 percent of the solar power generated on those days, he says. Experiments with solar power have been done in Northwest Alaska villages and in the Interior, but the applications are usually small, to help power a community building, for example.

Power Storage

As for wind, there is a fair amount of power being generated in remote Alaska communities and organizations like Alaska Village Electric Cooperative have operated wind projects for several years in several of the cooperative’s small utilities. But in almost all cases the “penetration” of wind in the local power grid—the amount of power being supplied by wind to offset diesel—isn’t as much as has been hoped for because of technical problems

Alaska Business Monthly | September 2015 www.akbizmag.com

and the economics of installing things in remote communities. “Thirty to 50 percent [for wind penetration] is a nice target,” Skaling says. Many rural communities with wind are below 30 percent. A wind project contributing 20 percent or less of a village’s power supply is problematic economically because the cost savings from displaced fuel is unlikely to justify the cost of operating the wind project, he says. Getting above 50 percent, and eventually to the holy grail of 100 percent or “diesel off,” will require a way of storing power from wind—improved batteries are the best candidate—as well as improvements in switch and control gear. Getting economical and reliable power storage is key because if enough power can be stored, in a battery, for example, it can give the community enough power to keep the grid functioning until diesel generators can be switched on. Standby batteries are being used in Alaska now, such as a large one operated by Golden Valley Electric Association in Fairbanks that gives the co-op a reliable emergency “cold start” capability for backup oil-fired generation, but the technology for smaller-scale and affordable battery packs for rural communities where transportation costs and maintenance needs pose challenges is still not available. A lot of work is being done in this area, and Alaska is considered a world leader in tackling the problems of “wind-diesel interface” for small remote communities.

Seeking Better Ways

The most promising wind “high penetration” village project is at Kokhanok, a small community on Lake Iliamna, where a leadacid battery package has been installed with custom-built switch gear to manage the grid along with a way to use surplus wind power, when that exceeded local power needs, by heating water in a boiler to keep community buildings warm. Kokhanok’s system is still not operating properly, however, and it is, after all, a demonstration project. The Alaska Energy Authority and a contractor are working on solutions, Skaling says. Rich Stromberg, Alaska Energy Authority’s wind project manager, says one remote community that may be close to solving problems is St. Paul, in the Pribilofs, although it involves a private commercial project rather than a community public power project. TDX Power, a subsidiary of TDX, the St. Paul village corporation, has long had wind turbines at St. Paul with one turbine that now supplies power to the local public utility to supplement diesel. www.akbizmag.com

TDX Power has a commercial building where it is testing a combination of a flywheel (a spinning device that can be a backup) to store power along with advanced switch gear to manage the electric system and storage of surplus power in hot-water boilers. The control system allows for both frequency and voltage regulation. TDX Power installed this in late 2014, and it has been operating since in a demonstration mode. Ample winds last winter allowed for significant periods of “diesel off” operation, Alaska Energy Authority says in a report. Meanwhile, Chugach Electric Association in Anchorage is also developing a flywheel-

battery package, in a test program, Chugach spokesman Phil Steyer says. The utility is seeking better ways to deal with variations in wind power from the nearby Fire Island wind project, from which Chugach buys power, and if the system works as hoped it could be expanded, allowing Chugach to purchase more wind power. Meanwhile, lessons learned by Chugach with the flywheel and battery combination can also be put to use elsewhere, including in small, remote communities. R Mike Bradner is publisher of the Alaska Legislative Digest.

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September 2015 | Alaska Business Monthly

TRANSPORTATION

Alaska Tugs & Barges

The tugboat Samson Mariner with the barge Fairweather, pulling into Dutch Harbor arriving from Adak; both vessels are owned and operated by Samson Tug & Barge.

Delivering to Alaskans rain or shine By Tom Anderson

o to any elementary school library and there’s bound to be a book or two on tug boats. Tugs, barges, and pulling and pushing cargo in stormy seas are as much a part of the American maritime tradition and marine ethos as “deadliest catch” commercial fishing and the prominence of the country’s US Coast Guard protecting domestic waters. The tug and barge industry touches every single person’s life in Alaska because of the spectrum of deliveries brought to and taken from Alaska, foundational to commerce at all levels.

The American Waterways Operators The American Waterways Operators is the national advocate for the US tugboat, towboat, and barge industry. Waterways and ports support more than forty-one thousand Alaska jobs and directly contribute $6 billion to the state’s economy. Vessels on 88

the waters of Alaska move 36 million tons of domestic freight every year, including $2.2 billion in agricultural and food products. Barge transportation is the primary means of delivering food to market shelves in many isolated Alaska communities. American Waterways Operators’ latest statistical data highlights more than 900 large container ships, tankers, and bulk cargo vessels call at Alaska ports each year. More than forty tugboat and barge companies are headquartered in Alaska, operating more than 140 vessels. More than twenty thousand pieces of military cargo have passed through the Port of Anchorage over the past eight years. American Waterways Operators notes the Port of Anchorage was designated a Department of Defense Nationally Strategic seaport in 2006. The organization emphasizes how crucial the industry remains in Alaska, injecting over $3.1 billion in personal income and $1.9 billion in direct business revenue to the state economy. Alaska is home to 5,500 miles of inland waterways, the most of any state in the nation. Alaska ports handle over 46 million short tons of cargo every year. Alaska’s Northwest Coast is home to the world’s largest zinc mine, accounting for 10 percent of the world’s production. Tugboats are critical to safely transporting zinc ore

from the mine’s shallow port to bulk ships that cannot safely transit in shallow waters notes Charles Constanzo, vice president of American Waterways Operators’ Pacific Region. Constanzo referenced $1.6 billion in manufactured products such as clothing, food, consumer products, computers, and machinery being shipped to and from Alaska through waterways and ports, while the state serves as a major energy hub for the United States and globally through petroleum products worth $1.6 billion moving on its waterways.

Vitus Marine

For some tug and barge operators, the marine industry is part of their ancestry. Mark Smith earned his sea legs at an early age growing up near Dillingham, tucked away at the confluence of the Nushagak River in the Bristol Bay region of southwestern Alaska. In 1934 his family entered the tug and barge business as Smith Lighterage Company. Starting in 1973 Smith worked over Alaska summers as a commercial fisherman and third-generation tug operator. The mosaic of ownership in the industry, with employee and customer crossovers, has been the result of numerous acquisitions over the last twenty years, explains Smith. The family business was merged

Alaska Business Monthly | September 2015 www.akbizmag.com

into Northland Services in 1999. Smith transferred to Yukon Fuel that same year and would later join Crowley upon its purchase of Yukon. By 2009 Smith wanted to continue his family’s legacy and started his own marine services company. Vitus Bering took the seas in the early 1700s. A Danish mariner and officer in Peter the Great’s Russian Navy, he is known for sailing through what is now named the Bering Strait. Smith liked Bering’s tenacity and courage, forming Vitus Energy in 2009. Within this parent company, subsidiaries include aviation, terminal operation, and marine services. Vitus Marine is the tug and barge arm of the business. Customers are scattered across the state from the Aleutian Islands to the Arctic Circle and inland on rivers such as the Kobuk, Nushagak, Kuskokwim, Kvichak, and Yukon. Upon re-entering the market, serendipity and strategy led Smith and his partners to Meera Kohler, president and CEO of the Alaska Village Electric Cooperative, a nonprofit electric utility serving fifty-six communities in Western and Interior Alaska. Alaska Village Electric Cooperative funded the construction and leased to Vitus its initial flagships, two articulating tug and barge vessels. Costeffective, faster, and safer deliveries of fuel were the results. Vitus has grown on the foundation of safe, reliable operations. With six barges, four tugs, and three landing crafts, 85 percent of the company’s business and revenue comes from marine fuel delivery. However the complexity of physical location is what makes services tenuous at times. “We’re dealing with the delivery of fuel, and the communities are dependent on this for their utilities, schools, city and village operations, and for personal and commercial use, so every shipment is critical,” says Smith. “That said, very few Alaskan docks afford easy access, so we’re landing on beaches and we’re hiring the best captains who have the local knowledge of the region’s waterways. There is no other choice without any, or rarely updated, hydrographic mapping information from National Oceanic and Atmospheric Administration.” Smith explains Alaska has limited inland docks in rural Alaska. He names West Dock on the North Slope, a Crowley dock at Kotzebue, the Port of Nome’s dock, Bethel, Dillingham, Naknek, and St. Mary’s as it—so the other 160 ports of call requiring prompt and consistent fuel deliveries require beach landings. The company’s seasonal peak of employment for tug and barge operations is more than forty-five personnel, from captains to crew hands to logistical staff. www.akbizmag.com

“Tug and barge operations are slow, weather susceptible, and risky from a safety standpoint when going on and off the tow wire,” adds Smith. The challenges Smith sees in the industry include climate change, with weather unusual and disruptive, bringing late fall super storms along with early and late freeze ups. Of recent, he recalls sequential extremely warm winters, low snow pack, dwindling glacier melt, and river height increasingly rain driven, all in concert affecting mobility and access. The remedy, as a result, may be safer navigation by using small, shallow draft tank ships known in the rest of the world as coastal or river tankers.

Cook Inlet Tug & Barge

When it comes to tug and barge service in the Cook Inlet region, a signature company with deep Alaska roots and specialization in ice escorts is Cook Inlet Tug & Barge. Formed in 1924 and originally named Anderson & Son’s Transportation Co., cargo, passenger, and general marine services were originally its main operations between Cook Inlet, Prince William Sound, and as far as Kodiak, Dutch Harbor, and Puget Sound. Following World War II the company rebranded into its current name. After the 1964 earthquake Cook Inlet Tug & Barge directed its focus on Cook Inlet and Port of Anchorage marine services. In 2011 Foss Maritime Corporation purchased Cook Inlet Tug & Barge. Foss is a Saltchuk Resources company headquartered in Seattle and oversees all tug and barge subsidiary companies within Saltchuk, which totals one of the largest tug fleets in the nation. “Our company has three lines of business in the tug and barge industry, so we stay busy,” says General Manager Ben Stevens, who has been at the helm of the company since January. “We have the longevity and track record, along with a foundation of safety-first, that has made operations successful over the decades in Cook Inlet,” says Stevens. “The unique challenge of operating yearround in Cook Inlet requires experienced mariners with a knowledge and understanding of ever-changing tidal and sea ice conditions. Our ice classed tugs and Alaska-based crews enable us to meet customer requirements with efficiency and dependability.” The business specialties Stevens references include assisting ships through ice escorts in the often turbulent and chronically shallow ice covered waters of Cook Inlet with two tractor tugs. These tugs were specifically designed and built for Cook Inlet mobility in heavy sea ice conditions. The September 2015 | Alaska Business Monthly

two vessels run the entire twelve months of the year through all seasons and directly aid ships and ocean barges in harbor operations, particularly Totem Ocean Trailer Express, Matson, and Alaska Marine Lines. Up and down Cook Inlet, including Nikiski and Homer ports, the ice escort specialty is of special importance to the company because of tenured expertise. The company’s fleet includes several tractor and conventional tugs as well flat deck barges with and without ramps. Ramp barges’ help in Cook Inlet Tug and Barge’s support of special marine projects is another example of industry coverage. The company’s barges mobilize and demobilize equipment and vehicles, most often tractor trailers, drilling equipment, and supplies to and from the Beluga River Gas Field, Trading Bay, and other developments in West Cook Inlet. The company’s subsidiary Anderson Tug & Barge, representing the third prong of the company’s essential services, operates out of Seward. Anderson handles harbor services and assists cruise ships by transporting marine pilots to the cruise line vessels via a small launch-assist tug. “Our company handles myriad tug and barge services, from harbor and ship assists to construction support recently including dredging support and Port of Anchorage

expansion,” says Stevens. “From container shipping to resource development including oil, gas, and mining, we believe Cook Inlet Tug & Barge is on the forefront and integral in operations for Cook Inlet commerce. Ninety-one years of service to Alaskans is indicative of our legacy.”

SERVING ALASKA

Brice Marine

Many Alaska tug and barge companies have longevity in the industry because of pioneering entrepreneurs who recognized the control of delivery and schedule that a marine asset can provide. Brice Marine, formed in 1973 as a subsidiary of Brice Incorporated, is no exception. Now owned (along with all the Brice Companies) by Calista Corporation, the marine company owns and operates a range of tug and barge sets from all-ocean to shallow draft, allowing operation in the majority of navigable Alaska waters. “Our primary business model is to provide marine support to Brice Incorporated, a fifty-year heavy civil construction company,” says General Manager Alba Brice. “As most of Brice, Inc.’s projects are in remote areas of Alaska, we feel that in a short construction season control of delivery schedules for equipment and materials for our projects is important.”

Brice’s inventory includes a shallow draft conventional tug and barge, truck-able set for specialized inland water uses, and two ATBs, or articulated tug and barges. Of the ATB, one set is shallow draft capable and the other is oceans capable. Brice introduced the first cargo deck ATBs to Alaska as the safety, efficiency, and ship-like capabilities of the design were attractive features to have in the short Arctic barge season. The ATB concept utilizes a system that connects the tug to the barge mechanically and eliminates the need for a tow wire. A notch built into the back of the barge receives the tug. A hydraulic ram built into the hull of the tug connects the tug to the barge and the set takes on many of the features of a landing craft or ship. The ATB eliminates the use of the tow wire, the handling of which can be a place where many of the injuries in the industry can be associated. Additionally, the ATB can be more efficient as the operator does not need to make or break tow. The vessel can land, drop the ramp, load cargo, leave the landing, and head directly to the delivery destination. While the primary model is to support the construction company, Brice Marine also provides barge services for its own

FOR T L I U B SKA

ALA

Alaska Business Monthly | September 2015 www.akbizmag.com

purposes as well as for other clients. These services can be in the form of freight, aggregate delivery, or vessel charters. This season, the company is supporting a variety of Brice contracts as well as delivering aggregate to Chevak. “We have a diverse set of vessels uniquely designed to provide marine support whether it be equipment, supplies, or aggregate delivery in all areas of Alaska and elsewhere—especially in places with shallow water and little or no existing infrastructure,” says Brice. Brice Marine’s shallow draft conventional set is in its fifth year supporting drilling operations at Oooguruk Island, a man-made drilling location offshore of the North Slope. Originally contracted by Pioneer Natural Resources Alaska to provide barge services between Oliktok Point and Oooguruk, Brice has continued to provide barge services in support of the island for the company that has assumed Pioneer’s interest in the operation, Caelus Energy Alaska LLC.

Samson Tug and Barge

Port Captain Wally Stilson has been with Samson Tug and Barge for more than thirty-five years and has served as port captain for the past twelve. He oversees Samson’s

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tug and barge operations, including several three-thousand-horsepower tugs at over one hundred feet long and as many as six barges averaging over three hundred feet in length. The company specializes in ocean transportation and works closely with industry colleagues like Boyer Towing, Island Tug and Barge, Brusco Tug and Barge, Western Towboat, and other complementary companies with delivery resources on contract. Depending on the cargo, it’s often a necessity in rural Alaska to partner with tug and barge companies for delivery. Stilson and Vice President Cory Baggen explain that there’s no sense in two sets of tugs and barges running side by side, half full of cargo—so in some markets, Samson strategically splits the delivery effort with other businesses. This is a common methodology in the regional shipping industry. Stilson notes tugboats are the workhorses of the sea. They typically sail with a small crew of five to six crewmembers. Samson hauls general cargo including household goods, vehicles, heavy equipment, building supplies, and lumber. Occasionally the company is pegged for unique transportation, such as Kodiak’s wind turbines. The company’s fleet sails from Seattle biweekly to the communities of Cordova, Val-

The Samson Mariner breaking through ice.

September 2015 | Alaska Business Monthly

ÂŠ Brice Marine

Brice ATB delivering rock to Kivalina.

dez, Seward, Kodiak, King Cove, and Dutch Harbor, serving the interior communities of Anchorage, Fairbanks, the Kenai Peninsula, and Prudhoe Bay through Seward or Valdez. Samson also sails from Seattle

weekly to the communities of Metlakatla, Ketchikan, Prince of Wales (including Craig) Klawock and Thorne Bay, Wrangell, Petersburg, Juneau, and its home town of Sitka. Samson serves Larsen Bay every

summer and provides service to the remote communities of Adak and Atka, as needed. Samson has three sets of tugs and barges moving every day in Western Alaska year round and adds as many as three additional sets in the summer. All seafood either goes to Dutch Harbor for export to foreign ports or to Seattle for transportation overseas or to the Lower 48. There is also a volume of cargo that is carried into Anchorage. The company has 140 employees to make sure deliveries get to their destinations, with offices across the state and in Seattle. Stilson alludes to the fact some deliveries can be pretty challenging in the winter. Occasionally a storm can bring thirty foot waves on the Gulf Coast, with waves documented as high as one hundred feet. Safety for the crew and the cargo is most important to the company, so tugs may hole up for weather for weeks at a time until the weather is safe enough to get underway. Baggen references a good safety record and takes pride in the experience of her captains and crew.

Crowley

A household name for tug and barge service in many communities throughout Alaska is Crowley. The company started its marine transportation fuel and freight services to Alas-

Alaska Business Monthly | September 2015 www.akbizmag.com

ka in 1953 and since has acquired several Alaska companies to increase its coverage and size, including Black Navigation, whose fuel and freight-hauling history dates back to the late 1800s. Crowley is continuing to modernize its fleet, launching two double-hull fuel barges in 2011 and four high powered Ocean Class tug boats in 2012. Two of these, the Ocean Wind and Ocean Wave, are towing the Polar Pioneer for Shell. In 2014 Crowley built two large 400-foot by 120-foot heavy deck barges in China for the foreign module market. These barges are currently transporting modules from China to the new Chevron Wheatstone LNG project in Australia. A significant part of the company’s large barge operations is based in the Gulf of Mexico where they have ten large deck barges and a variety of high horsepower tug assets. Crowley has also had a significant marine construction project ongoing in Cook Inlet this summer with the delivery and installation of the Furie Monopod with the heavy lift ship Svenja. In addition, Crowley outfitted a pipelay barge, the Ninilchik, which was specifically designed to install the sixteen mile pipeline from the shore gas processing facility to the new monopod. The barge Ninilchik, measuring 240 feet

long, is fitted with welding stations, along with a crane, living quarters for seventytwo people, a sophisticated anchoring system, and massive stinger to guide the pipe over the barge stern as it is fabricated. Many of the company’s barges are dedicated to petroleum product delivery, with a small fleet of coastal deck barges working out of Prudhoe Bay in a JV with UICBowhead Transportation Company on the Point Thomson development project. Walt Tague, Director of Commercial Operations for CPD Alaska LLC (Crowley), stresses the fact Crowley is a major player in fuel distribution along with Vitus Marine and Delta Western. Crowley has four coastal tugs and smaller, specially designed barges for Western Alaska, as well as three river tugs for the Kuskokwim and Yukon Rivers, Kotzebue Sound, and Kobuk regions. “Typically a village corporation or power supply company in a remote Alaskan village depends on fuel delivered by barge. Most rural communities have undeveloped port facilities so there’s just a beach, no dock or port.” Crowley arranges logistics to bring fuel to villages. Its fleet of vessels includes chartered tugs and barges and small to medium-size tankers. Tankers carry from 330,000 to 350,000 barrels of fuel into well-protected locations

at least three miles offshore like Togiak Bay, off of Nome, in Kotzebue Sound where barges can offload to smaller barges. The smaller vessels distribute the fuel to the villages, carrying 260,000 to 400,000 gallons into the beach and then run a hose to the tank farm. Crowley also carries freight on the decks of its river barges, including propane, small packages of home supplies, and domestic provisions from washers and dryers to school busses and earth moving equipment. Fuel products range from heating fuel, ultra-low sulfur diesel for vehicles and power generation, regular gasoline, jet fuel, and 100 Low Lead. The company also serves the Southeast in Juneau and Ketchikan. Throughout the year it has to make arrangements with suppliers, shipping companies, other tug and barge companies to logistically parcel out and deliver fuel. To that end, a challenge remains that it’s a seasonal business and nearly impossible to deliver in western parts of Alaska when the inland rivers are frozen, so summer is a densely calendared delivery time. On the North Slope the company has shallow draft tugs and barges for oil companies in summer. Crowley also has a Valdez fleet of escorts and docks ships in Prince William Sound. Escort tankers and dock

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vessels as well as barge assets deployed in Prince William Sound with spill recovery equipment for Alyeska Pipeline Company remain part of the contingent of escort response vessels available 24/7 to respond to spills and prevent coastal damage.

Alaska Marine Lines

A heavy-hitter in Alaska maritime transportation, with one of the largest fleets, is a company owned by Lynden. Alaska Marine Lines has thirty-six barges of varying sizes and delivers freight across the state, from Southeast to Southcentral to the turbulent waters of Western Alaska. Alaska Marine Lines doubled its size two years ago upon purchase of Foss Maritime Company’s Southeast Alaska delivery assets. The company’s business paradigm exemplifies an affinity for networking with other transport companies, like contracting with Western Towboat Company for Southeast and Southcentral deliveries and Dunlap Towing Company for Western Alaska transports. Alaska Marine Lines’ president, Kevin Anderson, has been with Lynden companies since 1982. He explains the company has a niche market in handling the shipment of rail cars by barge to Whittier from Seattle. Everything from construction supplies and drilling pipes to chemicals and other transportable products are off-loaded onto Alaska Railroad Corporation railcars. The company also patented, built, and introduced the world’s first 53-foot-long by 102-inch-wide by 10-foot-high ISO-rated dry and refrigerated containers and rack system that fit over the railcars carrying products for grocery stores, construction projects, and an abundance of frozen foods, particularly canned or refrigerated seafood south bound from hubs like Cordova and Valdez. Alaska Marine Lines uses three landing craft for interior river deliveries products like refrigerated goods, modular homes, and constructions materials to villages and inland communities dependent on each barge’s arrival. Anderson notes that a big part of the company’s overall business plan is hauling salmon across the state, recognizing a core commercial sector remains commercial fisheries. When it comes to safety, Anderson and Steve Carlson, the general manager overseeing the Marine Engineering, agree that it’s imperative to have the best crews and equipment, recognizing the critical nature of delivery to rural and urban Alaska communities. “Weather in Alaska can be very challenging, so we always consider the safety of crew, cargo, and barges operating in waters,” says Carlson. As a retired US Coast Guard captain overseeing Naval Engineering nationwide, he remembers graduating

Alaska Business Monthly | September 2015 www.akbizmag.com

from the US Coast Guard Academy and his first assignment patrolling Alaska’s stormy waters enforcing US jurisdiction. Anderson, Carlson, and management respect the waters Alaska Marine Lines vessels traverse, and as a result, the company’s culture of safety and caution ensure prompt, complete deliveries.

BOYER TOWING, INC. Base Operations in Ketchikan and Seattle

Into the Horizon

As technology modernizes, tugs and barges will become even more efficient. Government support, particularly with up-to-date and comprehensive mapping for tug captains, is an integral component to future safety and success in the industry. The tug boats of our youth are history, and state-ofthe-art vessels rule the waves. As Vitus Marine’s Mark Smith portends, “It will be incumbent upon NOAA to enhance its coastal mapping and inland waterways from Dutch Harbor to Dillingham to the southern mouth of the Yukon River, considering some of our navigational charts are populated with data that are centuries old.” Smith alludes to the reality that his tug and barge company, and essentially all others in Alaska, are by default reliant on local pilots and tug captains who know the waters so as to avoid damaging vessels and cargo, absent modern mapping that any captain might follow. The grounding of Shell’s chartered support ice-breaking vessel Fennica on an uncharted shoal in the busy port area of Dutch Harbor is indicative of the need for current and comprehensive mapping by the federal government. Without question, from inclement weather to monstrous swells and winter conditions, the world of tug and barge operations in Alaska is intense. Beyond pending policy and technological improvements, for the most part the industry is safe, stable, and thriving. There is clearly a symbiotic relationship between each cargo delivery and basic function of home, business, and local government. Heating, electricity, mobility, and so many other basic needs of hundreds of Alaska’s community are contingent on a barge’s arrival. “We know how important our job is, and we take it seriously, and that makes the profession genuinely rewarding for those of us who love the maritime business,” adds Smith. The state’s tug and barge industry delivers because of the fraternity of mariners who place their passion in front of profit, safety before timelines, and the daily needs of Alaskans at the destination point of their compasses, rain or shine. R

Serving Alaska Since 1953

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Seattle Office: Ph: 206-763-8696 Fax: 206-767-9517 E-mail: Logistics@boyertowing.com

Tom Anderson writes from across Alaska. www.akbizmag.com

September 2015 | Alaska Business Monthly

OIL & GAS

Alaska Native Corporation Industry Activity © Lucas Payne / AlaskaStock.com

Doyon Drilling Rig #25 on J Pad in the Prudhoe Bay Oilfield on the North Slope. Doyon, Limited entered the oil and gas industry through subsidiary Doyon Drilling.

Subsidiaries thrive providing oil and gas support services

By Mike Bradner

laska Native-owned corporations are among the most prominent industry-support companies in Alaska today, providing a wide range of services to companies ranging from oil and gas drilling, security, camp services, and logistics support and including construction and engineering. The names of Native-owned companies working on the North Slope are a who’s who of the Alaska business community. ASRC Energy Services, Doyon Drilling and Doyon Associates (two separate companies), NANA Oilfield Services, and Peak Oilfield Services, now owned by Bristol Bay Native Corporation, and Nordic Calista are a few examples. Almost every Native regional corporation and some larger village corporations have been involved in one way or another over the years in industrial support work on the North Slope. Actually, all of the regional and village corporations have a direct financial stake in the North Slope these days because Arctic Slope Regional Corporation (ASRC), the regional corporation for the Arctic slope, has a royalty interest in oil and gas production and must share royalty income with other Native corporations. Through a provision of the Alaska Native Claims Settlement Act, which created the corporations, 70 percent of resource royal96

ties is shared with all other Native corporations. Mineral revenues from the Red Dog Mine in Northwest Alaska, which is on lands owned by NANA Regional Corporation of Kotzebue, are shared the same way. Similarly, Cook Inlet Region, Inc. (CIRI) of Anchorage has shared natural gas production royalties from mineral lands it owns in Southcentral Alaska. However, direct contract work by Native corporations with the oil and gas industry has been an important source of profits for the corporations and has also allowed them to put shareholders to work in high-skilled, highly-paid jobs.

History of Engagement

There is a long history to the engagement of Alaska Native corporations in the industry support sector, and it is an important development because it has “Alaskanized” this important industry sector, giving Alaskan-owned companies a direct stake in the state’s major natural resource industries. This wouldn’t have happened without the Alaska Native corporations, mainly for two reasons. First, Native corporations had the capital to invest in starting, buying, and further developing support companies. Second, the customers—whether oil or mining companies—understood the advantages of doing business with locally-owned firms rather

than non-Alaskan contractors and support companies headquartered in the Lower 48. The political advantage of “buy Alaska” shouldn’t be overstated, however. The Nativeowned companies had to be competitive in the cost and quality of services, and in the beginning there was a big credibility gap on whether the Native corporations had the technical and management expertise to really be competitive with experienced out-of-state companies. Those concerns are now long gone, however. It hasn’t all been easy. There are cases where Native-owned companies, having grown complacent after winning contracts, have lost them. This happens in any business, however, and the periodic re-bidding of contracts has kept the entire support industry, not just Native corporations, on their toes.

Support Industry Creation

Still, the creation over several years of an Alaskan-owned support industry, most of it Native-owned, is a remarkable achievement. The norm in major oil and gas producing regions is that the service sector, particularly in high-technology services that are the most profitable, is dominated by well-established support firms the customers have done business with in other regions. The local-buy angle helped open the customers’ doors at the major oil and gas com-

Alaska Business Monthly | September 2015 www.akbizmag.com

panies, but only that. Without capital, which the Native corporations had, and a strategy to gain experience and expertise, and therefore customer confidence, which they developed over time, the Native corporations never would have been able to overcome the out-of-state competition. The strategy the corporations employed was to start small, at first working through joint-ventures and partnerships with firms established in the field. Fortunately, there were potential partners, experienced companies outside the circle of support firms already working, who wanted in. And for them, the connection with Native corporations was the entry ticket. For these companies, typically a service or contractor firm not established in Alaska or perhaps one wanting to grow, there were two main advantages of teaming up with a Native corporation. One was to get the edge on non-Alaskan competitors—to get through the customer’s door—and, second, to team with a partner with financial resources and staying power. Being resident in Alaska, with local shareholders, Native corporations weren’t likely to pull up stakes in a local investment and move elsewhere. Potential partners wanted to do business with people in for the long haul. This process unfolded, mainly in the 1980s and 1990s, as Alaska’s petroleum industry itself matured.

NANA Key Breakthrough

It had to start, however. A major producer would have to contract with a Native corporation for a vital service to show it could be done. The key breakthrough was NANA’s entry into catering and camp services on the North Slope in 1975, the first major Native oil and gas support contract. It was with BP, and it was to provide support for that company’s North Slope operations center. The partner was Mannings, an experienced industrial facility support firm. Interestingly, the contract with BP, and essentially the same partnership, is still in place forty years later and has also grown, hugely, to serve many other large industrial and institutional customers both in and outside Alaska. The company is now called NANA Management Services, and its partner is Sodexo, an international company. Interestingly, NANA’s facility-management venture also led it into hotel ownership in Anchorage and Fairbanks in partnership with Marriott.

Doyon Developed Initiative

After NANA broke the ice on the North Slope, a second major Native contracting initiative developed. Doyon, Limited, the Interior Alaska Native Corporation based in Fairbanks, entered a joint-venture in drilling www.akbizmag.com

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with Brinkerhoff Drilling, an experienced contractor. Doyon Drilling was formed. The venture was successful and Doyon subsequently bought out its partner so that the company became a wholly-owned subsidiary. Today, almost three decades later, Doyon Drilling is solidly established in drilling and is the second-largest drilling contractor in the state with seven rigs working and an eighth now under construction. Doyon is particularly proud of its shareholder employment record at Doyon Drilling. Fifty percent of the roughly five hundred employees of the company are shareholders, and over the years shareholders have steadily moved up in the ranks from “roustabouts” to supervisors on the rigs and managers in the company itself. The company operates a formal Roustabout Training Program to keep up a steady recruitment program. Both NANA and Doyon used the early contracts as springboards for expansions into related fields. Early on NANA purchased a camp to provide support for other contractors at Deadhorse, the North Slope industry support center, and also purchased Purcell, an industrial security company. NANA also started a local power utility to serve the Deadhorse community. It still owns the camp today, which is mod-

ernized but smaller, but has meanwhile sold the power utility to TDX Corporation, the village corporation from the Pribilof Islands in the Bering Sea. NANA Oilfield Services, Inc., a subsidiary, still supplies fuel to contractors. NANA Oilfield Services, Inc., better known as NOSI, has been very active this past winter at ExxonMobil’s Point Thomson project and played a key role this spring in getting fuel to North Slope customers during a critical period when the Dalton Highway was closed by flooding. Another NANA subsidiary, WHPacific, is meanwhile active in a variety of fields including rural energy projects. The company just completed a wind-diesel project at Buckland, a village in the NANA region, which included engineering, construction, and also assistance in arranging financing. Doyon also branched into other service fields including Doyon Universal Services, a catering and camp services company (a joint-venture with Sodexo, with Doyon 50.1 percent owner); a pipeline company, Doyon Associated (a joint-venture with Associated Pipe Line Contractors, Inc., with Doyon 51 percent owner); and an engineering company, Doyon Anvil, a venture with Anvil Corporation, based in Bellingham, Washington (Doyon is 51 percent owner). Doyon also has a security services firm.

Two high-profile pipeline projects on which Doyon Associated has worked on this past winter were at the opposite ends of the central North Slope region, to the east the twenty-mile liquids pipeline for the Point Thomson field, now under construction by Exxon Mobil Corporation, and in the west the pipelines supporting the new CD-5 production pad near the Alpine field, for ConocoPhillips.

Construction ASRC’s Initial Focus

Meanwhile, ASRC of Barrow, whose home base is the Arctic Slope, was initially reticent in the 1970s about contract support relations with the oil operators because of tax disputes between the companies and the newly-formed North Slope Borough, the regional municipal government. When those were settled ASRC quickly moved into industry support work, focusing initially on construction services. ASRC has been in the business ever since and today its main oil and gas subsidiary is ASRC Energy, which has services in technical support fields. Meanwhile, the parent corporation, ASRC, has its own “upstream” oil and gas investments. In this area, ASRC has become a partner in the small Badami oil field east of Prudhoe Bay and has bid in competitive state oil

Alaska Business Monthly | September 2015 www.akbizmag.com

and gas lease sales and won North Slope leases on state lands, which it is exploring. ASRC is also in the pipeline business, having purchased an experienced pipeline company years ago, and has built many of the pipelines serving North Slope oilfields, such as the Northstar pipeline built for BP, which was the first Arctic subsea pipeline. There are other Native corporations active on the North Slope, for example the previous half ownership by CIRI in Peak Oilfield Services, a long-established support firm working on the North Slope and Cook Inlet, in partnership with Nabors Industries, which is the state’s largest drilling contractor. After owning part of Peak for years, CIRI sold its share of Peak to Bristol Bay Native Corporation, which also owns technical support companies working on the slope. Two other Bristol Bay Native Corporation companies active in North Slope support work are CCI Industrial Services, which provides a variety of services in the facility maintenance and environmental fields including hazardous waste removal, and Kakivik Asset Management, which focuses on non-destructive testing and corrosion control in oil and gas operations. The central North Slope isn’t the only northern region of the state that will support oil and gas operations, of course. Shell’s offshore exploration has created opportunities for North Slope village corporations in providing support and services.

in trucking lead-zinc ore from the large Red Dog Mine, which is on NANA-owned lands in Northwest Alaska. Other NANA companies supply services at Red Dog including NANA Management Services in camp management and catering and a drilling subsidiary that works at the mine. NANA’s successful relationship with Teck, its mining company partner at Red Dog, has become a model for other Native corporations and mining companies. Although the Donlin Gold mine, on the middle Kuskokwim River, is not yet developed, it has already become an important source of business for Calista Corporation, which

is also the mineral rights owner, in providing support during exploration. If Donlin Gold is constructed by its developers, Barrick Gold and NovaGold Resources, the Kuskokwim Corporation, a consortium of villages in the region, will provide other support services under an agreement between the Kuskokwim Corporation and Donlin Gold. The Kuskokwim Corporation is the owner of surface lands around the mine. R Mike Bradner is publisher of the Alaska Legislative Digest.

Offshore Services

Olgoonik Oilfield Services, a subsidiary of Wainwright’s village corporation, Olgoonik, is working with Shell on that company’s Chukchi Sea exploration and has also previously done work with ConocoPhillips and StatOil, two other companies that hold offshore leases in the Chukchi Sea. Wainwright is an Iñupiat community on the Chukchi Sea coast southwest of Barrow. Shell will store oil spill response equipment and supplies and will conduct some air support activity from Wainwright, and Olgoonik will be involved in those activities. Barrow’s village corporation, Ukpeaġvik Iñupiat Corporation, also provides facility support to Shell at Barrow and has provided support in the past to companies exploring in the National Petroleum Reserve-Alaska, including to Linc Energy’s exploration at Umiat and a program several years ago to FEX, the Alaska subsidiary of Talisman Energy, in an exploration program in the northern National Petroleum Reserve-Alaska.

Mining Support

Native corporations also provide services to mining companies, with NANA in a longterm joint-venture with Lynden Transport www.akbizmag.com

September 2015 | Alaska Business Monthly

OIL & GAS

Alaska LNG Pipeline Building a Choreography of Coordinated Steps This update, provided by the Kenai Peninsula Borough mayor’s office, is part of an ongoing effort to help keep the public informed about the Alaska LNG project.

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KENAI PENINSULA BOROUGH

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Kenai National Wildlife Refuge

KENAI PENINSULA BOROUGH

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The information contained herein is for informational or planning purposed only, It does not nor should it be deemed to be an offer, request or proposals for rights or occupation of any kind. The Alaska LNG Project Participants and their respective officers, employees and agents, make no warranty, implied or otherwise, nor accept any liability, as to the accuracy or completeness of the information contained in these documents, drawings or electronic files.

ALASKA LNG PROJECT

PREPARED BY:

Appendix 1B LNG Site KENAI PENINSULA

DRAWN BY:

ALASKA

CHECKED BY:

REV. NO.:

REVISION ISSUED FOR REVIEW

DATE

DATE: 2015-02-04

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“Pipeline construction is a moving assembly line,” an Alaska LNG team member said.

PROJECTION:

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2015-02-04

PRELIMINARY

Alaska LNG Project

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Information Sharing at Workshops

Almost two dozen Alaska LNG team members met with nearly three dozen federal

Alaska Business Monthly | September 2015 www.akbizmag.com

SOURCE: Alaska LNG Project

he Alaska LNG project is a planning and coordinating effort of immense proportions. Not surprising when you consider that the pipeline construction alone requires piecing together about 115,000 40-foot-long sections in precise order, in rough terrain, in remote locations— and with 446 waterbody crossings. That’s 447 if you count the almost 30 miles across Cook Inlet to reach the proposed liquefaction plant at Nikiski. The project teams are mapping out every detail of building 870 miles of pipeline to move natural gas from Point Thomson to Prudhoe Bay (about 63 miles of 32-inch-diameter pipe) and on to Nikiski (about 807 miles of 42-inch pipe). The right amount of pipe has to be at the right place at the right time with the right equipment for welding, digging, and pipe laying during two years of construction, and that’s after two years of prep work to build construction camp and compressor station pads, storage yards, clear rights of way, develop gravel sources, and create access roads. No easy task when you’re moving and frequently relocating 9,000 pieces of equipment that would be used to build the mostly buried pipeline. Still more equipment would be used to build the North Slope gas treatment plant and the liquefied natural gas plant and marine terminal at Nikiski. An estimated 5,000 to 7,000 workers would be on the pipeline crews, with all of them living in work camps. Several thousand more are expected on the job at the gas treatment plant and the LNG plant, with the project estimating 15,000 workers total. Pipe storage yards would be sited about every 18 miles along the route, with the project requiring about 18 million cubic yards of gravel for access roads, pipeline right of way, and compressor station pads. The project would use existing pads wherever practical. Think of it as a choreography of engineers, geologists, biologists, environmental specialists, and logistics planners. Everyone has a role and everything has its place. And it’s all synchronized for efficiency, cost savings, and to limit environmental impact. 100

APPENDIX 1B - LNG SITE

By Larry Persily

and state regulatory agency personnel June 24-25, 2015, in Anchorage to share preliminary plans for pipeline construction and waterbody crossings and to listen to how and where the plans might be improved. Itâ&#x20AC;&#x2122;s not only construction needs that dictate the planning work. There are operational issues to consider, too. For example, the gas will be cooled for transit through permafrost zones along the proposed route so that it doesnâ&#x20AC;&#x2122;t melt the ground. That will require cooling units at the first six compressor stations whose job is to keep pushing gas through the line. But the last two compressor stations on the route southward, including the one before the line enters Cook Inlet, will be built with heating units to warm up the gas in an effort to match the ground temperature in Southcentral Alaska and the water temperature in

www.akbizmag.com

SOURCE: Alaska LNG Project

Much of this summerâ&#x20AC;&#x2122;s field work and office analysis is aimed at better identifying soil conditions, terrain, hillsides, vegetation, geology, safety, and environmental concerns as Alaska LNG continues to make decisions not only on waterbody crossings but also pipeline specifications to match different ground conditions such as discontinuous permafrost that would put additional stress on sections of pipe.

the inlet. Just as thawing frozen ground is bad, so too is freezing soil in the wrong places. The gas temperature should mimic the terrain it moves through, not change it. As an Alaska LNG team member said, the idea is to work with Mother Nature, not against her. If the project stays on schedule, if the marketplace cooperates, if the project sponsors and the state of Alaska successfully negotiate fiscal terms, and if investors sign up for the $45 billion to $65 billion project, site preparations for the pipeline work could occur in

September 2015 | Alaska Business Monthly

101

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The information contained herein is for informational or planning purposes only, It does not nor should it be deemed to be an offer, request or proposals for rights or occupation of Lower any kind. The Alaska LNG Project Participants and their Salamatof respective officers, employees and agents, make no warranty, implied or otherwise, nor accept any liability, Lake as to the accuracy or completeness of the information contained in these documents, drawings or electronic files.

Representative area for facility siting - subject to change ALASKA LNG PROJECT

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Liquefaction Facility Area

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PREPARED BY:

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Appendix 1B - Liquefaction Facility BOROUGH:

NORTH SLOPE

DRAWN BY:

STATE:

ALASKA

CHECKED BY:

REV. NO.:

REVISION ISSUED FOR REVIEW

DATE

t:+1.907.868.1185 | f:1.907.868.1846 3800 Centerpoint Dr. Suite 200 Anchorage, AK 99503 U.S.A. www.exp.com

2015-02-04

Secondary Road

Pacific Ocean

1:24,000 DATE: 2015-02-04

PRELIMINARY 0

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0.6 Miles

PROJECTION: NAD83 STATEPLANE AK 4 5004 FEET

• BUILDINGS • EARTH & ENVIRONMENT • ENERGY • • INDUSTRIAL • INFRASTRUCTURE • SUSTAINABILITY • DWG: APP A-A-LNG-4

SHEET:

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2020-2021, with actual pipeline construction in 2022-2023 and first LNG production in 2024-2025. There are a lot of unknowns to get to that point, but the project teams are doing their part to get ready. The teams are from project partners ExxonMobil, BP, ConocoPhillips, and TransCanada. The state of Alaska is also an investor in the project.

Waterbody Crossings

Of the 446 waterbody crossings, Alaska LNG’s preliminary plan is to:  Use open-cut trenching to install the pipe in a little more than half the locations. 102

 Temporarily restrict or divert the water flow for pipeline installation at fewer than half the crossings—called “flow isolation.”  Drill and pull the pipe under the river or bridge the waterway in a small number of locations, likely single digits. While still preliminary, the plan is to dig trenches and lay pipe across approximately half the open-cut water crossings during the winter, when the flow is frozen or minimal. The others would be crossed during the summer, when crews would work fast and, in some small crossings, the pipe could be in place in a matter of hours.

Temporary diversions would be used for the flow-isolation crossings, which could include water-filled “aqua dams,” sand bags, concrete blocks, steel flumes or pipes—it just depends on the water flow, soil, and site conditions, team members explained. Alaska LNG will decide on the most appropriate water-crossing methods in consultation with the Alaska Department of Fish and Game, US Army Corps of Engineers, and other state and federal agencies. Pipe specifications will be under the jurisdiction of the US Pipeline and Hazardous Materials Safety Administration. The “trenchless” crossings will use horizontal directional drilling to run pipe under the river bottom. The process involves drilling an initial pilot hole beneath the river, about 5.25 inches in diameter, then using successively larger drill heads to ream out the hole, making it bigger until it is maybe a foot larger in diameter than the 42-inch steel pipe, team leaders told federal and state regulators. The full length of the pipeline, all welded together and laid out in a large staging area at the entrance to the hole, is then pulled through to the other side. An Alaska LNG pipeline team member said the process is so accurate that crews can drill the pilot hole and hit a stake on the other side of a river. But sometimes the river is too deep, the ground too full of boulders, or the geology just not right to go through or under the waterway. In those cases, the Alaska LNG teams are looking at building pipeline bridges, especially in areas of steep terrain. A particularly steep area along the route is in the Nenana Canyon, just south of the community of Healy and east of Denali National Park, in a tight area of the Parks Highway, Nenana River, and Alaska Railroad. Project teams are working to find the best way through that congestion. The bridge proposals are still preliminary, as are all of the water crossings, team members told state and federal regulators. The teams and their consultants have a lot of work to do this summer to firm up their plans, with more information and a lot of details to come in the next round of environmental reports the project expects to file in February 2016 with the Federal Energy Regulatory Commission. In addition to consulting with state and federal wildlife, lands, and water managers, Alaska LNG will be working with a visual-impact consultant regarding the bridges, which likely would be within eyesight of travelers on the Parks Highway, a National Scenic Byway.

Pipeline Construction Plans

Much of this summer’s field work and office analysis is aimed at better identifying soil

Alaska Business Monthly | September 2015 www.akbizmag.com

conditions, terrain, hillsides, vegetation, geology, safety, and environmental concerns as Alaska LNG continues to make decisions not only on waterbody crossings but also pipeline specifications to match different ground conditions such as discontinuous permafrost that would put additional stress on sections of pipe. Highway and road crossings will be underground, generally at least four feet below the road base, the teams reported, with heavier steel pipe for additional protection. Current plans, subject to change, show about 45 percent of the Prudhoe-to-Nikiski pipeline built in the winter season and 55 percent in the summer, over two years. Depending on the weather—freeze-up, breakup, road restrictions, and terrain—some of the pipe laying could be done in shoulder months, the teams said. All 63 miles of the Point Thomson line would be built above ground and during the winter. The mainline would likely be divided into four “spreads” of about equal mileage, with four contractors all working at the same time on their spread. Crews would move around, laying pipe in areas best suited for the season. Frost heaves, permafrost, thaw settlement, steep terrain, and fish and wildlife would be among the considerations in deciding summer and winter work. Some areas will be more easily accessible to work crews than others. Reaching the pipeline work on the West Side of Cook Inlet will be challenging, the teams reported. Contractors would move some equipment and pipe by barge from Anchorage, and the current proposal is to move much of the equipment across the frozen Yenta River in the winter, then park it there until construction work resumes with warmer weather for the final southerly push toward tidewater. For those last miles on the West Side of Cook Inlet, the pipeline route would be in the uplands, away from the wetlands and the ENSTAR gas line and behind the Beluga power plant before turning toward the inlet. The Cook Inlet crossing would be a separate contract; that work was to be covered in an Alaska LNG workshop for state and federal regulators in August. Pipe laying on the Kenai Peninsula, for the last miles to the LNG plant site, would be scheduled for the second construction summer, 2023, according to preliminary schedules. R

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Larry Persily is the Oil & Gas Special Assistant to the Kenai Peninsula Borough Mayor’s Office. www.akbizmag.com

September 2015 | Alaska Business Monthly

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OIL & GAS

NIT trainees watch a welding demonstration.

Training the Next Wave of Oil and Gas Industry Workers Private, public, and partnering organizations build workforce

By Kirsten Swann

here’s a looming math question behind Alaska’s oil and gas industry. The current industry workforce totals more than 20,000 people, according to a 2014 presentation by the Alaska Department of Labor and Workforce Development. Over the next several years, the industry will need approximately 7,500 new workers. Priority occupations include engineering, geoscience fields, and remote sensing and inspection, the Alaska Oil and Gas Workforce Development Plan reports. New offshore development opportunities bring a demand for maritime workers, and shifting regulatory requirements have changed industry demand for health, safe104

ty, security, and environmental workers. Meanwhile, attrition means some of the state’s most seasoned workers are disappearing in droves, leaving gaps in manpower and skill. So where will the new workforce come from? Answering that question has an industry of its own. Government, commercial groups, and nonprofits alike have skin in the workforce development game. Statewide, there are numerous training programs and organizations devoted to building Alaska’s petroleum industry labor pool. ASRC Energy Services provides oil and gas-related internships and on-the-job training. The Alaska Process Industry Careers

Consortium has its own industry network devoted to workforce development initiatives. At the University of Alaska, there’s the Mining and Petroleum Training Service (MAPTS)—a growing program led by Executive Director Bill Bieber. Over the course of thirty-six years, more than one hundred thousand people have undergone MAPTS training. “Over the last two years since I took over, we have completely reestablished what we’re doing,” says Bieber, who joined the training service following an extensive career in the natural resource sector. “Our biggest challenge is trying to maintain our programs with obviously significant reductions in budget.”

Alaska Business Monthly | September 2015 www.akbizmag.com

MAPTS

MAPTS is a Statewide Corporate Program of the University of Alaska. Industry groups fund approximately 70 percent of the cost while the university picks of the rest of the tab, Bieber says. And like so many other state programs, MAPTS has been faced with some big budget cuts. Despite the fiscal hurdles, Bieber is bent on expanding MAPTS offerings: focusing on more hard skills, pumping up its mining program, and redesigning the roustabout program. Currently, the program offers wellhead control classes, mechanical maintenance courses, a certified septic installer class, and consultation services. Wellhead control classes usually see the biggest demand, Bieber says, and many students are already employed as rig operators. Most of the people who participate in MAPTS oil and gas training courses are Alaskan, according to the program’s executive director. Bieber hopes the program’s revamped catalogue will draw even more students. Before he came on board a few years ago, a lot of the training service was classroombased, with an emphasis on getting students the compliance certifications they need to go to work. But something was missing. “After talking with the employers, it became pretty evident that the one component that was lacking was the hands-on training,” Bieber says. The MAPTS mining program is campbased, two weeks on and two weeks off, and students practice operating heavy equipment and all the other skills they need to thrive on the job. When those students graduate, according to the executive director, they have a 100 percent employment rate. “What we’re trying to do is simulate, in a controlled environment, the workplace in every aspect,” the executive director says. “We’re trying to mirror that program for the oil and gas roustabout program.” For Bieber and the staff at the university training service, the end goal is employment. There’s no point in training just to train, and the program aims to place all of its students in an industry-related job after course completion. To do that, Bieber says, MAPTS works closely with employers to make sure students have a preliminary offer of employment prior to training. Once the training is complete, students are able to go to work without a hitch. After spending decades working in the natural resource sectors, though, Bieber knows that developing Alaska’s workforce will take more than compliance training and technical know-how. “The largest component to turnover is www.akbizmag.com

Alaska Governor Bill Walker with NIT Roustabout students.

rarely ever what’s going on on the job, it’s what’s going on at home,” he says. “That seems to just constantly be a drum beat from all [employers].” With that in mind, MAPTS has added a soft-skills training module specifically designed to teach students how to turn a job into a career. Besides heavy equipment and technical training, MAPTS trainees will learn how to fill out timecards and site inspection reports and all the paperwork associated with their new jobs. They’ll learn about the importance of accuracy, how to work safely, and how to fit in with a crew. The revamped oil and gas training program is set to roll out its pilot program next spring, Bieber says. Currently, MAPTS is working with employers to establish industry needs and tailor the courses accordingly. The oil and gas courses have capacity for ten to fourteen students at a time, according to the program’s executive director. “My long-term goal is to enhance what we do for the compliance and well control, but really start developing that fundamental roustabout class so we can put more and more of these local Alaskans to work,” Bieber says. “The challenge is to make sure you produce a result that employers are actually benefiting from.” Benefiting Alaska’s oil and gas industry employers—and the people they put to work—is the ultimate end game for training programs around the state.

NIT

Northern Industrial Training (NIT), a vocational school founded in 2013, knows just how important it is to produce the kind of workers employers can use. “Being a for-profit, [job placement] is our lifeblood,” said NIT Vice President Adam

Crum. “If our students don’t go to work, we don’t have students walk through the door.” NIT is a family business. Before Crum’s father founded the company more than a decade ago, he saw a huge need for workforce development and training opportunities within Alaska industry—especially in the face of looming attrition. Today, the school offers courses in truck driving, construction, welding, environmental health and safety, and oil and gas industry skills. Safety programs include everything from lead abatement to Helicopter Underwater Egress Training to Occupational Safety and Health Administration standards. Classes cost anywhere from several hundred to several thousand dollars. While only a portion of course offerings are directly related to the oil and gas industry, most of the people who go through NIT classes go on to work in some subset of the state’s petroleum industry, Crum says. “I like to refer to ourselves as a service to service industry,” he says. There’s a deep need for that kind of service. Statewide, the oil and gas industry employs more than thirteen thousand Alaskans in both primary roles and support services. Industry growth creates a need for new workers; attrition leaves a gap. “There are a lot of talented people who are starting to call it quits,” Crum says. More than a decade ago, his father saw the kind of demand that workforce exodus would generate and how the entire state could benefit from highly skilled, job-ready workers who had the experience and certifications to fill some big shoes. NIT follows a set of rigorous training standards, Crum says, and ever since its inception it has failed those who don’t meet the requirements.

September 2015 | Alaska Business Monthly

105

NIT Roustabout students in HAZWOPER gear.

That mindset has built NIT a reputation among employers—a reputation for producing qualified workers who are already prepared to spend long hours in the field

and who come to work with the necessary knowledge to dive right in. “We treat every training day like a work day,” the vice president says. “If you can’t

survive the training, you can’t survive the job.” NIT has trained workers for Carlile, Little Red Services, Baker Hughes, Arctic Slope Regional Corporation, and other big industry names. To avoid any disconnect between students, trainers, and employers, the company holds quarterly meetings to talk about employee needs. The training school aligns its offerings with industry HR requirements in an attempt to create a seamless transition between the course and the workforce. Recently, Crum says, there’s been a growing demand for welders and truck drivers. A lot of Alaska’s infrastructure is aging, and welding in particular is a highly technical skill. Producing qualified laborers that can keep the state’s infrastructure working is a priority. Some of NIT’s students are fresh out of high school—a process aided by a close working relationship between the company and the Matanuska-Susitna Borough School District. Other students are older Alaskans looking to begin a second career in the state’s top industry or longtime industry employees who need a special skill to take their work to the next level. Once the company was even approached by a woman in her eighties who said operating a tractor-trailer was on her bucket list,

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Alaska Business Monthly | September 2015 www.akbizmag.com

Crum recalls. With NIT’s help, she was able to climb up into the seat for the first time. To train truck drivers, the company leverages a partnership with the Alaska State Fair, using the Palmer fairgrounds as a training course before students are ready to hit the road. “Being a private company, we have to be creative,” the vice president says.

Partnering

That means partnering with other groups to find new training opportunities. In the Matanuska-Susitna Borough, NIT partnered with the Mat-Su Pop Warner organization to help clear ground for a new football complex. The agreement provided valuable labor for Pop Warner and a handson training experience for NIT’s students. The vocational school has a welding facility accredited by the American Welding Society, the only such facility in the state. That means NIT students can bring their certifications with them wherever they work—even outside Alaska. On the oil and gas side, the company offers roustabout and pipefitting courses. Pipefitting students learn about hand tools, power tools, pipe fabrication, underground pipe installation, piping systems, pipe hangers, and supports. Those enrolled in

the roustabout course—specifically created for Alaska oilfield workers—learn about safety procedures; securing pipe loads; hoisting and lifting with slings, ropes, and forklifts; cribbing and blocking; hazardous materials awareness; emergency response; offshore operations; and fire protection. The vocational school keeps classes small, with low student-to-teacher ratios and high expectations. It employs administrative staff specifically for student followup: making sure students can find and keep a job after graduation is NIT’s top goal. And time and time again, the company meets that goal. NIT’s Facebook wall is filled with messages from former students who’ve gone on to work on Alaska’s oilfields and other natural resource developments. “Got a great job on the North Slope soon after finishing eight-week heavy equipment/ CDL course,” wrote one former student. Another student wrote about scoring a foreman job at a Valdez logistics firm after going through NIT’s truck driving course. “I made that position in less than two years,” the student wrote. “That definitely says something about their training.” Former students wrote about everything from welding courses to heavy equipment classes.

“Great training from a knowledgeable staff has made finding an employer MUCH easier,” another former student wrote. “I would recommend this school to everyone.” Those are the kinds of things that make Crum proud, he says, “Putting people to work, and not just any job.” Hearing about the success his students find is like the icing on the cake. He looks forward to new opportunities within the oil and gas industry—specifically the massive amount of manpower that an Alaska liquefied natural gas project would require. At peak workforce, the multibillion-dollar Alaska LNG Project could employ upwards of fifteen thousand people, according to State of Alaska estimates. As a private company, NIT has an added degree of flexibility when it comes to building that workforce. They can avoid the bureaucratic red-tape sometimes associated with government programs and rally the resources necessary to train up a new generation of Alaska oil industry workers. “If there is a need, we can respond much quicker than most,” Crum says. “Whatever it takes to put Alaskans to work.” R Kirsten Swann is a freelance writer based in Anchorage.

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107

OIL & GAS

Alaska LNG Reviews Pipeline Route with Government Agencies Finding the best path from the North Slope to Nikiski By Larry Persily This update, provided by the Kenai Peninsula Borough mayor’s office, is part of an ongoing effort to help keep the public informed about the Alaska LNG project.

laska is vast, with a lot of open ground, but it seems like transportation projects in the state—be it roads, railroads, or pipelines—can’t help but cross over or under each other while traversing the same natural corridors. Preliminary plans for the proposed 800mile North Slope natural gas pipeline south to Cook Inlet show it would cross the transAlaska oil pipeline 12 times, the Dalton Highway 22 times, the Parks Highway 12 times, Alaska Railroad tracks four times, and the Elliott and Kenai Spur highways one time each. And don’t forget the natural transportation routes. The line would cross the Nenana River in four locations. Just once for the Yukon River. All told, the mid-May 2015 version of the proposed pipeline route includes 446 waterbody crossings. Some are rivers, some creeks, some smaller than that. Some are much larger, such as almost 30 miles across Cook Inlet. More than two dozen Alaska LNG team members and contractors met with 60 federal, state and municipal agency personnel May 12 in Anchorage to discuss the project’s latest revisions to the proposed natural gas pipeline route from the North Slope to Nikiski on the Kenai Peninsula.

Project Teams Adjust Pipeline Route The project teams reported they have made multiple adjustments to the pipeline route since filing the first draft route with the Federal Energy Regulatory Commission (FERC) in February 2015. It’s all about finding the best path for the pipeline to move North Slope gas 800 miles across the state to reach the liquefaction plant in Nikiski. The project is undergoing engineering and design, working toward a late-summer 2016 FERC application. The federal agency regulates LNG (liquefied natural gas) plant construction and opera108

tions, and will prepare the project’s environmental impact statement. While seeking feedback from government regulatory agencies at the all-day session May 12, the Alaska LNG team listed the optimal engineering criteria for pipeline route selection: stable ground, good drainage, and flat or gentle slopes. “We try to stay on the high ground every place we can,” a team leader said. All the while, the team is aiming for the shortest distance between two points while avoiding—as much as possible—fault lines, wetlands, frost-heave soils, power lines, fiber optic cables, visual impacts, cultural sites, and private land. The pipeline execution team reported they would like to keep the 42-inch-diameter, high-pressure gas line at least 200 feet away from the trans-Alaska oil pipeline, particularly to allow gas line construction equipment to maneuver a safe distance from the aboveground oil line. But some pinch points will require closer spacing. “In many cases, the oil line [built in the mid-1970s] picked the best spot, and we have to pick the next best spot,” a team member said. The challenge is to find the preferred route within the constraints of geology, terrain, and environmental considerations. Several stretches along the route are still under review, with project teams working to find the best way to manage geological, environmental, and historic preservation issues.

Finding the Best Crossing Point

One example is the effort to find the best place to cross from the west to the east side of the Nenana River in the area where the Parks Highway, Alaska Railroad, and a steep canyon all come together, about 120 highway miles south of Fairbanks near the entrance to Denali National Park and Preserve. This is near where the Moody Bridge crosses 174 feet above the canyon floor. No surprise, the span also is known as “Windy Bridge.” The Alaska LNG team would prefer to stay away from steep, failing slopes, keep outside of the national park, and run

the line east of the tourist commercial area known as “Glitter Gulch.” “We’ve got some additional work to do… the answer is still in front of us,” a team member said at the routing workshop. While at the same time working to minimize impacts on highway traffic during construction, especially during the busy summer season, and preserving the scenic views along the highway and at viewpoints that are so important to visitors—and Alaskans. The Alaska LNG pipeline execution team is working with their counterparts at the Alaska Gasline Development Corporation during the route selection, sharing information in an effort to avoid duplication of efforts as the two projects look for the best way past problem areas. The state corporation is designing a smaller-volume pipeline project as a backup for Alaskans to consider if the producer-led Alaska LNG project does not move forward. Alaska LNG teams include staff assigned by all four commercial partners in the effort: North Slope oil and gas producers ExxonMobil, BP, and ConocoPhillips, and pipeline partner TransCanada. The state of Alaska would also be an investor in Alaska LNG. Another area still under review by the pipeline team is Atigun Pass, the highest point on the route at 4,739 feet above sea level in the Brooks Range. The pass is about 175 miles south of the start of the pipeline at the gas treatment plant proposed for Prudhoe Bay. The intent is to thread the gas line over the pass, while keeping a safe distance from the Dalton Highway, the oil line and steep slopes.

Above Ground vs. Below Ground

Crossing the Yukon River, about 180 miles south of Atigun Pass, also needs more ground sleuthing, the team reported, particularly geophysical and geotechnical studies to learn every possible detail of ground and subsurface conditions. As of mid-May, the team was assessing the option of directional drilling and pulling the pipe underneath the river, at a point west of

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the existing oil pipeline bridge and downstream from deep shoreside bluffs. But that could change as the team learns more, and a bridge crossing is an option. Horizontal drilling and pulling pipe also would be used to run the line beneath highway and river crossings along the route, along with possible open cuts and burying the pipe. Although most of the gas line would be buried, several sections of the route would need to be above ground, much like the oil line. Such construction, with the pipeline supported on horizontal steel beams between two vertical columns, would allow the line to span fault lines, staying out of harm’s way. The most serious earthquake risk is the Denali Fault, which crosses the Parks Highway near Cantwell, just 35 miles south of where the gas line crosses the Nenana River near Denali National Park. A 7.9-magnitude earthquake in 2002 tested the oil pipeline, which crosses the fault about 130 miles to the east of the gas line route. The oil pipeline survived the quake, thanks to its elevated support structure. Other aboveground stretches for the gas pipeline would include the 60-some miles between the Point Thomson gas field and the gas treatment plant at Prudhoe Bay, where gas from both fields would be cleaned of carbon dioxide and other impurities. The first draft routing submitted to FERC in February indicated the line would be buried in this area, but the team reported at the May 12 workshop that it had decided aboveground construction is a better option to avoid drainage problems of surface and subsurface water flowing north to the Beaufort Sea. Along with Atigun Pass, the Yukon River, and Glitter Gulch, another area still under review by the pipeline team is the Deshka River crossing, about 65 miles north of where the line would enter Cook Inlet for its final stretch to Nikiski. Field crews have found multiple cultural sites along the river, with its rich history of subsistence fishing. Historic-use sites along the Deshka are so plentiful the area looks like it “could have been a subdivision,” a pipeline team member said. Alaska LNG is working with its cultural team and the State Historic Preservation Office to find the best river-crossing location.

Cook Inlet Crossing

Another routing question raised in Alaska LNG’s February filing with FERC is where the pipeline should cross Cook Inlet to reach Nikiski. For now, the project is focusing on what it calls the western route, running the pipeline on the west side of Cook Inlet until Milepost 764 from Prudhoe Bay, then going underwater for almost 29 miles, coming up on the east side of the inlet just 7 miles or so to the liquefaction 110

Alaska Business Monthly | September 2015 www.akbizmag.com

plant site in Nikiski’s industrial area. On its west side approach, the line would stay away from the Beluga power plant, ENSTAR natural gas line, and drilling pads and access roads. A barge landing would be built on the west side to bring in equipment and supplies, just as a barge landing would be built on the east side for the same purpose— including delivery of the huge modules that would become the liquefaction plant. On the west side, the team is looking at a couple of sites about a mile apart for the pipeline to enter the water, considering shoreline terrain and how far the buried pipe would have to run before reaching water deep enough (30-foot depth) for pipelaying barge access. For landfall on the east side of Cook Inlet, the line would likely come up at a location called Boulder Point, though the team is also looking at another spot just a couple of miles farther up the Kenai Peninsula coast (near Seneva Lake) with lower bluffs at tidewater. Just as with the west side location, the shortest distance to deep water is a consideration. An alternate path across Cook Inlet, called the eastern route, is not now under active review, team members said at the May 12 meeting. That route would have the pipeline veer east after the Deshka River, cross the Susitna River, and come to Port MacKenzie across the inlet from An-

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chorage. From there, the line would run through Upper Cook Inlet to the Kenai Peninsula, several miles northeast of the preferred crossing route. Onshore problems with the eastern route, team members told regulatory agencies, include crossing through an old artillery range with unexploded ordinance and proximity to power lines and tower guy wires. Offshore, the concerns are numerous: submarine cables in the pipeline’s path; sharp turns in the route needed to avoid the dredged channel for Anchorage port traffic; critical feeding habitat of endangered beluga whales; and scouring along the seabed that could undermine the pipeline. In gathering data for the Cook Inlet crossing, the project teams have learned a lot about the currents and siltation and will be surveying for obstacles and mapping the seabed this summer as route-selection work continues. The teams reported May 12 that currents along the preferred crossing route run 6 knots at the surface and 4 knots on the bottom. Water depth along the route would be 140 feet at the deepest point; generally about half that for most of the route. To cross Cook Inlet, the pipeline would be lowered from barges to the sea floor. Each heavily concrete-coated section of 40-foot-long, 42-inch-diameter pipeline would weigh 33 tons—the pipeline’s weight

would keep it in place on the bottom.

Summer 2015 Field Work

Alaska LNG contractors have a busy 2015 summer field season planned of soils testing, borehole drilling, stream surveys, wetlands mapping, geophysical work, cultural resource surveys, and other data gathering as the project works toward submitting its next round of draft environmental reports to FERC in the first quarter of 2016. The summer work will include “ground truthing” data obtained by LiDAR (Light Detection and Ranging), which maps out surface data and details with an airborne laser. Teams will walk the ground to verify LiDAR data at more than 100 sites along the pipeline route, particularly looking at slope stability and geophysical hazards. Additional Alaska LNG workshops for government agencies are planned for June, August, and September to cover in more detail route selections and construction methods for waterbody crossings, wetlands, and Cook Inlet, along with the dredging that would be required to bring in construction barges. R Larry Persily is the Oil & Gas Special Assistant to the Kenai Peninsula Borough Mayor’s Office.

September 2015 | Alaska Business Monthly

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special section

Building Alaska

Alaskan Architects: Building for Community

Some of Bristol Bay Native Corporation’s subsidiaries occupy the fourth floor of Calista’s headquarters building off C Street and International Airport Road in Anchorage. The interior design of the space by RIM Architects and RIM Design incorporates elements of the culture and nature of the corporation and includes open and shared spaces.

By Kirsten Swann

laska offers unique geographical, demographic, and environmental conditions. Some projects are built off the road system, where fuel is expensive—shipping, too. Those built in urban areas must serve the multi-faceted needs of diverse, growing communities. As governments across the state tighten their belts, many publicly funded projects have to meet 112

a laundry list of design goals with only limited dollars. Private projects can face similar challenges. Despite those hurdles, Alaska architectural firms continue to create buildings that are beautiful, efficient, and, perhaps most importantly, supremely useful to their communities. Many incorporate strong elements of Alaska Native art and culture. Some buildings employ modern designs and cutting-edge efficiency standards; oth-

ers pay homage to Alaska history. They’re all designed in close cooperation with the people who use them.

Boney Courthouse

Rebuilding a courthouse takes time, creativity, patience, and communication. Then add a little more time, a constructionsavvy owner and a general contractor with a knack for remodeling, and you’re almost there. Kumin Associates, the architecture

Alaska Business Monthly | September 2015 www.akbizmag.com

The logistics alone were Byzantine: Day-to-day court operations, space for judges and jurors, the public law library, and traffic court all came into consideration. The Department of Corrections and the state judicial system both had their own special requirements. The owner and general contractor had to remain very cognizant of comings and goings, ensuring that various parties could conduct their courthouse business without interruption throughout the course of construction. firm tasked with an extensive remodel of the Boney Courthouse in Downtown Anchorage, spent about a decade working on the project. Chip Banister, Kumin president, led the architecture team for the project. Jean Funatake was Kumin’s project manager and architect, responsible for designing the new security entrance and security system upgrades, lobby remodel concept, and interior mezzanine and balcony additions. Funatake assisted the court system and general contractor in value engineering efforts prior to fully engaging in construction efforts. She also coordinated the efforts of the consultant team including civil, structural, mechanical, electrical, security, and door hardware consultants. The work took place in three phases, which were each broken down into multiple sub-phases. And there was a catch: The courthouse had to stay fully occupied and operational throughout the entire process. “It was a pretty intense project,” says Dana Nunn, the Kumin interior designer who worked on the courthouse remodel. The logistics alone were Byzantine: Dayto-day court operations, space for judges and jurors, the public law library, and traffic court all came into consideration. The Department of Corrections and the state judicial system both had their own special requirements. The owner and general contractor had to remain very cognizant of comings and goings, ensuring that various parties could conduct their courthouse www.akbizmag.com

business without interruption throughout the course of construction. The design team successfully juggled security and privacy concerns and worked with a variety of government entities to get the job done. This meant that they occasionally had to visit the site before or after courthouse hours to discuss and coordinate changes during construction. Designing the project took intensive research and a close working relationship with Kumin’s client, the State of Alaska Court System. Like many Anchorage buildings, the courthouse was originally constructed in the early 1970s, according to municipal property records. It was built after the Good Friday Earthquake but before modern seismic codes, Nunn says, “So a huge part of this behind-the-scenes was seismic retrofits and strengthening the building.” Critical structural upgrades were necessary for the courthouse to maintain seismic stability due to rearrangement and enlargement of openings in the existing concrete shear walls and floors and additional floor loads from new high-density shelving. Lighting, HVAC, and security upgrades were achieved with the remodeling as well. Curved entry walls accentuate the symmetry of the building and are echoed in the new lobby south wall and mezzanine balcony. Curved design elements in the ceiling, lighting, and library stair underscore the theme. “The most recent phase was the stuff the public really sees more than anything,” the interior designer says. One of the charges—keep things as lowmaintenance as possible. A government budget left no room for any extravagance. The materials and design had to be “incredibly durable,” Nunn says. They had to account for people walking in with studded shoes, snow-melt salts, and other unavoidable parts of Alaska life. “And then they wanted it to be beautiful, because it’s a civic facility and it really represents a lot of heritage,” Nunn says. The end result is modern and elegant, with touches of a bygone age and a nod to history and Alaska culture. In the lobby there are iconic artichoke lamps. The courthouse design employs a refined palette in different ways throughout the building; tiled walls add texture and relief. “All of the furniture in the law library, for instance, has a very mid-century vibe to it,” Nunn says. “You see button-tufting details and wool menswear-inspired upholsteries and things like that.” Anyone who’s lived in Anchorage for any amount of time can probably recall the old Boney Courthouse. September 2015 | Alaska Business Monthly

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Alaska-based Bettisworth North Architects and Planners designed the Ryan Middle School in Fairbanks in partnership with Chicago-based Perkins + Will.

“It was just so austere,” she says. “So we warmed up the interior with a lot of wood.” The exterior security entry uses bronze aluminum column covers and fascia, fullheight butt-glazed glass walls to compliment the colors and materials in the original palette while adding a contemporary flair. Nowadays, Boney Courthouse is virtually unrecognizable. The curved building entry was placed in direct alignment with the elevator lobby along the central axis of the building, with direct access from the landscaped plaza on the south instead of the far west corner. The lobby is fresh and bright, with a layered cloud ceiling and mezzanine level that didn’t exist ten years ago. The renovations continue throughout the building, bringing new life to a piece of Anchorage history.

Renovating Historical Landmarks

For Anchorage-based architect Nichelle Seely, historic buildings are a special kind of puzzle. “It’s a balancing act,” said Seely, who owns Borealis Architecture and designs everything from schools to fire stations. During a recent stint with the National Park Service, Seely was responsible for designing ways to bring Alaska National Park Service properties into compliance with federal accessibility standards, at least as much as possible. She worked on visitor centers in Katmai and Kennicott and the 114

Russian Bishop’s House in Sitka and found ways to maintain the special characteristics of each building while making sure they could meet most modern requirements. As the owner of a one-woman architectural firm, many of Seely’s projects are uniquely Alaskan. Currently, she’s working to remodel the Kenai Airport Hotel—a modern, lodge-like hotel with an unfinished second floor. Modern architecture with deeply Alaska flair is a theme across the state.

Art Meets Architecture

In Anchorage, you can find one shining example at a new four-story, one-hundredthousand-square-foot commercial building at the corner of International Airport Road and C Street. Home to the Calista Corporation and a floor of businesses under Bristol Bay Native Corporation, the building was developed by JL Properties, Davis Constructors, and a team of subcontractors including Design Alaska, DOWL, HZA, Pacific Studio, Schneider, RIM Design, and RIM Architects. Tim Ridenour, RIM Architects principal, says the design team aimed to create an office building that could impart a signature aesthetic to the corner property, while remaining efficient and cost-effective. The site itself had certain features that weighed more heavily into the building’s design, Ridenour says. For example: ad-

jacent wetlands. To account for those, the team designed a building with a relatively long, narrow footprint. The building’s core and shell are LEED Silver certified, and a deconstructed interior layout allowed designers to maximize floorspace. It features a bold color palette—shades of gray and a candy-apple red entryway— a classic color scheme that won’t date itself over time. Inside, resin panels and porcelain tiles add warmth, while the exposed structure gives the building its own unique identity. “Ultimately, you have to provide a space that works for the client and works for their future growth needs,” says Natasha Schmidt, a principal at RIM Design. The building’s third-floor tenant came with its own unique needs: Specifically, a massive collection of Alaska Native art to display and a number of shareholders who often use the corporate building to display and sell their own handiwork. The Calista space had to account for both. To do that, interior designer Megan Lierman focused on creating a clean space with a spotlight on the wall space, which now holds Calista’s extensive Alaska Native art collection. Lierman, also a principal at RIM Design, says it was all about creating a sense of place and an almost museum-type ambiance. “I think it works really well,” she says. “It’s so clean and simple but it’s really beautiful.”

Alaska Business Monthly | September 2015 www.akbizmag.com

West High School and Romig Middle School career and technical renovation project. © Kumin Associates/ Anchorage School District

Clean and simple seems to be a trend among Alaskan architects.

West High School & Romig Middle School In West Anchorage, Kumin is working on a career and technical education expansion project at Romig Middle School and West High School. It involves a new two-story, twentyeight-thousand-square-foot building expansion housing twelve additional classrooms, according to the Anchorage School District. Another six-thousand-square-foot addition will provide room for two more applied technology and family consumer science classrooms. Dana Nunn, the project’s interior designer, says the challenge was building flexible spaces suited to a number of educational purposes. A new digital media program at the high school means classrooms must come with overhead lighting rails and room to set up a fully functioning studio space. At Romig, where students are involved in a competitive culinary arts program, the expansion project includes building semi-professional kitchens suitable for middle-school-age users. And applied technology class isn’t the old-fashioned woodshop it used to be: These days, students learn computer-aided drafting and computer-aided construction, and the new classroom space has to have room for 3D printers and robotics and other new programs. Besides designing a space with flexibility to meet all those needs, Nunn says, the Kumin team aimed to create a beautiful finished product on a school district-approved budget. “But there’s a lot of creative ways you can use really bare-bones materials to create effect,” she says. For example—mixing up tile placement to create subtle patterns or incorporating a single eye-catching material in a prominent place. A curving monumental staircase at the entryway is another striking touch. Building something beautiful has longterm rewards, especially for a school. “There’s research that’s shown in the past that with increased pride you have a decrease in behavioral issues,” Nunn says. “Certainly with a nicer school there’s more teacher satisfaction.” That’s something everyone can celebrate. www.akbizmag.com

Ryan Middle School & Valdez High School In Fairbanks, Bettisworth North Architects and Planners are working on another school project with a similar emphasis on flexibility. The Ryan Middle School renovation and replacement, a partnership between Bettisworth North and Chicago-based Perkins + Will, has a total budget of more than $37 million and a “substantial completion” date of summer 2016, according to the Fairbanks North Star Borough Department of Public Works. Tracy Vanairsdale, one of Bettisworth North’s three principals, says the firm worked closely with a number of stakeholders to design what “could possibly be the most-utilized school in the community.” Because the facility is used by many groups besides just students and teachers, a collaborative design process was especially important. Creating the kind of building that fits everyone’s needs is key. That was the idea down in Valdez, where the new Valdez High School is now in its first full year of occupation. Designed by Bettisworth North during a year of record snowfall, the facility was built with extreme weather in mind. Architects designed the school with double the usual structural capacity in order to meet the city’s multifaceted needs. “With their record snows, they need to be ready to offer some emergency facilities for their community,” Vanairsdale says. “So they really wanted a facility that they could feel sure about.” In rural parts of Alaska, where Bettisworth North does a large chunk of its work, design goals often revolve around efficiency. The cost of fuel in many communities can be monumental and architects work to create buildings that are sustainable and energy-conscious. “What we appreciate is in each of the communities, it’s important that the design phase involves everyone there,” Vanairsdale says. “Each school, each site, each client is different and unique.” R

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Kirsten Swann is a freelance writer based in Anchorage. September 2015 | Alaska Business Monthly

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special section

Building Alaska

Anchorage Housing Addressing Anchorage’s housing problems can build Alaska business By Tasha Anderson

ffordable housing is a problem in Anchorage. According to “Out of Reach 2015,” a report published by the National Low Income Housing Coalition (nlihc.org), Alaska is ninth in the country in terms of highest wage required to rent a two-bedroom unit. According to their data, the Fair Market Rent for a two-bedroom unit in the state is $1,173; in order for Alaskans to pay 30 percent of their income or less on housing, they need to make $22.55 an hour—Alaska’s current average renter wage is $17.47. Further, Alaska’s minimum wage is currently $8.75, which translates to working 103 hours per week to afford a two-bedroom unit (again, assuming housing costs are 30 percent of a worker’s income). In fact, according to the July 2015 Alaska Trends, a publication of the Alaska Department of Labor and Workforce Development (labor.state.ak.us/ trends/jul15.pdf), Anchorage residents “spend the most [of their income] by far on housing,” averaging more than 40 percent. Bill Popp, the Anchorage Economic Development Corporation’s (aedcweb.com) president and CEO, says, “We are the 21st most expensive housing market in the United States, according to the Cost of Living Index.” The July 2015 Alaska Trends says that Alaska ranks number four in terms of living costs, surpassed only by Hawaii, Connecticut, and New York. The “Out of Reach 2015” Report looks specifically at several occupations, their average wages, and how those compare the Fair Market Rent for one-bedroom and two-bedroom units. Of the twenty occupations identified, only four (managers, nurses, teachers K-12, office supervisors) had an adequate average wage for two-bedroom units, adding only the work category of executive assistants when looking at onebedroom units. A few of the occupations that don’t make the cut are retail sales, office clerks, personal care aides, cashiers, fast food workers, waiters, bookkeepers, cooks, and teachers’ assistants. 116

There’s no doubt that Alaska’s housing market has an influence on Alaska’s businesses. “We have about 60 percent of businesses that respond to our annual surveys [2015 Annual Business Confidence Index Report] that tell us that the cost and availability of housing has affected their ability to either attract, retain, or both, workforce. When housing is becoming that significant in the minds of the business community, we really know that it’s a more significant issue than it has been in the past,” says Popp.

Housing Availability

The availability of housing is a specific, yet obviously related, difficulty in Anchorage. “Out of Reach 2015” states that the 2014 average apartment vacancy rate in Alaska was 3.2 percent, while a “healthy” vacancy rate is in the range of 5 percent. It’s not just the availability of apartments that’s low; according to the same report, in 2007 there were 1,168 homes listings on the Alaska MLS (Multiple Listing Service) while in 2014 that number dropped to 638. The April 2014 Economic Trends provides information that’s even more of an indication of the tight housing market in Anchorage. “Between 2002 and 2012, 23,919 new single-family homes went up in Alaska. Mat-Su led the state with 47 percent of the new construction, adding nearly 30,000 new residents at the same time. “Although Anchorage has three times the population of Mat-Su, less than half as many single-family homes were built there.” While many do commute from the Valley to Anchorage, Dr. Bill Conerly, who advises businesses on strategy, finance, and economics (conerlyconsulting.com), says that the housing market in the Valley, because of the hour-long commute, won’t be a source of “relief” for the tight Anchorage market. “Given how many of the jobs [in Alaska] are in Anchorage and the length of that commute, most people have a strong preference for being no more than a half hour commute away [from work]. That

said, everything competes with everything else, but I would expect the effect to be relatively small.” Mark Masley of Mark Masley Real Estate Group also thinks that booming development will not have much of an effect on Anchorage housing costs: “I don’t feel development in the Valley will impact [Anchorage]… Much of it is a lifestyle choice— buyers will trade the commute for larger parcels of land and lower housing prices if that’s what they’re looking for. Anchorage, Wasilla, and Palmer are fairly close together, and in many parts of the country would be considered to be the same housing market.”

New Housing Creates More Affordable Housing If housing in Anchorage is both unavailable and costly, what’s the solution? The kneejerk response—build cheap houses—may not be a realistic answer in a real-world housing market. Conerly says that affordable housing isn’t built (outside of constructing subsidized housing). He says, “When you look at where most low-income people are living today, it’s not in newish housing that has been built specifically to be affordable; it’s typically in older properties.” Conerly says that new-built housing, whether multi-family or single-family, is generally larger and has new amenities, “and of course nothing has gone wrong with it.” Older housing generally has cosmetic or structural problems and fewer or out-of-date amenities. “The analogy that I like is that low-income people need reliable transportation, but we’re not thinking, ‘Let’s find a way to subsidize new, low-end cars for them.’ Instead, low-income people buy used cars.” One natural way for Anchorage’s market to equalize is for enough new construction to be built in such a way that aging residential infrastructure becomes affordable. Projections of Anchorage’s population and its current land capacity for residential con-

Alaska Business Monthly | September 2015 www.akbizmag.com

struction paint a bleak picture in that regard. In March of 2012 the McDowell Group and ECONorthwest prepared the “Anchorage Housing Market Analysis” for the Municipality of Anchorage. According to projections for 2030, in the Anchorage Bowl the only type of housing that has a surplus sufficiency (capacity minus demand) is large lot single family homes, with a surplus of 1,668 acres. All other types of housing (single family, two family/duplex, townhouse, multifamily/other) have a projected demand of 18,184 acres and a capacity of 11,000, resulting in a deficit sufficiency of 8,852 acres. The report states, “As of 2010, there were 5,800 acres of buildable residential land in the Anchorage Bowl, including 5,200 acres of vacant [undeveloped] land and 600 acres of partially vacant land that has space to be further subdivided or developed. “The inventory shows a 30 to 40 percent decline in the amount of buildable residential land in the Anchorage bowl since 1998. “Without increasing the current level of housing density and increasing the rate of development, the Anchorage Bowl will lack for land for about 8,900 of the projected new housing units, or about half of expected demand.”

‘Revive Our Building Industry’

Popp says “We need to revive our building

industry, building more housing, all kinds in multiple areas of Anchorage, and there’s not a lot of land available, so we have to go through a redevelopment strategy. We have to look at the permitting processes and the hearing processes and everything else that goes into the construction of housing to take a system right now that is designed to prevent problems… and turn it into a system designed to accomplish the development goals of the community.” Conerly says that often, when new development isn’t occurring, there are growth restrictions that can be reduced or eliminated. “The first thing I would look at is what does it cost anybody to build new housing… in some areas zoning restrictions are more onerous; sometimes there are building code requirements that are particularly difficult to meet, and that’s the kind of thing I’d be looking at.” While the housing issue is significant, it certainly isn’t insurmountable. Popp adds that the Alaska Economic Development Corporation is partnered with the private sector, including entities like banks, real estate companies, and developers; nonprofit organizations such as the Cook Inlet Housing Authority; and other organizations like the Municipality of Anchorage “to find strategies that will streamline the [housing construction] process, maintain

the priorities of the community in terms of having good housing, and meet the needs of different population segments.” There are various approaches Anchorage can take to get a handle on housing. The “Anchorage Housing Market Analysis” suggests increasing efficient land use; increasing residential densities by allowing small-lot single family homes and providing “opportunity areas” for denser housing; increasing the supply of buildable land by limiting rezoning of residential land or identifying public lands that would be suitable for residences and making those lands available for development; facilitating redevelopment; and improving the regulatory process. Masley says that, at a July 16 Anchorage Board of Realtors luncheon, the featured speaker, Governor Bill Walker, “promised to look into the feasibility of making some of the state holdings available for development.” Masley sees this as significant, as he believes “the biggest barrier to affordable housing is the availability of developable land. Anchorage is essentially a landlocked municipality, and most of the large tracts of land remaining are held by MOA [Municipality of Anchorage] or the state.” Additionally, Masley says, “the permitting process and requirements for development within the Municipality have grown

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September 2015 | Alaska Business Monthly

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bloated and cost prohibitive. A re-write of the Title 21 process would go a long way toward solving some of those issues, but not all. Management and leadership will be required to change some of the policies and practices within the planning and permitting departments.” The regulatory process has been under scrutiny for the last few years, specifically as the Municipality’s Planning Division has revamped Title 21, the city’s laws on Land Use, including zoning and subdivisions. An extensive rewrite was approved by the Anchorage Assembly in February 2013, which took effect January of 2014. Throughout 2015 applicants can choose to have their applications reviewed under the “old code” or the “new code,” allowing a period of transition for all parties involved that ends January 1, 2016, when all applications will be reviewed under the new code.

New Developments

Masley is optimistic about the Anchorage market’s growth levels. “Year-to-date our average residential [single family home] sales price is up nearly 2.5 percent from $359,593 in 2014 to $368,489 in 2015. I believe that growth is largely due to a short supply of well-priced homes, which requires buyers to pay a bit more to be competitive. I say healthy because we’ve avoid-

ed the double-digit housing inflation we’ve seen in other parts of the country which have led to significant losses when the economy takes a turn for the worse. With that growth and interest rates still in the 3.75 percent to 4.25 percent range, home ownership continues to be a viable investment in Anchorage.” Anchorage’s housing market isn’t at a standstill, and even with obstacles, growth continues. According to July 16 Alaska MLS data, in Anchorage there are twentyfive new-build subdivisions being developed. As of that date, in all subdivisions, there were eighty-five active listings and sixty-three pending listings. One of the subdivisions listed is West Park, near the intersection of West Dimond Boulevard and Sand Lake Road. This subdivision is being developed in what was previously a sand pit, an example of the ingenuity that developers are using to find suitable land for development in the Anchorage Bowl. West Park is a beautiful walk or five-minute car ride from Kincaid Park, is approximately ten minutes from Ted Stevens Anchorage International Airport, and provides a fifteen to twenty-five minute commute to midtown and downtown, demonstrating that solutions to the land shortage are possible and can produce communities that are convenient and pro-

vide a high quality of living.

Building Houses, Building Business “There’s a little tension here [between profitability for developers and community needs] and that’s healthy, but it shouldn’t be over-weighted to either side. There is a center point of balance between those two interests, and if we can get it back to that center point, we’re going to see a nice surge in construction of apartments, denser housing, as well as additional housing redevelopment going on,” Popp says. The Anchorage Economic Development Corporation is focused on helping all businesses in Anchorage, and Popp thinks addressing housing is one goal that would help businesses in Alaska, small and large, significantly. “If there’s something that we can do to help a business to keep it from failing, we want to be able to do that. Some of that is direct intervention, some of it is potential solutions, some of it is related to the ‘Live. Work. Play.’ effort. Probably one of the biggest things that we can focus on right now that is ‘low-hanging fruit’ is the housing situation.” R Tasha Anderson is an Associate Editor at Alaska Business Monthly.

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“Aging is not lost youth, but a new state of oppor tunity and strength” - Betty Freidan

The senior population in Alaska is increasing and projected to increase by 4 percent each year until the last baby boomers turn 65 in 2030. Many of these seniors are the very people who pioneered Alaska, building our infrastructure, our institutions and our communities. They are valuable contributing members of our community — they are mentors, leaders, keepers of history and knowledge, teachers and guardians.

SENIOR HOUSING D E V E LO P M E N T S Ninilchik House Seldovia House Chuda House Salamatof Heights Tyonek Terrace Kenaitze Pointe Chickaloon Landing Knik Corner Eklutna Estate Caswell Court Coronado Park Senior Village Ridgeline Terrace

At Cook Inlet Housing we develop affordable housing for seniors who live in the Cook Inlet region. We believe it is our collective responsibility to find a proper and welcome place for our seniors in our communities. Our senior housing is designed to support our seniors, allowing them to age in place. By combating isolation, loneliness and boredom, we keep our seniors healthy, thriving and living independently. The financial support of community partners, and local, State and Federal entities make the provision of affordable housing for our seniors possible. Thank you for supporting our mission and for caring about the development of quality, affordable housing for our seniors. If we’re lucky enough, we’ll all be seniors one day. Carol Gore President/CEO Cook Inlet Housing Authority

MISSION www.cookinlethousing.org 3510 Spenard Road, Suite 100 Anchorage, Alaska 99503

opportunities

To create housing that

empower

our

people and build our community.

special section

Building Alaska

The Glenn Highway Capacity Improvement Project in Eagle River saw girders set for the new northbound bridge in July.

Statewide Construction Project Roundup By Russ Slaten

lthough the busy summer construction season is over, it doesn’t stop many crews from continuing well into the fall. With the hopes of mild weather, Alaska contractors will bear down to stay on time and under budget.

Anchorage U-Med District

Neeser Construction continues to make progress on the University of Alaska Anchorage (UAA) School of Engineering parking structure on UAA Drive. The general contractor was building the second floor of the four-story garage in July. The $23 million project will be complete in the fall and opened for UAA’s 2016 fall semester next August. Neeser Construction completed the $78 million UAA Engineering and Industry Building on Providence Drive this summer, along with the connecting $6.1 million UAA Health Campus Pedestrian Bridge. Neeser finished the shell of the bridge in the summer and completed the finishing touches and laid down carpet in July. Davis Constructors & Engineers, Inc. 120

will complete the $6.7 million Wells Fargo Sports Complex Renewal and Repurposing Phase II project this month. The two-floor, 105,735-square-foot renovation project on the UAA campus began in May. On the Alaska Native Health Campus, Watterson Construction says it’s about 50 percent complete with the two-story Southcentral Foundation Therapy Center. The $25 million project will be complete in the fall of 2015. The Alaska Native Medical Center Patient Housing facility saw the completion of the parking garage and foundation work in the summer. Neeser will complete steel and roofing work in November and expect to start construction of the sky bridge next spring, with total completion expected in fall 2016. The Petersen Group is building the Thomas Center for Senior Leadership located near Lake Otis Parkway and Tudor Road. Owned by St. Mary’s Episcopal Church Housing Company LLC, the housing project is funded by a $5 million grant from Lowell and Tay Thomas. The Petersen

Group began construction in July 2014 and expect it to be completed in November, with thirty-five workers at peak construction. Neeser will complete construction of the Blood Bank of Alaska’s new headquarters, laboratory, and collection facility in Anchorage thanks to an $8.5 million loan from AIDEA (Alaska Industrial Development and Export Authority). The 57,000-square-foot facility will consolidate the Blood Bank’s Anchorage facilities and expand capacity and is expected to produce approximately 133 direct jobs over the sixteen-month construction period, according to the Blood Bank of Alaska.

Municipal Schools

The Airport Heights Elementary Renovation and Addition began this spring, and the Anchorage School District expects it to be complete by August 2016. General contractor Watterson Construction for the $16.7 million project says it was 10 percent complete with the project in July and expects peak employment to be about fifty workers. McCool Carlson Green designed the project.

Alaska Business Monthly | September 2015 www.akbizmag.com

Russ Slaten for Alaska Business Monthly

UAA Health Campus Pedestrian Bridge crosses Providence Drive in Anchorage and connects the new Engineering and Industry Building and the Health Sciences Building.

The new Rilke Schule German School of Arts and Sciences located off Dowling Road in Anchorage is set to be complete this month. RIM Architects designed the 39,500-square-foot building. Pfeffer Development and Sitnasuak Native Corporation, the village corporation of Nome, are partnering to develop the project under the joint venture, Nanuaq Development LLC. Criterion General saw about fifty workers at peak construction. The Rabbit Creek Elementary School Renewal project began this summer in South Anchorage. Watterson Construction was awarded the $8.4 million by the Anchorage School District. Watterson will complete the project by next summer, with peak employment at about forty-five workers. Watterson Construction expects to complete the Girdwood K-8 School Renewal project in August. The $19 million renewal project, designed by McCool Carlson Green, completely reworks the roof systems and includes a two-story expansion for middle school students, a gym, and a reimagined commons and library. Watterson began the Anchorage School District project in the summer of 2014, with fiftysix workers at peak construction.

Midtown Developments

Criterion General, Inc. is continuing to make progress on the Kuukpik Corporation Building on 36th Avenue that began last October. Fireproofing was nearing completion and interior framing of the www.akbizmag.com

building core areas continued through July. Pfeffer Development is the developer for the project while KPB Architects designed the 40,000-square-foot building. Criterion is expected to complete the building in December, with peak construction between seventy to eighty workers. Neeser will complete the Nordstrom Rack/Sears Remodel near the intersection of Northern Lights and the New Seward Highway this fall for Seritage Realty Trust. The renovation and addition project designed by RIM Architects includes demolition and seismic upgrades to 34,900-square-feet of the north side of Sears and the addition of new interior tenant walls and 2,900-square-foot loading dock. The Loussac Library in Anchorage is undergoing $13.5 million in renovations started in May, expected to take a year and a half. Pinnacle Construction began Phase 1 of the renovation on the southwest side of the building, location of the future driveby book drop. The expanded dimensions of the southwest wall will be framed in and completed, as will two meeting rooms in the former fiction area on level two. Phase 2 begins with the demolition of the outside entrance stairs and terrace this fall.

Around Town

In Downtown Anchorage, Pfeffer Development remodeled the former Covenant House Alaska building located at 609 F Street. The approximately 17,000-squarefoot building, designed by KPB Archi-

tects, is being transformed into an urban arts, food, event, and entertainment destination, Williwaw. General contractor Benchmark Construction started construction in January and the project was completed this summer, with peak employment between fifty to sixty workers. Watterson Construction began work on the Alaska Zoo Polar Bear Exhibit this summer. Designed by Seattle-based Portico Group, Alaska Zoo’s $1.87 million Phase I will build the Polar Bear Transition Center to better take care of cubs and increase the zoo’s ability to conduct research. Watterson expects to complete the project during next summer, with fifteen workers at peak construction. Granite Construction continues work on the West Dowling Road Reconstruction Phase II covering C Street to Minnesota Drive in Anchorage. The $36.9 million ADOT&PF (Alaska Department of Transportation & Public Facilities) project saw the completion of bridge, tunnel, and retaining walls and reopening of Raspberry Road in July. Granite expects to finish the project next month. The Anchorage Fire Department broke ground on the city’s new Fire Station 9, to be located at Lake Otis Parkway and DeArmoun Road in May. The new station will be in a better location to serve the South Anchorage community. The station was designed by Bettisworth North and will be built by Dokoozian Construction LLC for $5.1 million. Fire Station 9 and new Fire

September 2015 | Alaska Business Monthly

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Station 3 in Airport Heights are scheduled to be completed in spring 2016. SR Bales Construction will build the $4.9 million Fire Station 3 replacement. Granite Construction will complete the ANC Runway 7L/25R Rehabilitation project at Ted Stevens International Airport for ADOT&PF next month. The $48.5 million project improvements include rehabilitating the runway and connecting taxiways and replacing and upgrading airfield lighting and signage. Chugach Electric Association continued a number of construction projects this season. On the Anchorage Hillside, the $10.9 million project to build a new distribution substation at the intersection of O’Malley Road and Hane Street started in June with completion in spring 2016. Chugach Electric’s $3 million Dowling Substation improvement project in Anchorage began in July and ends in December.

Outside Anchorage

Communications upgrades are planned at several Chugach Electric substations in the Anchorage Bowl, including the addition or extension of communications towers within the substations. Chugach Electric’s $6 million project to rebuild six miles of transmission lines between Powerline Pass and the Seward Highway near Indian began in June and ends in October. ADOT&PF’s Glenn Highway Capacity Improvement Project in Eagle River is set to be complete this October. Kiewit Infrastructure West Co., along with subcontractor HDR Alaska, began the $42.5 million project in June 2014 and was setting girders for the new northbound bridge over the river in July. Hanson Alaska Professional Services, Inc. designed the threemile improvement project. Mass Excavation, Inc. began the Yosemite Drive Area Drainage project in Eagle River for the Municipality of Anchorage in June. The $2.2 million project designed by Stantec will provide a new storm drain system for Eagle River High School, Yosemite Drive, and part of the Eagle Pointe Subdivision, with expected completion next month. Granite Construction will complete the Seward Highway MP 99-100 Improvements project just south of Bird Creek next month. Started in May, the $7.5 million ADOT&PF project will rehabilitate pavement surface and widen the highway for a northbound passing lane. Davis Constructors will complete the Olympic Mountain Loop Improvements in Girdwood for the ADOT&PF next month. Began in May, the $2.4 million

Alaska Business Monthly | September 2015 www.akbizmag.com

Triodetic, Inc.

Triodetic, Multipoint Foundations Building Stable Foundations in Unstable Territory

riodetic, Inc. has been using its proprietary Multipoint Foundation System to successfully solve foundation problems in Alaska for more than 20 years. Multipoint Foundations provides a strong, stable “footprint” on permafrost, flood-prone land and other unstable terrain. Comprised of a preengineered steel or aluminum platform, it keeps buildings straight and level—regardless if the soil settles or sinks beneath them. The product comes in heights ranging from 2 to 8 feet to help elevate structures above flood waters. Multipoint Foundations is a proven and reliable solution for all types of terrain. Unlike conventional piles that tend to shift and cause structural damage, it virtually eliminates differential settlement, says inventor William Vangool, P.E. Multipoint Foundations doesn’t damage a building’s integrity, never requires maintenance and saves money over the long term. “Our foundation system is pain-free for the longevity of your building,” Vangool says. Fast, Easy, Customized Solutions Triodetic is an internationally-recognized designer, manufacturer and supplier of specialty structures, domes, free form structures, barrel vaults and space frames such as Multipoint Foundations. The company has deployed its Multipoint Foundation System in projects throughout Alaska, Louisiana, Russia, and Canada. In fact, Triodetic has used the same joint sys-

tem that’s in Multipoint Foundations to construct a variety of structures, including the Children’s Museum in Rochester, N.Y., and the Pittsburgh Children’s Museum—both of which earned American Institute of Architects awards—as well as the John F. Kennedy Presidential Library and Museum in Boston, Mass. In Alaska, the Multipoint Foundation System is typically used for constructing and retrofitting homes, but it’s equally suitable for supporting larger buildings like hospitals, schools, and churches, according to Foundations Manager Mike Landon. Regardless of the structure, Multipoint Foundations is quick and easy to assemble. Everything is bolted together, so no welding is required. The foundation frame can often be installed in one day or in about half the time it takes to construct a traditional frame. “It’s a great product,” Landon says. “I’m very excited about it.” Multipoint Foundations is a completely customized solution. Triodetic designs the foundation frame based on drawings, fabricates the frame to the building’s dimensions and ships the frame to the site for clients to assemble. “We rarely have to supervise installation,” Vangool says. Constantly Improving to Meet the Challenges of Alaska Multipoint Foundations is often used for projects in Bush Alaska. For example, Samaritan’s Purse recently used the system for an administrative building and dormitory in Bethel. Alaska Housing –

P A I D

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

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Finance Corporation has also employed Multipoint Foundations to shore up endangered homes in Bethel, Shishmaref and other communities. Although Triodetic has been serving Alaskans for decades, its work in the state continues to be exciting because the applications for Multipoint Foundations are constantly changing, Vangool says. “We continue to develop new methods to approach certain challenges that we find in the field,” he says. For instance, Triodetic is creating a hydraulic system to make it easier to lift buildings. It’s also supplying University of Alaska Fairbanks with foundation frames to serve as research platforms in places like the North Slope and Antarctica. Additionally, Triodetic continues to research various installation methods to better serve the evolving needs of clients in Alaska and elsewhere.

Mike Landon, Foundations Manager 4465 East Genesee St., PMB 306 Syracuse, N.Y. 13214-2253 800-565-2743, Ext. 2233 multipoint-foundations.com triodetic.com

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improvement project designed by DOWL is expected to include new pavement, curbs, street lighting, storm drains, pedestrian facilities, and landscaping.

Mat-Su Valley

The thirty-four-mile Port MacKenzie Rail Extension between Houston and Port MacKenzie began in the spring of 2011. The Matanuska-Susitna Borough and Alaska Railroad Corporation-owned $303.5 million project currently under construction does not have a set completion date due to funding, according to project engineer Hanson Alaska Professional Services, Inc. The Mat-Su Borough is managing the South Big Lake Road Realignment project that began in June. Originally a state project, the Mat-Su Borough requested to complete the $9.5 million road project. The new three-mile segment will be renamed West Susitna Parkway. HDR Alaska designed the project and Scarsella Brothers, Inc. built the road. Mass Excavation, Inc. began the Hatcher Pass Road MP 18-20 project near Palmer for the Alaska Department of Natural Resources in May. The $1.2 million road work project is expected to be complete by the end of this month. Hamilton Construction began the Glenn Highway Chickaloon River Bridge Replacement in the Mat-Su Valley in July. The $15.3 million ADOT&PF project will replace the Chickaloon River Bridge at the Glenn Highway. The roadway will be realigned over the new bridge at about MP 78 of the Glenn Highway. ADOT&PF expects the project to be complete by August 2016.

Southcentral

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Watterson Construction began the Alaska Vocational Technical Center Renovation and Addition project for the Alaska Department of Labor and Workforce Development in Seward this summer. The $9.5 million project is expected to be complete next summer, with about twenty-five workers at peak construction. Granite Construction completed the Homer East End Road Rehabilitation project in Homer for ADOT&PF in August. The $11.5 million project rehabilitated and improved safety on East End Road from Kachemak Drive to Waterman Road. A new pedestrian pathway will also be constructed. Chugach Electric’s $22 million Stetson Creek diversion project near Cooper Landing is expected to be complete by this fall. Construction of a diversion structure, two miles of buried pipeline, a siphon, and outfall works is necessary to divert water from Stetson Creek into the reservoir of Chugach’s Cooper Lake Hydroelectric Project.

Alaska Business Monthly | September 2015 www.akbizmag.com

The nearly $1 million project to convert Chugach Electricâ&#x20AC;&#x2122;s overhead distribution facilities to underground cables in 2015 will replace about a half mile of existing overhead line with new buried cable.

Southeast Alaska

Icy Strait Point, a wholly owned and operated subsidiary of Huna Totem Corporation, began the installation of a new floating pier along Alaskaâ&#x20AC;&#x2122;s Inside Passage near the village of Hoonah. Turnagain Marine Construction, an Alaska-based heavy marine construction firm, is working offshore at Icy Strait Point with completion expected by early October. The new fourhundred-foot floating pier will be able to accommodate some of the largest cruise ships beginning in 2016. Secon, owned by Colaska, Inc., completed the $20 million Juneau International Airport Runway 8/26 Rehabilitation project in August. Owned by the City and Borough of Juneau, Stantec provided the engineering work to resurface the lone runway at Juneau International Airport. Secon saw thirty to forty workers on the project.

Fairbanks

The Haskell Corporation/Davis Constructors joint venture is continuing con-

struction of the University of Alaska Fairbanks (UAF) Combined Heat and Power Plant in Fairbanks. The $245 million 17 megawatt combined heat and power plant project began in July and will be completed in June 2018, with 220 workers expected at peak construction. Also on the UAF campus, Armstrong Construction began the Lola Tilly Office Conversion in July. The 5,000-squarefoot, $400,000 project will be complete this month, with fifteen workers at peak construction, according to UAF. Watterson Construction began the UAF Irving 1 Repurpose for Veterinary Medicine project this spring. The $4 million project will see 13,000-square-feet revitalized and reconfigured to allow for a major teaching lab, student study carrels, and a classroom. Watterson expects the UAF project to be complete in the fall, with twenty-nine workers at peak construction. HC Contractors, Inc. will complete the Richardson Highway Fairbanks New Weigh Station project near Fairbanks for ADOT&PF in December. Began last August, the $11.2 million project include constructing two new weigh station facilities and an inspection building near MP 358 on the Richardson Highway. ADOT&PF expects peak employment to reach thirty-five workers.

Interior Roads

Great Northwest, Inc. will complete the Parks Highway MP 163-305 Passing Lanes Stage 2 project for ADOT&PF by the end of the month. The $29.6 million project includes the construction thirteen miles of passing lanes broken into seven sections along the Parks Highway. The project began March 2014, and ADOT&PF expect fortynine workers at peak construction. QAP will complete the Parks Highway MP 239-252 Rehabilitation project for ADOT&PF in October. The $28.9 million roadwork project consists of rehabilitating 13.7 miles of the Parks Highway and adding passing lanes at two locations. The project also includes culvert, guardrail, bridge, and signage work. The project began last April, and ADOT&PF expect fifty workers at peak construction. Cruz Construction is set to complete the Road to Tanana project for ADOT&PF in December. Started in July 2014, the $10.7 million project includes clearing land to build a spur extending from the Elliott Highway near Manley Hot Springs, through Tofty, and ultimately to the Yukon River near Tanana, in order to provide road access to the community of Tanana. The project also covers area improvements and spans 33.4 miles, with twenty workers at peak construction.

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September 2015 | Alaska Business Monthly

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ÂŠ Alaska DOT & PF

Western Alaska

Wolverine Supply, Inc. will complete $650,000 in deferred maintenance for the UAF Kuskokwim Campus Sackett Hall housing in Bethel by the end of the month. Wolverine Supply began the 6,000-squarefoot dorm room renovation project in June, with up to ten workers on site. UNIT Company will complete the $18.3 million Koliganek K-12 School project in the Dillingham area of Western Alaska by this fall. Stantec designed the 17,000-square-foot school for the Southwest Region School District that saw construction begin in 2012. Mowat Construction is expected to complete the Aleknagik Wood River Bridge Construction, Phase I project in the Dillingham area next month. Started in July 2014, the $19.5 million ADOT&PF project includes the construction of a new 440-foot bridge over Wood River and one mile of new road connecting Lake Aleknagik Road to Peter Krause Sr. Drive on the north side of Aleknagik. Dokoozian Construction will complete the $23.5 million Kwigillingok K-12 School Renovation and Addition in the Bethel region by this fall. Stantec designed the 14,000-square-foot renovation and 16,000-square-foot addition for the Lower Kuskokwim School District. Designed started and 2011, and construction began in the spring of 2012. 126

Alaska Business Monthly | September 2015 www.akbizmag.com

ABOVE & RIGHT: The Aleknagik Wood River Bridge project in the Dillingham area saw progress on the 440-foot bridge over Wood River.

Denali General is expected to complete the $24.4 million Quinhagak K-12 School Renovation and Addition in the Bethel area this winter. Owned by the Lower Kuskokwim School District, Stantec designed the 20,000-square-foot renovation and 30,000-square-foot addition. Design began in 2011, and construction started in 2012. QAP will complete the Tununak Airport Relocation project in the Bethel area for ADOT&PF next month. Started in July 2013, the two-year, $20 million project built a new 3,300-foot-long gravel runway. The Nagozruk building on the UAF Northwest Campus in Nome began renovations in July. The 4,700-square-foot renovation and replacement of the building’s exterior envelope and siding will be complete in November, with fifteen workers at peak construction. ASRC Civil Construction LLC will complete the St. Mary’s/Mountain Village Road Rehabilitation project in Western Alaska for ADOT&PF next month. Began in February 2014, the $10.5 million road project will rehabilitate a 15.5-mile section of road between the communities of St. Mary’s and Mountain Village and improve drainage, raise grade, and replace www.akbizmag.com

September 2015 | Alaska Business Monthly

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UIC Construction is building the fifteen-unit UIC Extended Stay Facility in Barrow.

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UIC Construction LLC continued building the Harold Kaveolook School Gym Addition in Kaktovik, on Barter Island along Alaska’s Northern coast. The $11.96 million project for the North Slope Borough School District includes construction of a new two-story, 12,000-square-foot gymnasium addition to the existing facility, and a 2,400-square-foot expansion to the existing main entry area. Expected completion date is December 2016, with project employment numbers at ten to twenty workers. UIC Construction began building the UIC Extended Stay Facility in Barrow in April and will complete the $6.3 million project by the end of December. The fifteen-unit, 11,834-square-foot facility owned by Ukpeaġvik Iñupiat Corporation was designed by Winchester Alaska. UIC Construction expects up to twenty workers at peak construction. ASRC SKW Eskimos, Inc. is completing the Barrow Airport Runway 07 Surface Variation Repair project for ADOT&PF by the end of December. The $3.6 million project began in April, with peak employment expected to reach thirteen workers. On the North Slope, CONAM Construction Company began the ConocoPhillips Drill Site 2-S (Shark’s Tooth) On-Pad Facility project in March. CONAM installed seven modules and skids, seven valve access platforms, thirty-four pipe supports and power, instrumentation, and telecommunications systems for the new drill site at Kuparuk. CONAM will complete the project by mid-September, and expect 120 employees at peak construction. R Russ Slaten is an Associate Editor at Alaska Business Monthly.

Alaska Business Monthly | September 2015 www.akbizmag.com

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15-07-20 1:48 PM

special section

Building Alaska

King Cove’s Road:

Deadly Environmentalism

For an Alaska town, the price of a wildlife refuge is paid in human lives

weather, that can be done with an air taxi from King Cove’s airstrip. But when the weather is foul, making the trip to Cold Bay requires a boat (and calm seas) or a medevac helicopter (often supplied by the Coast Guard)—and, potentially, more time than a patient has.

By Ian Tuttle

To solve this problem, King Cove residents have sought to build a one-lane, gravel road from King Cove to Cold Bay, across the twomile-wide isthmus that links the towns. Nineteen miles of the thirty-mile road already exist. But eleven miles remain—and they traverse the Izembek National Wildlife Refuge. This is one infrastructure project in which the Obama administration has not the slightest interest. In August 2013, with King Cove’s decades-long effort seemingly about to come to fruition—a bill having passed Congress, the president having signed it—Sally Jewell, secretary of the Department of the Interior, flew to King Cove and, to people who told her of loved ones waiting desperately for a rescue helicopter, and of friends perishing in plane crashes in the cloud-swathed mountains, announced: “I’ve listened to your stories. Now I have to listen to the animals.” The animals had the last word. “Building a road through the Refuge would cause irreversible damage not only to the Refuge itself, but to the wildlife that depend on it,” Jewell said in a December 2013 statement, citing a four-year environmental-impact assessment conducted by her department. “Izembek is an extraordinary place—internationally recognized as vital to a rich diversity of species—and we owe it to future generations to think about long-term solutions that do not insert a road through the middle of this Refuge and designated wilderness.” The Izembek National Wildlife Refuge, a 315,000-acre preserve established in 1980 by the Alaska National Interest Lands Conservation Act—without consulting the Native peoples, King Cove residents note—is, indeed, home to a rich array of wildlife, notably of the winged variety: 155,000 Pacific black brant (almost the entire global population) visit each fall, as well as emperor geese (6,000) and Steller’s eiders (23,000), to indulge in the eelgrass beds in the lagoons adjacent to the Refuge. It is for such species’ sakes that 300,000 of Izembek’s acres are “designated wilderness,” the highest level of protection afforded to federal lands. Yet there is something ironic about the federal government’s accusing Alaska Natives of treating local wildlife frivolously. The majority of King Cove residents are members of the Aleut peoples

he 950 residents of King Cove, Alaska, have been trying to build an emergency road to nearby Cold Bay. They have been trying to build the road for forty years. King Cove is near the western tip of the Alaskan Peninsula; a few miles west begin the Aleutian Islands. King Cove has a school and two churches and a Chinese restaurant, and its economy is buttressed by the presence of PeterPan Seafoods, one of the largest commercial fishing operations in North America, whose seasonal employees constitute about one-third of the local population. But like most towns in the Alaskan bush, it has only a small clinic and no full-time physician. For everything from minor surgeries to delivering a baby, residents must venture to a proper hospital—625 miles away, in Anchorage. Rarely can that be done direct from King Cove. The town’s 3,500-foot gravel airstrip, built in 1970 in the Delta Creek Valley north of town, cannot accommodate large aircraft, and the single- and twin-engine aircraft that use it are particularly vulnerable to King Cove’s weather and geography—which are, to put it lightly, forbidding. The airstrip is situated between two volcanic peaks, which funnel into the valley winds that regularly reach 70 mph. And while clear, calm days do visit King Cove, bad weather— thick fog, lashing rain, driving snow—is Mother Nature’s curse on King Cove a third of the year, sometimes more. So getting to Anchorage requires first getting to next-door Cold Bay, a hamlet of one hundred people, mainly transient state and federal employees, that happens to be home to a ten-thousand-foot, all-weather airstrip capable of handling the long-distance flight to the state’s largest city. (Why tiny Cold Bay has such an outsized role in King Cove’s story is something of a historical accident: Cold Bay Airport was built in World War II, when this distant patch of the Alaska Territory became a strategic outpost against a possible Japanese invasion. The site chosen, Army engineers agreed then, and locals agree now, was the only one in the area suitable for an airstrip of such size.) The problem is getting to Cold Bay. In clear 130

One-Lane Gravel Road

who have subsisted along this frontier for four millennia. They know how to coexist with the local fauna. And more to the point: The most endangered species in the area is not the eider.

Wind and Weather

In 1970, when King Cove built its airstrip, locals knew that wind and weather would present a challenge to pilots. In 1980, their worst fears were realized. A local fisherman had his foot severed when a crab pot fell on him; the local nurse feared he would bleed out if he did not get to Anchorage. The fisherman was hauled aboard a plane, joined by the nurse—the only one in town—and her assistant. A blizzard had blown in. The plane crashed before reaching Cold Bay, killing everyone aboard. In July of the following year, bad weather hid King Cove’s airstrip from an approaching charter pilot. He and his five passengers were killed when their plane crashed in the mountains nearby. Since 1980, nineteen deaths—in plane crashes, or waiting for a rescue vehicle that did not arrive in time—have been attributed to the lack of a safe, speedy route between King Cove and Cold Bay. And the number could be much higher: Since Secretary Jewell delivered her fiat, King Cove has required twenty-four medevac rescues, seven of which were performed by the Coast Guard. What difference would the road make? In April 2013, Etta Kuzakin went into labor early. She went to King Cove’s clinic at 8 a.m. The Coast Guard finally arrived—six hours later. King Cove residents estimate the road would cut the average bad-weather travel time— twelve to fifteen hours from King Cove to Anchorage, including time spent waiting for a medevac—by two-thirds. “I was lucky,” says Kuzakin. “The Coast Guard was in the area. That is really what it was. They were in the area.” She says she owes the life of her daughter, Sunnie Rae, to the Coast Guard. But the Coasties are not responsible for the residents of King Cove. From its air station on Kodiak Island, 250 miles southwest of Anchorage, the closest Coast Guard unit—the largest in the Pacific—is responsible for monitoring the safety of thousands of commercial fishing boats, freighters, cruise ships, and other vessels that chug about the Bering Sea, Bristol Bay, the Gulf of Alaska, and Alaska’s Pacific coastline, an aerial search range of 4 million square miles. Says Gary Hennigh, King Cove city administrator: “When you’ve got a sick

Alaska Business Monthly | September 2015 www.akbizmag.com

person in a community, the Coast Guard can be four hundred, five hundred miles away. We’re very fortunate and thankful that they do make those stops, but that’s not their job.” Consider the danger that threatened thousands of unwitting sailors and fishermen on March 11, 2014, when the Coast Guard medevaced—in separate trips—King Cove fisherman Walter Wilson Jr., after a six-hundred-pound cod pot fell on him, dislocating both of his hips and fracturing his pelvis, and his infant son, Wyatt, who was suffering breathing difficulties. And keep in mind: The Coast Guard does this—or tries to—for every underserved town.

Jewell Failed

In rejecting King Cove’s proposed road, Secretary Jewell failed to address the risk posed not only to King Cove residents but also to medevac personnel and Coast Guard servicemen— and, by implication, to every sailor and fisherman for whom they are responsible. Instead, she touted potential alternatives to the road, such as the hovercraft that conveyed residents of King Cove to Cold Bay from 2007 to 2010. She did not mention, of course, that that hovercraft not only proved too costly for locals to operate (it lost $1 million a year) but also could not operate in waves higher than six feet or winds stronger than 30 mph—in other words, about 30 percent of the time it was needed. Additionally, every alternative to a road was dismissed in 2003—in a previous Interior Department environmental-impact study. But it is not just the Obama administration that has favored this life-threatening status quo. Delegations of King Cove residents have been traveling to the nation’s capital, at no small cost, since the 1980s, when Senators Ted Stevens and Frank Murkowski were championing King Cove’s cause in the Senate (their Senate champion now is Frank’s daughter, Lisa). Five presidential administrations have heard their petitions. In 2007 the King Cove delegation met with all 535 congressional offices. Etta Kuzakin, president of King Cove’s Agdaagux tribe, led the group to D.C. in May. The history of the King Cove road campaign is a depressing affair, a too-long chronicle of lousy deals in Congress, broken (if well-meaning) promises in Alaska, and that notorious instrument of bureaucratic delay, the study, whether the pro-road Department of Transportation reconnaissance study in the early 1990s, the pro-road 2003 study, or the most recent, anti-road study upon which Jewell claims her decision is based (and which Hennigh says is blatantly, demonstrably biased). But it is, at root, a story of the institutionalization of environmental fanaticism and of government betraying its purpose. Nothing demonstrates this better than the land-swap tactic by which King Cove has tried to negotiate a solution. The first land swap, proposed by King Cove, was written up as the King Cove Health and Safety Act of 1998. It directed the Department of the Interior to agree to trade www.akbizmag.com

the 206 acres in the Izembek Refuge necessary to build the road for 650 acres of land adjacent to the Kinzarof Lagoon (which borders the Refuge) controlled by the King Cove Corporation. (The King Cove Corporation is one of more than two hundred Alaska Native Village Corporations created by, and responsible for administering the provisions of, the Alaska Native Claims Settlement Act of 1971, which sought to resolve longstanding conflicts over land titles between the federal government and Alaska’s Native peoples.) The bill required that the road be built with minimal impact on wildlife, and that during seasons of high bird concentrations it be restricted to emergency use. King Cove agreed, and the bill passed the Senate easily. But then–interior secretary Bruce Babbitt announced that he would press Bill Clinton to veto the bill. In June 1998, Babbitt published an op-ed in the New York Times—“Road to Ruin”—in which he accused Murkowski and Alaska congressman Don Young of secretly working on behalf of Alaskan oil interests. The bill was never taken up in the House.

was unmoved. The Obama administration (like the Clinton administration before it) has no plan to be the administration that set that precedent. Yet neither the administration nor environmentalists will admit that the precedent, in effect if not in statute, already exists—and in the disputed territory itself. The Izembek National Wildlife Refuge, including its wilderness areas, is already crisscrossed by fifty miles of roads, left over from the days of rattling Army trucks (which, rest assured, took no great precautions on behalf of the eelgrass). Rather than relinquish those roads to the vicissitudes of nature, the federal government has chosen to maintain them —not to save the lives of local residents, but to serve the large populations of hunters who fly to the Refuge yearly to shoot game or waterfowl. In fact, the US Fish and Wildlife Service advertises Izembek’s “world-famous” hunting opportunities on its website; the eager sportsman can pursue moose, brown bear, and several species of duck. You know what else you can hunt in Izembek? The Pacific black brant.

Land Exchange Ideas

Alaska, by dint of distance, has always harbored a temperamental antipathy toward the powers-that-be in Washington. Alaskans have been frequently unwilling to trust that a far-off government is able to recognize, and pursue, their best interests. Alaska’s Native peoples, who hunted the land long before America’s legal apparatus was erected upon it but who have nonetheless been cut out of many land-designation decisions, have been even more distrustful. In its dealings with King Cove, the federal government has validated that skepticism. Whether under a Republican or a Democratic administration, the federal government has prioritized the preservation of wilderness over the protection of its citizens. And when the very people in danger sought help, the federal government used the opportunity to wring concessions from them. “The transcendent law of nature and of nature’s God,” James Madison wrote in Federalist 43, “declares that the safety and happiness of society are the objects at which all political institutions aim.” But in King Cove, Alaska, where federal authorities have put wildlife ahead of human life, neither safety nor peace of mind is to be found. “You pray every day,” says Kuzakin, “that nobody has a life-threatening injury.” In King Cove, when the clouds gather, so does fear. R

When Frank Murkowski traded his Senate seat for Alaska’s governor’s mansion in 2002, he renewed the idea of a land-exchange bill. In a 2005 meeting with Bush-administration interior secretary Gale Norton, Murkowski proposed 4,400 acres (of state-owned land this time) for those same 206 acres in the Izembek Refuge. The next year, when Norton resigned, Murkowski increased the offer nearly tenfold to entice her replacement, Dirk Kempthorne: 41,500 acres of state land. In late 2006, community leaders from King Cove held extended talks with US Fish and Wildlife Service director Dale Hall. (Fish and Wildlife is part of the Department of the Interior.) For Hall, 41,500 acres was still insufficient. The final agreement, hammered out over the next several months, would include not just the state’s sizable gift but King Cove Corporation’s original 650-acre offer—sweetened by an additional 12,500-plus Corporation-controlled acres. Three-quarters of the total would become new, federally designated “wilderness” in Izembek. It was hardly a fair exchange, says Hennigh. “But residents said, ‘If this is what it’s going to take. Because this is about our lives.’ Sometimes the world’s not as fair a place as you might think.” The terms of the exchange were formalized in the Omnibus Public Land Management Act of 2009. The wildly disproportionate agreement—in terms of raw acreage, the federal government would add to Izembek more than 200 times what it relinquished—was intended by the people of King Cove to be a show of good faith, a demonstration that they understood the gravity of what they were asking for: the first congressionally approved road through a federally designated wilderness. But Sally Jewell, given final authority to determine whether the land exchange (and so the proposed road) was “in the public interest,”

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RIGHT MOVES Alutiiq Museum

Dr. April Counceller was selected as the Executive Director of the Alutiiq Heritage Foundation’s Alutiiq Museum in Kodiak. She was an assistant professor of Alaska Native studies at Kodiak College for two years. Counceller Counceller earned her BA in Anthropology and American Civilization from Brown University and a master’s in Rural Development and PhD Interdisciplinary Program in Language Planning and Indigenous Knowledge Systems from the University of Alaska Fairbanks.

Petro Star, Inc.

Angela Speight joins Petro Star, Inc., a wholly owned subsidiary of Arctic Slope Regional Corporation, as General Counsel. Speight has experience in domestic and overseas exploration and production and refining and grad- Speight uated from Baylor University and the University of Texas School of Law.

Rasmuson Foundation

Jeff Baird was promoted to Program Officer at the Rasmuson Foundation. Before joining the foundation in 2011, Baird was a law clerk for the Alaska Court System in Anchorage and Bethel. He earned a law degree and BA in Baird journalism from the University of St. Thomas in Minnesota. Roy Agloinga joins the foundation as a Program Officer. He was COO and interim president and CEO at Norton Sound Health Corporation and was the Tribal Affairs Director at Nome-based nonprofit Kawarek. Agloinga Agloinga earned a BA in English from the University of Alaska Fairbanks.

Lewis Law Firm

Samantha Weinstein joins Lewis Law Firm as the Juneau firm representative. She graduated from

Compiled by Russ Slaten Lewis & Clark Law School and California Western School of Law. Weinstein interned at Trustees for Alaska, NOAA’s Office of General Counsel, and a year with the Alaska State Legislature. She is a trained mediator and has extensive experience in legal writing.

McDowell Group

McDowell Group added two members to its research and consulting team. Economist Stephanie Warpinski recently completed a master’s degree in Resource and Applied Economics at the University of Alaska Fairbanks and adds depth to the firm’s seafood and fisheries expertise. Warpinski Warpinski has worked for the World Trade Center Wisconsin and earned a bachelor’s in International Business and Economics from Marquette University. Research Analyst Dan Lesh has a broad background in renewable energy, tourism, commercial fisheries, and nonprofit development. Lesh served as a research analyst for the Alaska Legislature and has served on Lesh the Gustavus City Council. He earned a bachelor’s in Biology and Environmental Studies from Grinnell College in Iowa.

Bristol Bay Native Corporation

Mark D. Nelson joins Bristol Bay Native Corporation as the President and CEO of its newly-formed oilfield and industrial services holding company. He was the Senior Vice President of Oil and Gas at Quanta Services and spent five years at ASRC Energy Services as General Counsel and Chief Operating Officer. Nelson holds a law degree from Stanford University and a BA from the University of Alabama.

University of Alaska Southeast

Dr. Rick Caulfield was selected as the Chancellor at the University of Alaska Southeast. Caulfield has been a part of the University of Alaska for more than thirty years. He earned a PhD in Development Studies from the University of

East Anglia in the United Kingdom, a master’s in Education from the University of Alaska Fairbanks, and BA and BS degrees in Political Science and Natural Resources from the University of California, Berkeley.

Alyeska Pipeline Service Company

Rod Hanson was promoted to Senior Vice President of Operations and Maintenance at Alyeska Pipeline Company. The twenty-three-year Alyeska employee was the Vice President of System Integrity, Engineering Hanson and Projects. Hanson has worked at numerous jobsites, including along the pipeline in Valdez and in Fairbanks and Anchorage.

Coffman Engineers

Coffman Engineers promoted Will Veelman, SE, to Chairman; Dave Gardner, SE, to CEO; Dave Ruff, PE, to President; and company founder Dave Coffman, SE, moves into a new role as “Founder and Director” of the firm. Coffman founded Coffman Engineers in 1979 and has served as CEO and Chairman since its inception. Veelman has been with the firm for thirty-four years and is a Principal in the Anchorage office. Gardner joined Coffman Engineers in 1990 and has more than thirty-two years of experience as a civil/structural engineer. Ruff has been with Coffman Engineers for nearly twenty years and is a mechanical engineer with a largely industrial focus.

SouthEast Alaska Regional Health Consortium

Pediatrician Dr. Marna Schwartz joins SouthEast Alaska Regional Health Consortium to provide regular pediatric medical services at outpatient clinics in the smaller communities it serves. Schwartz earned her MD from Schwartz Harvard Medical School in Boston and completed her residency in pediatrics at the University of Washington Medical Center in Seattle. She earned her undergrad from

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RIGHT MOVES Williams College in Williamston, Massachusetts, and received her Post Baccalaureate Premedical Certificate from Bryn Mawr College, in Bryn Mawr, Pennsylvania.

Goldbelt, Inc.

Goldbelt, Inc. re-elected three incumbent board members, Richard A. Beasley, Ben Coronell, and Katherine Eldemar, to three year terms. Lori Grant was elected Board Chair while Randy Wanamaker was re-elected Vice Grant Chair. Kathy Polk was elected Corporate Secretary and Trudy Skan was elected Treasurer.

Anchorage Neighborhood Health Center

The Anchorage Neighborhood Health Center welcomes new senior leaders to its practice. Tammy G re en j o i ns as Executive Director. Green has more than twenty-five years of experience developing health and wellness programs in both clinical and community settings, primarily with Providence and the Green state of Alaska. Jenny Love, MD, was appointed Medical Director. Love is a graduate of the University of North Carolina School of Medicine and the Montana Family Practice Residency. She spent the last ten years with the Love Alaska Psychiatric Institute, most recently as the Medical Director.

Brewers Guild of Alaska

Ryan Makinster was named Executive Director of the Brewers Guild of Alaska. Makinster has more than sixteen years of nonprofit administration, public relations, communications, and government relations experience. Makinster Makinster earned a bachelor’s in communications from the Edward R. Murrow

Compiled by Russ Slaten School of Communications at Washington State University.

Northrim Bank

Northrim Bank hired Barbara Gill as VP, Commercial Loan Officer and promoted Jared Shary to Marketing and Sales Officer. Gill has nearly twenty-eight years of banking and lending experience. She has worked for Alaska Growth Capital and Evergreen Business Capital. Gill earned a bachelor’s in Business A d m i n i s t r a t i o n f r o m t h e Gill University of Maryland European Campus. Shary started at Northrim Bank in 2009 as a teller before moving to the Marketing Department in 2011. Shary holds a Bachelor’s of Business Administration in Marketing and Finance from the University of Alaska Anchorage. Shary

MatSu Business Alliance

Malori Norton joins the MatSu Business Alliance, Inc. as an intern focused on economic development and business/community relations projects. Norton is graduating with a bachelor’s in Economics from the University of Norton Alaska Anchorage in 2016.

GCI Industrial Telecom

Melissa Marshall, PMP, joins GCI Industrial Telecom as a LMR/P25/TDMA Radio Program Manager. Marshall has worked as a consultant, system designer, and project management with extensive experience implementing communication systems including P25 TDMA and CDMA, VHF, UHF, 700-800 MHz, SCADA, DAS, video teleconference, satellite, fiber optic, and microwave systems.

Kumin Associates

Rich Monahan joins the design team at Kumin Associates. Monahan brings more than thirty years of experience in producing design and con-

struction documents for a wide range of building types, with a strong focus on Department of Defense projects. Monahan is a Certified Document Technologist, with in-depth familiarity with REVIT, AutoCAD, SpecsIntact, and Masterworks.

AECOM

Dr. Elizabeth Bella joins AECOM’s Anchorage office as a Senior Ecologist. Bella has fifteen years of applied ecology and regulatory experience with public lands agencies and private industry. She studied invasion patterns Bella as a postdoctoral scholar with the Bio-Protection Research Centre at Lincoln University, NZ. She has a PhD in ecology from UC-Davis, an MS in forestry from the University of Montana, and a dual BS in forestry and biology from SUNY-ESF. Bryan Strong joins AECOM’s Anchorage office as a wetland biologist. Strong has ten years of field experience in Alaska as a wetland ecologist, hydrologist, and soil scientist. Strong graduated with a BS in Natural Strong Resource Science from the University of Maryland. Tux Seims joins AECOM’s Anchorage office as an engineer in training. Seims was an intern at URS Corporation in the summer of 2014, shortly before URS combined with AECOM. He returns to AECOM after receiving a bach- Seims elor’s degree in civil engineering from the University of Alaska Fairbanks.

First National Bank Alaska

Daryl Lowe joins the First National Bank Alaska Wasilla Branch as the Assistant Vice President and Loan Officer. Lowe started his banking career in 1995 and previously worked in Dillingham and Glennallen before moving to the Lowe Mat-Su. R

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CompassData

ompassData, a provider of high-quality global ground control data and aviation geospatial products, embarked on a mission to survey the summit of North America’s highest peak, Mount McKinley, also known as Denali. The most widely accepted elevation value of Denali is 20,320 feet; the CompassData Summit Survey Team obtained a more accurate elevation value using the latest survey equipment. CompassData was assisted in this endeavor with planning, permitting, and equipment by several government and commercial partners including USGS, University of Alaska Fairbanks, NOAA, National Park Service, and Dewberry. The survey data will be processed in conjunction with the University of Alaska Fairbanks.

Muldoon Farmers Market

he new Muldoon Farmers Market began this year in East Anchorage at Begich Middle School. The weekly Saturday gathering features local music, family friendly activities like face painting; local vendors promoting Alaskan grown, baked, and cooked foods; locally-made products; and area service organizations. The Muldoon Farmers Market is a not-for-profit, grassroots, all-volunteer effort to bring Alaskan grown and farmed produce to East Anchorage. The farmers market will continue through September.

National Mining Association

n analysis by SNL Metals & Mining recently released shows how delays in the US mine permitting process diminish

Compiled by Russ Slaten

the value of a minerals project—underscoring the urgent need for a streamlined permitting process. The study, commissioned by the National Mining Association, finds that a duplicative permitting process that can delay mining projects a decade or longer is hindering the United States’ ability to meet a rising demand for minerals. Mines in Arizona, Alaska, and Minnesota served as case studies for the research. In one example, Alaska’s Kensington mine suffered twenty years of mining delays, while the capital cost of building the mine increased by 49 percent.

a new category of service that offers a secure and private way to pay. When a credit or debit card is added with Apple Pay, the actual card numbers are not stored on the device or Apple servers. Instead, a unique Device Account Number is assigned, encrypted, and securely stored in the Secure Element on the device. Each transaction is authorized with a one-time unique dynamic security code, instead of using the security code from the back of the card. Apple Pay works with Alaska USA personal credit and debit cards and small business credit cards.

Iñuit Arctic Business Alliance

Silver Mountain Construction

epresentatives of Arctic Slope Regional Corporation, NANA Regional Corporation, and Bering Straits Native Corporation established the Iñuit Arctic Business Alliance with a mission to provide a unified voice, collective vision, guidelines, and venue for doing business in the Arctic. The alliance’s goals are to ensure that their respective regions directly benefit from activity and operations in the Alaska Arctic. Iñuit Arctic Business Alliance will provide the Arctic Alaska Iñuit a voice with respect to transportation, infrastructure, energy, and all facets of sustainable economic development and cultural stewardship. The organization is governed by a nine member board of directors, comprised of three individuals from each member corporation.

Alaska USA Federal Credit Union

laska USA Federal Credit Union now offers its members access to Apple Pay,

ilver Mountain Construction, a whollyowned subsidiary of Cook Inlet Region, Inc., is working to design, build, and install a remote helicopter refueling system and shelter for the US Coast Guard on Sitkinak Island just south of Kodiak. This facility consists of two structures that will directly support search and rescue missions in the region. The first is a sixteen-foot fuel system shed that houses fuel tanks, pumps, control systems, and a full spill containment deck. The second is a twenty-foot shelter that includes a generator and a large ATV garage, which doubles as a survival shelter, complete with a VSAT emergency telephone. The module also stores survival gear and supplies for flight crews and is equipped with an advanced solar array and a high-speed wind generator.

Koniag, Inc.

he Kodiak Brown Bear Center, owned and operated by Koniag, Inc., kicked off a new season of guided bear viewing

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

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INSIDE ALASKA BUSINESS with new corporate retreat services beginning this year. Located on Camp Island in the middle of the remote Karluk Lake, the Kodiak Brown Bear Center offers float plane rides, luxury cabins with full utilities, and safe guided bear viewing in an area without boardwalks or large groups of tourists. Koniag, Inc. opened the center in 2012 in an effort to capitalize on its exclusive access to the highest density of brown bears on Kodiak Island.

Within the Wild Adventure Company

ithin The Wild Adventure Company’s Tutka Bay Lodge and Winterlake Lodge joined National Geographic Society’s Unique Lodges of the World program, a prestigious collection of boutique hotels in remarkable destinations throughout the globe. Winterlake Lodge and Tutka Bay Lodge are two of only three US lodges out of thirty-eight properties in the Unique Lodges of the World program. Each lodge demonstrates a commitment to authenticity, excellence, and sustainability, while offering outstanding guest experiences that support the protection of cultural and natural heritage.

Chugach Alaska Corporation

hugach Alaska Corporation acquired a substantial portion of All American Oilfield Associates LLC and its whollyowned subsidiary All American Oilfield Equipment LLC. Headquartered in Kenai, All American provides oil and gas services in the Cook Inlet region and other areas of Alaska. While All American became part

Compiled by Russ Slaten

of the Chugach organization, the company continues to operate out of its Kenai headquarters, and remains under the company’s same leadership team. Chugach also acquired a minority equity position in Geneva Woods Pharmacy. Geneva Woods has been the leading provider of integrated pharmaceutical care for patients in Alaska for more than thirty years, expanding more recently outside the state. Chugach’s investment is intended to facilitate additional growth by helping the company acquire and integrate quality long-term care and specialty pharmacies across the country.

Millrock Resources, Inc.

illrock Resources, Inc. entered into an Option to Joint Venture Agreement on the Alaska Peninsula copper-gold project with First Quantum Minerals Ltd. A drilling program consisting of eight holes was authorized by First Quantum Minerals to further assess the subsurface resources. Millrock is managing the drilling program of the Dry Creek prospect and the MDB prospect started in July. Drilling is carried out on surface lands owned by Far West, Inc. and Chignik Lagoon Native Corporation, two Alaska Native corporations with which Millrock has made surface access agreements. Bristol Bay Native Corporation owns the subsurface mineral rights; Millrock has an exploration agreement with an option to lease the mineral rights.

NovaCopper, Inc.

ovaCopper, Inc. has advanced the Arctic deposit towards a pre-feasibility study, expected to be carried out over a two to three year period. NovaCopper

has approved a $5.5 million budget for the 2015 field season to complete 2,500 meters of in-fill and geotechnical drill programs during July and August. Preparations were underway to make the Bornite camp fully operational by mid-July with drilling activities expected to be completed by September. This field season’s work program is designed to improve the confidence level of the resource model with the goal of recategorizing the in-pit inferred resources to measured and indicated. NovaCopper also plans to advance assessment work at Bornite, specifically to evaluate potential synergies between the Arctic and Bornite Projects.

Drifters Fish

ishermen Michael and Nelly Hand, the owners of Drifters Fish in Cordova, are expanding its community-supported fishery program for the Pacific Northwest. Drifters Fish has three current communitysupported fishery locations in Washington state—Seattle, Bellingham, and Anacortes. The Hands are currently expanding to additional Pacific Northwest locations as demand and requests increase for sustainable, wild Alaska salmon. Drifters Fish will deliver frozen sockeye orders directly to customer pick up locations in the Northwest.

Calista Corporation

alista Corporation certified results of the 2015 Annual Meeting of Shareholders. A total of 57.9 percent of the total issued and outstanding shares of Common Stock voted. Shareholders passed what Calista considers the most significant resolution in the company’s history: to enroll descendants and missed enrollees as share-

Your Project, Our Responsibility. 24/7 Service

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

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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 September 2015 | Alaska Business Monthly

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INSIDE ALASKA BUSINESS holders. A majority of voting shares cast totaling 411,786 favored the resolution. Calista will spend nearly two years developing the necessary forms and then implement the enrollment process. Calista estimates all eligible applicants will be enrolled between January and June of 2017.

Alaska Communications

laska Communications will connect healthcare providers in rural clinics with their counterparts at the Juneau Alliance for Mental Health, Inc. and Sitka Community Hospital in Juneau and Sitka using telemedicine devices. Alaska Communications is now a reseller of these devices including electronic stethoscopes, dermatology scopes, and medical carts with HD cameras for video consultations, which allow healthcare providers to diagnose patient symptoms from hundreds of miles away in real time over Alaska Communications’ network.

Torque Performance Motorsports

lexander Dublin, Alaska Native automotive detailer and paint correction specialist of Torque Performance Motorsports in North Pole, joins the 2015 Air Force One Detailing Team out of hundreds of detailers nationwide. He was chosen to be part of a thirty-man detailing team that meets annually at Seattle’s Museum of Flight to detail and preserve the first Air Force One presidential jet. The team restored the paint and preserve the shine on the SAM (Special Air Missions) 970, a Boeing 707-120 that served as a flying Oval Office for four US Presidents including Eisenhower, Kennedy, Johnson, and Nixon.

Compiled by Russ Slaten

ConocoPhillips Alaska

onocoPhillips Alaska is in the initial stages of marketing its North Cook Inlet Unit and interest in Beluga River Unit. While historically significant to the company’s investment in Alaska, the North Cook Inlet and Beluga River units are mature fields that are no longer considered core to Alaska operations, but are important assets that offer good opportunities for the right buyer. Development of a data room for the sale was expected to open in early August.

Arctic Slope Regional Corporation

rctic Slope Regional Corporation acquired Arctic Pipe Inspection, Inc. headquartered in Houston, Texas. Arctic Pipe Inspection was founded more than forty years ago by Royce Roberts to provide non-destructive testing of oil country tubular goods. It currently operates facilities in Houston and Deadhorse providing electromagnetic, ultrasonic, weld line, and mill inspection services to oil and gas producers and service providers. Concurrent with the retirement of Royce Roberts, Jim Hildebrandt, Arctic Pipe Inspection’s longtime vice president of operations, assumed the role of president and general manager of the new Arctic Slope Regional Corporation wholly-owned subsidiary.

Cook Inlet Housing Authority

aswell Court is the newest addition to the Cook Inlet Housing Authority Centennial Village community that makes it possible for seniors to live affordably and

independently. The new space offers thirtyfour rental units, providing much needed affordable senior housing to address the growing housing gridlock in Anchorage. Every unit is fully accessible with sight and sound equipment that can be adjusted to resident needs. The building offers easy access to the Centennial Center campus and adjacent Eklutna Estates, which offers such amenities as a game room, library, and community kitchen.

Alaska Airlines

laska Airlines is enhancing its unique partner portfolio in Mileage Plan by adding China-based carrier Hainan Airlines. Hainan operates a modern fleet to over ninety destinations throughout the world. From Seattle, Hainan flies nonstop to Beijing and Shanghai and offers an extensive network throughout China, including several top destinations for Pacific Northwest business travelers. Members of Alaska Airlines Mileage Plan can earn miles on Hainan Airlines and redeem miles on Hainan later in 2015.

ASTAC

rctic Slope Telephone Association Cooperative, Inc. (ASTAC) received a $1,418,502 grant from the US Department of Agriculture to continue increasing its capacity to provide customers with access to high speed broadband. This award will provide the Point Hope service area with the ability to construct a broadband network to provide individuals and businesses with high-speed Internet service. It will also prepare the network for an international undersea fiber connection project currently planned for construction within the next two years, targeted for 2016 to 2017. R

• General Contracting • Marine Infrastructure • Design Build

Dutch Harbor - Unalaska, Alaska

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AGENDA September Alaska Writers Guild/ SCBIW Annual Conference

September 19—Crowne Plaza Hotel, Anchorage: Two full days of breakouts, keynotes, and panels, plus optional intensives, manuscript reviews, a juried illustrator portfolio display, and of course a Saturday children’s literature rack in association with the Society of Children’s Book Writers and Illustrators. alaskawritersguild.com

Compiled By Tasha Anderson Alaska Business Monthly’s Top 49ers Luncheon

September 20-25—Fairbanks: Scientific objectives of the proposed CCEMD include magnetic storms, auroral and magnetospheric substorms, dayside and tail magnetic reconnections, and new results of the MMS mission. chapman.agu.org/magnetospheric

September 24-25—Hilton Anchorage, Anchorage: Meet more than two hundred human resources professionals, office managers and administrators, directors, and adult educators representing both public and private industry. This event will bring professionals from around the state to learn more about their responsibilities as HR Professionals. alaska.shrm.org

University Economic Development Association Summit

September 27-30—Hilton Anchorage: As the pinnacle of economic development, universities provide the resources, talent, and innovation necessary to drive the modern creative economy. The summit will gather more than two hundred individuals from the industry, including college and university presidents and deans, state and federal grant administrators, workforce development directors, and university and college faculty and students. universityeda.org/annual-summit/annualsummit-2015

2015 Arctic Energy Summit

September 28-30—Carlson Center, Fairbanks: The theme is “Security and Affordability for a Resilient North.” The 2015 Summit Tracks are: prudent exploration and production of oil and gas; renewable energy development and energy efficiency; power and heat in remote communities. arcticenergysummit.institutenorth.org

Alaska Fire Conference

September 28-October 3—Seward: Includes training, workshops, lectures, and a firefighter competition. The 2015 theme is “Passing the Torch.” alaskafireconference.com

www.akbizmag.com

IEDC Annual Conference

September 21-24—Anchorage: The Congress includes critical market assessments, the latest information from key industry players, and information on key issues impacting Alaska’s energy future. alaskaoilandgascongress.com

Alaska State HR Conference

September 30-October 3—Cordova: This year’s conference theme is “Joining Forces: Museums, Communities & Collaboration.” It will explore how partnerships bolster advocacy efforts, inform exhibit development, and complement outreach activities. museumsalaska.org

Alaska Federation of Natives Annual Convention

October 4-7—Anchorage: The annual conference of the International Economic Development Council. Join economic developers from around the world to discuss the most important issues in economic development today: “Foundational Transformations: Creating Future Growth & Prosperity.” iedcevents.org/AnnualConference

October 1-10—Land’s End, Homer: Celebrate the 40th Anniversary of the Alaska Recreation & Park Association as well as participate in the organization’s annual conference. alaskarpa.org

November

October 12-14—Anchorage: Events include keynote speakers and training sessions. alaskahousing-homeless.org/conference

October 12-16—Anchorage: This is the annual conference of the Alaska Association of Harbormasters & Port Administrators. alaskaharbors.org

Alaska Chamber Policy Forum and Conference

October 13-14—Fairbanks: Open to the public, the Alaska Chamber’s Annual Conference is the state’s premier business conference. Traditionally held in the fall, the Conference draws 200-225 attendees

November 11-14—AGC of Alaska is a non-profit construction trade association dedicated to improving the professional standards of the construction industry. agcak.org

AAMC Conference

AAHPA Annual Conference

November 8-10—Hilton Anchorage, Anchorage: This conference features nationally renowned speakers from the peer movement, as well as local presenters who offer workshops about innovative projects and inspiring models of recovery and wellness for all. akpeersupport.org

Associated General Contractors of Alaska Annual Conference

October 8-10— Anchorage: A continuing medical education conference put on by the Alaska Academy of Physician Assistants, providing up to 25 CMEs. akapa.org

Alaska Coalition on Housing and Homelessness Conference

October 26-29—Dena’ina Center, Anchorage: The conference provides a mix of education and networking, along with more than seventy exhibit booths. It also provides ample opportunities to learn about the latest best practices, innovations, and technology concerning utilities. nwppa.org

Alaska Peer Partnership Conference

All-Alaska Medical Conference

October 23-25—Sitka: Biennial conference for teachers of math and science of all grade levels. This year’s theme is “Navigating the Tides of Change.” amsc2015.org

NWPPA/APA Alaska Electric Utility Conference

October 5-8—Juneau: The 2015 “In Your Wildest Dreams” ATIA convention is for Alaska’s tourism industry leaders with delegates from tour operators, wholesalers, Alaska vendors, destination marketing organizations, and elected officials. alaskatia.org

Alaska Recreation & Park Association Conference

October 22-24—BP Energy Center, Anchorage: The National Association of Social Workers Alaska Chapter is an organization for professional social workers with close to 500 members in Alaska and 150,000 members in the Unites States and abroad. naswak.org/nasw-ak-conference

Alaska Math and Science Conference

Alaska Travel Industry Association Convention & Trade Show

October 15-17—Dena’ina Center, Anchorage: Annual gathering of Alaska Native peoples to discuss current news and events on a state, national, and international level. nativefederation.org

NASW Alaska Chapter Conference

October

Alaska Oil & Gas Congress

Museums Alaska Annual Conference

Chapman Conference on Magnetospheric Dynamics

September 30—Dena’ina Center, Anchorage: Come honor the top ranked Alaska companies by revenue at our annual luncheon. Get tickets online, last year’s event sold out early. akbizmag.com

and features keynote speakers, panel discussions, and breakout sessions on issues of statewide concern to Alaska business. alaskachamber.com

November 15-16—Anchorage: The Alaska Association of Municipal Clerks is an organization that focuses on providing educational training and mentoring and professional growth opportunities. alaskaclerks.org

Annual Local Government Conference

November 16-20—Anchorage: The Alaska Municipal League is a voluntary, nonprofit, nonpartisan, statewide organization of 162 cities, boroughs, and unified municipalities, representing over 97 percent of Alaska’s residents. akml.org

September 2015 | Alaska Business Monthly

137

ALASKA THIS MONTH By Tasha Anderson

TRAVEL

Great Bathtub Race

just something I conceived of for having a little fun yet having something that was sort of challenging. There were a few old bathtubs around and it was just an event that grew.” Teams are required to have five members, including a captain who is required to ride in the tub, which must have water in it from the start and finish with at least ten gallons officially, though Rasmussen says “we rarely do any measuring at the end because those who push bathtubs down Front Street have already exhausted whatever they’ve got in them.” The route is approximately three hundred yards, and contestants often dress up for the race. The prize for winning is a trophy of Miss Piggy and Kermit the Frog sitting on the tub, which the winning team will “hold onto for a year until it’s passed on. There are individual trophies for the winning team for the captain, the bathmat guard, the soap guard, the washcloth guard, they all get trophies,” Rasmussen says. He says the event is a lot of fun and, of the approximately four thousand residents of Nome, a quarter will come to witness the race. “I usually make sure I have water balloons in the tub so I can get rid of my water by throwing it away; it helps make the people active in their watching,” Rasmussen laughs. The race takes place every year on Labor Day, which is September 7 this year. It begins at “high noon.” visitnomealaska.com R

or nearly forty years, the residents of Nome have turned out to witness brave souls racing bathtubs down Nome’s Main Street from the Post Office to City Hall. Leo Rasmussen was the originator of the first event and still organizes it today. “It was

Nome’s Bathtub Race begins at high noon every Labor Day.

Alaskans serving Alaskans. Oxford is proud to be the only gold refiner and bullion dealer to maintain two locations in Alaska for more than 30 years. BUY : SELL : TRADE • ANCHORAGE • FAIRBANKS • NOME • NEW YORK

1.800.693.6740 www.oxfordmetals.com 138

Alaska Business Monthly | September 2015 www.akbizmag.com

ALASKA THIS MONTH By Tasha Anderson

DINING

Salad Box

Modern Boutique.

Russ Slaten for Alaska Business Monthly

CLASSIC CHARM.

Exquisitely restored in the heart of downtown, the Historic Anchorage Hotel offers superior service and luxury accommodations in a boutique setting – at a price you can afford. Its remodeled banquet spaces can accommodate 150.

330 E Street, Anchorage, Alaska 99501 | 907-272-4553 • 800-544-0988

www.HistoricAnchorageHotel.com

Mike Levshakoff, owner of Salad Box.

HIS012 ABM Print Ad_V7.indd 1

nchorage’s business community has a new, healthy, convenient delivery option for lunch. Officially launched in May, Salad Box is operated by owner Mike Levshakoff with some assistance from his family. “I really wanted to be something that kind of jumps to mind for people when they’re thinking about lunch: ‘What can I order and how can I stay healthy while doing it?’” Currently Salad Box offers four salad options, all of which come with a seasoned chicken breast: blue pear with romaine, sliced pears or apples, blue cheese crumbles, pecans, and blue cheese vinaigrette; apple walnut with mixed greens, feta cheese, candied walnuts, honey-mustard vinaigrette, dried cranberries, and sliced apples; a traditional Caesar with romaine, fresh shaved parmesan, and a house-made Caesar dressing; and raspberry parade salad of fresh spinach, raspberries, dried cranberries, feta, sliced almonds, and a raspberry vinaigrette. Salads can be ordered online or over the phone and will be delivered anywhere in Midtown or Downtown Anchorage. Hours are 9 a.m. to 4 p.m., Monday through Friday. Levshakoff prepares the salads every morning, ensuring that they’re fresh. He plans to add new options to the menu regularly, sticking to the theme of lunches that are fresh, healthy, and convenient, a service he felt was lacking when he worked in an office. “A good 40 to 50 percent of the time I was sitting at the desk and deadlines were looming and there was a stack of work, and you can’t just run out the door and buy something, you have to make that phone call to have something brought to you. There was nothing that just jumped out with that kind of single mission to bring something healthy to you.” Fortunately, now there is. squareup.com/market/aksaladbox R www.akbizmag.com

September 2015 | Alaska Business Monthly

8/30/12 1:38 PM

139

ALASKA THIS MONTH

CO M I N G I N OC TOB E R

Compiled by Tasha Anderson

Don’t miss our #1 issue of the year.

ENTERTAINMENT

2015

s ’ a lask

p o T rs

Courtesy of First City Players and Fitzwater Photography

Divas/Divos Competition

e 9 4

The Top 49 businesses owned and operated by Alaskans and ranked by gross revenue R E S E RV E YO U R TA B L E O R S E AT F O R T H E AWA R D S L U N C H E O N I F YO U R C O M PA N Y I N T E N D S T O AT T E N D . (Event sells out early for tables) Wednesday, Sept 30, 2015 11:30 am — 1:00 pm Dena’ina Civic & Convention Center Anchorage, Alaska

Make reservations early at akbizmag.com or call 907-257-2901

Table of 10 - $490, Individual Seat - $49 (Space is limited. Event will sell-out)

akbizmag.com 140

From left to right: Dale Curtis, Wyatt Anderson, and Lynn Caldwell, Divas/Divos Competition in Ketchikan 2014.

he Divas/Divos Competition is designed to entertain: “Those who are vying for the crown can do that by singing or dancing or juggling or jumping through hoops,” says Elizabeth Nelson, Artistic Director for First City Players. The competition is an annual fundraiser for First City Players, a community theater in Ketchikan. “We do about ten individual events a year, everything from a four-week summer youth camp to a full-on musical to original playwriting,” Nelson says. Competition starts long before the event with contestants selling votes, which cost two dollars each. “Our motto is vote early and vote often,” Nelson laughs. “It all leads up to a big, dynamic evening of performance,” for a crowd of approximately three hundred people. “The winner gets a crown and the glory of wearing it for a year everywhere they want,” she says. While competition is fierce, Nelson says, it’s also fairly nonserious. “Mostly it ends up being a party with some really good entertainment.” The performers are accompanied by a band comprised of local musicians lead by Austin Hayes, one of the Divas/ Divos producers. Tickets are thirty dollars, which purchases admittance, finger foods, and one glass of wine or beer. Nelson says the competition raises “anywhere from $20,000 to $40,000.” While vote sales can start months in advance, who wins on the night of the show can be a close thing. “At the event it can get a little crazy, especially if you’ve got people who are really close; they’re two or ten dollars apart—then people really push for their favorite to win, which is the best of all possible worlds for us,” she says. The Divas/Divos competition takes place this year Saturday, September 26, at the Ted Ferry Civic Center in Ketchikan. firstcityplayers.org R

Alaska Business Monthly | September 2015 www.akbizmag.com

EVENTS CALENDAR ANCHORAGE

12-13 Great Alaska Quilt Show Join the Anchorage Log Cabin Quilters for the Great Alaska Quilt Show. Large bed-sized, traditional, modern, applique, machine, and hand quilted quilts, as well as wearable quilt garments made by members, will be displayed. ConocoPhillips Atrium, 10 a.m. to 4 p.m. anchoragelogcabinquilters.blogspot.com 13 Fall Wedding Show This show showcases local wedding-related products and services and will feature fashion shows, door prizes, and various vendors. Alaska Native Heritage Center, Noon to 5 p.m. alaskabride.com/wedding_show.html 18-20 Alaska’s World of Log & Timber Frame Home Show This show is an opportunity for people to learn all about log homes, log cabins, and timber frame construction. Dena’ina Center: Friday 2 p.m. to 7 p.m.; Saturday 10 a.m. to 5 p.m.; Sunday 10 a.m. to 4 p.m. dammstraightproductions.com 19-20 Blues Train Ride the rail to Seward and take in the sweet sounds of The Diamonds. The round-trip Anchorage to Seward train adventure treats guests to Turnagain Arm before heading deep into the lush alpine regions of the Chugach National Forest on its way to the shores of Resurrection Bay. Includes round-trip, open seating rail fare; drink tickets; BBQ; one night’s hotel accommodations; and a whole lotta blues. alaskarailroad.com 25-27 Alaska Women’s Show Vendors celebrate everything that makes Alaska women unique. The show features financial seminars, fashion shows, jewelry, healthcare information, and more. Sullivan Arena. auroraproductions.net/women.html 26 Anchorage Symphony Orchestra Opening Night The opening night for the 2015-2016 season will include performances of Sinfonietta by Janacek; Concerto for a Piano in A minor, Op. 16 by Grieg, featuring pianist Joyce Lang; and Pines of Rome by Respighi, all conducted by Randall Craig Fleischer. Alaska Center for the Performing Arts, 8 p.m. anchoragesymphony.org 26-27 Senshi-Con Festivities range from cosplay shows and games to anime viewings and an artists’ gallery. Egan Center. senshicon.com

FAIRBANKS

12 Far North Fiddle Fest Benefit Concert This is a fund raising event for The Greater Fairbanks Community Hospital Foundation. All proceeds from the concert will be donated to the FMH Hospice program. David Concert Hall, 7 p.m. fairbankshospitalfoundation.com

GIRDWOOD

12 Alyeska Climbathon The Alyeska Climbathon is an endurance event where participants will walk, hike, and run up the steep North Face Trail of Mount Alyeska and ride the Tram down as many times as possible from 9 a.m. to 7 p.m. This event is a fundraiser for women’s cancer. Alyeska Tramway, 9 a.m. to 7 p.m. alyeskaresort.com 9/25-10/10 Oktoberfest at Alyeska Resort Celebrate German traditions, the changing of the seasons, and, of course, beer. This event spans over three weekends and will feature authentic Bavarian fare and festivities including full polka band. Open to all ages and free admission. Alyeska Resort. alyeskaresort.com

HOMER

26 Taste of Homer This is a tasting event sponsored by the fine food and beverage estabwww.akbizmag.com

Compiled by Tasha Anderson lishments of Homer, highlighting Homer’s culinary community. homeralaska.org

JUNEAU

19 Discover Eaglecrest Day Get acquainted with the mountain during this fun day of activities with something for everyone in the family. Events include free lift rides up the Porcupine Chair, Discovery Southeast disc golf, Fatmo’s Alpine barbeque, the Alaska Zipline beer and wine garden, and the Juneau Ski Club bake sale and registration. Eaglecrest Ski Area, 10 a.m. to 3:30 p.m. juneau.org

KENAI

27 Kenai River Marathon This includes three running events, the Kenai River Marathon, the Half Marathon, and the 5K. Proceeds generated from the Kenai River Marathon will go to the Kenai Community Foundation to support the development of parks and recreation in and around Kenai. Kenai Visitor Center. roadracerunner.com

NOME

7 Nome Rotary Labor Day Duck Race Hundreds of numbered rubber ducks are poured into the Snake River. The ducks are dumped into the river about 200 yards upstream from the bridge that crosses from the airport road over toward the port. First place is $1,000; second place earns $750; third place is $500. Snake River by Bering Air, 2 p.m. visitnomealaska.com

PETERSBURG

10-13 Rainforest Festival Events include the Rainforest half marathon, Annabelle Baker Memorial Art Show, basket making, homemade wine tasting, poetry reading, beaded mushrooms, and a Stikine River berries and mushrooms day trip, as well as various lectures and talks and events for children such as an insect walk and fish-print t-shirts. tongassrainforestfestival.org

SITKA

3-7 Mudball Classic Softball Tournament Organized by the Sitka Softball Association, the tournament is open to men’s, women’s, and coed teams. sitka.org

VALDEZ

19 Blues Cruise This is a fundraiser for the Valdez Arts Council taking place on the M/V Valdez Spirit that includes live music, desserts, and appetizers. 6 p.m. to 9 p.m. valdezalaska.org

WASILLA

11-27 Jane Eyre This classic novel by Charlotte Bronte was adapted by Robert Johanson for the stage and directed by Mariah Schachle. The adult Jane Eyre recalls the disturbing events of her childhood and young adulthood. Jane eventually finds her own personal epiphany through honesty, courage, and sacrifice. Valley Performing Arts, Fridays and Saturdays 7 p.m.; Sundays 2 p.m. valleyperformingarts.org 24 International Fly Fishing Film Festival Filmmakers from around the world have produced award-winning short and long features about fly fishing, and the IF4 brings them all together in one memorable evening. Glenn Massay Theater at Mat-Su College, 7:30 p.m. glennmassaytheater.com September 2015 | Alaska Business Monthly

141

ALASKA TRENDS

By Amy Miller

Alaska’s Arctic Position Brings Opportunity, Challenges

everal developments in recent months are bringing more attention to the potential and infrastructure needs of Alaska’s Arctic. In January 2015, President Obama issued an executive order for enhancing coordination of national efforts with respect to the Arctic. In late April, the United States began its two-year term as chair of the eight-nation Arctic Council. These events and others bring a renewed focus in this country on the Arctic and its importance to global trade, resource development, the environment, and indigenous cultures. In June of this year, the Congressional Research Service published a report called “Changes in the Arctic: Background and Issues for Congress” that includes a comprehensive cataloging of the infrastructure and other assets in the region as well as the needs to support future development. The report highlights a number of issues relevant to Alaska. The report defines the Arctic as the region bordered by the United States, Canada, Russia, Norway, and Denmark, of which Greenland is a territory. One of the most striking notes in the report is that the US Geological Survey estimates that 30 percent of the world’s undiscovered natural gas and 13 percent of the world’s undiscovered oil may be found north of the Arctic Circle. Specifically, the US Department of the Interior’s Bureau of Ocean Energy Management estimates Alaska portions of the Outer Continental Shelf contain undiscovered, technically recoverable resources of roughly 27 billion barrels of oil and 131 trillion cubic feet of natural gas.

Beyond resources, another great promise in the Arctic is that of transcontinental shipping. With climate change rapidly impacting the region, scientists anticipate that what is now the polar ice cap will be ice-free in late summers as early as the 2030s. This opens up opportunities for shortening major trade routes by thousands of miles and is already drawing cruise ships and other tourism to the region. While these opportunities are promising, there are challenges as well. The United States currently has limited capabilities when it comes to at-sea emergency response. With increased vessel traffic, the need for US Coast Guard air stations and deep-water ports is clear. As it stands, the closest Coast Guard air station is in Kodiak, and the nearest deep-draft port is in Dutch Harbor, both of which are more than a thousand miles from Barrow. Response times would be slow and potentially life threatening. Several events in the coming months will bring international focus to Alaska’s place in the Arctic, including the Polar Law Symposium in Fairbanks (September 23 to 24), and Anchorage (September 25 to 26); the Arctic Energy Summit in Fairbanks (September 28 to 30); a meeting of the Arctic Council’s Sustainable Development Working Group in Fairbanks (October 1 to 2); and the Arctic Council’s biannual Senior Arctic Officials meeting in Anchorage (October 20 to 22). R Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development.

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Alaska Business Monthly | September 2015 www.akbizmag.com

ALASKA TRENDS

By Amy Miller Arctic Sea Ice Loss

 Record low extents of Arctic sea ice in 2012 and 2007 have focused scientific and policy attention on climate changes in the high north and to the implications of projected ice-free seasons in the Arctic within decades. The Arctic has been projected by several scientists to be ice-free in most late summers as soon as the 2030s.  The melting of Arctic ice raises the possibility of saving several thousands of miles and several days of sailing between major trading blocs.

Source: Trans-Arctic shipping routes (Breaking the Ice, by Milosz Reterski, Council on Foreign Affairs)

The four Arctic coastal states other than the United States—Canada, Russia, Norway, and Denmark (of which Greenland is a territory).

Arctic Safety

 The Coast Guard has no designated air stations north of Kodiak, which is almost 1,000 miles from the northernmost point of land along the Alaska coast in Point Barrow. Although some of the communities have airstrips capable of landing cargo planes, no roads connect these communities. Vessel infrastructure is also limited. The nearest major port is in the Aleutian Islands, approximately 1,300 miles from Point Barrow.  Given the location of current U.S. Coast Guard operating bases, it could take Coast Guard aircraft several hours, and Coast Guard cutters days or even weeks, to reach a ship or a downed aircraft in distress in Arctic waters.

www.akbizmag.com

September 2015 | Alaska Business Monthly

143

http://www.fas.org/sgp/crs/misc/R41153.pdf

Arctic Energy Resources

 The USGS stated that the “extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth.” In the report, the USGS estimates that 90 billion barrels of oil, nearly 1,700 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids may remain to be discovered in the Arctic (including both U.S. and international resources north of the Arctic Circle). An article published in Science magazine indicated that 30% of the world’s undiscovered natural gas and 13% of the world’s undiscovered oil may be found north of the Arctic Circle.  Currently, areas offshore of Alaska encompassing more than 1 billion acres and more than 6,000 miles of coastline—more coastline than in the rest of the United States combined—are considered to have potential for energy development. These Arctic regions include the Beaufort and Chukchi Seas, the Bering Sea, Cook Inlet, and the Gulf of Alaska.  In terms of U.S. resources specifically, DOI’s Bureau of Ocean Energy Management (BOEM) estimated in 2015 that the Alaska portions of the U.S. outer continental shelf (OCS) contain undiscovered, technically recoverable resources of approximately 27 billion barrels of oil and 131 trillion cubic feet of natural gas (although not all of these resources may be economically viable to recover).

ALASKA TRENDS

Indicator

GENERAL Personal Income—Alaska Personal Income—United States Consumer Prices—Anchorage Consumer Prices—United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectorial Distribution—Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Information Telecommunications Financial Activities Professional & Business Svcs Educational & Health Services Healthcare Leisure & Hospitality Accommodation Food Svcs & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Unemployment Rate Alaska Anchorage & Mat-Su Fairbanks 144

By Amy Miller Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

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

1stQ15 1stQ15 1stH15 1stH15

39,836 15,100,011 217.11 236.27

39,218 14,941,804 216.83 237.09

37,534 14,360,913 213.91 233.55

6.13% 5.15% 1.50% 1.16%

Number Filed Number Filed Number Filed

May May May

36 28 6

39 31 5

45 37 5

-25.00% -32.14% 16.67%

Thousands Thousands Thousands Thousands Thousands

May May May May May

342.23 192.18 45.29 36.24 36.71

337.02 190.91 43.91 33.68 35.14

343.96 192.57 45.21 36.67 37.23

-0.50% -0.20% 0.18% -1.17% -1.40%

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

May May May May May May May May May May May May May May May May May May May May May May May May May May May May May May May May May

343.60 47.20 296.40 17.70 17.40 14.80 18.40 11.10 7.00 69.90 6.60 38.70 6.30 9.90 24.60 6.40 6.20 4.30 11.80 29.50 48.30 34.70 35.20 9.50 20.60 12.10 83.40 15.10 25.90 7.40 42.40 24.00 3.80

333.50 46.80 286.70 17.60 17.30 14.90 16.60 12.60 8.50 64.50 6.40 37.10 6.00 9.70 21.00 6.00 6.10 4.20 11.90 28.60 48.30 34.60 31.50 8.10 19.20 11.90 83.90 14.50 26.90 8.60 42.50 24.30 3.60

339.3 46.8 292.5 18.2 17.6 14.4 16.4 12.2 8.5 68.3 6.6 38.0 6.7 10.2 23.7 6.5 6.2 4.1 11.7 30.1 47.1 33.6 33.9 7.5 21.4 11.6 83.6 15.4 26.1 7.6 42.1 23.6 3.9

1.27% 0.85% 1.33% -2.75% -1.14% 2.78% 12.20% -9.02% -17.65% 2.34% 0.00% 1.84% -5.97% -2.94% 3.80% -1.54% 0.00% 4.88% 0.85% -1.99% 2.55% 3.27% 3.83% 26.67% -3.74% 4.31% -0.24% -1.95% -0.77% -2.63% 0.71% 1.69% -2.56%

Thousands Thousands Thousands Thousands Thousands

May May May May May

366.33 203.76 47.84 38.60 39.60

362.30 203.08 46.53 36.29 38.23

369.05 204.43 47.96 39.20 40.14

-0.74% -0.33% -0.25% -1.53% -1.35%

Percent Percent Percent

May May May

6.6 5.7 5.3

7.0 6.0 5.6

6.8 5.8 5.7

-2.94% -1.72% -7.02%

Alaska Business Monthly | September 2015 www.akbizmag.com

ALASKA TRENDS

Indicator

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

By Amy Miller Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

Percent Percent Percent

May May May

6.1 7.3 5.5

7.2 8.1 5.4

6.5 7.2 6.3

-6.15% 1.39% -12.70%

Millions of Barrels Billions of Cubic Ft. $ per Barrel

May May May

14.7 8.4 64.37

15.3 7.9 58.49

16.24 8.21 108.06

-9.48% 2.31% -40.43%

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

May May May May May

10 889 1181.88 16.80 2.29

12 976 1198.08 16.32 2.29

10 1859 1288.22 19.36 2.06

0.00% -52.18% -8.25% -13.22% 11.17%

54.80 18.56 18.75

57.93 19.14 19.87

58.1 30.3 25.8

-5.68% -38.75% -27.33%

Millions of $ Millions of $ Millions of $ Total Deeds Total Deeds

May April

819 *

939 229

724*GeoNorth 233

29.70% *

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

Thousands Thousands

May May

472.50 92.20

352.92 66.70

438.84 87.43

7.67% 5.46%

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 $

May May May May May May May

54638.00 55433.00 324.20 327.80 -75.50 -8.20 -49.70

54273.30 55353.10 333.90 367.50 -21.60 152.40 592.40

51692.70 52384.30 417.60 828.70 105.40 79.10 328.70

5.70% 5.82% -22.37% -60.44% -171.63% -110.37% -115.12%

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 $

1stQ15 1stQ15 1stQ15 1stQ15 1stQ15 1stQ15 1stQ15 1stQ15 1stQ15

5,913.90 222.57 151.28 2,866.23 19.95 5,109.57 4,334.37 1,779.18 2,555.19

3,994.74 207.48 154.35 2,313.63 10.57 3,506.48 3,340.30 1,000.84 2,327.83

5,477.64 347.62 139.05 2,517.48 18.63 4,731.67 4,070.91 1,612.83 2,458.08

7.96% -35.97% 8.80% 13.85% 7.09% 7.99% 6.47% 10.31% 3.95%

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

May May May May May

120.67 1.22 0.65 0.90 6.10

119.49 1.24 0.67 0.93 6.11

101.85 1.09 0.59 0.73 6.17

18.48% 11.93% 10.17% 23.29% -1.13%

Notes: 1. Source of Anchorage deeds of trust (GeoNorth) is cited in the data field. 2. Banking data has been updated to include Alaska State Banks and Alaska’s sole federally chartered, Alaska-based bank, First National Bank Alaska 3. *Deeds of trust data for Fairbanks in May was unavailable as of press time. www.akbizmag.com

September 2015 | Alaska Business Monthly

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ADVERTISERS INDEX AE Solutions Alaska LLC...........................110 Ahtna Inc......................................................... 57 Alaska Dreams Inc..................................... 101 Alaska Housing Finance Corp..................117 Alaska Logistics.............................................91 Alaska Miners Assoc................................... 44 Alaska Spine Institute .................................18 Alaska Traffic Company..............................89 Alaska Procurement Technical Assistance Center...............40 Alaska USA FCU............................................27 Alaska USA Insurance Brokers..................29 Afognak Leasing LLC..................................147 American Fast Freight .................................. 3 American Marine/Penco...........................142 Anchorage Sand & Gravel .......................124 Arctic Foundations ......................................81 Arctic Office Products................................38 ASRC Energy..................................................98 Avis Rent-A-Car .............................................17 BDO..................................................................62 Beacon Media & Marketing...................... 48 Bering Straits Native Corp.........................82 Bettisworth North........................................ 37 Bowhead Transport Company..................92 Boyer Towing ................................................95 Brand Energy & Infrastructure ................ 41 Bristol Alliance of Companies ..................93

146

C & R Pipe and Steel Inc. ...........................49 Calista Corp./ STG........................................67 Capitol Glass/Northern Windows.........122 Carlile Transportation Systems..................11 Catalyst Marine Engineering.....................43 Chris Arend Photography.........................146 Chugach Alaska Corp..................................63 Construction Machinery Industrial ..........2 Cook Inlet Housing Authority..................119 Cook Inlet Tug & Barge Inc.........................13 Cruz Construction Inc.............................. 107 Davis Block & Concrete............................122 Davis Constructors & Engineers Inc..... 127 Davis Wright Tremaine LLP........................51 Delta Leasing LLC......................................... 33 Delta Rental Services................................124 Design Alaska .............................................128 Donlin Gold................................................... 64 Doyon Limited............................................... 53 EDC Inc. ........................................................126 Everts Air Cargo - Tatonduk Outfitters....97 Fairweather LLC............................................79 First National Bank Alaska........................... 5 Foss Maritime................................................94 GCI .......................................................110, 148 Granite Construction..................................113 Hawk Consultants........................................85 Helimax Aviation...........................................45

Historic Anchorage Hotel......................... 139 Ilisagvik College.............................................39 Island Air Express.......................................138 Judy Patrick Photography ........................ 48 Landye Bennett Blumstein LLP................32 Lynden Inc........................................................15 Magtec Energy........................................... 103 Matson Inc...................................................... 21 N C Machinery ...........................................129 NANA Regional Corp...................................65 NCB ................................................................. 61 NMS Lodging.................................................49 North Slope Telecom...................................14 Northern Air Cargo............................132, 133 Northrim Bank............................................... 19 Olgoonik Corp...............................................86 Olympic Tug & Barge...................................95 Oxford Assaying & Refining Inc.............138 Pacific Alaska Freightways.........................59 Pacific Coast Maritime ...............................95 Pacific Pile & Marine ................134, 135, 136 Parker Smith & Feek....................................69 PDC Inc. Engineers......................................115 PenAir..............................................................83 Personnel Plus ............................................ 139 PND Engineers Inc.......................................85 Procomm Alaska LLC....................................13 Ravn Alaska.....................................................31

Ritchie Brothers Auctioneers..................128 RSA Engineering Inc...................................128 Rural CAP-Rural Alaska Community Action Plan Inc................. 61 Samson Tug & Barge ...................................94 Shoreside Petroleum..................................111 Shred Alaska ................................................. 30 Span Alaska Transportation Inc.............106 Spenard Builders Supply A Probuild Company............................ 118 Stellar Designs Inc........................................85 T. Rowe Price..................................................23 The Medallion Foundation Inc.................40 The Plans Room...........................................126 Think Office .................................................20 Total Safety.....................................................97 Totem Ocean Trailer Express ..................90 TRIODETIC ..................................................123 Tulalip Casino Resort................................... 77 UIC Bowhead-Crowley LLC....................109 UIC Commercial Services ....................... 103 Ukpeagvik Inupiat Corporation...............80 United Way of Alaska..................................28 Vigor Alaska....................................................87 Visit Anchorage ............................................68 Washington Crane & Hoist........................25 Waste Management.....................................99 Watterson Construction...........................125 WHPacific Inc...............................................40

Alaska Business Monthly | September 2015 www.akbizmag.com

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