August 2011 - Alaska Business Monthly by Alaska Business

August 2011

$3.95

a healthcare “ Managing enterprise as diverse as ours in bush Alaska can be quite a challenge. Thanks to our team at Parker, Smith & Feek who provide exceptional expertise supportive of our unique business model.

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AUGUST 2011 TA B L E O F C O N T E N T S

D E PA R T M E N T S From the Editor . . . . . . . . . . . . . . 6 Inside Alaska Business . . . . . . . . 8 Right Moves . . . . . . . . . . . . . . . . 34 Market Squares . . . . . . . . . . . . . 59 Alaska Trends . . . . . . . . . . . . . . 103 Ad Index . . . . . . . . . . . . . . . . . . 106

ABOUT THE COVER First National Bank Alaska sponsors the “Alaska’s economy is like a three-legged stool” campaign. The bank’s Vice Chair, Betsy Lawer, shares what it was like in Alaska before one of those legs, the petroleum industry, became a major force, and wonders if Alaska may be headed back to those challenging economic times. Three-legged stool image courtesy of First National Bank Alaska. Betsy Lawer photo ©2011 Chris Arend. ARTICLES

R E G U L A R F E AT U R E S

TECHNOLOGY Coral Cumming Howe . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Smartphones Becoming More Common as Business Tools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Owner, Alaska Photobooth Co. By Peg Stomierowski

VIEW FROM THE TOP REGIONAL REVIEW

Alaska and Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Sharing a mutually beneficial relationship. By Tracy Barbour

LEGAL SPEAK

Due Process and Websites . . . . . . . . . . . . . . . . . . . . . 29 Fair play and substantial justice with Internet business. By Jeff Waller

ALASKA THIS MONTH

State Fairs Rev Up Across Alaska for Summer Finale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Haines, Ninilchik, Fairbanks, Kodiak and Palmer delight all ages. By Nancy Pounds

ASSOCIATIONS

Associated Builders and Contractors of Alaska . . . . 36 Championing the ideals of free enterprise. By Tracy Barbour

TOWNS IN TRANSITION

Anchorage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Better, smarter, safer. By Heidi Bohi

ARTICLES

Check out the latest and greatest. By Tracy Barbour

ENERGY Aleutian Islands A-Team . . . . . . . . . . . . . . . . . . . . . . . 57 Leading the way in alternative energy planning. By Vanessa Orr

TRANSPORTATION Railway-Port Connections . . . . . . . . . . . . . . . . . . . . . . 61 Rising importance for state economy. By Rindi White

HEALTH & MEDICINE Men’s Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 More prone to hearing damage on the job. By Deborah Jeanne Sergeant

GENERAL OP-ED Seeking Champions for Alaska’s Future . . . . . . . . . . 69 Whose economic theory will guide Alaska – Keynes or Hayek? By Rachel Petro BUILDING ALASKA SPECIAL SECTION Construction Women of the Year. . . . . . . . . . . . . . . . . . . . . . . . . . 71 Alaska NAWIC Awards Three in 2011. By Stephanie Jaeger UAA Construction Management Program . . . . . . . . . . . . . . . . . . 74

ECONOMY OP-ED Hard-hatters secure jobs before graduation. By Tracy Kalytiak Alaska Needs a Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 It needs it now. By Betsy Lawer

ECONOMY Q & A Frank Talk with Bruce McCain . . . . . . . . . . . . . . . . . . . 18 Tackle problems head on; save our economy. By Debbie Cutler

U.S. Army Corps of Engineers Directs Federal Defense Dollars in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Spending includes military construction, civil works and environmental remediation. By Nicole A. Bonham Colby Increase in Number of Construction Bids in Alaska in 2011 . . . 81

Alaska companies lead the way. By Stephanie Jaeger TECHNOLOGY Workplace Identity Theft . . . . . . . . . . . . . . . . . . . . . . . 30 Protecting employee information. By Deborah Jeanne Sergeant

ENVIRONMENTAL & RECYCLING SPECIAL SECTION

OIL & GAS Pebble Partnership Collects Environmental Data . . . . . . . . . . . . 83 Alaska Oilfields Drive Industry Changes . . . . . . . . . . 40 ‘Best and brightest’ scientists conduct stringent work. Search for solutions fuels engines of innovation. By Mike Bradner

By Vanessa Orr

OIL & GAS Pebble’s Naysayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Oilfield Service Companies . . . . . . . . . . . . . . . . . . . . . 46 Groups abound, but will they prevail? By Tracy Kalytiak Production tax said to be jobs-killer. By Mike Bradner

Alaska’s Environmental Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

As competition grows, companies looking to find their niche. ENERGY Ameresco, Alaska Energy Authority Work Together . . 51 By Vanessa Orr Rural areas benefit from energy efficiency programs. By Vanessa Orr

Environmental & Recycling Directory . . . . . . . . . . . . . . . . . . . . . 95

www.akbizmag.com • Alaska Business Monthly • August 2011

EDITORIAL STAFF Managing Editor Associate Editor Art Director Art Production Photo Consultant Contributing Photographers

Debbie Cutler Susan Harrington Candy Johnson Linda Shogren Chris Arend Judy Patrick Azimuth Adventure Photography

BUSINESS STAFF President Vice President Sales & Mktg. Account Mgr. Account Mgr. Traffic Coordinator Accountant

Jim Martin Charles Bell Anne Campbell Bill Morris Ann Doss Mary Schreckenghost

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503 (907) 276-4373 Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial e-mail: editor@akbizmag.com Advertising e-mail: materials@akbizmag.com Pacific Northwest Advertising Sales 1-800-770-4373 ALASKA BUSINESS PUBLISHING CO., INC. ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., P.O. Box 241288, Anchorage, Alaska 99524; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2011, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues $3.95 each; $4.95 for October. Back issues $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, P.O. Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change. Manuscripts: Send query letter or manuscripts 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 Monthly is prohibited. Address requests for specific permission to the Editor, Alaska Business Monthly. Online: Alaska Business Monthly is available online from Data Courier and online from Thomson Gale. Microfilm: Alaska Business Monthly is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

THE

DITOR

Good News for Southcentral

Volume 27, Number 8 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

RO M

Apache shines like the midnight sun

s I was thinking about what I was going to write about this month, a press release from U.S. Sen. Mark Begich landed in my inbox titled “TAPS Low Flow Study Provides Wakeup Call for Alaska Industry.” Basically, we have 10 years left of the trans-Alaska oil pipeline, based on the current rate of decline. “With about 80 percent of State revenue and some of Alaska’s best private-sector jobs riding on the oil pipeline, its continued operation is obviously a top priority for our state,” Begich stated on June 29. “If we don’t act quickly to get more oil in the pipeline, that could go away in just a decade. That’s why I’m aggressively pushing for approval of more oil and gas development on federal lands and in federal waters.” While doom and gloom may be the voice of the North Slope, there is optimism in other parts of the state. Of note is an ABM article posted on our website June 28 titled “Significant Natural Gas Resources Remain to Be Discovered in Cook Inlet, Alaska.”

GREAT NEWS FOR COOK INLET Cook Inlet, it appears, holds far more natural gas reserves than previously predicted – about 19 trillion cubic feet of recoverable gas and 600 million undiscovered barrels of oil and 46 million barrels of natural gas liquids, according to the U.S. Geological Survey. And lease sales in the area jumped considerably, with 110 bids, 91 of which came from Apache Alaska Corp. Even though we’ve written about Apache as a newcomer to the state, I Googled the company to see their most recent press releases, and instead of getting its website, more exciting news: “Apache Corp. has eyes for Alaska,” “Apache Alaska Corp. Snatches Up Lion’s Share of Cook Inlet Leases,”

“Apache Big Winner,” “Apache Dominates Largest Cook Inlet Sales in Years,” and so on and so on. With 75 percent of our nation saying the U.S. is not doing enough to develop its gas and oil resources (according to the Rasmusseen Reports), Apache glows like a lantern, shining through Alaska’s dark winter night. Or perhaps, a better analogy for this time of the year, the midnight sun, penetrating all things dreary. Apache Corp. is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom, North Sea, Australia and Argentina.

‘URGENCY’ KEY Its mission statement “is to grow a profitable global exploration and production company in a safe and environmentally responsible manner for the long-term benefit of our shareholders.” Among its core values is “to drive to succeed with a sense of urgency.” My hope is Apache grows big in Alaska, investing in the state, Cook Inlet and in its people. My hope is not unlike U.S. Sen. Lisa Murkowski, who wrote. “Perhaps the best news is that this new estimate (by the U.S. Geological Survey) reflects major reserves in State waters and State lands. That means Alaska residents can expect the jobs, revenues and energy security benefits from these resources within just a few years, compared to the endless delays that plague development in federally held areas.” Let’s not forget about the North Slope, about offshore, about development in ANWR and the NPR-A. But let’s celebrate what we do have now: Cook Inlet. — Debbie Cutler Managing Editor

www.akbizmag.com • Alaska Business Monthly • August 2011

VIEW

FROM THE

TOP

COMPILED BY PEG STOMIEROWSKI

Coral Cumming Howe Owner

Alaska Photobooth Co.

everal years ago, the laughter began when Alaska Photobooth Co. rolled their first booth into an autumn wedding reception at the Native Heritage Center. Coral Howe, who grew up in Nome and Anchorage, continues to expand her Fairbanks-based business, inviting Alaskans to get silly at special events across the state, including at the Anchorage Museum’s Andy Warhol exhibit. While photo booths in a vending machine format have been around since the 1930s, flat-rate rentals are joining a diversity of entertainment venues. NO K KIDDING: IDDI ID DING DI NG:: AAss a sm NG small-business allllal l-bu l-b busi sine ine ness ss ddevelopment evel elop loppmentt sspe specialist p ciial pe alilis ist fo ist for th for thee Un U Uni University niv iversi iver sity ity ooff Alaska Fairbanks, I’d witnessed how important creativity and passion are to success. I wanted a business that was fun, fit my quirky personality, involved my family and made a difference to Alaskans. It takes only moments in the booth before wild laughter spills out from behind the curtain, since it’s impossible for folks not to make a funny face or kiss their sweethearts. LOVE LO L VE AT AT FIRST FIRS FI RST RS T SIGHT: SIGH SI GHT: GH T: IInn 20 2007 2007, 07,, I wa 07 was as flflip flipping ippi ip ping pi ngg tthrough hrou hr ough ou gh a m magazine aggaz a in inee wh when en I saw an old chemical photo booth being used for wedding entertainment. I loved the look of this old relic, and spent almost a year researching the idea. The deciding factor was a report showing that during tough economies, the entertainment industry grows. ALL AL A L AGES: AGES AG ES:: I eexp ES expected xppec ecte tedd to sser te serve erve er ve pprivate ririva vate va te eeve events, vent ve nts, nt s, w wed weddings eddi ed ding di nggs an andd sc scho school hool ho ol ffunctions. unct un ctio ct ions io ns.. I ns knew children, teens and young adults would love it, and suspected boomer parents would be sentimental about the notion as well. I found that no matter what age, everyone loves getting into the booth. Our motto: Rare moments and wild laughter ... capture the fun! ICEBREAKER: ICEB IIC EBRE EB REAK RE AKER AK ER:: TThe ER he eext extent xten xt entt of w en wid wider ider id er iinterest nter nt eres er estt – a fr es from om pprofessional rofe ro fess fe ssio ss iona io nall as na asso associations, soci so ciat ci atio at ions io ns,, ns nonprofits and small businesses to corporations that sponsor our booths for fundraisers and gala balls – came as something of a surprise. These booths become icebreakers at management meetings and trade shows, creating enduring promotional content that can be hung on refrigerator doors or office memo boards. Discounts are available to nonprofits or corporations sponsoring nonprofit events, to schools and the military. Special pricing is also available for multi-day events.

THE TH E REAL REAL DEAL: DEA EAL L: I m L: made adee th ad thee de deci decision cisi ci sion si o eearly on a ly oonn to ooperate ar p raate w pe with itithh several seve se veeraal st styl styles yles yl es of high-quality, eco-friendly, solid-frame, digital photo booths – some made in Alaska with a rustic flare. Old-style chemical booths weren’t feasible weather-wise or environmentally. The iconic “real photobooths” are so much more than curtains, and the firm is not a franchise. Our rental agreement includes set-up and delivery, services of an on-site trained event specialist, unlimited photos with custom graphic, high-resolution copies, fun props and for weddings, a scrapbook. Climb in, pull the curtain, smile and instantly enjoy your photos. EXCEEDING EXCE EX E CEED CE EDIN ED ING IN G EX EXPE EXPECTATIONS: PECT PE CTAT CT ATIO AT IONS IO NS:: AAPC NS PC w was as ggoing oing oi ngg ttoo be aann ad addi addition dititition di o ttoo my on small event planning business, Occasions by Coral & Chloë, which I operate with my daughter. It’s grown faster than imagined. In the first half of 2011, more than half of our new bookings came from referrals, and we are up 78 percent from last year. This year we plan to expand our use of social media. HOMEGROWN: HOME HO H MEGR ME GROW GR OWN: OW N: II’m ’m tthrilled hrililille hr ledd to see le see our our u reach rea rea each ch grow groow with with my my dynamic dyna dy naami micc support supp su ppor pp ortt or team, our new warehouse on Arctic Boulevard, booths soon on the Kenai Peninsula and in Juneau. And I’m planning to have a photo booth in Nome to capture the 2012 Iditarod ending! ❑ www.akbizmag.com • Alaska Business Monthly • August 2011 7 Coral Cumming Howe

INSIDE ALASKA BUSINESS UK Ambassador Tours Alaska, Speaks to Future Economic Growth

ir Nigel Sheinwald made his first trip to Alaska in June where he delivered an address titled “Britain, the U.S., and Alaska in the 21st Century” as part of the Summer Ambassador Series held by the Alaska World Affairs Council and the World Trade Centre of Alaska. His remarks highlighted the similarities of character and values, as well as the long-standing trade relationship between Alaska and the United Kingdom, and he discussed future energy and manufacturing opportunities. While economic growth is important, he argued, it must not be undertaken at the expense of the environment or respect for communities. The Ambassador toured UK-based firm Anglo-American’s proposed Pebble Project. Sir Nigel was briefed on the extensive health and environmental safety precautions already in place and met with local leaders to discuss how the site will fit in with the community. During his weeklong trip, the Ambassador also visited BP’s facilities on the North Slope. Before leaving he met in Anchorage with Gov. Sean Parnell and Lt. Gov. Mead Treadwell, and the new Chancellor of the University of Alaska Anchorage, Tom Case. He also had discussions at the Renewable Energy Alaska Project, which aims to facilitate the increased development of renewable energy in Alaska, on UK-Alaska collaboration on moving to a clean energy economy.

COMPILED BY NANCY POUNDS

Research Buoys Collect Sea Data

niversity of Alaska Fairbanks scientists installed two research buoys to help study how climate change may be affecting the pH level of northern seas. The first buoy was installed in April at the mouth of Resurrection Bay. It was assembled at UAF’s Seward Marine Center. A second buoy was to be deployed in the Bering Sea in May. A third buoy will be placed in the Chukchi Sea in October. The data collected by the buoys will be sent to scientists in real time via satellite. “This is the first dedicated ocean acidification mooring to be deployed in a high-latitude coastal sea,” said Jeremy Mathis, principal investigator for the project and a University of Alaska Fairbanks assistant professor of chemical oceanography. “Other moorings have been deployed with ocean acidification sensors, but this is the first complete package in Alaska.” Ocean acidification is the term used to describe increasing acidity in the world’s oceans. Scientists estimate the ocean is 25 percent more acidic today than it was 300 years ago. According to Mathis, the coastal seas around Alaska are more susceptible to ocean acidification because of unique circulation patterns and colder temperatures. The buoy will also help scientists determine how seawater pH changes throughout the seasons. “These buoys are really going to provide some new insights and understanding for ocean acidification in the Pacific-Arctic region,” Mathis said.

GCI to Open Mountain View Store

eneral Communication Inc. plans to open a retail store this year in Mountain View at Park Place Village, 4211 Mountain View Drive. The move continues community revitalization efforts by Cook Inlet Housing Authority and Anchorage Community Land Trust. Cook Inlet Housing Authority’s Park Place Village features retail space on the first floor and residential housing on the second and third floors. The new store will offer telecommunications services and products about 7,000 households within walking distance of Park Place Village. GCI is the second largest Alaska business to move in to the area. Credit Union 1 opened a branch in Mountain View in June 2010. “GCI is a community partner and we are excited about establishing a presence in Mountain View,” said Paul Landes, GCI’s senior vice president, consumer services. “GCI supports the vision for a revitalized and vibrant Mountain View and we are going to do our part to promote that vision.”

Nugen’s Ranch Moves to Point MacKenzie

ugen’s Ranch, a long-term drug and alcohol rehabilitation facility, relocated to a new facility at Point MacKenzie, 26731 W. Point Mackenzie Road, in June. Operators of Nugen’s Ranch had spent 30 years at its Wasilla location, but they decided to move due to a recent road expansion and growth of Wasilla. The new facility is

www.akbizmag.com • Alaska Business Monthly • August 2011

INSIDE ALASKA BUSINESS located 30 miles from the old one. The land was purchased in 2002. Several people and groups provided funds and advocacy efforts for building the new facility including Alaska Republican Rep. Don Young, the Mat-Su Health Foundation, the Rasmuson Foundation, Tim and Mary Anderson, former Gov. Tony Knowles, Donald McClintock, Steve Fishback, the Denali Commission and The Alaska Mental Health Trust Authority.

Group Supports Alaska Native Health Programs

he Healthy Alaska Natives Foundation donated about $97,500 to several Alaska Native Tribal Health Consortium programs. The foundation is ANTHC’s fundraising branch, which provides funds to support health care improvements and programs that promote good health and prevention. The foundation primarily raises funds at the annual Raven Ball, a black-tie benefit event. The largest grant, more than $40,000, was awarded to Alaska Native Medical Center’s pediatrics unit to renovate interior space, develop a literacy program and support an art therapy program. Other grants included: $10,000 to Behavioral Health to develop a suicide prevention media campaign; $8,000 to Dental Health Aide Therapy Program to purchase iPads for training; $7,800 to Behavioral Health to produce a documentary on suicide in Western Alaska and various other grants to fund training, equipment purchases and other programs.

CRW Engineering Earns National Ranking

RW Engineering Group LLC winning its fourth consecutive national CENews Best Firms to Work For award. For 2010, the firm was also honored for best recruiting and retention plan among national civil engineering firms. CENews includes only 35 firms in its Best Firms to Work For list, although hundreds of firms submit applications. The award is assigned base on answers to a corporate profile survey and anonymous employee surveys. The award is based on workplace practices, employee benefits, employee retention rates, company culture, recruiting, employee recognition, compensation and professional development.

Corps Honors Bristol Construction

ristol Construction Services LLC received a U.S. Army Corps of Engineers Wilmington District award for work on the military ocean terminal at Sunny Point project. The Certificate of Merit honors work done in fiscal year 2009-2010. The company also received a Corps award for work on the project in fiscal year 2008-2009. Bristol Construction is part of Bristol Alliance of Companies, owned by Bristol Bay Native Corp. The Southport, N.C., project called for improvements at the nation’s largest ammunition freight-handling facility and the Department of Defense’s primary East Coast deep-water port. The secure facility distributes military

weapons and munitions to troops deployed worldwide. Bristol Construction was commended for its focus on safety. Work included developing a plan that accounted for the presence of highly explosive cargo, ensuring a safe working environment for Army personnel, Bristol employees and subcontractors. This year, Bristol cleared more than 70 acres to make way for additional improvements.

Work Begins on New Anchorage Fire Station

onstruction began this spring on the new $6 million East Anchorage Fire Station No. 6. The state Legislature approved funding of the legislative grant. The new fire station, at 1301 Patterson St., is scheduled to open next year. The current fire station, built in 1970, was designed for that era’s smaller fire engines. Current emergency vehicles there fit with little extra room. One engine and one medic unit are stationed at Fire Station No. 6, but the new facility will provide room for additional equipment. In 2008 Fire Station No. 6 answered 3,685 calls for emergency assistance.

Business Competition Targets Bristol Bay Entrepreneurs

laska Growth Capital has launched its first Bristol Bay Marketplace Business Idea Competition for residents of some Bristol Bay communities. Winners could land funds to start or expand Bristol Bay-based businesses. Pebbled

www.akbizmag.com • Alaska Business Monthly • August 2011

INSIDE ALASKA BUSINESS Limited Partnership and the Pebble Fund are sponsoring the competition. Several awards of up to $50,000 will be awarded. Entries are due by 5 p.m. Sept. 2. The competition is based on Alaska Growth Capital’s North Slope Marketplace competition and the Alaska Federation of Natives’ Alaska Marketplace. The Business Ideas Competition aims to encourage economic development and sustainable entrepreneurship in rural Alaska. Winners will be invited to attend a workshop in October offering training in business accounting, taxes, marketing and technology. More information is available at www.bristolbaymarket place.com.

Firm Exports Clearly Alaskan Water to Asia

laska Brands Group LLC of Anchorage has begun exporting its Clearly Alaskan bottled water to Taipei and Hong Kong. The company is operating at the former Matanuska Maid building in Midtown Anchorage, bottling water from Eklutna glacier. The company aims to expand distribution to other markets in Asia and Europe later this year. Gregory Galik started Alaska Brands Group 10 years ago and has helped several Alaska companies pursue domestic and international markets. Clearly Alaskan officials tout the product’s purity and lack processing required compared to other bottled water. Clearly Alaskan water is charcoalfiltered and ozone purified for taste. The brand’s bottles are biodegradable

and can be recycled. Alaska Brands Group already markets Clearly Arctic bottled water for the Alaska market and Alaska Crystal Glacier water for the hotel and restaurant industry.

Doyon Moves to New Anchorage Office

oyon Emerald has relocated its office to 11500 C St., Suite 150 in Anchorage. The new office building also houses other members of the Doyon Ltd. family of companies including Doyon Ltd.’s Anchorage office, Doyon Associated Inc., Doyon Drilling Inc. and Doyon Universal Services. Company officials say the new facility offers room for expected employee additions.

Bare Escentuals Opens First Alaska Store

are Escentuals cosmetics retailer opened its first Alaska location at the Anchorage 5th Avenue mall in June. The 1,097-square-foot store is on the second floor. Bare Escentuals developed mineral-based cosmetics with no added chemicals. The company offers bareMinerals makeup and skincare products. Bare Escentuals operates more than 230 company-owned stores nationwide. “We’re thrilled to welcome Bare Escentuals to Anchorage 5th Avenue. They are a brand our shoppers are excited about,” said Maegan Kaser-Lee, director of mall marketing at Anchorage 5th Avenue.

Businesses Support Junior Achievement

everal Alaska businesses donated $10,000 or more each to Junior Achievement in Alaska for the 20102011 school year. Major corporate donors are AT&T, Alaska Communications, BP Exploration (Alaska) Inc., ConocoPhillips Alaska Inc., ExxonMobil, First National Bank Alaska, Fred Meyer, General Communication Inc., Key Bank, NANA Development Corp. and Wells Fargo. “These Alaska businesses continue to demonstrate a commitment to the future of Alaska business by supporting a program that helps young people own their economic success,” said Flora Teo, Junior Achievement’s Alaska president. “Their investment enables JA to help Alaska ‘Grow our own Business Leaders.’” Junior Achievement in Alaska is supported by several other businesses, more than 350 volunteers in 43 communities to reach 8,000 Alaska schoolchildren with information on financial responsibility.

Lodge Owners Open Homer Store

ithin the Wild Adventure Co., operated by Alaska chef Kristen Dixon and her family, opened a retail store in Homer this spring. The company, which operates three Alaska wilderness lodges, also added a new building – a World War II boat – at its Cooking School at Tutka Bay. RusticWild opened May 5. ❑

www.akbizmag.com • Alaska Business Monthly • August 2011

ECONOMY

Alaska Needs a Plan It needs it now BY BETSY LAWER

“W

Every time I hear that statement, I shake my head. I was born and raised in Alaska before there was oil. It’s easy to romanticize about what it was like then. I grew up running through the sprinkler in our yard, seeing how many sisters I could convince to cram themselves into a parrot cage (and then locking it…), or loading into Pop’s “Weasel” (track vehicle) to ride down to the Westchester swamp – catching sticklebacks and tadpoles in the summer and playing “Crack the Whip” on flying saucers in the winter. Pop was like the Pied Piper of the neighborhood. Kids ran out of their houses, pulling on jackets as they clambered onto the “Weasel” when he drove past. Not only was there no Internet, video games or cell phones, there was no TV yet in Alaska. We learned early how to entertain ourselves. In the summer, the neighborhood challenge was to see how many bees you could catch in a jar at the same time, without getting stung. I’m proud to have held the record for the neighborhood, and don’t remember ever getting stung. I loved animals and was mad about horses. While other girls were reading Nancy Drew, I was reading every Black Stallion book in the series. Pop thought a horse was too expensive to maintain in Alaska, so I never had one. But one morning I woke to discover a burro tethered to my bedroom window!

ROMANCE VS. REALITY? Like I said, it’s easy to romanticize that time in Alaska, before oil. But life was hard.

e were fine before oil and we’ll be just fine again without oil.”

Betsy Lawer • Vice Chair • First National Bank Alaska

Our economy was pretty simple – small, thin and seasonal. Total employment, averaged over the year, was about 90,000 jobs. There were few

Alaska businesses providing services to our natural resource-producing industries or to households. Alaskans were poor, relatively speaking – the average

www.akbizmag.com • Alaska Business Monthly • August 2011

First National Bank Alaska, from Institute of Social and Economic Research (ISER), UAA data

Cash injected into the economy by different Alaska industries.

Photo courtesy of Lawer family

household income was 10 percent to 20 percent below the U.S. average, all while the cost of living was significantly higher than the rest of the country. Fishing and construction associated with federal spending meant there were lots of private jobs in the summer, but the economy virtually shut down when winter arrived. Half the number of people worked in the winter as in the summer. I used to think of it as the lights going out for the winter – which they often did, literally, in those days. A change in the dollars circulating in Alaska had an overly dramatic effect. Incremental amounts of money injected into or taken out of such a small economy had an immediate and powerful impact. The times were truly “boom or bust.” The State had little money to spend on social services, infrastructure or education. We paid income tax and there were no Permanent Fund Dividends. Most social service support was furnished by volunteers. There was no tourism industry to speak of, little or no electricity or running water in rural Alaska and, due to

economies of scale, food and building materials shipped up north were very expensive. Most everything came from the “States.”

A BIG CHANGE Our economy has changed since then, to say the least. Economic growth since statehood has been sensational when measured by raw numbers – jobs, personal income and population. Employment has increased by more than 300 percent from 90,000 to 380,000 jobs. Income, in constant dollars, has increased even more rapidly, from $3 billion to $28 billion, and population has tripled. What accounts for all this growth? Federal spending plays an important role, of course, contributing to about one-third of those 380,000 jobs. Natural resource extraction industries, such as mining, seafood, agriculture and timber, along with the tourism and air cargo industry, make up another third. Those are two legs of Alaska’s economic three-legged stool. So what’s the third leg of the stool? It’s no surprise to anyone who’s lived

here for any length of time that the petroleum industry is a major economic driver in our state, and the critical third leg to our economic stool Barely a decade after statehood, with the discovery of the Prudhoe Bay oil field in 1968, and the next year, when the North Slope lease sale brought in nearly a billion dollars (and remember, this was when a billion was real money) the state’s economic future – and my life, personally – was changed forever.

SCHOOL LIFE, CHANGE FOR BETTER I was working in the bank that summer of ’69 and heading off to Duke University as a junior transfer student in the fall, accepted as an Interior Design major. I remember looking out the window from my desk at Fourth Avenue as the lease sale began. It had been a bright sunny morning. High clouds came in as the sale started and the sunlight dimmed. No one was out on the street – they were all inside, listening to the lease sale on the radio. It felt like a scene out of the old black and white Twilight Zone TV show. First National assisted with the lease sale, along with its correspondent banking partner, Bank of America. At that time, the physical check needed to be presented for deposit. With the size of that Prudhoe Bay check, we determined, by hiring a private plane and flying the check overnight to the Bank of America office in New York City for deposit, the State of Alaska could get an extra day’s interest and more than pay for the cost of the plane.

BENEFITTING ALASKA I was fortunate to be able to ride that plane back East with the Prudhoe Bay check. I was overwhelmed by this historic discovery and how it could so dramatically impact so many Alaskans and the financial well-being of our Great

When Lawer’s father, Dan Cuddy, brought out the Weasel, neighborhood kids all wanted a ride. www.akbizmag.com • Alaska Business Monthly • August 2011

something the world wants to buy. For most states that means manufacturing something; for Alaska it means natural resources, mostly petroleum. Over the course of a few years, massive amounts of dollars flooded into our economy thanks to the oil flowing down the line.

Photo courtesy of Lawer family

GENERAL FUND OIL-DRIVEN

Wetting a line in the summer of 1961.

Land. It made clear to me at a very fundamental level that economics isn’t just about numbers. When the jet landed in New York City, I boarded a flight to Durham, North Carolina, walked into the Admissions Office at Duke and promptly changed my major to Economics. I’ve never looked back. That lease sale permanently imprinted on me how changes in economics and the economy can radically change the future of a state and its people. At the time of the sale, the economy only supported 37,786 wage and salary jobs in Anchorage – 86,565 in the entire state of Alaska. Soon our lives changed dramatically. We had yearround jobs and money in our pockets – not just oil field and construction jobs, but also service and support business jobs. People flocked to Alaska and the increased demand from a rapidly growing population caused real estate prices to skyrocket. The “Dollar Flow into Alaska” chart accompanying this article shows graphically how dramatically the economy changed when oil began flowing through the trans-Alaska oil pipeline. The foundation of any economy is the money it brings in by providing

Today the petroleum industry funds a full 85 percent to 90 percent of the State of Alaska’s General Fund. That money funds myriad State services, many vital to our quality of life. State of Alaska money from oil royalties also funds tax credit programs that help encourage economic diversification via industries like tourism and film-making. Even more jaw-dropping – one out of every three jobs held by an Alaskan can be traced directly to the petroleum industry. Those two kinds of spending create jobs in every corner of Alaska. The ride up on the wave of a growing economy was a rush. The “high tide” raised almost everyone’s “boat.” It’s the ride back down the backwash of a slowing economy – without a plan to fill the pipeline – that has me very worried. We won’t be “fine” if oil, the third leg of Alaska’s economic stool, is kicked out from under us. We won’t be “fine” as the Alaska economy painfully adjusts to greater unemployment, fewer jobs and falling real estate values, as supply exceeds demand when people leave Alaska in search of jobs elsewhere. We won’t be “fine” when social service agencies – the safety net for many Alaskans – must close their doors in a time of fewer state grants and reduced donations. We won’t be “fine” as the state returns to a seasonal economy with fewer year-round jobs, reinstates an income tax, and discontinues paying out Permanent Fund Dividends. People accuse me of fear mongering. But I’m not. It’s basic economics, and I’m worried about an Alaska that doesn’t have a plan to fill the pipeline. 1. With royalties from the pipeline funding almost 90 percent of Alaska’s General Fund, there is not enough time to diversify our economy in a way that will replace the huge income stream that

oil in the pipeline provides to our state. When it’s gone, what will State government do for money? 2. The oil industry generates onethird of the jobs in Alaska. With the loss of those jobs, there will be an oversupply of houses, as people put their homes up for sale and head “South,” looking for jobs. Real estate values will crash. Were you here in the 1980s when that happened? I sure was. And it was ugly. Alaska lost 20,000 jobs, nearly 10 percent of all jobs. Real estate values dropped between 20 and 50 percent. People would literally walk into the bank and throw the keys to their homes at us and then get in their cars to drive “South.” It took more than a decade for housing prices to recover. It was a heart- and gut-wrenching time for those of us who love Alaska. We can avoid a reoccurrence of that awful scenario with a plan to fill the pipeline. 3. The pipeline is currently less than one-third full and the volume of oil flow is declining at a rate of 6 percent a year. The experts say it will have to be shut down before it’s completely empty. And when the pipeline is shut down, the law requires it be dismantled – mothballing pending future development isn’t permitted. 4. It takes seven to 10 years from discovery before the first drop of oil makes its way down the pipeline. None of the three major oil producers – BP, ConocoPhillips or Exxon – are exploring this year. With virtually maintenance of existing lines only being performed today on the North Slope and no exploratory wells being drilled, Alaska is already behind the curve in terms of filling the pipeline. Alaska needs a plan to fill the pipeline and it needs it now. We won’t be “fine” without a healthy oil industry ❑ in Alaska.

www.akbizmag.com • Alaska Business Monthly • August 2011

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ECONOMY

Photo Courtesy of KeyBank Corp.

Bruce McCain

Frank Talk with Bruce McCain Tackle problems head on; save our economy BY DEBBIE CUTLER

ruce McCain is the chief investment strategist for Key Private Bank, and tours the country providing economic outlook for the current year and years to come. ABM met with him in May for a Q&A session on Alaska’s, the nation’s and even worldwide economics.

ABM: So what’s the big news in the economy for 2011, the remainder of the year? Alaska and – nationwide and worldwide? McCain: Well, at this point things look pretty good. But I guess, you wonder how much longer it can last. We certainly have a number of problems

around the world – more so than in the United States and more than in the past economic cycles (worldwide). So, particularly if in the emerging markets the rising interest rates cause their growth to slow. Or if in – the same thing in Europe because the austerity spending – if we start to lose some of the exports

www.akbizmag.com • Alaska Business Monthly • August 2011

that we’ve had, that could make it a lot more difficult for an economy that still has consumers who are struggling with budgets that are too tight and businesses that lack confidence, in part because their sales are still not fully recovered and in part because their costs are going up pretty rapidly and they’re squeezed. ABM: What about the Alaska economy? McCain: I think it’s a little less adverse here. Things have not been as bad in Alaska. Your residential markets – you haven’t felt it as much as we have in the Lower 48. Certainly in terms of unemployment, it’s been bad. But it hasn’t been as bad. So for both reasons, I think that part’s good. The bigger issue for Alaska is that you’re heavily leveraged to energy and there are some problems unique to the structure of what’s going on and the energy dynamics within the state that probably will have more effect on where you go than other parts of the country.

need to invest in more energy – oil and the gas line. And do you think that investment is a possibility for the future? McCain: I think certainly, in most things, if you can diversify it makes sense, but there are limits to what you can do. You need to take a look at the resources you have, the smaller population, the fact that you are so far from the rest of the United States simply makes some things impractical. We (other Alaska leaders and I) were discussing the potential for a rail line to the Lower 48 (recently). There just isn’t enough to be shipped back to make that economically feasible. I think that’s the biggest difficulty for diversification for Alaska. You have some huge advantages in terms of shipping things into some parts of the Far East. Anything you can do that would help to expand that part of the economy is certainly a good thing, certainly helps to diversify. But, as I say, there are going to be limits to just how much you can do.

ABM: Do you think diversification is the key or do you think we just

ABM: Now with the Japan earthquake … they were a big export

country. What’s happening there and what’s the effect going to be short-term and long-term? McCain: The best estimates are that there will be probably two or three quarters of recession following this. Although, some who have been to Japan say that it’s really closer to business as usual than one might think. I think clearly the loss of productive capacity will certainly cause their economy to tip down somewhat. And they already had shown one-quarter of slowing growth. So I think the prospects for recession over the shorter term are extremely high in Japan. Then you’ll have the economic boost that comes from rebuilding. They probably will get to that somewhat faster than we got into rebuilding after Katrina. And, that should help to lift not only their economy, but may other parts of the world as well, especially those places like Alaska that are important feeder lines into that economy. ABM: Have you been paying attention to what Governor Parnell is doing in terms of reducing taxes to invite more investment in oil?

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McCain: We were asked to take a look at that. We also had a local speaker who talked quite a bit about that. And, certainly, you have an interesting dynamic there. As an outsider, it looks like both sides to an extent are playing chicken to decide who gives way first. But, I think that, especially, what does make it difficult, at least as I understand it, is the dynamic as volumes drop. You have some technical problems with the pipeline. And, what has become much more expensive oil relative to some other suppliers could become even more expensive if it becomes necessary to heat oil or do other things to keep the flow going through the pipeline. So, while both have reason to perhaps strike a deal, the state may be in a little worse position when the oil majors that have a number of places, especially, in the Lower 48 where they’re starting to use fracking processes to make formally unproductive oil fields more productive. It looks like they may have more options for development in the shorter term. ABM: Now, we’ve seen some of our economy go to North Dakota. Do you expect us to see more of that? I mean people are afraid here. People are fearful of the future. McCain: Yes, we’ve noticed the fear rising. I think there is certainly that potential shorter term. Now, the flip side of it is that in Pennsylvania, at least, there is a growing resistance. As one gentleman at lunch put it, when you turn on your water facet and you find that you can light the water because of the gas that’s leaked into the aquifer and is polluting your water source, I think that there are some questions as to how far they can go, at least, in the populated areas. But, since North Dakota is not as populated as some others, it’s going to certainly provide an alternative and, obviously, one that is physically much closer to the ultimate end markets there in the United States. ABM: A year ago, you projected a long-term growth for the economy, and you projected Alaska would see long-term growth as well as the rest of the U.S., that it would be – I think five to 10 years before

we saw stability completely again. Is that still your take? McCain: We still think there are some major problems that need to be solved. We’re far enough along in this cyclical recovery that we are concerned there may be a downturn, especially if we lose some of the important export markets that have helped to spark economic recovery in the U.S. But really, most of the developed countries of the world, whether it’s Europe, the United Kingdom, Japan, are experiencing the sluggish growth that we’ve seen in the United States. And that’s partially the transition from the dominance of those developed countries and the abject poverty in the rest of the world to a world where the emerging markets are gaining economic strength and they have rising living standards. So, they are not only competing with us for sales, they are competing with us for resources and that’s making it increasingly challenging for the U.S. consumers and the U.S. businesses – the lifeblood of the U.S. economy. ABM: So what’s the end result for five years? McCain: Well, the next five years – I think we will see continued pressure on our living standards. The question is whether or not we can meet the challenge and redirect what we’re doing in terms of investments to emphasize basis for jobs that play to the strengths that remain for the economy or whether we simply try to retrench and maintain the economy as it was – what was appropriate for the last 20, 30, 40 years, but really doesn’t fit the modern world. If we can make that transition, find what it is that we do competitively and emphasize those, we’ll be OK. We may not have as elevated standard of living standard as we did, but I think we’ll do all right. If we don’t adjust what we do, it’s going to be a lot harder.

the world GNP will be. If the world economy remains strong, we’re at the point where the amount of surplus supply is not that much. Inventories have come down. We’ll probably see prices trend higher. Over the longer term, you’re adding billions of new consumer into the mix and they’re increasingly using more and more oil; they’re using more and more metals. Just to give one instance of how much worse it can get. Somebody recently said that if you factor in the number of people in Africa, and we’re already seeing signs of that global development move – moving into Africa. There are as many people in Africa as exist in India or exist in China. So, you can increase by a factor of probably a third the number of people in the developing markets who suddenly would be looking to consume more energy, to consume more industrial metals. And, at the same time, put upward pressure on prices. So, I think the answer to your question with the longer term is how much the incomes rise. Because if incomes don’t go up and the price of energy goes up, we’ll simply have to get along

ABM: Now, right with the price of oil sky high, money is coming into the state very quickly. How long do you expect to see these high oil prices? McCain: Well, I think over the longer term, they’re going to trend higher. The big question, two-fold – part of the shorter term, the issue is now how strong

www.akbizmag.com • Alaska Business Monthly • August 2011

with less and you’ll see the demand cut off. You’ll still see an upward pressure on prices, but it will be limited by less economic growth in the United States from Europe and other places. Ultimately, if we find ways to substitute other sources of energy for oil, and to use it more efficiently, then our disposable incomes can rise. We may pay a higher price for oil, but we can afford to pay it and it won’t be such a limiting factor on growth. ABM: What do you think about President Obama’s statement that we need to invest in energy domestically? I mean, do you see that happening in the future. Investing more into domestic oil rather than overseas – what we are doing a lot of now? McCain: The demands on the world’s energy resources are tight enough that it’s going to make it increasingly uncomfortable for all of us. And arguably, we’ve been pretty loose in our use of energy. We’ve got ways we can tighten up, but part of that comes longer term from people moving closer

to their jobs and a lot of other things that take time to accomplish. In the meantime, we need to do whatever we can to expand the availability of energy and then, obviously, to offset that against environmental concerns, whether it’s the amount of particulates that go into the air or the effect that the fracking processing has on water supplies and other things in the ground as we try to get at the energy that’s there. ABM: What about manufacturing? More people are discussing the move toward more manufacturing in Alaska. Do you see this as a viable option for Alaska and diversification? McCain: Well, I think certainly for Alaska and certainly for the United States as a whole. Because what we find is, especially relative to Europe and some other parts of the country, we are becoming more competitive than we were. Certainly, too, as the dollar declines against other currencies, we would not be an advocate of intentionally lowering the dollar to gain an export advantage, but it does

help. I think the challenge is you can’t simply say OK, we’re going to manufacture more. It’s a function of how much does it cost to get the inputs into Alaska to make that work. Do you have the work force in terms of not only the numbers of people, but also the skills required to do that more effectively than it could be done in another part of the world to the extent that it does? And again, you’re located in a position that really makes a great deal of sense. Now, we were talking about the advantages of Anchorage as a transit point for transportation into the Far East. Those sorts of advantages, yes, absolutely, you need to exploit. And, if there are some manufacturing – some things that should be done here, particularly efficiently, then, by all means, that needs to be developed. Because it gives you a more balanced economy and, obviously, it gives you sources of job growth at a time when maybe other parts of the economy are lagging. ABM: I spoke to former Governor Sheffield, oh maybe a year ago or so.

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And he said to me that if we don’t develop more oil and gas in the state, that we might as well shut the doors, turn off the lights, pack up and leave and call it quits. What would your response that be? McCain: Well, I do think it takes time to make transitions in our economy. The dominant economy is still resource based. I think certainly you can’t turn your back on that and suddenly try to create from scratch something that doesn’t exist. Much like the discussion of making the transition to alternative energy sources, we still need to develop the traditional energy sources as a transition to whatever our future might be. And, I would gauge that’s probably likely the same with Alaska. You need to keep the natural resource base going as you try to build some other diversified bases for your economy. ABM: How do we diversify? How do we become more competitive in the world market? McCain: Well, I think first and foremost, you need to find the things where you have a particular advantage. Ideally, yes, you diversify into all sorts of things. But, there are some things where the particular location, where the size of your population, the climate, and what’s required for the product work well for production, here for example. There are other things where it wouldn’t make any sense whatsoever. For example, if you were trying to produce something that required a lot of heavy inputs and was only sold in Georgia, it probably doesn’t make any sense to ship them up here, make it and then send it back, unless you’re willing to work for a lot less per hour than somebody in Georgia would. Likewise, I think, taking a careful look at where you have some natural advantages, particularly because of the resource base, especially, if you have people who are highly skilled at a particular sort of thing that wouldn’t be available, or where because of your location. Because that’s so unique, there are some cost efficiencies and some advantages. Those are the things that you need to work on first. And then, as you build those, you’ll find that there are synergies with other things that will make further

www.akbizmag.com • Alaska Business Monthly • August 2011

development easier. But, it’s kind of a start with a competitive advantage and then you’ll find build-on things that are cost efficient once you’ve got that development in place. So economic development isn’t something you plan out and suddenly put in place, it’s something that you start, you get the flicker, and then it evolves over time as you can gain economies of scale and then build on those with related things that would not have been competitive at first, and then you just keep expanding. ABM: There’s a whole movement in Alaska where they don’t want development. They don’t want Alaska changed. They like it like it is. They don’t understand the risks of keeping it the same as it is. What would you say to those people? McCain: Nothing in life is constant. As economists say, ‘We’re always moving from one equilibrium to the next.’ The question and the hard part is forecasting with enough accuracy where you’re headed if you don’t make a change and deciding whether

you’re comfortable with that. I think the problem for those who want to stall development, they don’t realize that a failure to developing in some instances could mean the lights out option But, I think taking a careful look, particularly at the way that the oil is notorious for depleting… That’s a problem that is looming, sort of equivalent to the Social Security problems that we face as a nation. You see it coming, you need to deal with it, or at least, make sure you’re comfortable with the future if you do not make changes. ABM: What’s the final picture? McCain: Well, the final picture is – I think we need to look back and recognize that we avoided a second coming of the Great Depression. That’s the good news. We’ve made a lot of progress off that bottom and although we’re still trying to resolve some of the problems, there are some positives. We’re doing much better in our export markets. People are, in fact, bringing down credit card debt and other forms of debt. I think we’re also becoming certainly more competitive

just in terms of labor costs and other things. And, we do have some energy resources that give us advantages, relative to other parts of the world. That’s not to minimize the problems we face with our government deficits, with our aging population and some other things. But I think that we are in relatively better shape than some parts of the world. We just need to recognize that these challenges are serious. We need to deal with them and not simply close our eyes and say we can maintain the status quo indefinitely. If we do that competently, address the problems head on, then I think we’ve got a reasonable bright future. If we don’t, it’s going to be a lot tougher. ABM: Anything else? McCain: We’re part of the global economy. At one point, we were the king of the hill and we did what we felt we needed to do and everyone else adjusted. Now, we need to figure ways to tie into what the rest of the world is doing so it works well for us. And if we do that effectively, it will probably work better for them too. ❑

www.akbizmag.com • Alaska Business Monthly • August 2011

REGIONAL REVIEW

BY TRACY BARBOUR

Alaska and Canada Sharing a mutually beneficial relationship to the Government of Canada, Canada companies spent $3.9 billion on mineral exploration and development in Alaska. In 2008 alone, 38 Canada companies spent a total of $163 million on exploration in Alaska. An additional $304 million was spent on development. Canada companies account for approximately 70 percent of exploration and development expenditures in Alaska’s mineral industry. And in 2008, Canada mining companies employed about 1,700 Alaskans, who earned an average of $87,000 per year – nearly double the statewide average annual wage.

MAJOR CANADA PROJECTS Canada companies operate major mining projects throughout the state. For example, the Fort Knox Mine near Fairbanks – Alaska’s largest gold mine – is owned by Toronto-based Kinross Gold. It employs more than 450 people and generates $45 million in wages and benefits annually. Red Dog Mine in Northwest Alaska is the world’s largest producer of zinc concentrates. Owned and operated by Teck Resources, a Canada company, the mine employs 485 year-round workers and creates nearly $50 million in total wages annually. The Pebble Partnership, a joint venture between London-based Anglo American and Vancouver, B.C.-based Northern Dynasty Minerals, is another example. It’s currently assessing the potential for developing the Pebble gold and copper project in Southwestern Alaska. Between 2001 and 2008,

Alaska at a Glance Population: 710,231 Land Area: 571,951 square miles Persons per Square Mile: 1.2 Key Industries: Government; leisure and hospitality; educational and health services; trade, transportation and utilities; oil and gas; and natural resources and mining Median Household Income: $66,712 (2009)

Photo courtesy of the Denali Commission

hile Alaska and Canada share a common border, they also have similarities in their economies and are connected by important investments, partnerships and commerce. Alaska and Canada share 1,538 miles of land border. This stretch of land is part of what’s known as the International Boundary – the longest border in the world. The boundary extends 5,525 miles across the United States. Canada is the second-largest country in the world, while Alaska is the largest state in the United States. Both places are remote located and sparsely populated. Canada plays an important role in many aspects of Alaska’s economy, according to Wanetta Ayers, division director of the Division of Economic Development at the State of Alaska, Department of Commerce, Community and Economic Development. “Canada and Alaska share mutual interests in a number of industries,” she says. “As economies with significant natural resource endowments, we face many of the same opportunities and challenges.” The Alaska and Canada mining industries are prime examples and have been interlinked since the Gold Rush days of 1898. Canada companies are investing heavily in Alaska mining exploration, development and operations. This makes mining perhaps the most significant economic connection between Alaska and Canada. Between 1981 and 2008, according

Wanetta Ayers, division director of the Division of Economic Development at the State of Alaska, Department of Commerce, Community and Economic Development.

Pebble Partnership invested more than $350 million on engineering, exploration and environmental studies. If developed, the project is expected to create more than 1,000 production jobs. Alaska and Canada have mutual interests in tourism, fishing, and oil and gas, as well as ports, harbors, highways, and power supply and distribution. In the oil and gas industry, Petro-Canada holds a net land position – nearly 1.7 million acres – in the Alaska Foothills, as well as net acreage in the National Petroleum Reserve-Alaska. FEX LP, a subsidiary of Calgary-based Talisman Energy, leases about 1.2 million acres in the NPR-A on behalf of its partner Petro-Canada. Also, TransCanada is working to develop a pipeline project to move natural gas from the North Slope through Canada. In the area of seafood, Vancouverbased Alaska General Foods processes salmon products in plants in Ketchikan, Naknek and Egegik. With 600 workers at peak employment, it contributed to $85 million worth of Alaska seafood being exported to Canada in 2008.

www.akbizmag.com • Alaska Business Monthly • August 2011

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ALASKA’S ECONOMY

In terms of international trade, Canada has historically been Alaska’s third-largest export market. In 2008, for example, exports from Alaska to Canada were $370 million, comprising more than 10 percent of the state’s total overseas commodity exports, according to statistics from the Government of Canada. The main items exported were minerals, seafood and petroleum products. Canada companies shipped about $440 million worth of goods to Alaska in 2008 – mostly refined fuel products and mining and oil/gas field equipment. The Canada government estimated the value of the state’s Canada-related trade at $1.2 billion for 2008, which includes 8,500 jobs and $430 million in payroll in Alaska. All of this adds up to a mutually beneficial relationship between Alaska and Canada. Ayers says: “Through our common borders, positions as Arctic nations, shared infrastructure and similar economies, Canada and Alaska have longstanding trade relationships that result in significant economic interdependence.”

Alaska’s economic condition is somewhat difficult for Alaska Department of Labor Economist Neal Fried to characterize. It’s a continuation of 2010 where the state is experiencing broader economic growth, but that growth is quite moderate, he says. Some sectors are quite healthy. Gold is now very expensive. Oil prices are at near record highs, and fish prices are healthy. “Like Canada’s economy, we’re benefiting from strong prices in just about every good we export,” Fried says. Alaska’s seasonally adjusted unemployment rate for May was 7.4 percent, which is consistent with the rate for March and down from February’s rate of 7.6. Fried expects the State’s rate to continue drifting downward as the year progresses. “It’s amazing that we’re in our third year of having better unemployment rates than the nation,” Fried says. “We still look relatively good compared to other places in the United States.” Since the 2000 U.S. Census, Alaska’s population has increased by 83,300 residents, climbing from 626,931 to 710,231 for a 13.3 percent increase. The Anchorage/Mat-Su region grew the most, while Southeast’s population didn’t change at all. Agewise, the proportion of the population over age 18 in places with more than 500 residents ranges from a low of 53 percent in Fox River to a high of 100 percent in Prudhoe Bay. Geographically, Alaska is very much like Canada. And in some ways Alaska’s economy is more like Canada’s than any other state in the country, Fried says. Like Canada, Alaska has weathered the recession fairly well. The real estate market, which has been weighing down many states, remained favorable for both places during the recession. Fried says: “Like Canada, we did not over build so we did not have a real estate crisis. When it comes to housing, we don’t have a giant overhang that exists in some other places.” As another positive, Alaska’s total personal income grew by 4 percent in 2010. That’s less than the decade’s annual growth rate of 4.8 percent, but considerably stronger than the national

CANADA’S IMPACT ON ALASKA TOURISM With their proximity to Alaska, Canadians are very interested in visiting the state, Ayers says. About 100,000 Canadians arrive in Alaska during summer, representing about 6 percent of the state’s total visitor market. “Canada has always been a very important tourism partner in Alaska,” she says. “All of our highway and cruise passengers come through Canada at some point, so it’s a gateway to Alaska for many visitors.” Canada is the only country that’s both a primary market of origin for visitors and a country that the State co-markets with, Ayers says. Alaska has a longstanding partnership with British Columbia, Alberta and Yukon in the “North to Alaska” program. Alaska has worked with these provinces to create a visitor’s guide, Website and other promotional materials. “We actually consider them as part of our North American domestic marketing program because we share so many of the media and promotional outlets,” she says.

average of 3 percent. It’s also a major improvement over 2009, when the total personal income in Alaska dropped for the first time in 23 years. Fried – who attributes the “rebound” to the recovery in Alaska’s economy and a low inflation in Anchorage – isn’t surprised by the shift, since a majority of income comes from wages. “Unlike the rest of the country, our employment is higher than it’s ever been,” he says. In terms of trends, Alaska’s visitor industry also has seen overall steady growth. High energy prices are pushing up air fare prices, which are putting a damper on expansion in the industry, but so far reports about the industry are fairly positive. In addition, Alaska is seeing a resurgence of the mining industry, as well as growth in the air cargo industry. However, there’s one major uncertainty hanging over the state: What’s going to happen to the federal budget? Federal dollars are really important to Alaska, and those dollars will be declining. “We’re now moving into a phase of waning federal government in Alaska,” Fried says. “The federal government is a big player and will continue to be one.” So what does Fried think the future holds for Alaska’s economy? No one knows, he says, but one of the bigger challenges is: What will happen on the federal side? Will the other sectors be able to compensate for the impending decline? The answer to those questions will depend on the future health of the national and global economy, Fried says.

CANADA’S ECONOMY Like Alaska, Canada’s labor market is functioning relatively well, according to Phil Cross, chief economic analyst at Statstics Canada. Cross, who is based in Ottawa, paints an overall positive picture of the country’s economy and says Canada’s employment is considerably better than that of the United States. “We’ve had steady employment growth; it’s up 1.4 percent over last year,” he says. In May, Canada’s employment rose by 22,000, bringing gains over the previous 12 months to 273,000 – an increase of 1.6 percent. That increase,

www.akbizmag.com • Alaska Business Monthly • August 2011

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combined with a decline in the number of people looking for work, pushed the country’s unemployment rate down 0.2 percentage points to 7.4 percent. “A year ago, it was 8.1 percent; during the recession, it peaked at 8.9 percent,” Cross says. The employment increase was felt in Quebec, Alberta and Saskatchewan. However, the labor market in Newfoundland and Labrador declined and went virtually unchanged in the remaining provinces. Employment gains were felt in a number of sectors, including retail and wholesale trade as well as in information, culture and recreation. Cross adds: “Our fastest-growing sector for employment is construction, which is up 2.3 percent. We don’t have that overhang from the housing bubble.” The second fastest-growing sector is natural resources, which are more significant in Canada than in the United States. That sector is up 3.2 percent. However, manufacturing and educational services are lagging. A positive aspect of Canada’s economy is the government sector, where public-sector employment is up by 1.4 percent. Having a healthy functioning banking system is also a key factor in the country’s economic growth, Cross says. There a number of interesting population trends taking place in Canada, according to government statistics. As of Jan. 1, Canada’s population was estimated at 34.28 million, an increase of 40,400 from Oct. 1, 2010. Interestingly, Canada received more than 280,000 immigrants in 2010 – which is 28,500 more than in 2009, and the highest level recorded since the 1950s. But the increase in immigration was offset by a decline in the net inflow of nonpermanent residents. Canada’s population is growing a little less than that of the United States. However, it doesn’t have the decline in population that’s present in countries like Japan and Germany. Cross has noticed another interesting trend: “We are aging rapidly. The fastest-growing segment is the 55-and-older group; it’s growing about 3.2 percent.” Conversely, the number of Canada’s prime-age adults – those 25 to 54 years ❑ old – is down 4.5 percent.

www.akbizmag.com • Alaska Business Monthly • August 2011

LEGAL SPEAK

BY JEFF WALLER

Due Process and Websites Fair play and substantial justice with Internet business

s more businesses of all sizes use the Internet to expand their markets to out-of-state customers, a local business’ website can become the deciding factor in whether the business can be required to defend an out-of-state lawsuit. Advertising and conducting business through a company’s website may create sufficient contacts with another state to the extent the business could be required to defend a lawsuit if sued in another state. While states have various methods to bring an out-of-state defendant into that state’s court, which is called exercising jurisdiction over a defendant, those methods are limited by the Due Process requirements in United States Constitution and state constitutions. If Due Process is not satisfied, then normally that court may not exercise jurisdiction over the out-of-state business. For the purposes of this discussion, Due Process involves what courts call “fair play” and “substantial justice,” which is basically whether a business would be surprised if it were called in another state to defend a lawsuit. For example, if an Alaska company has never conducted any business with anyone in Florida, then the Alaska company would be surprised if it had to defend a lawsuit in Florida. Alternatively, if the Alaska company regularly conducted business in Georgia, then it would not be surprised if required to defend a lawsuit in Georgia.

PASSIVE VERSUS ACTIVE With more and more business being conducted through the Internet, one factor a court examines to determine if it is proper to exercise jurisdiction over an out-of-state business is whether the business has continuous and systematic contacts with the state through the business’ website. Courts typically use a sliding scale approach when examining a website. At one end of the scale are passive websites; at the other end are fully interactive websites.

GRAY AREA

Jeff Waller

A passive website provides information and does not include a process where products or services can be ordered or purchased over the Internet, and therefore typically does not support exercising jurisdiction over an out-of-state business. A passive website usually provides information about the business and how the business can be contacted by mail or phone. There is no interaction between the customer and the business through the website. A fully interactive website allows a customer to interact with the business through the Internet just as if the customer were physically present at the business, and therefore typically supports exercising jurisdiction. A website can be interactive in many ways, including allowing a customer to correspond with the business via email, providing online interactive customer service, and providing the ability to send, receive and complete contracts through the website. While the courts examine many factors for interactive websites and no one factor is typically more important than another, a fully interactive website makes it appear that the business is intentionally doing business in that state.

Between these ends of the spectrum are businesses whose website falls somewhere between passive and fully interactive. In these situations, courts examine factors like how many times the website has been viewed by users in that particular state, whether any business was actually transacted through the website with customers in that state, if the website was designed and maintained with the purpose of being accessed by any and all users throughout the United States, if the business sought to have customers from that state sign up for a mailing list, if the business automatically and indiscriminately responds to every contact made through the website no matter where the contact originated, or if the website particularly targets individuals in that state. The more interactive the website, the more likely a state court will decide it has jurisdiction over an out-of-state business being sued in that state court. Considering the present economy, arguably no company wishes to turn away business from any source, including business generated by the company’s website. Likewise, no company wishes to end up defending a costly long-distance lawsuit in a state where only minimal business has been conducted. Working with a website designer and an attorney can help minimize the possibility that the company is pulled into a court in a distant state to defend a lawsuit. ❑ About the Author Jeff Waller is a senior associate attorney at Holmes Weddle & Barcott P.C. in Anchorage. His practice includes litigation, construction law, employment law, insurance defense, and real estate matters. Prior to becoming an attorney, Waller owned and operated several businesses.

www.akbizmag.com • Alaska Business Monthly • August 2011

TECHNOLOGY

Workplace Identity Theft Protecting employee information BY DEBORAH JEANNE SERGEANT

hen identity theft comes to mind, you may think of a credit card offer stolen from your trash or a computer hacker breaking into your system, but probably not your company’s personnel files. Considering all the private information they hold, personnel files are a gold mine to identity thieves, enabling them to cause all kinds of financial havoc for employees. Although the Anchorage law firm of Burr, Pease & Kurtz hasn’t seen many cases in this area, managing shareholder and attorney Thomas Owens said: “Federal statutes take this sort of thing very seriously. It basically says employers have a responsibility when it comes to personal medical information or personal identifiers. You have an obligation to store securely and dispose of them so that it doesn’t fall into the wrong hands.” Recognize what information should be protected to prevent identity theft. The top three personal identifiers are name, date of birth and Social Security number. Armed with these, an identity thief can apply for credit cards, take out loans and create fake IDs. Employees’ home addresses, phone numbers, emergency contact (usually a spouse or parent), and work and educational history could also be valuable for thieves, as these could give clues to passwords or enable thieves to tap into bank accounts. Health insurance policy information can be valuable to a thief who could request new cards sent to his address and steal the employee’s health benefits to cover his own medical needs. If your company performs credit checks, employees’ credit history could provide thieves with numbers of closed accounts they could reopen and siphon dry. If you run drivers license checks, a scanned or copied license

could offer thieves even more information they could use for a variety of nefarious operations.

FIX LAX SECURITY Identify where the security in your company is lax and fix the breach. Lock the building when no one’s there and secure the area where you store vital information. The computer system should be password protected and guarded by up-to-date virus protection, a firewall and a secured wireless network to keep hackers out. “One of the easiest ways is to contact an IT firm that specializes in security and have them do an audit,” said Scott Thorson, CEO of Network Business Systems in Anchorage. “We look at how they’re connected to the Internet. That’s where the largest number of threats come from. We were getting about 5,000 to 7,000 unauthorized requests for access a day.” These aren’t necessarily criminals in back rooms hunched over computers looking for prey. “Automated bots out there (are) looking for vulnerable connections to the Internet,” Thorson explained. “These bots look for unlocked or even wide-open doors. If you lock the doors, you’ve solved 90 percent of the problems.” You don’t have to be a Fortune 500 company for a bot to attack. Keep in mind that an identity thief isn’t necessarily a bot or a “bad guy” wearing a ski mask burgling the building. It could be a new administrative assistant whose eyes wander as she drops off the human resources director’s mail. Or maybe it’s the delivery man who sneaks a peek at the monitor when the receptionist steps away. Even a long-term employee strapped for cash or disgruntled about changes

in the company could take advantage of a company with weak security. “A lot of sensitive information is on paper,” Thorson said. “There’s no way around it. Keep it in a locked file cabinet in a locked office. Only allow physical access to those who need to have access to it.” Restrict access to these files to a need-to-know basis. For those who do need to know, make their access to that part of the network password protected. “Require a complex password and require it to be changed on a regular basis,” Thorson said. “That will help prevent unauthorized access.” Train employees with access to personnel files to keep the employees’ sensitive information private.

COMMON PROBLEMS A 25-year veteran of the business, Thorson has seen many complex computer security breaches; however, the most common problems are basic ones, “like a password written on a sticky note on the monitor or sensitive data in a file laid on a desk,” he said. “Monitor people working with sensitive information,” Thorson added. “It seems like a simple thing, but it’s those simple things that trip people up the most.” It may mean that employees working with sensitive files need their own offices or to have their desks relocated to an area with less foot traffic. Their computers should be set up with a screen saver requiring a password for re-entry if left unattended to ensure no one will steal a quick peek when they step a away from their desks for a few minutes. Once you no longer need sensitive information, properly dispose of it. Dumping it in the trash or recycle bin makes it easy for identity thieves. “A lot of this stuff is stolen by dumpster divers,” Owens said. “Cut

www.akbizmag.com • Alaska Business Monthly • August 2011

PROTECTION POLICIES Developing privacy policies and procedures demonstrates that safeguarding employees’ sensitive information is important to your company. This will help you prove you have taken due care to protect employees should a thief steal any information and an employee bring a lawsuit. Don’t use employees’ social security numbers or dates of birth as employee numbers. If your health benefits provider or other third-party does so, work with them to pick a different identifier such as random numbers. Document the privacy policy training you give employees who handle sensitive information and periodically review the policy with them and document the review. “Have audits and controls in place,” said Bogdan Hoanca, professor of computer information systems at the University of Alaska Anchorage College of Business and Public Policy. “Track who has access to information. If there have been changes made, have a few people who keep an eye on each other.” Establishing a system of checks and balances will keep employees accountable without making you as an employer appear to distrust employees. Go the extra mile: periodically distribute identity theft information to employees as part of the company newsletter.

Password Security – Tips worth knowing The Alaska Department of Administration Enterprise Technology Services offers the following tips on password security: “When creating a password, try to be creative. The more obscure the password, the more difficult it will be to hack. Never use passwords that include birthdays, phone numbers, or anything pertaining to your life. The most common passwords are pets’ names, addresses and parts of your social security number. They can be guessed. Create a phonetic sentence using the pronounced sounds of the letters, numbers, and/or special characters. I tend to forget ITnd24g@ Are you lost today? RuLStD?2 Use the first letter of each word in a poem or song until you have enough letters (at least 8). JaJ$Wuth1 Jack and Jill went up the hill HINS-nw! Help! I need somebody-now!

Intentionally misspell words. Government Guvrmnt@2 Together 2Geth&er Take someone else’s full name that you can remember. Divide it into segments or blocks of the length you need for your password. John Quincy Adams John quin (drop) Cy@D@MS3 (keep) Take a word from the dictionary that is long enough to qualify as a password. Replace some or all of the vowels with numbers and special characters. Mornings M$rn#NG7 Psychotic Ps#CH@tC4 Take a word that is long enough to qualify as a password, and put all of the vowels together and all of the consonants together. Add numbers/symbols. Friends ie$FRNDS3 Douglas 3OUA&dgls

Photo courtesy of Joe Boltz

it into little strips so it can’t be used.” Using a shredder onsite or hiring a commercial shredding service such as Shred Alaska can help you safely get rid of sensitive, unneeded records, including most digital media. Joe Boltz, office manager at Shred Alaska in Anchorage, said the company is certified by the National Association for Information Destruction for on-site and plant-based digital and paper media. “We don’t do hard drives but we’re looking into it,” he added. “We have something that can destroy it to NAID standards, but not to our standards.” CDs, DVDs, video tapes, cassette tapes, floppy drives, microfilm, microfiche and paper: with their mobile service, Shred Alaska can destroy all of these before pulling away from your curb. The company recycles shredded material.

Shred Alaska performs shredding operations at businesses or at their own facility to help ensure the security of unwanted records.

“A lot of people don’t realize the importance of junk mail like a credit card offer that provides an easy way for thieves to steal and damage their credit,” Boltz said. While it’s impossible to make your paper and electronic files theft proof, it is possible to prove you have taken reasonable and sensible steps to prevent both internal and external identity theft.

You may think that no one will ever target your company and its employees for identity theft, but don’t be too sure. “Pay attention to this issue in a serious way and look at it as broadly as you can,” Owens said. “If affects everyone, large and small. It’s not something that just Google needs to pay attention to.” ❑

www.akbizmag.com • Alaska Business Monthly • August 2011

AUG

1-31 A L A S K A T H I S M O N T H

BY NANCY POUNDS

State Fairs Rev Up Across Alaska for Summer Finale Haines, Ninilchik, Fairbanks, Kodiak and Palmer delight all ages Rodeo with bull-riding, barrel racing and calf roping.

TANANA VALLEY STATE FAIR

any Alaskans mark the close off summer with a traditional adventure to the state fair. Five Alaska state fairs feature agriculture exhibits, enticing fair food, national and local performers, rodeos and events special to each region.

SOUTHEAST ALASKA STATE FAIR

The Southeast Alaska State Fair in Haines set for July 28-31 is the town’s most well-attended annual event. Last year 11,000 people came to the four-day fair, said Jessica Edwards, assistant director for the fair. “It is a huge economic boost for local businesses because it draws residents from around the region to our town of 2,500 people,” Edwards said. “Literally every bed and camping space in town is full.” The Haines fair is also a major arts event for Southeast Alaska, offering four days of performances at two fairground venues, she said. New food vendors join the fair this year, bringing the total to 60, she said. The fair will also feature a showing of the film “Smokin’ Fish,” which premiered at Smithsonian’s Native American Museum last month and has a fall

run scheduled on PBS. S Other O highlights include the logging show, the fisherman’s rodeo and fiddle and songwriting contests.

KENAI PENINSULA STATE FAIR

The Kenai Peninsula state fair in Ninilchik at mile 136 of the Sterling Highway runs Aug. 19-21. It serves as a place to meet friends, compete and experience fair delights. “The Kenai Peninsula Fair has been a place for the community and families to reconnect after a hard summer of working and share all their accomplishments for over 60 years,” said Lara McGinnis, fair manager. Last year about 7,800 people attended the Kenai Peninsula fair. About 100 vendors will operate booths again this year, McGinnis said. Pop rock musician Jules Larson will perform nightly. Larson has written and performed theme songs for TV shows “Castle” and “One Tree Hill.” Lower Peninsula tryouts for Alaska’s Got Talent” will be conducted Aug. 19 at the fair. The winner will earn a chance to compete for $5,000 at the Alaska State Fair finals in Palmer. The fair also features the Kenai Peninsula

Interior Alaska’s event, the Tanana Valley State Fair, will run Aug. 5-13 in Fairbanks. Fairbanks residents conducted informal fairs, but the first recorded event was held in 1924, said Randi Carnahan, general manager and executive director. She recently tracked down a 1924 exhibitor’s handbook, revealing fair life from the past. “You just hold it in your hand, and it takes you back,” she said. A few fairs were cancelled during the Depression and World War II, but after Fairbanks’ flood in 1967, the annual community event was postponed and held indoors, she noted. Carnahan billed the Tanana Valley State Fair as the oldest in the state and the farthest north in the continent. “We’re celebrating history this year,” Carnahan said, noting the 80-year milestone.

Mark your calendar! Southeast Alaska State Fair July 28-31 Haines www.seakfair.org

Kenai Peninsula State Fair Aug. 19-21 Ninilchik www.kenaipeninsulafair.com

Tanana Valley State Fair Aug. 5-13 Fairbanks www.tananavalleystatefair.com

Alaska State Fair Aug. 25-Sept. 5 Palmer www.alaskastatefair.org

Kodiak Rodeo and State Fair Sept. 3-4 Kodiak www.kodiakrodeoandstatefair.com

www.akbizmag.com • Alaska Business Monthly • August 2011

Fair organizers plan to bury a time capsule during the August fair to be opened in 20 years at the eventâ&#x20AC;&#x2122;s century milestone. Boy Scouts, Girl Scouts, 4-H members and others will contribute items to illustrate Fairbanks life in 2011. The fairâ&#x20AC;&#x2122;s history includes the economically rough year of 2008. Nine consecutive days of rain stymied attendance, which affected vendors and the fair operator, Carnahan recalled. â&#x20AC;&#x153;In 2008, we fell on hard times,â&#x20AC;? she said. For 2009 fair organizers regrouped, opting for low-key events rather than large concerts, she said. Fairbanks residents submitted ideas, and the changes have been successful. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s worked amazingly well,â&#x20AC;? Carnahan said. â&#x20AC;&#x153;We brought back watermelon-eating contests and sack races. Every year we try to add a new thing.â&#x20AC;? The revamped fair showcases Fairbanksâ&#x20AC;&#x2122; skilled residents. For example, last yearâ&#x20AC;&#x2122;s Fairbanksâ&#x20AC;&#x2122; Got Talent proved popular. Participants performed for nine hours before an attentive audience, Carnahan said. â&#x20AC;&#x153;I was surprised at how much talent Fairbanks has,â&#x20AC;? she said. Carnahan was unexpectedly delighted at the success of the show, which stands out as a special moment in her five years on the job. â&#x20AC;&#x153;You can do spectacular things that donâ&#x20AC;&#x2122;t cost a lot of money. It was very heart-warming,â&#x20AC;? she said. The 2011 fair will feature the long-awaited return of the Kenai Peninsula racing pigs and a Lady Gaga look-alike contest to benefit the food bank. A flaming-sword swallower â&#x20AC;&#x201C; one of 50 remaining such performers worldwide â&#x20AC;&#x201C; is scheduled to perform, Carnahan said. A new covered stage, the Usibelli Pavillion, which can seat 200, will debut. This yearâ&#x20AC;&#x2122;s added food booths include Mega Meatball, a meatball-on-a-stick offering, and Frinkies and Frandies leprechaun legs or deep-fried string beans. The Fairbanks fair has endured because it has become a beloved part of Interior life. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s very significant because itâ&#x20AC;&#x2122;s a huge part of familiesâ&#x20AC;&#x2122; summer traditions here,â&#x20AC;? Carnahan said. In one family, three generations â&#x20AC;&#x201C; a grandmother, mother and daughter â&#x20AC;&#x201C; volunteer to register flower exhibit submissions, she said. Every day is different at the fair, but Carnahan is pleased with residentsâ&#x20AC;&#x2122; response to the fairâ&#x20AC;&#x2122;s turnaround. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a big job, but when we get feedback itâ&#x20AC;&#x2122;s worth it,â&#x20AC;? she said.

ALASKA STATE FAIR

The stateâ&#x20AC;&#x2122;s largest fair, set in Palmer, will run from Aug. 25 to Sept. 5. Organizers of the Alaska State Fair are planning a 75th birthday bash complete with cake on Aug. 26. The stateâ&#x20AC;&#x2122;s largest fair drew more than 290,000 people last year with 475 small business and nonprofit vendors. More than 8,000 exhibit entries were entered in 2010. This yearâ&#x20AC;&#x2122;s fair will include traditional favorites: the giant cabbage competition, quilt and animal exhibits and food booths galore. Top entertainers this year will include Garrison Keillor, Queensryche, the Charlie Daniels Band and others. The popular Alaskaâ&#x20AC;&#x2122;s Got Talent preliminary round is Sept. 3 with the statewide finale on Sept. 5. New this year will be the fairâ&#x20AC;&#x2122;s largest offering featuring Alaska Native traditions and lifestyle called â&#x20AC;&#x153;Ravenâ&#x20AC;&#x2122;s People: Celebrating Alaskaâ&#x20AC;&#x2122;s Native Cultureâ&#x20AC;? programs. Performances will include Native Youth Olympics demonstrations and Alaska storyteller Jack Dalton. Other performers will include the Shanghai Acrobats, Original Synners Wild West Show and Pirates for Hire, an acting troupe including some cast members from â&#x20AC;&#x153;Pirates of the Caribbean.â&#x20AC;? â?&#x2018;

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ August 2011

RIGHT MOVES CREDIT UNION 1

Searcy

Mike Searcy was promoted to daily operations manager in the information technology department for Credit Union 1. Searcy has worked for the credit union since 2006. He most recently served as enterprise systems technician II.

FIRST NATIONAL BANK ALASKA

Floyd Huffman Richardson Garrett Floyd was appointed loan officer and Seward branch manager for First National Bank Alaska. He earned a bachelor’s degree in economics and business from Westmont College in Santa Barbara, Calif. Matthew Huffman also was appointed loan officer. He works in the special credits unit. Both Floyd and Huffman first joined First National as management associates. Katie Richardson was chosen to work as a mortgage loan originator at the Palmer branch. She earned an associate’s degree in small business from the University of Alaska. She is studying to earn an accounting degree.

ARCTIC SLOPE REGIONAL CORP.

Kenneth Asbury was chosen president and chief executive of Arctic Slope Regional Corp. Federal Holding Co. Asbury has spent the past 30 years at Lockheed Martin, most recently serving as president of three operating units and vice president of capture excellence.

COMPILED BY NANCY POUNDS HDR ALASKA

Ingrid Corson was appointed integrated water resources business class lead for HDR Alaska. She has more than 13 years of related experience. Ryan Rosston earned his professional civil engineer license for Alaska. He has six years of environmental and civil engineering experience. Jay Jefferies also earned his Alaska professional engineer license. He has more than six years of experience providing civil engineering for water and wastewater infrastructure in urban and rural Alaska.

CIRI ALASKA TOURISM CORP.

Eric Johansen was promoted to warehouse manager at Kenai Fjords Tours in Seward. The tour operator is owned by CIRI Alaska Tourism Corp. Tammy Schuldt was hired as operations assistant for Kenai Fjords Tours in Seward. She has more than 15 years of operations and management experience. Carri Fisher was promoted to marine passenger services assistant manager at Kenai Fjords Tours in Seward. She has worked seasonally for the company since 2001. Geri Nipp was promoted to marine passenger services manager at Kenai Fjords Tours. She worked in the company’s accounting office beginning in 2001 and later left to earn a teaching degree at the University of Minnesota.

STATE FARM AUTOMOBILE INSURANCE CO.

Al Bowler, Art Dorsey, Curtis Green and Tom Plooy, agents for State Farm Automobile Insurance Co. in Anchorage, received the Crystal Excellence award for customer service. They are also top sales performers, who earned the company’s Legion of Honor status. Steve Van Horne earned the Golden Triangle honor for an agent receiving the Legion of Honor status for 15 of the last 18 years, or 20 years total. Lisa Sanders was listed on the Silver Scroll for agents earning the Legion of Honor status for 10 of the last 12 years, or 15 years total. Stacey Roy and Troy Sayer were listed on the Bronze Tablet for agents earning the Legion of Honor status for five of the past six years. Charity Carmody, Todd Jackson, Amy Jones and Doug McCann also received Legion of Honor recognition.

ANCSA REGIONAL ASSOCIATION

Reitmeier

Kim Reitmeier was chosen executive director of the ANCSA Regional Association. Reitmeier previously worked as chief of staff at Alyeska Pipeline Service Co. The association includes leaders from regional corporations created as part of the Alaska Native Claims Settlement Act.

KONIAG INC.

Edward O’Hare was appointed senior vice president for Koniag Development Corp.’s Technology Business Sector, part of Koniag Inc. He most recently served as vice president at Dynanet Corp., where he handled business development and services for State and federal government customers.

MHW

Monique Garbowicz and Tracy Svanda were hired at the MWH Anchorage office. Garbowicz is principal client service manager. She has 25 years of experience in engineering design, regulatory compliance and management. Svanda is a civil/environmental engineer with experience in educating small utility boards and civil and environmental engineering work in rural communities.

PRINCE WILLIAM SOUND REGIONAL CITIZENS’ ADVISORY COUNCIL

The Prince William Sound Regional Citizens’ Advisory Council elected new board members. They are: Dorothy Moore, president, city of Valdez; Pat Duffy, vice president, Alaska State Chamber of Commerce; Thane Miller, secretary, Prince William Sound Aquaculture Corp. and Sheri Buretta, treasurer, Chugach Alaska Corp. Members-at-large are Walter Parker, Oil Spill Region Environmental Coalition; Blake Johnson, Kenai Peninsula Borough; and Steve

www.akbizmag.com • Alaska Business Monthly • August 2011

RIGHT MOVES LLewis, i SSeldovia. ld Two new board members were elected: Larry Evanoff, Chenega Bay and Roy Totemoff, Tatitlek.

SPONSORED BRADLEY REID + ASSOCIATES INC.

SOUTHEAST ALASKA . REGIONAL HEALTH CONSORTIUM

James Lontine was hired as a physician assistant and clinic supervisor at the SouthEast Alaska Regional Health Consortium Hydaburg Health Center. He previously worked 23 years with the Island Pond Health Center in Island Pond, Vt. His career includes work as a U.S. Army medic and a Peace Corps health assistant.

NORTH PACIFIC FISHERIES COUNCIL

Eric Olson was reappointed to the federal North Pacific Fisheries Council for 2011. The council represents Alaska as part of eight regional fisheries management councils.

NORTH STAR ELEMENTARY SCHOOL

Neva Reece participated in the Library of Congress Teaching with Primary Sources Summer Teacher Institute earlier this summer. Reece works at North Star Elementary School in Anchorage. The national program, geared for K-12 educators, helps participants develop teaching plans using the Library’s website of digitized historical artifacts and documents.

U.S. SMALL BUSINESS ADMINISTRATION

Hugh Short was appointed to the U.S. Small Business Administration’s Council on Underserved Communities. Short is president and chief executive of Alaska Growth Capital. The council’s 15 members advise the SBA on ways to increase access to capital and promote job growth and creation. Committee members were due to conduct meetings this summer with their community’s small-business owners and community leaders to collect information.

NORTHERN AIR CARGO

Zak is regional director for the Alaska Small Business Development Center. The board includes 500 leaders from various industries, nonprofit organizations and professional associations.

GEONORTH LLC

Heather Holland joined GeoNorth LLC as a senior programmer/analyst. She earned a bachelor’s degree in engineering and electrical specialties from Colorado School of Mines in Golden, Colo. Popely Fox Keith Popely was hired as a copywriter at Bradley Reid + Associates Inc. He most recently worked several years at an Anchorage public relations firm. Kyle Fox joined the advertising and public relations firm as an art director. He earned a degree in interactive arts and technology from Simon Fraser University in British Columbia and an International Baccalaureate while in Australia.

THOMPSON & CO. PUBLIC RELATIONS

Spencer Shroyer joined Thompson & Co. Public Relations as account executive. He most recently worked as features editor at the Anchorage Daily News. Gary Scott was promoted to director of new media and senior account manager. He handles the firm’s work for Princess Alaska Lodges, Anchorage Economic Development Corp. and the Anchorage and Valley Radiation Therapy Centers.

BUSINESS & PROFESSIONAL WOMEN/NORTH TO THE FUTURE

GOLDEN VALLEY ELECTRIC ASSOCIATION

Golden Valley Electric Association elected board of directors members in June. Tom DeLong and Rick Schikora were re-elected, and Aren Gunderson was chosen as a new board member. Board members represent specific districts. The election marked the first time voting was available electronically.

THE CHILDREN’S HOSPITAL AT PROVIDENCE

Dr. Michael Acarregui was hired as the new executive director for The Children’s Hospital at Providence. Acarregui has more than 25 years of experience working in the pediatric and neonatology fields. He most recently worked at the University of Iowa Children’s Hospital, including a 10-year stint as medical director for Iowa’s Vermont-Oxford Neonatal Network collaborative.

DENALI ALASKAN FEDERAL CREDIT UNION

Celeste Graham-Hodge was elected president of Business & Professional Women/North to the Future. The nonprofit group advocates for women in the workplace and family related issues. GrahamHodge works as a legislative aide for State Sen. Bettye Davis.

Judie Miller was appointed vice president, call center operations for Denali Alaskan Federal Credit Union. She has worked 16 years for the credit union, serving most recently as assistant vice president, electronic services.

ALASKA SMALL BUSINESS DEVELOPMENT CENTER

Beth Pattinson was honored at the National Audubon Society’s Women in Conservation Luncheon in New York City. She works for the U.S. Fish and Wildlife Service’s Alaska Region. ❑

Bryan Zak was appointed to the 2011 Malcolm Baldrige National Quality Award Board of Examiners.

FEDERAL GOVERNMENT

www.akbizmag.com • Alaska Business Monthly • August 2011

A S S O C I AT I O N S

BY TRACY BARBOUR

Azimuth Adventure Photography/www.azimuthadvenutre.com

Suzanne Armstrong, president of Anchorage-based Associated Builders and Contractors of Alaska.

Associated Builders and Contractors of Alaska Championing the ideals of free enterprise

organization’s Alaska chapter has 170 member companies that employ about 5,000 workers across the state. The bulk of those members are merit shop construction and construction-related firms that represent general contractors, engineers, architects, interior designers,

www.akbizmag.com • Alaska Business Monthly • August 2011

ounded in 1950, Associated Builders and Contractors (ABC) encompasses all specialties within the construction industry. It is comprised mainly of firms that perform work in the industrial and commercial sectors of the industry. The

and labor and corporate services. ABC was established with a unique mission: to advance the merit shop construction philosophy. That philosophy encourages open competition and a free enterprise approach that awards contracts based solely on

merit – regardless of labor affiliation. “ABC Alaska is not opposed to union organizations,” says Suzanne Armstrong, president of the Anchorage-based Alaska chapter. “We believe everybody should have a right to compete in the bidding process and projects should be awarded based on the lowest, qualified bid.”

ACTIVITIES AND INITIATIVES ABC Alaska is involved in a wide array of activities to help its members deal with construction issues on an industry-wide basis. The association provides its members with government representation, legal advocacy, education, work force development, communications, technology, recognition through national and chapter awards programs, employee benefits, information on best practices and business development through an online contractor search directory. “We’re a well-rounded trade association,” Armstrong says. Recently, ABC Alaska has turned to a renewed emphasis on business development and training for its

employers. As part of this initiative, the organization has expanded its education and training committee. It has also established a monthly breakfast series that focuses on best practices and topics such as insurance, human resources and legal issues. “We’ve looked at it as a proactive approach to educating our members to help them protect themselves and their employees and grow their business,” Armstrong says. “We’ve gotten a lot of positive feedback from our members about the series.” The educational breakfast meetings are an important part of helping ABC members properly prepare themselves to succeed in the construction industry. In a state like Alaska where there is a significant amount of public funding for construction projects, ABC Alaska wants to ensure there is an open process in which its members can compete. Take the Susitna Dam project, for example. Armstrong says: “We want qualified Alaska firms bidding on that work and qualified Alaska firms working on that job.” ABC Alaska is also concerned about

the overall health of the state’s economy. An estimated 41 percent of the private construction in the state this year is expected to be attributed to oil and gas, Armstrong says, referencing research by University of Alaska Anchorage’s Institute of Social and Economic Research. There’s no real major exploration happening; it’s mostly on preferred maintenance or units under development, she says. In addition, other private commercial construction is anticipated to be down about 21 percent this year, Armstrong adds. “In 2011, we’re not seeing any new shopping centers planned and no new high-rise towers being built. We’re keeping our eye on that because it means fewer construction jobs,” she says.

APPRENTICESHIP PROGRAM THRIVES As part of its mission to provide education and training to support the construction industry, ABC Alaska offers a four-year apprenticeship program. Under the program, participants must complete a minimum 8,000 hours of on-the-job training, plus 144 hours per

www.akbizmag.com • Alaska Business Monthly • August 2011

year of related instruction. Apprentices who complete the necessary training and education can learn how to become skilled construction laborers, electricians, plumbers, sheet metal workers and sprinkler fitters. “The apprenticeship program provides a valuable opportunity for a student to learn a trade under a skilled craftsman,” Armstrong says. The program also is getting younger individuals interested in the construction industry, which is important given the industry’s maturing work force and

shortage of younger workers. Since its inception about 10 years ago, the apprenticeship program has proven to be a “really successful model,” Armstrong says. It is helping younger people become aware of the phenomenal level of pay, highly transferable skills and other benefits available through construction jobs. So far this year, 14 apprentices have completed the program, with a total of 256 currently registered. There are nearly 60 employers participating in the ABC apprenticeship program. “They see it not only as a

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Alaska Business Monthly

The program also is getting younger individuals interested in the construction industry, which is important given the industry’s maturing work force and shortage of younger workers. commitment to developing the work force in Alaska, but also a commitment to building the construction industry work force,” Armstrong says. “All of our participation employers are proud of the commitment they have made to the program.” The ABC apprenticeship program is an initiative that impacts the entire state. Here’s how it works: ABC conducts statewide outreach to create a pool of applicants for each of the available trades. Applicants attend an orientation and are interviewed by participating companies. Qualified applicants are then placed with sponsoring employers who provide the appropriate wages and benefits based on industry standards. During the program, the apprentices receive valuable theoretical and practical knowledge, which is measured through testing. In addition to operating its apprenticeship program, ABC Alaska also offers management courses on a number of topics. The management series includes a Web-based Introductory Skills for the Crew Leader course. This knowledge-based course introduces new crew leaders to the basic leadership skills needed to supervise a construction crew. Subjects covered in the 16-hour course include: construction organization, team building, gender and minority issues, communication, motivation, problem solving, decision making, safety and project controls. ABC Alaska also offers more advanced courses in project supervision and project management, each of which runs more than 80 hours, respectively. In the future, ABC Alaska will continue its educational and work force development efforts to benefit its member companies and their employees. ❑

www.akbizmag.com • Alaska Business Monthly • August 2011

OIL & GAS

Search for solutions fuels engines of innovation Photos courtesy of BP

BP installed a special heavy oil processing facility and drilled four wells to establish the pilot project at Milne Point. The first pilot well – a horizontal well – began production in April 2011. Two of the pilot wells are CHOPS (cold heavy oil production with sand), and two are a type of horizontal well that incorporates a downhole pump system to bring heavy oil to the surface.

BY MIKE BRADNER

ver the years Alaska’s oilfields have been engines of innovation in the industry as companies moved to solve problems of high costs, remote locations and some technological challenges unique to Alaska. Over several decades there have been breakthroughs in several areas, most notably in drilling, that were developed in Alaska and are now being “exported” to other parts of the world. It must be recognized, however, that from the beginning of Alaska’s modern petroleum industry, companies have met challenges they faced with unique engineering innovations. The building of the Cook Inlet

production platforms in Southcentral Alaska were considered breakthrough technologies in the 1960s and early 1970s. The siting of platforms sturdy enough to withstand the heavy forces of moving ice and tides in upper Cook Inlet were substantial accomplishments. Likewise, construction of the Trans Alaska Pipeline System in the mid-1970s required the development of engineering solutions to unique problems, mainly permafrost. Some of the innovations developed for TAPS were invented at the time – they had not been done before. In recent years the list of “made in Alaska” innovations would include,

most notably, “horizontal” production wells drilled laterally through sandstone reservoirs; “coiled-tubing” wells drilled with a drill motor attached to coiled, flexible tubing (as compared to traditional wells drilled by “rotary” drill rigs); and “multi-lateral” wells, where several producing wells, or legs, are drilled off underground from a single well drilled from the surface. With multi-lateral wells the producing companies are now drilling as many as six underground producing legs from a single well to surface, an innovation that has reduced costs and allowed the production of small oil layers that would otherwise not be economic.

www.akbizmag.com • Alaska Business Monthly • August 2011

IMPROVING PRODUCTION There are also improvements to production technologies, some first done in Alaska and some borrowed from elsewhere but adapted to Alaska. Examples of these innovations are in the production of thick, viscous oil found on the North Slope. Viscous oil is the thick, lower-quality oil found adjacent and at shallower depths overlying the conventional “light” oil fields on the Slope. The West Sak viscous oil deposits in the Kuparuk River field is the best known of these. In the BP-owned Milne Point field nearby, they are called the “Shrader Bluff” deposits, essentially the same oil as in West Sak. Viscous oil development is an example of the Alaska producing companies engaging patiently in a long process of experimentation and development, with several deadends but finally success. Arco Alaska Inc. began working on ways to produce the West Sak deposits since the 1980s. Arco was followed soon by Conoco, prior to its merger with Phillips Petroleum, when that company owned the Milne Point field and the Schrader Bluff viscous oil

resource there (BP now owns the Milne Point field). Arco’s work was picked up by now-merged ConocoPhillips when the company purchased Arco’s Alaska assets, and Conoco’s Milne Point work was picked up by BP. The process has been one of gradually evolving technology as one technique after another was experimented with. Some were unsuccessful, others moderately so. Finally, it was the application by BP and ConocoPhillips of another innovation, multilateral horizontal production wells that finally allowed the two companies to produce viscous oil economically. Now the industry is tackling the heavy oil found in the Ugnu formation, an extremely large oil deposit of extra thick, heavy oil, some literally frozen into the permafrost, that is shallower even than the West Sak and the conventional “light” oil fields on the Slope. ConocoPhillips did one test of a production well drilled into the Ugnu a few years ago but the latest development is an adaptation by BP to the Slope of a heavy oil production technology borrowed from Canada’s tar sands projects, “Cold Heavy Oil

Production in Sand,” or CHOPS. If this works, it could unlock a large new resource that is now uneconomic. BP recently started up a test production project in the Milne Point field using CHOPS and variations of it. The first goal is to see if the technique works from a technical standpoint, BP has said. After that the economics of producing this extra thick oil will be considered, the company said.

MAJOR INNOVATIONS COMING Now there are two other major innovations in the works. One being an adaptation to Alaska of a new technique of producing oil from shale rock now being done successfully in the Lower 48 states; and the second being production of methane, the main component of natural gas, from frozen methane “hydrates,” which are known to exist in the shallow permafrost of the Slope and which contain extremely large quantities of methane. If ways can be found to produce the methane from hydrates, and there are two approaches now being tried by both BP and ConocoPhillips, this could open up a large new

www.akbizmag.com • Alaska Business Monthly • August 2011

WHEN CAPABILITY COUNTS...

gas resource in Northern Alaska. This would supplement the known large conventional natural gas that could someday supply a natural gas pipeline.

VISCOUS OIL ISSUES

...COUNT ON FUGRO www.fugro.com

Of any engineering challenge that would be most frustrating to the industry, and remains so today despite an apparent successful outcome, it is the development of viscous oil production. Basically, viscous oil (as distinct from heavy oil) is heavier, lower-quality oil that exists in large quantities on the North Slope. The challenge has been to extract it at production rates high enough for commercial production. This is made complicated by the fact that the rock holding the oil is less strong and more crumbly, so that as the oil is withdrawn sand breaks loose and flows with the oil to the well. This can damage the wells and production machinery, and dealing with it has been the greatest challenge for companies producing viscous oil. The presence of the viscous oil in the West Sak and Shrader Bluff deposits have long been known, along with the true heavy oil of the Ugnu formation, because the producing companies have drilled through it to reach the conventional oil that lies in deposits at deeper intervals. When Arco Alaska began experimenting with ways of producing the West Sak viscous oil in the 1980s the initial attention was focused on various kinds of screens and other devices built around the producing wells to retard the sand and yet allow the hydrocarbon liquids to flow through. After years of efforts and hundreds of millions of dollars in research and development investments, which included pilot production projects, these approaches appeared at a dead end. The devices being experimented with did catch much of the sand but they also impeded the flow of the oil, which prevented these wells from increasing their production rates enough to sustain commercial production. The early, experimental viscous oil rates in both the Kuparuk and Schrader Bluff projects were producing at rates of about 200 barrels per day. The daily rates had to be much higher for the wells to produce profitably, given the investment required. It didn’t help that there were

www.akbizmag.com • Alaska Business Monthly • August 2011

periods of low oil prices in the 1980s, and again in the 1990s, that affected the budgets for these research and development projects and made the goal of profitable production even more elusive. In the 1990s, two innovations, the drilling of horizontal production wells and later of drilling multi-lateral wells, came to the rescue. Horizontal wells, or wells drilled laterally or sideways through the oil reservoir, had been done outside Alaska but the innovations in Alaska were to drill these with precision to target thin layers of oil or oil pockets that had been bypassed earlier, usually because they were walled off from the main reservoir by an impermeable shale layer. These were too small to tap with conventional “vertical” wells drilled from the surface because the volume of oil was too small to pay for the well drilled just to that oil pocket. Also, a vertical well exposes just a few feel of the well-bore to the reservoir and if it is a lateral, flat interval the drainage would be insufficient. Horizontal wells changed this picture because these wells could tap several small intervals, sometimes curving

Lisa Roberts Roberts, a production chemist at BP Alaska Alaska, inside the BP Heavy Oil process module at Milne Point.

www.akbizmag.com • Alaska Business Monthly • August 2011

Multilateral wells were developed entirely in Alaska and are being done with increasing frequency and complexity, on the North Slope. up and down to reach oil pockets at different depths, thereby increasing the amount of oil that can be reached with one, albeit more complex and expensive well. However, because the horizontal production wells also drilled laterally they cut through a horizontal oil layer and exposed much more of the oil to the well than would have happened with a vertical well. This resulted in more efficient drainage, with more oil at less cost. Horizontal production wells moved quickly from just a few being done 20 years ago to tap isolated oil pockets when they were found to where new fields are being developed almost totally with horizontal wells right from the beginning. This has proved to be particularly effective where there are small and complex reservoirs, the Nikaitchuq field on the North Slope as an example. Multilateral wells were developed entirely in Alaska and are being done with increasing frequency and complexity, on the North Slope. As with horizontal wells the driving force is the need to reach and produce more oil at lower costs. The concept of a multilateral well is that of separate wells, or producing “legs” being drilled off underground, and typically horizontally, from a single well to the surface. The idea developed from “sidetracks,” a simpler concept of a single well being drilled from an older well that was depleted. The lower part of the depleted well was cemented off and a new well was drilled off the upper part of the original well, thereby using a good part of the old well and all the supporting infrastructure at the surface. It was a new well at a fraction of the cost. The logical next step was to drill two wells, then three wells, and now up to six, from the older well. These wells are most efficient in tapping large quantities of oil with less expense, steel in the ground and labor, but they are complex

www.akbizmag.com • Alaska Business Monthly • August 2011

and their development has required a lot of experimentation and technical innovation by the producing companies and the service contractors. The combination of these two, multilateral horizontal wells, was to make the production of the viscous oil deposits commercial because by drilling laterally the horizontal wells could expose long stretches of the viscous oil layer to the well, and with several wells drilled off one (the multilateral well) the wells drilled from the surface, and the support infrastructure, the production pads, pipelines, utilities, were done more efficiently.

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TESTING NEW TECHNOLOGIES Building on this base, the industry is now hard at work on three other innovations, heavy oil, oil from shale, and the production of methane from hydrates. BPâ&#x20AC;&#x2122;s heavy oil production test is now under way in the Milne Point field, producing from the Ugnu formation, an extra large accumulation of the thick substance. The first approach BP is experimenting with is an effort to get the oil to flow through a horizontal well with a long section drilled through the oil-bearing sands. An auger-type device is then bringing the oil mixed with sand to the surface, while also creating a kind of suction in the well to draw in the oil. A special plant built at the surface removes the sand, and the oil is piped on to be mixed with other, conventional oil being produced. This test is technical, to see if the oil can be made to flow, and it will continue for some time, BP says. After the evaluation of technical problems, questions of economics, whether the oil can be produced profitably, will be considered. Both BP and ConocoPhillips also have hydrate-methane production tests under way; with ConocoPhillipsâ&#x20AC;&#x2122; test beginning this fall. Its plan is to inject carbon dioxide into the frozen methane hydrate to attempt to displace and produce methane. BPâ&#x20AC;&#x2122;s approach, which will be tried later, involves gradually depressurizing the hydrate, which will release the methane. The North Slope is an ideal place to test these technologies because methane hydrates are known to exist and because the infrastructure of the producing fields is available. â?&#x2018;

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OIL & GAS

Oilfield Service Companies Production tax said to be jobs-killer BY MIKE BRADNER

ow’s business for Alaska’s oil and gas service companies? This is an important question because these firms, many of them Alaskan-owned, provide the brawn and increasingly the brainpower behind the development of new oil and gas. They are also the companies employing most of the people working in the industry, too. What happens to service companies is vital to the state’s economy. As for business, though, service companies are widely reporting business is down, or stagnant, because of the lack of new development activity. The firms blame this on the State’s high oil and gas production tax, which they say is impeding new industry investment in development. Gov. Sean Parnell agrees with this and has a bill pending in the Legislature that would ease the tax. The issue has become highly controversial, however, and will be one of the hot issues in the 2012 State legislative session, as it was in the 2011 session. Service and support companies are leading a grass-roots effort to build support for the governor’s bill, arguing that the tax has been a jobs-killer for them.

New Doyon Drilling Inc. Rig 25 is now at work for BP on North Slope. Doyon has all seven of its rigs at work this year. www.akbizmag.com • Alaska Business Monthly • August 2011

Photo courtesy of Doyon Ltd

CONFLICTING DATA But is there data that supports the claim? In testimony before legislative committees service company after service company cited their experience of reduced business activity that has forced them to lay off people or go elsewhere for work. But perversely, employment data from the State Department of Labor and Workforce Development indicates not only that the loss of jobs in the industry support sector hasn’t occurred, but that employment has actually increased. For example, April 2011 data from the labor department showed 13,100 people at work in the industry in total. That’s up from 12,500 in May 2010.

A different set of Labor Department data for 2010, which are audited and verified, show oil and gas employment at 12,752 in December 2010, up from 11,959 in January 2010. These numbers also break out oil and gas service company employees from producing company employees, which the numbers cited previously did not. The December 2010 total of service company employees is 9,201, compared with 8,427 the previous January. Other indicators show a similar pattern. Well drilling data from the Alaska Oil and Gas Conservation Commission do show a steady decline in the drilling of new wells since 2007, which coincidentally was the year the Legislature passed the controversial oil tax increase. But the AOGCC data shows drilling picking up in 2010 to some degree, which also fits the pattern of increased activity in the industry. The data shows 164 new development wells drilled in 2010, up from 132 in 2009. However, there is still a decline since 2007 when 153 development wells were drilled. On top of this is information on

new industry investment from the State Department of Revenue itself, which ironically is provided by the oil and gas producing companies. This data, in the semi-annual State revenue forecasts, shows that industry capital spending has been steadily climbing in recent years and has increased again in 2011. In 2011 the producing companies plan to spend $2.572 billion, up from $2.389 billion in 2010 and $2.212 billion in 2009, they reported to the Revenue Department. All of this seems to undercut the service companies’ claims that business is down, and the data has given legislators who oppose the governor’s bill a huge stock of ammunition. How to explain this contradiction, at least in terms believable to legislators who are on the fence on the tax issue or the public, has become one of the central dilemmas for the governor in his continued push for the tax change.

MAINTENANCE VS. EXPLORATION There is an explanation, of course. It is that the increased spending, activity and employment are mostly in oilfield maintenance work, not in the kinds of

activities that result in new development and new oil coming into the pipeline. However, while this is intuitive for those who are engaged in the industry or who watch it closely, there is no way the data itself can be sorted to show how many oilfield workers are on maintenancetype projects and how many on new well work, or how, absent audits by the Revenue Department, the new capital investment is split out between increased maintenance on aging production facilities and work that gets new oil. There are two powerful statistics, however, that do support the anecdotal reports of less work expended on finding more oil. One is that oil production continues to decline at a rate of about 6 percent a year, which means that unless new oil is developed the trans-Alaska oil pipeline, which now moves about 630,000 barrels a day, will be down to 550,000 and 500,000 barrels a day within just a few years, a point where the pipeline begins to experience operating problems. The other indicator, which affects service companies more directly, is that new exploration drilling on the North

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Slope has dropped to a record low of one new well drilled last winter. The trend in exploration drilling, in fact, is sharply down. One well drilled in 2011 compares with four the previous winter, 11 in 2009 and 17 in 2008. While maintenance work is important and it is increasing as the oil production facilities age, the activity doesn’t have the economic impact in terms of jobs and requirement for support that new drill pads, well-heads and all of the related work can generate. A rough parallel can be drawn with the construction industry, where road paving and maintenance, while important, does not have the same job impact as does construction of buildings. The lack of exploration drilling has a particularly heavy impact on contractors and support companies because these wells, typically remote from the existing infrastructure of the producing fields, require a lot of support and service, including construction of temporary ice roads and ice pads to support a drill rig. Ice road construction requires specialized equipment, and the mobilization and demobilization and movements of the drill rig involve major expenditures. During drilling there is a lot of trucking needed, to carry fuel, drill “mud” and cement, steel pipe and groceries out to the exploration site.

TESTIMONY TO LEGISLATURE Last March many of Alaska’s major contractors and service companies explained their current situation to State legislators in a meeting of the House Finance Committee March 21. Tom Maloney, Alaska Area Manager for CH2M Hill, said his company has seen a decrease in all areas of its drilling and well-support work, including drivers, mechanics and support services. “ Co n s t r u c t i o n , i n c l u d i n g a t NORCON, our union construction company, has seen decreased employment. With the lower level of drilling opportunities there is a decreased need for modular construction, well tie-ins and related installation work,” Maloney told the legislators. CH2M Hill has seen a 60 percent decline in its engineering and design staff, who work primarily in the company’s Anchorage’s offices, Maloney said. Engineering is at the front-end

www.akbizmag.com • Alaska Business Monthly • August 2011

of any new development work, so an increase or decrease in engineering is a signal of what will happen in trucking, construction and the support needed for those activities. Doug Smith, president of Little Red Services Inc., an Alaska company that operates high-pressure pump trucks that provide fluid-handling services in the North Slope oil fields, told the committee he has seen a 20 percent decline in the demand for services in the fields. The company has had to lay off 11 employees over two years, Smith said. Cruz Construction is a company based in Palmer that does significant business on the North Slope, but since 2007, the year the State Legislature increased the oil tax, the company has seen its workers on the Slope drop from 200 to 12, owner Dave Cruz told the legislators. The company has since opened an office in North Dakota, where the petroleum industry is booming. Jim Jansen, CEO of Lynden Inc., a major transportation company serving Alaska, told the committee that 70 percent of Lynden’s business is Alaska-related, in transportation and construction-

related services, and while only 20 percent of the company’s revenue and jobs are directly related to oil and has work, indirectly most of Lynden’s business is driven by the industry. “Our direct petroleum-related jobs and revenues have been flat to down since 2007. This downward trend, contrary to oil activity elsewhere in the country, concerns me,” Jansen told the legislators. “With oil prices over $100 per barrel Alaska should be booming, like the rest of the oil provinces. Instead we have falling production, less petroleum-related jobs and almost no exploratory drilling or new development,” he said. Lynden operates a fleet of six Hercules cargo aircraft, but the company’s activity for these planes in Alaska has fallen to almost zero. “We now have one aircraft operating in Paupa, New Guinea, and are very close to placing another aircraft in Peru. We do not want to operate in these difficult locations, but that is where the investment is taking place and we have no choice but to work there or go out of business,” Jansen said.

While maintenance work is important and it is increasing as the oil production facilities age, the activity doesn’t have the economic impact in terms of jobs and requirement for support that new drill pads, well-heads and all of the related work can generate. There were other reports. Nabors Drilling had five drilling rigs working in the state with about 12 rigs “stacked,” or in storage, and last year Doyon Drilling, the other major drilling contractor, had about the same number of rigs at work. This year, however, Doyon has seven rigs at work, its entire drilling fleet, with the start of work of a new rig built for BP on the Slope and a smaller rig drilling in the Beluga gas field in Southcentral Alaska.

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COOK INLET WORK What seems perverse about this situation, however, is that there is another petroleum-producing region where explorers and even producers complain about the lack of local oil service companies being available, and that is Cook Inlet. Marathon Oil Co. has said that one of its major concerns in sustaining its Cook Inlet operations is whether there are service companies available to do specialized work. For example, in the recent past, Marathon has had

to fly service company workers to Cook Inlet, at considerable expense, to perform certain special procedures on wells because the services weren’t available locally. This, of course, is a chicken-and-egg problem. As the level of industry activity declines service companies have to look for work elsewhere. In the 1970s and 1980s as the North Slope boomed, many service companies based on the Kenai Peninsula and supporting Cook Inlet work, sent their people and equipment to the Slope. This has resulted in

Cook Inlet brought a small rig owned by its parent company, Miller Energy, to the inlet last year and plans to hire or purchase another rig, a larger one, for more drilling at the platform as well as onshore. a “thinning out” of the service industry in Southcentral Alaska. Now the same cycle may be beginning on the North Slope. Because work is down, Alaska-based service companies are focused on opportunities elsewhere, such as the Lower 48 states and North Dakota in particular where Alaska companies’ cold weather expertise is needed. Ironically, the relatively few number of service companies and the lack of competition is being cited by explorers on the Slope as an impediment. Now industry work in Cook Inlet may be picking up, too. There is more exploration drilling for natural gas, led by independent companies, and an apparently commercial gas discovery has been made by Buccaneer Energy, as well as the start of new gas production at North Fork, a small gas field east of Homer by Armstrong Oil and Gas. There is also the recent restart of oil production at the shut-in Osprey oil platform on Cook Inlet’s west side by Cook Inlet Energy. Cook Inlet brought a small rig owned by its parent company, Miller Energy, to the inlet last year and plans to hire or purchase another rig, a larger one, for more drilling at the platform as well as onshore. Finally, the acquisition of leases by Apache Oil Corp. in a State Cook Inlet lease sale held in June has now led to Apache becoming the largest lease owner in Cook Inlet. This brings a major new company with resources and expertise to the region. All of these are encouraging signs, for the oil services industry as well as the state and com❑ munities in the region.

www.akbizmag.com • Alaska Business Monthly • August 2011

ENERGY

Ameresco, Alaska Energy Authority Work Together

Photos courtesy of Ameresco Inc.

Ameresco traveled to Alakanuk School to review all of the mechanical equipment in the building.

Rural areas benefit from energy efficiency programs BY VANESSA ORR

o matter where you live in Alaska, energy efficiency is important. Not only are residents dealing with keeping buildings warm and well-lit during long, dark winters, but the cost of fuel can make a huge difference in a community’s quality of life. In 2010, two programs – the Village Energy Efficiency Program (VEEP) and Energy Efficiency and Conservation Block Grants (EECBG) – began providing funds to make it possible for communities around the state to determine where energy is being lost and what can be done to improve efficiency. This funding supports energy

efficiency and conservation improvements to public buildings and public facilities. Both grants are managed by the Alaska Energy Authority (AEA) as directed through the Alaska Housing Finance Corp. and the U.S. Department of Energy. “Money is short and expenses are high in small, rural communities, and the expertise for performing these projects may not be available within these communities,” said Sean Skaling, project manager, Energy Efficiency and Conservation Program, AEA. “Insulating a building is not just about putting up insulation and sealing the building

with caulk; there is an entire building science that goes behind it to make sure the building has the right amount of air ventilation and movement. Cleaning or installing a boiler could mean bringing someone in from Anchorage, and a ticket from Anchorage to Emmonak costs $800 or more.”

GET GRANTS To this end, AEA has hired two service providers to help eligible cities and villages take advantage of the grant programs. These include the Alaska Building Science Network and Ameresco Inc., a leading energy

www.akbizmag.com • Alaska Business Monthly • August 2011

efficiency and renewable energy company. Ameresco was assigned 22 cities under the EECBG program in three regions: Western Alaska, the Interior and the North Slope. They were also assigned 14 communities under the VEEP program, as well as the three Whole Village sites – Emmonak, Alakanuk and Fort Yukon. “We began our energy audits last fall, and we’ve now finished with all of the village audits and are continuing with the EECBG audits,” explained Michael Bartlett, business development manager, Ameresco. “In most cases, we travel to the site to perform an energy audit, after which we provide a written report that is given to the site and the AEA. Each city and village has different needs, so these are often very fluid reports; we may recommend anything from replacing lighting to commissioning new boilers, to installing new windows or making HVAC upgrades, to improvements to the building envelope itself. “At any given location, we may recommend between 10 and 30 different ideas,” he added. “Our goal is to work

on areas in which the village is most interested and that will provide the best financial return on the grant money.”

HOW THE PROCESS WORKS EECBG is a new program that received funding for the first time under the American Recovery and Reinvestment Act (ARRA) of 2009. VEEP, which is funded by the State Energy Program (SEP), is a continuation of a program AEA administered in the past with funds from the Denali Commission. SEP received a lot of extra funds as a result of ARRA, providing more money per site than was available in the past. “Some larger cities and boroughs, as well as tribal governments, were direct recipients of grants from the federal government,” said Rebecca Garrett, project development specialist, AEA. “Smaller cities were passed through the State Energy Office to distribute, which was done through a formula process with a base amount and then weighted for population.” City allocations ranged from $10,600 to $227,800, based upon population. In early spring 2010, all of the

eligible communities in Alaska were notified of their potential amounts and asked to fill out applications. Cities had the option of choosing to have the AEA hire a service provider to help manage and implement their projects, or choosing to get an audit first and then manage their own projects. A third option was provided for cities with known efficiency projects to implement at the time of application. “The applications were very simple and they became the grant documents,” Garrett said. “As an incentive, if cities did not apply for their funds, the extra money would be redistributed to the Option 1 sites, based on the same formula.” Of the 97 cities that responded, 57 selected to have AEA hire a service provider. “Ameresco was awarded a portion of these sites, which included VEEP sites in the same region as their EECBG sites, which created a great economy of scale,” Garrett said. Three Whole Village retrofit sites – Emmonak, Alakanuk and Fort Yukon – were also selected because of extensive infrastructure work going on in those communities.

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www.akbizmag.com • Alaska Business Monthly • August 2011

According to Skaling, Ameresco was selected to provide VEEP and EECBG services because it was felt that the company had experience with putting together projects in rural Alaska and understood the challenges that they might face. “Ameresco had a solid Alaska work force as well as an extended nationwide base to help get these projects implemented quickly while still meeting all of the requirements of the Recovery Act,” he said.

AN INVITE Ameresco, which is headquartered in Framingham, Mass., originally came to Alaska in 2002 on an energy services performance contract with Elmendorf Air Force Base. The company eliminated the base’s central heating and electrical generation plant, connecting it to Anchorage Municipal Light and Power’s grid and installing individual boilers throughout 131 buildings. The company still maintains these boilers today. By taking on projects at a number of villages and cities within the same

Ameresco engineers utilize chartered airplanes, ATVs, snowmobiles and trucks to reach the facilities they survey.

region, the company is able to save both time and money. “Breaking these sites out regionally helps a lot; you may have folks based out of Bethel going to a number of villages, which saves the return trip to Anchorage each time,” Skaling said. In most cases, Ameresco sends a project manager and engineer to visit each site, where they collect data, take photos and examine all of the area’s public facilities. “After the village or city and the AEA review our recommendations and agree on the work that they want us to perform, we install whatever compo-

nents are needed, bring the equipment online, and provide maintenance and operations training to members of the community,” Bartlett said. “In villages, what we’re usually seeing is a general atrophying of equipment. Equipment is suffering from general wear and tear and a lack of maintenance, because it’s difficult to take care of in such remote locations. The people in the villages are doing a great job with what they have. If the equipment is still in reasonable condition, we’ll recommission it after minor repairs. We’re also there to provide education – we meet with the people who will be taking care of

www.akbizmag.com • Alaska Business Monthly • August 2011

Aleut Corporation supports the use of renewable energy, energy conservation and solar-powered greenhouses to promote economic stability for our shareholders and residents in the Aleutian/Pribilof Islands region.

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the equipment, walk them through the process, and teach them what they need to know to keep it maintained.” As for the types of repairs being made, “Lighting is always an easy answer,” Garrett said. “There are still a lot of inefficient lamps in rural Alaska. Where heating fuel and electric prices are so high, any project will have a great payback. We are seeing a lot of boiler replacements, programmable thermostats, weather stripping, caulking and insulation projects.” EECBG projects must be completed no later than Aug. 31, 2012. VEEP has a deadline of March 31, 2012, which adds a new challenge – Ameresco has only one construction season in which to complete the work. According to Bartlett, because construction can’t take place at such remote locations during the winter, installation is just now getting under way. New equipment is expected to be operational around the end of summer.

DOCUMENTED SAVINGS Once all of the recommendations have come to fruition and the equipment is up and running, communities can expect to see both short- and longterm savings. “The energy efficiency measures implemented through EECBG and VEEP have a payback period averaging around four to five years,” Garrett said. “Because these are grant funds, these projects will save these communities a lot of money immediately, and they will continue to save on energy and fuel costs for many years to come.” As programs come online, the AEA will gather energy savings measurements that will be displayed on a public GIS-based website in the future. “Documenting energy savings is not an exact science – many things change,” Bartlett said. “But based on run-time hours, similar weather conditions and the same occupancy, we will be able to say how much a specific piece of equipment saves, pre- to post-retrofit.” If these projects are successful, it is hoped similar energy efficiency projects will take place in the future. The AEA is looking into continuing VEEP with a new source of funding, though the EECBG program has not received any ❑ new federal funding.

www.akbizmag.com • Alaska Business Monthly • August 2011

TECHNOLOGY

Smartphones Becoming More Common as Business Tools Check out the latest and greatest BY TRACY BARBOUR

martphones are becoming thinner, faster and more featurerich, transforming them into a more functional tool for business users who want to work on the go. Today’s smartphones are loaded with computing capabilities and other features that make them akin to laptop computers. The latest models offer larger screens, high-definition display, higher-resolution cameras, faster processors, longer battery life and more internal memory. Many also offer mobile broadband, allowing high-speed access to the Internet, as well as quicker access to applications and files. “Smartphones are more powerful than computers of a decade ago,” says Greg Schlabaugh, commercial applications consultant for GCI. “They’re about information and consumption – getting those nuggets of communication that you need throughout the day and communicating throughout the world.” High-powered smartphones are making it easier for business users to balance their professional and personal lives. Email is the most commonlyused feature among mobile workers. People are also using their smartphone to update their calendar, access their corporate dashboard and research information on the Web. They can also download special apps for fleet management, sales automation and field service automation to handle more specific tasks when they’re away from their home office. It all boils down to having instant access to information and life management, Schlabaugh says. “It’s about making the most of every second, whether you’re riding in an elevator or standing in a hallway waiting for a meeting to start.”

POPULAR MOBILE OPERATING SYSTEMS The power of smartphones rests in their operating system, which controls the software and hardware of the device. The most widely used mobile operating systems are Android, BlackBerry, Apple’s iOS (iPhone) and Windows Mobile. BlackBerry is still the king when it comes to extremely reliable email delivery, but it’s starting to lose its grip in the market, Schlabaugh says. “It has not been as quick to innovate as other manufactures and match what the other ecosystems can offer.” Android phones are by far the most popular smartphones on the market today. Customers are drawn to their ease of use, multitude of applications and simplicity, according to Cassandra Palmer, wireless product manager for Matanuska Telephone Association (MTA). Industry research has indicated that men prefer Androids and women prefer iPhones, but Palmer hasn’t noticed such gender-related preferences among MTA’s customers. “Both men and women love the open source functionality of the Android phones,” she says. “It allows consumers to fully tailor the phone to suit their interests.” Like Palmer, Schlabaugh doesn’t associate any particular gender preference with either of the mobile operating systems. Instead, he feels the choice comes down to personality types. “People who really understand technology and want to customize their device, gravitate toward the Android platform. Those who want to use the device right out of the box, tend to choose the Apple iPhone product,” Schlabaugh says. AT&T has also noticed that more of its customers are reaching for Android phones. In response to the increase in demand, the company is

launching 12 Android phones this year, according to Scott Meyers, director of sales for AT&T Alaska. “Android is the fastest-growing operating system out there,” Meyers says. “It’s available from a variety of manufactures, and it’s very customizable.” The attraction to Android devices is not surprising, given that users can download thousands of apps to enhance the functionality of their device. The Windows Mobile platform is also gaining popularity, mainly due to the integration with Windows. “To have a phone that incorporates Microsoft Office products is a major draw for consumers,” Meyers says.

THE LATEST AND GREATEST PHONES Regardless of the operating system, mobile workers can find a variety of smartphones available to suit their tastes and needs. At AT&T, for instance, the latest and greatest smartphones are the Samsung Infuse 4G and Motorola Atrix 4G, both powered by the Android 2.2 platform. The Samsung Infuse, which features a large, 4.5-inch screen and a super slim body, is being billed as a great phone for entertainment and social messaging. It’s equipped with a high-resolution, 8-megapixel camera, a high-speed processor, and high-speed mobile broadband that offers quick access to the Internet. “It’s the fastest smartphone that AT&T has ever offered,” Meyers says. The Motorola Atrix – being touted as the world’s most powerful smartphone – has a dual-core processor and unique Webtop application. It features a full Web browser and a laptop dock that affords users many of the same functions as their laptop. “It gives you a full screen and keyboard and enhanced battery,” Meyers

www.akbizmag.com • Alaska Business Monthly • August 2011

says. “It helps to blur the line between laptop computers and smartphones.” Another unique feature of the Motorola Atrix is a fingerprint sensor that allows the authorized user to swipe their finger instead of typing in a password. Motorola Atrix owners can also use simultaneous voice and data capability to talk while they access data, send emails or even review a PowerPoint presentation. “That’s unique to AT&T,” Meyers says. “It will be available with any smartphone that uses our network.” In the near future, AT&T will offer the LG Thrill 4G, the country’s firstever 3D smartphone. The device will feature a “glasses-free 3D experience” in addition to the ability to capture 3D video and snap 3D photos. At MTA, the Motorola Milestone X and Samsung Showcase are two of the newest smartphones. The Milestone X comes with a large 4.3-inch, highresolution screen, a high-definition camcorder and 8-megapixel camera. It also has a virtual QWERTY keyboard with Swype technology that speeds up data input. The Motorola Milestone X also boasts a fast processor that lets users quickly connect to their corporate or personal email. “The Milestone X will keep you in style, while staying in touch,” Palmer says. The Samsung Showcase is a Galaxy S Android phone with full integration of Google Mobile Services. With an ultra-slim design and 4-inch touchscreen display, it’s loaded with a variety of multimedia and entertainment features. In addition, the Samsung Showcase comes with a 5.0 megapixel camera/camcorder and 2GB of internal memory. With its bright screen and fast processor, the Samsung Showcase is also a popular model for GCI. Schlabaugh describes it as the “overall package” and says GCI has received positive customer feedback about the device. Likewise, the Samsung Showcase Galaxy and Motorola Milestone are two of the hottest phones available from Alaska Communications, according to Director of Corporate Communications Heather Cavanaugh.

POPULARITY CAUSING SURGE IN NETWORK TRAFFIC The popularity of smartphones is constantly growing, as more companies

view the devices as essential tools for business. Worldwide, shipments of business smartphones rose from 54 million to 77 million between 2009 and 2010, and are expected to rise to 166 million by 2014, according to global market researcher IDC. And an April survey by The Nielsen Company indicates 37 percent of mobile consumers in the United States have smartphones. That’s consistent with what’s happening at AT&T, where 40 percent of the contract customers are using smartphones, according to Meyers. “This is a 12 percent increase from where we were the first quarter of 2010,” he says. The surge in data traffic from the growing use of smartphones is causing a network capacity crunch for some wireless carriers. AT&T has seen an 8,000 percent increase in data traffic. Consequently, the company has been upgrading its system to handle the customers’ voracious demand. “AT&T is investing heavily in Alaska and the rest of the country with our mobile broadband,” Meyers says. “Last year, we spent between $18 billion and $19 billion dollars. We’re continuing to invest to be able to handle the increases in our traffic.” Schlabaugh says GCI has also experienced a considerable increase in traffic on its network. The trend will likely continue as the company introduces more smartphones and as the capability of smartphones keeps expanding. “We’re working to meet that demand on the back end; we are building out a 4G network to stay ahead of the demand,” he says. GCI’s 4G network should be completed this year, Schlabaugh says. MTA also recently upgraded its wireless network to support greater capacity and faster data speeds, Palmer says.

SMARTPHONE TRENDS A number of interesting trends are unfolding as smartphones continue to pervade the market. Research shows that smartphones are viewed by many people as being closer to minicomputers than cell phones. This may be raising consumers’ expectations regarding the functionality of their smartphones. Today’s mobile workers are demanding access to features you wouldn’t expect to be on a business phone, such as Facebook and game apps, according to Schlabaugh. Also, business-centric

devices are being outfitted with more “bells and whistles” that make it easier for users to balance out their day. They need a highly functional smartphone, but they also want it to look cool and flashy. Schlabaugh says: “Business people want the premium features. People are willing to pay to have the best.” However, Schlabaugh advises companies to develop a mobile strategy and carefully consider how they are actually deploying smartphones. Instead of just buying smartphones as cool toys for their employees, they should look at how these mobile devices can positively impact their bottom line by making workers more productive. At Alaska Communications, internal surveys indicate business customers want more options and value from smartphones, according to Cavanaugh. So the company has redesigned its wireless plans to better meet customers’ needs. For example, it recently launched new Smart Partner wireless plans for business customers. The plans focus on providing high-quality, cost-effective services to businesses, as well as their employees and families. “Whether you want one plan with a bucket of minutes shared by many and billed to your organization or separate plans billed to individuals for reimbursement, we have a solution for you,” Cavanaugh says. Alaska Communications also launched new prepaid wireless plans that offer “true” unlimited talk, text and Web for a flat fee. From there, customers can customize the plan depending on their needs. None of the plans require a minimum contract. “It’s smart and simple,” Cavanaugh says. In terms of general trends, MTA is noticing a dramatic shift in the way business users and other customers are utilizing their smartphones. Palmer says voice calls are no longer the most-used feature, and text messaging, alone, has quadrupled in the past three years. Social networking is the most popular and fastest-growing behavior, with most of the growth driven by smartphone users. Palmer says, in the future, she expects to see smartphones continue to provide more integrated, business-type services. She also expects consumers to use smartphones as an alternative for laptops in the next few years as the ❑ technology advances.

www.akbizmag.com • Alaska Business Monthly • August 2011

ENERGY

Aleutian Islands A-Team Leading the Way in Alternative Energy Planning

Photos by Connie Fredenberg

The 65-kilowatt wind turbine is being lifted in place at Nikolski.

BY VANESSA ORR

s the United States seeks to free itself from its reliance on fossil fuels, many states are beginning to explore alternative sources of energy. Alaska, with its wind, wave and geothermal resources, is the perfect place in which to try to harness these forces of nature as a way to reduce not only its need for traditional sources of fuel, but its own carbon footprint. One area that is leading the way in alternative energy planning is the Aleutian Islands, where the A-Team, made up of leaders from Aleutian regional organizations such as the Aleut Corp., Aleutian Pribilof Islands Association (APIA) and the Aleutian Pribilof Islands Community Development Association (APICDA), are working in collaboration with a number of

community organizations to find better, more affordable energy sources. The A-Team, which was created approximately two-and-a-half years ago, was originally designed to review the various services provided to shareholders throughout the Aleutian region. “We realized that many of the services that are provided by various entities in our region overlap; for example, the Aleut Corp.’s foundation and APIA both offer burial assistance,” said Chris Lace, administrative manager, Aleut Corp. “We created a service directory that helps people figure out where to go for the resources they need, and our shareholders love it.” According to Lace, a member of the APICDA then asked the A-team to focus on the issue of energy.

ENERGY ESSENTIALS “Our second project was a two-day Energy Summit, which was attended by 80 people who flew in from all over the Aleutians,” Lace said. “The timing was just right – if we’d held this meeting even five years ago, there would have been very little interest.” Today, the energy arm of the A-Team is still going strong, the result of which is that there is now an alternative energy project under way in almost every Aleutian community. “When people have to choose between eating and heating, they come on board pretty quickly,” said Lace of the A-Team’s success. “When you can’t afford to live here, you need to get pretty creative in your solutions. Alternative energy is allowing people to stay in the

www.akbizmag.com • Alaska Business Monthly • August 2011

Inside the Nikolski geodesic dome greenhouse during spring planting.

Al ti and Aleutians d nott pay such h hi high h prices i for fuel.” Bruce Wright, senior scientist for the APIA and an original member of the A-Team, says he is pleased with the organization’s progress. “By combining the efforts of a lot of separate groups, we’ve been able to take a more holistic approach to dealing with energy in the region as well as other issues,” he said. “It’s an interesting model, which I believe is pretty unusual in this state. I’ve been working very closely with members of APICDA and the borough to write a proposal for a tidal program in False Pass. If even one of us wasn’t at the table, this project wouldn’t have worked out. It’s a really neat collaboration.” The A-Team targets three different initiatives in its quest to provide Aleutian residents with a better energy plan: using renewable energy, encouraging and educating communities about conservation, and exploring bulk-fuel options. “Conservation is an ongoing activity that includes encouraging people to change to more energy efficient light bulbs and to winterize their homes,” Wright said. “This takes place primarily though the Aleutian Housing Association (AHA). The focus on bulk fuel came about when we began having issues getting fuel delivered to some communities. The original idea was to set up our own cooperative to buy fuel in bulk at reduced rates.” The A-Team is still investigating this possibility, and questionnaires have been sent out to Aleutian communities to gauge need and interest.

RENEWABLES The most notable initiative of the A-Team has been to get a renewable energy project into each community

in off th the area’s i order d tto ttake k advantage d t ’ natural resources. “We get a lot of rain here, so there is hydro potential on almost all of the islands,” said Wright. A run-of-the-river hydroelectric facility in King Cove, for example, is expected to double the area’s energy capacity, providing extra energy for home heating and the local fish plant. A hydro project in Atka is expected to go online in late fall, and Akutan also will have a small hydro plant. “We’re also right on the Pacific ‘ring of fire,’ so geothermal energy is an option for most communities,” Wright said. “Last year, two shallow test holes were drilled outside of Akutan, which showed a large volume of 350-degree water. Unalaska sits on the backside of the Makushin volcano, another proven geothermal resource.” Wind turbine projects, such as those in Nikolski, Sand Point and St. Paul, are already up and running and more are proposed in the future. “The highest class of wind is Class 7, and all of the Aleutians have that,” Wright said, adding that wind farms in the Lower 48 are often built in areas featuring Class 3 winds. The A-Team is currently considering the idea of tidal or ocean current projects in False Pass and St. George Island – concepts that wouldn’t have even been considered a short time ago.

‘MOVING TARGET’ “Alternative energy planning is such a moving target; Everette Anderson of APICDA and I began talking about tidal power in False Pass about oneand-a-half years ago – three years ago, fishermen were the only people talking about it,” Wright said. “These ideas weren’t even on our radar screen a few years ago; now we’ve submitted

www.akbizmag.com • Alaska Business Monthly • August 2011

two proposals for tidal power projects and plan to submit one more.” To make such change happen in such a short period of time takes not only the commitment of the A-Team, but the cooperation of local communities. “Because so many people here are dependent on an ocean that is being hammered by climate change, they are into being environmentalists,” Wright said. “They are forward-thinking folks who understand that we need independence from fossil fuels. This is their livelihood, so it’s not a hard sell.” Anderson says he has seen communities rally around energy efficiency projects first-hand. In conjunction with Wright and Robert Mikol, he compiled an abstract for wind-powered commercial greenhouses. “It’s a sustainable, viable project that pays for itself; the greenhouse can sell its food to the community or to a store, and it also provides

jobs and job training,” he said. The proposal, which was presented to the Alaska Legislature, is geared to providing Aleutian communities with nutritious and healthy alternative food sources, as well as providing food security in the case that planes or boats carrying the community’s foodstuffs don’t arrive. The plan has been shown to work in Nikolski, where Connie Fredenberg, a former APIA employee, established a greenhouse for the community with support from the local tribe. “That greenhouse, which has been in place for three years, was harvesting cabbage up until February of this year,” said Anderson. “Locals are getting highquality, nutritious food throughout the winter months and are learning the art of growing food in a remote location.” The greenhouse, which runs on sunlight, feature a geodesic dome built to withstand inclement weather and a black water tank that

harnesses the sun’s natural heat. “The community really rallied around the concept, volunteering their time to ensure that it worked,” Anderson added. “It’s a proven example on a smaller scale – you can replicate it anywhere.” Funding for these different projects comes from a variety of sources including the federal government, the Alaska Renewable Energy Fund, and some private funding. “Roughly $1 million was provided by the TDX Power for the wind turbines at Sand Point, and the wind turbine at Nikolski was partially paid for through tribal funds,” Wright said. Through these collaborative efforts, the Aleutians are leading the way in alternative energy efforts. “We’ve made unbelievable progress with only a handful of individuals involved on a day-to-day basis,” ❑ Anderson said.

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www.akbizmag.com • Alaska Business Monthly • August 2011

TRANSPORTATION

Photo courtesy of Alaska Aerial Technologies

The future rail route heading north out of Port MacKenzie awaits funding to extend the line north to the Alaska Railroad.

Railway-Port Connections Rising importance for state economy BY RINDI WHITE

laska’s railway-port connections are key to the state economy and, with a major rail expansion in the works, their importance is on the rise. “There are three economic drivers in the state. One is the Alaska Railroad, one is Ted Stevens (Anchorage) International Airport and the other is the Port of Anchorage,” said former Alaska Gov. Bill Sheffield, Anchorage port director.

Rail is one of those three key economic engines, but it also supports the other two. Jet fuel and other products are shipped by rail to the airport and, according to Sheffield, nearly 70 percent of the freight destined for Fairbanks and Interior Alaska offloaded at the Port of Anchorage is transported north by rail. Most products sold in local stores are trucked from freight barges docked at

the Port of Anchorage. But the railroad carries materials needed to build large projects – the pipe that built the transAlaska oil pipeline, for example – and heavy, sometimes hazardous materials such as fuel, fertilizer and bulk antifreeze used at the Anchorage airport and sold by the gallon in Carrs/Safeway stores. Those shipments come in through Alaska Railroad Corp.’s two oldest ports – Whittier and Seward, as do

www.akbizmag.com • Alaska Business Monthly • August 2011

Photo courtesy of Alaska Aerial Technologies

An aerial view shows the expanded barge dock at Port MacKenzie, more than doubling the size of the dock in preparation for large projects such as building oil field modules or storing pipe for natural gas pipeline construction.

one of Alaska’s other bulk commodities – tourists. Seward has one of the busiest ports in Southcentral Alaska and Whittier is a major freight intake point. The two communities are integral parts of today’s rail operations and the Alaska Railroad, in turn, has helped shape both cities. While Alaska Railroad does not operate a dock at the Port of Anchorage, the railroad’s corporate headquarters are located near the port and it is one of the port’s busiest customers, shipping freight north to the Interior and transporting fuel and other goods to Anchorage International Airport. Alaska’s rail line is poised to become even more vital to the state economy. In the Matanuska-Susitna Borough, a $218 million project is under way to build a rail line from the main Alaska Railroad line north of Wasilla to the borough-owned Port MacKenzie.

ALASKA’S FIRST RAILOPERATED PORT Seward is where it all began, and it remains the busiest rail-linked port city in Southcentral. In 1903, the first railroad in the state began in Seward and ran 50 miles north. Twelve years later, Congress paid $35 million to extend

the rail line to Fairbanks, in the process creating Anchorage, which began as a railroad construction town. Today, Alaska Railroad manages the Port of Seward. With good weather and a decent amount of storage, Seward frequently takes in large pieces of freight and it’s where Usibelli Coal Mine stores and ships coal mined in Healy. “We have a little neighborhood of industrial work there,” said Jim Kubitz, vice president of real estate and facilities for the railroad. There are ships docked at Seward every day, Kubitz said. On a recent day, there were four barges, four tugs, a cruise ship and a coal ship all at the port. Sometimes it’s too busy for last-minute users, such as the U.S. Navy on a few occasions, to dock. Kubitz said Alaska Railroad officials have been discussing a plan to expand the freight dock to accommodate the occasional bottleneck. “We would get more ports of call from the Navy. They like (the warm weather and deep water) but they don’t want to tell us they’re coming until the last minute, for Homeland Security reasons,” Kubitz said. He said Alaska Railroad officials are seeking funding sources for the expansion right now.

www.akbizmag.com • Alaska Business Monthly • August 2011

A RAIL-RUN CITY Whittier is a unique city by many standards – it has beautiful views, tremendous fishing and a mountain separates it from the rest of Southcentral. It’s also a city whose land is mostly owned by the Alaska Railroad, and the railroad plays an active part in how Whittier develops today. “We’re joined at the hip whether we like it or not,” said Whittier Mayor Lester Lunceford. Whittier started as a military port during World War II and in 1944 it opened Alaska’s second railroad port. The characteristics that made it ideal then – an ice-free port with deep water – still make it a key component of Alaska Railroad operations. Alaska Railroad officials said Seward might be the busiest rail-operated port but Whittier receives more tons of freight over the course of a year. “It never freezes up and it never needs dredging,” Lunceford said. “Because of that, it’s even sometimes more attractive to marine industry than the Port of Anchorage.” Lacking room to expand, Whittier

will never be able to handle the volume of freight Seward and Anchorage ports can, he said. But its natural characteristics will keep it busy into the future.

LITTLE ROOM TO GROW Land ownership has been a sometimes tense issue between Whittier residents and the Alaska Railroad. Development is constrained by the limited level land available. The city is surrounded on three sides by mountains and bordered by Prince William Sound on the fourth. Alaska Railroad owns much of the developable land, though the city does lease some land back and has developed an assortment of restaurants and gift stores near the water. That ownership has caused friction between the city and the railroad in the past. Carr said although the railroad retains some authority over its land, the City of Whittier mostly controls how the land is used. “The relationship is sometimes difficult … but in the last 10 years or so it’s come a long way. They really do have control of their destiny,” Carr said. Lunceford said the city hopes to

gain more control by developing land it owns east of the city, at Shotgun Cove. The city is building a road to the 640acre city-owned parcel and plans to sell the land for development. It would be an ideal place for city residents to live and for new businesses to locate, Lunceford said. Mostly, the relationship works for Whittier, he said. Things improved for Whittier residents when the State and Alaska Railroad opened the previously rail-only tunnel through Maynard Mountain to vehicle traffic. “The city of Whittier has seen an increase in revenue because of the tunnel,” Lunceford said. Last year nearly 700,000 people visited Whittier. Prior to the tunnel opening, the city regularly saw between 150,000 and 180,000 visitors. More visitors means more revenue from sales tax and transportation taxes paid by people who take glacier cruises out of Whittier. Lunceford said for many residents the tunnel has also meant more freedom. Previously residents had to pay about $75 to put their vehicle on a rail car and unload it at Portage, then drive

www.akbizmag.com • Alaska Business Monthly • August 2011

to Anchorage, he said. People would plan to have all their shopping, errands and doctor appointments done while they were there. â&#x20AC;&#x153;Now it only costs $12 to come back to Whittier and you can go and come back in the same day. Itâ&#x20AC;&#x2122;s a lot more convenient and a lot less expensive,â&#x20AC;? Lunceford said.

YOUNGEST RAIL-OPERATED PORT IS BUSIEST

Port MacKenzie Rail

helping diversify diversify Alaskaâ&#x20AC;&#x2122; Alaskaâ&#x20AC;&#x2122;s economy economy helping ÂŠKenGrahamPhotography.com

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If you buy something at a store in Alaska, thereâ&#x20AC;&#x2122;s a good chance it passed through the Port of Anchorage. According to the municipality, 90 percent of all consumer goods imported to Alaska arrive through the port. It wasnâ&#x20AC;&#x2122;t always that way. Prior to the 1964 earthquake, barge traffic went mainly to Seward and goods arrived in Anchorage either by rail or tractor-trailer, Sheffield said. But Seward and other nearby ports were crippled by the massive Good Friday quake and shippers were forced to use the Anchorage port. â&#x20AC;&#x153;They started coming in the next week to Anchorage,â&#x20AC;? Sheffield said. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;ve come in nearly every week since.â&#x20AC;? Sheffield said ice initially kept the Anchorage port from being used yearround. But shippers discovered that, with two high tides each day and soft, silty ice through the winter, the Anchorage port is usable all year. Although the Alaska Railroad doesnâ&#x20AC;&#x2122;t have a dock at the Port of Anchorage it is a primary port user. As such, the port in 2002 built a rail link from the port to Alaska Railroadâ&#x20AC;&#x2122;s yard aimed at streamlining shipping for the railroad. The rail line will allow shipping containers to be unloaded from a barge and dropped on a flatcar, eliminating the need to truck the container from the barge to the Alaska Railroad yard for loading. Sheffield said the rail line is in place but the city lacks space at the port to make those transfers happen. â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t have the room between the road and railroad tracks to efficiently use this area,â&#x20AC;? he said. A new road being built as part of the Anchorage Port Expansion Project will make room for those streamlined

www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ August 2011

freight transfers. Sheffield said that project is still a few years out.

PROVIDING ACCESS TO UNTAPPED MINERALS Meanwhile, work at Port MacKenzie, two miles north of the port of Anchorage, is progressing at a fast clip and port supporters say it won’t be long until the Mat-Su is shipping out raw minerals and new mines are opening up in Interior Alaska. The rail line to the borough port, scheduled to be completed by 2014, would be more efficient mostly because it would shave 140 miles off the distance to tidewater. “The production of bulk resources is heavily dependent on low transportation costs. This new rail link will shorten the distance to tidewater and lower transport costs to such an extent that minerals now idle will be profitable to mine and export,” stated Mat-Su Borough assistant manager Elizabeth Gray in a recent project fact sheet. A 2007 analysis of potential rail extension users by Fairbanks economic and mining geologist Paul

Metz shows Port MacKenzie could be key to making Interior mining profitable. The report cited deposits of lead, copper, molybdenum, zinc, limestone and other minerals that could be mined and shipped through Port MacKenzie via rail. “Metallic mineral deposits and coal in the Railbelt corridor have the greatest potential for generating additional rail freight revenues and additional revenues to the State of Alaska as well as additional economic benefits to the Railbelt communities,” Metz states in his report. Metz estimated the State would receive $18.1 billion in license fees, permits, corporate income taxes and mining royalties over 60 years.

PROJECT POISED FOR PROGRESS The Mat-Su Borough is slated to receive $37.5 million in State capital funding this year for the next phase of the 32mile rail extension. Over the past four years, the borough will have received more than $100 million for the project. The money has funded a rail loop within the Mat-Su Borough’s 9,000-acre

port district, a project still in construction. Port MacKenzie Director Marc Van Dongen said the borough is preparing to solicit bids for the next major section – about five miles of rail bed headed north of the port. The borough is hoping to receive funding to complete the rail bed and lay rails over the next two years. Van Dongen said interest among port users is heating up. The borough is in discussions with a company that is considering building a fuel tank farm there and PacArctic Logistics, a logistics and trucking company, has applied for a seven-acre lease. Those two companies join two already operating at the port, Van Dongen said. Alutiiq Manufacturing Contractors LLC, an Afognak Native Corp.-owned company builds modules to be trucked to the North Slope, and NPI, a former wood-chip exporting company is now importing cement. Van Dongen expects more interest as the rail project progresses. “Once the rail is completed, things are really going to take off there,” he said. “And the rail is the crown jewel.” ❑

Shipping to Alaska might seem complicated, but Span Alaska has spent over 30 years finding the right solutions for our customers. With decades of experience moving freight to and throughout Alaska, no one is better equipped to handle all your transportation needs. Across the country or across the state, we know how to get the job done. And get it done right. Because we don’t just move freight – we deliver satisfaction.

Mike Landry, President 1.800.257.7726 www.spanalaska.com www.akbizmag.com • Alaska Business Monthly • August 2011

HEALTH & MEDICINE

Men’s Hearing More prone to hearing damage on the job BY DEBORAH JEANNE SERGEANT

RISKY PERCEPTIONS

he Occupational Safety Health Administration (OSHA) reports that 30 million people nationwide are exposed to hazardous noise on the job annually. Anyone can experience hearing loss; however, men suffer higher rates than women. Lisa Owens, a doctorate in audiology, directs Alaska Speech and Hearing Clinic in Anchorage and stated there is no anatomical difference between the genders’ ears. Availability of exposure causes the disparity between their rates of hearing loss. Many traditionally male occupations involve ear-damaging environments or tasks.

OCCUPATIONAL NOISE Power equipment and heavy machinery are top contributors to occupational noise. Men’s reluctance to wear hearing protection or visit an audiologist to learn about how to protect their hearing also play a role. Many instances of hearing loss take decades to manifest at perceptible levels, which can lull men into thinking they are not damaging their hearing. Of course, OSHA standards require you to protect your employees’ hearing. Alaska Administrative Code, Occupational Health and Environmental Control 04.0104 gives specific directions on Noise Exposure and Hearing Conservation Programs, for which no business is exempt because of small size. Scott Ketcham, director of OSHA’s Anchorage Area Office, said, “Any employer who has employees is responsible to meet that requirement.” In general, a business that exposes employees to sounds 85 decibels (dB) or higher for eight hours or more must have a Hearing Conservation Program, which includes providing free hearing protection, education and training. A safety technician uses electronic equipment to measure the time-weighted average for a shift.

Donna Demarco, hearing instrument specialist and owner of Accurate Hearing.

“It is conceivable that a blast of noise is loud enough you could overexpose employees and have a quiet remaining shift,” Ketcham said. For many people unaccustomed to safety protocols, the regulations can be confusing as to what constitutes unsafe noise. For example, a janitor may seem to have a low occupational risk. “They run vacuums and those can cause hearing loss if they’re running them all day long,” said Donna Demarco, hearing instrument specialist and owner of Accurate Hearing in Anchorage. Different models of the same equipment create different levels of noise. For louder workplace noises, just one exposure can damage hearing. “With carpenters, if you hit the nail on the head right, you can damage hearing,” Demarco said. “It only takes once.”

Think your office employees are safe from hearing damage? Owens at Alaska Speech and Hearing Clinic in Anchorage has many clients from office settings who may work near a piece of noisy equipment. “People who use headsets that are set high find a loss in one ear,” she added. “OSHA requires some industries to be closely followed, but some are overlooked.” She offered musicians playing in bars as one example. “Supervisors who are in and out of noisy workplaces – the ‘just a couple of minutes’ syndrome – are susceptible to hearing damage,” said Sandra MacLean Uberuaga, occupational audiologist and president of Alaska Occupational Audiology and Health Services Inc. in Anchorage. The perception of what causes hearing damage often places people at greater risk. For every five decibels above 85 dB, the length of exposure time decreases by half. “It also depends upon the workplace acoustics,” Owens said. “If there’s a lot of absorption of sound, you can be in that place for a longer period of time.” A music-practice room outfitted with sound-absorbing tiles and carpeting is likely safer for the ears than a room with a cement floor and no drapes. “The ‘safe’ amount of time to be exposed to most chainsaws is less than 15 minutes per day,” MacLean Uberuaga said. “Most chainsaws produce well over 100 decibels to the operator. Just one round from a 30.06 rifle has the same energy as someone shouting into your ear for eight solid hours. It is just compressed.” Even a whisper quiet environment can cause hearing damage. “Few know that many chemical exposures can damage hearing,” MacLean Uberuaga said. “Some of the ‘ototoxic’

www.akbizmag.com • Alaska Business Monthly • August 2011

Sandra MacLean Uberuaga is an occupational audiologist and president of Alaska Occupational Audiology & Health Services Inc.

agents known to cause hearing loss include common industrial solvents such as benzene, toluene, styrene, xylene and

trichloroethylene. Heavy metals such as arsenic, lead and mercury and gases such as carbon monoxide and low oxygen levels are also known to cause hearing loss.” The central nervous system can suffer damage, as can the auditory nerve. Combined with dangerous noise, the two can cause greater damage than exposure to each individually. As a baseline, make sure your company abides by OSHA regulations, but don’t rely solely upon OSHA standards. “It is well known in the industry that OSHA is not protective enough,” MacLean Uberuaga said. “Following the hearing conservation standard by the letter will still allow hearing loss in some employees.” Ketcham would agree. “It’s important to protect employees and look at the spirit of the law, not the letter of the law,” he said.

PROTECTING HEARING Beyond practicing good ethics, protecting employees’ hearing also can help your bottom line. Employees with hearing loss will find it more difficult to communicate with others,

creating barriers among employees and with clients. “They can put themselves and others in danger,” Owens said. “If the company was liable, they can be responsible for the cost of treatment depending upon what industry they’re in.” An employee also can sue for his occupational hearing loss. Supply employees with the right protective equipment, train them on how and when to use it, and follow through to make sure everyone’s on board. “Always look at the noise reduction rating, which tells you how many decibels it will reduce for you,” Demarco said. “A lot of people buy hearing protection off the shelf and they think they’re protecting their hearing and they’re not.” The Noise Rating Reduction (NRR) on ear plugs or ear muffs tells how many decibels it will protect the wearer from, but Ketcham cautions employers to take the rating with a grain of salt. “If there’s a NRR for an ear plug, we generally cut that in half because it’s tested in a lab but when real person puts them on, they don’t do it like in a lab,” he said.

www.akbizmag.com • Alaska Business Monthly • August 2011

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An NRR of 30 should be considered only 15 to compensate for reallife usage. Many times, employees resist wearing protective equipment because it’s ill-fitting. That’s why it’s important to consult with a company that can help you find the right equipment. “Testing different types of hearing protection can help,” Demarco said. “The ones that are custom made don’t hurt your ears and are washable in soap and water. The pressure won’t build up.” Some employees may fear they will be unable to talk while wearing hearing protection. “If an employee has basically normal hearing they should be able to hear conversation or machinery better with properly worn hearing protection while in noise levels above 80 dB,” MacLean Uberuaga said. “When there is hearing loss present the alternative types of protection may be indicated.” More isn’t necessarily better. Overdoing hearing protection can cause worse problems and contribute to disuse of it. “Sometimes employees are overfitted with hearing protection, putting them at increased risk of an accident,” MacLean Uberuaga said. “It is not an effective Hearing Conservation Program if the employee cannot achieve a proper or appropriate fit based on their exposures and their hearing abilities.”

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Once employees are outfitted with hearing protection, make sure they use it. Educating employees about the risk of their workplace, the signs of early hearing loss and how hearing protection mitigates that risk will also help increase compliance. “Early signs of hearing loss to watch for are tinnitus (ringing in the ears), a dull feeling in the ears after exposure, temporary hearing loss that seems to restore to pre-exposure levels after several hours,” MacLean Uberuaga said. “Perhaps one of the most reported complaints of hearing loss from noise is the employees’ inability to hear clearly while in background noise. “Underlying damage can be present before it even shows up on the hearing test. Hearing loss from noise can

be prevented but once hearing is lost it is irreversible.” Follow through with annual hearing tests to ensure your hearing safety program is working.

Listen Up! By Deborah Jeanne Sergeant The American Academy of Audiology (www.howsyourhearing. org) offers the following comparison of everyday sounds, warning that “noise-induced hearing loss can be caused by prolonged exposure to any loud noise over 85 decibels (dB).” ● 60 dB Normal conversations or dishwashers ● 80 dB Alarm clocks ● 90 dB Hair dryers, blenders and lawnmowers ● 100 dB MP3 players at full volume ● 110 dB Concerts (any music genre), car racing and sporting events ● 120 dB Jet planes at take-off ● 130 dB Ambulances ● 140 dB Gun shots, fireworks and custom car stereos at full volume The best way to assess the hearing hazards at your workplace is to consult with a safety expert; however, the American Academy of Audiology offers the following tips on how to know if a noise can damage hearing. Noise is dangerous if: ■ You have to shout over background noise to be heard ■ The noise is painful to your ears ■ The noise makes your ears ring ■ You have decreased or muffled hearing for several hours after exposure.

www.akbizmag.com • Alaska Business Monthly • August 2011

GENERAL OP-ED

Seeking Champions for Alaska’s Future Whose economic theory will guide Alaska – Keynes or Hayek?

man is walking along a road in the countryside and comes across a shepherd and a huge flock of sheep. He tells the shepherd, “I will bet you $100 against one of your sheep that I can tell you the exact number in this flock.” The shepherd thinks it over; it’s a big flock so he takes the bet. “973,” says the man. The shepherd is astonished, because that is exactly right. “I’m a man of my word. Take an animal.” The man picks one up and begins to walk away. “Wait,” cries the shepherd, “give me a chance to get even. Double or nothing that I can guess your exact occupation.” The man takes the bet. “You are an economist,” says the shepherd. “Amazing!” responds the man, “you are exactly right! But tell me, how did you deduce that?” “Well,” says the shepherd, “put down my dog and I will tell you.” Dogs and sheep aside, Alaskans are engaged in a nearly century-old debate among economists. Sometimes referred to as the “dismal science,” just saying the word “economics” has been known to induce coma-like symptoms. Heck, an economist told me that shepherd joke. And yet, every day we awake to the real-world impacts of the debate between Keynesians and Hayekians.

ECONOMIC THEORIES Keynes postulated that deficit spending to stimulate in poor economic times would be repaid in the resulting good economic times. Hayek asserted that government-led spending would miss

the correct market signals, and deepen the economic troubles, leading to further interventions, further deficit spending, and further removal of capital from the private sector – the economic version of a nose dive. Worldwide, elements of Keynes’ ideas reigned supreme from the 1930s through the 1970s, and then elements of Hayek’s ideas gained the upper hand. The bursting of the dotcom and real estate bubbles has world leaders running back to the Keynes camp. Our own presidents George W. Bush and Barack Obama jumped feet first into the Keynes camp by proposing government stimulus and “too big to fail” programs with borrowed money. Please note that I qualified that governments have adopted “elements” of each economists’ ideas. I was not the best economics student, but I know these two and their acolytes wrote, and are still writing, volumes of theories that few human beings could digest, let alone understand and implement in the public arena. On one hand, some Alaska leaders think that in tough economic times, government spending is the preferred method to create jobs and invigorate the economy. On the other hand, some Alaska leaders think government spending is an element of central economic planning that will never allocate resources as efficiently as unfettered supply and demand. Like so many things in politics, economists and their theories have been turned into commonplace jokes.

Photo by Flavin Photography

BY RACHEL PETRO

Rachael Petro, President/CEO Alaska State Chamber of Commerce

However, there is truly much to debate on the ideas behind the quips. Now back to how Keynes versus Hayek affects Alaska. First, it is odd for State leaders who cannot borrow money to fund non-capital spending to be favoring Keynesian interventions. Since our State government has taxed our way into billions of surplus dollars, we can “afford” to be Keynesian, or at least spend like them. Hayekians in Alaska maintain that our State government has removed that surplus tax money from the private economy, will be spent inefficiently and result in less spending by private interests governed by the hyper-efficient forces of supply and demand. So how do the Keynesians in Alaska

www.akbizmag.com • Alaska Business Monthly • August 2011

propose to repay the dissipation of surplus? Are the “investments” being made today by record State spending going to alter our economic future enough to replace the oil wealth we enjoy today? When less and less oil is produced from tax-paying State fields, will the Keynesians want to make further “investments” to stimulate a worsening economic future? To date, State government spending has been maintained by lucky breaks on oil price. Are the Keynesians convinced that oil will soon reach $150 per barrel?

Unfortunately, we cannot ask Keynes and Hayek to answer these questions. We can use their written words, and the works of their followers to help us chart a path forward that achieves the following: ■ Protect and grow our oil economy. Without oil to tax, we have no hope of funding even a fraction of current government. Growth of the oil economy will create more private-sector jobs and allow us to protect and sustain valued government services.

■ Nurture and get out of the way of new economic sectors. Fostering new private sectors takes time, risk, and dogged persistence and requires government policies which nourish and embrace growth. ■ Focus on economic activity in all regions of the state. While oil taxes are critical to fund government programs including schools, from Bethel to Ketchikan, the oil economy does not create many private sector jobs in these communities. New sectors need to be identified and created all regions. ■ Invest in human capital. We must prepare young Alaskans to do the hard work of sustaining and growing Alaska’s economy rather than just postulating theories. ■ Of course, these four goals must be done while speaking civilly, sustaining our environment, and strengthening our communities and cultures.

WINNING A BRIGHT FUTURE Economics is the only field in which two people can share a Nobel Prize for saying opposing things. Hayek and the Swedish version of Keynes, Gunnar Myrdal, jointly won the 1974 Nobel Prize in Economics. The Royal Swedish Academy of Sciences recognized them “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.” The prize the Keynesians and Hayekians in Alaska can win is much greater – a bright future. Plan to attend the Alaska State Chamber of Commerce’s 52nd annual conference Sept. 19-21 in Talkeetna where champions for Alaska’s future, Keynesians and Hayekians alike, will gather to discuss how to make Alaska the best place to do business. ❑ About the Author Rachael Petro joined the Alaska State Chamber of Commerce in February 2011 as the President/CEO. Her principle role is advocacy of sound business policies on behalf of businesses across Alaska. Petro has served in various advocacy roles for over 15 years, always with a focus of improving Alaska’s business climate.

www.akbizmag.com • Alaska Business Monthly • August 2011

SPECIAL SECTION:

BUILDING ALASKA

Construction Women of the Year Alaska NAWIC Awards Three in 2011 BY STEPHANIE JAEGER

Photo by Marya Pillifant

ach year the Alaska Chapter of the National Association of Women in Construction (NAWIC) presents the Construction Woman of the Year Award to women who have demonstrated outstanding capabilities as construction professionals. This year, three women were recipients of this award: Marya Pillifant, project manager at Benchmark Construction; J. Ellen McKay, professor at the University of Alaska Anchorage Architecture and Engineering Technology Program; and Mary Kay Bunker, project engineer at PCL Construction Enterprises. NAWIC is an organization that offers education, networking, mentoring, leadership and advocacy of women who work in the construction industry.

MARYA PILLIFANT

Photo by Judy Patrick Photography

Marya Pillifant came to construction by way of Wyoming and France. She was born in Massachusetts, raised in Wyoming and began her college studies there. She then traveled to France where she worked as a nanny while

2011 NAWIC Award Winner Marya Pillifant nominated by Benchmark Construction.

Northern Holdings 40,000-square-foot hangar/office building built by Benchmark Construction.

earning a degree in International Studies and French. After working for the Forest Service on a summer job, she joined the “construction crew” and helped pour concrete for fishing areas for the disabled and built campground facilities. Heredity played a big role in Pillifant’s attraction to construction. Her great uncle was Harry Morrison who founded Morrison Knudson Construction that built the Hoover Dam and the Alyeska Pipeline. Her family supported her in her ambition to work in construction, a nontraditional profession for a woman. “Concrete is my favorite building material,” Pillifant says. “I also enjoy helping clients realize their vision.” Not only did Pillifant inherit love of construction, her family came from Alaska. Her mother grew up on Kodiak

Island and her grandfather had worked as a Bush pilot flying a Grumman Goose. In 1989, Pillifant was working for MK Construction in New York when she and her mother decided to come to Alaska to look for jobs after the Exxon Valdez oil spill. They began working as bus drivers and became members of the Teamsters Union. After the oil spill cleanup ended, Pillifant completed the carpenter’s apprenticeship through Local 1281 and became a journeyman carpenter. From there she was hired as project manager at Benchmark Construction. In the past year, Pillifant has worked as project manager on two diverse building sites for Benchmark. The first was a state-of-the-art hangar and office facility for Northern Holdings Inc. at Ted Stevens Anchorage International

www.akbizmag.com • Alaska Business Monthly • August 2011

each of these projects is a great example of this. Pillifant’s future plans are to continue to participate in cutting-edge projects, to explore new sustainable design and building methods, and to travel to some of the more remote parts of the state she hasn’t seen.

J. ELLEN MCKAY

University of Alaska Anchorage professor Ellen McKay wins NAWIC Award.

Airport. Benchmark completed this 40,000-square-foot building in less than 32 weeks. The second was the renovation of a downtown 1950s era Anchorage home. This home was transformed into an airy, modern space in tune with the client’s creative personality. Pillifant says Benchmark is true to its byline “Creating Remarkable Buildings” and

J. Ellen McKay came to Alaska as a freshman in college when her parents moved here. Her undergraduate degree was in archaeology, but from there she began taking classes in the Drafting Technology Program at Anchorage Community College, now known as University of Alaska Anchorage. The Drafting Technology Program became the Architectural and Engineering Technology Program in the late 1970s. After earning a certificate in civil engineering and survey drafting, she worked for a surveyor before returning to the program at UAA as an adjunct instructor. After four years, in 1984, she was hired as a full-time instructor. “I have been doing this for more than 30 years and have trained literally hundreds of women in the construction

field,” McKay says. “In fact, one of the other recipients, Mary Kay Bunker, was one of my students.” McKay helped write the curriculum for UAA’s construction management degrees. Now senior faculty, she has hired and mentored every faculty member in the department. In addition to teaching at UAA, McKay’s other interest is Title 21, the land-use code for the municipality; computer applications for the design and construction fields (AutoCAD and associated programs); and faculty evaluation. She is a member of the Municipality of Anchorage Platting Board. In her spare time, McKay explores the roads on her BMW motorcycle.

MARY KAY BUNKER Living in Alaska since age 3, Mary Kay Bunker began her career as an administrative assistant after graduating from UAA with a degree in management. After a few years, she felt she was not being challenged enough in this position. She was concerned about her ability to manage the demands of her family, work and night school.

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www.akbizmag.com • Alaska Business Monthly • August 2011

Photo by Brian Bennett

Mary Kay Bunker (left) receives 2011 NAWIC Alaska Chapter Constructive Woman of the Year Award from chapter President Darla Hall.

Her daughter encouraged her when she said, “Why not? You always say I can be anything I want, so why can’t you?” Her husband, Mike, was also supportive of her decision to go back to school and took on the responsibility of sharing the work in their household. With the help of Associated

General Contractors of America (AGC) scholarships, Bunker went back to school at UAA in the Architecture and Engineering Program. Near the completion of her studies at UAA, she began working for PCL Construction. Bunker finds construction exciting. “The lifecycle of a project and seeing it through from a hole in the ground to a beautiful new building gives me a great sense of pride and accomplishment,” Bunker says. “Then it is on to a new entirely different project.” PCL encourages ongoing education and certifications that keep her enthusiastic and interested. While working at PCL, she has completed her Leadership in Energy and Environmental Design (LEED) certification and her Commercial Building Inspector certification. Her newest interest is green building and responsible construction practices. She is working toward more involvement in quality control in her job as field engineer at PCL. In the future, Bunker plans to continue to learn more about quality control and to work for PCL in Kodiak,

the place she lived as a child. She also enjoys riding her motorcycle, camping, reading and traveling. Bunker has found PCL a wonderful employer. “I do not find myself running into the ‘boys network’ roadblocks,” she says. Outside of her job, Bunker is very active in NAWIC and is on its board of directors and membership committee. This year she organized a membership drive that brought 15 more members into the organization, increasing the membership by a third. “We have incredible networking and educational opportunities and reach out to the community to promote and support women in construction,” Bunker says. In spite of her involvement in the organization, Bunker’s nomination for the award came from PCL’s construction manager, Scott Ivany, and their business development manager, Louis Gire. “I was completely shocked when I won,” Bunker says. “I had never considered myself worthy of the award based on the caliber of incredible women who ❑ have won in the past.”

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BUILDING ALASKA

UAA Construction Management Program BY TRACY KALYTIAK

arah Smythe had just completed her senior year of high school when her father, a master mechanic for Summit Paving, found her a job as a flagger at a job site. It wasn’t exciting work, so she moved into working as a general laborer before heading off to Northeastern University in Boston. During summers, she would return to Alaska and continue working in construction jobs. “When I graduated, I came home to Anchorage and kept doing it,” Smythe said. “It was more lucrative than what I’d been going to school for, communications. It was a good workout and it was kind of nice in the summer to be outside.” Smythe worked as a grade checker for eight years, at Summit and then for Quality Asphalt Paving. She wanted to learn how projects were designed, so she decided to enroll at the University of Alaska Anchorage and study civil engineering. In the meantime, at work, QAP moved Smythe into a project engineer position. “If no one would have said anything, I probably would have kept on with civil engineering because I didn’t know there was a construction management program at UAA,” Smythe said. But someone did say something. That someone was Ben Northey, president of Colaska, QAP’s parent company. Northey invited Smythe to a meeting of the UAA construction management program’s advisory board – comprised of Associated General Contractors of Alaska members – and convinced Smythe to pursue a four-year degree in construction management. She earned a Bachelor of Science in Construction Management and received her degree May 1. “Those people told me what the curriculum was for the program and made it pretty easy for me to decide to switch majors,” Smythe said. “Construction management was actually

Students in the University of Alaska Anchorage’s construction management degree program celebrate their graduation in a “hard-hatting” ceremony at the Associated General Contractors of Alaska headquarters.

h I was doing d i as a project j engineer. i what Civil engineering was geared more toward design.”

CONSTRUCTION MANAGEMENT Construction management deals with scheduling, budget control, labor, equipment monitoring, materials costs, job-cost tracking, construction law, how to deal with subcontractors, scope of work, construction documents and how to actually put those tools to use — how to manage projects, how to schedule jobs. Construction management students can tackle a variety of jobs – construction foreman to construction management, cost estimators, project superintendents, field engineers, assistant field engineers and working in government agencies. Jeffrey Callahan, director of UAA’s CM department, says 14 students have graduated with Associate of Applied Science degrees since 2006 and 30 students have graduated with Bachelor of Science degrees since 2008. Courses in the CM curriculum are closely tied to the industry that needs and supports it, Callahan has said. The curriculum was designed in accordance with requirements of the American Council for Construction Education. Callahan and other architectural and engineering technology faculty at UAA in 2001 first discussed the possibility of forming a CM program, but a needs-assessment survey done the following year by UAA’s David E. Gunderson, Dr. Jang W. Ra, Dr. Herb Schroeder and H.R. Holland

l d their h i efforts, ff ki accelerated sparking conversations between industry and academia representatives and bringing forth Alaska’s first CM program. The survey stated that while Alaska’s construction industry contributes 7.5 percent of a $24.4 billion gross state product and was expected to experience a 27 percent increase in employment from 2005 to 2045, the closest post-secondary construction education program was located 2,435 miles away, at the University of Washington. Alaska was one of seven states – Delaware, Hawaii, New Hampshire, Vermont, West Virginia and Wyoming – without a CM program. The other states (with the exception of Hawaii) were located within 260 miles of a university with a CM program, however. Ninety-nine people in the construction industry returned their surveys, which indicated the need for approximately 31 CM graduates annually. Respondents said they would be willing to pay an average starting annual salary of $39,004 to someone with little or no experience, but an average starting salary of $42,233 to a CM graduate with six months of internship work experience.

STEADY GROWTH The program has been dealing with steady but manageable growth, Callahan said. For about four years, the department was dealing with doubledigit percentage growth in total credit hours and during the current academic year it saw just a 7 percent increase in credit hours over 2010. “We believe that enrollment has plateaued now… with our course capacity averaging

www.akbizmag.com • Alaska Business Monthly • August 2011

Photo courtesy of Ben Northey, Colaska

Hard-hatters secure jobs before graduation

about 85 percent,” Callahan said. Course offerings have expanded. The department developed a new course in construction surveying that will be delivered through the School of Engineering in the geomatics department. “The students will be exposed to the latest and greatest tools being used in industry today,” Callahan said. Callahan says AGC’s relationship with the CM degree program has matured. “AGC has continued to provide support for our program in many ways,” Callahan said, “but at the same time I think that they have learned to trust the CM program at UAA to deliver professional management education for individuals who are just beginning their careers in the industry and to produce graduates who are making a positive impact. In terms of direct support, the members of AGC have consistently provided direct support to the program, especially for student activities and scholarships.” AGC members serve on the UAA Construction Management Advisory Committee, which meets four times each academic year.

“Their contributions to the program in an advisory capacity are invaluable,” Callahan said. “Many of our graduates are working for AGC members and many of our interns are employed by AGC members. Completing an internship is a requirement for all CM graduates and we have never yet failed to place a UAA CM student in an internship.” This summer, Callahan said, 26 interns are working in the field for general contractors, subcontractors, engineering/ management firms, construction management consulting firms, federal government owner agencies and Alaska Native-owned construction entities. “Most of these companies look at internships as a way to attract and evaluate talent for future professional positions,” Callahan said. “Notably absent from this list are the State of Alaska, the Municipality of Anchorage, the Anchorage School District and other Alaska local governments, who seem to be oblivious to how important professional management internship programs are to the future of our industry and our Alaska economy.”

AGC of Alaska has supported the UAA CM Student Club/AGC Student Chapter, which took top honors this year in the commercial category of the Associated Schools of Construction Region 6 and 7 student competition in Reno, Nev. “That’s like someone coming out of the minor leagues and winning the World Series,” said Mike Swalling, president of Swalling Construction Co. Last May, the CM department topped off its academic year with a graduation celebration known as a hard-hatting ceremony, held at AGC headquarters. “The AGC Scholarship program has been especially kind to our CM students,” Callahan said. “I believe every UAA Construction Management student who applied for a scholarship received some level of support from the AGC Scholarship Fund.” Post graduation support is even better. “I think the most important thing to report is that 100 percent of the graduates had already secured jobs,” Ben Northey said of this year’s graduating class. “We need to fill the pipeline with these young bright minds, and this is ❑ the way to do it.”

www.akbizmag.com • Alaska Business Monthly • August 2011

SPECIAL SECTION:

BUILDING ALASKA

U.S. Army Corps of Engineers Directs Federal Defense Dollars in Alaska Spending includes military construction, civil works and environmental remediation BY NICOLE A. BONHAM COLBY

CORPS CONTRACTS INFUSE LOCAL ECONOMIES The U.S. Army Corps of Engineers Alaska Division serves as the nation’s engineering, technical and construction-support arm to support peacetime and contingency operations throughout the Pacific Region and Alaska. Established on April 9, 1946, the division is headquartered at Elmendorf Air Force Base in Anchorage and is responsible for the largest geographic area in the nation. The Alaska Division program represents among the largest within the Corps of Engineers, with primary focus on military construction, civil works and environmental cleanup. Military construction projects constitute the greatest portion of the Alaska Division’s workload, trending toward the specific support of U.S. Army transformation mission and U.S. Air Force realignment and re-stationing.

ith construction among Alaska’s key economic drivers, the infusion each year of federal monies for military-related construction projects is – not surprisingly – significant. In that regard, the Alaska economy uniquely benefits from the state’s strategic geographic location. As a northern stronghold of military presence for the nation, Alaska hosts a broad array of comprehensive facilities for the various branches of military service. That federal financial infusion flows to the front lines of the state’s work force when local private companies and their employees are awarded contracts to design, build and maintain military-related facilities in Alaska. The Army Corps of Engineers Alaska District awarded a $ $33.8 million contract to Watterson Construction Company in August 2008 to construct the Military Police Complex Barracks project on JBER/Richardson. The barracks house 264 single soldiers in a manner that is similar to housing in the private sector community surrounding the installation.

The Corps’ civil works program operates and maintains 52 river and navigation projects along Alaska’s coastline, including 36 small-boat harbors, 10 channels, four breakwaters and two river projects. The division’s Formerly-Used Defense Sites (FUDS) program has identified 312 environmental cleanup and restoration projects within the Alaska, with well over 100 projects completed to date. The Corps of Engineers Alaska Division military construction program will be steady over the next couple of years, with a small growth in the 2013 program, according to Corps officials. After that, the Corps of

Engineers’ military program will flatten out. Projected military program totals feature 15 projects for FY11 for $418 million; an estimated seven projects in FY12 totaling $370 million; and an estimated 12 projects in FY13 totaling more than $550 million, according to Corps officials.

CORPS TO AWARD 15 PROJECTS IN FY11 MILITARY PROGRAM The Corps expects to award 15 construction projects, totaling $418 million, during FY11. The current contract award season began on May 5, 2011, delayed due to budget negotiations in Washington, D.C. The Corps usually

www.akbizmag.com • Alaska Business Monthly • August 2011

ÂŠ kengrahamphotography.com

The Army Corps of Engineers Alaska District awarded a $39 million contract to Watterson-Davis Joint Venture and Kumin to build a consolidated maintenance hangar on JBER/Elmendorf. Construction was completed in early 2011. This project included a hangar for six aircraft with a wash rack, an aircraft maintenance unit, and squadron operations area, including a Reserve associate squadron operations area, to support the beddown of F-22A fighter planes. The concrete foundation met Alaska seismic and frost heaving requirements. The building is a structural steel frame with metal skin and standing seam metal roof.

awards its contracts in the second quarter of the fiscal year: January through March. When the budget passed, Alaska received priority in the distribution of funds because of its short construction season. As a result, the Corps will award most of its projects in the third and fourth quarters this year: April through June and July through September. A sampling of construction projects follows. Joint Base Elmendorf-Richardson ( JBER)/Richardson will see three Corps projects awarded in FY11, at a cost $113 million. Included among those is the JBER/Fort Richardson Multipurpose Machine Gun Range. The Alaska District awarded the $10.2 million contract to Tunista Construction, LLC, as a competitive Small Business Administration 8(a) set-aside. The scope includes an additional six target lanes, two new buildings, covered bleachers, and site

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development. The project will start this summer and is scheduled for completion in July 2012. Major subcontractors are Brice Incorporated and Alcan Electrical and Engineering. Tunista and Brice are both wholly-owned subsidiaries of Calista Corporation, the second largest of the original 13 Alaskan Native corporations. Fort Wainwright will see five projects awarded at $193 million. The Corps’ Alaska District awarded the Fort Wainwright Aviation Task Force Phase IIA Hangar project to Watterson Construction Company for $78 million on May 10. The project includes a Rotary Wing Parking Apron, Foundations, Superstructures and Private Operating Vehicle Parking Area. In addition, Fort Wainwright also will receive replacement of family housing. The Corps awarded the Fort Wainwright Army Family Housing Replacement FY11 design/build project to American Mechanical Inc. for $14.1 million on May 12. This project completes utilities, landscapes, hardscapes and roads within a partially constructed neighborhood of 110 single-family housing units constructed as part of a combined FY04 Family housing project, according to the Corps. The project will complete and perform corrective work to primary facility housing units and supporting facilities site work Under the Corps FY11 award schedule, Fort Greely will receive one construction project at a cost of $26 million. The Corps’ Alaska District awarded the Fort Greely Fire Station contract to American Mechanical Inc. for $18.6 million on May 10. The Design Bid Build project will construct an approximately 28,000-square-foot, three-company headquarters fire station for the facility. JBER/Elmendorf will receive three projects totaling $30 million. Eielson Air Force Base will receive three construction projects, totaling $56 million, as part of the Corps’ FY11 award schedule. The Corps awarded the Eielson AFB Repair CHPP Boilers Phase I and Repair CHPP Boilers Phase II Design/Build projects to Haskell Corp. on June 2. The contract award amount was $53.9 million. These projects will replace boiler No. 6 (Phase I) and No. 5 (Phase II) with new 120,000-pound/

hour spreader stoker boilers. To accomplish the project, FY10 Emergency Add and FY11 Military Construction Air Force project funding were combined into a single contract.

FY12 ESTIMATES $372 MILLION IN CORPS CONTRACTS Corps spending will drop from $418 million in FY11 to $372 million in FY12, also dropping from 15 projects in FY11 to an estimated seven projects slated for FY12. JBER/Richardson will see construction projects totaling $200 million. Fort Wainwright will receive one construction project, totaling $114 million. Two projects are scheduled for Eielson Air Force Base, totaling $58 million.

ESTIMATED $550 MILLION IN CORPS PROJECTS FOR FY13 The Corps’ military spending will total an estimated $550 million in FY13. The 12 projects are expected to span the following Alaska military sites: four projects slated for JBER/Richardson, totaling $208 million; six projects for Fort Wainwright, totaling $285 million; one project at Eielson Air Force Base, at a cost of $45 million; and one project at Clear Air Force Station, totaling $12 million.

FORT WAINWRIGHT COMPLEX FOCUS OF NINE PROJECTS The estimated expenditure for work at the Aviation Task Force Complex at Fort Wainwright is reflected in each fiscal year’s figure above. However, given the complexity and expanse of the project, it is also useful to view the complex in a vacuum, as an example of the large-scale work occurring in Alaska through the federal infusion of military construction spending. The Aviation Task Force Complex at Fort Wainwright encompasses nine projects, totaling $484 million and spanning nearly a half decade. • FY10: Phase I – 4 projects at $95 million • FY11: Phase II – 2 projects at $167 million • FY12: Phase IIIA – 1 project at $114 million • FY13: Phase IIIB – 1 project at $68 million; Phase IV – 1 project at $40 million

www.akbizmag.com • Alaska Business Monthly • August 2011

MILITARY’S ECONOMIC INFLUENCE SPANS 49TH STATE Military facilities and related construction projects span the state from its southernmost region to the Arctic. To understand the influence of military spending in Alaska, simply look north to south. In the extreme southern Panhandle, the U.S. Navy operates its primary acoustic engineering measurement facility in the Pacific: the Southeast Alaska Acoustic Measurement Facility (SEAFAC). Located in Behm Canal near Ketchikan, SEAFAC is the U.S. Navy’s sole West Coast asset for making high-fidelity, passive acoustic-signature measurements. The waterway’s unique geography provides an ideal ship acoustic-measurement site characterized by low ambient noise and minimal noise interference. With more than 33,000 miles of Pacific shoreline in Alaska, it’s not surprising that the influence of the U.S. Coast Guard is similarly widespread. Divided into seven operational units with representation across Alaska’s primary coastal communities, the U.S. Coast Guard District 17 features 12 cutters, three air stations, eight marine safety units, among other operational units. From Anchorage to Kodiak to Ketchikan, the impact of this branch of military service – and its related project spending – is considerable. The community leaders and merchants of Ketchikan once again learned as much following depletion of the number of personnel stations at its local base. The ebb and flow of military personnel on the local economy of Ketchikan is one micro-example of that service’s front-line financial impact. The Coast Guard’s Ketchikan base suffered the loss of some 100 personnel over the last year due to closure of the Coast Guard LORAN Station Shoal Cove and departure of its 17 personnel, followed soon after by decommission of the cutter Acushnet and reassignment of its 80 staff. That downturn and local economic hit, however, was offset by news that up to three more cutters may be homeported at the Ketchikan facility over the next several years, according to reports in the Ketchikan Daily News.

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RAIL PROJECT ANOTHER EXAMPLE OF IMPACT Beyond the military construction component of the Corps’ duties, the civil works aspect of its purview encompasses other, large-scale construction projects funneling resources and funding into Alaska. As example, the Corps in June issued a Department of the Army permit to the Alaska Railroad Corp. (ARRC) to construct Phase 1 of the Northern Rail Extension project. Phase 1 consists of construction of a bridge, approach road and levee associated with crossing the Tanana River near Salcha. Phase 1 would result in construction of 2.6 miles of the proposed 80-mile long project to construct a new rail line from Eielson Air Force base to Fort Greely, according to the Corps. Col. Reinhard Koenig, U.S. Army Corps of Engineers Alaska District commander, said he found there are no less environmentally damaging, practicable alternatives available to the ARRC for construction of Phase 1, according to a Corps announcement. The Department of the Army permit is issued under

authority of Section 10 of the Rivers and Harbors Act of 1899, which regulates the placement of structures and work in navigable waters of the United States and Section 404 of the Clean Water Act, which regulates placing dredged or fill material in waters of the United States, including jurisdictional wetlands. The Phase 1 project includes an access road and bridge over Piledriver Slough, a rail embankment and construction staging area, a material site, a 3,300-feetlong bridge across the Tanana River (a navigable river), an 11,042-feet-long levee along the east bank of the Tanana River; access road and rail embankment with two rail and two road bridges over Boundary and Beebee sloughs; spur dikes for rail embankment protection and ancillary support facilities including a guard shack, gate and utilities. This phase of the project results in permanent filling of 6.20 acres of wetlands and the permanent filling of 26.4 acres and separation of 10.9 acres of the Tanana River from the main channel. Temporary impacts to waters and wetlands of 15.6 acres are not authorized under this permit until a Temporary

Construction Plan for all proposed temporary construction impacts is approved by the Corps. The permit requires compensatory mitigation, including in-lieu fees, for direct, indirect and secondary impacts to waters and wetlands. The permit includes special conditions to avoid and minimize potential adverse impacts and to compensate for unavoidable adverse impacts to the aquatic ecosystem and to ensure that the project would not be contrary to the public interest. ARRC officials highlight the purpose of the entire Northern Rail Extension project as “to provide freight and passenger rail service to the region south of North Pole, including Tanana Flats and Donnelly Training Areas and the Delta Junction area.” ARRC officials suggested there is a need to provide a safe, reliable and efficient transportation alternative to the Richardson Highway for freight and passenger service and the need for reliable, year-round access to training areas used by the United States military.

CONSTRUCTION SPENDING OVERALL AN ECONOMIC STAPLE Construction spending – both public as described above and private sector – constitutes a backbone of the Alaska economy. Last year, the construction industry served 16,000 workers across the sector, totaling an annual payroll of $60,000 per worker, according to “Alaska’s Construction Spending: 2011 Forecast – Annual Report for the Construction Industry Progress Fund and the Associated General Contractors of Alaska.” The report predicted an increase of 1 percent in spending in Alaska for national defense, at $555 million. With military spending divided into three categories – MILCON (Military Construction), civil works and environmental remediation, including FUDS – the largest share is concentrated at the primary bases in Anchorage and Fairbanks, according to the report. As evidenced by the Corps schedule of current and upcoming projects, typical construction projects for the national defense include aircraft hangars, housing replacement, training facilities, air support facilities ❑ and utility upgrades.

www.akbizmag.com • Alaska Business Monthly • August 2011

SPECIAL SECTION:

BUILDING ALASKA

Increase in Number of Construction Bids in Alaska in 2011 Alaska companies lead the way BY STEPHANIE JAEGER

The Goldenview Reservoir project by Roger Hickel Contracting Inc. provided an additional one million gallons of storage at the existing SAMS reservoir in the southeast corner of Prominence Point Subdivision located at 16899 Olena Pointe Circle, Anchorage. The project consisted of furnishing and installing a one-million-gallon insulated welded-steel water reservoir with site improvements and piping modifications at the existing valve house.

said “We haven’t seen any Burkhart said. slowdown in design opportunities for this year. Seventy-five percent of our project design volume was booked by June. And although we keep hearing about an influx of outside bidders entering the market, those submitting prices for our publicly bid projects were all Alaska companies.” Other factors may be the overall world situation with the unrest in the Middle East and the earthquake and nuclear disaster in Japan, which have added to the feeling of uncertainty about construction in the future, he added. “Unlike the Lower 48, we have seen no significant layoffs in the design community,” Burkhart said. “Something is happening to keep us going more

S at least for the than the rest of the U U.S., short-term.” “Yes, it is true there are increased numbers in the amount of individual bids being submitted for projects across the board,” said Louis Gire of PCL Construction Services. “Federal, State, Muni and private projects have all seen a rise in competition.” Large contractors are bidding more and earlier on smaller projects because of the recession and because they have the capacity to perform more work. Although less affected by the recession than the rest of the U.S., Alaska did see a slight contraction in the economy in 2009, but a resumption of growth in 2010. Now more Alaskans and a fewer contractors from other states are bidding on more Alaska projects.

www.akbizmag.com • Alaska Business Monthly • August 2011

laska’s construction industry is its third largest industry, pays the state’s second highest wages and employs more than 21,000 workers with a payroll of more than $1 billion. Construction makes up 20 percent of Alaska’s economy, contributing $7 billion a year. This year, construction projects in Alaska have seen an unprecedented increase in the number of bids on all types of projects both from local bidders and from construction companies in the rest of the nation. Some Alaska projects – such as the Anchorage Aviation Building Bridge Replacement, Anchorage Fire Station No. 6 Replacement, Anchorage Merrill Field Taxiway and others – had their bids completed by late April or early May. In a normal year, such projects would receive four to five bids. This year these projects received from nine to 14 bids each. All of the bidders were Alaska companies, so the recession in the Lower 48 shouldn’t be responsible for this increase in contractor interest and the number of bids. This increase may be due to a general feeling of uncertainty in the construction industry. “Contractors like a backlog of work and may be bidding early because they are concerned there will not be a lot of work out there,” said Blase Burkhart, principal at Burkhart Croft Architects. “There was a big unknown, so they felt they had to pursue available projects immediately.” He added they did put the Anchorage Fire Station No. 6 Replacement and many other project bids out earlier than usual. Contractors were anxious to fill up their schedule so they would be certain to get enough volume this building season. “Perhaps they had heard there was a low work projection, either a temporary dip or trend for the year,”

There are more Alaska contractors now than in previous years – especially building contractors. “Through 2007, Alaska experienced 20 years of steady, uninterrupted growth, and developed a large capacity in the building industry,” said John MacKinnon of the Associated General Contractors. “As work slowed down in private spending, those contractors who used to do more private work have moved to bidding on public projects, since that’s where the work is.” Alaska has a surplus in commercial and office buildings according to the vacancy rate, especially here in Anchorage. “Our annual construction forecast has indicated overall flat construction spending for the past five years at about $7 billion per year,” MacKinnon added. “While that may indicate a stagnate economy, compared to the rest of the country, we’re doing well and we should count our blessings.” MacKinnon differentiates between building contractors and civil contractors or those contractors who do road, airport and other horizontal work. “We are seeing more competition

on the building side, and more work on the civil side,” MacKinnon said. “Civil is largely supported by government spending through the Department of Transportation and local government work. The stimulus two years ago also pumped $250 million into Alaska civil construction.” The State Legislature also has been generous, with recent record capitol budgets including the $397 million statewide education bond package passed by Alaska voters in November 2010. Military projects also have seen a marked increase in bidders both from Alaska and the rest of the U.S. “Military construction varies from year to year,” said Chris Tew, chief of contracting at the U.S. Army Corps of Engineers. “But that variation has nothing to do with the economy.” He says he also thinks they have seen more bids because more companies are chasing the smaller projects because of the recession. “The military doesn’t necessarily take the lowest bidder,” Tew said. “We also take problems such as increased

transportation costs in remote areas into consideration when paying our construction companies.” The overall number of projects will increase in the next few years. “There have been big projects in Fort Greely and Anchorage and these will continue for at least the next two years,” Tew said. Alaska’s military projects also get funded earlier than the rest of the U.S.’s military projects. “They know we have a really short working season,” Tew said. “So they get the money to Alaska first.” In the past people have thought the military was hard to work for because of its many rules and regulations. “The military has done many things internally to make their projects more attractive to contractors and to mitigate the costs,” Tew said. Except for uncertainty in the petroleum sector, the Alaska economy is predicted to continue to grow slowly next year. Alaskans will have to wait and see if the number of construction bids continues to increase, stays the same or declines to previous levels. ❑

www.akbizmag.com • Alaska Business Monthly • August 2011

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Environmental

Pebble Partnership Collects Environmental Data ‘Best and brightest’ scientists conduct stringent work BY VANESSA ORR

Photos courtesy of the Pebble Partnership

EXTENSIVE STUDIES

To maintain a minimal environmental footprint, there are no permanent facilities at the Pebble deposit area – the Pebble Partnership transports all equipment and workers to and from work sites by helicopter.

ny time a new development is brought into a community, it is sure to be met with close scrutiny. But when a project has the potential to affect the natural environmental like the Pebble Mine, it receives even more attention than usual. The Pebble deposit, which is located roughly 200 miles southwest of Anchorage, has one of the largest concentrations of copper, gold, molybdenum and silver in the world. The mine is expected to hold 80.6 billion pounds of copper, 5.6 billion pounds of molybdenum (which is used to alloy steel for strength and heat resistance), 107.4 million ounces of gold, and commercially significant amounts of silver, rhenium and palladium. Before plans can be made to build the mine, however, numerous environmental studies must be undertaken to create a comprehensive

Environmental Baseline Document (EBD) characterizing the environment around the proposed mine site. According to Mike Heatwole, vice president of public affairs for the The Pebble Partnership, an Alaska limited partnership between Anglo American PLC and Northern Dynasty Minerals Ltd., the project is currently in a prefeasibility and pre-permitting research stage. Data collected will be used to generate a proposed mine development plan to be submitted for government and public review. “We are expecting to have the EBD ready by mid-summer, which will be a compilation of the work we have done between 2004 and 2008,” Heatwole said. “This document will provide folks with a solid understanding of what we’ve observed at the site, and what this may mean for the next phase of the project.”

Approximately $120 million is being invested into the Pebble Partnership’s environmental studies program, which explores a wide range of subjects in and around the deposit. Program data includes the results of air quality monitoring; fish and wildlife field studies; surface and ground water monitoring; soil and sediments studies; subsistence and traditional knowledge studies, and more. “Stakeholders, especially those who live in and around the project area, have a significant interest in what we’ve found,” Heatwole said. “Before we initiate any permitting process, they want to know what our plans are for the area.” At its conclusion, the EBD, which currently numbers 20,000 pages, will be released to the public on the Internet and by DVD, and a limited number of printed copies will be available. This baseline information will then become part of The Pebble Partnership’s pre-feasibility study, which will determine if the Pebble Mine is a technically and economically viable project to take to the next step of development. Issues such as what the proposed development will include and how long the company proposes to mine in the area will be decided, along with public issues of concern including where mine tailings will go; what the daily rate of extraction will be; and associated infrastructure and transportation corridor requirements. The pre-feasibility study is expected to be completed in 2012. Later this year, certain aspects of the EBD will be included in ongoing community outreach efforts, including an open forum series moderated by the Keystone Center, a nonprofit organization that brings together public, private and civic sector leaders to confront society’s most challenging environmental,

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energy and public health problems. These forums, which will provide a neutral platform for stakeholders and the general public to learn more about the environmental studies undertaken at Pebble, will also allow the opportunity for the public to pose questions to a wide range of scientific experts.

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According to Heatwole, before Northern Dynasty initiated its original environmental studies, the company decided to go after the area’s “best and brightest” scientists. “A very good decision was made to involve scientific experts in all disciplines of science that this type of project requires; to employ the premier firms in Alaska, and when that expertise was not available in Alaska, to bring it in from outside,” he said. “The result is that 35 different companies were involved in this work, and an additional nine laboratories.” HDR Alaska Inc. has been working for The Pebble Partnership since 2004, focusing on issues such as water quality, surface hydrology, wetlands, fisheries and mitigation planning for wetlands. The firm is currently involved in a number of water quality and hydrology studies, providing monthly monitoring and gathering baseline data. “Pebble is doing a good job using this baseline data to plan the project to minimize any potential environmental impacts,” said Shawn Florio, senior engineer, HDR Alaska Inc. “A lot of really good data has been gathered; Pebble did not cut any studies short. This project has more in-depth studies than many developments do – it is very high-quality data.” If The Pebble Partnership decides to move forward after reviewing prefeasibility and feasibility studies, there are still many hurdles to overcome. More than 67 types of State and federal permits will be required, and the mine must meet State and federally mandated environmental requirements, including the Clean Water Act and more. The project will also be overseen by more than a dozen State and federal entities. “Every time that we propose to cross a stream in our road corridor, it requires

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They are designed to protect the bugs at the bottom of the stream to ensure that the food chain remains viable.” ABR Inc. has been working with The Pebble Partnership to provide wildlife survey information for its baseline study. “We are studying songbirds in the uplands and marine birds and mammals and everything in between,” said Stephen Murphy, president, ABR Inc. “We’ve also been working with the environmental team doing wetland mapping to evaluate the quality of this habitat for different wildlife species.” According to Murphy, it is vital Pebble has this information during the planning process. “It’s a very important tool; it is critically important, for example, to understand the population status and habitat use patterns of endangered species like the Steller’s Eider, or high-profile species like caribou,” he said. “It also aids a developer in determining what data is needed for permitting. A strong baseline study can be used in the Environmental Impact Statement (EIS) to show what the environment is like before

Extreme winter temperatures at the Pebble deposit area create unique challenges for scientists conducting year-round studies.

a Fish and Game permit; we will need to get 80 to 100 of these permits just to build the road,” Heatwole said. “I don’t think that a lot of folks fully understand the stringent requirements in

Alaska as they relate to water quality. Aquatic life standards for water discharge are very high – much higher than they are for drinking water, and they are significantly harder to meet.

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development occurs, so that a company can predict what will occur after development. It also provides insight into what post-development monitoring will be required after permits are granted.”

THE HUMAN FACTOR In addition to impacting marine life and wildlife, a development such as the Pebble Mine will influence people in the area as well. To this end, the Pebble Partnership hired consulting anthropology firm Stephen R. Braund & Associates to provide subsistence and traditional knowledge studies and cultural resource surveys for its baseline study. “We are providing subsistence and traditional knowledge studies for 20 communities in the Bristol Bay region that have been identified as having the potential to be affected by the downstream consequences of the mine,” said Proprietor Stephen Braund. “We have contracted with the Alaska Department of Fish and Game Division of Subsistence to conduct subsistence household harvest surveys in each of the communities, which we will then incorporate into our own findings. Our baseline studies

Scientists in scuba gear count fish in a stream near the Pebble deposit area.

will document where these communities go for their subsistence harvests over time, whereas the Division of Subsistence surveys will report how much of each resource was harvested and where harvesters went last year.” With information provided by active harvesters in each community, Stephen R. Braund and Associates will be able

to map subsistence use areas for the last 10 years. The studies also include information on how each resource has changed in distribution, abundance, migration and health. “We are asking local residents what changes the caribou, moose, fish and marine mammal populations are undergoing,” Braund said.

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“The Pebble Partnership is very interested in doing a good job – in having a bulletproof baseline. They know the intense gauntlet they need to run in order to get through permitting, so they want to make sure that they have the best science, provided by the most credible scientists, to move the project forward.” – Stephen Murphy President ABR Inc.

we’re doing, we want to know people’s issues and concerns. We take these back to our engineers and management team, and see if we can provide more information or solutions to a particular issue.” According to Murphy, Pebble is taking the right steps to provide those who have concerns with the most accurate information available. “The Pebble Partnership is very interested in doing a good job – in having a bulletproof baseline,” he said. “They know the intense gauntlet they need to run in order to get through permitting,

so they want to make sure that they have the best science, provided by the most credible scientists, to move the project forward.” Braund agrees. “While Pebble advises us on the scope of the work required, the methods we use and the science are ours,” Braund said. “They pretty well leave the science to the experts. We’ve had the flexibility to do what needs to be done to address the resources scientifically. We are able to work with no ❑ scientific constraints.”

Once all of this information is compiled, the company shares it with each community first before it is approved and sent onto The Pebble Partnership. Cultural resource surveys, also provided by the company, will address ethnographic, archeological and “built environment” cultural resources that are more than 50 years old. “Pebble is complying with the intent of the National Historic Preservation Act, which requires doing surveys on the ground before the ground is disturbed,” Braund said. “Once you send out drills, earth removers and backhoes, you take the risk of inadvertently destroying a cultural resource site. To avoid this, Pebble is doing its cultural resource surveys first.”

COMING TO A CONSENSUS Even with all of the studies being done and the number of environmental companies involved, there will still be a lot of discussion, and sometimes disagreement, on the development of the Pebble Mine. “Any time a developer proposes a change – from putting a shopping mall into a neighborhood to a road expansion to building a mine in a remote area – there will be questions, concerns and opposition,” Heatwole said. “But the fact is, our project design team and management – and the company across the board – benefit from the questions raised. When we share the current status of what www.akbizmag.com • Alaska Business Monthly • August 2011

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Environmental

Pebble’s Naysayers Groups abound, but will they prevail? BY TRACY KALYTIAK process is expected to begin in 2012 and last about three years, Shively said. The permitting would likely cover 20 to 30 years of the project’s anticipated 80- to 100-year lifespan, he said.

ONGOING LITIGATION

John Shively and Jaslyn Wren track work teams in the field at the Pebble deposit.

tussle has been occurring for years in Alaska over a project with immense potential both for wealth and, its detractors claim, catastrophe. The Pebble Partnership – a 50-50 partnership between a wholly owned affiliate of Northern Dynasty Minerals Ltd. and a wholly owned subsidiary of Anglo American PLC – is exploring the feasibility of constructing a mine and extracting immense deposits of gold, copper and molybdenum from State land located 200 miles southwest of Anchorage, in an area 17 miles upstream of Lake Iliamna. Proponents say mining the lowgrade ore – estimated to contain 60 percent copper, 30 percent gold and 10 percent molybdenum – will be managed in an environmentally responsible way, create jobs for Alaskans, put money in State tax coffers and stimulate the economy in rural areas of Alaska. Organizations that favor development of Pebble include the Resource Development Council, Alaska Miners Association and the

Alaska State Chamber of Commerce. Opponents, however, say the ore at the mine contains potentially hazardous sulfur. They also claim there is no way to prevent a quake or other natural disaster that could result in destruction of earthen dams – also known as impoundment facilities – used to contain mining waste, upstream of places where salmon spawn. Groups that oppose Pebble include the Renewable Resources Coalition, Bristol Bay Native Association and other Native groups, as well as organizations associated with commercial and sport fishing, including the Alaska Wilderness Recreation and Tourism Association, Alaska Independent Fishermen’s Marketing Association, Trout Unlimited and American Rivers. Pebble Partnership is expected to complete an environmental baseline study sometime this summer, said Pebble Chief Executive Officer John Shively, and results of a prefeasibility study will follow sometime toward the middle or end of next year. The permitting

Construction, once started, would take about four years, but lawsuits are already in play. A judge earlier this year heard arguments in a 2009 lawsuit filed in Dillingham by six Alaska tribes challenging the validity of the 2005 Bristol Bay Area Plan and seeking to require the Alaska Department of Natural Resources to construct a new plan. A ruling had not been made by press time. Another lawsuit filed in 2009 by Trustees for Alaska sought to void existing permits the Alaska DNR had issued to Pebble entities. The trial in that case took place late last year; Anchorage Superior Court Judge Eric Aarseth, at press time, had not yet ruled on the constitutionality of the State’s process for issuing exploratory permits. Opponents of the proposed mine are also seeking to derail the Pebble project with an initiative that adds the following language to the Lake and Peninsula Borough permitting code: “Where a resource extraction activity could result in excavation, placement of fill, grading, removal and disturbance of the topsoil of more than 640 acres of land and will have a significant adverse impact on existing anadromous waters, a development permit shall not be issued by the (planning) commission.” The initiative, if voters approve it in October, would also require applicants to obtain a development permit from the borough before seeking State and federal permits. Pebble is suing, claiming that the borough cannot zone by initiative. A ruling had not yet been issued by press time.

www.akbizmag.com • Alaska Business Monthly • August 2011

CONTINUOUS STUDIES The U.S. Environmental Protection Agency is currently performing a socalled “pre-study” of the Bristol Bay watershed to see if it should invoke a section of the Clean Water Act that “authorizes EPA to restrict, prohibit, deny, or withdraw the use of a water body as a disposal site for dredged or fill material – such as mining and other waste – if the discharge will have unacceptable adverse impacts on municipal water supplies, shellfish beds and fishery areas, wildlife, or recreational areas.” Section 404(c) authority may be exercised before a permit application is submitted, while an application is pending, or after a permit has been issued, according to the EPA. The EPA’s pre-study focuses on areas open for large-scale development, primarily in the Nushagak and Kvichak watersheds. EPA will be looking for answers to the following questions: ■ Is the Bristol Bay salmon fishery a one-of-a-kind, world-class fishery? ■ What are the existing and potential risks to the Bay’s salmon

fishery associated with large-scale development activities such as hard-rock mining? ■ Are there technologies or practices that will mitigate these risks? Tentative plans are for the EPA to make available a draft for public, tribal and stakeholder review sometime late this year or early next year, and a final report in the summer of 2012. “The opponents of the mine asked that EPA use its 404(c) authority to say a mine like ours shouldn’t exist in this region,” Shively said. “It allows the EPA to tell the Corps of Engineers what can and can’t happen on waters in the U.S. Our entire congressional delegation objected to the EPA doing that, that it was premature because we have no plan or permitting and EPA has never used it outside the permitting process.” Shively says Pebble has spent $120 million compiling a prefeasibility study of a small portion of that watershed – an area mostly around the mine – that the mine could potentially affect. “It will contain the science we’ve accumulated between 2004 and 2008,” Shively said. “It’s 20,000 pages long.”

PECULIAR ALLIES Opposition to Pebble has created a peculiar network of allies, including people who, under other circumstances, would call themselves pro-development. Former Alaska Senate President Rick Halford is a Republican who served for 24 years in the State Legislature. He now works as a consultant for Trout Unlimited and Nunamta Aulukestai, a party in one of the pending lawsuits. Halford recently described this phenomenon in an article he posted in mid June to “The Hill’s Congress Blog.” “I made a living as a commercial pilot and guide, often flying miningindustry clients,” Halford wrote. “I also own a small saw mill. I cut up trees; I don’t hug them. I know mining can do a lot of good things. But this particular project, by size, location and type of ore, totally defies reason and history.” The gold, molybdenum and copper in the Pebble deposit is trapped in low-grade ore, which contains large amounts of sulfur, Halford explained, and this deposit spans the headwaters of the two largest rivers feeding into Bristol Bay, home of

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the world’s richest salmon fishery. “These fish have fed the Alaska Natives and other residents of the region for generations,” Halford wrote. “They are the foundation of a culture that is thousands of years old. They are also the economic engine of the region.” Commercial and sport fishermen, hunters, pilots, outfitters, guides and seafood processors all rely on the health and bounty of fish that swim to and from Bristol Bay. Dave Cruz of Cruz Construction believes development of Pebble can be done without harming the fish of Bristol Bay and the industries and people that depend on those fish. “This is 2011, it isn’t 1930,” said Cruz, an advocate for Pebble and the mining industry in Alaska. “Environmental protection is taken extremely seriously. I deal with it every day. Pebble will give local residents jobs, give them a tax base. Look at the positive impact Red Dog has had with NANA. Regional corporations have thriving businesses and high-paying jobs that don’t disappear when leaves fall off the trees.”

EXAGGERATED FUSS Cruz believes the groups that oppose Pebble are exaggerating risks associated with it. “To try to kill a job because the sky’s falling is not a bright thing to do,” he said. “They have a preservationist attitude. They oppose Pebble because if they can sue the federal agency that gives Pebble the permit, if they can do that and prevail on one point, then they get publicinterest litigant status and the federal government will subsidize their lawsuit. That’s how they make their money.” Anders Gustafson, executive director of Renewable Resources Foundation, disagrees with the depiction of his group as an “environmental” organization. “We’ve always prided ourselves on being a conservation organization,” Gustafson said. “That comes from the root of who we are, who founded us, people with the Theodore Roosevelt mentality. We don’t consider ourselves to be of the same feather as environmentalists. We’re hunters, we’re fishermen, subsistence users.” Gustafson says he and others in his

organization don’t oppose mining. “This is a different thing,” he said of Pebble. “This would be the largest open-pit mine in America. This involves a renewable resource being threatened by a nonrenewable resource. This particular area, this project, this place – we believe it deserves permanent protection from that kind of development. We all want to get back to business and back to fishing.” Shively says it’s possible for the mine to operate without devastating the fish or the surrounding environment. “A major mine on the Copper River in the early part of the last century operated for decades when there were no environmental controls,” Shively said, noting that the area’s salmon runs are now world-renowned. “The Fraser River last year had its best salmon run in 100 years. The whole idea that mining just destroys everything is wrong.”

PEBBLE’S FUTURE Shively said the permitting process will be extensive. “There are 67 major kinds of permits we have to have,” he said. “Every

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time we cross a stream that contains fish there will be a separate permit. We’re literally dealing with hundreds of mitigation measures and all sorts of reporting we have to do on a regular basis.” The mine is necessary, Shively said, because people need copper. When people are discussing jobs that grow out of a “green” economy, he said, “they never mention miners. It takes five tons of copper to make a 3 megawatt wind turbine,” Shively said. “The amount of copper in my hybrid car is twice as much as in one with a combustion engine. If we’re going to change our habits, we’re going to need copper.” Shively says that if the mine gets going, it would generate 800 to 1,000 full-time jobs. Red Dog Mine, he says, has a work force that is more than 50 percent Alaska Native. “At Pebble, I’d like to do better than that,” he said. Shively says the company is aware the mine is in an area where it has to take seismic activity into account in its design work, and is planning accordingly. “We’re going to have to design for a seismic event,” he said. “There’s evidence you can. Last year in Chile, there was an 8.8 quake, a whole bunch of aftershocks. All the impoundment facilities for a major mine held. Chile is in the same (earthquake-prone) ‘Ring of Fire’ as Alaska. It’s a design issue; we know we have to deal with the design, and we think there’s evidence you can do that.” Shively, a former Vista volunteer who worked in Bethel and Yakutat, says local residents will receive the benefits of cheaper goods because of a new port and an 86-mile road the mine will require, and cheaper electricity. “It’s hard for us to explain how the project’s going to work when we haven’t fully designed it,” Shively said. “We hope to have that sometime late next year. It is going to be a big job, no question about it. We can show people why it will work, allay the fears of people – even people ordinarily opposed to mining. We are in an area with an economy that basically doesn’t exist. My interest in this project is really the economic opportunity piece of it. It’s ❑ an extremely exciting project.” www.akbizmag.com • Alaska Business Monthly • August 2011

SPECIAL SECTION:

Environmental

Alaska’s Environmental Sector As competition grows, companies looking to find their niche

laska is renowned for its natural environment – its beauty attracts tourists from all over the world; its natural resources provide jobs and opportunities for economic development. From the state’s earliest days when Alaska Natives lived on the bounty of its land and waters to its present use as a source of natural gas, oil and minerals, the 49th state has provided well for those who live and work on the Last Frontier. As the state continues to grow, however, it is important that the natural environment and all that it provides be protected so that future generations can also benefit. To this end, many local, State and federal regulations have been put into place, spawning an entire environmental services industry. “One of the things that’s really unique about working in Alaska is that natural resource issues here are on the front page – they are really important to everyone,” said Stephen Murphy, president, ABR Inc. “Whatever impacts wildlife, water and air quality dominates our news – our media and State and federal agencies, are geared toward it. In the Lower 48, there are so many other things going on that it’s just not as big a deal. Here, there’s a really big audience – everyone from subsistence users to sport hunters to recreational users has an angle on proposed developments; there are a lot of eyes on projects that affect land or water use.”

A GROWING FIELD As more development projects are proposed, the need for talented, experienced environmental scientists, planners and engineers continues to grow. A number of environmental companies from within the state are expanding; outside companies are opening their own branches in Alaska as well. “There’s a good level of competition

in the industry; I’d say it’s the highest now that it’s ever been,” said Mark Dalton, Alaska operations manager, HDR Alaska Inc. “There are definitely outside firms moving into the market – they may not have been substantial players in Alaska before, but they are seeing the opportunities available and are investing in offices here.” Dalton credits this expansion to the strength of the state’s resource-based economy. “I haven’t surveyed my cohorts in the industry, but my sense is that work in the environmental sector is pretty robust right now,” he said. “The state’s resource industries – oil, gas and minerals – are seeing really high or extremely high returns, which means a lot of interest in new prospects and in revisiting old prospects. There are also baseline programs going on for government-focused work relative to infrastructure that require environmental planning and study. Overall, I’d say that the industry is pretty healthy.” An employee-owned architecture, engineering and consulting firm, HDR Alaska Inc. provides a spectrum of services that include a focus on infrastructure needs in Alaska. “We do a lot of transportation projects and are also heavily focused in the oil, gas and mining sectors,” said Dalton. “We also do a pretty substantial amount of up-front work in the areas of regulatory issues and permitting, as well as design and construction oversight.” The company, based out of Anchorage, has offices in Palmer, Fairbanks and Juneau. According to Stephen Braund, owner of consulting anthropology firm Stephen R. Braund & Associates, there has been growth in the amount of Outside firms providing environmental consulting in Alaska, including firms seeking cultural resources work on larger projects such as the gas line. “I have seen an increase in envi-

Photo courtesy of ABR Inc.

BY VANESSA ORR

Matt Macander, ABR Senior Scientist, conducting a snow survey near the proposed Pebble Mine site.

ronmental firms moving their offices to Alaska in anticipation of upcoming projects in the state over the last fiveplus years,” he said. “Still, I think it’s a little slower for my firm this year than it has been in the last few years for cultural resources work, though it only takes one or two jobs to change that. Overall, the field has grown; companies want to develop the state’s natural re-

www.akbizmag.com • Alaska Business Monthly • August 2011

sources, which means they have to go through the NEPA process, perform baseline studies and create Environmental Impact Statements, and that all ties into the growth of the environmental sector.” Even as the number of competitors is growing, it is also creating new opportunities for some niche-type firms. This includes ABR Inc., which provides ecological restoration, wildlife and fisheries ecology and environmental assessment services. “We compete with a lot of national and multinational companies that offer a broad range of services like engineering and permitting but only have a small biological team,” said Murphy. “We work cooperatively with them when they need intensive field work because while we employ 25 wildlife biologists, they may have only two. We compete for some projects, but other times, they come to us. For example, something like the gas line project, which may have an 800-mile footprint, requires a lot of field biologists. It’s hard to gear up for a project of that size with people off the street.”

HDR Alaska, Inc. staff doing wetlands studies in Alaska.

CREATING A BRAND One of the best ways to deal with increasing competition is to find a way to set one’s company apart. Stephen R. Braund & Associates, for example, specializes in both subsistence and traditional knowledge studies and cultural resource work.

“Not many firms do both, so we can serve as a single contractor for companies that need these services,” Braund said, adding that the company has been providing subsistence studies for more than 33 years. The business also has developed specialized subsistence mapping techniques using geographical

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Photo courtesy of ABR Inc.

information systems (GIS) that are not routinely offered by its competitors. ABR Inc. prides itself on being a science-oriented group that is known for its emphasis on fieldwork. “We believe that people need to be out in the field studying the environment intensively in order to understand a project’s impact and how to mitigate its effects,” Murphy said. In addition to working in Alaska, ABR Inc. has also become involved in wind energy projects around the world. “We have people on staff who are world-renowned experts on the impacts of wind turbines on birds and bats,” Murphy said, adding that the company has worked on such projects throughout the Pacific Northwest and overseas for more than 20 years. “Wind energy has a huge upside, but the downside is bird and bat mortality. We’ve developed technologies to monitor bird and bat movements at night, which is a very specialized service.” ABR Inc. has also been involved on the North Slope almost since its inception and as the oilfield has aged, has begun providing rehabilitation and restoration services for disturbed and abandoned sites. According to Murphy, ABR Inc. is currently focusing on a number of areas important for its growth. “What we’re concentrating on most right now is our marine science group, which is working in the Chukchi Sea, Prince William Sound and Cook Inlet, studying marine mammals and birds,” Murphy said. For the Chukchi project, ABR Inc. is leading a group of multidisciplinary scientists from the University of Alaska and private industry that is conducting offshore work on behalf of the oil industry. The company has also recently created an endangered species group. “This is the same group of people we had, but we are packaging it differently,” Murphy said. “We’ve had specialists working in this area for years, but we are seeing more restrictions and hurdles on land use caused by the Endangered Species Act, so we’re now helping clients who are struggling with how to deal with the act and it implications. In recent years, we’ve also gone beyond our emphasis on wildlife to add more intensive fisheries and aquatic programs.”

Julie Parrett, ABR Research Biologist, conducting a raptor survey near the proposed Pebble Mine site.

According to Dalton, clients that use HDR Alaska Inc. benefit from the fact that its employees represent a myriad of different disciplines all under one roof. “We have one group that does public outreach on behalf of our clients; they make sure that any concerns get addressed during a project’s planning and development,” he said. “We have engineers, planners and scientists inhouse that enable us to deal with almost any issues that come up and we also rely on local partners who specialize in areas like geotechnical and surveying to make sure that our clients’ projects have everything that they need. We are always looking at our client base to ensure that we stay diversified. As funding shifts and priorities change, we need to change, too. We do strategic planning up to five years out with our staff to predict where things are going. Our goal is to anticipate what is going to happen to the market and to be as proactive as possible.”

WHAT THE FUTURE HOLDS While the industry is doing well, there are some changes taking place that may affect its future growth. “I have seen study areas shrink and areas of study being reduced,” Murphy said. “Some field studies are not as comprehensive as they used to be. Things seem to be shifting more toward permitting issues and more paper-pushing exercises. On a number of projects, there has been a shift to provide less funding for hard-core fieldwork, though happily there are exceptions, such as the work we are doing for The Pebble Partnership and in the Chukchi Sea.” “In an infrastructure-poor state like Alaska, there are still a lot of projects that need to happen,” Dalton said. “In many areas, we still need very basic infrastructure like roads, sewers and ports. In the Lower 48, they’re dealing more with brownfields – redeveloping and revitalizing urban areas. Alaska still has new opportunities that can be ❑ developed responsibly.”

www.akbizmag.com • Alaska Business Monthly • August 2011

ALASKA BUSINESS MONTHLY 2011

Photo courtesy of HDR Alaska, Inc.

ENVIRONMENTAL & RECYCLING DIRECTORY

HDR Alaska Inc. staff conducting a bridge inspection in Cold Bay, Alaska.

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ August 2011

ALASKA BUSINESS MONTHLY 2011 ENVIRONMENTAL/RECYCLING DIRECTORY ENVIRONMENTAL FIRMS

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ August 2011

ALASKA BUSINESS MONTHLY 2011 ENVIRONMENTAL/RECYCLING DIRECTORY ENVIRONMENTAL FIRMS %#& $-

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ August 2011

ALASKA BUSINESS MONTHLY 2011 ENVIRONMENTAL/RECYCLING DIRECTORY ENVIRONMENTAL FIRMS '%( &0

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ August 2011

ALASKA BUSINESS MONTHLY 2011 ENVIRONMENTAL/RECYCLING DIRECTORY ENVIRONMENTAL FIRMS

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ August 2011

ALASKA BUSINESS MONTHLY 2011 ENVIRONMENTAL/RECYCLING DIRECTORY RECYCLING FIRMS ! " )

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www.akbizmag.com â&#x20AC;¢ Alaska Business Monthly â&#x20AC;¢ August 2011

TRANSITION

BY HEIDI BOHI

TOWNS

Better, smarter, safer

t’s a tale of two cities. Along with its smaller sister communities across the state, Anchorage faces many of the challenges that are simply inherent to local government – shrinking budgets and spending cuts, keeping up with public safety, improving education, pulling through the economic slump, and trying to keep up with the never-ending demand for local services. At the same time, as the city turns an eye toward emerging as a global presence, the Anchorage business community increasingly dedicates resources to marketing and visioning efforts with hopes these essentials will eventually pay off in the form of a better quality of life and a consensus on how to ease into the next couple of decades.

AEDC’S STRATEGIC FOCUS “It’s a great city, but we can always improve,” says Bill Popp, president and chief executive officer of the Anchorage Economic Development Corp. (AEDC). AEDC’s “Live. Work. Play.” initiative, based on the board’s vision statement developed in 2010, is one of the

ways this economic development organization launched what it is calling a “strategic-planning process.” A longterm grass roots exercise, AEDC’s goal is to engage the community in developing a narrative that defines the elements of what it would take to make Anchorage the No. 1 city to live in by 2025. An email survey being conducted by AEDC is being distributed to tens of thousands of Anchorage residents and asks two questions: Why do you live here? Why would you leave? Responses can be any length, Popp says, and will be condensed into a narrative with a list of quantitative metrics that can be measured locally and benchmarked nationally to describe Anchorage in several categories that could include high school graduation rates to employment numbers and the number of trails. The data will be presented to the AEDC board this month and by November the organization hopes to finalize mid- and long-term plans for partnering with other organizations to achieve these visions. “Rather than taking outsiders’ definitions, we are defining it ourselves based on what we’re good at and what we

can be best at by taking a bottom-up, grass-roots approach instead of a topdown prescriptive approach,” Popp says, adding that it is an effort to make Anchorage more competitive globally by attracting new business that helps make it the community residents want it to be. “This is not some marketing slogan effort, but real work that focuses on outcomes.”

THE MAYOR’S SUMMIT In the meantime, the Municipality of Anchorage is tackling issues that need immediate attention and will affect how Anchorage residents answer questions such as why they live there and what would cause them to leave. “What would it take to be a shining light in education?” This is one of the questions Anchorage Mayor Dan Sullivan is attempting to answer when the city launches the Mayor’s Education Summit in November. Participants will include education policy members and stakeholders from business, labor, alternative schools and parental sectors. Sullivan says education specialists from around the world will also participate in the event that

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101

DEVELOPING THE ECONOMY

The Port of Anchorage expansion also received $37.5 million that will be used to leverage federal dollars. One of the highest profile developments in Anchorage – and what Sullivan likes to think of as “the port of Alaska” – it is the gateway for most of the goods entering the state and, with improvements, is expected to be able to support the community for the next 75 years. As the summer construction season wraps up, Anchorage is celebrating about $70 million in new road, trail and drainage work that created hundreds of local jobs and resulted in more than 60 municipal projects being in some phase of construction, including roads, parks, trails and transit improvements. The State of Alaska Department of Transportation also made headway on major projects that include expanding sections of the Seward Highway, Victor Road and upgrading Huffman Road.

In terms of economic development, this year’s legislative session was a resounding success for Anchorage, Sullivan says, resulting in securing funding for several capital projects that will direct government money back to the private sector while giving the local economy a shot in the arm. Part of that funding includes almost $10 million for renewing Project ’80s facilities that were part of the late Mayor George Sullivan’s legacy. As some of the city’s most well-known landmarks turn 30, the current mayor says maintaining his father’s vision so these buildings continue to be community assets for at least the next three decades is important and one of the most exciting construction efforts in the city. Reconstruction and upgrades include $5 million for Loussac Library, $2 million for Sullivan Arena, $1.5 million toward upgrading collections storage at the Anchorage Museum at the Rasmuson Center, and $732,000 for improvements to the Alaska Center for the Performing Arts. Dempsey Anderson Ice Arena will benefit from $250,000, Ben Boeke Ice Arena will get $300,000 in upgrades, and Anchorage secured $34 million to support the new University of Alaska Anchorage Sports Complex, a $90 million facility that will have a capacity of 5,600 when completed.

Although quality of life is one of the Sullivan administration’s top priorities, “Having the best facilities and parks and trails won’t matter if we’re afraid to go out and use them,” the mayor says. Of the seven crime categories measured by the Uniform Crime Report system, Sullivan announced this spring that Anchorage showed decreases in five of seven areas from 2009 to 2010: murder, forcible rape, robbery, burglary and motor vehicle theft. He attributes this to the Anchorage Police Department focusing on drug and gang activity, and street-level crime. Aggravated assault and larceny crime categories continued to increase slightly. In addition to continuing budget deficits and slow economic recovery, with declining oil production looming in the background Sullivan finds it difficult to relax knowing the devastating effect it would have on Anchorage, which has always been considered an oil town. Although there is little the city can formally do to challenge oil industry taxes and reverse the trend of decreasing North Slope throughput, Sullivan says, “I have used my bully pulpit as mayor to speak out and remind people there’s no more important item than keeping the pipeline full and to applaud the governor’s efforts ❑ in this area.”

The Loussac Library, a Project ’80s facility.

will identify ways to improve student performance in Anchorage public schools by answering three key questions: “Are we the best school district in the country? Do we want to be the best? How do we get there?” In 1999, when Sullivan was on the Anchorage assembly, the school district budget was just more than $400 million. Today, only 12 years later, it has doubled to more than $800 million, yet the outcomes indicate the city is not getting the best value for the dollar, he says. The cost-per-student is high and the district is investing in high-quality schools, though many Anchorage students are graduating without the skills needed to assume entry-level jobs. Budget concerns are not the only issue, Sullivan says. “People want better results and they don’t mind paying more for education if they are getting the performance results.” The two-day summit Nov. 15-16 is by invitation only and will result in several options for consideration. In 2012, the second step comes about in January and February, is open to the public, and will include a series of conversations among key education, government and business leaders that will later guide the public in discussing the options developed and develop an action plan. In April and May, leaders and some local residents will review citizen comments and develop recommendations for K-12 reform.

102

CUTTING CRIME

www.akbizmag.com • Alaska Business Monthly • August 2011

ALASKA TRENDS

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

Anchorage Building Permit Valuations (2007-2011)

ince the start of the recession in December 2007, much attention has been directed towards real estate, both residential and commercial. The real estate market, specifically residential real estate, has been slow to recover with much of the increase in sales consisting of foreclosures; houses were also remaining on the market for extended periods due to the increased competition experienced from foreclosures. Real estate, both residential and commercial can be used as a tool to gauge the economic outlook of consumers and businesses respectively. As each type of construction, requires large capital investment, an increase may indicate an increasingly positive outlook from the consumer or business. However, it is important to note that due tto th the declining prices and increasing foreclosures experienced since the beginning of the recession, some portion of any increase in building permit valuations may be due to either individuals or businesses taking advantages of market corrections in real estate prices and subsequently making improvements. The individual or business purchasing real estate at foreclosure or significant discounts due to the recession might not have done so at the real estate prices existing prior to the recession and therefore

i di t any increase i i their th i economic i outlook. tl k may nott indicate in The chart shows Anchorage Building Permit Valuations for both residential and commercial buildings from January 2007 through April 2011. Some seasonality in the levels of construction seems to be indicated in both residential and commercial construction; residential construction seems to occur at high levels during the spring and summer, while commercial construction appears to occur more sporadically and also to experience ❑ much larger variation.

Chart Data: Municipality of Anchorage

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

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103

ALASKA TRENDS Indicator

Units

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 Sectoral Distribution – Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Truck Transportation Information Telecommunications Financial Activities Professional & Business Services Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Services & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast

104

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

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

4th Q10 4th Q10 2nd H10 2nd H10

31,760 12,701,052 195.46 218.58

31,554 12,582,051 195.46 218.58

30,559 12,228,649 193.456 215.935

3.93% 3.86% 1.03% 1.22%

Number Filed Number Filed Number Filed

April April April

94 69 15

116 89 20

89 70 5

5.62% -1.43% 200.00%

Thousands Thousands Thousands Thousands Thousands

April April April April April

331.04 184.29 43.25 36.10 34.29

330.98 184.48 42.78 35.04 34.36

327.84 181.27 43.04 36.24 34.44

0.98% 1.67% 0.49% -0.39% -0.44%

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

April April April April April April April April April April April April April April April April April April April April April April April April April April April April April April April April April April

321.4 40.3 281.1 16.0 15.6 13.1 14.5 12.5 6.4 62.7 6.0 35.1 6.1 10.0 21.6 5.6 3.3 6.4 4.3 15.1 26.1 43.1 31.5 30.3 6.0 19.7 11.6 85.8 16.7 26.7 8.6 42.4 25.5 3.7

317.4 41.0 276.4 15.7 15.4 12.9 1.2 12.8 9.0 60.9 6.0 33.9 5.9 9.7 21.0 5.5 3.3 6.4 4.2 15.1 25.4 43.2 31.2 29.4 6.3 19.1 11.3 84.7 16.6 26.4 8.6 41.7 24.8 3.7

314.8 39.9 274.9 14.8 14.5 12.2 14.1 11.0 7.4 60.5 6.1 34.6 6.1 9.8 19.8 5.4 2.9 6.2 4.1 14.5 25.3 41.5 29.7 28.5 6.3 18.2 11.3 87.1 17.4 26.7 8.6 43.0 25.6 3.5

2.10% 1.00% 2.26% 8.11% 7.59% 7.38% 2.84% 13.64% -13.51% 3.64% -1.64% 1.45% 0.00% 2.04% 9.09% 3.70% 13.79% 3.23% 4.88% 4.14% 3.16% 3.86% 6.06% 6.32% -4.76% 8.24% 2.65% -1.49% -4.02% 0.00% 0.00% -1.40% -0.39% 5.71%

Thousands Thousands Thousands Thousands Thousands

April April April April April

358.80 197.86 46.37 39.00 37.87

360.69 198.97 46.14 38.33 38.24

357.54 196.25 46.37 39.30 38.23

0.35% 0.82% -0.01% -0.76% -0.94%

www.akbizmag.com • Alaska Business Monthly • August 2011