Alaska Business Monthly March 2015

THE ARCTIC ISSUE ARCTIC OIL & GAS | DEEP-WATER PORTS | CONSTRUCTION | IDITAROD

March 2015

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Alaska’s Big Arctic Project page 124

CH2M HILL’s Terry Bailey

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March 2015 TAB LE

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CONTENTS ABOUT THE COVER

DEPARTMENTS From the Editor ���������������������������������������� 7 Market Squares �����������������������������������139 Right Moves ���������������������������������������� 140 Inside Alaska Business �����������������������142 Agenda �������������������������������������������������145 Alaska This Month ���������������������������� 146 Events Calendar �����������������������������������149 Alaska Trends ���������������������������������������150 Ad Index �����������������������������������������������154

Terry Bailey, senior vice president and Alaska manager for CH2M HILL, leads the company’s Point Thomson work. A long shot of the central pad area of the Point Thomson site from the air is in the background. “Point Thomson: Alaska’s Big Arctic Project”

by Mike Bradner begins on page 124 and is part of this month’s Arctic Oil & Gas special section.

Terry Bailey photo © Chris Arend Photography Point Thomson photo courtesy of CH2M HILL Alaska Cover design by David Geiger

ARTICLES

Photo by Cathryn Posey

Visitors in front of Log Cabin Visitor Center in Anchorage.

Arctic Ideas

8 | Arctic Innovation, Worldwide Impact Embracing Northern Challenges to Create Innovative Solutions for the World

By Adam Krynicki

Real Estate

14 | Re-Making the American Dream Changing housing decisions here and now

By Andrew J. Romerdahl and Terry J. Fields

Energy

18 | Why Alaska Holds the Key to Continuing America’s Energy Revolution

By Anne Seneca

Consultant’s Corner

20 | Trigger Events in Buy-Sell Agreements What events prompt the buy-out?

By Mel B. Bannon

4

Crush! in downtown Anchorage is part of the 100 Days of Dining contest.

Insurance

22 | Strategies for Controlling Business Insurance Costs Minimizing risk while maximizing protection

By Tracy Barbour

36

Financial Services

28 | United Way’s AARP and IRS Collaborations Creating economic stability through partnerships

By Rindi White

Visitor Industry

32 | Seasonal Visitor Industry Job Market Winter hiring for summer staffing is the norm

By Tasha Anderson 36 | Iditarod Trail Sled Dog Race The businesses making it a success

By Rindi White

Telecom & Technology

40 | Arctic Fibre and Quintillion Bringing High-Speed Internet to Northwest, Arctic Alaska

By Julie Stricker

Photo by Chuck Talsky

32

Photo courtesy of Anchorage Downtown Partnership

146

Jeff King’s daughter Ellen hugging a dog at the Iditarod start.

Safety

44 | The Effect of Reporting Near Misses on Large Construction Projects

By Brian McKay

Transportation

84 | Western Alaska Deep-Water Port Potential Nome, Port Clarence, Cape Blossom all viable locations

By Julie Stricker

Alaska Business Monthly | March 2015 www.akbizmag.com

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March 2015 TAB LE

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special section

special section

Building Alaska

Arctic Oil & Gas

CONTENTS

A Foss tug delivering Point Thomson project materials.

50 | Frigid Progress in Alaska Arctic Infrastructure development inches forward

By Kirsten Swann 56 | State Halts Industrial Road to Ambler Mining District $400 million, 220-mile project crucial for NovaCopper’s plans

By Julie Stricker 60 | Alaska’s Construction Forecast for 2015 Annual Report for the Construction Industry Progress Fund and the Associated General Contractors of Alaska

By Scott Goldsmith and Pamela Cravez, Institute of Social and Economic Research, University of Alaska Anchorage 74 | Alaska Business Monthly’s 2015 Construction Directory

118 100 | Arctic Lease Sale Revisions BOEM’s Alaska OCS program at risk

By Mike Bradner

Photo courtesy of Furie Operating Alaska LLC

© Foss Maritime

50

Furie’s Kitchen Lights offshore platform for Cook Inlet on a Crowley barge at the Port of Seattle before shipment to Alaska.

108 | For Arctic Oil Exploration—Dowland-Bach’s Success is Music to the Ears

By Tom Anderson

130 | Blaming Oil Tax Reform for Alaska’s Current Budget Deficit Is Just Plain Wrong

By Jim Jansen

114 | Negotiating the Rapids of Arctic and Alaska Oil and Natural Gas Reserves

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

132 | A Synthesis of Existing, Planned, and Proposed Infrastructure and Operations Supporting Oil and Gas Activities and Commercial Transportation in Arctic Alaska

By Kevin Hillmer-Pegram

118 | Structural Standards: ISO 19906:2010 in Alaska

By Kirsten Swann 124 | Point Thomson: Alaska’s Big Arctic Project Extending industry infrastructure on the North Slope

By Mike Bradner

138 | Olgoonik/Fairweather Receives ATC Distinguished Achievement Award Company honored for its contribution to the Chukchi Sea Environmental Studies Program

ARTICLES

Environmental Services 90 | Water & Wastewater: Nome’s Aging System Funding needed for more permanent solution than patchwork responses

By Rindi White

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94 | Handling Hazardous Materials Providing critical links in keeping Alaska clean

By Naomi Klouda

HR Matters

98 | Communicating Across Cultures Connecting and finding common ground

By Kevin M. Dee

Alaska Business Monthly | March 2015 www.akbizmag.com

FROM THE EDITOR

The Arctic Issue

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Volume 31, Number 3 Published by Alaska Business Publishing Co. Anchorage, Alaska Jim Martin, Publisher 1989~2014

EDITORIAL STAFF

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

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

BUSINESS STAFF

President

General Mgr.

VP Sales & Mktg.

Senior Account Mgr.

Account Mgr. Survey Administrator

Accountant &

Circulation

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

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503-2577 (907) 276-4373 Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial email: editor@akbizmag.com Advertising email: materials@akbizmag.com Pacific Northwest Advertising Sales 1-800-770-4373 ALASKA BUSINESS PUBLISHING CO., INC. ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2014, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues of the Power List are $15 each. Single issues of Alaska Business Monthly are $3.95 each; $4.95 for October, and back issues are $5 each.

Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, PO Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change, or update online at www.akbizmag.com. Manuscripts: Send query letter to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Publishing Co., Inc. is prohibited. Address requests for specific permission to Managing Editor, Alaska Business Publishing.

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T

MAP: NERC Arctic Office, British Antarctic Survey, Natural Environmental Research Council | arctic.ac.uk

his month we’ve put together another Arctic Issue, this year in March instead of February, with quite a sampling of content focusing on Arctic issues.

All over the world, and especially (and literally) all over the top of the planet, we have Arctic issues. Nowhere is this more evident than in Alaska where the very fiber of the state’s earliest inhabitants’ being is entrenched in more than ten thousand years of survival and unity with the Arctic—the elements of which are now changing more rapidly than at any time in the last 4.5 billion years of sedimentary elucidation—as far as we know.

It’s no wonder the fierce protective nature of Alaska Natives of the state’s farthest western and northern reaches is such that these peoples of the north—their corporations, subsidiaries, and joint ventures—have become intricately involved in the exploration, development, and production of the natural resources of the area, as well as in scientific Arctic research.

Who better to submerse themselves in the dialogue among the lucrative minerals extraction industries, including the off and on again emergence of offshore oil and gas development, than the people with the most enduring history and longest DNA strain of Arctic genetic knowledge? No one.

They’ve got a lot of help in this regard. Countries and organizations from around the world are involved in the Arctic, trekking through for a chance to find out everything about it. For example, the map on this page includes Arctic Research Stations and was created by the NERC Arctic Office, British Antarctic Survey, Natural Environmental Research Council.

The NERC Arctic Office is in the midst of a five-year Arctic Research Program slated to last until 2016 and scheduled to have a UK Arctic Science Conference in September this year. It is another international effort to learn more about this region of the world and share ideas and findings.

Which is what we’ve done in the March issue of Alaska Business Monthly—shared ideas and findings. The team has put together another really great magazine, enjoy!

—Susan Harrington, Managing Editor March 2015 | Alaska Business Monthly

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Arctic In ovation, Worldwide Impact ARCTIC IDEAS

Embracing Northern Challenges to Create Innovative Solutions for the World

By Adam Krynicki

© Todd Paris

Sunlight filters through the clouds on a July evening in a remote area of Alaska’s eastern Interior.

B

estselling books such as the “$100 Startup,” “The Lean Startup,” and “The 4 Hour Work-Week” tell stories of modern entrepreneurs who quickly turn a startup company into a massive enterprise.

Though these stories seem like fairytales, they are quickly becoming the new dogma of entrepreneurs and innovators worldwide.

Traditionally, companies needed a large workforce and regional offices to reach nationwide customers, but recent acquisitions and Initial Public Offering valuations point to a new trend. In this new world, entrepreneurs can provide a product economically The UAF Arctic Innovation Competition (AIC) was created by Dr. Ping Lan in 2009 to recognize inventors in the Arctic. This year, Charlie Parr took first place for software designed to fly a wide variety of drone aircraft using a simple, intuitive interface. From left to right: Dr. Charlie Sparks, Dr. Ping Lan, Brennen Chamberlain, Charlie Parr, Bharat Jhaveri, Clay Beethe, UAF Chancellor Brian Rogers.

Photo courtesy of Arctic Innovation Competition

8

and scale up to reach a worldwide audience with just a handful of employees.

Recently, thirteen staff at Instagram turned 551 days of effort into a $1 billion photo sharing business—a value of $77 million per employee. Where Microsoft went from zero to $1 million revenues in three years, Facebook, by comparison, went from zero to $150 million. Twitter was coded and launched within four months, and now it’s a company with a valuation of more than $38 billion, according to the Wall Street Journal.

After seeing this rapid growth, it’s not surprising that investors are flocking to e-

commerce companies and funding them at nearly three times the rate of companies in other industries. It’s also not surprising that many of our nation’s great programmers and entrepreneurial minds are dedicating their efforts to building social networks and games after seeing the success of Facebook and Angry Birds.

The modern infatuation with mobile apps and games has earned the ire of some influential figures. Peter Thiel, co-founder of Paypal, has criticized the recent attention on social media tools by lamenting, “We wanted flying cars—instead we got 140 characters.” Neil Degrasse Tyson, director of the Hayden Planetarium, has criticized the apparent focus on software, saying to entrepreneurs, “Society has bigger problems than what can be solved with your next app.” Even Buzz Aldrin, the second man to walk on the moon, has been featured on the cover of the MIT Technology Review with the headline: “You Promised Me Mars Colonies. Instead I Got Facebook.”

It’s easy to dismiss gaming software and social networks as trivial when many problems around the world are more pressing and can’t be solved with a social media website or gaming app. Silicon Valley problems have led to Silicon Valley solutions, and in many places around the world, these solutions just aren’t enough.

Alaska Business Monthly | March 2015 www.akbizmag.com

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A ‘Remote Solutions’ Laboratory

Like so many other communities worldwide, businesses, nonprofits, and governments are dedicated to solving regional problems and often take on large initiatives to address pressing needs. The backbone of these big projects unlocks big opportunities for new technology.

Coincidentally, the technology itself 10

The University of Alaska Fairbanks is building a variety of technologies to address the problems of remote areas.

Image by Dayne Broderson and UAF GI Design

seems to be getting smaller, no matter where you are. For example, University of Alaska Fairbanks (UAF) researchers are designing small rockets to decrease the expenses associated with testing sensors on rockets.

Because most rockets were used only once, testing sensors was an extremely expensive task. The Geophysical Institute Electronics Shop designed a reusable, $25,000 carbon fiber rocket that can be fired several times.

Sensors and communication devices are also getting smaller. For example, where measuring infrasound typically required large, fire extinguisher size devices, UAF inventors have created small and low power infrasound microphone, making the technology useful for new applications. The inventor, Jeff Rothman, has developed a sensor that is roughly the size of a hockey puck and just as sensitive as high-end models.

Because the size of the sensor has decreased, the number of users for the device is increasing. In the past, these sensors were set up in large arrays and used to monitor compliance with the Nuclear Proliferation Treaty or geophysical phenomena. A complete sensor array can be carried by a single person or unmanned aircraft, and the sensor operates with smaller battery packs. Now the sensors have the potential to be deployed worldwide to monitor major issues, such as ballistic detonation, wildlife poaching, and illegal timber cutting, from miles away. The inventor worked with the university to file a patent last year, leading the way for him to work with a startup company and sell the technology from Alaska.

Rockets and vehicles are shrinking in size, small unmanned aircraft are becoming more useful, and sensors are paving the way to streamlined communication. These small systems and devices can be built anywhere there is the expertise and ownership.

Additionally, they can be shipped around the world to compete in a global economy.

Made In Alaska for The World

Tangible devices are just the beginning.

Riding on beams of light, software can be exported all over the world at almost no cost, and numerous inventors can develop

software to meet a region’s needs and also export this software around the world.

For example, the Alaska Center for Energy and Power developed software and hardware technology that addresses the energy problems faced by remote communities on isolated electric grids. This technology provides proprietary hardware and software to help communities manage electricity on microgrids and help them manage energy more efficiently than by installing large systems designed for cities and military bases.

Numerous communities and companies (such as mining operations) face the same energy management issues worldwide.

© Todd Paris

Embracing the Problem In a place like Alaska, our geography defines our daily challenges. Alaskans are blessed with an abundance of resources, but access to these resources has always been a major challenge.

At more than twice the size of Texas, access to resources is expensive, and the problem is only intensified by Alaska’s Arctic and subarctic climates. The state’s remoteness drives up costs, as exemplified by the fact that Alaskans face the highest cost of energy per capita, and Alaska has the fourth highest cost of living in the nation behind Hawaii, New York, and Connecticut. In remote areas, emergency medical care is hours away, brownouts are common, and plumbing infrastructure is scarce. Alaska has the lowest food security in the nation and has been featured in National Geographic as the home of the $16 breadstick and $39 watermelon.

Alaska is dependent on its natural resources for jobs and economic growth, but these resources are located in remote areas, driving up the cost of doing business. Exports of fish, raw minerals, oil, natural gas, and timber account for the vast majority of trade, accounting for over 90 percent of exports in Alaska. Because natural resource exports are highly dependent on market volatility and regulatory changes, shifts in commodity or energy prices have a significant effect.

Nowhere else in the United States is there a more pressing need for innovation in areas like energy production, adaptation to climate change, healthcare, and food security. As America’s only Arctic state, Alaska is at the forefront of the nation’s opportunities for national and international research, stakeholder collaboration, energy development, and governance initiatives.

Alaska is not alone in these challenges. Billions around the world need access to clean water and low-cost energy. Many people are not located in areas with dense transportation or communication networks. Others lack access to healthcare, a cheap food supply, or the ability to manage a disparate workforce.

Alaskans have developed numerous solutions to address the challenges of living in remote and Arctic locations. In this new Alaska decade, the opportunity will be building these technologies in Alaska, creating jobs, and, at the same time, solving the most pressing problems that Alaskans face.

The Alaska Center for Energy and Power (ACEP) is dedicated to applied energy research and testing focused on lowering the cost of energy throughout Alaska.

The inventors are looking to take the technology worldwide by launching a startup to sell the technology. The company intends to address the energy problems faced by remote communities and isolated electric grids by providing proprietary hardware and software to help these communities use energy more efficiently.

The startup, V-ADAPT, Inc., is helping the South Korean government assess how airborne particulates could impact regional aviation, safety, and commerce and is looking to use the tools for hazards other than volcanoes, including industrial pollution and sand storms. Further, the company is collaborating with Mobile Mapping Corporation (another UAF faculty-owned company) on a Phase II Small Business Innova-

Alaska Business Monthly | March 2015 www.akbizmag.com

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Inventors from the Alaska Center for Energy and Power have invented “Black Box” hardware that can collect data from microgrids and isolated power generation systems. tion Research Grant. The grant will pay for the next stage of development of software that can be used by airplane manufacturers to assess damage to engines due to dust, ash, and other airborne particulates.

UAF has developed several signal processing technologies to capture, detect, track, and communicate signals. Other technologies can filter background noise or even boost the range of devices hundreds of miles, like radar.

This software has been licensed to Northrop Grumman for use all over the world.

Other inventors have demonstrated that unmanned vehicles can automate expensive activities that require manual inspection, such as pipeline surveillance, road inspection, or property tax assessment. From their work with the Alaska Center for Unmanned Aircraft Integration, UAF researchers turned entrepreneurs have developed a ground control station that works with software to make flying unmanned aircraft as easy as running a phone app. The new company, ArcticFire Development Corporation, is building piloting software. Their software and ground control station will help professionals process flight data to make business decisions based on the data that they collect from drone flight.

Researchers have developed software as an aside to their everyday jobs. Will Fisher and Dayne Broderson have developed software that forecasts employee expenditures for grant-based institutions, like universities.

The web-based software tool takes a complex set of information based on grant awards, contract termination dates, employee workloads, and project teams to forecast how much money and time they have left to complete a project. The developers plan on launching a website at Pridict.us to provide their software to university supervisors around the world.

Supporting Remote Innovators

Remoteness produces a pressing need to innovate and puts those in remote locations at the forefront of research into vehicles, sensors, data processing, and software that can be used all over the world. But inventions and concepts are not products. They 12

require many hours of additional work to turn into patents, capital to turn into working prototypes, and still more time to turn them into something that can be bought.

Acting upon the potential within Alaska to create innovative new products, UAF has begun working with several partners to commercialize technology. UAF formed the Office of Intellectual Property and Commercialization (OIPC) in FY 2011. OIPC helps UAF inventors protect their inventions and move University research into the private sector, where it can create jobs and stimulate economic development. To provide flexibility and commercial experience to licensing efforts, the nonprofit Nanook Innovation Corporation was formed in 2012 to license intellectual property from research, and Nanook Tech Ventures, a forprofit company, was created in 2013 to build startups based on university technology.

Through its commercialization center, UAF is bridging the gap between research and the private sector, but remoteness causes a problem for commercialization programs as well. Not all departments have the same expertise or equipment, and not all investors have the same exposure to bring their invention to market. In an effort to decrease infrastructure and support costs, OIPC is leveraging the many experts at the university and its commercialization center to keep costs to a minimum.

To build momentum for devices, OIPC is providing inventors with the means to access services for CAD (computer aided design) schematics and 3D printed prototypes. OIPC is connecting inventors with staff from the UAF Community and Technical College who can provide these services. From this initial work, CAD drawings can be used for functional prototyping and be useful for filing a patent.

For software, OIPC is working with Nanook Innovation Corporation to provide small “proof of concept” websites for software developers. Through these sites, developers can upload, license, and assess whether their tools fit the needs of the consumers. This method allows the software developer to rapidly improve the software, turn it into a product, and reduces the time it takes to bring software to market after each new development. Several software inventors are moving forward. One developer at UAF has already released a tool for Blackboard learn via the e-commerce site, a student plans to launch his mobile app via Google Play, and two others will to launch their physics modeling software online.

From these simple efforts, multiple innovators are streamlining the process to marketing, lowering costs, and building a bigger community of innovators and mentors in the process.

Growing Efforts with Industry

Remoteness may lead to some interesting technological solutions, but it makes big problems seem bigger. Remoteness makes it difficult to find the right business partners, technical expertise, mentors, or capital to launch new products.

But there are ways to make a remote area seem less so. The solution is to broaden the amount of collaboration beyond departments, entities, and companies. In many cases, commercializing technology requires establishing partnerships between industry and academia to translate new ideas and discoveries to real products and services in the marketplace.

To expedite this, a community can use some best practices in working together.

UAF has a long history of working closely with industry, and recently UAF has increased the speed of contracting and the efficiency of technology commercialization. It has also begun working with private companies on unique opportunities including Small Business Technology Transfer Research grants, Small Business Innovation Research Grants, and other interdisciplinary research.

UAF and its collaborators are licensing new technology as well as creating new startups in conjunction with entrepreneurs.

Through collaboration, UAF inventors and entrepreneurs can overcome obstacles, innovate, and build great products that can be exported.

Beyond The Arctic

Alaskan innovators are building technologies that work at a distance for the distant. Innovators are building new devices, vehicles, software, and products that address the challenges of living in a remote place. So many in the world are also facing these same issues, and if these problems can be conquered with local innovations, then the big problems Alaskans face won’t seem so big, and lives in the far North will be substantially changed.

The monetary valuation of the business may not be on par with the next Facebook or Twitter, but the value of remote innovation to everyday lives will far exceed them both. R Adam Krynicki is the Business Development Director for the University of Alaska Fairbanks Office of Intellectual Property and Commercialization and serves on the board of Nanook Tech Ventures.

Alaska Business Monthly | March 2015 www.akbizmag.com

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REAL ESTATE

Re- Making the American Dream Changing housing decisions here and now

By Andrew J. Romerdahl and Terry J. Fields

D

uring the last ten years, the nation’s rate of homeownership has steadily fallen from nearly 70 percent down to just over 64 percent. Homeownership’s seemingly inseparable attachment to, or rather its entanglement with, the American Dream has sparked a number of debates concerning Americans’ attitudes toward housing. What does this fall from grace say about the conventional dream of homeownership? What forces are really driving the numbers—personal desires or practical means? In other words, how are Americans make their housing decisions in today’s climate?

Statistical Surprise

For a country that so embodies homeownership as a foundation of the American Dream, it might come as a surprise to some that the homeownership rate between 1900 and 1940 was roughly 45 percent.

Deliberate government intervention raised this figure to more than 60 percent by the 1960s, and it has never dropped below that level since. This unprecedented spike can be contributed to a number of factors, including the introduction of tax incentives for homeowners, longer mortgage amortization periods (twenty-plus years), higher loan-to-value ratios (resulting in lower down payment requirements), the development of secondary mortgage markets, the introduction of mortgage insurance, incentive programs like the GI Bill (allowing for returning veterans to purchase a home with little to no equity requirements), and national marketing campaigns touting the economic and social benefits of owning your own home.

These political and monetary inducements drastically lowered the hurdle for home buying, and the rapid rise in homeownership rates indicates that there were many Americans eagerly willing to take advantage. This national experiment revealed that most Americans, given the opportunity and means, preferred to be homeowners.

Over the period of 1960 to 1990, the homeownership rate remained fairly stagnant, fluctuating slightly between 62 per14

cent and 65 percent. In 1995, the federal government released its National Homeownership Strategy: Partners in the American Dream program. The goal of this initiative was to raise the homeownership rate to a new high of 67.5 percent by the year 2000. Like the efforts in the 1940-1960s, the administration advocated for relaxing lending requirements and lowering down payment and other mortgage costs. The strategy successfully reached its goal, and continued efforts eventually pushed the rate of homeownership to nearly 70 percent in 2004. Since this time, the homeownership rate has steadily decreased in spite of falling interest rates and stimulus efforts (e.g. First-time Homebuyer Tax Credit).

This decline has prompted many to question whether the classic notion of the “dream” has changed.

Is The Dream Changing?

To say that the dream is changing, or that the pursuit of homeownership is waning in the minds of Americans, implies that the decline in the rate of homeownership is merely a factor of shifting desires. However, this diagnosis fails to consider the many factors that impact housing decisions.

Desires and dreams, alone, do not make a market. Mortgage applications do not ask how strongly the applicant desires to buy a home. The existence of a dream cannot simply be extracted from a rate that also reflects quantifiable economic realities.

The physiological need for shelter requires everyone to make a housing decision. For most, the bilateral consideration is either to rent or to buy this shelter. Among the renting population reside two distinct groups: renters-by-choice and renters-bycircumstance. It is amid these two groups that the view of homeownership as an integral component of the American Dream can be more clearly delineated. As the name implies, renters-by-circumstance desire homeownership but, relative to their particular housing market and current lending requirements, their financial circumstances do not allow them to act on their desires. Renters-by-choice have the financial means to purchase a home,

but choose against it for one reason or another. Certainly, an increase in renters-bycircumstance would not imply a shift in the desire for homeownership, merely a shift in its attainability. An increase in rentersby-choice, however, would indicate a shift in belief that would contradict the classic American view that homeownership is always the most financially, socially, and emotionally beneficial form of housing.

The fact remains that the homeownership rate has fallen nearly 6 percent over the past decade. The less definite statement is why. Some point to a housing bubble, a deep recession, high unemployment, mounting credit card, student, and medical debts, stricter lending standards, or higher equity requirements. This camp would reason that the dream has not changed, the ability to attain it has. Others point to macro-level demographic shifts, resulting in more young people wanting to live in highdensity areas and baby-boomers wanting to downsize and forego home maintenance demands. This camp would also point to a generation of people who experienced or witnessed the stress of foreclosure and therefore refuse to put themselves in that situation, as well as a shift in employment practices that provide the most advantages to those willing to move for opportunities.

They would conclude that even in the face of falling interest rates, falling home prices, and stimulus efforts, more Americans are simply choosing to rent despite having the means to buy. Like all great debates, the truth behind this gradual decline probably lies somewhere in between these two schools of thought.

Rent vs. Buy Analysis: Anchorage Example A widely held belief is that, in comparison to renting, homeownership is simply the more financially-beneficial option. A true rent vs. buy analysis can be conducted using the net present value (NPV) of costs associated with each option over the same time period. Using NPV is important because homeownership generally has large upfront costs (down payment and closing costs), and the return on that investment does not

Alaska Business Monthly | March 2015 www.akbizmag.com

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happen for several years. Discounting the payments and receipts for both owning and renting to present day will account for the opportunity costs of having money tied up in a home and not earning interest from another form of investment.

The following assumptions have been used for a rent vs. buy analysis for the Anchorage market: Homeownership Assumptions

 Sale Price = $358,000 (roughly the 2014 average for Anchorage)  Down Payment = 5%  Buyer Closing Costs = 1.25%  Seller Closing Costs = 7%  Loan Term = 30 Years  Interest Rate = 4.5%  Asset Appreciation = 2% per year  Property Taxes = 1.5% of the asset price per year  Home Insurance = 0.35% of the asset price per year  Private Mortgage Insurance = 0.6% of the sale price (drops off after 80% loan-to-value)  Maintenance/Renovation Costs = 0.5% of the asset price per year

Renting Assumptions

 Rent Price = $2,100 per month  Security Deposit = $2,100  Rent Appreciation = 2% per year

Individual Assumptions  Marginal Tax Rate = 25%  Discount Rate = 6%

In addition to the assumptions above, two personal questions must be answered to determine if renting or buying is a more favorable financial decision: Does the homeowner/renter already itemize deductions on his or her tax return (file long form)?

How long does the homeowner/renter intend to live in the home before moving?

Tax deductions for mortgage interest and property taxes can make a significant difference in the financial decision to purchase a home; however, they are only relevant if they are itemized on a tax return in lieu of the standard deduction available to everyone. Tax statistics from 2007 show that less than 25 percent of Alaskans itemized mortgage interest or property taxes, despite a homeownership rate of over 60 percent.

For most, the acquisition and disposition of real estate carries heavy transaction costs in the form of commissions, mortgage fees, transfer fees, appraisals, and inspections.

Almost 30 percent of homeowners move within the first five years. Another 40 percent stay for over twenty-five years. Short hold periods will likely negate any appreciation in value, and in general, homeownership becomes a better option the longer the home is owned.

16

Using the assumptions above, an NPV analysis produces the following scenarios for Anchorage: Scenario 1: The homeowner/renter fully deducts mortgage interest and property taxes at the 25 percent marginal rate.

Hold Length 1 Year 3 Years 6 Years 9 Years 12 Years 15 Years

Ownership Costs Rent Costs -$41,349 -$23,892 -$65,606 -$69,000 -$107,071 -$130,463 -$138,783 -$185,212 -$165,929 -$233,981 -$191,591 -$277,426

Decision Rent Buy Buy Buy Buy Buy

In just under three years, the costs of renting exceed the costs of homeownership, making it a better decision to buy if the property will be held for three or more years.

Scenario 2: The homeowner/renter does not itemize mortgage interest or property tax deductions, instead claiming the standard deduction.

Hold Length 1 Year 3 Years 6 Years 9 Years 12 Years 15 Years

Ownership Costs Rent Costs -$46,090 -$23,892 -$78,947 -$69,000 -$124,519 -$130,463 -$165,137 -$185,212 -$199,488 -$233,981 -$230,927 -$277,426

Decision Rent Rent Buy Buy Buy Buy

At six years, the costs of renting exceed the costs of homeownership, making it a better decision to buy, only if the homeowner/renter will be holding the property for more than six years. This example indicates the significance of tax deductions in the rent vs. buy analysis.

A number of variables and assumptions go into these projections. Some may think a discount rate of 6 percent is too high, while others might think it is too low (an S&P 500 Index Fund performed at over 7 percent during the last ten years, including the recession). In general, Anchorage is currently a buyers’ market for those that can meet the lending requirements and commit to over five years of ownership. Low interest rates are the primary factor behind this analysis.

All other assumptions held constant, an interest rate increase from 4.5 percent to 6 percent would alter the analysis, for those that do not itemize deductions, accordingly: Hold Length 1 Year 3 Years 6 Years 9 Years 12 Years 15 Years

Ownership Costs Rent Costs -$50,793 -$23,892 -$92,060 -$69,000 -$148,035 -$130,463 -$197,631 -$185,212 -$239,236 -$233,981 -$275,400 -$277,426

Decision Rent Rent Rent Rent Rent Buy

Under these circumstances, renting is a more favorable financial decision unless the home will be held for fifteen years or more.

The Real American Dream

The bottom line—renting is not necessarily a waste of money, and buying a home is not necessarily a good financial decision. Everybody’s situation is unique. For some, housing is simply a form of shelter.

For others, it is the heart of their family or a symbol of safety and stability. For some, the American Dream is living somewhere new every five years. For others, it is settling down in one place for a lifetime. A housing decision does not need to be the one with the highest NPV, but it should be an informed decision in light of personal priorities, as opposed to a prescribed expectation. The real American Dream is having the right and the means to choose the housing that best suits one’s needs and fits one’s unique situation, now, as well as in the future.

R

Terry J. Fields and Andrew J. Romerdahl have been working together since fall 2013 developing a property management and real estate degree program in the UAA College of Business and Public Policy.

Fields is the Program Director and an Assistant Professor for the Weidner Property Management and Real Estate Program at UAA CBPP. Romerdahl is the Weidner Chair of Business Management at UAA CBPP, Regional Director of Real Estate and Construction for Providence Health and Services, and Regional President of the Building Owners and Managers Association Pacific Northwest Region.

Alaska Business Monthly | March 2015 www.akbizmag.com

ENERGY

Why Alaska Holds the Key to Continuing America’s Energy Revolution

By Anne Seneca The opinions expressed herein are the author’s own and not those of Alaska Business Publishing Company, Inc.

A

bout a decade ago, the United States faced what seemed to be a dismal, almost frighteningly bleak energy future. We were on the verge of a large—and seemingly unsurmountable—energy shortage.

Our country’s lack of domestic production, coupled with rising imports of petroleum, was adding to our nation’s mounting deficit, not reducing it.

Long-lasting, detrimental impacts were expected to unfold as the direct or indirect result of this shortage. American consumers, in addition to seeing their job security deteriorate, would see their energy costs skyrocket. Our competiveness globally would nosedive, as would our country’s economic stability. Even our national security could be compromised, experts advised.

Most important, the United States would have to rely more heavily on faraway rival nations to provide us with the energy we need to power our communities and fuel our vehicles.

There was no way around this, we were told. It was, in essence, inescapable. However, thanks to Alaska and several other energy-plentiful states and regions, none of that ever materialized.

A New Era in Energy Consumer Energy Alliance always said the pendulum would swing back the other way if the United States, in an economically and environmentally friendly way, continued to explore and harness its abundant resources.

Fortunately, our nation’s perseverance paid off. New technologies combined with advancements in old hydraulic fracturing techniques have accelerated domestic energy production to heights not seen since the 1970s. Imports have decreased; in turn, so has the US trade deficit. Instead of importing about 60 18

percent of the petroleum we consume, as we did not too long ago, the United States now imports about 40 percent.

The turnaround has had a domino effect throughout the national economy.

Job growth accelerated. We are more energy self-efficient. National security has strengthened. Manufacturing is up, as is consumer spending. Filling up a car has never been lighter on the wallet, and American consumers are keeping more of their hard-earned dollars in their pockets—just as we expected.

Instead of having an energy shortage, our country now has an energy surplus—and it’s changed everything.

Geopolitical Consequences The avalanche of geopolitical consequences that have resulted from our newfound dominance in energy exploration and extraction is not lost on Consumer Energy Alliance.

The steep drop in fuel costs is not an American-only occurrence; the effects have been felt worldwide. US shale production has unquestionably played a key role in this phenomenon. Reduced demand and increased supply, thanks largely to the abundance of production from the United States, top the list of causes as to why oil prices are mindbogglingly low for the United States and nations across the globe.

For Americans, the whims of the Organization of the Petroleum Exporting Countries (OPEC) are now of little consequence for the first time in decades.

As American production has increased, OPEC’s influence on the global oil marketplace has decreased.

They have a plan for that—and a gutsy and expensive one at that. Rather than cut current production levels, which would have propped up oil prices, OPEC, led by Saudi Arabia, did the opposite. They left production levels unchanged. Why? Well, since shale production, which now produces 4 million barrels daily, is more expensive than conventional ex-

traction, keeping oil prices bottom-ofthe-barrel low will in due time drive out US shale producers, allowing OPEC and the Saudis to reclaim the market share lost to the United States. The Saudis said the kingdom will rely heavily on the billions they have in reserve to help ease the short-term burden of their artificially inflated prices. That’s the theory anyway.

In fact most estimates show that American energy companies can weather the low price environment much better than previously thought, making the Saudi’s gambit an expensive and futile one.

Now’s Not the Time to Slow Down It’s quite evident by now that much has changed over the course of the last several years. We are now leaders, not followers, in the global energy marketplace. Thanks to our abundance of energy, oil prices are low, much to the delight of consumers and motorists countrywide. Instead of overspending on high fuel or electricity costs, Americans are shopping and dining out more and going on those long-awaited vacations that had been on hold for years.

This, of course, includes Alaskans.

There’s more: The United States is now the largest oil-and-gas producer in the world, and its record-breaking rate of development has helped spearhead the nation’s economic recovery from the lingering effects of the Great Recession.

Nevertheless, our energy ascendency has also jumpstarted a “geopolitical game of chicken” between Americans and the Saudis-led OPEC. Who will blink first?

As long as the United States maintains its supremacy in the global energy sector by continuously diversifying its energy resources, continuing its strong rate of production, and exploring all available natural resources, it will not be us.

Alaska’s Key Role This is where Alaska and its encircling Arctic region, cluttered with vast amounts of yet-to-be-tapped resources,

Alaska Business Monthly | March 2015 www.akbizmag.com

are critical. According to the Alaska Resource Development Council, there are an estimated 27 billion barrels of oil and 132 trillion cubic feet of natural gas in the Arctic waters off Alaska.

These resources, we calculate, could heat every home in the United States for more than thirty years. Similarly, they could dramatically reduce energy costs for millions of households, generate billions in additional revenue, and manufacture countless jobs for all Americans, especially Alaskans.

As such, it’s imperative that we make better use of the Arctic’s vast array of resources. Unfortunately, to date, we haven’t. While energy production in the Lower 48 states has gone up 77 percent in the last five years, Alaska has seen its production drop from a high of 2 million barrels per day in the late 1980s to under 400,00 per day today. On top of government delays and foot-dragging, years-long environmental reviews, excessive and unnecessary litigation, new management plans, and regulatory uncertainty are also to blame.

Make no mistake, roughly 62 percent of Alaska’s mainland and all waterways more than three nautical miles offshore are owned and managed by the federal government, which has been unwilling to lease and permit expanded development on its territory. Consequently, Alaska’s competitiveness has plummeted. According to the Alaska Oil and Gas Association, Alaska oil production accounts for less than 10 percent of US domestic production today. In contrast, it accounted for more than 20 percent before 2000.

It is also important to maintain production even as the state faces a sizeable deficit due to the recent dip in oil prices. Oil has long been the economic backbone of Alaska, with production revenue accounting for more than half of its annual budget and nearly all of the state’s discretionary spending. This, too, shall pass, and when it does it will be important for Alaskans to work together to ensure the long-term budget stability of the state moving forward.

Now more than ever is the time for Alaska to lead the way and demonstrate to the Lower 48 the immeasurable economic and environmental benefits that energy exploration and production, onshore and offshore, can bring to Alaskans www.akbizmag.com

and all Americans. The road to American energy security has always run through Alaska. Let’s make sure that continues to be the case. Consumer Energy Alliance

will do its part to ensure Washington understands the importance of Alaska energy production and the role it will play in the future. Join us.

R

Anne Seneca is the Executive Director of Consumer Energy Alliance-Alaska. An Alaskan for almost twenty-five years, Seneca has a passion for safe and economical energy development both within Alaska and nationally. With experience in marketing and public relations, Seneca serves as the key liaison in reaching out to large groups of Alaskans with a strong, succinct message of the benefits of responsible resource development and consumer advocacy. alaskacargo.com

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March 2015 | Alaska Business Monthly

19

CONSULTANT’S CORNER

Trigger Events in Buy-Sell Agreements What events prompt the buy-out?

By Mel B. Bannon

A

n effective buy-sell agreement just makes good business sense.

Closely held businesses, especially multi-owner corporations and partnerships, need to have this succession protection plan in place. Individually owned businesses can also profit from the use of a buy-sell agreement. This is essential for smooth transition of ownership upon the occurrence of several events.

Most business owners think of only one event—death. Since none of us like to face our own mortality, business owners often procrastinate in dealing with succession planning. There are other statistically more likely events that a properly structured Buy-Sell Agreement can address. We’ll discuss each one individually in the corporate context; however, this also applies to partnerships and LLCs. In a singleowner business, the buyer could be a key employee(s), a business competitor, a supplier/vendor, or even a customer.

Death of a shareholder: In the event of death of an owner, the business can suffer a financial setback (key person loss).

This problem can be compounded if the surviving shareholders have to take in a new partner, the deceased owner’s spouse. He/She may have very little knowledge of the business, yet expect a salary and profits from the business.

Harmonious transition of the business can be accomplished with a buy-sell agreement fully funded with life insurance coverage to cover the expected length of time the shareholder will remain in an ownership position. The economics for the use of life insurance as compared with funding the buyout from profits following the loss of a key shareholder are generally quite commanding, as compared with using future business profits or personal funds.

20

Disability of a shareholder: While most buy-sells take into account death (even though the agreement value may be low or underfunded), many totally ignore what could be a more serious financial drain—disability. Quite often, disability is poorly defined in the buysell document (if at all) and not funded or underfunded. A disabled shareholder would expect his/her salary to continue, as well as to get a share of profits. If the disability was extended, how long could the business keep paying? All of these decisions should be outlined in the agreement. This should be a business decision based on previously agreed-upon terms, not on emotions or personal finances at the time of a disability. And, of course, the disability agreement needs to be fully funded with Disability Buy-Out coverage, providing a lump sum for the buy-out once the disability reaches permanent status. (This should not be confused with Disability Income coverage, which is a different product, generally used as personal income replacement for an individual.)

Divorce of a shareholder: It would not be unusual for a spouse to end up with one half the business interest of a closely-held business, in event of a divorce— even in non-community property states such as Alaska. There should be a provision in the buy-sell to have such spouse forced to sell stock back to either the: (a) corporation; (b) original shareholder; or (c) other shareholders. Again, the price cannot be higher than the death price.

Departure or Retirement of a shareholder: When a shareholder leaves, whether for regular retirement or early voluntary retirement, his/her business interest should be purchased. The purchase price can be the same as or less than the death price (it cannot be more). A lower purchase price might be set for early termination. As for retirement planning, a sinking fund can be established to build the future buyout value. Often the sinking fund can be contained within the life insurance contract, providing tax-advantaged cash values to be used as a retirement supplement structured as buy-out payments.

Default: In most closely-held corporations, the individual shareholders must personally guarantee corporate loans from banks and/or contribute payments to the bank or business. There should be a provision whereby if a shareholder defaults, a buyout would be triggered for his/her interest.

Deadlock: If equal owners come to a major disagreement, the business can become “deadlocked” and unable to further conduct normal operations. In this case the business may have to be liquidated. This may have to be taken into consideration in the agreement.

Minority-Majority Disagreement among owners: If ownership is unequal, and there is a major disagreement, a minority shareholder could be forced out of active employment. In that case, it would make sense to purchase his/her interest.

This contingency should be taken care of in the agreement.

Valuation: The most important item in a buy-sell is the valuation of the business interest. No one wants to over-pay for a business interest. In addition, each owner would want to be sure he/she or their family received fair value in event of a living buyout or death. Appraisals may be viable and even required if

Alaska Business Monthly | March 2015 www.akbizmag.com

family members are involved. Another reason for proper valuation is to fix the value in the deceased’s estate for Federal Estate Tax purposes. One of the stipulations is that the value must be Fair Market Value at the time the agreement is entered into. The agreement should contain a formula for future valuation and/or periodic independent appraisals. If appropriate life insurance is not maintained to fund the full value, then an installment purchase arrangement should be included to provide for any remaining balance.

Sometimes you need boots on the ground... ...or sneakers, or Xtra tuffs, or crutches...

Bottom Line When buy-sells are drafted or reviewed, these “Trigger Events” would make a good checklist for consideration. It’s far easier to make business decisions regarding these situations then, than to make emotional decisions after the event has taken place.

R Mel B. Bannon, CLU, ChFC, RFC, California Insurance License #0412338, is a registered representative of Lincoln Financial Advisors Corp.

Securities offered through Lincoln Financial Advisors, Corp., a broker/dealer (Member SIPC).

Investment advisory services offered through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor.

Insurance offered through Lincoln Marketing and Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc. and other fine companies. 31111 Agoura Rd., Ste. 200, Westlake Village, CA 91361 (818) 540-6967 / 1500 W. 33rd Avenue, Ste. 210, Anchorage, AK 99503 (907) 522-1194. This information should not be construed as legal or tax advice. Consult a tax advisor regarding this information as it relates to your personal circumstances.

CRN-1086913-123014 www.akbizmag.com

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March 2015 | Alaska Business Monthly

21

INSURANCE

Strategies for Controlling Business Insurance Costs Minimizing risk while maximizing protection

By Tracy Barbour

C

ontrolling insurance premiums is an important part of keeping expenses down for any business.

However, the key is to reduce costs while maintaining coverage that provides adequate protection—and minimizes risks.

In Alaska and elsewhere, the most widely-used types of insurance include workers’ compensation, liability, property, and commercial auto. With some calculated steps, business owners can capitalize on a variety of ways to decrease their costs for these and many other kinds of insurance.

Controlling Costs for Workers’ Compensation Government-mandated workers’ compensation insurance is a major expense for most companies. And it represents one of the biggest areas for cutting costs. Workers’ comp, as it’s commonly called, offers protection from claims by employees who experience work-related injuries or illnesses sustained on the business premises or because of the operations of the business. Coverage provides employees with medical, rehabilitation, disability, and re-employment benefits, as well as death benefits for dependents in cases involving workrelated fatalities.

The rates for workers’ compensation insurance are static, with prices set for every $100 of payroll. The only real control employers have on costs is to maintain an environment where they’re not going to have injuries, according to Mike Gordon, president of Denali Alaskan Insurance. That’s because a major part of what determines the workers’ comp premium is the company’s “experience modifier,” or loss history.

The experience modifier, often re22

“If you have a good safety culture where employees are looking after employees, looking after the business, and looking after customers, that is the number one way to mitigate lawsuits.”

—Mike Gordon President, Denali Alaskan Insurance

ferred to as the “e-mod” or “mod,” is a number that represents the employer’s claims history over a three-year period.

The e-mod is based on how an employer compares to others in its industry with similar employees, and it results in a reduction (credit) or increase (debit) of the company’s insurance premium. A credit indicates that an employer has less than average loss experience, while a debit shows the opposite.

An experience mod of 1.00 is the average. A business with no or few claims may have a mod of 0.75, which translates into a 25 percent credit that comes off the workers’ comp bill, Gordon says.

A company with numerous claims may have an experience mod of 1.6, which will result in a 60 percent debit. This can have a significant impact on the annual premium. “With a $100,000 premium with a 1.6 mod,” he says, “that becomes $160,000.”

However, employers can effectively reduce their workers’ comp premium by controlling their hiring practices.

“Bad hires can cost you a lot of money,” he says. “If you hire someone who bounces from job to job and has lots of injuries, that could be a problem.”

Gordon feels that having a strong safety culture is vitally important. And that culture must be engrained in the entire organization. Addressing safety

issues, he says, can involve something as simple as cleaning up a spill or cautioning an employee not to engage in a potentially dangerous activity, such as standing on the top rung of a ladder. “If you have a good safety culture where employees are looking after employees, looking after the business, and looking after customers, that is the number one way to mitigate lawsuits,” he says.

Having a return-to-work program for injured or sick employees is also critical.

Claims don’t get any cheaper, and the longer an individual is out of work, the more expensive the claim is for the employer. So it’s essential to get employees back to work where they can get back to being productive, Gordon says. Getting employees back into the work cycle not only makes them feel better about themselves but it also gets them off the workers’ comp claim much faster.

Like Gordon, Business Insurance Associates President Chris Pobieglo emphasizes safety as a primary way to minimize workers’ comp premiums.

He says companies can also reduce their premiums for workers’ comp (and general liability) insurance by ensuring their employees have the proper classification code. Employee classification codes—which are set by the National Council on Compensation Insurance— are assigned to different jobs to indicate

Alaska Business Monthly | March 2015 www.akbizmag.com

Landye_Blumstein_AKBusMon_2013_Layout 1 12/20/12 10:56 AM Page 1

the work and level of risk involved.

Each class code represents a group of employers with the same kinds of exposure (potential for loss). Occupations with a greater risk of injury equate to higher workers’ compensation premiums. For example, a dynamite worker is more expensive than an office worker to insure. Class codes can change, so employers should periodically review and make cost-saving adjustments. “Traditionally, door and window installers were classified under carpentry,” Pobieglo explains. “Two years ago, they introduced a new class code for door and window installation, and it’s half the rate than for the carpentry code. So it is important to make sure your class codes are up to date and accurate.”

Lessening Liability Premiums Most companies need some type of liability insurance package, which is defined by the business activities, Pobieglo says. For instance, general liability insurance would be suitable for a retail store.

Professional liability coverage, which offers protection against malpractice, errors, and negligence, would be beneficial for anyone who makes recommendations, such as accountants, architects, engineers, and independent consultants.

Holding down liability insurance expenses can be challenging because there are fewer controllable factors involved, according to Pobieglo. General liability costs are primarily driven by the type of exposure. For instance, retail stores will be rated on gross revenue. Sometimes payroll, subcontractor costs, and square footage are applicable. “It also depends on your class code and the type of work that you’re doing, as well as deductibles and your limits of liability,” Pobieglo says. “Obviously, avoiding claims can be helpful. But there isn’t very much you can do to lower general liability premiums.”

Professional liability is a different story. Premiums for this type of coverage are determined more by an underwriting process that considers factors like the type of work being done and gross revenue estimates. Many professional liability policies require minimum premiums. In addition, there are no standard ISO (Insurance Services Offices) forms that define, limit, and explain what property or property inwww.akbizmag.com

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23

“Business owners can reduce their property insurance costs by choosing to increase their deductibles, reducing the hazards of their operations, and improving the property condition and fire protection and security.

Landlords can reduce property costs by carefully selecting low-hazard tenants.”

—Tim Maudsley President, Alaska USA Insurance Brokers

terest is covered, so each of the professional liability companies writes their own coverage form.

Hence, Pobieglo encourages business owners to look at the coverage as much as the pricing and who the insurance carrier is. They should ask themselves these questions about carriers: Are they reputable? Do they have a good A.M. Best rating? Have they been established in Alaska? “Being that most people aren’t insurance experts, that’s where the impetus goes a lot to the credibility of the carrier,” Pobieglo says. “We go with companies that we know are reputable and have fiscal stability.”

Cost-Cutting Strategies for Property and Auto Insurance Maintaining adequate commercial property insurance is essential for safeguarding tangible investments that businesses use to operate. This type of insurance can protect the actual building that houses the business, inventory, equipment, furnishings, and other items. Coverage can also extend to equipment breakdowns and the cost of debris removal after a loss.

A host of factors determine property insurance premiums, according to Tim Maudsley, president of Alaska USA Insurance Brokers. They include the amount of insurance needed or required by a mortgagee, the size of the deductible, the age and construction type of the building, the square footage of the building, the operations being conducted in the building, the fire protection systems in the building and the public fire services in the geographic area, any past claims history, and the business owner’s industry experience.

Maudsley says there are a number of effective strategies companies can employ to control property insurance 24

premiums. “Business owners can reduce their property insurance costs by choosing to increase their deductibles, reducing the hazards of their operations, and improving the property condition and fire protection and security,” he says. “Landlords can reduce property costs by carefully selecting lowhazard tenants.”

Commercial automobile insurance is another area that affects many business owners. This type of insurance offers protection against liability arising from accidents in company vehicles such as cars, trucks, or vans.

In commercial automobile insurance, Maudsley says, premiums are driven by the age and types of vehicles in the business fleet, the coverage requested (liability and physical coverage such as comprehensive and collision), the geographic areas the vehicles are operating in, the distance vehicles are being driven and the frequency of trips, and the type of passengers or cargo being hauled. In addition, the motor vehicle record and age of the drivers, as well as the automobile claims history and experience of the business, are also strongly considered.

According to Maudsley, business owners can reduce their automobile insurance costs by deleting increasing physical damage insurance (comprehensive and collision) on older vehicles or increasing deductibles on all coverages. Businesses should also take steps to hire and reward safe drivers, he says.

This can be done by actively and regularly reviewing their drivers’ motor vehicle records and taking steps to remove drivers with unacceptable or unsafe driving violations. In addition, Maudsley recommends that business owners actively inspect, manage, and maintain their fleet of vehicles to ensure that crit-

ical elements such as brakes and lights are inspected and repaired to prevent malfunctions.

Going the Self-Insurance Route Larger businesses—those with more than one hundred employees—have more options to manage risk and thereby decrease overall insurance costs through a variety of alternative methods, Maudsley says. Self-insurance, the assumption of risk through the use of large deductibles or self-insured retentions, is a popular financial strategy for bigger businesses.

Also gaining popularity among large employers is the use of “captive” insurance companies, those programs which are owned or shared by members of the captive and reinsured by traditional insurance companies, according to Maudsley. The major benefit to these alternatives is it gives employers more control and predictability over their insurance costs because the premium is based on the employers’ individual loss experience. This is contrary to the traditional insurance cycle, where rates are set based on the loss experience of an industry in total. “Therefore, if you are a large employer with low loss experience, you could be paying higher rates due to your industry not performing as well as you,” he says.

Maudsley also points out that most self-insurance strategies are centered on casualty risk exposures, such as workers’ compensation, automobile, and general liability insurance. He advises, “Companies considering alternative risk management must have strong safety and loss control procedures in place before moving to such structures, due to the assumption of risk involved.”

General Tips for Controlling Costs When it comes to insurance needs, every business is different. And there are myriad general strategies companies can use to decrease their costs for everything from employment practices liability and cyber liability to directors and officers insurance and special coverages.

“By assuming additional risk and increasing deductibles, the business owner can take advantage of additional credits that can reduce rates by as much as 10 percent or more,” Maudsley says.

Alaska Business Monthly | March 2015 www.akbizmag.com

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However, many times business owners are not properly informed as to the amount of risk that can be transferred to insurance companies today, Maudsley says. Large and small businesses, knowingly or unknowingly, frequently self-insure significant exposures such as environmental (pollution) hazards, cyber risk, employment practices risk, and shareholder risk when it is no longer necessary. “Competition between insurance companies has reduced the premiums associated with these risks, and business owners should take advantage and free up reserves set for these items on their financial statements,” he says.

Maudsley feels it is crucial for companies to work with a knowledgeable insurance broker who intimately understands the detailed operations of the business in order to recommend an adequate and appropriate risk management program that provides protection for loss. “It is difficult to recommend minimum coverage levels without analyzing the individual business’ operations, risk profile, and appetite,” he says. “Risk can be business-related, strategic, or hazard-based, and each

has significant impact to the business’ bottom line. The insurance broker can detail ways not only to transfer risk through insurance and contracts, but also design strategies to prevent, mitigate, and finance risk in business.”

Gordon expressed similar thoughts.

To effectively lower insurance rates, companies need a clear understanding of their risks. Business insurance isn’t just a commodity, he says. It’s a transfer of risk, with deductibles and limits coming into play.

Without sufficient insurance, he says, a company could be driven out of business by an uncovered exposure. But over insuring could cause a business to become “insurance-poor,” with more insurance than they can afford.

“People often don’t know what’s required versus what their exposure is,” Gordon says. “They shouldn’t use contracts or statutes to guide them on how much insurance they should buy. They have to understand how they’ll deal with the exposure.”

Therefore, Gordon encourages companies to find an insurance brokerage that they trust and feel confident in

to help them through the process of evaluating their risk and making informed decisions about reducing their premiums. “Insurance isn’t rocket science, but it can be complex, and people who work in it day in and day out are in better position to help the business,” he says. “They need to think of their insurance broker as their guide.”

Pobieglo says it’s not a bad idea to see what other markets are doing. However, business owners themselves should avoid going out to market every single year because this can produce “underwriter burnout.” Instead, they should let their broker do the shopping for them. “It doesn’t hurt to go out and get some competitive pricing through your broker,” he says.

Additionally, Pobieglo advises owners to keep in mind that price is only half the equation. “Understand that the lowest price isn’t necessarily the primary factor,” he says. “Compare at apples to apples.”

R Tracy Barbour is a former Alaskan.

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FINANCIAL SERVICES

United Way’s AARP and IRS Collaborations Creating economic stability through partnerships

By Rindi White

F

It might seem small, but filing taxes for free and receiving a refund can be an important leg up to a family in the midst of financial crisis.

Volunteers Help Bring in $8.8 Million in Tax Refunds for Anchorage Residents One of the most important services offered by AARP TaxAide, the federal Internal Revenue Services, United Way of Anchorage, and its partners is an opportunity to have income taxes prepared at no cost. More than one hundred volunteers staff eleven sites around Anchorage and prepare taxes for free.

According to United Way, more than 5,500 people stopped at the tax preparation sites last year to have their taxes done for free, or used an online site, MyFreeTaxes.com, to do so. By United Way’s estimates, attendees saved more than $797,000 in tax preparation fees (estimating the average cost to file at $150 per return) and took home an estimated total of $8.8 million in tax refunds. The average annual income of the households receiving free tax preparation was about $29,000, United Way reported.

The free online tax preparation site limits the maximum income of users to $60,000, but United Way Income Impact Director Maureen Haggblom says income is not limited at the in-person preparation sites. However, United Way does ask that people with complicated returns, such as business owners, people with multiple homes, or those who have complicated investment portfolios, use another tax preparation method. The volunteers are trying to work through as many returns as possible between February and April, Haggblom says, and complicated returns take a significant amount of time.

“We want to be able to help as many people as possible,” she says.

It might seem small, but filing taxes for free and receiving a refund can be an important leg up to a family in the midst of financial crisis. Although United Way does not share identifying information related to clients, Haggblom says a number of success stories were shared recent-

inancially stable residents boost local economies, are better employees, and help communities grow and thrive. That’s part of why United Way of Anchorage and its community partners team up throughout the year to offer Alaskans the chance to move toward greater financial stability and offer opportunities aimed at helping people on the path toward a more positive financial future.

“At United Way of Anchorage, we strongly believe that financially stable families are the backbone of the community. Families have a lot of moving parts; they need a lot of things to become financially stable. No one program, no one entity can do that alone,” says Michele Brown, president of United Way of Anchorage. “What we have been doing over the last several years is convening a lot of partners to work together in the way that families work. It’s an ongoing process to help them become financially stable.”

Michele Brown says United Way and its partners hope to help families move beyond times of financial crisis to a financially stable point where all bills are paid, then forward to increasing incomes and saving money for larger assets, such as a home.

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ly by several partners. One of the stories shared the boost a single father of three, recovering from an accident that left him with a temporary head injury, received after stopping in a site for free tax help.

“While recovering, he was a victim of a scam that took the funds he had intended to use to supplement his income throughout the year. Without this income, he became behind on bills and could not see a way to ever pay off the debt. A financial counselor recommended he take his taxes to one of the Anchorage free tax prep sites. It seemed his refund should cover his outstanding debt while providing free tax service rather than the expensive tax preparation and high-cost loan he had received in the past. It seemed to be a great solution, and when we followed up a few weeks later, his refund had come … and it was enough to pay off his debt and leave him with a little extra to spread throughout the year,” Haggblom reports.

The service is popular, and it grows a little more each year as word spreads.

Early this year, United Way was gearing up for a January 31 tax preparation Super Saturday kickoff. Haggblom says about 150 households showed up for the first Super Saturday event in 2014. Three Super Saturday events are typically held each year—this year, another is scheduled for February 21 and one for March 28—as well as a Procrastinator’s Day event on April 15 where last-minute filers can get tax help until 11 p.m.

Alaska Business Monthly | March 2015 www.akbizmag.com

“Businesses can encourage their employees who have skills to share to volunteer for some of these opportunities, they can donate media or sponsor events or marketing efforts, and of course they can donate money to further expand our work to a broader audience.”

—Laura Brown Senior Director of Communications, United Way of Anchorage

United Way of Anchorage also operates a free information line—Alaska 2-1-1 (also reachable by dialing 1-800478-2221)—that all Alaskan residents can call Monday through Friday, from 8:30 a.m. to 5 p.m., to find out, among many other things, where to go for free tax preparation. Although Anchorage has the largest program in the state, many other areas of the state also offer tax preparation help, Haggblom says.

More Volunteers Needed Demand always outpaces the number of tax returns volunteers can complete in the few months the tax preparation assistance is offered.

“We do, unfortunately, have folks come in to the tax prep sites that we’re not able to help because we don’t have enough volunteers,” Haggblom says. “It’s done on a

first-come, first-served basis and we don’t take appointments … so we are always on the lookout for additional volunteers.”

Although the volunteer base of about one hundred people remains steady from year to year, Haggblom says a few people stop volunteering due to out-ofstate moves or medical issues, among other things. AARP TaxAide undertakes an extensive recruitment and training process each year to keep the number of volunteers level. Recruiting for new volunteers begins in August, she says.

“We tend, in our outreach, to touch thousands of households,” Haggblom says. “In the end, we might have forty or fifty people who say they are interested.”

Of that number, she says generally fifteen to twenty-five people complete the forty-hour training course. Many of the volunteers are retirees, Haggblom says.

They might have a background in tax preparation or a related field, she says, and they are generally more likely to have the time to volunteer in the middle of a workday. But this year, Haggblom says, more non-retirees volunteered and organizers are gladly working around their schedules to accommodate them.

United Way and AARP TaxAide are always on the lookout to make the tax preparation services work better and be more relevant to residents, says Laura Brown, senior director of communications for United Way of Anchorage.

“Businesses can encourage their employees who have skills to share to volunteer for some of these opportunities, they can donate media or sponsor events or marketing efforts, and of course they can donate money to further expand our work to a broader audience,” Laura Brown says.

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The Broader Goal: Financial Fitness Bringing taxes up to date and filing returns is only part of the equation when it comes to achieving financial fitness.

As Michele Brown mentioned in the beginning, families often need several kinds of help, sometimes at different stages, to become financially stable.

“We want to keep people moving forward … so they’re becoming financially stable, then they’re increasing their income, then they’re saving up for assets,” Michele Brown says.

The goal, she says, is to meet families where they are and make sure they have a full array of tools at the ready for use at the most appropriate time. That’s where the Financial Partnership Network comes in— and something United Way of Anchorage calls “the mathematics of collaboration.”

It’s an idea lifted from business advisor and popular author Marty Neumeier. He wrote about it in his book “The Brand Gap.” Neumeier wrote that, when it comes to collaboration, 1 + 1 = 11. In other words, when people (or companies) work together, they can become exponentially more than the sum of their parts.

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“We want to keep people moving forward … so they’re becoming financially stable, then they’re increasing their income, then they’re saving up for assets.”

—Michele Brown President, United Way of Anchorage

To start with, it’s important to use a strong team of partners. A few of the partners United Way of Anchorage and its Alaska 2-1-1 service work with include AARP Alaska; AARP TaxAide; Assistance Resources of Alaska; Alaska Housing Finance Corporation; Better Business Bureau; Catholic Social Services; Cook Inlet Lending Center; the Governor’s Council on Special Education and Disabilities; the Internal Revenue Service; Money Management International, Inc.; NeighborWorks Anchorage; Nine Star Education and Employment Services; UAA Center for Human Development; Volunteer Income Tax Assistance; and YWCA. The group, which meets monthly and has been doing so for about six years, comes from a variety of backgrounds— housing, education, and employment.

It can be difficult to quantify the

kinds of help the group has provided to Anchorage families in need, Haggblom says, but one method of measuring has been impressive: more than nine hundred people have improved their credit scores thanks to help from members of the Financial Partnership Network.

“This partnership, although expansive, cannot touch everyone who needs something in Anchorage,” she says.

“Among those people served, [the improved credit score] can show how many people are actually … seeing some level of improvement in their situation.”

Larry Snider, western regional director and head of the Anchorage office for credit counseling company Money Management International, Inc., says one of the most important things the partnership provides low- to moderate-income residents of Anchorage is an array of options.

Alaska Business Monthly | March 2015 www.akbizmag.com

“The very important part of what we do is help individuals make choices … that would have, very often, been lost opportunities for them,” he says.

So instead of spending a tax return on a new flat-screen television, Snider might suggest a family bring a current utility bill and then get set up on budget billing, so utility bills can more easily be budgeted throughout the year.

“I’ve seen individuals that have been able to address debts that they knew existed but were ignoring because they didn’t think it was possible [to pay them off],” he says.

“The other thing we’ve been able to do is to get some individuals to begin saving.”

Alaska Saves, an Initiative to Help Families Dig Themselves Out of Debt A striking number of Alaskans don’t use banks regularly, Haggblom says.

“Over 19 percent of Alaskans are under-banked, and almost 2 percent of Alaskans are unbanked,” she says.

Under-banked generally refers to people who have a bank account solely for getting their Permanent Fund Dividend check electronically distributed, Haggblom says.

Sometimes encouraging a family to get a savings account and begin using it is more a factor of working with banks to provide suitable options than it is about changing the mindset of a family.

“What we might have is households that had problems in their past that might not make them the most appealing customer for all the products that a bank might offer,” Haggblom says. “But we are working with banks that have developed low-fee or no-fee products and we plan to feature those products.”

What’s so great about having a bank account? Haggblom says families who don’t often rely on payday lenders or others to cash checks.

“It tends to cost them more than $800 a year in check-cashing fees a year,” Haggblom says.

Working with banks to provide lowcost banking options for low- to moderate-income families is one of the key components of the Alaska Saves initiative, which kicked off at the January 31 Super Saturday event. Information about Alaska Saves will be available at other Super Saturday events, at United Way of Anchorage’s Financial Fitness

Fair, and at the Alaska 2-1-1 website.

Snider says Alaska businesses benefit directly from the financial programs of United Way and its partners.

“Business is a beneficiary of this because of the thousands of dollars these consumers don’t have to pay in fees, and it puts money in their pockets,” Snider says.

“They’re able to do things that they weren’t able to do otherwise. The other part of this is, families and individuals burdened with financial stress have a negative stress load.

If they get help, that stress is gone.”

In addition to business, families and whole communities benefit.

“Stronger families equal a stronger, more financially stable community for everyone,” Haggblom says. “When a family achieves higher levels of self-sufficiency and financial independence, it changes that family’s current situation and has the power to improve their future. Strong families are empowered to contribute back into their economies and communities—creating a stronger future for all.” R Rindi White is a freelance journalist living in Palmer.

Anchorage School District Bond Paying off debt $269.6 million paid off in last five years.

$282 million

$59.3 million bond to improve 8 schools

Package with 60-70% state reimbursement addresses significant building needs at several schools.

Four elementary schools These schools would receive significant renovation to extend building life.

• Gladys Wood Elementary • Mountain View Elementary

to be paid in next five years.

Additional proposed projects

ASD is paying off

• West High School – roof soffit in pool area • East High School – bus loop

$56.4 million

per year in bond debt.

• Rabbit Creek Elementary • Turnagain Elementary

Four additional schools that have emerging needs also have projects on this school bond.

• Fire Lake Elementary – roof replacement • Inlet view Elementary – domestic water supply

State reimbursement means the average homeowner will pay roughly $5.28 for every $100,000 of assessed property value per year. The state legislature has fully funded the state’s debt obligation each year for more than 30 years. This program significantly lowers the principal project costs to taxpayers. Without state reimbursement homeowners would pay approximately $14.11 per $100,000 of assessed value.

Learn more before you vote. www.asdk12.org/bonds Find us on Facebook: AnchorageSchoolBonds This Information is paid for by the Anchorage School District. Ed Graff, Superintendent, 5530 E. Northern Lights Blvd., Anchorage, Alaska 99504.

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March 2015 | Alaska Business Monthly

31

VISITOR INDUSTRY

Photo by Frank Flavin/ Courtesy of CIRI Alaska Tourism

Talkeetna Alaskan Lodge Tour Desk employee helps guests with planning a flightseeing tour.

Seasonal Visitor Industry Job Market Winter hiring for summer staffing is the norm

By Tasha Anderson

A

laska is in many ways a land of extremes. In the winter it’s cold, dark, and mostly white, and in the summer the landscape transforms to explode with color, lit up by seemingly endless hours of sunlight. This transformation is echoed in the tourism industry; before summer fully hits, as the sun climbs its way into the sky earlier each morning and sets itself a later curfew each night, the Alaska visitor industry is busy preparing to welcome a flood of guests.

In January, Visit Anchorage CEO Julie Saupe presented the annual “Report to the Community,” a review of some of the highlights of the 2014 year in Anchorage: bed tax collections were estimated to be $24.2 million (a record year, the fifth year of growth); the estimated economic impact of meetings in Anchorage alone was $98.1 million, stemming from an average of fifty-five meetings per month in Anchorage’s convention centers, with a total of 662 events held in 2014; looking forward, in 2014 $91 million was secured in future

32

conventions. Saupe said, “There’s a lot to be excited about in 2015.”

Statewide, the industry continues to grow. The previous year saw 1.96 million visitors spend $1.8 billion for an economic impact of $3.9 billion, with $1.3 billion classified as labor income and $179 million as taxes and revenues according to the Alaska Division of Economic Development (ADED). In a recent report, ADED found there were 1.66 million out-of-state visitors between May and September 2014.

The Season Begins When it Ends The visitor industry, in Anchorage and throughout the state, is appropriately powered by people, about 46,500 at peak season, according to ADED. By the time the cruise ships come into port and branded hats and polo shirts are being sold or handed out to employees, visitor industry businesses have already advertised for, offered positions to, and trained the summer workforce, starting as early as the end of the previous season.

Holland American Line-Princess Cruises is a huge presence in the Alaska tourism market; according to Roma Rowland, manager of Human Resources HAP Alaska-Yukon, in order to find the employees they need for the season they “start recruiting in September for the following summer,” to find staff for their five seasonal lodges (Copper River Princess Wilderness Lodge, Denali Princess Wilderness Lodge, Fairbanks Princess Riverside Lodge, Kenai Princess Wilderness Lodge, and Mt. McKinley Princess Wilderness Lodge) that span the state as well as their numerous cruises that explore Alaska’s waterways and ports.

Gideon Garcia, chief operating officer of CIRI Alaska Tourism Corporation, a wholly owned subsidiary of Cook Inlet Region, Inc., says the hiring process begins in November or December of the year prior. CIRI Alaska Tourism operates three lodges, the Talkeetna Alaskan Lodge, Seward Windsong Lodge, and the Kenai Fjords Wilderness Lodge on Fox Island, and they operate Kenai

Alaska Business Monthly | March 2015 www.akbizmag.com

Fjords Tours, which focus on whale watching and wildlife viewing.

Goldbelt, Incorporated is an Alaska Native corporation that participates in the visitor industry through its properties in Juneau: the Goldbelt Hotel, Goldbelt Mount Roberts Tramway, and the Seadrome Marina. To staff their operations, Joann Flora, the director of Tourism Marketing, says that hiring begins in January, at the very latest in February.

And Saupe, with Visit Anchorage, says that they too hire on extra help in the summer to staff their series of visitor centers; “the log cabin [in Downtown Anchorage] is our most visible one,” she says. Hiring starts as early as December.

How Many People Does it Take to Run Alaska?

Visit Anchorage is on the lower end of the spectrum in terms of summer staffing needs. Saupe says that they hire fifteen to twenty staff to supplement a year-round volunteer staff of about one hundred. “We have a lot of people that return, but every year we need probably

Photo by Jack Bonney/ Courtesy of Visit Anchorage

The iconic Visit Anchorage Visitor Information Center Log Cabin in downtown Anchorage on the corner of 4th Avenue and F Street.

five to ten new faces to help supplement,” she says “It’s a challenge, but it’s a fun job, which helps.”

Visit Anchorage recruits summer staff through job fairs, word-of-mouth,

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March 2015 | Alaska Business Monthly

33

Photo by Chris Batin/ Courtesy of CIRI Alaska Tourism

Kenai Fjords Tours boat crew bringing in glacier ice to show passengers.

in a while we have a student [from the Lower 48] looking for an internship or something,” she adds.

Flora says that nearly, if not all, of Goldbelt’s summer workforce are Alaskans, and that in addition to local hire, the company is also motivated by its Alaska Native roots.

“We solicit through Goldbelt shareholder communications, because our operations are Goldbelt properties,” Flora says. “We are committed to shareholder hire.”

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Goldbelt finds more than one hundred staff for the summer season— about one hundred to run the tram and a half dozen to boost the hotel, Flora says. For comparison, the tram has seven year-round employees while the hotel has about twenty.

“I’m going to guess that we have about half our tram staff that returns,” Flora says. “We have people of all ages.

One of our long term employees is in her seventies: she’s a retired individual who’s been with the tram for years, and she comes back every summer. A lot of the seasonal employees are college age to late twenties, but we really have people from high school to seniors.”

Garcia says that CIRI Alaska Tourism has a year-round staff of about 65 to 70 employees, a workforce that’s supplemented by 350 to 400 employees in the summer. CIRI Alaska Tourism also tries to hire local as often as possible.

“We will hire every CIRI shareholder and Alaskan applicant who meets the requirements of the position they’re applying for,” Garcia says. “Guests are fascinated to meet Alaskans.”

HAP has approximately 500 permanent employees in Alaska, according to Rowland. “We hire approximately 3,500 seasonal workers each year,” she says. “[That] number has remained approximately the same over the last few years.” Rowland says HAP “strives to hire as many Alaskans as possible, and close to 40 percent of our employees are Alaskan.” She says that nearly half of the company’s seasonal employees return every year, and “some have been coming back every year for twenty-five years.”

HAP, because of its size, does have the benefit of a large pool of applicants, recruiting through Internet advertising, social media, local government resources, and by attending “events and job fairs all across the United States and Canada at educational institutions to include hospitality schools, culinary schools, universities, and colleges,” Rowland says.

Why They Hire, How They Train Of course, none of these companies want to hire just anyone; they want to hire quality employees that will leave visitors raving over Alaska and their specific experience. “It’s a very competitive market

for high quality seasonal employees, and there are many other companies that are looking too, so we’re all out there looking for the best people we can get,” Garcia says.

The number one attribute that CIRI Alaska Tourism is looking for is “a spirit of hospitality. This is a business about people; our guests are our number one priority,” he says. “If my employees don’t have the right attitude and perspective of delivering top-notch service then they don’t have a place in the company.”

In addition, he says, fundamentally, they need people who are available for the entire summer season, preferably 90 to 120 days of availability. “The more time out they need, the more challenging it is to make a reliable schedule that meets the guests’ and managements’ needs.”

CIRI Alaska Tourism trains their seasonal employees on-site. Training can last from a week to a few months, depending on the specialization of the position. For example, Kenai Fjords Tours works carefully with all of their boat captains to make sure that they provide the best experience for cruise guests.

“It takes a fair amount of training: first and foremost, our employees are safe, especially our boat captains,” Garcia says.

In addition to piloting the boat, the captains also provide narration to the guests, so training can be extensive.

“Our boat captains are people that we do invest in with a great deal of training and time because we hope they will come back year after year,” he says.

Goldbelt holds an orientation to the company at their corporate office in the Valley, Flora says, “but all of our actual job training happens on-site.”

She, too, says training is variable based on the position and emphasizes that they “provide everybody the training they need to do the job correctly and comfortably.”

One of the tools they’ve found useful in training employees is used on the tram: a mentoring program. “We will buddy up new people with experienced people, so they have a mentoring relationship,” she says.

The tram car conductors also give live narrations, as the tram ascends or descends from Mount Roberts. “[They] may be talking about the history of the tram and suddenly there’s a bear on the

Alaska Business Monthly | March 2015 www.akbizmag.com

trail below; well, everything stops and we talk about bears,” she laughs. “So you have to have that kind of ability to be flexible and be very immediate with what’s going on.”

Flora says that Goldbelt looks for seasonal workers who are “smart, engaging, motivated people with good references.” She adds, “One of the things that we try to emphasize to our seasonal employees is that you never want to leave someone wanting for assistance.

If somebody has an issue, a problem, a question, a need, and you can’t solve that problem, you have to communicate to that person that you will find somebody who can [solve it].”

The most important attribute HAP looks for in summer employees is simply availability. “Candidates who are able to work the entire summer season from May through September,” Rowland says. They also train their workforce on-site, and the amount of time the training takes varies from position to position. Similar to the tram car operator and boat conductors, HAP has many employees that narrate while providing transportation, and the time it takes to be licensed to drive a commercial bus is significant.

Visit Anchorage is unique in that it trains its own workforce and tries to help other businesses in Anchorage and throughout the state in finding and training a qualified workforce.

“We help through networking, luncheons, spreading the word, and then we spend time and resources going into both college classes and some high school classes and spreading awareness of tourism as either a starter job or tourism as a career,” Saupe says.

In addition to finding students, Visit Anchorage is always happy to supply cross-training opportunities. Specifically, on May 7 Visit Anchorage hosts the Frontline Training Trade Show, where seasonal workers can “get a lay of the land,” Saupe says.

September, we would not have a visitor industry.” Employees that are offered positions in December or January don’t report until spring, which gives them time to find other opportunities, she says. Garcia would agree. “It’s always a delicate balance. If you hire [seasonal employees] too early, they may find jobs closer to home. If you hire too late, you run the risk of not finding enough good people.”

But a recurring theme is that while these businesses are recruiting for the summer, many times they end up re-

cruiting for Alaska. “Many of our full time staff came up to Alaska for a summer job and never left,” Rowland says.

“I was a typical outsider,” Garcia says.

“I came up for one summer to drive a bus for Holland American Line, I fell in love, and now I drive a desk twenty years later,” he laughs. “It’s just a great industry and a great place.”

R Tasha Anderson is the Editorial Assistant for Alaska Business Monthly.

Hire Early, Be Competitive An outsider of the industry may not realize the market is very competitive for high quality workers. “Seasonal employees are really, really important to the visitor industry in Alaska,” Flora says. “Without the seasonal people, the people who work just May through www.akbizmag.com

March 2015 | Alaska Business Monthly

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VISITOR INDUSTRY

Iditarod Trail Sled Dog Race The businesses making it a success

By Rindi White

I

f the work of the Iditarod Trail Committee were limited to simply staging the Iditarod Trail Sled Dog Race, it could be accomplished in roughly four and a half months of dedicated work by a crew of about five full-time staff, five independent contractors, and scads of volunteers to make Alaska’s own Superbowl-class sporting event, the Iditarod Trail Sled Dog Race, a success.

But long after the dogs are back at their respective kennels and every musher who raced is back home dreaming of how their team can improve for next year’s race, the work of Iditarod Trail Committee and its staff continues on.

Stan Hooley, the long-time Iditarod executive director, jokes that his job keeps him busy fourteen months a year. Hooley is ultimately responsible for everything Iditarod-related, but he says his primary focus is raising money to keep the race running. It’s no small task—last year the race had a $4 million budget.

“The only reason we exist is to meet our objective of staging the world’s premier sled-dog race, so naturally, a big part of our focus—our human effort—is directed there,” he says. “It’s never the same goal as the year before. The expectation is that we grow every year. For the most part, we have been successful at that.”

The twice-yearly Iditarod Raffle, in which four Ram pickups and a long list of other goods and services are awarded to people who buy the limited number of $100 tickets, are key fund-raisers, Hooley says, but it’s not where most of the money it takes to stage the race comes from.

“Sponsorship is the biggest piece of our revenue pie, by a long shot,” he says.

Nearly 40 percent of the Iditarod Trail Committee’s funds in 2014 came from sponsors. Raffles and gaming, at 14 percent, comprised the next-largest revenue stream, followed by special events and merchandise sold in the two Iditarod gift shops (one in Wasilla, one in Anchorage) and through its website.

With sponsorship as the largest revenue stream, Hooley says that’s where most of his time and effort is spent.

36

“The development of those all-important sponsor relationships, taking care of existing sponsors, negotiating new deals with broadcasters … and also finding new sponsors, we’re doing that on a year-round basis.”

Iditarod: Synonymous with Alaska Hooley’s task could be overwhelming, except that most Alaskans are strong supporters of the race and, by extension, so are the twenty-seven businesses that partner with Iditarod to make the race a success.

“Of the nearly thirty sponsors we have in this race, they all have a different reason to be a part of it,” Hooley says. “Some use it to promote a certain product; some use it to build relationships with clients or important customers; others use it to build employee morale by getting their employees involved.”

For Anchorage Chrysler Dodge Center, one of the race’s longest-running sponsors, the match is symbiotic.

“The dealership has been in business since 1963,” says Chuck Talsky, owner of Husky Advertising, which handles advertising for Anchorage Chrysler Dodge Center. “The success of the dealership in connecting with Alaska’s Superbowl, if you will, has been tremendous.”

The linking of the dealership and Iditarod has helped Anchorage Chrysler Dodge Center take home its own top honors—that of being one of the top twenty Chrysler, Dodge, Jeep, and Ram dealers in the nation, Talsky says. The news didn’t escape notice from Chrysler Dodge executives, who Talsky says called to learn the secret of the high-performing dealership.

“This race is so Alaskan, the spirit of it, the people connect with that. I think that’s the exciting thing about it,” he says. “We’re in this … not just to sell our trucks and our products, but because of the competitive excellence and the uncompromising care the mushers show. You can’t have one without the other.”

What does Iditarod get out of the partnership? In addition to the donation of a Ram pickup for the winner each year and other sponsorship arrangements, Talsky

says Anchorage Chrysler Dodge Center owner Rod Udd also provides the Iditarod Trail Committee with two of the four Ram pickups raffled off in winter and spring and two purchased at dealer cost. The two entities also work together on marketing.

Sprinkled around the Anchorage Chrysler Dodge Center website are photos and videos related to the Iditarod, including a string of videos of Udd with Iditarod winners at the finish line in Nome.

“We have expanded our marketing into this race, big-time,” Talsky says. “Our presence will be enormous during the live events.”

There will also be big race-related vehicle sales events, Talsky says. This year, the

Alaska Business Monthly | March 2015 www.akbizmag.com

Dallas Seavey recieves the key to his new Dodge pickup truck under the burl arch after winning the 2014 Iditarod in Nome on Tuesday, March 11.

Iditarod Sled Dog Race 2014. © Jeff Schultz/IditarodPhotos.com

Iditarod Trail Sale, as it’s called, will include the recently released book “Chasing Dogs” by longtime Iditarod photographer Jeff Schultz for anyone who buys a vehicle from Anchorage Chrysler Dodge Center.

Schultz used funding website Kickstarter to pay for the project, which includes photos from the trail and, in some cases, the stories behind the photos.

“This is a collector’s item. Anyone who loves the race will be bowled over,” Talsky says.

Donlin Gold, a Shared History It’s fitting that one of the largest sponsors of Iditarod is Donlin Gold, a gold mining project hoping to operate near the same remote www.akbizmag.com

area of Alaska that mushers pass through on their way between Anchorage and Nome.

“We like the fact that [Iditarod] is an iconic Alaskan event,” says Kurt Parkan, Donlin’s external affairs manager. “The original trail itself started with the gold miners in the Iditarod gold belt region, bringing gold to market and supplies [to mines] up that original trail.”

Mushing and mining were paired back then, Parkan says; it’s fitting that they work together today. As race sponsors, he says Donlin employees sponsor the race itself, but have also helped with trail clearing along the middle stretch of the race, where Donlin has done field work.

The company also helps staff checkpoints—usually at the ghost town of Iditarod, the midway point of the southern route—and sponsors a few mushers, too, generally those who live in the Yukon-Kuskokwim region. This year, Donlin is sponsoring Mike Williams Sr., Mike Williams Jr., and Pete Kaiser, winner of the Kuskokwim 300. Williams Sr. and Williams Jr., from Akiak, are both sitting out the Iditarod this year but were sponsored by Donlin Gold to participate in the Kuskokwim 300 race.

Donlin also helps communities in the region celebrate or take part in the race, from helping pay for Iditarod-related school activities in Anvik to helping the

March 2015 | Alaska Business Monthly

37

local school provide food for mushers traveling through Nikolai.

“We’re trying to connect to communities who want to participate in the race in their own way as well,” he says.

A Race for Extreme Telecommunications Alaska telecom provider GCI is another of the race’s principal partners. The company has for fourteen years provided vital telecommunications links at checkpoints along the trail, including at remote and often uninhabited (except during Iditarod) sites.

“Iditarod is Alaska’s race and we are Alaska’s statewide telecommunications provider,” says Jim Kostka, senior director for business services at GCI. The company’s subsidiary, KTVA Channel 11, will also be providing live coverage of the ceremonial start of the race in Anchorage, as well as the restart and the race finish, says GCI spokesman David Morris.

“You want people to turn to your station first to get the information,” Morris says.

For most of the twenty-three or twentyfour checkpoints along the trail (depending on whether the north or south trail is used), setting up telecom services means sending a couple of employees, along with a pallet full of equipment, to each checkpoint to set up a remote satellite link for the duration of the race, Kostka says.

“We have to put together something that can be dropped off [by airplane]; it has to be designed well and it has to be the bestin-breed equipment … that can withstand the Alaska environment,” Kostka says.

Each checkpoint gets bandwidth for internet/data usage, so volunteers and people covering the race can upload photos and even stream video. Checkpoints also receive cellular service and at least two voice channels to provide a guaranteed phone line in case of emergency.

He says Iditarod also gets special event service—if a problem pops up, Iditarod volunteers need only call the twenty-fourhour commercial network control center, which can help pinpoint troubles and get them resolved quickly.

In addition to providing one of the harshest testing grounds available for telecommunications equipment—Kostka says Ethernet cables have shattered like glass in the deep cold sometimes experienced on the trail—the services GCI provides for Iditarod have been beneficial to the company by opening the door to new services. The company’s iDirect service, which Kostka says allows it to set up remote Ku-band satellite delivery systems, grew out of the technology used for checkpoint satellite links.

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“It can fit in an airplane to go to a village, and it only needs one or two people to set it up. We’ll set up a permanent mount at a lodge and just activate the service when it’s their season. That was a direct result of [the equipment] we used during Iditarod,” he says.

Kostka says in the twenty-two years GCI has been sponsoring the Iditarod, a new pattern has emerged: Companies that want to be taken seriously in the Alaska market have become Iditarod donors to get brand-name recognition here. A Rochester, New York, business phone technology company, Allworx Phone Systems, provides phone systems for use at the Iditarod race headquarters at the Millennium Hotel in Anchorage, as well as in Nome and at the Iditarod’s Wasilla headquarters.

“It’s like a little ecosystem of giving,” he says.

The sponsorship, in turn, allows GCI to nurture its own ecosystem of giving within the company and the larger Alaska community, Kostka and GCI spokesman David Morris say. Kostka says he gets to reward his team for their hard work during the race with tickets to the Mushers banquet in Anchorage.

“The biggest benefit my team gets is they get a chance to actually deliver and implement the services we do, day in and day out in the urban areas … in the harshest conditions and the most beautiful places in the world,” he says.

Morris says other GCI employees also get to attend the Mushers banquet—the company will be occupying at least six tables at the banquet in Anchorage this year, he says. And a GCI employee, recognized during the previous year for exceptional workplace performance, will be selected to deliver the halfway prize, $3,000 worth of gold nuggets, to the first musher who arrives at the old town of Iditarod.

There are also lots of opportunities for GCI employees who are Iditarod fans to volunteer to be part of the event. GCI employees distribute promotional items at the ceremonial start in Anchorage, he says, among other roles that day.

GCI customers also stand to benefit from the sponsorship. Morris says the company plans to hold Facebook and other social-media promotions where participants can get an official musher’s bib, win tickets to go to the banquet in Nome, and other prizes.

Longtime Supporters Bring Depth to Race, Coverage Hooley says there’s a theme among Iditarod sponsors—longevity.

“The average time a sponsor has been part of this event is 16.8 years,” Hooley says. “I think that speaks to the relationships we’ve built.”

ExxonMobil, one of the longest running sponsors, is celebrating thirty-eight years of partnering with Iditarod this year. The company has been a principal sponsor since 2009, says Alaska production manager Karen Hagedorn. Their sponsorship focus has been primarily Iditarod’s education program.

The race is popular both across the nation and around the world, and one reason is because teachers use the race as a backdrop to discuss math and science using “real-time experiential learning projects,” as the Iditarod website describes them.

In sponsoring the race, ExxonMobil helps support the creation of curriculum and hosts an educators’ conference for teachers from around the nation to come to Alaska to talk about how they use Iditarod in their classrooms.

ExxonMobil supports science and math education not only in the United States but in other countries where the company operates.

It’s a core value principal of the company that dates back to the days when John D. Rockefeller ran Standard Oil, the company from which Exxon descended, Hagedorn says.

ExxonMobil is a founding sponsor of the National Math and Science Initiative, an effort focused on “dramatically improving math and science education in the US,” according to ExxonMobil. As part of that initiative, ExxonMobil also helps fund the UTeach program, which recruits and trains math and science majors for careers in teaching, with the goal of turning around a statistic showing that the United States is not producing or retaining enough qualified math and science teachers to keep the nation competitive in the global marketplace.

The fact that Iditarod is so iconically Alaskan, and that ExxonMobil has been actively working in Alaska for ninety years, makes the pairing even more appropriate, she says.

“The Iditarod Education Program, when you throw in the Alaska backdrop and the larger-than-life [musher] stories, like that of Dallas Seavey, Aily Zirkle, and Martin Buser … then you throw in the dogs—it’s a great way to get kids interested in science and math,” Hagedorn says. “We’re very strategic in how we do our corporate investments.

This is a very good fit for ExxonMobil, with the focus on math and science education and a very unique spin on it here in Alaska.” R Rindi White is a freelance journalist living in Palmer.

Alaska Business Monthly | March 2015 www.akbizmag.com

TELECOM & TECHNOLOGY

By Julie Stricker

R

emember back in the mid-1990s when the Internet was referred to as the “Information Superhighway?” While that description may provide a (dated) picture of today’s Internet experience in Alaska’s larger cities and much of the Lower 48, most of Alaska is still in stop-and-go traffic when it comes to connectivity.

A series of initiatives and projects on the state, federal, and international levels could change that in the next few years, bringing widespread access to high-speed Internet to rural communities in much the same way electricity was built out in the previous century, an Alaska Broadband Task Force study released in October 2014 concludes. In today’s world, highspeed Internet access is as integral to daily life as electricity became a century ago.

“We no longer need to debate the benefits and role that broadband plays in the community,” the Alaska Broadband Task Force study states. “The use of broadband services is prevalent in nearly all that we do from trade, commerce, education, and healthcare, to finance, government services, knowledge transfer, social networking, or simply entertainment. Technology, the Internet, and connectedness are part of our daily lives.”

In 2010, the federal government released a federal broadband plan that included a number of initiatives and billions of dollars in funding to spread digital literacy and access to high-speed Internet nationwide. In Alaska, Department of Commerce, Community and Economic Development Commissioner

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AFI Subsea Cable Quintillion Spur Quintillion Terrestrial Line Existing System

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Prudhoe Bay

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Anchorage

Shemya

Susan Bell created the twenty-twomember Broadband Task Force in 2010 to develop a plan to accelerate the deployment, availability, and adoption of affordable broadband statewide.

It set a goal of providing every Alaskan access to 100Mbps (megabytes per second) broadband connectivity by 2020.

It’s a tall order.

Low Ratings for Alaska The study notes twenty-one thousand Alaska households lack broadband, as well as many hospitals, schools, libraries, and local governments. In 2012, Alaska ranked forty-nine out of the fifty states in broadband adoption, network quality, and economic structure by TechNet. That low rating is largely due to the state’s size, small population, lack of roads, geographic diversity, and the high cost of building technology infrastructure under those conditions.

A map of the existing terrestrial broadband network in Alaska shows a line roughly following the sparse highway system from Prudhoe Bay south to Anchorage and the Kenai Peninsula, with spurs to Kodiak and the top of the Alaska Peninsula. A separate network connects a patchwork of communities in southwest Alaska via fiber and microwave. The latter, called the TERRA project, was built using a combination of loans and a one-time federal grant.

Communities outside those networks typically are connected via satellite.

The Institute of Social and Economic Research (ISER) at the University of Alas-

ka Anchorage conducted a study in which it notes two-thirds of rural Alaskans are online daily, despite slow speeds and uneven service. How slow? Downloading a movie on a typical 56Kbps (kilobytes per second) dial-up can take 27.5 hours. On a 20Mbps connection, that same movie would take about 5 minutes to download.

Building the necessary infrastructure will likely require public and private partnerships. The task force notes, “if private investments could return a profit on infrastructure development, investments would already have been made in rural broadband infrastructure. But because of Alaska’s remote landscape and diffused population, a profitable return has been and will continue to be challenging.”

However, residents of communities along Alaska’s Northwest and Arctic coasts may soon have access to broadband connections in excess of 100Mpbs, thanks to a project to link London and Tokyo by undersea cable via the Northwest Passage, the shortest route between the financial centers in Western Europe and Eastern Asia.

Connecting Coastal Communities Arctic Fibre, a telecommunications company based in Toronto, Canada, is planning to lay a fiber optic cable via a ten thousand-mile-long route that would traverse the Northwest Passage, the Bering Strait, and the northern Pacific Ocean. The cable is capable of speeds of 24 terabytes per second. (One terabyte equals 1,024GB (gigabytes) and 1GB equals 1,024MB.) It will be the fastest connection between the two centers, giving users a fraction-of-a-

Alaska Business Monthly | March 2015 www.akbizmag.com

Map courtesy of Quintillion Networks LLC

Arctic Fibre and Quintillion Bringing High-Speed Internet to Northwest, Arctic Alaska

www.akbizmag.com

That also holds true in the public sector.

“Where you’re really going to see the impact is medical, where you can do home monitoring or send X-rays to be reviewed digitally,” Pfeffer says. “For the hospitals, the universities, the Native corporations, the state of Alaska, for Homeland Security, oil and gas research development, NOAA—you’re really going to see a lot of opportunity created at that level. You’re also going to see opportunities for the home user.”

Although no costs have been announced, Pfeffer says Quintillion’s market research indicates users will pay significantly less for quality bandwidth than what is currently available.

Quickest Route Arctic Fibre began visualizing the project in 2009 as a way to introduce a redundant fiber-optic connection between the global finance communities in London and Tokyo.

“The push overall for everyone is faster speed, lower latency, and larger capacity, both for individual users, but particularly for the financial market,” Pfeffer says.

The Northwest Passage route was chosen because it provides the shortest, therefore the fastest, link between the two endpoints. Arctic warming and improved technology have made the route feasible, Pfeffer says. A Russian project, Polarnet, plans to use the same strategy via the Northern Sea Route over Siberia.

“The over-the-top approach has always been looked at,” she says. “Now the climate, ice conditions, and technology and demand have brought the project into production.”

The Arctic Fibre project is coming at a time of increased activity in Alaska’s Arctic, as more research, commercial, and cruise ships seek to transit the Northwest Passage and the Northern Sea Route.

With the additional traffic comes a demand for increased communications.

Arctic Fibre also has been working closely with residents of northern Canada to ensure the project benefits them without affecting subsistence activities. The cable itself will be buried several feet below the seafloor in areas subject to ice scouring, mostly in the Canadian Arctic. One segment will cross over land in the Boothia Peninsula, where a trench will be carved out of the permafrost to house the cable.

The project will be completed in three

Communications Engineered for Alaska and Beyond

Arctic Communications

second advantage over competitors in the fast-paced financial markets.

Through its partners, the project will include spurs to about twenty-five communities in northern Canada and seven communities along Alaska’s Arctic and Northwest coasts, bringing robust, high-speed Internet in its wake.

While Arctic Fibre will own the cable, which provides the backbone of the network, other companies will provide feeder lines to communities and work with regional telecoms to provide service to individual customers. In Alaska, Anchorage-based Quintillion Networks LLC will provide the middle-mile service between Arctic Fibre and the “final-mile” telecommunications companies such as TelAlaska, Arctic Slope Telephone Association Cooperative, and OTZ Telephone Cooperative, says Desiree Pfeffer, Quintillion chief operating officer.

Quintillion is working closely with those companies and others, such as Alaska Communications, to assess whether the network can be extended to other rural Alaska communities via microwave links or fiber optic cables. One of those is a potential spur line north of Nome, which could link to a major port site at Port Clarence that Bering Straits Native Corporation hopes to develop.

Although no costs have been announced, Pfeffer says Quintillion’s market research indicates users will pay significantly less for quality bandwidth than what is currently available.

The project will bring 100GB capacity to the communities it serves, which in turn will provide huge opportunities, Pfeffer says.

Reliable broadband is an economic generator, according to a 2011 Connect Alaska survey, which estimates nearly 5,600 Alaska businesses lack broadband access. It also found that Alaska businesses with high-speed connections bring in significantly higher revenues—a median of $200,000—than businesses without.

“In the digital economy, businesses must embrace broadband and other transformative technologies like it in order to survive,” says Brian Mefford, CEO of Connected Nation, the umbrella organization for Connect Alaska, in a news release. “The Internet is driving products and services to the marketplace in an environment where creativity and innovation are both reinforced and rewarded.”

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41

phases, Pfeffer says. The first is the Alaska segment from Nome to Prudhoe Bay, which includes side nodes to the communities of Barrow, Wainwright, Prudhoe Bay, and Kotzebue. Permitting, civil engineering, and geotechnical work at the landing sites was done in 2014. Although only the engineering work has been done and construction has not yet begun at the Alaska sites, Pfeffer says the communication shelters that will house the equipment were built last summer and are ready to go. Construction is expected this summer.

The second phase will be from Nome to Tokyo. The third, and most difficult, will be from Prudhoe Bay east to Europe. The portion of the route over northern Canada and the Boothia Peninsula is the most difficult because of icing issues, so further studies are continuing in those areas, Pfeffer says.

The total project is expected to cost between $650 million and $750 million, with the Alaska phase alone accounting for $170 million. Although the original completion date was late 2014, the project has been pushed back two years and is expected to go online in fourth quarter 2016, Pfeffer says.

Interior Capacity Planned In addition to the spurs to Alaska villages, Quintillion is also planning a terrestrial branch line from Prudhoe Bay to Fairbanks, which would join the existing broadband links to Anchorage and the Lower 48, Pfeffer says. That will bring additional capacity to Interior Alaska.

Alaska Native corporations have been strong proponents of the Arctic Fibre project, Pfeffer says. “There are several Native corporations that are very supportive, both financially as investors as well as subscribers to the capacity for, say, their government clients,” she says, noting that confidentiality rules don’t allow her to name some of them. “They’re also politically supportive of the project because it’s so good for Alaska, for their shareholders and their regions.”

One investor that has announced its backing publicly is Futaris, Inc., a subsidiary of Calista Corporation, the Alaska Native regional corporation for much of southwest Alaska. Futaris has thirty years of private and federal telecommunications experience and provides informational technology and communications solutions.

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“Alaska currently has a broadband deficit and this project will fill that need,” Futaris President Daniel J. Boone notes in a 2014 press release announcing its investment in Quintillion. “More importantly, rural Alaskan families and businesses along the western coast will finally have access to affordable and reliable broadband Interior access.”

The ISER study looked at what the benefits of such access can provide to far-flung rural residents.

It can bring more jobs as a result of increased infrastructure construction and provide opportunities in healthcare, education, and financial services.

Mining, construction, and information technology also benefit from improved connectivity. The study notes, “the relationship between broadband and employment growth is stronger in places with lower population density.”

Higher connectivity also means more educational opportunities for students, such as programs using iPads to boost reading literacy, videoconferencing, and college-level distance learning programs.

According to ISER, benefits can be classified in terms of: “Efficiency: saving time in applying for grants and filing online reports and business data, keeping track of inventory, and managing operations. Effectiveness: increasing the quality of services provided, such as in health and education.

Equity: reducing the distance barriers between rural and urban communities by providing access to information, entertainment, education, and other services not otherwise available in remote communities. And Reach: enabling Alaskans to extend their range electronically to market Native crafts, tourism, and other local assets.”

“Broadband is fast becoming the key infrastructure element to economic growth, improved healthcare and education solutions, and emergency response and national security capabilities,” Quintillion Networks CEO Elizabeth Pierce stated in a news release.

“This fiber optic cable is not just an excellent opportunity for rural Alaska, but for the state and all Alaskans.”

R Julie Stricker is a journalist living near Fairbanks.

Alaska Business Monthly | March 2015 www.akbizmag.com

SAFETY

The Effect of Reporting Near Misses on Large Construction Projects

T

By Brian McKay

here is one thing I know for sure: if someone wanted to start an argument between two safety professionals, there are few topics more contentious in the safety game than the definition of the near miss. While admittedly a pedantic lot, safety professionals will find themselves debating the simple (non)-event for hours on end, leaving bystanders nostalgic for the likes of a long line at the DMV or even the highly caffeinated “chatty” arm rest hog on that last flight down to Seattle.

The problem in defining the term can be summarized by that ever present philosophical dichotomy of whether one considers themselves a “lumper” or a “splitter.” In this context, lumpers are people who mentally emphasize the similarities of an event instead of the differences, and, according to Wikipedia, splitters are those people who reject simplistic classifications and would rather emphasize the differences. Just to emphasize the point, even comedians

44

like George Carlin had hinted that there is a problem with the language when he quipped, “Here’s one that they just made up: ‘Near Misses.’ When two planes almost collide, they call it a near miss. It’s a near hit. A collision is a near miss.”

For the purpose of this article, a near miss can be defined as any combination of unsafe actions or conditions presenting themselves at the site of work that exposes personnel, equipment, facilities, or the environment at undue/unplanned risk or harm, however remote.

In the interest of full disclosure, the author of this article would be defined as a lumper. A lumper defines both the unsafe conditions and unsafe behaviors as a near miss with the understanding that any event, however small, can contribute to the development of a knowledge base of what exactly is going on at the work site; working conditions meet big data. The goal of this article is to report out on recent research on the subject where a near miss management program was applied during a large petrochemical construction project. The near

miss program will be reviewed and the results and impact discussed.

This article is about a novel type of near miss program that was designed and implemented during a heavy phase of construction on an LNG (liquefied natural gas) plant overseas. It was a comparatively large multibillion dollar project with a peak manpower of 7,500 international and expatriate personnel.

The safety performance of the project measured by incident rates, a modest 0.45/100 which compared to the US average of 4.0/100 full time construction personnel (Bureau of Labor Statistics 2011 Data), is a remarkable achievement.

However, those numbers represent injuries to people, so any number above zero should not be tolerated, and it wasn’t.

The near miss program’s goal was to stop all injuries specifically targeting the first aid; a typical approach where it is considered pertinent to stop the small stuff so that the serious injuries do not occur.

The importance of the near miss in improving safety performance has been well known and used in many highly

Alaska Business Monthly | March 2015 www.akbizmag.com

technical, complex, and error light industries according to James Reason in his work Managing the Risks of Organizational Accidents (1997). Mature industries such as oil and gas refining, nuclear fuel production, air traffic control, chemical processing, and others have reported successful utilization of these programs while sharing some similarities; these industries are highly technical in nature, are heavily regulated, and have a low probability of catastrophic events. Because these systems are mature and have been exposed to a variety of risk mitigating activities, there are very few serious incidents ever acted on because they don’t exist. However, it has been theorized that for every serious incident, there are a number of less serious events occurring that may either directly contribute to serious events or at least be complicit in their occurrence. And, for every less serious event that contributes to these “big events,” a whole host of even less serious errors, omissions, commissions, and lapses occur on a daily basis— this is represented by Heinrich’s Triangle; arguably one of the most prolific and recognizable graphics in all of safety.

Heinrich’s Triangle

Heinrich was an investigator with Travelers Insurance when he investigated industrial 1 claims for occupational incidents. He Major concluded that major injuries and near Injury misses have common causes; by studying all incidents, measures can be constructed to reduce 29 Minor these events. Heinrich’s Injuries work, and methods for his research, remain controversial in the HSE realm but his work is still highly 300 Near Misses referenced.

So, according to the research, near misses are both plentiful and used by highly complex organizations in the development of their loss control programs (i.e., HSE Management Systems) and they have done so for years. However, the same cannot be said about using near miss management programs in construction or on construction site activities, at least in the literature. In an online review, this author found more than 103,000 near misses hilariously

captured on YouTube clips (if you still have a problem in defining a near miss, watch some of these for clarification) while the more serious results from peer reviewed sources found 2,961 hits on the term “near miss;” using “near miss” and “safety” resulted in 938 returns; “near miss” and “management” found 696; and, finally, using the terms “near miss” and “construction” only returned 42. Something clearly had to be done and, coincidentally, a pub-

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lic health practicum project had to be written by this author that resulted in “Measures of Effect: Near Miss Reporting on Construction Site Injuries.” The remainder of this article will review and highlight some of the key elements of that research paper starting with a summary of the program.

The Near Miss Program Tjerk van der Schaaf identified the essential elements of a good near miss, which were applied to this construction project. The essential elements applied in the research, briefly discussed below, were first investigated in van der Schaaf’s work entitled “Near Miss Reporting in the Chemical Process Injury (1992)” and include: Definition—as a project or company, an agreed upon definition for a near miss is essential in the implementation of the program. The construction project in this example used an all-inclusive (lumper) definition with the understanding that we wanted to investigate all unplanned events on the construction site for classification.

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Roll Out—Think of the new near miss program as a new product line. Generate buzz and anticipation for the roll out of the new program and communicate with a purpose. In this example, we identified barriers which included the “flavor of the month” feeling from some of the personnel who thought that this was just another project from the HSE Department that would be suggested with little or no follow-up and the possibility that some personnel would be punished for turning in near misses, especially from within their own work group.

Unfortunately, the fear of punishment or retaliation is a real phenomenon in the industry where not following the safety rules may lead to employment termination. Trust is not easily earned in a punitive atmosphere, so the successful execution of this program requires the assurance that nobody is going to get canned for turning in a near miss, regardless of severity. This kind of assurance can only come from the top so use social credibility wisely in responding to these reported near misses.

Collection—Make the process for writing and turning in a near miss as easy as possible. Multilanguage forms and convenient collection boxes are a must.

The introduction of an electronic version of the near miss reporting card significantly improved our response rates from the office bound personnel.

Analysis—The types of data that can be harvested from even the simplest of near miss reporting cards are surprising. The basic information such as time, place, and type of incident are only the beginning of the classification possibilities. From there, and in the practice of this near miss management program, the types of human errors can be evaluated; to whom and at what event these errors are taking place can be charted and general group characteristics can be realized. For example:  At the onset of the program, we asked for simply an increase in the number of near misses being reported and we would report out the group turning in the most near misses (e.g., scaffolders, pipefitters, etc.).

Alaska Business Monthly | March 2015 www.akbizmag.com

 The most significant near miss can be identified.  The most repetitive near miss can be identified.

Feedback—Arguably the most important aspect in the program, feedback supplies the information back to the workforce about what is happening on the worksite.

In this program, feedback was as close to immediate as we could manage. Each near miss, about twenty-five per day at peak, were analyzed and reported on the plan of the day note. This document was produced each morning and sent out with each foreman in order to deliver messages from project management to the workforce of 7,500. The analyzed near misses were discussed at each work crew meeting so they were hearing about what happened to other work crews the night before. Important lessons were shared about the risk characteristics of the job and also how to resolve them in the field.

At the peak of this program, there were over 150 near misses being reported per week. Many of those were related to unsafe conditions exhibited on site (smoking in the wrong areas, not wearing PPE).

But remember, this was a lumper program; we wanted to hear about them all.

To some, this sounded like a snitch program so that we could catch people smoking, but nobody was to get in trouble for the near miss reporting, and we used the information for information purposes and reminders. The inappropriate behaviors extinguished themselves through the increased attention without pointing out any single person or work group.

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Methods and Analysis As mentioned previously, the purpose of the near miss management program was to stop the next first aid case which, in theory, prevents more serious events.

It was hypothesized by this author that by increasing the rate that near misses were being reported, and acted upon, that the rate of first aid cases would decrease in a linear relationship. In order to test this relationship, a series of statistical tests were conducted on the available data which consisted of hours worked, injury database, and the near misses being reported during the testing period over thirty weeks, fifteen prior to the start of the program and fifteen weeks after starting the program.

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• Welcome & Exhibitor/ Sponsor / Speaker Appreciation Reception to be held evening of 24th.

• A General Session each morning; and 5 concurrent sessions to choose from.

• Expanded Exhibitor Showroom opens for day 2 & 3 of the conference.

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47

Results The first step was to compare the rates of near miss reporting before and during the trial period and correlate that data with the types and frequencies of occupational injuries experienced on the project, which are represented in the table at right: The rate of near misses being reported rose significantly during the program testing period. In the form of a statistical analysis, there was very strong effect in the rate of near misses being reported by simply asking for more near misses to be reported. In fact, the program was

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Prior to Near Miss Program

During Near Miss Program

Near Miss rate

5.43

77.34

First Aid Case Recordable Injury Case

5.04 0.90

4.83 0.07

(median rate using Mann- (median rate using MannWhitney U test statistic) Whitney U test statistic)

so successful that near miss reporting increased by over 966 percent over the reporting period, going from 0 to 5

near misses per week to over 150 being turned in during a week.

Surprisingly, the effect on first aid cases was not as robust. Speaking statistically, there was actually not a significant effect on the rate of first aid cases, even as the rate of near misses was going up as originally hypothesized. However, the effect of an increasing rate of near misses being acted on did have a moderate impact on the rate of recordable injuries (recordable injuries require advanced procedures beyond first aid for resolution). Speaking statistically, again, as the rate of near misses being reported increased, the rate of occupational related recordable injuries decreased in a predictable way, or r(30)=-0.342, p<0.05 (sorry about that) according to the statistical tests. (For a full accounting of the statistics and research, please contact this author for a copy of the research practicum or it can be found at the UAA/ APU Consortium Library under â&#x20AC;&#x153;Measures of Effect: Near Miss Reporting on Construction Site Injuries.â&#x20AC;?)

So according to the statistics, the program worked. What that looks like in language other than statistics is that, for a moment, we stopped the next first aid case, the original goal of this project.

There were two weeks in a row that there were no first aid cases experienced by the workforce of over 7,500 people. We hadnâ&#x20AC;&#x2122;t had a zero first aid case week since the inception of the project, let alone during a heavy construction phase with this many personnel. In addition, we really impacted the more serious cases of the OSHA recordable injury. Prior to the implementation of the program, there was about one recordable injury every ten days or so which, with this number of personnel, is still a low rate of injury.

However, when zero is the goal, other measures have to be used; in this case, the near miss program contributed to a run of zero recordable cases for 110 days.

Alaska Business Monthly | March 2015 www.akbizmag.com

Conclusion The ultimate purpose of the near miss program being applied to this construction project was to stop the next first aid case from happening. After all, the difference between a first aid case and something more serious is often just a matter of luck and circumstance.

While the rates of first aid cases were not changed in a statistically significant manner, there were some outcomes that are worth mentioning:  There was a statistically significant reduction in OSHA recordable injuries during the near miss program and an inverse relationship exists between the number of near misses being reported and the number of recordable injuries on the project (more near misses reported equals fewer OSHA recordable injuries).  Compared to other safety and health initiatives, the near miss program was very popular with the work crew. There were even cases where individuals were excited to see their contribution, their near miss, on the

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plan of the day notes for the entire workforce to discuss the very next day.  While turning in a near miss could be anonymous, many chose to provide their name as they turned them in. In this way, we could reward personnel for either turning in the most per group, turning in the most per craft type or area of work, or, more importantly, we could reward the person for turning in the most significant (serious) near miss for the week. This is the kind of near miss that could have resulted in catastrophic consequences if it weren’t for the resilience of the crew or a bit of luck. In any case, it could teach valuable lessons as personnel on the site experience the event through discussion and vicarious experience.

The full research document can be accessed through the UAA/APU Consortium Library under “Measures of Effect: Near Miss Reporting on Construction Site Injuries” or the American Society of Safety Engineers Body of Knowledge website under the same title. You can also

contact me directly on the email provided for an electronic copy. I am always interested in discussing the program as I still believe it was the most important contribution I have made in the safety game and in decreasing injury on the construction site. The research has been chosen by the American Society of Safety Engineers as a presentation topic at the 2015 National Professional Development Conference where it will, hopefully, influence more near miss work on construction sites. R Brian McKay has a post graduate degree in Public Health and is a Certified Safety Professional (CSP) and Certified Industrial Hygienist (CIH). McKay is the Director of Quality, Health, Safety, and the Environment for Fairweather, LLC. Contact him at 907-270-6804 or brian.mckay@ fairweather.com.

March 2015 | Alaska Business Monthly

49

special section

Building Alaska

Frigid Progress in Alaska Arctic Infrastructure development inches forward

By Kirsten Swann

T

he prospect of economic growth and infrastructure development in the Alaska Arctic remains the subject of all kinds of attention: media headlines, government studies and spending, and industry investment.

In March 2013, the US Army Corps of Engineers (USACE) released its first report on a three-year study covering a potential deep-draft Arctic port system. In the July/

50

August issue of Foreign Affairs magazine, Arctic Circle co-founder Scott Borgerson wrote that Anchorage could one day become a Singapore of the north in terms of shipping and commercial potential.

In 2014, the Alaska Legislature passed a bill creating an official Arctic infrastructure development program and fund within the Alaska Industrial Development and Export Authority. In November 2014,

the Seattle Chamber of Commerce hosted a forward-looking forum on Arctic port and infrastructure development, including representatives from Shell, Bering Straits Native Corporation, Foss Maritime Company, and the US Coast Guard.

Then, in January, the Alaska Arctic Policy Commission released its final report to the Alaska Legislature, making recommendations on topics ranging from port construction to disaster response. Meanwhile, work continues at oil and gas infrastructure developments along the North Slope. Thereâ&#x20AC;&#x2122;s progress at Point Thomson,

Alaska Business Monthly | March 2015 www.akbizmag.com

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March 2015 | Alaska Business Monthly

51

“We have to be realistic,” says Matt Ganley, vice president of resources and external affairs at BSNC. “So much talk has been based on speculation.”

groups alike, communications infrastructure remains a large priority.

“We need better and faster and more reliable communication,” says Ganley, who believes improved communication infraCommunications structure could help the region’s residents When it comes to Arctic infrastructure, become more engaged in other aspects of there are numerous ongoing projects Arctic development. “For them to be inand yet-to-be-realized proposals: a deep- volved effectively, it’s all about media and draft port; enhanced communications; being involved in the process online, so it’s improved and expanded facilities for the really important to get that speed up.”

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ments to the National Telecommunications and Information Administration (NTIA) regarding a federal telecommunications assessment of the Arctic.

The stakeholders shared similar messages: The telecommunications administration needs to expand its “narrow” definition of Arctic regions, and communications infrastructure is the first step toward developing other projects, like ports and Coast Guard bases. Ron Philemonoff, CEO of the St. Paul Islandbased Tanadgusix Corporation, said the remote nature and geographical challenges of the Alaska Arctic made communications infrastructure all the more important.

“Another key recommendation that we endorse is to prioritize rapid development of broadband access that improves current service levels by reaching all locations as quickly as possible using satellite and terrestrial connections to deliver service at 10 Mbps or greater per household or business unit,” Philemenoff wrote in a December 3 letter to NTIA. Ganley, in his own December 3 letter to NTIA, told the federal agency that enhanced communications infrastructure is critical to the future development of a deep-draft port prospect at Point Spencer.

“This port will be vital to shipping and other interests that will transpire in the Arctic Region,” Ganley wrote. “And, communications—now very limited on the island—will have to be expanded in order to satisfy the needs of the Coast Guard, the State of Alaska, and private developers and to ensure the safety of all those who transit the Bering Sea on the way north.”

Arctic Slope Regional Corporation, in a letter signed by chief executive Rex Rock Sr., said all the communities it represents are subject to a notoriously unreliable communications network.

“As the Arctic becomes more and more attractive to conduct business, the pressing need for reliable high speed network technologies and communication services is noticeably apparent,” states the Arctic Slope Regional Corporations letter. “If there is going to be development or increased marine activity in the Arctic, the availability of appropriate and dependable communication assets must be in place.”

Alaska Communications Systems pressed NTIA to consider expanding

Alaska Business Monthly | March 2015 www.akbizmag.com

terrestrial middle-mile fiber optic transport facilities in Arctic regions. In its own written comments, General Communication, Inc. (GCI) urged the federal telecommunications administration to streamline permitting requirements and ensure predictable timelines in order to remove barriers to communications infrastructure development.

But GCI also brought up the question of economics. Given the Arctic’s vast distances and tiny populations, communication infrastructure can be prohibitively expensive.

“Economically stable anchor tenants—customers of broadband services—are necessary to support the considerable investment in and ongoing costs of operating broadband infrastructure throughout rural Alaska,” GCI told NTIA in written comments dated December 4, 2014.

According to the telecommunications company, those anchor tenants often take the form of rural healthcare systems or school districts. Without them, the demand for communications infrastructure in the Arctic might not justify the investment.

Still, several recent projects have slowly expanded communications services in northern Alaska.

GCI’s TERRA project brought 3G mobile wireless to Kotzebue in late November 2014, according to the company. A trans-oceanic project spearheaded by Arctic Fibre plans to connect Asia with Western Europe, bringing reliable and affordable high-speed internet to the Arctic within several years, according to the Canadian-based company.

Deepwater Ports But while communications infrastructure projects make halting progress with the support of a variety of Arctic stakeholders, other infrastructure plans remain uncertain.

A port, for instance.

“We’ve heard a lot about the need for this infrastructure, the need for this deepwater port, but my questions are all… ‘where’s the economy to support this?’” says Ganley, whose corporation is at the forefront of the Arctic port discussion.

With the backing of Alaska Representative Don Young and the authority of the Alaska Native Claims Settlement

Act, BSNC is moving to secure land at Point Spencer—also known as Port Clarence—for future development.

The USACE report released in 2013 named Port Clarence as one of two sites short-listed for potential Arctic deepdraft port development and stated BSNC was working with Crowley Maritime Corporation on a deepwater port development plan. More than a year after that report was released, Ganley says he’s still not entirely sure about the port idea.

“We just don’t have the economic engines in the state to really drive a robust infrastructure along the Arctic coast,” he says.

Unless significant new oil and gas production warranted it, Ganley says, Alaska’s natural resources could be handled by existing infrastructure.

The North Slope has the Trans Alaska Pipeline System. Red Dog Mine, the largest in the state, ships about 1.2 million tons of ore annually from its own port complex. A significant increase in activity in the state’s natural resources sectors could undergird the need for a new deep-draft port complex, Ganley says, but that activity has yet to happen.

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While Bering Straits has gone so far as to complete an economic feasibility study of the port concept, the project is far from the drawing board.

“It’s still built on speculation, because we don’t know what the markets will be,” Ganley says. Despite the element of speculation, the idea of a northern port has garnered the support of the Alaska Arctic Policy Commission.

The policy commission—created by the Legislature in 2012—is tasked with tailoring Alaska’s Arctic policy.

Its members include state lawmakers, industry leaders, and representatives from the federal and local levels. Bethel Representative Bob Herron, the commission’s co-chairman, says the AAPC recommends facilitating the development of an Arctic port system in the Bering Strait region “to support export, response, and regional development.”

“A deep-draft port at Port Clarence near Nome will have a positive impact on all of western Alaska, including Dutch Harbor and the Aleutians,” Herron writes in an email. “We need to make sure any new ports integrate with Alaska’s existing port system in a holistic way.”

Besides the recommendation to move forward with deepwater port planning, Herron says the policy commission also emphasized the need for expanded Coast Guard capabilities and response infrastructure in the Arctic. It recommends the federal government provide enough funding for the Coast Guard to perform emerging duties in a developing Arctic. The commission also endorses federal funding for new Polar Class icebreakers and more ice-capable cutters, Herron says.

“The AAPC recommends the state facilitate and secure public and private investment in support of critical search and rescue, oil spill response, and broader emergency response infrastructure,” the representative writes in an email.

Ganley says spill and emergency response capabilities are also among his corporation’s top priorities when it comes to Arctic development.

For many in the region, cultural preservation is intimately tied to food security. Ocean-based subsistence is a major part of life for Bering Straits communities, Ganley says, and “they want to make sure traffic doesn’t impede people’s ability to do that.”

Changing ice conditions in northern waters has led to increased ship traffic off Alaska’s west coast, and an emergency with a passing vessel could have disastrous consequences for a small arctic community.

“There isn’t the capacity, even locally, to handle a large marine disaster,” Ganley says.

He says providing even a minimum amount of response training and hardware at the community level could help involve residents and facilitate responsible Arctic development.

In its 2013 Arctic port study, the USACE highlighted Port Clarence as an ideal base for regional search and rescue and disaster response operations.

With its close proximity to Bering Sea shipping lanes, USACE says Port Clarence could provide “rapid international environmental response capabilities.”

Other port prospects recognized by USACE include Cape Blossom outside Kotzebue and Nome, which already has a medium-draft port and a documented increase in traffic. The number of vessels docked at the Nome port increased by more than tenfold between 1988 and 2011, according to USACE, and a massive graphite deposit discovered nearby in 2012 could strengthen the economic case for a deepwater port there.

Still, the graphite deposit is “a long time” from production, according to USACE. There’s currently no viable demand for a deepwater port in the region, Ganley says. He’s not sure where the money to build would come from.

Funding Dilemma At the head of the Legislature’s Arctic policy commission, Herron says the state is also pondering the question of capital.

“Obviously the biggest hurdle on Arctic infrastructure is cost—it’s particularly expensive to build in the Arctic and the state is facing a severe budget crunch while the Federal government isn’t feeling too rich either,” Herron writes in an email. “So it’s particularly important for us right now to choose the right priorities and try to leverage any state money with federal and private sector financing as much as possible.”

The state is forecasting multibilliondollar budget deficits, in future years, and in the waning hours of 2014 Governor Bill Walker issued an administrative order

Alaska Business Monthly | March 2015 www.akbizmag.com

halting non-obligated spending on six major infrastructure projects: the Alaska Stand Alone Pipeline Project, Ambler Road, the Knik Arm Crossing, the Juneau Access Road, the Kodiak Launch Complex, and the Susitna-Watana Dam. “This is a way for us to not commit new money into projects that may not be continued during this fiscally challenging time,” the governor said at the time.

A deepwater port project faces the same challenges.

On the other hand, Herron says, planning, funding, and construction is a decades long process. Proper planning could lead to incremental progress, he says, “and the costs will be spread out.”

“The South Bering Sea and the Aleutians already see large numbers of container ships and other vessels and this number will only increase as Arctic sea ice diminishes,” the Bethel representative writes.

After several years of increasing traffic, the amount of cargo transported through the thawing Northern Sea Route in 2014 plummeted, according to data provided by the Northern Sea Route Information Office.

“It’s a real indicator of the uncertainties we face,” Ganley says.

While the route along Russia’s northern coast is navigable during summer months, it remains a seasonal option that lacks the reliability of other more southern shipping lanes.

Mike Lauer, director of project sales at Foss Maritime Company, says the shipping giant doesn’t see a lot of promise within the Northern Sea Route.

“If you look at most shipping traffic, it’s provided on a scheduled basis,” he says. “Reliability is a key factor.”

Without reliable, year-round shipping traffic, a public deepwater port in Western Alaska could be hard to justify.

Instead of banking on emerging shipping routes, Lauer says, his corporation is riding the swell of gradual growth in the Alaska Arctic—preparing for an increase in business with the construction of three new ice-class tugs at a shipyard in Rainier, Oregon.

Lauer says the first of those tugs is set to transport material between Asia and the North Slope this summer. While growth in the Arctic continues to provide new contracts for his company, Lauer takes a measured view on future prospects.

“The economics and the risk associated www.akbizmag.com

with projects in the region are extremely high,” he says. “I don’t see it as being a rampant, double-digit growth market.”

Like Ganley, Lauer says he believes business growth in the region will mostly be tied to resource extraction projects. The three new tugs—the last of which is slated for completion around the end of 2016—will help Foss take advantage of the development already happening in the Arctic, Lauer says.

But if it weren’t for ongoing economic and political instability—state budget deficits, prohibitive permitting processes, and environmental roadblocks—the Foss director says his company might have invested in even more new tugs.

“If our customers were more bullish on the opportunity then we would be more bullish,” Lauer says.

He says the resource development companies Foss works with often have investment choices to make, and “we don’t have a crystal ball.” As far as a large-scale infrastructure project like a deepwater port, Lauer remains skeptical.

First, he says, there would need to be a new commercial driver to increase demand—a driver he doesn’t see materializing any time in the near future. Without steady industry to justify permanent infrastructure development, Lauer says most projects could be served by temporary infrastructure built for a specific need—like the port complex that serves Red Dog. “Until a large capital investment project really takes the lead, a lot of the infrastructure desires aren’t going to make sense,” Lauer says. “Maybe more important would be increased search and rescue capability.”

Despite the uncertainty surrounding Arctic growth and infrastructure development, one thing remains clear: The region remains the center of global interest, from government entities to private business. Talk of large-scale infrastructure development clashes with economic and political instability, subsistence concerns, and environmental issues. As Arctic development inches forward, Ganley says he hopes to see everyone involved “regrouping and rethinking what the needed infrastructure is,” adding, “I try to take a really measured tone with it.” R Kirsten Swann is a freelance journalist based in Anchorage.

March 2015 | Alaska Business Monthly

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special section

Building Alaska

State Halts Industrial Road to Ambler Mining District $400 million, 220-mile project crucial for NovaCopper’s plans BARROW

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AMBLER MINING DISTRICT ACCESS PROJECT DESCRIPTION DOCUMENT PRELIMINARY BROOKS EAST CORRIDORS CONSIDERED DATE: March 04, 2014

User: cfelker

By Julie Stricker

n the 1960s, prospectors discovered a huge trove of buried mineral wealth in the middle Kobuk River valley in Northwestern Alaska. Over the next several decades, they identified rich deposits of copper, gold, zinc, and lead. At least two sites, called Arctic and Bornite, show promise as major mines.

A major hurdle to mine development is the remoteness of the Ambler Mining District, a seventy-five-mile-long band of mineralization that encompasses the Arctic and Bornite sites, as well as many other mineral deposits. The region is sparsely populated and the only access is by boat, plane, or snowmachine.

A road is necessary for mineral development in the region, says Rick Van Nieuwenhuyse, president and CEO of NovaCopper, which is working with NANA Regional Corporation to devel56

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op the Arctic and Bornite deposits.

“Our base assumption is we’re working off of a road,” Van Nieuwenhuyse says. “Right now, there’s nothing that I can point to that says we can do something else. If there were and it was economic, we’d certainly be doing it.”

A New Rural Road But in rural Alaska, building a road means more than just finding the most efficient way to travel from Point A to Point B. Roads bring change, both good and bad. A road may bring jobs, economic opportunity, and a higher standard of living. It can also disrupt subsistence activities, bring dust, noise, light, and people to formerly untrammeled regions. A road to the Ambler Mining District raises questions on both sides of the issue, which residents have aired in a series of community and regional public hearings.

The process started decades ago, in

the years after the region’s mineral wealth became apparent.

The necessity of building a road to access what are now stranded resources was addressed in the Alaska National Interest Lands Conservation Act in 1980, which was cited by the Alaska Industrial Development and Export Authority (AIDEA) in a memo to the governor in 2015.

Section 201(4)(b) notes, “Congress finds that there is a need for access for surface transportation purposes across the Western [Kobuk River] unit of the Gates of the Arctic National Preserve [from the Ambler Mining District to the Alaska Pipeline Haul Road] and the Secretary shall permit such access in accordance with the provisions of this subsection.”

In 2010, the Alaska Department of Transportation and Public Facilities (DOT&PF) started studying potential road and railroad routes from the Ambler Mining District west to the coast of the Bering

Alaska Business Monthly | March 2015 www.akbizmag.com

Sea and east to the Dalton Highway. The agency settled on a roughly 220-mile corridor east to the Dalton, where vehicles would have access to all-season ports via highway and the Alaska Railroad.

The road corridor, which became one of former Alaska Governor Sean Parnell’s “Roads to Resources,” has generated both support and criticism from various groups. In 2013, AIDEA took over the project from DOT&PF. In 2014, AIDEA held a number of hearings in communities along the route, including two unprecedented regional hearings, one in Kotzebue in July 2014 and one in Fairbanks in December 2014, to collect public input toward an Environmental Impact Statement (EIS).

Completing the EIS is one step. It will document potential impacts on subsistence and social and economic conditions, identify and evaluate mitigation measures to reduce impacts, and identify agency conditions on project construction, operations, and final closure procedures.

AIDEA’s Vision As envisioned by AIDEA, the road will begin near Prospect Creek at Mile 135

of the Dalton Highway and head west, staying south of the Brooks Range. It would cross the Kuskokwim River and cut across a corner of Gates of the Arctic National Preserve. It will cost an estimated $400 million.

“The reason the road is going to the east to the Dalton is it connects you to a year-round port through the Alaska Railroad in Anchorage,” Van Nieuwenhuyse says. “That’s an advantage to trying to connect through the west, which would be a seasonal port like Red Dog. …

Any roads to the west [from the Ambler Mining District] are going to have more impact on caribou, more impact on fish, more impact on wetlands. This is the beginning of that EIS process, where you’ve got the information and you identify the concerns and you look to where you can address those concerns and mitigate any impacts to the environment.”

DOT&PF turned the project over to AIDEA so it could investigate alternative funding sources outside of Alaska capital funds. AIDEA has also worked on another large infrastructure project in Northwest Alaska—the Red Dog Mine access road and port.

AIDEA is looking at using private funding to build the road, classifying it as an industrial road. That would allow AIDEA to limit users, resulting in lower costs.

Mine operators would pay tolls. When mining ceases in the region sometime in the future, the road would be removed.

Regional Opposition The Ambler Industrial Road is a “fairly unique project,” says Joy Huntington, a consultant who moderated the regional public meeting in Fairbanks. “It’s not being financed in the usual way and the level of partnership with communities and Alaska Native corporations has been unprecedented. Questions still remain on who can use the road and how those permissions will be decided. The biggest is how to find a balance between economic development and the traditional way of life in the villages.

“I think we can agree we don’t have all the answers yet,” Huntington says.

Residents of Interior Alaska villages are leery of the road’s impacts on subsistence and village life. The Tanana Chiefs Conference passed a resolution opposing the development of the road.

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57

“We don’t oppose the mine, we oppose the development of the road through our traditional tribal areas,” says Tanana Chiefs Conference President/Chairman Victor Joseph. “We rely on the resources the land gives us.

We’re at the table because we believe the discussion is important.”

Any road construction is several years in the future, Huntington notes.

“This road is not a sure thing,” she says.

“We’ve talked about it being a marathon and not a sprint.”

Governor’s Order Another speed bump was raised in late December, when newly elected Alaska Governor Bill Walker halted spending on six major construction projects, including the Ambler road, as plummeting oil prices put a strain on the state budget.

Jeremy Woodrow, a communications officer for DOT&PF, says the governor’s order would “allow the administration time to review the projects and determine if these projects are appropriate to continue in this fiscal climate.”

The project holds should have little to no impact on jobs this year, he notes.

“The majority of our projects were federally funded and most of those projects were put out to contracts last fall.”

Those contracts will be honored. The long-term impact on major projects is unknown, Woodrow says.

In early January, AIDEA responded to Walker’s order, noting the road’s economic benefits to rural Alaska and resource development. It asked the state to allow the $8.2 million already allocated for the EIS process to continue in 2015. It noted no new state funding would be necessary until fiscal year 2017 or 2018 when another $6.8 million would be needed to complete the EIS. AIDEA says it will be seeking private funding to construct and maintain the road, instead of state or federal funding. AIDEA will request limited access rights and the road would not have any public right-of-way rights. Communities along the road would be granted access for fuel and freight, however.

No decision had been made on the project as of late January, although Walker noted he would like to see a private company take over the project.

In the meantime, AIDEA plans to continue the EIS process through the 58

end of the current fiscal year.

NovaCopper’s View At the December meeting, NovaCopper’s Van Nieuwenhuyse talked about the need for the road to make the mining in the region feasible.

The road’s importance to developing the Ambler District’s mineral resources can’t be overstated, says Van Nieuwenhuyse, who first started working in the district as a geologist in the 1970s.

He later started NovaGold, which discovered a gold deposit near Crooked Creek in the Yukon-Kuskokwim region northeast of Bethel estimated to hold 33 million ounces of gold. The resultant Donlin Gold project is now in the permitting phase and is projected to be one of the largest gold mines in the world. It is a prospect that stands to remake the economy of southwest Alaska, in much the same way the Red Dog zinc mine, in partnership with NANA, has created an economy in Northwest Alaska.

While not as rich as Donlin, the Ambler Mining District contains deposits of high-grade copper, lead, gold, and zinc. The Arctic deposit alone could generate more than $300 million in taxes and royalties as a working mine, employing more than 1,300 construction jobs over two years and another 1,000 operations-related jobs during the mine life, according to AIDEA. The Bornite, Sun, and Smucker mining prospects could generate similar benefits. “[Arctic] has been known quite a long time as a significant deposit, very good grade,” Van Nieuwenhuyse says. “It’s roughly 6 percent copper equivalent, which is very high grade for a deposit.

It’s not big, it’s a relatively small deposit, but it’s high quality.”

NovaCopper is working closely with NANA as a partner in developing the Arctic prospect, as well as the Bornite prospect, which is located on NANA lands. NovaCopper is committed to local hire, he says, and so far more than half of those working in the region are local residents and NANA shareholders.

NovaCopper is basing its working model on NANA’s relationship with Teck Alaska, which operates the Red Dog zinc mine north of Kotzebue, employing hundreds of NANA shareholders. Red Dog is the catalyst for the economy of the Northwest Arctic Bor-

Alaska Business Monthly | March 2015 www.akbizmag.com

ough. Van Nieuwenhuyse says the Arctic prospect is roughly comparable with Red Dog in terms of size and footprint.

“Red Dog celebrated its 25th anniversary of operation this year, and it’s that sort of a project that we certainly envision between Arctic and Bornite,” he says. “These are lower grade deposits than Red Dog, different metals. It might not start as big as Red Dog is today, but Red Dog didn’t start this big; things grow over time.”

Van Nieuwenhuyse envisions a twenty to thirty-year mine life between the Arctic and Bornite sites, but any active mine project is still years away, he says.

NovaCopper is in the initial steps toward a feasibility study for Arctic, he says. They’re looking at the site to determine the best location for the mill, tailings disposal, what areas have permafrost, and where wetlands are located.

“We’ve done preliminary studies, so we’ve got ideas,” Van Nieuwenhuyse says. “The next step is to gather more information, engineering, environmental hydrology, and then start designing to a feasibility scale what size of an operation it will be. We’ll start at

Arctic and then go to Bornite and see where it fits in.”

Another Decade Even if everything falls into place on schedule, including a road, Van Nieuwenhuyse estimates it will take eight to ten years for mining to begin in the Ambler district. The road, however, is key.

“We certainly recognize the road as a significant capital commitment and a significant operating commitment,” Van Nieuwenhuyse says, noting that the investment climate for mining is extremely tight.

“From the beginning, we’ve said as far as we understand today, there’s nothing out there besides a road that is going to make this project viable.”

So far, the state of Alaska has appropriated more than $26 million toward the road through fiscal year 2015. NovaCopper has spent about $55 million on exploration in the Upper Kobuk Valley, Van Nieuwenhuyse says. The regional hearings are part of the EIS procedure, which is still early in any development process, he says.

“AIDEA is doing a good job of get-

ting the public dialogue and input from the communities,” Van Nieuwenhuyse says. “It’s never perfect. It’s never ideal, but there are a lot of good thoughts that are being put on the table in terms of jobs and training and capacity development in rural communities in Alaska.

That’s something that mining has demonstrated that it can do.”

And, while oil makes a lot of money for the state, it doesn’t generate a lot of oil jobs statewide, he says. Mining is done on a local level, and training programs can build rural jobs.

“That’s certainly been our focus,” Van Nieuwenhuyse says. “It’s been our focus on Donlin. We’ve done a good job of that. It’s been Red Dog’s focus. They’ve done a good job of that. Mining does support those communities. It supports our community here in Fairbanks with both Fort Knox and Pogo. I think that it’s something that we can continue to improve on and that’s certainly the objective we have as a corporation.” R Julie Stricker is a journalist living near Fairbanks.

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March 2015 | Alaska Business Monthly

59

special section

Building Alaska

© Trent Swanson/ AlaskaStock.com

A laska’s C onstruction Forecast for 2015 Annual Report for the Construction Industry Progress Fund and the Associated General Contractors of Alaska

By Scott Goldsmith and Pamela Cravez Institute of Social and Economic Research, University of Alaska Anchorage Dear Alaskans, The Construction Industry Progress Fund (CIPF) and the Associated General Contractors (AGC) of Alaska are pleased to have produced the 13th edition of “Alaska’s Construction Spending Forecast.” Underwritten by Northrim Bank, compiled and written by Scott Goldsmith and Pamela Cravez of the University of Alaska’s Institute of Social and Economic Research (ISER), the “Forecast” reviews construction activity, projects and spending by both the pri60

vate and public sectors for the year ahead.

The construction trade is Alaska’s third largest industry, paying the second highest wages, employing nearly 16,000 workers with a payroll over $1 billion. It accounts for 20 percent of Alaska’s total economy and currently contributes approximately $8.5 billion to the state’s economy. The construction industry reflects the pulse of the economy. When it is vigorous, so is the state’s economy.

Both CIPF and AGC are proud to make

this publication available annually and hope it provides useful information for you.

AGC is a non-profit, full service construction association for commercial and industrial contractors, subcontractors and associates. CIPF is organized to advance the interests of the construction industry throughout the state of Alaska through a management and labor partnership.

—Mike Shaw, CIPF Chairman The 2015 Forecast is generously underwritten by Northrim Bank

Alaska Business Monthly | March 2015 www.akbizmag.com

BusinessPROFILE

Mass Excavation, Inc.

Photos ©Ken Graham Photography

Digging into Challenges and Sorting out Solutions

E

stablished in 2004, Mass Excavation Inc. takes a strong employee and customer-centered approach to conducting business. The company works very closely with clients to find the best solutions and continually refines their efforts during projects while respecting the value of its 55 employees and their contributions, according to General Manager Mark Erickson. “We invest a lot of effort to discover the solutions that others would not find, and we deliver those solutions safely and cost-effectively.” he said.

In fact, Mass Excavation is driven by an intrinsic desire to “dig into challenges and sort out solutions” for its clients. This often involves suggesting design modifications that not only save time and money but also result in a better final product. Consequently, Mass Excavation has gained a reputation for completing projects ahead of schedule and below budget while maintaining the highest quality. “We don’t get to a static point and say, ‘That’s the way it has to be,’” Erickson said. “Things change, and when challenges come, we continue to work to find the best solution to fit those changing needs.”

That approach has served the company well over the years. Mass Excavation is a successful outgrowth of Davis

Constructors & Engineers, Inc., which created the company, after nearly 30 years in business, out of a need for more reliable civil capabilities to handle project sitework. Today, Mass Excavation performs a wide array of services, including building sitework, subdivision development, public works, and environmental cleanup. The company’s work touches the lives of Alaskans in relevant and practical ways.

“We build the streets you drive on, the parking lots you use, and the utilities powering your homes and businesses,” Erickson explained.

Since its inception, Mass Excavation has completed more than 140 projects throughout Alaska, including school construction, military housing, hotels, retail stores, private developments, multi-story office buildings, utilities, and highly specialized construction such as hangars and hospitals. Recent projects include Penland Parkway and Northwood Street improvements for the Municipality of Anchorage, sitework for the new eight-story CIRI –

P A I D

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

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building at New Seward Highway and Fireweed Lane, the new sewer trunk line for Target and Cabela’s, and two beautiful subdivisions at Resolution Pointe and Eagle Crossing in Eagle River.

Mass Excavation is consistently expanding in size, capabilities and resources. For instance, the company recently reached an agreement to provide aggregate resources for the Anchorage Bowl and Mat-Su Valley. It operates the 43-acre Eklutna Gravel Site with areas for aggregate processing, pit run gravel, and clean material disposal. It also plans to open a second gravel pit near Palmer.

As Mass Excavation continues to broaden its scope, Erickson is excited and optimistic about the future. Yet, he remains committed to perpetuating the integrity that defines the company’s brand. “We will work tirelessly to meet any challenge,” he said. “You can trust us to do our best.”

Josh Pepperd, President Mark Erickson, General Manager PO Box 241093 Anchorage, Alaska 99524 Ph: (907) 771-9272 Fax: (907) 770-7752 www.massexcavation.com

2015 Alaska Construction Spending TOTAL Total Excluding Oil & Gas Private Oil and Gas Mining Rural Other Basic Utilities* Hospitals/Health Care* Other Commercial Residential Public National Defense Highways and Roads Airports, Ports, and Harbors Alaska Railroad Denali Commission Education Other Federal Other State and Local

Level $ 8,510,000,000 $ 4,670,000,000 $ 5,545,000,000 $ 3,840,000,000 $ 210,000,000 $ 25,000,000 $ 680,000,000 $ 240,000,000 $ 135,000,000 $ 415,000,000 $ 2,965,000,000 $ 435,000,000 $ 755,000,000 $ 465,000,000 $ 25,000,000 $ 10,000,000 $ 465,000,000 $ 255,000,000 $ 555,000,000

Change -3% -5% -6% -2% +19% -46% -20% 0% -21% -14% +1% +10% -1% +9% +11% +11% -3% -15% 0%

* Many projects in these categories are supported by public funds.

fund (excluding grants from the federal government) for capital spending. In addition the legislature gave the state authority to sell $0.45 billion of general obligation bonds for transportation projects. Much of that record appropriation is only now becoming “cash on the street.” And even though the general fund capital budgets in the last two years have been only $1.1 billion, there are still billions “in the pipeline” that will keep state spending strong this year.

Because of the size of the state budget deficit, it is possible that some projects in the pipeline that have not yet been approved could be cancelled. This will be moderated by concern over the negative impacts on the economy.

In any event the project backlog will begin to taper off next year. Furthermore, the governor has proposed a bare-bones general fund capital budget of about $100 million for FY2016 that would just cover the state match on federal grants.

Fortunately, federal spending, mostly consisting of grants, both to the state (about $1 billion annually) for transportation (roads, harbors, the railroad and the ferry system) and sanitation projects, and to non-profits for health facilities and housing, is not sensitive to the price of oil. Although the federal government has a difficult time producing a budget, the level of federal spending this year should be similar to last year.

Our revised projection for 2014 was $8.8 billion, slightly lower than the original estimate of $9.2. The revision is based primarily on lower than anticipated oil and gas spending in 2014.

1

We define construction spending broadly to include not only the construction industry as defined by the U.S. Department of Commerce and the Alaska Department of Labor, but also other activities. Specifically, our construction-spending figure encompasses all the spending associated with construction occupations (including repair and renovation), regardless of the type of business where the spending occurs.

For example, we include the capital budget of the oil and gas and mining industries in our figure, except for large, identifiable equipment purchases such as new oil tankers. Furthermore, we account for construction activity in government (like the carpenter who works for the school district) and other private industries. The value of construction is the most comprehensive measure of construction activity across the entire economy.

2

3

“On the street” is a measure of the level of activity anticipated during the year. It differs from a measure of new contracts, because many projects span more than a single year.

4

Alaska Department of Labor

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Alaska Business Monthly | March 2015 www.akbizmag.com

Source: Institute of Social and Economic Research, UAA. Percent change based on revised 2014 estimates.

Overview The total value of construction spending “on the street” in Alaska in 2015 will be $8.5 billion, down 3% from 2014.1,2,3 Wage and salary employment in the construction industry, which increased an estimated 6 percent last year, to about 17,600, will decline slightly in 2015.4 Oil and gas sector spending will fall 2% to $3.8 billion from its record level of $3.9 billion last year.

Other spending will be $4.7 billion, a decline from $4.9 billion last year.

Private spending, excluding oil and gas, will be about $1.7 billion, down from $2.0 billion last year—while public spending will increase from $2.9 to $3.0 billion.

Construction spending in Alaska in 2015 is expected to be strong in spite of the drop in the price of oil from more than $100 per barrel in the summer of 2014 to between $45 and $50 today.

However, the longer the price stays low, the greater the risk that some projects will be cancelled or postponed. It is impossible to predict what will happen to the oil price, because world supply has outstripped demand. The price will stabilize, and perhaps begin to increase, only when the low price stimulates more demand and eliminates high cost production, a process that could take more than a year. A further complication is the unpredictability of the role of OPEC in determining oil supply.

In particular Saudi Arabia, the largest producer, could decide to restrict supply for political or strategic reasons.

Because of the drop in the price of oil, the state is facing a general fund budget deficit of about $3 billion for the current fiscal year (FY2015) and is projected to have a similar deficit in FY2016 (which begins July 1 of this year). However, this will not have a large negative impact on state government construction spending this year for several reasons.

In FY2013 the state appropriated a record high $2.3 billion from the general

Furthermore, spending for national defense has also remained robust.

The oil and gas sector is always a difficult category to forecast. Because plans can and do change, and because of many factors associated with weather, logistics, the availability of supplies, the evaluation of work completed, regulatory and environmental challenges, tax policy and other operational and strategic concerns.

Spending plans developed by the oil and gas companies during the last quarter of 2014 suggested an increase in spending of 18% for 2015 compared with the year before. However, this target is unlikely to be met because oil prices have continued to fall since those plans were announced. We estimate spending will be about the same as last year. As price expectations continue to change every company will continue to re-evaluate its investment plans.

The lower oil price means both a dramatic reduction in cash available for investment in new projects and also a reduction in the profitability of those new investments. Fortunately the industry tends to make investment decisions based on a conservative, and long run, oil price. Consequently the drop will have less negative impact on the viability of projects than on the ability of companies to move forward with investments because of capital constraints.

However, some of the largest operators in Alaska are quite strong financially, and others have funding sources not tied to the oil price. Furthermore, in Cook Inlet, activity is more sensitive to the price of natural gas than of oil, and the state, through its tax credit programs, has also provided a funding source not directly tied to the price of oil. Finally, the industry is under political pressure to show that the new state production tax, SB21, has stimulated new investment. Consequently, strategic considerations might help to keep the flow of investment spending high.

The economy of the state has slowed somewhat over the last three years. Job growth continues, albeit at less than 1% per year. Population growth, which had been tracking employment, came to a halt in 2014. Out-migration exceeded inmigration for the second year in a row.

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ture direction of the economy brought on by the sudden fall in the oil price, will slow new private investment in the commercial and residential construction sectors as investors adopt a “wait and see” attitude.

As in past years, some firms are reluctant to reveal their investment plans, because they don’t want to alert competitors; also, some have not completed their 2015 planning. Large projects often span two or more years, so estimating “cash on the street” in any year is always difficult—because the construction “pipeline” never flows in a completely predictable fashion. And because of the large number of projects financed by federal and state dollars, tracing all those dollar flows without double counting is also a challenge.

We are confident in the overall pattern of the forecast—but as always, we can expect some surprises as the year progresses.

Privately Financed Construction Oil and Gas: $3,840 Million The biggest sector, and the most difficult to predict, is oil and gas. We expect spending will be about 18% less than originally anticipated by the industry and that spending will be down about 2% from last year, to $3.8 billion.

The long-term development prospects for oil and gas in Alaska remain strong, but cash for investment will be tight this year. The following description of activity is based on the announced plans of the companies. As indicated, we expect some to be postponed.

On the North Slope, ConocoPhillips’ largest project will be developing the CD-5 satellite, west of the Colville River and the Alpine field, which should begin production late this year. It will be developing a new production site in the Kuparuk field and adding two new rigs to slow the rate of decline of that field.

Its other major efforts will be the West Sak viscous oil project (NEWS) and Greater Moose’s Tooth (GMT-1) in the NPRA (National Petroleum Reserve Alaska) west of the Colville River.

BP will concentrate on expansion in the Prudhoe Bay field after selling its full interests in Endicott and Northstar and half interests in Liberty and Milne

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Alaska Business Monthly | March 2015 www.akbizmag.com

Point to Hilcorp Energy Company. It will be expanding drilling pads and adding two new drilling rigs.

ExxonMobil is continuing work on development of the Point Thomson field, which it expects to bring into production this year. Modules for operation of the field will be delivered this summer from Anchorage and Korea.

The Italian firm ENI (Ente Nazionale Idrocarburi) still has a two-year program of well drilling to bring the Nikaitchuq field into full production.

Caelus will be working on both the Oooguruk and Nuka fields. It has two more years of drilling for total build out of Oooguruk and is considering expansion of the offshore island from which the field is accessed. Development of the Nuka field will begin this year if it gets a favorable ruling on its royalty relief request.5 Brooks Range Petroleum is moving forward to develop the Mustang field, west of Kuparuk, with financial assistance from AIDEA (Alaska Industrial Development and Export Authority).

The North Slope will host two new operators this yearâ&#x20AC;&#x201D;Hilcorp and Cook Inlet Energy, which have taken over fields formerly operated by BP and Savant.

A number of other firms have announced plans for exploration including Repsol, Nordaq, Great Bear, and Linc Energy.

Other companies, including Chevron and Anadarko, have interests in various fields on the North Slope but are not operators. Their expenditures are also included in the total.

Shell Oil is hoping to come back and complete the well it started to drill in 2012, on the OCS (Outer Continental Shelf) in the Beaufort Sea. Meanwhile, Statoil has not announced any plans to explore its prospects in the Beaufort Sea. Spending in Cook Inlet will be dominated by Hilcorp, a relative newcomer to Alaska that recently purchased the assets of both Chevron and Unocal. Hilcorp drilled 20 new wells in 2014, and plans are for a similar level of effort this year. Cook Inlet Energy, which operates in the Redoubt, West Mac, and North Fork fields has been forced to cut back on development plans but will still be drilling this year.

5

Pioneer recently sold its assets to Caelus.

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Building Alaska’s Tomorrow

Blue Crest Energy, which purchased the assets of Buccaneer, is working on development of the Cosmopolitan field from an existing onshore pad, and Furie is working to develop the Kitchen Lites offshore field using a new monopod platform. Buccaneer had been using the Endeavour jack-up rig but that has been sold and will no longer be available for use in the inlet. Furie is using the other rig—Spartan 151—in its operation.

Other companies active in Cook Inlet include Apache, Nordaq, Aurora, and XTO. Elsewhere in the state, there will be exploration for gas near Nenana and Copper Center.

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©Ken Graham Photography.com

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Mining: $210 Million Spending by the mining industry—on exploration and development,6 as well as maintaining and upgrading existing mines—will be higher in 2015 in spite of some weakness in metal prices.

The bright spot is the anticipated spending of the six major mines operating in the state, some of which have higher capital expenditures planned this year. This spending is for both exploration to extend the life of the mines and for upgrading of facilities for existing operations.

Spending for drilling and other site work remains low this year at the three world-scale mine projects currently in various stages of development (Donlin Creek, Pebble, and Livengood).

Numerous smaller projects across the state, such as the Bokan rare earth metals prospect in the Southeast, and the NovaGold upper Kobuk mineral projects, will also see activity. Construction has also begun on a new ore terminal in Skagway.



Other Basic Industries in Rural Alaska: $25 Million Investments in facilities to support tourism, the seafood and timber industries, and other natural resource industries often occur in rural areas.

Although the number of tourists visiting Alaska is increasing, there are no announced significant capital investments in rural parts of the state. A number of seafood plant additions have been announced across the state.

Excluding exploration and development costs associated with environmental studies, community outreach, and engineering.

6

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Utilities: $680 Million 7 A decline in spending for new and upgraded electric generating plants will drive utility spending lower this year.

Among the Railbelt electric utilities, the large new MEA (Matanuska Electric Association) plant at Eklutna is essentially finished. The largest remaining project is the AML&P (Anchorage Municipal Light and Power) replacement plant in northeast Anchorage. GVEA (Golden Valley Electric Association) has taken over the Healy Clean Coal plant and also plans substation work at Clear Air Force base. CEA (Chugach Electric Association) will be doing substation, distribution and refurbishment work.

HEA (Homer Electric Association) has finished both its new power plants.

The smaller utilities continue to be involved in hydroelectric projects like Allison Creek at Valdez and facilities like the new headquarters building in Kodiak. Many of these have received at least partial funding from the state Renewable Energy Fund.

Telecommunications spending will also be somewhat lower this year as new firms (Verizon) become established.

Expenditures continue to bring better service to rural Alaska. Telecommunications spending in Alaska benefits from funds generated by the Universal Service Funds, which channel revenues collected from services provided in other locations to help pay for needs in Alaska.

One phase of the state project to transport LNG from the North Slope to Fair-

banks will get under way—expansion of the gas distribution system in Fairbanks.



Hospitals and Healthcare: $240 Million Spending will be about the same as last year, concentrated in Anchorage at facilities supported by federal government grants to the ANTHC (Alaska Native Tribal Health Consortium) and Southcentral Foundation. One major project is the 200-room patient housing facility on the Anchorage campus of the Alaska Native Medical Center.

Private, non-profit, and public hospitals around Alaska are continuously renovating and expanding. This year major projects are expected in Fairbanks, Ketchikan, Anchorage, and on the Kenai Peninsula. On the other hand Providence, the largest hospital complex in the state, has recently finished a large capital expansion program and will have only modest capital expenditures this year.

Smaller projects are underway across the state, in response to the growing need and aging of the population. For example, a new blood bank facility in Anchorage will be completed this year.



Other Commercial: $135 Million Commercial construction spending consists primarily of office buildings, banks, hotels, retail space, and warehousing.8 The level of spending from year to year can be influenced by a few projects, like large office buildings.

Although we include utilities and hospitals/health care spending in private spending, there is also a significant amount of public spending for some projects in these categories.

7

Our commercial construction figure is not comparable to the published value of commercial building permits reported by Anchorage and other communities. Municipal reports of the value of construction permits may include government-funded construction, which we capture elsewhere in this report. We have also excluded hospitals and utilities from commercial construction, so we can provide more detail about those types of spending.

8

Oil & Gas Construction

Serving Alaska Since 1984 www.conamco.com

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67

We expect the commercial construction rate will be down both because of the slowing of growth of the economy and uncertainty generated by the falling price of oil. A couple of new office buildings are under construction in Anchorage and several new hotel projects have been announced. A new Fred Meyer store is scheduled for construction in Palmer, and Wasilla may see construction of a “Fun Center.” Elsewhere the Sealaska Heritage Institute is building the Walter Soboleff Center in Juneau, and the Richard Foster Building in Nome is progressing.

Projects with government funding are more likely to move forward than privately financed projects. Private investors will want to wait and see how the fall in oil prices impacts the general economy before moving forward with new projects.



Residential: $415 Million Activity in the residential housing market continues to be concentrated in the Matanuska-Susitna Borough, where state population growth is concentrated. Other large markets face either shortages of land for expansion, like Anchorage, or high heating costs, like Fairbanks. The deceleration of economic and population growth will slow activity in this sector of the construction industry. Uncertainty over the impact of lower oil prices will also take a toll.

Projects with public funding will be less sensitive to these economic trends.

Publicly Financed Construction National Defense: $435 Million Defense spending, which has been trending downward, will be slightly higher this year. The budget for MILCON (military spending for facilities on bases) is forecast to be $144 million, but won’t involve any large projects. The environmental program budget, including FUDS (Formerly Used Defense Sites), will be a little higher than last year, at $130 million. This program includes cleanup of hazardous substances and contaminants at former defense sites as well as on current Army and Air Force installations.

Spending on the smaller civilian pro-

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Alaska Business Monthly | March 2015 www.akbizmag.com

grams and other interagency programs will be higher than in past years. This spending mostly funds Corps of Engineers projects for other federal agencies like NOAA, FAA, and the BLM, and projects done in cooperation with Alaska communities, such as harbor improvements.

Missile defense spending at Fort Greely, was recently added to the federal budget at an expected level of $50 million. This is the start of a $1 billion expansion that will add 14 interceptor missiles to the defense system at Fort Greely over the next several years.

Other defense entities like the Pacific Air Forces Regional Support Center will have modest capital budgets.



Transportation—Highways and Roads: $755 Million Spending on highways and roads will be marginally lower this year. The largest source of funding for highway construction is federal grants, in particular MAP21 (The Federal Transportation Reauthorization Act). Although the federal government keeps postponing dealing with the problem of adequate funding of this program since gasoline tax revenues are falling, the program continues to limp along. Alaska continues to receive between $400 and $500 million annually from this and other federal programs.9 These funds will pay for major projects throughout the state, such as reconstruction along the Parks highway, pavement preservation on the Seward and Sterling highways, bridge construction, and extension of major arteries in Anchorage. Some federal funds also go

directly to Alaska Native tribal organizations for transportation projects.

The state also funds road construction through both the Department of Transportation and grants disbursed by the Department of Commerce, Community, and Economic Development.

This source of funds will be marginally lower this year because the large size of the grant program in FY 2013 was not repeated in FY2014 or FY2015. Some money was also allocated for the state’s Roads to Resources program, largely for continued planning. The state will continue to pay for deferred maintenance.

The $453 million state general obligation bond package for transportation that passed the legislature in 2012 included $227 million for highways and $35 million for bridges, with the rest allocated to ports.

Many of the projects identified in that appropriation are now under construction.

Local governments also spend on road construction and maintenance.

For example, the Matanuska-Susitna Borough is in the second year of road improvements financed by general obligation bonds.

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Transportation—Airports, Ports, and Harbors: $465 Million Federal funds, mainly from the Federal Aviation Administration’s AIP (Airport Improvement Program), provide the bulk of funding for airport improvements both at the large international airports in Anchorage and Fairbanks and the many smaller state-owned airports across the state. This continues to be a stable source of funding that has averaged about $200 million in recent years. The biggest single project is im-

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provements at the Kodiak airport. The international airports also fund some improvements through revenue bonds.

Spending related to ports and harbors will be up this year in spite of an absence of progress on the redevelopment of the Port of Anchorage. Federal funding, state general funds, the transportation bond package, and local sources are combining to underwrite projects in Nome in the Northwest; Kodiak, Homer, and Seward in Southcentral; and Juneau, Sitka, Hoonah, and Haines in the Southeast. In addition to upgrading of harbors, some of these facilities will enhance the capability of communities to handle larger cruise ships and others will upgrade the ferry system.

Spending on the Point McKenzie rail extension will be lower this year.



Alaska Railroad: $25 Million The core capital construction program for modernizing and upgrading the Alaska Railroad will continue at about the same level as last year. This is funded through a combination of federal grants, cash flow, and revenue bonds. The railroad is awaiting funding to move forward on the PTC (Positive Train Control) system, mandated by the federal government.

 “Commitment to Quality Through Pride of Employee Ownership.”

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

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

907.344.5011

www.superiorpnh.com • P.O. Box 230387 • Anchorage, Alaska 99523 70

Denali Commission: $10 Million The Denali Commission—an innovative federal-state partnership Congress created in 1998 to more efficiently direct federal capital spending to rural infrastructure needs—continues to decline in importance. Most of its modest capital budget will be for energy-related projects.



Education: $465 Million Spending for education will be about the same as last year, with a slight decline in University of Alaska spending offset by more K-12 spending.

University of Alaska construction spending on buildings will be down at both main campuses. The new Seawolf Arena in Anchorage is now complete and work is focused on completion of the engineering building, a parking garage, and a pedestrian overpass. In Fairbanks the engineering building will be enclosed, but funds to complete

Alaska Business Monthly | March 2015 www.akbizmag.com

the interior have not yet been identified.

The largest project on the Fairbanks campus is the initial stage of replacing the power/heating plant.

The state has appropriated funds for construction of several new rural schools as part of the settlement of the Kasayulie case. Construction of new schools is now planned or underway at Kwethluk, Nightmute and Napaskiak. They will be built over the next two years. The general fund also contains numerous educationrelated grants for local school districts throughout the state.

New schools will be under construction in Anchorage, the MatanuskaSusitna Borough, Fairbanks, and Kodiak, funded by local bonds that are largely reimbursed by the state. Local school bonds in Anchorage, Fairbanks, the Mat-Su Borough, and elsewhere are also funding upgrades and renovations for other educational facilities.

ď ˝

Other Federal: $255 Million Other federal construction will be lower this year as the federal government tries to hold down growth in the budget. In Alaska this will be felt in a decline in spending for direct procurement by federal agencies like the Department of the Interior (National Park Service, U.S. Fish and Wildlife Service, and Bureau of Land Management), the Postal Service, the Department of Agriculture, and NOAA (the National Oceanic and Atmospheric Administration).

In addition to funding a large share of spending on transportation infrastructure through grants from the Department of Transportation, the federal government funnels construction dollars to the state though many other programs.10 Most of the funding for the state-administered Village Safe Water program for rural sanitation comes from federal sources, including the Environmental Protection Agency and the Indian Health Service. With the state contribution, it is expected to be constant at about $60 million this year. Other types of federal grants fund armories and

10 It is difficult to track all the federal dollars that find their way into construction spending in the state, because there are so many pathways, and they change every year. The possibility of double counting funds as they pass from agency to agency, or become part of a larger project, also creates difficulties for the analyst.

www.akbizmag.com

March 2015 | Alaska Business Monthly

71

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Wasilla, AK | June 13 Learn more at

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Where Engineering Meets the Environment.

With a staff of professional environmental scientists, engineers, geologists, chemists, biologists and technicians, tutka is ready and available to perform projects across the State of Alaska.

All services are streamlined to ensure the highest level of regulatory compliance and cost controls.

• General Contractor/ Heavy Civil Construction • Environmental Cleanup and Consulting • Operations and Maintenance of Wastewater Pre-treatment Systems

veterans’ facilities and ferry terminals, among other things.

The federal government also provides construction grants to Alaska tribes, non-profit organizations, and local governments across the state.11 Alaska Native non-profit corporations, housing authorities, and health-care providers receive most of this money. The largest of these programs in Alaska is NAHASDA (the Native American Housing Assistance and Self-Determination Act), which provides about $100 million annually for housing construction in Alaska Native communities, through grants to federally recognized tribes and Alaska Native housing authorities statewide.



Other State and Local: $555 Million State and local government capital spending—excluding transportation (roads, airports, and ports), education, health, and energy—will be about the same as last year. Many of these projects have been funded through the grants by the Department of Commerce, Community and Economic Development to local governments and non-profits throughout the state.

The state budget also includes the ongoing state weatherization and home energy rebate programs, which have now been expanded to include commercial buildings. Work is expected on a number of state-funded buildings, including the new library-museum in Juneau. The budget also funds a modest amount of deferred maintenance spread across all state departments.

Local government capital spending, from general funds and bonds as well as enterprise funds and direct federal grants, tends to be stable from year to year. A large share of this spending is for water and sewer facilities, but it also includes other construction, such as libraries, museums, recreational facilities, and solid waste facilities.

What’s Driving Spending?

The three primary drivers of construction spending are private basic sector investment (mainly petroleum and (907) 357-2238 | www.tutkallc.com

SBA Certified HUBZone & EDWOSB/WOSB • State of Alaska Certified DBE 72

11 Federal spending on health care projects for the Alaska Native community funneled to Alaska Native organizations is included in the Hospital/Health Care section of this report.

Alaska Business Monthly | March 2015 www.akbizmag.com

mining), federal spending (military and grants to state and local governments and non-profit organizations), and state capital spending (which ultimately depends on petroleum revenues), through the general fund and bond sales.

These large external sources of construction funds also give a general boost to the economy—and thus add to the aggregate demand for new residential, commercial, and private infrastructure spending.

Construction in the Overall Economy Construction spending is one of the important contributors to overall economic activity in Alaska. Annual wage and salary employment in the construction industry in 2014 was about 17,600 workers, with an average annual wage of $75 thousand, second only to mining (including petroleum). But that figure doesn’t include the “hidden” construction workers employed in other industries like oil and gas, mining, utilities, and government (force account workers). In addition, it does not account for the large number of self-employed construction workers—estimated to be about 9,000 in 2011.

Construction spending generates activity in a number of industries that supply inputs to the construction process. These “backward linkages” include, for example, sand and gravel purchases (mining), equipment purchase and leasing (wholesale trade), design and administration (business services), and construction finance and management (finance).

The payrolls and profits from this construction activity support businesses in every community in the state.

As this income is spent and circulates through local economies, it generates jobs in businesses as diverse as restaurants, dentists’ offices, and furniture stores.

R

Alaska’s Construction Spending Forecast for 2015 is published in Alaska Business Monthly with the permission of the Associated General Contractors of Alaska and the Construction Industry Progress Fund. www.akbizmag.com

AN ALASKA MINING PROJECT COMMITTED TO: LOCAL HIRE RESPONSIBLE DEVELOPMENT ENVIRONMENTAL INTEGRITY

ENERGY INFRASTRUCTURE CONSTRUCTION SERVICES 301 W. Northern Lights Blvd. • Suite 300 • Anchorage, Alaska • 99503 907.278.4400 • www.pricegregory.com March 2015 | Alaska Business Monthly

73

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

City workers in Nome use wider and deeper trenches than in the 1980s when replacing water and sewer lines.

2015 CONSTRUCTION DIRECTORY Company

Top Executive

ABC, Inc. 401 Driveway St. Fairbanks, AK 99701 Phone: 907-457-2221 Fax: 907-457-5045

Susan Ellison, Pres.

Alaska Interstate Construction LLC 301 W. Northern Lights Blvd., Suite 600 Anchorage, AK 99503 Phone: 907-562-2792 Fax: 907-562-4179

Steve Percy, Pres.

Alaska Mechanical, Inc. 8540 Dimond D Cir. Anchorage, AK 99515-1938 Phone: 907-349-8502 Fax: 907-349-1324

Larry Buss, Pres.

Alaska Quality Builders PO Box 674 Willow, AK 99688 Phone: 907-495-6200 Fax: 907-495-6200

Karrol Johnson, Pres.

BC Excavating LLC 2251 Cinnabar Lp. Anchorage, AK 99507 Phone: 907-344-4492

Gordon Bartel, President

Builders Choice, Inc. 351 E. 104th Ave. Anchorage, AK 99515 Phone: 907-522-3214 Fax: 907-522-3216

Mark Larson, Pres.

CDF General Contractors, Inc. PO Box 211586 Anchorage, AK 99521 Phone: 907-337-7600 Fax: 907-272-2209

Gary Murphy, Pres.

ChemTrack Alaska, Inc. 11711 S. Gambell St. Anchorage, AK 99515 Phone: 907-349-2511 Fax: 907-522-3150

Carrie Lindow, Pres.

CONAM Construction Co. 301 W. Northern Lights Blvd., Suite 300 Anchorage, AK 99503 Phone: 907-278-6600 Fax: 907-278-4401

Dale Kissee, Pres.

Cornerstone General Contractors, Inc. 5050 Cordova St. Anchorage, AK 99503-7222 Phone: 907-561-1993 Fax: 907-561-7899

Joe Jolley, President

Criterion General, Inc. 2820 Commercial Dr. Anchorage, AK 99501 Phone: 907-277-3200 Fax: 907-272-8544

Dave DeRoberts, President

Cruz Companies 7000 E. Palmer Wasilla Hwy. Palmer , AK 99645 Phone: 907-746-3144 Fax: 907-746-5557

Dave Cruz, President

GENERAL CONTRACTORS

COMPANY

74

TOP EXECUTIVE

FOUNDED/ESTAB. AK

info@akabc.com akabc.com

info@aicllc.com aicllc.com

amialaska.com

akqual@mtaonline.net alaskaqualitybuilders.com

admin@bcxllc.net bcxllc.net

sandi@builderschoice.us.com builderschoice.us.com

cdfinc@alaska.net cdfincak.com

info@chemtrack.net chemtrack.net

conamco.com

jjolley@cornerstoneak.com cornerstoneak.com

cocod@criteriongeneral.com criteriongeneral.com

info@cruzconstruct.com cruzconstruct.com

WORLDWIDE\AK EMPLOYEES

Services

Š Nome Joint Utility

SERVICES

1995 1995

21 21

General contractor specializing in energy efficient remodeling and product sales.

Seamless siding and gutters, windows, doors, all remodeling. Material Sales include: Commercial doors, windows, store front, metal siding, metal flashing, door hardware, window wells.

1987 1987

450 450

Alaska Interstate Construction, LLC is an Alaska company providing heavy civil construction services to private industry, as well as local, state and federal government agencies in the oil and gas, mining and public works sectors throughout Alaska-from the Aleutian chain to the North Slope.

1975 1975

60 60

General contractor.

1994 1994

5 5

Residential and commercial construction, home building, additions, remodels, garages, shops, saunas, insurance losses, custom homes and don't forget landscaping. "We Build Dreams."

1982 1982

45 45

Complete hauling and excavation services, environmental, water, sewer and storm utilities, site work, hydro excavation, CCTV Inspection, GPS Site Mapping and fabrication.

1996 1996

285 210

Manufacturer of modular buildings, wood and steel floor and roof trusses, full service lumber yard.

1983 1983

4 4

Tenant improvements, commercial, residential, renovation and repair of damaged buildings, new construction, commercial, elevator installation and general contracting.

Focused on Green building practices. Another service we offer is construction consulting.

1973 1973

8-25 Please check out our Statement of Qualifications at chemtrack.net/about_us.htm.

8-25

1984 1984

100 100

General construction contractor specializing in design and construction of oil and gas facilities and pipelines, mining facilities, water and sewer facilities, and other remote infrastructure projects.

1993 1993

50 50

General contracting utilizing collaborative project delivery methods for new commercial construction and the precision renovation of existing facilities for Alaska leading academic, civic, industrial, medial, non-profit, oil and gas, and private development organizations.

1992 1992

82 82

Commercial general contractor.

1981 1990

481 250

Specializing in heavy civil construction and remote work locations throughout the state of Alaska. Oilfield support services and support, ice roads, ice pads, transportation and rig support.

March 2015 | www.akbizmag.com

Davis Constructors & Engineers, Inc. 6591 A St., Suite 300 Anchorage, AK 99518 Phone: 907-562-2336 Fax: 907-561-3620

Josh Pepperd, President

Delta Constructors LLC 3000 C St., Suite 202 Anchorage, AK 99503 Phone: 907-771-5800 Fax: 907-771-5911

Ed Gohr, Chief Executive Officer

Golden Heart Construction PO Box 72728 Fairbanks, AK 99707-2728 Phone: 907-458-9193 Fax: 907-458-9173

Craig Robinson, Pres.

Granite Construction Company 11471 Lang St. Anchorage, AK 99515 Phone: 907-344-2593 Fax: 907-344-1562

Derek Betts, VP/Region Mgr.

Jay-Brant General Contractors 460 Grubstake Ave. Homer, AK 99603 Phone: 907-235-8400 Fax: 907-235-8731

Jay Brant, Mgr./Partner

K & W Interiors 9300 Old Seward Hwy. Anchorage, AK 99515 Phone: 907-344-3080 Fax: 907-349-5373

Dale Kaercher, Pres.

K-C Corp.

2964 Commercial Dr. Anchorage, AK 99501 Phone: 907-258-2425 Fax: 907-278-8018

Byron D. Kohfield, Pres.

Ken Brady Construction 4001 Turnagain Blvd. E. Anchorage, AK 99517 Phone: 907-243-4604 Fax: 907-248-3920

Tim Brady, Pres.

Kiewit Corporation 2000 W. International Airport Rd., Suite C-6 Anchorage, AK 99502 Phone: 907-222-9350 Fax: 907-222-9380

Kiel Beloy, Project Executive

TOP EXECUTIVE

FOUNDED/ESTAB. AK

admin@davisconstructors.com davisconstructors.com

info@deltaconstructors.net deltaconstructors.net

craig@goldenheartconstruction.net goldenheartconstruction.net

alaska.projects@gcinc.com graniteconstruction.com

cjay@jaybrant.com jaybrant.com

knwinteriors@alaska.net k-winteriors.com

bkohfield@kccorporation.com

kenbrady.com

WORLDWIDE\AK EMPLOYEES

Services

SERVICES

1976 1976

100 100

Commercial construction and design-build. Current Projects: UAF Engineering, UAF CPHR Power Plant, Starbucks Building at Target South, MOA Bolin Street, Denali Tower Remodel, CIRI Fireweed Office Building, CIHA Mountain View Village, Various TI's & projects at Providence Health & Services Alaska.

2007 2007

600 100

We manage over $13B in oil and gas projects for our clients across North America Services include Electrical/Instrumentation Automation/Controls Mechanical/Piping Structural/Piling Insulation Turnaround Projects Tie-Ins Well Site Devp Program/Project/ Construction Mgnt & Execution Professional Staff.

1982 1982

7 7

1922 1974

Commercial and residential remodel and new construction.

4,000 Public and private heavy civil construction, design-build, construction aggregates, 60 recycled base, warm and hot mix asphalt, road construction, bridges, piling, mine infrastructure and reclamation and sitework.

1983 1983

25 25

Public works, military and commercial construction.

1985 1985

21 21

K&W Interiors is a family owned business, providing Alaskans with fine quality interior finishes for over 28 years. K&W was selected as one of the top 500 Remodelers in the nation for 2012 and 2013 by Qualified Remodeler magazine. From Design to Installation your Satisfaction is Guaranteed.

1986 1986

40 40

General contracting commercial/industrial. Specializing in light gage metal framing, sheetrock, taping, painting and specialty coatings.

1954 1954

15 15

General contractor.

1884 1949

12,000 Continuous Alaskan operational presence since 1949. Vertical bldgs, infrastructure 48 (heavy civil, roads, bridges), dams, oil/gas facilities, mining.

kiewit.com

MAXIMIZE UPTIME

GENERAL CONTRACTORS

Top Executive

COMPANY

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

Company

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Because the more you accomplish each day, the more you earn.

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Sales, Parts and Service Anchorage 1301 E. 64th Avenue 907-563-3238 March 2015 | www.akbizmag.com

Fairbanks 2143 Van Horn Road 907-451-0333

75

GENERAL CONTRACTORS

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

76

Company

Top Executive

Knik Construction Co., Inc. 6441 S. Airpark Pl. Anchorage, AK 99502-1809 Phone: 907-245-1865 Fax: 907-245-1744

Steve Jansen, Pres.

Little Susitna Construction Co. 821 N St., Suite 207 Anchorage, AK 99501 Phone: 907-274-7571 Fax: 907-277-3300

Tammie Smith, Gen. Mgr.

Loken Construction LLC 5400 Eielson Anchorage, AK 99518 Phone: 907-868-8880

Tyler Loken

Marsh Creek LLC 2000 E. 88th Ave. Anchorage, AK 99507 Phone: 907-258-0050 Fax: 907-279-5710

Mick McKay, CEO

Mass Excavation, Inc. PO Box 241093 Anchorage, AK 99524 Phone: 907-771-9272 Fax: 907-770-7752

Josh Pepperd, President

NORCON, Inc. 949 E. 36th Ave., Suite 143 Anchorage, AK 99508 Phone: 907-349-0821 Fax: 907-275-6300

Curt Dodd, Business Mgr./Interim VP

North Country Builders of Alaska 3435 N. Daisy Petal Cir. Wasilla, AK 99654 Phone: 907-373-7060

Thomas Smith, Pres.

Northern Dame Construction PO Box 871131 Wasilla, AK 99687 Phone: 907-376-9607

Doris Coy, Owner

Osborne Construction Co. PO Box 97010 Kirkland, WA 98083 Phone: 425-827-4221 Fax: 425-828-4314

George Osborne Jr., Pres.

Pfeffer Development 425 G St., Suite 210 Anchorage, AK 99501 Phone: 907-646-4644 Fax: 907-646-4655

Mark Pfeffer, Pres.

Price Gregory International 301 W. Northern Lights Blvd., Suite 300 Anchorage, AK 99503 Phone: 907-278-4400 Fax: 907-278-3255

Robert Stinson, Sr. VP

Pruhs Construction 2193 Viking Dr. Anchorage, AK 99501 Phone: 907-279-1020 Fax: 907-279-1028

Dana Pruhs, CEO

R H Development LLC PO Box 32403 Juneau, AK 99803 Phone: 907-790-4146 Fax: 907-790-4147

Richard Harris, Managing Member

Ridge Contracting, Inc. PO Box 240121 Anchorage, AK 99524 Phone: 907-222-7518 Fax: 907-272-2290

Drew V. McLaughlin, Pres.

Roger Hickel Contracting, Inc. 11001 Calaska Cir. Anchorage, AK 99515 Phone: 907-279-1400 Fax: 907-279-1405

Mike Shaw, Pres.

Siemens Industry, Inc. 5333 Fairbanks St., Unit B Anchorage, AK 99518 Phone: 907-563-2242 Fax: 907-563-6139

Leverette Hoover, Gen. Mgr. AK

Spinell Homes, Inc. 1900 W. Northern Lights Blvd., Suite 200 Anchorage, AK 99517 Phone: 907-344-5678 Fax: 907-344-1976

Charles Spinelli, Pres.

STEELFAB 2132 Railroad Ave. Anchorage, AK 99501 Phone: 907-276-4303 Fax: 907-276-3448

Richard Faulkner, Pres.

COMPANY

TOP EXECUTIVE

FOUNDED/ESTAB. AK

information@lynden.com lynden.com/knik/

littlesu@ak.net littlesu.com

info@lokenconstructionak.com lokenconstructionak.com

gina.heath@marshcreekllc.com marshcreekllc.com

admin@massexcavation.com massexcavation.com

Inquiries@NORCON.com norcon.com

tsmith@northcountrybuilders.com northcountrybuilders.com

doris@northerndame.com

occ@osborne.cc osborne.cc

info@pfefferdevelopment.com pfefferdevelopment.com

pricegregory.com

dana@pruhscorp.com pruhscorp.com

admin@rhdalaska.net rhdalaska.net

drew@ridgecontracting.org ridgecontracting.org

contact@rhcak.com rogerhickelcontracting.com

leverette.hoover@siemens.com siemens.com

spinell@spinellhomes.com spinellhomes.com

steelfabak.com

WORLDWIDE\AK EMPLOYEES

Services

SERVICES

1973 1973

76 73

Knik Construction is a general heavy construction company specializing in remote-site projects. Knik's experience includes heavy construction, road building, asphalt paving, foamed asphalt treated bases, airport construction and reconstruction, excavation, crushing and transportation.

1980 1980

18 12

A general, mechanical and electrical contractor. Architects, civil, mechanical and electrical engineers, licensed in twelve states. Construction project management.

Importer, exporter and global project consultation.

2003 2003

25 25

Commercial and residential framing and siding.

2004 2004

~160 Energy systems, environmental, construction, telecommunications.

140

2004 2004

25 25

Mass Excavation, Inc. was born out of a need for a responsive civil contractor capable of meeting the diverse range of services from large project development to more intricate building site improvement details. Mass X provides residential, commercial and industrial site development, and more.

1974 1974

136 136

NORCON is a full-service General Contractor with particular expertise in Mechanical construction. NORCON delivers high quality mechanical installations work at Prudhoe Bay, AK, executing a variety of projects, including: Well Tie-Ins, critical shutdowns/ turnaround, and support facility construction.

1998 1998

4 4

Commercial and residential general contractor for new, remodel and all phases of construction.

1992 1992

12 12

Traffic control services.

1987 1988

112 93

General contractor focusing on commercial, industrial or residential buildings, designbuild, civil, site development, utilities and engineering work.

2002 2002

23 9

Commercial real estate developer delivering private & public-private projects-office buildings, medical facilities, retail, parking facilities, multifamily housing. Services: strategic structuring, siting services, public process, project finance, design-build, construction, facilities & asset mgmt.

1974 1974

2,500 Pipeline, power, heavy industrial construction, EPC and consulting services.

200 Infrastructure construction services provider.

1958 1958

150 150

1992 1992

6 6

2000 2000

1995 1995

1849 1982

Heavy civil contractor, roads, airports, site work, underground utilities, industrial.

Residential and light commercial construction Real Estate Development. All aspects of construction and development. Certified green professional, member of SEABIA.

5-75 Heavy civil, rural airport construction, road construction, fuel system installation and 5-75 removal, contaminated sites clean up and remediation, demolition, underground construction, and remote work throughout Alaska.

50 50

General contractor; commercial and road work.

340,000 Energy Services Company (ESCO)/Total Building Integrator: to include Building 100 Automation/Energy Management control systems, fire alarm, HVAC mechanical systems, security (card access, CCTV, intrusion, etc.), audio and video solutions and mass notification systems.

1987 1987

25 25

General contractor-residential and light commercial construction.

1948 1948

48 48

STEELFAB-Steel Source for Alaska. Fully-integrated steel fabricator, service center, and coatings facility with the largest volume capacity in the state. Located in Ship Creek since 1948.

March 2015 | www.akbizmag.com

STG Incorporated 11710 S. Gambell St. Anchorage, AK 99515 Phone: 907-644-4664 Fax: 907-644-4666

James St. George, Pres.

The Superior Group, Inc. PO Box 230387 Anchorage, AK 99523 Phone: 907-344-5011 Fax: 907-344-5094

Heath Martin, President

Tunista Construction LLC 745 W. Fourth Ave., Suite 306 Anchorage, AK 99501 Phone: 907-646-2214 Fax: 907-646-2244

Daniel Esparza, Pres.

Turnagain Marine Construction 9330 Vanguard Dr., #100 Anchorage, AK 99507 Phone: 907-261-8960

TOP EXECUTIVE

info@stgincorporated.com stgincorporated.com

tmentzer@corp-tsgi.com superiorpnh.com

tclcon.com

jdavis@turnagain.build turnagain.build

Tutka LLC 5825 E. Mayflower Ct., Suite B Wasilla, AK 99654 Phone: 907-357-2238 Fax: 907-357-2215

Amie Sommer, Member

UNIT COMPANY 620 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-349-6666 Fax: 907-522-3464

Michael J. Fall, President

Watterson Construction Co. 6500 Interstate Cir. Anchorage, AK 99518 Phone: 907-563-7441 Fax: 907-563-7222 Company

FOUNDED/ESTAB. AK

amie@tutkallc.com tutkallc.com

info@unitcompany.com unitcompany.com Bill Watterson, Pres.

Top Executive

info@wattersonsconstruction.com wattersonconstruction.com

WORLDWIDE\AK EMPLOYEES

Services

SERVICES

1991 1991

81 76

Rural infrastructure construction, renewable energy systems, tower construction, power generation and distribution facilities, pile foundations and bulk-fuel systems.

1964 1964

150 150

Full service mechanical, electrical, design support and maintenance contractor.

2009 2009

50 15

We are a commercial general contractor that offers vertical and civil construction, design-build, remote Alaska projects, and construction management. Our bonding and support from Calista Corporation allows us to do small or large projects.

2014 2014

40 40

Turnagain Marine specializes in complex heavy marine construction projects that include large diameter socketing, rock anchors, offshore mooring & heavy lift requirements. Over the last decade, their management team has delivered over 50 design-build and hard bid projects from Ketchikan to Nome.

1999 1999

40 40

WBE/DBE (SOA), EDWOSB/WOSB, HUBZone, General Contractor, heavy civil construction, environmental cleanup and consulting, oil water separator maintenance, cleaning & repair.

1977 1977

60 60

Design Builder active in all types of construction throughout the state of Alaska.

1981 1981

101 AK 100

Construction. Special Olympics; Kodiak High School; Ft. Wainwright GSAB Hangar; Nuka Building for Southcentral Foundation; YMCA Addn; Mech/Elec Bldg - Ft. Greely.

Estab. Empls.

Services

Mark Mckinney, Operations Manager

2007 2007

7 7

An established electrical contractor on the North Slope and the Alaskan interior APC provides full service electrical contracting.

Chenega Energy LLC 6151 A St. Anchorage, AK 99518 Phone: 907-382-7772 Fax: 907-261-3299

Greg Porter, Pres.

2012 2012

6 5

Founded in 2012, Chenega Energy LLC provides a broad range of renewable/ sustainable energy solutions, including: design and implementation of energy savings projects, energy efficient retrofits, commercial energy auditing, alternative energy solutions, efficient power generation systems and more.

March 2015 | www.akbizmag.com

gporter@chenegaenergy.com chenegaenergy.com

ELECTRICAL CONTRACTORS

AK Power & Communications 5451 Laona Dr. Anchorage, AK 99518 Phone: 907-563-4696

GENERAL CONTRACTORS

Top Executive

COMPANY

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

Company

77

HEAVY EQUIPMENT DEALERS

ELECTRICAL CONTRACTORS

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

Company

78

Estab. Empls.

COMPANY

TOP EXECUTIVE

City Electric, Inc. 819 Orca St. Anchorage, AK 99501 Phone: 907-272-4531 Fax: 907-264-6491

Gabriel Marian, Pres.

Electric International LLC 5451 Laona Dr. Anchorage, AK 99518 Phone: 907-792-2427

FOUNDED/ESTAB. AK

Services

WORLDWIDE\AK EMPLOYEES

SERVICES

1946 1946

150 150

Electrical and communications contracting NAICS; 237130, 238210.

Steve Wisdorf, Pres.

1964 1964

166 165

Electric International is a recognized leader in electric construction in Alaska today. Our clients range from the home owner to the developer of a high rise. We work throughout the state of Alaska

HotWire Communications LLC 6151 A St. Anchorage, AK 99518 Phone: 907-565-4027

David Ellis, President

2005 2005

35 35

Hot Wire communications provides premier services in installation o communication and IT electrical networks.

HotWire Electric LLC 5451 Laona Dr. Anchorage, AK 99518 Phone: 907-258-9473

Mark McKinney, Operations Manager

1991 1991

26 26

Hot Wire Electric has a skilled work force to meet your exterior electrical line work.

Power & Light, Inc. 7721 Schoon St., #4 Anchorage, AK 99518 Phone: 907-522-5678 Fax: 907-349-5678 Company

Todd Houston, Pres.

2004 2004

12 12

Commercial, residential and industrial electrical installations. Automation, audio, video, CCTV security systems, fire detection and controls.

gabrielm@cityelectricinc.com cityelectricinc.com

toddhouston@alaska.net

Powerandlight.Biz Top Executive

Airport Equipment Rentals 1285 Van Horn Rd. Fairbanks, AK 99707 Phone: 907-456-2000 Fax: 907-457-7609

Jerry Sadler, Owner/Pres.

Construction Machinery Industrial 5400 Homer Dr. Anchorage, AK 99518 Phone: 907-563-3822 Fax: 907-563-1381

Ken Gerondale, Pres./CEO

Craig Taylor Equipment 733 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-276-5050 Fax: 907-276-0889

Lonnie G Parker, Pres/CEO

Delta Leasing LLC 8101 Dimond Hook Dr. Anchorage, AK 99507 Phone: 907-771-1300 Fax: 907-771-1380

Rudi von Imhof, President

Equipment Direct, Inc. PO Box 425 Willow, AK 99688 Phone: 907-696-7375 Fax: 907-696-7375

L. Butera

Equipment Source, Inc. 1919 Van Horn Rd. Fairbanks, AK 99701 Phone: 888-868-9049 Fax: 907-458-7180

Troy Lockes, General Manager

Haltness Equipment LLC 205 Meals Ave. Valdez, AK 99686 Phone: 907-835-5418 Fax: 907-835-3694

Erik Haltness, Manager

N C Machinery 6450 Arctic Blvd.

Anchorage, AK 99518 Phone: 907-786-7500 Fax: 907-786-7580

John J. Harnish, Pres./CEO

Totem Equipment & Supply, Inc. 2536 Commercial Dr. Anchorage, AK 99501 Phone: 907-276-2858 Fax: 907-258-4623

Mike Huston, VP

TrailerCraft | Freightliner of Alaska 1301 E. 64th Ave. Anchorage, AK 99518-1908 Phone: 907-563-3238 Fax: 907-561-4995

Lee McKenzie, Pres./Owner

Washington Crane & Hoist 651 E. 100th Ave., Unit B Anchorage, AK 99515 Phone: 907-336-6661 Fax: 907-336-6667

Mike Currie, VP

West-Mark Fairbanks Service Center 3050 Van Horn Rd. Fairbanks, AK 99709 Phone: 907-451-8265 Fax: 907-451-8273

Grant Smith, CEO

Yukon Equipment, Inc. 2020 E. Third Ave. Anchorage, AK 99501 Phone: 800-478-1541 Fax: 907-258-0169

Charles Klever, Interim President

aerinc4@alaska.net aer-inc.net

o.prestwick@cmiak.com cmiak.com

anc.sales@craigtaylorequipment.com craigtaylorequipment.com

info@deltaleasing.com deltaleasing.com

sales@eqdirect.com eqdirect.com

equipmentsourceinc.com

haltness.com

sfield@ncmachinery.com ncmachinery.com

sales@toteminc.com toteminc.com

sales@trailercraft.com trailercraft.com

SDick@washingtoncrane.com washingtoncrane.com

wwalker@west-mark.com west-mark.com

info@yukoneq.com yukoneq.com

Services 1985 1986

105 105

Industrial services.

1985 1985

105 105

Construction and mining equipment sales, rentals, service, and parts.

1954 1954

57 57

Factory authorized dealer for: Komatsu construction and mining, Doosan Bobcat loaders and excavators, John Deere commercial and lawn tractors, Dynapac compaction rollers, Fecom land clearing attachments and carriers. Providing sales, parts and service.

2002 2002

35 35

Specialized leasing of fleet trucks, SUVs, vans, & shuttle buses, as well as construction & mining equipment, oil & gas equipment. GM, Dodge & International warranty repair center. Alaskan-owned. Deadline driven. Results oriented. Anchorage/Kenai/Prudhoe Bay/Fairbanks/Remote Alaska.

1985 1985

4 1

Construction equipment sales, parts, rentals. Morooka all-terrain dump carriers.

2000 2000

55 35

We offer durable, Alaskan built industrial heaters, generator sets, triplex pumps, water pumps, trailers, enclosures, and more. Our manufactured products focus on supplying solutions for the oil, gas, and mining industries. We are also a proud Kubota Tractor dealer.

1987 1987

10 10

Equipment and tool rentals.

1776 1926

1,166 Cat machine sales, parts, service, and rental. Cat engines for marine, power generation, 265 truck, petroleum, and industrial applications. Sales and rental of Cat and other preferred brands of rental equipment and construction supplies.

1961 1961

20 20

Totem heaters, Frost Fighter heaters, Sure Flame heaters, Sany Excavators, Terex, Mustang, Rhino Sky Jack, Clemco, Wacker, MultiQuip, Honda, Alkota, Genie, Vector,Wyco, Weber,Wacker,Biljax,Blast-pro,Toro/Dingo, Munter heaters.

1969 1969

55 55

Parts, sales and service for trucks, tractors, trailers, transport equipment, snow plows and sanders.

1975 2008

7

Crane builders, crane design, new crane sales, new hoist sales, lifting equipment design and sales. Material handling solutions for industry, hoists, job cranes, work stations, chain falls, lever hoists, crane upgrades, crane maintenance, crane inspection, crane repair, hoist repair and crane parts.

2009 2009

210 14

Liquid transportation tank trailer repair.

1945 1945

45 45

Sales, service, parts, rental and lease equipment, including Case, Trail King, Elgin, Vactor, Oshkosh, Etnyre, Monroe, Trackless, Snow Dragon. Anchorage, Fairbanks and Wasilla locations. A subsidiary of Calista Corp.

March 2015 | www.akbizmag.com

Company

TOP EXECUTIVE

FOUNDED/ESTAB. AK

facebook.com/thegpsstore accupoint.com

Ace Supply, Inc. 2425 E. Fifth Ave. Anchorage, AK 99501 Phone: 907-277-4113 Fax: 907-277-4112

Ellis Smith Erick Smith, Sales Manager

Alaska Concrete Casting 5761 Concrete Way Juneau, AK 99801 Phone: 907-780-4225 Fax: 907-780-4230

Dave Hanna, Managing Member

Alaska Dreams, Inc. 2081 Van Horn Rd., #2 Fairbanks, AK 99701 Phone: 907-455-7712 Fax: 907-455-7713

Meini Huser, President

Alaska Hearth Products 8600 Airport Blvd.

Juneau, AK 99801 Phone: 907-789-1332 Fax: 907-500-7358

Larry Traeger, Owner

Alaska Industrial Hardware, Inc. 2192 Viking Dr. Anchorage, AK 99501 Phone: 907-276-7201 Fax: 907-258-3054

Mike Kangas, Pres./Gen. Mgr.

Alaska Roof Coatings 1210 G St. Anchorage, AK 99515 Phone: 907-952-0944

Tyler Moor, Owner

Alaska Rubber & Rigging Supply 5811 Old Seward Hwy. Anchorage, AK 99518-1479 Phone: 907-562-2200 Fax: 907-561-7600

Janeece Higgins, Pres.

March 2015 | www.akbizmag.com

WORLDWIDE\AK EMPLOYEES

Services

SERVICES

1986 1986

30 30

Sales, service, rent; Trimble & Garmin GPS equipment. Authorized dealer & repair.

Construction, Geospatial, Heavy Highway, Machine Control, Fleet management. Survey & construction supply. Satellite Phones; Marine & Recreational GPS.

1962 1962

5 5

Petroleum handling equipment for Commercial, Industrial and Aviation Industries.

Pumps, Meters, Reels, Filters, Tank Monitors as well as Fuel Testing Equipment.

2004 2004

4 4

Full service precast concrete supplier, furnishing utility, traffic and retaining wall products as well as custom casting, building panels and foundation systems. Rebar fabrication and supply house stocking 20' and 40' bar in #2 through #10 bar. Detailing, bending and cage tying services.

1994 1994

30 30

Design, sales and construction for fabric covered and pre-engineered metal buildings.

1984 1984

7 7

Retail and service of pellet, wood, gas, oil stoves and inserts. Pellet fuel.

1959 1959

200 200

Erick@akpetro.com

alaskaconcretecasting@gci.net

sales@alaskadreamsinc.com alaskadreamsinc.com

ahp@gci.net alaskahearthproducts.com

info@aih.com aih.com

alaskaroofcoatings.com

info@alaskarubber.com alaskarubber.com

2013 2013

1981 1981

Industrial/Constructions supplies; power tools; hand tools; safety; fasteners; maintenance and janitorial; material handling; outerwear.

15-20 Spray on silicone membrane coating for your flat, low-rise or metal roofing.

15-20

60

AK's largest supplier of hydraulic & industrial hose assemblies & associated products; specialize in fabrication/testing of wire rope, chain & synthetic slings for overhead lifting & rigging; supply & service fueling, lubrication & pressure washing equip, hydraulic pumps, motors, cylinders & valves.

COMMERCIAL & INDUSTRIAL SUPPLIERS

Accupoint Inc-The GPS Store 7125 Old Seward Hwy., Suite 100 Anchorage, AK 99518-2282 Phone: 907-522-1600 Fax: 907-522-1640

Top Executive

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

COMPANY

79

COMMERCIAL & INDUSTRIAL SUPPLIERS

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

80

Company

Top Executive

Alcan Forest Products LP PO Box 23105 Ketchikan, AK 99901 Phone: 907-225-1710 Fax: 907-225-1709

Eric Nichols, Partner

Altrol Heating, Cooling & Plumbing 2295 Van Horn Rd. Fairbanks, AK 99701 Phone: 907-452-8680 Fax: 907-452-6778

David Bridges, Pres./Gen. Mgr.

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

Dale Morman, Pres.

Anchorage True Value Hardware 9001 Jewel Lake Rd., # 5 Anchorage, AK 99502 Phone: 907-248-9211 Fax: 907-248-6976

Tim Craig

Architectural Supply Co., Inc. 3699 Springer St. Anchorage, AK 99503 Phone: 907-561-1919 Fax: 907-562-5540

Jennifer Mattingly, AHC, Pres.

Arctic Controls, Inc. 1120 E. Fifth Ave. Anchorage, AK 99501 Phone: 907-277-7555 Fax: 907-277-9295

Scott Stewart, Pres.

ATCO Structures & Logistics Ltd. 425 G St. Anchorage, AK 99501 Phone: 907-677-6983 Fax: 907-677-6984

George Lidgett, President

Aurora Construction Supply, Inc. PO Box 83569 Fairbanks, AK 99708 Phone: 907-452-4463 Fax: 907-456-3414

R L "Dick" Engebretson, Pres.

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

Diane Shaishnikoff, Owner/Mgr.

Builders Choice, Inc. 351 E. 104th Ave. Anchorage, AK 99515 Phone: 907-522-3214 Fax: 907-522-3216

Mark Larson, Pres.

Cabinet Fever, Inc. 8220 Petersburg St., Suite 1 Anchorage, AK 99507 Phone: 907-349-4871 Fax: 907-349-4891

Kurt Echols, Pres.

Carberry Associates PO Box 242563 Anchorage, AK 99524 Phone: 907-227-1598 Fax: 907-345-2497

Tom Carberry, Owner

Door Systems of Alaska, Inc. 18727 Old Glenn Hwy. Chugiak, AK 99567 Phone: 907-688-3367 Fax: 907-688-3378

Beth Bergh, Owner

Equipment Source, Inc. 1919 Van Horn Rd. Fairbanks, AK 99701 Phone: 888-868-9049 Fax: 907-458-7180

Troy Lockes, General Manager

Glass Sash & Door Supply 500 E. Ship Creek Ave. Anchorage, AK 99501 Phone: 907-276-1655 Fax: 907-276-6712

Tom Dooley AHC/CDC, VP

Hayden Electric Motors, Inc. 4191 Old Seward Hwy. Anchorage, AK 99503 Phone: 907-561-1073 Fax: 907-561-5867

Roger Saunders, VP/Gen. Mgr.

COMPANY

TOP EXECUTIVE

FOUNDED/ESTAB. AK

alcantimber@kpunet.net transpacfibre.com

dave@altrolinc.com altrolinc.com

anchsand@anchsand.com anchsand.com

anchoragehardware@truevalue.net truevalue.com

Jennifer@archialaska.com

customerservice@arcticcouriers.com arcticcontrols.com

atco@atcosl.com atcosl.com

WORLDWIDE\AK EMPLOYEES

Services

SERVICES

2002 2002

14 3

Timber procurement and sales.

1982 1982

30 30

Heating, ventilation, air conditioning, plumbing, sheet metal, and refrigeration contractor and service company.

1938 1938

100 100

Anchorage Sand & Gravel has been supplying building materials to Alaska since 1938.

We specialize in building materials relating to concrete and aggregates, including landscaping products, rebar, block, and precast. Our showroom off of Klatt Road in south Anchorage is open to to the public.

1949 1949

20 20

Traditional retail hardware store with core departments: tools, hardware, plumbing, electrical, paint and seasonal products.

1977 1977

8 8

Supplier of Division 8 & 10-commercial doors, frames, hardware, toilet partitions, and toilet accessories.

1985 1985

4 4

Arctic Controls Inc. is Alaska's leading expert in valves, flow meters, actuators, instrumentation, and process controls for commercial oil, gas, and water management.

Providing professional expertise for all commercial applications and can assist you with estimates and recommendations.

1947 2009

3,000 ATCO Structures & Logistics offers complete infrastructure solutions to customers 2 worldwide, including remote work force housing, portable offices and trailers, innovative modular facilities, construction, site support services, operations support, catering and noise reduction technologies.

1978 1984

2 2

Specialty items in Division 10.

2004 2004

5 5

Native owned and operated business specializing in the production and placement of high-quality rock materials, as well as providing heavy equipment rentals and services for any type of small or large construction project, including airports, boat harbors and road building projects.

1996 1996

285 210

Manufacturer of modular buildings, wood and steel floor and roof trusses, full service lumber yard.

1999 1999

8 8

Commercial & residential custom cabinet shop producing high-end custom kitchen cabinets, counter tops & installation as well as custom furniture, entertainment centers, reception desks, medical, dental & retail casework, store fixtures. Also carry two lines of manufactured residential cabinets.

1994 1994

1 1

Manufactures REP for commercial building products.

2000 2000

12 12

Commercial and industrial doors, rolling doors, grilles, shutter. Fire-rated rolling door and accordion fire-rated side folding partitions. Flat wall partitions, Accordion Partitions, SkyFold room separation. Dock equipment. Hangar doors. Blast-resistant doors.

2000 2000

55 35

We offer durable, Alaskan built industrial heaters, generator sets, triplex pumps, water pumps, trailers, enclosures, and more. Our manufactured products focus on supplying solutions for the oil, gas, and mining industries. We are also a proud Kubota Tractor dealer.

1952 1952

5 5

Builders hardware, commercial wood and steel doors and frames, toilet partitions and accessories.

1959 1959

12 12

Sales, service and rewinding of electric motors and generators and associated equipment. On-site service calls. Re-certification of explosion-proof motors.

Hi-Tec Professional Autobody Supply, Inc. Bert Hubbard, President 2375 E. 63rd Ave. Anchorage, AK 99507 mike.mcgovney@gmail.com Phone: 907-562-6567 Fax: 907-563-9601 hitecautopaint.com

1989 1989

20 20

Supply automotive, aircraft and industrial paint and all the related supplies.

Independent Lift Truck of Alaska 1200 E. 70th Ave. Anchorage, AK 99518 Phone: 907-344-3383 Fax: 907-344-8366

1982 1982

22 22

Authorized Dealers and repair centers for Advance floor care machines. CAT, Jungheinrich, Mitsubishi, Manitou, Maximal, Bendi and DREXEL forklifts; GEHL and Wacker Neuson construction equipment. Full parts, sales and service for most all makes and models of equipment.

March 2015 | www.akbizmag.com

aurorasupply@gci.net

Dianeshai@hotmail.com beringshairock.com

sandi@builderschoice.us.com builderschoice.us.com

kurt@cabinetfever.net cabinetfever.net

carberryassociates@acsalaska.net

beth@doorsystemsak.com doorsystemsak.com

equipmentsourceinc.com

info@glasssashanddoor.com glasssashanddoor.com

ask@hayden-ak.com hayden-ak.Com

Wayne Dick, Pres. barry.ilt@gci.net iltalaska.com

Lifewater Engineering Company 1936 Donald Ave. Fairbanks, AK 99701 Phone: 907-458-7024 Fax: 907-458-7025

Bob Tsigonis, President/PE

Magic Metals Inc. 530 E. Steel Lp. Palmer, AK 99645 Phone: 907-746-7800 Fax: 907-746-7802

Joan Tolstrup, Pres.

Motion Industries Inc. (Anchorage) 611 E. Int'l Airport Rd. Anchorage, AK 99518 Phone: 907-563-5565 Fax: 907-563-5536

Matt Bailey, Anch. Branch Mgr.

Motion Industries Inc. (Fairbanks) 1895 Van Horn Rd., Unit A Fairbanks, AK 99701 Phone: 907-452-4488 Fax: 907-456-8840

Brad Deweese, Fairbanks Branch Mgr.

N C Machinery 6450 Arctic Blvd.

Anchorage, AK 99518 Phone: 907-786-7500 Fax: 907-786-7580

John Harnish, Pres./CEO

Northland Wood Products 4000 S. Cushman St. Fairbanks, AK 99701 Phone: 907-452-4000 Fax: 907-452-1391

Jason Knoles, Sales/Ops Mgr.

Northland Wood Products 1510 E. 68th Ave. Anchorage, AK 99507 Phone: 907-452-4000 Fax: 907-452-1391

James Enochs, Anchorage Mgr.

Polar Supply Co. 300 E. 54th Ave. Anchorage, AK 99518-1230 Phone: 907-563-5000 Fax: 907-562-7001

Ed Waite, Sr. VP

Puget Sound Pipe & Supply Co. 2120 Spar Ave. Anchorage, AK 99501 Phone: 907-277-7473 Fax: 907-277-9656

Scott English, Alaska Div. Mgr.

TOP EXECUTIVE

FOUNDED/ESTAB. AK

Bob@LifewaterEngineering.com LifewaterEngineering.com

magicmetals@mtaonline.net magicmetalsinc.com

MiMarketing@motionindustries.com motionindustries.com

MiMarketing@motionindustries.com motionindustries.com

sfield@ncmachinery.com ncmachinery.com

sales@northlandwood.com northlandwood.com

northlandwood@acsalaska.net northlandwood.com

dshooner@polarsupply.com polarsupply.com

senglish@pspipe.com pugetpipe.com

Services

WORLDWIDE\AK EMPLOYEES

SERVICES

1998 1998

10 10

Manufacture and designer of sewage treatment and drinking water treatment plants, commercial and residential. Specializing in design, permitting, fabrication, training, and operation. Plants built to work in the most extreme environments and most remote places. Plastic tank fabrication.

1990 1990

5 5

Magic Metals, Inc. manufactures a variety of roofing and architectural metal products as well as custom trim and accessories. We are open to retail and wholesale customers and offer great customer service and quick turn around. Perforation on panels and trim is available.

1970 2010

6,468 A leading distributor of industrial maintenance, repair and operation (MRO) replacement 8 parts (over 5.2 million parts), including bearings, power transmission, hydraulic/ pneumatic components, linear, hydraulic/industrial hose, industrial and safety supplies, seals, process pumps & material handling.

1970 2010

6,468 A leading distributor of industrial maintenance, repair and operations (MRO) 4 replacement parts (over 5.2 million parts), including bearings, power transmission, hydraulic/pneumatic components, linear, hydraulic/indus. hose, indus. & safety supplies, process pumps, seals & material handling.

1776 1926

1,166 Cat machine sales, parts, service, and rental. Cat engines for marine, power generation, 265 truck, petroleum, and industrial applications. Sales and rental of Cat and other preferred brands of rental equipment and construction supplies.

1965 1965

38 38

Building supplier. Produce WWPA-graded surfaced lumber, rough lumber, large lumber and house logs. Stocks materials to fulfill all building needs.

1965 1965

40 40

Building supplier. Produce WWPA-graded surfaced lumber, rough lumber, large timber and house logs. Stocks materials to fulfill all building needs from the foundation piers to the roof screws.

1985 1985

1984 1984

10,000 Polar Supply is Alaska's leading supplier of industrial products and construction 700 materials. Putting customer service first, Polar has consistently delivered for clients large and small. A Division of Spenard Builders Supply with locations in Anchorage, Fairbanks and Kenai.

34

Alaska's largest supplier of pipe, valves and fittings to Alaska oilfields. Two locations in Alaska: Anchorage and Kenai.

COMMERCIAL & INDUSTRIAL SUPPLIERS

Top Executive

COMPANY

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

Company

Nimble as a Mountain Goat AGILE … ADAPTABLE … ABLE

Span Alaska’s flexibility and experience have allowed us to provide our customers with custom shipping solutions for more than 30 years.

SHIPPING TO ALASKA? CALL SPAN ALASKA.

1.800.257.7726

March 2015 | www.akbizmag.com

•

w w w. s pa n a l a s k a . c o m

81

COMMERCIAL & INDUSTRIAL SUPPLIERS

ALASKA BUSINESS MONTHLY | 2015 CONSTRUCTION DIRECTORY

82

Company

Top Executive

Specialty Products, Inc. 1425 Spar Ave. Anchorage, AK 99501 Phone: 907-276-7932 Fax: 907-279-2749

Mike Brunke, Alaska Manager

Spenard Builders Supply, Inc. 300 E. 54th Ave., Suite 201 Anchorage, AK 99518 Phone: 907-261-9105 Fax: 907-261-9142

Ed Waite, Senior VP

Statewide Door & Glass 221 E. Ship Creek Ave. Anchorage, AK 99501 Phone: 907-562-2074 Fax: 907-562-1803

Mike Hammer, Pres.

STEELFAB 2132 Railroad Ave. Anchorage, AK 99501 Phone: 907-276-4303 Fax: 907-276-3448

Richard Faulkner, Pres.

Surveyors Exchange Co. 3630 Springer St. Anchorage, AK 99503 Phone: 907-561-6501 Fax: 907-561-6525

David Wilmarth, Owner

Swagelok Alaska 6160 Tuttle Pl. Anchorage, AK 99507 Phone: 907-563-5630 Fax: 907-563-4721

Brenton Burbank, Dir. AK Ops

Totem Equipment & Supply, Inc. 2536 Commercial Dr. Anchorage, AK 99501 Phone: 907-276-2858 Fax: 907-258-4623

Mike Huston, VP

W.W. Grainger 6240 B St. Anchorage, AK 99518 Phone: 907-562-5400 Fax: 907-562-2072

David LaBarre, AK Market Mgr.

Washington Crane & Hoist 651 E. 100th Ave., Unit B Anchorage, AK 99515 Phone: 907-336-6661 Fax: 907-336-6667

Mike Currie, VP

COMPANY

TOP EXECUTIVE

FOUNDED/ESTAB. AK

mikeb@specialty-products.com specialty-products.com

facebook sbsalaska.com

hammer.statewide@gmail.com Statewidedoors.com

steelfabak.com

garza@tse-ak.com satellitephonesak.com

info@alaska.swagelok.com swagelok.com/Alaska

sales@toteminc.com toteminc.com

david.labarre@grainger.com grainger.com

SDick@washingtoncrane.com washingtoncrane.com

1974 1974

1952 1952

WORLDWIDE\AK EMPLOYEES

44 4

Services

SERVICES

Manufacturer and distributor of polyurethane spray and pour foams, polyurea elastomer coatings, and application equipment. Solutions for: oil and gas, mining, wastewater, building insulation, marine, and many other industries. Year-round 24-7 tech support, classroom and offsite training.

10,000 Provides a full line of building materials and home-improvement products to fill the needs 700 of residential and commercial contractors.

1992 1992

32 32

Commercial aluminum curtain-wall, storefront, and glass contracting. Architectural glass doors, handrails, skylights and door hardware. Installation and maintenance of automatic sliding/swinging door systems. Design, sales, and service for card reader access systems. Architectural panels.

1948 1948

48 48

STEELFAB-Steel Source for Alaska. Fully-integrated steel fabricator, service center, and coatings facility with the largest volume capacity in the state. Located in Ship Creek since 1948.

1969 1969

15 15

Satellite phone and two-way radio specialists, auto-desk software, surveying instruments, sales, rentals and service.

1965 1965

54 8

Instrumentation and fluid system components. Authorized Swagelok distributor for Alaska.

1961 1961

20 20

Totem heaters, Frost Fighter heaters, Sure Flame heaters, Sany Excavators, Terex, Mustang, Rhino Sky Jack, Clemco, Wacker, MultiQuip, Honda, Alkota, Genie, Vector,Wyco, Weber,Wacker,Biljax,Blast-pro,Toro/Dingo, Munter heaters.

1927 1989

1975 2008

22,000 North Americaﾃ不 leading broad-line supplier of maintenance, repair and operating (MRO) 55 products, with an expanding global presence within 22 countries.

7

Crane builders, crane design, new crane sales, new hoist sales, lifting equipment design and sales. Material handling solutions for industry, hoists, job cranes, work stations, chain falls, lever hoists, crane upgrades, crane maintenance, crane inspection, crane repair, hoist repair and crane parts.

March 2015 | www.akbizmag.com

TRANSPORTATION

Western Alaska Deep-Water Port Potential Nome, Port Clarence, Cape Blossom all viable locations

By Julie Stricker

I

n the 1800s, the western coast of Alaska was a relatively busy place during the ice-free months as hundreds of whaling ships sailed through the Bering Strait in pursuit of whales. Explorers searching for the Northwest Passage made their way along the coast, while the Western Union Telegraph Expedition’s Scientific Corps established at camp at Port Clarence on the Seward Peninsula. The gold rushes in the Klondike, Interior Alaska, and Nome brought hordes of stampeders to the region.

In the decades since then, Alaska’s western coast has been quiet. Only a handful of small communities dot the coastline, which stretches more than 3,600 miles from Bethel to the Canadian border. Compare that with the US East Coast, which measures a mere 2,069 miles from Maine to Key West.

The next decades may bring significant change as eyes turn toward the Arctic, which is becoming more accessible for shipping, oil and mineral exploration, and tourism as the climate warms and the ice pack melts. Currently, only limited infrastructure is available, but officials on the federal, state, and local levels are advancing a number of port development plans, among them projects in Nome, Port Clarence, and Kotzebue.

The port projects would meet several needs in the region, says Michael Lushkin, a ports and harbor engineer with the Alaska Department of Transportation and Public Facilities (DOT&PF).

“They start from the very high level of maintaining US sovereignty in the Arctic to economic needs, Sexauer search and rescue, protecting the borders—land, air, and sea borders—of the United States,” Lushkin says.

Deep-Draft Vessels Need Deep-Water Ports Chief among the needs is a deep-water port. Deep-draft vessels can tie up in Anchorage, Seward, Valdez, Kodiak, Unalaska, and Homer but nowhere near the communities along Alaska’s Arctic coastline. The US Corps of Engineers has been looking for solutions for several years.

“We looked at several sites along Western Alaska as part of this joint project, all the way from the Canadian/US border 84

down to St. Matthews Island, up to and including Bethel. We covered quite a large area,” Lushkin says. “We concentrated in the Nome, Port Clarence, and Teller area for the first part.

There are a lot of things happening.”

The Corps published a study in November 2013 noting, “Increased vessel traffic coupled with limited marine infrastructure along Alaska’s Western and Northern shores poses risks for accidents and incidents, increases response times for Search and Rescue, and requires international coordination.”

The Alaska Deep-Draft Arctic Ports Navigation Feasibility Study of Alaska and the New Maritime Arctic looked at fourteen sites along the coastline during the three-year study. Although Corps recommends infrastructure improvements at all of them, it singled out the city of Nome and Port Clarence to the northwest for further study. Cape Blossom, outside Kotzebue, is the site of another proposed deep-water port.

The Corps of Engineers plans to release its findings in the first quarter of 2015, says Bruce Sexauer, chief of the Civil Works branch of the Alaska Corps of Engineers.

However, he says the Corps has tentatively approved a proposal that focuses on the facilities in Nome.

“Nome already has an existing port structure that can be expanded upon,” he says. “It has a major airport. It has the regional hospital and an expanding fuel tank system. It’s just already wellsuited and well-fit for a port facility.”

Nome is the regional hub for the Seward Peninsula and western Alaska. Fuel and supplies for villages from the Arctic coast to villages along the lower Yukon River go through the one-time gold boomtown.

The Corps is working with the City of Nome on the project, which would include dredging the harbor to a depth of minus 28 feet in mean low water and extending the causeway 2,150 feet.

The port would be able to provide support for resource extraction in the region and support the needs of the Alaska Native communities, such as search and rescue. The port will be able to accommodate line haul fuel barges, ice breakers, cargo barges, tankers, Coast Guard cutters, NOAA research vessels, landing craft, and tugs, according to the study.

Alaska Business Monthly | March 2015 www.akbizmag.com

SOURCE: NOAA

www.akbizmag.com

March 2015 | Alaska Business Monthly

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“It would be a safe port for a variety of vessels,” Sexauer says.

The plan is still in its early stages and has not gone through final approval, Sexauer cautions. “It is the tentatively selected plan that we’re putting forth for everyone to review and provide us comments on.”

The improvements tie in with Nome’s long-term plans to become a major international port. The city requested $150 million from the state Legislature in Ganley 2012 to design and build a deep-draft port. While that proposal was not funded, several other projects are underway.

The City of Nome is planning to add additional dock space to the port this summer. City officials say number of vessels working in the area continues to increase, and, with the port operating only during its four- to five-month ice-free window, congestion has become a problem.

In a 2014 request to the state for $3 million in funding to complete the project, city officials note, “vessel calls at the Port have increased significantly in the past five years, with the growing interest in the Arctic, as well as regional economic development through resource extraction, transportation facility improvements, fisheries expansion, and a steady growth in local/regional services.”

Port Clarence Bering Straits Native Corporation, headquartered in Nome, wants to develop the Port Clarence site seventy miles northwest of Nome on the Seward Peninsula. Also referred to as

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Cape Spencer and Point Spencer, which is the tip of the spit enclosing the natural harbor, the site was used during the whaling era as a place for whaling vessels to overwinter or find safe harbor in a storm.

In 1850-1852, vessels searching for the lost Franklin expedition over-wintered in Port Clarence. It later housed a small Coast Guard LORAN station, which was decommissioned in 2010.

The site is one of the first areas selected by BSNC under the Alaska Native Claims Settlement Act, says President and CEO Gail Schubert, and has been a focus for the corporation for the past five years.

“The growing potential of the Arctic is a high priority for us,” she says. “I believe that in addition to supporting oil and gas industry needs, Port Clarence is going to positively contribute to sustainable economic growth in the BSNC region.”

Matt Ganley, vice president of resources and external affairs for Bering Straits, says the corporation is trying to expedite the conveyance by having it approved by Congress instead of going through the lengthy Bureau of Land Management process.

Alaska Representative Don Young introduced House Resolution 4668 in May 2014, which was passed by the House Natural Resources Committee in November 2014.

“We are desperately in need of development in the region, particularly as activity in the Arctic continues to increase,” Young says. “This bill establishes a path forward for a variety of necessary tasks and missions, including search and rescue operations, shipping safety, economic development, oil spill

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SERVING ALASKA

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SOURCE: US Army Corps of Engineers

prevention and response, port development and refuge, arctic research, and maritime law enforcement.”

The bill would convey 2,381 acres of land at Point Spencer to BSNC, as well as reserving 140 acres for the US Coast Guard and 180 acres to the state of Alaska, including an existing airstrip and right-of-way for future development of a road from the airstrip to the mainland.

Port Clarence is ideally located to take advantage of expected increases in vessel traffic through the Bering Strait, Ganley says.

“It’s the only real deepwater refuge on the western coast,” he says. The long spit that curls around the natural harbor is relatively low land, but it’s high enough that it blocks the storms that blow up from the south and southwest. Its location south of the Arctic Circle also gives it a little more ice-free time than potential port locations to the north at Kotzebue.

The port is located near where a number of natural resource and infrastructure developments are expected to come together in the coming years: a high-speed undersea fiber-optic cable that will link Europe and Asia via the Northwest Passage, a world-class graphite mine on the Seward Peninsula, and a potential geothermal energy development at Pilgrim Hot Springs.

In a letter to the National Telecommunications and Information Administration, unrelated to the Arctic Fibre fiberoptic cable, Ganley notes BSNC’s proximity to the Arctic and its preparations for the developments expected in the region.

“BSNC is in the process of developing a deep water port that will be a staging base not only for US Coast Guard activities but also for the private sector that has already expressed

an interest in Arctic oil and gas and transshipment projects,” the letter notes. “Once the land is conveyed to BSNC, we will be working with the State of Alaska and other stakeholders to develop important infrastructure at Point Spencer.”

The port will require expanded communication capacity “in order to satisfy the needs of the Coast Guard, the State of Alaska, and private developers and to ensure the safety of all those who transit the Bering Sea on the way north.”

The Coast Guard has proposed a 4.6-mile-wide shipping route through the Bering Strait, sort of a two-lane highway for vessels, in response to the doubling of ship traffic since 2008. In 2014, ves-

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sels transited the strait 440 times. Ganley says much of the shipping is coming via the Northern Sea Route over Russia, not the Northwest Passage. The Russians are also looking to develop infrastructure on their Arctic coast, which could compete with Alaska projects.

As it stands, even speculation on increased shipping and current development in the area, however, won’t be enough to sustain a port facility at Port Clarence, Ganley says.

“Oil and gas development would make the infrastructure work,” Ganley says.

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“Short of the oil and gas industry, the economic model for Port Clarence doesn’t work very well.”

—Matt Ganley Vice President of Resources and External Affairs, Bering Straits Native Corporation

“Short of the oil and gas industry, the economic model for Port Clarence doesn’t work very well.”

BSNC released its own economic feasibility analysis of the port in February 2014, which stated development of the port would be feasible if it was devel-

oped in conjunction with oil and gas development on Alaska’s Outer Continental Shelf. It could be developed with private investment, and BSNC says several entities had contacted it and professed interest in partnerships to finance Port Clarence development.

Ganley says that if oil and gas exploration were to get underway in 2015 in the Beaufort and Chukchi seas and the land conveyance to BSNC completed, a port facility could be in place within a couple of years. President Obama’s late January announcement closing 9.8 million acres in the Arctic Ocean to offshore oil development doesn’t affect current leases held by Shell, which indicated in a statement it was looking forward to future drilling programs in the region.

Outside of oil and gas, a major deepwater port isn’t cost-effective, but that doesn’t mean facilities shouldn’t be developed in the area to handle other needs, Ganley says.

A high-grade graphite deposit east of Port Clarence under development

by Vancouver-based Graphite One Resources could produce fifty thousand tons of graphite annually.

“That’s not a lot for shipping,” he says.

However, the graphite mine is one piece of an economic puzzle that could add up over time to support a port facility at Port Clarence.

“A lot of these things are going to be developed in tandem and there’s going to be a lot of speculation,” he says.

“I don’t say speculation in a bad way, it’s just mining. Right now we have a world-class deposit. It’s great it can be mined. Is it economical? I don’t know.”

Ganley says the geothermal project at Pilgrim Hot Springs is his favorite development project in the region. The springs, which were purchased from the Fairbanks Catholic Diocese by a consortium of regional groups, has a lot of potential. It could provide power to Nome or possibly Port Clarence. A purchase agreement has already been reached with the Nome utility, but if a power line to either location proves too

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costly, the geothermal springs could be used locally to grow fresh produce onsite.

Cape Blossom Farther north, the port proposal outside Kotzebue would be an economic boon to a region that has some of the highest energy costs in the state.

Kotzebue is located on a spit in Kotzebue Sound, which is relatively shallow, says Derek Martin, Kotzebue city manager. A barge with a nineteen-foot draft would need at least twenty-five feet of water to maneuver safely.

“There’s an entrance channel into Kotzebue that’s limited to about 5.5 to 6 foot of depth,” Martin says. Large barges, such as those that supply bulk fuel for Kotzebue and other villages in the region, have to anchor fifteen to twenty miles outside of Kotzebue and lighter the freight in on smaller vessels.

“That is impacting the overall cost of goods, including fuel, to Kotzebue as well as the other villages,” Martin says. “The lack of a good deepwater port or port infrastructure is having a negative impact on Kotzebue and all of western Alaska.”

Kotzebue is working with the Corps and DOT&PF to design and build a deep-water port at Cape Blossom, ten miles south of Kotzebue. An environmental assessment of an eleven-mile, $67 million road from Kotzebue to the port site is underway. Martin says he’s working with DOT&PF to finish the road design this summer and hopes to have a bid package out in early fall.

The second phase of the project is construction of oil storage facilities at the port and a pipeline to Kotzebue. That is estimated to cost $32 million. Construction of the port itself

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would be a third phase. Overall, the project would cost $132 million, according to the city’s Transportation Investment Generating Economic Recovery grant proposal. It notes the port would save more than $1 million annually in fuel costs by removing the need to lighter the fuel.

Martin says Kotzebue is strategically located between the Bering and Chukchi seas. “We could become an important safe harbor, a port of refuge for some of the smaller vessels traveling through the Bering Straits.”

As an example, he points to an incident in 2012 in which a passenger ship was forced to anchor in Kotzebue Sound to offload passengers because of inclement weather in Norton Sound to the south. Several hundred passengers had to come in to Kotzebue from the ship on small boats.

“It highlighted a need for port infrastructure here,” Martin says. “It also demonstrated that Kotzebue Sound could be used as a port of refuge.”

Although Kotzebue’s primary goal is to lower the cost of living in the region by lowering the price of fuel and goods, ancillary goals include safe port facilities for the fishing fleet, marine, commercial, and international transportation, and enhanced infrastructure for national security, specifically the Coast Guard.

Martin says some of those needs may be well in the future, but he’d rather have the port built sooner, rather than “sit here waiting for the next economic crash to occur, and be sitting here thinking we’d really like to a have a port.” R Julie Stricker is a journalist living near Fairbanks.

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ENVIRONMENTAL SERVICES

© Nome Joint Utility

City workers in Nome replacing water and sewer lines use wide and deep trenches, geotextiles, and insulated pipes.

Water & Wastewater: W

Nome’s Aging System

Funding needed for more permanent solution than patchwork responses

By Rindi White 90

ater and wastewater are some of the most expensive utilities to provide and also the most vital to keeping a community healthy.

The American Council for an Energy-Efficient Economy says municipal water and wastewater treatment systems “are among the most energy-intensive facilities owned and operated by local governments, accounting for about 35 percent of energy used by municipalities.”

In Alaska, costs can be even higher than those national averages, especially in small rural and remote communities where groundwater is brackish or soils unsuitable for building wastewater treatment facilities.

But what’s happening with water and wastewater in Alaska’s larger communities? Are water utilities much different than Outside? What are the issues facing these utility providers?

In this ongoing series, Alaska Business Monthly readers can learn about utilities across Alaska and find out how each community is preparing for the future.

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he historic gold-rush town of Nome has some of the best-tasting water in the state, Nome Joint Utility System Field Superintendent Toby Schield says, but it’s battling outdated piping that, paired with the permafrost lurking below the surface of the ground, is causing real problems for the city.

Nome won the Alaska Rural Water Association’s large water system of the year award at the group’s 2014 annual conference in October. The award is given yearly to recognize rural water systems for outstanding performance and professionalism.

But about a third of the roughly twenty-seven miles of piping that carries water and wastewater for about 3,600 Nome residents—1,100 customers—is aging and in need of replacement. When insulated piping installed in 1982 and 1984 was buried, the practice at the time didn’t include digging out the permafrost layer and replacing it with thaw-stable material. Along the length of the ‘80s era piping, the permafrost has thawed and the pipes are

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utility system, Schield says. The subdivision was previously served by hauled water and pumped wastewater, but about twenty-five years ago the subdivision was annexed into the city. That’s the most recent major expansion the city has had, he says. Most projects in the past two decades have focused on replacing failing utilidors, or walk-through shafts, and the older direct-bury piping, which is simply pipe buried in the ground and not enclosed in a shaft, like a utilidor.

City workers in Nome replacing water and sewer lines. © Nome Joint Utility

settling. Leaks—on both the water and wastewater lines—have occurred as a result, Schield says. When leaks happen, the situation can get worse fast, because the water is piped warm to keep it from freezing, and septic waste is also warm, causing permafrost thawing to happen faster.

The city responds quickly to leaks or breaks, but city leaders hope to get funding for a more permanent solution than the patchwork response current funding levels allow.

The city has replaced roughly half of the fifty-five thousand feet of sewer and water line installed in the 1980s with Arctic pipe of an improved design. It has a corrugated jacket and additional insulation surrounding an interior, carrier pipe.

Schield says continuing the replacement effort is presently on hold because water and wastewater funding has nearly dried up, and the city can’t afford to replace the system without grant assistance.

“We applied for various funding sources, including matching grants through DEC [the state Department of Environmental Conservation],” says John Handeland, general manager of Nome Joint Utility Service System.

“Despite our applications, the DEC Municipal Matching Grant Program has been severely chopped and we’re not on the funding list,” he says. “With the status of the state’s own budget woes, there is likely no money coming forth in that program this year.”

Handeland says both the water and wastewater piping systems are currently performing well, with no major leaks. If leaks crop up, he says the city www.akbizmag.com

will rely on its limited maintenance budget to respond.

“We will certainly do repairs to keep the system functioning,” he says. “But, it is a patchwork approach and does not address the long-term reliability of the system.”

Dual-Purpose Drinking Water Nome residents receive their drinking water from three wells drilled in 2000 on Anvil Mountain, about four miles from the city.

“Our water is very pristine—it’s probably some of the best water in the state,” Schield says.

The water is disinfected, he says, and the city adds fluoride. After being treated, the water flows by gravity feed to a 1 million gallon drinking water storage tank.

It’s then piped into the city power plant, where it circulates and cools the generators used to provide power to the city.

Using drinking water to cool the generators has the added benefit of heating the water, so it’s piped back out to customers at temperatures of between forty-eight and fifty-two degrees in an effort to keep lines from freezing up in the subarctic environment.

Schield says the water then goes through a pump house, where it’s pressurized and circulated throughout town. On the city’s north end is another 1 million gallon water reservoir and another pump house, where water is pressurized again and sent out to Norton Sound Regional Hospital and to the roughly seventy-home subdivision, Icy View, about two miles from the city.

The subdivision and the hospital are the most recent additions to the city’s

Wastewater Treatment—a Simple Approach Nome employs a very simple water treatment process that Schield says that works well for their roughly 3,600 residents.

Wastewater flows from customers to nine different lift stations around the city, each equipped with grinder pumps to chew up solids and some with baskets where solids are collected for later removal. The lift stations direct the waste toward a main lift station and then out to large open-air lagoons for final treatment.

The two lagoons each measure 425 feet by 125 feet, about 100 feet longer but more narrow than a football field. Each can hold 4.27 million gallons, Schield says.

Visitors to Nome have likely passed the city’s treatment plant—the main lift station that all the waste flows to—without even realizing it; it’s located about a block and a half from the Iditarod finish line on River Street, Schield says.

After nearly two weeks of retention and aeration treatment in the lagoons, the wastewater flows out to the city’s outfall, which extends about 2,600 feet offshore in Norton Sound. The city semi-annually tests the outfall and the surrounding mixing zone to be sure that tested elements, such as levels of biological oxygen demand (or dissolved oxygen), fecal coliform, and suspended solids stay within the range specified by the state Department of Environmental Conservation.

The city must also keep its maximum per-day discharge under the 846,000 gallons allowed by its operating permit.

How does the city test the water a half-mile from shore? Schield says Nome Joint Utility workers use a city rescue boat to collect water samples at the outfall and in the mixing zone.

Unless it’s winter, of course, when city workers simply walk or snowmachine out on the ice and collect it.

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With higher gold prices and more ship traffic due to warming water and more ice-free days, Nome has seen a dramatic increase in gold dredging activity and also in cruise ship visits in recent years. Schield says the city is seeing between six and eight cruise ships a year—smaller ships than the enormous cruisers that typically travel the Inside Passage. The cruise ships regularly fill their water tanks in Nome, he says, but the city doesn’t accept ship waste.

Although the influx of gold miners during the summer increases the city’s population slightly, Schield says daily water use stays relatively the same, as many year-round residents spend time in the summer out of town at fish camps.

“It evens out with people going out of town to camps,” he says.

Piping Problem Linked To Pipe-Laying Technique When state and federal funding for water and sewer projects was more readily available, Schield says the city was making real headway in replacing the fifty-five thousand feet of failing water and sewer line installed in the 1980s.

Given another five to seven years of funding, he says, all the dilapidated utilidors and old direct-bury piping would have been replaced with newer materials and installed using the latest materials, techniques, and methods for installing utilities in the Arctic.

Funding is currently elusive, but Schield says the city has one project designed and ready to go, should money become available. The project would replace piping in the most problematic area in the city, Kings Way. Schield says some of the sewer lines in that area have settled and water can pool and freeze in the line, so city workers must keep them jetted. The initial phase of the project would cost an estimated $5.5 million, which has been the typical cost of annual infrastructure replacements.

Part of the reason for the high cost of pipe replacement is due to the city’s new approach to sewer and water line installation. Schield says the insulated pipe laid in the 1980s was laid in shallow trenches and covered. Instead of insulating the pipe in hopes it won’t thaw the permafrost, he says City of Nome workers now dig a much deeper and wider trench.

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Nome Joint Utilities has replaced about half of the water and sewer lines installed in the 1980s using the new techniques. © Nome Joint Utility

“We now over-excavate six to eight feet below the pipe alignment to remove ice lenses and thaw unstable material,” he says. “We’re trying to get to a thaw-stable material, like a sandy material. We try to find that thaw-stable old beach line.”

If the sand lurking below the permafrost can be found, it generally doesn’t shift if it warms and thaws, Schield says.

The process seems to be effective, but it is significantly more expensive than other methods that have been used. Schield estimated it might increase project costs by as much as one-third. Not all of that is due to having to move more material, he said—a lot of the added cost is pegged on the slow process of over-excavating frozen soil, as well as having to maintain customer water-sewer service during the transition from old to new mains.

Using Technology to Increase Efficiency While the utility works to update water and sewer system infrastructure, on the technology front Nome has one of the most advanced systems in the state. For the past eight years, the city has been gradually implementing a SCADA, or Supervisory Control and Data Acquisition system, that allows water and sewer managers and operators to monitor and even change certain system operations from their desks.

If the pressurized water line running to Icy View subdivision and the hospital isn’t under enough pressure, for

© Nome Joint Utility

An example of a failed pipe that is being replaced.

example, Schield says he can change the pressure from his office instead of having to drive to the pump house and manually make the change.

The telemetering system includes alarms that sound if in-line temperatures dip below a set standard, giving utility employees a heads-up to check the situation before it becomes a frozen and possibly broken line.

“It’s been a real asset to the operations of our system and a good indicator of the health of the system,” he says.

Schield says the city is steadily increasing the reach of the monitoring system, making upgrades online as funding allows.

R Freelance journalist Rindi White writes from Palmer.

Alaska Business Monthly | March 2015 www.akbizmag.com

BusinessPROFILE

NRC Alaska LLC

Emerald Alaska Integrates into NRC Alaska LLC New Name. Expanded Capabilities. Same Superior Service.

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s one of the state’s premier environmental services companies, Emerald Alaska is highly regarded for its consistent expertise, responsiveness, safety, and service. In November 2014, the firm underwent one of the most significant changes in its fourteen-year history; it was acquired by National Response Corporation (NRC).

Today, the company bears a new name: NRC Alaska LLC dba Emerald Alaska. Emerald Alaska has been a leading provider of environmental and emergency response solutions to all industries in Alaska. Based in Anchorage, the company employs more than one hundred employees across seven facilities strategically situated throughout Alaska.

NRC is a leading commercial provider of United States Oil Pollution Act of 1990 regulatory compliance services, as well as a global supplier of remediation, industrial, and emergency response solutions. With headquarters in Great River, New York, NRC has regional offices across the United States and internationally. It has annual revenues exceeding $240 million and more than one thousand people worldwide.

NRC has continued to expand its geographic presence in recent years, and the addition of Emerald Alaska adds a strategic region to its domestic footprint, according to Steve Candito, chief executive officer of NRC. “We believe the combination of NRC’s extensive capabilities and Emerald Alaska’s quality personnel, well-located facilities, and proven track record makes for

a strong strategic fit,” Candito said.

“We are very happy to welcome the Emerald Alaska team and look forward to growing NRC’s business in Alaska.”

Blake Hillis, president of Emerald Alaska, said: “Emerald Alaska has built an excellent reputation as a high quality provider of environmental solutions throughout the state of Alaska.

We are excited about moving forward as part of NRC and believe the combination of NRC and Emerald Alaska will enable us to continue to support and expand our services to our customers throughout the state. NRC’s suite of services perfectly complements the work Emerald Alaska does, and I am confident that this will make both companies stronger.”

In short, the recent transition reflects Emerald Alaska’s continued commitment to provide the highest quality services to the Alaska community, as well as NRC’s expanded capability to offer international resources and expertise to the Alaska market.

Although NRC Alaska/Emerald Alaska now operates under a different name, some things will remain the same. For instance, the company –

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

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will continue capitalizing on the strength of experienced, local staff—many of whom have lived in Alaska for thirty-plus years and fully understand the challenges faced by Alaska customers. NRC/Emerald will also keep listening to its customers and adapting services to meet their needs.

In addition, NRC/Emerald will continue providing superior recycling and environmental services—bolstered by the global resources of its parent company. The company be will focusing on providing an array of environmental and industrial services, ranging from used oil and petroleum by-product recovery to spill response and clean up, including the transportation and disposal of hazardous and non-hazardous wastes for industrial, marine, automotive, and government clients.

“It will be the same company that people have come to rely on for years,” Hillis said. “Regardless of the name, we’re still going to provide the same high quality services to this marketplace.”

NRC Alaska/Emerald Alaska W. Paul Nielsen III Director of Sales and Marketing 800 East Ship Creek Ave. Anchorage, Alaska 99501 907-646-5005 PNielsen@nrcc.com nrcc.com

ENVIRONMENTAL SERVICES

Handling Hazardous Materials

Photo courtesy of NRC Alaska

An NRC Alaska vacuum truck at a refinery.

Providing critical links in keeping Alaska clean

By Naomi Klouda

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tanker-trailer hauling diesel fuel from Fairbanks to the North Slope went off the Dalton Highway the afternoon of June 7, 2014, and rolled. The injured driver required a medivac to Fairbanks Memorial Hospital.

The ruptured container spilled 2,500 gallons of fuel onto the tundra wetlands 110 miles south of Deadhorse. An additional 7,149 gallons of fuel needed to be pumped from the damaged trailer.

Both Alaska Chadux Corporation and NRC Alaska (formerly Emerald Alaska), were called to respond by the trucking company’s owner, NANA Oilfield Services, Inc. (NOSI).

The manner in which cleanup proceeded shows companies in an action chain that’s become crucial for Alaska spill response. The Alaska Department of Environmental Conservation (ADEC) “situation report” described it in what also has become routine: a report to the public.

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Chadux and NRC Alaska conducted the emergency cleanup, which involved round-the-clock shift work and dozens of trained employees. A slick had traveled five hundred feet downstream, requiring boom absorbents and streamside platforms built from plywood on the spot. There were two stages.

“First there’s an emergency response to an uncontrolled release of diesel spilled in the creek and on the wetlands,” says Steve Russell, a state on-scene coordinator at ADEC. “The second stage is when they move into ‘project mode.’

Now the fuel isn’t moving, now it is under control. Now they decide whether to excavate the soil, flush it or burn it, or use a fertilizer treatment, or whatever the case may be. This is engineering that moves beyond emergency response.”

Each company response fills a piece in the puzzle. The nonprofit Chadux is the on-call responder to NOSI’s North

Slope fuel tank farm. NRC Alaska, the largest Primary Response Action Contractor (PRAC) in the state, was called in for its manpower and equipment, such as the vacuum trucks that literally swept spilled fuel off the tundra. Then, NRC Alaska’s barges dealt with the disposal of soils and/or fuels later on.

“The environmental response industry—including those that can show up in the middle of the night on the side of the road—has grown tremendously over the last decade,” Russell says. “More services have become available, and that’s good news.”

Expanding Opportunity The past decade witnessed an increasing expertise in oil spill response work and waste disposal that continues to attract new companies to Alaska or expand work opportunities for companies already doing business here. Emerging

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needs in the Arctic for harbors and services means some companies are already setting expansion plans in place.

There are now eighteen PRACs certified with the ADEC Division of Spill Prevention and Response. Five PRACs are Alaska Native corporation subsidiaries, and four are owned by the major oil and gas companies in the state, including BP, ConocoPhillips, and ExxonMobil. Several are nonprofit regional responders that are member-owned by industries such as those in Cook Inlet and Crowley’s fuel barges all along the coast. Three are private corporate entities, including NRC Alaska, the former Emerald Alaska recently purchased by the global National Response Corporation, headquartered in New York.

Russell sees the accumulation of contractors as providing an ever-widening safety net cast over the environment.

“They each guarantee they can respond with services in a specified time frame,” Russell says. “Environmental response and management is a hugely important issue—and it can pay well.

But they have to be able to perform. If you say ‘my group can respond at 3 a.m. in the morning,’ then they have to be able to respond. There’s no faking it.”

Such as when the fuel spilled from the tanker truck that went off the Dalton Highway last June—a company on contract as the go-to responder guarantees they have the necessary training and employees.

“We were called out when they [NOSI] activated us,” explains Matt Melton, general manager of Alaska Chadux Corporation. “We were the technical authority for the responsible party. We would let NOSI and incident commanders know this is what we are doing and this is what we think. Other contractors did the soil samples. We did the dirty work with booms. Emerald [NRC Alaska] did collection of the bags and if there is any liquid, it was vacuumed up.

They disposed of the waste.”

Though potentially harmful, this lesser dramatic spill paints the mosaic of tasks performed by each responder to fulfill federal spill regulations. ADEC deals with the company that “holds the risk,” Russell says. These are the companies employing a contractor, and they’re the ones fined if violations are found. In the end, the ADEC signed off on NOSI’s www.akbizmag.com

cleanup response as satisfactory.

Alaska has seen more PRAC operations spring up in response to the huge amount of work, Russell says. A few PRAC businesses formed in the mid1990s in response to the newly implemented Oil Spill Pollution Act, a federal anti-pollution law which came about after the 1989 Exxon Valdez oil spill.

Yet, even more contractors certified as PRACs entered the industry in Alaska after the wreckage of the Malaysianowned M/V Selendang Ayu in 2004.

That environmental disaster involved

65,400 tons of soy bean spillages and 1,100 tons of fuel. The resulting spill off the coast of Unalaska killed more than 1,600 birds and other marine life.

A new social culture of environmentalism has caused the most pervasive industry changes, though, Russell says.

“I was in Homer a few years ago after about five hundred gallons of diesel had been dumped in a creek, which ran into Kachemak Bay three-quarters of a mile later,” Russell says. “The man who dumped it told me they used to dump fuel in the ditch all the time—to keep

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the mosquitoes down. ‘I don’t see the problem,’ he told me.”

Today most people wouldn’t agree with the old timer. Industries also carry the new consciousness, Russell says. “One of the main factors is that industries and communities see sound environmental management is critical to their company or their community.”

PRACs at work in Alaska respond to the gas stations that occasionally get spills. They serve in a routine not that different from weekly curbside trash pick-up, collecting black and gray water from Cook Inlet oil rigs or waste fuels from the North Slope on set schedules, as well as batteries and spent light bulbs. And they sit at the ready for fuel barges traveling Alaska’s coast—essential and, now, routine.

Pipeline Responders Alaskans may be most familiar through discussions of response preparedness along the Trans Alaska Pipeline System (TAPS). It is guarded by dozens of people employed by five different PRACs. Each works for Alyeska Pipeline Service Company, the consortium of oil companies that owns TAPS. Three are Alaska Native corporation subsidiaries. Starting at Prudhoe Bay, Alaska Clean Seas oversees the first 167 miles of pipeline.

ARSC Energy Services, owned by Arctic Slope Regional Corporation, is responsible for the next 167-mile segment of pipeline.

Gregory Campbell, ARSC Energy Services program director, says they are the first responders for any emergency, but also perform routine maintenance work for their 167 mile pipeline segment.

“We have a myriad of training for services that relate to handling crude, diesel, antifreeze,” Campbell says. “The employees are trained on all TAPS equipment, on containing and disposing of waste. We are responsible for all the surveillance on the pipeline and have the first-responder teams in place.”

The area is broad and there are many details to keep track of. Ahtna Construction and Primary Products Corporation take up where ASRC leaves off, and at the tail end of the pipeline on Prince William Sound, coordinating with Alyeska, is another Native corporation subsidiary, Tatitlek Chenega Chugach LLC, a subsidiary of Chugach Alaska Corporation.

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Crowley, the fifth PRAC assigned to the pipeline, overseas the marine portion of the Alyeska marine terminal.

On the North Slope, the on-call PRAC is Alaska Clean Seas, a nonprofit consortium of North Slope crude oil producers, including BP, ConocoPhillips, and ExxonMobil.

Non-Black Oil Work Another category of work PRAC consultants perform is research. UMIAQ, based in Barrow with offices in Anchorage, performs scientific studies and provides data for industries doing or planning work in a fast-changing Arctic.

Kirsten Ballard and Randy Pysher own Arctos LLC, a planning and response company. They complete Oil Spill Prevention and Contingency Plans for emerging companies such as drilling companies in Cook Inlet. They also advise clients in advance of updating requirements.

In addition to other clients such as the North Slope fuel farm owner NOSI, Alaska Chadux works in fourteen hub communities from Adak to Barrow, along the Crowley fuel barge routes.

Though the role is to stand ready for any emergency in communities during fuel offloads, their contract work is for Crowley. In fact, the reason Chadux emerged, explains Melton, was to keep fuel costs down for villages that pay upwards of $6 or $7 a gallon much of the time.

“Chadux came about when OPA required the investment of millions of dollars for compliance. The people on the other end of the hose would have to pay more for fuel if those costs were factored in,” he says. Instead, Chadux was built on the idea that with a pool by members financing equipment kept in key areas, a hub based system would share costs rather than pass it along to consumers.

A new hub in Adak on the Aleutians is currently in the planning stages.

Melton says this means the nonprofit will be locating boomers, skimmers, boats, and other spill ready equipment in that port. Adak is expected to take a role as the changing climate means a melting Arctic and increased marine traffic that until recently couldn’t have made it there.

In the City of Nome, a long-standing client, Chadux keeps nine containers of equipment, booms, and skimmers

handy for cleanup work, including a “boat in a box,” he says.

Emerald Alaska performs as its consultant, which calls for the routine removal of waste and response readiness, says Shaun Tucker, business development manager. The company has a long track record working with local, state, and federal agencies as well. One example is the military, whose historic bases stored hazardous fuels leaching in many parts of Alaska.

“During one project we did at a military site, we removed seventeen thousand tons of PCB-contaminated soil,” Tucker says. “The soil was moved using twenty-two ninety-ton railcar gondolas, seventy-two twenty-foot intermodal containers, and a bulk barge, which required one hundred trucks running round the clock for four straight days.”

Emerald then moved the waste to Seattle, where it went by rail to the Columbia Ridge Recycling and Landfill treatment disposal facility in Arlington, Oregon.

All told, the project took one week.

“People are shocked when they see how we respond very quickly,” Tucker says. The one hundred employees claimed by NRC Alaska are the “boots on the ground” in Anchorage, Fairbanks, and Kenai.

The company also recycles fuel to create new solvents. It is the largest recycler of fluids and solvents in the Northwest, cleaning and recombining over 12 million gallons of waste oil and solvents a year. The end product is manufactured antifreeze then sold to the public and to private sector clients.

The Disposal Side In the chain of environmental response work, the last step along the way is getting hazardous chemicals and waste out of Alaska. That’s expensive, as Tucker points out, since transportation costs for long distances can become a major expense of any project.

Since Alaska has no hazardous waste disposal facility, disposing of it will likely continue to involve barge, train, and vehicle transportation many years ahead.

The reason boils down to necessity.

Alaska has several places to process and treat petro-based contaminated soils and absorbents. De-watering fuel and rehabilitating dirt is done in Alaska.

“When it comes to problems, it is with hazardous materials,” Russell

Alaska Business Monthly | March 2015 www.akbizmag.com

says. “These are generated from incidents and present a risk on the road system. But it’s an unpopular idea, to have a hazardous waste storage facility or disposal system.”

Several efforts to build one in the last few decades haven’t succeeded. It’s hugely expensive to build one, Russell says. “It’s also hugely unpopular.”

But there’s a fortuitous side to not having a readily available hazardous waste disposal site in Alaska.

“Companies are being as proactive as possible to use less hazardous materials.

It’s expensive to ship them here, and it’s expensive to handle them, and it’s expensive to dispose of them,” Russell says.

That boils down to practicality. If it costs a company $50,000 for a fifty gallon drum of a hazardous chemical, and if they must pay another $5,000 to ship it out for disposal, “they will look for a cheaper alternative than using that chemical,” Russell points out.

In such an environment, recycling certain fuels becomes a laudable alternative.

Waste Management Services, though not a PRAC, serves a critical role along with NRC Alaska as major transport-

Emerald Services, Inc.

ers of hazardous waste. Known by its acronym WM, the same company that handles Alaskans’ curbside trash pickup utilizes the transportation network in place to transfer and track shipments for industrial waste.

“Initially, we characterize customer waste streams via sampling or use of safety data sheets in order to understand what the waste consists of chemically-speaking and what our options are for the waste,” says William Hickey, WM’s operations support manager for the Pacific Northwest and Alaska.

“We prefer to recycle or reuse waste if at all possible, so this is our first goto approach when working with our waste approval managers and recycling subject matter experts, he says. “Once they understand the waste stream and where it will be going, WM provides field service support to package, label, and ship wastes to destinations nationwide. They also supply all the logistics support. We prefer to be the boots on the ground at the source, so we are sure wastes are shipped safely and in accordance with regulations and the receiving facility requirements.”

Technology provides a big help. The company tracks waste shipments from point of origin through final disposition via WM tracking applications used online anywhere a wireless signal can be received. Customers also can access the tracking information.

When the waste reaches the final disposition location, WM generates certificates of disposal for verification—often required by regulatory agencies as well.

Most transportation is done in the summer months, and Hickey says, “What appears to be a fairly straightforward process is actually a quite complex orchestration of events due to Alaska’s remote locations we work in and because the timelines are tight in Alaska’s narrow working window—trucks, barges, planes, and all other modes of transport book up quick, so working the system becomes a real art.”

R Naomi Klouda is the former editor of both the Homer Tribune and the Tundra Drums. She is a lifelong Alaskan and freelances from Anchorage.

EMERALD ALASK A IS CHANGING TO NRC ALASK A. Excellence in environmental and emergency solutions.

Serving all of Alaska 907-258-1558 Toll Free 877-375-5040

n r c c . c o m Photo by Scott Steindorf – Out North Photography

www.akbizmag.com

March 2015 | Alaska Business Monthly

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HR Matters

By Kevin M. Dee

Communicating Across Cultures “We were always welcomed in our travels wherever we went… we came with young children and a soccer ball. Kids connect real quick with other kids and soccer is pretty universal.”

—Family of four that spent five years travelling to thirty-six countries by camper van

L

ess than fifty years ago the American view of the world, brought to us by National Geographic magazine, included exotic faraway places with exotic people living lives very differently.

I treasured reading each issue, old or not, to learn and understand about these places and people. Each issue explored and celebrated cultures that were so dif-

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Connecting and finding common ground

ferent than my world. It was exciting and amazing. Today, our world has shrunk to where connectivity through media and the internet is instantaneous. We are more connected and exposed than ever to the wide world. Why is it then that we still have difficulty understanding and bridging differences across cultures?

With our world shrinking and becoming more connected every day, how can we understand our differences and find common ground? How do we also stay true and connected to our own cultures?

I was originally raised in Boston … where you “pahk” your “cah” in the “yahd” and then wonder where you left your “khakis.” When I went out to college in Iowa and ordered a “beah” at the

“bah,” a bunch of locals turned and one said, “Where you from?” in a menacing tone. I immediately lost my Boston accent and only regain it when I go back to New England.

A long time ago I was leading a five day workshop in Sydney, Australia, for more than two hundred participants. After an exercise they were slow to move back to their seats and I said, “Everyone needs to quickly put their fanny in a chair.” The room burst out in raucous laughter and I was bewildered. An Aussie assistant came to me and informed me that “fanny” in Australian is slang for female genitalia and that Aussies do not wear fanny packs—they wear bum bags. It was an embarrassing moment to say the least,

Alaska Business Monthly | March 2015 www.akbizmag.com

yet I was relieved that they had such good humor about it (they laughed for ten minutes). Misunderstanding and confusion can abound when communicating across cultures. Misunderstanding is often the precursor to conflict. Conflict left unresolved is like cancer.

Conflict and misunderstandings can often be traced to cultural differences— the values and even the language that different cultures practice. There are so many differences at times that we think some people must be from another planet (my in-laws come to mind). In its extreme form it can lead to violence. Yet there are ways each of us can connect and find common ground that make everyone richer for the effort.

In Alaska we have numerous diverse indigenous first people cultures and people who have moved and settled here from all over the world. From the Tsimshian and Haida in the southeast, to the Iñupiaq in the north, the Yupik and Alutiiq in the west, and the Athabascan in the interior to name but a few and the wide variety of transplanted ethnicities sprinkled throughout, Alaska is about as diverse a place as you can find.

Cultural Values to Consider Relationships: How does the culture view roles and responsibilities, parenting, elders, etc., and in what ways is respect awarded? How do interrelationships occur and how are violations of the relationship beliefs are handled?

Views of cooperation and competition: Is cooperation valued over competition or vice versa? Is everyone trying to do better than their neighbors or is win/win the way? Does the culture even consider other cultures in the pursuit of goals?

Approaches to problem solving: Does everyone see one person’s issue as part of the whole group’s issue or do they see that person’s problem as their own?

Time values: How long does it take to surface issues? Immediately? Sleep on it? Or is it “never in this lifetime because we don’t talk about those things!”

Language and communication: What are the real meanings of the language and words? How much is lost in translation? Is communication direct or indirect? What about body language? Does eye contact mean truth and directness or is it intrusive or aggressive? How much is being communicated verbally www.akbizmag.com

and non-verbally?

Impact of larger social structures: How do larger social structures influence values and decision-making? What religious, social, or political structures does a group or an individual answer to in making decisions or resolving concerns?

The role of outsiders: How are people outside the culture welcomed or perceived? Are differences celebrated or disdained? How have other cultures historically interacted with the culture?

How would you know if you are welcomed or merely tolerated?

Physical space: What is the appropriate space and body language that is important to the culture? Eye contact, proximity, sitting, standing may all be important or not. Hugs or touching may be a connecting point or offensive.

Walking in Two Worlds In Alaska, the dilemma of very different cultural values between traditional subsistence lifestyles (with attendant collaboration and competition values) and more westernized monetary based culture can create a schism. Being able to walk in two worlds, honoring where you came from and how you were raised while competently navigating western ways of business and competition can be daunting to say the least.

Individuals good at learning to adapt to change have an advantage here. It is therefore essential that, in a rapidly shrinking and ever-changing world, we know ourselves and our own culture and values so we can be open to understanding and respecting other cultures and finding the common ground that we all share.

Here are some practices that, when followed, can reduce and eliminate cultural clash and misunderstanding (hint: these practices also work in personal relationships!). n Prizing (Honoring): Creating inside yourself the attitude that this person and or culture has something important you can learn or understand that will benefit you and the individual you are communicating with, who is doing their best to convey it. n Intent Observation: Watching everything from tone of voice, body language, eye contact, order of speaking, societal roles, etc. Ask

questions (when it is appropriate) so that you fully understand. Remember to seek to understand first then to be understood. n Neutrality and Respect: We all come with predisposed ideas of what is right and wrong and how to apply these beliefs based on how we were raised and our own experience in the world. People and different cultures may not share your beliefs. Don’t impose your beliefs or compare and judge. What is right for you may not be right for them. Seek understanding and support others beliefs as valid and right for them. n Empathy and Compassion: When we can put ourselves fully into the experience and “what’s important” to others, we begin to experience deeper connections. We are able to see the common ground we all stand on and can begin to resolve the barriers that have separated us as individuals and cultures. n Humor: In every culture humor has an important role. Learn to laugh with and enjoy your differences as well as what that culture enjoys. Chances are they are very similar.

There is so much we can learn from one another once we learn to understand what is important to each of us. Until we learn the values and motivations of different cultures, we will never truly understand our differences. Until we practice respect at all levels for everyone who is not us or like us we will never find the gift that children find so easily—underneath we are all the same.

R Kevin M. Dee has a master’s degree from Vanderbilt University and is the president of KMD Services & Consulting.

He has more than thirty years of experience providing leadership development, organizational development, and human resources services in Alaska and internationally.

Contact him at mail@ kmdconsulting.biz.

March 2015 | Alaska Business Monthly

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special section

Arctic Oil & Gas

Arctic Lease Sale Revisions OCS Oil and Gas Leasing Alaska Region Planning Area Boundary 2017–2022 Oil and Gas Leasing Draft Proposed Program Areas

Chukchi Sea

Beaufort Sea

Presidential Withdrawal Areas (January 27, 2015)

Russia Whaling Areas Barrow and Kaktovik Hanna Shoal Area Subsistence Area

Hope Basin

25-Mile Buffer Russia

Canada

Norton Basin

Alaska

St. Matthew-Hall Navarin Basin

St. George Basin

Bowers Basin

North Aleutian Basin

Gulf of Alaska

Kodiak

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BOEM’s Alaska OCS program at risk

By Mike Bradner

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f Shell is unable to drill on its offshore Chukchi Sea federal leases this summer after years of delay, the credibility of the Outer Continental Shelf (OCS) oil and gas leasing program in Alaska may well reach rock bottom. This is important because the US Bureau of Ocean Energy Management (BOEM) is now planning OCS lease sales in the Chukchi and Beaufort seas in 2016 and 2017 and on January 27 announced a new five-year lease sale program with another Beaufort sale in 2020 and a Chukchi sale in 2022. BOEM says companies have expressed interest 100

in the government having the future sales, so things are proceeding for now.

The Department of the Interior has also announced, however, that 9.8 million acres of sensitive marine areas in the Beaufort and Chukchi seas will be withdrawn from future lease sales.

Much of this acreage had not been offered in previous sales, having been deferred, but the new designation is a more definitive statement that these lands will not be offered.

The areas withdrawn include three areas of the Chukchi Sea, a twenty-fivemile buffer area along the Alaska coast,

an additional subsistence use area near Barrow, and the Hanna Shoal, an environmentally-sensitive area. Two areas of the Beaufort Sea are withdrawn, subsistence whaling areas near Barrow and Kaktovik, two Inupiat villages along the northern coast.

The coastal buffer and subsistence whaling areas are currently withheld from leasing but the Hanna Shoal is a new addition that would apply in the planned 2016 and 2020 Chukchi sale.

The Hanna Shoal is a large area northwest of Barrow in the central Chukchi Sea area. The withdrawal does not affect

Alaska Business Monthly | March 2015 www.akbizmag.com

Bureau of Ocean Energy Management | boem.gov

Cook Inlet

Aleutian Basin

The maritime boundaries and limits shown hereon, as well as the divisions between planning areas, are for initial planning purposes only and do not necessarily reflect the full extent of U.S. sovereign rights under international and domestic law.

OCS Oil and Gas Leasing Beaufort Sea Planning Area Boundary 2017–2022 Oil and Gas Leasing Draft Proposed Program Area Presidential Withdrawal Areas (January 27, 2015) Barrow and Kaktovik Whaling Areas

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ALASKA Alaska

The maritime boundaries and limits shown hereon, as well as the divisions between planning areas, are for initial planning purposes only and do not necessarily reflect the full extent of U.S. sovereign rights under international and domestic law.

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March 2015 | Alaska Business Monthly

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• BOEM does not have complete and current geographic information regarding the subsistence use for the communities of Wainwright, Point Lay, and Point Hope. The BOEM Environmental Studies Program is planning a study (to begin in 2013) to map the subsistence use of the communities of Wainwright, Point Lay, Point Hope and update the use information for Barrow. This study will provide an updated baseline in these communities and identify, among other things, resource harvest locations, areas of harvest intensity, and variation in duration of use. This study will provide information analogous to the Beaufort subsistence use data.

• As it becomes available, results from the above mentioned study and any other additional information regarding changes in subsistence use patterns will be incorporated into leasing decisions.

Point Hope

Coordinate System: NAD 1983 UTM Zone 3N Chukchi Planning Area

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An interactive version of the data depicted here can be found by referencing the "BOEM MMC Mapping Tool - Arctic" map on the Map Gallery Page on MarineCadastre.gov. Or go direct to: http://www.marinecadastre.gov/MMC%20Pages/gallery.aspx

-174°0'0"

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High Petroleum Potential

Subsistence, High Use

OCS Historical Leases

Medium Petroleum Potential

Subsistence, Medium Use

Polar Bear Critical Habitat Seaward Extent

Low Petroleum Potential

Subsitence, Low Use

Bathymetry (10 meter intervals)

An interactive version of the data depicted here can be found by referencing the "BOEM MMC Mapping Tool - Arctic" map on the Map Gallery Page on MarineCadastre.gov.

Or go direct to: http://www.marinecadastre.gov/MMC%20Pages/gallery.aspx

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existing leases—there are seven leases held by Shell (not Shell’s primary targets for drilling, however) and three by Repsol—but rather that the acreage around the leases will not be offered in future sales including one planned in 2016.

All eyes are on Shell, however. The company has spent $6 billion, and if its drilling plans are frustrated again, seven years after the 2008 Chukchi Sea OCS lease sale, one can hardly blame the company for washing its hands of the business.

Given the track record it seems unlikely that ConocoPhillips, StatOil, and Repsol, the other companies holding leases from that lease sale, will pursue their drilling plans until Shell is allowed to drill.

Hopeful Shell Shell is still hopeful, however, that it will get the green light to drill this year. As this is written, a positive development is that a Supplemental Environmental Impact Statement (SEIS) prepared by the BOEM is on track to be published in February with a final Record of Decision on the SEIS due in March.

The SEIS is being done to clear up an issue of litigation—the size of a potential discovery in the Chukchi Sea lease sale area—brought by environmental groups over the original 2008 Environmental Impact Statement (EIS) done for the lease sale. The revised estimate for discoveries in the sale area is 4.3 billion barrels of recoverable oil, an increase from the 1 billion barrels estimated in the original EIS. Natural gas resources of 2.33 trillion cubic feet recoverable were also forecast in the SEIS. When the BOEM revised the estimate the agency’s geologists had the benefit of bids by companies, which it did not have in 2008, and access to more geologic data. The 2014 estimate is better informed and is more likely to withstand new litigation.

There are still other uncertainties facing Shell, however. New Arctic drilling rules from the US Department of the Interior are due in early spring, and though the content of the rules are generally known to industry, there could be surprises.

Another lawsuit, a challenge to Shell’s oil spill containment and recovery plan for it 2012 drilling, which has been ap-

Alaska Business Monthly | March 2015 www.akbizmag.com

BusinessPROFILE

Alaska Dreams Inc.

‘If you can imagine it, we can construct it.’

Photos by Kevin Smith Photography

A

fter 20 years of being the leading source and provider of industrial building solutions in the state, Alaska Dreams Inc. recently began marketing its own brand of buildings: “AKTec.” These fabric-covered units—available in sizes ranging from 12 to 60 feet wide—offer an instant solution for shelter, storage and various other needs. They also enable customers to avoid waiting weeks for a custom order product to be delivered. “Since summers in Alaska are so short, stocking buildings right here in Alaska with the new product option allows us to serve people quicker and eliminates long waiting times,” says President Meini Huser.

Alaska Dreams keeps basic sizes in stock, but its AKTec buildings offer added choices. Custom made for Alaska Dreams, AKTec structures are a value-driven, high-quality product designed for the harsh Alaska environment and demands.

Offering Turn-Key Solutions Established in 1994, Alaska Dreams is an authorized dealer/builder of Varco Pruden pre-engineered metal buildings, as well as a dealer/builder resource for numerous manufacturers of advanced fabric-covered building structures. It primarily serves the oil and mining industries, along with government and private-sector clients throughout Alaska and worldwide.

Alaska Dreams not only designs

and sells an array of products, but it can also provide a complete turn-key solution. This is due to the company’s diverse expertise in consulting, designbuild, engineering, general contracting, pre-construction and estimating and project management. For example, Alaska Dreams’ skilled staff can use Varco Pruden’s sophisticated estimating and design program to design a metal building on the spot. “Within a short time, we can have preliminary sketches and drawings of what the building looks like,” Huser says.

Alaska Dreams is also accustomed to designing buildings to specific-site conditions—including extreme environments and project-specific needs.

“We can modify a building so it is suitable for the Arctic environment,” Huser explains.

Once an industrial building arrives on site, Alaska Dreams will construct it. If the customer chooses to construct the building, Alaska Dreams can supply a Tech support person to ensure proper installation. Alaska Dreams also sells building components such as insulation, doors, and electrical and mechanical packages to complete the buildings.

Willing to Go the Extra Mile Alaska Dreams goes above and beyond to tailor its customizable products to customers’ specific needs. This is evidenced by the company’s mantra: “If you can imagine it, we can construct it.”

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P A I D

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

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Often, Alaska Dreams tries new approaches and does specialized projects for clients—many of whom are repeat customers. “We are not afraid to think outside the box,” Huser says.

These commitments to innovation and customer satisfaction, along with quality, integrity, consistency and teamwork, are what have made Alaska Dreams successful over the years.

Basic business fundamentals like being honest, polite, and true have also been instrumental in the company’s growth.

Customers can count on Alaska Dreams to create a positive experience that ensures their complete satisfaction. “We do what we say,” Huser says. “And if there are any issues, we always stand behind our product.”

Meini Huser, President and Chief Executive Officer alaskadreamsinc.com Alaska Dreams Inc. 2081 Van Horn Road Ste. #2 Fairbanks, Alaska 99701 907-455-7712 Alaska Dreams Inc. 3116 Commercial Drive Anchorage, Alaska 99501 907-646-1219

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proved by the Department of the Interior, is now before the Ninth Circuit Court of Appeals.

Shell has been picking its way through these and other obstacles since the company first attempted to drill in the Arctic in 2007 on leases acquired in a 2005 OCS lease sale. The drilling was halted by an injunction from the Ninth Circuit Court in a lawsuit brought by environmental groups. Shell spent two years revising its drilling plans and this time the appeals court unanimously upheld the plans. But then back luck hit—the BP Macondo offshore blowout and spill in the Gulf of Mexico blowout.

That watershed event changed the regulatory and political landscape for the offshore industry, including in Alaska.

Shell’s efforts since then have been bogged down by federal regulatory delays, more bad luck, and some delays caused, to be fair, by Shell’s own doing.

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Multiple Factors The biggest piece of bad luck was being caught in the outwash of the Macondo well blowout, which Shell had nothing to do with and was far from the Arctic. The aftermath, however, was that Shell had to operate in a new, hypercharged regulatory and political environment, with its every move put under a microscope.

If Macondo had the effect of putting the government’s regulatory machinery in slow gear, out of caution, it put environmental groups and the national media into high gear, which ramped up the political sensitivity over offshore drilling.

There was also a new awareness of the Arctic caused by climate change, which brought even more of a focus on Shell’s program by the national media.

Environmental groups, adept at public relations, took full advantage of this.

Shell contributed to its own problems, to some extent. The company was finally able to mobilize and get its drilling equipment to the Arctic in 2012, but two exploration wells, one in the Chukchi Sea and one in the Beaufort, could only be partly drilled.

That’s because Shell was unable to get a custom-built Arctic spill containment barge completed and inspected in time to meet the 2012 summer open-water drilling window in the Arctic. The barge was completed later in the fall, but it was too late. The consequence of the delay,

Alaska Business Monthly | March 2015 www.akbizmag.com

The supreme irony in all this is that the government has had an OCS program in place for Alaska for decades, and companies have been bidding in sales and drilling exploration wells for years, all safely. however, was not having the vessel with the drill fleet in the Arctic in 2012.

Because the barge was not present to handle a potential spill, Shell received approval from the government only to drill “top holes,” or partly-drilled wells that did not penetrate potential oil-bearing reservoir rocks. Those were drilled, one in the Chukchi Sea and one in the Beaufort Sea. Had Shell been able to complete both wells, with the drill bit sunk deeper to test potential oil-bearing reservoirs, the company’s entire program would be further along.

Another piece of bad luck for Shell was losing its drillship Kulluk in a Gulf of Alaska storm in December 2012. Although this was strictly a marine accident caused by bad weather, a fierce storm, in an area far from the Arctic (the Kulluk was being towed to Seattle

for winter maintenance) the accident was amplified by environmental groups in their campaign which cited this as an example of poor management by Shell.

In early 2013 the environmental groups’ lawsuit against the 1-billionbarrel discovery estimate in the 2008 EIS hit home. The Ninth Circuit agreed with the environmental plaintiffs that the estimate was too low and sent the case back to an Alaska District Court.

That caused the BOEM to revise its estimate and prepare a new SEIS. Until that is completed and approved there is a legal cloud over all of the 2008 Chukchi Sea leases, those held by Shell and others. Without clear legal title to the leases, Shell cannot drill. Those uncertainties, and the delayed Arctic drill rules, caused Shell to sit out the 2013 and 2014 Arctic drilling seasons. The

company now proposes to drill in 2015 with two drilling vessels to catch up for lost time, but the legal uncertainties remain.

Supreme Irony—It’s All Been Done Before The supreme irony in all this is that the government has had an OCS program in place for Alaska for decades, and companies have been bidding in sales and drilling exploration wells for years, all safely. Shell drilled in the Chukchi Sea in the early 1990s and made a large gas discovery at its Burger well, which was uneconomic to develop at the time. Shell dropped its federal OCS leases then but reacquired them again in 2008, including the Burger prospect.

Shell’s current objective is to go back and explore Burger to evaluate, with modern technology, what was found in the early 1990s.

Shell is also an old hand in the Alaskan Beaufort Sea. The company acquired its current leases there in 2005 and 2007 OCS lease sales, but the company previously held Beaufort Sea leases and had conducted exploration drilling.

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Much of Shell’s early Beaufort Sea exploration was in the waters relatively near shore on state-owned submerged lands and federal OCS acreage just beyond the three-mile limit, while other companies ventured further offshore.

The one producing Arctic offshore field, the Northstar field now owned

by Hilcorp Energy that had been developed, produced, and then recently sold

by BP, was originally discovered by Shell, which originally named it Seal Island.

Northstar actually straddles the federalstate boundary, so part of its production is from OCS acreage and part from state-owned submerged lands, although the artificial gravel production island is in state-controlled waters.

There has been a lot of drilling in the Beaufort Sea OCS by companies other than Shell including Union Oil of California, Amoco, and Sohio (now BP). In total there have been thirty-one exploration wells drilled in the Beaufort Sea OCS along with six in the Chukchi Sea federallymanaged area. In total, ten OCS lease sales have been held since 1979 in the Beaufort Sea and three sales in the Chukchi Sea. There have been discoveries other than Shell’s at Seal Island, too. They were uneconomic at the time, just as Shell originally considered Seal Island uneconomic.

Two Beaufort discoveries were made in the OCS northeast of Prudhoe Bay, one called “Hammerhead” by Union Oil of California and a second, “Kuvlum,” by ARCO Alaska.

Since these were judged uneconomic, the federal leases were dropped and later acquired by Shell in the 2005 and 2007 lease sales. Shell’s prime Beaufort Sea targets today are in the area of these discoveries, although the company has no immediate plans to return to the area.

Interestingly, the Beaufort Sea OCS was where one the most famous, and expensive, exploration “dry holes” was drilled in the early 1980s. This was “Mukluk,” drilled by Sohio (now BP) on federal leases in Harrison Bay, northwest of Prudhoe Bay. Mukluk was on a large geologic formation that, had it been successful, could have been a very large oil discovery. As luck would have it, the oil was once there but had drained away, so the test well produced only water.

It was a very expensive well because it required the construction of an artificial gravel island. The island and the well cost Sohio over $160 million,

Alaska Business Monthly | March 2015 www.akbizmag.com

a huge sum at the time, but when expenditures on the leases were included (some leases were held by other companies) the total cost was over $1 billion.

The Mukluk failure was to cast a pall on the Beaufort OCS that would last for years, in fact until Shell’s reentry into the region in the 2005 OCS lease sale caused the industry to reconsider the region. Even now, however, Shell is the only major company that has a serious interest in the Beaufort Sea although Repsol, the Spain-based company, also holds OCS offshore leases.

Repsol’s primary focus now is exploring onshore on the North Slope, however.

There is also a long history of OCS sales and drilling in other Alaska coastal regions, too. There were three OCS lease sales in the Gulf of Alaska from 1976 to 1981 with twelve wells drilled; five sales in lower Cook Inlet with thirteen wells drilled; one sale in the North Aleutian Basin, off Bristol Bay, in 1988 with no wells drilled (the leases were subsequently bought back by the government); one sale in St. George Basin in the eastern Bering Sea with ten wells drilled; one sale in 1984 in the Navarin Basin, a remote region in the central Bering Sea, with eight wells drilled; and one sale in 1983 in Norton Basin near the Seward Peninsula with six wells drilled.

an expression of interest from oil and gas companies in the sales.

Would anyone bid, however? Unless Shell finally gets permission to drill in a lease sale held seven years ago the credibility of the federal government’s Arctic offshore program will be damaged. The Arctic regions could join the offshore federal submerged lands off southern California in a kind of OCS graveyard.

Political opposition also killed plans to drill off California.

If this happens it will be a huge win for environmental groups. Their strategy of

litigating on multiple fronts to find chinks in the government’s procedural preparations and working to focus national media attention on the Arctic could basically spoil the political environment in which a company must operate. The same strategy is being utilized in efforts to block the big Pebble copper/gold project in southwest Alaska, and it has been shown to work. R Mike Bradner is publisher of the Alaska Economic Report and Alaska Legislative Digest.

New Lease Sales Planned Despite the uncertainties, the federal government is holding to its plans for future OCS sales in Alaska, including the Arctic. Three sales are planned in the current five-year lease sale cycle, one in lower Cook Inlet, one in the Chukchi Sea, and one in the Beaufort Sea. There had been reports that the 2016 and 2017 sales in the Chukchi and Beaufort seas would be delayed or scrapped, but BOEM had said they are still planned.

Meanwhile, preparations for the Cook Inlet sale are underway. The preparation of an EIS was announced last fall and “scoping sessions” with the public, the first step of the EIS, were completed in December.

The next five-year OCS sale schedule would begin with a Lower 48 OCS sale in 2017, with the Arctic offshore sales toward the end of the five-year program. The agency is now evaluating comments on the proposal including suggestions from industry, and, despite all of Shell’s problems, there has been www.akbizmag.com

March 2015 | Alaska Business Monthly

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special section

Arctic Oil & Gas

For Arctic Oil Exploration— DowlandBach’s Success is Music to the Ears

By Tom Anderson 108

W

hat do English Renaissance composer and lutenist John Dowland and the Baroque period’s most famous composer, Germany’s Johann Sebastian Bach, have in common?

The answer is they’re the namesakes of one of Alaska’s largest control panel and chemical injection system manufacturing businesses in the state.

Anticipating Needs It was more than forty years ago when Lynn Johnson lived on Campbell Lake in Anchorage and worked for his parents at Alaska Helicopters. Johnson befriended neighbor Ed Clinton who was a distributor for Swagelok, a high-end

premium compression tube fitting company, through Alaska Valve & Fitting.

Clinton believed that with the North Slope coming online for drilling by the mid-1970s, there would be a significant need for Arctic environment cold weather wellhead control safety systems.

After assessing viability and contacting the early oil company pioneers who were exploring in northern Alaska in the hope of securing a contract, Clinton and Johnson formed Dowland-Bach deeming the potential great they could achieve substantive Arctic sales. The business name would become a conversation starter and door-opener in marketing efforts because of the partners’

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As companies like Arco and BP were preparing to build infrastructure and drilling platforms in Alaska’s burgeoning Arctic, the new Dowland-Bach team focused on control panels and systems that could function in extreme weather conditions. In the early 1970s, globally there were minimal to no specialized wellhead safety systems for freezing conditions absent oil recovery occurring in Arctic countries. Most electronic, hydraulic, and pneumatic didn’t www.akbizmag.com

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function well in extreme cold weather.

The technologies that did exist for such drilling belonged to the military.

Niche Market Dowland-Bach found a niche that would blossom over forty years of specialization. The partners’ business plan was timely, and as resource development sprouted across the state, so too did Dowland-Bach’s customer base. In four decades the spectrum of products and services the company has developed is impressive, ranging from control systems to automation and engineering services, and the majority of which are part of Alaska’s record for safe oil and gas transfer to market. As Johnson admits, “Our uniqueness has been and remains that we can plan, engineer, and then build panels and specialized componentry. While most companies contract with an engineering firm for design and then another separate company to fabricate to specifications, Dowland-Bach handles the entire project, from the design concept to the build.”

Consider the environment of drilling in the Arctic, and the actual process of

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extracting oil. After the hole is dug, various stages of the process require monitor and detection, from high-pressure waters and acids injected into the pipe to waters and natural gas flowing out of the ground with oil. Water must be injected back into the ground. Crude oil, natural gas, and water excesses must be separated at gathering centers (also called separation facilities). The largest gas handling facilities are Flow Station 1 and Gathering Center 1, each capable of processing 2.7 billion cubic feet of gas per day based on the latest BP fact sheet.

Multiply every drilling hole and project and camp and the magnitude of exploration requires a massive amount of control and safety monitoring for success.

From its out-of-garage beginnings, Dowland-Bach has since evolved into a vibrant thirty-one-employee industrial control panel specialist led by its president Reed Christensen, who rose through the ranks starting back in 1995 as the company’s controller.

Christensen became general manager by 1998 and vice president in 2009. Also in 2009, the company was purchased by Kodiak-based Koniag, Inc., one of the

thirteen Alaska Native regional corporations established by the Alaska Native Claims Settlement Act. Koniag has operations nationwide.

‘Strongest Asset’ Dowland-Bach’s management is quick to praise its staff, attesting to the reality that a company’s strength comes primarily from a core employee base.

“Dowland-Bach’s strongest asset is our team of dedicated employees,” says Christensen. “We are a niche company, with niche employees, with a unique collective skill set.”

“What our control panels do is protect personnel, environment, and infrastructure from the potential of an oil well igniting, rupturing, or corroding,” Christensen says. “We’re facing Arctic conditions with extreme low temperatures, mixed with aging wells and elements within the pipes that all or separately create the potential for a problem, which our panels recognize, react to, and ultimately shut off the systems to accomplish their purpose.”

The company’s manufacturing facility in southeast Anchorage has twenty-

Alaska Business Monthly | March 2015 www.akbizmag.com

Custom wellhead control panel for Cook Inlet Energy.

Photo by Reed Christensen/ Courtesy of Dowland-Bach Corp.

one thousand square feet for sheet metal fabrication and welding. It primarily works with stainless steel and has a full accompaniment of electricians, welders, mechanical engineers, electrical engineers, and fabricators.

Dowland-Bach had a busy year in 2014. The company provided wellhead control panels and chemical injection systems for ConocoPhillip’s CD5 project. It provided wellhead control panels and electrical control panels for BP at Prudhoe Bay. The team has also supported the ongoing renaissance of exploration and development in Cook Inlet with companies such as Hilcorp and Cook Inlet Energy through products and services.

Diverse Clientele One claim to fame of the company is designing and thereafter coining the term “skimpy panels.” The need for a modified, simpler panel emanated from

producers in the 1980s seeking a small, compact, inexpensive control panel.

Johnson explains that some valves and componentry were unnecessary on certain equipment, yet typically added by default and quite expensive when multiplied times one thousand units. The company opted to craft panel systems that were “less expensively but robustly built,” and the popularity of the systems was huge.

The company has representation in Houston, Texas, which Christensen and Johnson refer to as the “epicenter” of the oil industry for the globe. The company even had a second office there at one time. However it was quickly discovered that competing for design and fabrication contracts in the Lower 48 against Lower 48 companies much closer to a project often caused concern that the panels and injectors were not

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local. Perhaps the same holds true in Alaska, adds Johnson, when his company trumps out-of-state manufacturing competitors attempting to enter the control panel fabrication market.

On a global scale, Dowland-Bach has designed, fabricated, and shipped almost $30 million in product to Bogotá, Columbia, primarily for solar powered equipment. It has built and shipped systems to the United Arab Emirates for Haliburton and designed and fabricated panels for North Sea products as well.

Locally, outside of oil industry designs, Dowland-Bach has become a source for stainless steel brewpub equipment, building for local breweries ranging from Midnight Sun Brewery to Moose’s Tooth Pub & Pizzeria. The craft brewery trade has relied on the company’s in-house fabricators to produce myriad brewing equipment, including former BP executive Steve Marshall, who is one of the owners of Anchorage Brewing Company. As Johnson attests, “When you’re dealing with food and beverage production, the last thing you want are scratches in the preparation equipment that can lead to illness, so stainless steel is the way to go to prevent problems because of our expertise in fabricating high-end culinary equipment.”

Christensen adds that the company is special because, while there are fabricators of stainless steel that operate in the state, since stainless steel is seven to eight times more expensive than carbon steel or aluminum, Dowland-Bach purposely stocks abundant supplies of the metal to help customers promptly.

Particularly for Arctic development and resource extraction, the ability to provide the metals, design, fabricate, and build all in one facility and locally is attractive to clients.

As the petroleum industry ramps up its production this year, the unique control panel technologies Dowland-Bach provides will continue to keep Alaska competitive in the marketplace. For the oil and gas exploration companies requiring such design and fabrication for Arctic drilling, a one-stop local shop for specialized panels and injectors is simply music to their ears.

R Tom Anderson writes from across Alaska.

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Alaska Business Monthly | March 2015 www.akbizmag.com

special section

Arctic Oil & Gas

Negotiating the Rapids of Arctic and Alaska Oil and Natural Gas Reserves

By Dr. Shiva Hullavarad & Dr. Ashok K. Roy The opinions expressed herein are the author’s own and not those of the University of Alaska System or Alaska Business Publishing Company, Inc.

“You can never cross the ocean until you have the courage to lose sight of the shore.”

—Christopher Columbus “In the afternoon they came unto a land In which it seemed always afternoon.

All round the coast the languid air did swoon, Breathing like one that hath a weary dream.”

—Lord Alfred Tennyson

T

hree major events occurring between 2006 and 2008 depict the increasing interest for access and control of oil and natural gas resources in the Arctic and its major passages. These three events are: the opening of the Northwest-East passage through the Bearing Sea due to a decline in sea ice; oil prices reaching $147 a barrel causing concern that the current global oil production will not be able to meet demand from the emerging markets of China, India, and Brazil; and Russia planting a deep-sea flag—as a strategic signal to the world of the importance of Arctic to the leadership in Moscow. Concurrently in the same time frame, the US Geological Survey estimated that approximately 25 percent of the world’s recoverable oil and natural gas deposits were most likely located in the Arctic.

The recent oil price declines are primarily the result of a price war by Saudi Aramco.

According to Yardeni Research, an independent investment strategy and economics research firm, the goal of Saudi Aramco is to maintain its market share by pairing oil output to supply. Another factor contributing to the declining oil prices is supply—higher oil production by the United States and Canada (from 0.9 million barrel per day, or mbd, to 12.7 mbd, exceeding Saudi Arabia’s 9.6 mbd and Russia’s 10.6 mbd in the second quarter of 2014). Demand, on the other hand, is not meeting the surplus due to a slower growth rate in advanced economies. Strong declines in commodity prices typically signify a supply-demand imbalance.

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As to how low the oil prices can go may depend on how much China’s economy slows down as the world’s largest consumer of oil. Falling oil prices could prove an advantage for Mexico since its new oil costs only approximately $45 a barrel, which is well below the Texas crude; and the proposed one thousand mile natural gas pipeline from Los Ramones to Texas may also spur global firms to lose interest in the more costly Arctic. Goldman Sachs estimated in mid-2014 that US shale producers will need about $85 a barrel to break even.

It must be noted that there are a number of challenges in aggressively pursuing oil and natural gas exploration. First, the ramifications of an environmental impact in the event of a major oil spill will have to be considered. Second, because of inadequate geological maps, patchy communication systems, and polar icecap melting, iceberg movements become uncertain and unpredictable. Third, the lack of transportation infrastructure to move the extracts from the drilling sites to the processing plants poses a challenge. Finally, the extreme cold weather presents challenges in a number of areas.

Interestingly, despite all these potential challenges, none of the Arctic nations (United States, Canada, Russia, Norway, Iceland, Greenland, and others), have slowed their quest for oil exploration or natural gas reserves and infrastructure development.

Even the non-Arctic nations that are geographically far away from the region (China, South Korea, India, Italy, and Singapore) have shown interest and appear anxious to reap the benefits. As a result, the Arctic Council has granted these nations an observer status. There is a flurry of resource development activities. For example, in Alaska scenario planning has been applied to marine shipping, climate change, port site selection, and resource development issues.

The Arctic environment is changing rapidly, especially with regard to the erosion of the coastlines from storm surges, early breakup and late freeze of ice and shifts in density, and

the composition of the Arctic flora and fauna.

Over the last five decades, according to the Arctic Climate Impact Assessment Report, the thickness of the Arctic ice and the ice’s spread have been declining at an annual average rate of 3.7 percent. At this rate of decline, theoretical models forecast that the Arctic will be completely free of ice by 2040.

An ice free land or reduction of hard ice on the high seas will open new opportunities for oil and natural gas production from longer exploration seasons, as well as in transportation from maritime transportation and summer-time trans-Arctic shipping that takes advantage of the shorter distance between Asia and Europe.

There will be socioeconomic consequences as the Arctic and the adjacent subArctic seas supply food for indigenous peoples whose traditional way of life and culture are affected by the prevalence of open water.

Furthermore, the fragile Arctic ice might move at a greater speed with potential risks to off-shore/on-shore oil rigs and vessels (e.g., as was experienced by Terra Nova, a large oil field located about 230 miles off the coast of Newfoundland); and roads, runways, pipelines, harbors, and homes all will become more vulnerable to the effects of warming in permafrost-rich regions.

Oil and natural gas companies are likely to take higher risks due to guaranteed returns on their investments in the exploration of these reserves from the region due to its low political risk as measured by the Political Risk Services Group Index (Canada’s index is 94 as compared to, say, Iran’s index of 45: note that higher the index, lower is the political risk).

It is estimated that the Arctic has one of the largest hydrocarbon reserves in the world. Notably, Russia, Greenland, and Norway alone hold 82 percent of the total Arctic gas resources with the remaining 18 percent split between the United States and Canada. Interestingly, Russia, Greenland, and Norway account for 63 percent of the total Arctic oil resources with the remaining 37 percent split between the United States and Canada as seen in Figure 1.

Alaska Business Monthly | March 2015 www.akbizmag.com

such products with alternative sources of energy becoming more viable. The EIA recently opined that oil prices are likely to average $83 a barrel in 2015.

Strong declines in commodity prices typically signify a supply-demand imbalance.

As to how low the oil prices can go may depend on how much China’s economy slows down as the world’s largest consumer of oil.

SOURCE: USGS 2008

Alaska’s Immediate Concerns: Declining Oil Fossil fuels in general, and in particular oil, are traded in an imperfectly competitive market with limited number of suppliers

and numerous consumers. In the international gas market, the global price setting is complex as consumers and suppliers are, for the most part, tangled together by longterm purchase agreements that involve drilling, transportation, and investment in infrastructure development activities, thus discouraging a switch to a cheaper supplier.

EIA’s Annual Energy Outlook in 2012 presented a price scenario analysis for the Alaska North Slope production, as seen in Figure 2. To maintain the current oil production level in the Arctic, the price of oil must maintain a threshold price of $80 and above per barrel. The same study indicates

The US Energy Information Administration (EIA) estimates that in the next twenty-five years, the overall world consumption of oil and natural gas will increase by 20 percent and 50 percent respectively.

Based on this forecast, it is obvious that the oil and natural gas resources in the Arctic will play a significant role in geopolitics (e.g., in November 2014, to stem the slide in Russia’s exports from oil prices, Russia signed a deal with China to export gas from Siberia via new pipelines in order to replace Europe as its main export market).

The global demand for oil is unlikely to decline mainly due to the emerging markets in China and India, both of which are not significant oil producers and will have a burgeoning middle class fueling the demand for automobiles and other energy centric consumer products.

Challenges of Oil and Gas Exploration in the Arctic There is a premium cost to explore the reserves in the Arctic (due to remoteness, lack of infrastructure, extreme weather conditions, and others). Additionally, alternative energy sources may become more competitive if oil and gas costs reach the backstop prices.

Increased awareness and government policies to reduce the climate effects caused by fossil fuel pollutants, as well as increasing taxes on the use of fossil fuels may significantly impact the demand for such products. The resultant ramifications from these challenges may impact the supply and demand for oil and gas leading to reduced production and consumption of www.akbizmag.com

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March 2015 | Alaska Business Monthly

115

SOURCE: US Energy Information Administration 2012

that Arctic oil and gas production will increase significantly if the oil price crosses $130 per barrel, taking into account estimated global demand and supply projection near 2030.

In the worst case scenario, if oil prices were to fall below $75 a barrel, the oil flow through the Trans Alaska Pipeline System might decline to a level of non-operational capacity. EIA also estimates that the offshore Arctic production costs (including drilling, production facilities, operating, and decommissioning) to be approximately $35 to $40 per barrel.

However, an interesting observation outlined in the study by the Arctic Monitoring and Assessment Program shows that historically, the increased development in the Arctic mostly consisting of increased permits issued by the governments, exploration and discovery wells, ground monitoring, seismic analysis, and production wells, is not nearly correlated to high oil prices.

We feel that if oil prices go up, Alaska’s current oil production trend may be reversed.

There might also be operational issues with the declining oil supply flowing from North Slope to Valdez. The Alyeska Pipeline Service Company estimates low crude oil flow rates through the Trans Alaska Pipeline System below 600,000 barrels per

day might lead to technical issues, including pipeline corrosion by potential water drop out from crude oil, ice formation, wax precipitation, deposition and displacement of buried pipelines from soil freeze and thaw as pipeline operating temperatures decrease.

Continued Focus on the Arctic

The Arctic will continue to be a focus and will be a major hub for operations for oil and gas companies, Arctic and non-Arctic nations, and environmental groups, due to the

reasons enunciated earlier in this article. A number of factors make the Arctic attractive such as the low political risks of most Arctic nations belonging to the western capitalist economies with entrepreneurial communities driven by aggressive local and federal government business-friendly policies).

Some oil and gas companies have formed consortium to explore the Arctic and leverage each other’s capabilities for resource optimization.

Russia, which holds the largest reserves of Arctic oil and natural gas, has national-

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ized its energy sector. As a consequence, global political and economic trends are less likely to impact Russia’s aggressive strategy in resource exploration and market share. This may force other Arctic nations to follow suit and pave the way for a busier Arctic passage.

Needless to say, Arctic nations have been granting exploration licenses to oil companies who have invested approximately $5 billion in just the last decade. The Arctic serves as a backup for the oil companies’ long-term supply strategy.

There are also bilateral collaborative efforts through government/nongovernment agencies addressing the various issues of Arctic resource development ranging from physical infrastructure, logistical and operational support, and multilateral research opportunities to investments. The US Arctic Research Commission, in its recent white paper on oil spills in the Arctic, recommends future work in areas such as oil spill response technologies for cleanup and recovery of oil, data management tools, and long term effects, thereby providing a clear roadmap for strategic development of natural resources.

At the confluence of smart resource extraction, hidden riches, and the preservation of pristine landscape, stands the Arctic as an enigmatic and mystic place for the future. R Dr. Shiva Hullavarad is the Enterprise Content Management administrator at the University of Alaska System.

Hullavarad has graduate degrees in physics and in business administration, and has authored seventy publications.

Dr. Ashok K. Roy is the Vice President for Finance & Administration/ Chief Financial Officer of the University of Alaska System and Associate Professor of Business Administration at the University of Alaska Fairbanks.

Roy holds six university degrees and five professional certifications, and has authored over eighty-five publications. www.akbizmag.com

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special section

Arctic Oil & Gas

Structural Standards: ISO 19906:2010 in Alaska

Photo courtesy of Furie Operating Alaska LLC

Furie’s Kitchen Lights offshore platform (shown under construction last May) will meet the international construction standards of ISO 19906:2010, which classifies Cook Inlet as a unique Arctic environment.

B

By Kirsten Swann

etween environmental concerns, permitting requirements, economics, and politics, developing oil and gas projects in Alaska’s Arctic waters is no simple endeavor.

Major corporations spend years and millions of dollars in hopes of tapping into subsea reserves in the Chukchi and Beaufort Seas. Ongoing regulatory hurdles continue to stand in the way of exploration. Production remains—at the very least—several years away.

By the time that happens, there may be another element in the mix: the rigorous construction standards of ISO 19906:2010.

Esoteric in Alaska ISO 19906:2010, a set of international normative standards, covers oil and 118

gas-related structures in offshore Arctic waters, but it remains relatively esoteric in Alaska. Industry groups are unfamiliar with the name. Very few projects have been built under 19906 standards.

One day, though, that could all change.

“We’re kind of ahead of the game,” says Dr. Andrew Metzger, an assistant professor of civil engineering at the University of Alaska Anchorage.

Last updated in 2010, the 19906 was put together by a group representing seven different Arctic nations, Metzger says. There were engineers, scientists, and representatives from the petroleum industry, all coming together to develop a consensus standard for offshore structures in harsh Arctic environments.

The 19906 is part of a seven-part series governing offshore structures—the full series also includes specific requirements for petroleum and natural

gas industry offshore structures, fixed steel offshore structures, floating offshore structures, fixed concrete offshore structures, and site-specific assessments of mobile offshore units. The standard dealing with offshore structures in Arctic environments was developed by Technical Committee ISO/TC 67, which covers materials, equipment, and offshore structures for petroleum, petrochemical, and natural gas industries.

But not all Arctic environments are created equal, and Metzger says that’s the trick with writing building codes.

“If you make it too restrictive, you can stifle or create a situation where you’re not able to build anything: Too broad, and people can build whatever they want,” he says. “So they laid out this design philosophy, and it’s up to the user to come up with the numbers to implement that design philosophy.”

Alaska Business Monthly | March 2015 www.akbizmag.com

Metzger is part of the scientific team working to tailor the design philosophy of 19906:2010 for use in the unique Alaska Arctic.

The federal Bureau of Safety and Environmental Enforcement (BSEE) funds his work through a grant to the university, and a federal regulatory agency may eventually choose to adopt the 19906:2010 as a requirement for offshore work in US Arctic waters. If that happens, Metzger says, industry groups would do well to understand it.

Huge Document The document itself is nearly five hundred pages long. According to the International Standards Organization, the independent group that publishes it, 19906 “specifies requirements and provides recommendations and guidance for the design, construction, transportation, installation, and removal of offshore structures, related to the activities of the petroleum and natural gas industries in Arctic and cold regions.”

It exists to make sure that Arctic offshore structures provide a standard level of reliability when it comes to ev-

erything from safety to environmental protection and asset value, the ISO states. In general, though, 19906:2010 doesn’t cover operations, maintenance, service-life inspection, or repair.

The series of standards stresses the importance of structural integrity as an overall concept comprising models for design rules, structural analyses, describing actions, safety elements, workmanship, quality control, and other requirements, “all of which are mutually dependent.”

According to the standard’s official introduction, it intends to achieve structural reliability regardless of the type of offshore structure or the nature or combination of materials used in construction. Changing just one part of an overall design can disrupt the balance of reliability, and the implications of even a single modification need to be considered as part of a whole.

The 19906:2010 aims to provide “wide latitude” in choice of structural configurations, materials, and techniques, and it was developed in response to industry demand for “a coherent and consistent definition of methodologies to design, analyze, and assess Arctic and cold re-

gion offshore structures,” according to the International Standards Organization. Among many other topics, the standard address issues like topsides winterization, escape, evacuation, and rescue, all unique to Arctic climes.

But there’s still much work to be done before the 19906 standard can be applied to Alaska’s Arctic. Metzger says there are many unknowns about the specific Alaska conditions applicable to the international construction standard.

“The 19906 normative is a reliabilitybased philosophy that’s laid out in such a way that you will achieve a desired level of reliability in an offshore structure,” Metzger says. “What is missing from the current document are the numbers you put into that reliability algorithm.”

That’s where the team of BSEE-funded researchers comes in.

First Known in Europe Metzger says he first learned about 19906 from faculty in Europe and was intrigued by the questions it presented for Alaska’s offshore waters.

“Knowing what I know about building codes, if they’re going to try to have

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a building code in the Arctic, there are some questions and blanks that need to be filled in if they’re actually going to implement this document,” he says.

There are questions about seismic conditions, wind, currents, temperature, and—perhaps most importantly—questions about sea ice.

Before the 19906, Metzger says, there was no internationally accepted consensus standard for the design of offshore structures in the Arctic; no consensus standards for the force of ice on any particular structure; no consensus standards for which ice features engineers should consider when building those offshore structures. And, he says, “Ice is a complicated thing.”

“You have level ice, that’s just a plane, a sheet of ice; then up there we have pressure ridges, which can extend … it’s just a jumble of ice, when the ice gets pressed together you get a sail up top and a keel down below, it’s a big mass of ice; then coming out of the Canadian Arctic we also have what we call multi-year ice—ice that’s been around longer than two years.

It tends to be denser and stronger, so if it impacts your structure it will cause more

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“The knee-jerk reaction, especially at the policy level, is, ‘Well, we want no risk, we want no probability of failure.’

That’s not practical. You wouldn’t build anything, in that case.

There’s always uncertainty.”

—Dr. Andrew Metzger Assistant Professor of Civil Engineering, University of Alaska Anchorage

force on the structure,” Metzger says.

“So what the 19906 does, among other things, is it will help characterize the demands in the Arctic, and it is heavily concerned with sea ice conditions.”

Currently, according to BSEE, the lack of sea ice design criteria specific to US Arctic waters makes implementation of the 19906 “questionable.”

Metzger says he and his team plan on studying sea ice conditions throughout 2015. The data they gather will be used to manage uncertainties and complete reliability algorithms within the normative.

“Right now, my research team is looking at what size pressure ridge should we consider? Other work has been done when it comes to multi-year ice: How much of a hazard is it? We know it exists but in the lease areas, it really doesn’t

show up that often, it’s kind of what we call an ‘outlier event,’” Metzger says. “It may or may not show up, it’s not certain you’re going to run into multi-year ice.”

It could happen, though, and he says it could “potentially be an extraordinary event.”

Metzger says the data he and his team work with shows two thousand to seven thousand pressure ridges of varying sizes would hit an Arctic offshore structure during any given season. He says their work involves looking at the statistics surrounding pressure ridge size and probability. What size ridge would have a low probability of occurring over the lifespan of a structure?

The current standard doesn’t have that information, he says. And while customizing the 19906 for Alaska’s Arc-

Alaska Business Monthly | March 2015 www.akbizmag.com

tic wouldn’t completely ensure the success of an offshore oil or gas structure, it would provide an internationally accepted level of reliability.

“The knee-jerk reaction, especially at the policy level, is, ‘Well, we want no risk, we want no probability of failure.’ That’s not practical,” Metzger says.

“You wouldn’t build anything, in that case. There’s always uncertainty.”

Compliance in Cook Inlet While Metzger and his team are still months away from completing their research, at least one Alaska offshore structure is already making headway under the prescriptions of ISO 19906:2010.

Furie Operating Alaska LLC, a Texas-based company with lease rights to more than eighty-three thousand acres in Cook Inlet, is working to begin production from the first offshore platform to come to the inlet since Forest Oil Corporation’s Osprey platform in 2000.

The Furie project involves installing and operating a natural gas production platform and subsea natural gas pipelines in the Kitchen Lights Unit, as well as an onshore production facility near Nikiski.

Photo courtesy of Furie Operating Alaska LLC

Furie’s Kitchen Lights offshore platform on a Crowley barge in Seattle before shipment to Cook Inlet in Alaska.

According to the Alaska Department of Natural Resources, the Kitchen Lights Unit is initially expected to produce up to 200 million standard cubic feet of natural gas every day. The gas would travel from

the offshore platform and through two underwater pipelines to the onshore facility for eventual delivery throughout the Railbelt, state permitting, documents filed with the Division of Oil and Gas show.

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And according to Furie’s unit plan of operations, the Kitchen Lights offshore platform will meet the international construction standards of ISO 19906:2010, which classifies Cook Inlet as a unique Arctic environment.

The standards include requirements that an offshore natural gas platform be designed to withstand extreme meteorological or oceanic events with no damage and abnormal events with minimal damage—no loss of life or pollution— according to Furie’s plan of operations.

An extreme event could include a 100-year ice event or a 200-year seismic activity and the accompanying wind and current activity, while abnormal events include combined environmental factors like ice, seismic, wind, and currents. The energy company’s operating plan describes a 100-year event as one of so large that it has only a one percent chance of “occurring or being exceeded in any one year,” while a 200year event has just half that chance.

The Furie platform is built to withstand the crushing impact of 100-year strength sheet ice, wind, waves and currents and 200-year strength volca-

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nic activity and earthquakes.

According to the final operating plan approval for the project, issued by the Alaska Department of Natural Resources Division of Oil and Gas in May 2014, the Kitchen Lights Unit gas platform will be a monopod supported by a single eighteen-foot caisson. Development there is expected to produce up to 300 billion cubic feet of gas annually, with the possibility of drilling up to six wells, according to the state.

The platform facility will include gaspowered generators, a test separator, a methanol injection skid, a main deck and helideck, an air compressor, a utility water pump and gas scrubber/filter skid, a vent scrubber, two five thousand-gallon potable water storage tanks, a sewage treatment center, crane, and well control headers and manifold. According to the operating plan approval, the platform’s main deck will accommodate a workover rig during operations and additional wellservicing and well completion activities.

“Although not required by ISO 19906:2010, the platform is conservatively engineered to withstand the combined impacts of 80 percent of the force

generated by a 100-year sheet ice event, 80 percent of a 200-year earthquake event, and 100 percent of a 100-year current event occurring simultaneously,” Furie’s operating plan states.

While the international normative for offshore platforms has made its way into Cook Inlet, it’s still far away from more northern waters. In Alaska’s Arctic, exploration and subsequent production face an uncertain future.

Drilling on Hold in Chukchi Energy giants ConocoPhillips, Shell, and Statoil all hold offshore leases in the Chukchi Sea, but drilling remains on hold while the Bureau of Ocean Energy Management, or BOEM, completes a Supplemental Environmental Impact Statement for a 2008 lease sale.

ConocoPhillips, which holds seventyone blocks of federal offshore leases and originally planned on exploratory drilling in 2014, says it’s now reassessing the situation.

“We plan to work with the federal government and other stakeholders to further define and clarify the regulatory requirements for drilling in the Alaska

Alaska Business Monthly | March 2015 www.akbizmag.com

Arctic offshore,” the company says in a brief statement. “Once those requirements are understood, we will reevaluate our Chukchi Sea drilling plans.”

Shell, which was awarded 275 Arctic OCS leases following the 2008 sale, submitted a draft revised Chukchi Sea exploration plan to BOEM in August 2014.

The plan was not formally deemed submitted, though, and the bureau did not accept public comment on it at that time.

The draft exploration plan outlines a proposal to continue exploratory drilling activities in six lease blocks within the promising Burger Prospect in 2015. Shell was last active at the site three years ago, when Burger A was drilled to a depth of 1,505 feet then temporarily abandoned according to BSEE regulations.

A spokeswoman for Shell declined to comment on the company’s current Arctic plans.

Until there is exploration, though, there will be no production. Until there is production, Metzger says, the standards and requirements of ISO 19906:2010 will remain largely irrelevant for Alaska subcontractors.

“We’re looking at a ten-year time frame before we would start building permitted structures out there, at the minimum.

They’re in the exploratory phase right now: ISO [19906:2010] is for offshore structures that are meant to be out there for a while. Right now we’re just dealing with seasonal facilities that they can float out, drill a well, and float away,” the civil engineer says. “If we move into permanent deployment—permanent would mean it would have a twenty-or-moreyear design life; it would be designed with the intent of being out in that environment for twenty or more years—then the ISO becomes more pertinent.”

Metzger says he’s seen starts and stops in the Arctic for several years now, and there’s much uncertainty surrounding offshore production.

“If the price [of oil] goes too low, it just might not be worth pursuing anymore,” he says. “It’s hard to say what will happen.”

The 19906 prescriptive standard has been adopted by the European Union, according to the Brookings Energy Security and Climate Initiative. Russia and Canada are in the process of adopting it as a requirement for offshore structures.

The standard isn’t yet a requirement www.akbizmag.com

in the United States, Metzger says, and not widely applicable for industry use.

As Arctic development inches forward, though, the international standard becomes increasingly relevant for regulatory agencies and commercial groups alike.

Metzger—who’s worked on consensusbased standards for buildings, docks, ferry landings, and others structures—says he has a different kind of interest in standardizing Arctic offshore infrastructure.

“My academic curiosity is, ‘Ok, we move into the offshore environment with sea ice, which is a very compli-

cated phenomenon, how do we come up with a reliability-based consensus standard?’” he asks.

As for the 19906:2010’s applicability for Alaska businesses: Metzger says it’s still just a distant possibility.

“If I was a business owner, would I buy several copies of the standard and have my staff come up to speed on it?

That might be premature,” he says. R Kirsten Swann is an independent journalist based in Anchorage.

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Arctic Oil & Gas

Point Thomson: Alaskaâ&#x20AC;&#x2122;s Big

Photo courtesy of CH2M HILL Alaska

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Alaska Business Monthly | March 2015 www.akbizmag.com

Arctic Project

Extending industry infrastructure on the North Slope

By Mike Bradner

T

he Point Thomson project sixty miles east of Prudhoe Bay is one of the largest and most technically challenging oil and gas projects built in years on the North Slope. It is requiring $4 billion by its owners, mainly Exxon Mobil Corporation and BP Exploration (Alaska), Inc., and while it will produce condensates, a natural gas liquid, it can also be seen as the first part of the larger natural gas pipeline and liquefied natural gas (LNG) project that will commercialize Alaskaâ&#x20AC;&#x2122;s large North Slope gas resources.

This is no conventional oil and gas field. Point Thomson is mainly a natural gas deposit with about 8 trillion cubic feet of gas, but there is also an estimated 200 million barrels of liquid condensates in the reservoir along with the gas.

There are difficulties, however. The reservoir is at an extreme high pressure at over ten thousand pounds per square inch, which is about twice the original reservoir pressure of the Prudhoe Bay field. It is one of the highest-pressure oil and gas reservoirs in the world, and safely drilling into, and producing from, such a high-pressure field is tricky, requiring advanced technologies and experienced companies.

High Pressure Point Thomson was discovered in the 1970s by ExxonMobil but remained undeveloped because the field was remote and there was no way to market the natural gas. The liquid condensates, however, can be produced and, if transported to Prudhoe Bay, mixed with the crude oil in the Trans Alaska Pipeline System, or TAPS, and sent to market. But producing the condensates also involves producing gas, and since state law prohibits the flaring of gas it must be injected back underground, an www.akbizmag.com

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expensive proposition with a high pressure reservoir.

Given the delays in building the gas pipeline the state Department of Natural Resources, which manages the state’s North Slope’s lands, pressed ExxonMobil and the other lease owners to pursue ways to develop and produce the condensates as a way to develop the leases.

The plan ExxonMobil ultimately developed was gas “recycling,” or producing the gas and liquids, removing the liquids, injecting the gas back underground, and shipping the condensates on to Prudhoe Bay and TAPS through a new pipeline.

The principle of gas cycling is to drill wells and produce the gas, which contains the condensates, remove the condensate liquids at the surface (this is accomplished by lowering the pressure so the liquids “drop out” of the gas) injecting the gas back underground, and sending the liquids on to Prudhoe Bay. This isn’t easy with such a high-pressure field, however. The well casings and tubular piping for the wells have to be sturdy enough to handle the high

126

pressure—likewise the gas process vessels in the production facilities, which have to be thick-walled and made with special steels. The compression equipment that repressurizes the gas, injecting it back underground, have to be at pressures higher than the natural reservoir (so the gas can be pushed back in), and the compression technology to be used at Point Thomson is leadingedge in the industry. Until recent years it was simply not available, in fact.

The principle of the “cycling” is that the injected gas, which is put underground through special injection wells, moves through the reservoir rock toward the producing wells and is produced again along with more liquids.

Having been produced once with liquids removed the gas is “lean” when injected. It reacquires liquids as it moves through the reservoir rock. When the gas, now with liquids, is produced again, the liquids are stripped off for sale and the gas, once again lean, is injected again.

This will happen again and again as the field is produced, so the gas is thus “cycled.” The mechanism that causes

the gas to move through the reservoir rock is that the injection is done at high pressure and the nearby producing well is a point of lower pressure, because gas is being produced. The gas thus moves from a point of high pressure at the injector well to the point of lower pressure, the producer, in the same way that air in the atmosphere moves from high pressure to lower pressure areas as wind.

There is always uncertainty as how efficiently this will function, because there is, as yet, no production history at Point Thomson. The actual performance will determine whether the project can be expanded, so the petroleum engineers will be watching closely, monitoring the wells.

Point Thomson is scheduled to begin production in 2016 and will initially produce ten thousand barrels a day of condensates in a first phase. There could be an expansion of condensate production, to about thirty thousand barrels per day, if the reservoir performs well, but the facilities are also being designed to just produce gas or a combination of gas and condensates. In this way Point

Alaska Business Monthly | March 2015 www.akbizmag.com

Thomson could truly become the first part of the bigger gas pipeline and LNG project.

In Construction Meanwhile, the field is in construction. The most critical part of ensuring that Point Thomson’s startup is orderly Bailey and on schedule—that it works as expected and things are put together properly—requires extensive pre-planning, site preparation, and coordination. The ultimate goal is that everything fits together like Legos after the huge modules built in South Korea arrive by sealift in summer 2015, says Terry Bailey, senior vice president and Alaska manager for CH2M HILL. CH2M HILL’s Alaska division is one of the companies playing a key role in Point Thomson’s construction with the assistance of two other firms, Delta Constructors and ASRC Energy Services, a subsidiary of Arctic Slope Regional Corporation. The contractor list at Point Thomson is a virtual who’s who of Alaska’s oil support industry, with companies like Alaska Frontier

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Constructors (civil); Doyon Associated (pipelines); Crowley, NANA Oilfield Services, and Alutiiq General Contractors (warehouses); and other Alaska companies deeply engaged.

CH2M HILL has had an office in Alaska for more than fifty years, working in its legacy fields of water, wastewater, transportation, and environmental but branched out into oilfield support work with the purchase of Veco Corporation, an Alaska company, in 2007.

Point Thomson is the company’s largest project in years. Four large modules totaling ten thousand tons in weight will be landed and moved onto pre-installed steel vertical support members.

Everything has to fit precisely, Bailey says. Engineering and construction teams have spent months developing meticulous plans for this installation.

The company has a second assignment, too, which is managing the fabrication of smaller “truckable” modules and other equipment that are assembled in Anchorage and moved to

the North Slope by truck on the Dalton Highway and then east sixty miles, by ice road, to Point Thomson.

There are technical challenges even with the smaller modules because of the unique nature of Point Thomson, Bailey says. The underground reservoir is at an extreme high pressure so that special high-strength steel has to be used in the piping and gas processing vessels, he says. Some of the steel is two and three-quarters inch thick. The piping varies from three to eight inches in diameter. “It’s like welding gun barrels,” Bailey says.

CH2M HILL has spent a lot of time developing welding procedures, certifications, and safety training for working with the special steel.

‘Work Packages’ An important part of the construction planning is developing the construction “work packages,” the detailed instructions of how to translate engineering to a physical facility. “It’s like a cookbook.

Worley Parsons does the engineering and our task is to develop a construction activity plan, the ‘what to do first’

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Photo courtesy of CH2M HILL Alaska

Point Thomson central pad area.

plan, along with all the material lists,” Bailey says.

It’s a big scope of work and the planning has to be meticulous. “We have to ensure the material arrives when it is needed and stored properly, and that the work doesn’t interfere with the drilling activities, which will be happening at the same time. There is a lot of activity on a small footprint.” Bailey says.

The steel vertical support members have to be set precisely on the gravel pad to support the module when it is moved into position. A lot of buried cable and above ground pipe racks have to be set in place in advance. Piping installed in the modules in South Korea has to match up precisely to pipe installed at Point Thomson. All this takes months of planning.

CH2M Hill has also sent teams to South Korea to coordinate with the module fabricator. One goal, Bailey says, is to ensure that the facilities meet the proper Alaska fire safety codes.

“There have been cases in the past where modules built overseas have arrived on the slope without being able to pass muster with the state fire marshal,” he says. In that case, costly onsite remediation was needed before the facilities could be put into operation.

That mistake cannot be made at Point Thomson.

On almost all large module projects, there is also some work that may not be 128

quite finished at barge sailing time, always a critical date because it is aimed at meeting the open-water season in the Beaufort Sea and getting to Point Thomson at the right time. With its people on scene at the Hyundai Heavy Industries fabrication site in Korea, CH2M HILL aims to minimize unfinished work but also plan for anything that does have to be accomplished after the modules arrive at Point Thomson.

Point Thomson modules will weigh in on average at about 2,500 tons each.

They won’t be the largest installed on the slope–that prize goes to the GHX gas processing module for Prudhoe Bay, which were 5,000 tons. But they are still big.

The companies that are engaged have a lot of experience installing modules on the slope. CH2M HILL’s predecessor, VECO Corp., installed most of the large modules on the slope following the startup of Prudhoe Bay in 1977, with the exception of the Alpine field where module installation as well as fabrication was done by ASRC Energy Services.

Large Workforce CH2M HILL and its subcontractors currently have about 400 people working on Point Thomson, including people on rotation, and the number will grow to 450 or 500 at the peak of activity next summer.

Bailey is proud of the Alaska-hire

performance of CH2M HILL and its subcontractors—89 percent so far. The company has also made a special effort to recruit experienced veterans and military retirees not yet ready to finish their working careers. These people bring skills and good work habits and are accustomed to working in remote, sometimes difficult locations.

About 10 percent of CH2M HILL’s Point Thomson workforce is former military, Bailey says.

Meanwhile, a lot of construction has been accomplished at Point Thomson.

A new 22.2-mile pipeline has been completed from the field to a connection with the existing Badami pipeline, which connects to Prudhoe Bay. A permanent operations camp, a mile-long airstrip, marine facilities, warehouses, power generation—all are in place.

Point Thomson is a busy place this winter, too. All 815 beds in the Point Thomson construction camp are expected to be filled, mostly by employees of the mainly-Alaskan contractors.

Activity planned for this winter, besides the installation of the truckable modules built by CH2M HILL and Arctic Slope Energy, includes the installation of field gathering lines by Doyon and the additional installation of piling.

One of the most significant things about Point Thomson is that it has extended industry infrastructure, like the pipeline and the facilities at the field, to the eastern North Slope. The pipeline, for example, is built with a capacity of seventy thousand barrels per day, far more than the initial ten thousand barrels per day Point Thomson will produce. This leaves ample capacity for conventional oil that is likely to be produced from several known but undeveloped oil deposits that are nearby.

What is also important is that if Congress ever opens the nearby Arctic National Wildlife Refuge coastal plain to exploration, or oil is discovered offshore in the eastern Alaskan Beaufort Sea where Shell has been exploring, Point Thomson’s facilities could play an important support role in those developments.

R Mike Bradner is publisher of the Alaska Economic Report and Alaska Legislative Digest.

Alaska Business Monthly | March 2015 www.akbizmag.com

special section

Arctic Oil & Gas

Blaming Oil Tax Reform for Alaska’s Current Budget Deficit Is Just Plain Wrong

By Jim Jansen

O

The opinions expressed herein are the author’s own and not those of Alaska Business Publishing Company, Inc.

ur budget deficit today is a result of low oil prices, low oil production, and overspending, not oil tax reform.

A group of Native leaders, unions, businessmen, and thousands of Alaskans who care deeply about Alaska’s long-term economic future led a threeyear campaign to reform oil taxes to stop the decline of oil production.

We spent an additional year defending against a referendum to repeal the new law, called SB21.

If we had not been successful, Alaska’s current deficit could be substantially worse. Here’s why: SB21 raised the base tax rate but eliminated progressivity so taxes are lower under high oil prices but the state collects more revenue when prices are low. With oil less than $50/barrel that means Alaska is in much better shape with the new tax law because today’s more predictable and stable tax policy encourages the oil industry to increase investment. More investment equals more oil.

Secondly, the new tax law changed the way tax credits are issued. Now they are tied to production to provide incentives to put more oil in the pipeline, as opposed to the prior credits which were based on dollars spent.

Many of the exploration credits are going to smaller or new companies that are actively seeking new oil, but have not yet reached the development stage.

They are also going to Cook Inlet as well as the North Slope. If Alaska cuts back on these credits we may receive a little more present revenue, but would sacrifice future revenue from the new 130

Jansen

oil that will result. As prices improve, Alaska will benefit from more oil.

Even though we have a serious budget deficit problem this year, let’s consider the positives spurred by tax reform.

Employment and spending by the oil industry is at record highs, caused by major investment on the North Slope.

This activity is slowing the production decline with renewed ability to reverse the decline and increase production.

This gives Alaska opportunity for a sustainable, long-term economic future. It also keeps Alaskans employed.

Oil tax reform was a very long and difficult process, with thousands of hours of testimony, public education, and a huge effort by thousands of Alaskans. If we had failed, Alaska would not only face a larger budget deficit today,

but the economy would be worse as the drilling activity in Alaska would be much less vibrant, and there would be little chance of stemming the production decline.

Alaska’s economy needs a stable, competitive tax and regulatory environment and a partnership with the resource companies to encourage investment to reverse the production decline.

There is no way that Alaska can tax our way to prosperity.

Most of the talk recently has been about production tax rates. The winwin for Alaska is to increase new and old oil production, resulting in increased royalties, state corporate tax, property taxes, and production taxes.

The Walker Administration, the Legislature, and Alaskans statewide face serious budget challenges ahead. We need to continue to work together to make tough decisions that will determine whether Alaska is a place where our kids and grandkids can live, work, and prosper.

At this critical time, it is imperative that we view the resource industry as our partners to keep the State moving forward.

Finding fair and balanced solutions to our budget deficit—while building on our renewed activity and competitive improvements—creates the foundation we need for Alaska’s future generations. R

Jim Jansen is the Chairman of Lynden and a co-founder of the Make Alaska Competitive coalition.

Alaska Business Monthly | March 2015 www.akbizmag.com

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special section

Arctic Oil & Gas

Editor’s Note: We’re offering a brief look at an important work that’s recently been completed by Kevin Hilmer-Pegram, an Interdisciplinary PhD candidate at the University of Alaska Fairbanks. He is in the Resilience and Adaptation Program and housed in the Political Science Department and has given Alaska Business Monthly permission to republish excerpts from the report.

Because we do not have room for the entire report in these pages, we’ve selected three maps as an overview and encourage all to download the entire report, read it, and use it when engaging in Arctic discussions, planning, and activities. Go online to the UAF International Arctic Research Center website iarc.uaf.edu/en/NX2020/current-projects/oil and click on the cover image.

A Synthesis of Existing, Planned, and Proposed Infrastructure and Operations Supporting Oil and Gas Activities and Commercial Transportation in Arctic Alaska

By Kevin Hillmer-Pegram Author’s Summary This report synthesizes quantitative and qualitative information about existing, planned, and proposed infrastructure and operations that support oil and gas production and commercial Map 10: Existing, Planned, and Proposed Infrastructure Supporting Oil and Gas Activities and Commercial Transportation in Arctic Alaska.

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Nathan Walker, Melanie Smith/Audubon Alaska

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Nathan Walker, Melanie Smith/Audubon Alaska

transportation over the whole of Arctic Alaska, compiling a region-wide vision of these industrial activities that has not previously existed. It provides readers with an overview of the history, current conditions, and plausible future extent of industrial infrastructure in Arctic Alaska. It is intended as a factual and unbiased reference for the wide range of stakeholders interested in such industrial activities in support of integrated Arctic planning.

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In addition to tables and text, the report contains ten original maps of infrastructure created by Nathan Walker with the aid of Melanie Smith at Audubon Alaska. Numerous beautiful photographs of oil and gas infrastructure in Arctic Alaska illustrate it.

The report finds that if proposed infrastructure projects develop in the manner described in state and federal analyses, the extent of Arctic Alaskaâ&#x20AC;&#x2122;s industrial infrastructure would increase

significantly. The number of structures would almost double, from 460 to 816.

The number of wells would increase by around one third, from 6,215 to 8,673.

Miles of road would more than double, from 1,138 to 2,503. Miles of pipeline would more than quadruple, from 901 to 4,667. Lastly, the infrastructure footprint would increase by about half, with over 27,000 acres of Arctic Alaska ultimately being directly covered or excavated for industrial development.

Alaska Business Monthly | March 2015 www.akbizmag.com

Map 9: Marine Vessel Traffic (20092012) and Deep Draft Ports in Arctic Alaska.

Given the significant amount of infrastructure that is plausibly foreseeable, the benefits and drawbacks of developmentâ&#x20AC;&#x201D;in terms of economic, social, and environmental impactsâ&#x20AC;&#x201D; should be carefully weighed and deliberated by the multiple stakeholders involved in regional decision-making. www.akbizmag.com

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Nathan Walker, Melanie Smith/Audubon Alaska

Sub-Regions of Arctic Alaska Introduction The land and sea sub-regions that comprise Arctic Alaska exhibit a complex arrangement of political jurisdictions and legal designations for use. Authority over different areas is divided among federal, state, municipal, and Alaska Native entities, with multiple organiza-

tions sharing authority in many cases.

The purpose of this chapter is to introduce the reader to Arctic Alaska by briefly describing the jurisdictions and designations for use in each sub region used by this report. The six sub-regions generally follow common geographic and political boundaries and should be recognizable to most readers.7

Many of the major political boundaries in Arctic Alaska, however, do not align with the boundaries of the ecoregions described previously. Accordingly, readers should not view the six sub-regions as independent, self-contained units. Rather the six sub-regions may be connected to other sub-regions through the movement of and interaction among not only

This report uses political boundaries that correspond to previous studies of oil gas infrastructure in order to ease data analysis and presentation. The political boundaries of boroughs and census areas in Arctic Alaska are also important but not discussed here. North Slope Borough, Northwest Arctic Borough, Nome Census Area, and Yukon-Koyukuk Census Area can be seen at http://labor.alaska.gov/research/census/maps/AlaskaBorCA2013.pdf.

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Map 1: Sub-regions of Arctic Alaska.

plant and animal species, but also people, natural resources, and infrastructure.

Indeed, the connectedness of the subregions is a significant factor in creating the need for comprehensive planning. R Kevin Hillmer-Pegram is an Interdisciplinary PhD Candidate of Environmental Governance at the University of Alaska Fairbanks. www.akbizmag.com

truckwell.biz

5801 Silverado Way, Anchorage, AK 99518 | Tel. 907-312-1796

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special section

Arctic Oil & Gas

Olgoonik/Fairweather Receives ATC Distinguished Achievement Award

Photo courtesy of Olgoonik/ Fairweather LLC

An Olgoonik/Fairweather vessel crew safely deploys scientific equipment on the Chukchi Sea from the scientific research vessel R/V Westward Wind.

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Company honored for its contribution to the Chukchi Sea Environmental Studies Program

lgoonik/Fairweather LLC is being honored by the 2015 Arctic Technology Conference (ATC) with a Distinguished Achievement Award for its contribution to the Chukchi Sea Environmental Science Program (CSESP).

The award, shared by ConocoPhillips, Shell, and Statoil, recognizes the co-design and safe operation of one of the largest multidisciplinary science programs in the world. Having just completed its seventh year, the CSESP is operated by Olgoonik/Fairweather and supported by ConocoPhillips, Shell, and Statoil.

The CSESP is focused on characterizing pre-exploration baseline information on the ecology of the northeastern Chukchi Sea. Despite numerous logistical and natural hazards, the program has operated with zero recordable injuries, accumulating over 395,000 manexposure hours and 13,000 vessel miles.

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The CSESP covers an area of 37,000 square kilometers (14,286 square miles) of the northeastern Chukchi Sea. Disciplines of the program include: seabirds, marine mammals, plankton, physical oceanography, sediments, benthic studies, acoustic monitoring, chemical oceanography, and fisheries.

To date, over two hundred presentations, documents, and papers have been presented using data collected from the CSESP. The program features an unprecedented data sharing agreement with the National Oceanic and Atmospheric Administration (NOAA). Signed by the three sponsoring companies, this agreement enables all CSESP environmental data to be shared freely with the public through the NOAA and the Alaska Ocean Observing System (AOOS) websites: noaa.gov and aoos.org.

The ATC Distinguished Achievement

Awards honor individuals and organizations for their important technological, humanitarian, environmental, and leadership contributions to the Arctic industry. The 2015 Arctic Technology Conference will be held March 23â&#x20AC;&#x201C;25 in Copenhagen, Denmark.

Olgoonik/Fairweather LLC is a joint venture with Olgoonik Oilfield Services, a subsidiary of Olgoonik Corporation, the Alaska Native Corporation for the Village of Wainwright, and Fairweather Science, a leading provider of scientific research, remote sensing, and logistics services to the Arctic offshore oil and gas industry. The company operates a number of scientific research vessels in the Arcticâ&#x20AC;&#x201D;offering economy to its customers through cost sharing. Visit chukchiscience.com to learn more. R SOURCE: Olgoonik/Fairweather LLC

Alaska Business Monthly | March 2015 www.akbizmag.com

About the ATC ATC is an Arctic focused expansion of the Offshore Technology Conference (OTC), the world’s foremost event for the development of offshore resources in the fields of drilling, exploration, production, and environmental protection, founded in 1969.

ATC is built upon OTC’s successful multidisciplinary approach with fourteen technical societies and organizations working together to deliver the world’s most comprehensive Arctic event.

ATC is managed by the American Association of Petroleum Geologists and is supported by fifteen of the leading scientific organizations.

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SOURCE: arctictechnologyconference.org

About the Award For the first time, ATC 2015 opened The Distinguished Achievement Award for Organizations is awarded nominations for the Arctic Technolby the ATC to recognize distin- ogy Distinguished Achievement guished achievement by a com- Awards. Modelled after the prestipany, organization, or institution gious Offshore Technology Conferin the field of Arctic technology. ence (OTC) Distinguished AchieveTo be eligible for nomination and ment Awards, the ATC Awards consideration by the Awards Com- Committee considered nominations mittee, a company, organization, for major technological, humanitaror institution shall have made a dis- ian, environmental, and leadership tinct and unique achievement in, or contributions to the industry. The contribution to, any field of Arctic committee determined that only if technology. Examples include, but truly significant would it name an are not limited to, the application individual and a company, organiof concepts; the design, develop- zation, or institution as recipients of ment, and construction of tools, the first ATC Distinguished Achieveequipment, techniques, vessels, ment Awards. Anyone can nominate or instrumentation; contributions an individual or company and those to areas of safety, environmental nominations remain active for three efforts, engineering, or scientific years. More details about the Awards knowledge which has contributed and the nomination process are to the development of Arctic re- available under the Awards page at sources or environment. arctictechnologyconference.org. R

RIGHT MOVES Ahtna

Ahtna named Tim Finnigan as the President of subsidiary companies Ahtna Environmental, Inc. and Ahtna Engineering Services LLC. Finnigan will be based out of the Anchorage office.

Finnigan has been with the Ahtna family of companies since 2008. He has more Finnigan than fourteen years in an executive role and more than forty-four years in the construction/environmental industry. He has spent the last twenty years interfacing directly with government and commercial agencies for remediation and construction projects.

Carlile

C arlile Transpor t ation Systems hired Nance Larsen as The Corporate Director of Communications and Marketing. She has more than thirty years’ experience in communications, marketing, public relations, and advertising. Larsen’s experience includes develLarsen oping numerous public relations and fundraising campaigns and communication plans for several industry sectors. She received her BA in Journalism from Arizona State University.

SEARHC

SouthEast Alaska Regional Health Consortium Mt. Edgecumbe Hospital hired general surgeon Dr. Patricia McPherson. McPherson earned her medical degree at the University of Washington School of Medicine in Seattle and comes to SEARHC from her position as a surgeon at Claremore Indian Hospital in Claremore, Oklahoma. Her internship and residency was at East Tennessee State University, and she received two Bachelor of Science degrees from the University of Alaska Anchorage where she graduated with honors.

CRW Engineering Group, LLC

Cheryl Evans joined CRW Engineering Group LLC as the Director of Communications. Evans holds a Bachelor of Business Management from the University of Alaska Fairbanks and an MBA from Alaska Pacific University. Her broad background in executive administration and human resources management brings a wealth of experience as demonstrated in various

Compiled by Russ Slaten infrastructure-building organizations throughout Alaska over the last fifteen years including the Alaska Railroad Corporation, Shoreside Petroleum, and Fairweather LLC.

ACE Air Cargo

ACE Air Cargo has named Vicki Anderson as their Director of Sales, overseeing all aspects of marketing at the company.

Anderson joined ACE in 2005 and has served as a customer service representative, supervisor of customer service, and manager of customer service and Anderson passenger charters.

SolstenXP, Inc.

SolstenXP, Inc. promoted Stephen Lewis to Drilling and Wells Manager at SolstenXP. He brings with him extensive hands-on drilling engineering credentials with over forty years of experience in the design and execution of drilling programs worldwide. Lewis’ career focus has been onshore and offshore frontier exploration in remote and hostile environments including those at subarctic and Arctic latitudes.

MSI Communications

NANA Regional Corporation

NANA’s board appointed Wayne Westlake as its new President and CEO. Westlake is a NANA shareholder originally from Kiana. Prior to accepting the position at NANA, Westlake served in many executive level positions including president of Tern Point LLC; Lithocore LLC; and vice president of Business Development Westlake at Kikiktagruk Iñupiat Corporation. Westlake holds an MBA from Alaska Pacific University and a BA in Secondary Education from the University of Alaska Anchorage.

Old Harbor Native Corporation

Old Harbor Native Cor­ poration promoted Joe Merrill to Vice President of Tourism, responsible for the Grande Denali Lodge and the D enali Bluf fs Hotel, located outside the entrance to Denali National Park and Preserve. Merrill has forty years’ experience in th e Al aska tourism industry. His career began Merrill at the Baranof Hotel in Juneau in 1972. Since then, he has overseen and managed nine hotel properties in Sitka, Fairbanks, Tok, and Anchorage.

Ekstrand

Coe

MSI Communications promoted Maria Ekstrand and Jim Coe to Vice President.

Ekstrand has been with MSI for three years. With more than twenty years of marketing experience in the Pacific Northwest, Ekstrand has managed local and national brands in a wide range of industries. She majored in business management at the University of Alaska Anchorage.

Coe, a veteran creative director who has developed advertising campaigns for some of the best-known brands in Alaska, joined the agency two years ago.

As the agency’s Creative Director, Coe supervises MSI’s creative product and the creative team. Coe earned his BA from Central Washington University in graphic design.

Alaskan Dream Cruises

Alaskan Dream Cruises hired Russell Dick as CEO. He was also named by former Governor Sean Parnell to the Alaska Tourism Marketing Board. He is the former president and CEO of Haa Aaní LLC, a subsidiary of Sealaska Corporation, and serves as chairman of the board of directors for Huna Totem Corporation. Dick holds an MS in management from Stanford Graduate School of Business; a bachelor’s in industrial engineering from Stanford University; and a bachelor’s in business and accounting from the University of Phoenix. He is a member of the Tlingit Kaagwaantaan clan.

Additionally, Peter Butz is the new Operations Manager, bringing decades of small-ship cruise line experience. After extensive travels as an expedition

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WE’RE OFF TO RURAL ALASKA

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RIGHT MOVES leader with Lindblad Travel and Special Expeditions, Butz spent twenty-five years serving as the vice president of fleet operations and as COO of Lindblad Expeditions. He managed the growth of Lindblad Expeditions’ fleet to six vessels deployed in global operations, including Antarctica, Galapagos, the Arctic, and Alaska.

Bezek Durst Seiser

Caroline Storm, a member of the BDS architectural design team, earned her accreditation as a Registered Professional Architect in Alaska. A specialist in both healthcare and interior design, Storm brings more than fifteen years of architec tural experience to her client’s projects. Storm recently Storm served as the lead medical designer for the new Dena’ina Wellness Center in Kenai and is currently acting as Project Architect for “The Gathering Place” Chickaloon Tribal Health Clinic. Storm is a LEED Accredited Professional.

Compiled by Russ Slaten Fullerton also has extensive experience as a marketing consultant. He holds a BA in Psychology from the University of California Santa Cruz as well as an MBA in Internet and Traditional Marketing from the University of Phoenix.

GeoNorth LLC

GeoNorth chose Michael McCarthy to be the new General Manager. McCarthy will largely be responsible for growing GeoNorth’s traditional business and marrying it with the company’s recently acquired remote sensing capabilities. McCarthy began his career as an international management consultant where he worked on behalf of many industry-leading technology companies. In 2003, McCarthy was hired

by DigitalGlobe to help submit its eventual winning bid for the US Government’s Enhanced View Program which led to DigitalGlobe designing, building, and launching three successful new satellites from 2005present.

ACENT

UIC Construction

UIC Design, Plan, Build, subsidiary of Ukpeagvik Iñupiat Corporation, named Clayton Arterburn UIC Construction’s General Manager. Prior to being appointed General Manager Arterburn has worked for UICC for nine years, most recently as a Senior Project Manager. With more than twenty-three years of con- Arterburn struction experience, Arterburn began in the field working his way through college as a laborer, operator, and carpenter. His portfolio spans large-scale civil, residential, commercial, marine, and industrial projects.

Arterburn holds a BS in Construction Management from Central Washington University.

Alyeska Resort

Alyeska Resort hired Eric Fullerton as the new Director of Marketing. Fullerton comes to Girdwood, Alaska, by way of Carbondale, Colorado. He has built a career in marketing including work with such companies as Blizzard Internet Marketing, Sport Obermeyer, Stay Aspen/Snowmass, and the Aspen Skiing Company.

Johnson

Schook

Lemert

Jennifer Lemert graduated from the University of Maryland School of Nursing at Baltimore in 1991.

Lemert spent five years working in surgical oncology at the National Institutes of Health after graduating from Georgetown University with a MS as a family nurse practitioner.

Loduska Schook earned her BS in nursing from Georgia Southern University in 2003. She began her career in emergency medicine, later transitioning to critical care as a flight. Schook is currently an advanced cardiovascular life support, pediatric life support, and basic life support instructor.

Elise Blomfield has experience in real estate and hospitality in addition to nursing. Blomfield graduated from the University of Alaska Anchorage School of Nursing with a bachelor’s in nursing and minor in psychology.

Calista Corporation

Calista Corporation a n n o un ce d B o n n i e J. Paskvan as the new General Counsel. Paskvan previously served as The Alaska Wireless Network’s Vice President and Senior Legal Counsel. Additionally, she was Corporate Counsel for GCI and its subsidiaries for more than two decades.

Paskvan earned her BA in Paskvan International Relations from Stanford University and Juris Doctorate from Stanford Law School.

Stantec

Blomfield

ACENT, (Alaska Center for Ear, Nose and Throat) added two advanced nurse practitioners to its Anchorage office and two new registered nurses at Faces, its medical spa and laser center.

Staci Johnson earned a master’s degree in nursing from Allen College in 2008. After working in an ICU, cardiac catheterization lab and labor/delivery, Johnson spent two years as a traveling registered nurse.

Gary Gervelis, PLS, joined Stantec as a Senior Survey Project Manager in it s Anchorage office. With more than thirty-six years of industry experience, Gervelis will develop Alaskaspecific survey opportunities, while expanding the firm’s regional and North American wide capabilities.

Gervelis spent more than Gervelis a decade as the land survey manager for City of Seattle. Among the highlights of his work with Seattle were managing the city’s surveying component for the Central Link light rail project; managing surveying for the Lake Union trolley; and contributing to the creation of the nation’s first real-time GPS network.

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INSIDE ALASKA BUSINESS

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Chuchuna Minerals Company

ijik Corporation the ANCSA Village Corporation of Nondalton and Alaska Earth Sciences, Inc. formed the Chuchuna Minerals Company, a strategic joint venture entity, to advance the Groundhog Project located adjacent to the Pebble Project in southwest Alaska.

Alaska Earth Sciences, Inc. owns a 51 percent interest and Kijik Corporation owns a 49 percent interest in Chuchuna Minerals, jointly holding State of Alaska claims near Groundhog Mountain.

Thus far, numerous geophysical surveys have been conducted on the Groundhog property over several years.

Geophysical results infer the Groundhog Project lies along the Northeast margin of the large Cretaceous granodiorite Kaskanak batholith and is intersected by a north-northeast-trending corridor of distinctive co-magmatic hypabyssal intrusives. These geophysical surveys reveal very large discordant conductive and resistive bodies in northeast trending structures on the Groundhog property.

GCI

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n 2014, General Communication, Inc. (GCI) brought increased connectivity and new entertainment options to more than a dozen rural communities in Alaska with the expansion of its wireless network footprint and popular TiVo service. GCI is now present in more than two hundred communities statewide, with coverage reaching more than 95 percent of the state’s population and growing.

Compiled by Russ Slaten

Among many network improvements in 2014, GCI turned up 3G wireless service in rural communities including Akiak, Akiachak, Atmautluak, Bethel, Kasigluk, Kotzebue, Kwethluk, Napakiak, Napaskiak, Nome, Nunapitchuk, Tuluksak, and Unalakleet. These network upgrades deliver improved mobile data speeds, giving customers faster audio and video streaming, web browsing, and more. Furthermore, cellular service is now available in Yakutat, Minto, and Manley Hot Springs for the first time, connecting the communities to Alaska’s largest wireless network with 2G/Edge wireless speeds. In addition to these network upgrades, GCI opened two new retail stores in Bethel and Dillingham.

GCI announced plans to turn up 3G speeds in Naknek and King Salmon by February, as well.

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a principal in the project, is responsible for formulation and development of scientifically appropriate products utilizing these omega-3 ingredients and other bio-actives produced at the Dutch Harbor Bering Select facility.

Marine Ingredients is involved in the formulation and production and distribution of finished products under the AlaskaOmega brand.

Siu-Alaska Corporation is a wholly owned for-profit subsidiary of the Norton Sound Economic Development Corporation. Siu’s functions include the management of current and future forprofit investments. Distributions from these investments will go to Norton Sound Economic Development Corporation so that they can continue to provide programs and benefits within the Norton Sound region.

Bering Select

ering Select, a new manufacturing facility, began producing premium quality omega-3 ingredients in Dutch Harbor in January. The plant produces the rich omega-3 oils of locally caught Alaska cod and other fish species.

The state-of-the-art facility is a joint venture between Clipper Seafoods, Marine Therapeutics, Marine Ingredients, and Siu-Alaska Corporation. The first ingredients produced at Bering Select are from locally sourced Alaska cod, which offers unique advantages.

The Clipper Seafoods’ Alaska cod is line-caught so there is little damage to the marine ecosystem or unwanted by catch of other species.

Marine Therapeutics, headed by Dr. Jeffrey Bland, the scientific advisor and

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Brand Energy Services LLC

s of January 1, R&R Scaffold Erectors, Inc. announced the adoption of the corporate name Brand Energy Services LLC. Brand Energy and Infrastructure Services acquired R&R Scaffold in early 2013. Though the company has chosen to change their name, it still operates under the same company values, dedication, policies, and level of safety.

R&R Scaffold Erectors, Inc. is recognized as the largest scaffold company in Alaska offering scaffold rentals, sales, design, and erection, all with the highest level of safety in the industry over the last twenty-five years. R&R specializes in competency and safety training to ensure the highest levels of safety.

Your Project, Our Responsibility.

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

www.pacificpile.com I (907) 276-3878 276-3873 142

From critical lifts to platform support, PPM is sufficiently resourced to deliver a wide range of construction services.

620B East Whitney Road I Anchorage, AK 99501

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INSIDE ALASKA BUSINESS With operations around the world, Brand Energy is one of the premiere providers of integrated specialty services to the global energy, industrial, and infrastructure markets. Its portfolio of specialized industrial services include scaffolding, coatings, insulation, refractory, formwork and shoring, specialty mechanical services, cathodic protection, and other related crafts.

With $750 million in assets and 15,000 specialty craft personnel in the Brand network, R&R has been able to take on larger projects and ensure sufficient resources on client projects.

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Alaska Interstate Construction, LLC

IRI and Nabors Industries completed the sale of Alaska Interstate Construction (AIC) in December 2014.

AIC and its Canadian operating company were acquired by Cruz Construction, Inc., based in Palmer. For nearly a decade, subsidiaries of CIRI and Nabors Industries each owned 50-percent of AIC. Cruz Construction, owned by Dave Cruz, has an excellent reputation in Alaska. While CIRI no longer has an ownership interest in AIC, CIRI remains a partner with Dave Cruz through Cruz Energy Services, based in North Dakota, and Cruz Marine, a tug and barge company with operations throughout Alaska and beyond.

In a joint statement to AIC employees, CIRI and Nabors said, “While AIC has had its struggles, we are confident Cruz Construction recognized the talented individuals on the AIC team and is looking forward to positive opportunities for AIC and its employees.(We) wish

Compiled by Russ Slaten

to thank each of you for your hard work and dedication over the years. Your contributions have been significant, and we have been proud to embrace you as part of our corporate families.”

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Evergreen Business Capital and FNBA

arl A. Propes Jr., president and owner of Scan Home, Inc., received a $1,481,000 SBA 504 Loan through Evergreen Business Capital and a $1,799,000 loan from First National Bank Alaska (FNBA), totaling $3,280,000. The loans make it possible to create nine new positions at Scan Home with a budget to grow, building on the company’s objective since its first store opened in 1984 to offer moderately priced Scandinavian furniture to the residents of Alaska.

Evergreen Business Capital has worked with FNBA to approved eight SBA 504 loans during the fiscal year ending September 2014, totaling $9,688,378. In recognition, Evergreen Business Capital recently presented FNBA two Partnership Awards in 2014: Community Lending Institution of the Year and Northwest Lending Institution Community Bank of the Year.

Brice Environmental

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rice Environmental Services Corporation, an 8(a) Alaska Native Corporation and Calista Corporation subsidiary, announced the opening of an Anchorage office location in the JL Towers to complement the corporate office and professionals based in Fairbanks. Brice says it is excited to pursue

new opportunities that this team brings to Alaska and beyond.

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Donlin Gold

onlin Gold was welcomed by the Yuut Elitnaurviat Learning Center to serve on the Yuut Elitnaurviat Board of Directors, joining ten other partnering organizations.

Yuut Elitnaurviat is the first stateof-the-art vocational campus for the people of the Yukon-Kuskokwim region and is also known as “the people’s learning center.” The center was built with the region’s socio-economic needs in mind and is dedicated to providing regionally responsive training and educational programs.

Donlin Gold will work with fellow board members to oversee training and academic opportunities the Yuut Elitnaurviat Center offers.

Alaska Housing Finance Corporation

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laska Housing Finance Corporation (AHFC), announced its 2015 Greater Opportunities for Affordable Living grants and tax credits. Funds will be awarded to six projects in Anchorage, Cordova, Juneau, and Soldotna. In total more than 180 units will be developed and upgraded benefitting low-income and senior Alaskans.

The Home Run 1 project in Juneau will result in forty-one new rental units for low-income seniors featuring solar energy and combined residential housing with commercial space. Developers are GMD Development and St. Vincent de Paul.

Your Project, Our Responsibility. 24/7 Service

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

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

From critical lifts to platform support, PPM is sufficiently resourced to deliver a wide range of construction services.

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INSIDE ALASKA BUSINESS Sleep Spruce in Juneau, a twentyfour-unit property, will be acquired and renovated for low-income families and will feature solar energy systems.

Developer is GMD Development.

Cordova Mews, a twenty-two-unit property in Cordova, will be substantially renovated and upgraded for lowincome families. Developer is Cordova Mews Associates.

Silverwood Housing Phase III in Soldotna will be a newly constructed five-unit property for mixed-income seniors. Developer is Kenai Peninsula Housing Initiatives.

Creekview Plaza in Anchorage will add forty-nine new rental units for lowincome seniors. This development combines residential and commercial space and solar and geothermal energy. The project developer is Cook Inlet Housing Authority.

Grass Creek North in Anchorage will create more than forty new affordable rentals for families and feature solar and geothermal energy. Developer is Cook Inlet Housing Development Corporation.

The 2015 program awards generate more than $55 million in economic impact to Alaska’s economy. Three of the projects successfully leveraged AHFC’s awards with $2.2 million from the Rasmuson Foundation.

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Lower Kuskokwim School District

he Lower Kuskokwim School District (LKSD) received the first AdvancED Systems Accreditation in Alaska for its use of distance learning.

With more than four thousand stu-

Compiled by Russ Slaten

dents spread across twenty-two thousand square miles in twenty-seven schools, ensuring students across the district can access the same education opportunities as other parts of the country is critical. The Lower Kuskokwim School District, with the help of GCI SchoolAccess, implemented Alaska’s largest distance education program using video conferencing. This helps connect all students in the district with highly qualified teachers in all the right subjects. AdvancED’s accreditation committee identified the technology infrastructure, particularly the distance learning network, as excellent.

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Ambri and UAF

he University of Alaska Fairbanks (UAF) and industry partner Ambri will collaborate on a project to demonstrate a new battery technology that could lower consumer electric prices in rural Alaska.

The $1.5 million project, funded by a $749,000 grant from the Alaska Energy Authority and a match by Ambri, and the UAF Alaska Center for Energy and Power, will use a liquid metal battery developed by Ambri. The battery could ultimately provide needed energy storage and increased system reliability, enabling communities to shift away from diesel fuel and toward renewable resources such as wind and solar for power generation.

Phase one of the grant will test a 35 kWh battery at the Alaska Center for Energy and Power’s Power Systems Integration Laboratory in Fairbanks.

After lab testing, UAF and Ambri will install a larger 100 kWh battery module in Eagle, , in partnership with Alaska

Power and Telephone, to test the battery under challenging conditions and in conjunction with a solar array.

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Horizon Lines

orizon Lines, Inc. has received a permit providing a conditional waiver from the North American Emissions Control Area fuel sulfur content requirements of MARPOL Annex VI regulation 14.4. The permit is in force while Horizon pursues installation of Exhaust Gas Cleaning System (EGCS) on each of its three D7-class vessels which operate in the Alaska trade.

The permit was issued by the US Coast Guard and the US Environmental Protection Agency and became effective this year and will allow these Horizon vessels to use low-sulfur heavy fuel oil in their main engines while operating between Washington state and Alaska, subject to compliance with other terms and restrictions of the permit.

Further, Horizon has entered into a supply agreement with Alfa Laval Aalborg Nijmegen BV for design and procurement of the PureSox 2.0 EGCS for the three Horizon D7-class vessels which operate in the Alaska trade.

This Alfa Laval EGCS is a multiple inlet hybrid system which will clean the exhaust gas from the main engine as well as the main generators and is the first system of its kind for a Jones Act container vessel. Horizon expects to incur a total of approximately $18 million of capital spending in connection with the EGCS for the three vessels. Installation of the first system is planned to begin on the Horizon Kodiak in September, and completion of the project is expected by December 31, 2016.

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• General Contracting • Marine Infrastructure • Design Build

Dutch Harbor - Unalaska, Alaska

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AGENDA March Sustainable Agriculture Conference

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March 3-5—Westmark Fairbanks Hotel and Conference Center, Fairbanks: Held every year in Fairbanks, this conference brings together farmers, ranchers, researchers, extension agents, and members of the agriculture support industry to find ways to improve the agriculture industry in Alaska. uaf.edu/ces/ah/sare/conference

Compiled By Tasha Anderson AFCCA Annual Child Care Conference

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March 4-6—Alaska Pacific University, Anchorage: Learn, network, and share information on wind systems in island and islanded grid environments through expert panel discussions, stakeholder dialogue, and training. alaskarenewableenergy.org March 4-7—Hilton Anchorage, Anchorage: The annual meeting includes workshops, an evening reception for information and registration, paper presentations, and an awards banquet, business meeting, and the Belzoni meeting. alaskaanthropology.org

Alaska Native Studies Conference

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March 6-8—University of Alaska Fairbanks, Fairbanks: This year’s theme is “Troth Yeddha’ Roots: Connecting The Place With The People.” alaskanativestudies.org March 10-11—Hilton Anchorage Hotel, Anchorage: This unique international event focuses on trade, commerce and investment opportunities and is an excellent networking venue for making contacts and connections to promote business interests in the region. wtcak.org

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March 24-26—Anchorage: The Alaska Safety Advisory Council works with organizations to promote safety so that resources can be marshaled and used to reduce the menace of accidental death and injury. labor.alaska.gov/lss/asac.htm

Southcentral Foundation 2015 Nuka System of Care Conference

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Alaska Tribal Transportation Symposium

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March 31-April 2—Westmark Hotel, Fairbanks: Annual meeting for tribal leaders, managers, and administrators and transportation staff; transportation and infrastructure professionals; federal and state representatives; and all those seeking to learn more about tribal transportation and transportation challenges in remote Alaska communities. attwg.org

AOPA Crime Conference

April 20-24—Anchorage Sheraton Hotel & Spa, Anchorage: Hosted by the Anchorage chapter of the APOA, or Alaska Peace Officers Association. apoaonline.org

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June 10-14—Anchorage: The Animal Behavior Society was founded in 1964 to promote the study of animal behavior in the broadest sense, including studies using descriptive and experimental methods under natural and controlled conditions. animalbehaviorsociety.org June 15-19—Southcentral Foundation Ahklun Mountains Building, Anchorage: The conference includes a pre-conference workshop for building effective relationships, general workshops and break-out sessions, evening networking, and a cultural reception. southcentralfoundation.org

International Conference on Solid-State Sensors, Actuators, and Microsystems

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

October Alaska Business Monthly’s Top 49ers Luncheon

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October 7—Dena’ina Center, Anchorage: Come honor the Top 49 Alaskan-owned companies ranked by gross revenue at our annual luncheon.

Contact: Melinda Schwab, 907-276-4373 accounts@akbizmag.com, akbizmag.com

Alaska Federation of Natives Annual Convention

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July Rocky Mountain Mineral Law Institute

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September 20-25—Fairbanks: Scientific objectives of the proposed CCEMD include magnetic storms, auroral and magnetospheric substorms, dayside and tail magnetic reconnections, and new results of the MMS mission. gi.alaska.edu/2015ChapmanConference

Alaska Fire Conference

June 21-25—Dena’ina Center, Anchorage: The world’s premiere conference in MEMS sensors, actuators and integrated micro and nano systems. transducers2015.org

April

n

Chapman Conference on Magnetospheric Dynamics

n

n

July 23-26—Anchorage: One of the CU Conferences, which educates the Credit Union Community, this conference provides information such as generating loans across all age groups and what types of loans can increase earnings. cuconferences.com

September

Animal Behavior Society Annual Conference

n

July 23—Dena’ina Center, Anchorage: A one-day trade show for the snow and ice management industry brought to Alaska by the Snowfighters Institute. This year’s conference will include special educational conferences targeting snow contractors, property managers, and municipalities and “Lunch and Learn,” round table discussions facilitated by sponsors and industry leaders during a buffet lunch. alaskasnowsymposium.com

Annual Strategic Lending Conference

n

May 28-30—Land’s End Resort, Homer: The annual meeting of the Alaska Dental Society, which is “Committed to enhancing the dental profession and the health of all Alaskans.” akdental.org

June

Governor’s Safety and Health Conference

n

May 23-27—Westmark Fairbanks Hotel & Conference Center, Fairbanks: This is the international symposium for the Application of Computers and Operations Research in the Mineral Industry. apcom2015.org

ADS Annual Meeting

Arctic Ambitions IV: Trade | Commerce | Investment

n

May 4-7—Hotel Captain Cook, Anchorage: The Alaska Water Wastewater Management Association is dedicated to the stewardship of the environment and the protection of public health. awwma.org

APCOM 2015

n

July 18-25—Alaska Pacific University, Anchorage: Alaska Business Week is a one-week summer program teaching the basic principles of private sector business to Alaskan high school students. alaskachamber.com

Alaska Snow Symposium

n

AWWMA Annual Conference

Alaska Anthropological Association Annual Meeting

n

April 24-26—NEA-Alaska, an affiliate of the National Education Association, is an organization with over twelve thousand members who work in Alaska’s public schools. neaalaska.org

May

n

scholarly and practical study of the law and regulations relating to mining, oil and gas, water, public lands, energy, environmental protection, and other related areas. rmmlf.org

Alaska Business Week

n

NEA-Alaska Spring Conference

n

Islanded Grid Wind Power Conference

n

April 24-25—BP Energy Center, Anchorage: The theme of the Alaska Family Child Care Association’s 2015 conference is “For the Love of Kids.” alaskafcca.org

July 16-18—Dena’ina Center, Anchorage: The Rocky Mountain Mineral Law Foundation (RMMLF) is a collaborative educational non-profit organization dedicated to the

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

March 2015 | Alaska Business Monthly

145

ALASKA THIS MONTH

By Tasha Anderson

DINING Photo courtesy of the Anchorage Downtown Partnership

100 Days of Downtown Dining

A sample of the sticker cards used for participation and dining gift card awards.

A

nchorage residents looking to spruce up their dining life during the dark winter days can participate in the 100 Days of Downtown Dining, a winter promotion that rewards diners for patronizing downtown eateries from January 26 through April 26.

Penny Smythe, the director of Marketing for the Anchorage Downtown Partnership, which organizes the promotion, says that this has been going on for several years. “People really seem to like it and the downtown restaurants appreciate it.”

The gist of the program is that participants will receive a sticker every time they purchase and enjoy an entrée at any of the participating restaurants. Stickers are combined on cards. “Every time you redeem a card, you can get entered” into a drawing for a luxurious Downtown Anchorage vacation, which includes a stay at an Anchorage hotel, a spa package from Allure Day Spa & Salon, and dining certificates.

Alternatively, participants can use a free app to track their dining and are still eligible for the raffle.

But that’s not all there is to win; during the course of the 100 days, if diners turn in thirty stickers, they will receive $75 in dining certificates. “The largest amount of dining certificate is $25, and we compile them. We base it off what we have in stock and what the customer prefers, as much as possible,” Smythe says.

Participating restaurant include Alaska Gourmet Subs, Anchorage City Limits-Lofts, Brown Bag Sandwich Co., Crush, Dark Horse Coffee, Fat Ptarmigan, Flattop Pizza & Pool, Ginger, Glacier Brewhouse, Hard Rock Café, Haute Quarter Grill, Humpy’s, McGinley’s Irish Pub, Midnight Sun Café, Moose A’la Mode, Muse, My Thai, Orso, Pasta Avanti, Red Chair Café, Sack’s Café, Sherri’s at 5th, Simon & Seafort’s, Sizzlin’ Café, Slippery Salmon (Ramada Inn), Snow City Café, Snow Goose, Sub Zero, Sullivan’s Steakhouse, and Uncle Joe’s Pizzeria. anchoragedowntown.org R 146

Alaska Business Monthly | March 2015 www.akbizmag.com

ALASKA THIS MONTH

By Tasha Anderson

TRAVEL

Photo by Karen H. Clautice

BP World Ice Art Championships

“Soul of the Moon” won second place in the realistic category of the multi-block competition of the World Ice Art Championships in Fairbanks in March 2014.

T

his is the 26th year of the World Ice Art Championships in Fairbanks. The Championships include not just single- and multi-block competitions, but an ice park full of sculptures, mazes, and winter activities for children and adults.

Chairman of the 2015 BP World Art Ice Championships Dick Brickley says that this year’s event will include a new, exciting activity. “We’re going to try to do an ice carving above ground and then sink it below the ice and see how long it will last,” he says. “Then divers will go down into the pond and can take pictures of it.”

According to Brickley, the event was dreamt up by one of the ice artists who is also a diver. “Because the ice is so clear, people can walk over the sculpture, on top of the ice, and see it underneath. That’s the theory. Whether it’ll work or not, we don’t know,” Brickley laughs.

Events that take place every year include Ice Sculpting classes; an ice park; the Alyeska Ice Puppy rink, which is an ice skating rink formed entirely of ice, even with unique ice dasher boards; and a giant maze sponsored by Fred Meyer.

More than one hundred artists are invited to participate, and the interest isn’t surprising: the prize for the single-block competition is $15,000 and the multi-block is $25,000.

Brickley says forty-five thousand people came into the park last year, though some may be duplicates because they count how many people enter the park and many people come back to the park several times while it’s open.

As far as admission, “the best deal is definitely for people to find a family pass, which is $100. You get two cards with ten punches each, so it figures out to about $5 a punch,” he says.

Tickets are available at the gate; the park is open until March 29. icealaska.com R

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Fairbanks Anchorage

Skagway

Kenai Haines Whittier Sitka

Kodiak

Petersburg

Juneau

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March 2015 | Alaska Business Monthly

147

ALASKA THIS MONTH

By Tasha Anderson

ENTERTAINMENT

Leading Actress Elizabeth Ware in costume for her roles as Molly Ivins (above) and Mary Colter (right).

M

Modern Boutique.

CLASSIC CHARM.

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

Its remodeled banquet spaces can accommodate 150.

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

www.HistoricAnchorageHotel.com 148

arch is Women’s History Month. Cyrano’s is celebrating with two plays, “A Woman by Design” and “Red Hot Patriot: The Kick-Ass Wit of Molly Ivins.”

“A Woman by Design” was written by David Edgecombe and Elizabeth Ware and will be directed by Edgecombe.

Sandy Harper, Cyrano’s Producing Artistic Director, says: “This is the story of Mary Elizabeth Jane Colter as a woman struggling to establish herself in the male-dominated world of early twentieth century architecture and her turbulent artistic life. She became the chief architect and designer for the Fred Harvey Company and her buildings famously dot the South Rim of the Grand Canyon. The innovative use of media adds to the story of this amazing woman who set the precedent and influenced the look and feel of National Parks around the country.”

“Red Hot Patriot: The Kick-Ass Wit of Molly Ivins” was written by Margaret and Allison Engel. It’s about Molly Ivins, a newspaper columnist who was “often described as a modern day Mark Twain,” Harper says. “From writing Elvis Presley’s New York Times obituary to becoming the most widely read, self-proclaimed “pain in the ass” to the powers that be … Her sharp-tongued humor and unabashed political criticism is fresher than ever today.”

According to Harper, both roles will star Elizabeth Ware, the star of the one-woman production “Libby,” which was “not only a major success in Alaska but internationally.”

Harper says, “Her range as an actress is phenomenal and you should treat yourself to both plays to see two entirely different people beautifully come to life on stage.”

“A Woman by Design” is playing from March 21 through April 12. “Red Hot Patriot: The Kick-Ass Wit of Molly Ivins” will run from March 20 through April 11. More information about specific show times can be found, and tickets can be purchased, at centertix.net. cyranos.org R

Alaska Business Monthly | March 2015 www.akbizmag.com

HIS012 ABM Print Ad_V7.indd 1

8/30/12 1:38 PM

Photo courtesy of Cyrano’s

A Woman by Design & Red Hot Patriot

EVENTS CALENDAR 13-15

Compiled By Tasha Anderson

ANCHORAGE

Anchorage Boat Show

The Anchorage Boat Show is Alaska’s largest, with more than forty thousand square feet of boats and equipment on display.

Food and refreshments will be available. Free parking. AT&T Sports Pavilion at the O’Malley Sports Complex, Friday 1 p.m. to 9 p.m.; Saturday 10 a.m. to 9 p.m.; Sunday 10 a.m. to 7 p.m. anchorageboatshow.com

5-7

FAIRBANKS

Festival of Native Arts

The Festival of Native Arts provides cultural education and sharing through Native dance, music, and traditional arts. The Festival continues the UAF student-led tradition that began in 1973 of bringing together artist, performers, and performance groups in a celebration of Native cultures. The festival is also a venue to purchase authentic arts and crafts directly from Alaska Native artisans. Davis Concert Hall. fna.community.uaf.edu

JUNEAU

21

BodyVox on Tour

BodyVox of Portland, Oregon, has toured extensively throughout the United States as well as Canada, Mexico, Europe, Japan, and India and is known for its visual virtuosity, distinctive wit, and unique ability to combine dance, theater, and film into breathtaking productions rich in imagery, athleticism, and humor. JDHS Auditorium, 7 p.m. traveljuneau.com

31

Clink! Season 41

A panoply of wines from around the world is showcased by Specialty Imports, with hors d’oeuvres and live music by Tom Locher and Wayne Norlund. The refreshments are provided

by Panhandle Provisions. Proceeds support the Juneau Arts & Humanities Council. JACC, 5 p.m. jahc.org

8

KETCHIKAN

SITKA

2-13 Arti-Gras

Arti-Gras is a two-week celebration of arts events that takes place every spring. The event includes workshops, guest artists, a gallery walk, exhibitions, the Wearable Arts Runway Show & Extravaganza, a forty-eight-hour film fest, classes, music, and more. thinkartthinksitka.com

8

TALKEETNA

African Guitar Summit

Nine musicians, each an expert in their individual style, create musical magic as the African Guitar Summit. The musicians, who are distinct in cultural backgrounds and languages, share stories and sing each other’s praises. Sheldon Community Arts Hangar. talkeetnachamber.org

3/20-4/19

WASILLA

South Pacific

Set in an island paradise during World War II, two parallel love stories are threatened by the dangers of prejudice and war. Valley Performing Arts, Fridays and Saturdays 7 p.m.; Sundays 2 p.m. valleyperformingarts.org

27-29

Mat-Su Outdoorsman Show

Featuring the ADF&G Laser Shooting Range for kids of any age, 142 booths, book signing and seminars by Alaskan outdoor authors, local experts leading seminars and demonstrations on outdoor topics, outdoors and sporting vendors, and an outdoor space displaying boats, trailers, ATVs, RVs, etc. Menard Sports Center, Friday Noon to 7 p.m.; Saturday 10 a.m. to 6 p.m.; and Sunday 10 a.m. to 5 p.m. chinookshows.com

Birds of Chicago

J.T. Nero and Allison Russell form this musical group, playing guitar, banjo, ukulele, and clarinet as a new voice in North American roots music. Saxman Tribal House, 7:30 p.m. ketchikanarts.org

22

Empty Bowls Dinner

Like the Empty Bowl Project that takes place in Anchorage every year, this event is a reminder of the empty bowls present in any community. Attendees receive a bowl to take home after the dinner. Soups are provided by local Ketchikan restaurants.

Proceeds go to the Day Shelter. First Lutheran Church Gym, 4:30 p.m. to 7 p.m. ketchikanarts.org

Alaskans serving Alaskans.

Oxford is proud to be the only gold refiner and bullion dealer to maintain two locations in Alaska for more than 30 years.

BUY : SELL : TRADE • ANCHORAGE • FAIRBANKS • NOME • NEW YORK

1.800.693.6740 www.oxfordmetals.com www.akbizmag.com

March 2015 | Alaska Business Monthly

149

ALASKA TRENDS

By Amy Miller

Arctic Climate Change Brings Opportunity, Challenges

A

laskans recently said goodbye to the warmest year on record in the state—2014—and are still experiencing warmer than normal temperatures in 2015.

Over the past fifty years, temperatures in Alaska have risen twice as fast as those in the rest of the United States, according to the US Environmental Protection Agency.

Among the changes brought by a steadily warming climate is the retreat of the Arctic sea ice. Scientists project that late summers could be nearly ice free as early as the 2040s, causing a host of challenges for residents and wildlife but also bringing increased opportunities for economic and resource development to the region.

According to the Alaska Arctic Policy Commission, businesses could save up to 40 percent on shipping costs using Arctic routes as compared to the Suez Canal. Cruise tourism to this unique and beautiful region is already underway and is expected to grow. And offshore oil and gas development becomes more feasible as ice retreats.

As businesses and nations clamor to position themselves on the leading edge of these Arctic opportunities, the region’s residents and its wildlife face extreme challenges.

Melting permafrost makes construction of permanent in-

frastructure challenging and expensive. Traditional food sources may become harder to come by for residents living subsistence lifestyles. And as the climate warms, Arctic shorelines once protected by sea ice are being rapidly eroded, forcing villages to relocate in some areas.

The Alaska Arctic Policy Commission was formed by the Alaska State Legislature in 2011 to advocate for Alaskan people and issues in the greater geopolitical environment in which policy decisions for the Arctic are taking place. In January 2014 the commission released a preliminary report outlining the issues and opportunities faced by the state in, and it was due to release its final report in January 2015 following a period of public input.

The United States is chairing the international Arctic Council in 2015, a group of Arctic nations working cooperatively to set policy and strategy for the region. President Obama and Secretary of State John Kerry named former Coast Guard Commandant Robert Papp as the first-ever US ambassador to the Arctic.

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

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150

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Alaska Business Monthly | March 2015 www.akbizmag.com

ALASKA TRENDS

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By Amy Miller

March 2015 | Alaska Business Monthly

151

ALASKA TRENDS

Indicator

GENERAL Personal Income—Alaska Personal Income—United States Consumer Prices—Anchorage Consumer Prices—United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectorial Distribution—Alaska Total Nonfarm Goods Producing

Services Providing Mining and Logging Mining

Oil & Gas Construction

Manufacturing

Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade

Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Information

Telecommunications Financial Activities Professional & Business Svcs Educational & Health Services Health Care Leisure & Hospitality Accommodation

Food Svcs & Drinking Places Other Services

Government

Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Unemployment Rate Alaska Anchorage & Mat-Su Fairbanks 152

By Amy Miller Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

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

3rdQ14 3rdQ14 2ndH14 2ndH14

39,306 14,789,078 216.83 237.09

39,057 14,646,964 214.78 236.38

36,923 14,180,492 213.91 233.55

6.45% 4.29% 1.37% 1.52%

Number Filed Number Filed Number Filed

November November November

26 9 7

50 21 5

35 20 4

-34.62% -122.22% 42.86%

Thousands Thousands Thousands Thousands Thousands

November November November November November

339.89 191.78 43.96 34.57 36.97

342.63 190.34 44.17 35.94 37.73

331.80 177.60 39.00 34.30 29.30

2.44% 7.98% 12.72% 0.79% 26.18%

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

November November November November November November November November November November November November November November November November November November November November November November November November November November November November November November November November November

323.50 279.60 43.90 18.40 18.00 15.00 15.70 9.80 5.90 63.70 6.30 37.20 6.60 10.60 20.20 6.00 6.10 4.00 11.80 29.50 46.80 33.50 28.10 5.80 18.50 11.50 82.10 14.30 26.20 8.60 41.60 24.20 3.90

329.90 281.80 48.10 18.80 18.40 15.10 17.30 12.00 8.10 64.10 6.40 37.00 6.60 10.50 20.70 6.20 6.10 4.00 11.70 30.10 46.40 33.30 29.30 6.10 19.20 11.60 82.50 14.50 26.40 8.40 41.60 23.90 4.00

320.90 41.50 279.40 18.10 17.50 14.70 16.70 6.70 2.90 61.50 5.60 35.70 6.10 9.50 20.20 5.50 6.10 4.00 13.40 27.90 47.20 33.50 28.00 5.70 18.60 11.80 83.50 14.10 26.30 8.70 43.10 24.20 3.30

0.81% 573.73% -84.29% 1.66% 2.86% 2.04% -5.99% 46.27% 103.45% 3.58% 12.50% 4.20% 8.20% 11.58% 0.00% 9.09% 0.00% 0.00% -11.94% 5.73% -0.85% 0.00% 0.36% 1.75% -0.54% -2.54% -1.68% 1.42% -0.38% -1.15% -3.48% 0.00% 18.18%

Thousands Thousands Thousands Thousands Thousands

November November November November November

362.50 202.38 46.68 37.10 39.80

364.19 200.37 46.52 38.30 40.40

363.99 203.18 46.71 37.67 38.26

-0.41% -0.39% -0.06% -1.51% 4.03%

Percent Percent Percent

November November November

6.2 5.2 5.6

5.9 5.0 5.3

6.5 5.2 5.4

-4.62% 0.00% 3.70%

Alaska Business Monthly | March 2015 www.akbizmag.com

ALASKA TRENDS

Indicator

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

By Amy Miller Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Latest Report Period

Percent Percent Percent

November November November

6.8 7.1 5.8

6.1 6.5 5.7

6.7 7.7 7

1.49% -7.79% -17.14%

Millions of Barrels Billions of Cubic Ft. $ per Barrel

November November November

15.52 8.21 77.41

15.50 9.09 84.91

16.07 7.51 101.28

-3.42% 9.32% -23.57%

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

November November November November November

8 1925 1176.36 15.97 2.26

8 1925 1223.03 17.19 2.27

9 1756 1275.82 20.76 0.96

-11.11% 9.62% -7.80% -23.07% 135.42%

43.59 8.63 33.81

37.64 16.23 20.65

29.71 10.57 19.14

46.72% -18.35% 76.65%

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

November November

671 186

835 232

682*GeoNorth 150

-1.61% 24.00%

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

Thousands Thousands

November November

345.41 66.67

382.27 76.06

320.58 65.64

7.75% 1.57%

ALASKA PERMANENT FUND Equity Assets Net Income Net Income—Year to Date Marketable Debt Securities Real Estate Investments Preferred and Common Stock

Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

November November November November November November November

51610.80 52342.20 234.20 442.20 11197.20 6068.10 235.60

51110.50 51824.30 167.60 332.70 74.80 102.40 135.40

48770.10 49396.00 215.50 439.90 -58.40 26.50 270.60

5.82% 5.96% 8.68% 0.52% -19273.29% 22798.49% -12.93%

BANKING (excludes interstate branches) Total Bank Assets—Alaska Cash & Balances Due Securities Net Loans and Leases Other Real Estate Owned Total Liabilities Total Bank Deposits—Alaska Noninterest-bearing deposits Interest- bearing deposits

Millions of $ 3rdQ14 Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

5,781.68 299.37 146.66 2,742.89 18.01 5,002.29 4,346.55 1,830.26 2,516.30

5,589.78 309.79 145.27 2,703.46 18.73 4,814.61 4,188.54 1,702.65 2,485.89

5,432.28 478.68 133.97 2,464.96 17.23 4,697.44 4,086.89 1,693.48 2,393.41

6.43% -37.46% 9.47% 11.28% 4.53% 6.49% 6.35% 8.08% 5.13%

FOREIGN TRADE Value of the Dollar In Japanese Yen In Canadian Dollars In British Pounds In European Monetary Unit In Chinese Yuan

Yen Canadian $ Pounds Euro Yuan

115.86 1.13 0.63 0.80 6.14

107.97 1.12 0.62 0.79 6.14

100.21 1.05 0.62 0.74 6.13

15.62% 7.62% 1.61% 8.11% 0.16%

November November November November November

Notes: 1. Source of Anchorage Deeds of trust (GeoNorth) is cited in the data field.

2. Banking data has been updated to include Alaska State Banks and Alaska’s sole federally chartered, Alaska-based bank, First National Bank Alaska

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March 2015 | Alaska Business Monthly

153

ADVERTISERS INDEX AE Solutions Alaska LLC........................117 Alaska Air Cargo........................................19 Alaska Aviation Heritage Museum.....149 Alaska Communications.........................131 Alaska Dreams Inc................................. 103 Alaska Governor’s Safety & Health Conference.........................47 Alaska Interstate Construction (AIC).111 Alaska Roof Coatings...............................54 Alaska Rubber.........................................104 Alaska Traffic Co.......................................58 Alaska USA Federal Credit Union........57 Alaska USA Insurance Brokers.......25, 59 American Fast Freight............................... 3 American Marine/Penco......................150 Anchorage Chrysler Dodge....................39 Anchorage Opera................................... 148 Anchorage Sand & Gravel..................... 64 Anchorage School District..................... 31 Arctic Foundations................................ 122 Arctic Office Products........................... 46 AT&T ..............................................................9 Avis Rent-A-Car.......................................147 BDO..............................................................45 Bering Air Inc...........................................147 Bering Straits Native Corp.................. 107 Bowhead Transport Company LLC... 110 Brand Energy & Infrastructure...........129 Business Insurance Associates Inc.......26 Calista Corp. / Brice..............................123 Carlile Transportation Systems....30, 155

154

Chris Arend Photography.....................154 Colville Inc...............................................106 Conam Construction Co.........................67 Construction Machinery Industrial........2 Crowley Alaska Inc...................................27 Cruz Construction Inc...........................121 Davis Constructors & Engineers Inc....66 Delta Leasing LLC.....................................79 Delta Rental Services.............................. 64 Design Alaska.............................................54 Donlin Gold................................................73 Dowland-Bach Corp............................... 135 Doyon Limited..........................................113 EDC Inc....................................................... 68 Emerald Alaska /NRC Alaska LLC.93, 97 Everts Air Cargo-Tatonduk Outfitters....65 F. Robert Bell & Assoc..........................105 Fairweather LLC....................................... 48 First National Bank Alaska....................... 5 Foss Maritime..........................................112 Fountainhead Hotels...............................52 GCI....................................................106, 156 Global Services Inc................................. 116 Golder Associates Inc.............................115 Granite Construction...............................67 Greer Tank..................................................23 Greg Johnson, Jack White Real Estate.....................117 Hawk Consultants LLC............................52 Historic Anchorage Hotel.................... 148 Holmes Weddle & Barcott....................70

Homer Marine Trades Assoc...............139 Hot Wire LLC............................................. 71 Hotel Captain Cook..................................29 Island Air Express................................... 146 Judy Patrick Photography..................... 42 Landye Bennett Blumstein LLP.............23 Lounsbury & Assoc................................112 Lynden Inc................................................... 13 Magtec Energy.......................................... 51 Mass Excavation Inc................................. 61 Medical Park Family Care Inc................47 MFCP Motion & Flow Control Products Inc..........................69 MICROCOM...............................................43 N C Machinery...........................................83 Nalco Champion....................................... 68 North Slope Telecom...............................41 Northern Air Cargo......................140, 141 NPC Energy Services............................. 119 NTCL........................................................... 135 Olgoonik Corp.........................................120 Oxford Assaying & Refining Inc..........149 Pacific Alaska Freightways Inc..............55 Pacific Pile & Marine...........142, 143, 144 Paramount Suppy Co.............................139 Parker Smith & Feek................................11 PDC Inc. Engineers...................................69 PenAir......................................................... 89 Personnel Plus........................................ 146 Plans Room................................................. 71 PND Engineers Inc................................104

Port of Nome............................................88 Port of Valdez..........................................127 Price Gregory International Inc.............73 Ravn Alaska................................................21 Ritchie Brothers Auctioneers................72 RSA Engineering Inc.................................66 Samson Tug & Barge.............................. 137 Seward Convention & Visitors Bureau...86 Span Alaska Transportation Inc............81 Spenard Builders Supply ........................77 Steelfab........................................................ 51 Stellar Design Inc....................................139 Stephl Engineering LLC...........................65 Superior Group.........................................70 Totem Ocean Trailer Express (TOTE)....87 Trailercraft Inc. / Freightliner of AK....75 Truckwell of Alaska................................ 137 Turnagain Marine Construction...........88 Tutka LLC....................................................72 UIC Commercial Services....................105 Ukpeaġvik Iñupiat Corp........................126 United Way of Alaska..............................35 Vigor Alaska.............................................109 Visit Anchorage......................................... 33 Washington Crane & Hoist....................49 Waste Management.................................95 Watterson Construction.........................53 Wealth Strategies of Alaska................... 17 Wells Fargo Bank Alaska......................... 15 West-Mark Service Center..................109 Yukon Equipment Inc...............................63

Alaska Business Monthly | March 2015 www.akbizmag.com