Alaska Business Monthly November 2016

MINING | NATURAL RESOURCES DEVELOPMENT | DEBT RESTRUCTURING | ALASKA ECONOMY

November 2016

Digital Edition

COAL

PREVAILS

USIBELLI’S 73-YEAR LEADERSHIP STREAK

November 2016 Digital Edition TA BLE OF CONTENTS

ARTICLES ECONOMY OP-ED

8 | Alaska’s Economy

By Betsy Lawer

MILITARY

10 | Alaska Guardsmen Compete, Earn Best Warrior Titles Luiken, Marnell will advance to Army National Guard Regional Best Warrior Competition

By Staff Sergeant Balinda O’Neal Dresel

TELECOM & TECHNOLOGY 12 | Enhancing Business Profitability

Companies provide cost-effective IT options

By Rindi White

FINANCIAL SERVICES

16 | Debt Restructuring and Refinancing Helps Businesses

Lowers costs, increases cash flow, and gets capital for improvements, investments, acquisitions

By Tracy Barbour

EDUCATION

20 | Continuing Education for Professionals No matter the industry or profession, ongoing education offers benefits

By Tasha Anderson

HR MATTERS

22 | Employee Engagement: Having Heart

Making life richer in the workplace and beyond

By Kevin M. Dee

SERVICES

24 | Alaska Snow Symposium

Modernization of snow and ice removal

By Tom Anderson

4

ABOUT THE COVER: In the annual Mining special section we take a look at the Usibelli Coal Mine leadership that is shared by Chairman Joe Usibelli Sr. and President Joe Usibelli Jr. at the family-led business founded in 1943 by Emil Usibelli.

The story by Tasha Anderson begins on page 34.

The special section begins on page 32.

7 110 112 115 116 118 119 122

Cover Photo: © 2016 Judy Patrick Photography Cover Design: David Geiger, Art Director

Mining Special Section 32 | You Should Care about Mining in Alaska

38

Alaska mining promotes safety, environmental stewardship, and healthy economies

By Deantha Crockett

© Kinross Gold Corporation

DEPARTMENTS

FROM THE EDITOR RIGHT MOVES INSIDE ALASKA BUSINESS BUSINESS EVENTS EAT, SHOP, PLAY, STAY EVENTS CALENDAR ALASKA TRENDS AD INDEX

34 | Leadership and Usibelli Mine

Operating as a family business for 73 years

By Tasha Anderson

38 | Fort Knox Celebrates 20 Years

Area’s gold history dates to 1901

By Julie Stricker

48 | Red Dog Mine Supports Region

Big exporter with small footprint is a rural role model

By Julie Stricker

CONSTRUCTION

26 | Remote Crew Camps

Alaska companies accommodate workers

By Rindi White

TRANSPORTATION

66 | Alaska Railroad LNG Transport

Trial run carries groundbreaking cargo

By Julie Stricker

70 | Logistics of Transportation in Alaska

Overview of Kinross Gold Corporation’s Fort Knox gold mine operations.

52 | Alaska Business Monthly’s 2016 Mining Directory 56 | Alaska 2016 – Mining in Review

By Curtis J. Freeman

INDUSTRIAL FINANCING 108 | Meet AIDEA

Investing in enterprise infrastructure

By Tracy Barbour

CORRECTIONS In the Alaska Native Village Corporation Directory in the September 2016 issue the information for Paimiut Corporation was incorrectly reported.

Paimiut Corporation can be contacted at: PO Box 240084, Anchorage AK, 99425; (Phone) 907-561-9878; or (Fax) 907-563-5398.

Joe Usibelli Jr. was named but not pictured in the Top 49ers Usibelli listing in the October issue.

The photo was of Joe Usibelli Sr.

Freight and information working in harmony

By Tasha Anderson

76 | Hanjin’s Insolvency

What to expect from a Chapter 15 proceeding

By Isaak R. Hurst

Joe Usibelli Jr.

Alaska Business Monthly | November 2016 www.akbizmag.com

N ove m b e r 2 016 D i g i t a l E d i t i o n TA B L E

O F

C O N T E N T S VOLUME 32, NUMBER 11

Natural Resources Special Section

Published by Alaska Business Publishing Co. Anchorage, Alaska

78 | Natural Resources are Foundation of the State’s Private Sector Economy Mining industry health impacts Alaska’s other resource development industries

By Marleanna Hall

EDITORIAL STAFF

Managing Editor Susan Harrington 257-2907 editor@akbizmag.com Associate Editor Tasha Anderson 257-2902 tanderson@akbizmag.com Art Director David Geiger 257-2916 design@akbizmag.com Art Production Linda Shogren 257-2912 production@akbizmag.com Photo Contributor Judy Patrick

Photo courtesy of Everett Thompson

BUSINESS STAFF

80 Commercial fishing in Bristol Bay, from stern to bow, Travis Hall, Lakota Love Thompson, Jeremy Coghill , and Everett Thompson on the flybridge.

80 | The Alaska Commercial Fishing Fleet

Thousands ply the sea for abundant fisheries

By Tom Anderson

84 | Shipping Live Crab from Alaska A risky business with logistical challenges

By Will Swagel

86 | Alaska Timber Industry Needs Increased Tongass Harvest

Federal policies and politics have abolished large scale logging and manufacturing

By Owen J. Graham

88 | Winter Tourism Expands Visitors captivated with Interior offerings

By Julie Stricker

92 | Alaska’s Road to Power from Power Generation Time for LNG to be replaced by UHVDC in Alaska

By Darryl Jordan

98 | North Slope Activity

President Billie Martin VP & General Manager Jason Martin 257-2905 jason@akbizmag.com VP Sales & Marketing Charles Bell 257-2909 cbell@akbizmag.com Account Mgr. Janis J. Plume 257-2917 janis@akbizmag.com Account Mgr. Holly Parsons 257-2910 hparsons@akbizmag.com Accountant Ana Lavagnino 257-2901 accounts@akbizmag.com Customer Service Representative Emily Olsen 257-2914 emily@akbizmag.com 501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503-2577 (907) 276-4373 | Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com | Editorial email: editor@akbizmag.com

ALASKA BUSINESS PUBLISHING CO., INC.

ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2016, 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: Email query letter to editor@akbizmag.com. 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. Email specific requests to editor@akbizmag.com. Online: Alaska Business Monthly is available at www.akbizmag.com/Digital-Archives, www.thefreelibrary.com/ Alaska+Business+Monthly-p2643 and from Thomson Gale. Microfilm: Alaska Business Monthly is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

facebook.com/AKBusinessMonth

Alaska’s North Slope lives up to its potential

By Tasha Anderson

104 | Tolsona No. 1

twitter.com/AKBusinessMonth

Ahtna successfully begins drilling program

By Tasha Anderson

6

Alaska Business Monthly | November 2016 www.akbizmag.com

FROM THE EDITOR

Vote

Alaska Voter Turnout Statistics General Elections since Statehood Year

Registered Voters

Votes Cast

If you make a mistake while voting, return the ballot to the election official for a new one.

A vote which has been erased or changed will not be counted.

1958

Not available

50,343

1960

Not available

62,177

1962

Not available

60,084

1964

Not available

68,858

1966

Not available

67,361

1968

Not available

84,902

1970

Not available

82,405

1972

Not available

98,581

1974

Not available

98,557

Instructions: To vote, completely fill in the oval next to your choice, like this: Please be sure to vote both sides of the ballot

United States President Vice President (vote for one)

Alaska Constitution

Castle, Darrell L. Bradley, Scott N.

Democrat

Clinton, Hillary Kaine, Tim De La Fuente, Roque "Rocky" Steinberg, Michael

Non Affiliated

Johnson, Gary Weld, Bill

Libertarian

Stein, Jill Baraka, Ajamu

Green

Trump, Donald J. Pence, Michael R.

Republican

Ballot Measure No. 1- 15PFVR An Act Allowing Qualified Individuals to Register to Vote When Applying for a Permanent Fund Dividend Ballot Measure No. 1 This act would instruct the Division of Elections to register a qualified Alaskan to vote when applying for the permanent fund dividend (PFD). If a person registers to vote for the first time through a PFD application, the Division of Elections would compare the person's information to state records to ensure that the person is an eligible voter. The Division of Elections would let the citizen know if he or she has been added to the state registration list, or if the person's current voting address does not match the one provided on the PFD form. In that case, the person could change their voter registration address.

The notice also would allow an applicant to request removal from the registration list. Thus, using the data from the PFD form, the Division of Elections would register a qualified Alaskan to vote unless he or she opts out. The notice would also allow a person to register with a political party. Voter information is already confidential under existing state law.

Should this initiative become law?

YES

Write-in

(vote for one)

Craig, Breck A.

Non Affiliated

Gianoutsos, Ted

Non Affiliated

Metcalfe, Ray

Democrat

Miller, Joe

Libertarian

Murkowski, Lisa

Ballot Measure No. 2 This amendment to Article IX, section 8 of the Alaska Constitution would expand the State's authority to incur debt by letting the State issue general obligation bonds backed by the state for postsecondary student loans.

Republican Should this constitutional amendment be adopted?

Stock, Margaret

Non Affiliated

YES

NO

Supreme Court

Write-in

United States Representative

Justice Bolger Shall Joel H. Bolger be retained as justice of the supreme court for ten years?

(vote for one)

Lindbeck, Steve

Democrat

McDermott, Jim C. Souphanavong, Bernie Young, Don

Libertarian Non Affiliated

YES

NO

Justice Maassen Shall Peter J. Maassen be retained as justice of the supreme court for ten years?

Republican

YES

NO

Court of Appeals

Write-in

State Representative District 1

V

NO

Ballot Measure No. 2 Allow Debt for Postsecondary Student Loans Senate Joint Resolution No. 2

United States Senator

Judge Allard Shall Marjorie K. Allard be retained as judge of the court of appeals for eight years?

(vote for one)

Kawasaki, Scott J.

Democrat

YES

NO

ote this November in the General Election. Registered voters should turn out in force to make a difference with their votes. In the August Primary Election only 88,817 of 515,714 registered Alaska voters cast ballots—a 17.2 percent turnout. As an aside to contrast this year’s poor Primary Election participation, in Alaska’s 1992 General Election, 82.9 percent of registered voters cast ballots—the highest percentage of voters so far.

By October 3 the number of registered voters had risen to 522,767, and if Ballot Measure No. 1 passes that number could automatically increase in coming years. The measure is a novel approach to ensure more Alaskans are easily registered to vote by automatically registering eligible voters when they apply for a Permanent Fund Dividend and requiring a person to opt out if they don’t want to be a registered voter. Ballot Measure No. 1 does nothing that actually causes more people to vote, although by registering more voters it could have the effect of increasing the number of people going to the polls.

The other ballot measure also comes with possible consequences. Ballot Measure No. 2 changes the Alaska Constitution by allowing general obligation bonds for postsecondary student loans. This might sound like a good idea and perhaps it is; however, recently some general obligation bonds have been linked to risky financial strategy—to the tune of $3.5 billion as a way to meet unfunded state pension fund liabilities—but those are being called pension obligation bonds, not general obligation bonds.

Also on the ballot and with probably more far-reaching consequences are the candidates for a president, US senator, and US representative to the national political arena, as well as state senators and representatives. The biggest thing readers need to do is vote; and vote as if the development of Alaska’s natural resources depends on it—it does. Alaska is a natural resources state and whomever is elected will have a direct impact on whether or not and to what extent Alaska’s natural resources are developed.

Write-in

www.akbizmag.com

Continue Voting on Next Side

FRONT Card 1 SEQ# 1 English

Percent Turnout

1976

207,190

127,877

61.7%

1978

238,434

129,705

54.4%

1980

258,742

162,653

62.9%

1982

266,224

199,358

74.9%

1984

305,262

213,173

69.9%

1986

292,274

182,526

62.4%

1988

292,441

203,433

69.5%

1990

300,467

197,540

65.7%

1992

315,058

261,427

82.9%

1994

336,226

216,668

64.4%

1996

414,815

245,212

59.1%

1998

453,332

227,156

50.1% 60.8%

2000

473,648

287,825

2002

460,855

232,852

50.5%

2004

474,740

313,592

66.0%

2006

465,421

238,213

51.1%

2008

495,731

327,341

66.0%

2010

494,876

258,746

52.3%

2012

506,432

301,694

59.6%

2014

509,011

285,449

56.1%

Chart Data: Alaska Division of Elections

SAMPLE BALLOT FRONT

INSTRUCTIONS TO VOTER: To vote for the issue/candidate of your choice, fill in the oval next to the issue/candidate you want to vote for. Place your ballot inside the secrecy sleeve and then take your ballot to the ballot box.

Know before you go (to the polls). Research who the candidates are, what they’ve said, where they stand on issues, when they’ve demonstrated exceptional leadership, and how they’ve promoted (or dissuaded) responsible development of natural resources. Vote informed—it’s a big deal.

And so is the November issue of Alaska Business Monthly.

Two huge special sections: Mining and Natural Resources, along with columns and articles across the Alaska economy and our monthly fixtures. The team at Alaska Business Monthly has put together another really great magazine—enjoy!

Susan Harrington, Managing Editor November 2016 | Alaska Business Monthly

7

ECONOMY OP-ED

Alaska’s Economy

By Betsy Lawer

T

he foundation of Alaska’s Economy has not changed, even though economic circumstances world-wide have changed dramatically. The striking change in commodity prices worldwide has left state government with less money to spend, but it has not changed the competitive advantages that drive Alaska’s economy.

The foundation of any economy, big or small, is capital investment—money spent to make money. Investment capital flows to competitive advantage. The competitive advantages that Alaska enjoys have not changed, except maybe for the better.

Alaska’s principal competitive advantage is an abundance of certain natural resources. Oil is by far the most abundant natural resource found in Alaska and the most valuable. But natural gas, minerals, fish, timber, and incomparable natural scenery are also in abundant supply in comparison to other places in the world. Geographic location offers the other competitive advantage. Proximity to Asia lowers the cost of delivering natural resources extracted in Alaska to Asian countries that are the largest market for those natural resources.

Geographic location also brings to Alaska an enormous amount of federal spending for national defense. Alaska’s geographic location may prove increasingly valuable as the Arctic passage is developed as a second major route for surface transportation of commodities and products.

Investment for oil exploration and development is being curtailed, but it hasn’t stopped. Major finds and development projects were announced earlier in the year, and the companies involved are going forward.

Through mid-September of this year, average daily oil production was up about five thousand barrels a day and projected to exceed the average daily production level on an annual basis forecast by the Alaska Department of Revenue. Investment will be curtailed as long as the price of oil remains low; as long as governments, both state and federal, make it more expensive to get the oil out of the ground; and as long as state government insists on taking a larger share of the profits from its sale.

Abundant natural gas deposits remain and are not stranded as some portray it.

North Slope gas is being injected into the ground to maximize oil production and by 8

regulation cannot be harvested and sold off until perhaps 2025, under any circumstances. So, the fact that the major oil producers have left the commercialization of that gas to the State of Alaska is not negatively impacting the economy at present. New discoveries and recovery techniques in Cook Inlet assure lower energy costs for the largest portion of Alaska’s population and economic sector. Alaska Gasline Development Corporation, the State sponsored gas pipeline development company, continues to spend the money appropriated for gas line development planning, and the new executive officer of the company, together with the governor, are expressing confidence that other pipeline investors will be found.

Enormous levels of national defense spending in Alaska continue to bolster the economy. Threatened base closures were avoided, and substantial new appropriations were authorized for new systems and facilities to accommodate the F35 fighters coming to Alaska and further development of the missile defense system installed in Alaska.

Tourism results this season were strong and by last report resumed pre-recession levels for travel to Alaska by cruise ship when the 1 millionth cruise ship visitor arrived in Alaska.

Commercial fishing results were mixed this year, as the total catch was greater than in recent years, but sales prices were down as stocks from previous years remained to be sold in the largest markets for Alaska seafood.

On the construction front, residential construction starts have been in steady decline, but the level of government spending for capital projects remained at similar annual levels as projects commissioned before the price of oil declined were completed.

So, from an employment standpoint, overall the effects of the precipitous decline in oil prices have yet to be felt. According to the Alaska Department of Labor, seasonally adjusted August employment levels compared favorably to the same month last year. Declines in employment in the higher-paying petroleum and construction industries were somewhat offset in pure numbers by growth in the healthcare, manufacturing, and leisure/hospitality segments of the economy.

All of this goes to show that the foundation of a healthy economy still exists in Alaska—just not one that can sustain the state spending that followed dramatically increased oil prices. Alaska has been down

this road before, more than once, and has come back with a stronger recovery each time because the foundation of Alaska’s economy remained unchanged. In fact, it appears that Alaska is better positioned to weather the current decline in commodity prices brought on by the reduced demand for those same commodities. But further change is needed.

Right now in the banking industry we are seeing a decline in loan demand at the same time we are experiencing a steady increase in deposits. We attribute the decline in loan demand to uncertainty in the private sector that state government can do what is necessary to reduce government spending, make use of other sources of revenue to balance the state budget, and avoid taxing the oil and gas industry to the point where further investment in oil and gas exploration and development stops. On the other hand, we attribute the increase in deposits to the same uncertainty in the private sector. Private enterprise and its constituents are maintaining liquidity and increasing savings so they have reserves to fall back on if state government fails to do what is necessary to sustain economic prosperity in Alaska or so they have the resources to act quickly and promptly to take advantage of economic opportunities that will become available when the pale of state government inaction (or worse) is removed.

Together with my fellow employees at First National Bank Alaska, we believe there is real prospect that the people of Alaska can bring about a change in government savings and spending that was not present the last time we saw a precipitous decline in commodity prices and, particularly, in oil prices world-wide.

So too we see a real change in the reaction of the private sector in regard to savings and spending. The last time, notwithstanding a precipitous decline in commodity prices and a contemporaneous unwarranted increase in asset prices, borrowing continued unabated and savings, if any, added to spending to buy assets at unsustainable prices. In short, we believe Alaskans have learned from past adverse economic events—WE BELIEVE IN ALASKA. R Betsy Lawer is Chair and President of First National Bank Alaska.

Alaska Business Monthly | November 2016 www.akbizmag.com

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For more information, call our Alaska Support Center at 1-877-678-SHIP or visit matson.com/Alaska

MILITARY

Alaska Guardsmen Compete, Earn Best Warrior Titles Luiken, Marnell will advance to Army National Guard Regional Best Warrior Competition

By Staff Sergeant Balinda O’Neal Dresel

T

wo members of the Alaska Army National Guard were recognized as top contenders for the Alaska Army National Guard Best Warrior Competition during an awards ceremony on Joint Base Elmendorf-Richardson in September.

The victors had to demonstrate mastery of multiple skills through a series of fifteen events designed to challenge their physical and mental toughness during the state-level competition.

“The Best Warrior Competition recognizes Soldiers who represent their unit 10

with distinction, demonstrating their proficiency with warrior tasks, physical fitness ability, and endurance,” host State Command Sergeant Major Marc Petersen said at the Best Warrior Competition awards ceremony. “This three day event tested the competitor’s ability to operate in stressful conditions while battling pain and fatigue.”

Among the events designed to test the participants were an Army physical fitness test, live-fire weapons ranges, casualty evacuation, day and night land navigation, an obstacle course, cross country run, written exams, and state command sergeant major board.

“We would like to recognize all the competitors for their motivation, hard work,

and tenacity during this demanding competition,” said Petersen, before recognizing and congratulating each of the ten competitors from units across the state.

During the ceremony, Corporal Anthony Luiken, Bravo Company, 1st Battalion, 297th Infantry Regiment, was named winner of the noncommissioned officer category, and Specialist Trent Marnell, 49th Missile Defense Battalion (Ground-Based Midcourse Defense), took top honors for the enlisted category.

“The winners will move on to compete in the Army National Guard Regional Best Warrior Competition in Washington this May 2017,” said Petersen. “The regional winners will then move on to the Army National

Alaska Business Monthly | November 2016 www.akbizmag.com

The Best Warrior Competition was designed to test soldiers in a series of mentally and physically challenging events over the course of seventy-two hours to determine who the best junior enlisted and noncommissioned officers are in the Alaska Army National Guard.

US Army National Guard photo by Staff Sergeant Balinda O’Neal Dresel

Guard’s national-level Best Warrior Competition, testing their mettle against soldiers in the other six regions of our Guard nation.”

Should the winners not be able to compete, they will be replaced by the runnersup from the state competition. This year, Specialist Jonathan Holston, 1st Battalion, 207th Aviation Regiment, was the runnerup in the enlisted level.

R Staff Sergeant Balinda O’Neal Dresel is the 134th Public Affairs Detachment Noncommissioned Officer in Charge. www.akbizmag.com

Alaska Army National Guard Corporal Anthony Luiken, Bravo Company, 1st Battalion, 297th Infantry Regiment, right, and Specialist Trent Marnell, 49th Missile Defense Battalion (Ground-based Midcourse Defense), are recognized as the winners of the state-level Best Warrior Competition during an awards ceremony on Joint Base-Elmendorf Richardson, Alaska, September 10.

US Army National Guard photo by Staff Sergeant Balinda O’Neal Dresel

November 2016 | Alaska Business Monthly

11

TELECOM & TECHNOLOGY

Photo by Robert Posma / Courtesy of PDC Inc.

One of the benefits for engineering firm PDC of working with AlasConnect was instant connectivity from any workstation or conference room with nearly anyone else in the firm, no matter their location. In this photo, Katy Kless (left) and Robert Posma are in the PDC Inc. office in Anchorage, talking to three workers in other PDC offices. On the screen are Carole Bullman in Juneau, Heather Benton in Soldotna, and Malia Shoults in Fairbanks. The fourth photo on screen shows Posma.

Enhancing Business Profitability Companies provide cost-effective IT options

By Rindi White

A

year and a half ago, PDC Inc. Engineers in Anchorage had a second office in Fairbanks, each with a resident information technology, or IT, worker.

The company wanted to expand, but doing so was difficult because keeping the offices linked together by using centralized data, organized data backup, and simple day-today communication was a logistical hurdle.

With a limited IT staff, PDC Principal Electrical Engineer Robert Posma says, just day-to-day maintenance could be difficult.

“It was hard if there was a major problem, or if someone left or was sick,” he says.

“We were having some interesting difficulties managing the two plants.”

Enter AlasConnect, a company that spe12

cializes in outsourced IT that, last December, was purchased by Valley-based Matanuska Telephone Association.

“Bringing AlasConnect on was one of the best ideas our IT crew has had in a long time,” Posma says.

“We have the ability to bring in 30 to 40 highly skilled IT technicians to address all aspects of IT support for a company and save them money at the same time,” says Jeff Yauney, president and CEO of AlasConnect.

“It is impossible for a single IT person to be a specialist in all areas and AlasConnect didn’t grow up as a telecommunications company, we’ve always been an IT shop focused on providing high quality customer support.”

Now, PDC has offices in Anchorage and Fairbanks as well as Mat-Su, Juneau, Soldotna, and a small, one-person branch office

in Seattle. Everyone can tap into AutoCAD files of current projects and make changes to them if necessary. And quick, face-toface meetings are easy to set up, Posma says.

“One of the things we use extensively now is Skype for Business. It allows individual engineers or anyone on their desktop to connect nearly instantaneously with anyone else in nearly any of our locations,” he says. “Just that ability to communicate has really helped.”

Posma says the company has been able to be more diverse in its work products, bringing in employees with specific skill sets even though the project may be hundreds of miles from where they work. The structural engineer working in Seattle, for example, worked on several projects in Alaska before moving to Washington state. One project was at the Alaska Native Medical Center, and Posma says the engineer continues to work on elements of that project from Seattle.

“We frequently bring him in on conver-

Alaska Business Monthly | November 2016 www.akbizmag.com

sations. Our architect [on that project] is in Seattle, so things go smoothly,” Posma says.

Posma says he was PDC’s IT guy for the first ten years the company was in existence.

“That was my nighttime job, in addition to my day job,” he says. “I realized if I were going to be working late, it would be better if those were billable hours.”

Yauney says that’s the case for many small business owners and managers. Core business needs get put on hold if a server goes down or a virus creeps into the system.

“We help free them up so they can focus on their core business,” he says. “It’s our job to make sure that they are not impacted by the complexities of IT.” Posma says PDC hired IT employees, tested out another outsourced-IT company, went back to their own IT staffing, and, after about fifteen years of having one person in each office managing IT needs, finally switched to AlasConnect.

“Realizing at that point, because of our growth and our need for stability and commonality across locations, we looked for AlasConnect,” he says.

Posma says working with AlasConnect has definitely saved them money, though it’s difficult to quantify just how much. All workstations work on the same platform, so employees can go anywhere and have full access to their files. HR functions can be done through the network, so HR workers can be in one office, serving the whole company, he says. Accounting also works centrally.

“The initial implementation was a savings to us. We definitely spend less [on outsourced IT] than the two full-time IT folks we had employed. I wouldn’t say we were able to take one position and implement another engineering position, but it definitely saved us money,” Posma says.

“It definitely made the expansion, especially to Palmer and Soldotna, possible. I don’t think we would have tried what we did without having the centralized IT there,” he says.

And in a pinch, having IT employees monitoring things around the clock has ultimately made the PDC team more productive. Posma mentions an August outage at the Anchorage office that happened around 2 a.m. No one at PDC was aware of it, but AlasConnect’s team was at work on the problem. By the time most employees were at work, the outage had been fixed.

“That’s one of the things we try to provide to the companies we serve,” says Robert Thurston, chief technology officer with AlasConnect. “All systems are functional all of the time.”

security is one option many businesses take.

That was included in AlasConnect’s partnership with PDC, and it’s a vital service many telecommunications companies offer.

Chris Reaburn, vice president of managed services at Alaska Communications, says no matter what type of business the company is working with, IT security is a primary concern.

“We’ve all seen headlines about hackers targeting large corporations, but the reality is cybersecurity breaches are a risk for any business. From start-ups to enterprise businesses, we identify and mitigate risk for all of our clients using managed services. Of

course, some companies have needs for advanced security—for example, healthcare customers, businesses that need to comply with federal privacy laws—which we address with customized solutions,” Reaburn says.

Yauney and Thurston say medical offices are one of the many professional businesses seeking to outsource IT, in part because they are required to have their systems online and secure at all times.

“A small doctor’s practice has similar liabilities in terms of HIPAA [Health Insurance Portability and Accountability Act] and other laws as a large hospital. We’re able to help them make sure they’re cov-

Security a Common Concern

With the potential for data theft a real concern for many businesses, outsourcing IT www.akbizmag.com

November 2016 | Alaska Business Monthly

13

ered in those areas regarding IT security,” Thurston says.

Updating Technology

Each company has unique technology and telecommunications needs, and likely each of them has tackled those needs in a slightly different fashion. Bringing them up to date can mean a complete overhaul in some cases, Reaburn says.

“With more established companies, we typically bring their IT infrastructure to a contemporary design, so it’s best suited to meet strategic business needs. Often, this means replacing aging infrastructure with new, more secure, reliable and efficient infrastructure. Increasingly, the most efficient and effective solutions are based in the cloud,” he says. “It’s also an exciting time for younger companies. From the beginning, new businesses can have cloudbased infrastructure. We can provide them with highly reliable, secure storage and computing solutions, so they never have to go through the cycle of replacing old equipment or updating old infrastructure.”

AlasConnect got its start building a regional cloud operation for businesses in Fairbanks. That was in 2003, before cloud computing was a thing, Yauney says.

“We would go into a customer managed organization, replace their servers and systems with high-end equipment within our data centers and connect them, via our fiber optic network,” Thurston says.

The company has since expanded to support companies from Prudhoe Bay to Kethickan, and has four data centers around the state. AlasConnect moved into the Anchorage market in 2009, and offers “A to Z” IT services for businesses ranging in size from just a few people to companies with hundreds of employees.

Thurston says instead of asking a business to completely overhaul its equipment, AlasConnect works with companies to upgrade over time, if needed. “Our model is very scalable,” he says.

Saving Money

Yauney says the vast majority of professional offices, such as engineering firms and particularly doctor’s offices—businesses that need their systems to be up and secure at all times—are typically the companies seeking IT services.

In times of budgetary constraint, such as Alaska is facing today, he says their business is busier than ever with companies large and small approaching AlasConnect, hoping to find ways to save money and remove the headaches associated with IT. It’s easier to quantify how much a larger company can save than a smaller one, he says—it’s typi14

cally in the neighborhood of 20 to 25 percent, while receiving enhanced IT services.

Raeburn says Alaska Communications focuses more on strategy than the cost savings. “There are typically savings involved, but we also ask how we’ve helped business customers execute their strategy and become who they want to be in the market or how we help organizations avoid or mitigate previously unseen risks. Helping local Alaska businesses compete in their market and succeed is our chief interest,” he says.

Alaska Communications worked with nonprofit behavioral health provider Akeela to allow Akeela clinicians to work with patients all around Alaska. By providing greater connectivity, Akeela provides the same level of care to patients thousands of miles away from providers in its Anchorage or Ketchikan offices.

In September, Alaska Communications became the first Microsoft Azure ExpressRoute partner based in Alaska. ExpressRoute is a dedicated cloud connection, which Alaska Communications used to help Akeela perform some business functions at its headquarters instead of in each individual office.

One-Stop Shopping

Thirty years ago, GCI was a small Alaska start-up, offering interstate long distance phone service, says Brad Spees, VP of GCI Business.

“Since that time we have grown to become Alaska’s largest integrated technology company. While we still offer traditional telecom services, our product and service portfolio has expanded to offer virtually any technology service required by a business—including Internet, wireless, cloudbased IT service, voice, data, video, fully managed services, staff augmentation, and outsourcing,” Spees writes by email.

Instead of working with vendors to provide services, GCI provides the services and manages them itself. Spees says some companies benefit most from the company’s mobility solutions—allowing a locksmith to stay connected wherever their business takes them, for example. Others rely on the company’s 1G broadband offering, which connects them to customers, suppliers, and employees. Because of the wide range of solutions the company provides, Spees says GCI can help companies with connectivity—one of the most important keys to a successful business.

“Ultimately, the most critical means for a business to increase profits or gain customers is to be exceptional in what they do— offering a quality product or service with value—and it is also critically important to be easy to do business with,” he writes.

“Technology tools can assist these efforts in many ways, and our consultative approach helps us work with customers to

determine the best application of technology so they can meet their customers’ needs and support their business plan.”

Greater IT Hosting

Jim Kostka recently became the director of GeoNorth in Anchorage. He says GeoNorth already works with businesses to provide tools that help save money—directed marketing tools to make sure their marketing dollars are being funneled where they’re most useful, for example, and designing streamlined websites and applications.

Their primary tool for small businesses is directed searches, Kostka says.

“A tow truck company or a real estate agent or a politician running for office can reach out to us and let us know the type of profile—who they want their message to go to,” he says.

Using the public record search engine Ingens, clients can call GeoNorth to do a customized one-time search, or they can subscribe to a service and perform their own searches, Kostka says.

GeoNorth also does web design and custom-designed applications, along with some pretty impressive imagery services. The company is the only one in the United States to own and operate its own direct receiving stations for seven Airbus satellites. That allows GeoNorth to have priority use of the satellites for optical imagery and other needs.

Now, GeoNorth is working toward offering more IT solutions.

“The market has changed and customers are asking for it,” Kostka says. “We have it on a small scale. We will be moving in that direction more so than we are now.”

Kostka comes from a background of providing IT solutions for businesses at his former employer, GCI. GeoNorth, a subsidiary of Tatitlek Corporation, an Alaska Native Corporation, snapped him up before his retirement papers were a week old. He says he’s eager to help the company move forward. The company is rooted in handling federal contracts, which means it must be consistent, reliable, and have great attention to detail.

“GeoNorth and Tatitlek will continue to adapt to the market. And right now, our customers are asking us to do more in the business space. With the economic headwinds, they’re asking where they can cut and still stay in business, and, unfortunately, it’s really the one or two-person IT staff [that are being considered for cuts]. They’re looking at how they can get it done cheaper, and with depth,” Kostka says.

R Freelance journalist Rindi White writes from Palmer.

Alaska Business Monthly | November 2016 www.akbizmag.com

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FINANCIAL SERVICES

Debt Restructuring and Refinancing Helps Businesses Lowers costs, increases cash flow, and gets capital for improvements, investments, acquisitions

By Tracy Barbour

A

fluctuating economic climate and persistently-low interest rates are prompting a broad mix of Alaska businesses to refinance and restructure their existing debt.

Debt restructuring and refinancing are very similar terms, but they convey slightly different shades of meaning.

A refinance involves paying off debt with the proceeds from a new loan that is usually the same size and uses the same property as collateral. “Refinancing typically means we are revising an existing facility, which can mean restructuring the interest rate and extending the term and amortization,” Morris says KeyBank Commercial Banker Tracy Morris. “Additionally, the client can extract equity to purchase assets, get working capital, and do an acquisition.”

Refinance options for businesses are typically driven by the kind of collateral or purpose that is driving the financing, says Allen Hippler, a commercial loan officer with Northrim Bank. For example, Northrim has different refinance options for debt linked to short-term assets like inventory and accounts receivables, as well as for longer-term fixed assets such as equipment and real estate.

A refinance simply changes the way debt is paid, Hippler says. And it entails looking at the entire structure of a company financially. “A good refinance will, if possible, restructure debt so it is best matching the needs of the business,” he says.

Debt restructuring is generally a process that enables a company or entity facing cash flow problems and financial distress to reduce and renegotiate delinquent debts to improve liquidity so it can continue operating. Debt restructuring carries a negative connotation with the average person because it is often associated with financial hardship. Restructuring debt, which has 16

historically been an instrument of large rower. The most common kinds of refinancing corporations, is usually a less expensive al- are rate-and-term and cash-out transactions. ternative to bankruptcy.

Rate-and-term refinancing happens when the In the realm of commercial financing, original loan is paid and replaced with new however, debt restructuring is considered financing. Cash-out refinancing—which is to be a positive tool that can benefit busi- common when the asset collateralizing the nesses of all types and sizes, according to loan increases in value—involves withdrawChad Steadman, a vice president ing the value or equity in the asset in exchange and regional unit manager with for a higher loan amount. Essentially, the borFirst National Bank Alaska. rower can gain access to the equity through a “When it comes to restructur- loan without having to sell the asset. ing, they might be looking at Businesses choose to restructure and the balance sheet of their com- refinance debt for a myriad of reasons. A pany to see if they can take some common goal is to pay less interest over the debt from one place and put life of the loan. Many borrowers also want it somewhere else,” Steadman to modify the duration of the loan or switch says. “Maybe they want to take from a variable-rate to a fixed-rate loan. a line of credit that should be for And in cases with commercial real estate, short-term use and restructure some borrowers want to trade a fixed-rate it into a longer term. I’m thinking of my loan to an adjustable loan. balance sheet and how I can better align it As a community bank, First National with my long-term goal of building more often helps businesses refinance commerequity in my business.” cial real estate loans. These cusHaving a properly-aligned tomers typically want to lower balance sheet is essential for interest rates, lengthen amorbusiness survival. “If your baltizations, or extract equity to ance sheet is unequal, and you keep more profit in their pocket, have too much in that short-term Steadman says. bucket, it can hurt the business,” Steadman says non-real esSteadman says. “If you have tate businesses tend to refinance short-term debt that should be in to lower payments and increase the long-term bucket, it can stunt cash flow for expansion purposes. your growth or your ability to ex- Steadman Occasionally, they may borrow tract profits from the business.” more than what is owed on the Restructuring is generally not a one- existing debt and use the additional funds to and-done deal. Customers with commer- wipe out other financial obligations. “We’re cial real estate may look at restructuring seeing customers refinance to lock in low their debt almost every five years, while rates and prepare for economic uncertainty,” businesses without real estate may consider Steadman says. “I think they are trying to get restructuring annually. “It’s amazing how their debt obligations as low as possible to often people are looking at it,” Steadman have options if they need to.” says. “We’re seeing people look at it more The current interest rate environment is so and more.” good that it makes sense to consider refinancing, says Bond Stewart, Wells Fargo’s AnchorCommon Reasons to Refinance age business banking manager. As with most There are a wide variety of refinancing options financial institutions, Wells Fargo’s customavailable, depending on the needs of the bor- ers are refinancing for two main reasons: to

Alaska Business Monthly | November 2016 www.akbizmag.com

lower payments and reduce interest. “A lot of the time now people want to lock in low rates and extend the term out—and not have to worry about what the rate environment will be down the road,” Stewart says.

Sometimes refinancing is driven by a unique situation such as when one business partner needs to buy out another partner who may be retiring or exiting for other reasons.

Or the transaction could stem from having an existing loan with a “call” provision.

For instance, a borrower may have received a longer-term loan with a twenty-five-year amortization with a maturity of five or ten years. When the loan matures, there is a balance that the borrower must pay directly or through a refinance. “Sometimes, they will be approaching the end of a call provision and will borrow enough funds to pay off the existing loan and get some extra for expansion or other expenses,” Stewart says.

Regardless of the impetus for refinancing, Wells Fargo is seeing a broad base of refinance requests from various industries, Stewart says.

Meeting Unexpected Challenges

Almost any business could find itself in a position of needing to refinance to save money and/or boost cash flow, Stewart says. “Everybody goes into a situation

where they believe they can predict their earning position, and sometimes they are wrong,” he says. “They may see economic circumstances that are challenging, and they have a need to refinance.”

Wells Fargo offers a variety of debt refinancing and restructuring options, ranging from Stewart standard portfolio loans that it holds in house to refinancing with Small Business Administration (SBA) programs like 7(a) and 504 loans.

SBA loan programs are designed to help businesses succeed. Its 7(a) and 504 loans are practical options for long-term financing from starting and growing a business to purchasing commercial real estate. SBA 7(a) loans—which are part of its most common loan program—award funding that may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business. The specific terms of SBA loans are negotiated between the borrower and an SBA-approved lender.

Certified Development Company (CDC)/504 loans provide financing for major fixed assets such as equipment or real estate. As the name indicates, CDC/504

loans are facilitated through a certified development company, which are nonprofit corporations that are certified and regulated by the SBA. They work in conjunction with participating lenders to provide financing to small businesses. There are approximately 270 CDCs nationwide, each covering a specific geographic area. Evergreen Business Capital, the largest CDC in the Pacific Northwest, serves Washington, Alaska, Oregon, and Idaho.

Wells Fargo, incidentally, has been named the SBA Alaska Lender of the Year (based on loan unit volume) for seven straight years. In Alaska, the bank has approved eighty-one SBA 7(a) loans for a total of $16.7 million through July 31 of federal fiscal year 2016. This represents a 62 percent market share on loan unit volume and a 31 percent market share on loan dollar volume in 2016.

Nothrim, like Wells Fargo, employs government programs offered by the SBA as well as the Alaska Industrial Development and Export Authority to assist customers.

“We use these programs to offer more options for businesses that need to refinance,” Hippler says.

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November 2016 | Alaska Business Monthly

17

Refinancing can enhance cash flow by reducing payments or providing access to cash through lines of credit or the extraction of equity. It can improve income by reducing the interest expense. “It’s really nice when you can accomplish both at once,” Hippler says.

“Surprisingly often, Northrim has Hippler borrowers who do both.”

He adds, “Now we’re in a very incredibly-low interest rate environment, which can make it attractive to refinance.”

At KeyBank, the most common reason customers are refinancing is to improve cash flow, Morris says. They are also using restructuring as a tool to facilitate debt consolidation.

KeyBank offers three categories of debt restructuring and refinancing: term debt, lines of credit, and leases. The end result that the client is seeking will dictate which of these options is the most appropriate for their situation. To determine this, Morris dialogues with clients about their objectives and needs. “We’re going to talk to them about what is the general outcome they want with the restructuring,” she says.

“And through that conversation, we can come up with a solution.”

When assisting clients with a refinance, Morris typically projects cash flow and how the new debt will impact the business. There could be a prepayment penalty for the existing financing, so she advises clients to take this into consideration. “If the interest rates are low, you have to see if it’s worth paying a prepayment penalty to refinance,” she says.

Knowing what the long-term business goal is will help borrowers select a loan product and decide whether refinancing is cost-effective or feasible.

Like Morris, Steadman of First National also encourages clients to take an introspective stance toward refinancing or restructuring debt. “I think it’s a good idea to have your CPA and banker on the same page and help them understand the most important thing you want to accomplish,” he says. “Is it to lower interest rates or get a better cash flow?”

tory or equipment,” he says.

Morris, on the other hand, is seeing restructuring that is more of an annual occurrence in Alaska’s seasonal industries like tourism and construction.

Seasonal businesses are adding a “bulge” in their line of credit.

The bulge—which is like a line within a line—may be for a shorter term of thirty to sixty days. “We’re not changing the structure of the line, but increasing the amount of the line,” Morris says. “It gives them a temporary increase on that line.”

Refinancing Trends

 Over what period of time will I need to repay the new loan?  What does this entail in terms of my monthly cash burden?  What collateral, if any, will I need to pledge?  What happens if I want to prepay or need to pay late?

In terms of trends, the low-interest-rate environment seems to be driving businesses to refinance debt on income-producing property, Hippler says. Refinancing real estate, for instance, is particularly advantageous due to the longer terms that are usually involved.

Often when businesses have non-income producing property, they restructure their entire financial statement to consolidate debt or extract equity to make capital investments, Hippler says. “It’s a great opportunity for businesses to acquire new inven18

The Financing Process

The application process for refinancing and restructuring debt is very similar to what borrowers undergo with most commercial loans. At Wells Fargo, for example, the process starts with borrowers receiving a list of financials that the bank will need. The “needs list” could include tax returns, balance sheets, profit and loss statements, and other basic documentation. “We would look at a restructure or refinance as a new loan,” Stewart says.

To refinance a real estate loan, borrowers might need an appraisal to determine the current valuation of their property. They also may need to provide personal financial statements. But every loan is different, so the required financial paperwork will vary.

“If you’re an investor and you own a building that has tenants, we also want to see how much income you will make,” Stewart says.

Some lenders might even require a projected cash flow for the project being refinanced or a well-thought-out business plan.

Borrowers need to do their homework to determine the viability of restructuring or refinancing their existing debt. The main components they should focus on are the interest rate, closing costs, and loan term.

They need to decide whether refinancing will be worthwhile once they weigh the savings in interest against the fees associated with the transaction.

To further explore their options, borrowers can also ponder these basic questions:

For example, a borrower might be considering a merchant cash advance, in which a business sells a portion of its future credit card receivables. With this kind of financ-

ing the borrower repays the advance based on a “buy rate.” So with a merchant cash advance of $100,000 and a 1.2 buy rate, the borrower would repay a total of $120,000 over an agreed-upon period. “This type of financing is easy to obtain, but typically more expensive,” Hippler says.

With some lenders, a borrower must repay that total amount, even if they’re able to pay off the debt ahead of schedule. In some situations, it may make sense to stick with the existing loan. However, if the current debt obligation is extremely detrimental to the business, refinancing may be the better optioneven if it means taking a hit by prepaying.

Words of Advice

Stewart of Wells Fargo advises customers to be ready to provide well-prepared personal financials and tax statements. “The better the financial package, the easier it is for us to get it through lending channels,” he says.

He also encourages them to maintain a positive lending record from their credit and repayment sources. Bad credit can restrict their options and necessitate a higher interest rate. “We want to make every responsible loan possible for creditworthy businesses,” Stewart says.

Stewart also stresses the importance of customers developing a relationship with their bankers before they need financing.

Lenders can provide guidance to small business owners who may be considering debt restructuring or refinancing. “We encourage our customers to come in and talk to us.”

Small business owners can also capitalize on resources like the new Business Credit Center that Wells Fargo rolled out in September. Available online at www. wellsfargoworks.com/credit, the center is designed to help users take an informed and candid look at the financing process to decide if and when business credit is right for them. It walks them through the process of finding, applying for, and managing credit. In addition, users can take advantage of articles, videos, a glossary, credit quiz, repayment calculator, business plan tool, and other helpful resources.

As a final piece of advice, Steadman urges businesses to carefully consider whether they are utilizing debt in the most effective way. He shares these words of admonition: “Don’t be lazy. Either you manage the balance sheet, or it manages you. If you have short-term debt that should be in the long-term bucket, it can stunt your growth or the ability to extract profits from the business.”

R Freelance writer Tracy Barbour is a former Alaskan.

Alaska Business Monthly | November 2016 www.akbizmag.com

What 40,000 lbs. of shipping capacity looks like.

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EDUCATION

Continuing Education for Professionals No matter the industry or profession, ongoing education offers benefits

By Tasha Anderson

I

t’s beneficial for all employees in every industry to receive continuous education and training throughout their careers, whether that education takes place formally for credit at an educational institution, through in-house training programs, or through individual research, study, or practice. Every day employees are expected to keep up with advancing technology, methodologies, and best businesses practices.

The purpose of the UAA (University of Alaska Anchorage) Business Enterprise Institute is “supporting businesses and entrepreneurial capacities across Alaska by linking economic development programs,” according to its website. The Business Enterprise Institute is comprised of several economic development programs across the University of Alaska system, including the Center for Corporate and Professional Development, led by Director Molly Ridout.

The Center for Corporate and Professional Development “We offer open-enrollment classes that are hard-skill and soft-skill based; there’s everything from leadership to finance for non-financial people,” Ridout says. The classes that the Center offers are not for college credit, but are geared toward professionals looking to learn or enhance skills outside of a degree program. To that point, the Center does offer classes that qualify as continuing education credits for those licensed professionals that require ongoing education to maintain and renew their licenses, such as lawyers, social workers, and human resource professionals.

Ridout is new to the program, having been the director for about half a year. She says the Center is always reviewing the courses they offer to make sure the classes are a good fit for the business community they’re designed to benefit. As one example, the center is offering a class for engineers to teach them sales skills. “As the workforce is having to change, subject matter experts are often-times now directly interfacing with the customer. Where their comfort zone may be engineering, now they have to maybe be more extroverted and more customer services and sales oriented. It’s kind of teaching them the skill set for relationship building, which is what sales is all about,” Ridout says. Other soft-skills courses in20

clude “Pitch Perfect: Effectively Presenting to Your Alaska Legislators” and “Staging Success: Sharpening Your Business Presentation Skills.”

Ridout says that the Center for Corporate and Professional Development has two sides: open enrollment courses and customized corporate trainings. “If we have a company that is looking to develop internally, say they have entry-level supervisors and they want to help them grow to the next stage, we’ll put together a package for them that will address learning outcomes that are specific to their jobs, or specific to the company’s goal.”

While the Center is part of UAA, it doesn’t operate on a set semester schedule, so courses can be developed any time of year. Ridout says that such training courses are tailored to the corporation in every way, from the size of the class to the location to the instructor.

For both the open-enrollment courses and the customized trainings “we leverage faculty from across the whole University of Alaska system,” Ridout says, primarily from UAA at the moment, though she plans to utilize staff from the University of Alaska Fairbanks and University of Alaska Southeast moving forward. In addition to University staff, “we also use business community members who are passionate about what they’re doing.”

small business. She’s excited about an upcoming course called “Social Media for Your Business.” She says, “I keep getting all these phone calls from people who say: I know how to work [social media], but I don’t know how to leverage it for my business.” This course was envisioned to address that issue and will be taught through collaboration: an MBA grad student who is a “social media analytics wizard” and a faculty out of the theater department. “The combination presents the analytics side of it—how you can track and get really granular level detail on your clients—and here’s how you can use that live video feed to really drive people to your site and gain interest,” she explains.

Ridout acknowledges that in Alaska’s current tentative economic environment every dollar counts. “Training dollars [may be one] of the first places where businesses cut, but I would stress that there’s a lot of value to investing in your workforce, and there’s even more value to doing it locally,” which allows for Alaska-specific information as well as savings on travel and hotels.

“Even more now than before, it’s really important to grow our local economy, and the way that we do that is by investing in our staff and by showing people that they’re worth it,” Ridout says.

Providing Classes Professionals Need She says the Center’s goal is to “meet people where they’re at.” Ridout continues: “Our classes are geared in a way that [for example] a PhD who’s gone through all the years of school, who might not have supervisory training, without having to commit to a semester long class can come in, get the competencies they need, and then go and apply it.” The classes are designed to fit the topic, so while some may be a one-time afternoon seminar, others may have several sessions, allowing attendees to take information, apply it in the real world, and then return as a group to discuss the results.

Ridout emphasizes that these classes can be hugely beneficial to all professionals, whether they’re just entering the workforce, trying to bolster opportunities for upward mobility, at the executive level, or broadening their horizons to better run a

Northrim Bank Invests in Employees Northrim Bank’s VP of Human Resources Talent Manager Anne Sakumoto says that Northrim’s leadership encourages ongoing education for their employees, whether through in-house training, certificate programs, or professional development courses like those offered by the Center for Corporate and Professional Development. “Northrim is extremely supportive of employee professional development,” Sakumoto says, “So when an employee has requested to attend a class, managers generally approve those if at all possible. For the Commercial Lending Program, I don’t know that any requests have been denied.”

In 2014 Northrim Bank initiated monthly “Lunch and Learn” events, where employees are educated on a current “hot topic.” She says Northrim is currently engaged

Alaska Business Monthly | November 2016 www.akbizmag.com

in a training program that is offered bankwide for all employees called “Superior Customer Service.” “We believe so strongly in it we did what we could to get 100 percent employee participation,” she says. That program of learning began in May of this year and the company reached their 100 percent goal at the end of September. “The message from the top was to get everyone, so we would have classes of twenty to twenty-five, and there could be two or three classes in one day,” Sakumoto says. “Now we’re in the next category of training on ‘Relationship Building’ with our customers.” To make sure the training is consistent, it’s being conducted by an in-house Northrim team of four instructors, who had a part in developing the curriculum.

Sakumoto says that it’s valuable to their employees to be trained by a Northrim team “because they can supplement the training with Northrim real world scenarios or specific people to contact.” Northrim does quite a bit of internal training, and she says she’s looking into the possibility of documenting just how much training and classes the bank develops and deploys. “I believe that would be a wonderful way to communicate to potential employees, or applicants, how much we invest in our employees,” she says.

Northrim also uses their expertise to the benefit of the business community in general. Two of Northrim leadership are instructors for UAA’s Lending School: Michael Martin, EVP, COO, and General Counsel, teaches “Law for Banking” and Annette DeLong, VP Construction Loan Unit Manager, teaches “Loan Structure, Documentation, and Compliance.”

Sakumoto lists several other organizations that offer valuable trainings, such as the American Bankers Association, which offers diplomas and certification programs; Toastmasters, International, which can provide training in soft-skills such as prepared or impromptu speeches, meeting management, or leadership; Microsoft Office Training at the Microsoft Training Center website; and other online programs such as the Khan Academy and Ted Talks.

She says that as a talent manager, records of training and certifications are beneficial to applicants, as they demonstrate “a certain level of knowledge or achievement— that they have foundational knowledge in a certain area.” Sakumoto says that exposure to different terminology and concepts helps speed their progression along, even if some additional training is required.

R

ACHIEVE MORE

Of all the numbers we work with this is the most important

907

14

Branches statewide

91

Number of Northrim Business Bankers

It’s not news that we could be facing a few economic storms.

That’s why many people are sitting down with their Northrim banker. At Northrim, we’ll develop a plan to help you weather these unique times, to dig a little deeper and see what opportunities are out there. Call us and let’s get started.

northrim.com | 907-562-0062

Tasha Anderson is the Associate Editor for Alaska Business Monthly. www.akbizmag.com

November 2016 | Alaska Business Monthly

21

HR Matters

By Kevin M. Dee

Employee Engagement: Having Heart Making life richer in the workplace and beyond

I

t’s a privilege to be asked to write a column on the things I care about and the work I do in the world. My editor suggested a piece on employee engagement and how to create more of it. This is a topic and area that I work in a lot and am quite comfortable doing. I started mentally composing what I should say and how to make it interesting. Then I happened to have a conversation with an elder Alaskan who I respect highly and who always seems to say something that sticks with me.

We talked about a whole host of things: how he built his first cabin, how his neighbors came from miles away to chip in or give advice, and just the richness of his many years of adventures and experiences in Alaska. Time seems to stand still when I hear his stories and the larger than life characters that fill them. Throughout all his stories, from the great adventures to the heartbreaking ones, one thing stood out: his deep passion for what he did in his life and the people who shared those times. He had heart.

The twinkle in his eyes says he still does, even worn down by life and creaky. Every adventure he shared, whether a bonanza—or bombshell of an event like losing a child— was filled with the deep gratitude for the people who came together to share the good and the bad times. I realized in listening to him the things that really matter in my life are the people I surround myself with and how I walk in my world with them. I want more of those rich meaningful experiences. In my workplace and my life I want to be surrounded by people who also live with more heart.

Having Heart

So what does it mean to have heart? You all know it when you see it. It is found in those friends and family who make your life richer just by being in it. Those close friends who, no matter how often seen, make you light up with a smile that runs throughout you. You find heart in the people in your life that challenge you to be a better person. They are part and parcel your family or extended family. You have mutual and deep trust. Your experiences with them bring out the best in you and are treasured. Heart is celebrating what’s right with the world in all its crazy messy ways.

Heart is a living compassion for each person regardless of how stupid they some22

times act. Heart is forgiving the person but not the act. Heart is allowing someone who has wronged you to make it up to you.

Heart is compassion in action (and deeds) that is inclusive of the people around us and their well-being. I don’t mean just ignoring actions that affect me or others.

I mean still caring about the person even when I am doing my utmost to eliminate the behaviors that are offensive.

When offensive or inappropriate behavior occurs in the workplace and the person chooses not to clean up their act, then heart is promoting that person to the job market in support of the larger group. Leadership from the heart does not fire people—they promote people to go to a workplace where their behaviors are more acceptable than your workplace. Heart, even in negative circumstances, demonstrates compassion for their well-being.

Heart also has courage to it. Courage is defined as commitment to a course of action with uncertainty as to the outcome.

Heart gives you the courage to surface and talk about difficult things, ask for help and be supportable, and support those in need, even when you may have to sacrifice getting or accomplishing something for yourself.

When I see people speaking from the heart it is an instant connection. It conveys us to the place where we experience our common humanity and connection. When we take the time to listen fully, we all hear the heart of a matter. When someone shares what’s important to them and we hear it, we are heart connected.

Togetherness

Alaskans share many things that keep them here: family, work, the unsurpassed beauty in all seasons that is found just by gazing in any direction or looking overhead at night.

Some of the most amazing people found anywhere in the world, doing extraordinary things, live and play in Alaska.

A general collective of shared difficulties and hardships that can send some people scrambling to leave the state makes those of us who love it here stronger. Not least of all that we share is the belief that we are all in this together. That is what has made this transplant from Boston fall in love and make Alaska my home since 1979.

Alaska’s heart is more than the beauty and the people here. It’s the common experience and code of helping each other out when needed. Here if someone goes ditch diving we ask ourselves if they are alright and if not, we stop and help. The very least we do is rate the quality of the ditch dive itself. Especially fun is predicting the amount of newbies ditch diving on the first real snowfall. In other places people have the tendency to look, think to themselves, ”glad it’s not me” and continue on their way (best not to get involved). Alaskans tend to lead with heart and get involved.

Got Heart?

Does your workplace have heart? Is everyone treated with respect and compassion? Does management empower people to be their best and insure that bad actors are held accountable? Does your workplace have a culture where everyone is caring, accountable, and pulls their weight to the best of their ability?

Most importantly, is your workplace and life in balance? Are you fully engaged in pursuing that which brings you passion and fulfillment at work and at home? If you can say yes to these questions, then you are well on your way. If not, what are you going to do about it? Thinking there is nothing you can do is playing the victim.

It takes courage and heart to bring about meaningful change. I see too many Eeyores who say and act if there is nothing that can be done and nothing will change in many organizations. Heart is about not giving up even after failing many times—life is too short not to have one that fills your heart with all the things that have meaning and heart. Creating the life you want does not just happen. It takes your willingness to create it for yourself and the heart-directed actions to make it happen.

R

Kevin M. Dee has a master’s degree from Vanderbilt University and is the president of KMD Services & Consulting. He has been providing organizational development services, human resources consulting, and leadership development since 1984 in Alaska and internationally. Contact him at mail@kmdconsulting.biz.

Alaska Business Monthly | November 2016 www.akbizmag.com

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SERVICES

Alaska Snow Symposium Modernization of snow and ice removal

By Tom Anderson

O

n any given winter morning, as snow lightly blankets the state, government employees and private contractors are likely hard at work plowing snow. From sidewalk to street, parking lot to highway, most of us don’t pay attention to the process, nor consider the enormity of removing so much snow so swiftly.

While we’re inattentive to the minutiae of plowing, we surely enjoy getting to our destination on time because of a clear, safe road.

’Let It Snow’

When it comes to Alaskans who hope for snowfall, there’s no one singing Sammy Cahn’s “Let it Snow” louder than Jeannie Schenderline.

Raised in Anchorage and the daughter of electrical contractors, Schenderline grew up 24

in the construction trades. She and her husband came upon an opportunity to enter the market in 1990, purchasing a grounds maintenance company named Jeffco. One of Jeffco’s services was snow removal.

Things weren’t easy for Schenderline back then. The market was tight, snow plowing was male dominated, and she was raising her toddler while performing the same work and hours as her crew. Distracted and overwhelmed, after the first season she lost several long-time clients cultivated by the previous owner. That was just the first year and it was an eye-opener to the realities of the fickle business of snow.

Schenderline was determined to succeed and thrive. “It took time and persistence.

People in the snow plowing industry simply didn’t believe in a woman doing this kind of

work back in the 1990s. It was male-dominated for so long,” she recalls. “I didn’t care and kept pushing. Jeffco grew substantially. We’ve provided a quality service and products to our clients, which has been gratifying.”

Schenderline started with a crew of four: herself and three employees. Fast-forward almost twenty-seven years and she now has twenty-five employees with satellite offices in Fairbanks, Mat-Su, and Soldotna and headquarters in Anchorage. Jeffco also has the largest fleet of arctic sectional snow pushers in the state.

“It was a slow-build centered on being reliable and dependable. Solid employees, engaged management, and me—someone who loves this industry—all made the difference,” she says. The only element missing remained a source and venue through

Alaska Business Monthly | November 2016 www.akbizmag.com

Snow Fighters Institute

After more than two decades working in the snow, Jeffco’s equipment and crew were sizable. Management’s underlying fear still remained that no matter your fleet size, Mother Nature can throw a snow berm in the mix.

Over the 2011-2012 season, an additional six feet of snow fell in Anchorage. Clients didn’t expect such a dump, and budgets were depleted to keep up with the demand for clear, open parking lot ingress and egress. In the 2012-2013 season, a wave of sizable contracts were dropped as profits the year prior were burned up on plowing. Many businesses performing snow plowing and removal suffered, some even closing their doors.

Jeffco needed new clients and revenue to sustain its crew and workload. Shenderline learned of new technology in the industry through a colleague on the East Coast who attended the Snow Fighters Institute.

John Allin founded the Institute in 2010.

His motivation came on the tail of the Snow & Ice Management Association (SIMA) that he founded in 1996.

Allin began snow plowing in 1978. His business grew over time, becoming the largest snow contractor in Western Pennsylvania by the mid-1990s. As he pushed outside of his original market, his business eventually grew into a $40 million snow and ice management company performing services and sales in forty states. Between 2000 and 2004, Allin’s organization was rated as the largest snow management contractor in North America.

The emphasis of Allin’s Snow Fighters Institute and SIMA is training and education on the latest snow and ice management trends.

“In 1996 the Snow & Ice Management Association was founded in the basement of my house, in Erie, Pennsylvania,” says Allin. “It’s now the largest association for snow contractors on the planet. SIMA’s symposium and trade show draws over five hundred exhibitors, and upwards of three thousand attendees, every year. I was the board president the first six years and as a result interacted with thousands of snow contractors throughout North America to facilitate networking and training opportunities,” he adds.

Like Minds Can Help an Industry

Schenderline sought new methods and input on equipment. On her friend’s advice, she attended a Snow Fighter’s Institute one-day seminar in 2013 along with twelve www.akbizmag.com

other snow contractors from across the nation. She was the only Alaskan. She met Allin and through presentations and vendors learned that in the Lower 48 most snowaffected communities control parking lot ice through de-icing compounds. Back in Alaska, it was suspected this wouldn’t work because of the depth and density of Alaska ice, but Schenderline wanted to try the de-icing product she was shown at the seminar. She envisioned offering de-icing as a supplemental service by Jeffco when snow didn’t fall or require plowing. “Either you maintain, you grow, or you get out of the business,” was a theme she learned at her first seminar.

“Loader and buckets are ‘old school,’ so we researched and sought the most modern, innovative snow removal technology to better serve our clients,” says Schenderline.

“Thanks to John Allin’s insight and our own networking efforts, we now have equipment allowing for thirty-two-inch sections and steel edges that can contour to pavement, enabling the section to drop down and remove additional snow and even more efficiently.”

Snow isn’t necessarily a problem in the removal world, she adds, delineating that ice build-up is the typical bane of the industry’s efforts. So Jeffco added de-icing to its menu of services. In 2014, unsure of the snow fall levels for the winter season, and wanting to broaden services and revenues, Schenderline purchased more than one hundred tons of de-icing material for the Alaska de-icing market. “That was our first year offering de-icing in Alaska, beyond our plowing and removal service, and we were extremely successful,” she says. “This winter [2016-17], if you go to certain Holiday gas stations that Jeffco maintains, restaurants like Suite 100 and Sea Galley, and even Fred Meyer parking lots, you’ll often see asphalt showing instead of ice because our product works so well.”

Allin and Schenderline’s passion for the industry, from innovation to safety, led to the Alaska Snow Symposium in 2014. “We elected to bring a snow management trade show to Alaska to make it easier for those in the nation’s largest state to see new technology, equipment, and techniques without onerous travel,” says Allin.

Symposium attendees represent the spectrum of users and providers, from the snow and ice management contracting side of the industry, to municipal and state sectors, and university and campus representatives. More than 250 attendees were expected, plus thirty-five exhibitors at this year’s third annual event.

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which to get updates on new technology, equipment, practices, and safety protocols.

If a season or two experienced minimal to no snowfall, Schenderline wanted to stay current on other services and products to keep the snow businesses flowing.

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CONSTRUCTION

Photo by Mack Pennington / Courtesy of Cruz Construction

Cruz Construction’s Kuskokwim Camp supports the company’s road work on the Dalton Highway from the Franklin Bluffs pad during the summer of 2016. The sixty-four-bed camp has 11,840 total square feet and was built in 2014.

Remote Crew Camps Alaska companies accommodate workers

By Rindi White

O

ne thing construction projects in the Lower 48 don’t often have to worry about: providing temporary camps and camp services for workers in remote areas.

Numerous Alaska companies have emerged to provide camp logistics and camp management for crews working in the backcountry. Each summer, remote camps pop up all over the state, as geologists and engineers investigate potential mine sites, scientists study the unique ecosystems in Alaska, or crews clean up hazardous materials left over from our military past. Remote construction camps represent a significant share of the number of seasonal camps operating across Alaska.

How the companies outfit a camp depends a lot on the kind of work being done.

Construction crews, in particular, might need to work in inclement weather in the early spring or late fall, so many crews use mobile camps made up of ATCO sleeper units or other shelters if housing in a nearby community is unavailable.

When it comes to cooking and housekeeping for the remote crews, companies might provide their own camp services staff or work with a company such as Doyon Universal or NANA Development Corporation subsidiary NMS to arrange cooks and housekeepers.

Six Camps at the Ready

Cruz Construction needs camps both for remote construction projects and for oilfield operations. Owner Dave Cruz says the company has six different camps, the larg26

est of which can host about two hundred people.

“We can mix and match them like Legos,” Cruz says.

Two camps were needed for road construction projects this year: one that housed about sixty workers in support of the Dalton Highway Milepost 379 to 397 project and a second at Manley that housed about fifty people and supported the Road to Tanana project.

The individual units are forty-foot shipping containers that have been rebuilt to Cruz’s specifications. Shipping containers tend to be about half the weight of other similarly sized portable structures, he says, and they’re very portable.

“We can ship these on the water, we can double and triple stack them,” he says.

“They’re easier to move in remote locations, whether we’re hauling it by barge or by an all-terrain vehicle.”

When set up, the units connect together, so a worker can get changed in his room, then pad in slippers to a bathroom unit, continue down a hall to a TV room or exercise room, and into the kitchen/dining area.

While some employees who might be called on at any time of day, such as medics and managers, have single-room status, meaning they have their own room, most workers at a remote camp share a room with another person. But Cruz says they try to pair a day-shift worker with a nightshift worker, so there are fewer instances of people being disturbed by a snoring roommate, for example.

There are a few keys to making a remote camp work, Cruz says. Mobility is one. While most construction camps remain in place for much of the season, sometimes they need to be moved. If that’s the case, he says, the shipping containers make the task simple.

“We can serve breakfast at 6 a.m. and move the camp during the day and be serving supper at 6 p.m., having moved twenty miles,” he says. “That’s the advantage of our camps.”

Connectivity is another key— making sure a camp has wireless Internet throughout and that it’s capable of handling forty people all using their phones or laptops at once. Cruz uses a satellite-based system, typically working with Satellite Alaska. If it’s a large project, he says, Cruz might contract with GCI to configure the phone and technological details.

Without power, there is no connectivity.

Cruz says the company uses diesel generator units to power the camps.

Water and wastewater handling is another important aspect of running a remote camp.

“We have a self-contained water plant,” Cruz says. The plant meets Alaska Department of Environmental Conservation, or DEC, standards for drinking water and wastewater treatment. That means having a state-certified operator, just like treatment plants in Alaska cities require.

Finding water often means hauling water many miles, he says. Treatment might mean shipping sludge out periodically.

One of the most important aspects of operating a remote camp is food, Cruz says.

“Whether it’s a drilling project or a construction project, the pulse of the project

Alaska Business Monthly | November 2016 www.akbizmag.com

runs on how good the food is,” he says. “If you provide good food, people are happy.”

Running a stocked kitchen can be challenging, depending on just how remote the camp is. Cruz says his crew stocks pantry items (non-perishables like flour, sugar, and salt) overland or by barge, and perishables come by air if the camp isn’t on the road system.

Many Christmas dinners, Thanksgiving dinners, Easter dinners, and other holidays have been celebrated in remote camps, he says. Making it a nice occasion is important when workers can’t be home with their families.

The Cruz camp division is under the Cruz Construction umbrella, but it operates separately and contracts out to other companies, he says. Often that means providing the cooks and camp maintenance employees as well.

It’s a nice side business, but the real reason Cruz has invested in the inventory needed to run his own camps is simple: It’s tied in to the project bid package, so it’s one less detail the project owner has to worry about.

The Stephan Lake camp included several WeatherPort shelters at Stephan Lake Lodge. Being surrounded by majestic beauty is one of the advantages of working at a remote camp.

This bottom photo shows views at the Stephan Lake Lodge camp in 2013.

Photos by Alaska Earth Sciences employee Rick Harris

Watana Project Studies Required Three Camps In 2013, the Alaska Energy Authority worked with Alaska Earth Science and other subcontractors to provide three camps

www.akbizmag.com

November 2016 | Alaska Business Monthly

27

for field crews working on the SusitnaWatana Hydroelectric Baseline Studies project.

While not strictly a construction project, the field crews completed studies that are essential to determining if the project will, one day, be built. If built, the roughly $5 billion dam would be one of the largest hydroelectric projects in the nation and would produce enough electricity to meet about half the needs of Southcentral Alaska.

Governor Bill Walker has since shut down the project, citing state budgetary concerns. His order emphasized that the studies conducted and data gathered by the field crews be preserved for potential future use.

Orchestrating the three camps for the future construction project took some skill, Alaska Earth Science (AES) leaders say. Two of the three camps operated yearround, and all were in place in some form for more than one season of work.

Michelle Johnson, project manager with AES, says the Alaska Energy Authority had more than 10,000 man-days in the field in 2013. The crew of field workers has gotten smaller: in 2014 there were more than 6,500 man-days in the field and another 330 in 2015. This year, about 350 man-days have been logged in the field—all of which have been based at existing lodges (Swiss Alaska Inn and Latitude 62) in Talkeetna.

Two of the camps were remote; one was accessible by road. The camps, located at Stephan Lake in the Talkeetna Mountains, Gold Creek along the Susitna River, and near the Talkeetna Airport, were installed to house and support field contractors conducting an array of studies pertaining to the potential hydroelectric dam project.

Contractors studied geology, water quality, geomorphology, hydrology, in-stream flow, fish and aquatic resources, wildlife and botanical resources, recreation and aesthetics, cultural and paleontological resources, subsistence, social economics, and transportation.

“It was quite a complex project,” says AES partner owner Bill Ellis.

Ellis’s company was in charge of logistics—making sure the scientists doing the work got into and out of the field at the right time, helping set up camps at Gold Creek and Stephan Lake, arranging the Atco structures for the Talkeetna camp, and doing other camp-management duties.

Stephan Lake is about 140 air miles north of Anchorage in the northern corner of the Nelchina Public Use Area. The camp there consisted of a group of WeatherPortstyle shelters set up on wooden platforms, Johnson says. The shelters were set up by Stephan Lake Lodge and lodge staff coor28

Alaska Business Monthly | November 2016 www.akbizmag.com

dinated cooking and resupply for the first season. Flying equipment or people to and from the site was made easier by the fact that the lodge had its own airplane, a de Havilland Beaver, which flew from Anchorage or Talkeetna when needed. Ellis says heavier equipment had to be helicoptered in from Talkeetna or from the nearby Denali Highway.

The Gold Creek camp was unique in that it was the only time AES has been able to bring supplies in by train—the Alaska Railroad Hurricane Turn flag-stop train ran near the property, Johnson says.

“This historic rail service is unique to Alaska and to be able to install a remote camp with rail access tremendously reduced the cost for camp facilities mobilization and demobilization, personnel and equipment transport, and camp resupply,” Johnson says. “The crews also accessed Gold Creek Camp via snowmachine in the winter months, when safe trails could be cleared.”

AES tapped long-time partner Alaska Minerals Incorporated to supply the camp and do the cooking at Gold Creek. Landowner Tod Bauer contracted with AES to do camp management and operate a fuel depot. Some supply missions and travel was done on the Susitna River, which was also adjacent to the camp.

www.akbizmag.com

The Gold Creek Camp, which was set up for more than a year, also operated during winter.

Photo by Alaska Minerals Exploration Services employee Brandon Houghlon

The Talkeetna Atco camp came about after AES workers realized lodging in Talkeetna was simply not available in the tourist-busy summer. The company contracted with Atco to provide sleeper structures

and an office located near the Talkeetna Airport. And because the consultants were working for the state, workers used state per diem instead of food service, which Johnson said gave local businesses a boost.

November 2016 | Alaska Business Monthly

29

The lounge in Cruz Construction’s Kuskokwim Camp.

Photo courtesy of Cruz Construction

“It extended the local operating season for a month because our crews were still there,” Johnson says.

AEA contractor employees spent more than $250,000 at food establishments in Talkeetna, using their state per diem, she says. And over the life of the project, Mat-Su businesses saw an influx of cash totaling $8.2 million, about half of which was spent directly in Talkeetna.

“Integration and utilization of local residents and businesses was an essential fac-

tor in the safe and cost-effective execution of this project,” Johnson writes in an email.

“Many companies were involved in this project, from the local housekeeping and shuttling service to the camp operations and marine transport.”

Cooking for a Hungry Crowd

AES relies on Alaska Mineral Exploration Services to handle cooking and kitchens.

Ellis says he’s been working with Alaska

Minerals owner Mike Smith for nearly forty years.

Smith says his company’s business is now about 85 percent camp logistics, though he still provides drilling supplies if needed. His workers were at Attu Island with Bristol Environmental, running the camp for a cleanup project this year. The company used to do mostly mineral exploration camps, but now the company frequently manages cleanup and construction camps, too.

Every camp is different, but a few essentials remain the same.

“One real important thing, for me, is where’s the water? How far away?” Smith says.

If it’s a quarter mile away, he needs to bring water line and high-pressure pumps.

Filter systems are always needed to make sure the water is potable, he says.

Food is another essential. For the camp at Attu, he says, his company barged a load of dry goods out early, then had weekly resupply flights that came from Adak to Attu. At a cleanup camp in Prince William Sound this summer, he says, the supplies came by boat instead.

Smith says his clients, whether cleanup crews, construction crews, or something else, all basically want the same thing: two hot meals and a carry-out lunch for most,

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Alaska Business Monthly | November 2016 www.akbizmag.com

clean places to sleep, and reliable communications.

“We put in our own satellite system,” Smith says. He uses Satellite Alaska for about 98 percent of his camps and, so far, has been lucky.

“I have not yet hit a location where we couldn’t hit a satellite,” he says.

Most camps used to ask for televisions in the sleeper tents but today, Smith says, his clients want access to email and the Internet.

“We’ve put in Internet and VOIP [voiceover Internet protocol] in every camp we’ve put in, even in the ones that are only up for two or three weeks,” he says.

Internet service is a matter of keeping workers connected with their employers, but it’s also a matter of safety, Smith says.

When he started putting Internet service in his camps several years ago, it could cost several hundred dollars a month.

“But if you’re in the middle of Alaska and the weather is sideways, you can call up the air carrier and say, ‘You can’t get in here, don’t come,’ and you’ve saved that money,” he says.

The Internet connections at his camps aren’t robust enough to allow workers to watch movies on their phones, but it will allow them to stay in touch with family members while they’re in the field, Smith says.

Cooking is probably what camps like Smith’s are best known for. He typically provides one cook for twelve to twenty people. His cooks are generally long-term employees, some of whom have been with him for twenty-five years.

“They’re good meat and potatoes-type cooks,” he says. “Next to the Internet, you have to look out for those bellies. Guys and gals working twelve-hour days in the rain and cold and miserable weather, they come in and they need to energize back up.”

That’s especially true for camps that go late in the season or have crews active in the winter. The difference with winter camps, he says, is that the WeatherPort tents are insulated—it’s nothing fancy, a double-layer of bubble wrap wrapped in aluminum foil on the walls and a Visqueen barrier on the floor.

“There’s no energy star rating,” Smith jokes, but the extra insulation does help.

“We’ve been in them at 55 below [zero, Fahrenheit] and we’ve been comfortable,” he says, and having heaters—Smith generally uses a drip-pot stove or a Toyo stove in each tent—helps.

R Freelance journalist Rindi White writes from Palmer. www.akbizmag.com

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31

SPECIAL SECTION

Mining

You Should Care about Mining in Alaska Alaska mining promotes safety, environmental stewardship, and healthy economies

By Deantha Crockett

A

s a life-long Alaskan, I’m proud to call this state home and I’m equally proud to represent Alaska’s mining industry. As our state copes with a serious fiscal crisis, mining is one of the few industries with great potential for growth, which would mean more good jobs, more state revenue, and more diversity for Alaska’s economy.

Here’s why you should care about mining Alaska, why you’ll find it’s an activity you can support, why you should be concerned about challenges the industry faces, and on a brighter note, why you should be optimistic about the future of mining in Alaska.

We Alaskans certainly appreciated our sunscreen (and the need for it!) this summer. We can thank the mineral zinc, which, chances are, was mined from one of the world’s largest zinc mines at the Red Dog Mine near Kotzebue. Driving to and from our favorite camping and fishing spots, we were kept safe by highway guardrails, galvanized by the same valuable zinc. Emergency rooms around our state use silver sulfadiazine to treat burns. Alaska is home to one of the world’s Top 10 silver producers, the Greens Creek Mine near Juneau.

You may be reading this column on your cell phone which, among other metals, contains gold and silver which are mined at five large-scale mines; and gold is also mined at nearly three hundred small-scale mines throughout Alaska.

There is no question that each and every human being on Earth has a strong dependence on minerals. Unfortunately, there’s a disconnect in today’s society between some people’s negative perception of mining and their daily use of the products of mining.

Our dependence on mining products is higher than ever and going nowhere anytime soon. The demand for mined products will continue, and they have to come from somewhere. Why not Alaska?

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Phenomenal Accomplishments

Alaska’s mining industry can boast many phenomenal accomplishments in terms of safety, environmental protection, and benefits to the Alaska economy. Mining in Alaska brings exceptional economic benefits to communities, the state, and the nation while safeguarding workers and not only protecting the environment, but enhancing it.

Let’s start with safety, as everything in our industry starts with safety. I’d like to take this opportunity to highlight the importance of safety in the mining industry.

In 2016, our six large mining operations achieved significant safety milestones: 1.6 million hours without a lost time incident, International Society of Mine Safety Professionals Award, two years no lost time incident, and more. Safety at Alaska’s mines isn’t just regulation, it is a culture that managers and crews alike take seriously.

It is our top priority that every person goes home safe and healthy every day, and that culture is apparent in these milestones.

Alaska is, in my born-and-raised humble opinion, one of the most beautiful places on Earth. So why would I advocate to mine in Alaska? Because I know that in Alaska, mining is done right.

The planning and environmental review, testing, and approval process to permit a large mine in Alaska takes many years and likely billions of dollars on behalf of the developer, from start to finish. The process involves a lengthy and consistent stream of public process and gathering input. A permitted mine means the project will have in hand dozens of local, state, and federal government agency permits.

One of the most important things to understand about this process is that it does not guarantee approval. Every mine is different and requires a tailor-made plan for environmental mitigation. And I am proud to tell you that in many cases, Alaska’s mines go beyond their permit requirements. The Usibelli Coal Mine adjacent to Denali National Park performed reclamation long before it was required by law. The Fort Knox Mine near Fairbanks undertook reclamation on neighboring property. No agency required them to do this, and they had no liability for the property. They did it because it was simply the right thing to do. Today, one of the best Grayling fisheries in Alaska thrives in the rehabilitated and enhanced fish habitat performed by the mining industry.

Safety and the environment are cornerstones of Alaska’s mining industry. The hat trick for us is to also significantly contribute to the economy on a local, state, and national level. Alaska’s large and small scale mines employ nearly five thousand people per year, in more than fifty Alaska communities, paying an average wage of $108,000 per year. These are stable, year-round jobs with double the amount of the state’s average annual wage and in many cases exist in communities with few other economic opportunities. The mines also provide significant local government revenue in property taxes and other payments to the City and Borough of Juneau, Fairbanks North Star Borough, Northwest Arctic Borough, Denali Borough, City of Nome, and more.

Finally, the industry contributes significant revenue to the State of Alaska through Alaska Mining License Tax, Alaska Corporate Income Tax, royalties on State of Alaska land, rental claim fees and taxes, and more. In fact, the net benefit is considerable. The state receives far more revenue from mining than it costs the state to manage the industry. This is partly because the state’s permitting and monitoring costs are billed to the companies. As a result, most of the revenue from mining taxes and fees helps pay for valuable state services like schools, public safety, and state roads.

Significant Challenges

With these compelling contributions, it is important to be aware of the significant challenges that pose a threat to our industry. One of the biggest obstacles in Alaska is the expanding regulatory blanket being posed by the federal administration. Coupled with this is the vast amount of lands controlled by the federal government and potentially closed to transportation and development. This is especially onerous in Alaska and can have a profound negative impact. Examples like significant permitting and regulatory delays; increasing numbers and reach of new unreasonable regulations that do not correct existing problems or further enhance the environment yet do burden the mining industry; and Executive Orders insisting on regulatory control without authority brought by statutory action by Congress.

Federal challenges alone are enough to negatively impact the industry. Combine them with a multi-year trend of low commodity prices impacting existing opera-

Alaska Business Monthly | November 2016 www.akbizmag.com

www.akbizmag.com

too are reviewing the ability to impose special taxes on industry. Severance taxes, which are entirely separate from the local borough or municipality’s assessment of property taxes, levy a tax on a mining operation that while within a local government boundary, is actually taxing resources that the local government does not own. This is an inappropriate taxation regime that poses dangerous threats on an operation’s ability to operate and expand mine life, and is just one more challenge our already stressed industry is fighting.

owner of the Hecla Greens Creek Mine in Juneau, celebrates its company’s 125th Anniversary. These mark extensive timelines of hugely successful Alaska mining operations, all containing hundreds of Alaskans working safely and responsibly each day.

At AMA’s Annual Convention November 6-12, we will celebrate these milestones with a look at each operation’s past, present, and future. This is truly a thing to celebrate, and we look forward to sharing more accomplishments with you readers in the years to come.

R

Resilient, Innovative, and Proud

Despite these challenges, Alaska’s mining industry is resilient, innovative, and proud.

Our six large operating mines, dozens of development projects, sand and gravel operations, and hundreds of small placer mines—as well as the support industry that services the mines—are all willing to continue working hard to ensure our industry remains safe, environmentally responsible, and a good economic partner to Alaskans.

In 2016 we will celebrate some big birthdays in the mining industry. The Pogo Mine near Delta Junction celebrated its 10th Anniversary of operation; the Fort Knox Mine in Fairbanks celebrated its 20th Anniversary, and Hecla Mining Company,

Deantha Crockett is the Executive Director of the Alaska Miners Association, which advocates for and promotes responsible mineral development in the state of Alaska.

She was born and raised in Alaska and came to AMA from the Resource Development Council, where she led issues and policy for the mining and tourism industries for seven years.

November 2016 | Alaska Business Monthly

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MINING SPECIAL SECTION

tions and exploration in further and new projects, and the industry faces barriers that require a great deal of capital, and even more patience, to bring new mines online.

Despite the factors that reduce the industry’s ability to flourish economically, the State of Alaska has decided now is a good time to increase the total government contributions mining pays in Alaska. Please don’t get me wrong: Alaska is experiencing a serious budget crisis that requires meaningful, long-term solutions to restore the State’s financial well-being. It is the position of AMA that the State cannot and should not return to existing revenue sources, i.e., the resource and economic development industries that currently pay specific industry taxes to the State. Alaska’s solutions must come from broad-based efforts that, regardless of industry conditions and external factors, are equitable and shared by all those who rely on government services. Also, the State of Alaska should keep its eye on the prize: just one more mine coming into operation would increase the industry’s government contributions by millions. We all know diversifying the economic portfolio is important, and we should remain focused on making that a reality.

In addition to the State’s taxation regime being closely examined, local governments

Leadership and Usibelli Mine Operating as a family business for 73 years

By Tasha Anderson

U

sibelli Coal Mine was founded in 1943 by Emil Usibelli and remains a family-led business today. Joe Usibelli Jr. is the company’s president, and his father, Joe Usibelli, is the chairman of the Board of Directors. Joe Jr. says the family dynamic is inherent to the organization. “We try to keep that family atmosphere at a professional level, but we’re friends, we respect each other, and everybody is expected to work hard,” he says.

Workplace Family Atmosphere

Usibelli Coal Mine is located in Healy, and the company has offices in Healy, Fairbanks, and Palmer. Healy is a small community with a population of about 1,021, according to the 2010 census. All of Usibelli’s 112 employees are located in Alaska and the majority of these live in the Healy area. While being in a remote location can have drawbacks, Joe Jr. says it can be a benefit when it comes to fostering a family atmosphere. “Everybody lives together; I grew up with a lot of the employees, so we’ve known each other for our whole life. I had a retirement last week for an employee, and we knew each other for forty-five years.”

Positive workplaces require maintenance no matter the community, and Joe Jr. says he works daily to promote a productive atmosphere. The most important thing, he says, is simply to be friendly, listen to employees, and genuinely care about them. Additionally, he makes sure every day at work is his “best day,” whatever may be occurring in his personal life. “Nobody cares if I’m having a bad day, really,” he says pragmatically.

“Who wants to be around somebody that’s sour or is all about themselves or their troubles?” As Usibelli’s president, his attitude and demeanor sets the tone company-wide.

Negative and unsociable employees, he says, “tend to kill an organization—it tends to damage the working relationship of employees, which is one of the most important things for an organization, employees getting along with each other.”

Another aspect of Usibelli Coal Mine’s family atmosphere is that the company is literally operated by families, and not just the Usibellis, as the company has employees that are third and fourth generation workers from the community. Joe Sr. says, “I’ve never understood companies that have so-called 34

© 2016 Judy Patrick Photography

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Mining

Joe Usibelli Jr. at the Healy office of Usibelli Coal Mine.

anti-nepotism policies that say, ‘If I hire you, I can’t hire your sister.’ Why? If you’re a great fit for the company, why wouldn’t I? And that’s exactly the attitude we’ve taken.” He adds that most people are brought up to have a good work ethic, and that hiring from local families generation after generation has “worked well for us for a long time.”

Management and Leadership

Joe Jr. says that the best method he’s found in leading and managing Usibelli is “lots of

delegation with observation.” He says Usibelli has a strong management and leadership team, and his role is to guide them. Joe Jr. and Joe Sr. are both huge assets to Usibelli simply in terms of their experience at the mine and in the mining industry. Their long history allows them to direct their employees when seemingly “new” issues arise that the mine may have previously encountered.

Joe Jr. says sometimes it’s not a matter of following a previous good solution but finding an alternative to what didn’t work before.

Alaska Business Monthly | November 2016 www.akbizmag.com

employer want out of an employee—what does it take for an employee to keep a job?

Joe Jr. says there are four basic components: (1) reliability—come to work on time and on the right schedule, (2) professionalism and integrity—be ready to give your best every day, mentally and physically, (3) honesty—always do the right thing, and (4) teamwork and recognition—get along with fellow employees, pitch in and help out when needed, and recognize your peers. “At Usibelli, it is important that we all work together towards the company’s goals,” Joe Jr. says. A recent growing concern for employers has been impaired workers on the job.

“Of course we’re very sensitive to it here because of our safety culture. It’s of the utmost importance.” Beyond the safety issue, being an impaired employee compromises productivity, the quality of work being done, and can also negatively influence the performance of others. “Coming impaired to work is a great pariah on our society. Communicating the importance of safety and what’s at risk for an employee has helped us mostly eliminate this issue,” Joe Jr. says.

Building Leaders

Usibelli’s low turnover also speaks to the quality of their employees, but no matter

Employer Expectations

It is important for Usibelli to take care of their employees, and it’s important for employees to meet certain expectations as well. Joe Jr. thinks employer expectations are “a great issue in our society but are not often talked about; at Usibelli we try to make sure that we are all on the same page.” Employers and employees have expectations of each other and high performance occurs when these expectations are blended together. Essentially, what does an www.akbizmag.com

November 2016 | Alaska Business Monthly

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MINING SPECIAL SECTION

“Sometimes it’s a little bit hard to communicate, ‘Well, we’ve already done this, so let’s not do it again because it didn’t work that time.’” Joe Sr. agrees with a chuckle, “Yeah, we learn a lot of things that way, don’t we?”

Joe Sr. has a similar idea of how to lead a company, saying, “My management style was always to hire the very best people and get the hell out of their way. There are people out there that know a lot more about their job than I know do. Ultimately it’s up to them, we trust that they will make the best decisions for the mine and for our team of employees, and that’s a good thing.”

He says it’s important to pay attention to employees and for employees to know that management is engaged. He says he found success with a style of management referred to as “management by wandering around” or “management by walking around,” whereby company managers wander around in an unstructured way and at random times to check in with employees, equipment, or projects.

“Basically you give them the job and stop by talk with people face to face and get a sense of how they think things are going. You pay attention to them, and let them know that you are cognizant of what they’re doing, and that alone makes them do a better job and makes them feel that they are part of the decisionmaking,” he says. Joe Sr. continues, “Observation is critical in a leader; spend more time observing than espousing. You don’t need to listen to yourself talk.”

Joe Jr. says that Usibelli has found success allowing Usibelli’s workforce to be mobile.

“We encourage that because our turnover is so low. Our average employee has worked here for around fourteen years.” While low turnover is an indicator of employee satisfaction, it may result in a low rate of opportunities to move up the ranks. “To keep people stimulated we allow lateral moves, and they become more valuable employees because they have knowledge about multiple jobs that are here,” Joe Jr. says. Joe Sr. adds that this prevents some employees from feeling trapped in a job; however, that type of lateral movement is up to the employee. “Some people do one job and they’d be happy doing that job for the rest of their life, and that’s fine,” he says.

MINING SPECIAL SECTION

how good the pool of talent, good leaders are necessary at every level of an organization.

Joe Jr. says the key to finding those with leadership skills is, again, observation. “We’ve hired people right out of high school, a lot of them. And you see the ones that are eager to learn new things. I think a big attribute for a leader is to always be curious and learn new things, otherwise you become stale.” As employees work with each other, it becomes obvious which employees can lead their peers and which cannot. Joe Sr. says, “They tend to rise of their own accord. By observation and listening to what other people are saying, we can observe that person closer to see how they’re doing and give them more opportunity to demonstrate responsibility.”

Joe Jr. says when he’s looking for potential leaders it’s vital they demonstrate a willingness to learn from those around them, “because collective knowledge is way more powerful than just your individual knowledge.” Joe Jr. says he doesn’t know everything, but he draws on the resources of those around him to find solutions to any problem. “It’s just the organization in getting to that point of determining which route to go.” Joe Sr. adds, “There’s so many ways to solve every problem, you just want to pick the one that is most efficient.”

Looking to the Future

Joe Jr. says that instead of managing the details of what’s happening every day, “my role is more about preparing for the future. I’m trying to set the stage for next year, ten years from now, and beyond.” Usibelli has been exporting coal to foreign markets since the early 80s, but this market has declined, due in large part to the strength of the US dollar, making it difficult for the mine to compete with other international coal suppliers. Joe Jr. says that the scope of Usibelli’s operations is “always market limited.” At current production rates, Usibelli has permitted reserves for another fifty years of mining operations.

With international markets so difficult, Usibelli is supplying coal to Alaska, primarily to “co-generation facilities, meaning they burn coal in a power generation facility that also provides space-heating for an entire area,” Joe Jr. says, listing the University of Alaska and Eielson Air Force Base as examples. “We re-examine ourselves all the time to ask how we can do it better,” he says. “We continue to try to do things smart. We invest in capital that is going to keep us at a productive level, or even make us more productive.

And we invest in infrastructure that’s going to maintain or gain productivity.”

R Tasha Anderson is an Associate Editor for Alaska Business Monthly.

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Alaska Business Monthly | November 2016 www.akbizmag.com

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SPECIAL SECTION

Mining

Fort Knox Celebrates 20 Years

A gold pour at Kinross Gold Corporation’s Fort Knox gold mine. © Kinross Gold Corporation

38

Alaska Business Monthly | November 2016 www.akbizmag.com

By Julie Stricker

D

ecember 13, 1996, was a milestone day in Interior Alaska as Amax Gold workers poured the first bar of gold from Fort Knox. It was the beginning of commercial production for a mine that would become the most productive source of gold in Alaska.

At startup, Fort Knox was estimated to have reserves of 4 million to 5 million ounces of gold with an estimated mine life of twelve years. But even then, according to Tom Irwin, Fort Knox operations manager at startup, they suspected the resource was richer than early estimates showed.

“We didn’t know exactly what we had,” he says. “We knew it would support a very large mill. Early on, we thought we had 5 million recoverable ounces, and our drill holes mostly ended in mineralization,” indicating the potential for more reserves below.

As time went on and the drills were able to go deeper, that additional mineralization added more than 2 million ounces of gold and more than a decade of operations. In July 2016, Fort Knox poured its 7 millionth ounce of gold and is celebrating twenty years of production.

The story of Fort Knox begins with Felix Pedro’s 1901 discovery of gold in what are now the Fish and Pedro creek valleys, twenty-six miles northeast of Fairbanks.

For nearly a century, sporadic placer mining and dredge operations took out a fortune in gold from the two valleys.

And there was more gold to be found.

In 1984, a geologist discovered visible gold on the Fort Knox claims, just upstream from the areas previously mined. In 1992 Amax purchased the Fort Knox project and in 1998 merged with Kinross Gold Corporation, which still owns the mine.

it alone. It’s always the team. I was very proud to work with those folks.”

Oleson started working at Fort Knox during construction of the laboratory at the mill.

“The mood was very exciting,” he says.

“We came from a gold mine in Nevada that was on its downward path to closure. It was very exciting to come up to Alaska to a brand new property, new construction, a lot of money, and a lot of gold.”

The ore at Fort Knox is low-grade, less than 1 gram of gold per tonne, and is generally visible only under a microscope. To make the recovery of the gold economically feasible, the mine operates on an enormous scale. It

has a fleet of Caterpillar trucks, the smallest of which carries 150 tons—the largest is 240 tons and is the size of a two-story building.

They travel dusty roads between the giant, open pit and the crusher or the heap leach in a meticulously organized ballet.

The movements of the each truck, loader, and shovel are precisely mapped and planned for maximum efficiency. It is such an efficient system that Fort Knox is one of the lowest-cost, highest-producing mines in Kinross’ portfolio, with production costs of roughly $600 per ounce of gold.

The ore is processed by two methods.

The higher-grade ore is processed through

A Golden Team

Amax put together a strong team to design and plan Fort Knox’s startup, which was crucial to its long-term success, Irwin says.

Among them were Chris Kennedy, who is now general manager at Pogo Mine, an underground gold mine operated by Sumitomo sixty miles northeast of Delta Junction; Fort Knox General Manager Eric Hill; and Chief Metallurgist Jim Oleson.

“It always comes down to the team,” says Irwin, who is now vice president at International Tower Hills and working to bring a gold mine online at Livengood that has potential reserves even richer than Fort Knox’s. “No one does it alone; you can’t do www.akbizmag.com

November 2016 | Alaska Business Monthly

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Area’s gold history dates to 1901

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Inside the mill at Kinross Gold Corporation’s Fort Knox gold mine. © Kinross Gold Corporation

the carbon-pulp mill, while the lower grade is stacked on the Walter Creek heap leach, which came online in 2009. In 2014, the mine produced a record 421,641 ounces and another 401,553 ounces in 2015.

The basics of ore-processing technology haven’t really changed, Oleson says.

“From the technology standpoint, things are bigger,” he says. “They are computerized, but when you break it down to the work that has to be done, it hasn’t changed in hundreds of years. Our mill runs the same as it did twenty years ago. Our lab runs the way it did twenty years ago.”

Oleson did suggest a number of improvements that have added millions in annual cash flow, such as boosting the carbon in column optimization process and leading the mill recovery team.

Although Kinross honored Oleson for these achievements, the metallurgist says he can’t take all the credit. “It’s continuous improvement,” he says. “I worked with other individuals to bring those things online. It’s a partnership and a group effort to implement these things.”

The Role of Technology

Technology also played a role in boosting efficiencies in other parts of the mine.

Hill started at Fort Knox about six months after production started and has worked in every aspect of the mine over time.

“We’re always constantly re-evaluating the property and looking at how we can do things more efficiently,” he says. Operations are planned in advance, but those plans are constantly being tailored to the price of gold, the specific resources at hand, and any other factors that might crop up such as energy costs.

“We have become smarter over twenty years on how we can be efficient and how we can optimize and keep the mine operating for as long as it has,” Hill says.

Technology, such as fleet management software, is one of the tools Fort Knox uses to maximize efficiency. In such a huge operation, being able to match the equipment to a specific task and shave seconds off every trip made by every truck is key.

“It’s all a lot of little incremental changes that all add up and make us more efficient,” Hill says.

“It’s not a static atmosphere,” Oleson adds. “It’s continual movement, growing.”

It was long thought that a heap-leach to recover gold would not work in Interior Alaska’s subarctic winters, but Fort Knox changed that. The process involves spraying the stacked ore with cyanide to dissolve the gold, which trickles into catchment areas before the gold is separated from the leachate and the cyanide reused. The Wal40

Alaska Business Monthly | November 2016 www.akbizmag.com

MINING SPECIAL SECTION

ter Creek heap leach went online in 2009, making it possible to recover grades of ore that weren’t economic to mill and extending the life the mine further.

In a brief overview of his years at Fort Knox, Oleson writes: “The success [of the heap leach] is evidenced by producing nearly a quarter of a million gold ounces.

This success extended the life of mine, ensuring continued employment for many people, which contributed to the economy and social well-being of Fairbanks.”

Community Connection

The mine’s close connection with the Fairbanks community is another boon, both Hill and Oleson say.

The Fort Knox metallurgical staff worked closely with the mining schools at the UAF (University of Alaska Fairbanks) on ore processing procedures. “Half a dozen to a dozen papers were written on Fort Knox in association with the university,” Oleson says. “It’s been a very strong partnership.”

Fort Knox has hired many of its skilled employees through the mining schools, and Fort Knox employees frequently serve on UAF advisory boards. Kinross and Pogo are each funding a $1 million endowment at UAF for mining engineering research.

They also support heavy equipment maintenance programs at Hutchison High School and teach a distance education class aimed at high schoolers in coordination with Pathways to Mining that seeks to link mines with potential future workers.

The History of Kinross Gold Corporation’s Fort Knox Mine Compiled by Julie Stricker 1901 1902 1902-1903 1910-1930

Felix Pedro discovered gold near Fish Creek Felix Pedro discovered gold on Pedro Creek Fairbanks gold rush begins Small scale drift & placer mining along Fish Creek, intermittent lode mining in Fish Creek Valley 1916 Approximately 200 tons of stibnite shipped from the Hindenburg prospect 1920s Tanana Valley Gold Dredging Co. (Old English Co.), moderate-scale dredge operations 1929 90-mile Davidson Ditch completed, diverting 80 million gallons of water each day for dredging 1930s Fairbanks Exploration Co. (F.E. Co.) begins large-scale dredge operations 1942 Federal government closes all non-strategic mining 1960s Placer mining resumes in Fish Creek 1984 Geologist discovers visible gold on Fort Knox claims 1987-1991 Fairbanks Gold Ltd. & Gilmore Gold Inc. progress with exploration/pre-development programs 1990 AMAX acquires Hindenburg (True North) prospect 1991-1992 Initial drilling on the Hindenburg (True North) property began 1992 AMAX purchases 100 percent of Fort Knox project, Fairbanks Gold Mining, Inc. (FGMI) is formed as a subsidiary and is responsible for exploring, developing, and operating Fort Knox 1992-1995 Further exploration, engineering, environmental, and feasibility studies 1993-1994 La Teko acquires 100 percent interest in the True North property 1994 State and Federal environmental review completed and permits issued 1995 Construction begins along with pre-strip mining 1996 First gold pour (December 13) 1997 FGMI declares commercial production 1998 Kinross Gold Corp. and AMAX merge – Fort Knox mine now 100 percent Kinross owned Fort Knox is awarded Sentinels of Safety Award by US Department of Labor 1999 1 million ounces of gold produced at Fort Knox 1 million man-hours worked without a lost time incident Kinross acquired La Teko and 35 percent interest in True North, purchased the remaining 65 percent interest in the claims from Newmont True North mine now 100 percent Kinross owned 42

2001 2002 2003 2004 2005 2006

2007 2008 2009

2010

2011 2012 2013

2014

2015 2016

Mining begins at True North 1 million man-hours worked without a lost time incident achieved a second time 2 million ounces of gold produced at Fort Knox True North is awarded Sentinels of Safety Award by US Department of Labor Kinross merges with TVX and Echo Bay, making Kinross the 7th largest gold producer in the world 1 million man-hours worked without a lost time incident achieved a third time Mining at True North suspended Reclamation begins at True North Produced 3 millionth ounce of gold from the Fort Knox Mine 1 million man-hours worked without a lost time incident achieved a fourth time Poured 4 millionth ounce of gold 1 million man-hours worked without a lost time incident achieved a fifth time 2 million man-hours worked without a lost time incident achieved for the first time Walter Creek Heap Leach facility commissioned and first gold poured 3 million man-hours worked without a lost time incident achieved for the first time Ore Processing group awarded Sentinels of Safety Award by US Department of Labor Achieved 4 years no lost time incident 4 million man-hours worked without a lost time incident achieved for the first time Produced 5 millionth ounce of gold Heap Leach Expansion Second CIC building commissioned Produced a record 421,641 ounces True North reclamation completed Poured 6 millionth ounce of gold Safety Award for Outstanding Dedication to Safe Quality Production for reaching 2.6m hours without a lost time incident - Presented by the International Society of Mine Safety Professionals Received Interstate Mining Compact Commission Reclamation Award for True North Poured 7 millionth ounce of gold Celebrates 20 years of production

Alaska Business Monthly | November 2016 www.akbizmag.com

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MINING SPECIAL SECTION

Enormous Caterpillar 789C ore trucks lined up at Kinross Gold Corporation’s Fort Knox gold mine. © Kinross Gold Corporation

Fort Knox also hosts four hundred to five hundred third- and fourth-grade students for mine tours every year.

“They come out, and some of them, their parents are actually employed at the mine,” Hill says. “So between that and working with the teachers to understand mining, those are all the right things to do for Alaska. Everybody needs to understand how it works and what we do.”

With operations in their twentieth year, more than one generation of Fairbanks families are represented on the Fort Knox workforce.

Socio-Economic Impact

According to a 2014 McDowell Group study on the socio-economic impacts of the mine, it creates 1,300 jobs and direct, indirect, and induced wages totaling $120 million annually. Average wages are $104,609 per employee, approximately 2.3 times higher than the 2014 average for private-sector workers in the Fairbanks North Star Borough.

The mine spent $206.8 million with 424 private sector vendors in Alaska, about 72 percent of its total spending. Of that, $60.9 million went to toward fuel and $45.1 million for utilities. It paid the borough $6.9 million in property and business property taxes, and the state received $17.1 million in taxes and fees.

From the beginning, safety has been the watchword at Fort Knox, Hill says. The mine employs more than six hundred workers annually and is proud of its safety record.

Over its twenty years of operations, Fort Knox has met safety milestones such as 1 million man hours without a loss-time accident five times, in addition to four consecutive years and 4 million man-hours without a loss-time accident.

In 1999, the US Department of Labor awarded the ore processing group its Sentinels of Safety Award. In 2014, the International Society of Mine Safety Professionals awarded Fort Knox a safety award for Outstanding Dedication to Safe Quality Production for reaching 2.6 million hours without a loss-time accident.

That’s important because over the years, workers at the mine become like family, Hill says. That, more than all the gold, is what has made the biggest impression on him, he says.

“Being here all these years, you definitely get to meet a lot of interesting people and they leave marks on you for a lifetime,” he says. “Those are the pieces you remember.

I’ve had the opportunity to work in nearly all the areas and I’ve been able to see and work with a lot of different people.”

Environmental Legacy

The miners laying the groundwork for Fort Knox, such as Irwin, Ken Poole, Dan Snodgress, and Arne Bakke, did so with the 44

Alaska Business Monthly | November 2016 www.akbizmag.com

MINING SPECIAL SECTION

Derek started building cars straight out of school and now has risen to become Senior Mobile Maintenance Foremen at Kinross Gold Corporation’s Fort Knox gold mine in Fairbanks. See how moving to Alaska and enjoying the great outdoors has become a lifelong dream fulfilled: https://youtube/ HEOQ04NjSm0. © Kinross Gold Corporation

region’s environmental legacy in mind, Oleson says. Even before production began, Fort Knox was working with the Alaska Department of Fish and Game to rehabilitate the wetlands in the Fish Creek valley that had been disturbed by decades of placer mining.

“One of the real highlights of the design is of course we realized we needed a water reservoir,” Irwin says. “We knew we needed reclamation in the valley.”

In the early ‘90s, grayling fishing in the Chena River was limited to catch-and-release because of overfishing. Mining-impaired Fish Creek leads to the Little Chena and Chena watersheds, and Irwin and Fish and Game officials hatched a plan to turn the valley into a reservoir and fish hatchery, cleaning up mining debris and mitigating erosion in the process.

The goal was to create a self-sustaining population of 880 to 1,200 Arctic grayling within ten years. The goal was reached in two years.

The burbot population is also self-sustaining and supports a habitat that includes birds that feed on the fish, moose, wolves, bear, fox, and other animals just downstream from Fort Knox’s huge open pit and mining operation.

Tagged fish are being caught in the Chena River, helping boost the numbers in the popular Interior fishery, Hill says. “That was really a great effort by the folks who started the mine,” he says.

In 2009, Fort Knox and the Alaska Department of Fish and Game jointly received the Tileston Award for the reclamation project.

The award, presented by the Alaska Conservation Alliance and the Resource Development Council, is given in honor of longtime Alaska activists Jules and Peg Tileston.

Kinross also was honored for reclamation of its satellite True North field, which was in production between 2001 and 2004.

According to the current mine plan, mill operations are scheduled to shut down in 2017, while ore will be added to the heapleach facility through 2020, and the facility will continue to process ore for several years.

“That is our current life-of-mine plan,” Hill says. However, Kinross continues to explore nearby areas for possible areas of mineralization and will continue to try to create efficiencies where possible.

“Kinross has continued to run the mine correctly because they’re listening to their people,” Irwin says, “both the people who started it and the people there now. When we look at both Fort Knox and Pogo, you’ve got two mines doing what they said they would do: protect the people with a focus on safety; protect the environment; and they’ve made money. And the community supports them.”

R Freelance journalist Julie Stricker lives near Fairbanks.

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Alaska Business Monthly | November 2016 www.akbizmag.com

Our Legacy: Our People

Twenty years ago, Fort Knox Gold Mine began production with 260 workers just outside of Fairbanks. With hard work and a dedicated staff, Fort Knox has become one of Alaska’s most successful mines.

In the past two decades, our staff has grown to more than 600, providing people with new career opportunities, good pay and good benefits. We indirectly support over 1,000 jobs in the local area.

Today, we thank our past and present employees for making us the longest producing gold mine in Alaska. We are proud of the legacy they have built for both Fort Knox and for Alaska.

kinross.com

Celebrating

20 YEARS

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Mining

Red Dog Mine Supports Region Big exporter with small footprint is a rural role model

By Julie Stricker

D

espite the fact that it’s one of the largest zinc exporters in the world, Red Dog Mine’s footprint is relatively small.

“It’s extremely rich ore,” says Wayne Hall, Red Dog’s manager for community relations.

While that means workers don’t have to move as much waste rock to reach the ore—it’s about a one-to-one ratio with ore containing about 18 percent zinc—with recent zinc prices trending low, finding ways to most efficiently move and mill that ore is important.

Teck and NANA

Red Dog is operated by a subsidiary of Teck Resources Limited in partnership with NANA Regional Corporation. The mine is located above the Arctic Circle eighty-two miles north of Kotzebue. It’s an open-pit operation, using traditional drill and blast mining methods. The on-site mill uses grinding and sulfide flotation methods to produce zinc and lead concentrates, which are trucked fifty-two miles to a port facility on the Chukchi Sea coast and stored until they can be shipped during the region’s brief ice-free season.

The mine has been in operation since 1989 and is the major economic driver of Northwest Alaska. It produces about 1.2 million wet metric tonnes of zinc concen48

trate and 200 tons of lead annually.

Despite its high latitude and harsh environment, mine operations continue around the clock throughout the year.

“Operations can be quite favorable in the winter because you don’t have the range of muds you might have in the spring and fall,” Hall says. “The only time I’ve seen us not mine is when it gets down to about 45 below [zero Fahrenheit]. We’ll suspend some of our in-pit operations to keep the steel on the equipment from cracking.”

Rural Role Model

The mine employs about 450 full-time Teck Alaska employees plus 100 more employees that work for NANA Management Services and Lynden Logistics, Hall says. About two-thirds of the workers are on-site at any particular time, he adds. In the summer, during construction and shipping season—about one hundred days between July and mid-October—Red Dog sees another 150 contractors and temporary workers.

Of the workers, a quarter live in the region and 52 percent of Red Dog’s full-time employees are NANA shareholders. It’s a partnership that has been held out as a role model for resource development in rural areas. NANA owns the land on which the mine is built and receives royalties. NANA shareholders also receive hiring preferences and other benefits from the mine. In 2015, approximately 603 NANA shareholders working at the mine received $39.3 mil-

lion in wages, according to NANA. “There were some really incredibly forward-thinking people both at NANA and at Cominco [Teck] had some real foresight and had a real innovative agreement that is definitely a success,” Hall says. “When it comes to employment opportunities, it’s not always just the employees who work at the mine. Shareholders have used Red Dog as a stepping stone in their career and gone on to other things. That Red Dog has been a part of that career path I think is an underrealized benefit.”

Borough Support

The mine is also the largest source of income for the Northwest Arctic Borough.

Under a Payment in Lieu of Taxes agreement, Teck has paid about $140 million to the borough, including $11.6 million in each of 2014 and 2015, of which $2.6 million went to the Arctic Borough School Board each year. The current Payment in Lieu of Taxes agreement expired at the end of 2015, and the borough instead announced it would levy a severance tax instead. The severance tax is based on the extraction of the ore mined from the ground and would more than triple Red Dog’s annual payment.

In response, Teck Alaska sued the Northwest Arctic Borough, saying the increased cost would make the mine less economic, threatening its future and the jobs it supports.

Alaska Business Monthly | November 2016 www.akbizmag.com

© Teck Resources Limited

MINING SPECIAL SECTION

Zinc and lead concentrates are trucked fifty-two miles from the Red Dog mine to a port facility on the Chukchi Sea. The Red Dog mine is a partnership between Teck Resources Limited and NANA Regional Corporation.

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“Red Dog under that scenario is the only taxpayer,” Hall says. “The borough doesn’t have any other taxes other than a small, insignificant tobacco tax. We feel it is unfair to put all of that tax burden on one entity. It also results in a tremendous increase in our taxes. We’re already the highest taxpayer of any of the boroughs that have mines in them by orders of magnitude.”

As of mid-September, however, Hall says talks are continuing between Teck Alaska and the borough.

“We’re encouraged with the recent discussions we’ve had with the borough and will continue those talks,” he says.

Teck Alaska also contributes to regional projects, such as a long-term Chukchi Sea polar bear study, based in part out of Red Dog’s port facilities. The US Department of Fish and Wildlife began the study in 2008.

The mine’s community investment program contributes about $30,000 in-kind, which includes lodging, meals, transportation, shipping supplies, and logistics for five to six Fish and Wildlife personnel over a six-week period.

• ANCHORAGE

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• FAIRBANKS • NOME • NEW YORK

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Rich Deposit

Red Dog sits on an extraordinarily rich deposit of zinc, discovered when bush pilot Bob Baker flew over it and noticed rocks that were stained red in one drainage. He mentioned the finding to a geologist who sampled the outcrop and found the richness of the ore. The area was named Red Dog after Baker’s Irish terrier, O’Malley.

Because of the area’s remoteness, the richness of the ore body is what made it feasible to mine. The Main Pit, which was mined from 1989 to 2010, contained about 20 percent zinc. The Aqqaluk deposit, adwww.akbizmag.com

November 2016 | Alaska Business Monthly

49

MINING SPECIAL SECTION

jacent to the Main Pit, contains about 62 million short tons of ore grading to about 18 percent zinc. It is expected to keep the mine in operation until 2031.

“Teck does continue to explore in the area around Red Dog,” Hall says. “We think that there is high potential for further zinc mineralization in the area.”

Despite the richness of the deposit, Teck Alaska keeps an eye out for ways to operate more efficiently.

In 2015, Teck Alaska implemented the Wenco Fleet Management System to better manage its fleet of six 992 and 993 loaders and ten Caterpillar 777 one-ton haul trucks.

It’s a real-time monitoring system that allows operators to see where any piece of equipment is at any given time and determine what, and how much, material it may be hauling, as well as its destination. Maps also display dig locations and drill patterns.

It took about six months for the system to rollout, including training time, hardware and software installation, and a new WiFi system. The benefits were immediate, Teck says in its quarterly newsletter.

“By accurately tracking where our equipment is being used, mine shifters can optimize their crew efficiencies. Wenco has also given us a way to accurately track our production fleet downtime. The system allows us

to track maintenance types and hours spent inoperable, enabling us to better address fleet reliability needs,” the newsletter states.

In the first few months the system was implemented, Red Dog saved about $2 million in payload improvements alone.

Records and Upgrades

In the first quarter of 2016, Red Dog set a record for mill throughput and metal production. On top of that, the mine announced it had achieved 1 million man-hours worked without a loss-time accident, the fourth time the mine has notched that goal.

The accomplishment demonstrates “once again that when we work safe, production follows,” General Manager Henri Letient states in a message to workers.

A new lime slaking facility was also brought online in late 2015. The mine uses a quick lime slurry to treat reclaimed tailings water and acid rock drainage, removing dissolved metals as a solid. The solids are settled out of the water and the clean water is discharged. The new facility replaces one that relied on lime transported in bags, requiring workers to handle them several times during the process, according to Teck Alaska.

With the new facility, bulk lime is delivered by Connex secured to a tipping table.

The lime is tipped into silos, where it is au-

tomatically fed into the new equipment to create the slaked lime. The new equipment increased the facility’s slaking capacity by 160 percent. It also is more automated and safer to operate.

More improvements are on the horizon.

In July, GCI and Teck Alaska announced an agreement to bring high-speed broadband Internet service to Red Dog and the community of Noatak. The upgrade will allow Red Dog to upgrade other operations, Hall says.

“We currently have Internet here; however, it all has to be done via satellite and it can be quite slow,” he says. “The bandwidth can be very narrow and it can be very expensive as well.”

The upgraded service will improve reliability and increase bandwidth and the total speed, he says.

“It will allow us to use certain types of software we haven’t been able to use,” he says. As far as worker training, Hall says there may be some practical applications, but Red Dog typically doesn’t rely on Internet training.

“We’ve got a real robust training opportunity here,” he says. “We’ve got one of the best in the state.”

R Freelance journalist Julie Stricker lives near Fairbanks.

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www.mfcpinc.com 50

Alaska Business Monthly | November 2016 www.akbizmag.com

MINING SPECIAL SECTION

ALASKA BUSINESS MONTHLY’S 2016

MINING COMPANIES

MINING DIRECTORY

52

Company COMPANY

Top Executive TOP EXECUTIVE

Alaska Aggregate Products LLC 2525 C St., Suite 305 Anchorage, AK 99503 Phone: 907-562-2792 Fax: 907-562-4179

Dave Cruz, CEO/Pres.

Avalon Development Corp.

PO Box 80268 Fairbanks, AK 99708 Phone: 907-457-5159 Fax: 907-455-8069

Curt Freeman, Owner/Pres.

Browns Hill Quarry PO Box 58158 Fairbanks, AK 997711 Phone: 907-488-2527 Fax: 907-488-7185

Luther Brice, Pres.

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

Wayne Zigarlick, VP/GM

Constantine Metal Resources Ltd. PO Box 315 Haines, AK 99827 Phone: 907-766-2057

J. Macveigh, Pres./CEO

Diamond Gold Corp.

HC 89 Box 5601 Willow, AK 99688 Phone: 907-232-7719

Ed Ellis, Pres.

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

Stan Foo, GM

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

Kristina Walcott, Pres./CEO

Goldrich Mining Co. 2607 Southeast Blvd., Suite B211 Spokane, WA 99223 Phone: 509-535-7367 Fax: 509-695-3289

William Schara, CEO

Graphite One Resources, Inc. 600-777 Hornby St. Vancouver, BC V6Z 1S4 Phone: 604-697-2862

Anthony Huston, Pres./CEO

Heatherdale Resources Ltd. 1040 West Georgia St. Vancouver, BC V6E 4H1 Phone: 604-684-6365 Fax: 604-684-8092

Scott Cousens, Chairman

Hecla Greens Creek Mining Co. PO Box 32199 Juneau, AK 99803 Phone: 907-789-8100

Scott Hartman, GM

FOUNDED/ESTAB. AK

info@aicllc.com ak-gravel.com

avalon@avalonalaska.com avalonalaska.com

lutherb@briceinc.com briceinc.com/browns-hill-quarry/

jtrigg@coeur.com coeur.com

info@constantinemetals.com constantinemetals.com

diamondgoldcorporation@yahoo.com diamondgoldcorporation.com

info@donlingold.com donlingold.com

ask@freegoldventures.com freegoldventures.com

ggallagher@goldrichmining.com goldrichmining.com

anthonyh@graphiteoneresources.com graphiteoneresources.com

info@hdimining.com heatherdaleresources.com

hecla-mining.com

Mining District | Commodity | Recent Projects SERVICES

WORLDWIDE\AK EMPLOYEES

2006 2006

96 96

Recent Projects: Ft. Knox, Kensington, Pogo Mine. Mining District: Statewide Commodity: Pit Run Gravel, Processed Aggregates, Redi-mix Concrete, mining and resources infrastructure support.

1985 1985

55 55

Recent Projects: Tetlin. Richardson. Golden Summit. Mining District: Multiple Commodity: Precious Metals, Base Metals, Platinum Group Metals, Rare Earth Metals.

1972 1972

10 10

Recent Projects: Supply Crushed aggregate materials and riprap to Fairbanks, North Pole, Eielson, Ft. Wainwright, Clear AFB, Denali Park and surrounding areas. Mining District: Fairbanks Commodity: Aggregate, Sand, Gravel, Basalt

1987 1987

2,100 Recent Projects: The Kensington underground gold mine & milling facilities are located 328 in the Berners Bay Mining District. It is owned & operated by Coeur Alaska, Inc., a wholly owned subsidiary of Coeur Mining. Mining District: Juneau Commodity: Gold Recent Projects: Constantine operates the Palmer Project, a promising mineral exploration opportunity in the Haines Borough. We are committed to sustainable activities and to supporting local jobs and business. Mining District: Haines Commodity: Base Metals, Copper, Zinc, Gold, Silver *seasonal employees

2006 2006

6 25*

1978 1978

5 5

Recent Projects: Fire Brick Mine-Gold, Silver and Copper large mine project, Yentna Mining District. Sable Crown Custom Mill, Seward Mining District. 5 employees. Mining District: Yentna Mining District Commodity: Gemstones, Gold, Silver, Copper, and Palladium

2008 2008

16 16

Recent Projects: Permitting. Mining District: Aniak Commodity: Gold

1985 -

3 Ă‘

Recent Projects: Golden Summit Shorty Creek Mining District: Fairbanks,Tolovana Commodity: Gold, Copper

1959 1959

2 0

Recent Projects: Joint venture project currently operating the placer mine at Chandalar.

Mining District: Chandalar Commodity: Gold, Placer Gold

2007 2010

5 1

Recent Projects: Graphite Creek Project. Mining District: Cape Nome Commodity: Graphite

2010 -

3 1

Recent Projects: Niblack Mining District: Alaska Commodity: Gold, Copper, Zinc, Silver

1988 1988

1400 Recent Projects: . Mining District: Admiralty Mining District Commodity: Silver, Zinc, 415 Lead, Gold

November 2016 | www.akbizmag.com

Eric Hill, GM

Kiska Metals Corp.

880 - 580 Hornby St. Vancouver, BC V6C 3B6 Phone: 604-669-6660 Fax: 604-669-0898

Grant Ewing, Pres./CEO

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

Greg Beischer, Pres./CEO

NOVAGOLD 789 W. Pender St., Suite 720 Vancouver, BC V6C 1H2 Phone: 604-669-6227 Fax: 604-669-6272

Gregory Lang, Pres./CEO

Nyac Mining Co./Nyac Gold/NyacAu/ Tulusak Dredgeing 1634 W. 13th Ave. Anchorage, AK 99501 Phone: 907-279-6094 Fax: 907-279-6867

Mike James, Pres.

Oxford Assaying & Refining Corp.

3406 Arctic Blvd.

Anchorage, AK 99503 Phone: 907-561-5237 Fax: 907-563-8547

Toni Goodrich, VP

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

Dan Graham, Chuitna Proj. Mgr.

Pebble Limited Partnership 3201 C St., Suite 602 Anchorage, AK 99503 Phone: 907-339-2600 Fax: 907-339-2601

Tom Collier, CEO

TOP EXECUTIVE

FOUNDED/ESTAB. AK

anna.atchison@kinross.com kinross.com

info@kiskametals.com kiskametals.com

info@millrockresources.com millrockresources.com

info@novagold.com novagold.com

mjames@nyacak.com

facebook.com/oxfordmetals oxfordmetals.com

chuitnacoalproject.com

receptionist@pebblepartnership.com pebblepartnership.com

1996 1996

Mining District | Commodity | Recent Projects

WORLDWIDE\AK EMPLOYEES

SERVICES

8,000 Recent Projects: We recently celebrated our seven millionth ounce gold pour in July 673 and look forward to celebrating our 20th anniversary in December. Mining District: Fairbanks Commodity: Gold

2009 2009

5 1

Recent Projects: Copper Joe - Copper/Gold exploration in southeast AK funded by First Quantum. Goodpaster gold exploration project adjacent to Sumitomo's Pogo gold mine.

Mining District: Goodpaster River Commodity: Gold, Copper, Silver

2008 2008

15 5

Recent Projects: Alaska: Alaska Peninsula, Apex El Nido, Liberty Bell, Stellar, Tibbs, West Pogo. British Columbia: Oweegee Dome, Poly, Todd Creek. Mexico: Los Chinos, los Cuarentas, Batamote New Mexico: Red Basin. Mining District: Alaska, Southwest USA, British Columbia and Mexico Commodity: Base Metals, Gold, Precious Metals, Uranium

1998 1999

14 0

Recent Projects: NOVAGOLD is focused on the development of its flagship 50% owned Donlin Gold project. Current activities at Donlin Gold are focused on permitting, community outreach and workforce development. Mining District: Kuskokwim Gold Belt Commodity: Gold, Placer Gold, Precious & Base Metals

1982 1982

56 56

Recent Projects: 1. Little Squaw Creek 2. Nyak Placer. 3. Nyak Hard Rock Exploration.

Mining District: Southwestern Alaska and Northern AK Commodity: Gold

1980 1980

7 7

Recent Projects: We offer maximum returns on gold and silver, whether youÕre a miner or an investor. Buying, selling, or trading Ð Oxford provides the service, value, honesty, and integrity that Alaskans count on. Mining District: Alaska Commodity: Gold, Silver

1972 2005

2 2

Recent Projects: Chuitna Coal Project. Mining District: Beluga Coal Field Commodity: Coal

2007 2007

11 10

Recent Projects: Advancing world class mineral project on state of Alaska land. Mining District: Southwest Alaska - Iliamna Commodity: Copper, Molybdenum, Gold

MINING COMPANIES

Top Executive

Kinross Fort Knox PO Box 73726 Fairbanks, AK 99707 Phone: 907-490-2218 Fax: 907-490-2290

ALASKA BUSINESS MONTHLY | 2016 MINING DIRECTORY

Company

COMPANY

We’re there for you, Wherever your “there” is.

When your entire project depends on reliable equipment, we make sure your gear is fueled up and ready to work. Every day. No matter where your crew is working. That’s Signature Service you can count on.

Premium Products, Signature Service.

PETRO 49

companies

shoresidepetroleum.com Anchorage • Cordova • Seward • Wasilla • Whittier www.akbizmag.com | November 2016

53

MINING COMPANIES

ALASKA BUSINESS MONTHLY | 2016 MINING DIRECTORY 54

Company

Top Executive TOP EXECUTIVE

Polar Mining, Inc. 5836 Poker Creek Cir. Fairbanks, AK 99712 Phone: 907-455-4198

Dan May, Pres.

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

Chris Kennedy, GM

Tower Hill Mines 506 Gaffney Rd. Fairbanks, AK 99701 Phone: 907-328-2800

Thomas Irwin, CEO

Trilogy Metals Suite 1950-777 Dunsmuir St. Vancouver, BC V7Y 1K4 Phone: 604-638-8088 Fax: 604-638-0644

Rick Van Nieuwenhuyse, Pres./CEO

Ucore Rare Metals, Inc. 210 Waterfront Dr. Bedford, NS B4A 0H3 Phone: 902-832-5246 Fax: 902-491-4281

Jim McKenzie, CEO

COMPANY

FOUNDED/ESTAB. AK

pmi@ak.net

pogominealaska.com

info@ithmines.com ithmines.com

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

info@ucore.com ucore.com

Joseph E. Usibelli Jr., Pres.

Usibelli Coal Mine, Inc. 100 Cushman Street, Suite 210 lisa@usibelli.com Fairbanks, AK 99701 Phone: (907) 452-2625 Fax: (907) 451-6543 usibelli.com WestMountain Gold, Inc. 120 East Lake St., Suite 401 Sandpoint, ID 83864 Phone: 208-265-1717 Fax: 208-906-8621

Gregory Schifrin, CEO

ZAZU Metals Corporation 885 Dunsmuir St., Suite 350 Vancouver, BC V6C 1N5 Phone: 604-878-9298 Fax: 604-568-9298

Matthew Ford, Pres.

mlangway@westmountaingold.com westmountaingold.com

info@zazumetals.com zazumetals.com

Mining District | Commodity | Recent Projects SERVICES

WORLDWIDE\AK EMPLOYEES

1981 1981

6 6

Recent Projects: Fox Mine Site. Mining District: Fairbanks Commodity: Base Metals, Gold, Placer Gold, Gravel

2005 2005

320 320

Recent Projects: High grade underground gold mine located in Interior Alaska along the Goodpaster River. Produced more than 3 million ounces of gold with years of reserves booked for continued operation. Mining District: Goodpaster Commodity: Gold

2006 2006

10 10

Recent Projects: Livengood Gold Project. Mining District: Livengood, Fairbanks Commodity: Gold

2012 2012

38 30

Recent Projects: The Company invested $5.5 million in 2016 at the Upper Kobuk Minerals Projects for drilling at the Arctic high-grade copper project as well as for geotechnical and environmental studies. Mining District: Ambler Commodity: Copper, Zinc, Lead, Silver, Gold

2006 2006

45 1

Recent Projects: Ongoing environment evaluation on Prince of Wales Island. SuperLig One Pilot Plant completion. Mining District: Ketchikan Commodity: Rare Earths, PGM, Lithium,Tantalum, Niobium

1943 1943

112 112

Recent Projects: Two Bull Ridge and Jumbo Dome, Usibelli's active mining units, produce coal for five Interior power plants. Reclamation work continues for Poker Flats, Gold Run Pass and Two Bull Ridge mining units. Mining District: Healy Commodity: Coal

2007 2007

25 15

Recent Projects: Terra Project. Mining District: McGrath Commodity: Gold

2006 2007

3 1

Recent Projects: Lik Project, NW Alaska nr Red Dog. Large tonnage high grade potentially open-pittable Zinc-lead deposit, currently being prepared for permitting.

Mining District: Northwest Alaska Commodity: Zinc, Lead

November 2016 | www.akbizmag.com

Alaska 2016 – Mining in Review

By Curtis J. Freeman

T

rying to summarize Alaska’s mining industry over the last year is relatively easy: we started the year flat out on the canvas, on figurative life support, but as I write this summary, the industry has staggered back on its feet and is in the midst of a remarkable recovery after over four years of depressed everything. The hard thing to explain is just why this Phoenix has risen from the ashes, and why now? Those given to conspiracy theories, which I am decidedly not, will say it is because “they” have determined it is time for resource markets to rebound.

Such theories rely on a remarkably secretive cabal pulling levers behind the curtain, but I rather think Ben Franklin was right when he said, “Three can keep a secret, if two of them are dead.” It is far more likely that simple supply and demand, albeit on a global scale and in their own good time, have once again imposed order on chaos, clarity on uncertainty.

This magical change has been predicted for several years but nobody knew just when the magic would take effect. For Alaska it took place somewhere during the period March through May of this year, when several companies discussed in the following paragraphs either began new mineral ventures in Alaska or increased budgets and scopes of work on existing ventures. Motivations driving these new and renewed efforts varied and included the need to replace depleting resources, the drive to move a development project toward production, and the desire to find Alaska’s next new ore body. Regardless of the motivation, Alaska’s mineral industry is looking forward to an exciting 2017.

n

Western Alaska

Teck Resources Ltd. and partner NANA Regional Corporation, Inc. announced year-end 2015 and first-half 2016 results from its Red Dog mine. For all of 2015 the mine produced 567,000 tonnes of zinc in concentrate. Zinc ore grade for the year was steady at 16.7% and mill recoveries were up slightly to 84.2%.

The mine also produced 117,600 tonnes of lead in concentrate in 2015. Lead ore grade for the year increased to 4.8% while mill recoveries decreased to 60.7%. Gross operating profit for the year was $537 million, compared with $574 million in 2014. Mill throughput for 2015 was down significantly to 4,026,000 tonnes, due in part to extended annual mill maintenance 56

© Kinross Fort Knox

SPECIAL SECTION

Mining

Kinross Gold Corporation’s Fort Knox gold mine.

shutdown. During 2015 the mine paid partner NANA Regional Corp. Inc. and the State of Alaska royalties of $178 million versus royalties of $215 million in the year-previous period. For the first half of 2016 the mine produced 310,000 tonnes of zinc in concentrate. Zinc ore grade was 17.4% with recoveries at 83.3%. The mine also produced 59,400 tonnes of lead in concentrate at a grade of 4.9% with mill recoveries at 56.6%. The mine posted a $135 million operating profit for the first half of 2016, down significantly from the $192 million profit in the year previous period.

Royalty costs for the first half of 2016 were $20 million versus $42 million in the year previous period. For 2016 mine zinc production is expected to be 570,000 tonnes.

n

Graphite One Resources Inc. announced the results from the initial performance tests on coin cells manufactured with the company’s premium grade, coated spheroidized graphite from the Graphite Creek project. The benchmark test results show that the application of a coating produces little change in the important reversible discharge capacity of the coin cells. Discharge capacity is a measure of a battery’s energy storage capability once charged. Coin cell 1220 successfully completed three charge/discharge cycles, the second and third discharge curves show almost complete overlap with the first discharge curve, attesting to repeatability in performance across subsequent charge/

discharge cycles. The next product development test phase will use representative graphite from the project to compare with the test results and generation of additional sample product for interested third parties.

The test results will be used in the company’s Preliminary Economic Analysis, expected in the 3rd quarter of 2016.

n

NovaGold Resources Inc. and partner Barrick Gold announced yearend 2105 milestones and completion of the draft environmental impact statement (DEIS) public comment period for its Donlin gold project. Calista Corporation, owner of the minerals, and The Kuskokwim Corporation, owner of the surface lands, both welcomed the publication and comment period relating to the DEIS, the culmination of twenty years of effort since the project was first leased by Placer Dome U.S. As lead permitting agency, the US Army Corps of Engineers will review submitted comments and create a final EIS, expected in 2017.

Meanwhile, work continued with State and Federal agencies to advance other required permits, including the air quality, pipeline authorizations, water use and fish habitat permits, and land and shoreline lease and right-of-way approvals. More than one hundred permits will be required to reach production. The partners also continued evaluating alternatives to reduce initial capital costs through third-party owner-operator agreements including a Request for Expression of Interest for third-party participation

Alaska Business Monthly | November 2016 www.akbizmag.com

n

Northern Dynasty Minerals Ltd. announced plans for the company’s Pebble copper-molybdenum-gold deposit. Amount the items the company intends to work on include the US Environment Protection Agency’s proposed pre-emptive regulatory action under the US Clean Water Act and preparation of the project’s initiate federal and state permitting under the US National Environmental Policy Act. The company also indicated it was continuing efforts to find a partner to aid in advancement of the project.

n

Redstar Gold Corp. announced completion of its exploration program at its Unga gold project near Sand Point. The company focused its efforts on delineation of new drill targets at the Shumagin, Empire Ridge, and Apollo-Sitka Mine prospects. The company collected 272 soil/ talus and 325 rock samples over exposed bodies of silicification at Orange Mountain, silicified and mineralized structures located between Orange Mountain and Shuma-

www.akbizmag.com

gin, and exposures of multi-phase breccias and additional structures at Shumagin. The Shumagin prospect is characterized by multi-episodic gold-silver bearing quartzadularia-rhodochrosite breccia bodies that occur within structurally controlled dilation zones along the +1,200-meter long Shumagin Scarp. High-grade gold-silver mineralization is open at depth within the main breccia body at Shumagin. Multiple dilation zones and coincident gold-silver bearing breccia bodies exist along strike of the Shumagin Scarp and remain untested.

At Empire Ridge, the southwest extension of the historic Apollo gold mine, the company plans to conduct detailed structural mapping and drill targeting.

n

Interior Alaska

Kinross Gold announced year-end 2015 and second half 2016 results from the Fort Knox mine near Fairbanks.

For 2015 the mine produced 401,553 ounces of gold at a cost of $629 per ounce.

The mill processed 13,446,000 tonnes of ore ranging in grade from grading 0.64 to 0.87 grams of gold per tonne (gpt gold).

Mill recoveries averaged 83%. During 2015 the mine placed 25,218,000 tonnes of ore ranging in grade from 0.26 to 0.29 gpt gold on the valley leach facility. The mine

also announced year-end revised resources, including proven and probable reserves of 147,318,000 tonnes grading 0.40 gpt gold (2,022,000 ounces). Measured and indicated resources were 95,822,000 tonnes grading 0.50 gpt gold (1,423,000 ounces). Inferred mineral resources were 14,824,000 tonnes grading 0.50 gpt gold (221,000 ounces).

For the first half of 2016, the mine produced 185,021 ounces of gold at a cost of $753 per ounce. Production increased in the second quarter of 2016 compared with the first quarter as a result of higher mill throughput and recoveries. Cost per ounce in the second quarter of 2016 increased compared with first quarter 2016 and second quarter 2015 primarily due to higher costs associated with waste mining. Overshadowing these operational results was the July 23, 2016, pouring of the mine’s 7 millionth ounce of gold. The mine poured its first ounces in 1996 after going to production with a resource of just over 4 million ounces. Twenty years into a ten-year mine life (wait, what?) the mine continues to prosper. In fact, the Walter Creek heap leach facility started up in in 2009 and has contributed over 750,000 ounces of gold to the project’s production totals. The mine currently anticipates milling gold through 2019 with several years of post-milling heap leach production.

November 2016 | Alaska Business Monthly

57

MINING SPECIAL SECTION

in the proposed natural gas pipeline to the project. During 2016, the partners anticipate spending $18 million to fund expenditures at Donlin and an additional $2 million for joint project technical studies.

MINING SPECIAL SECTION

n

Freegold Ventures Limited announced positive results of its Preliminary Economic Assessment prepared for 100% owned Golden Summit project near Fairbanks. The study evaluates a two-phase, twenty-four-year open pit mine generating two gold ore streams, one from oxide ore, the other from sulfide ore, each operating at 10,000 tonnes per day. Using a cut-off grade of 0.3 gpt gold, the study included in-pit indicated oxide resources of 345,000 ounces grading 0.66 gpt gold, in-pit inferred oxide resources of 183,000 ounces grading 0.59 gpt gold, in-pit indicated sulfide resources of 1,018,000 ounces grading 0.70 gpt gold, and in-pit inferred sulfide resources of 1,401,000 ounces grading 0.70 gpt gold. Processing operations for the oxide and sulfide mineralized materials are heap leach and bioxidation, respectively. Using a gold price of $1,300 per ounce, the envisioned operation would have a post-tax net present value, calculated at 5%, of $188 million and an internal rate of return on investment of 19.6%. Average gold production would be 96,000 ounces per year, generating a total of 2,358,000 ounces of bullion over its operating life.

Total cash operating costs were estimated at $842 per ounce. Initial and sustaining capital costs, including contingency, were estimated at $88 million and $348 million, respectively, with a payback of 3.3 years post-tax. Gold recovery was estimated at 80% for oxide ore processed by heap leaching in years 1 through 14, and 90% for sulfide ore treated by bioxidation followed by carbon in leach cyanide recovery in years 9 through 24. The truck and shovel operation has been scheduled to provide up to 3.5 million tonnes per year of each ore type.

The company plans to advance the project to Preliminary Feasibility-level, evaluating several value-enhancing opportunities, including oxide resource expansion, leased mine equipment, improved metallurgical performance, liquid natural gas, local labor surveys, electrical power generation equipment, and local power contracts.

n

On January 12, 2016, Sumitomo Metal Mining’s Pogo gold mine celebrated its 10th anniversary since ore was first processed at the mill. On February 12, it will celebrate the 10th anniversary of its first gold pour. During that period the mine had poured well over 3 million ounces of gold and taken its place as one of Alaska’s largest mines and one of Alaska’s best corporate citizens.

n

Northern Empire Resources Corp. announced year-end 2015 exploration results and plans for 2016 at its Richardson 58

gold project in the Richardson District.

Efforts in 2015 included review of all available historic data, prospecting, and the collection of 256 soil samples and 25 rock samples at the Democrat Pit, portions of the adjacent intrusive body known as the Wide Zone, and at Tenderfoot Creek. Significant results include rock grab samples from outcrop in the Democrat Pit zone that returned 71.2 gpt gold and 48.6 grams of silver per tonne (gpt silver), 4.6 gpt gold and 111 gpt silver, and 5.88 gpt gold and 6.09 gpt silver. Soil samples collected four hundred to eight hundred meters from the Democrat Pit both returned anomalous gold and silver in soils. Soils collected in the Wide Zone returned anomalous gold and copper values. Soils samples from four hundred meters to the north of the brecciated quartz feldspar porphyry in the Democrat Pit indicate a gold bearing structural corridor extending at least 800 meters to the north of the Democrat Pit. The first phase of the 2016 exploration program has been budgeted at approximately $500,000 and consisted of soil sampling, trenching, prospecting, ground magnetic surveys, and relogging of historic core holes.

n

International Tower Hill Mines Ltd. announced the results of a Preliminary Feasibility Study on an optimized configuration for its Livengood gold project. The engineering optimization studies were based on a project that will process 52,600 tons of ore per day and produce 6.8 million ounces of gold over twentythree years. As compared to the 100,000 tons per day project evaluated in the September 2013 Feasibility Study, this revised configuration reduces capital costs by 34% to $1.84 billion, operating costs by 28% to $7.48 per ton, and the all-in sustaining costs by 16% to $1,263 per ounce. The revised study called for conventional open pit mining, followed by crushing, grinding, and both carbon in leach and gravity recovery milling. Life of mine head grade was 0.71 gpt gold with 75% average recovery to produce an average of 294,100 ounces of gold per year. The revised study concluded that at $1,300 per ounce gold prices, the operation would have a posttax net present value, calculated at 5%, of negative $404 million and an internal rate of return on investment of 1.8%.

n

Freegold Ventures Limited announced commencement of drilling at its Shorty Creek copper-gold project near Livengood. Previous drilling by Asarco on Hill 1835, one of the current two target areas, had suggested the potential for a porphyry system at depth. The 1898 twen-

ty-hole drill program noted the presence of copper mineralization in conjunction with gold mineralization at depth in most of the shallow drill holes completed. Following ground geophysics and soil sampling in 2014, the company completed four holes in 2015 and confirmed the presence of intrusive-hosted copper-gold mineralization, the best interval of which was 91.4 meters grading 0.55% copper, 7.02 gpt silver, and 0.14 gpt gold in hole SC15-03. Work in the Hill 1835 area in 2016 focused on extending the known mineralization to depth as well as testing the center of the magnetic high associated with the prospect. Hole SC 1601 intersected 434.5 meters grading 0.36% copper, 7.46 gpt silver, and 0.12 gpt gold from the base of oxidation at 86.1 meters to the bottom of the hole at 520.6 meters.

Mineralization consists of quartz stockwork veining and disseminations within strong secondary biotite primarily situated within a flysch unit intruded by feldspar quartz porphyry sills and/or dykes. Additional drilling is planned for the Hill 1710 area where a 6 kilometer by 1.5 kilometer soil anomaly contains coincident copper up to 669 parts per million (ppm) and molybdenum up to 235 ppm.

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Endurance Gold Corporation announced plans to drill its Elephant Mountain gold project. Three targets are being prioritized for drilling with five drill holes within the 1,800 meter by 600 meter intrusive-hosted gold target. Surface grab rock samples from the South Zone target include 12.98 gpt gold, 5.21 gpt gold, 4.44 gpt gold, 3.02 gpt gold, and 2.59 gpt gold associated with iron oxide stained and altered granitic rocks. The 2015 exploration program confirmed a continuous 1,000 meter long soil anomaly exceeding 100 parts per billion (ppb) gold with peak values up to 320 ppb gold. Gold is associated with anomalous arsenic (up to 1,660 ppm) and antimony (up to 267 ppm).

Three drill holes are currently planned for this target. The company also plans to drill one hole in the North Zone soil anomaly, which covers are area approximately 1,200 meters by 500 meters wide, with peak values of up to 1,540 ppb gold. One drill hole also is planned for the Central zone where a chargeable IP anomaly with dimensions of about 1,500 meters by 500 meters was identified.

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Contango ORE, Inc. announced year-end 2015 and year-to-date 2016 drill results from its Tetlin gold project, a joint venture with a wholly owned subsidiary of Royal Gold, Inc. During 2015 the joint venture expended approximately

Alaska Business Monthly | November 2016 www.akbizmag.com

16235 which returned 38.88 meters grading 51.62 gpt gold, hole 16237 which returned 14.19 meters grading 45.33 gpt gold, and hole 16238 which returned 15.67 meters grading 49.67 gpt gold. Significant results from the West Peak zone include hole 15174 which returned 5.54 meters grading 22.077 gpt gold and 11.28 meters grading 3.429 gpt gold, hole 15181 which returned 10.22 meters grading 4.635 gpt gold and 19.81 meters grading 4.116 gpt gold, hole 15188 which returned 9.67 meters grading 2.376 gpt gold, hole 16208 returned 19.99 meters grading 2.822 gpt gold, hole 16209 returned 6.25 meters grading 4.863 gpt gold, and hole 16218 which returned 15.01 meters grading 7.10 gpt gold.

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Alaska Range

Usibelli Coal Mine announced the retirement of Bill Brophy, the public face of Usibelli for the last fifteen years.

Bill was the kind of ambassador that every company wishes it had—informed, upbeat, unassuming, and unflappable in a position that calls for all of those skills and then some. I am personally indebted to Bill for the continuing flow of information he sent me for this column over the years. No matter what I needed, Bill came through with facts and figures that let everyone know

what an important place Usibelli occupies in the Alaskan mining industry. So thank you and best wishes Bill!

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Alaska newcomer White Rock Minerals Ltd. announced acquisition of Metallogeny Inc.’s Red Mountain volcanogenic massive sulfide project in the Bonnifield District. Previous exploration has resulted in historical estimates of mineral resources at the two main prospects—Dry Creek and West Tundra Flats. Significant drill results from Red Mountain include 4.6 meters grading 23.5% zinc, 531 gpt silver, 8.5% lead, 1.5 gpt gold, and 1% copper from 6.1 meters; 5.5 meters grading 25.9% zinc, 346 gpt silver, 11.7% lead, 2.5 gpt gold, and 0.9% copper from 69.5 meters; and 7.1 meters grading 15.1% zinc, 334 gpt silver, 6.8% lead, 0.9 gpt gold, and 0.3% copper from 39.1 meters. Significant drill results from West Tundra Flats include 1.3 meters grading 21% zinc, 796 gpt silver, 9.2% lead, 10.2 gpt gold, and 0.6% copper from 58.6 meters; 3 meters grading 7.3% zinc, 796 gpt silver, 4.3% lead, 1.1 gpt gold, and 0.2% copper from 160.9 meters; and 1.7 meters grading 11.4% zinc, 372 gpt silver, 6% lead, 1.7 gpt gold, and 0.2% copper from 104.3 meters. Mineralization is hosted in metamorphosed volcanic and

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Greens Creek is one of the world’s largest and lowestcost primary silver mines, and it continues to drive Hecla’s strong, consistent production performance.

Greens Creek has produced approximately 200 million ounces of silver and 1.5 million ounces of gold since its startup in 1989.

These are the values that drive Hecla forward.

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www.hecla-mining.com

November 2016 | Alaska Business Monthly

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$6.8 million on the project, focused primarily on its 1.1 million ounce Peak gold deposit and other newly discovered gold bearing areas. In early 2016 the joint venture approved a $4.2 million winter program which took place in January through March and later approved an additional $6.6 million program for the summer and fall of 2016. The partners hope to complete a new mineral resource estimate by the spring of 2017. The 2015 drilling programs, consisting of 14,059 meters of core drilling in sixty-one holes, confirmed the presence of a gold mineralization in previously untested zones up to 3.5 kilometers away from the Peak deposit. Drilling through August 2016 consisted of 16,641 meters of core drilling in eighty-two additional holes which included both expansion and infill drilling in the Main Peak, North Peak, and West Peak zones. Significant results from the North Peak zone included hole 15171 which returned 16.8 meters grading 17.939 gpt gold, hole 15177 which returned 23.04 meters grading 19.859 gpt gold, hole 16192 which returned 13.27 meters grading 49.194 gpt gold, hole 16210 returned 43.96 meters grading 3.275 gpt gold, hole 16227 which returned 10.75 meters grading 18.62 gpt gold, hole 16232 which returned 13.68 meters grading 5.52 gpt gold, hole

MINING SPECIAL SECTION

volcaniclastic rocks of the Lower Mississippian to Middle Devonian Totatlanika Schist and subordinate amounts of intercalated metasedimentary rocks. The Dry Creek and WTF deposits have the volcanic, geochemical, alteration, and sulfide assemblage characteristics of a shallow water, boiling hydrothermal system with higher prospectivity for gold enrichment, an element that has not been targeted during previous exploration efforts. Historical estimates for the combined resources at Red Mountain and West Tundra Flats are 5.7 million tonnes grading 5% zinc, 120 gpt silver, 2.1% lead, 0.7 gpt gold, and 0.16% copper.

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Coventry Resources Limited announced year-to-date exploration results from its Caribou Dome copper project in the Valdez Creek District. Plans for 2016 include initial drilling at the Menel, Guardian, Lense 9, and Lense 3 induced polarization (IP) geophysical targets, located along strike from the 700-meterlong mineralized zone drilled to date. All four of these targets consist of strong IP anomalies that coincide with outcropping and/or sub-cropping mineralization and strong copper geochemical anomalies at surface, including rock chip samples that assayed up to 16.5% copper at the Guard-

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ian target. In addition to drilling, new IP data will be acquired over extensive soil anomalies delineated over 7 kilometers of strike. While preparing to drill the Menel Target, significant copper mineralization has been mapped directly above and immediately along strike from the Menel IP anomaly. During 2016, five drill holes (2,371 meters) have been completed as part of a planned 8,000 meter drilling program.

Two Recently completed induced polarization geophysical surveying, drilling, and mapping has extended the strike extent of mineralization at the Menel IP Trend by over 1,000 meters. While two holes drilled were not deep enough to intersect the source of the IP anomaly, the second hole drilled in this area, CD16-005, intersected 46 meters of mineralized sediments at the target depth. Variable quantities of chalcopyrite were noted in drill core, assays of which are pending. These sulfide-bearing horizons are located at the contact between the sediment and volcanic sequences, the same stratigraphic position that the Caribou Dome deposit occupies. This extension is contiguous with and immediately northeast of the previously drilled 700-meterlong corridor of known high-grade copper mineralization. Mineralization has been intercepted to a depth of 290 meters in this new extension where two rigs currently are focusing on determining the geometry and grade of copper mineralization. The company also indicated that additional IP surveying is now progressing to the west and southwest of the deposit, to test previously identified soil anomalies and outcropping copper mineralization. The company also announced initial metallurgical studies in 2015 from 50 kilograms of the sample material was from Lenses 4, 5, and 6 (average grade 5.03% copper) and a 20 kilogram composite from the Lense 7/8 area. Initial flotation testing resulted in concentrate recoveries in excess of 85% with concentrate grades up to 24.5% copper. Additional metallurgical samples will be collected during the planned 2016 drilling program.

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Brazil Resources Inc. announced an initial mineral resource estimate for the Island Mountain deposit, one of several porphyry centers identified on its Whistler project in the Alaska Range. At a 0.3 gpt gold equivalent cut-off, the new resource estimate at Island Mountain includes an indicated resource of 25.75 million tonnes grading 0.53 gpt gold, 1.16 gpt silver, and 0.06% copper. The deposit also contains an inferred resource of 69.23 million tonnes grading 0.51 gpt gold, 1.07 gpt silver, and 0.06% copper. The resource is based on 12,668 meters of drilling in

Alaska Business Monthly | November 2016 www.akbizmag.com

Alaska Range. The Evening Star prospect is defined by a 2.5 kilometer diameter area of intense phyllic alteration that hosts an outer margin with significant D-style quartzpyrite veining and a 1 kilometer wide inner zone defined by significant banded quartz-molybdenite veining. Porphyry footprint lithogeochemical modeling, hyperspectral white-mica analysis, and chlorite chemistry analysis suggests that this inner zone represents the high-level core of the porphyry system. Geophysical surveys indicates that this inner zone is centered on a discrete, 1 kilometer wide, conductivity low anomaly approximately 650 meter

below surface. This anomaly is draped by a 2.5 kilometer wide chargeability high induced polarization geophysical anomaly.

The core of anomaly defines a compelling drill target. The Morning Star prospect occurs 2.2 kilometers to southwest of the Evening Star prospect in a relatively lowlying area mostly covered by glacial till.

Morning Star is defined by narrow outcrop exposures in creek gullies that contain chalcopyrite mineralization in early dark micaceous veins and B-style quartz veins over a 400 meter wide area. Previous grab samples collected from this area returned up to 0.73% copper and 0.42 gpt gold.

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Kiska Metals Corporation and partner First Quantum Minerals announced the start of exploration drilling at its Copper Joe copper-gold-molybdenum porphyry project in the western Alaska Range. Exploration efforts in 2015 defined two porphyry targets, the Evening Star and Morning Star prospects. In 2016 the partners plan to drill the magnetotellurics anomaly comprising the core of the Evening Star prospect. Morning Star has yet to be tested by geophysical surveys or drilling and will be further investigated in 2016. The project hosts an extensive area of phyllic alteration, including local zones of potassic alteration, porphyry-style veining with chalcopyrite mineralization, and diatreme, pebble dyke, and magnetite breccias in Eocene and Miocene intrusive rocks.

Mineralized intrusions of this age represent a relatively unrecognized yet potentially significant geological province in the www.akbizmag.com

November 2016 | Alaska Business Monthly

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MINING SPECIAL SECTION

thirty-four holes on the southwest slope of Island Mountain. The deposit is up to 400 meters in width and has been drilled over a strike length of 300 meters to a depth of 450 meters. Mineralization remains open to depth and to the north where surface mapping, geochemistry, and geophysics have identified coincident hydrothermal breccia, multi-element geochemical anomalies, and magnetic anomalies for an additional 400 meters. Gold-copper mineralization is hosted by intrusive and hydrothermal breccia associated with strong sodic-calcic alteration. Gold-only mineralization is hosted by diorite porphyry with vein and disseminated pyrrhotite.

Brazil Resources Inc. also announced an initial mineral resource estimate for the Raintree West deposit, another of the porphyry centers identified on its Whistler project in the Alaska Range. At a 0.6 gpt gold equivalent cut-off below the 100 meter elevation, the new resource estimate at Raintree West includes an inferred resource of 51.76 million tonnes grading 0.68 gpt gold, 3.74 gpt silver, and 0.10% copper. At a 0.3 gpt gold equivalent cutoff above the 250 meter elevation, the deposit also contains an inferred resource of 31.68 million tonnes grading 0.40 gpt gold, 5.39 gpt silver, and 0.06% copper.

The resource is based on 7,078 meters of drilling in fourteen holes. The deposit is up to 400 meters in width and has been drilled over a strike length of 500 meters to a depth of 700 meters. The deposit is open along strike to the north and south, and at depth. Gold-copper mineralization is associated with quartz plus magnetite stockwork zones hosted in potassic altered diorite intrusive rocks.

MINING SPECIAL SECTION

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Miranda Gold Corp. and JV partner Gold Torrent, Inc. announced an updated mineral resource for their Willow Creek gold project near Hatcher Pass. The updated mineral resource estimate includes Measured and Indicated mineral resources of 121,500 ounces of gold contained in 206,500 tonnes grading an average of 18.3 gpt gold. An additional Inferred mineral resource includes 35,150 ounces of gold contained in 59,000 tonnes grading an average of 18.5 gpt gold. All of the estimated mineral resources are based on a cutoff of 5 gpt gold. In total, mineral resources at the Willow Creek project include eight veins in the Coleman area and two veins in the Lucky Shot area. The mineral resource estimate is based on information from 174 drill holes. Expansion potential exists in the down-dip extensions of the Coleman and Lucky Shot area, and the exploration targets in the War Baby and Murphy areas along strike to the east. The companies completed a Preliminary Feasibility Study, calling for a five-year mine plan with production ranging to 10,000 ounces to 26,000 ounces per year using rail-support underground mining techniques and feeding a mill about twenty-nine miles away from the mine facility. Average recovery is expected to exceed 91%.

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Northern Alaska

Trilogy Metals Inc., formerly NovaCopper Inc., provided a year-end 2015 and year-to-date 2016 update on its Ambler project at its Upper Kobuk Mineral project, a partnership with NANA Regional Corporation, Inc. in the Ambler District. For 2016, the company budgeted $5.5 million, mainly for drilling and related activities at the Arctic copper project. A planned 3,000 meter drill program using three diamond drill rigs was completed in mid-summer.

In addition, the company conducted in-pit geotechnical, hydrological, metallurgical, environmental, and waste rock characterization studies. The company will continue to engage with the State of Alaska on the permitting of the Ambler Mining Industrial Access Project. During 2015 the company advanced the Arctic volcanogenic massive sulfide deposit towards pre-feasibility with 3,056 meters of infill drilling intended to reclassify the inferred resources to the measured and indicated categories for the potential of reporting reserves and resources in a future pre-feasibility study. The company spent $5.5 million during 2015, mainly on a successful field program comprised of fourteen diamond drill holes, twelve of which were resource estimation holes and two of which were designed to collect geotechni-

cal and hydrology information within the proposed Arctic open-pit. Significant drill results include hole AR15-0145 which intersected four mineralized intervals, including 22 meters of 3.86% copper, 0.86 gpt gold, 71 gpt silver, 1.15% lead, and 5.36% zinc; 5 meters of 3.82% copper, 0.68 gpt gold, 74.7 gpt silver, 1.60% lead, and 7.21% zinc; and 6.5 meters of 6.67% copper, 0.52 gpt gold, 31.4 gpt silver, 0.20% lead, and 3.38% zinc. Hole AR15-0136 intersected two mineralized intervals, including 32 meters of 3.08% copper, 1.56 gpt gold, 45.9 gpt silver, 0.18% lead, and 2.72% zinc and 9 meters of 7.36% copper, 2.34 gpt gold, 219.3 gpt silver, 0.77% lead, and 5% zinc.

Trilogy Metals Inc. also announced an updated resource estimate for the Bornite deposit, also within its Upper Kobuk Mineral project, a partnership with NANA Regional Corporation, Inc. At a base case 0.50% copper cutoff grade, the Bornite deposit is estimated to contain in-pit indicated resources of 40.5 million tonnes at 1.02% copper for 913 million pounds of contained copper. At a base case 0.50% copper cutoff grade, the deposit is estimated to contain inpit inferred resources of 84.1 million tonnes at 0.95% copper for 1.8 billion pounds of contained copper. At a base case 1.50% copper cutoff grade, the deposit is estimated to

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Southeast Alaska

Hecla Mining Company announced year-end 2015 and year-to-date 2016 production and exploration results from its Greens Creek mine. During 2015 the mine produced 8,452,153 ounces of silver and 60,566 ounces of gold, representing 8% and 3.1% year-on-year increases over 2014 levels.

The mill operated at an average rate of 2,231 tons per day during 2015, almost identical to 2014. During 2015 mining and revised resource calculations at lower metals prices resulted in an 8% decrease in gold and silver reserves. Year-end 2015 reserves and resourc-

es for the mine included proven and probable reserves of 7,214,000 tons grading 12.3 opt silver, 0.09 opt gold, 3% lead, and 8.1% zinc. In addition, the mine contains measured and indicated resources of 1,227,000 tons of indicated resources grading 10.6 opt silver, 0.10 opt gold, 3% lead, and 7.5% zinc.

The mine also reported inferred resources of 3,255,000 tons grading 12.8 opt silver, 0.09 opt gold, 2.8% lead, and 6.7% zinc. During the first half of 2016, the mine produced 4,575,360 million ounces of silver and 27,509 ounces of gold constituting an 18% increase and a 5% decrease in the amount of silver and gold produced, respectively, over the year previous period. Operating costs increased to $4.61 per ounce of silver versus $3.27 per ounce in the year-previous period. The average grade of ore mined during the first half of 2016 was 14.22 opt silver, up from the average grade of 13.05 ounces per ton that was mined in the first half of 2015.

During the half of 2016 the mine also produced 10,433 tons of lead and 30,186 tons of zinc. The mill processed 408,356 tons of ore during the quarter, up from 395,163 tons milled in the year-previous period. Increased silver production resulted from higher grades as well as slightly higher throughput. Gold production was impacted due to a one-time adjustment in the gravity circuit. The mill op-

erated at an average of 2,256 tons per day in the first half of 2016. As a result of both higher grades and recoveries, the company now expects the mine to produce 8.3 million ounces of silver and 53,000 ounces of gold at a cost of $5 per ounce of silver.

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Coeur Mining, Inc. announced yearend 2015 and year-to-date 2016 production and exploration results from its Kensington gold mine near Juneau. The mine produced 126,266 ounces of gold in 2015 compared to 117,823 ounces of gold for 2014. For the year, the mine processed 660,464 tons of ore at an average grade of 0.20 ounces per ton. Average recovery was 94.9%. Average cost of production was $798 per ounce. The company also announced year-end resources and reserves at the mine, including proven and probable reserves at Kensington of 2,659,000 tons grading 0.194 opt gold (517,000 ounces) and an additional 166,000 tons grading 0.259 opt gold (43,000 ounces) at Raven. Measured and indicated resources for Kensington are 1,775,000 tons grading 0.278 opt gold (493,000 ounces) and an additional 58,000 tons grading 0.414 opt gold (24,000 ounces) at Raven.

Total inferred resources for Kensington are 1,741,000 tons grading 0.285 opt gold (496,000 ounces), an additional 29,000 tons

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November 2016 | Alaska Business Monthly

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MINING SPECIAL SECTION

contain below-pit inferred resources of 57.8 million tonnes at 2.89% copper for 3.7 billion pounds of contained copper. Overall, contained copper in indicated resources has increased from 334 to 913 million pounds, a 173% increase in contained metal over the previous 2014 resource estimate. The estimate was based on 235 diamond drill holes totaling 78,745 meters of drilling. The deposit remains open to expansion to the north and northeast. The Lower Reef and South Reef mineralization is open over a 1 kilometer wide front along the north end of the deposit while to the southwest the South Reef mineralization is open over a 200 meter wide front along the south end of the deposit.

MINING SPECIAL SECTION

grading 0.517 opt gold (15,000 ounces) at Raven, and an additional 289,000 tons grading 0.619 opt gold (179,000 ounces) at Jualin.

The company indicated that it is sequencing its operation to take advantage of higher grade resources at the adjacent Jualin system where internal rate of return on investment is estimated at a whopping 70%. First half 2016 production was 64,184 ounces of gold at cash operating costs of $761 per ounce in the first quarter falling to $740 per ounce in the second quarter. The mine processed 316,477 tons of ore grading 0.21 opt gold during the first half of the year. Average recovery was 95.8% for the first quarter and 94.1% for the

second quarter. Mill throughput averaged 1,748 tons per day, down slightly from 2015, but the decreased mill throughput was more than offset by higher gold grades during the first half of 2016. Work on the decline into the Jualin deposit is over 50% complete with a resource update expected at year-end. Estimated 2016 total production is pegged at 115,000 to 125,000 ounces of gold at cash operating costs of $825 to $875 per ounce.

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Constantine Metal Resources Ltd. and funding partner Dowa Metals & Mining Co., Ltd. announced year-to-date 2016 exploration results from their Palmer

copper-zinc-silver-gold project near Haines. Following successful expansion drilling in 2015 at the Palmer deposit as well as discovery of additional surface massive sulfide mineralization at the Tsirku and Waterfall prospects, $3.7 million 2016 budget was focused on testing new zones on the project.

Drilling included four reconnaissance exploration holes (1465 meters) and three geotechnical holes (502 meters) for a combined total of 1967 meters. Principal targets included depth and strike extensions of silver-rich massive barite sulfide mineralization at the Cap prospect where limited historic drilling has intersected 134 gpt silver over 23.2 meters and 31 gpt silver over 90.6 meters and where 2016 drilling returned a 20.5 meter thick zone of chert and semi-massive pyrite zone similar to that seen near the Palmer resource. The company also explored an untested zone of intense volcanogenic massive sulfide footwall style alteration exposed in a creek drainage approximately 1000 meters on strike and east of the mineral resource, a strong conductor anomaly located 1000 meters to the north of the mineral resource that is identified by geophysical surveys and supported by the presence of mineralized boulders grading up to 16.1% zinc and 13.2 gpt silver. The 2016 field program also includes continued community engagement efforts along with environmental, hydrogeology, and engineering studies. The company recently received permits and started road building to the mineral resource area and began environmental, geotechnical, and engineering studies to evaluate a potential exploration drift for the purpose of continued drill expansion and drill definition from underground. Dowa is in the fourth year of their agreement with Constantine and has spent approximately $16.2 million on the project prior to 2016. Dowa must spend $22 million in order to earn a 49% interest in the project and has indicated its intent to do so by December 31, 2016.

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Ucore Rare Metals spent the year conducting a series of staged metallurgical tests to recover rare earth oxides from the company’s Bokan-Dotson Ridge project near Ketchikan. Approximately 40 tonnes of material from the property were processed in Germany utilizing the company’s preferred ore sorting technology, resulting in approximately 19 tonnes of sorted rare earth bearing material containing 96% of the rare earth metals. A three-tonne bulk sample was split from the sorted material and was processed through the circuit developed for the company’s Preliminary Economic Assessment which includes crushing, grinding, and magnetic separation, followed by a nitric acid leach, to yield approximately 500 gallons of pregnant leach solution. The 64

Alaska Business Monthly | November 2016 www.akbizmag.com

Curtis J. Freeman, CPG #6901, is head of Avalon Development Corporation, PO Box 08268, Fairbanks, AK 99708. Phone: 907-457-5159 and Fax: 907-4558069. He can also be contacted by email at Avalon@alaska.net or found online at avalonalaska.com. www.akbizmag.com

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company’s SuperLigŽ-One pilot recovery facility was then used to process the pregnant leach solution in the following stages: 1) rare earth separation, in which all rare earths, as a group, are isolated from the waste materials in the pregnant leach solution, 2) removal of scandium, a valuable rare earth element used in advanced aluminum alloys for the aerospace sector, 3) class separation of the light rare earth elements (lanthanum to neodymium plus yttrium) and the heavy rare earth elements (samarium to lutetium), and 4) separation of individual rare earth elements, including the pilot program separation of terbium and europium at over 99% purity, plus dysprosium at 99.99% purity.

The process recovered over 99% of the available scandium with product purity at greater than 99%. The scandium recovery process did not deplete other rare earth metals, which remained in the pregnant leach solution for subsequent recovery. This process was followed by separation of the light and heavy rare earth elements into two products.

The process created two classes, heavy rare earth elements comprised of samarium to lutetium and light rare earth elements comprised of lanthanum to neodymium plus yttrium. The class separations have been achieved at greater than 99% purity and at greater than 99% recovery of contained rare earth metals. The next step was separation of the sub-groups samarium-dysprosium and the holmium, erbium, thulium, ytterbium, and lutetium sub-group from the heavy rare earth element class. The separation of the two sub-groups was achieved at greater than 99% purity and greater than 99% recovery.

The final step was production of a product containing 99.99% dysprosium, a significant first for the rare earth mining industry.

The company indicated that successful scaling of the molecular recognition technology system from the lab-scale to the pilot plant level has demonstrated the feasibility for construction of a full scale commercial system for rare earth element separation and recovery.

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65

TRANSPORTATION

Alaska Railroad LNG Transport Trial run carries groundbreaking cargo

By Julie Stricker

© Alaska Railroad Corporation

Alaska Railroad successfully transported the first-ever shipment of liquefied natural gas by rail in the United States in September. The railroad planned to ship two containers twice a week during a four-week demonstration project.

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s snowflakes fell on a late-September morning, an Alaska Railroad freight train pulled in to the Fairbanks station. Although it was one of the railroad’s five regularly scheduled freight trains to the Interior city, this train also carried some groundbreaking cargo. Among the cars carrying coal, fuel, pipe, and consumer goods were two forty-foot-long gray cylinders with bright red letters spelling out LNG. It was the conclusion of the first-ever shipment of liquefied natural gas (LNG) by rail in the United States, part of a long-term effort to provide Fairbanks residents with easy, affordable access to the relatively inexpensive, clean-burning fuel. Hitachi High-Tech AW Cryo of Vancouver, Canada, loaned the containers to the railroad for the demonstration.

“It is a feather in the cap for the Alaska Railroad to be the first railroad in the country to do this,” railroad spokesman Tim Sullivan says.

Rail Efficiency The railroad started planning to move LNG several years ago, receiving the unprecedented two-year permit from the Federal 66

Rail Administration in October 2015 after an arduous permitting process. Although LNG is regularly transported by rail in Europe and Japan, it has never been allowed on a US railroad, until now.

“I know I’ve said this a couple of times, but we’re pretty proud of this,” Sullivan says. “We’re pretty proud of the opportunity, and we think we can take this opportunity and run with it. We’re hopeful that the folks at Titan and FNG [Fairbanks Natural Gas] will see this as a good opportunity maybe as well. We think it’s good for the railroad. We think it’s good for the Interior.

We think it’s good for the state in general.”

The cryogenic containers can hold about 27,546 pounds, equivalent to 7,024 gallons, of LNG apiece. The railroad plans to transport two containers twice a week during the four-week demonstration project. If FNG agrees to use the railroad to ship LNG, the tank cars would supplement or replace the fleet of trucks now used to bring LNG to the Interior city from the Titan LNG plant at Point Mackenzie.

“The goal is to show the people who are currently moving LNG by truck that we can

do it very efficiently by rail,” Sullivan says.

“It’s a good way to move it and maybe it’s an opportunity for them and for Interior Alaska to get LNG here cheaply and efficiently.”

Fairbanks and the nearby community of North Pole suffer some of the worst air pollution in the country, mostly due to residents heating their homes with wood during the Interior’s subzero winters. Although FNG currently serves only 1,100 customers, a project has been in the works for several years to expand the natural gas network. That would give more residents the opportunity to burn LNG, which is less expensive and cleaner than fuel oil and much cleaner than wood.

If FNG chooses to use the railroad as a shipper, Sullivan says, it means no additional capital costs for the Alaska Railroad.

Titan or FNG would likely lease the tank cars from Hitachi or another vendor.

Shipping LNG

The trek to Fairbanks has several legs. First, the LNG is trucked from the plant at Point Mackenzie 70 miles to the rail yard in Anchorage. There, the tanks are loaded onto

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© Alaska Railroad Corporation

flatbeds and transported 350 miles to Fairbanks. Two Alaska West trucks offload the tanks for the 4.5 mile leg to FNG, where the LNG is stored. Then the tanks are returned to Titan LNG to repeat the process.

“All we’re going to be doing is shipping it,” Sullivan says. “You know that gym commercial where the guy says ‘I pick things up and put them down?’ That’s us. We put it on a train, we move it to Fairbanks, take it off the train, and put it on a truck.”

Before the demonstration project, the railroad transported one of the empty tanks up the Railbelt, stopping in Wasilla, Talkeetna, Healy, Nenana, and Fairbanks in order to familiarize first responders with the LNG, as well as other cargoes the railroad regularly transports.

“There’s always opportunities for things to go wrong,” Sullivan says. “We’re taking every opportunity we can to make sure they don’t. We’ve got a lot of training from people who’ve been working with LNG for a long time making sure we’ve got all of our ‘T’s crossed and our ‘I’s dotted to make sure we’re moving LNG in a safe and efficient manner.”

Several other railroads have been watching Alaska Railroad’s experience with LNG very closely, Sullivan says. Representatives from a Florida railroad were in Alaska to

First responders were familiarized with the LNG shipping procedure by training with an empty tanker before the initial trial run.

watch the demonstration project.

“We’re really proud of it,” Sullivan says.

“We’re really proud to be the first one in the nation. We’re really proud to be able to show off that we can do this correctly, not just as the Alaska Railroad, but as a member of the railroad industry to show that this is something that can be done in Alaska and in the Lower 48.”

Safe to Transport

The first leg of the demonstration project went smoothly, says railroad spokeswoman Stephenie Wheeler.

“Operations went very smoothly on both ends and the railroad is overall very pleased with how this first leg of the demonstration project unfolded,” Wheeler says.

“Federal Railroad Administration officials

November 2016 | Alaska Business Monthly

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were here to observe the move and we understand they were pleased as well.”

LNG is a very safe material to transport, as it is much less volatile than fuel or propane, which the railroad also moves, he says. It’s not toxic either, which Alaska Senator Peter Micciche likes to demonstrate by dipping crackers in to a vat of LNG and eating them.

“It’s quite a bit safer than quite a few things we move around the state,” Sullivan says. “It’s safer than propane. It’s less explosive than a lot of other materials, but it still is a hazardous material and we treat it that way.”

First responders’ biggest concerns aren’t fire and explosion, he says, but frostbite and frostburn. “[The LNG] is being moved at 260 degrees below zero, so a lot of the training has to do with making sure they know when to stay away and when not to do things as opposed to rushing into it and spraying water onto a situation where they shouldn’t spray water,” he says.

If something does happen and a tank gets damaged, it vents very quickly because the LNG is so cold. It’s in a liquid form at minus 260 degrees, so when it hits the air, it almost immediately turns to gas and disperses very quickly if it’s outside. If it happened to vent in a closed area, it would pose more problems, as the gas is flammable. A person could asphyxiate if it replaced the oxygen in a room, as well.

Intermodal Tanks

The tanks supplied by Hitachi are intermodal, so in addition to being able to be transported by train or truck, they can also be used as standalone storage units in smaller communities.

“They can be kept here in Fairbanks as storage units if there isn’t enough storage built,” Sullivan says. “It’s a bit of a capital asset just to have to be used for storage, but it is an opportunity. It takes about three months before you start to see any reduction in the viability of the LNG. You can hook them up to power and they’ll still stay cold for a long, long time.

“Basically, it’s a giant Thermos.”

Communities in Japan hook similar LNG cars right up to their power grids. That’s certainly an option for some small Alaska communities, Sullivan says, noting LNG is a more efficient fuel source than propane.

“We’ve talked about it,” he says. “It may be a little pie in the sky but we’ve talked about getting them to Nenana and they go on the river system. There are opportunities for that, as well. There are a lot of small communities on the Railbelt and off the Railbelt that these could be beneficial for in the long term.” R Freelance journalist Julie Stricker lives near Fairbanks.

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Alaska Business Monthly | November 2016 www.akbizmag.com

TRANSPORTATION

Air Land driver Pete Epple (left) and account manager Johnclaude (JC) Snead in front of one of Air Land Transport’s sixty trucks and more than one hundred trailers. ©Unique Designs & Graphics / Courtesy of Air Land Transport

Logistics of Transportation in Alaska Freight and information working in harmony

By Tasha Anderson

J

eremy Miller, VP of Operations for Carlile, says, “Logistics is two components: it’s the actual freight and it’s the information about the freight, and both of those have to move in harmony.” Luckily for Alaskans, transportation companies around the state have spent years fine-tuning to get rid of all the bad notes, and no matter what one needs moved where, there’s a solution.

Air Land Transport

Air Land Transport, Inc. has offices in Anchorage, Kenai, and Fairbanks and provides transportation to locations on the road system throughout Alaska. Johnclaude (JC) Snead, an account manager for Air Land Transport, says, “We transport a variety of 70

unique freight, [including] human remains, helicopters, rare/unique vehicles, live animals (rarely), jumbo sized sculptures, boats, and bridges, as well as steel, building materials, and heavy equipment.” Air Land Transport’s ability to transport whatever fits in a truck is a direct result of their many services, including in-state LTL (less than truckload), in-state full load, cross-dock and consolidation services, and air freight.

Snead says, “Air Land Transport will recover freight and deliver it to any air carrier [and vice versa] for shipment to beyond destinations [or delivery in Alaska]. Our drivers are trained to comply with the most current TSA regulations.” The company manages a fleet of sixty trucks and more

than one hundred trailers, “which can accommodate just about any transportation,” Snead says, including flatbed, refrigerated (both chill and freeze), and oversized loads.

An important logistics service that Air Land Transport provides is cross-dock and consolidation, whereby customers with consolidated shipments “require dispersal into several smaller shipments or for routing to several destinations. We can also provide handling services for customers who require multiple shipments to be consolidated for a single delivery,” he says.

One project Air Land Transport handles every year is the Iditarod, hauling and handling all of the dog food and musher equipment. Snead says the Iditarod is actually

Alaska Business Monthly | November 2016 www.akbizmag.com

one of their more challenging yearly events, as their Anchorage terminal facility is partially loaned out, and so the warehousemen and drivers have less room to utilize.

Snead says that for any project to be completed successfully, “communication with the client is the most vital and important detail. Air Land is based off our excellent customer services, and that is what continues to drive our company.” To provide timely information to their customers, all of Air Land Transport’s terminals have access to their tracking and POD system, and customers can call in or email in their order number to get up-to-date information, whatever freight they may need moved throughout Alaska.

“Everything comes from the back of a truck, so we have seen it all,” Snead says.

PenAir

PenAir provides transportation to Alaska routes west of Anchorage including the Bristol Bay area, the Aleutian Islands (including the Pribilof Islands), Aniak, McGrath, and Unalakleet. Danny Seybert, PenAir CEO, says, “For the communities that we serve, by and large, the only way they’re going to get their product into the community is if it fits in the door of our airplane.” While many of the rural and small communities PenAir serves receive barge service in the summer, only Unalaska gets barge service yearround. “For the communities in Bristol Bay and out West, logistically anything that they want in their community has to be flown in.”

And Seybert means anything: “One year we flew in a heard of alpacas to Unalaska.

That was quite unique.” On most days PenAir isn’t transporting livestock—Seybert says the seafood industry is one of their largest customers. “When they’re out fishing and have a generator fail or they have some kind of an issue and need to get something in a hurry from Seattle, we react very quickly. Al [Orot, VP of Cargo Services] and his team, they can get a call at 2 in the morning and they’ll have that product on an airplane by 5 a.m.”

PenAir coordinates with other transportation companies whenever the job requires. “It takes all of us working in partnership to deliver the product to the consumer out in the rural areas of Alaska,” Seybert says. PenAir is primarily a scheduled airline, but does provide chartered air services, though Seybert says that chartered services accounts for less than 5 percent of their operations.

Generally, if the airline has freight that “must ride,” PenAir will accommodate that by finding an appropriate scheduled flight or moving up the priority of that cargo and putting it on a freighter aircraft. Orot says, “If we have to reroute an aircraft in a different way to accommodate these folks, www.akbizmag.com

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especially if there’s a crisis somewhere, we take a look at it and dispatch the aircraft to that area and route it to where things need to go.” Orot’s team of employees includes six people at the cargo facility and approximately thirty ground personnel.

PenAir uses an in-house tracking system which shares information between departure and arrival stations to keep everyone on the same page. Customers that want up-to-date information can call PenAir with a request. Seybert says PenAir’s reliability rate for their flights “sits at about 98 percent,” meaning 98 of the flights they schedule they complete; however, their ontime performance is “not as good,” he says.

“Take a place like Unalaska: the weather can be very difficult to fly in out there, so oftentimes we’ll fly as far as Cold Bay and then we’ll wait until the weather gets good enough to go and we’ll complete the flights—not necessarily on time, but we complete it… If you live in St. George, and the plane is scheduled to be there at noon on Wednesday, and it gets there any time on Wednesday, you’re going to be happy about that,” he says.

Seybert says that the state’s current fiscal difficulties are going to further complicate the logistics of delivering to rural and remote communities. “DOT [the Alaska De-

72

partment of Transportation] is now shortening its hours of operation because of the state budget cuts,” he says. Because of this, some runways that used to be open into the evening will now close at 5 p.m., such as in King Salmon. Additionally, in the past DOT has authorized overtime for runway maintenance during the winter. “My understanding is that this winter is going to be different; there is no more overtime allowed and they’re not going to be coming out to work on the runway after hours.”

This will have a “significant impact,” Seybert says, on PenAir’s ability to service these communities, as flights which are delayed for weather until late in the day may not be able to deliver that day at all.

Another logistics issue Alaska presents for PenAir is that planes are often flying empty: “We historically have a 60 percent load factor on both our freight mail product and passenger products,” he says. In comparison, many air carriers operating in the Lower 48 have 98 to 99 percent load factors. “Here in Alaska, by and large, most of us are flying around half the time empty,” Seybert says, which affects the cost of transportation. But PenAir is passionate about the communities it serves. Seybert, who has been flying since he was fourteen, grew up in Bristol Bay and has been with PenAir for

forty-three years. He says, “We understand what it’s like living in rural Alaska; we grew up in rural Alaska, so we try very hard to take care of the communities that we serve.”

Carlile

Tom Hendrix, VP of Oil and Gas for Carlile, says, “We’re definitely a multi-modal company and we do everything from very small one-off shipments for somebody’s yarn shop in Kenai to moving some of the biggest production plants and rigs.” Carlile is part of a family of companies owned by Saltchuk Resources that also includes TOTE Maritime, Foss Maritime, Cook Inlet Tug & Barge, and Northern Air Cargo, allowing Carlile to coordinate any shipment, whether it needs to come by land, air, sea, or all three.

“We’re very much in the heavy haul business, and we had a pretty interesting project that we did for Blue Crest Energy,” Hendrix says. Carlile moved 160 loads from all over the continental United States and Canada to transport Blue Crest’s production facility into Alaska. Primarily Carlile utilized TOTE Maritime’s liner service to move the various components that would fit on a ship, but there were some pieces that were 18 feet tall which needed to be transported from Edmonton, Alberta, Canada, down into Montana, through Idaho, and through eastern

Alaska Business Monthly | November 2016 www.akbizmag.com

Washington state. “They had that ‘hundredyear storm’ in the Pacific Northwest, so they shut down Snoqualmie Pass, and we had trucks and trailers that are 150 feet long, 22-foot wide, and 18-foot high that we have to take up over the pass and into downtown Seattle to get them onto a barge because we couldn’t fit the materials through the ship’s door,” he says. The adventure didn’t end there, as the same storm forced the barge to pull into a cove in the Gulf of Alaska for ten days before continuing on to Seward.

Planning, Miller and Hendrix say, is vitally important for a project’s success.

“You’ll get to dysfunctionality just through osmosis,” Hendrix says, so never plan for chaos. “As long as you have a baseline execution plan, you know the tools that you’re going to use, what your schedule is, and try to work to that plan. When anomalies come up, you can deal with those one-off issues like over-dimensional pieces that are really bigger than what they were on the drawings, or when you go to pick them up and they’re 18 feet tall instead of 16 feet tall,” Hendrix says, referring to the components for Blue Crest’s facility. Carlile successful completed moving the plant in January and completed the rig for the production facility this July.

The plant is currently producing crude, which Carlile hauls by truck from Anchor

Point to the Tesoro Alaska refining facility.

This project, Hendrix says, “is kind of neat, because with this new tax-credit/AIDEA-funded rig—it’s a tax credit that’s working. They’ll be able to produce Alaska crude to go into an Alaska refinery to refine Alaska product to get hauled to wherever it’s needed in the state.”

Carlile has also been providing logistics/ transportation services for the Anchorage Museum’s remodel, hauling more than fifty loads of structural steel and other support materials. Additionally, “We actually had about a month where we were storing the products here in our yard in Anchorage, and we would allow their project managers and their foreman to come over and they would literally pick-and-choose through and go, ‘Okay, bring me that trailer next,’” Miller says. The product was then delivered to the Museum’s downtown Anchorage location: “You can imagine trying to deliver anywhere from a 40-foot to a 53-foot trailer into Downtown Anchorage, so it required a lot of coordination during offhour delivery times,” Miller continues.

Carlile is also the transportation company for materials for the Combined Heat and Power Plant at the University of Alaska Fairbanks.

An interesting logistics issue regarding this project was in maximizing the utilization of the trailers. Miller says they removed the steel from the ship almost “as-is” to get it out in a

timely fashion. The steel was transported to a lay-down yard where it could be organized to maximize road utilization. “What took us 200 loads to move between Anchorage and Fairbanks probably took us 350 loads to move from the port, within Anchorage, just to get it off the boat,” Miller says. “All the while moving in excess of 150,000 miles without an injury or accident.”

As Miller says, logistics is about freight and information, and Carlile has invested in PeopleNet for the information side of the equation. PeopleNet is a GPS tracking system that attaches to a truck to track the truck’s location, speed, and fuel economy.

It’s also used to track events and on-board logs. PeopleNet uses both satellite and cellular to communicate data, defaulting to cellular and diverting over to satellite if it loses the cell signal. “Basically it’s a website where we can pull up a big map of where all the trucks are,” Miller says. People Net is an internal tool, but Carlile does provide visibility to their customers, who can log in any time to get information on freight in motion.

With project managers in mind, Carlile developed in-transit reports, which are auto-generated emails that go out daily at 4 a.m. “For somebody that is working on a project, it’s basically a snapshot that says, ‘Here is where all of your freight is

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73

Rendering courtesy of Air Land Transport ©Unique Designs & Graphics

Air Land Transport has sixty trucks and more than one hundred trailers in their fleet of vehicles; On the right is Johnclaude (JC) Snead, one of Air Land Transport’s account managers, and on the left is Pete Epple, an Air Land Transport driver.

throughout the system,’” including detail level information, Miller says.

A New Tool in the Toolbox

PRL Logistics, a Pacific-Rim based logistics company, announced August 30 a partnership with UK-based Straightline Aviation to bring one of the world’s first heavy-lift hybrid airships, the LMH-1, to Alaska in 2019. The airship is referred to as a hybrid because it combines the abilities of a heavy lift airplane, a helicopter, and a hovercraft.

The airships have been developed and will be built by Lockheed Martin. In total, the order is for twelve airships, the first of which will come to Alaska, says PRL Logistics CEO Ron Hyde. Each airship costs approximately $44 million; they are capable of landing on virtually any surface including snow, ice, gravel, and even water, depending on certain conditions. “The way the ship is designed it has a hovercraft landing system, so it can land on ponds, lakes, rivers, or the ocean, assuming there’s reasonable wave height and wind conditions,” Hyde says. The ship has a hovercraft landing system, which eliminates the need for a landing gear and is utilized for taxiing the ship—when reversed it provides a grip to the landing surface, which is useful during loading and unloading operations.

The cargo bay is at the rear of the aircraft 74

and will be 60-foot-long, 10-foot-wide, and 10-foot-tall, “so its internal cargo capability similar to the C-130 aircraft,” Hyde explains.

Additionally, if items longer than 60 feet can be secured properly within the weight and balance limit, the hybrid aircraft can be operated with the tail door open. The hybrid can fly simultaneously with a full-load cargo of forty-two thousand pounds and nineteen passengers. The passenger cabin on the hybrid is non-pressurized and as such will be certified to operate up to an altitude of ten thousand feet above sea level.

One aspect of the airship that Hyde emphasizes is that it’s flown with helium, a nonflammable gas, “like the balloons you see at a grocery store.” A fabric “envelope” filled with helium provides 80 percent of the lift which is controlled by an expanding and contracting air bladder. “It’s not really an airplane,” Hyde says. “It probably has more characteristics of a helicopter than an airplane because it has the ability to do a vertical take-off and landing.”

Hyde says, “I’m extremely excited about the possibilities this hybrid airship provides.”

The hybrid’s flight range of 1,400 nautical miles allows it to remain in the field, hovering if necessary, for days when in standby mode or making short runs. The ship can land (or not) without a runway, ice road, or other infrastructure, meaning it has significant

potential to operate as a mobile emergency center or to facilitate natural resource exploration with a significantly reduced footprint.

“It’s not a big gorilla coming into displace what [transportation modes] exists today.

It’s going to enable projects in the state of Alaska to be executed without investing in a lot of new infrastructure like roads and airstrips. This new capability will keep existing businesses moving and growing. To be able to encourage and have the capability to support smaller and more remote projects in Alaska is something we’re looking forward to doing. We see the hybrid airship as a cost effective means to better supply rural and remote Alaska communities without the seasonal limitations of other transportation modes,” Hyde says. Additionally, this may be another way to supply rural and remote Alaska communities. “I’m excited as an Alaskan, having spent a good part of my life in rural and bush Alaska and continuing to work in those remote regions. I know this hybrid airship can provide relief to many of those remote communities, and I know the hybrid will attract new business to the state.”

R Tasha Anderson is the Associate Editor for Alaska Business Monthly.

Alaska Business Monthly | November 2016 www.akbizmag.com

TRANSPORTATION

Hanjin’s Insolvency What to expect from a Chapter 15 proceeding

By Isaak R. Hurst

A

s many readers are aware, one of South Korea’s largest shipping companies, Hanjin Shipping Co. Ltd., has filed for bankruptcy. The insolvency of Hanjin, which is the world’s seventh largest container line, will have a significant impact on the global transportation and retail sector. Shippers, charterers, freight forwarders, motor carriers, terminal operators, and commercial retailers are now scrambling to reroute $14 billion worth of cargo, which is packed into 540,000 containers and loaded onto any one of Hanjin’s 141 vessels (some owned, some chartered). This logistical nightmare is exacerbated by the fact that these vessels call at every major maritime port on the planet. Indeed, Hanjin’s insolvency will cause significant disruptions to the global supply chain, including material

the water and not enough Americans buying cheap exports from China. As a result, large shipping companies like Hanjin struggled to keep their ships full, and eventually Hanjin’s bankers threw in the towel.

After Hanjin filed for bankruptcy, the South Korean Court issued a comprehensive injunction and asset protection order (aka an “automatic stay”), which blocks Hanjin’s creditors from arresting or seizing Hanjin assets. The Korean Court’s protective injunction, however, only blocked creditors from arresting or seizing assets in Korea—not globally. Luckily, for Hanjin, South Korea is a signatory to the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency (1997). This international treaty provides for the recognition of domestic insolvency

tract terminations. Unfortunately, it wasn’t until September 6 that the Bankruptcy Court for the District of New Jersey got around to hearing the case.

The Chapter 15 Gap

During the time period between the initial August 31 filing in South Korea and the September 6 hearing in New Jersey, Hanjin was not protected by any provisions of the Chapter 15 Bankruptcy Code, such as the automatic stay that blocks creditors from arresting or seizing Hanjin assets. This is frequently referred to as the “Chapter 15 gap period,” which typically results in a flood of creditor lawsuits and vessel arrests across the world. Hanjin’s Chapter 15 gap period was no different, and several lawsuits and vessel arrests commenced in the United States im-

The Hanjin situation is in its early stages, and international bankruptcy proceedings are naturally complicated. Indeed, it should come as no surprise that these worldwide proceedings will be difficult to navigate, and creditors will likely be required to carefully consider all options in dealing with Hanjin’s perspective rehabilitation. delays in the delivery of retailer goods for this upcoming holiday season.

The intent of this briefing is to provide an overview of Hanjin’s insolvency, outline which parties will be most affected by Hanjin’s collapse, and provide these affected parties with ideas for moving forward as these international insolvency proceedings unfold. Before we begin, however, here is a brief summary of the events leading to Hanjin’s insolvency.

Too Big to Fail?

Evidently Not in Korea After losing the support of its banks and trade creditors, Hanjin commenced insolvency proceedings in South Korea on August 31, 2016. At the time of the filing, Hanjin estimated its debt to be around 6 trillion won ($5.5 billion), which put Hanjin’s debt to equity ratio at 850 percent. This colossal debt to equity ratio is a reflection of the diminished demand in international shipping, which is a combination of too many boats on 76

proceedings in foreign jurisdictions and is designed to protect and maximize the value of an insolvent company’s assets located outside the country while that entity is engaged in domestic and foreign insolvency proceedings. Put another way, this international treaty stops creditors from arresting every Hanjin vessel and container that is located outside Korea in a last ditch effort to get paid.

Unfortunately, it only applies to countries that are signatories to that treaty.

On September 2, 2016, two days after Hanjin filed for Bankruptcy in South Korea, Hanjin filed for protection in the United States under Chapter 15 of the Bankruptcy Code, which incorporates the UNCITRAL Model Law on Cross-Border Insolvency into American law. Again, the purpose of this reciprocal filing is to protect Hanjin assets located in the United States and to prevent certain collection actions against Hanjin’s US assets, including vessel arrests, asset seizures, lien foreclosures, and con-

mediately. As a result, many shippers now have their cargo stuck on an arrested vessel or stuck on vessels too scared to enter ports for fear of being seized by US Marshals. In other instances, US terminal operators are refusing to unload Hanjin ships simply because they are concerned about getting paid.

Either way, freight forwarders, shippers, and many US retailers are all worried about getting their cargo (or their client’s cargo) off these ships before it’s too late.

Now What?

While the above section illustrates how Hanjin will use the UNCITRAL Model Law on Cross-Border Insolvency and its counterpart in the United States (Chapter 15) to prevent a fire sale of vessels and containers, the above information will not do much for shippers, freight forwarders, and US retailers with stranded cargo. With that in mind, many affected parties might be asking: Now what are my options? Below are a few ideas.

Alaska Business Monthly | November 2016 www.akbizmag.com

Option A: Take a Close Look at Your Insurance Policy Without going into the myriad of potential financial exposures for shippers resulting from the bankruptcy of Hanjin, there is likely a clause in a cargo owner’s ocean cargo insurance policy that may provide coverage for expenses incurred as a result of the insolvency or financial default of the owner/charterer or operator of the vessel or other conveyance.

Arguably the biggest class of claims will come in the form of late deliveries. Here, cargo owners may be able to claim for damages if the market value of the cargo on the date it should have been delivered under the relevant shipping contract is more than the market value on the date it is actually delivered.

The second biggest class of claims will be from cargo owners who were transporting perishable goods. After all, refrigerated (reefer) containers don’t run on pixy dust, and any interruption in the power supply could result in the deterioration of the refrigerated cargo.

For example, Alaska seafood that was being shipped from the United States to Asia is highly prone to spoilage, and it’s likely that these cargo owners will inevitably look to their insurers for reimbursement if said cargo is spoiled.

The third class of claims is likely to come from cargo owners who were forced to bear additional transshipment costs (also known as forwarding costs) to get their cargo to its final destination. For example, if a seafood company had a few containers worth of frozen product, which was originally scheduled to be delivered to California but instead the vessel was arrested in Prince Rupert, Canada (as was the case with the Hanjin Scarlet), the seafood company will now need to reroute that cargo from Prince Rupert down to California, thus incurring some transshipment costs. Fortunately, for the seafood company, its cargo insurance policy should have a provision that allows for recovery of these expenses, and the seafood company’s insurance underwriter will be legally forced to reimburse the cargo owner for any such charges reasonably incurred.

Option B: File a Claim Against Hanjin The importance of filing a claim in a bankruptcy proceeding cannot be understated.

After all, absent the timely filing of a claim, a creditor is unable to share in any distribution made, or otherwise participate, in the bankruptcy case. Here, the situation is no different and parties with claims against Hanjin are urged to get their claims in before it is too late. Moreover, it’s important to note that the collapse of Hanjin is not just affecting cargo owners. There are dozens of other potential creditors who will have legal claims against Hanjin, including port agents for www.akbizmag.com

outstanding agency payments; crew for unpaid salaries; vessel suppliers for unpaid invoices; haulers and rail operators for unpaid freight; port, terminals, and container yards for unpaid terminal and storage charges; freight forwarders for advanced payment of slots; container lessors for unpaid hire and recovery of containers; ship owners for unpaid charter hire; and of course banks and bondholders for any outstanding mortgages, bonds, and other corporate debt that Hanjin may have. Indeed, Hanjin will have its hands full for the immediate future—provided these affected parties submit their claims to the appropriate tribunal on time.

Conclusion

The Hanjin situation is in its early stages, and international bankruptcy proceedings are naturally complicated. Indeed, it should come as no surprise that these worldwide proceedings will be difficult to navigate, and creditors will likely be required to carefully consider all options in dealing with Hanjin’s perspective rehabilitation. In the immediate future, however, it is critical that any Hanjin creditor understand, among other things, where claims need to be sent and provide enough delivery time so that the claim arrives before the claim bar date, especially if the claim is being sent overseas. As such, affected creditors are encouraged to seek guidance in the near term to best protect their position and maximize their recovery. R

Isaak R. Hurst is an attorney with the International Maritime Group, PLLC—a boutique law firm that provides legal services to the maritime, fisheries, oil and gas, mining, and international business communities of the Pacific Northwest. For more information, please visit internationalmaritime.net.

November 2016 | Alaska Business Monthly

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SPECIAL SECTION

Natural Resources

Natural Resources are Foundation of the State’s Private Sector Economy Mining industry health impacts Alaska’s other resource development industries

By Marleanna Hall

A

laska is one-fifth the size of the rest of the United States, with more coastline than all other states combined. This state contains immense natural resources, including minerals and offshore resources like oil and gas and seafood.

Alaska’s natural resource industries provide jobs, revenues to the state, and are the foundation of the private sector economy.

After all, our constitution, Article XIII, section 2, mandates that Alaska “encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.”

It is because of these natural resources that Alaska became a state in the first place.

During the fight for Statehood, William A. Egan remarked in his 1956 speech at the Alaska Constitutional Convention: “Many of the states now in the Union would be happy indeed, if they could be endowed with Alaska’s natural resources. Even though our resources are in their present state of underdevelopment, mainly because of the federal territorial-status yoke, our economy is amply able to support statehood.”

But enough about Alaska’s responsibility to be self-reliant and avoid becoming a burden on the federal government; let’s talk about mining and the important role the industry has had in Alaska for more than one hundred years and will continue to have for decades to come.

Alaska has a very rich history in mining, but currently only has six large producing mines. If it were its own country, Alaska would rank in the top ten for each of the following resources: coal, copper, lead, gold, zinc, and silver. Alaska’s minerals, much like the seafood it exports, are highly valuable and could be marketable around the world.

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Historic Cornerstone

Historically, mining has been a cornerstone of Alaska’s economy. Many roads, docks, and other infrastructure throughout Alaska were originally constructed to serve the mining industry. Major communities like Fairbanks, Juneau, and Nome were founded on mining activity.

Mining in Alaska covers all facets of the industry from exploration to mine development, production, and ultimately reclamation. The industry produces zinc, lead, copper, gold, silver, and coal, as well as construction minerals such as sand, gravel, and rock.

In addition to family wage jobs, mining creates public revenue by paying state and local taxes. Mines help support local economies in both urban and rural Alaska, and in some communities mining companies serve as the largest taxpayers.

Worldwide interest in Alaska’s mineral potential continues to increase, but overall investment in exploration is down. However, worldwide consumption of mined materials is not down and is only expected to increase with the continued demand for electronics, renewable energy components, and high-efficiency vehicles.

What many people don’t understand is the relationship between mining and renewable energy. Mining is critical to renewable energy products, providing many of the required elements for wind turbines, solar panels, and cars. The raw materials necessary are in the ground. If we are going to build infrastructure and renewables, we need mining.

There are many issues facing exploration and development, including access, high energy costs, federal and state policy, and the natural environment. The high cost of energy and the lack of energy sources available is an important challenge facing projects in Alaska.

Industry Connections

The health of the mining industry impacts Alaska’s other resource development industries. For example, oil and gas exploration and development needs mined materials such as copper, sand, and gravel.

The fishing industry consumes mined materials for vessels, mined resources for energy, and advanced technology built from mined materials to keep seafood cold to be transported all over the world.

Tourism relies on mined products for everything from infrastructure to the copper in a cell phone used for posting a beautiful Alaska photo on social media.

What remains of a once vibrant forestry industry still requires mined metals to responsibly harvest timber for products in a renewable industry.

These mined materials, which will be used to advance responsible resource development across Alaska and to build renewable energy products, are going to come from somewhere—why not here?

Alaska has a proven record of high standards in responsibly developing natural resources, protecting the environment, promoting jobs, and growing Alaska’s economy.

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Marleanna Hall is the Executive Director for the Resource Development Council for Alaska, Inc., a membershipfunded organization comprised of individuals and companies from Alaska’s oil and gas, mining, timber, fishing, forestry, and tourism industries, as well as all twelve land-owning Alaska Native Regional Corporations. For more information visit akrdc.org.

Alaska Business Monthly | November 2016 www.akbizmag.com

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The Alaska Commercial Fishing Fleet

Photo courtesy of Cole Rehder

SPECIAL SECTION

Natural Resources

Thousands ply the sea for abundant fisheries

By Tom Anderson

T

he heart of the Alaska fishing industry, and the backbone of its success, has always been the fishermen and their vessels. The enormity of Alaska’s commercial fishing fleet is indicative of the trade’s vital importance to communities across the state as an economic lifeline for thousands of workers who choose the sea as their workplace.

Just how big is big and who’s in charge?

Alaska’s commercial fleet is sizable. As of September 2016, there were 9,350 vessels registered with the Alaska Department of Fish & Game (ADF&G). The registration areas spread from Southeast to the Alaska Peninsula and Aleutians to the Yukon River, including fish-rich waters like Prince William Sound, Kodiak, Chignik, Bristol Bay, Cook Inlet, and the Bering Sea. The lifespan of vessels registered with the state encompasses a huge range, with some of the oldest vessels dating back to 1907 and 1912. Add to the equation the varied kinds of commercial fishing boats: From purse seiner to gillnetter, troller to longliner, and certainly the crabbers, the industry’s array of vessels is multi-faceted.

The sentinel of Alaska’s commercial fishing waters, along with several other federal governing bodies, is predominantly ADF&G. Forrest Bowers, the Deputy Director of ADF&G’s Division of Commercial Fisheries, is a former Alaska commercial fisherman who understands the layers and nuances of the industry. ADF&G works integrally in oversight with the National Marine Fisheries, International Halibut Commission, North Pacific Fisheries Management Council, Board of Fisheries and Limited Entry Commission.

ADF&G monitors the collective of commercial vessels through owner self-reporting and licensure. An online spreadsheet is maintained in real time, delineating a vessel’s 80

The Kustatan coming into Homer harbor with halibut.

name, owner, home port city, identification number through ADF&G, year built, length, weight in gross and net tons, horsepower, holding tank, fuel capacity, and type of vessel.

“One of the important tools we have in fishery management is the ability to track efforts,” notes Bowers. “The number of licensed vessels is an indicator of effort. When managing fisheries during the season it’s critical to know the fishing power of the fleet and when the quota threshold is met.”

Commercial fisherman have to be aware of the multiple levels of oversight and compliance, which include different gear types or fishing hooks and nets used. It can get complex. The Board of Fisheries has a vessel size limit for some fisheries, and for the salmon fisheries there are gill net limits for drift gillnetters and statewide purse seine vessel limitations which can bleed into fisheries for Pacific cod fisheries that state manages—as well as some crab fisheries in the Gulf of Alaska that can exclude larger vessels that may be more competitive and owned by fisherman that don’t reside in local communities.

Bowers indicates the Ground Fish fishery is the largest fishery in the state by volume and per federal management. The Bering Sea Pollock fishery, which is the largest single-species fishery in the world in terms of volume, generates a large tax revenue split with state and municipalities like Unalaska, Akutan, and Kodiak. The next largest fishery managed by the state in this category is Pacific cod. Add in Bering Sea and Gulf of Alaska rock and flat fish—and halibut—and the species, regions, range of vessels, and licensure data management becomes extensive.

The Lure of Prince William Sound

In the coastal community of Cordova, Thea Thomas has been fishing Alaskan waters since 1980.

Thomas began salmon seining in Cor-

dova in 1986 from June to late August. By 1987 she had enough income to launch in salmon gillnetting and purchased a twenty-six-foot bow picker, focusing on the sockeye (red) salmon laden Copper River.

The mainstay in this fishery remains salmon gillnetting. Ten years ago she ordered a thirty-two-foot diesel run, fiberglass-hulled boat, christened the Myrmidon. Her season begins May 15 and is the first salmon fishery in the state. All eyes are on the Copper River sockeye fishery, with news media covering the first salmon being delivered on Alaska Airlines to Seattle.

After the opening is announced, she heads out to the various locations along the sixty-mile wide Copper River and begins her strategy. When the salmon are at their prime, Thomas harvests them, including bleeding and icing on board as soon as caught. Once she’s at capacity she delivers to a tender at sea so she can keep her net out and not break from fishing. She works alone, without a crew, and collects her fish ticket from the processor who transfers to ADF&G to help determine strength of run, strength of harvest, and when fishermen can catch more salmon.

Thomas is active and helped found the Copper River/Prince William Sound Marketing Association. It has about 540 drift and set gillnet salmon fishermen members.

Christa Hoover, executive director, says each of the Association’s members is a small boat, family-owned business which ranged from first generation to fourth generation operations. “Our members live in Cordova, Homer, Seward, Juneau, Palmer, Wasilla, Anchorage, and beyond,” she says, adding that in Cordova, there are 619 residents directly employed in commercial fisheries according to the McDowell Group in a June 2015 report for the Alaska Salmon Alliance.

Thomas says Prince William Sound has long seasons that extend from mid-

Alaska Business Monthly | November 2016 www.akbizmag.com

Catching Records in Bristol Bay

Everett Thompson knows his fish and his politics. He’s the kind of commercial fisherman who stays active in every nuance of the regulation and statutes that affect his trade. As a Naknek resident, Thompson’s world revolves around an industry that is magnified in notability because Bristol Bay carries the largest wild sockeye salmon fishery in the world.

Thompson is finishing his term on the board of the Bristol Bay Fisherman’s Association, which has been representing commercial fisherman in the region for more than fifty years. He also serves on the ADF&G Advisory Committee for NaknekKvichak’s Salmon District.

Thompson started fishing when he was seven years old and this year is his 33rd season. He’s been a permit holder since 1987, never having missed a year of fishing, and for nineteen years has been drifting for salmon.

For thirteen years he had one of the oldest boats in the Bay, built in 1970 and called the Chulyen, which means “raven” in Athabascan. He currently works with his thirty-twofoot Northern Flyer double-jet aluminum boat, built by Gregor Boat Company and upgraded with a refrigerated seawater system.

The schedule for Thompson in Bristol Bay includes April and May preparing vessel and crew. The Northern Flyer enters the water June 10 and stays there until the end of July.

It takes a tractor and trailer to put into the water and remove, $300 each way. The Bristol Bay area is divided into five management districts (Naknek-Kvichak, Egegik, Ugashik, Nushagak, and Togiak) connecting to the major river drainages. Thompson typically fishes Egegik and Naknek-Kvichak, but during one long season he worked all districts.

Thompson’s crew size includes three other commercial fishermen. Weather doesn’t matter, and for the most part he endures the waves and catches the fish because so much is riding on a season financially. The crew lives, eats, and sleeps on the boat until it’s put back on blocks. Notified by ADF&G through KDLG Dillingham public radio and state website messaging, the crew and vessel move into action as soon as escapewww.akbizmag.com

ment is reached and enough salmon are in the rivers to spawn. The fishing openings range from four to twelve hours or more.

How about profits? “It’s a respectable, hardworking business, but often fisherman are not rewarded as much as they should be for their catch with ex-vessel prices,” laments Thompson. He and his fellow industry members wish the processors gave the price per pound before fishing season starts—but they don’t and haven’t since before the Limited Entry rules were enacted.

“When we’re done with the season we find out the price,” he adds.

In 2016 it was a great year for Bristol Bay fishermen in the amount of poundage of

salmon caught, but the price was only $0.75 per pound. Thompson recalled when he was thirteen years old the price was $2.50 per pound. In 2015, just one year ago, it was only $0.50. The average catch is in the 165,000 pounds range on any given season, while incentives are offered for keeping fish refrigerated below 38 degrees ($0.15 per pound), bleeding the fish ($0.05 per pound), and keep them floating in the refrigerated seawater ($0.05 per pound).

Thompson respects the pristine water and streams—a fishery that’s been ongoing for 140 years. “As fisherman we’re also stewards of the resource and tasked with protecting it for both subsistence and economic value,” he says.

We are...

artists.

We are many things, but tobacco does not define us. It’s a fact. Over half of Alaska Native adults don’t use tobacco.

For more resources on building a healthy life, visit ANTHC.org/WeAre November 2016 | Alaska Business Monthly

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NATURAL RESOURCES SPECIAL SECTION

May to mid-September, averaging two to three openers per week. But don’t forget the expenses. A boat costs approximately $200,000, and permits are in the $175,000 range, and then annual expenses include fuel, nets, equipment, food, and insurance.

The average revenue for the Prince William Sound fleet in 2016 may be as low as $75,000.

In 2015 it was in the $100,000 range. The reason for the lower price this year, she adds, is that the salmon run in Bristol Bay was so strong it put more salmon on the market and reduced the price in total.

NATURAL RESOURCES SPECIAL SECTION

Fishing the Mighty Yukon

Commercial fishermen are not just working Alaskan’s oceans. Add rivers to the list of salmon treasure troves.

John Lamont is a second-generation commercial gillnetter who grew up in Lamont’s Slough, named after his father John “Jack” Lamont, at the mouth of the Yukon River.

Jack Lamont started one of the first salmon processing plants (Saltry and Cold Smoker) on the river and genetics ruled the day with his son. The younger Lamont, now sixty, began commercial fishing at the ripe age of nine years old, buying a vessel, gear, and fishing license in 1965. He ultimately built his own camp at the southern mouth of the Yukon River, between Alakanuk and Emmonak.

As a Yupik, Lamont savors his culture and fondly recalls the traditional commercial chinook “king” salmon fishery he enjoyed, which ended because of the Pacific Salmon Treaty’s Yukon Salmon Agreement between Canada and the United States regarding access by chinooks to the spawning grounds in the Yukon Territory and British Columbia. The Treaty was an effort between the United States and Canada to sets limits and allowable harvests of salmon to prevent depletion in one nation during singular migration routes. The effect on fisherman at the mouth of the Yukon was costly.

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Lamont was never idle because of regulatory change. Throughout the State’s statutory and regulation evolution with the industry he persevered, starting with a seventeen-foot wooden skiff and fifteen horsepower Johnson outboard motor. In the early 1980s he built an eighteen-foot wooden skiff.

In 1987 he bought his first aluminum boat.

By 2001 he bought a state-of-the-art twentyfoot aluminum skiff manufactured in Emmonak by Yukon Marine Manufacturing, which is owned by the Yukon Delta Fisheries Development Association.

Openers to alert the local Yukon fisherman to start their engines and catch salmon comes via VHF marine radio announcements, local radio in Bethel on KYUK, in Nome on KNOM and KICY, or direct to a smartphone text when coverage is accessible. Lamont drifts with his gillnet using a fifty-fathom (three-hundred-foot) net for summer and fall chum and coho salmon.

In ten to fifteen feet of water he can harvest 250 to 400 chums in a twelve-hour opening, depending on the run. Old military landing crafts are used as tenders where the fish can be offloaded for delivery to a processor.

Kwik’pak Fisheries, LLC, also owned by the Yukon Delta Fisheries Development Association, is based in Emmonak, the economic hub for processing and market in that area.

“Coho season ends September 10, and then it’s the whitefish for some; up to twenty thousand pounds can be commercially harvested,” Lamont says. “I make sure my boat, fishing gear, and other necessary equipment are up to speed and prepared for the next year’s season and run of salmon: twelve to fifteen communities, four hundred to five hundred commercial fishers in our region, community members, and consumers are depending on it.”

Here, There, Everywhere

Ultimately, the commercial fishing industry, from its vessels to its communities, thrives because of the heart of the people who take the risk.

Debbie Rehder grew up with a fishing net in her hand while drifting, long-lining, and crabbing with her father, Ted Rozak. Debbie, a chip off the block, would later meet her best friend and husband, commercial fisherman Charlie Rehder. A tag team was born of formidable fishing prowess.

Charlie started fishing in high school while living in Homer. He had a trucking business in the summer and during the winter months sought crab in Cook Inlet and Kachemak Bay on The Big Valley.

The Rehders’ current vessel is the onehundred-foot steel hulled Kustatan.

Alaska Business Monthly | November 2016 www.akbizmag.com

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

NATURAL RESOURCES SPECIAL SECTION

Their fishing “season” never seems to end. Typically after Christmas, in January, the Kustatan heads from Homer south to Dutch Harbor over a four-day, often rough, trip. Their reward for the journey comes in the form of Opilio “snow” and Bairdi “Tanner” crab in the Bering Sea by St. Paul Island. This crustaceous endeavor’s ending date depends on the season and ice; some years they can’t finish until late May. After crab season, it’s back to Homer and possibly Pacific cod fishing, if the federal or state season is still open.

From April to May they tender herring in Togiak. When the summer comes the Kustatan becomes a tender for local fishermen’s hauls. The process includes special refrigeration, and then the harvests are transported to canneries like Icicle Seafoods with plants in Seward, Homer, on the Kasilof River, and also in Bristol Bay, the Rehders say.

By mid-June there is a switch back to tendering salmon, and the crew and vessel head to Bristol Bay until directed to return to Cook Inlet or Prince William Sound.

They tender until the end of August. By mid-September the boat fishes for its halibut in the IFQ (individual fishing quota) fishery. “Since the initial IFQ allocations, the total allowable catch has diminished by nearly 70 percent,” says Debbie.

Crab fisheries start on October 15 for king crab. “It used to be a November opening, and over three hundred boats would rush to their sweet spots with forty-eight hours in a derby-style fishery, before IFQs were implemented in 2005,” adds Charlie.

Commercial fishing isn’t an easy lifestyle, but the Rehders appreciate the opportunity and value the camaraderie.

Charlie admits the “Witch of November” (October to March) in the Bering Sea is not always welcomed. The 2015 season brought one memorable storm with 150 mile-perhour gusts that shook the wheelhouse and sucked air out. He adds that income varies year to year, and the economy of the industry is based on the amount of crab brought in, in conjunction with IFQs and one’s catch history.

“It’s worth it, at the end of the day,” says Debbie. “Our family is a commercial fishing family, working across the state and on many of its waters. We’re proud and supportive of our industry. We know it matters to Alaska, and to our community in Homer, and there’s no more rewarding feeling than that.”

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ENVIRONMENTAL GROUPS USE THE NORTH SLOPE AS A FUNDRAISING TOOL.

Tell the environmental groups to stop jeopardizing our subsistence resources for their own financial gain.

OUR VOICE. OUR VISION.

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November 2016 | Alaska Business Monthly

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Photo courtesy of Alaska Glacier Seafoods

SPECIAL SECTION

Natural Resources

Workers from Alaska Glacier Seafoods load live king crab into fish totes. The crab will travel alive all the way to their final destinations in British Columbia, Washington, and California. Live crab fetches a hefty premium at market.

Shipping Live Crab from Alaska A risky business with logistical challenges

By Will Swagel

H

omemade sandwich signs stating “Live Crab for Sale” and directing those interested to a certain docked fishing boat are a common sight in communities on the Gulf of Alaska. Indeed, in communities all the way down the West Coast to San Francisco Bay and even farther south, live crab is sold at the docks.

During the season, lucky coastal residents can easily buy the freshest crab possible.

Inland residents have a tougher time.

Some retail stores and restaurants have salt water-filled tanks that can keep the crab alive for days, but most don’t. Even kept moist and at low temperatures, only the 84

very strongest crab can survive twenty-four hours out of water. A less robust crab might last fourteen hours or even less.

To get crab from Alaska fishing boats to buyers is a logistics challenge and a tense one that requires constant monitoring. Live crab is often flown at night, sometimes on air freighters chartered for the occasion.

“I can’t tell you all the nights we stayed up babysitting crab,” says Mike Erickson, president of Alaska Glacier Seafoods, a medium-sized fish processor located in Juneau. “There’s a lot of things that could go wrong and only one thing that can go right, and that’s the crab getting there healthy.”

Lion’s Share of King Crab

Alaska Glacier processes nearly every type of Alaska seafood, fresh and frozen, portioned or not. About seventy people work at the plant year-round and up to two hundred in summer. The family-owned company specializes in fresh product, Erickson says, which is facilitated by Juneau’s robust airlift capability.

The company also specializes in supplying live king crab to eager buyers in the Lower 48, using expertise gained over two decades or more. Erickson says his company does not ship live Dungeness crab because of warmer air and surface water temperatures during the bulk of the Dungeness season, which falls during summer.

The king crab supply has been reduced in the past few years, but five years ago business was booming.

“We were once told we were the biggest live shipping exporter in the state of Alaska,” Erickson says. “Five or six years ago, we were buying half the quota [of golden king crab]. It was very common for us to charter a 737 and load it up with live crab.

That was a weekly activity for us.

“So the production we’re doing now is a fraction of what we were doing five or seven years ago,” he says.

Erickson is aware of the up-and-down nature of seafood harvests, but notes— with a caveat for the unknown effects of

Alaska Business Monthly | November 2016 www.akbizmag.com

“The logistical challenge of getting live crab to market has been a major stumbling block that has limited who has access to that market.”

—Tyson Fick Spokesman Alaska Seafood Marketing Institute

ply comes from the Lower 48—the waters off Puget Sound to the waters off central California. The crab go into one of Happy Crab’s twelve salt water holding tanks.

Alaska-sourced Dungeness occupy only a small fraction of Haber’s production.

One of his Alaska suppliers is Peter Ord, a halibut and crab fisherman from Juneau.

Ord and Haber have been doing business together for more than twenty years and each speaks highly of the other’s expertise.

Ord is a catcher/exporter and does not process the Dungeness crabs nor the halibut he catches. Dungeness season runs from mid-June to mid-August and then again in October and November. Ord has a permit which allows him to deploy up to three hundred pots at a time from his thirtyseven-foot boat. When he hauls the pots up,

he takes only the legal size males, which he places in a tank with circulating seawater.

The rest of the crab go back into the ocean.

Most of the crab Ord keeps weigh between two and two-and-a-half pounds each. In his best years Ord’s catch approaches forty thousand crab. In a slow year, he might get fifteen thousand crab.

Some of Ord’s crab and all of his halibut is processed by Alaska Glacier Seafoods; nearly all the rest of his crab goes to Happy Crab. Ord’s crab travels on dedicated flights in the middle of the night, usually on designated cargo planes.

In Seattle, Ord’s crab are loaded into trucks, whisked to Portland, and put into one of Happy Crab’s tanks, where they recover from their trip. “[For] a lot of the big processors, live shipping—at least in Alaska—is problematic and risky,” Ord says.

“It’s always been on the radar,” says Alaska Seafood Marketing Institute’s Fick.

“You see those massive markets when it works right. There’s been a lot of interest but that fades when the complexity and risks are revealed.”

R Author and journalist Will Swagel writes from Sitka.

A Long Coastal Bounty

In Portland, Oregon, Joe Haber was pleased to hear that Cathay Pacific Airlines had planned to begin flying non-stop from Portland to China this fall. For more than twenty years, Haber and his wife have operated Happy Crab, a small processor specializing in live Dungeness crab and fresh crab meat. They sell to distributors who may then resell the crab around the country. They also sell directly to some retailers and restaurants. Many of Happy Crab’s suppliers and customers have been doing business with them for a decade or more.

“We’re small players in a boutique shop,” Haber says.

Dungeness crab are caught in Southeast Alaska, but the bulk of Haber’s supwww.akbizmag.com

November 2016 | Alaska Business Monthly

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NATURAL RESOURCES SPECIAL SECTION

climate change—that he is confident the crab harvest will improve.

The lion’s share of Alaska Glacier’s live crab ends up in Vancouver, British Columbia, Canada, which has a high proportion of residents of East Asian ethnicity, notably a large number of people of Chinese ancestry. Erickson says the appetite for his crab is even greater in Vancouver than in San Francisco, which also has a large population of Asian descent. Erickson estimates that 80 percent of his crab goes to Vancouver and 20 percent to California.

Vancouver is a three-hour drive from Seattle, so Vancouver buyers can transfer the crab in the same fish totes they flew in, iced and with dampened paper used to keep the crabs’ gills from drying out. To make the longer trip to California, buyers transport Erickson’s crab in salt-water filled totes. In trucks equipped with live tanks aerated to the proper levels, the crab can live for up to three days. Some fortunate Seattle buyers can have their crab into tanks within two hours of landing at Sea-Tac. By all accounts, the potential market in live Alaska crab—if it could be more easily shipped to China—could be stupendous.

Seafood processors are generally a closedmouth bunch when it comes to the prices they pay fishermen and receive from buyers.

But sources for this article confirm there is a hefty premium for delivering the crab alive.

Tyson Fick, a longtime spokesman for the Alaska Seafood Marketing Institute, says there has been talk over the years of building a crab landing port at Cold Bay or another Aleutian port to facilitate shipping to cities in China.

“The logistical challenge of getting live crab to market has been a major stumbling block that has limited who has access to that market,” Fick says.

Besides the high cost of building infrastructure for the crab port, he says, shippers fear the uncertain Aleutian weather could ground planes for days at a time.

SPECIAL SECTION

Natural Resources

Alaska Timber Industry Needs Increased Tongass Harvest Federal policies and politics have abolished large scale logging and manufacturing

By Owen J. Graham

A

laska’s timber industry varies greatly by region within the state and there is great potential for growth of the industry. There are roughly 126 million forested acres in Alaska, but only about 14 million acres support fast-growing commercial timber. This is about the same acreage of commercial timberland in Florida, Louisiana, and Tennessee. However, those similar size forests support thirty-six thousand, twenty-three thousand, and forty thousand jobs respectively, according to the 2002 American Forest & Paper Association State Economic Brochures. Alaska’s commercial forest currently supports only about one thousand jobs statewide.

Interior Region

The Interior region has millions of acres of both hardwood and softwood timber, but much of the timber is isolated and costly to access. There are a number of small, stable sawmills in the region and there is a significant amount of timber cut for fuelwood.

There is also a facility manufacturing wood pellets and compressed fuel logs in Fairbanks, but due to low oil prices, the pellet side of the operation is currently idle due to a large inventory of pellets. Residential space heating customers can switch back and forth between their pellet stove and oil furnaces and do so regularly based on the price per BTU; they go with the cheapest fuel option. Despite low oil prices biomass energy is still a good choice for many, especially remote communities. There are numerous communities heating public buildings, such as schools. These commercial scale biomass units use wood chips or solid wood as their fuel source.

The Tok region continues to make investments in manufacturing infrastructure. For instance, Young’s Timber Inc. has recently installed a new sawmill and is in the process of adding both a compressed log line and a wood pellet mill. This project is being done in phases, but it is one of the few areas in the 86

state where private financing is upgrading or building new wood manufacturing facilities.

In part, this is because of the stable wood supply from the surrounding Tanana Valley State Forest and longer term timber sale contracts between the company and the Division of Forestry. The Interior forest products industry is modest, but individual companies and entrepreneurs continue to find markets and grow their forest-based businesses.

Southcentral Region

The Southcentral region has better access to its timberlands than the Interior region and the coastal areas have high volumes of fast growing softwoods. These coastal areas support a significant log export business, and the inland areas have a number of small sawmills operating.

The nation’s second largest national forest, the Chugach, is in this region, and the commercial timberland in the Chugach National Forest could support up to 16 million board feet of harvest annually. Since 2002 there has been almost no timber harvesting from this forest, but recently the agency has resumed selling a few small timber sales.

These timber sales are a welcome addition to the Southcentral regional timber supply.

There is a mixed land ownership pattern within the rural areas around the Mat-Su Borough. This creates the potential for conflict between residents and logging operations. The lack of access to a reliable supply of larger sawlogs in this region has kept the sawmill industry from flourishing; however, there may be an opportunity for a much better timber supply if the state timber resources in the Susitna and other areas can be accessed. An effort to establish a new state forest in this region stalled out in the 2013/14 Legislature despite widespread support from the industry and communities.

A secure and stable land base is necessary for the industry to grow in this region and we are hopeful that this initiative and other efforts to improve the timber supply in Southcentral will be revisited in the near future.

Southeast Region

About 90 percent of the commercial timber in the Southeast region is managed by the federal government; however, the amount of timber available to the industry from the Tongass National Forest has steadily declined over the last twenty-five years. The timber industry, which was once the largest employer in the state, has declined along with the timber supply and now represents less than 4 percent of the employment in the Southeast region. The state and private landowners manage only about 10 percent of the timberland in this region, but they are providing two-thirds of the timber supply. Currently there is only a single midsize sawmill still operating in the Southeast region along with a handful of much smaller sawmills.

Large scale logging and manufacturing on the Tongass began in 1954. Prior to that date, the timber industry in the region was limited to a few small family owned sawmills that produced lumber primarily for local markets-canneries, docks, etc. From 1954 until 1997 there were two pulp mills in the region that utilized low-grade logs and chips from local sawmills to manufacture dissolving pulp which was shipped to over thirty countries around the world. By 2000, the decline in federal timber sales resulted in the closure of the pulp mills and several sawmills in the region. As the decline in federal timber sales continued, the last of the Ketchikan sawmills and veneer plant closed as did a large sawmill in Wrangell.

Uncertain Future for the Timber Industry in Southeast Alaska Congress has set aside about half of the commercial timberland within the Tongass National Forest for wilderness, national monuments, and other non-development uses. The half that Congress did not lock up would, according to the US Forest Service, sustain about 2 billion board feet of timber harvest annually. The timber industry needs less than 20 percent of that 2 billion board feet (roughly 300 million to 350 million board feet annually) to restore a viable, fully integrated manufacturing industry, but bureaucrats in Washington, DC, have directed the federal agency to limit the timber supply in Alaska for the next ten to fifteen years to less than 3 percent of the 2 billion board foot potential.

In addition to further restricting the volume of timber from the Tongass National Forest, the Forest Service has been directed to implement a Transition Framework that

Alaska Business Monthly | November 2016 www.akbizmag.com

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State Timber Task Force

In 2011, the State of Alaska assembled a Timber Task Force to recommend actions state government could take to revitalize the timber industry. In 2012 the Task Force completed its work.

Task Force Findings:

The downward spiral of the Southeast timber industry has adversely affected communities, schools, and local economies.

Federal policies and management practices fail to provide sufficient timber supply for Southeast’s timber industry.

The current US Department of Agriculture “Transition Framework” and associated “Investment Strategy” being implemented across the Tongass National Forest abandons traditional timber sales in favor of young growth harvest and restoration activities, which is to date, a failed alternative for sustaining Southeast communities.

Environmental groups have exerted undue influence over US Forest Service policy and direction related to forest management on national forests in Alaska.

Task Force Recommendations:

 Increased access and expansion of legislatively-designated state forests.

 Review the State of Alaska timber harvesting statutes and regulations to insure these regulations are effective but do not unnecessarily constrain resource development.  Pursue withdrawal of 2 million acres from the Tongass National Forest from federal management and/or ownership to support an integrated timber industry.  Work jointly with other states/entities seeking change in the management of federal lands. Possible changes include the concepts of “trust” or state management of federal lands, the transfer of federal lands into state ownership, adjustments to the Alaska Statehood Act by Congress, and measures to force the agencies, primarily the US Forest Service, to increase timber harvest.  Support finalization of Sealaska’s outstanding land entitlements, Alaska Mental Health Trust’s administrative land exchange with the US Forest Service, and settlement of land entitlements for the unrecognized Southeast Alaska Native Communities.  Assist with timber demand and supply analyses.

 Assist with additional wood products development.

Bottom Line

The timber supply in the northern regions of the state has been increasing slowly, but the ongoing reduction in timber supply from the Tongass National Forest has forced the closure of most of the timber businesses in Southeast Alaska and the political decision to limit future timber sales to immature young growth trees will worsen the situation. The transition to young growth harvesting has always been the plan for the Alaska timber industry, but it cannot happen until there is sufficient, mature young growth timber to sustain a viable manufacturing industry.

The timberland harvested in the 1950s will be mature and large enough to be sawn into high value products in about thirty years.

That is when the transition should begin and the transition will not be complete until there is sufficient young growth acreage to support an economy of scale adequate to sustain a viable, fully integrated timber manufacturing industry.

R Owen J. Graham has been the Executive Director of Alaska Forest Association since June of 2001. The Alaska Forest Association is a trade association that was formed in 1957.

Alaska Forest Association’s activities are directly related to the viability of the forest products industry in Alaska. Its resources are committed to advancing the restoration, promotion, and maintenance of a healthy, viable forest products industry in Alaska.

The Association also maintains a health insurance plan and a pension plan for its members and the Association sponsors the Sustainable Forestry Initiative Program for Alaska.

Graham has a degree in Forest Management from the University of Washington. Prior to his employment with the Alaska Forest Association, Graham was the Timber Division Manager for Ketchikan Pulp Company for fifteen years. Prior to 1986, he worked for thirteen years as a forester and logging engineer in Alaska and Washington state.

Graham’s experience includes supervising the harvesting, purchasing, and selling of timber as well as managing logging and road construction activities. Early in his career, his duties included logging road survey and design, road construction foreman, timber cruiser, and land surveyor.

November 2016 | Alaska Business Monthly

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would prematurely limit most future timber harvesting to young growth stands.

If this early transition mandate is not rescinded, it will force the closure of most of the remaining sawmills in Southeast because the oldest young growth timber in the region is only about sixty years old and will not be mature for at least another thirty years. At the current age, the trees are too small for the manufacture of anything other than the lowest value lumber.

Since Southeast Alaska sawmills must barge their lumber some eight hundred miles to the Pacific Northwest, the mills would be at a significant economic disadvantage to much larger sawmills located within the Pacific Northwest that produce the same low value lumber. Currently, in order to compensate for the higher cost of shipping lumber from Alaska, the local mills produce higher value lumber products like piano and guitar stock from spruce logs; doors, windows, and molding from hemlock logs; and gazebo stock and other finished wood for Cape Cod-style homes from cedar logs. These are high-value products, but they cannot be sawn from small diameter, young growth logs.

In addition to the small diameter of the current young growth timber, the volume of timber per acre in the older young growth stands is currently less than half of what it will be a maturity. Harvesting these small trees now will result in exacerbating the industry’s competitive disadvantage— the Southeast Alaska sawmills would have to harvest more than double the acres of land to get the same volume of timber as their competitors in the Pacific Northwest.

The lack of a sufficient economy of scale is yet another major disadvantage for the timber industry in any of Alaska’s regions.

In Southeast Alaska the industry was once comprised of pulp mills and sawmills and even a veneer plant that we hoped would develop into a plywood facility. Sawing lumber from round logs results in a lot of chips, sawdust, planer shavings, and bark.

These residuals represent as much as 40 percent of the fiber in the logs. In the Pacific Northwest, all these sawmill residuals are utilized in pulp mills, fiberboard plants, and other integrated facilities. The current small amount of timber harvest in Southeast Alaska will not generate sufficient residuals to support these integrated manufacturing facilities. The only way to restore a viable timber manufacturing industry in Southeast Alaska is to increase the supply of timber from a portion of the Tongass National Forest because the state and private landowners are already managing their lands to maximize their sustainable timber supply.

SPECIAL SECTION

Natural Resources

Visitors to Christmas in Ice enjoy Elf’s Icy Playground at North Pole, Alaska.

Photo by Bear Alaska Photography / Courtesy of Christmas in Ice

Winter Tourism Expands Visitors captivated with Interior offerings

By Julie Stricker

R

onn and Marketa Murray spend Interior Alaska’s winter months savoring the long, dark nights.

“We’re basically vampires half the year,” Ronn Murray says. It’s a lifestyle they’ve chosen and that brought them many rewards.

They sleep all day so they can take clients out after dark in search of the aurora borealis.

“What we do is take people out and teach them how to photograph the northern lights, first and foremost,” Ronn Murray says. He also takes portraits of people with the lights dancing in the background and talks about the science behind the lights “to give them a nice, broad education on what they’re seeing.”

Their business, The Aurora Chasers, is a recent addition to Fairbanks’ winter tourism offerings. Although the Murrays have been photographing the aurora since 2008, the pieces have all come together in just the past couple of years, a period that has seen phenomenal growth in winter tourism as a whole in Fairbanks.

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Changed Perception

For decades, the general perception of winter in Alaska is of bitter cold, long dark nights, and cabin fever. Gradually, however, winter also began to conjure images of the northern lights, dog sled adventures, and ice sculptures, images that are being spread far and wide by social media and the efforts of tourism organizations such as Explore Fairbanks.

“The perception of winter in Fairbanks has changed dramatically,” says Amy Geiger with Explore Fairbanks. “Aurora viewing got a bit of a boost when Lonely Planet named us No. 2 as an aurora viewing destination. We really are sort of becoming synonymous with the aurora.”

Now, visitors can choose from a variety of aurora watching lodges and destinations such as Chena Hot Springs Resort.

Businesses, such as the Murrays’ Aurora Chasers, focus on expert photography and a deep knowledge of the subject. Technology helps, too.

“It’s easier to [photograph the aurora] with a digital camera than it was to grab an image with film, and with social media you can share it immediately,” Murray says.

“I think the world just became awake and aware of the northern lights.”

Some businesses also offer visitors a chance to view the aurora from the back of a dogsled. Kennels that offer sled dog rides ranging from a couple of hours to a couple of days are proliferating. Visitors also can learn to carve ice, go ice fishing, ski, or take a guided trip to the Arctic Circle.

Aurora Season

Deb Hickok, president and CEO of Explore Fairbanks, says the organization began to focus on winter as a distinct tourist attraction about fifteen years ago.

“We actually say we have three seasons,” Hickok says. “We have summer—midnight sun—and we have winter and then we have aurora season, which sort of straddles both.”

Although the aurora can be active any time of the year, it’s not visible in Fairbanks during the summer because it’s light all night for nearly four months. But when the skies darken about the third week of August, the tourists start flocking in.

It’s difficult to quantify the growth in winter tourism numerically, Hickok says, but even taking into account there are fewer rooms available in the winter and prices are generally lower than summer, bed taxes are rising steadily.

“March is the most popular month,” she says. Weather in March is generally mild and Fairbanks is host to sled dog races, the Ice Alaska Ice Park, and, in 2016, a major Arctic

Alaska Business Monthly | November 2016 www.akbizmag.com

NATURAL RESOURCES SPECIAL SECTION

science convention was held in Fairbanks.

“We were booked that week,” Hickok says.

“That’s the first time that’s happened that I can recollect in my seventeen years here.”

Mushing Transformation

One trend Hickok has noticed is an uptick in the numbers of mushers that are dipping into the tourism sector.

“We’ve seen a transformation,” she says.

“We’ve also seen some businesses that were summer only are now year-round.”

For instance, Trail Breakers Kennel, a popular summer stop on the Riverboat Discovery cruises established by Yukon Quest International Sled Dog Race champion David Monson and four-time Iditarod champion Susan Butcher, just started staying open year-round.

Other kennels offering sled dog rides, many of which are homegrown mom-andpop operations, have sprung up all over the Interior.

Anita Fowler, owner of Sirius Sled Dogs outside of Fairbanks, prefers to keep her operations small and intimate. She started coming to Alaska when she lived in North Carolina and fell in love with sled dogs while visiting the kennel of Mary Shields, the first woman to finish the Iditarod.

“I just decided after I had learned about sled dogs and been out mushing with Mary: I wanted to move up to Alaska and own sled dogs,” she says.

“The plan was to try and do tours to feed my dogs because I really wanted a dog team,” she says.

She takes up to four clients a night for a sled dog run to view the aurora. She also hosts a popular aurora-viewing webcam, (siriussleddogs.net/aurora-web-cam.html) that doubles as advertising. Not that she’s interested in growing too much.

“I’m as busy as I want to be,” she says.

“I’ve been able to buy dog food. That’s my goal. I’m not in the business to have another big business. I just want a small business to share my love of Alaska with the people who visit, and they help buy my dog food.”

Even as she keeps her tours personal and low-key, Fowler says she has definitely seen an uptick in demand.

“By the middle of January, I’ll be totally booked for February and March,” she says.

International Visitors

Winter tourism is bringing visitors from all over the world, but a large block is flying in via charter flights from Japan and, more recently, China.

“The cool thing is we’re getting some Chinese charters, and we’re still getting high interest from our Japanese charters,” Hickok says. www.akbizmag.com

November 2016 | Alaska Business Monthly

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Increased Aurora Interest

Murray says he noticed more people becoming interested in the aurora several years ago. While working for another aurora company that wasn’t photographybased, he and Marketa found the opportunity to fill that niche.

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© The Aurora Chasers

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In the 2016 fall season, Japanese tourists flocked to Fairbanks via three airlines: All Nippon Airlines, Japan Airlines, and Uzbekistan Airways.

“Then we’ll see direct flights from Taipei via China Airlines,” she says. “We’ll have two charter flights from Taipei.”

In addition to the charters, Hickok says more foreign visitors are entering Alaska on domestic flights.

“Both Delta and Alaska [Airlines] have great connections to Asian markets through Seattle and LAX,” she says. “Alaska [Airlines] has really worked on building its code-share partners.”

Explore Fairbanks’ Scott McCrea regularly visits China to promote Alaska tourism.

“One thing that is important to note is that China travel to the United States is a recent trend over the last three years, thanks in part to changes in the visa requirements,” he says via email. A Chinese visitor’s visa used to be good only for one year, but that has been extended to ten years. “Combine that with a strong economy and a growth in the middle class, not to mention a population of 1.2 billion people, and it’s easy to see why the United States is excited about the potential for this market.”

Most Chinese visitors to the United States choose a destination such as Los Angeles, Los Vegas, or New York for their first visit, McCrea says.

“Once they have done that, they want to try something different for their next trip, and Alaska fits that bill. Cruises in the summer are popular with the China market, but viewing the aurora is right up there, and that’s why Fairbanks stands to benefit.”

Fairbanks has played host to scores of Japanese visitors over the past decade, but the cultural expectations of Chinese visitors is different, he says. Meeting with Chinese tour operators and travel agents is an educational process—for both parties.

McCrea says he tries to educate them what Interior Alaska offers as a destination, but he also tries to learn their expectations so he can pass them on to local businesses.

“Their interest in Fairbanks is almost entirely focused on the aurora borealis,” McCrea says. “I’ve found in my conversations with Chinese tour operators and travel agents, where there is a language barrier, as is often the case, the word ‘aurora’ sparks immediate interest.”

The Aurora Chasers, Ronn and Market Murray, have forty to fifty northern lights locations to take visitors.

They got a loan in 2013 for their first van and were off.

“We just kind of threw all of our eggs in one basket, which you should never do in a business,” Ronn Murray says. “Fortunately, it all worked out.”

The Murrays go out with clients six days a week. They travel to any of forty or fifty aurora viewing locations, depending on the weather and how crowded those locations are. “Favorite spots change,” he says. “We don’t give out information on our favorite spots. It’s kind of like your favorite fishing hole.”

Ronn says they are looking at hiring some experienced drivers and expanding to the point that they can run the business by day while the drivers take clients out at night. They spend the summers in Hawaii running photography workshops.

“It’s kind of nice to split it up between the best two states,” he says.

And while winter tourism is on the rise, Hickok says Explore Fairbanks still has a lot of work to do.

“It’s been about fifteen years that we’ve been working on winter,” Hickok says.

“We’ve a ways to go. We’re not there yet.

We’ll know we are when we can stop saying winter is important and just know it.” R Freelance journalist Julie Stricker lives near Fairbanks.

Alaska Business Monthly | November 2016 www.akbizmag.com

EET I N

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SPECIAL SECTION

Natural Resources

Alaska’s Road to Power from Power Generation

While this eight hundred ton, one-hundred-foot long transformer built by ABB is very large, it is very compact when compared to a similar facility built to convert AC to ultrahigh voltages. ŠPhoto: ABB

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Alaska Business Monthly | November 2016 www.akbizmag.com

By Darryl Jordan

M

embers of the State of Alaska’s Legislature Resource Committee got the bad news August 24 when their energy consultant reported, “The Alaska LNG Project, in its current form, is one of the least competitive natural gas fields vying for large multi-year contracts with Asian cities.” The options appear to be to put more cash into LNG, through more State ownership, or bring the cost of investment down.

These options will be discussed in Juneau, but the right answer is to look at new technology and value added. The new technology is Ultra High Voltage Direct Current (UVHDC) transmission and the value added is creating and shipping power rather than a condensed form of methane.

Forty years ago I took a class at MIT named Resource Allocation. It was a new requirement to the engineering curriculum, replacing Surveying as a required course for graduation. I was a little more than upset as my dad, Franklin Jordan, was an Alaskan surveyor in the Territory of Alaska and somehow the world minimized the profession in favor of the concept of Time Value of Money (TVM).

Dad spent time running through his yellow waterproof field book rechecking all the calculations at the kitchen table after work to ensure the cipher was correct. I was lucky in the sense that technology replaced the slide rule with a four-function calculator while I was at MIT and I learned engineering before 1980. This story is important as we need to remember that technological changes happen and we need to adapt overnight. The other thing to remember from my mentor, Dennis Nottingham, is that an engineer should solve the problem using $1 for every $2 used by the “other guy.”

A similar story is unfolding today in Alaska. Oil prices and oil production are down. Alaska has a huge reserve of methane gas at Prudhoe Bay and maybe the solution for the State of Alaska is to move that gas to tidewater and reap the reward. Alaska’s proven reserve of approximately 40 trillion cubic feet (cf) of gas might sell for $3 per thousand cf if it were at Henry’s Hub in Louisiana. A $120 billion prize, minus the cost of transport from the North Slope and production: neither the transport nor the production is inexpensive. Technology

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Time for LNG to be replaced by UHVDC in Alaska

NATURAL RESOURCES SPECIAL SECTION

and TVM will change the equation.

MIT forced its engineers into TVM to help them understand that the prize is not captured today, but over time. Time will erode that prize at a discount rate. Using a discount rate of 5 percent over thirty years, compounded annually, changes the prize to a PV of $77 billion in 2016 dollars. Against this prize, someone has to invest the costs of delivery to market. If that cost were $40 billion invested over five years with an expected return of 15 percent compounded annually, that investment becomes $80 billion and sums to a net negative investment.

This is vastly oversimplified economics and the results change with different rates, value of prize money, and importantly, the cost of transport.

Shipping Power

Before we discuss making the movement of gas to Southcentral Alaska or a gas pipeline network in Mid-Canada, we need to consider our experience with Cook Inlet gas. A trillion cubic feet of natural gas was found in the Inlet, and Southcentral needed power. The Chugach Electric engineers could have shipped gas to Anchorage to make power or build a plant on the edge of nowhere and ship power. We know the economics favored building the

power facilities in Beluga on top of the gas field and shipping power. The economics were simple. Build a huge gas line or build overhead power and subsea cables. The economics were so powerful that despite the need to build a new barge dock, camp, airfield, living quarters, and operating the IBEW crews on a rotation schedule, power was shipped instead of gas. That was the economics from fifty years ago. Those engineers spent $1 for every $2 used by a “ship gas” solution.

Skipping back to transport cost, economically one would rather ship oil versus gas, as a cubic foot of crude oil might deliver 100,000 BTU/hour. Methane gas only delivers 1,000 BTU/hour for the same volume. Increasing the pressure on the gas and dropping the temperature to very low temperatures can create condensed gas that acts like a liquid which will reach the equivalent BTU/hr. But this is at the cost of major cooling and compression facilities.

So why not ship power out of the North Slope instead of methane? Distance was the problem in 1970. Shipping power back then cost a lot over long distances. Edison and Westinghouse argued direct current (DC) versus alternating current (AC) for transmission before America had electricity.

Back then, the DC alternative lost a lot of

energy over distance due to the resistance of the conductor and AC power was good both in less “line loss” and motors were more efficient using the phasing power of the alternating waves of electricity. At low voltages, DC attempts to push a large amount of electrons through the same space and heat is created when they get into each other’s way. AC current created less heat (and thereby less “line loss”) by not moving electrons all the way to the end of the chain.

This is where technology and engineering move into the equation. We already know that high voltage lines are used to move AC current from Beluga to Anchorage. A representative line loss example: a one-hundred-mile line carrying 1,000 MW of power at 765,000 volts, or 765 kV, can have losses of 1.1 percent to 0.5 percent. A 345 kV line carrying the same load across the same distance has losses of 4.2 percent.

For context, the Intertie to Fairbanks is about 345 kV and is longer than one hundred miles. We know the line loss is greater.

A North Slope to Southcentral line is still greater in distance and there are larger line losses.

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Alaska Business Monthly | November 2016 www.akbizmag.com

The Right Solution?

Instead of a natural gas pipeline from the North Slope to market, the right solution may be shipping power directly to the consumer. Incredibly the world is already investing or has invested in power shipping rather than transporting resource.

The largest coal plants in America are in Wyoming and Northern Texas and they are shipping power and not low-grade coal.

Internationally, Sweden is shipping power to their offshore islands, not fuel. UVHDC transmitted this power to the island community.

China has a wealth of power potential in the Western Himalayan Mountains, but the energy users are more than one thousand miles east of the hydroelectric and www.akbizmag.com

coal power. The Chinese are not shipping coal or coalbed methane gases east but power in the form of UHVDC and are setting records for distance and number or transcontinental lines.

Alaska has been described in many forms including Seward’s Folly, “a place where the Northern Lights r’ a running wild,” the Last Frontier, America’s Backyard, a Resource State, and an Energy State—but maybe the future is as a Power State. We build the plant on the gas field and ship the power.

Shawn Freitas wrote his master’s thesis at UAF about shipping power instead of

methane through a TransAlaska gas pipeline to Calgary. At the time I was an IBM consultant to the Department of Energy as the Anchorage lead for Arctic Energy.

When I read his work, there was certain “electrification.” Shawn allowed me to use his thesis in UAA classes on engineering economics and hoped that his work had real merit. Shawn ran economics that cut the investment cost for using Alaska gas in half.

I taught an engineering economics class when I was teaching at UAA, and I asked the senior engineering students of all four disciplines—civil, mechanical, electrical,

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November 2016 | Alaska Business Monthly

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relationship of voltage (the desire of the electron to get from one place to another) and current (amount of electrons passing through) and power. Power is Voltage times Current (P=V*I). Increasing voltage will correspondently reduce current in the power equation. Less current means less resistance and equates to smaller “line loss.” Enough science: higher voltage means greater economy.

The Trans-Alaska gas pipeline study estimated line loss at 5 percent, which would represent the energy lost due to pumping against the friction and gravity inherent in the pipeline through Canada. The technology change is that 765 kV and higher voltage DC lines are now possible with line losses of 3 percent to 7 percent. UHVDC lines were always possible but not economical until recently. Since 2012, a number of companies have made conversion of electron flow a matter of semiconductor technology.

Back in the great debate of Edison and Westinghouse, the transmission of DC power would have required stepping up the voltage to something more than the 120V we use in America. The line loss was created by using transformers which change voltage by lots of copper windings around a mutual core creating resistance heat and electromotive force inductance (another unexplained mystery of quantum physics as far as I am concerned). One had to step from 120v to 240v, then 240v to double that number and so on. To get to 745 kilovolts (kV), it was a lot of steps up from 120v and then a lot of steps down from 745 kV. What if someone was able to convert the steps, using semiconductor technology and computers to convert the power?

It appears that three worldwide companies have bridged the gap. Siemens, ABB, and Alstom have changed the landscape for energy transmission since 2012.

NATURAL RESOURCES SPECIAL SECTION

© Photo: ABB

This submarine cable is being loaded for use in the North Sea for Statoil and will carry 100 megawatts of DC power. This particular installation is 80 kv and with higher voltages the cross-sectional area gets smaller. It is easy to see how the smaller size will be cheaper in materials, environmental impact, and installation costs. The cable will be supplying power from the Norwegian grid to Statoil’s North Sea Johan Sverdrup offshore facility, eliminating the need to burn diesel and gasoline to power the offshore platforms, which are expected to produce 550,000 to 650,000 barrels of oil per day.

and computer science—to break down Freitas’s estimate. The assignment was to find reasons it was incorrect or improve upon the assumptions and conclusions.

Multiple classes over multiple years came to the same conclusion: Half was a good estimate. I taught in that same class that a conceptual estimate was as good as the time you put in and a Very Rough Order of Magnitude (VROM) estimate was worth +30 percent to 45 percent of the real cost, and that might cost 1 percent of the total project cost. When I talked to Freitas, he admitted his estimate did not have that kind of investment, but his work survived multiple reviews by hundreds of engineering students trying to find a flaw.

It turns out that the transmission cable was not only about 6 inches in diameter but could be buried. The line losses were less if hung from a transmission tower and even lower if in water. This is a key fact to remember. The early cost review was easy because a 6-inch cable is much smaller than a 52-inch pipeline and would take a lot less material, just 1 ¼-inch thick, high strength 96

steel times 2,300 miles. The environmental impact would be measured on a scale of a crew with a trench digger versus an army of welders and pipe layers.

An enterprising student called out one session, “Mr. Jordan, I didn’t repeat Mr. Freitas’s work but shortened the route by running to Valdez and then going submarine to Seattle. What Alaska is trying to do is get power to the market and with power you don’t need to go to Calgary or Chicago, the power grid is connected at Seattle.”

Sure enough, the route is not only shorter, the Northwest power grid is already connected to the users, and a submarine cable is cheaper with less line loss.

So the next semester, I reassigned the same project and expounded upon the brilliance of the former student who had seriously changed the economics of the project.

Not to be outdone, a mechanical engineering student, challenging the former student and my civil engineering degree from MIT says, “Mr. Jordan, you must not be very familiar with turbines as the power offtake is a function of the temperature differential

between the intake air and the exhaust temperature, about 900° F. North Slope intake air is very cold and you get about 10 percent more power.” True story, the Alaska oil field generates more oil in the winter as the cold intake air allows the turbines to generate more power, resulting in more gas compression, hence more production given low gas to oil ratios. If you ship Alaska gas to anywhere in the world that on average is warmer than the North Slope, it could not generate as much power as if it were produced in the Arctic. Any line losses generated are absorbed by the increased power production. Said another way, if the world wants 5 to 10 percent less greenhouse gas production, just generate the power in a cold climate.

Not done yet. Other UAA undergraduates proposed what more could be done: more power could be created by using the world’s largest heatsink, the Arctic Ocean, to cool intake air; CO2 and waste heat could be used for oil or coal processing; and the same equipment that currently compresses 8 billion cf per day for reinjection could be

Alaska Business Monthly | November 2016 www.akbizmag.com

The distance from Prudhoe Bay to Seattle is slightly longer than this Chinese UHVDC line commissioned this spring with delivery scheduled for 2018.

The TransCanada gas pipeline alternative would have shipped an energy equivalent of 10 gigawatt converted to power. ©www.siemens.com/press

used for power production without changing the air quality. My only caveat is some of that equipment is pretty old and modern turbines can produce 30 percent more power than a turbine built in 1980.

Additional Potential Power Sources Natural gas to power is only part of the story. There is low oil flow, coal bed methane, geothermal, wind, hydropower, and even solar wind potentials that can also be shipped as power.

Let’s start with low oil flow. The Alaska oil pipeline is flowing four times under capacity at less than five hundred thousand barrels per day. The oil flowing at four times the old rate will take four times longer to get to Valdez for transport. In the winter, four times slower means the rate of cooling is sixteen times faster, an inverse square law. Alyeska pipeline is already poised to spend more transportation dollars to get that oil to market and it gets worse with time. At about two hundred thousand to three hundred thousand barrels per day of transport, the pipeline pumps will have pressure problems as well as temperature problems. A solution at that point may be to convert the remaining oil, perhaps a billion barrels, to power.

Few understand that oil and gas is less than 5 percent of Alaska’s energy potential, and most of the rest is coal reserves. Broadly, two thirds of the world’s coal is in the United States and half of that is in Alaska.

Incredibly, the largest coal field in Alaska is on the North Slope and ASRC is struggling with how to get the energy to market.

I am not going to skip geothermal, wind, and other renewal sources, such as solar wind, as they also exist in the Arctic. The www.akbizmag.com

converters necessary to convert power to DC for transmission do not care about phase changes, modulation, fluctuations, or other power grid concerns. If generating power on a UHVDC system, the system can use the power without concern for how that power needs to be delivered downstream.

Finally, we can ship our resource to another market and they will convert it, gain-

ing the added value. Another approach may be to add the value here in Alaska and, through cheaper transportation of the finished product, Alaska becomes a “Power State.”

R Freelance writer Darryl Jordan lives in Anchorage.

November 2016 | Alaska Business Monthly

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Siemens will be supplying transformers for an approximately 2,050 mile (3,300-kilometer) highvoltage direct-current (HVDC) transmission line designed to carry DC voltages of 1,100 kilovolts. These are the highest transmission voltages ever realized commercially for lines and transformers.

SPECIAL SECTION

Natural Resources

North Slope Activity

Alaska’s North Slope lives up to its potential

By Tasha Anderson

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S

ince oil prices plummeted to $26.23 a barrel January 20, a result of a glutted global market, Alaska has had to face some hard truths: we’ve been spending money like teenagers with their first credit card—the money came easy and was spent even easier. Every Alaskan felt the result on a deep and personal level as this October the expected Permanent Fund Dividend was cut in half as a cost-saving measure. In the Last Frontier 2016 has been a year of introspection, as all Alaskans have once again been made aware, perhaps for the first time since the last oil crash, of just how much we rely on the oil and gas industry to fund state government and keep the overall state economy

humming along. But as of October 6, the ANS West Coast price of oil had climbed to $49.67 per barrel, continuing an upward trend since bottoming out in January.

ConocoPhillips Alaska

And for Alaska, that is just the tip of the iceberg in terms of good oil industry news.

ConocoPhillips Alaska has had three significant announcements this year: additional funding, a drilling record, and increased drilling capabilities.

In April, ConocoPhillips Alaska announced funding had been approved for additional wells and on-pad infrastructure to increase production at the CD5 drill site in

Alaska Business Monthly | November 2016 www.akbizmag.com

Photo courtesy of Caelus Energy

Caelus Energy employees commemorate the Smith Bay Tulimaniq exploration wells, which were drilled “near shore” in two to six feet of water.

Photo courtesy of Caelus Energy

the Colville River Unit (Alpine) on the North Slope. Originally the CD5 pad had been permitted to accommodate thirty-three wells, but only fifteen wells had been planned and funded. The April allocation would allow for the pad to be utilized to its full potential.

As of October, thirteen of the fifteen original wells had been drilled. Of particular interest is the twelfth well, which set an Alaska drilling record for overall measured length of a well in-state. A horizontal injection well was drilled to a true vertical depth of approximately 7,400 feet with a horizontal leg of 17,228 feet for a total length of 26,196 feet.

Shon Robinson, ConocoPhillips Alaska’s Drilling and Wells Manager, says that the www.akbizmag.com

November 2016 | Alaska Business Monthly

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Caelus Energy’s Smith Bay project on the North Slope is estimated to contain 6 billion to 10 billion barrels of oil.

NATURAL RESOURCES SPECIAL SECTION

vertical depth is typical for a well, but the horizontal length is significantly longer than the other wells, “well beyond what we typically drill,” he says. He continues, “Drilling a longer injection well is an optimization, essentially replacing another well.” One long well can potentially have the same capability as two shorter wells, which is the case here.

Robinson says, “From a surface perspective, you don’t have any of that infrastructure, and that allows space for other development.”

Injection wells are used to maintain the pressure of the reservoir and can be injected with a variety of materials, such as gas, sea water, or other fluids, and the materials can be alternated.

Robinson says that there are some additional risks in drilling one longer well: “The risk you take is a lot of times as you’re drilling you have longer open holes and sections that haven’t been cased and cemented, so there’s some risk to the operator that the holes may collapse. The further you go, it’s less easy.”

He continues that with the success of the other wells ConocoPhillips Alaska had drilled on site, they were confident in their ability to effectively complete the one, longer well. “Obviously if you have that much rock exposed, which is normally in the seven thousand or eight thousand foot range, you’ve got to rely on that whole thing longer;

100

we felt confident after initial wells. And because of drilling this well in this fashion, we were able to eliminate drilling another one.”

Construction at the CD5 pad will be ongoing says ConocoPhillips Alaska spokeswoman Natalie Lowman. The wells and infrastructure investment announced in April will begin this year, with first oil from this next phase of drilling expected in the third quarter of 2017. CD5 has been exceeding expectations in terms of production. Originally ConocoPhillips Alaska had a production target for CD5 of 16,000 barrels per day of oil, and along with the drilling record they announced in September that the drill site was producing approximately 20,000 barrels per day gross average, year to date. Lowman says that as of yet the company hasn’t released new figures of anticipated production levels, but as development continues “more wells means more production.”

As the entire pad was already permitted to its full potential, none of the April funding will need to be used for new gravel, just additional onsite infrastructure such as pipe racks and any equipment necessary to tie in the additional wells.

Armstrong

In October 2015 Armstrong Oil & Gas, a private exploration and production com-

pany, put its faith in Alaska’s North Slope and increased its stake in the Colville River Delta Region for a total consideration of more than $800 million. From partner Repsol, the company acquired an additional 15 percent interest in the Colville development area, increasing its stake to 45 percent, and increased its share in the jointly owned exploratory area from 45 percent to 75 percent.

With the adjustment in ownership, thenupcoming drilling plans were cancelled.

The joint venture between Armstrong and Repsol holds more than 750,000 acres across the North Slope, and under Repsol’s operation sixteen wells were drilled, all of which found oil; most of them found oil in multiple zones.

Armstrong is calling the field, located in the Pikka Unit, Nanushuk after the name of the rock formation in which the oil is held. A third party has estimated C1 (proven contingent) reserves of approximately 500 million barrels of oil, C2 (probable contingent) reserves of 1.4 billion barrels, and C3 (possible contingent) reserves of approximately 3.7 billion barrels.

Thus, the Nanushuk discovery’s proven, probable, and possible reserves are larger than the Alpine, Kuparuk, and Prudhoe fields, respectively, although the oil is in multiple reservoirs, not just one, as was the case with the original Kuparuk and Alpine discoveries.

Alaska Business Monthly | November 2016 www.akbizmag.com

NATURAL RESOURCES SPECIAL SECTION

Caelus Energy’s Oooguruk project on the North Slope, which since 2008 has produced more than 25 million barrels of oil.

Photo courtesy of Caelus Energy

In February the US Army Corps of Engineers began preparing an Environmental Impact Statement on the new discoveries.

Armstrong has announced plans to initiate a drilling program this winter comprised of two wells, an appraisal well right outside the Pikka Unit and a “wildcat” well approximately twenty miles south of Pikka.

A wildcat well is an exploration well drilled in an area that isn’t known to be an oilfield.

The company says the decision to drill the wildcat well originated from their Horseshoe 3D seismic program, which was shot and processed in the winter of 2015-2016.

If all goes according to plan, Armstrong will initially produce 120,000 barrels of oil a day from three pads, but it’s within the realm of possibility that production could reach 250,000 barrels per day.

The current price of oil is still problematic, as at approximately $50 a barrel Alaska oil companies still aren’t breaking even.

Such oil prices probably wouldn’t support the investment necessary to get the project up and running, but Armstrong believes prices will come back up to the approximately $80 a barrel mark by 2021, when production could begin if there aren’t any delays. Armstrong said at EnerCom’s The Oil & Gas Conference in August that the world is living off inventory found in the fifties, sixties, and seventies. He said by the end of this decade, demand will overcome production from those sources, and that’s not counting oil that’s economic but all of the technically recoverable oil. “We’re going to fall 225 billion barrels short of demand by the end of this decade, even considering that technically recoverable oil,” he said.

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Armstrong is bullish not just about the oil and gas market in general, but the Alaska oil and gas industry. He says the Pikka field hits many of the marks of a “dream field,” as it’s in the United States; it’s onshore; it’s an oil field versus a gas field; it has a lot of oil in a small space; it’s big; and the individual wells have great porosity, great permeability, and thick pay zones, which translate into big individual wells, leading to good economies.

The Nanushuk field is located approximately 150 miles southeast of Barrow between ConocoPhillips Alaska’s Alpine and Kuparuk River field, along the Colville River.

Caelus Energy

Caelus Energy is a privately held, independent exploration and production company that operates the Oooguruk field and has three other ongoing projects: Nuna, Smith Bay, and East Acreage Exploration.

It’s the Smith Bay project that exploded across Alaska and national news in early October with the announcement that, if estimates prove true, it could be one of the largest finds ever in Alaska. Smith Bay is located approximately fifty miles southeast of Barrow in shallow waters and could provide 200,000 barrels per day of light, highly mobile oil, which is preferable as it’s recovered more easily than other types of oil. Caelus estimates the oil in place at approximately 6 billion barrels, and there may be upwards of 10 billion barrels of oil in place in the Smith Bay fan complex when adjoining acreage is included. Casey Sullivan, a Caelus representative, says the Smith Bay announcement “is the right news for the right time for a lot of

reasons. It’s nice to see a sense of hope and optimism. Will it be the answer for today’s fiscal problems? Maybe that answer is no, but ultimately we do know we need as many fields coming online as soon as possible, and this is one of those that can make a significant difference for Alaska’s economic future.

So we’re excited about this opportunity and Alaskans should be excited about it.”

With an expected recovery rate of 30 percent to 40 percent, there are about 2.4 billion barrels of recoverable oil at Smith Bay. These production estimates are internal numbers, and as of yet Caelus has not done any well testing, nor has a third party conducted an analysis of the field.

Other Caelus operations include the Nuna Project, an onshore development located just east of the Colville River and southwest of the Oooguruk field. It has an estimated resource potential of 75 million to 150 million barrels and peak production of 15,000 to 18,000 barrels per day. While the project was sanctioned in 2015, currently Caelus has slowed development due to the oil price crash earlier this year and ongoing uncertainty over the state’s oil and gas tax credits. Development of the field, which requires construction of a new onshore gravel pad, drilling multiple wells, and tying-in to current infrastructure, would cost approximately $1.4 billion and would employ hundreds of Alaskans during construction and operation.

Additionally, Caelus is the current operator and majority owner of the Oooguruk Development Project, located in the Beaufort Sea in State of Alaska waters. The first field in the history of Alaska’s North Slope to be operated by an independent company,

Alaska Business Monthly | November 2016 www.akbizmag.com

CAELUS ENERGY ALASKA, LLC ACREAGE

Beaufort Sea

EASTERN SLOPE EXPLORATION ACREAGE 500-750 mmbo estimated net recovery

Teshekpuk Lake

KUPARUK

NATIONAL PETROLEUM RESERVE ALASKA

A map of Caelus Energy’s current projects. *Includes Nuna and Oooguruk.

Map courtesy of Caelus Energy

it was brought from exploration to development in five years. Since production started in 2008, Oooguruk has produced more than 25 million barrels of oil.

The company says that additional drilling and seismic should improve estimates of the oil in place at Smith Bay, and it is currently planning the appraisal program, with at least one appraisal well scheduled for January 2018. Thus far, the two exploration wells, Caelus-Tulimaniq #1 and CaelusTulimaniq #2, targeted a submarine fan complex that spans more than three hundred square miles. Because of seasonal time restraints, neither well was flow tested, but “extensive sidewall coring and subsequent lab analyses confirm the present of reservoir-quality sandstones containing light oil ranging from 40-45 API gravity,” the company states. Sullivan says the company focused on getting both wells drilled to get an idea of the full extent of the sands they wanted to look at rather than drilling one well and performing flow testing. The wells were located “near-shore,” less than two miles from the shoreline, in shallow water less than six feet deep. Barring complications, production could begin in 2022.

As for 2017, Sullivan says Caelus will not be performing any drilling activity, but the company’s goal is to begin regulatory efforts. “In the summer season we’ll start a number of our regulatory studies and other regulatory activities and prep work for the project,” he says.

R Tasha Anderson is an Associate Editor for Alaska Business Monthly. www.akbizmag.com

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SMITH BAY 2,400 mmbo estimated net recovery

SPECIAL SECTION

Natural Resources

Tolsona No. 1

Ahtna successfully begins drilling program

By Tasha Anderson

A

htna, Incorporated announced on September 29 that drilling had begun for the Tolsona No. 1 gas exploration well. While drilling an exploration well may seem like the beginning of the process, Tolsona No. 1 was the cumulative effort of eighteen months of work—which is a “very accelerated schedule,” says Ahtna Oil & Gas Development Manager Dan Lee. “Those things typically take years in the 104

making, and we’ve condensed them down to a year and a half or so.”

Tax Credits Essential

Ahtna Netiye’, Inc. Executive VP Roy J. Tansy Jr. says that when Ahtna decided to move forward with this project, it was with the understanding that in order for the project to be economically feasible, Ahtna would need to take advantage of soon-to-expire tax credits. “The 025 Middle Earth tax basin credit [scheduled] to expire at the end of June this year put us on a very tight time schedule,” he says. “Being a company that’s not able to absorb these types of expenses easily, the board was at a point in which it was either going to receive the tax credits and drill or not get those specific tax credits and put off this operation,” Tansy says.

Beyond significantly truncating Ahtna’s schedule, this also meant the company was competing for resources with any other entities also scrambling to take advantage of the credits—resources such as industry partners, subcontractors, equipment, etc.

In fact, Ahtna had originally planned to begin mobilizing a 2 million pound drilling rig, materials, and equipment much earlier this year and ultimately delayed mobilization until September 8, waiting for the rig to become available. “That’s not to say the industry hasn’t supported us,” Lee says. Tansy and Lee say that their industry partners, including PRA (Petrochemical Resources of Alaska), Cruz Construction, Lynden, MagTec Alaska, Saxon Drilling, and Schlumberger, have been instrumental for the project.

Alaska Business Monthly | November 2016 www.akbizmag.com

NATURAL RESOURCES SPECIAL SECTION

100 percent owner/operator Ahtna began drilling Tolsona No. 1 on September 29.

Photo courtesy of Ahtna, Inc. © 2016 Judy Patrick Photography

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Ahtna faced additional obstacles because of the well’s location: “Not a lot of wells are drilled in the Glennallen area, so the services and support for an oil and gas operation really aren’t there,” says Marty Lemon, PE, of PRA, which is providing drilling support services. “The logistics definitely are a challenge,” with equipment coming from both Kenai and the North Slope.

The well itself is challenging. “It’s a relatively shallow well, but there’s high pressure water in the area,” Lemon says. High pressure water is more difficult to control in a larger hole, so Ahtna had drilled a 9 and 7/8ths inch pilot hole to a depth of approximately 1,000 feet as of September 30.

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NATURAL RESOURCES SPECIAL SECTION

opening that hole up.” The hole will be enlarged to 16 inches to “allow us to run the 13 and 3/8ths inch casing that we need to set surface,” Lemon says. “There’s this big unknown about this high pressure water,” he says. Not every well dug in the area previously hit water, but the closest well to Tolsona No. 1 did, hence the precautions. “If we hit [high pressure water] it’ll take a little while to control it, but we’re all set up to do that with the design of the well.”

At press time Ahtna anticipated that drilling would take twenty-six days with a target depth of approximately four thousand feet, which is where a gas zone is located.

Lemon says that there are approximately fifty to sixty-fix employees on site. Eleven of those are Ahtna shareholders, the majority from the region, according to Lee. Lemon says the number of people on site spikes during “flat times,” which are periods of time between drilling when work is done to maintain the drilled well such as running and cementing casings and changing out surface equipment.

Full Project Ownership

Ahtna had originally anticipated being a one third owner of this project. Tansy explains that with the drop of oil prices, both of Ahtna’s partners backed out of the proj-

Tom Maloney, Ahtna Netiye’, Inc. CEO with Michelle Anderson, Ahtna, Inc. President on site.

Photo courtesy of Ahtna, Inc. © 2016 Judy Patrick Photography

ect, and Ahtna decided to move forward as 100 percent owner/operator. He says that Ahtna is interested in addressing high utility costs and the issue of out-migration. “We would like to be able to attract development.

We’d like to be able to lower the cost of living out in the region, and utilities are one way to do that. We’d like to provide jobs as well, long term jobs.” Ahtna is also supporting the local economy through housing by utilizing local lodges instead of construct-

ing a man camp, in addition to using local water carriers and other services.

Lee says, “We’re trying to utilize the basin at a local level as much as possible.

Ahtna has continued to stay the course and take this project on 100 percent, and that is a straight benefit to the region.”

R Tasha Anderson is an Associate Editor for Alaska Business Monthly.

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Alaska Business Monthly | November 2016 www.akbizmag.com

Netiye’, Inc.

OUR STRENGTH

INDUSTRIAL FINANCING

Meet AIDEA Investing in enterprise infrastructure

A

s the relatively-new head of the Alaska Industrial Development and Export Authority (AIDEA), John Springsteen is focusing on a number of important issues concerning mining and resource development: responsible resource development, access, and enterprise infrastructure.

Regarding responsible resource development, Springsteen says Alaska is abundant with renewable and nonrenewable resources.

Renewables include everything from timber, fish, and game to beautiful places that attract tourism. Nonrenewable resources like oil, natural gas, and minerals earn money to pay for services and to build savings for all Alaskans. “I believe Alaska has a good model for developing its nonrenewable resources while maintaining these renewable resources, balancing between subsistence, environment, and development,” he says.

For example, AIDEA owns the road and port that service the Red Dog Mine, a massive lead and zinc mine located about eighty miles north of Kotzebue. The road to the mine is curved and slightly sloped to facilitate the migration of the dwindling Western Arctic Caribou Herd, and when the leaders of the herd begin to traverse the road, all transit stops. In fact, that’s what happened when Springsteen visited Red Dog last year. He explains: “We were driving from the port to the mine to catch a return flight to Anchorage, and caribou had started to cross the road. We turned around and went back to the port, and there we overheard cousins calling cousins with messages like, ‘The herd is on the way!’ and, ‘Fill the freezer!’ We waited and waited and ended up flying back the next day. The point is, the rules are well worth the result: a successful passage of thousands of caribou.”

The issue of access continues to “hamstring” resource development in the state, Springsteen says. “When I discuss access, I am talking about permission to put infrastructure in place to be able to access a resource,” he says. “Working with developers and communities to be able to access resources throughout the state is crucial 108

in order for the development that pays for Alaska’s services and fills Alaska’s savings account to take place.”

With the proper permissions for access in place, AIDEA’s focus is on investing in enterprise infrastructure. Enterprise infrastructure, according to Springsteen, consists of all the things necessary to support resource development. Depending on the resource involved, this could encompass roads and pads, docks, industrial facilities, heat and electricity plants, processing equipment, and other similar industrial infrastructure.

Not New to AIDEA and Finance

Although Springsteen was appointed CEO and executive director of AIDEA in March 2015, he is not new to the organization or the world of finance. He had previously served as AIDEA’s infrastructure development officer.

Before joining AIDEA, he worked for global audit, tax, and advisory firms Grant Thornton LLP, PwC, and Deloitte, as well as with the management consulting firms Bridge Strategy Group and The Chicago Group. In addition, he served as vice president and chief financial officer for a small, publicly traded, natural gas exploration company focused on China resource development.

Prior to then, Springsteen worked in the field of environmental engineering, amassing a diversity of experience. In terms of his formal education, he earned a Masters of Business Administration from the Kellogg Graduate School of Management, Northwestern University and an undergraduate degree in civil engineering from the Massachusetts Institute of Technology in 1991.

Promoting Economic Growth and Diversity Springsteen’s broad expertise is serving AIDEA well. AIDEA, a quasi-public corporation of the State of Alaska, was created in 1967 by the Alaska Legislature “in the interests of promoting the health, security, and general welfare of all the people of the state, and a public purpose, to increase job

AIDEA

By Tracy Barbour

AIDEA Executive Director John Springsteen.

opportunities and otherwise to encourage the economic growth of the state, including the development of its natural resources, through the establishment and expansion of manufacturing, industrial, energy, export, small business, and business enterprises.”

The mission of AIDEA is to provide a variety of financing to support economic growth and diversity. It accomplishes this by acting as a funding resource in partnership with other financial institutions, economic development groups, and guarantee agencies. AIDEA offers a number of programs, including Loan Participation, Conduit Bonding authority, Loan Guarantees, and Development Finance.

AIDEA’s Loan Participation, Project Development, and Infrastructure Development Programs are commonly used to finance mining and resource development projects in Alaska. For instance, in its Loan Participation program, AIDEA participated with $20 million in a loan for dock and facility improvements at Icy Strait Point.

Now, there’s no longer a need to tender from cruise ship to dock, as the improvements allow cruise ship passengers direct access to Icy Strait Point. “It was great for me to see passengers with limited mobility able to experience the area with their families,” Springsteen says.

Under AIDEA’s Project Development Program, it provided a $30 million direct loan to Blue Crest Energy for an extended reach drilling rig that is being used to develop oil reserves in Cook Inlet. This loan is secured by the rig itself and a cash reserve.

And in its Infrastructure Development Program, the Alaska Legislature provided AIDEA with bonding authority up to $145

Alaska Business Monthly | November 2016 www.akbizmag.com

million to invest in infrastructure and equipment to support development of the Bokan-Dotson Ridge Rare Earth Element mine in Southeast Alaska near Ketchikan.

Springsteen says, “This mine is being developed by Ucore Rare Metals Inc., and we continue to work with Ucore as they finalize development plans and pilot test processing equipment.”

Focus to Remain on Enterprise Infrastructure Alaska is a huge state with immense resources. And when it comes to financing Alaska resource development projects, Springsteen is very definite about the direction AIDEA is taking. He says AIDEA will continue to use the tools it has available to finance enterprise infrastructure for resource development. “For projects in the $1 million to $25 million range, we will use to the greatest extent possible our Loan Participation Program,” he says. “In partnership with other investors, we will use our Project Development Program to make direct investments up to $50 million.

For projects in the $50 million to $500 million range, we will use our Infrastructure Development Program to issue bonds for enterprise infrastructure.”

AIDEA is also establishing a public/private partnership office at AIDEA to lead in the development of multi-purpose infrastructure. “In addition to enterprise infrastructure for resource development, there are opportunities to work with communities that have public needs/wants to move goods and services and to coordinate with the military and research institutions that need access by land, sea, or air to parts of Alaska,” Springsteen says.

The programs AIDEA offers to support enterprise infrastructure have always been in place, Springsteen says. But now there is more clarity about where AIDEA is expected to participate. For example, a port may have multiple uses: public needs and public wants to deliver goods to and from a community; support for military and research vessels; and support for resource development (fish, timber, oil and gas, minerals, and tourism).

For AIDEA, Springsteen says, enterprise infrastructure revolves around resource development. And the investments in the enterprise infrastructure are supported— and need to be supported—by the revenues from resource development. So financing for a port development project could be structured using several scenarios, including a municipality or borough issues a bond for the public needs from the port; the military provides capital for a share of the port to be used by military vessels; and www.akbizmag.com

AIDEA provides financing that is backed by revenue from resource developers.

In addition to its emphasis on enterprise infrastructure, AIDEA has established a six-factor model for evaluating resource development projects. Here’s a brief explanation of each factor: Operating Experience: The developer has a demonstrated background and history in successfully building and operating the type of project for which they are seeking financing from AIDEA. Capital Contribution: The developer will invest funds in tandem with AIDEA for the construction of the project.

Plans and Designs: The developer has complete plans, designs, and specifications for the project they wish to develop.

Permits: The developer has the necessary permits for the project.

Purchase Contracts: The developer has access to key materials and equipment.

Sales Contracts: The developer has revenues under contract from credible entities.

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Better Communication

Springsteen has noticed various trends relating to mining and natural resource development in Alaska. For example, there seems to be enhanced communication between communities and resource developers on making projects compatible with communities. “This kind of engagement helps create an environment of productive dialogue, and we support this trend,” he says. “Developers are better able to address concerns of the communities and to find opportunities for the mutual benefit of the developers and the communities.”

Additionally, Springsteen says, there is greater recognition by communities of the value of having an enterprise economic engine that provides much-needed local jobs, improves access to goods and services, and, most importantly, provides a tax base to help fund community sustainability (energy, water/wastewater, transportation infrastructure, and public facilities).

These positive trends serve to support AIDEA’s overall mission in Alaska. “AIDEA is here for the benefit of Alaskans, and to the extent we can enhance the discussion between communities and developers, we will all, I think, achieve greater success,” Springsteen says.

As a final thought, Springsteen says he feels Alaska is well positioned to determine how and when its resources are developed.

“I think Alaska has a bright future,” he says. “I look forward to AIDEA playing a greater role in this bright future.”

R Freelance writer Tracy Barbour is a former Alaskan.

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109

RIGHT MOVES Stantec

Mark Parrott, PE, has joined Stantec’s Fairbanks office as a Senior Mechanical Engineer. He has more than a dozen years of in-state industry experience, including design and con- Parrott struction support throughout northern and Interior Alaska, primarily focused on commercial and public buildings, utilities, and power plant support systems. At Stantec, Parrott will focus on military and utility projects.

Stantec’s Anchorage office also recently added four new team members: Corey Rogers, Electrical Designer; Jake Alward, Civil Engineer in Training; Riley Bronga, Civil Engineer in Training; and Annamarie Courtright, CAD Designer.

Rogers brings fifteen years of experience to his role as an Electrical Designer. He has previously worked for design firms in both Fairbanks and Anchorage.

Since joining Stantec, Rogers has worked on airport projects in Rogers Anchorage and Hughes, the Arctic Valley Water Treatment Plant and the Girdwood Wastewater Treatment Plant for the Anchorage Water and Wastewater Utility. He is a University of Alaska Fairbanks graduate, with degrees in Electrical Engineering and Applied Mathematics.

Alward joins Stantec civil engineering team after working in the local design industry since 2014. Since joining Stantec, Alward has worked on multiple projects, including the Ted Stevens Anchorage International Alward Airport Gate B Reconstruction Project and various projects for Doyon Utilities and the Anchorage Water and Wastewater Utility.

Alward is a Gonzaga University graduate.

Bronga, a University of Alaska Anchorage graduate, has worked in the Anchorage design industry as a Land Surveyor, Logistics Coordinator and Engineering Intern. At Stantec, he will provide design assistance in the Bronga Transportation group. Since joining the firm, he has worked on projects across the state,

including the 100th Avenue Extension in Anchorage and the Kenai Spur Highway on the Kenai Peninsula.

Courtright joins Stantec’s Aviation group as a Design Technician with eight years of experience. She has previously aided in design for water treatment plants, water storage tanks, highway improvements, Courtright and subdivisions. Since joining Stantec, Courtright has worked on projects for the Department of Transportation and Public Facilities at Ted Stevens Anchorage International Airport and Kotzebue’s Ralph Wien Memorial Airport. She is a graduate of Charter College in Anchorage.

RIM Design

RIM Design LLC is pleased to announce the promotion of Interior Designer Kelsey Davidson to Associate. With a Bachelor’s in Interior Design from the University of Nevada Reno, Davidson joined Davidson RIM Design in 2013 and has provided commercial design services including programming and space planning, interior construction documents, interior finish palettes, furniture consultation, and specialty detailing.

McCool Carlson Green

McCool Carlson Green announced Cara Rude (formerly Mazurek), Director of Interior Design, has become an Associate Principal of the firm. Rude is an important member of the firm’s leadership team. As Associate Rude Principal and Director of Interior Design, Rude will continue to provide leadership for their current and future clients as well as help McCool Carlson Green provide high quality design, documentation, and outcomes.

The Nature Conservancy in Alaska

The Board of Trustees of The Nature Conservancy in Alaska is pleased to announce the election of two new trustees: J. Michael Johnson and Greta Schuerch.

J. Michael Johnson has more than thirtyfive years of experience in finance, commercial

real estate, investment management, and capital markets.

He also serves on the The Nature Conservancy’s California Leadership Council.

Greta Schuerch’s professional experience includes roles with Johnson the Alaska State Legislature, Inuit Circumpolar Conference, the Alaska Humanities Forum, and the North Slope Borough. She has comprehensive knowledge of rural issues and extensive experience in Northwest Arctic Schuerch Borough communities.

First National Bank Alaska

Phavana Kovin was recently named First National Bank Alaska’s newest Loan Officer by the Board of Directors. In her appointed position, Kovin will focus on loan processing and underwriting. Experienced in Kovin lending, administrative, and operational aspects of banking, Kovin first joined First National as a teller in 2007. Three years later, she was promoted to the bank’s Mortgage Lending Department where she has since excelled.

Additionally, two First National Bank Alaska banking experts with more than thirty years of combined experience were recently appointed Branch Managers by the bank’s Board of Directors.

Ophelia Faumuina is the new Branch Manager at the North Star Branch on Joint Base ElmendorfRichardson. Faumuina first joined First National as a teller in 2003.

She excelled in bank operations at several Anchorage branches. Faumuina Faumuina also worked in Escrow Servicing and in the Central Vault.

Rhoda Frei takes over as Branch Manager of the Northern Lights Branch in West Anchorage.

Frei joined First National in 2000 and worked as a Teller, Customer Service Representative, and Operations Supervisor until the Frei appointment to her new position.

Real Alaskans. Real cargo.

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Alaska Business Monthly | November 2016 www.akbizmag.com

Cha

Compiled by Tasha Anderson Arctic Slope Regional Corporation

ASRC (Arctic Slope Regional Corporation) is pleased to announce a series of subsidiary management changes.

Doug Smith, President and CEO of Little Red Services and ASRC Construction Holding Company (ACHC), assumed the role of President and CEO of AES in August. Smith was previously a Vice President and Business Unit Manager of AES. Joe Curgus, the long-time VP of Operations for Little Red Services, will take over as President and CEO of Little Red Services. Curgus has been an essential member of the Little Red Services team for more than thirty years and has played a critical role in the successful transition of the company into the ASRC family of companies.

Brady Strahl, the current President of ASRC SKW, will take over as President and CEO of ACHC. Strahl has been with the ASRC family of companies since 2009. He has been a key member of the ACHC leadership and has been instrumental in improving ACHC’s financial and project performance over the past two years. Strahl graduated from Gonzaga University in 2003.

Alaska Army National Guard

The Alaska Army National Guard’s 38th Troop Command welcomed a new commander, Lieutenant Colonel Wayne Don, in August. Don has served more than twenty-two years in the Army, nine of which were with the Alaska Army National Guard. He has served in a number of command and staff assignments, most recently as Commander of the 103rd Civil Support Team, where he led a multicomponent unit of Army and Air Guard Chemical, Biological, Radiological and Nuclear Specialists.

Residential Mortgage

Residential Mortgage is proud to announce the hiring of Mortgage Loan Originators Tina Chowaniec and Esteban Trujillo.

Chowaniec brings eleven years of mortgage industry experience to Residential Mortgage. Most recently, she spent sixteen years at First National Bank Alaska as an Operations Supervisor and Mortgage Loan Originator. Chowaniec has an Associates Degree in Business from Mat-Su College.

Trujillo joins Residential Mortgage with three years of experience in mortgage lending. Most recently, he was a Mortgage Loan Originator at

First National Bank Alaska. Trujillo, who is fluent in Spanish, graduated from the University of Oregon with a Bachelor of Science in Business and Psychology.

to the position. Foley earned a BA in Economics from Whitman College and a Juris Doctor from Lewis & Clark Northwestern School of Law.

Northrim Bank

The Alaska Heart & Vascular Institute is proud to welcome Mark Willcox, MD, to its staff of cardiovascular physicians.

Willcox, an Electrophysiology Specialist with a varied background in cardiovascular disease Willcox and rural training, will join the Alaska Heart & Vascular Institute at its main Anchorage office. Willcox received his undergraduate degree in chemistry from Creighton University in Omaha, Nebraska. He then earned his medical degree and graduated cum laude from Georgetown University School of Medicine in 2007. Willcox is Board Certified in Internal Medicine and Cardiovascular Disease.

Northrim Bank is proud to welcome Susan Matson, AVP- Branch Manager at Northrim’s Lake Otis Community Branch. Matson joins Northrim Bank from Cadence in Florida where she was the Branch Manager for the Sun City Center Matson Office. She has eighteen years of experience in banking as well as five years as a Realtor.

Matson has volunteered with United Way, The Lions Club International, and as a financial educator.

Northrim’s Board of Directors promoted Michael Martin to serve as Chief Operating Officer of Northrim Bank. Martin remains an executive VP, General Counsel, and Corporate Secretary at both the corporate and bank levels. Martin has been with Martin Northrim Bank since 2011, and has been in the financial industry since 1995.

Century 21 Realty Solutions

Century 21 Realty Solutions is excited to announce its newest addition to the Anchorage Office, Realtor Edward Appellof. After moving to Alaska in 1997, Appellof spent ten years with the Alaska State Troopers in the Judicial Services Appellof section. He decided to make a change and pursue Property Management after seeing a need for higher professionalism in both tenant services and owner representation. Appellof strives to maintain common ground between landlords and tenants, as well as working to develop the perfect relationship with each property owner.

University of Alaska Foundation

The University of Alaska Foundation Board of Trustees and University of Alaska President Jim Johnsen announced the appointment of Susan Behlke Foley as President of the University Foundation. Foley, an Anchorage-based attorney, brings substantial executive and nonprofit leadership

Alaska Heart & Vascular Institute

Northwest Strategies

Northwest Strategies is pleased to announce the promotion of Elinda Hetemi from Account Coordinator to the position of Junior Account Executive.

Hetemi received her Bachelor’s in Economics from the University Hetemi of Alaska Anchorage in 2013, is a member of the American Marketing Association – Alaska Chapter, and an enthusiastic and active supporter of social causes, such as suicide prevention and awareness.

National Park Service

Maija Katak Lukin, Maniilaq Association Tribal Environmental Manager and former Mayor of the City of Kotzebue, has been selected as the new Superintendent for the Western Arctic Parklands. She will oversee Lukin operations in Noatak National Preserve, Kobuk Valley National Park, and Cape Krusenstern National Monument. Lukin is halfFinnish and half-Inupiat Eskimo and grew up at the family’s Sisualik fish camp on the shores of Cape Krusenstern.

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Inside

Alaska Business November 2016 NORDIC SKIING ASSOCIATION OF ANCHORAGE fter three years of volunteer work and generous community support, the Nordic Skiing Association of Anchorage celebrated the completion of significant upgrades to the Karl Eid Jumping Complex on Anchorage’s Hillside. The upgrades allow Alaska’s ski jumpers to train and compete year-round. The project was funded by a grant from the State of Alaska, with additional funding from The Rasmuson Foundation, the Alaska Ski Education Foundation, and the Downtown Anchorage Rotary Club. anchoragenordicski.com

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AGDC | CONOCOPHILLIPS he State of Alaska (through AGDC) and ConocoPhillips Alaska Inc. have executed a Memorandum of Understanding regarding negotiations to form a joint venture company that could facilitate marketing LNG from the Alaska LNG project to global LNG markets and acquire North Slope gas, with the goal of bringing LNG buyers and North Slope wellhead sellers together. AGDC and ConocoPhillips also intend to pursue the support of the other major North Slope producers in the formation of the joint venture. conocophillips.com | agdc.us

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Compiled by ABM Staff ALASKA DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT he US Department of Labor has awarded Alaska a $500,000 grant to expand employment services offered to incarcerated individuals. The Alaska Department of Labor and Workforce Development will operate Job Centers within Hiland Mountain Correctional Center and Goose Creek Correctional Center. Hundreds of inmates will have access to career services inside to prepare them for post-release employment. Individuals will receive assistance with employability skills and be linked to education, training, job placement and supportive services. labor.state.ak.us

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GCI ne year after bringing 4G LTE coverage to Ketchikan, GCI is expanding its coverage area by adding three new cell towers to the Ward Cove, Saw Mill, and Cranberry Road areas, which now completes a tensite cellular coverage area. The additional towers are expected to bring increased wireless speeds and faster download speeds to GCI customers in Alaska’s most southeastern city.

GCI also announced significant upgrades to GCI Managed Video Conferenc-

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ing, and customers can now virtually collaborate using a desktop, laptop, tablet, or mobile device without being tethered to conference room hardware. With the workforce becoming increasingly mobile, GCI’s flexible, cloud-based offering will allow customers to connect without the restrictions of room-based video conferencing hardware. Users can still enjoy the benefits of high-definition video, screen sharing, and 24/7 customer support. gci.com ALASKA AIRLINES laska Airlines will launch historic new flying to Havana, Cuba, on January 5, 2017. The daily nonstop flight from Los Angeles is among the first regularly scheduled commercial flights to the island country in more than fifty years and is the only nonstop flight to Cuba from the West Coast.

The flights were awarded by the US Department of Transportation in August and remain subject to approval by the Cuban aviation authorities. Travel to Cuba requires advance planning: the US government does not currently allow US citizens or travelers flying on US airlines to visit Cuba strictly for tourism. Travelers must fall into one of twelve approved categories, including family visits, educational activities, and public performances or exhibitions. alaskaair.com

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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 112

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

Alaska Business Monthly | November 2016 www.akbizmag.com

ALASKA USA laska USA Federal Credit Union has opened a new branch in Wasilla for a total of four branches in the Mat-Su Valley and thirty-six branches statewide. The West Parks Highway branch, located at 1850 West Rupee Circle, opened September 23 with a ribbon cutting by Alaska USA Executive Vice President Geoff Lundfelt, and Wasilla Mayor Bert Cottle. The branch offers a full range of credit union services, plus a depository, twenty-four-hour ATM, and a Self Service Center. alaskausa.org

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ALASKA DEPARTMENT OF NATURAL RESOURCES n collaboration with University of Alaska Fairbanks geoscientists, the Division of Geological & Geophysical Surveys has published a series of reports that describe potential inundation from tsunami waves for Yakutat, King Cove, Cold Bay, Chignik, Chignik Lagoon, and Nikolski. The report authors combined historical observations and computer simulations to model potential earthquakes and the resulting tsunamis. They then used these results to map the extent and depth of modeled tsunami floodwaters on land. The maps are being used by community planners, emergency managers, and residents to develop action plans for when a tsunami threatens. dnr.alaska.gov

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SEALASKA TECHNICAL SERVICES ealaska Technical Services, LLC announced that its joint venture with Tetra Tech was selected to provide design-build services to the US Department of Energy’s National Nuclear Security Administration.

Under the Design, Integration, Construction, Communication, and Engineering contract, the joint venture will share in the $400-million contract ceiling over seven years. The joint venture team will provide

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design-build services to support the installation and deployment of fixed and mobile radiation detection systems and associated infrastructure at border checkpoints, airports, seaports, internal country locations, and maritime borders outside of the United States. sealaska.com LOCKHEED MARTIN COMPANY ikorsky, a Lockheed Martin Company, announced that North Slope Borough received its first S-92® helicopter dedicated to search and rescue. The helicopter will perform the critical mission of search and rescue operations for all North Star Borough residents. The aircraft was selected to provide a safe, efficient, and reliable airborne response to aero medical evacuation (medevac), search and rescue, and other emergencies. lockheedmartin.com

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WITHIN THE WILD ADVENTURE COMPANY hefs Kirsten and Mandy Dixon of Within the Wild Adventure Company traveled across Morocco in September on behalf of the US Department of State to cook with Moroccan chefs and culinary students during US/Morocco Food Week, which strives to foster cross-cultural exchange and promote American culinary culture. In partnership with the Alaska Seafood Marketing Institute, the Dixons prepared a few of their signature recipes at various events and cooking demonstrations, showcasing wild Alaska seafood. The Dixons’ work also supported the US Department of Agriculture’s mission of promoting American food products and featuring principle exports as a way of encouraging trade and investment in American goods. withinthewild.com

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CLIA ALASKA or the first time in seven years, Alaska welcomed its 1 millionth cruise ship visitor. The industry is expected to bring even

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more visitors next year as Alaska continues to increase capacity. Holland America Line recently announced that it would be adding a seventh ship to the Alaska market next year. Seabourn has also announced that it will be returning to Alaska in 2017 for the first time in fifteen years. The last time Alaska saw more than 1 million cruise visitors was 2009. cliaalaska.org ARCTIC SLOPE REGIONAL CORPORATION rctic Slope Regional Corporation announced the acquisition of Restoration Services, Inc. by their wholly-owned subsidiary ASRC Industrial Services, LLC. Headquartered in Oak Ridge, Tennessee, Restoration Services was founded twenty years ago and provides a variety of environmental services, including regulatory strategy, comprehensive characterization, long-term stewardship, project controls, and beneficial site reuse. Restoration Services serves both federal and commercial customers throughout the continental United States.

Arctic Slope Regional Corporation also announced the establishment of a new platform holding company, ASRC Industrial Services, LLC (AIS). AIS will be headquartered in Concord, California. Greg Johnson, the president and CEO of ASRC’s wholly-owned subsidiary, Petrochem Insulation, Inc., will take over as president and CEO of AIS. Petrochem will be AIS’ first operating company. asrc.com

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MILLROCK RESOURCES illrock Resources Inc. announced that induced polarization geophysical surveys are presently being conducted on its Stellar gold-copper project located near the Denali Highway in central Alaska.

The work is being done by Vista Minerals (Alaska) Inc., a wholly-owned subsidiary of Vista Minerals Pty Ltd, a private Austra-

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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 lian company. Vista and Millrock formed an option to joint venture agreement on the project in late 2015. Millrock presently owns a 100 percent interest in the claims, subject to Vista’s right to earn up to an 80 percent interest by expending $4 million on exploration and paying $300,000 to Millrock over a four-year period. A production royalty would be payable to Altius Minerals Corporation. Vista is the exploration operator. millrockresources.com MAT–SU VALLEY CANCER CENTER he Matanuska Susitna Valley will soon have a new, high tech facility to help residents fight cancer. The Mat–Su Valley Cancer Center was scheduled to open this fall. Dr. Clare Bertucio, Radiation Oncologist, will be the medical director. She is excited to bring a personable, state-of-the-art facility to the Valley. matsuvalleycancer.com

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PDC INC. ENGINEERS DC Inc. Engineers welcomes Murray & Associates Consulting Mechanical Engineers to their growing team in Juneau.

PDC’s Juneau office staff now exceeds twenty professionals offering in-house civil, structural, mechanical, and geotechnical engineering, as well as land survey and materials testing services. Murray & Associates Consulting Mechanical Engineers owner Douglas Murray will maintain his leadership position as a Principal at PDC, while their full staff will continue in their same capacity. Doug Murray has provided mechanical engineering in Southeast since the 1980s. pdceng.com

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BASS PRO SHOPS ass Pro Shops and Cabela’s Incorporated announced that they have entered

Compiled by ABM Staff

into a definitive agreement under which Bass Pro Shops will acquire Cabela’s for $65.50 per share in cash, representing an aggregate transaction value of approximately $5.5 billion. A driving force behind this agreement is the highly complementary business philosophies, product offerings, expertise, and geographic footprints of the two businesses. The essence of both Bass Pro Shops and Cabela’s is a deep passion to serve outdoor enthusiasts and support conservation. The combination brings together three of the nation’s premier sporting brands: Cabela’s, a leader in hunting; Bass Pro Shops, a leader in fishing; and White River Marine Group, a worldwide leader in boating, which is part of Bass Pro Shops. basspro.com UNIVERSITY OF ALASKA he University of Alaska Board of Regents in September had a first look at and gave their initial support to President Jim Johnsen’s direction for his Strategic Pathways academic and administrative priorities. The regents supported Johnsen’s general direction in the seven administrative and academic areas that are part of the Strategic Pathways process. Academic recommendations now move to implementation teams for work on the details including financial implications, timelines, and other details. Implementation of the administrative priorities may occur more quickly.

Some of the directions approved for Strategic Pathways include: Information Technology: Centralize most IT employees currently working in departments into a central hub on each of the university campuses.

Procurement: Centralize system-wide administrative and policy authority at UAF and support a second office at UAA.

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Research Administration: Consolidate research administration at UAF with service centers at each campus under UAF leadership.

Engineering: No structural changes recommended, though the two programs at UAA and UAF would be required to develop common course numbering/descriptions, a common curriculum committee, joint advisory board, and course sharing to increase student choices and gain economies of scale for FY 2018.

Management/Business: Task a team to reduce from three schools of management to two, at UAA and UAF, with specific degree programs delivered from faculty at all three universities.

Education: Consolidate the current three schools of education into a single statewide organization with the administrative head at one university with degree programs delivered on the three campuses and online.

Regarding accreditation, regents agreed with Johnsen’s recommendation to postpone—for the time being—any further move toward a single accreditation.

Regents approved moving forward with issuing a general revenue bond package to complete the University of Alaska Fairbanks’ engineering building. The bonds will provide the funds to complete construction of the facility by December 2017.

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Business Events

Compiled by Tasha Anderson

NOVEMBER

NOV

Sitka WhaleFest

Sitka WhaleFest is a unique science festival to celebrate the marine life. The core of the festival is a unique science symposium blending local knowledge and scientific inquiry concerning the rich marine environment of our northern oceans. sitkawhalefest.org

4-6

NOV

AMA Fall Convention and Trade Show

Dena’ina Center, Anchorage: Statewide annual convention and trade show of the Alaska Miners Association, a nonprofit corporation headquartered in Anchorage with branches located in Anchorage, Fairbanks, Kenai, Juneau, Denali, Ketchikan/Prince of Wales Island, and Nome. alaskaminers.org

6-12

NOV

AGC of Alaska Annual Conference

Hotel Captain Cook, Anchorage: The Associated General Contractors of Alaska is a nonprofit construction trade association dedicated to improving the professional standards of the construction industry. agcak.org

9-12 NOV

AASB Annual Conference

Anchorage Hilton: The mission of the Association of Alaska School Boards is to advocate for children and youth by assisting school boards in providing quality public education, focused on student achievement, through effective local governance. aasb.org

10-16 NOV

AAMC Conference

Hotel Captain Cook, Anchorage: The Alaska Association of Municipal Clerks is an organization that focuses on providing educational training and mentoring and professional growth opportunities. alaskaclerks.org

13-15 NOV

Local Government Conference

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

14-18 NOV

RDC Conference: Alaska Resources

Dena’ina Center, Anchorage: The conference provides timely updates on projects and prospects, addresses key issues and challenges and considers the implications of state and federal policies on Alaska oil and gas, mining and other resource development sectors. akrdc.org

16-17

Tribal Providers Conference NOV-DEC BIA26 Dena’ina Center, Anchorage: Annual

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meeting of Alaska’s 229 federally recognized tribes and their federal partners.

The conference provides attendees with the opportunity to be informed and prepare for upcoming challenges in Alaska, as well as the opportunity for tribal leaders, Native corporations, and rural representatives to connect with federal agencies. biaprovidersconference.com www.akbizmag.com

DECEMBER

DEC

4-7

ALASBO Annual Conference

Anchorage: Annual conference of the Alaska Association of School Business Officials. alasbo.org

JANUARY 2017

JAN

Meet Alaska Conference

The Sheraton Anchorage Hotel, Anchorage: Hosted by the Alliance, this is the largest one-day energy conference in Alaska and includes educational forums and a tradeshow. alaskaalliance.com

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JAN

Health Summit

JAN

Alaska Marine Science Symposium

17-19

Hotel Captain Cook, Anchorage: The 2017 theme is “The Changing Landscapes of Public Health.” alaskapublichealth.org

Hotel Captain Cook, Anchorage: Scientists, researchers, and students from Alaska, the Pacific Northwest, and beyond come to communicate research activities in the marine regions off Alaska. amss.nprb.org

23-27 JAN

25-28

Anchorage AEYC Early Childhood Conference

Hilton Anchorage Hotel: “Best Practices in the Face of Change.” Join other early childhood community members to learn new strategies, hear about the latest research, try out a few practical techniques, and discover new tools and resources to help face any challenge. anchorageaeyc.org

JAN

26

Junior Achievement of Alaska Awards Banquet

Dena’ina Civic & Convention Center, Anchorage: Four new Alaskans will be inducted and recognized with this prestigious award.

Attended by over four hundred business representations, the program consists of a networking reception, dinner, and awards ceremony. juniorachievement.org

JAN

26-29

Alaska Peony Growers Association Winter Conference

Westmark Hotel Fairbanls: The Alaska Peony Growers Association is a membership organization comprised of commercial peony growers as well as those interested in the emerging peony industry in Alaska. alaskapeonies.org

JAN

28-29

Alaska RTI/ Effective Instruction Conference

Dena’ina Center, Anchorage: A small and rural schools preconference will take place Friday, January 27. asdn.org/school-year-conferences-and-institutes

FEBRUARY

FEB

4-10

Alaska Statewide Special Education Conference Hilton Anchorage Hotel: The Alaska Statewide Special Education Conference

(ASSEC) is committed to providing high quality professional development relevant to the cultural, rural, and remote characteristics of Alaska. assec.org

FEB

Alaska Forum on the Environment

Dena’ina Center, Anchorage: The Alaska Forum on the Environment is Alaska’s largest statewide gathering of environmental professionals from government agencies, nonprofit and for-profit businesses, community leaders, Alaskan youth, conservationists, biologists, and community elders. akforum.com

6-10

FEB

13-17

Alaska Surveying & Mapping Conference

Hilton Anchorage Hotel, Anchorage: This is the 51st annual conference.

The theme for this year is “Centuries Charting Change,” celebrating the sesquicentennial purchase of Alaska from Russia in 1867 and one hundred years of the Alaska Railroad. aksmc.org

FEB

ASTE Annual Conference

FEB

Sustainable Agriculture Conference

Hotel Captain Cook, Anchorage: This is the educational technology conference of the Alaska Society for Technology in Education. This years’ theme is “Explore, Capture, Connect, Reflect.” aste.org

18-21

Fairbanks: This conference is held every year and brings together farmers, ranchers, researchers, Extension agents, and members of the agriculture support industry to learn from one another and to find ways to improve the agriculture industry in Alaska. uaf.edu/ces/ah/sare/conference

22-24

FEB

23-26

Alaska Library Association Annual Conference

Ted Ferry Civic Center and Cap Fox Lodge: AkLA is a nonprofit professional organization for the employees, volunteers, and advocates at academic, public, school, and special libraries of all sizes in Alaska, as well as library products and services vendors. akla.org/ketchikan2017

Anthropological Association FEB-MAR Alaska Annual Meeting

27-2

Westmark Fairbanks Hotel and Conference Center: 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

APRIL

APR

AKHIMA Annual Meeting

BP Energy Center: The Alaska Health Information Management Association (AKHIMA) is a state organization affiliated with the national organization American Health Information Management Association, an association of health information management professionals worldwide. akhima.org R

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CONVENTION HOTELS

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laska business takes place statewide, and it is often both cost effective and convenient for organizations to take advantage of hotels and lodges that feature banquet halls, catering, and other business services for professional conferences, conventions, and meetings.

Here are some lodging locations across the state that the business community can utilize, keeping Alaska’s local economies strong.

Alyeska Resort is located in Girdwood at 1000 Arlberg Avenue with more than 9,000 square feet of dedicated Alaska meeting space, not counting 15,000 square feet of special events space, offering meeting planners lots of flexibility in addition to all modern meeting amenities. alyeskaresort.com Pike’s Waterfront Lodge on the Chena River in Fairbanks has 180 rooms, 28 cabins. Several thousand square feet of meeting

STAY 

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and event space is available in a variety of configurations. Full catering and AV services are available. pikeslodge.com There are four Fountainhead properties in Fairbanks: Wedgewood Resort, Sophie Station Suites, Bridgewater Hotel, and Bear Lodge.

Conveniently located minutes from downtown Fairbanks at 212 Wedgewood Drive, Wedgewood Resort is ideal for a business event and features state-of-the-art AV equipment, with a resort conference center offering more than 9,500 square feet of meeting space; the resort can accommodate up to 275 guests and offers professional catering. At 1717 University Avenue South, Sophie Station Suites also offers AV equipment in all of its conference and meeting spaces. Wedgewood Resort and Sophie Station Suites have more than 40,000 square feet of space between them

with additional outdoor areas. fountainheadhotels.com Westmark Hotels caters to business conventions and events statewide with properties in Anchorage, Fairbanks, Juneau, Sitka, and Skagway. The Westmark Anchorage, located at 720 West Fifth Avenue in downtown Anchorage, has seven meeting rooms that total more than 5,000 square feet.

The Westmark Fairbanks Hotel and Conference Center (813 Noble Street) boasts thirteen function rooms totaling more than 17,000 square feet, including the Gold Room Ballroom, at 5,400 square feet, features 16-foot ceilings, making it ideal for AV presentations, and can be subdivided into smaller spaces. The Baranof Juneau is in the heart of downtown Juneau at 127 North Franklin Street, near the cruise ship docks, state Capitol, and government buildings. Seven meeting rooms

By Tasha Anderson total 5,684 square feet and a full service catering department provides the range from onsite banquet dinners to offsite lunch delivery. Located at 330 Seward Street, the Sitka Hotel & Conference Center has a total of 2,759 square feet between five meeting rooms and is walking distance to many Sitka historical and cultural sites, the boat harbor, and shopping.

Two meeting rooms and two restaurants are available on a private rental basis at the Skagway Hotel & Conference Center, located on the corner of Third and Spring streets in Skagway. westmarkhotels.com The Nullaġvik Hotel in Kotzebue has seventy-one guest rooms, seven suites, and a meeting room that can accommodate up to 100 people.

The hotel has welcomed guests from all over the world. An observation room looks out over Kotzebue Sound. Situated

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

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The Best Western Kodiak Inn & Convention Center is located at 236 West Rezanof Drive in Kodiak, a convenient downtown location near museums and shops. The Best Western Kodiak features meeting and banquet rooms that can accommodate up to 105 people, and the property has an on-site business center. bestwestern.com The Best Western Plus Landing Hotel is located in Ketchikan at 3434 Tongass Avenue. The Sunny Point Conference Center is located in the venue’s North Court Building and has 3,200 square feet of banquet area and a full service kitchen, accommodating up to 240 guests. Within the center are four spaces with AV amenities, allowing event coordinators to select the size room they need. landinghotel.com

The Best Western Bidarka Inn is located at 575 Sterling Highway in Homer. It has a large meeting room with 2,000 square feet that can fit up to 200 people. The room can be broken down into smaller meeting spaces, and can be arranged for banquet or auditorium seating. bestwestern.com Embassy Suites Anchorage is located in Midtown at 600 East Benson Boulevard; a full hotel renovation was completed in March 2016. Its largest meeting room measures 2,167 square feet, and the property has several flexible meeting spaces to choose from equipped with high tech AV equipment. embassysuitesanchorage.com The Hotel Captain Cook, located in Downtown Anchorage at 939 West Fifth Avenue, has fourteen meeting and conference rooms ranging from a 288-square-foot library to a 9,000-square-foot ballroom

with street level access. A full range of support services and AV equipment are available, and all of the rooms are equipped with complimentary high-speed wireless Internet. captaincook.com Homewood Suites by Hilton Anchorage is located at 101 West 48th Avenue and has several customizable meeting spaces for classroom, theater, or conference table seating.

The largest space is 1,176 square feet. homewoodsuites3.hilton.com The Anchorage Marriott Downtown at 820 West Seventh Avenue boasts twelve meeting spaces, ranging from 756 square feet in the Kodiak Room to the 8,122-square-foot Grand Pacific Ballroom, which can be configured to fit 600 banquet attendees or 888 meeting attendees, theater-style. On-site catering ranges from coffee to sit-down meals. Every room has state-of-the-art facilities and

high-speed Internet. marriott.com The Sheraton Anchorage Hotel & Spa has thirteen meeting spaces; AV services and equipment are available for all of the rooms, ranging from the 408-square-foot Chairman Room to the 9,395-square-foot Howard Rock ballroom, which has a banquet capacity of 850. starwoodhotels.com The Lakefront Anchorage is just a mile from Ted Stevens Anchorage International Airport on the shores of Lake Spenard by Lake Hood. It’s located at 4800 Spenard Road and has 248 rooms and 5,000 square feet of event space with flexible options for board meetings, conferences, conventions, or use as a large training venue. The Lakefront’s events planning team is efficient and experienced. millenniumhotels.com/ Anchorage R

AVISALASKA.COM/VIP

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CONVENTION HOTELS

in the Arctic, the Nullaġvik is a unique venue with full amenities. nullagvikhotel.com

EVENTS CALENDAR NOVEMBER 2016

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Anchorage NOV

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Anchorage

Alaskan Christmas Bazaar

NOV

With more than one hundred vendors from all over the state of Alaska selling their handmade, unique items, this bazaar is the perfect place to begin your holiday season, taking place in Anchorage City Church. Be sure to stop by the silent auction tables filled with hundreds of hard-to-find deals. alaskanchristmas.com NOV

27

Hosted by AT&T and the Anchorage Downtown Partnership, the lighting ceremony features free cookies, hot chocolate, holiday music, and an opportunity to meet Santa and his reindeer at Town Square. The ceremony begins with a concert at 5:20 p.m. anchoragedowntown.org

Great Alaska Shootout

Alaska Community 22-26 The gets its hoops fix when host

University of Alaska Anchorage takes on top foes in one of the longestrunning tournaments in college basketball at the Alaska Airlines Center. goseawolves.com

NOV

24

Skinny Raven Turkey Trot

The annual Turkey Trot brought to you by Skinny Raven is back and warmer than ever. In 2015 Turkey Trotters donated 1,158 pounds of food and $7,500 to the Food Bank; the goal for 2016 is 1,500 pounds of food.

Staging will be outside the Dena’ina Center: the 5K starts at 11 a.m. and the 3K starts at 11:10 a.m. skinnyraven.com NOV-DEC

Pinkalicious: The Musical

25-18 Based on the popular book, a children’s musical about Pinkalicious!

See how she gets out of her pink predicament and pink indulgence of

eating pink cupcakes... ending up with pinkatitis, which turns her pink from head to toe. Of course, there will be pink cupcakes, but warning: it’s best not to eat too many. cyranos.org

Chugiak NOV-DEC

Christmas Towne

weekly on 17-18 Recurring Sunday, Thursday, Friday,

and Saturday, Christmas Towne brings together the sights, sounds, and smells of Christmas, including lit walking trails, a library and book nook, pictures with Santa, and an opportunity to reserve time with Santa and Mrs. Clause to make printed ornaments or bake cookies from scratch. Christmas Towne is located at 23001 Camp Gorsuch Road. christmastownealaska. com

Fairbanks NOV

STELLAR-DESIGNS.COM Holiday Checklist

The

Hap

Best

py HWay to Sa olida y ys

ition Employee Recogn iation Customer Apprec Supplier Gratitude New Year Gifts

Athabascan Fiddlers Festival

9 Alaska Native musicians gather in Fairbanks for an annual musical celebration at Chief David Salmon Tribal Hall. explorefairbanks. com

NOV

Alaska Bald Eagle Festival

14-19 Many of the festival activities are located at the American Bald Eagle Foundation museum, such as wildlife workshops, tours, and presentations.

There are also visits to the Alaska Bald Eagle Preserve to witness the “Gathering of the Eagles,” where usually more than three thousand eagles can be seen. baldeagles.org/ festival Juneau NOV

Juneau Public Market

market has taken 25-27 The place every Thanksgiving

weekend since 1983 and includes arts, crafts, imports, photography, and wearable art, as well as food and a 118

Kenai NOV

Christmas Comes to Kenai

25 The kick off of the holiday season begins with Santa, an electric lights parade, and fireworks at the Kenai Visitor and Cultural Center. Santa arrives at 11 a.m., the parade begins at 5 p.m., and fireworks start at 7 p.m. kenaichamber.org Ketchikan NOV

25-27

Ketchikan Arts and Humanities Winter Arts Fair

Guests can check off their entire gift list with new creations from more than eighty local artisans and kids can explore and learn at the Imagination Station while their parents shop. There’s sure to be everything from wreaths to pottery, jewelry to photography, tie-dye to metalwork at Cape Fox Lodge and Ted Ferry Civic Center. ketchikanarts.org

North Pole NOV-JAN

Christmas in Ice

Christmas in Ice, the sixweek winter ice park located next to Santa Claus House in North Pole, features Christmas-themed ice art competition pieces, ice slides and a maze, twirlers, indoor kids’ crafts, and educational ice sculpture demonstrations, adding color and light to the Interior Alaska winter. christmasinice.org

26-8

Petersburg NOV

Haines

STAY

visit from Santa, all at Centennial Hall and the Juneau Arts & Culture Center. juneaupublicmarket.com

AT&T Holiday Tree Lighting Ceremony

Holiday Food and Gift Festival

19-20 This is a fun and family oriented event featuring strictlyAlaskan handmade items including clothing, jewelry, bath products, home decor, gourmet food, and more. Attended by more than fifteen thousand people, the festival is at the Dena’ina Center. anchoragemarkets. com NOV

Compiled by Tasha Anderson

25

Festival of Lights and Community Tree Lighting

The lighting of the seventy-foot Community Christmas Tree is celebrated with hundreds of people walking down Nordic Drive, with Santa, carrying lightstix or candles.

Complimentary hot cider is available. petersburg.org

Wasilla NOV

Heyi Niłtu

The Mat-Su College Alaska Native Cultures Club invites all to join them at the Glenn Massay Theater for their Alaska Native Heritage Month Celebration—Heyi Niłtu. The celebration will include an Alaska Native food potluck; dancing; making Athabascan bead necklaces, Iñupiaq yo-yos, and/or Yup’ik dance fans; and the Pamyua concert. glennmassaytheater.com R

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Alaska Business Monthly | November 2016 www.akbizmag.com

ALASKA TRENDS

By Zachary Rassell

Gold Prices A nugget of good news

H

istorically, the price of crude oil and the price of gold (among other commodity metals) have been strongly correlated. This is partly because both commodities are traded globally but priced in US dollars. When the dollar rises, dollar-denominated assets usually drop in price, as investors of other currencies find dollar-denominated assets more expensive.

Commodities thus often see price movements in the same direction. However, this hasn’t been the case with the recent crash in oil prices, which have held roughly steady for the last year.

Crude Drops—Gold Rises

Crude decreased by about $2 a barrel from about $48 in August 2015 to $46 for the same month in 2016. Gold on the other hand has increased by over $200 per ounce in the same time frame, from a little over $1,100 to more than $1,300 per ounce. For a state that produces the second highest amount of gold in the country, this is a nugget of good news, not to mention the fact that silver and zinc prices have also increased significantly. Gold,

silver, and zinc prices have increased by about 20 percent, 30 percent, and 20 percent, respectively, over the last year.

Petro/Metal Diversion

What accounts for the diversion between precious metals and oil?

It’s mainly a matter of supply and demand. A glut in the global supply of crude oil caused the price collapse that Alaskans know too well, but there’s been no comparable increase in the production of precious metals like gold and zinc. The global economy remains hungry for these materials, and supply is tight as mines take years to navigate permitting and public approval processes before going into production. With Alaska’s mines producing steadily, 2016 is shaping up to be a relatively good year for the industry.

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

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119

ALASKA TRENDS

Indicator

By Nolan Klouda

Units

GENERAL Per Capita Personal Income—Alaska US $ Per Capita Personal Income—United States US $ Consumer Prices—Anchorage 1982-1984 = 100 Consumer Prices—United States 1982-1984 = 100 Bankruptcies Alaska Total Number Filed Anchorage Total Number Filed Fairbanks Total Number Filed

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

1stQ16 1stQ16 1stH16 1stH16

56,269.0 48,707.0 216.9 238.8

55,934.0 48,322.0 216.7 237.7

55,889 46,998 217.1 236.3

0.7% 3.6% -0.1% 1.1%

August August August

32.0 26.0 5.0

39.0 31.0 4.0

35 26 2

-8.6% 0.0% 150.0%

Labor Force in Alaska Unemployment Rate Alaska United States Employment Alaska Anchorage/Mat-Su Region Anchorage, Municipality Interior Region Fairbanks North Star Borough Southeast Juneau, City and Borough Northern Region Gulf Coast Southwest Region Sectorial Distribution—Alaska

Thousands

August

366.5

371.5

369.4

-0.8%

Percent Percent

August August

6.8 4.9

6.1 4.9

6.6 5.1

3.0% -3.9%

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

August August August August August August August August August August

344.8 191.3 148.3 50.1 44.1 39.4 17.0 9.3 38.7 20.0

348.7 191.0 149.8 49.5 43.6 36.7 16.8 9.4 37.7 18.2

348.6 189.7 148.7 51.3 45.0 39.6 17.2 10.2 39.2 18.7

-1.1% 0.8% -0.3% -2.3% -2.0% -0.5% -1.3% -9.2% -1.2% 6.9%

Total Nonfarm Goods-Producing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Service-Providing 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

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

August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August August

361.2 56.9 15.5 15.5 12.2 19.8 21.6 17.4 304.3 71.9 6.7 39.8 6.2 11.4 25.4 6.5 6.1 4.1 12.6 29.5 49.3 36.9 44.7 13.0 25.1 11.5 78.7 16.4 23.5 6.1 38.8 19.1 4.1

364.6 60.8 15.8 15.7 12.4 19.9 25.1 20.8 303.8 72.0 6.7 40.2 6.3 11.3 25.1 6.5 6.1 4.2 12.7 29.3 49.0 36.6 44.6 13.0 24.9 11.9 78.2 16.6 23.3 5.5 38.3 17.9 4.2

360.3 60.0 17.7 17.4 14.2 20.8 21.5 17.2 300.3 70.9 6.7 39.4 6.3 11.1 24.8 6.6 6.3 4.3 12.7 31.3 47.2 34.6 42.1 12.2 23.9 11.6 78.2 15.5 24.9 6.4 37.8 18.4 4.0

0.2% -5.2% -12.4% -10.9% -14.1% -4.8% 0.5% 1.2% 1.3% 1.4% 0.0% 1.0% -1.6% 2.7% 2.4% -1.5% -3.2% -4.7% -0.8% -5.8% 4.4% 6.6% 6.2% 6.6% 5.0% -0.9% 0.6% 5.8% -5.6% -4.7% 2.6% 3.8% 2.5%

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ALASKA TRENDS

Indicator

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 Government Average Loan in Housing Market Statewide Single-Family Condominium Multi-Family Refinance Average Loan Statewide Single-Family Condominium New Housing Built Statewide Single-Family Mobile Home Multi-Family VISITOR INDUSTRY Total Air Passenger Traffic—Anchorage Total Air Passenger Traffic—Fairbanks

By Nolan Klouda Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Units

Period

Millions of Barrels Billions of Cubic Ft. $ per Barrel

August August August

14.2 6.5 44.2

13.6 6.6 44.1

12.6 8.3 48.3

12.7% -21.4% -8.5%

Active Rigs Active Rigs $ Per Troy Oz. $ Per Troy Oz. $ Per tonn

September September August August August

4.0 414.0 1,341.0 19.6 2,282.0

4.0 407.0 1,337.4 19.9 2,183.3

13.0 652.0 1117.50 14.9 1,897.7

-69.2% -36.5% 20.0% 31.5% 20.3%

Millions of $ Millions of $ Millions of $ Millions of $

July July July July

29.3 12.3 13.4 3.5

36.8 18.9 14.5 3.5

31.8 15.3 14.0 2.4

-7.9% -19.7% -4.2% 45.1%

Dollars Dollars Dollars

2ndQ16 2ndQ16 2ndQ16

294,513.0 193,878.0 560,935.0

290,179.0 184,481.0 572,364.0

287,989.0 184,829.0 481,798.0

2.3% 4.9% 16.4%

Dollars Dollars

2ndQ16 2ndQ16

236,829.0 159,641.0

228,377.0 160,394.0

233,442.0 163,474.0

1.5% -2.3%

Units Units Units

2ndQ16 2ndQ16 2ndQ16

185.0 75.0 237.0

89.0 4.0 43.0

228.0 67.0 118.0

-18.9% 11.9% 100.8%

Thousands Thousands

August August

678.4 125.1

709 120.4

674.77 124.09

0.5% 0.8%

ALASKA PERMANENT FUND Equity Millions of $ July Assets Millions of $ July Net Income Millions of $ July Net Income—Year to Date Millions of $ July Marketable Debt Securities Millions of $ July Real Estate Investments Millions of $ July Preferred and Common Stock Millions of $ July

53,992.6 52,769.7 52,887.4 55,901.8 54,324.5 54,016.3 102.8 (47.1) 146.0 1,187.5 89.8 43.4 90.4 196.4 29.5 117.9 37.9 13.1 1,003.8 -205.0 (4.7)

BANKING (excludes interstate branches) Total Bank Assets—Alaska Cash & Balances Due Securities Net Loans and Leases Other Real Estate Owned Total Liabilities Total Bank Deposits—Alaska Noninterest-bearing deposits Interest- bearing deposits

Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

2ndQ16 2ndQ16 2ndQ16 2ndQ16 2ndQ16 2ndQ16 2ndQ16 2ndQ16 2ndQ16

6,323.0 305.6 141.3 3,048.2 21.0 5,466.3 4,729.4 2,040.1 2,689.2

6,281.1 323.6 146.6 3,014.6 21.0 5,439.0 4,701.6 2,014.1 2,687.4

5,973.90 275.40 147.67 2,926.22 17.90 5,166.50 4,448.14 1,893.39 2,554.75

5.8% 11.0% -4.3% 4.2% 17.3% 5.8% 6.3% 7.7% 5.3%

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

August August August August August

101.2 1.3 0.8 0.9 6.6

103.5 1.3 0.8 0.9 6.6

123.25 1.31 0.64 0.90 6.32

-17.9% 0.0% 18.8% -1.1% 5.1%

2.1% 3.5% -29.6% 2636.2% 206.4% 800.0% 21457.4%

Notes: 1. Banking data has been updated to include Alaska State Banks and Alaska’s sole federally chartered, Alaska-based bank, First National Bank Alaska. 2. Information oh housing is retrieved from AHFC website.

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November 2016 | Alaska Business Monthly

121

ADVERTISERS INDEX Advanced Physical Therapy of Alaska..........90 AE Solutions Alaska LLC.......................................94 AECOM..........................................................................60 Ahtna Inc..................................................................107 Alaska Air Cargo - Alaska Airlines...................19 Alaska Dam Safety Program.............................. 44 Alaska Directional LLC..........................................99 Alaska Dreams Inc..................................................33 Alaska Miners Association..................................64 Alaska Native Tribal Health Consortium......81 Alaska Railroad.........................................................68 Alaska PTAC................................................................11 Alaska Traffic Company.......................................77 Alaska USA Federal Credit Union.....................17 Alaska USA Insurance Brokers..........................63 Alyeska Resort..........................................................25 American Fast Freight...........................................75 American Marine / Penco.................................119 Arctic Office Products.......................................100 AT&T...............................................................................15 Avis Rent-A-Car......................................................117 BP ..................................................................................95 Bureau Veritas Minerals.......................................60

C & R Pipe and Steel Inc.......................................85 Carlile Transportation Systems........................69 Colville Inc..............................................................105 Construction Machinery Industrial...................2 Craig Taylor Equipment....................................123 Crowley Petroleum Distribution.......................71 Delta Leasing.............................................................27 Cruz Construction Inc..........................................57 Delta Mining Services...........................................46 DOWL............................................................................62 Dowland-Bach Corp..............................................93 Doyon Limited.............................................................3 EDC Inc........................................................................28 Everts Air Cargo Tatonduk Outfitters........................................40 Fairweather LLC....................................................103 First National Bank Alaska.....................................5 Foss Maritime............................................................49 Fountainhead Hotels.............................................65 GCI..................................................................101, 124 Greer Tank..................................................................30 Hecla Greens Creek Mining Company..........59 Historic Anchorage Hotel................................116

Holmes Weddle & Barcott...................................97 Judy Patrick Photography...............................122 Kinross Fort Knox....................................................47 Lynden Inc..................................................................79 Matson Inc.....................................................................9 Mechanical Contractors of Fairbanks...........29 MFCP Motion & Flow Control Products Inc.....................................50 Motive Power Marine............................................82 N C Machinery...........................................................51 Nalco Energy Services..........................................36 New Horizons Telecom Inc................................35 Northern Air Cargo.................................110, 111 Northrim Bank..........................................................21 Novagold Resources Inc......................................37 Orica..............................................................................39 Oxford Assaying & Refining Inc.......................49 Pacific Pile & Marine..................112, 113, 114 Paragon Interior Construction.........................93 Parker Smith & Feek...............................................43 PenAir...........................................................................73 Personnel Plus.......................................................116 PND Engineers Inc..................................................65

Ravn Alaska................................................................89 Resource Development Council......................41 Seatac Marine Service...........................................68 Shoreside Petroleum.............................................53 Span Alaska Transportation Inc.......................72 Stellar Designs Inc...............................................118 Sumitomo Pogo Mine...........................................61 T. Rowe Price.............................................................23 Teck Alaska Inc.........................................................45 The Plans Room.......................................................28 TOTE Maritime Alaska...........................................55 Trilogy Metals...........................................................54 Turnagain Marine Construction....................105 Tutka LLC.....................................................................36 UIC-Umiaq...............................................................106 United Way of Alaska.............................................13 Usibelli Coal Mine...................................................60 Visit Anchorage........................................................91 Voice of the Arctic Inupiat..................................83 Washington Crane & Hoist..................................67 Yukon Equipment Inc............................................ 31

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122

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