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OIL & GAS

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

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

Subsidiaries thrive providing oil and gas support services

A

By Mike Bradner

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

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

History of Engagement

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

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

Support Industry Creation

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

Alaska Business Monthly | September 2015www.akbizmag.com

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