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Uqalugaawich W H E R E

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S H A R E

I N F O R M A T I O N

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Former ASRC board chairman Oliver Leavitt greets Governor Bill Walker and his wife Donna at the AEF Ivalu Gala in early February. Current board chairman Crawford Patkotak looks on.

Ieagiiwoivut Our Relationships – We develop and maintain relationships that focus on the creation of value for all participants.

asrc.com


Contents T A B L E

O F

1 ASRC annual meeting and shareholder informational meetings schedule ................ 2 ASRC urges lawmakers to solve budget crisis ......................................................... 3 Opinion editorial – Rex A. Rock Sr. ......................................................................... 4 North Slope Iñupiaq communities aim to speak as one ........................................... 6 Voice of the Arctic Iñupiat takes issue with the Ninth Circuit decision .................... 7 ASRC disappointed in Ninth Circuit Court decision .................................................. 8 Are you ready for retirement? ................................................................................ 9 Shareholder sister act finds inspiration in music .................................................. 10 ASRC pleased by U.S. Supreme Court’s unanimous decision in Sturgeon case ...... 11 AEF’s 2016 Ivalu Gala .......................................................................................... 12 Petro Star builds new asphalt oil plant in North Pole ........................................... 14 Iditarod 2016 ...................................................................................................... 17 Shareholder Spotlight: Marlana Peidlow ...............................................................18 ASRC Federal Mission Solutions’ Mobile Application Challenge ............................. 20 ASRC Board declares $40 per share annual dividend distribution ........................ 22 Climate and energy agreement with Canada causes concern ............................... 23 ASRC Days 2016 ...................................................................................................24 President’s message ...............................................................................................

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President’s message As many North Slope communities get ready for what we pray is a safe and successful spring whaling season, it’s a good time to remind ourselves of the vital importance of early preparation as well as teamwork. As traditional Iñupiaq crews from Point Hope to Point Belcher have discovered for generations, if you don’t include both preparation and teamwork in your game plan and your efforts, you greatly diminish your chance for success. The same is true when it comes to our state’s fiscal crisis, which is affecting every corner and facet of Alaska; this includes Arctic Slope Regional Corporation, our subsidiaries, our shareholders and our employees. When the price of North Slope crude topped $100 and even $110 a barrel, it was difficult for some to reign in state spending to prepare for the inevitable – a much leaner, more sustainable financial scenario. With those century-plus prices now a distant memory, a new reality has emerged across Alaska – the reality of a lowered credit rating for the state, stagnant job growth and diminished opportunity. And, I believe another reality has also taken shape – as a state we must take the necessary steps to steer us into another direction and we must do it now. That’s why ASRC made the decision in February to join the Alaska’s Future coalition, a growing number of varied companies and individuals with a common concern over the state’s budget mess – a situation that currently sees Alaska outspend its pull of revenue to the tune of $300 million every month and promises to wipe out the Permanent Fund Dividend program within three short years. You can read more about the Alaska’s Future coalition later in this newsletter.

“ If you don’t include both

While the state makes the necessary changes preparation and teamwork in to adjust to the current fiscal climate, the Corporation is forced to do the same. At ASRC your game plan and your Energy Services, they are making changes efforts, you greatly diminish in order to keep things running strong in this your chance for success.” new market scenario. Those changes include further diversification – focusing not just on oil and gas, while offering the same professional and consistent service to a broader range of clientele in the natural resources, energy, infrastructure, industrial, power and marine industries. When it comes to weathering this fiscal storm in Alaska, at ASRC we’re in the fight together.

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In fact, it’s the Iñupiaq value of Ixagiiŋñivut, or Our Relationships, that make us stronger. An excellent example of this is the Voice of the Arctic Iñupiat, or VOAI, a new nonprofit corporation bringing ASRC together with nearly 20 other organizations from across the Slope. Finally, we will be speaking in one collective voice when it comes to engaging on a variety of fronts. I’m excited about the possibilities of VOAI and look forward to seeing it live up to its potential. We officially set up the organization earlier this year and there is additional information about VOAI inside this newsletter. The new year may be full of promise, but 2016 is also lined with serious challenges – obstacles that could test conventional norms when it comes to the state’s fiscal health and future. However, I have confidence in the resiliency of our elected officials as well as fellow Alaskans and know the path to finding a long-term, sustainable solution can only be taken together. I look forward to the journey. Taikuu.  Rex A. Rock Sr. President, CEO

ARCTIC SLOPE REGIONAL CORPORATION (ASRC) ANNUAL MEETING WILL BE HELD IN KAKTOVIK ON JUNE 18, 2016. Because ASRC is a private, shareholder-owned company, information discussed during the annual meeting is intended for ASRC shareholders only and is not available to the general public. Therefore, the meeting will not be broadcast on public radio. Please join us instead in person at any of the following meetings:

SHAREHOLDER INFORMATIONAL MEETINGS 6 TO 9 P.M. Monday, May 23

Palmer, MTA Sports Center

Tuesday, May 24

Anchorage, Egan Convention Center

Thursday, May 26

Fairbanks, Carlson Center

Friday, June 3

Point Lay, Kali School

Friday, June 3

Point Hope, Tikigaq School

Monday, June 6

Barrow, Ipalook Elementary School

Thursday, June 9

Anaktuvuk Pass, Nunamiut School

Thursday, June 9

Nuiqsut, Trapper School

Friday, June 10

Atqasuk, Meade River School

Friday, June 10

Wainwright, Alak School

ASRC ANNUAL MEETING – 1:30 P.M. Saturday, June 18

Kaktovik, Kaveolook School

If you have any questions related to the ASRC Annual Meeting you can contact the Stock Department at 1-800-770-2772 or by emailing stock@asrc.com. The Annual Meeting will be webcast at www.iaminupiaq.com.

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WHERE PEOPLE SHARE INFORMATION


ASRC urges lawmakers to solve budget crisis ASRC joins Alaska’s Future coalition In mid-February, Arctic Slope Regional Corporation joined a diverse group of organizations and individuals across the state, concerned about Alaska’s budget deficit and its impending impact on services and future job growth. The Corporation has partnered with Alaska’s Future, urging lawmakers to solve the state’s fiscal crisis this legislative session by using Permanent Fund earnings to support essential public services. “A financial collapse in Alaska would have devastating effects statewide, but it would hit the communities in our region, the North Slope, especially hard,” said Rex A. Rock Sr., ASRC president and CEO. “We have carefully studied the available options and if the Alaska Legislature fails to act this session, we will not have enough earnings to distribute a PFD beyond 2018. The approach through Alaska’s Future protects the Fund in the long-term.” While the Alaska’s Future coalition does not support one particular fiscal plan over another, it is pushing for broad support of the idea of using Fund earnings. Alaska’s budget deficit currently sits at $3.8 billion, with every year of inaction taking another $4 billion from the state’s constitutional budget reserve. You can read more about the mission of Alaska’s Future at: www.akfuture.org.

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Opinion editorial by Rex A. Rock Sr. Published February 25, 2016 – the Arctic Sounder Anyone who has ever been in a leadership role knows they are required to make tough decisions – some that may prove to be as unpopular as they are necessary. That’s why I congratulate Governor Bill Walker as well as those state lawmakers who have taken a good, hard look at Alaska’s current fiscal crisis and have concluded, as I have, the only real, sustainable solution is using Permanent Fund earnings to support essential public services. Recently, ASRC joined Alaska’s Future, a diverse bi-partisan group of organizations and individuals across the state concerned about Alaska’s budget deficit and its impending impact on services and future job growth. Together, we are urging lawmakers to not wait and solve the state’s fiscal crisis this legislative session.

Simply put, medicine is not supposed to taste good, and Alaska is in dire need of some fiscal medicine. I have to admit, there is much to not like about many of the proposed budget plans, and for some, the choice to use Fund earnings to pay for state government may be a pill that’s hard to swallow. Many details will affect Arctic Slope Regional Corporation, or ASRC, our shareholders and our employees directly. But our eyes are focused on the long-term fiscal health of our state. Without an immediate course correction that stops the drain on the state’s savings account, Alaska’s economy will become increasingly unstable.

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This includes a further erosion of Alaska’s credit rating, diminished investment, stagnant job growth and an end to the Permanent Fund Dividend program. These results are unacceptable and would negatively affect every corner of the state; this is especially true in my region – the North Slope. Simply put, medicine is not supposed to taste good, and Alaska is in dire need of some fiscal medicine. The Governor, and some lawmakers, concede their final plans could look different than they do right now. But if we’re aiming for a real, long-term solution, we will never arrive at that destination until someone takes the first step. The Governor’s plan calls for sacrifice from everyone, while keeping intact a dividend that Alaskans have come to expect. In order to save the dividend, the Governor is proposing it be tied to oil development, while the earnings of the Permanent Fund be used to support a sustainable budget. Governor Walker has proposed another $100 million in cuts to state spending. Some lawmakers say those cuts need to go even deeper, forcing us to be weaned away from services or programs we’ve taken for granted. The legislature must also ensure those cuts do not disproportionately impact Alaska’s rural areas. I eagerly await answers to where the State can take advantage of additional cost savings, while still providing essential services and allowing for economic growth. With the legislative session quickly approaching the halfway point – the clock is ticking.

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Though I recognize changes are coming, I also have faith Alaska’s elected officials – even in an election year – will recognize the potential of the state’s tax credit programs and base their budget decisions on an understanding of the delicate balance between economic stimulation and economic dampening. Some lawmakers say the Governor needs to take even more from the oil and gas industry, and hope oil prices eventually rise. At ASRC alone, recent refinery tax credits paved the way for us to invest in the construction of an Interior asphalt plant that will eventually supply locally-produced product, saving the state in transportation costs.

Simply saying no or pushing the tough decisions down the road will not eliminate our $3.8 billion deficit. In fact, inaction will only make our fiscal situation worse. I’m asking our elected officials to study the various plans, including the Governor’s, and improve them where they can. I congratulate Governor Walker for his successful push to get concerned Alaskans to the negotiating table and beginning the conversation. The finer details of a solution may not be set in stone as of yet, but I know this – preventing the state’s economic collapse will take bold leadership. And tough decisions.

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PER SEMESTER

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CDL, Hazwoper, Hazmat certification and more

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May 1, August 1, December 1, March 1

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Contact the AEF office for more information. We are located on the 2nd floor of the Arctic Slope Regional Corporation Building in Barrow. PHONE: 907-852-8633 • FAX: 907-852-2774

arcticed@asrc.com

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North Slope Iñupiaq communities aim to speak as one Voice of the Arctic Iñupiat brings together organizations from across the region “Until now, there just hasn’t been a vehicle for us to come together and find ways of protecting those interests. I’m excited to see Voice of the Arctic Iñupiat up and running with the promise to live up to its potential.” A new nonprofit corporation has taken shape on the North Slope, bringing together the leadership of 20 organizations from the region with the goal of providing a unified front on topics ranging from engagement and advocacy to legislative outreach. Voice of the Arctic Iñupiat (VOAI) held its first annual meeting in early February to launch the corporation and set its long-term agenda. “For decades we have watched as outside groups, some even well-intentioned, have attempted to speak for the Iñupiaq people,” said Rex A. Rock Sr., VOAI board chairman. “With the formation of Voice of the Arctic Iñupiat, we begin to communicate collectively on a wide variety of issues that affect our way of life, our traditions, our region and our future.”

“With the formation of Voice of the Arctic Iñupiat, we begin to communicate collectively on a wide variety of issues that affect our way of life, our traditions, our region and our future.”

The goals of VOAI include addressing and participating in legislation, increasing communication and information-sharing among all Iñupiat organizations of the North Slope, promoting Iñupiat stewardship of the region and to provide local advocacy and engagement for the Iñupiat to local, state, federal and international forums. VOAI membership organizations include Arctic Slope Native Association (ASNA), Arctic Slope Regional Corporation (ASRC), Atqasuk Corporation, City of Anaktuvuk Pass, City of Atqasuk, City of Barrow, City of Kaktovik, City of Point Hope, City of Wainwright, Ixisaġvik College, Kaktovik Iñupiat Corporation (KIC), Native Village of Atqasuk, Native Village of Point Hope, Native Village of Point Lay, Wainwright Tribal Council, North Slope Borough, Nunamiut Corporation, Olgoonik Corporation, Tikigaq Corporation and Ukpeaġvik Iñupiat Corporation (UIC).

“The people of the North Slope have very similar interests, whether you live in my hometown of Point Hope or Anaktuvuk Pass,” added Sayers Tuzroyluk Sr., VOAI president.

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WHERE PEOPLE SHARE INFORMATION


A vision for the future In the Arctic, our people are rich in culture and our land rich in resources. At Voice of the Arctic Iñupiat, our twenty member organizations have joined together to ensure those resources are developed responsibly and our Iñupiat culture and values always protected. Voice of the Arctic Iñupiat represents the unified voice of our Native people when it comes to issues affecting our region. Together, we speak as one, and bring a strong vision for the future of our communities. Our voice. Our vision.

voiceofthearcticinupiat.org

Voice of the Arctic Iñupiat takes issue with the Ninth Circuit decision Ruling doesn’t take into consideration the needs of the Iñupiat “Our members are appalled the Ninth Circuit places the habitat of the polar bears above the habitat of the people of the Arctic,” stated Sayers Tuzroyluk Sr., president of Voice of the Arctic Iñupiat (VOAI). “We continue to be frustrated, through utilization of the Endangered Species Act, as federal agencies continue to set aside lands in our homeland as critical habitat. These designations remove our ability to have the same basic rights of people elsewhere.” Under the auspices of the Endangered Species Act, the U.S. Fish and Wildlife Service designated 187,000 square miles as critical habitat for polar bears – despite the fact the science used for the designation did not show a reduction in numbers of polar bears. On March 1, 2016 the Ninth Circuit reversed the U.S. District Court ruling that limited the area designated as critical habitat for polar bears. “This decision does nothing to restore sea ice,” added Tuzroyluk. “It instead can have significant negative economic impacts to our communities. We would hope that someday the federal government will recognize the indigenous people of the area as unique and worth saving too.”

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ASRC disappointed in Ninth Circuit Court decision Ruling could needlessly delay or cancel development projects in the state and make cost of living in northern and western regions even higher Arctic Slope Regional Corporation (ASRC) is reacting to a decision in early March by the three-member panel of the Ninth Circuit Court of Appeals, which sets aside approximately 187,000 square miles in Alaska as critical habitat for polar bears. That’s an area larger than the states of Washington and Arizona combined, and reverses a 2013 conclusion by the U.S. District Court for Alaska. “We are very concerned and frustrated by this decision,” said Rex A. Rock Sr., ASRC president and CEO. “Clearly, it is another egregious example of federal overreach when it comes to the limited rights and protections the Alaska Native community has on its own lands. This appellate court’s finding threatens to impede much-needed economic development in our region at a time when the state’s economy is already unstable. It could also make the cost of goods and services even steeper.” Rock strongly added, “As I have said in the past, this wrong-minded decision will adversely affect the indigenous people and communities across our region, with the area now set aside larger than the state of California. The science used to justify the ruling is inappropriate and does not reflect the

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dynamic ocean sea ice regime or the life cycle of these animals. Through this process the U.S. Fish & Wildlife Service (USFWS) and now the Ninth Circuit is wrongfully burdening the people of the North Slope.” In the fall of 2010 the USFWS announced its plan to set aside the area across the Arctic Slope, Northwest Arctic, Bering Straits and Calista regions as critical habitat for polar bears. For more than five years, ASRC and the North Slope Borough have been leading a coalition of Alaska Native groups from the North Slope, northwest and southwest Alaska to fight that ruling in court. The coalition has until mid-April to ask for a rehearing. Rural Alaska is also being hit by other burdensome efforts that include international agreements with Russia to limit the take of Alaska-Chukotka polar bears without the U.S. Fish and Wildlife Service appropriately consulting with or incorporating the views of North Slope Alaska Natives. In addition, proposals to the United States and Canadian governments from the World Wildlife Fund and Natural Resources Defense Council threaten to shut down economic opportunities for Alaska’s Arctic residents.

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Are You Ready for Retirement? No matter how far in the future retirement may be for you, saving for that time in your life is important. The key is to begin saving now – especially if you are employed by a company that offers an easy way to save, or even matches your 401(k) savings like ASRC does. Retirement is supposed to be fun and less stressful than during your working years, and it can be for those who plan and sacrifice a bit now by saving money. Saving for retirement provides more independence for everyone who saves. The sad truth is that more than 65 percent of Americans are not participating in any type of savings plan, and nearly a third of us will enter our retirement years at or below the poverty level. You can avoid falling into this group by making sure planning for your future is a priority. Participate in a savings program if your employer offers one, or begin saving on your own. Waiting to start a savings plan is costly, so don’t put if off. The sooner you begin, the more time your investments have for potential growth. It’s important to start saving now—no matter how old you are! Here is an illustration of two employees who began working at age 25: ........................... JANE ...........................

• • • •

vs.

Begins contributing to her company’s 401(k) plan immediately Contributes $100/month for the next 15 years Stops contributing at age 40 to meet other financial obligations Total contributions: $18,000

........................... MICHAEL ...........................

• • • •

Spends his earnings in his early years and delays saving for retirement Begins contributing to his company’s 401(k) plan at age 35 Contributes $100/month for the next 30 years Total contributions: $36,000

.................................................................................................................................................

If both accounts earn 8% a year, who has saved more by the age of 65? Jane may have saved nearly $254,000. Michael may only have $149,036. What if Jane didn’t stop contributing at age 40? If Jane kept contributing to her 401(k) plan rather than stopping at age 40, she might have nearly $350,000 saved up for retirement at age 65!

Jane Michael $0

$50,000 $100,000 $150,000 $250,000 $300,000

Pre-tax contributions Potential earnings

Through the power of compounded investment earnings, your contributions and any earnings are reinvested and may continue to grow. The longer you invest, the more you may earn through compounding. Starting to save early could add tens of thousands of dollars to your retirement savings. The earlier you start, the longer your money has to work for you.

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Shareholder sister act finds inspiration in music Duo about to release first collection of original songs on various digital channels Two sisters, originally from Barrow, are hoping to inspire others in the Iñupiaq community through their music. Jamie and Jennifer Christiansen are putting the finishing touches on their first EP, a collection of eight songs the two have been working on in their Los Angeles-based recording studio. Here We Come is scheduled to be released later this spring, with the content available on the major digital music sites such as iTunes, Spotify and Amazon Music. The first single, On Top of the World, is available now. “We are really proud to be Iñupiaq and are excited about helping our people,” said Jamie from her California home. “Our goal is to make music a full-time career. We want to use music as a tool to reach young men and women throughout Alaska.” Jamie and Jennifer are the youngest of six children, the daughters of Jim and Jeanette Christensen.  Jamie graduated from Colony High School in 2008 and decided to move to Atlanta for college. After Jennifer graduated, she joined her sister there and both young women started to learn the ropes of the music business, being introduced to professional studios and the commitment it would take to turn their hobby into a full-time career. After a while, they made the move to L.A. and have been there ever since. “We named our recording facility Akpak Studios,” said Jamie. “Akpak in Iñupiaq means to reach the top. It

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also means to overcome a personal problem. It is representative of everything we had to fight for and do to accomplish our dreams. Letting go of fear and rejection and chasing our dream is what made us feel like we were back on top of the world. We challenge ASRC shareholders to dream big and never give up.” “We live everyday of our lives focused on finding a way to improve the quality of life for ASRC shareholders,” said Jennifer. “Drug and alcohol abuse is a huge epidemic in our communities, which leads to high crime and suicide rates. We have done a lot of research on this subject to figure out why so many Alaska Native men and women struggle with addiction and suicidal thoughts. We know that isolation, darkness and depression are huge factors, but we have become convinced through our own experience that a lot of young men and women are just bored. Our purpose is to use art and culture to bring a positive light into our Alaska Native communities.” In February, the two received the news they wanted to hear when recording engineer Greg Wells decided to work on their project. While the sisters are new to the music scene, Wells is anything but – having been nominated for several Grammy awards for his work with artists ranging from Adele, Katy Perry, Aerosmith and Elton John. “Yeah, he’s a really big deal,” Jamie admits. “He is finalizing our album, which is a huge break for us.” The collection of eight songs is going through the final mixing and mastering process. You can check out samples of their music at: www.jamieandjennymusic.com.

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ASRC pleased by U.S. Supreme Court’s unanimous decision in Sturgeon case High court resets the deck, sends case back to Ninth Circuit ASRC is reacting to the recent decision by the U.S. Supreme Court in the Sturgeon v. Frost case. The Supreme Court handed a narrow victory to John Sturgeon, an Alaskan moose hunter who was threatened with a citation from the National Park Service in 2007 for using a hovercraft to travel on the Nation River, inside the Yukon-Charley Rivers National Preserve. Sturgeon sued the federal government, arguing the regulation banning hovercraft in federal parks and preserves has no bearing in Alaska, because the river is owned by the state, where hovercrafts are allowed. While yesterday’s decision was a narrow victory for Sturgeon, it was a huge victory for ASRC and other Alaska Native corporations. “This case had a David versus Goliath feel to it from the very beginning,” said Rex A. Rock Sr., ASRC president and CEO. “I applaud John Sturgeon for holding to his principles and not giving up. The case, as we now know, is much larger than just one man fighting for his access to hunt moose; it’s also about state sovereignty – clearly defining the rights of the state and other landowners in Alaska as spelled out in the Alaska National Interest Lands Conservation Act (ANILCA) of 1980. We’ll continue to monitor this case as it moves forward, but the unanimous decision by the Supreme Court yesterday is a very encouraging sign.” In an 8-0 opinion, the high court sided with Sturgeon – and sent the case back to a lower court to re-evaluate an earlier decision. In 2014, the Ninth Circuit Court of Appeals ruled in favor of the federal government. ASRC filed an amicus brief, supporting Sturgeon in the case, last year. Other Alaska Native corporations are also supporting Sturgeon, as are Alaska’s Congressional delegation, the state of Alaska and the Alaska Miners Association.

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AEF’s 2016 Ivalu Gala On Friday, February 12, 2016, Arctic Education Foundation hosted its second annual Ivalu Gala. The gala was once again held at the Sheraton Anchorage Hotel. The night was filled with new as well as longtime supporters of AEF and featured a live and silent art auction. The goal of the Ivalu Gala is to raise funds for Arctic Education Foundation scholarships. In fact, many recipients of those scholarships, AEF alumni and current college students, were in the building that night. The Ivalu Gala is also a platform to honor long time AEF supporters. Two awards are given during the gala – the Umialik Award, given to a financial supporter, and the Flossie Hopson-Anderson award, which is given to an individual who has contributed to the success of AEF through their tireless work and dedication. This year, the Umialik Award, meaning “captain” or “boss,” went to ConocoPhillips Alaska, which has given nearly $70,000 to AEF since 2007. Nick Olds, vice president of North Slope operations and development, was in attendance to accept the award on behalf of ConocoPhillips. The Flossie HopsonAnderson Award was presented to Leona Okakok, former AEF director, who was also in attendance that night along with her husband, Rex Okakok, Sr. The keynote speaker was Doris HugoShavings, with Ukpeaġvik Iñupiat Corporation (UIC), who gave a heartfelt speech about her journey to success and how AEF has helped her along the way. The emcees for the

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Itta of Hallelujah Designs, Joni Edwardsen of Tundraberry, Jamie Johnson of MAJ Designs, Christina Rexford-Brown and Barrow Brower. The designers created outfits for ten models in all – each of whom were past or current AEF scholarship recipients – who walked the runway while they showcased the live auction pieces to the crowd. The night ended with a special performance by Pamyua – a widely recognized and popular music group, which showcased Iñuit culture through music and dance. AEF is proud to share that, through the gala, more than $250,000 was raised in sponsorships, donations, table sales, ticket sales and auction purchases – all of which go directly to the foundation to provide scholarships for students across the North Slope. The goal of the foundation is an educated, trained Iñupiat professional workforce – and for the second year in a row the Ivalu Gala has made significant contributions to ensuring the continued success of AEF and its scholarship recipients. AEF would like to thank our Amikraq Sponsors, who donated at the $10,000 level for the 2016 Ivalu Gala: Little Red Services, Arctic Pipe Inspection, ASRC Federal Holding Company and Kirkland & Ellis, LLP. evening were Angela Cox, with Arctic Slope Native Association and Bobby Pico, with the Alaska Air National Guard. Fashion elements were incorporated into this year’s event, including a light-up runway for the models. AEF teamed up with local artists to create custom fashion pieces for the gala. Fashion designers included Bobby

AEF would also like to thank our Honorary Committee for their support of the 2016 Ivalu Gala: Mr. Jacob Adams, Sr., Mr. Oliver Leavitt, Mrs. Brenda Itta-Lee, U.S. Senator Lisa Murkowski and U.S. Senator Dan Sullivan. For more information about the Ivalu Gala, how to become involved or to be on future mailing lists, contact Marie Duriez at 907.339.6889 or MDuriez@asrc.com.

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Petro Star builds new asphalt oil plant in North Pole By Cheryl Chapman

Once its new production plant goes on line in June, asphalt oil from Petro Star Inc.’s North Pole refinery will be paving the same Interior and Northern Alaska roads that have been traveled by its fuel products for 30 years. Getting asphalt oil again locally will be a boon for the region’s road contractors and the State of Alaska. Since Flint Hills Refinery in North Pole shuttered its asphalt oil plant in 2014, Interior contractors have had to buy it from Alaska’s sole remaining source, Tesoro’s Nikiski refinery 540 miles and 12 highway hours away. “The new Petro Star plant will make it a lot easier to acquire the asphalt oil we need,” said Dan Guay, general manager of North Pole’s Emulsion Products Co., an asphalt paving mixture and block manufacturing firm that is a Petro Star client. “For the last two summers, all our asphalt oil had to be hauled from Nikiski, and there were a lot of logistical challenges. We could no longer just pick it up. We had to haul it, store it and haul it again, and there were increased expenses due to all that handling and hauling.” Work on Petro Star’s new asphalt oil plant is advancing according to plan, and the refinery’s new product should be in its tanks and ready for sale by the projected rollout date June 1, said Doug Chapados, president and CEO of Petro Star, a wholly owned subsidiary of Arctic Slope Regional Corporation.

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Petro Star’s North Pole refinery is situated next to the trans-Alaska pipeline and draws the oil it needs from the pipeline to make heating fuel, diesel fuel, jet fuel, kerosene and, soon, asphalt oil. “Between 40 and 50 people are employed in the asphalt oil construction phase, depending on what’s going on,” Chapados said. “In addition, we have filled eight new permanent positions in maintenance, the fuels lab and operations for the plant itself.” The construction has multiple moving parts. “It’s a complex project, and different entities are responsible for different facets,” the CEO said. “CBI — Chicago Bridge & Iron Co. — is doing the engineering for the processing unit and storage tanks, and CEI Enterprises of Albuquerque is handling the other storage facilities and the truck loading area. The general contractor is ASRC Energy Services, also a subsidiary of Arctic Slope Regional Corp., along with AES-Houston Contracting Company (HCC), its union subsidiary.” Other project contractors depend on activity and task, but all are local: Bear Electric; Black Gold Inc. (insulation); CNS Inc. (general contractor); GBC Inc. (general contractor); Haulin’ Hanna Inc. (transport); North Pole Gravel Products; and Precision Cranes Inc. Kevin Maechtlen, Petro Star project engineer, is splitting his time between North Pole and Anchorage to oversee the project under Jim Boltz, Petro Star senior vice president for refining and engineering.

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“Contractors will pick up their asphalt oil here to take to a batch plant to mix whatever they need. We are putting in dedicated loading facilities with two separate truck scales; we’ll weigh the trucks going in and again as they come out and charge based on the weight change.” All equipment, machinery and controls for the plant are new and configured precisely for Petro Star’s needs.

The new asphalt oil plant will cover between five and six acres and use its own fuel to heat and process its product. “We’ll be producing one single grade: base oil, Performance Grade 52-28,” Chapados said. “The contractors can modify that for their own purposes with different additives. Pavement is about five percent asphalt oil, so we are providing the contractors with one of the pieces that they need.” The control system is a sophisticated Fisher Delta V DCS, or Distributed Control System. “This system is specialized for continuous processing with automated controls, though there will be staff oversight, maintenance and inspection,” Chapados said. Unlike heating or fuel oil, sold by the barrel, asphalt oil is sold by weight. “This will be a new experience for us,” Chapados said. “We’ll be selling asphalt oil by the U.S. ton — short tons (2,000 pounds) — and we can produce a maximum of 550 tons per day, more than enough to meet all Interior contractor needs. We will be able to store 3,500 tons of asphalt oil for future use, and our plant design has potential for expansion.”

“We looked at Flint Hills’ asphalt oil equipment, but the parts of refineries and production plants are so thoroughly integrated that it’s difficult to pull out specific pieces for standalone use elsewhere, and also, that equipment was 30 years old. We decided we’d be better off to install all new equipment, built to suit our needs.” Petro Star’s president credited the Legislature’s in-state oil refinery tax credits, approved and signed into law in 2014, for helping make the expansion possible. “Building a new petroleum facility is very expensive,” he said. “What 10 or 15 years ago looked good doesn’t cut it anymore; the costs of all aspects of construction are much higher, and naturally inflation also has been a factor. The idea of the in-state oil refinery tax credits was to encourage new products and create logistical efficiencies. Without this program, I have doubts whether we would be doing this project. We are considering additional projects in light of these potential tax credits, exploring whether they might qualify.” Though Petro Star owns a second refinery in Valdez, Chapados said only the North Pole facility would be producing asphalt oil at this time. Starting in June, contractors continued on page 16

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and Petro Star will be engaged in a mutually beneficial demand-and-supply dance for local asphalt oil. “Petro Star is always producing fuel,” said Guay, of Emulsion Products, “but we can only use asphalt oil in the warm months. Nobody here buys asphalt in the winter, so crunch times for the refineries are in spring (when they’re gearing up) and the fall, when they want to leave the season with their tanks empty. The key is communicating. We communicate our needs and our demand schedules to coordinate with the refinery. This new plant will be good for the market. There are supposed to be a lot of jobs coming up, and having asphalt oil available here will help the northern region.” Petro Star, founded in 1984 to produce light oil heating fuels for homes and local businesses, became associated with ASRC in 1985. Its first business, the North Pole refinery, started operations that same year, and by 1986, Petro Star was buying distribution companies to deliver its products to military, industrial, commercial and residential customers. In 1993, the Valdez

refinery began operations and today produces two grades of ultra-low sulfur diesel, marine diesel, military and commercial grade jet fuel, turbine fuel and heating oil. The only Alaska-owned refining and marketing operation in the state, Petro Star maintains businesses in seven Alaska communities — North Pole, Fairbanks, Valdez, Kodiak, Dutch Harbor, St. Paul Island and Anchorage — and has an office in Seattle as well. Other companies under the Petro Star umbrella include Petro Star Lubricants, a bulk lube repackaging and service company; North Pacific Fuel, a fuel distribution and service company; Sourdough Fuel, the oldest and largest fuel distributor in Interior Alaska; Gas-N-Go gas stations and convenience stores in Dutch Harbor and Kodiak; and the Valdez Petroleum Terminal. Cheryl Chapman is an editor for MARCOA Publishing Alaska.

Arctic Education Foundation congratulates AEF scholarship recipients and Fall 2015 graduates Alicia Flores University of Alaska Anchorage; Bachelor of Science in Biological Sciences

Don Gray City University of Seattle; Master Degree in Leadership

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Iditarod 2016 2011 Iditarod champion John Baker and his team prepare for the ceremonial start in Anchorage. Baker raced in his 17th Iditarod in 2016, reaching Nome in nine days, three hours and 45 minutes. He finished 17th out of 71 mushers to complete the race.

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Shareholder spotlight: Marlana Peidlow, founder of “Above the Influence AK” “With increasing accessibility to drugs, our communities need awareness more now than ever,” says Barrow resident, Marlana Peidlow. “It’s my mission to bring that awareness and support to villages on the North Slope.”

“ I had caused so much pain to my family and friends. I needed to change that and become a positive example for my kids.” Marlana “Tuigan” Peidlow understands the dangers of drug abuse first hand. She, herself, was once a user. “The stress and pressure was a lot to deal with,” she says. “Trying to provide for my family while being in a verbally abusive relationship – it all led to my using.” Less than a year ago, she was faced with an ultimatum. She could either lose her job, or seek help. Having already lost her husband and three children, Peidlow says the choice was easy. She immediately sought treatment from a facility in Washington, where she addressed her drug addiction and began her road to recovery.

and alcohol addictions, domestic abuse and thoughts of suicide. While the page is simply a forum for sharing inspirational experiences or motivational quotes, Peidlow says many of the members have contacted her directly. “A lot of the people I’ve spoken to think they have no one. They think there’s no one who understands,” says Peidlow. “I’m not a therapist, but I’m here now to be a source of encouragement and share my story.” Peidlow says her recovery would not have been possible without the support of her family and church. With their help, Peidlow has changed the course of her life and she hopes to help others do the same. In February of 2016, Peidlow established a Narcotics Anonymous program in Barrow and she is actively working to bring the program to other villages. She currently works for the North Slope Borough School District and will begin online courses at Liberty University this summer for a bachelor’s degree in psychology, addictions and recovery and life coaching.

After completing treatment, Peidlow returned to Barrow with hopes of helping others. “It was scary coming back,” she says. “I had caused so much pain to my family and friends. I needed to change that and become a positive example for my kids.” Peidlow began by creating the Facebook page, “Above the Influence AK,” which now has more than 900 members. The purpose of the group is to increase awareness and provide support for individuals struggling with drug

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Marlana (left) with her daughter Amaya.

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EDITOR’S NOTE: Due to the escalating problem of drug abuse and distribution across the state of Alaska, to include North Slope communities, ASRC will include drug prevention and awareness messages in upcoming newsletters, as well as provide a list of resources that are available to provide help.

In 2014, a third to more than half of households across the North Slope were negatively impacted by the effects of drug and alcohol abuse. This affects not only families, but entire communities. – Health Indicators in the North Slope Borough, June 2014 –

If you or a loved one is in need of help, do not hesitate to contact one of the following resources: • • •

Call the Alaska Suicide Prevention Careline at 1-877-266-HELP (4357) or Text “4HELP” to 839863 Call the North Slope Borough Hotline at 1-800-478-0267 Call the North Slope Borough Behavioral Health Center at 907-852-0366

PreventionCrew

THIS MESSAGE HAS BEEN PROVIDED BY THE NORTH SLOPE BOROUGH DRUG PREVENTION COALITION

Kamatchapaluktugut! Kamatchapaluktugut! We are proud of you

We are proud of you.

Congratulations to Brent Renfrew, ASRC Vice President of Corporate Development, on being named to the Top Forty Under 40 in 2016!

Congratulations to Brent Renfrew, ASRC Vice President of Corporate Development on being named to the Top Forty Under 40 in 2016!

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ASRC Federal Mission Solutions’ Mobile Application Challenge The inaugural ASRC Federal Mission Solutions’ Mobile App Challenge was a 24-hour, non-stop coding session which included six teams – five from ASRC Federal Mission Solutions and one from Rowan University. In all, there were 25 coding participants and seven volunteers. When all was said and done, five applications were developed in time and made it to the finish line. The intent of the Mobile App Challenge was to give Mission Solutions employees the opportunity to dive into different technologies, resulting in something that can potentially be extended through IR&D funding given the relevant problem spaces that are defined. Beyond that, the goals were to provide a team building atmosphere that involved the organization as a whole, and to do something new and exciting. The quote that best exemplified the event was from Dennis Sandlin, a radar engineer, who said, “I had an Android book on my desk for three years and never had the time to read it. This event gave me the push to finally do it.”

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The event kicked off at noon, where all teams were provided with an ASRC Federal swagbag and t-shirts that illustrated the Arctic/ Star Wars theme chosen for the event. Teams dispersed to their designated workspaces in the building, where they immersed themselves in Android or iOS bliss. They were given the topics in advance, which were all Arctic themed, and were directed to provide an objective statement by 1:30 p.m. Most teams worked late into Friday night and a few even pulled an “all-nighter” for the friendly competition. It was pens down at 11 a.m. on Saturday so the teams could start presenting their final products. Each team had ten minutes to present and were measured against how well they were in alignment with their objective statement; their ability to present the material; the product itself; answers to questions; and by the usability of the application itself. The judging panel carefully assessed the results for each team with Han Shot First earning the top honor, followed by

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Other teams had applications that also developed unique and useful features:

Java the Hutt. All of the Mission Solutions teams made it to the finish line with an app to demonstrate. The winning application from Han Shot First was a polished application that could be used for boating, hiking and hunting safety. It featured a geo-referenced display with locations of other hikers and hunters and computed a geo-fence route for each that built in safety margins to prevent accidents. This feature was also joined by a trip planning feature, a history capability and a social media tie-in to post pictures of sites and trophies. The Java the Hutt team developed an application for boater safety and Search and Recovery (SAR) support. Boaters, usually commercial fishermen, could plan their trip and enter it into a database along with details of planned destinations, number of onboard crew and expected time of return. This information was visible to a harbormaster and could be used to aid SAR missions in the event that an accident occurred at sea or a vessel failed to make it back to the harbor in time.

Team Rebel Scrum zeroed-in on the challenge of using mobile applications in the outdoors by ensuring that a loss of network connectivity didn’t leave their application’s users stranded in the middle of nowhere when a cell tower wasn’t around. Their utilization of web app architecture allowed the application to run on laptops, iOS, Android and even Windows devices.

Team Disturbance in the Source developed an application to capture data from a Kestrel weather device. Not only were they brave enough to write a Bluetooth API for Android, but their innovative Heat Map feature was a cool addition to their satellite map-based display.

Team Snowflake created a hunting management application that not only showed a graphical representation of hunting grounds, but served as a common portal into hunting ground management that could prove very useful to administrators and hunters alike.

The success of the event can be contributed to a collaborative team effort among several entities of the Mission Solutions organization.

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ASRC board declares $40 per share annual dividend distribution For the first time, the Corporation is offering a single payment option for dividends as well as quarterly disbursement. At its January meeting in Barrow, ASRC board of directors declared a $40 per share annual dividend, distributed in four payments throughout 2016. The first quarterly dividend payment of $10 per share has a record date of February 19, 2016 and is scheduled for payment in early March. The average ASRC shareholder owns 100 shares of ASRC stock and will receive $1000. When the March dividend is paid, ASRC will have distributed a total of approximately $904 million in dividends since its incorporation.

“Still, in light of the current challenges I believe a $40 per share dividend is strong and highlights the positive impacts of the Corporation’s diverse portfolio.” The remaining 2016 quarterly dividend distributions are scheduled for July, September and November. As has become customary, the board approved an adjusted quarterly payout schedule that reflects a higher dividend in March to support spring

hunting and whaling activities as well as a larger dividend in November to support larger purchases around the Christmas holidays. For the first time, the Corporation is offering shareholders the option of receiving their quarterly dividend payments in a single payment, available at the end of the year. Enrollment in the new program for the current year was open until February 19, 2016. “The impact of the continued low price of North Slope crude on our earnings and business segments is very real,” said Crawford Patkotak, ASRC board chairman. “Still, in light of the current challenges I believe a $40 per share dividend is strong and highlights the positive impacts of the Corporation’s diverse portfolio. As we did in 2015, we will reevaluate our 2016 dividend levels at the end of the year based on our earnings and available liquidity.” “Our strong financial condition and liquidity has allowed the Corporation to be flexible,” added Rex A. Rock Sr., ASRC president and CEO. “However, like the State of Alaska, we are focusing on ways of managing our costs in light of current oil prices while providing for the future of our Corporation and our shareholders.”

DECLARED AMOUNT

RECORD DATE

PAYMENT DATE (DIRECT DEPOSIT)

$10.00 per share

February 19, 2016

March 2, 2016

$7.50 per share

June 27, 2016

July 13, 2016

$7.50 per share

September 9, 2016

September 21, 2016

$15.00 per share

November 18, 2016

November 30, 2016

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Highlights of the ASRC March 2016 dividend: • • • • • •

The amount was $10 per share The record date was Friday, February 19, 2016 The record date was the last day shareholders were allowed to enroll or make any changes to shareholder information with the Corporation Direct deposits were distributed March 2, 2016 Checks were mailed out March 4, 2016 ASRC now has a single payment option for shareholders who prefer to receive their quarterly dividend payments in one single payment at the end of the year. Applications must have been received prior to the record date, February 19, 2016.

Climate and energy agreement with Canada concern for Voice of the Arctic Iñupiat People of the Arctic are afterthoughts to President Obama as he continues to build his legacy around climate change “Once again the people of the Arctic have been forgotten and left out of President Obama and his administration’s decisions with regard to the Arctic,” stated Sayers Tuzroyluk Sr., president of Voice of the Arctic Iñupiat (VOAI). “We are appalled by the lack of inclusion or consideration by the President when setting sweeping objectives with Canadian Prime Minister Trudeau last week. Through instigation by the World Wildlife Fund and the Natural Resources Defense Council, the Iñupiat continue to be victims to outside forces who impose themselves and their views on the Arctic.” Through a news conference held on March 10, 2016, President Obama and Canadian Prime Minister Trudeau provided a laundry list of requirements and potential new regulations that will affect the oil and gas industry – which provides for the economy of the North Slope – in the name of climate change initiatives. “Without consultation the U.S. and Canada are preventing local community economic development for the indigenous people of both countries – this is a huge disappointment to all Inuit. We will be reaching out to our families in Canada to unify on specific items in the agreement that will have a negative effect on our people and culture,” said Tuzroyluk.

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ASRC Days 2016 Strengthening our future through our I単upiat values

ASRC and subsidiary employees visit schools across the North Slope during February and March, teaching the importance of Elders, spirituality and I単upiat values.

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PRSRT STD US Postage PAID Anchorage, AK Permit #537

P.O. Box 129 Barrow, Alaska 99723 asrc.com

ASRC Elder and shareholder rates Rates effective beginning May 15, 2016. STANDARD ROOM

Single occupancy Double occupancy Triple occupancy Quad occupancy

DELUXE ROOM

$ 193.20 $ 214.20 $ 235.20 $ 256.20

Single occupancy Double occupancy Triple occupancy Quad occupancy

$ 246.75 $ 267.75 $ 288.75 $ 309.75

*All rates include tax.

ASRC shareholders must show their shareholder ID card on their first visit and stay at the Top of the World Hotel. The shareholder’s ID card will be entered into the hotel database, and the next time the shareholder stays at the hotel, the front desk clerks will be notified that they are ASRC shareholders and will qualify for the lower hotel rate. For more information please contact the hotel at 907.852.3900 or by email at twh@tundratoursinc.com.

Profile for I am Iñupiaq

ASRC 1Q 2016 Newsletter  

ASRC 1Q 2016 Newsletter  

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