Elizabeth Earl

Peninsula support companies feel pinch of oil industry layoffs

KENAI — The round tables were fringed with people chatting leisurely and exchanging bits of news, like they were on lunch break. A few feet away, two young men ignored the conversation and clicked away on desktop computers. Yet another group stood on the edges of the room, pacing and waiting, their heads snapping up when the front doors opened. All heads turned as soon as Rachel O’Brien called for session participants, and all rose, shuffling slowly toward the back room of the Peninsula Job Center in unison. As soon as the door closed, the room fell silent. All the jobhunters had come for an informational session on Hilcorp’s job opportunities. There were limited seats in one session, so those who didn’t make it in time signed up for the second session, held an hour later. With the downturn in oil prices taking its toll, former oil company employees and related service companies are actively out hunting for work. About 4.2 percent of Alaska’s population worked in oil and gas jobs in 2015, according to an April 2016 report from the Alaska Department of Labor and Workforce Development. The department expects there to be about 1,000 fewer jobs in oil and gas from month to month in 2016 than in 2015, according to the January 2016 job forecast. The Kenai Peninsula was home to approximately 60 oil and gas-related businesses in 2015, according to the Kenai Peninsula Economic Development District, and many workers who are employed by companies that operate elsewhere in the state. It’s not just the direct support businesses that are feeling it, either — many other types of businesses, like hotels and restaurants, are feeling the reduction, said Rebecca Logan, the general manager of the Alaska Support Industry Alliance. “Everybody’s truly a support company for oil gas and mining,” Logan said. “We have drillers, but we also have hotels, graphics companies. … You’d be hard pressed to find a company that isn’t supporting the oil and gas industry in some way.” The support industries have been hard pressed by the oil industry contraction for more than a year now, and they have been slimming down in an attempt to compensate, Logan said. Many started with benefit and salary reductions before moving to layoffs, but lay off they did — about 2,000 employees to date, Logan said. There is no booming shale gas marketing in the Lower 48 to run to now, either, she said. “When this scenario happened before, our companies went to North Dakota and Texas,” Logan said. “There was a lot of work for them there. That is not the case now.” She said the Alliance has weighed in a number of times to the Legislature about the proposed changes to the oil and gas tax credits in the state, requesting that the Legislature leave the tax credits alone for now. The state’s Oil and Gas Competitiveness Review Board plans to issue a report on the effects of the Cook Inlet tax credits by January 2017, which would provide useful information to the Legislature, Logan said. And even with the additional revenue from reducing the tax credits, the budget deficit remains more than $3 billion, she said. “Our recommendation is to wait,” Logan said. “Get that Cook Inlet report in place, have a much better understanding of where you are. Don’t react to things to fill a budget gap, but come up with good policy that addresses the needs of the state.” The Peninsula Job Center in Kenai has seen an increase in traffic in all levels of the oil-related and support positions, said O’Brien, the Gulf Coast/Southwest Regional Manager for the job center. Every person who comes in looking for work has a unique situation, O’Brien said in an email. “We look at what other jobs may be available in or outside the local area, if the person is willing to relocate, that matches their personal needs and qualifications,” O’Brien said. “We also look at whether assisting that person with higher education or industry certifications might increase their chances of returning to (the) oilfield or another career field that will come close to replacing their lost income.” When someone is laid off, the Department of Labor and Workforce Development offers Rapid Response Services, which connects the person to resources and helps them transition back into the workforce. The program is designed to minimize impacts of income loss to the families and individuals, according to the Department of Labor and Workforce Development’s website. The job center staff will notify the local radio stations, and post flyers in the job centers and throughout the community with information about any upcoming information sessions, as well as send emails to people registered in ALEXsys — the state’s online job bank — who have a valid email address and are receiving unemployment insurance, O’Brien said. “We work with our local employers very regularly to offer informational sessions such as the one Hilcorp Alaska held here at the Peninsula Job Center this week,” O’Brien said. Reach Elizabeth Earl at [email protected]  

Furie positions jack-up for drilling at Kitchen Lights Unit

KENAI — Residents and visitors to Nikiski might notice a new silhouette on the skyline of Cook Inlet as the Randolph Yost jack-up rig moves into the neighborhood. The tall legs of the rig can be seen from the bluff in Nikiski. The rig is situated in the Kitchen Lights Unit, leased by Furie Operating Alaska. Furie has brought the rig to Alaska specifically to drill additional gas wells, and is currently planning to drill up to two this year. The jack-up rig has been docked in Homer for the last two months, and shipped out for the northern part of Cook Inlet on May 5. However, it won’t be ready to drill until roughly a month from now, around the second week of June, said Bruce Webb, Furie’s vice president. The rig still has to be outfitted, crewed, stocked, arranged and run through some preliminary tests, he said. The rig will drill two new producing wells close to the currently producing well. The reservoir of gas is centrally located — by regulation, producers are not allowed to drill new wells within 3,000 feet of an existing well. Furie had to file for an exception to the regulation, which is mostly like “checking regulatory boxes,” Webb said. Some companies will file for pool rules on a field, allowing them to operate without having to file for exceptions each time they make a new move, but Furie does not plan to file for pool rules, Webb said. “We’re a small platform and the reservoir is pretty centrally located,” Webb said. “Going for pool rules is a little bigger exercise than we are … planning.” Furie is only producing natural gas and has signed contracts with Enstar Natural Gas Co. and Homer Electric Association. With the two new wells drilled this year, the company should be able to fill its contracts until 2019 or 2020, when the market opens again, Webb said. The company plans to continue drilling exploration wells in the intervening years, though, he said. “The current permits we have out are up to two permits (to drill wells) every year for five years,” Webb said. “That’s just in case we have time to drill more than one every year. It’s easier to permit two and drill one rather than permit one and want to drill two.” One factor that could provide an outlet for more gas from Furie would be the restart of the Agrium fertilizer plant in Nikiski that closed in 2007. The Alaska Legislature recently approved a bill that would grant a tax credit to urea, ammonia and gas-to-liquid products, which would benefit Agrium with a payment equal to the percentage of the amount of royalties paid on natural gas from a state lease that is delivered to the plant to use. The tax credit would remain budget neutral by balancing the deferred tax revenue from the credit with income from royalty payments made by the gas supplier. Agrium is in talks with the gas suppliers in Cook Inlet about potential deals, as previously reported by the Clarion. However, Agrium would also have to spend a certain amount before obtaining that credit, said Larry Persily, the special assistant for oil and gas in Kenai Peninsula Borough Mayor Mike Navarre’s office. The gas supplier would have to provide a competitive price to Agrium to entice the company to reopen the plant, he said. “Agrium restarting is going to depend on finding a gas supplier who can guarantee them five years, 10 years of supply at an affordable price, and that price is going to have to be less than what Southcentral utilities are paying,” Persily said. “They’re going to have to hope that someone strikes a big reservoir and says, ‘OK, I can give you a lower price if you sign a long-term contract and buy a lot.’” The other factor in play is the future of the oil and gas tax credits in the state. The Legislature is still in discussions about whether to cut down the tax credit program, and if so, how that might look. Webb said Furie is not dependent on the tax credits, but they do accelerate the pace of development. “You can accelerate faster when you have a AAA rated partner (like the State of Alaska) with you,” Webb said. “If the tax credits go away, that just means we’ll slow down.” Reach Elizabeth Earl at [email protected]

AOOS launches portal for Cook Inlet beluga whale data

KENAI — There’s a lot of research happening on Cook Inlet beluga whales at any given time. Unfortunately, a lot of the data has stayed isolated, held by the entities that collect it. The Alaska Ocean Observing System, an organization that monitors ocean and coastal conditions, is trying to link some of the data with a new online portal called the Cook Inlet Beluga Whale Ecosystem Portal. Varying information about the endangered whales, ranging from sightings to ocean conditions in their habitats, is presented in a map available to the public on AOOS’s website. Holly Kent, the program coordinator for AOOS, said some of the information — such as the records of sightings in Cook Inlet — has never been made available to the public before. Anyone can log onto the portal and use the data, mapped like color-coded honeycomb cells, showing the frequency of beluga sightings in any one area of northern Cook Inlet, Turnagain Arm or Knik Arm. The map allows for layers to be stacked, too, juxtaposing historical data from agencies like the Alaska Department of Fish and Game with other information pertaining to beluga whales, such as water temperature and the Marine Exchange of Alaska’ ship tracking information. “(The portal) gives you more information on how the whales interact within their ecosystem, which gives you a handle on how to better manage that resource, when you’re also dealing with development going on,” Kent said. “This is the first time that agency people and resource managers have had the ability to look at all of these things in one place at one site.” The public may find it interesting, too, Kent said. The data sets are available to be downloaded for research purposes as well. “We’re just trying to make the information easier and more accessible to more people,” Kent said. “That includes agencies.” The AOOS is one of a network of ocean observation system organizations in the Integrated Ocean Observing System, spanning from Alaska along the coasts of the U.S., reaching to Puerto Rico. Though these organizations receive funding from, and are overseen by the National Oceanic and Atmospheric Administration, they function separately, Kent said. AOOS had collected significant data on the Cook Inlet beluga whales, which are considered one of eight species most at risk of extinction in the near future, according to a February announcement from NOAA. The agency recently issued a five-year plan for managing the belugas, which have an estimated population of about 340 as of 2014. The priorities listed in the plan include reducing human-generated noise in the whales’ habitat, habitat protection to encourage foraging and reproduction, research on the whales’ population characteristics, ensuring prey is available and improving the stranding response program. Cook Inlet beluga whale managers from NOAA had initiated the process of accumulating information on beluga whale sightings from different sources several years ago, said Mandy Migura, the Cook Inlet beluga whale manager for NOAA’s Alaska Region. NOAA made contact with groups such as the Joint Base Elmendorf-Richardson and the Port of Anchorage to use their data from beluga sightings, she said. “There were all these different data sets of monitoring for beluga whales, but they hadn’t actually been compiled and made available … we wanted to go for the scientific sightings so we had some quality control over what was actually a beluga,” Migura said. “I’m not going to say it’s comprehensive of every potential data set that is out there, but these are the ones for the initial effort that we got permission to use.” Migura said AOOS approached NOAA to use its data for the beluga whale portal as part of an ecosystem-based management. Although the map tool is useful, it will not be a single stop for all the information about Cook Inlet beluga whales — there are still caveats to the information available there, she said. “I think this would be one tool in our toolbox,” Migura said. “We don’t expect that’s every single sighting. Just because there’s one area that doesn’t show beluga presence, it doesn’t mean there are no belugas there. (The map shows) just positive sightings. If there are not sightings, we can’t assume that means there’s no belugas there.” The portal links together data and allows viewers to see different data points in layers, possibly illuminating connections that bear implications for the whales, Kent said. With NOAA’s data available on the portal as well as other data, agencies and researchers can network on how to best manage the whales, she said. “We have now got (NOAA’s data) out on a map, open to the public, for lots of researchers and agency resource managers to do what’s called ecosystem based management, where they can manage that resource by using the ecosystem factors,” Kent said. “They can see if there’s any kind of connections.” The Cook Inlet Beluga Whale Ecosystem Portal can be accessed at portal.aoos.org/cibw.php. Reach Elizabeth Earl at [email protected]

Federal commission questions Inlet permits over Belgua concerns

Proposed geotechnical work has raised concerns for the beluga whale habitat from the federal agency tasked with enforcing the act protecting marine mammals. The Marine Mammal Commission, an independent government agency that enforces the Marine Mammals Protection Act, has taken issue with the National Marine Fisheries Service for approving permits for oil and gas operations that may disturb several species of marine mammals in Cook Inlet. The commission asserts that the agency should not allow the permits because the cause of the decline of the Cook Inlet beluga population is still unknown. When an oil and gas operator in Cook Inlet thinks marine life might be affected by the activity, the operators apply for an incidental take permit from the federal government. The U.S. Fish and Wildlife Service and the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service share the responsibility for the permits. In this case, the geophysical and seismic activity being conducted by ExxonMobil Alaska LNG, LLC, BlueCrest Energy and SAExploration Surveys could have effects on several protected species, including the endangered Cook Inlet beluga whale population. The Marine Mammal Commission raised concerns particularly for the beluga whales because of the declining population. Vicki Cornish, an energy policy analyst and marine biologist with the commission, said the main concern is that the cause for the continued whale population decline is still unknown. “There are a number of human and natural forces that could be contributing to the continued demise of beluga whales, we just aren’t sure what the circumstances are,” Cornish said. The most recent count concluded that there are approximately 340 Cook Inlet beluga whales in the inlet, a slight increase from the previous count. The population may be stabilizing, but the Marine Mammal Commission would like to see the numbers increase and the population recover, Cornish said. It also seems the whales’ habitat may have shrunk to only occupy the northern part of Cook Inlet, while they used to roam the whole inlet, she said. “We just don’t know how much of their habitat they’re using throughout the rest of the year,” Cornish said. “There are some acoustic studies being done to try to track the beluga whales throughout the rest of the year, but that information is still being synthesized.” The National Marine Fisheries Service received an application for an Incidental Harassment Authorization, a type of take permit, for ExxonMobil’s LNG-related activities and is in the process of reviewing it. Public comment closed on March 7. If issued, the permit would authorize the incidental harassment of up to 34 beluga whales, 13 killer whales, 54 harbor porpoises and more than 4,600 harbor seals. (Incidental harrassment is defined as causing injury or disturbance by NOAA Fisheries.) Marine Mammal Commission Executive Director Rebecca Lent wrote a letter to the National Marine Fisheries Service urging the delay of any permits proposing sound-based activities until the agency can establish clear criteria that the activities would not harm more than a small number of Cook Inlet belugas. “Such a conclusion should be based on clear and consistent criteria regarding the (Marine Mammal Protection Act’s) small numbers and negligible impact requirements, the standards for which currently do not exist,” Lent wrote in the letter. Lent called on the National Marine Fisheries Service to develop a systemic plan to address the cumulative effects of all the marine activities on beluga whales in Cook Inlet. The agency has developed a draft environmental assessment of the activities, and will make the final environmental assessment available when it publishes, said Connie Barclay, the director of NOAA’s Communications and External Affairs office. “This Environmental Assessment, which analyzes multiple proposed Incidental Harassment Authorizations, is the interim step taken by NOAA Fisheries until a Draft Environmental Impact Statement can be completed,” Barclay wrote in an email. The draft includes some additional oversight measures, such as annual reports to the National Marine Fisheries Service at the end of the drilling season covering monitoring efforts, marine mammal sightings and weekly reports when in-water surveys take place. Cornish said the Marine Mammals Commission is most interested in minimizing the overall impact of activity on the whales, and possibly employing tactics like shutting down operations while whales are in close vicinity. But the risks to the whales aren’t just in the geotechnical activities — many kinds of boating traffic and marine activities pose a risk to belugas, such as commercial fishing, recreational boat traffic and changing ocean conditions. The National Marine Fisheries Service is actively monitoring the whales alongside the Marine Mammal Commission, Cornish said, trying to determine the cause for the whales’ decline and how to help them recover. The other stocks of belugas in Alaska, such as those in Bristol Bay and the Chukchi Sea, are doing well and can help provide a health baseline for biologists studying the whales in Cook Inlet, she said. “Each animal has value in the environment, and it’s hard for us as people to understand of that,” Cornish said. “All of them are connected, all of them have a role to play.”   Reach Elizabeth Earl at [email protected]

AK LNG summer fieldwork includes water tests at plant site

KENAI — The managers of the Alaska LNG Project are moving forward on field work planned for this summer, including water tests, offshore work and borehole drilling onshore in Nikiski. With only one season left before the project will go to the Federal Energy Regulatory Commission for approval, the summer field work will be more limited in scale — about a third the scale of what it was in the summer of 2015, said Jeff Raun, project advisor for the Alaska LNG Project, during a community meeting on April 14 at the Kenai Visitors and Cultural Center. Field work will begin both onshore and in Cook Inlet beginning in April, with the offshore work ending in June or July “to get out of the way of the fishermen,” Raun said. An offshore vessel will do more follow-up bathymetry work on smaller scale than the work done in 2015, filling in patches that need more information on the surface geology on the bottom of Cook Inlet, he said. Onshore, the workers will drill approximately 50 more boreholes about 150 deep, part of a requirement for any project that deals in hydrocarbons, Raun said. “The purpose of this year’s program is really to hone in on the equipment locations,” he said. “We’re getting those site-specific geotechnical data and information by drilling more holes in the proposed locations of the major equipment for the facility, and we’ll be providing that information to FERC (Federal Energy Regulatory Commission) so they can review it and say, ‘Yep, looks good.’” The one new component will be water tests. Residents have raised concerns about the proposed plant’s water use, worrying that such a large plant will reduce the amount of water available for locals. Geotechnical information has shown three aquifers beneath Nikiski, two shallower and unconfined, the third deeper and confined, Raun said. Two pump test wells will be drilled into the second aquifer and 350 gallons of water per minute will be pumped out of it for 10 days as a test, mirroring the maximum amount required during construction, Raun said. One of the wells will be converted to go deeper into the lowest aquifer and 1,000 gallons per minute will be pumped from it for 8 hours, a test for resupplying tanks during firefighting, he said. “We want to know, although we don’t believe there will be impact on the existing aquifers from this operation, but we need to test that,” Raun said. “We understand that 1,000 gallons per minute, that’s quite a draw. We want to ensure that if we ever need to draw at that rate, we’re able to do so without impacting other water users in the area.” Tweaks to the plans The proposed megaproject, consisting of an 800-mile pipeline bringing natural gas from Prudhoe Bay and Point Thompson on the North Slope to a plant in Nikiski where it will be cooled and condensed into liquefied natural gas, is now in its third year of field work but is still in the pre-FEED phase — the preliminary front-end engineering and design work. The design work proper has not even begun yet, a process estimated to take two to three years. The plans for the plant are still being tweaked, said Mike Britton, the Alaska LNG Project manager. The latest edition downsized some of the footprint for the plant, changing the number of tanks from three smaller tanks to two larger tanks and condensing the administration building, he said. With the new plans, the plant itself will take up a little more than a third of the total 900 acres of land that the project managers intend to acquire, he said. Many of the space requirements are ruled by required buffers, such as the buffer required around the LNG tanks for pools and another for potential spill hazards, and play roles in how they design the plant, he said. “Every change we make is on a cost-benefit basis,” Britton said. “If you can have A with B and using C is a little cheaper, but you can’t have C with A, then you’re restricted there.” The proposed dock will be a little different as well — it has been raised off the beach to allow access to the beach beneath it and is about 3,600 feet out into the water. Additionally, the designers are proposing to use a type of equipment for the pipeline called pipe-in-pipe, which is safer in case of leaks and allows the pipe to go straight out from the bluff to the tanker docking location, Britton said. One thing that will not change, however, is the size of the pipe. At the request of Gov. Bill Walker, the project managers spent five months investigating the option of using a 48-inch pipe rather than the originally planned 42-inch pipe. Raun said the project team officially recommended staying with the 42-inch pipe. “A lot went into that decision,” Raun said. “Our recommendation as a project team is to stay with a 42-inch pipeline. Despite months of meetings, the dozens of Nikiski residents and other locals who turned out for the meeting still grilled the project managers with questions right up until the end of the allotted 90 minutes. Most of the concerns centered around additional land acquisition and the proposed water testing. “How deep is that (third aquifer)?” a woman in the audience asked, jotting notes throughout the presentation. “I’m at 170 (feet). What’s that going to do to me?” Raun said the third aquifer is at 250 feet and said the engineers do not expect there to be an impact, but they will be measuring the effects in the area when they do the pump test. In addition, the water will be discharged into a gravel pit on Robert Walker Avenue, a move the Alaska Department of Environmental Conservation will have to review and approve. “I think in all of the conversations that the team has had with the community, water has been a very serious topic of discussion, and rightly so,” Raun said. “We’ve said that we are going to start a program to better understand what’s going on with groundwater in our area of interest.” Mike Peek is concerned about crime from the leftover, empty homes that the project has bought but not demolished yet. From his home across the street from the LNG-purchased property, he said he has seen crime pick up in that area, and with no Alaska State Troopers station and no local police in Nikiski, it is a concern, he said. He urged the project managers to carefully consider the consequences of their property purchases if they do not tear down the houses and secure the property. “Just so you know, the ones right outside that boundary (of the property you intend to buy) are the ones most impacted,” Peek said.

Cosmo drill permit filed as credits debated

KENAI — If it gets the state’s approval, BlueCrest Energy will switch its drilling operations from onshore directional drilling to an offshore jack-up rig. The company’s Alaska arm, BlueCrest Operating Alaska, applied to the Alaska Division of Oil and Gas to change its operating plan, adding an extra well and changing its drilling method. The company originally planned to drill three wells from its onshore facility near Anchor Point, drilling diagonally out into Cook Inlet to reach oil in its Cosmopolitan lease. The change in plans would bring a jack-up rig — either the Spartan 151, currently in Resurrection Bay, or a similar rig — to Cook Inlet to drill the two remaining wells and a new one for BlueCrest, according to the application. The Cosmopolitan formation has both oil and gas assets. The gas is situated above the oil, and because of the shallow depth of the gas, drilling for it from onshore is impossible. The wells drilled from the offshore rig would delineate the oil and gas formations, according to the application. However, the gas production would not begin immediately — after the wells are drilled, they would be plugged and abandoned below the lowest gas reservoir once logging and evaluation of the oil formations has been completed, according to the application. “The wells may be re-entered and developed for gas production operations under a future development and production authorization,” the application states. If approved, the company would drill one well in 2016 and the remaining two in 2017. If there are delays, two may be drilled in 2017 and the third drilled in 2018. One well has already been drilled from onshore, a hydraulic fracturing well, also known as fracking. Drilling operations would include casing and cementing, geologic evaluations, flow testing and well plugging and abandonment. If the company decides to flow test a well, it will develop a testing program. Two helicopter flights per day would support the operations at the offshore rig. The flights would come from either the Kenai or Homer airports, changing rig crews and handling cargo, according to the application. The Spartan 151 is currently docked in Seward, with its seasonal contract under negotiation, according to Spartan Offshore Drilling’s website. Furie Operating Alaska brought the rig to Cook Inlet to drill in its Kitchen Lights lease in 2011 and used it until 2015, when its permanent gas production platform was installed. BlueCrest’s president and CEO Benjamin Johnson has said the company would not be able to drill offshore if the oil and gas tax credit program were to change significantly. The expense of developing the gas limited the company’s ability to conduct operations offshore. The jack-up rig is not a permanent offshore operation, but it places wells offshore. The Legislature is currently debating a number of options to change the structure of the oil and gas tax credit regime at the prompting of Gov. Bill Walker, who has called the current tax credit system unsustainable for the state because there are no caps on how much the state will pay. One proposed bill would cut all the Cook Inlet oil and gas tax credits by 2018; another would cap repurchases at $25 million per company per year. The Legislature’s regular session was scheduled to end on Sunday, but was extended with the oil and gas tax credit bills still in limbo. With $525 million sunk into developing the Cosmopolitan field with no revenue yet — oil production is estimated to begin in April — BlueCrest representatives have spoken out strongly against the tax credit cuts. The company submitted testimony to the Legislature on a committee substitute for HB 247, one of the oil and gas tax credit bills, urging the Legislature to leave the tax credits stable so the company could continue to develop the resources even at low oil prices. Johnson testified to the House Finance Committee on April 4 that any changes should be gradual. He said the state’s investment has been a good one at Cosmopolitan because the company has done low-risk drilling on known resources — the company bought its field in 2014 from Pioneer, which was planning to operate on a former Pennzoil discovery in the area. “I want to emphasize that the state’s investment through its tax credit program has facilitated our success at Cosmopolitan,” Johnson said at the meeting. “BlueCrest is in Alaska today directly as a result of Alaska’s tax credit program.” Reach Elizabeth Earl at [email protected]  

Hatcheries made up one-third of 2015 salmon harvest

KENAI — Though hatcheries are a major part of the commercial fishing industry statewide, they’ve remained a small portion of the harvest in Cook Inlet. Fish from Alaska’s salmon hatcheries made up a third of the total commercial fishery harvest in 2015, mostly in pink and chum salmon. However, in Cook Inlet, hatchery fish made up less than 2 percent, according to a report from the Alaska Department of Fish and Game. The report, which is updated annually, provides a broad picture of the state of Alaska’s 28 producing hatcheries. Since their beginnings in the 1970s, the hatcheries have grown to be a substantial part of the fishing industry and contributed 93 million salmon to the commercial fishery last year, nearly a third of the 264 million total fish, according to the report. Cook Inlet’s hatcheries carried a total ex-vessel value of approximately $3.2 million in 2015, with approximately $1.7 million coming from sockeye and the remainder coming from pink salmon. However, Cook Inlet has the smallest hatchery value in the state — Prince William Sound led the market with a total of $79.5 million in ex-vessel value, followed by Southeast with $37.5 million and Kodiak with $4.5 million, according to the report. The commercial fisheries in Cook Inlet harvested 144,000 hatchery-produced salmon in 2015, approximately 2 percent of the total catch. Most of the return was harvested for cost recovery, approximately 2.2 million fish. One of the reasons for the smaller harvest is the recently reopened Tutka Bay and Port Graham hatcheries, operated by Cook Inlet Aquaculture Association. Both are building up their broodstock over time to reach the returns the facilities can handle. In 2015, only enough fish to fulfill broodstock and cost recovery returned to those two stocks, according to the report. Cook Inlet’s hatcheries mostly produce sockeye salmon, which garner a higher price per pound than pink and chum. Most of the hatcheries rely on pink and chum salmon, which are lower-value fish. However, Cook Inlet Aquaculture Association is in the process of diversifying its stock to include both pink salmon and sockeye. Sockeye are more expensive to raise because they must be retained in freshwater longer, requiring the hatcheries managers to overwinter them, said Mark Stopha, a fisheries biologist with Fish and Game in Juneau who wrote the report. They are more expensive to feed and run a higher risk of mortality, possibly because of the longer rearing time. Pink and chum salmon, on the other hand, can hatch in the spring and go directly to salt water, providing a faster return on investment, he said. The number of hatchery fish harvested in other fisheries is much smaller — the sport, personal-use and subsistence fisheries harvested about 275,000 salmon, rainbow trout, arctic char and grayling in 2015. The hatcheries are managed with the wild stocks as a priority, according to the report. Coded wire tags and thermal marking, which is the process of marking the earbones of hatchery fish to determine their origin and brood year, allow fisheries managers to sample returning fish during the season and estimate the total return for hatchery fish and thus more accurately estimate wild stock escapements. Straying of hatchery fish into wild fish systems has long been a concern with the programs statewide. There have been straying reports conducted on most systems where hatcheries operate, but not on Cook Inlet. Stopha said the relatively small hatchery operation did not necessitate a straying study. “I don’t know of any that have been done in Cook Inlet … and maybe that’s because we don’t have any concerns there because of the low level of hatchery production in some of the areas,” Stopha said. “I don’t think it has come up as a concern.” Fish and Game originally began evaluating all the hatcheries in the state as part of the Marine Stewardship Council certification process in 2012, but eventually reviewed them all, Stopha said. One of the main things he said he’s seen is that the hatcheries do not seem to have been damaging salmon runs. Many of the hatchery programs have enhanced the already existing stocks rather than shipping eggs in from elsewhere, he said. “I think the main thing, when I’ve looked at these over 40 years, no one just went in and put in a 100, 200, 300 million egg hatchery and said, ‘We’re just going to do it,’” Stopha said. “In truth, there’s been a lot of bad press about hatcheries over the years, and hatcheries down south have not followed the same protocols we have. 2013 and 2015 were some of the highest returns over the state.” Reach Elizabeth Earl at [email protected]    

AK LNG pre-FEED work continues onshore and offshore

KENAI — More geophysical and technical work will take place in Nikiski this summer as preparation for the Alaska LNG Project. The partners on the liquefied natural gas pipeline project — ConocoPhillips, BP, ExxonMobil and the state through the Alaska Gasline Development Corp. — are moving forward with fieldwork for the 2016 season. The fieldwork will be on a smaller scale than it was last year, but the partners want to finish the preliminary front-end engineering and design work, or pre-FEED, said Josselyn O’Connor, the Community Stakeholder Advisor for the project. “The project partners are committed to completing the pre-FEED work,” O’Connor said. “This work that we’re doing is going to inform and help shape future decisions.” Although the ultimate fate of the project is still undecided, the project partners approved a budget of approximately $230 million for field work for the 2016 season. The 2016 season’s geophysical work will include some onshore work near the proposed site of the LNG production facility in Nikiski and offshore work in the Cook Inlet from three vessels, all up to 240 feet in length. The vessels will collect data about the bottom surface and subsurface of Cook Inlet, evaluate seabed features and identify soil conditions. Offshore, surveyors will be doing bathymetry — submarine topography — to gather information to determine the best route for the proposed pipeline. O’Connor said the work would begin as soon as April or May. She also said project managers are still working on the resource reports for the Federal Energy Regulatory Commission. “That’s a big milestone for 2016,” O’Connor said. “The second round of the resource reports will be coming out later this spring or summer.” Throughout the process, Alaska LNG Project managers will coordinate with the other marine operations in Cook Inlet to ensure there are no issues, O’Connor said. She also said the marine communications team will also work closely with fishermen, both the drift fleet and the setnetters, to apprise them of what is going on. “That’s very important to us,” O’Connor said. “We recognize the fishermen as an important stakeholder and are committed to communicating with them on a very regular basis.” Throughout the winter, project coordinators have hosted “Coffee with AK LNG” community meetings to update locals with information about the project. The meetings have been well-attended, O’Connor said. Another is scheduled for April 14, where the hosts will present more information about the upcoming field season. “The format of these coffee meetings has been absolutely wonderful,” O’Connor said. “It has allowed for this back-and-forth, two-way communication. It has allowed us to present bits and pieces as the project goes along.” The next Coffee with Alaska LNG meeting is scheduled for 6:30 p.m. April 14 at the Kenai Visitors and Cultural Center in Kenai.   Reach Elizabeth Earl at [email protected]    

Larger expected king run loosens restrictions on setnets, drifters

Commercial fishermen in Upper Cook Inlet will be somewhat freer to fish at the outset of the 2016 season thanks to a larger projected king salmon run. For the past few years, Alaska Department of Fish & Game commercial fisheries managers have had to work around restrictions on their fisheries because of low king salmon runs to the stream systems across Upper Cook Inlet. However, with a projected late-run return of 30,000 king salmon to the Kenai River and improved runs to the Deshka and Little Susitna rivers, managers will be able to operate under normal restrictions, according to the 2016 Upper Cook Inlet commercial salmon fisheries outlook. “This will be the first year we’ve had the luxury of operating those fisheries without the restrictions,” said Pat Shields, the area management biologists for the Commercial Fisheries Division in Soldotna. For the first time in three years, setnetters in the Upper Subdistrict will be managed by the Kenai River Late-Run Sockeye Salmon Management Plan, restricted only by inseason assessments of sockeye salmon runs and the escapements of late-run kings to the Kenai. In the past, they have been constricted by the low projected run of king salmon to the Kenai River, limiting the number of hours they can fish. This year, they will be able to operate with an additional 84 hours of fishing each week, with a mandatory 36-hour closure each week beginning between 7 p.m. Thursdays and 7 a.m. Fridays, Shields said. The season is set to open June 27 unless opened earlier by emergency order, based on an inriver estimate of 50,000 Kasilof River sockeye salmon before the opener. The earliest it could open would be June 20, according to the outlook. As the season progresses, managers will be carefully watching both the number of sockeye salmon and king salmon in the rivers. “What we’ll do is watch the king salmon numbers as they come in each day in July, and we’ll plan our strategy for how to fish based on the combination of those two sets of numbers,” Shields said. Additionally, commercial setnetters in the Northern District of Cook Inlet will be able to target king salmon again at the season opening. King salmon escapements in the Northern District, which includes all of Cook Inlet north of Boulder Point, have improved in the last few years. More king salmon have been returning to the to the Deshka and Little Susitna rivers as well, and Fish & Game is willing to open up the fishery as well. Shields said it is a relatively limited fishery targeting kings specifically early in the season, with limited fishing periods and fewer nets allowed. The commercial setnet fishery in the Northern District will open with four fishing periods in the 2016 season: May 30, June 3, June 13 and June 20, according to the outlook. After June 27, there will be two 12-hour fishing periods per week with a full complement of gear with at least 600 feet between nets. However, the area from the wood chip dock to the Susitna River will remain closed, reducing the king salmon harvest by approximately half, and the Deshka River will be watched closely. Any closures will come from inseason counts, according to the outlook. The drift gillnet fishery will open by the third Monday in June or June 19, whichever is later. There will be an additional 12-hour fishing period in the Expanded Kenai and Expanded Kasilof sections and Drift Gillnet Area 1 because the Kenai River sockeye run is projected to be greater than 2.3 million fish, according to the outlook. Between July 16 and July 31, there will be an additional 12-hour fishing period each week in the Expanded Kenai, Expanded Kasilof and Anchor Point sections, and no additional restrictions on the remaining regular 12-hour fishing period. One of the challenges of managing this season will be balancing the king run, which is projected to be above the 22,500 target set in the Kenai River Late-Run King Salmon Management Plan, with the sockeye salmon run. A larger than average sockeye return is projected for this year — 7.1 million total, with a 4.1 million commercial fishery harvest, 1.2 million more than the 10-year average annual harvest. Shields said the department has a number of tools for managing the sockeye overescapement if the fisheries are restricted by emergency order again. “It’ll be an interesting year to watch,” Shields said. “Everybody will be watching those two numbers really closely. Our strategy and challenge here will be how many of those extra (setnet) hours will we need to use to keep the sockeye salmon escapement in check.” Last year, both the Kenai and Kasilof rivers saw large overescapements of sockeye salmon, partially due to the closures of the setnet fishery. Managers tried to control the escapement by opening up the drift gillnet fleet for more fishing, which worked “moderately well,” Shields said. “It’s going to put the department in a difficult position — how far do you let the sockeye salmon run go above your escapement objective while you still maintain all the provisions in the (management) plan?” Shields said. One option the managers have is to discuss going outside the Upper Cook Inlet Salmon Management Plan to control escapement, which has been done before. It is a serious decision and requires input from the upper echelons of Fish & Game, but it was done as recently as last year, Shields said. A proviso in the management plan allows Fish & Game to deviate from the management plan to make their escapement goals, he said. However, that doesn’t mean the decisions are always clear. Shields said the decisions to go outside the management plans often generate disagreements within the department and commentary from the public. “When you start exceeding (escapement goals) by quite a bit on the upper end, you see a likelihood for smaller returns,” Shields said. “I wished it was a square decision with nice straight 90-degree corners, but sometimes the lines get a little fuzzy.” Reach Elizabeth Earl at [email protected]

State reaches royalty oil deal with Tesoro

KENAI — The state is considering selling an additional 20,000 to 25,000 barrels per day of its royalty-in-kind oil to Tesoro Refining & Marketing Co. per day as a way to prop up its finances. The state negotiates sales of the oil it collects from North Slope producers instead of taxes to the in-state refineries. Tesoro’s Nikiski refinery is one of three that produce commercial products in Alaska at present. The Alaska Department of Natural Resources has negotiated a five-year contract with the company to sell some of the state’s North Slope royalty oil to be refined at the company’s facility in Nikiski. The five-year contract is shorter than in the past, giving the state more flexibility to respond to the changing market for North Slope oil. The Nikiski refinery is currently producing less than its nameplate capacity of 72,000 barrels per day, or approximately 65,000 barrels per day during the peak season in the summer, according to the state’s Best Interest Finding, issued March 17. “Under the proposed contract, the sale of royalty-in-kind oil will maximize the revenue the State receives for its royalty oil,” the Best Interest Finding states. “In light of the State’s current and projected fiscal condition, the State has a heightened interest in maximizing revenue.” The contract would at least double the current amount of royalty oil sold to Tesoro, which was approximately 15,000 barrels per day, according to the 2014 Best Interest Finding for the sale of royalty oil to Tesoro. The state estimates that the sale of the additional oil under the contract will bring in an estimated $45–$56 million in revenue in addition to what would have been obtained in value, according to the Best Interest Finding. The finding emphasized multiple times how the state is focused on maximizing revenue through royalty oil and that the sale would help the administration to do so. Tesoro will have a choice in how much royalty oil it purchases from the state each month. If the company chooses to purchase the maximum amount from the state, between 45 and 68 percent of the total forecast North Slope royalty oil will go to the company, according to the Best Interest Finding. The state originally asked the state’s five refiners — BP, ConocoPhillips, Petro Star, Tesoro and FHR — whether they would be interested in purchasing more royalty oil in January 2015. Because of the state statute requiring that royalty oil be sold and used for the benefit of Alaskans, BP and ConocoPhillips were not able to meet the standards because they ship their product out of state. Petro Star and Tesoro are the only two commercial refineries that met the requirements and responded with interest, according to the Best Interest Finding. Of the two, Tesoro offered to accept a higher differential in price. “…In light of the very small number of interested parties and the low probability that competitive bidding would maximize total State value, the Commissioner determined that seeking a non-competitive, negotiated agreement was in the State’s best interest, and therefore, waived competitive bidding,” the Best Interest Finding states. Under the proposed contract, the oil will be sold to Tesoro for the monthly average of the daily high and low prices for Alaska North Slope crude. However, the state reserves the right to negotiate a price directly with Tesoro if either party feels the true market value of the crude is not being reflected in the averages. The state has the right to limit how much oil it sells so that the total amount of royalty oil sold does not exceed 95 percent of the total forecast production, according to the Best Interest Finding. There is also a built-in failsafe for both parties: if Tesoro fails to purchase oil for three months in a row, the contract automatically terminates. The Nikiski refinery currently employs 210 Alaskans and between 20 and 30 contractors, not counting the employment at its gas stations throughout the state. Though Petro Star’s refineries also produce commercial fuel, they focus on jet fuel. Tesoro is the only refinery that produces consumer gasoline in Alaska. Tesoro is also in negotiations to purchase two oil-importing terminals previously owned by Flint Hills Resources, which shuttered its refinery operations in North Pole in 2014. The company does not plan to acquire the refinery and storage components, taking aim only at the two terminals in Anchorage and Fairbanks. Tesoro Kenai Refinery Vice President Cameron Hunt said at a speech to the Kenai Chamber of Commerce in February that the company plans to use them to expand its market in the state. “What we see there is an opportunity to provide fuel to the Interior at a low cost,” Hunt said at the meeting. The contract will require the Legislature’s approval. Gov. Bill Walker’s administration introduced a pair of bills to the Legislature, SB 205 and HB 373, requesting approval for the sale on March 23. The Senate Resources Committee will discuss the bill on Wednesday, and the House Finance Committee will discuss it March 31. Reach Elizabeth Earl at [email protected]

Cook Inlet seismic, exploration work underway

KENAI — Despite pessimistic oil and gas outlooks, two companies are conducting seismic data-gathering activities on the Kenai Peninsula this spring and another is planning more exploration work. Hilcorp Alaska is planning to gather more seismic data on the oil and gas beneath the southern Kenai Peninsula, and SAExploration, a Houston, Texas-based oilfield services company, is gathering 2D and 3D seismic data on an area of the northern Kenai Peninsula near Nikiski. After April 1, Furie Operating Alaska plans to use a jack-up rig to drill new wells in its Kitchen Lights Unit. Hilcorp, which is also based in Houston, contracted with Global Geophysical Services Inc. to do a seismic survey of the area east of Anchor Point. The exploration is planned to through roughly May 31, and will cover a scattering of different lands on the southern peninsula. The Alaska Division of Oil and Gas is working to respond to public comments and approve the application. The areas included will be near the North Fork of Deep Creek, an area south of Ninilchik on the Stariski Creek, the whole vicinity of Anchor Point, a patch of land north Homer on the South Beaver Creek and an area near the end of East End Road. Global Geophysical Services plans to primarily use shotholes as an exploration method, though vibroseis — using heavy trucks pressing plates to the ground to shake the earth and measuring the reaction on ground-based sensors — is still a possibility. The company plans to drill 800 shotholes, three inches wide and 35 feet deep, approximately 330 feet apart in the exploration areas. Shothole drilling will be supported by helicopters, and if necessary, the company will clear an 8- to 10-foot diameter space around each hole to allow access, according to the application. All the equipment and personnel will come from Deadhorse and Anchorage, setting up a base of operations on private property between Ninilchik and Anchor Point. However, the company may look to hire support personal and utilize services locally, such as housing and waste disposal, according to the application. “Efforts will be made to hire community members and utilize local resources for select support positions,” the application states. Some have raised concerns about the environmental impact of Hilcorp’s seismic work, though. Bob Shavelson, executive director of Homer-based conservation organization Cook Inletkeeper, wrote in a public comment on Hilcorp’s application that the company “does not have a realistic grasp of the complex and sensitive habitats in which it seeks to operate.” Shavelson called for more detailed information from Hilcorp about the fish habitat in the proposed exploration areas, saying the application did not include detailed enough information about stream crossings. He also noted that while the company treated shotline trajectory as confidential, it released that information at a community meeting in Anchor Point and to the private landowners. “While Inletkeeper is disappointed in the cursory information provided by the applicant to make important decisions around our invaluable salmon habitat, its intent is to help (Department of Natural Resources) and other state and federal agencies improve the process for assessing the impacts — and mitigating the impacts — from projects such as the South Kenai 2D program,” Shavelson wrote. SAExploration’s project is in a more limited space north of Nikiski and being conducted entirely from helicopters, according to the application, which was approved Jan. 8. The area includes 85 square miles in portions of the northern Kenai National Wildlife Refuge and adjacent to the Captain Cook State Recreation Area. The work was originally expected to run through April 15, but it may be done by the end of March, said Rick Trupp, the general manager for SAExploration’s Alaska operations. The company was contracted by Cook Inlet Region Inc., the Southcentral Alaska Native regional corporation, to do the exploration work, Trupp said. “We have a staging site that’s fairly close to the coast, and we’re supporting operations from on the refuge,” Trupp said. CIRI’s goal in the project is to gain more specific information about the resources that it is fairly confident are there, said Jason Moore, the senior director of corporate communications. It is a fairly small-scale operation compared to other seismic work, Moore said. “We’re confident there’s gas resources where we’re looking,” Moore said. “We’re trying to get some very specific data.” In addition to the Hilcorp and SAExploration projects, Furie has applied to conduct further exploration projects in its Kitchen Lights Unit near the west side of Cook Inlet. Furie plans to drill nine more wells over the course of the next five years, or roughly two wells per year, according to its permit application. The exploration will drill through the Tyonek and Hemlock formations into the Jurassic formation. To conduct the exploration, the company has brought a new jack-up rig to the Kenai Peninsula, the Randolph Yost. The rig is currently docked in Homer for mechanical modifications and will be deployed to the Kitchen Lights Unit when the drilling season opens on April 1, according to Furie Senior Vice President Bruce Webb. Webb said the company is ready to drill, but the rate at which the wells will be drilled will depend on what the Legislature decides about the oil and gas tax credit program. Furie is a relatively small company and has invested a fair amount in the Cook Inlet area and is just beginning to see the first money come back from its investments, he said. “We’re told ‘when is the first day we can be out there?’” Webb said. “A lot hinges on what the state does with the (oil and gas) tax credits.” Reach Elizabeth Earl at [email protected]

Apache to shutter Alaska operations

Apache Corporation, which has been exploring oil and gas resources in the Cook Inlet area, announced Thursday that it will exit the state. The Houston, Texas-based corporation has been exploring north of Nikiski since approximately 2010. Apache’s Alaska general manager, John Hendrix, informed the Legislature of the company’s decision. “Low oil prices are certainly affecting the way companies do business not just here in Alaska but across the nation,” said Walker in a release. “My team and I are committed to working with the federal government and producers to increase oil production into the Trans Alaska Pipeline System and achieving a balanced and sustainable state budget.” The company had not yet released a public notice of its decision, but the news was publicly announced during the Alaska House of Representatives morning press conference Thursday. Low oil prices informed most of the decision, said Speaker of the Alaska House of Representatives Mike Chenault, R-Nikiski. Chenault said he spoke to the company Wednesday about its decision. “With oil prices the way they are, they don’t really have much choice,” Chenault said. “They can’t keep investing money without a short term investment.” He said the local economy will likely feel the company’s departure. “It could be just about anyone, all the way down to the restaurant down the street that’s providing food (to the workers),” Chenault said. “Each time one of these smaller companies goes away, it affects everyone.” The company had been engaged in stop-and-start exploration and seismic data gathering, marked by multiple delays and consideration of other potential projects, such as extending the North Road. In its annual report to the Securities and Exchanges Commission, the company called 2015 “a transitional year for Apache.” Most of its adaptation to low oil prices was to reduce activity and cut overhead and operating costs, according to the report. “We are prepared for a potentially ‘lower for longer’ commodity price cycle, while retaining our ability to dynamically manage our activity levels as commodity price and service costs dictate,” the company wrote in its annual report. Sen. Cathy Giessel, R-Anchorage, the chair of the Senate Resources Committee, said in a statement that she was disappointed that low oil prices forced the company to exit. “My hope is that we, as a state, can set the right environment and conditions for our private economy to weather the economic downturn,” Giessel said. “We owe it to Alaska’s economy, Alaska’s communities and Alaska’s families to be measured in how state government moves forward.”   Reach Elizabeth Earl at [email protected]

Report: More imported gasoline drives up in-state price

The market for Alaska’s refineries is becoming even tougher with reduced demand and increased pressure to compete with imported fuels. Though the state’s refineries are closer to markets in Alaska, reducing transportation costs, competitive pricing from refiners in Asia and the U.S. West Coast may challenge their businesses, according to a December 2015 report prepared for the Alaska Department of Natural Resources. California-based Econ One Research, Inc., completed the report in response to a request from the Alaska Senate Finance Committee. The state is down to three commercial refineries after Flint Hills’ North Pole refinery ceased operations in 2014: Petro Star’s refineries in Fairbanks and Valdez and Tesoro’s refinery in Nikiski. Petro Star mostly produces jet fuel while the Tesoro refinery mostly produces gasoline and exports the remaining heavy oil to other markets. Alaska’s refineries are smaller and simpler than other operations, and in Tesoro’s case, the distance from other markets that insulates it from competition may also make it difficult to export other products. Tesoro exports about 30 percent of each barrel in the form of fuel oil, for which there is no market in Alaska, because the facility in Nikiski is limited by its technology and cannot convert it to lighter fuel oils. The refineries on the West Coast can convert up to 90 percent of a barrel, making it harder for Tesoro to compete, according to the report. About 70 percent to 80 percent of total demand for petroleum products comes from in-state refineries, while the rest comes from the Pacific Northwest or Asia. In-state refiners supply most of the demand in Southcentral and Interior Alaska, according to the report. Exports from Alaska have been gradually decreasing. Before 2008, Alaska was a net exporter of refined petroleum product; after 2009, the state became a net importer. Imports represented 22 percent of Alaska’s supply in 2013, according to the report. “Alaska’s refineries supply the majority of demand for refined product in the State, though their contribution has declined over the past decade as imports have claimed an increasingly larger percentage of Alaska’s product demand,” the report states. Diane Hunt, the special projects and external relations coordinator for the Alaska Division of Oil & Gas, said the report was requested by Sen. Anna MacKinnon, R-Eagle River, in the wake of the Flint Hills refinery closure and had been sent to the senate roughly the same time as the Department of Natural Resources. The report also shed a little more light on refined petroleum product prices in Alaska. Prices are generally higher than they are in the rest of the U.S., although it is not consistent across products — the biggest difference is seen in gasoline and diesel, while the least difference is seen in jet fuel. Tesoro is now the only gasoline and diesel producer in Alaska, and concerned about a monopoly, some have called for an investigation into the company’s practices because Alaska’s gas prices are consistently much higher than other states’. The Alaska Department of Law has looked into the higher cost of gas in Alaska several times over the past few decades. The latest was in 2008, when an investigation concluded that there was no evidence of collusion between the state’s refiners. Price gouging itself is not illegal, but collusion between companies to raise prices is illegal, according to the investigation. The renewed call came from Sen. Bill Wielechowski, D-Anchorage, who sought to block Tesoro Alaska’s proposed purchase of several Flint Hills assets to expand distribution in the Interior region. “The already delicately balanced retail gas market in Alaska will be dominated by the company should this sale be approved, keeping further competition from the state and hiking prices for customers,” Wielechowski wrote in a January letter to Alaska Attorney General Craig Richards. The report puts forth an alternative explanation for higher gas prices in the state. Essentially, the authors suggested large buyers of gasoline secured purchases at prices similar to what the cost of importing would be, called “import parity.” “While gasoline is generally not imported into the Southcentral or Interior of the State, imports are a potential alternative to local supply,” the report states. “Large buyers of gasoline and diesel, including the State, have been able to purchase gasoline and diesel at prices that generally reflect the cost of importing product … from the Pacific Northwest.” Reach Elizabeth Earl at [email protected]sulaclarion.com.

Nonresidents pass residents in individual guide permits

KENAI — The number of guides and guiding businesses in Alaska is staying stable but the percentage of nonresidents is still climbing. Since the state saw a drop in guide participation in 2009, the numbers have stabilized, according to the 2014 license and logbook data published by the Alaska Department of Fish and Game. In 2014, there were 1,805 licensed guides in Alaska and 132 licensed businesses, with 983 holding a combined license. The majority of licenses are in the Southcentral region. Nonresident individual licensed guides overtook resident individual licensed guides for the first time in 2014. Between 2010 and 2014, the number of licensed resident guides fell from 1,009 to 892, while the number of nonresident guides climbed from 702 to 913, according to the report. However, there are still significantly more residents who hold either combination or guiding businesses licenses than nonresidents. Of the 983 total combination licenses in 2014, 868 went to residents. Of 132 licensed businesses, 105 went to residents, according to the report. Overall, 63 percent of licensed guides were residents, while 37 percent were not. The percentage of nonresidents has been slowly increasing by about 3 percent every year, climbing from 33 percent in 2012 to 35 percent in 2013. In Southcentral Alaska, freshwater guiding remains dominant over saltwater guiding. The Southcentral region dominates the freshwater guiding market statewide; 81 percent of freshwater participation occurred in the region in 2014, according to the report. Sockeye, coho and king salmon were the most common species harvested, comprising 45 percent, 44 percent and 6 percent of the statewide harvest respectively. Out of a total of 95,003 freshwater guided angler-days in Southcentral, 8,123 were spent by residents, and 84,396 were spent by nonresidents. The remainder were compensated, crew or unknown, according to the report. The demographics of target species for freshwater guided trips are changing, too. With tightened king restrictions for the past several years, guides have had to change tactics to other species. Sockeye and coho are taking an increasingly larger role as target species for all guided trips, while kings are on the decline, according to the harvest data for 2012–2014. On the Kenai River specifically, the statistics are fairly similar to those statewide: of the 336 total registered guides in 2014, 32 percent were nonresident. That number has also steadily increased over the years, climbing from a 25 percent in 2010 to 33 percent in 2015. The total number of guides continues to fall, though — 2015 saw the fewest guides of any year since 1994, according to the registration records. The large number of guides on the Kenai River, especially of nonresident guides, has been a concern for some time for Kenai Peninsula locals. The Kenai River Special Management Area advisory board, composed of citizens and state agency representatives, has been discussing for some time whether to limit the number of guides on the river and how it could be done. At an open house for peninsula guides in November, some complained about the behavior of nonresident guides and asked if the state could charge nonresidents more in the guide registration process. However, others were more settled with nonresident guides. Courtesy on the river has improved since the implementation of the Kenai River Guide Academy, a mandatory class for guides on the river, said Mike Fenton, a guide with Fenton Bros. Guided Sportfishing Alaska in Soldotna. “I don’t see a lot of disparity in the quality of the nonresident guides,” Fenton said. “From a courtesy standpoint, I think all the guides that have gone through the course understand courtesy on the river.” Nonresident guides do have to pay steeper fees. They should be able to guide in Alaska if they want to, the same way Alaskan guides should be able to guide elsewhere if they choose, said Rod Berg, co-owner of Rod N’ Real Charters in Soldotna. “I know some of the public thinks it should be all resident guides, but if I want to go down to Washington or Oregon and guide, that’s my right,” Berg said. “I don’t care about nonresident guides. We have far more pressing issues.” Reach Elizabeth Earl at [email protected]  

BlueCrest: Credits an investment, not a cost

KENAI — BlueCrest Energy President and CEO Benjamin Johnson urged the public to contact the Legislature and ask them not to make any changes to the oil and gas tax credit program until 2017. The company is less than three months away from its first oil production at the Cosmopolitan field off the coast of Anchor Point. Production will be relatively limited at first — neighbors can expect to see one to two trucks a day on the Sterling Highway, taking crude oil north to the Tesoro refinery in Nikiski. As more wells are drilled, that number could be as many as 20 per day, Johnson said. While the oil production is on schedule, the other aspect of the development remains in limbo. A gas pocket that sits above the oil reservoir will be postponed if the state makes significant cuts to the oil and gas tax credit program, Johnson said at the annual Industry Outlook Forum in Kenai’s Old Carr’s Mall on Jan. 28. “It doesn’t work without the tax credits or some type of incentive,” Johnson said. “But we know that we have large amounts of resources. … These resources need to be developed. The tax credits are really critical to make sure that that’s done.” The position of the gas requires offshore drilling, while the oil development will be done with directional drilling from a facility onshore. Placing offshore platforms is significantly more expensive, and if the tax credit program is modified too much, it will postpone the gas development, Johnson said. There is a deadline for the gas development as well. A jack-up rig, the Spartan 151, is currently harbored in Seward and would be used to develop the gas wells if the development moves forward, Johnson said. However, unless the development goes through in 2016, the rig will leave Alaska and, “I’m not sure when we’ll be able to get another rig to drill offshore,” Johnson said. “To know if we’ll drill in 2016, we have to have the funding commitments and everything put together in 2016,” Johnson said. “Everything’s ready to go, we could be drilling April 15 if we knew the tax credits were going to be in place. ” The oil and gas tax credit program is one of the most scrutinized area of Alaska’s state budget as the Legislature looks to plug an approximately $3.5 billion gap in the unrestricted general fund this year. Gov. Bill Walker has called the incentives “unsustainable” and has proposed changes that would significantly cut payments, limiting the annual repurchases to $25 million. While Johnson said he could see the reason for some changes to the program, he said the Legislature should keep the same program for at least the next year. The company has already signed contracts based on the expectation that those tax credits will be carried through, he said. BlueCrest has accrued $45 million in tax credits to date, and the building this year would total about another $100 million in tax credit payments, Johnson said. He asked the attendees at the forum to “let the governor know” the impacts of changing the oil and gas tax credits. “This is the time that … it’s important that the Legislature and the governor understand that the gas development in the Cook Inlet is very important,” Johnson said. “Properly designed tax credits are … a very good investment for Alaskans. It’s an investment, not a cost.” Even if the gas production has to be delayed, the company plans to begin drilling soon, with first oil expected by April from the first well. Two additional wells will be drilled later this year, all of which will be hydraulic fracture wells, Johnson said. All three wills will be directionally drilled from an onshore rig that was designed specially for the BlueCrest project, designed to run on both diesel and natural gas, Johnson said. Johnson said 100 percent of the employees hired to work on the facility are Alaskans, and the company just hired several graduates from Kenai Peninsula College. Jayce Robertson is one of those new employees. A December 2015 Kenai Peninsula College graduate, Robertson obtained his degree in process technology and was immediately offered a job working at BlueCrest, which he said he will start Feb. 1. “I am extremely grateful for the opportunity that BlueCrest has offered me,” Robertson said when he spoke at the forum. “This is also a success story for Kenai Peninsula College and BlueCrest Energy.” Johnson said Robertson was one of a group of students who attended the forum last year who stood up during Johnson’s speech and asked to be hired for the development of Cosmopolitan. “We’re really excited about the folks that we just hired out of Kenai Peninsula College,” Johnson said. “I was thankful when they stood up last year and said, ‘Hey, hire me!’ And we did.” Reach Elizabeth Earl at [email protected]

Hilcorp still ready to buy assets as it looks to cost control

KENAI — As other oil and gas companies seek to trim expenses with layoffs and stalling development, Hilcorp Alaska has no plans to stop acquisitions. The company will continue to buy properties in Alaska, said Chad Helgeson, the Kenai area operations manager, in an update to the public at the annual Industry Outlook Forum in Kenai on Jan. 28. “Hilcorp is a growth company, acquisition-based,” Helgeson said. “That’s been our model.” The company’s workforce has also steadily increased. Of the approximately 520 employees statewide, 240 live on the Kenai Peninsula, Helgeson said. Aggressive purchases have left Hilcorp as the largest producer in Cook Inlet and with holdings on the North Slope. The company has no plans to downsize, either, and will take advantage of properties coming up for sale as other companies hit the rocks, Helgeson said. “Right now, pretty exciting times — a lot of properties are probably going to be available for sale,” Helgeson said. “What are we going to buy next? I have no idea.” At the same time, the company is feeling the impacts of sliding oil prices, though it continues to purchase and spend. Between 2014 and 2015, Hilcorp’s spending in Alaska decreased from $443 million to $281 million, a direct reflection of the decline in oil prices, Helgeson said. This year, the company expects to spend about $220 million, he said. The allocations of investment changed as well. In 2014, most of the money went to capital projects and drilling; in 2015, that changed to be majority maintenance and operations. As oil prices continue to decrease, the company will continue to monitor it and adjust its operations accordingly, Helgeson said. “As the price of oil continues to drop down, our goal is to be responsible and sustainable,” Helgeson said. “Our goal is to be here for the long-term. Our oil and gas contracts are going eight years out … we’ve got to be responsible.” The focus for the Kenai area this year is to control costs, Helgeson said. One of the questions is how the company can look at its Cook Inlet assets and continue to make them profitable, he said. The company applied earlier this year to drill two new wells in its Happy Valley pad southeast of Ninilchik and is in the process of applying to expand the boundaries of its lease in the Deep Creek Unit. The current pool boundaries, defined by the Alaska Oil and Gas Conservation Commission in 2004 when Marathon Oil leased the property, do not adequately include the majority of the gas in the formation, according to the application. This is still in process but is something the Kenai area team will work on this year, Helgeson said. If the commission approves the motion, Hilcorp’s rights under the lease would expand by about 400 acres, according to the application. Helgeson said the company is also exploring a project on the southern Kenai Peninsula and is planning to do seismic work on it later this year. However, the permitting process takes time, so it may be 2017 before any work actually begins, he said. He said there would be public meetings on any exploration the company does but did not give a more exact location of the exploration. “(We’re asking) ‘What can we do to extend the life of our fields?’” Helgeson said. “We’re planning to do some exploration type of activity. … What we’re finding is that it takes somewhere between 12 and 18 months to fully permit a project.” Reach Elizabeth Earl at [email protected]

Miller, SEC settle for $5M fine; assets overvalued by $400M

KENAI — The U.S. Securities and Exchanges Commission has reached a $5 million settlement with Miller Energy Resources after the company inflated the value of its Alaska assets. The settlement, reached Jan. 12, concluded the SEC’s investigation into the oil and gas company, the parent company of Cook Inlet Energy. The SEC charged the company, two former executives, and one of its former accountants with fraudulently inflating the values of the company’s Alaska oil and gas properties by more than $400 million. The inflated reports began in January 2010, shortly after Miller Energy acquired a series of Alaska properties from another company, according to the settlement document. Between 2010 and the announcement of the charges in August 2015, the company’s stocks skyrocketed — from about 60 cents per share to almost $9 per share. The company’s then-CFO, Paul W. Boyd, double-counted fixed assets, and then-CEO of Alaska operations David M. Hall knowingly understated expenses, according to the SEC’s cease-and-desist order from August 2015. An accountant from now-defunct accounting firm Sherb & Co audited the company’s reports in the year after the acquisition and failed to thoroughly investigate the financial statements, according to the cease-and-desist order. The company bought its Alaska properties for $2.25 million in 2009 and later valued at $480 million. “When computing their estimate of fair value, Miller Energy and the CFO failed to consider the existence of numerous, readily apparent data points strongly indicating that the assets were worth substantially less than the $480 million value Miller Energy recorded,” according to the settlement. Boyd and Hall requested a reserves report with faulty numbers and then presented it as the total fair value of the oil and gas reserves, increasing the total value of the company on paper by $368 million, according to the settlement. They also “refashioned” an insurance study that misrepresented the value of the company’s assets, according to the settlement. “As a result of the foregoing, Miller Energy overvalued the Alaska assets by more than $400 million,” according to the settlement. Miller Energy has agreed to unregister all its stocks and fully cooperate with the SEC to produce documents and provide employees to testify about the violations, according to the settlement. Miller Energy is also in the midst of a Chapter 11 bankruptcy and restructuring itself. The company announced the bankruptcy in October, blaming plummeting oil prices, a drilling plan that did not produce to expectations and the withdrawal of a private lender. The company owes more than $180 million, as reported by the Clarion on Oct. 1, 2015. Should the bankruptcy court accept the company’s plan for restructuring, the $5 million will become a “general unsecured claim,” essentially an IOU. The fine would then be paid “consistently with the payments made to Miller Energy’s other general unsecured creditors,” according to the SEC decision. The federal bankruptcy court has until June 30, 2016 to decide whether to accept the bankruptcy plan, according to the settlement. If the court does not accept the bankruptcy plan, Miller Energy will have to pay the SEC in installments, completing payment by no later than 2019. Reach Elizabeth Earl at [email protected]

Miller Energy, SEC settle for $5M

KENAI — The U.S. Securities and Exchanges Commission has reached a settlement with Miller Energy Resources after the company inflated the value of its assets for a $5 million payment. The settlement, reached Jan. 12, will conclude the SEC’s investigation into the oil and gas company, the parent company of Cook Inlet Energy. The SEC charged the company, two former executives, and one of its former accountants with fraudulently inflating the values of the company’s Alaska oil and gas properties by more than $400 million. The inflated reports began in January 2010, shortly after Miller Energy acquired a series of Alaska properties from another company, according to the settlement document. Between 2010 and the announcement of the charges in August 2015, the company’s stocks skyrocketed — from about 60 cents per share to almost $9 per share. The company’s then-CFO, Paul W. Boyd, double-counted fixed assets, and then-CEO of Alaska operations David M. Hall knowingly understated expenses, according to the SEC’s cease-and-desist order from August 2015. An accountant from now-defunct accounting firm Sherb & Co audited the company’s reports in the year after the acquisition and failed to thoroughly investigate the financial statements, according to the cease-and-desist order. The company bought its Alaska properties for $2.25 million in 2009 and later valued at $480 million. “When computing their estimate of fair value, Miller Energy and the CFO failed to consider the existence of numerous, readily apparent data points strongly indicating that the assets were worth substantially less than the $480 million value Miller Energy recorded,” according to the settlement. Boyd and Hall requested a reserves report with faulty numbers and then presented it as the total fair value of the oil and gas reserves, increasing the total value of the company on paper by $368 million, according to the settlement. They also “refashioned” an insurance study that misrepresented the value of the company’s assets, according to the settlement. “As a result of the foregoing, Miller Energy overvalued the Alaska assets by more than $400 million,” according to the settlement. Miller Energy has agreed to unregister all its stocks and fully cooperate with the SEC to produce documents and provide employees to testify about the violations, according to the settlement. Miller Energy is also in the midst of a Chapter 11 bankruptcy and restructuring itself. The company announced the bankruptcy in October, blaming plummeting oil prices, a drilling plan that did not produce to expectations and the withdrawal of a private lender. The company owes more than $180 million, as reported by the Clarion on Oct. 1, 2015. Should the bankruptcy court accept the company’s plan for restructuring, the $5 million will become a “general unsecured claim,” essentially an IOU. The fine would then be paid “consistently with the payments made to Miller Energy’s other general unsecured creditors,” according to the SEC decision. The federal bankruptcy court has until June 30, 2016 to decide whether to accept the bankruptcy plan, according to the settlement. If the court does not accept the bankruptcy plan, Miller Energy will have to pay the SEC in installments, completing payment by no later than 2019. Reach Elizabeth Earl at [email protected]

ADFG reports show sportfishing may damage Kenai River

KENAI — The increasing numbers of bank anglers and powerboats on the Kenai River may be damaging the river habitat. The Alaska Department of Fish & Game released two long-delayed reports in October addressing the effect of bank angling and powerboat use on bank erosion in the Kenai River. The reports, covering the years 2000 and 2001, found that as more anglers fished the river, the more banks crumbled and vegetation disappeared. The reports are the final two installments of a series commissioned by the Board of Fisheries in 1996 to study the effects of increased sport fishing participation on the Kenai River after the board increased the sockeye salmon escapement goal. Sport fishing participation more than tripled on the Kenai River between 1977 and 1995. The Board of Fisheries requested that the ADF&G monitor angler use and impacts to the habitats on the river, which was done from 1997 to 2001. Although the reports from 1997, 1998 and 1999 were published within two or three years, the reports from 2000 and 2001 never appeared. At first, the research team encountered some snarls with methodology, said Mary King, a former fisheries biologist who served as the principal investigator for the study. When they began in 1997, there was no definitive methodology for studying bank change over time. By 1998, they had determined how to approach the measurements and were getting observable results by 1999. “The reports that were published in ‘97 and ‘98, we were stumbling around trying to find a method that the Board of Fisheries asked us to do,” King said. “Once we found a method and were getting results, they never got published.” The researchers focused on the herbaceous lands and shrublands to study angler effect because they would be more sensitive to foot traffic, said Patricia Hansen, King’s co-author on the study. They also tried to select an even number of sites on both sides of the river, she said. “For each macrohabitat type, sites were selected as randomly as possible allowing for various levels of angler use,” Hansen wrote in an email. “We also checked to be sure both bank and meander were represented within each habitat type.” The plant habitat on the banks was significantly impacted because of trampling by anglers, according to the 2001 report. As vegetation was trampled, bare ground and water cover increased. Invasive species moved into the damaged soil — dandelions, grass and horsetails. Low angler effort areas had a small increase and areas with many anglers saw less grass but more horsetails and dandelions. About half the sites showed bank gain while the other half showed bank loss. Bank gain largely occurs when the bank has broken but not separated yet in a process called calving. The average bank loss came out to about .28 meters, slightly more than 10 inches, King said. Some of the accelerated erosion underneath the edge of the bank can be attributed to the wake from powerboats and some is due to the increased presence of sport anglers, she said. “What the conclusions indicated was that there are measurable changes in habitat that can be attributed to the presence of sport fishing on the Kenai River,” King said. “If you compound (powerboats) with whatever shore angling is going on, we saw changes in vegetation that were damaging to the natural habitat.” Stuck in draft That significant changes were detected over only three seasons was “cause for concern,” the researchers wrote in the conclusion. They recommended the fisheries managers reevaluate how sport fisheries are prosecuted on the Kenai River to minimize damage to the riparian habitats. Though the results were presented to the Board of Fisheries in 2002, the studies were never published. King said she did not want to speculate as to why they were not published, but said the results had been filed on time and presented as requested. In her presentation to the board in 2002, King made three recommendations: to continue assessment of shore angler use and bank position change until better methods are developed, to finish the aerial photogrammetry feasibility study and make recommendations for future application river-wide and to develop better programs to educate anglers on how to preserve the environment. The second two were carried through, but the shore angler and bank change assessments were abandoned. Jim Hasbrouck, the chief fisheries scientist for the Fish & Game in Anchorage, said the reports were delayed because of staffing changes. The reports were classified as “draft” for that time period. “The information was presented to the Board of Fisheries, but several staffing changes happened at the time, people moving around into different positions,” Hasbrouck said. During the 14 years it took to release the reports, several people called for their release at Board of Fisheries meetings, but the logs held at the Alaska Department of Fish and Game commissioner’s Office have no record of anyone ever submitting a public records request for the reports, said Lisa Evans, assistant director of Fish and Game’s Division of Sport Fish. There are also no records of correspondence about the reports between 2000 and the present between staff at the Soldotna Fish & Game office and the Commissioner’s office, Evans wrote in an email. In a public comment submitted at the 2008 meeting, Gary Hollier of the Kenai Peninsula Fisherman’s Association cited King’s presentation in 2002 on the damage to the riverbanks and asked why there were no updated habitat reports in the years since. Two other members of the public also asked why there had been no updates on the habitat reports in 2008. In 2014, Lisa Gabriel, also of the Kenai Peninsula Fisherman’s Association, submitted a public comment to the Board of Fisheries detailing that she knew the reports existed and asking why they hadn’t been published. Gabriel said she never submitted a formal records request for the 2000 and 2001 reports because she was able to find the draft versions on the Internet. When she requested a copy of the most current habitat report, she was given another Kenai River habitat assessment from 2010 from a team of researchers from Inter-fluve, a river restoration research firm, and Cramer Fish Sciences, a fisheries research firm. The report had been presented to Fish & Game and to the Kenai River Sportfishing Association. It primarily focused on restoration efforts, but in the section addressing bank erosion said some reports had indicated that increased angler traffic caused bank loss. The report concluded that there is insufficient information about the scale of habitat changes and what causes them. “There was nothing on biological habitat information,” Gabriel said. “(The report said) we’re repairing walkways, that sort of thing. All of the reports we were seeing at the Board of Fish level, none of them were official reports.”  ‘Appropriate modification’ King, who retired from Fish & Game in 2010, said she did not change offices for some time after the reports were filed and did not know why the reports had not been published. In a presentation she gave to the Kenai River Special Management Area board in February 2015, she said she requested the status of the reports when she retired in 2010 and was told they had never been peer-reviewed. The project ended in 2001 and has not been revived, she said. There are no ongoing habitat research projects on the Kenai River through Fish & Game, according to Habitat Division director Ginny Litchfield. Fish & Game is required by statute in the late-run salmon management plan to conduct habitat studies “to the extent practicable” for the Board of Fisheries meetings on the Upper Cook Inlet. It also requires the board to make “appropriate modification” if the studies show a net loss of riparian habitat, according to the management plan. To be published, Fish & Game’s research reports must first be compiled, sent through the peer review process, edited, reviewed again and then sent to Research and Technical Services in Anchorage to be published. Sometimes this process takes years, with backup through the system. However, King and Hansen’s report remained in publishing purgatory for an exceptionally long time compared to other reports published by Fish & Game. Other reports are published within five or six years; some are published in less time. The first reports they wrote were published in fewer than three years. Jeff Fox, the former Director of Commercial Fisheries based in Soldotna, said people repeatedly came in asking for those reports and that they were demanded at various meetings. The department is required to perform yearly assessments on the habitat quality of the river but has not done so in years, he said. At this point, King’s reports are so old as to be irrelevant, he said. “That’s the interesting thing,” Fox said. “If you hang onto something long enough, it doesn’t matter what the conclusions are.” Under the Alaska open records laws, oral requests are usually considered valid requests for public records. If the oral request is denied, the requester is supposed to follow up with a written request. The department can ask that the request be submitted in writing, but it is still a valid request. Fish & Game has been investigated for noncompliance with the open records laws before. In 2009, an incident at the Anchorage office over the disclosure of a public document led to the Alaska Ombudsman’s Office investigating Fish & Game and recommending that the department release the record, train its staff how to comply with records requests and consult with the Assistant Attorney General on how to better fulfill requests in the future. The department did release the record requested, but the investigation was closed as “partially rectified” because the agency did not fully implement the ombudsman’s recommendations, according to the investigation archives. No further reports have been funded by Fish & Game on the habitat of the Kenai River. King said the studies were cut off, but they would have likely continued to show damage. “Had the project continued, we probably would have found further correlations with the sport fishery,” King said. “But the hard part of it is the teasing out of what the natural process was. The correlations were to look at whether or not something was significant accelerating the erosion.” Reach Elizabeth Earl at [email protected]

AK LNG Project may bring more Kenai River traffic

KENAI — Managers are concerned that pressure on the Kenai River could increase if the Alaska LNG P roject goes through. The project is still tentative and will not receive a final ruling until 2018 at the earliest, but if it does go through, the borough could see an influx of as many as 5,000 workers for the five years it takes to construct the 900-acre plant in Nikiski. Unless the camp is closed, many of them will likely recreate on the Kenai River. The Kenai River Special Management Area board raised concerns about access to the river at its meeting Nov. 12. The Kenai River is already seeing impacts from too many people wanting to fish and boat, and the addition of a potential 5,000 more LNG employees — and potentially their families — to the peninsula. Larry Persily, borough mayor Mike Navarre’s special assistant for oil and gas, addressed the board with an update about the particulars of the project. Much is still up for debate, including whether the project will even happen, he said. “It’s going to be three years at best before we know whether this project is going to go through,” Persily said. “But during those three years, there will be a lot of work to do and a lot of community input.” The board has been debating ways to limit access to the river for some time. During the board’s October meeting, the members asked Alaska Department of Parks and Outdoor Recreation representative Jack Blackwell to request a white paper from the Department of Law about ways to limit use of the river. Blackwell said he requested the paper, but it was not ready for the November meeting. However, he said it would be ready for the December meeting. The overuse of the river could be affecting habitat and water quality as well. Jeanne Swartz, a board member and an environmental program manager with the Alaska Department of Environmental Conservation, said a water quality survey from the Kenai Watershed Forum showed a relative improvement in water quality but elevated levels of certain metals, including copper and zinc. “We’re not sure what could be causing that,” Swartz said. “We looked at the things that we were sure weren’t a problem and took them out of the program, and everything else is going to be looked at closely. Then we’ll be able to make a more sophisticated or more in-depth analysis.” Elevated levels of copper can disturb young salmon, according to the National Oceanic and Atmospheric Administration. When the agency conducted a survey of 811 sites around the country in 2007, they found that elevated levels of copper may have come from road runoff in the surrounding areas and interfered with the salmon’s senses. Swartz said the Department of Environmental Conservation is not sure what is causing the elevated levels of metals in the river but may request data from the Alaska Department of Transportation about road traffic as well as other information about potential sources of toxins in the environment. If the LNG does come to Nikiski, there will likely be significant increases in traffic on roads close to the Kenai River, which could cause impacts in the water quality if road runoff damages salmon. Persily suggested that the board list all its items of concern and submit them to the Federal Energy Regulatory Commission, which will be conducting the Environmental Impact Statement for the LNG project. That statement will take approximately three years and will play a significant role in the project’s fate, he said. “FERC and the regulators know that this is going to have to look at salmon habitats, road traffic and air quality standards,” Persily said. “If there’s a concern that what are the company’s plans to deal with 5,000 workers roughly who on their days off will want to go to limited recreational opportunities on Kenai, that should be proposed in the EIS.” Reach Elizabeth Earl at [email protected]

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