Elwood Brehmer

Commerce Dept. focusing on addressing energy problems

Alaska Commerce Department Commissioner Susan Bell highlighted the wide-ranging work her department is involved in across the state in a May 19 speech to the Anchorage Chamber of Commerce. Bell said dealing with the ever-present energy issues the state faces are “central” to the mission of many of the 13 agencies in the broad Department of Commerce, Community and Economic Development. “When we’re thinking about our economic foundations something we all need to do is think about how we use the energy resources we’re blessed with and how we bring down the cost of energy across the state,” she said. Through the Alaska Industrial Development and Export Authority and its sister agency the Alaska Energy Authority, both under the Commerce umbrella, the department is involved in major projects to lower the cost of living in the state. Bell serves on the board of directors for both state groups, as well as the Alaska Gasline Development Corp. board. AIDEA’s Interior Energy Project includes more than $260 million of work to develop an area-wide natural gas storage and distribution network in Fairbanks and North Pole. While gas will initially be supplied via trucks hauling it from the North Slope, Bell said the distribution system is a long-term investment. “Whether we have a large (gas) pipeline or a medium-sized pipeline it will be critical that we have a market in place and ready to use that gas when it comes.” Bell said. Getting natural gas to the Interior could cut heating bills in half for the region’s residents that currently rely on fuel oil, economic impact studies have indicated. Lowering energy costs is one of the single most important things the state can do to spur job creation, Bell said. As AIDEA works to lower heating costs, AEA is focused on meeting the Legislature’s goal of generating at least 50 percent of the state’s electricity through renewable sources by 2025. Bell said a little more than 20 percent of Alaska’s power comes from such sources — primarily hydro — now. She stressed that the impetus behind the work is to reduce cost. “We’re not just developing renewables for renewables’ sake,” she said. Alaska’s biggest renewable energy project, which will be one of the tallest dams in the country if it’s built and would get the state to the 50 percent goal, is the Susitna-Watana dam. In the state’s 2014 fiscal year about to end June 30, AEA had a $95 million budget for “very detailed” environmental, engineering and technical work to get the project to FERC licensing, Bell said. There is $20 million to continue Susitna-Watana study in the 2015 capital budget on Gov. Sean Parnell’s desk now. With AEA as a catalyst, the Legislature has appropriated $227.5 million since in 251 renewable energy projects large and small across Alaska through the Renewable Energy Fund since its inception in 2008, she said. The Legislature put $22.8 million towards the fund in the pending capital budget. Bell called the 50-plus mile long Red Dog mine road and port system in Northwest Alaska a “template” for future resource development. Owned by AIDEA, the transportation infrastructure to the zinc mine is considered by some one the authority’s greatest success story. “Our department has been working to increase the visibility of our resources as well as the tools that we have from permitting to financing entities like AIDEA that can partner with the private sector, with our banking community,” Bell said. AIDEA is in the midst of a several years-long environmental impact statement process to ultimately build another industrial road in the region, a 220-mile road from the Dalton Highway to the Ambler mining district. The authority is finalizing a route and working with local communities to answer key questions about the project, she said. Elwood Brehmer can be reached at [email protected]

Kenai company leading the way on unmanned aircraft radar

With a little hard work, Kenai’s John Parker might just be able to answer the biggest question facing the Federal Aviation Administration: Can manned and unmanned aircraft coexist? Parker, founder of Integrated Robotics Imaging Systems Ltd., acquired exclusive patent rights to a prototype “sense and avoid” radar for unmanned aerial vehicles in early April from a University of Denver research team. “My phone’s kind of been ringing off the hook since it went public that I’ve got this thing,” Parker said. While in Alaska for the opening of the Pan-Pacific UAS Test Range Complex, headquartered in Fairbanks, FAA Administrator Michael Huerta said safely integrating unmanned aircraft into the national airspace is the biggest challenge the emerging technology presents. An unmanned aerial vehicle becomes an unmanned aerial system, or UAS, when outfitted with a camera, radar, or other equipment to perform a specific task, Parker explained. “(UAS) flights in VFR (visual flight rules) airspace, where there is no air traffic control, that raises one set of issues and the kind of questions we need to understand is who else is using that VFR airspace and can they see this aircraft because VFR airspace relies on ‘see and avoid,’” Huerta said. For UAS, the FAA mantra is transformed to “sense and avoid,” according to Parker. The “sense” part of the equation has seemingly been worked out. The radar can detect small aircraft and their altitude, speed and direction up to a mile away, he said. During tests at Atlanta’s Hartsfield-Jackson International Airport, Parker said it correctly identified planes and their routes with 99.99 percent accuracy while the takeoff and landing frequency was as high as one every 39 seconds. As far as he is aware, Parker’s radar is the most advanced unmanned aircraft sense and avoid system in the country, he said. Parker’s curiosity in unmanned aerial vehicles grew in 2011 when using the craft to monitor debris washing up on Alaska’s shore from the Japanese earthquake was considered. Parker incorporated Integrated Robotics Imaging Systems in November 2012 and began assembling engineering talent and industry expertise, he said. “In my research I actually stumbled across this white paper on radar-based detection and it piqued my interest because I knew being an aircraft (accident) investigator for a lot of years — the key to UAVs in the national airspace is collision avoidance,” he said. “That’s the key to the whole thing.” The Integrated Robotics team currently consists of five people across the U.S. and Canada and is headquartered in Kenai. His team will soon be centralized on the Peninsula, he said. When placed under a protective dome, the 12-ounce radar with a roughly four-inch square antenna will be tested on the Infotron IT180, a French-made, dual-rotor unmanned platform at Pan-Pacific Range sites, Parker said. The Alaska Center for Unmanned Aircraft Systems Integration, run by the University of Alaska Fairbanks, had its Pan-Pacific Range, which includes test sites in Oregon and Hawaii, chosen by the FAA in December as one of six UAS testing operations nationwide. The ranges are a major step in the FAA’s attempt to develop guidelines for melding commercial UAS operations into the national airspace, something Congress has dictated be done by the end of 2015. At 31 pounds and with a 71-inch rotor diameter, the IT180 can carry the radar and classifies as a small craft. It is significantly larger than other unmanned aircraft in production — which are often less than 10 pounds — meaning the radar will have to be downsized to make it truly universal. Parker said phased array antennas of about an inch-square are available and doesn’t foresee downsizing the radar to be an issue. The next big hurdle, he said is developing a software program to handle the “avoid” part of the equation. If the radar detects an aircraft flying a potentially dangerous route nearby, the software needs to take over if the pilot on the ground doesn’t respond appropriately, or in time, Parker stressed. “The real-time capability of this equipment is key and that autonomous timing situation to make sure that if we have to we take the pilot out of the scenario and the aircraft avoids a target and we’re talking about very little time,” he said. “That envelope is going to be very small.” Exactly how short the timeframe needs to be will be determined during testing, but Parker said he believes it will be in the “tenths of seconds.” Parker’s plan is for his team to have software ready to test and fly in six to 10 months, he said. Once the bugs are worked out, it’s a matter of designing a universal plug adapting the radar to other UAVs, he said. Ultimately, Parker sees Integrated Robotics as about 18 months away from manufacturing its first commercial sense and avoid radar system, a timeline that fits with FAA’s. He already has a 3,000 square-foot building in South Kenai waiting to be the Integrated Robotics manufacturing facility when the time comes. Putting each unit together will take an additional five-person crew “a couple days” once a system is in place, Parker estimates. Then, it’s on to the sale. With much work left to do a price point for the early radar systems has not been set, but when considering the technology and the fact that radars for small general aviation are often $15,000, a $7,000 to $10,000 tag would not be unreasonable, he said. “If we produce a quality product, we won’t have any problem selling it,” he said. For Parker, getting the equipment in the hands of those that need it is the most important thing. “Because it’s a one-off and there’s no comparative you’ve got to look at the value to the client, and it fulfills two issues,” he said. “One, it allows companies to meet the requirements FAA is going to put on all of us, and two, by meeting those requirements it will drive revenue to their company. We see there’s an additional spin-off on that for us because as it drives revenue to their company they’re going to be needing more so it will create follow-on revenue for us.” Elwood Brehmer can be reached at [email protected]

Sealaska posts $35M loss

Sealaska Corp. reported a $35 million net loss for 2013 in its annual report released May 14. The Southeast Alaska Native corporation attributed much of the bad year to a $26 million operating loss from one of its construction subsidiaries that offset profits in other businesses in a corporate release. “Despite posting losses, Sealaska is a stable institution that continues to protect its Native land, support education and shareholder opportunities, while growing our investments and operations,” Sealaska President and CEO Chris McNeil Jr. said in a formal statement. “Sealaska has strong cash flow and access to financing and we are well positioned to make new acquisitions.” Overall, the financial report indicates operational losses of $52.2 million in 2013. Sealaska made up $21.9 million of that in net natural resources revenue sharing from other Native corporations as part of the Alaska Native Claims Settlement Act. A spokesman for a collection of Sealaska board candidates known as the Sealaska 4 said in a group statement that the prospect of “huge losses” motivated the four candidates to run for board seats, and that the losses turned out to be greater than first feared. “The shareholders of Sealaska deserve a full explanation of these losses, and the reported accounting adjustments as well,” Randy Wanamaker said. The corporate release states the company realized $24.6 million in accounting adjustments for the year. In April, Sealaska announced spring shareholder distributions totaling $11.8 million that were reportedly paid out April 11. The company’s annual shareholder meeting will be held June 28 in Seattle. Elwood Brehmer can be reached at [email protected]

Pebble cites EPA emails were biased

Pebble mine developers claim they have proof Environmental Protection Agency officials acted with bias and a pre-determined mindset when examining the potential risks a mine could pose to Bristol Bay fisheries. Documents and email chain records from as far back as 2010, obtained by Pebble Limited Partnership through the Freedom of Information Act, show EPA Region 10 staff in lengthy communications about the prospect of preemptively banning large mines in the Bristol Bay watershed. These communications occurred between staff within the EPA and with agency staff and conservation group members. In an email dated Sept. 14, 2010, EPA Aquatic Ecologist for Bristol Bay Phil North wrote to current EPA Region 10 Office of Ecology, Tribal and Public Affairs Manager Michael Szerlog and program manager Richard Parkin that the land in the Nushagak and Kvichak drainages — where Pebble’s copper and gold claims are located — is owned almost entirely by the State of Alaska and private parties, making it susceptible for development, and because of that, action should be taken to prioritize its protection. The email predates by months the EPA’s Feb. 7, 2011, announcement it would undertake a yearlong risk assessment of the impacts of mining in the Bristol Bay watershed. Most other Bristol Bay land is federally protected as wildlife refuge or national park land. “A big project like Pebble would be a big blow by itself (not to mention seven more Pebbles), but it is the accumulation of mines and highways and all the associated residential and commercial development enabled by the larger scale developments, that will ultimately cause the demise of the (salmon) resources we are targeting,” North wrote. EPA Administrator Gina McCarthy said Feb. 28 that the agency would move forward with the early stages of a process to use authority granted it under subsection 404(c) of the Clean Water Act to block the large mineral project from getting a required U.S. Army Corps of Engineers wetlands dredge and fill permit. The regional U.S. Army Corps of Engineers handles Section 404 permit applications for all projects, public or private, that could impact wetlands. McCarthy said at the time the decision was based on the agency’s final assessment, released in January, of potential impacts a mine could have on salmon stocks in the Bristol Bay region. More than half of the Bristol Bay region is considered wetlands under the Clean Water Act. If developed, the Iliamna-area mine would likely be one of the largest surface copper and gold mines in the world in the middle of the region that returns roughly half of the world’s sockeye salmon every year. While the EPA has vetoed wetlands permit applications 13 times since 1972, it has never used the power to deny a permit before an application was submitted, as is the case currently with Pebble. North continued in the September 2010 email: “So a 404(c) that targets the primary habitat of the resource we are trying to protect, salmon, is a logical approach. First at the specific habitat level by prohibiting discharge in stream channels and the riparian (or adjacent) wetlands that most directly support them. Second by initially addressing Bristol Bay as a whole then narrowing to those watersheds that are at risk.” Subsection 404(c) of the Clean Water Act states that the EPA can prohibit the use “of any defined area as a (material) disposal site” when the agency administrator deems the placement of fill material “into such an area will have an unacceptable adverse effect” on fish, wildlife or water supplies. The question remains whether that language gives the agency the authority to veto an activity such as mining across a broad area, rather than just in a specific location. On May 2, the Office of Inspector General for the EPA announced it would review the agency’s actions in developing the Bristol Bay watershed assessment at the request of Pebble, the State of Alaska and several members of Congress. EPA Region 10 spokeswoman Hanady Kader wrote in an email to the Journal that the agency received requests from nine Tribal governments in 2010 to use the Clean Water Act authority to protect the watershed and fisheries from a proposed Pebble Mine. “EPA made transparency and public engagement a priority from day one of the Bristol Bay Watershed assessment. It is a strong scientific document based on hundreds of peer-reviewed studies. The agency considered thousands of comments and scientific data submitted during two separate public comment periods and eight public meetings. EPA met with many stakeholders over the course of its assessment, including multiple meetings Pebble Limited Partnership,” she wrote May 13. A memo from consulting Anchorage attorney Geoffrey Parker to EPA’s Parkin dated Feb. 14, 2012, suggested the agency change its course of action at the time to speed up the Pebble veto. “This recommends that EPA shift from a ‘linear’ to an ‘overlapping’ schedule for its watershed assessment and 404(c) process. Doing so can maintain and improve quality, and should result in a more legally defensible final decision,” Parker wrote. Pebble claims additionally that the peer reviews of drafts of the watershed assessment call its scientific validity into question. “Not only does EPA not have the statutory authority to undertake pre-emptive action at Pebble, they are threatening to do so based on a flawed study that is now the subject of an investigation by their own agency,” said Ron Thiessen, president and CEO of Northern Dynasty Minerals Ltd., which owns the Pebble project, in a formal statement May 6. Pebble has said the EPA could still veto its project after a wetlands permit application is submitted to the Corps of Engineers if it does not meet regulatory standards. While Pebble says the mine would generate up to 1,000 full-time jobs over 25 years, Kader said the economic value of the commercial salmon fishery in Bristol Bay has been overlooked in recent media reports covering the controversy. An April 2013 study from the University of Alaska Anchorage’s Institute of Social and Economic Research commissioned by the Bristol Bay Regional Seafood Development Association found that the 2010 Bristol Bay commercial sockeye harvest generated $1.5 billion of final sales value across the U.S. The ex-vessel value of the 29 million sockeyes harvest from the region that year was $165 million, 31 percent of the total Alaska salmon harvest value, and helped support 12,000 seasonal fishing and processing jobs nationwide, according to the report. Elwood Brehmer can be reached at [email protected]

Coast Guard to move slowly into the Arctic

The U.S. Coast Guard unveiled its draft plan for increased Arctic operations over the next decade at open houses held across Alaska May 12-16. The preferred alternative action in the draft environmental assessment of USCG Arctic Operations and Training Exercises matches the growth in maritime Arctic activity expected in the coming years with an appropriate USCG presence, 17th District Arctic Planner James Robinson said at an Anchorage open house May 13. Doing so would mean responding to the “seasonal surge” in Arctic activity, primarily mid-March through mid-November, with a shore, air and sea presence, the report states. Further, the Coast Guard’s plan is a response to Arctic strategies laid out by the White House and Defense Department among other federal agencies over the last two years, Robinson said. Outside of responding to specific missions, the Coast Guard has not historically emphasized being in the usually quiet Arctic. The USCG cutter Healy, typically used in support of scientific missions, has been its only consistent presence in the region, according to the assessment. Robinson said when Shell was exploring its Beaufort Sea oil and gas leases in 2012, the Coast Guard positioned a forward operating base in Barrow. Last summer, with no Arctic Outer Continental Shelf drilling occurring, a forward operating base was stationed in Kotzebue to generally learn more about operating in the Bering Strait, he said.  “We look at our operations and analyze our risk picture,” when determining where to deploy resources, Robinson said. With no drilling this year, he said the Coast Guard would likely split resources between the North Slope and Western Alaska, working to advance logistical knowledge for future operations. According to the assessment, the risk picture in the Bering Strait is growing. Maritime traffic transiting the strait increased from 220 vessels in 2008 to 480 in 2012, as summer sea ice continues its general retreat. The U.S. Army Corps of Engineers is expected in the coming months to release a deep-draft port proposal for the Seward Peninsula, another federal response to a busier Arctic. A deep-draft port in the Nome area could serve as an operations center for Arctic emergency responders, including the Coast Guard, Corps of Engineers Alaska officials have said. Robinson said the Coast Guard is reevaluating plans to rid itself of its small former base and airstrip at Port Clarence as a result. With deep water, Port Clarence, northeast of Nome, is cited by the Corps of Engineers as a possible place for civilian or military infrastructure development. It could help Coast Guard missions mitigate “the tyranny of distance and time” that makes seasonal Arctic operations so expensive, Robinson said. The Coast Guard is looking for partners of all types, from the military to Alaska Native corporations, to mitigate those costs and maximize efficiency, he said. USCG C-130 aircraft positioned at Eielson Air Force Base near Fairbanks can fulfill a myriad of Arctic missions, according to Robinson. While the Coast Guard is often welcomed in rural Alaska, he noted that an emphasis must be placed on reaching out to residents in the villages of Northwest Alaska to assure them the Coast Guard will take steps to minimize its impact on wildlife, marine or otherwise, and will do its best to make sure others do as well. Keeping a distance from wildlife will be of high priority in the Arctic going forward. All vessels and aircraft will avoid areas of active or anticipated subsistence hunts by contacting those in area villages to determine a proper course of action, according to the assessment. Additionally, when weather allows, Coast Guard planes will not fly below 1,500 feet and less than a half-mile from polar bears and they won’t be below 2,000 feet when within a half-mile of walruses. The draft assessment is available for review online at www.uscg.mil/D17. A public comment period on the report is open until May 28. Elwood Brehmer can be reached at elwood.b[email protected]

Inspector General to investigate EPA Bristol Bay process

The Office of Inspector General for the Environmental Protection Agency asked EPA Region 10 officials for a list of names, documents, dates and spending associated with developing the Bristol Bay watershed assessment when it notified the office May 2 that a review of the assessment process would be conducted at the request of Pebble Limited Partnership and members of Congress. In February, the EPA said it intended to initiate a seldom-used process to block large-scale surface mining in the Bristol Bay region to protect the region’s robust salmon fishery, using the 1,000-plus page watershed assessment as a basis for its decision. Questions have been raised by Pebble and media reports about the EPA’s objectives while conducting the assessment. Ron Thiessen, president and CEO of Vancouver-based Pebble owner Northern Dynasty Minerals Ltd., said in a May 6 formal statement the mining company is “thankful” the IG’s office plans to investigate the agency’s Bristol Bay actions. “While the documents we’ve received to date through Freedom of Information Act requests have been sparse and heavily redacted, they paint the picture of an agency launching a watershed assessment to justify a predetermined outcome,” Thiessen said. If developed, it is believed the Iliamna-area Pebble mine would be one of the largest surface copper and gold mines in the world. Sen. Lisa Murkowski and Rep. Don Young sent a letter to the EPA Inspector General Arthur Elkins Jr. in February requesting an inquiry into the science behind the watershed assessment. Spokesmen for Murkowski and Young both said they are in “wait and see” mode until the IG issues a final report. Sen. Mark Begich took a stance opposing the mine after release of the Bristol Bay assessment in January. Begich spokeswoman Heather Handyside wrote in an email to the Journal that the senator welcomes the review if it can resolve lingering uncertainty about the assessment that “was subject to two peer reviews and an extensive public process involving tens of thousands of comments, the vast majority of which support the science in the Bristol Bay assessment.” Young and Murkowski have officially said they remain neutral on the mine project.  According to an April 30 Washington Times report, EPA officials were discussing how the Clean Water Act could be used to stop a mine in 2010, before the official three-year assessment process began. United Tribes of Bristol Bay spokeswoman Alannah Hurley said area Tribes asked about how EPA could use its Clean Water Act power to stop the mine prior to the assessment and the group that has long opposed Pebble is confident the EPA has met all its public responsibilities. Trout Unlimited’s Tim Bristol, who is Alaska executive director of the nonprofit leading the fight against the proposed mine, said Pebble’s request for a review of the assessment is nothing more than a sign of desperation and that he doesn’t know how a government agency having discussions with the public could be considered scandalous. “It’s clearly just another unsettling act by Pebble Partnership to try and delay the Clean Water Act process,” Bristol said. In a detailed and blunt 60-page document dated April 29, the Pebble Limited Partnership laid out five claims describing how it believes the EPA overstepped its authority and damaged the federal environmental permitting process when it announced its intent to begin work to preemptively veto a wetlands permit for a mine plan that has yet to be filed. The letter is addressed to EPA Region 10 Administrator Dennis McLerran and is signed by Pebble CEO Tom Collier. EPA Administrator Gina McCarthy said Feb. 28 that the agency would move forward with the early stages of a process to use authority granted it under subsection 404(c) of the Clean Water Act to block the large mineral project from getting a required U.S. Army Corps of Engineers wetlands dredge and fill permit. It’s unclear if the EPA will be able to move forward with its work while the Inspector General investigation is underway. The agency has said the full Clean Water Act process would likely take about a year. The Region 10 EPA office did not respond to a request for comment in time for this story. The regional U.S. Army Corps of Engineers handles Section 404 permit applications for all projects, public or private, that could impact wetlands. McCarthy said at the time the decision was based on the agency’s final assessment, released in January, of potential impacts a mine could have on salmon stocks in the Bristol Bay region. More than half of the Bristol Bay region is considered wetlands under the Clean Water Act. The first and most repeated claim in Pebble’s response to the EPA is that the agency overstepped its Clean Water Act authority by issuing an intent to begin the 404(c) permit veto process before the group has submitted a wetlands application to the Corps of Engineers or released a formal mine plan. In a formal statement issued by Pebble to coincide with the letter submittal, Collier said, “The actions EPA is contemplating today go well beyond Pebble. It is a precedent that will be leveraged by environmental activist groups and will have a chilling effect on future investment and job creation throughout the country. Congress never intended to grant EPA the authority to undertake proactive watershed zoning over broad areas of state and private lands when it passed the Clean Water Act, yet that is exactly what is happening here.” While the EPA has vetoed wetlands permit applications 13 times since 1972, it has never used the power to deny a permit before an application was submitted. In documents obtained by the Washington Times, a decision “matrix” rating the pros and cons of the tradition National Environmental Policy Act, or NEPA, process versus a preemptive veto were weighed. Among the “cons” listed for the traditional NEPA process was that the EPA would only be able to veto one project at a time as opposed to vetoing all activities in a large area. Listed as “cons” under the preemptive veto decision were “litigation risk” and the fact that the action has never been taken in the agency’s history. In 2011, when the EPA formally announced it was initiating the assessment process, the Journal reported on a 2008 document from the Region 10 EPA Environmental Justice unit that listed protecting subsistence fishing on the Colville River and addressing impacts of hard rock mining in Bristol Bay as examples of successful long-term outcomes. The EPA succeeded temporarily in halting the ConocoPhillips CD-5 project that included a bridge crossing the Colville River in 2010 and is now moving to block Pebble as well. The Environmental Justice unit at Region 10 is led by Rick Parkin, who Region 10 Administrator Dennis McLerran tapped to lead the Bristol Bay assessment. Subsection 404(c) states that the EPA can prohibit the use “of any defined area as a (material) disposal site” when the agency administrator deems the placement of fill material “into such an area will have an unacceptable adverse effect” on fish, wildlife or water supplies. Additionally, Pebble claims the agency cannot meet its burden of “finding that the Pebble project will have an ‘unacceptable adverse effect’ because a permit application has not yet been submitted.” Collier also noted in his statement that the EPA could still veto the wetlands application if the group fails to submit an environmentally safe plan, as the agency has done with other projects. Alaska Attorney General Michael Gerhaghty, in an April 29 letter to regional EPA chief McLerran, called the agency’s actions “premature, speculative, without precedent, illegal in terms of both process and substance, and unnecessary.” April 29 was the final day of a 45-day period for stakeholder response to the EPA on the final assessment, a period extended from the minimum 15-day period at the request of the state and Pebble. EPA has said the veto process usually takes about a year to complete. Further, Geraghty wrote that a “cloud of uncertainty” hangs over lands owned by all parties in the region as a result and that the EPA would deny the state its right to develop lands conveyed to it under the Alaska Statehood Act and other federal agreements that were chosen specifically for their mineral potential, a stance echoed by Pebble. The Pebble copper and gold claims are entirely on state land. Finally, Geraghty stated that there is no risk to the environment by working through the current federal and state statutes including the National Environmental Policy Act, which offers the public significant comment on proposed development, and the Clean Water Act. The February announcement by McCarthy was praised by commercial fishing and conservation groups steadfastly opposed the proposed mine and lambasted by Young and Murkowski, who have said repeatedly Pebble should be allowed to go through the same review process as any other project. Murkowski has remained neutral on the project, but has pushed the Pebble Partnership to unveil a mine plan so it can be judged and speculation about the project can be put to rest. When former 50 percent-share Pebble investor London-based Anglo American Plc pulled out of the project in September, remaining investor Northern Dynasty Minerals said it would hold off on issuing a formal plan until a new investor could be secured. Pebble says the mine would generate about 1,000 full-time jobs for up to 25 years in a region with high unemployment. Mine opponents say it is too risky of a project in the middle of the largest sockeye salmon fishery in the world. Bristol, of Trout Unlimited, said in a formal statement that Pebble’s response to the EPA doesn’t change that a large mine could damage a fishery that supports thousands of jobs every year. “The EPA has legal, policy and scientific backing to protect Bristol Bay and its economy from Pebble mine.” Bristol said. “It also has the backing of 80 percent of Bristol Bay residents, a majority of Alaskans and vast numbers of Americans across the political spectrum who have spoken out on this issue. The agency should work to complete the 404(c) process as quickly as possible and apply the much-needed Clean Water Act protections to the headwaters of Bristol Bay.” The 2013 ex-vessel value for all commercial salmon harvested in Bristol Bay was $140.5 million, according to the Alaska Department of Fish and Game. United Tribes of Bristol Bay President Robert Heyano said in a release the mine threatens “salmon-based” livelihoods and cultures in the region. “The Pebble Limited Partnership’s response to the 404(c) process does nothing to ease our concerns about its plans in Bristol Bay,” Heyano said. “The fact remains that the Pebble deposit is massive in scope, sits in a sensitive location, and poses severe impacts to the sustainable salmon resource in Bristol Bay.” Elwood Brehmer can be reached at [email protected]

Fairbanks flight opens unmanned aircraft test site

A small and unassuming unmanned aircraft made a short flight Monday in Fairbanks that signified a big step in aviation, Federal Aviation Administration chief Michael Huerta said. The quad-rotor Aeryon Scout’s flight of less than five minutes at the University of Alaska Fairbanks Large Animal Research Station officially made the Alaska Center for Unmanned Aircraft Systems Integration the second operational unmanned aircraft systems, or UAS, test site in the country. “Alaska is positioned to make great contributions to our research of unmanned aircraft,” Huerta said from Anchorage. The FAA recently approved a two-year certificate of authorization, or COA, for the Unmanned Aircraft Center for Scout flights at the research station. In late December, the center’s Pan-Pacific UAS Test Range Complex, which also includes sites in Oregon and Hawaii, was sanctioned by the FAA as one of six UAS testing grounds across the country. “This is absolutely a special day for our program and for our people who have worked so hard to make this happen — make it a reality,” center director Marty Rogers said in Fairbanks. “We have and have had for a long time a very active and science and research unmanned aircraft program with over a decade of successful flight operations across Alaska, the Lower 48, and internationally, but this, the very first flight at any of the UAS test sites is groundbreaking for us because it is a visible and tangible event that moves us collectively one step closer to safe integration of unmanned aircraft into our national airspace.” The test sites are the result of a 2012 congressional mandate to the FAA to develop operating procedures to meld UAS and traditional aviation by 2015. Rogers said the center would work with UAF scientists to determine the feasibility of using the Scout and other UAS to do what Huerta called often “tedious” large animal studies in the wild. While also symbolic, Monday’s flight at the Large Animal Research Station was also used to see how musk ox at the station responded to the Scout, Pan-Pacific Range Director Ro Bailey said. Huerta said the Pan-Pacific Range and other sites would be used in coming years to determine safe flight conditions, proper operator qualifications, support systems and, most importantly, effective “sense and avoid” technology for flying among traditional aircraft. “I think we need to think about this as an evolutionary process,” he said. While initial UAS guidelines will likely be implemented in 2015, they will continue to morph as new technologies arise, Huerta said. UAF Geophysical Institute researchers counted Steller sea lions with an infrared camera affixed to a UAS in the Aleutian Islands for the National Oceanic and Atmospheric Administration in 2012 — a low-altitude mission that would be dangerous and largely ineffective for a manned aircraft.  Additionally, the UAF crew has used the little fliers to monitor oil spill response drills run by Chevron in at the mouth of the Columbia River in Oregon. The experience of the UAF staff was a “major factor” in selecting the Alaska Center as a test site operator, according to Huerta. “They came to us with a very tight and well-developed research program that addressed a very broad scope of the research objectives we identified for the program in its entirety,” Huerta said. That work was done as government research, before the test site program was in place. The FAA is not currently issuing COA’s for commercial UAS operations and the only legal commercial unmanned flight in the country’s history took place last September when ConocoPhillips used a UAS to survey its offshore oil leases in the Chukchi Sea. Elwood Brehmer can be reached at [email protected]

Pebble to EPA: mine veto would overstep authority

The group working to develop the Pebble copper-gold deposits in Southwest Alaska responded April 29 to the Environmental Protection Agency’s possible move to preemptively block the mine. In a detailed and blunt 60-page document, the Pebble Limited Partnership laid out five claims describing how it believes the EPA overstepped its authority and damaged the federal environmental permitting process when it announced its intent to begin work to preemptively veto a wetlands permit for a mine plan that has yet to be filed. The letter is addressed to EPA Region 10 Administrator Dennis McLerran and is signed by Pebble CEO Tom Collier. EPA Administrator Gina McCarthy said Feb. 28 that the agency would move forward with the early stages of a process to use authority granted it under subsection 404(c) of the Clean Water Act to block the large mineral project from getting a required U.S. Army Corps of Engineers wetlands dredge and fill permit. The regional U.S. Army Corps of Engineers handles Section 404 permit applications for all projects, public or private, that could impact wetlands. McCarthy said at the time the decision was based on the agency’s final assessment, released in January, of potential impacts a mine could have on salmon stocks in the Bristol Bay region. More than half of the Bristol Bay region is considered wetlands under the Clean Water Act. The first and most repeated claim in Pebble’s response to the EPA is that the agency overstepped its Clean Water Act authority by issuing an intent to begin the 404(c) permit veto process before the group has submitted a wetlands application to the Corps of Engineers or released a formal mine plan. In a formal statement issued by Pebble to coincide with the letter submittal, Collier said, “The actions EPA is contemplating today go well beyond Pebble. It is a precedent that will be leveraged by environmental activist groups and will have a chilling effect on future investment and job creation throughout the country. Congress never intended to grant EPA the authority to undertake proactive watershed zoning over broad areas of state and private lands when it passed the Clean Water Act, yet that is exactly what is happening here.” If developed, it is believed the Iliamna-area mine would be one of the largest surface copper and gold mines in the world. While the EPA has vetoed wetlands permit applications 13 times since 1972, it has never used the power to deny a permit before an application was submitted. Subsection 404(c) states that the EPA can prohibit the use “of any defined area as a (material) disposal site” when the agency administrator deems the placement of fill material “into such an area will have an unacceptable adverse effect” on fish, wildlife or water supplies. Additionally, Pebble claims the agency cannot meet its burden of “finding that the Pebble project will have an ‘unacceptable adverse effect’ because a permit application has not yet been submitted.” Collier also noted in his statement that the EPA could still veto the wetlands application if the group fails to submit an environmentally safe plan, as the agency has done with other projects. Alaska Attorney General Michael Gerhaghty, in an April 29 letter to regional EPA chief McLerran, called the agency’s actions “premature, speculative, without precedent, illegal in terms of both process and substance, and unnecessary.” April 29 was the final day of a 45-day period for stakeholder response to the EPA on the final assessment, a period extended from the minimum 15-day period at the request of the state and Pebble. EPA has said the veto process usually takes about a year to complete. Further, Geraghty wrote that a “cloud of uncertainty” hangs over lands owned by all parties in the region as a result and that the EPA would deny the state its right to develop lands conveyed to it under the Alaska Statehood Act and other federal agreements that were chosen specifically for their mineral potential, a stance echoed by Pebble. The Pebble copper and gold claims are entirely on state land. Finally, Geraghty stated that there is no risk to the environment by working through the current federal and state statutes including the National Environmental Policy Act, which offers the public significant comment on proposed development, and the Clean Water Act. The February announcement by McCarthy was praised by commercial fishing and conservation groups steadfastly opposed the proposed mine and lambasted by Rep. Don Young and Sen. Lisa Murkowski, who have said repeatedly Pebble should be allowed to go through the same review process as any other project. Murkowski has remained neutral on the project, but has pushed the Pebble Partnership to unveil a mine plan so it can be judged and speculation about the project can be put to rest. When former 50 percent-share Pebble investor London-based Anglo American Plc pulled out of the project in September, remaining investor Northern Dynasty Minerals Ltd. said it would hold off on issuing a formal plan until a new investor could be secured. Sen. Mark Begich took a stance opposing the mine after release of the Bristol Bay assessment in January. Pebble says the mine would generate about 1,000 full-time jobs for up to 25 years in a region with high unemployment. Mine opponents say it is too risky of a project in the middle of the largest sockeye salmon fishery in the world. Trout Unlimited’s Tim Bristol, who is Alaska executive director of the nonprofit leading the fight against the proposed mine, said in a formal statement that Pebble’s response to the EPA doesn’t change that a large mine could damage a fishery that supports thousands of jobs every year. “The EPA has legal, policy and scientific backing to protect Bristol Bay and its economy from Pebble mine.” Bristol said. “It also has the backing of 80 percent of Bristol Bay residents, a majority of Alaskans and vast numbers of Americans across the political spectrum who have spoken out on this issue. The agency should work to complete the 404(c) process as quickly as possible and apply the much-needed Clean Water Act protections to the headwaters of Bristol Bay.” The 2013 ex-vessel value for all commercial salmon harvested in Bristol Bay was $140.5 million, according to the Alaska Department of Fish and Game. United Tribes of Bristol Bay President Robert Heyano said in a release the mine threatens “salmon-based” livelihoods and cultures in the region. “The Pebble Limited Partnership’s response to the 404(c) process does nothing to ease our concerns about its plans in Bristol Bay,” Heyano said. “The fact remains that the Pebble deposit is massive in scope, sits in a sensitive location, and poses severe impacts to the sustainable salmon resource in Bristol Bay.” Elwood Brehmer can be reached at [email protected]

Skagway ferry dock still salvageable, service suspended

Ferry service has been suspended to Skagway through May 9 after the town’s ferry terminal dock sank without warning; however, it appears the dock is salvageable. Skagway Borough Manager Scott Hahn said early April 30 that he was told the floating dock would be operational in about a week. Workers from a local marine contractor were able to refloat the dock April 29, according to an Alaska Marine Highway System update on the project. The dock will immediately receive an intense inspection to determine what parts need to be replaced and why it sank in the first place. AMHS contracted with Western Marine Construction Inc., which has facilities in Seattle and Juneau, on an emergency basis over the weekend of April 26-27 to float, inspect and hopefully repair the dock as quickly as possible, system spokesman Jeremy Woodrow said. Estimating the fixes would be complete might be “a bit optimistic,” Woodrow said, but he confirmed the dock does not need to be replaced. “Once the inspection is complete the (Transportation) Department will have a better handle on the necessary repairs and how long it will take to get the dock back in operation,” Woodrow said. The submerged hydraulic and electrical parts will undoubtedly need to be swapped out, he said. A temporary fix to the hydraulics that move the vehicle ramp will likely be sought to make the dock operational while a permanent solution is found, he said. The 160-foot by 120-foot dock is comprised of 24 individual, airtight concrete chambers, each 12 feet deep. The 24 chambers are supposed to provide a redundancy backup, he said, meaning if one fails, the other airtight boxes keep the dock afloat. “To have the dock submerged like this, there has to be multiple failures or some other issue,” he said. People on their way to work saw the partially submerged floating dock about 6 a.m., April 24, and the dock was completely under water within 90 minutes. Every individual chamber has been inspected by the state in the last two years, Woodrow told the Associated Press. There was “no visible sign of wear or indication that would lead to this submersion,” he said. The state has ferry service scheduled to Skagway about three times a week during the winter and six days a week during the summer. Hahn said the interruption in ferry service caused a “hassle” for some business owners preparing to greet the season’s first cruise ship scheduled to arrive in Skagway May 1, but that it appears major logistical problems have been avoided if the dock is back in operation soon. Businesses in many coastal Alaska communities use the ferry service to transport merchandise and supplies, along with employees. “It would’ve caused quite a stir for us” if the dock needed replacing, he said. “It would’ve been a big cost to the city.” Hahn said he heard of a few tourists who planned on using the ferry to visit the area before the cruise ships arrived and were subsequently inconvenienced, but understood the situation and found other ways to get to Skagway. If it turns out the dock has to be out of commission for an extended period he said city leaders would sit down with business owners and the Skagway Chamber of Commerce to quantify the impact of no ferry service to the community, as well as try to facilitate another vessel operator to transport goods and vehicles. The community about 15 miles from the Canadian border is not cut off, however. It’s connected to the Yukon by the Klondike Highway, and is a couple hours away from Whitehorse, in Yukon Territory. It’s also about a six-hour drive to Haines, Alaska, a distance that takes about 45 minutes on a ferry. Jan Wrentmore, owner of the Red Onion Saloon, said she was dismayed when she saw the dock underwater. “It was pretty unbelievable,” she said. “It’s something that you rely on and take for granted, and suddenly it’s gone.” Several local entities combined to help drag to shore parts of the dock that were still accessible above the water line. Also removed from the water was a forklift that had been on the dock. It’s not the first time a dock in Skagway fell into the ocean. In 1994, the city’s railroad dock sank. The cause was never determined. AMHS is asking parties interested in updated Skagway sailing information to call 907-465-3941 or 800-642-0066. Updates on the Skagway ferry terminal dock can also be found at www.ferryalaska.com. Elwood Brehmer can be reached at [email protected] The Associated Press also contributed to this story.

Alaska Air Group starts 2014 with another record profit

Alaska Air Group Inc. is on a major roll. The airline company announced it earned $94 million of first quarter net income in its earnings report April 25. The quarterly profit more than doubled the $37 million of net earnings from quarter-one of 2013 — also a record at the time — and marks the company’s 20th consecutive money-making quarter, and it’s seventh record quarterly return over the eight quarters. Seattle-based Alaska Air Group is the parent to Alaska Airlines and regional carrier Horizon Air. The company’s adjusted first quarter net income was $89 million after a $5 million fuel-hedge hit to its $94 million generally accepted accounting principle, or GAAP, profit. Broken down, the $94 million profit is $1.35 per share. Alaska Air Group shares traded at $93.37 on the New York Stock Exchange at the end of business April 28, up more than 27 percent for the year. The profit spike was on the back of $249 million of operating cash flow generated during the quarter, up 17.4 percent from $212 million year-over-year. Alaska Air Group President and CEO Brad Tilden said in a conference call with investors that the first quarter result would be strong for any quarter and is particularly remarkable because of when it came. “It wasn’t that many years ago that we created an objective of simply not losing money in the first quarter,” Tilden said. “Our business, like a lot of other airlines, (has) been very seasonal and, unfortunately, we have become used to digging the hole in the first quarter that we would have to dig our way out of in the second and third quarters.” The record first quarter comes on the heels of a record $383 million full-year 2013, which followed a record-breaking profitable 2012 for Alaska Air Group. It’s 12-month trailing return on invested capital, or ROIC, was a strong 14.8 percent at the end of March and a 1.4 percent improvement over the previous running year, said Brandon Pederson, company vice president of finance and chief financial officer. Alaska Air Group ended the quarter with $1.4 billion in cash and near-term investments, Pederson said. Total revenue grew by 8 percent on a 4.6 percent increase in capacity. The company’s non-fuel operating expenses grew 5 percent, while adjusted fuel expenditures were about flat, he said. At the end of quarter-one Alaska Air Group had an adjusted debt-to-capitalization ratio of 32 percent, down from 35 percent at the start of the year, and $400 million in net cash, according to Pederson. The debt reduction is the continuation of a philosophy company executives have pushed since early 2009 when its “debt-to-cap” ratio was 81 percent, Pederson has told the Journal. Tilden said to investors that Standard and Poor’s, which recently increased the company’s credit rating to BB+, also recently commented that Alaska Airlines, which drives Air Group financials, has the “strongest financial profile of any U.S. airline.” Alaska Air Group repurchased about 350,000 shares of stock totaling about $30 million during the first quarter, Pederson said. The company expects to return about $350 million to shareholders this year through dividends and stock repurchase plans, he added. Alaska Air Group began paying 20-cent per share quarterly dividends to shareholders last August; that amount has since been increased to 25 cents per share. With quarter-one giving the company a strong financial start to the year, Pederson said capital expenditures should be in the range of $530 million to $545 million in 2014. The company spent $93 million on capital projects in the first quarter, resulting in $156 million of free cash flow, he said. “Even though our mainline fleet will only increase by three units this year, we are actually taking 10 very efficient (Boeing) 373-900ERs and retiring seven older and smaller aircraft, further improving our fleet’s efficiency,” he said. Alaska Airlines operates Boeing 737s exclusively and Horizon Air flies only Bombardier Q400 turboprops. Near-term business will focus on retaining Alaska Airlines’ hold on Pacific Northwest market, specifically Seattle, Tilden said. To that end, new capacity will be reallocated to new seasonal routes originating from Seattle including Tampa, Detroit, New Orleans and Baltimore, he said. The airline will pull out of “underperforming markets,” such as Portland, Ore.-Atlanta and Los Angeles-San Jose, Cali., according to Tilden. “We are mindful of the growing capacity in Seattle, specifically from one large carrier,” he said. “We believe our competitors’ actions are creating a surplus of capacity in many of the markets we serve, which we will be dealing with until supply and demand come back into balance, which is something we do believe will happen.” Delta Airlines has added Seattle routes in recent months, including some to Alaska destinations, moves that have strained what had been a seemingly healthy partnership between Alaska Airlines and Delta in the past. Pederson said the company expects competitive capacity in Alaska Airlines’ markets to grow between 7-8 percent for the year. On the internal business side, Tilden said Alaska Air Group has a strong foundation with all of its union employees except Alaska Airlines flight attendants under contract through 2018. The large carrier flight attendants recently rejected a tentative contract agreement earlier this year. “I want to thank our flight attendants for being very professional and for continuing to provide great service to our customers as we proceed through the negotiating process,” Tilden said. Elwood Brehmer can be reached at [email protected]

AIDEA, AEA approve $75 million-plus for statewide energy

More than $75 million in financing for energy projects from the North Slope to Prince of Wales Island in far Southeast was approved Thursday by the joint Alaska Industrial Development and Export Authority and Alaska Energy Authority board. A $50 million direct investment by AIDEA into the North Slope Mustang Field processing facility highlighted the nearly eight-hour board meeting. With the investment, AIDEA entered into an agreement with CES Oil Services Pte. Ltd. to form Mustang Operations Center 1 LLC. The $200 million-plus facility will be operated by independent Brooks Range Petroleum and owned by AIDEA and CES Oil. The Mustang Field has 24 million barrels of potential resources and production at the field could peak at about 15,000 barrels per day, Brooks Range has said. AIDEA already had $20 million invested in late 2012 in a well pad and road to the field that was completed this spring. AIDEA estimates its investments could help spur more than half a billion dollars of private investment in the Mustang Field and help generate up to 525 jobs through design, construction and operation of the processing facility. On the Interior Energy Project, the state’s push to truck liquefied Slope gas to the Fairbanks area, AIDEA spent $6.3 million. Of that, $1.8 million is to purchase Spectrum Alaska LLC, the North Slope holdings of Oklahoma-based Spectrum LNG. In acquiring Spectrum Alaska, AIDEA secured a pad site for its North Slope gas liquefaction plant. Spectrum previously submitted a bid to AIDEA to partner with the state authority on its Slope LNG plant, a contract that was awarded to the Colorado-based engineering and technical firm MWH Global Inc. in January. AIDEA also approved $4.5 million for early works contracts with Northern Lights Energy LLC, the venture formed to control the North Slope gas that will be trucked to utilities and potentially other users in the Interior. That money will go towards arriving at a cost estimate for the 9 billion cubic feet per year LNG plant and contracting to place gravel on the formerly Spectrum pad. A wetlands permit for a 10-acre pad had been approved by U.S. Army Corps of Engineers; the AIDEA-MWH plan will require a modified permit for a 17-acre pad. In its role to lead the Alaska Energy Authority, the seven-member board approved a $20 million loan for Haida Energy to finance construction of a five-megawatt hydropower plant on Prince of Wales Island. Haida Energy is a joint venture between Alaska Power and Telephone and the Haida Corp. Alaska Native village corporation. The loan was approved with a 4.6 percent fixed interest rate, a term Haida Energy officials objected to because it does not match what AEA had previously agreed to. In January 2013, AEA staff and Haida energy agreed to a term sheet with a variable interest rate loan to protect the utility and its current ratepayers from high initial costs associated with Reynolds Creek hydropower. Under those terms, the loan would be interest free until production from the 5-megawatt plant hit 7,300-megawatt hours annually. From there, the interest rate would scale up to 4.84 percent when about 20,000 megawatt hours of power was produced. The resolution that approved the loan included a late amendment by board member and Department of Revenue Deputy Commissioner Mike Pawlowski that allows Haida Energy to reject the terms and requires AEA to reenter negotiations with the utility over more agreeable loan terms within the next 30 days. The board members emphasized their understanding about the impact high energy costs continue to have on the region, where the burning diesel fuel is often the primary means of generating power. “The board’s push is to make something work and come back to us,” board member and Commerce Department Commissioner Susan Bell said. Grimm told the board that the fixed loan terms could push the cost of Reynolds Creek power above the cost of diesel-generated electricity and because of that a purchase agreement for the hydropower would likely not be approved by the Regulatory Commission of Alaska. The board also moved its next meeting to Wednesday, June 4; it was originally scheduled for Monday, June 2. Elwood Brehmer can be reached at [email protected]

FAA approves GPS device to improve emergency response

The Federal Aviation Administration has expanded options for pilots wishing to participate in an Alaska-specific emergency response program. Mapping company DeLorme’s inReach GPS is now an approved device for use in the Enhanced Special Reporting Service, according to FAA’s Alaska Flight Services office. Along with the SPOT Global Phone and Spidertracks devices, pilots with an inReach can sign up for the service, which allows them to contact emergency responders outside of cell phone and radar range — most of Alaska. The Enhanced Special Reporting Service, or eSRS, was launched in February 2013 with the SPOT and Spidertracks as approved GPS units, Alaska Airmen Association spokesman Adam White said. White sat on a working group formed by the FAA in 2011 to develop the service. It allows the FAA to expound on the flight plan-radio program, he said. Traditionally, pilots file a flight plan and radio to an airport when they reached a designated checkpoint. “If you missed a check-in point the assumption was something bad has happened and we need to scramble search and rescue,” White said. “The thing with radio — same thing as radar coverage — radio coverage is not always the best here.” Pilots that sign up for the voluntary program are forwarded an FAA email address and text message phone number to add to their contacts for their GPS devices. In the event that a checkpoint is missed or a flight plan isn’t closed, the service can call someone in the pilot’s emergency contact list to reach the hopefully safe pilot. “Once you (sign up) the first time, you’re good to go. I know a lot of folks who have mentioned to me the peace of mind the program gives them,” White said. The Enhanced Special Reporting Service vets the flight plan. White said the working group really wanted to cut down on “false alarms.” He emphasized that the FAA does not actively follow aircraft with the devices. “The FAA does not want access to your tracking points. The whole problem with security and keeping your information on the secure side of their computer system, they just don’t want to deal with that, which I appreciate,” he said. “I don’t want big brother tracking me anymore than the next guy.” As of April 22, White said Alaska Flight Services officials told him more than 1,000 flights had been flown utilizing the service and one “S.O.S.” had been issued with a GPS. FAA Alaska Region spokesman Allen Kenitzer said the agency preferred to not comment for this story. “Pilots and aircraft owners are encouraged to participate in this program while operating within the state of Alaska,” Alaska Flight Services Manager James M. Miller said in a March 27 DeLorme release. “Once an alert is generated, the position of the aircraft is transmitted to Flight Service either directly or through the International Emergency Response Coordination Center.” The service allows rescue operations to go directly to the potentially downed aircraft’s location, rather than searching the entire route when a flight is overdue, according to Miller. The Enhanced Special Reporting Service is exclusive to Alaska because the Lower 48 has the necessary radar coverage. While the GPS technology service helps rescue crews locate an aircraft after a flight plan has expired, it’s extremely helpful for those flying to a remote cabin or hunting or fishing camp when a flight plan can’t be closed, White said. If a pilot flying to such a location files a 14-day flight “round robin” plan and crashes, White said he or she may be stranded for days because there is no indication to responders that an emergency is ongoing. “Let’s say I crash 30 minutes after takeoff…good luck,” he said. The inReach is a “game changer” for the service because it allows for two-way, 160-character text messages with 100 percent coverage, White said. The most the other devices are capable of is short, outgoing texts. They also have had coverage issues in some extremely far north locations where satellite signals can be affected by the curvature of the earth. NextGen ADS-B recently completed The FAA announced April 14 completion of the nationwide Automatic Dependent Surveillance-Broadcast radio network, or ADS-B. Completion of the network will enable air traffic controllers to better track aircraft and give pilots more information as well, according to an agency release. “This upgrade is an important step in laying the foundation for the (next generation) system, which provides controllers a much more precise view of the airspace, gives pilots much more awareness and information, and as a result strengthens the safety and efficiency of our system. This state-of-the-art satellite system is already providing controllers with visibility in places not previously covered by radar,” U.S. Transportation Secretary Anthony Foxx said in a formal statement. The broadcast network, or ADS-B supports a satellite system that tracks aircraft with the aide of GPS more accurately than radar. Of 230 air traffic facilities in the country, 100 are currently using ADS-B to sort air traffic. The FAA plans to have all facilities using ADS-B by 2019, the agency has said. Jane Dale, a government and regulatory affairs representative for the Alaska Air Carriers Association said ADS-B ground stations have been installed across Western Alaska and the North Slope, but areas of the Interior near the Canadian border lack coverage. If infrastructure installation is complete, Dale said she wonders if those areas will receive coverage. All aircraft operating in controlled airspace will be required to have ADS-B Out technology by Jan. 1, 2020, in accordance with FAA requirements. Elwood Brehmer can be reached at [email protected]

Employee training caters to tour travelers with disabilities

A group in Juneau is doing what it can to make sure everyone gets a chance enjoy the natural beauty of Southeast Alaska. Southeast Alaska Independent Living Inc., or SAIL, is offering training, equipment and other assistance to tour business owners hoping to make their shops or services more disability friendly with its Accessible Tourism Program. “Whether a business wants to make a change to the layout of their gift shop to make it more user friendly for someone in a wheelchair, or if they want to train their staff on how to guide someone who’s blind on a hike, we’re happy to help,” SAIL’s Outdoor Recreation and Community Access Program Director Tristan Knutson-Lombardo said. SAIL began the Accessible Tourism Program with two training sessions in early 2013. About a dozen businesses, museums and public facilities were represented at the first sessions, Knutson-Lombardo said. This year, the number of training workshops has grown and each of the sessions focuses on a different sector of tourism customer service. “We’ve kind of catered them to different industry niches,” he said. In all, six training sessions for guides and outfitters; customer service and “front-line” staff; and lodging and dining businesses are scheduled for late April and early May. The training is geared towards helping individuals with mobility, vision and hearing impairments, Knutson-Lombardo said, but SAIL will do what it can to help anyone with a request.  “We really want to continue to work with businesses to cater training to their needs — that’s when the training becomes the most successful,” he said. Principally, the training is the “dos and don’ts” of working with customers with disabilities, but it comes down to simply meeting the needs of a customer with safety in mind, he said, something businesses try to do every day. The training is part one of a three-pronged approach to making Southeast more accessible to tour consumers with disabilities. Knutson-Lombardo said SAIL also has a separate website for the accessibility program and an information line for visitors or those living in Southeast who want to get out and see the Inside Passage. Third, SAIL can usually offer equipment ideas and planning for businesses hoping to expand their services to potential customers with disabilities, he said. Answering a request from one proactive business several years ago helped jumpstart the larger program. About 15 years ago Allen Marine Tours, which operates charter and tour boats out of Juneau, Ketchikan and Sitka, decided to make its vessels more accessible, company vice president John Dunlap said. Allen Marine builds its own vessels, and currently about three-quarters of its 25-vessel fleet is “as accessible as we can make them,” Dunlap said — nearly all of Allen Marine’s 100-plus passenger capacity vessels. The tour boats have wider aisles and doorways and wheelchair accessible bathrooms. “For many years we had been very dissatisfied with accessibility on passenger boats and we said, ‘Let’s do better; let’s build a better boat.’ There still is no (American’s with Disabilities Act) code as to how a passenger vessel should be built, so we were kind of on our own with that,” he said. “Kind of hand-in-hand with trying to build a better boat, we said, ‘Let’s try and have a better trained crew to handle folks with disabilities.’” So, Allen Marine reached out so SAIL for assistance in developing service etiquette and proper techniques for serving a customer with a disability, and SAIL responded, he said. Now, with the help of SAIL, Allen Marine trains about 150 of its shoreside and on-vessel customer service employees every spring on how to best serve customers with disabilities. Dunlap said the employees learn safe practices on how to best assist a passenger boarding a vessel down a steep ramp to a dock and on the boat, for example. Other common lessons are to sit at eye level when talking with someone in a wheelchair, ask questions about their preferences, and never assume. “A lot of our crew are young folks and some of them have only had a couple job experiences — certainly not anything like this — it’s not all intuitive,” Dunlap said. Once the training is complete every spring, Allen Marine operates a sightseeing tour at each of its three ports set up specifically for the consumers of SAIL, Dunlap said. SAIL sells tickets to Southeast residents and uses the tours as a fundraising opportunity while Allen Marine employees get a chance to put their fresh training to work, he said. More than 100 people turn out for the tour in Juneau, he said, with slightly smaller groups in Sitka and Ketchikan. “We’ve had a very good symbiotic relationship (with SAIL),” Dunlap said. In addition to the modified vessels, he said Allen Marine keeps wheelchairs at all of its dock facilities to meet the needs of customers who might only need the assistance for a short time. Knutson-Lombardo said increased requests from travelers with disabilities combined with the work with Allen Marine spawned the idea for the Accessible Tourism Program. Knutson-Lombardo said he hopes to organize a directory of businesses this summer with their specific offerings and capabilities for disabled tour customers. Eventually, he plans on developing a smart phone app as well, something similar organizations in California and New York have done successfully to reach a larger audience. Juneau Convention and Visitors Bureau President and CEO Nancy Woizeschke said she is very excited about the program. “SAIL does such great work; we’re hoping it will eventually spread to more ports in Southeast,” she said. As far as he knows, Knutson-Lombardo said SAIL’s training program is unique in Alaska. Because most of the funding for the program comes from passenger vessel fees in Juneau the program will stick to that city for now he said, but he reiterated that SAIL is eager to help anyone across the state improve their access or that of their customers. Dunlap said he has been asked to speak about Allen Marine’s vessels and disability training at industry meetings across the country as word has gotten out about what they’re doing in Southeast Alaska. He also said the cruise operators Allen Marine works with have become aware of the company’s ability to accommodate travelers with special needs and have started sending more business their way. “Every year there are more people traveling with disabilities,” he said. “It’s just one of those things where doing the right thing and good business intersect.” Elwood Brehmer can be reached at [email protected]

University of Alaska items top $2.1B budget

The University of Alaska was a big winner when the Senate passed its $2.1 billion version of the state capital budget. In the Senate, $195 million was added to Gov. Sean Parnell’s 2015 fiscal year budget proposal to fully fund an overhaul of the combined heat and power plant at the University of Alaska Fairbanks. Another $35.6 million was added to complete the UA Anchorage campus engineering building and associated parking garage.  The 17-megawatt plant has a $245 million price tag, but fuel savings from new high-efficiency boilers will allow the UAF to finance the remaining $50 million, according to the Board of Regents. General fund money makes up $37.5 million of the $195 million approval, with much of the rest being bonded. While funding the power plant in one lump sum was unexpected, university system leaders for years have emphasized the need to overhaul the 50-year old, coal-fired plant at Fairbanks and prioritized that project over the funds needed to finish their own engineering building now under construction. With $547.9 million in unrestricted general funds, the Senate added more than $132 million of such money to the governor’s budget proposal. More than $1.1 billion of the capital budget is federal funds. As of press time April 16, there was no reason to believe the university add-ons to the governor’s budget would not pass the House. Parnell had appropriated $10 million to the UAA engineering building, but the Senate’s total $45.6 million appropriation should finish the $123.2 million, 75,000-square foot building and 500-space parking garage, the latter of which is required by Municipality of Anchorage zoning laws because of the parking eliminated by the building construction. When he released his budget in December, Parnell said the state would focus on completing existing work in the midst of a budget shortfall projected to be in the neighborhood of $1.5 billion. The Senate followed the governor’s lead. “Our main objective is to show continued restraint in capital spending while maintaining current assets, finishing what we started and focusing on critical needs within our communities,” Senate Finance co-chair Kevin Meyer, R-Anchorage, said in a formal statement after passing the budget. The budget passed with a 19-1 vote; Anchorage Democrat Bill Wielechowski was the only dissenter. During debate Wielechowski said the budget disproportionately doles out funding. “Anchorage is 42 percent of the population of the state and by my calculation we’re getting about 20 (percent) to 21 percent,” he said. “I think there needs to be better regional balance.” Sen. Johnny Ellis, D-Anchorage, said the UAA funding would come as a “great relief” to university faculty and students. Meyer said he felt good about the capital budget because of the cooperation between the Republican majority and the Democrats on the bill. Anchorage Democrat Sen. Hollis French called the budget “defensible” but added, “Had the minority written this bill it would have been smaller.” A $10 million appropriation for the UAF engineering building in Parnell’s budget stayed in the Senate version. UAF spokeswoman Marmian Grimes said the money would allow the university to enclose the structure and finish it when the power plant is done. Finishing the 119,000-square foot engineering building will mean putting $23.3 million towards it in future years. Grimes said in an interview that the university is ready to get to work on the power plant so it can be up and running for the winter of 2018-19. “We’ve received an air quality permit and there’s an RFP (request for proposal) for boiler designs on the street now,” she said. The new boilers would decrease most particulate and gas emissions by more than 50 percent, according to UAF. Along with the plant funding, the Senate added language to the budget stating the university system should implement a utility surcharge or increase tuition up to $2 million annually to offset revenue bond debt service for the plant. Wielechowski’s amendment to remove the surcharge language was voted down 5-15. The Anchorage Democratic caucus voted for the failed amendment. “I can just imagine what the (UAA) students will think when the hand of government goes into their pockets to help the students at UAF,” French said. Other projects One day before passing a complex financing plan for the Knik Arm Crossing, the Senate approved $55 million for the Knik Arm Bridge and Toll Authority. That money will be used for remaining bridge design, contract procurement and permitting needed before formal construction begins among other things. The KABATA appropriation matches the governor’s recommendation. The Alaska Railroad Corp. got $15 million in the Senate’s version of the budget to continue installing the federally-mandated Positive Train Control safety system. Railroad spokesman Tim Sullivan wrote in a statement to the Journal that the $15 million is a “good start” but won’t cover all the expenses incurred from the system meant to remotely slow or stop a train before an accident occurs and will soon be necessary for the railroad to avoid federal fines and continue passenger service. An additional $5.2 million request has been sent to the House along with the budget, Sullivan wrote. Before the legislative session began, railroad officials requested $20.2 million in fiscal 2015 and $20.6 million in 2016 for Positive Train Control. The Matanuska-Susitna Borough-led, 32-mile Point MacKenzie Rail Extension from Houston to Port MacKenzie got $11 million. If the figure holds in the House it will leave the quarter-billion dollar project about $90 million short of completion, which has been hoped for late 2016. With the added expense of the university projects, the state cannot afford the KABATA or rail extension money, French said. He was one of four senators to vote against the Knik Arm Crossing Financing plan April 12. The State Museum in Juneau, which closed in February for more than two years of renovation and will reopen as the State Library, Archives and Museum, received $37.5 million from the general fund. The Anchorage Museum was appropriated $5 million for a gallery redesign in the Senate budget as well. Statewide village water and wastewater projects received $51.5 million, of which $42.7 million is federal money. An additional $14.5 million went to municipal water and waste facilities grants — all general fund money. The Alaska Energy Authority got $10 million for continued Susitna-Watana dam reconnaissance work and $22.8 million for its popular Renewable Energy Fund, slightly more than Parnell’s recommendation. If the controversial emergency access road from King Cove to Cold Bay on the Alaska Peninsula championed by Sen. Lisa Murkowski is ever approved by the federal government, the state will be ready to build it with a designation of $21 million from the federal State Transportation Improvement Program. Port work in Seward, where the city is looking to complete its breakwater and develop additional marine infrastructure was awarded $3.9 million. The Senate approved $3 million for similar work in Nome. Elwood Brehmer can be reached at [email protected]

CIRI seeks customers for Fire Island phase two expansion

Cook Inlet Region Inc. wants to double the size of its Fire Island wind farm, but first it needs someone to buy the extra power. Suzanne Gibson, vice president of the wholly owned CIRI subsidiary Fire Island Wind LLC, said the company must secure a power purchase agreement with a Railbelt utility “as soon as possible” in order to fit its construction window. Phase two of the Fire Island project offshore from Anchorage is in line for a 30 percent federal energy tax credit on the $50 million of work if it’s completed by the end of 2015, Gibson explained during a Renewable Energy Alaska Project presentation April 10 in Anchorage. Once a purchase agreement is reached it must go to the Regulatory Commission of Alaska, which has six months to approve the contract. If an agreement can be reached before May, that would give the RCA until October to rule; and it’s only after that approval that CIRI will be able to secure financing for the 11 wind turbines and associated work, Gibson said. That timeline would have the turbines being commissioned in September 2015. “We really need to be closing financing by the end of the year so we can be ready to construct in the spring of next year,” Gibson said. CIRI will cover about 30 percent of the cost with equity and finance the remainder of the project, she said. Gibson called the power purchase agreement the “anchor contract that gets everything going” and said that several utilities were showing significant interest in contracting with the project. She said because essential infrastructure such as transmission lines, an operations and maintenance building, and spare turbine parts are in place from phase one, lower capital costs associated with phase two — and the $15 million tax credit — will allow Fire Island to sell its power about 20 percent cheaper than the 9.7 cents per kilowatt that Anchorage-based Chugach Electric Association is paying for phase one power as part of a 25-year purchase agreement. “(Phase two) Fire Island winds will compete with the cost of natural gas now,” Gibson said. The original 11-turbine phase of the wind farm went online September 2012. CIRI has said it eventually hopes to have a 33-turbine wind farm on Fire Island. “Whoever buys power from phase two will get all the benefits from what’s happened before it,” she said. While a power purchase agreement is before the RCA, Gibson said Fire Island will move quickly to secure the wind turbines and a construction contracts. The construction request for proposal, or RFP, will likely include design and engineering for roads and turbine foundations and procuring and mobilizing equipment to the island, including the turbines themselves. During the first round of construction the large Pasadena, Calif.-based engineering firm Tetra Tech Inc. led work and used local subcontractors extensively, Gibson said, a model that worked well for Fire Island Wind. In its first year, Fire Island Wind generated 51,800 megawatt hours of electrical power, just more than what was modeled before construction.  Phase two is projected to generate slightly less, about 48,000 megawatt hours per year, because of a less productive wind resource on the east side of the 4,300-acre island. The phase one turbines run from the spit on the southern tip of the island generally up the middle of the island. At about 100,000 megawatts combined, Fire Island Wind should provide enough power to supply more than 12,000 Railbelt homes, according to Gibson. The second round of 1.6-megawattt General Electric turbines should run at about 31 percent net capacity overall, she said. Wind farms rarely produce more than a third of the electricity the turbines are capable of generating over a lengthy period because of variances in wind resources. Fire Island Wind began general work on phase two last fall in order to meet a December 2013 tax credit deadline for project initiation. Gibson said fall 2013 work included clearing trees for access roads to the turbine pads, excavating and grading for of the pads and drilling three wells to supply future construction with water. With other ventures in Wyoming, Texas and Nebraska, she said CIRI has an interest in 535 megawatts of wind capacity across the country. Elwood Brehmer can be reached at [email protected]

Alaska class ferry design complete, construction upcoming

The first pieces of the newest state ferries should start to come together late this summer if all continues to go as planned, Department of Transportation and Public Facilities Deputy Commissioner Reuben Yost told the Senate Transportation Committee April 15. Meant to service the busy Lynn Canal corridor between Haines-Skagway and Juneau, the design of the two Alaska class ferries, as they have come to be known, was completed in February, Yost said. The design requirements of the ferries have not changed from a 300-passenger, 53-vehicle capacity vessel that can make a roundtrip from Juneau to Haines and back in 12 hours, he said. To accomplish those goals the 280-foot ferries will have a cruising speed of 15.5 knots and be powered by two 3,000 horsepower diesel engines. The budget for both Alaska Marine Highway System ferries will fit into the $114 million remaining from a $120 million capital appropriation originally meant for one 350-foot vessel, he said. Designing the big ferry ate up $3 million and another $3 million was expended revamping that design to the “day boat” configuration. All indications are the ferries will be built by Alaska Ship and Drydock, or ASD, in Ketchikan, which has been assisting the Marine Highway System in designing them, Yost said. ASD parent company Vigor Industrial executives have been working with the ferry system to iron out the project management structure and players, he said. “This will be the first vessel ever constructed in the United States under the CMGC (construction manager, general contractor) process,” he said. If talks with Vigor continue to go well, a final shipyard contract should be awarded in June, Yost said; if not, a bid would be put out in late May with a contract awarded sometime in July. No federal money was used in the project so the state would have ultimate say over where the ferries are built, with the goal of keeping construction in Alaska. “Next month we will begin line item by line item negotiations for the pieces of the vessels,” he said. Passenger comfort was a top priority when designing the ferries, Yost said. At 35 feet longer than the M/V LeConte they should be able to handle what can be rough conditions in Lynn Canal come winter, he said. A 15-foot wooden model of the hull design was taken to Norway and tested in wave conditions simulating the worst Lynn Canal has to offer, he said. The resulting hull motions were evaluated against a maritime industry standard motion sickness index. He said the hull design passed 95 percent of the harshest January Lynn Canal conditions in the simulation. “It basically says that if 10 percent of the people get sick on a two-hour (segment) of the worst part of the voyage, people are not going to want to ride that boat,” Yost said. “Some people get sick just looking at a boat and some, nothing will make them seasick so 10 percent is the standard.” The dayboat design concentrates as much of the passenger activity as possible to the two passenger decks located mid-ship — the most stable area of the vessel — whereas the most room on the LeConte is in the front viewing deck near the rocking bow, he said. Additionally, moving the “casings” to the side of ferries as opposed to the center, their location on most of the current ferries, will make car deck activity easier and safer, Yost said. “When you’re walking on the car deck and you want to get to an elevator or stairs you don’t have to cross vehicle traffic,” he said. Based on public feedback the ferries will have outlets at nearly every table and Wi-Fi is “being looked into,” according to Yost. A light menu similar to that on the fast ferries will consist of soups, sandwiches and salads. On April 16 the Marine Highway System announced dates for public meetings about the M/V Tustumena replacement in three communities the 50-year-old ferry serves. The first Tustumena Replacement Vessel Reconnaissance Report meeting will be held in Unalaska May 19, at the city hall. On May 21 a presentation will be given in Kodiak at the public library and a meeting will be held in Homer May 22 at Pioneer Hall on the Kachemak Bay Campus. All meetings will be held from 5-7 p.m. Individuals can participate via teleconference at 1-800-315-6338, conference code 3905#. Elwood Brehmer can be reached at [email protected]

Tourism expected to hold the line in 2014

It’s almost time for the rush of family and friends from the Lower 48, and Alaska’s tourism industry leaders are expecting a good, but not great, 2014 visitor season. John Binkley, president of Cruise Lines International Association Alaska, formerly the Alaska Cruise Association, said he is expecting 972,000 cruise visitors to the state this year, a slight decrease from the 999,600 cruisers to Alaska in 2013. While the final 2013 tally did not quite reach the 1 million cruisers, it was the first year since 2009 that the benchmark was even approached after the global recession and a since-repealed cruise passenger state tax increase hit the industry hard. Less than 900,000 passengers toured Alaska by cruise ship in 2010 and 2011. Binkley said this year’s projection is based on less available cruise openings caused by some of the lines adjusting their schedules from last year because of Environmental Protection Agency regulations. “When (the cruise companies) were making their decisions for 2014 we still had the cloud of ECA, the Emission Control Area, hanging over us that the EPA had mandated with the expensive fuel, so that affected the deployment decisions as to where they were moving their ships,” Binkley said. Passed in 2010, Emission Control Area standards required ships operating within 200 miles of U.S. or Canadian coasts to burn fuel containing less than 0.1 percent sulfur by 2015. In September, Carnival Corp., the world’s largest cruise company announced it had reached an agreement with the EPA to add less expensive “sulfur scrubbers” to the ships’ exhaust systems to comply with the regulation as opposed to burning fuel that Binkley has said would’ve added an expense to cruise operators of $150 per passenger. He said several of the other major cruise lines operating in Alaska have since reached similar compromises with the EPA. “At least they allow for the technology solution rather than mandating the expensive fuel,” he said. After Anchorage saw no cruise ships in 2013, Holland America’s Amsterdam will call on the city four times from May to August. The Amsterdam will also stop in Homer on its way to Anchorage. Despite having no ships in port last year, Binkley said the state’s largest city still felt the economic impact of Whittier and Seward being “turn-ports” for cruise ships. Being the airport and railroad hub for Southcentral draws cruisers beginning or ending their ocean voyages in the smaller communities to Anchorage often for several days as opposed to those visiting it just for a day as a “port of call,” he said. Visit Anchorage President and CEO Julie Saupe said her organization considers the other region ports a part of Anchorage. “If you’re a hotel in Anchorage you like Seward and Whittier as a stop more so than Anchorage as a port of call,” Saupe said. “Now if you’re a museum or a lunch spot downtown you really appreciate the Amsterdam coming right in.” She said she is optimistic about the summer of 2014 because of increased airline exposure to Alaska and how the cruise prices are holding up. “Things seem to be selling without extra effort, without having to throw in additional values or 10 percent off and that’s something we always watch for,” she said. “We know the cruise lines work hard to fill those ships; the question is how hard to they have to work to fill those ships?” Icelandair is continuing seasonal service to Anchorage from Reykjavik that started in 2013 and Yakutia Airlines is doing the same with flights from Eastern Russia. Delta has also increased its flights from the West Coast to Anchorage this year. Interior Fairbanks is coming off a “robust” winter tourism season, Explore Fairbanks President and CEO Deb Hickok said, and she hopes that will carry to summer. The winter Aurora viewing season in Fairbanks is popular with Japanese and Korean tourists as well as domestic travelers. Bed tax revenue in the City of Fairbanks was up 19 percent in January over 2013 and Hickok said she is anticipating strong numbers for the first quarter overall. More than half of the summer visitors to Fairbanks are tied to cruise-tour packages, Hickok said, and because of that she expects similar visitor numbers to last year. Delta is offering nonstop service from Seattle to Fairbanks and United Airlines will again be flying direct between Fairbanks and Chicago and Denver this summer, routes it first flew in 2013. Frontier Airlines will also be flying between Fairbanks and Denver, Hickok said, providing more options for travelers and hopefully driving down airfares to the Golden Heart City. “Competition is a good thing,” she said. Interior businesses tied to winter tourism are reporting more and more international visitors from nontraditional markets like Taiwan, Australia and China, Hickok said — a trend she hopes to see grow. “We’re seeing a good mix of international visitors that I think is going to carry over into summer,” she said. Hickok and Saupe spoke to the Journal from Chicago, while attending the U.S. Travel Association’s 2014 IPW (International Pow Wow) meant to bring North American travel industry marketers together with worldwide vacation planners. Elwood Brehmer can be reached at [email protected]

Ambler District potential justifies road, says NovaCopper CEO

NovaCopper Inc. CEO Rick Van Nieuwenhuyse said his company is near a goal of 10 billion pounds of copper for potential development in the Ambler Mining District. The Ambler Mining District, which stretches for approximately 75 miles between the Brooks Range to the north and the upper Kobuk River to the south, is a world-class copper deposit, Van Nieuwenhuyse said at an April 3 Resource Development Council presentation. “The thing that’s unique about Ambler is grade,” he said. Vancouver-based NovaCopper has two large areas of focus in Ambler, the Arctic deposit and its 3.1 billion pounds of 6 percent indicated copper and the Bornite deposit, with 5.7 billion pounds of inferred resources and 300 million pounds of indicated copper. The Arctic deposit also has 400 million-pound inferred resource and could be worth up to $1.4 billion over a conservative 12-year mine life. The resource estimates for the Arctic deposit are from a September 2013 preliminary economic assessment. Bornite figures are from a technical report NovaCopper released April 1. South of the main mining district, the Bornite deposit is separated into 2.3 billion pounds of about 1 percent-grade surface-accessible copper ore and 3.4 billion pounds of high-grade, 2.8 percent copper ore that would be reached via underground mine, Van Nieuwenhuyse said. Overall, Arctic ore is believed to average a 3.3 percent copper grade and 4.5 percent zinc. If developed, it would also yield about 29,000 ounces of gold and 2.5 million ounces of silver yearly, he said. Because of the quality of the Arctic deposit, its estimated capital requirement of about $7,000 per ton of material is about half of the industry average, according to Van Nieuwenhuyse. Still, the one mine would have a startup cost of more than $700 million and cost $164 million per year to operate, he said. Those costs are calculated with diesel power. If the state’s plan for trucking North Slope liquefied natural gas to Interior comes to fruition, potential mine development — from NovaCopper and others — could stand to benefit from the lower cost fuel, too. “The trucks would just have to learn to turn right off the Dalton Highway,” Van Nieuwenhuyse said. The trucks would turn onto a roughly 200-mile long access road to the Ambler Mining District. Both the Alaska Industrial Development and Export Authority, which took over work on the road proposal from the Department of Transportation for financing purposes, and Van Nieuwenhuyse have said no Ambler-area mines will be developed without a road. During March legislative hearings, AIDEA Deputy Director Mark Davis said what is envisioned for the road now is a one-lane industrial road at a cost of nearly $400 million. AIDEA is working to “value engineer” the cost down, Davis said. In an interview, Van Nieuwenhuyse said he would like to see a road financed through bonds or lower interest loans paid by tolls, rather than direct private investment. To date, there has been about 127,000 meters of exploratory drilling done in the Arctic and Bornite deposits, Van Nieuwenhuyse said, about 48,000 meters of which was done by NovaCopper. Previous exploration teams did the rest from the late-1950s through the late-1980s. The drilling done recently has been done with operations set up primarily with helicopters, he said. “There’s hardly any drilling in this district because it’s bloody expensive,” Van Nieuwenhuyse said. Since 2004, he said NovaCopper has spent $82 million on exploration of the Arctic and Bornite deposits. “Any district worth its salt would have millions of meters of drilling,” Van Nieuwenhuyse said. He continued: “Just to develop the mining district, just from a drilling standpoint, you could justify building a road just on that.” Over the next three years, NovaCopper will be working on combining the Bornite and Arctic projects first in feasibility studies and then financing plans, he said. Whether or not a road would be seen as justified without a firm commitment of mine development from the state or region stakeholders remains to be seen. Van Nieuwenhuyse said the impact a road could have on caribou, the primary subsistence resource in the region, needs to be studied further. He added that NovaCopper’s work is gaining traction among the residents in the potential corridor because of the prospect of well-paying jobs and access to lower-cost fuel provided by the road. Inland Northwest Alaska communities have some of the highest fuel costs in the state. According to Van Nieuwenhuyse, his company has paid $1.3 million to regional NANA Development Corp. and village corporation shareholders over the last three years for work at the exploration sites. Elwood Brehmer can be reached at [email protected]

AIDEA backs first loans for LNG trucking plan

The Alaska Industrial Development and Export Authority board approved $23.1 million in loans for the Interior Energy Project April 3 — money that will be used to build the first part of the complex natural gas supply chain for Fairbanks-area residents. A $15 million loan was awarded to Fairbanks Natural Gas, which currently serves about 1,100 customers in the city’s core, and the borough-owned startup Interior Gas Utility was approved for $8.1 million. FNG President and CEO Dan Britton told the AIDEA board that the $15 million would be used to add about 30 miles of pipe to its existing infrastructure in the next two years and allow the utility to serve up to 2,500 new customers in its service area.  “We’re happy to be expanding and getting more gas to more customers versus just talking about it,” Britton said. Gary Wilken, AIDEA board member and a former state senator from Fairbanks, said FNG’s plan is “aggressive and welcome.” FNG, which currently trucks about 1 billion cubic feet, or bcf, of Cook Inlet gas  per year to Fairbanks, was criticized during Alaska Regulatory Commission hearings last fall for not growing its customer base on its own within the service area that was ultimately awarded to IGU. Britton has long contended that the utility’s small size made it difficult to secure long-term gas contracts needed to back expansion. Britton said FNG has its design and permits ready and has been working with the Department of Transportation to coordinate its digging with road projects scheduled for this summer. IGU board chair Bob Shefchik said the utility would use the money to design, permit and secure right-of-ways for its extensive gas distribution system to be started in North Pole. By 2021 IGU has said it plans to lay nearly 670 miles of gas pipeline in an effort to reach more than 11,600 customers. He said IGU would be “in the dirt in the summer of 2015.” While the utilities work at the southern end of the Interior Energy Project, AIDEA will be working with its North Slope gas liquefaction plant partner Colorado-based MWH Americas Inc. The trick will be melding the ends of the project and setting up a trucking network to begin hauling LNG down the Dalton Highway by early 2016, AIDEA’s stated goal. “This is the biggest puzzle I think I’ve ever worked on in my life,” AIDEA Executive Director Ted Leonard said. Poor winter air quality and the fact that some residents pay up to $5,700 annually for fuel oil to heat their homes has driven the initiative to get natural gas to Fairbanks. AIDEA projects that trucked North Slope gas will be about half the cost of fuel oil in the Interior. The loans to the utilities are from the state’s Sustainable Energy Transmission and Supply fund and act as essentially as 20-month, no interest lines of credit, AIDEA Deputy Director Mark Davis said. Passed last year, Senate Bill 23 initiated the Interior Energy Project and authorized AIDEA to use up to $125 million in loans from the SETS fund for the North Slope plant and distribution systems. The end of 20-month grace period roughly coincides with when AIDEA hopes to get first-gas to Fairbanks, which would give the utilities a revenue stream to pay for the debt.  “This is designed to get them jumpstarted. We don’t want customers paying for unused pipe,” Davis said. FNG’s loan was approved unanimously, while IGU’s was approved on a 4-2 vote with board members Crystal Nygard and Wilson Hughes dissenting. Board member Russell Dick was absent. Hughes and Nygard expressed concerns over whether IGU could repay the loan and if it should instead be a grant from the $57.5 million capital appropriation as part of SB 23. “This (IGU loan) is a little unique because usually AIDEA loans are for hard assets like the one to Fairbanks Natural Gas for pipe,” Davis said. He continued: “If IGU is unable to pay this at the end of 20 months then there would really be a discussion as to whether IGU was really in existence.” IGU’s distribution system design, permits and right-of-ways would become AIDEA’s if the utility cannot repay its loan, he said. According to Shefchik, IGU had about $450,000 available at the end of March. On March 27 the Fairbanks North Star Borough approved the utility for a $7.5 million line of credit available through 2021, when full build-out of its system should be wrapped up. The borough credit is not a loan backstop, he said. The loan “represents a compromise between us and the AIDEA management rather than utilizing the capital money now is to have it be a loan,” Shefchik said. How the loans are structured once repayment begins will depend on how much gas the utilities commit to buy from the North Slope plant, according to Davis. As gas distribution expansion continues beyond 2015 the utilities will have the option of purchasing gas from other places but would then have to look for other financing too, Leonard said. Board member Wilken asked about AIDEA’s ability to drive demand to the North Slope plant. “I love competition but I hate stranded assets,” Wilken said. Leonard said “take or pay” agreements with the utilities for gas are essential for the viability of the plant. “Our position has been that any funding or financing that (AIDEA) provides has to be tied to utilizing gas from the North Slope plant. In accordance with SB 23, interest rates on the SETS loans can be up to 3 percent, and will be worked out in the future along with further gas purchase contracts. FNG will purchase up to 500 million cubic feet from the North Slope plant as part of the current loan terms to supply the customer base served by expanded infrastructure and paid for with the $15 million, Leonard said. The final design for the 9-bcf North Slope plant that could cost up to $180 million, is still up in the air. In the coming months AIDEA must decide whether to build the entire plant at once or to build a 4.5-bcf module initially that can have a second added as demand increases. Leonard noted that the Interior Energy Project has never been viewed as a long-term solution for Fairbanks energy, and that if a gas pipeline ever bisects the state the utilities would be able to draw cheaper gas from it. By then, he said, it’s possible other demand from customers such as mines could arise for trucked LNG, keeping the North Slope plant viable. After full build out, FNG is projected to have another 3.5 bcf worth of demand added to its 1 bcf now. IGU’s end demand is expected to total 4.5 bcf as well; the difference being the vast majority of its customers will be residential and require less gas than some of FNG’s commercial customers in the heart of Fairbanks. Britton said about 50 percent potential customers are expected to switch to gas within the first two years of it being available, with 20 percent converting in year three, and 15 percent in year four. Leonard said that Golden Valley Electric Association’s purchase of gas will be essential to the success of the project. Golden Valley President and CEO Cory Borgeson said in an interview the cooperative is ready to purchase about 2 bcf per year of gas for electricity generation. “We’re in on this very important project,” Borgeson said. Regardless of how the gas demand washes out, Leonard said backing the gas infrastructure is a good thing. “We are building out distribution with these funds that does provide distribution either for our plant or for the larger pipeline or for alternative gas on the plant side,” Leonard said. “These loans provide low-cost financing for the citizens of Fairbanks for their distribution system.” Elwood Brehmer can be reached at [email protected]

Flurry of medevacs stokes road battle

When it comes to a road for King Cove, Sen. Lisa Murkowski has held true to her word and has not let the issue die. Alaska’s senior senator has railed on Interior Department Secretary Sally Jewell’s decision to deny a land swap that would allow emergency road access between the Alaska Peninsula villages of King Cove and Cold Bay at every opportunity since Jewell announced her ruling Dec. 23, 2013. At an impromptu press conference in Anchorage immediately following that call she received from Jewell, Murkowski called the decision an “insult” and “offensive,” and said she regretted voting to confirm Jewell. Murkowski took her fight to the Senate floor April 1, a day after the medevac of an injured fisherman out of King Cove in which the fishing vessel he was aboard couldn’t make it to Cold Bay because of rough seas and the Coast Guard had to wait four hours to reach King Cove because of high winds. “Maybe I’m taking this too personally,” Murkowski said about 10 minutes into her April 1 floor speech. “Both my sons fish in these areas; they go through the Gulf of Alaska; they go through Unimak Pass (west of Cold Bay) every year as fishermen. And if something should happen to them or if something should happen to their crew, and the closest deepwater port happens to be King Cove but the weather is to the ground I want a road for them. I want a road for the people of King Cove. I want a road for the Seattle fisherman who is transiting back because it’s a lifeline.” Alaska’s congressional delegation, Gov. Sean Parnell and King Cove residents say the road would provide an essential link for emergency services when bad weather prevents flights out of King Cove or boat travel across Cold Bay. With a paved runway longer than 10,000 feet, Cold Bay’s airport has one of the longest civilian runways in the state and is the area’s main link to Anchorage. The old military post was built during World War II. King Cove’s airport has a 3,500-foot gravel runway. The village has roughly 960 year-round residents. Over the years 19 people have died in plane crashes or waiting to get medevac service out of King Cove. However, no one has died trying to leave since 1994. Murkowski did not change her choice of words when speaking directly to Jewell during a March 26 hearing held by the Senate Appropriations Interior and Environment Subcommittee on the proposed Interior budget for the 2015 fiscal year. “The notion from your department that you must protect Alaska from Alaska Natives, our first people, is insulting,” Murkowski said to Jewell. At the heart of the issue is a planned 11-mile gravel road that would cut across what is now Izembek National Wildlife Refuge land and connect King Cove and Cold Bay. The land exchange calls for the federal government to turn over 206 acres in the Izembek Refuge along with 1,600 acres outside the refuge in exchange for about 56,000 acres land owned by the state and King Cove Corp., the Alaska Native village corporation. Congress approved the land swap and it was signed into law in 2009, but turning over the federal land requires the Interior secretary’s approval. It would give the state the right-of-way it needs to build the section of road that has been estimated to cost about $21 million and would be paid for by the state. In February 2013, the U.S. Fish and Wildlife Service, an Interior agency, recommended that then-Interior head Ken Salazar reject the land swap based on the impact it could have to wildlife habitat in the refuge. Salazar chose not to rule on the issue and Murkowski’s confirmation vote for Jewell’s appointment was contingent upon her visiting King Cove, which she did last August. Jewell said in a December Interior Department release that the road would cause “irreversible damage” to the Izembek Refuge, that she understands the need for reliable transportation between the communities and that other methods of transport could be improved to meet community needs. In summer, the 315,000-acre refuge is home to 98 percent of the world’s population of Pacific black brant, a goose that breeds there, according to the Interior Department. “The lives of our people, our elders, children and grandchildren are at stake over this issue,” Aleutians East Borough Mayor Stanley Mack said after Jewell’s decision. “Are birds really more important than people? It seems so hard to believe that the federal government finds it impossible to accommodated both wildlife and human beings. Is the Obama administration turning its back on Native Americans?” Murkowski said to Jewell March 26 that the president’s Interior budget does not have any money set aside for alternative modes of transportation between King Cove and Cold Bay. Jewell said the department needs suggestions from local residents about viable alternatives if the road that she diplomatically called Murkowski’s “preferred alternative” does not go through. The possibility of a permanent U.S. Coast Guard position in Cold Bay, which has been floated by Jewell and others, is out of the question according to Murkowski, who said she talked to regional commanders in the Coast Guard who dismissed the idea. “I think it is very clear that the Coast Guard does not view this as a mission, that they do not view this as a mission they wish to take on,” Murkowski said. “In order to accommodate the people of King Cove on a somewhat regular basis they would require two additional helicopters at $26.1 million apiece.” Murkowski spokesman Robert Dillon said Coast Guard medevacs from King Cove to Cold Bay — there have been five conducted through April 1 this year and eight since Jewell’s Dec. 23 decision — cost up to $210,000 each, as a helicopter often must be dispatched from Kodiak Island. In an April 2 letter to Murkowski, Coast Guard Congressional and Governmental Affairs Cmdr. Daniel P. Walsh wrote that a new, permanent facility in Cold Bay equipped with two MH-60T Jayhawk helicopters would cost $112 million initially and $11.4 million per year to operate. Jewell’s decision, while relentlessly hammered by Murkowski, has been supported by conservation groups, a number of former assistant Interior secretaries and some of the residents of Cold Bay. In February 2009, the village of Cold Bay mailed out 52 surveys asking residents to share their sentiment about the proposed road link with their neighbors. According to a summary of the surveys, 29 were returned with stances against the road and nine were for it. When asked about the issue, Cold Bay Mayor Jorge Lopez said he would have to consult with the city council and would not be able to comment in time for this story. A bipartisan group of former assistant Interior secretaries from the Nixon, Ford, Clinton and George W. Bush administrations wrote a letter to Jewell dated March 14 supporting her stance against a road through Izembek. The letter notes that in 1998, the Clinton administration reached an agreement with the road’s then-biggest proponent, Alaska’s late Sen. Ted Stevens, to appropriate $37.5 million for upgrades to the King Cove clinic, dock facilities and a new hovercraft for use between King Cove and Cold Bay. After spending $9 million on a hovercraft, the Aleutians East Borough took the hovercraft out of service in 2010 saying it was too expensive to operate and couldn’t handle rough water. Jewell has said the hovercraft handled every emergency transport needed while it was in service. What is happening to the hovercraft now is another story. Used for nearly two years as a shuttle between the Aleutian village of Akutan and the new village airport on Akun Island about 6 miles away, Aleutians East Borough spokeswoman Laura Tanis said it was taken out of service Feb. 15. The borough plans to put the hovercraft up for sale, Tanis said, with the proceeds going to projects in Akutan and King Cove. Tanis cited the cost and unreliability of the hovercraft as reasons for discontinuing its use. Bruce Babbitt, Interior secretary under President Clinton, wrote an op-ed piece for the Los Angeles Times March 11 with the headline “Alaska’s ‘road to nowhere’ is still a boondoggle,” referencing the infamously-dubbed Bridge to Nowhere proposed between Ketchikan and Gravina Island. According to Babbitt, the road would connect salmon processing facilities in King Cove to the Cold Bay’s airport and allow for expanded shipping of commercial fish. Additionally, he wrote that the road would “set a dangerous precedent as the first new road ever authorized through a congressionally protected wilderness area, one of the most stunning estuaries on the planet.” Murkowski has emphasized the road would be restricted to emergency-use only. Even the Yukon-Kuskokwim Delta-area Association of Village Council Presidents, which represents 56 Western Alaska Native villages, has weighed in. In a letter to Jewell dated May 6, 2013, AVCP President Myron P. Naneng Sr. wrote that the group opposes the Izembek road as stakeholders of the waterfowl resource because of concerns about what it would do to goose habitat. “In taking this position (against the road), AVCP is not dismissing the valid concerns of the people of King Cove. We believe, however, that the proposed road is not the solution — that other transportation alternatives that would not impact migratory waterfowl should be discussed and developed with King Cove,” Naneng wrote. Alaska Region Director of The Wilderness Society Nicole Whittington-Evans echoed Babbitt in an interview saying that the road set a very dangerous precedent for development in designated wilderness areas and questioned how the road would be kept open during dangerous winter weather. “We want local residents (in King Cove) to have safe transportation that is as reliable as their remote location allows,” Whittington-Evans said. She added that residents in need of immediate medical care would not use a road when faster air transportation is available. The Wilderness Society’s Alaska spokesman Tim Woody said the organization supports Jewell’s ruling on the road through “science-based rationale” and that other alternatives, such as returning the hovercraft to service, should be investigated. “We agreed with Sally Jewell that this is about finding a solution that meets all needs,” Woody said. Elwood Brehmer can be reached at [email protected]  

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