Elwood Brehmer

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]  

Tongass exemption reinstated; FWS moves to list wolves

A federal appeals court overturned a lower court ruling that denied exempting the Tongass National Forest from the controversial “Roadless Rule” on March 26. In its 2-1 opinion to uphold the Tongass exemption, a 9th Circuit Court of Appeals panel cited the U.S. Department of Agriculture’s attempt to ease the socioeconomic impact to Southeast Alaska created by the Roadless Area Conservation Rule, address regional timber demand and its wish to end litigation as acceptable justifications for the original USDA action. The Appeals Court remanded the case to Alaska U.S. District Court to determine if a supplemental environmental impact statement is needed for the exemption. At roughly 17 million acres — the size of West Virginia — the Tongass is the largest national forest. Enacted at the end of the Clinton administration in January 2001, the Roadless Rule has been at the center of lawsuits in four other western states and Washington, D.C. It was meant to preserve nearly 60 million acres of national forest across the country from further development. In 2003, the USDA issued a record of decision that determined the Tongass should be exempt from the development ban. A 2011 Alaska U.S. District Court ruling overturned the exemption and the State of Alaska sued to reinstate the exemption and overturn the entirety of the Roadless Rule. Also in 2011, the 10th Circuit Court of Appeals rejected a State of Wyoming petition to reinstate a District Court injunction barring implementation of the rule, thus restoring Roadless management in the state. The most recent version of the case pitted the Organized Village of Kake and 11 regional and national conservation organizations including Greenpeace and the Sierra Club as plaintiffs against the USDA — the parent department to the U.S. Forest Service — and the State of Alaska and the Alaska Forest Association as defendant and interveners. A year and a day before the Appeals Court decision, 9th Circuit Court Judge Richard J. Leon wrote in a 2013 ruling that the state’s quest to repeal the Roadless Rule completely came too late, after the six-year statute of limitations had expired. The members of Alaska’s congressional delegation and Gov. Sean Parnell lauded the March 26 ruling as a win for the state against federal policy that doesn’t fit the state’s situation. “This is a huge victory for Alaskans and their families who depend on economic development in the Tongass. Although this rule has already done irreparable harm to the timber industry and small communities in Southeast Alaska, this win will allow Alaskans to start building the industry back up,” Parnell said in a formal statement. In early 2011, Sens. Lisa Murkowski and Mark Begich co-sponsored stalled legislation to permanently repeal the Roadless Rule. Sealaska Corp. spokeswoman Dixie Hutchinson wrote in an email to the Journal that the ruling will return management of the Tongass back to the Forest Service and provide the people of Southeast with a voice in how the forest is managed. Sealaska, the Alaska Native regional corporation for Southeast Alaska, has been working the delegation for years to gain roughly 70,000 acres still owed to it by the federal government under the Alaska Native Claims Settlement Act. Corporation leaders have stressed the primarily timer land it has requested would temporarily lift the region’s once-strong timber industry. Timber harvest is allowed in Roadless areas, but industry officials say the helicopter logging required is slow and expensive. Judge Carlos T. Bea cited USDA’s 2003 record of decision extensively in the majority opinion issued March 26. Bea noted the department’s acknowledgement that the Tongass is a unique situation with 29 of the 32 communities inside the national forest isolated from the highway system. Because of that, “the Roadless Rule would condemn these communities to continued isolation” and economic hardship, according to USDA. Unemployment rates in some small Southeast communities not benefited by tourism range between 15 percent and 20 percent. Thus, the exemption is a “reasoned explanation” based on the department’s expertise, to which the court is supposed to defer, Bea wrote. Further, Bea referred to the historical timber harvests as a reason to reinstate the Roadless Rule exemption in the forest. From 1980-2002, the average harvest in the Tongass was 269 million board feet and prior to 2001 the harvest had never been less than 100 million board feet, according to the 2003 record of decision. Given the historical harvest figures, a conservative market demand estimate of 124 million board feet was deemed reasonable in the record of decision. Here again Bea deferred to the department’s expertise in his ruling. “It is certainly reasonable for the agency to determine that a higher market estimate from 22 years of data is preferable to a lower market estimate based upon demand in a short cyclical downturn, even for a ‘short term’ rule,” Bea wrote. The fiscal year 2012 timber harvest in the Tongass with the Roadless Rule in effect was 20.8 million board feet, according to the Forest Service’s 2012 Tongass Monitoring and Evaluation Report. Judge M. Margaret McKeown disputed the timber demand projections in her dissenting opinion because they did not account for the “dramatic post-2000 decline in timber demand,” she wrote. The record of decision projected the Roadless Rule would cause a harvest reduction of 77 million board feet per year, which didn’t hold true by 2003, according to McKeown. The 2003 decision also noted the pending litigation at the time as a reason for exempting the Tongass from the Roadless Rule — a way to mitigate future court proceedings — according to Bea’s opinion. Litigation has continued for more than a decade after the record of decision, a fact noted by McKeown in her dissent. However, Bea wrote that the McKeown dissent “argues that the record of decision created more litigation than it resolved. But such an analysis second-guesses the USDA’s decision based on 20/20 hindsight. Agencies are not soothsayers, and litigation is an uncertain art.” US Fish and Wildlife moves to list Tongass wolf While the reinstatement of the Tongass exemption to the Roadless Rule can be seen as a win for the timber industry, a March 28 announcement from the U.S. Fish and Wildlife Service that the agency has taken the first step to list a Southeast wolf species as threatened could temper timber optimism. Fish and Wildlife has initiated a 90-day petition to list the Alexander Archipelago wolf as threatened and to designate critical habitat under the Endangered Species Act. The Alexander Archipelago is the island chain that makes up nearly all of Southeast Alaska and stretches roughly from Juneau south to the British Columbia coast. According to the Fish and Wildlife Federal Register posting, the wolves inhabit all of mainland Southeast and islands south of Frederick Sound, meaning the large islands of Baranof, Admiralty and Chichagof would be exempt from any possible habitat classification while Prince of Wales Island would not.  Murkowski said in a written statement from her office that if the decision to list the wolf is made it would further “lock up” Southeast and limit economic development. “I find it ironic and more than a mere coincidence that this administration would decide to take this step right after the 9th Circuit Court overturned the Roadless Rule in the Tongass,” she said. “This will have real and lasting ramifications on the economy of Southeast. That, to me, is unacceptable.” As part of the 90-day petition, Fish and Wildlife is asking for comments and scientific data on the wolves of Southeast. Based on the information submitted, a 12-month finding on the petition will be issued. In a March 28 statement responding to the Fish and Wildlife action, the Alaska Region of the Forest Service issued a written statement saying it would work with the service and the Alaska Department of Fish and Game to gather sound population data on the wolves and assist in future management of the predators. The Federal Register comment deadline is May 30. Elwood Brehmer can be reached at [email protected]

Alaska has a love-hate relationship with its energy

Every year Alaskans wait with bated breath for the PFD announcement — their personal share of the state’s oil wealth. While clean, reliable hydropower provides inexpensive electricity to Southeast, residents of the Interior and Western Alaska struggle to afford $5 per gallon fuel oil. Some pay more for heat than their mortgage every month. For 10 years, Chris Rose, founder of the Renewable Energy Alaska Project, or REAP, has tried to level the energy field across the state. “We have worked very hard to help people understand this is an economic issue,” Rose said. According to Rose, Alaskans spend more than $5 billion per year on energy, with most of that money leaving the state. Over the past couple years, REAP has partnered with the state in an effort to make sure Alaska’s future leaders have the basis to tackle their state’s wide-ranging energy challenges. In 2012, the nonprofit began developing the AK Energy Smart curriculum with the Alaska Center for Energy and Power at the University of Alaska Fairbanks as a way to spread the word about the importance of energy awareness through the state’s schools. REAP took the curriculum on a barnstorming mission to about a dozen communities across the state. Teachers and administrators were invited to workshops to learn how AK Energy Smart principles could be melded into their current lesson plans. Courtney Munson, REAP’s education coordinator, said in all representatives from 39 districts learned about the curriculum in 2012. Energy curriculums from across the country were studied and bits and pieces that applied to Alaska were added to AK Energy Smart. A popular focus in Lower 48 schools that was omitted is being energy efficient during summer when air conditioners are running, a problem not typically associated with Alaska, Munson noted. “The first thing we did when we created this curriculum was break out the big concepts; what are the things we want everyone to know?” Munson said. From there, the lessons such as  “Be an Energy Saver,” geared towards middle school students, needed to be scaled for older and younger kids, she said. In high schools the focus is on action components, Munson said, with more involved and detailed measures students can take to impact energy use at home or school. Younger students are simply made aware of the broad concepts and “energy pathways” around them, she said. It’s a way for teachers of the youngest students to weave AK Energy Smart principles into their current lesson plans. “Some of the lessons are ones the teachers would take as a reading lesson; it’s just the story is about energy. It’s a story about a girl in her house who started discovering things using energy and through the story we teach these concepts,” Munson said. “These are things that younger children can understand; it’s just more visualizing it.” Feedback from teachers was mostly positive after the first summer. They found AK Energy Smart particularly easy to integrate into the classroom because the lessons were designed around Alaska, she said. Teachers in rural Alaska could get a few kilowatt meters that cost $30 to $40 and have their students track energy usage of certain appliances and translate that to cost, she said. It doesn’t require complicated or expensive materials. The impetus for the education work is to share information, an essential part of changing the culture and reducing expensive energy use, Rose said. The sooner the learning can start, the better, he said. “Talking to kids early on about why energy is important, where their energy comes from is an important thing for our future — to make sure our kids are energy literate,” Rose said. “There’s a tremendous ignorance, sadly, about where energy comes from. A lot of people know very little about how their electricity is produced.” When Jack Walsh was the superintendent in the Western village of Naknek, he and some of his teachers sat in on an AK Energy Smart workshop. Walsh said he too was impressed with how applicable the curriculum was to his small school with about 180 students from kindergarten through high school in one building. “Where an elementary class might work with their teacher on turning off lights or learning how they could conserve energy in other ways, what we saw with some of our older students, especially in classes like science, they could do more exploring with some of the options that exist with wind or solar power,” Walsh said. A staff meeting about the curriculum and how it could be applied directly to the school began to change everyone’s habits, according to Walsh. He said the school’s maintenance director tried to make everyone aware of how much electricity the 90,000 square-foot building was using and costing — nearly $30,000 every month. “He put the number from the electric bill on a piece of eight-and-a-half by 11 piece of paper and hung it next to every light switch,” he said. The simple act got others to do simple but often overlooked things — to close open windows and doors and turn off the lights before they left, he said. Additionally, just beginning to talk about energy in the school broadened the scope of the conversation to bigger topics nearly immediately. Walsh said the local electrical cooperative was investigating the prospect of generating power from geothermal sources at that time. Naknek is powered with diesel-fired generators. “There were a lot of things going on in the community that were important for us to better understand and unfortunately while (the geothermal) project wasn’t as successful as people had hoped it was important for kids to know that there are so many ways for us to reduce our reliance on fossil fuels because they might be able to save that in ways I never thought of or others had never thought of in the past,” Walsh said. Now the superintendent at the Craig district in Southeast, Walsh said he plans to implement AK Energy Smart into classrooms there. Alaska Housing Finance Corp. now has a two-year, $200,000 contract with REAP to continue AK Energy Smart outreach, AHFC Energy Specialist Tim Leach said. He looks at it as a way to give students a “leg up” on how to make good energy choices in the future, Leach said. “We really want to make sure that this curriculum, which we see really as an essential element for students here in Alaska, moves forward and gets in the hands of the teachers here in Alaska and allows the students to become energy literate,” he said. Teachers who aren’t able to attend in summer at workshops in regional hubs can attend via webinars. He said the curriculum can also be downloaded from the AK Energy Smart website. Elwood Brehmer can be reached at [email protected]

Great Alaska Quake shook up science

When North America’s largest-known earthquake shook Alaska for all it was worth at 5:36 p.m., on Good Friday, March 27, 1964, George Plafker was in the right place at the very right time. At 35, Plafker was an up-and-coming geologist with the U.S. Geological Survey in Menlo Park, Calif. Because he had spent the previous three years mapping Southcentral Alaska’s mineral resources, Plafker was one of the few USGS scientists familiar with the infant state and subsequently was sent north. “I was at a meeting in Seattle so they only had to pay my fare half way,” Plafker said during a February lecture. The March 28 flight would send Plafker’s career in a new direction. “I don’t think any of us had any experience working on earthquakes,” he said. Today, Plafker is scientist emeritus of the Earthquake Hazards Program at the USGS Menlo Park Science Center. Part of a three-man team of geologists, Plafker was on the ground in Anchorage less than 24 hours after the earthquake struck. His flight was diverted to Elmendorf Air Force Base north of the small city because the air-traffic control tower at the international airport had collapsed. The lone individual in the tower was killed. The 9.2 magnitude earthquake, with its epicenter 74 miles east of Anchorage on the north edge of Prince William Sound, was felt as far away as Dutch Harbor and Seattle. The quake and resulting tsunamis took 128 lives from Alaska’s Gulf Coast all the way south to Los Angeles. In Alaska, 15 people are believed to have died during the four-minute quake, while another 113 were killed by the large waves. Damage in the state totaled more than $310 million at the time, roughly $2.3 billion in today’s dollars. Crescent City, Calif., took the brunt of the damage to the Lower 48. The small town sits about 20 miles south of the Oregon border on the California coast. Its locale on a point in the coastline makes it particularly susceptible to large waves. When the March 27 tsunami hit Northern California, the 21-foot swell of water killed 10 people in the town, according to the University of Southern California Tsunami Research Group. Of the $17 million worth of damage in California associated with the tsunami, $15 million of it occurred in Crescent City. Waves as high as 6.5 feet were recorded as far south as San Diego, and one person died when the tsunami surge hit Cerritos Channel in Los Angeles. Small, “warning waves” along British Columbia gave residents of Vancouver Island notice to the 20-plus foot wall of water that was coming, preventing any loss of life in Canada despite no official warning system. Plafker said many of the waves that caused damage in Southcentral were “secondary,” localized waves, those caused by coastal landslides and not the direct ground shake. A landslide in Shoup Bay just west of Valdez started a wave that snapped trees 100 feet above the shore, he said. Southcentral Alaska is particularly prone to earthquake-induced land failures because of the abundance of unstable glacial till soil, above or below the water, that is ready to give way. When added to nearby towns built on the only flat areas near sea level — Valdez, Whittier, Seward — it makes for dangerous sum. “What we learned is — stay away from these places. If you can’t stay away run like hell to higher ground when it starts shaking,” Plafker said. During their first 10-day reconnaissance trip to try and draw early conclusions about what had happened during the quake, Plafker said the Army at Fort Richardson made helicopters and housing available to the Outside geology team. At the time, it wasn’t even known exactly how large of the quake was. “It was called an 8.5 for 10 to 12 years after the fact,” he said, because that was as high as the Richter scale went in 1964. Changing the science The modern theory of plate tectonics was just starting to evolve in 1964 as well, and Plafker’s research would have as much to do as anything with how what happens under our feet is viewed today. In the early 1960s, evidence began to circulate that what is known as “sea floor spreading” was occurring under the Pacific Ocean, he said. That is, magma erupting and oozing from cracks in mid-ocean ridges cools, hardens and forms new ocean floor. “About ’64 the idea that the sea floor is spreading out was accepted but all of the people — we called them in those days ‘stabilists’ versus the ‘mobilists’ — the stabilists would say, ‘Oh, well the earth is expanding to accommodate that and there’s nothing happening at the edges,” Plafker said in an interview with the Journal. The southern coast of Alaska is at one of the edges. It’s there where the denser, younger sea floor plate is pushed under the lighter, older continental plate, forming a subduction zone. The Pacific plate is sliding under the North American plate at about two to three inches per year, Plafker said. As the years turn to decades to centuries, that plate relationship is not without stress, however. The edge of the North American plate gradually bunches up and along with it the land behind the edge is pushed upward. When the pressure behind the edge of the plate becomes too great, the land springs forward  — generally south — and causes a major earthquake. Enter Good Friday 1964. Searching for subduction After returning to Alaska in May, Plafker and his team spent the spring and summer of 1964 traveling Prince William Sound by boat, searching for evidence to support the subduction zone theory. Some of the evidence was pushed right out of the ocean for all the world to see. Parts of Montague Island on the south side of the Sound and Middleton Island farther out in the Gulf of Alaska rose up to 36 feet during the earthquake. Plafker said the movement was obvious where barnacle lines on shore side rocks became exposed. “These little critters all knew where they belonged in the water and they came up very abruptly and died,” he said. Dead trees along Kenai Peninsula and Kodiak Island shores evidenced where the ground had sunk into the saltwater zone. As Plafker explained, when the continental plate pushes out it adds mass to its leading edge and stretches and thins the land behind it. He said areas of Anchorage, where sinkholes all but swallowed homes and roads, fell as much as 10 feet. Plafker’s findings left the stabilists with little solid ground to stand on. “For 50 years I’ve been telling this stuff to all of the people that would listen,” he said. After publishing his team’s findings, Plafker said geologists at the California Institute of Technology who had studied the 9.5-magnitude earthquake in Chile in 1960 — still the lone-recorded event larger than the Alaska earthquake — met the results with resistance. “A friend of mine at Cal Tech said, ‘If that’s what happened (in Alaska), how come it’s the only place in the world it happened?’” Plafker recalled. “I said, ‘Well, I don’t think it’s the only place; it’s the only place we’ve really looked.” He said the Cal Tech professors had determined the Chile quake was caused by an offshore strike-slip fault where the plates collide and grind sideways, much like the San Andreas fault that bisects California. When his dissenting friends offered grant money for Plafker to prove them wrong, it was an opportunity he couldn’t turn down. After chartering a fishing boat for two months in 1969 and studying 600 miles of “inland sea,” — an area he said is very similar to Prince William Sound — in Southern Chile, Plafker said the resemblance to what he saw half a world away was undeniable. “It was a matter of serendipity you can’t believe,” as he described it. Not coincidentally, the USGS started its formal Earthquake Hazards Program soon after Plafker’s research was publicized. “I used those two earthquakes and a comparison of the two for my dissertation at Stanford,” Plafker said. “Besides having a hell of a good time in Chile I got a Ph.D. out of it very easily. Those were the two biggest earthquakes in history and they had a very tight story.” As for when another mega-quake can be expected in Southcentral Alaska, Plafker said, “I’m still working on that.” He said geologists are studying sediment layers on the Copper River delta to determine if the 1964 quake was the eighth or ninth major event in the last 5,600 years, meaning there should be another one in about 570 to 650 years, he said. Plafker was scheduled to give a lecture at the Anchorage Museum on March 27 to commemorate the 50th anniversary of the Great Alaska Earthquake, but he is currently recovering from a bike accident and won’t be able to make the trip to Alaska. USGS Research Geologist Peter Haeussler from the Alaska Science Center is expected to take his place. Building for ‘the big one’ Alaskans love their state — snow, cold, dark, earthquakes and all. Adapting to most of the challenges Alaska presents means simply having a little thicker skin than Outsiders; living with earthquakes takes a bit more engineering. Alaska is by far the most seismically active place on Earth. According to the USGS, nearly one in 10 earthquakes in the world happen in the state. The Municipality of Anchorage adheres to the International Building Code, or IBC. Ron Wilde, a structural plan reviewer with the municipality’s Community Development Department, said IBC standards are then amended to mesh with the local conditions. Areas in West and North Anchorage that have soil layers susceptible to slides and gave way in 1964 call for more particular design requirements, he said. N. Claiborne Porter, an architect in Anchorage for more than 40 years, said homes in the city mostly survived the large quake unscathed if they didn’t fall into sinkholes or weren’t caught up in landslides. The 1964 earthquake was not one of terrible motion, rather one of exceptional duration at more than four minutes long, which caused land to give way. It’s the amount of energy released over such a long period of time that puts it second on the all-time list. Still, “Post earthquake, there has been a terrific increase in the amount of hardware that goes into a structure,” Porter said. Almost all wood frame homes in Anchorage today are designed with ultra-sturdy metal plates that fasten the joists together. The idea is that the flexible wood can absorb the energy and motion endured during an earthquake while the strong joints hold the structure together. “A building is a total system,” Porter said. Ken Andersen and Mike Fierro, engineers with the structural and civil firm Reid Middleton Inc. in Anchorage, said the modern idea behind designing large commercial buildings is much the same. Fierro said steel structures are designed so the lateral beams act as a “seismic fuse” and spare the columns — designed heavier for two to three times more load — and thus the entire structure. “Steel turns into tangy taffy. It can stretch; it can take an enormous amount of deformation but not fail,” he said. “So, we want the (lateral) beam to do that.” Engineers in Reid Middleton’s Everett, Wash., office have a promising tool to determine the structural integrity of essential facilities immediately after an earthquake; it’s called the Rapid Evaluation and Assessment Program and it’s been installed at the San Diego Naval Medical Center. Andersen said sensors are installed in key structural areas of the building and after during an earthquake they send signals to a monitoring station where it established whether or not the building exceeded its design acceleration and needs to be evacuated. While he said it has only been installed in San Diego so far, other military facilities on the West Coast are looking into adopting the REAP technology. Andersen said nonessential buildings are built to withstand accelerations 25 percent to 30 percent greater than those experienced in 1964. They’re built to stand long enough during design-load events so everyone inside can get out before the building fails, he said. Essential facilities, such police and fire stations, hospitals and to some extent schools, are designed to levels at least 1.5 times beyond an average office building, Andersen said. Those criteria are likely to change, he added. “Every time there is a significant earthquake that results in building damage, technical people — scientists, engineers, geologists, FEMA (Federal Emergency Management Agency) — will send out groups to take a look at the site, take a look at the damage and what they see evolves into the code,” he said. Elwood Brehmer can be reached at [email protected]

Lawmakers briefed on Ambler, Juneau road projects

Legislators were brought up to speed on $900 million worth of work on two of the road proposals on the state’s ever-growing list of mega projects at a March 6 committee hearing. The Joint Transportation Committee heard from Alaska Industrial Development and Export Authority leadership on the Ambler Road project in Northwest Alaska and from the Department of Transportation and Public Facilities regarding the Juneau Access road. AIDEA Deputy Director Mark Davis told lawmakers that the authority took over work on the proposed corridor to the Ambler Mining District from DOT last June so the state’s infrastructure financing gurus could investigate options beyond traditional capital appropriation funding for the project. The road would provide access to four copper, zinc, lead and silver deposits that stretch for about 75 miles between the Brooks Range and the upper Kobuk River. Exploration of the deposits has so far been led by NovaCopper Inc., which owns the rights to the largest copper claim known as the Arctic deposit. NovaCopper has also teamed with NANA Regional Corp. on exploring the Bornite deposit, just south of the main Ambler claim belt. A February 2013 report from NovaCopper estimated the Bornite deposit holds roughly 2.4 billion pounds of copper. In July of last year the company issued a preliminary economic assessment of the Arctic deposit that estimated a total resource value of between $619 million and $1.4 billion. The final version of that report, released in September, projected mining and income tax payments to the state of $273.4 million over a 12-year mine life. “Without a road the mines cannot be developed,” Davis said. The Ambler Road would run west for approximately 200 miles from near milepost 135 of the Dalton Highway and give any Ambler-area mines that are developed rail access in Fairbanks.  There, AIDEA would likely partner with the Alaska Railroad to build a small ore terminal, Davis said. DOT took up the project in 2010 when it began reconnaissance studies on the corridor. Since then, the state has put $17.75 million towards the Ambler Road and Gov. Sean Parnell has asked for an additional $8.5 million in his proposed fiscal 2015 budget. Rough cost estimates have put the road in the $400 million range. Davis said AIDEA has value engineered DOT’s two-lane proposal down to a one-lane industrial road that should cost “significantly less,” he said. If AIDEA can secure private funding for the Ambler Road and avoid using public money for construction, its classification as an industrial road could allow restricted use and lower costs. One or more partners would be sought for all construction and maintenance costs, Davis said, similar to what AIDEA has done with the Red Dog mine road north of Kotzebue. “The rationale is to put some of the construction and design on the private sector,” he said. “They tend to be more innovative; they tend to be quicker; they tend to be less expensive than the government.” By starting the National Environmental Policy Act environmental impact statement process this year, environmental permitting could begin in 2016, with construction in 2019, he said. Davis said bonding the state’s portion of work — possibly up to $90 million — could mean no other state contributions would be needed beyond the NEPA process. AIDEA estimates it will need between $15 million and $21 million beyond what Parnell has proposed until permitting is complete. NovaCopper and AIDEA have a memorandum of understanding to keep each other updated on work, given the ties between the road and mine development, according to Davis. This year, AIDEA is continuing discussions about the subsistence, access and economic impacts of the road and mines with area villages, he said. Also, the authority will contract again with DOT and the University of Alaska on geotechnical and environmental impact study work. Years from now, if the road is built and all activity in the Ambler Mining District has wrapped up, Davis said there are multiple options that could provide increased public access on the road. Those decisions will be made during the NEPA process, he said. The first half of the 52-mile Pogo gold mine road near Delta will open to the public once the mine is closed, he said. Lois Epstein, engineer and Arctic program director for The Wilderness Society, testified before the Transportation Committee and raised concerns about how fast the state is moving on the project. “The administration has gotten ahead of itself on Ambler Road,” she said. Before the state puts any more money towards Ambler development, Epstein said there should be clear facts about the viability of the mine prospects and the support garnered from area villages. She questioned whether the state would be able to find private partners to finance enough of the road to justify the estimated $273.4 million return in taxes. NovaCopper’s July 2013 report justifies moving forward with a pre-feasibility study, the company has stated. Epstein said the villages of Bettles, Evansville, Alatna and Allakaket all recently passed resolutions stating positions against the proposed road. One of the biggest concerns area residents have is how the east-west road would impact caribou migration patterns, she said. The Red Dog mine road, which has been promoted as an example of responsible resource development, runs north-south and could affect herds differently, Epstein said. Rep. Craig Johnson, R-Anchorage, said the direct return on investment the project could have is secondary to the benefits of job creation in the very rural region and all but dismissed Epstein’s testimony. “I just hope that at some point we get to see the benefits of development testified to,” Johnson said. “I know we’re looking at specifics, but at some point I think we also need to look at the positive impacts that jobs, and creation of jobs and access to less expensive energy plays in this and we can’t just deal with a piece of dirt turned over and a caribou having a good road to walk on north and south instead of having to cross east and west.” In his testimony, AIDEA’s Davis said the possibility of ice roads used to deliver lower-cost fuel to area villages off of the Ambler Road exists if the road is built. Greta Schuerch, government relations coordinator for NANA, said the state’s partnership with the Native corporation on Red Dog stands as a successful model for Ambler, but that everyone still needs more information on the Ambler project before decisions are made. Juneau access road Extending a road almost, but not quite, to Skagway from Juneau was the second topic for the Transportation Committee. DOT Division of Program Development Director Jeff Ottesen said extending Juneau’s Glacier Highway 48 miles north to the Katzehin River, about three quarters of the way to Skagway, would save the state untold millions in the coming years. The savings would come from retiring one of the state’s mainline ferries without replacing it and the lower maintenance cost of a road versus a 400-foot ferry. “One thing about a road, is that most of that first investment is retained over decades and decades and decades,” Ottesen told the committee. “It doesn’t wear out; it’s not steel that corrodes; it’s not engines that wear down.” Over 50 years, building and maintaining a mainliner ferry costs upwards of $1.4 billion, even after money recovered from fares is factored in. A November cost analysis put the road “right at $500 million,” Ottesen said. The state put $4.6 million towards the project in the current fiscal year and Parnell has $55 million for it in his budget. Currently, DOT is working with federal agencies to complete a supplemental environmental impact statement, or EIS, needed after the 9th Circuit Court of Appeals ruled in 2011 that the state’s original document failed to consider the possibility of improving service with the existing ferries and terminals. The road would end at the Katzehin because the National Park Service deemed the area around White Pass to be a national historic resource and an area that can’t be impacted based Federal Highway Administration regulations. That means the “day boat” ferries on the verge of being built for running Lynn Canal would run up to 10 times per day between a ferry terminal at the end of the road, Haines and Skagway. DOT projects that activity would increase vehicle capacity in the corridor nearly 10-fold by 2020 — anticipated completion of the two-lane road — and demand by more than 18 times from 71 vehicles to more than 1,300 vehicles traveling the route per day. Additionally, travel time between Skagway and Juneau would be cut in half, from an average now of about 7.2 hours with wait-time, to about three hours. Gary Hogins, DOT’s lead on the project, said the traffic added to Juneau’s road system would be “insignificant.” Elwood Brehmer can be reached at [email protected]

House aims to revamp high-cost workers' comp system

Workers’ compensation rates in Alaska have continued to climb in recent years despite a declining number of claims. The House Labor and Commerce Committee took up legislation March 7 aimed at reforming the system and reigning in costs. House Bill 316, introduced by committee chair Kurt Olson, R-Kenai, would eliminate the current usual, customary and reasonable, or UCR, fee schedule and replace it with a schedule set by the state Workers’ Compensation Board. The board would base its fee schedule on Medicaid and Medicare rates and further adjust costs to reflect the market with a conversion factor it would set. The UCR fee schedule is based on what physicians charge in a geographical area, not what it costs to perform medical procedures, according to Olson’s sponsor statement. A biannual study done by the State of Oregon found that Alaska carries the highest workers’ compensation insurance premium rates in the country, despite a 3 percent drop in premiums in 2012. In 2000, Alaska ranked 28th in workers’ compensation premium rates, but by 2006 it was the most expensive state in the country. Since then, Alaska has been first or second. While workers’ compensation claims declined 14 percent in the past year, medical costs increased 25 percent in the same period, said Olson staffer Anna Latham, who presented HB 316 to the committee. Alaska workers’ compensation premiums are 160 percent greater than the national median, Latham said, and medical costs make up 76 percent of overall premium rates. Alaska Department of Labor and Workforce Development Workers’ Compensation Director Mike Monagle has said medical costs nationwide account for about 60 percent of premium rates. According to a brief provided by Olson’s office, primary medical care in Alaska is paid at 185 percent above Medicare rates; surgeries are paid at 482 percent above Medicare; and radiology procedures are paid at 312 percent above Medicare. Latham said the Workers’ Compensation Board, Gov. Sean Parnell and leglislators all agree that the rate system needs serious revision. Alaska State Chamber President and CEO Rachael Petro said during public testimony that the state’s high workers’ compensation costs have become a competitive issue for Alaska businesses. Reforming workers’ compensation rates “is a top priority for the Alaska Chamber and for our members,” Petro said. Approved in 2004, the UCR system has been extended numerous times since it was first supposed to sunset in 2007 by lawmakers unable to reach an agreement on workers’ compensation reform. Another change HB 316 would make is it would add a fee schedule for emergency transportation services, something the current system does not do. Schedules would also be set for in-patient hospital fees, physician visits and out-patient care, Latham said. The fee-setting methodology employed by HB 316 is used in 32 states, she said. The Workers’ Compensation Board would also set reimbursement limits for durable medical equipment and prescription drugs. These rates and the conversion factors would be set annually, Latham said. Additionally, HB 316 requires prescriptions include a code from the Food and Drug Administration’s National Drug Code directory, aimed at better tracking prescription drugs and curbing drug abuse. Monagle, with state workers’ compensation, estimates prescription drug costs account for 20 percent of all compensation claims. Those who testified that the workers’ compensation system in the state needs to change largely supported Olson’s bill. Concerns were raised about the ability of the board to properly set the conversion factors and a clause in the bill calling for the system to sunset in 2019 and revert back to the current system. The Workers’ Compensation Board is made up of nine state labor representative and nine management representatives appointed by the governor. The worry behind the sunset clause is that it would prevent long-term certainty in the industry. When the committee reconvened March 10, Olson said the sunset provision had been removed in a committee substitute for HB 316. “I would say that’s the only thing so far that’s brought all the stakeholders together; nobody liked the sunset clause,” Olson said. As to the board setting the conversion factors, the committee substitute language also called for fellow Labor Department group, the Medical Services Review Committee, to advise the Workers’ Compensation Board on the annual issue. If passed, the board would begin setting fee schedules July 1 at the start of the state fiscal year, and the changes would go into effect Jan. 1, 2015, Latham said. No action was taken on the bill March 10 because Labor and Commerce Committee members did not have the requisite time to review the committee substitute, Olson said. The committee was set to take up HB 316 again March 14. Elwood Brehmer can be reached at [email protected]

Bypass mail proposals draw ire from Alaska delegation

Legislation in the U.S. House of Representatives that would work to cut the cost of bypass mail to the U.S. Postal Service by millions has drawn staunch opposition from the Alaska congressional delegation, who are claiming the changes would have just the opposite effect on the rural freight system. During a March 4 hearing of the House Subcommittee on Federal Workforce, U.S. Postal Service, and the Census, Deputy Postal Service inspector general Tammy Whitcomb testified that the Alaska-specific program lost $76 million last year, or 70 cents for every dollar of the $108 million the post office invested. The Alaska Bypass Modernization Act would require the Postal Service to establish bypass mail rates that cover 30 percent of program costs in fiscal year 2015 and increase to cover half of the cost of bypass mail by fiscal 2020. Oversight and Government Reform Committee chair and bill sponsor Rep. Darrell Issa, R-Calif., said postal ratepayers nationwide are sharing the burden of the bypass mail losses. His legislation, at current rate prices at freight levels, would save the Postal Service about $24 million per year. Established in 1972 as a way to ease demand on postal facilities that were running over capacity, bypass mail supplies a large portion of the consumer goods used in rural Alaska. The program uses a complex system of rate and aircraft classifications depending on the route served to determine freight fees. Those rates are established by the Department of Transportation and imposed on the post office. Air carriers transport the freight orders that could be anything from food to power tools to household items, directly to their destination without going through a postal facility. The carriers are paid by the Postal Service. The current minimum shipping price for a requisite 1,000-pound palletized order is $365, according to Postal Service Alaska District Manager Ronald Haberman. “I would like to point out that despite its costs, the bypass mail system works well for the Postal Service,” Haberman said. Sen. Mark Begich said to the House committee that bypass mail saves the post office $45 million per year versus using standard postage because it cuts down on facilities and labor costs that would have to be incurred if the system were abolished. He testified that, “anyone citing the cost of bypass mail should include that ($45 million) figure.” Rep. Don Young spoke off the cuff to the committee and said he did not know where the title of the hearing, “Alaska Bypass Mail Delivery: A Broken System,” came from. “Chairman Issa has a strong interest, as I’ve said before, in legislating in my state,” Young said. “He’s worried about $70 million lost, supposedly. This would cost the Postal Service probably $200 million if they were to have this, what we call parcel post.” Young said that the losses incurred through bypass mail are small when compared to the overall financial state of the quasi-government organization. “There’s a $15 billion debt in the post office and you’re worried about $70 million,” he said to the committee. The financial troubles of the Postal Service are well documented. The service reported a $354 million loss in the first quarter of fiscal year 2014 as well as $40 billion in unfunded liabilities driven by pension obligations. It marked the 19th net loss over the last 21 quarters, according to a USPS release. Postmaster General and CEO Patrick Donahoe has said the Postal Service cannot continue on its current financial path without legislative action and will likely default on a $5.7 billion pension payment due Sept. 30 without significant help from Congress. Begich lauded the Senate Homeland Security and Governmental Affairs Committee, on which he serves, for moving the Postal Reform Act that would give the Postal Service more freedom to manage its debt and allow for some funding surpluses to be put towards pre-funding pension payments. The Senate bill does not include any changes to the bypass mail system. In written testimony, Sen. Lisa Murkowski stated that bypass mail saves the Postal Service $13.4 million per year by allowing a “huge volume of qualifying parcel post mail to literally bypass postal facilities.” Processing bypass mail through “in-house” operations would increase the mail through Anchorage and Fairbanks facilities by nearly 1.7 million pounds per week, the Postal Service’s Haberman testified. More than 87 million pounds of intra-Alaska freight was moved via bypass mail in calendar year 2013, according to Haberman. Deputy inspector general Whitcomb offered that eliminating the statutory restrictions limiting new carriers from entering the market could be a way to make the system more efficient, along with simply raising bypass rates to “eliminate its burden on other customers.” She suggested the State of Alaska could reimburse the Postal Service for its bypass losses if the program remains the same with Permanent Fund money. To make up the $76 million 2013 shortfall the state would have only had to contribute 2.6 percent of the $2.9 billion the fund earned last year, Whitcomb testified. Murkowski also testified that the freight system saves other federal agencies money by allowing them to ship goods for programs such as U.S. Department of Agriculture’s food aid programs more efficiently. Additionally, she stated that the relationship between how many passengers the six mainline bypass mail carriers serve and how much mail they are allotted has encouraged increased passenger service in rural communities, thus leading to 40 fewer communities relying on Essential Air Service and saving the government millions. The Alaska Bypass Fair Competition Act, also sponsored by Issa, moved out of the full Oversight Committee Feb. 11. It would open competition for mainline bypass service by shortening the time a carrier must participate in the program to be an existing mainline carrier to 36 months of continuous service. Currently, all existing mainline carriers must have met the detailed criteria as of January 2001. Murkowski and Begich both testified that increasing competition among the now six mainline carriers would lessen the amount of mail each carrier transports and hurt the program’s efficiency. Rate rollback In February, Begich said he had gotten Postmaster General Donahoe to agree to roll back rate increases that went into effect Jan. 26 on large packages in the traditional mail system. Rates on packages heavier than 50 pounds had increased by up to 50 percent for some in rural Alaska. At the time, Begich said Donahoe told him the sharp rate hikes were an unintended consequence of system-wide rate adjustments and would be scaled back as soon as possible in areas where the Postal Service is the only parcel carrier. The rates are set to return to pre-hike levels March 20, according to a March 7 release from the senator’s office. It was that day that the Postal Regulatory Commission approved the rollback. “There were some unexpected bureaucratic hoops but I am pleased that relief from the higher parcel post rates is on the way for Alaskans,” Begich said in the release. “My office has been hounding the Postal Service and the PRCD over the past month to expedite the process and I’m happy that we’ve cleared a major milestone today (March 7).” March 20 is the end of the 30-day Federal Register notification period required for all rate changes. Elwood Brehmer can be reached at [email protected]

Anchorage files suit against MARAD over port management

The Municipality of Anchorage is broadening the reach of litigation to include the federal government among the defendants in the ongoing port expansion drama. During a March 3 press conference, Anchorage Mayor Dan Sullivan discussed his administration’s decision to file a lawsuit Feb. 28 against the U.S. Maritime Administration, or MARAD, in the U.S. Court of Federal Claims. The U.S. Department of Transportation agency was in charge of managing the construction project at the city’s port when cost overruns and questions about construction and design techniques brought the critical infrastructure project started in 2003 to a halt in 2010. No significant work has been done on the port in nearly four years. The latest legal action by the municipality brings the total number of defendants involved in the port work to four in two cases. The municipality sued PND Engineers, CH2M Hill, owner of former port design consultant VECO Corp., and Integrated Concepts and Research Corp. on March 8, 2013, in state Superior Court. That case has since been moved, despite protest by municipal counsel, to federal Alaska District Court in Anchorage. The Court of Federal Claims in Washington, D.C., where the municipality has sued MARAD has jurisdiction over contract disputes with the federal government. The business relationship between the municipality and MARAD ended unceremoniously in 2012 when the agency was “kicked out” of the port project, Sullivan has said. The municipality now has oversight responsibility of the port expansion. “As we all know the management of (MARAD’s contract) was not handled competently and we’re seeking damages as a result of that,” he said. Damages in excess of $10,000, but ultimately to be determined by the court, are being sought on two counts of breach of contract and one count of “breach of the implied covenant of good faith and fair dealing,” according to the municipality complaint. MARAD signed memorandums of agreement with the municipality in 2003 and 2011 detailing its responsibilities at the port. MARAD also signed contracts in 2003 and 2008 with Integrated Concepts and Research Corp., the firm it hired as a management partner under the Small Business Administration’s 8(a) program, which has special provisions for Alaska Native corporations. ICRC was owned by Koniag Inc., the Alaska Native Regional corporation for Kodiak, at the time of the first contract, but was sold to a Virginia company prior to the 2008 contract. Improper application of the preferential 8(a) rule by MARAD in 2008 was one of several issues raised in a scathing Inspector General audit released in August 2013, reviewing the agency’s involvement in port projects in Guam, Hawaii and Anchorage. According to the complaint, MARAD agreed to pay ICRC $11.3 million in September 2012 as part of a negotiated contract adjustment agreement without the municipality’s knowledge. “At the same time MARAD was secretly negotiating a settlement with ICRC, MARAD was pretending to work with (the municipality) to reject the ICRC claim and to prepare a counterclaim with (the municipality’s) assistance,” the complaint alleges. The settlement released MARAD and ICRC from liability and recourse against each other regarding contract work at the Port of Anchorage, the municipality claims. Per the agreements between MARAD and the municipality, the federal agency took 3 percent of the $302 million appropriated for the project as fees for its work, amounting to just more than $9 million since 2003. On Feb. 25, the Anchorage Assembly approved CH2M Hill as a project manager for the port on an initial five-year, $30 million fee-for-service contract. CH2M Hill prepared the 2013 study that deemed PND Engineer’s patented Open Cell Sheet Pile design unsuitable for seismic and design-life criteria at the port. That study was cited extensively in the first lawsuit. PND has claimed from the outset that faulty sheet pile installation was to blame for the project’s challenges. Over the next few weeks, a project management plan will be drafted and Sullivan said he hopes to have a new design approved within a year. First, some of the projects expired permits must be re-acquired. “We’ve got this project back on track, but it’s important that any and all entities that were responsible for previous mismanagement or mishaps in construction are held accountable,” he said. The general statute of limitations on disputes in Federal Claims court is six years; Sullivan said the case falls within that time frame. He said the municipality is standing up for the people of the state that depend on the Port of Anchorage. Outside of Southeast, roughly 90 percent of all the goods that enter the state go through the Anchorage port. So far, the Anchorage Assembly has approved $1.75 million for legal proceedings dealing with the port project, he said. Overall, $439 million in combined funding has been appropriated to the project that started with an estimated cost of less than $300 million in 2003. Of that, $138.6 million was federal money appropriated through various channels over nine years. During his Feb. 18 report to the Legislature, the Anchorage mayor said it would probably need another $250 million to $300 million in addition to the roughly $130 million the municipality has set aside for work now. The money available now will last for some time, Sullivan said, as his plan has scaled back the scope of the project. A brand new $280 million “north berth” dock has been taken off the table and future work will focus on traditional, pile-supported structures to mainly replace what is at the port now, he has said several times. As the 50th anniversary of the 1964 earthquake approaches, port officials have said the aging structure that withstood that disaster likely wouldn’t fare so well if a similar quake were to happen now as corrosion and general age have taken their toll. Sullivan told state lawmakers that he thought that the likelihood of the project receiving federal funding similar to past levels going forward — $138.6 million over nine years — is “very slim,” he said. Because the Defense Department has deemed the Port of Anchorage is a strategic port, $60.4 million of the federal funds the construction project has received to date came from the department, which requires dredging to a mean depth of 45 feet at such ports. The port is currently dredged to about 35 feet at the dock face. That might make the project available for some Defense and federal grant dollars, but he added that he plans to meet with the Gov. Sean Parnell and officials with the Alaska Industrial Development and Export Authority and the Alaska Housing Finance Corp. in the coming months about alternative funding. He said the municipality will prepare its plans for next legislative session and the port would almost certainly be its largest single request to the state in 2015. “We need to really strategize on what are the best sources of money that may again include some additional local debt,” Sullivan said at his press conference. The city has contributed $80.3 million to port construction. Sullivan also may have hinted to the Legislature that action against MARAD was being planned. “We are not going to go quietly into that good night when it comes to legal options with MARAD,” he said at the time. Elwood Brehmer can be reached at [email protected]

Arctic players talk infrastructure, spill response in Girdwood

GIRDWOOD — Alaska’s need for Arctic infrastructure — fixed and mobile — dominated the discussion at World Trade Center Alaska’s Arctic Ambitions conference Feb. 27 in Girdwood. State officials and representatives from Arctic nations and their businesses provided insight into what the state and federal governments can do, and who could be possible international partners with them, as economic activity in the region grows. Former Lt. Gov. and University of Alaska Anchorage Chancellor Fran Ulmer said oil spill response highlights nearly every forum she attends regarding Arctic policy and economic development. Ulmer, who was chancellor at UAA from 2007-11, is currently the chair of the U.S. Arctic Research Commission. The National Council is set to issue a report in April that will compile research focused on best practices of oil spill response in what she referred to as “icy waters.” She said the report will update previous work done by the U.S. Arctic Research Commission. Spill response procedures are needed as trans-Arctic shipping activity grows along with Outer Continental Shelf oil exploration, Ulmer said. While Arctic shipping currently represents only about 1 percent of all commercial maritime activity, she said it is growing about 5 percent per year. “It’s a big increase for a region that has limited infrastructure to support it,” Ulmer said. Multiple reports have put the number of commercial vessels that traveled the Northern Sea Route along Siberia and through the Bering Strait in 2012 at around 40. The U.S. need for additional icebreaking capacity is something the members of Alaska’s congressional delegation have spoken about at-length and was noted throughout the conference. The U.S. Coast Guard has two active icebreakers, the heavy Polar Star and the medium-duty cutter Healy. As non-Arctic nations such as China and South Korea are investing in icebreaking fleets, state government officials as well as the delegation have said the U.S. is falling behind. Growing the U.S. icebreaker fleet will likely cost several billon dollars. Until that investment is made, Tero Vauraste, president and CEO of the Finnish maritime support company Arctia Shipping, told the conference attendees that the U.S. and other Arctic nations could look to the Baltic region for icebreakers and general “icy waters” expertise. He said the region is one of the only areas in the world where there is heavy commercial activity in often ice-choked waters — outside of what occurs on a smaller scale in the Great Lakes. The countries surrounding the Baltic Sea are some of the only one’s in the world that have developed and working plans for managing commerce in Arctic-type conditions, he said. Arctia operates five icebreakers and offers supports the offshore oil and gas industry that operates in the Baltic Sea, Vauraste said. The company also assisted Shell with its exploration in the Chukchi Sea with two support vessels. Further OCS exploration by Shell has been suspended indefinitely as the Bureau of Ocean Energy Management deals with the January decision by the 9th U.S. Circuit Court of Appeals finding flaw with the environmental impact statement on which the OCS lease sale was based. Of the roughly 100 icebreakers operating throughout the world, about 60 were built in Finland, according to Vauraste. “We are good in hockey, but we’re world champions in icebreakers,” he said, referring to Finland’s victory over the U.S. men’s hockey team in the Olympic bronze medal game. He also warned against the belief that shrinking summer sea ice will eliminate all the challenges to Arctic business. “The diminishing of ice does not mean conditions get easier; they get more variation,” Vauraste said. The need for fixed marine infrastructure in Western Alaska is something the U.S. Army Corps of Engineers and the State of Alaska have been investigating in a joint study for nearly three years. It’s also something Vitus Marine CEO Mike Smith exemplified in his presentation. Vitus Marine orchestrated the fuel shipment to Nome in 2012 with the Russian tanker Renda and the Coast Guard Cutter Healy that captivated observers around the world. Smith said serving Bristol Bay communities can be extremely challenging as shifting channels at river mouths can make marine charts obsolete nearly as fast as they can be published. State Sen. Lesil McGuire, R-Anchorage, said at the conference that Senate Bill 140, which she is sponsoring, would expand the power of the Alaska Industrial Development and Export Authority to allow it to partner in financing Arctic infrastructure. Companies shipping to remote villages in the region often rely on local captains familiar with the latest conditions to help them navigate. At Nome, where the port is dredged to 21 feet, there are still “real economic implications to having to having a lack of infrastructure,” Smith said. Vitus Marine is only able to deliver up to 1.8 million gallons of fuel at a time because of the depth of Nome’s port. That means on a contract to deliver 2.5 million gallons two multi-day trips must be made with a tanker that could have made one delivery, adding up to $300,000 to the total cost of the fuel, or more than 10 cents per gallon, he said. In its presentations to state and federal officials, the Army Corps of Engineers has related the 800-mile infrastructure gap in Western Alaska between Nome and the deepwater port of Dutch Harbor as being similar to the distance between New York City and Jacksonville, Fla. Corps of Engineers Chief of Planning for the Alaska District Bruce Sexauer said at the Arctic conference that initial plans to issue a recommended deepwater port plan for the Seward Peninsula have been pushed back from this March to early summer as Corps leadership in Washington, D.C., has asked for more investigation of the proposed sites. Sexauer said the Corps of Engineers is not the only group interested in a port capable of supporting Arctic commercial activity. The study team will be giving a second presentation to a White House committee on their progress in the coming weeks, he said. The project is viewed by the Obama administration as a matter of national security, he said. Program manager for the Corps on the port project Lorraine Cordova has said there are 23 iterations of proposed infrastructure development being looked at when the Nome, Cape Riley and Point Spencer sites are combined. Most of the plans call for the Nome port to be dredged to between 26 feet to 39 feet, Sexauer said, at a projected cost of about $250 million. At those depths response and security vessels could be stationed in Nome or at Point Spencer, which has natural 40-foot depths, but no shore side infrastructure. He said Cape Riley is being looked at as a possible shallow draft barge facility for resource extraction projects. The most immediate export prospect in the area is the Graphite Creek prospect 40 miles north of Nome. Leadership in Graphite One Resources, the company developing the graphite claims, have said construction the project, with an initial 50-year life, could start as soon as late 2016. Elwood Brehmer can be reached at [email protected]

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