Rashah McChesney

Lawmakers to hold floor sessions in nearby gym after clearing Capitol

JUNEAU (AP) — Alaska legislators are moving into temporary digs due to ongoing renovation work on the state Capitol. The building effectively needs to be cleared by Monday under the current construction schedule. House Speaker Mike Chenault says legislators will move into the Bill Ray Center, which is a few blocks from the Capitol. He says floor sessions will be held in the gym of the Terry Miller Building, just up the hill from the Capitol. The regular session was scheduled to end April 17 but lawmakers were unable to complete their work by then. Proposed changes to oil and gas tax credits have been a point of contention. The offices of Gov. Bill Walker and Lt. Gov. Byron Mallott also are moving to an alternate space, about a block from the Capitol.

Cruise lines sue Juneau over passenger fee spending

JUNEAU (AP) — A life-sized whale statue has landed Juneau in hot water as a cruise ship association alleges it's a symbol of the Alaska city's misuse of millions in fees paid by visitors. The Cruise Lines International Association and its Alaska affiliate filed a lawsuit against the city and borough of Juneau on Tuesday in federal court in Anchorage. They're challenging the legality of so-called head tax fees paid by cruise passengers who visit Alaska's picturesque capital. Cruise ships collect the fees and pass them on the city. Juneau gets a $5 entry fee per cruise ship passenger in addition to a per-passenger port development fee of $3. The association estimates it has given Juneau more than $35 million in entry fees in the past four years. The group represents 12 cruise lines, including Carnival, Holland America and Disney. They contend the city has used portions of those fees on projects that do not directly benefit cruise ship passengers and therefore violate federal restrictions on entry fee taxes. Listed among the association's complaints is the $10 million price tag on a planned nearly 50-foot whale sculpture set in an infinity pool, along with upgrades to the city's waterfront. The project is more than a mile from the cruise dock. The lawsuit also lists $22 million spent on government operating expenses, $2 million for city bus services and $447,000 for upgrades to a private dock that cruise ship vessels and passengers are not able to use. The city's mayor, who is also listed in the lawsuit, did not immediately return phone calls or emails seeking comment. Juneau is in the southeast panhandle of Alaska. It is not on the state's road system and is reachable only by boat or plane. The city's easy access to whale-watching, glacier views and hiking has made it a tourism hot spot in the state. Juneau's Convention and Visitors Bureau estimates that 1 million cruise ship passengers will visit in 2016. Lawsuits over head tax fees are rare in the U.S., though passengers have sued over the amount of fees levied against them by cruise lines. That's because while most ports charge a fee, they don't use the money for non-cruise related projects, said Alaska's association president John Binkley. "The Constitution allows you to charge a fee, but it has to be used in conjunction with that vessel," Binkley said. "You can't take the money and use it for city operations." After consulting with the national association's lawyers, Binkley said to his knowledge, Juneau's alleged misuse of the funds is unique among the ports its cruise lines visit. The lawsuit also names the city manager and finance director.

Debate on oil tax credits slows progress in state House

JUNEAU (AP) — With just days until the regular session ends, the state House majority is hung up on a bill that would reform the state's tax credit program for oil companies. A planned Sunday vote on a bill that is designed to gradually reduce the $825 million in credits to companies with no tax liabilities stalled on the House floor. Republican House majority members have delayed committee meetings Monday as they meet to hammer out a consensus on House Bill 247. The debate comes as Alaska faces a multi-billion dollar budget deficit and lawmakers are considering options to reduce the deficit. Senate Republicans say they are waiting for a decision from the House. Anchorage Sen. Lesil McGuire says it's imperative that lawmakers make changes to the credit program given the current low price environment.  

Alaskans take 553K Cook Inlet salmon in PU fisheries

JUNEAU — Fishermen harvested nearly 533,000 salmon in Cook Inlet personal-use fisheries last year and the Kasilof River saw its highest sockeye salmon harvest to date. Personal use fishing was established by Alaska’s Board of Fisheries as a means of complying with federal subsistence requirements. It allows Alaskans to take certain types of finfish, shellfish or aquatic plants for use as food for themselves or their immediate families. According to Alaska Department of Fish and Game data, both the Kenai and Kasilof Rivers have continued to see heavy use. Both are located on the road system on the Kenai Peninsula, about 15 miles apart and about 160 miles south of Anchorage. While personal use fishermen can harvest multiple species of salmon on the two rivers, sockeye salmon typically make up the majority of their take. On the Kasilof River, anglers dipnetted more than 89,000, while on the Kenai River, they took nearly 378,000. More than 34,920 permits were issued in 2015, according to Fish and Game data. While the vast majority of the dipnet fishing effort occurs on the Kenai River, the Kasilof River has become increasingly popular. The Alaska Department of Natural Resources has received more than $2.8 million in funding from the state Legislature for site improvements. They’ve proposed adding more parking, an access road, portable toilets and dune fencing to the area.

Bills propose adding legislators to AGDC board of directors

JUNEAU (AP) — Two Republican lawmakers want to add legislative oversight to the board of an organization that plays a key role in Alaska’s natural gas pipeline project development. Both Sen. Mia Costello, R-Anchorage, and House Speaker Mike Chenault, R-Nikiski, have proposed adding two non-voting lawmakers to the board of the Alaska Gasline Development Corp. The state-owned gasline corporation holds the state’s 25 percent interest in the Alaska LNG Project. The Senate was expected to consider Costello’s bill on March 23. As lawmakers, stakeholders and the governor’s office look for ways to move the project ahead amid low oil prices, Costello said the Legislature struggled to discern Gov. Bill Walker’s vision for the gasline. Calling the gas line the “bright spot on the horizon,” Costello said during a March 21 Senate majority press conference that the aim of her legislation is to improve communication and move the project forward. The Alaska LNG Project is the latest attempt to develop natural gas found on the North Slope. If it proceeds, the project, which includes an 800-mile pipeline, would be one of the largest projects of its kind. But low oil prices have been a concern for the state and its oil company partners in the project, with Walker announcing last month that the state and its partners would look at different options for moving forward. “It’s a viable project at this point but we’ve got to get to a point where we know whether it’s really economical or not,” said North Pole Republican Sen. John Coghill. Costello wrote in her sponsor statement that having legislators on the board would helpful for discussing project financing and understanding the types of budget decisions needed to meet the state’s cash obligation for a gasline project. Chenault’s bill goes farther than Costello’s, in laying out requirements for the public board members. It requires that the governor appoint board members who have experience and expertise in natural gas pipeline construction or other experience that is relevant to gas line projects. “Most of the board members, whom I respect, do not have the qualifications of previous board members,” Chenault said in his statement. Adding legislators to the gas line corporation board would give lawmakers better insight into issues facing the board, he said in the statement.

Setnet ban ruled unconstitutional

The Alaska Supreme Court overturned a lower court ruling on Thursday, declaring a ballot initiative to ban setnets in certain areas of the state unconstitutional. Calling the initiative a “give-away program” that was designed to appeal to the self-interests of non-commercial fishermen, the court issued an opinion on Thursday that put an end to a lengthy legal process that began in late 2013. Lt. Gov. Byron Mallott certified the ballot initiative after the initiative’s sponsor, the Alaska Fisheries Conservation Alliance, submitted 43,000 signatures in support of the measure, 36,000 of which were declared valid by the Division of Elections. The initiative would have almost exclusively impacted the Kenai Peninsula, where 735 setnet permits are registered alongside a large guided angler industry. Alaska residents hold more than 80 percent of the permits. After the initiative was filed, then-Lt. Gov. Mead Treadwell rejected it in January 2014 as an allocative measure, which is prohibited by the Alaska Constitution. AFCA appealed and won a reversal in Superior Court that allowed it to begin collecting signatures. "I'm still shaking," said Resources for All Alaskans President Jim Butler. Resources for all Alaskans, or RFAA, is a relatively new group formed to combat the setnet ban. It weighed in on the argument in March 2014 supporting the state's assertion that the initiative was a prohibited appropriation of state resources. At the time, Butler said the idea of banning setnetting at the ballot box was bad policy. "The proposal to ban setnetters is particularly destructive because it doesn't address the real reasons for declining king salmon populations and would instantly destroy 500 small Alaska family businesses and hundreds of other jobs," Butler said at the time. The Alaska Fisheries Conservation Alliance released a statement saying its members were disappointed by the decision and referring to the signatures of more than 43,000 registered voters who signed to have the ban put on the ballot. "We are disappointed with the court's decision to deny voters an opportunity to weigh in on the method and means for harvesting," said AFCA president Joe Connors in the written statement. Founding member Bob Penney is also quoted in the statement, he said he is "deeply disappointed because the Kenai Kings are the real loser here and it now seems their species will continue to decline. Maybe it’s time the federal government looked into this issue." According to the court, commercial setnetters are a distinct user group who would be unfairly stripped of a public resource allocation — their part of the millions of salmon that return to Alaska each year — to another party’s benefit. Most of the members of AFCA are sportfishermen who would ostensibly see more salmon inriver where the commercial nets to be removed from the water; one board member, Joe Connors, is a former setnetter. Banning setnets, the court wrote in a Dec. 31 ruling, that the initiative would essentially devote salmon to a specific user group on the Kenai Peninsula, to the exclusion of another.  “We concluded that the initiative in question was a give-away program because it was ‘designed to appeal to the self-interests of sport, personal, and subsistence fishers, in that those groups were specifically targeted to receive state assets in the circumstance of harvestable shortages,” the court wrote. The court also concluded that the ballot initiative would have narrowed the Legislature’s and Board of Fisheries’ ability to make allocations. “If (the initiative) were enacted, then neither the Legislature or the Board would be able to allocate any salmon stock to this significant, existing user group.” AFCA’s attorney, Matt Singer, had argued that Alaska has a history of making resource-related ballot initiative decisions, such as aerial wolf hunting and bear baiting. The Supreme Court said the argument is invalid, as the user groups for salmon are more clearly defined. “Under the Limited Entry Act and its implementing regulations, commercial set netters must obtain gear-specific setnet permits, which are limited in number, hold significant value, and may be bought and sold,” the court wrote. “This makes commercial setnetters a far more cohesive, recognizable, and permanent group than individuals who hunt wolves using same-day aerial techniques and snares, or who hunt bears using baiting or feeding methods.”   DJ Summers can be reached at [email protected]

Cook Inlet Energy parent company files for bankruptcy protection

KENAI — After more than a month of negotiations, Miller Energy Resources Inc. filed Thursday for Chapter 11 bankruptcy protection and reorganization. The parent company of Alaska-based Cook Inlet Energy blamed the substantial decline in oil prices, a drilling plan that resulted in lower-than-expected additional production and the withdrawal of a private lender who had promised the company a more than $165 million loan to refinance its outstanding debt, according to a media release. In August, two of its creditors — Schlumberger and Baker Hughes — filed an involuntary bankruptcy petition over more than $2.6 million in unpaid bills. Miller Energy Resources Chief Executive Officer Carl Giesler said at the time that the two debtors were looking to collect on a fraction of the more than $180 million the company had in debt. At the time, Giesler said he was hopeful that the combination of tax credit payments owed to the company by the State of Alaska, the sale of non-core assets like the Badami field on the North Slope and now-failed negotiations with a large lender could help the company avoid restructuring. On Thursday, Giesler said the company had reached a preliminary deal with the second lien lenders to which it owes the bulk of its debt and would be able to clear away a lot of the issues the company has faced in recent months once the restructuring is completed. In March, VAI Inc., won nearly $7 million from Miller Energy over a contract dispute. Then, company was de-listed from the New York Stock Exchange in July after it stock price fell, and stayed, below listing standards for market capitalization. After the company announced its bankruptcy on Thursday, its stock price fell to a new 52-week low of 6 cents per share. In August, the U.S. Securities and Exchange Commission charged the company, two of its executives and an accountant with inflating the values of the company’s Alaska oil and gas properties by more than $400 million. The SEC administrative proceeding announcement that was the “straw that broke the camel’s back,” Giesler said. The involuntary bankruptcy petition followed a day later and the company has been working to avoid bankruptcy since, he said. Still, the bankruptcy restructuring could help the company get back on track. “We’re going to be getting a haircut and a lot of the big strands, the dangling strands that have been tripping us up — whether they be lawsuits, regulatory actions from the SEC, etc. — those will get cleaned up and finally resolved through the bankruptcy process,” he said. “When we emerge, we will have a clean balance sheet with an appropriate amount of debt that will allow us to get back to doing what we should be doing which is safely and efficiently developing oil and gas resources for the benefit of our customers and Alaska.” Giesler said the company’s employees will continue to work, be paid and should not expect any further layoffs. In addition, the company expects to pay its vendors and other service providers for work going forward, according to the media release. “This is the good news for our employees and for the people we work with,” he said.

State partially pays Cook Inlet Energy

KENAI — The State of Alaska has promised to wire Cook Inlet Energy LLC — a subsidiary of Miller Energy Resources — a $6.4 million partial tax credit payment as the company works its way through an involuntary bankruptcy case. Although neither the state nor Miller Energy CEO Carl Giesler were willing to discuss the exact amount owed to the company, Miller Energy reported in a July 29 fiscal report that the state owed $32.2 million. The company expected to get the majority of those funds by late August. Cori Mills, an attorney with the state’s Department of Law said the state would not disclose when it would wire the money to Cook Inlet Energy or when it would pay the company the rest of its tax credit earnings. Alaska has incentive programs for companies that develop the state’s oil and gas resources. It is unclear if the tax credit payment to Cook Inlet Energy is related to exploration or production. Miller Energy announced in July that it was working to reposition its assets. “We were very clear that our capital structure, as is, currently isn’t sustainable,” Giesler said in a previous Clarion interview. However, as it was restructuring, three companies filed claims in federal bankruptcy court seeking more than $2.6 million in unpaid bills owed by Cook Inlet Energy on Aug. 6. Baker Hughes Oilfield Operations Inc., MI-SWACO — a subsidiary of Schlumberger Technology Corporation — and Schlumberger filed the petition citing payment owed for goods, materials and services. Neither company specified the type of work done for Cook Inlet Energy nor why personnel had decided to push Cook Inlet Energy toward bankruptcy. Melanie Kania, media contact for Baker Hughes, said the company would not comment on the specific type of work that Baker Hughes has performed for Cook Inlet Energy in Cook Inlet, for which it has yet to be paid. Kania wrote in an email that the lawsuit was an “ongoing legal matter” and the company would not comment beyond its public filings. A spokesperson for Schlumberger also cited the ongoing legal case as a reason for refusing to speak about the matter. After the case opened, several other creditors piled on, including AIX Energy LLC, Apollo Investment Corporation, D&D Equipment Sevices, GE Oil&Gas Pressure Control, LP and Vetco Gray Inc. None of the companies that filed to be part of the case specified how much Cook Inlet Energy owes. While Cook Inlet Energy initially had 20 days to respond to the petition it has since been granted an extension of the deadline until Oct. 6. Giesler said the company intended to file for a dismissal of the involuntary petition. But, he said, that won’t be as easy as paying off the creditors that filed the petition. Rather, a settlement must be agreed upon by the Anchorage-based bankruptcy judge Gary Spraker. “You can’t just pay them off, the judge won’t let you,” he said. However the case is resolved, Giesler said the petition had stirred up nervous energy at a time when the company has been working toward restructuring, staying profitable and continuing to operate in Alaska. “The filing of that petition has not been helpful to secure a non-bankruptcy solution and, at least in my opinion, will likely do more harm to the unsecured creditors in the State of Alaska than it will help them,” he said. The bankruptcy petition is the latest in a series of financial blows for Miller Energy Resources, which was de-listed from the New York Stock Exchange July 30 after its stock price fell, and stayed, below listing standards for market capitalization. Additionally, in March, VAI Inc., won nearly $7 million from Miller Energy over a contract dispute. VAI, Inc., is a Pennsylvania-based financial advising and consulting company that accused Miller Energy of breaching a contract between the two companies that would have netted the company 1.75 million shares of Miller stock. Miller intends to appeal the ruling, according to its fourth quarter report. Giesler said the company does not plan to use the funds it acquired from the state to pay just the creditors involved in the bankruptcy petition. “That would be unfair because they’d be paid in full and all the other unsecured (creditors) wouldn’t and they’d kind of be rewarded for filing an involuntary petition and creating a lot of nervous energy,” he said. According to the state’s filing in the case, Cook Inlet Energy intends to file a plan for the distribution of the tax payments when it responds to the bankruptcy petition. Giesler said Cook Inlet Energy is actively working toward a non-bankruptcy solution, but it is not guaranteed that the company can avoid Chapter 11. “I don’t want to give anyone false hope that there will be a resolution, I don’t know that,” Giesler said. If it fails, it will be the second Cook Inlet explorer to reach bankruptcy in 2015; Buccaneer Energy filed for bankruptcy protection on May 31, 2014. Its assets were sold to AIX Energy LLC last Oct. 27. Giesler said Miller Energy had been making progress in other areas that could net the company more cash. Miller Energy has assets and oil and gas operations in Cook Inlet in the North Fork and West MacArthur fields. It also owns assets in the North Slope through a 67.5 percent stake in the Badami field which it bought in December. It has been working to sell its stake in Badami to an Alaskan partner in order to focus on its “core assets” Giesler said. That sale is “moving along nicely” he said. “I’m very happy on that progress, I’m very confident. It’s far along but not yet done.”

Seward welcomes President Obama on glacier viewing tours

SEWARD — Standing at the bow of the Viewfinder, President Barack Obama gripped the steel railing as the boat cut through the deep blue water of Resurrection Bay amid the mountains, islands and glaciers in the Kenai Fjords National Park. For two hours, the president’s boat sped through the park, stopping briefly at Fox Island and the spit where dead trees — salted during the 1964 earthquake — stood in stark contrast to the sunny blue sky. He sat chatting with a park ranger as his boat stopped to look for humpback whales and then to slowly roll up on a group of Stellar sea lions basking on a rock. Nearly an hour into the trip, the president’s boat drew close to Bear Glacier where he paused to talk about its rapid retreat. It was the final public trip of a day in Seward during which the president spent hours at Exit Glacier before leaving to tour the fjords. Arrival After more than an hour of waiting, a crowd of at least 200 people lining the Seward Highway near Exit Glacier Road finally got their chance to wave at the President of the United States on Sept. 1. Or, at least, his motorcade. It wasn’t clear which vehicle Obama arrived in and rampant speculation was fueled by the sporadic arrival of three Huey helicopters and three Ospreys, each landing in a parking lot several hundred yards away from spectators. “It’s a pretty historical moment and pretty cool for our little town,” said Seward resident Rebekka Federer. Her 2-year-old son Finn was less impressed with the growing crowd and seemed more interested in darting out of his mother’s arms and into the road. “We couldn’t miss this opportunity. I’ve probably never been this close to a president.” Federer said she would pull her daughter out of school early and head to the family’s home on Exit Glacier Road to catch a glimpse of the president leaving his tour of Exit Glacier later in the afternoon. Obama left Elemendorf Air Force Base at about 10:45 a.m. on Sept. 1 and flew to the port town of about 3,000 on the Kenai Peninsula for a day of touring Exit Glacier, filming with famed survivalist Bear Grylls, and eventually boarding a vessel for a tour of the Kenai Fjords National Park. Amelia Mueller, 11, got to skip a day of classes at Kenai Middle School to get up at 6:30 a.m. and make the nearly two-hour drive from Kenai to Seward with her dad Marcus and brother Tucker. Mueller said she was excited. “I’ve never gotten to see the president before, I don’t think I’m going to get to again for a really long time,” she said. Several signs and flags lined the Seward Highway heading into the town, most bearing welcoming messages for the president. Outside of the Seward Animal Clinic, one hand-lettered warned readers to “hide the women” as the Secret Service had made it to town. Seward resident Lori Landstrom stood with Kenai Peninsula Borough Assembly candidate and Seward resident Brandii Holmdahl as the two wrestled with a blue tarp as the wind picked up. On the tarp, a message gave the president a Denali-sized welcome to Seward. “Duct tape on a blue tarp,” Landstrom said. “It doesn’t get any more Alaskan than this.” Landstrom said she has been excited for the president’s visit to the state. “The changing of (Mount McKinley’s name to Denali) is just an added bonus,” she said. Several in the crowd supported Obama’s stance on global warming and want him to take a hard line on climate change. A polar bear dubbed “Frost Paw” from the Center for Biological Diversity stood in the crowd waving alongside several activists protesting Shell’s drilling activity in the Arctic. Steve Jones, who donned the polar bear suit for the day, said he wanted to see the president work to keep climate change at the forefront of public discussion. “We’re really happy to hear Obama focusing on climate change, we just want his actions to match his words,” Jones said. Another man wearing a “NObama” shirt stood nearby but, despite their politics, nearly everyone in the crowd waved as the president’s motorcade drove by, heading toward the glacier. “It seems like everyone is sayingn ‘No matter what your politics are, this is kind of cool,’” said Tim Lorimer, of Wasilla. Lorimer said he was glad to see the president visiting the Kenai Peninsula. “For all of us, we think this is pretty special. There’s the Great Wall of China, the Coliseum and we’ve got Exit Glacier and the fjords,” he said. After visiting Exit Glacier, the president stopped to get out on Fourth Street in Seward where the roads were blocked and a large crowd gathered. He stepped into Sweet Darlings, a fudge and dessert shop, for an ice cream — taking orders from some in the press pool and for secret service agents hovering nearby. “Ring us up!” he said as he prodded those around him to order in between bites of his chocolate and coconut ice cream. Icebreaker Just before he embarked on his tour of the fjords, the president stopped at the Seward City Dock to announce a proposal to accelerate construction of a heavy icebreaker. During a trip that has largely focused on climate change, Obama said he wanted to talk about the changing nature of the Arctic and its strategic implications for the country. He said the country had just three icebreakers, down from seven just after World War II. Russia has 40 either planned or in construction, he said. “It’s important that we are prepared so, whether it’s for search and rescue missions or national security reasons, whether it’s for commerce reasons, that we have much greater capability than we have now,” he said. Kenai Fjords While the president spent most of his time looking at the natural wonders the Kenai Fjords have to offer, he did stop at the base of Bear Glacier to talk about its rapid retreat in recent years. Park Ranger Colleen Kelly said the glacier has retreated 2.22 miles in the last 15 years. It drew back just 1.17 miles in the 112 years prior, she said. “(It’s) amazing and pretty unsettling,” she said. When asked what he thought of the wall of ice that dwarfed the phalanx of boats circling the president’s vessel, he said “spectacular.” At the base of the glacier were several large icebergs floating in a freshwater lake. “Each of these ice bergs is the size of a Costco,” Obama said, drawing grins from several listening members of the press. After the trip, the president headed back to the Seward airport at about 7:25 p.m. and boarded Marine One for his flight back to Anchorage. On Sept. 2 the president traveled to Dillingham to meet with area fishermen and families, and attend a cultural performance. That evening, the president traveled to Kotzebue to deliver remarks there before heading back to Anchorage for the return trip to Washington, D.C.

Creditors file involuntary bankruptcy against Cook Inlet Energy

Three companies have filed claims in federal bankruptcy court seeking more than $2.6 million in unpaid bills owed by Cook Inlet Energy LLC. Baker Hughes Oilfield Operations Inc., MI-SWACO, and Schlumberger Technology Corp. filed an involuntary bankruptcy petition against the Alaska-based subsidiary of Miller Energy Resources citing payment owed for goods, materials and services. The companies filed with the U.S. Alaska Bankruptcy Court in Anchorage on Thursday, but a summons was not issued to Cook Inlet Energy until Friday according to court documents. It is unclear from the court filings where the unpaid work was performed. No one from Cook Inlet Energy or Schlumberger immediately returned calls for comment while a communications spokesperson from Baker Hughes said she would look into the matter. It’s the latest in a series of financial blows for Miller Energy Resources, which was delisted from the New York Stock Exchange July 30 after its stock price fell, and stayed, below listing standards for market capitalization. Currently, it is trading at 13 cents per share. Then on Thursday, the U.S. Securities and Exchange Commission announced charges against two former Miller Energy executives along with an accountant who audited Miller’s finances. The SEC alleges that the company’s former Chief Financial Officer Paul W. Boyd and Chief Executive Officer David Hall falsely inflated the values of the company’s Alaska assets by more than $400 million. An accountant, Carlton Vogt, was also charged in connection with the case for his role in auditing the company and failing to notice irregularities or comply with accounting standards, according to the SEC order. The company’s CEO David Hall resigned as a result of the charges and the company issued a response to the SEC’s notice of charges on Friday stating that it took the allegations seriously and is working with its Board of Directors to take action. “The (SEC) elected to file its proceeding before an administrative law judge employed by the Commission itself,” Miller responded according to its press release. “Miller Energy intends to note its objection to this, preferring that the issues raised over the now five-year old (sic) valuation be heard in the more neutral forum of the federal courts.” Additionally, in March, VAI Inc. won nearly $7 million from Miller Energy Resources over a contract dispute; Miller intends to appeal, according to its fourth quarter results report. Houston-based Miller Energy Resources owns Cook Inlet Energy, of CIE, which has produced and explored primarily in Southcentral Alaska. Currently, CIE is developing the Redoubt Unit and the West McArthur River Unit on the west side of Cook Inlet and the North Fork Unit near Anchor Point. In December 2014 it purchased a two-thirds stake in the oil-producing Badami Unit on the North Slope. It has benefitted heavily from Alaska’s tax credits program. In July, it told investors that it had recently received about $9.3 million in cash state tax credits and expected an $27.2 million more by the end of August. It also told them that it had applied for nearly $6 million more. During a July 29 conference call with investors, Miller Energy’s new CEO Carl Giesler told investors that the company had to reduce the value of several of its assets by nearly $100 million, which contributed to its overall loss of $584 million for the fiscal year that ended April 30. During the July 29 call, Giesler told investors that the company had just $2.9 million in cash on hand as of April 30, and $60.2 million currently. Despite the struggles of its parent company, Cook Inlet Energy CEO Leland Tate said Thursday that business would continue as usual. He has yet to return a call for comment on the pending involuntary bankruptcy filing on Friday. During the last quarter, the Miller Energy added a new gas contract with an Alaskan utility for up to 12 million cubic feet per day, through March 2016, and a short-term sales agreement with ENSTAR, according to its July 29 call. Miller Energy is technically in default on two of its lines of credit and currently in debt more than $183 million, according to the July 29 call. Cook Inlet Energy has 21 days to respond to the petition. Under federal bankruptcy laws, an involuntary bankruptcy filing against a debtor must be made by three or more creditors. An involuntary bankruptcy is essentially a complaint asking the court to place the debtor into bankruptcy. If the court ultimately agrees with the creditors, a motion for relief is granted and the company is placed into bankruptcy and into the supervision of the bankruptcy court.

Kenai River will open with limited king salmon fishing

KENAI — Anglers will soon be able to target Kenai River king salmon, but with restrictions. The Alaska Department of Fish and Game on June 25 released a batch of emergency orders designed to allow limited king salmon fishing on the Kenai and Kasilof rivers. In July, anglers must fish no-bait and on a single hook. The restriction is in place on the Kenai River from its mouth upstream to the Fish and Game marker at the outlet of Skilak Lake. While the river is restricted to no bait from Skilak Lake down, fishing for late run king salmon will only be allowed from a Fish and Game regulatory marker downstream of Slikok Creek to the river mouth. This is the fifth consecutive year that Fish and Game area managers have closed king salmon fishing on 32 miles of river downstream of Skilak Lake. The closure is from river mile 50 to river mile 18, or about 60 percent of the river that’s open to king salmon fishing in regulation. To justify the restrictions, sportfishing managers cited the 2015 preseason forecast of 22,000 fish in the late run of Kenai River king salmon. The escapement goal range that managers attempt to reach with the late run of Kenai king salmon is 15,000-30,000 fish. Soldotna area sportfish management biologist Robert Begich said a total run of 22,000 fish leaves just 7,000 Kenai River king salmon available for harvest between all commercial, sport and personal-use fishermen in Cook Inlet who could conceivably catch the fish. “If (the run) is realized, it would be really hard to make the escapement with unrestricted harvest,” he said. Typically, when Kenai River king salmon anglers are restricted to no-bait and a single hook, it cuts their effectiveness in half, Begich said. However, with the additional restrictions on the area of the river available for fishing, that number is likely to be much higher. Also in the Kenai River, personal-use dipnetters will be prohibited from keeping any king salmon that they catch. That fishery opens July 10 and runs through the end of the month. On the Kasilof River, anglers will not be able to use bait or multiple hooks from the river’s mouth upstream to the Sterling Highway Bridge for the entire month of July. During the Kasilof River’s early run of king salmon, managers aim to hit a target of between 650-1,700 naturally-produced king salmon in the river. As of June, 518 non-hatchery king salmon had been counted at the river’s weir on Crooked Creek. That is on par with the last two years when escapements exceeded 1,000 fish and were enough to harvest eggs for brood stock. Managers justified the restrictions with the assertion that restricted king salmon fishing on the nearby Kenai River would likely cause more fishing pressure on the Kasilof River, according to the release. Begich said a conservative start on the late run king salmon fishing may avoid further restrictions later in the month. “Since it’s going to be a low run, we’ve forecasted a low run, we’re giving the best chance that we have to have a fishery for the whole month of July,” he said. The restrictions to sportfishing for king salmon on the Kenai River triggers restrictions in the commercial setnet fishery on the east side of Cook Inlet. Setnetters will be capped at 36 hours per week of fishing time beginning July 1. If the in-river fishery is further restricted to catch and release, setnetters will be limited to one 12-hour period per week.

Despite promising numbers, managers uncertain about kings

KENAI —A strong, early pulse of king salmon on southern and central Kenai Peninsula streams has runs off to a good start. But, managers say it is still too early to tell if the Cook Inlet’s ailing king salmon runs will rally from the last few years of poor returns. Sixteen days after the Alaska Department of Fish and Game began counting early run king salmon on the Kenai River, there are hundreds more fish estimated to have passed the sonar through June 1 — 960 fish — than the last two years combined. On the Anchor River, there were more kings counted in the river by June 2 than any year since 2007, more than 1,800. But multiple years of poor king salmon returns have led to fishing restrictions on both rivers. The Kenai River has been closed to early run king salmon fishing for the past two years, while managers closed two weekends typically open to king salmon fishing on the Anchor River and restricted the area available to fishing on the remaining opening weekends. “So far, the king numbers are better than they have been in the past several years,” said Homer-based Fish and Game Area Management Biologist Carol Kerkvliet on the Anchor River weir and sonar data. “We are still waiting for the run to develop.” The strong numbers could be an indication of a good-sized run or the king salmon could be hitting the rivers early, said Soldotna-based ADFG Area Management Biologist Robert Begich. Run timing can have a profound effect on how managers choose to allow fishing. In 2012, uncharacteristically low numbers of king salmon passed the sonar on the Kenai River and managers eventually closed the river entirely to king salmon fishing when they were not projecting to make their goal. It was an unprecedented move at the time and it triggered a closure in the commercial setnet fishery on the east side of Cook Inlet. The year was so bad for commercial guides, sportfishing and tourism-related businesses and commercial fishermen in the area that the U.S. Department of Commerce declared the it a fisheries disaster. Millions in disaster funding has been paid to Cook Inlet fishermen. Once the run was closed, steady numbers of fish continued to trickle into the river. After the season closed on July 31 and by the time the year ended, managers estimated that more than a quarter of the run had come in later than usual. There are some indicators of run-timing this year, such as the catch sampling of king salmon in the popular marine recreation fishery in southern Cook Inlet. Begich said data coming from that fishery, including the number of spawners being caught, indicates that Cook Inlet-bound fish are coming in earlier than normal. “It’s not clear yet,” he said. “It’s too early in the season.” While managers make projections on the size of the run, Begich said ADFG biologists won’t start making those projections until the first week of June. Early on in the season, those projections have a large margin of error, but as the run progresses managers can project the run strength and estimate run timing with more confidence. Despite the uncertainty, area managers are still hearing from anglers who see the strong, early numbers as a sign that the king salmon runs are regaining strength. “There’s some pressure from people that just want to go out there and fish,” Begich said. He said he’d rather see kings returning in significantly larger numbers. “A few hundred fish a day, that’s what we want to see rather than just dozens trickling in each day,” he said. So far, the season-high day for kings on the Kenai River was June 1 when 164 fish swam past the sonar, according to Fish and Game data. While the lower Kenai Peninsula streams have seen strong, early numbers of returning king salmon the streams conditions are different in the northern Cook Inlet streams. On the Deshka River, a tributary of the Susitna River, a two-day surge of fish pushed the run total to more than twice of last year, when the river’s lower escapement goal was met with an overall run of about 16,300 kings. As of June 2, 1,194 kings were estimated to have passed the Deshka weir, with 1,007 of those fish pushing up in the first days of June. Palmer-based ADFG Area Management Biologist Sam Ivey said anglers have reported steady king salmon catches at the mouth of the Deshka where salmon will sometimes hold when water temperatures are too high on the tributary. Generally, he said anglers would begin reporting strong catches near the mouth of the Deshka during the first week of June. However, hot and dry weather conditions typically cause the low-gradient Deshka to heat up quickly and king salmon will hold in the Susitna River and wait for cooler temperatures. Ivey said he’d have a better estimation of the run timing on the Deshka by mid-June. “Fishing success is decent for this time of year,” he said.

Board of Fish chair Johnstone resigns, replaced by Maw

Alaska Board of Fisheries Chairman Karl Johnstone has resigned. He could be replaced by United Cook Inlet Drift Association Executive Director Roland Maw according to documents filed on Tuesday to the Alaska Legislature.   Maw's appointment will have to be confirmed by the Legislature. If he is confirmed, his term will end in 2018.  Gov. Walker asked for Johnstone's resignation after a recent joint Board of Fisheries and Board of Game meeting during which the Board of Fisheries voted unanimously to quash Maw's application to be the commissioner of Fish and Game.  "I expect the Board of Fisheries to hold a fair, transparent, and public process when selecting candidates ... It is apparent to me that it is time for a change on the Board of Fisheries," wrote Walker in an message to House Speaker Mike Chenault.  The chairman, whose term was set to be up in June of 2015, confirmed in an email Tuesday that he had resigned his position after being told by Gov. Walker that his name would not be submitted to the Legislature for reappointment. “I offered to step down if it would assist him in getting someone else in place and up to speed,” Johnstone wrote. The Board of Fisheries is a 7-member panel that sets the rules for all of the fisheries in the state. Gov. Walker’s press secretary, Grace Jang, said Walker decided to replace Johnstone after a recent joint Board of Fisheries and Board of Game meeting which was convened to forward candidates to the Governor for the next commissioner of the Alaska Department of Fish and Game. “The Governor basically wants new ideas on the board,” she said. Of the four candidates for the position, just one, Sam Cotten, was selected for an interview and another,  Maw was blocked from being interviewed by a unanimous Board of Fisheries vote. Board of Game members had voted unanimously to interview Maw — but a majority from both boards had to support the candidate to further the Kenai Peninsula resident’s application. After the meeting, Chenault, R-Nikiski, wrote to the governor questioning the Board of Fisheries role in the nomination process and asked the administration to review the board’s action. “(Gov. Walker) shares Speaker Chenault’s concerns that the process wasn’t played out,” Jang said. “Including the fact that more names weren’t forwarded and there were people who had submitted applications and they weren’t even interviewed.” Coming right on the heels of Johnstone's resignation, Walker's office announced that it had appointed Cotten to Fish and Game commissioner's position.  Maw said he has not drawn a salary from the United Cook Inlet Drift Association — a commercial fisheries advocacy group — for months and no longer owns a commercial drift fishing permit in the Upper Cook Inlet.  Johnstone is a retired Alaska Superior Court Judge and has been on the Board of Fisheries since 2008 when he was nominated by then-Gov. Sarah Palin. His resignation is effective Jan. 27, 2015 according to Walker's letter to Chenault.  He wrote that it had been a privilege to serve on the board and that he saw several issues ahead for the remaining six members. “The (Board of Fisheries) faces significant challenges in helping rural Alaskans in the Interior get their subsistence needs met and will be challenged in deciding whether to develop State water pollock fisheries or continue to use federal regulations in State waters.”

Board allows municipalities to weigh in on gasline taxes

KENAI — After months of meetings, a municipal board formed to give Gov. Sean Parnell input on the proposed Alaska LNG Project has been inundated with information. It is working toward a recommendation on the controversial move from the current property tax model to a payment in lieu of taxes, or PILT, model. At least one member of the board, Kenai Peninsula Borough Mayor Mike Navarre, said he has become more comfortable with the idea of a PILT as the meetings progress. The Alaska LNG Project includes an 800-mile pipeline to move natural gas from the North Slope to Southcentral, an LNG plant at Nikiski and a major gas processing plant on the North Slope. When considering changes to the existing tax structure, Navarre said he had to take a statewide perspective rather than one that only considered the needs of the Kenai Peninsula Borough. “For (the Kenai Peninsula Borough) it would probably be better if we just did it under the existing tax structure as we have the (majority of the taxable portions of the project) sited here. We’re getting a good portion of the tax value,” he said. “But, currently under the statutes, the state doesn’t get any revenues off of LNG facilities … So, for the rest of the state, I think a PILT works better because there are impacts all over the state because of this project, and those impacts need to be compensated.” The Municipal Gas Review Board was formed in March of 2014 after mayors from municipalities across the state, which stand to be affected by the pipeline, voiced concerns that the state would change the tax structure without weighing the concerns of those who would be directly affected by the change. The existing oil and gas pipeline tax structure is a major source of revenue for the state, but the structure for taxing a liquefied natural gas pipeline does not exist, and must be developed. The 12-member board includes the mayors of the North Slope, Fairbanks North Star, Denali, Matanuska-Susitna and Kenai Peninsula boroughs, in addition to the commissioners of the Department of Revenue, the Department of Natural Resources and the Department of Commerce, Community and Economic Development. The pipeline project proposals has generated a lot of interest in the state, with BP, ConocoPhillips, ExxonMobil and TransCanada signing on as partners. The state is also a partner in the project through it’s Alaska Gasline Development Corp., but the state’s role as a partner has also put it in conflict with its role as a negotiator on behalf of municipalities that will be affected by the pipeline. “One of the things that (the municipalities) were arguing for was ‘wait a minute, if the state has an equity interest in this pipeline, it creates a conflict between them and the municipalities … if you’re an equity owner, you want the expenses as low as you can get them,” Navarre said. “We didn’t want them negotiating our share to the state’s side of the ledger, without at least having some involvement and I think that’s legitimate.” In addition to concerns about the state’s role as a negotiator, Navarre said borough mayors, specifically North Slope, Valdez and Fairbanks which tax at a much higher rate than the Kenai Peninsula Borough, did not want to see a new tax structure applied to existing infrastructure and projects as it could represent a significant loss of revenue. “The state has told us that’s not the case, they’re not going to go in that direction  and that they don’t need to because the economics of oil are different,” Navarre said. During the board’s Nov. 12 meeting, members were given a complex model of what municipal revenues could be if the project were to succeed and continue under the current tax structure. It’s the first step in a process that should allow board members to compare potential revenues between the current structure and a proposed PILT, Navarre said. “In terms of the project, what happens in the normal tax structure is you get, lets say $23 billion and that’s the start. So you tax it. Then, over time, if throughput drops or through just natural depreciation of value, this income starts going down and, also, because the taxes are so heavily loaded on the front end, revenues are dropping year after year,”  he said. The PILT, depending on its structure, could allow project managers to spread that cost out of over time, resulting in consistent revenues for municipalities and the state. “So it may make sense to try to equalize this project out,” he said. “There’s a lot of calculations that go into that in terms of time, value of money and things like that, but for a project, it makes sense because they are going to be going into 25- to 30-year contracts and they’re based on pricing.” Navarre said board members had been discussing a PILT based on a throughput model, which could benefit municipalities because the LNG project’s long-term contracts would guarantee throughput. “So, if we get a valuation based on throughput, that sort of gives you an equal amount every year, then you’re not messing around with battles on ‘OK, what’s this pipeline really worth,” Navarre said. Boardmembers have not yet seen a model of a PILT, Navarre said. The board is also working to prepare its first report, due annually by Dec. 15 according to the administrative order that established the group. Ultimately, Navarre said he hoped to see the state follow a municipal advisory board recommendation that would be beneficial to all involved. “It really boils down to dollars and cents and how they’re allocated. The state’s going to get a share, municipalities are going to get a share and right now, my concern was not that a PILT is bad, but that a PILT that goes to the state and the state then allocates would be bad for us,” he said. “That was my biggest concern because I’ve seen fights over a big pile of money before.”

Alleged violation revolves around job title

It’s all semantics when it comes to one state employee’s defense against being required to file certain financial disclosure forms required of public officials with the Alaska Public Offices Commission, or APOC. Kelly Hepler, whose title with the Alaska Department of Fish and Game is either “assistant commissioner” or “special projects coordinator,” was the subject of a Wednesday APOC hearing on several complaints that claim he should have filed a Public Official Financial Disclosure form annually from 2009-2013 and, on those forms, he should have disclosed that he had received gifts from the politically influential Soldotna-based Kenai River Sportfishing Association. His title as “assistant commissioner” is a deviation from one that he has previously held and that would be required by state law to file a financial disclosure form, that of “special assistant” to the commissioner. At issue were appeals of seven complaints filed by four Kenai Peninsula residents against Hepler. The complaints, originally filed in late August, were rejected by APOC staff on the basis that Hepler’s actual title with Fish and Game is “Special Projects Coordinator” and his current job title is not subject to the state’s Public Official Financial Disclosure reporting requirements. The original complaints Hepler were part of about 200 complaints that were filed with APOC regarding the Kenai River Sportfishing Association’s Kenai River Classic and other outreach and lobbying of public officials on fisheries management issues. The vast majority of those complaints, including the ones against Hepler, were rejected. In October, Homer residents Garland Blanchard, Eric Ball and Emily Chalup appealed the rejection, citing extensive documentation from Fish and Game’s personnel directory and the directory of state officials, that referred to Hepler as an “Assistant Commissioner.” According to their complaints, Blanchard, Chalup and Ball assert that Hepler should have filed the annual financial disclosure forms from 2009-2013 and that he should have disclosed gifts he received from the Kenai River Sportfishing Association on his disclosure forms. Staff at APOC again recommended rejecting the complaints as unfounded. “Staff believes Mr. Hepler is using what is commonly referred to as a ‘working title’ on websites and in certain directories. Staff has not traditionally recognized working titles applied by departments or individuals and instead refers to the State Employees Directory and human resources departments for official titles,” according to a staff summary presented on Wednesday to APOC. Even if APOC staff did recognize Hepler’s title as “Assistant Commissioner,” he still would not have been subject to the state’s reporting requirements as that title is not listed under the definitions of those required to file the public official disclosures. APOC has not investigated whether Hepler should have disclosed his gifts from the sportfishing association as it does not believe that Hepler would have been required to report the gifts. Hepler’s current title is a slight deviation from one that would be required to file financial disclosure forms — that of the “special assistant to the commissioner.” Hepler previously filled that role for a prior commissioner of Fish and Game, but that position is currently unfilled, according to Fish and Game’s website. The Kenai River Sportfishing Association did list Hepler as a public official and reported gifts that it had given to him according to a 2011 report filed with APOC. However, Hepler corroborated APOC staff’s assessment that his title as an assistant to the commissioner was a “working title.” During his testimony to the commissioners Wednesday, Hepler said he works with a lot of Outside organizations in his role with Fish and Game and those organizations put a special emphasis on his position title. “Title is important to them and special projects coordinator doesn’t resonate a lot, so that’s where that working title came from,” Hepler said.

Pricey reds rank Cook Inlet salmon value third-best in 10 years

KENAI — If measured in sheer volume of fish, the Upper Cook Inlet commercial harvest of salmon was low: preliminary Alaska Department of Fish and Game estimates show it at about 20 percent less than the 10-year average harvest. But, when the $2.25 price per pound for sockeye is factored in, the ex-vessel value of the 2014 harvest was high at $35 million — making it the second year in a row that Cook Inlet commercial harvesters have seen lower-than-average harvests with higher-than-average values. Last year, the commercial harvest in Upper Cook Inlet was valued at just more than $39 million, ranking it as the eighth-highest ex-vessel value since 1960, according to Fish and Game data. This year, commercial fishermen made just more than $35 million, coming in at the ninth-highest ex-vessel value since 1960 and the third-best in the last 10 years. While commercial fishermen harvest all five species of Pacific salmon between the Northern District and Central District, which make up the Upper Cook Inlet area, sockeye salmon are the most valuable. More than 93 percent of the total value of the commercial fishery in the last 20 years has come from sockeye salmon. But, the value of the sockeye harvest wasn’t spread equally among fishermen — a trend in recent years as Upper Cook Inlet setnetters find themselves on an increasingly restrictive fishing schedule due to low numbers of king salmon returning to area streams. Between the two types of commercial fishing in Upper Cook Inlet, drift gillnetting boats caught approximately 1.47 million sockeye salmon, or about 64 percent of the total salmon harvest in Upper Cook Inlet. In 2013, drift fishermen caught about 1.65 million sockeye salmon, compared to the setnet harvest of 992,000 fish. In 2012, when setnet fishermen were shut down for the bulk of the season, drift fishermen took nearly 93 percent of the total salmon harvest. Typically, harvest is more evenly split between drift and set gillnet fishermen, said Commercial Area Management Biologist Pat Shields in a previous Clarion interview. However, as sockeye salmon continue to return to the inlet in large numbers and king salmon numbers continue to drop, disparities in harvest between the two gear types have become more pronounced. “Typically it’s not quite a 50-50 split between drifters and setnetters,” said Assistant Area Management Biologist Aaron Dupuis. “Usually the drifters get a bit more, but the difference increased quite a bit since we’ve had a low abundance of kings.” Among setnetters, a disparity in harvest on the east side of the Cook Inlet was also more pronounced as setnetters in the Kenai and East Forelands section of the set gillnet fishery found themselves in the water for six openings during the 2014 fishing season, while the Kasilof section was opened 14 times. However, a special harvest area concentrated at the mouth of the Kasilof River and open to all setnet fishermen who fish on the east side of the Cook Inlet was opened for hundreds of hours in July. The total sockeye salmon harvest in the upper subdistrict was approximately 705,000 fish — the second lowest since 2001. “It’s not unprecedented for them to fish those few days,” Dupuis said of the set gillnet fishery. There have been times when we’re trying to make goals in the Kenai River that they’re kept out of the water. “But, given the abundance of sockeye salmon in the inlet, it is unusual for them to be kept out of water.” Dupuis said the low numbers of king salmon — a fish caught more often in the setnet fishery than in the drift gillnet fishery — are primarily responsible for the restrictive fishing regime setnetters find themselves operating under. The setnet fishery was restricted in July to allow king passage into the Kenai River, and finally closed July 26, when escapement was estimated at less than 10,000 kings. An estimated 2,055 kings were caught by Upper Subdistrict setnetters. ADFG’s final escapement estimate was about 16,000 kings into the Kenai, after in-river mortality was removed, and meeting the sustainable escapement goal range of 15,000 to 30,000 Kenai kings. Inlet-wide, an estimated 4,331 kings were harvested, with a price of about $2.80 per pound for those that were sold, according to the ADFG summary. The total king take is about 70 percent less than the recent 10-year average Elsewhere in Upper Cook Inlet, setnetters in the western subdistrict, fished three 16-hour periods a week from July 5 through Aug. 5 as the Crescent River sockeye run was considered above-average. Setnetters in that district caught 29,500 sockeye salmon. Kalgin Island commercial fishermen and those in the Northern District were below average. On Kalgin Island, approximately 39,000 sockeye salmon were harvested — the 10-year average is 64,000 — and in the Northern District 35,700 sockeye salmon were harvested, which is about 60 percent less than the 47-year average. In addition to sockeye, commercial fishermen harvested nearly 134,00 coho salmon, about 29 percent less than the 10-year average; 632,000 pink salmon, about 75 percent greater than the 10-year harvest; and about 115,000 chum salmon. In Lower Cook Inlet, pink salmon harvests were much higher than those of other salmon. Fishermen harvested 298,000 of them, and the vast majority were caught in the Outer District, an area along the eastern side of the Kenai Peninsula that starts southeast of Elizabeth Island and runs north along the coast toward Seward, ending at a point just south of Aialik Bay. Fishermen harvested nearly 164,000 pink salmon in that district, though that figure was down from a 10-year harvest average of about 546,000 pink salmon. Commercial harvests of sockeye and chum salmon in the Outer District were significantly higher than the ten-year harvest average in the area. Elsewhere in Lower Cook Inlet, fishermen caught fewer chinook salmon, sockeye salmon and chum salmon than the 10-year harvest average, according to the preliminary lower Cook Inlet season summary. When the season ended, commercial fishing and hatchery cost recovery and brood stock gathering efforts led to a harvest estimate of about 651,000 salmon — about 68 percent by the commercial fishermen and 32 percent by hatcheries, according to the summary.

State's largest pike poisoning project underway in Soldotna

SOLDOTNA — They couldn’t have timed it better. As the last of the interagency team of invasive northern pike killers stepped off of the Derks Lake on Oct. 9, it began to snow in Soldotna. If all goes according to plan the fish killing piscicide rotenone will work its way through each of the four lakes treated by the Alaska Department of Fish and Game, its degradation slowed by the coming winter. When it breaks down completely, it will leave behind pristine, but empty, waters to be restocked with native fish in the coming years. The state agency moved quickly after getting the final approval for the extensive project which, when completed, will be the eighth and largest pike killing project to-date in the state. It will take four years and more than $1 million in both state and grant funding, but if the plan succeeds, the Soldotna Creek Drainage should be free of northern pike by 2018. As dozens of personnel in bright yellow hazardous materials suits crossed East Mackey lake on Oct. 8, Area Management Biologist Robert Begich and Assistant Area Management Biologist Jason Pawluk sat in a boat netting dead pike that floated to the surface. “We’ve not picked up any other kind of fish,” Begich said. The rotenone is being applied in two forms, powder and liquid. Both compounds have to be mixed with the lake water, as the chemical is not very water soluble, before they’re applied. Several boats on the lake apply the poison and then run through the surrounding waters to help mix the poison deeper into the water column. As the rotenone spread through the lake, the occasional white-bellied fish floated to the surface, its body no longer able to process oxygen. The poison, rotenone, penetrates the fish’s body at a cellular level and makes it impossible for the fish to use oxygen it takes in, according to the Oregon Department of Fish and Wildlife. It isn’t just fish that are affected by the rotenone however, it’s any invertebrate. Invertebrates are animals that lack any internal or external bone skeleton. They vast majority of animal species on the planet are invertebrates and some of them, like insects, fall squarely into the category of fish food. “Invertebrates are one of the groups that’s hardest hit, particularly plankton,” said Fish and Game biologist Krissy Dunker, during a recent presentation to the Alaska Board of Fisheries. “Their populations can take between one and two years to fully recover.” Fish and Game researchers spent time studying the affects of the poison on invertebrate populations as part of the permitting process for the project. “We needed to ensure that there’s food and forage available for the fish that we’re putting back in (to the water),” Dunker told the board. Some results were encouraging, she said. “We did see, at Scout Lake, one year following the treatment ... we immediately that spring found tadpoles swimming in Scout Lake and it looked like the loons were feeding on them,” she said. “We weren’t sure how that was going to play out, but we were encouraged by that.” Pawluk and Begich zipped around the lake in an aluminum boat, netting the fish as fast as they appeared in an effort to keep the smell of rotting fish to a minimum. There are large houses dotting the shorelines of three of the four lakes Fish and Game treated this year. “We told people we would do that,” Begich said. In addition to removing dead fish from the water, Fish and Game will also be monitoring the drinking water near Soldotna Creek, though Dunker said the poison penetrates the soil to about 1 inch and isn’t a concern for nearby wells. “The primary health concern is actually to the people who are applying the rotenone,” Dunker said. In addition to applying the poison to East and West Mackey Lakes, Derks Lake and Union Lake this year, Fish and Game staff will monitor the degradation of the poison and continue netting underneath the winter ice, though no fish other than the northern pike are believed to be present in the lakes anymore. After biologists are sure the lakes are free of rotenone and invasive fish, they’ll move onto the next phase of the project, which is to begin rounding up native fish from the mainstem of Soldotna Creek, Tree Lake and Savena Lake. As researchers catch the Dolly Varden, steelhead, rainbow trout, lamprey, round white fish, salmon, stickleback and slimy sculpin still left in the Soldotna Creek drainage, they’ll transfer the fish into the four lakes being treated this year. “This will begin the process of restoring fish populations to the drainage,” said Fish and Game Regional Supervisor Tom Vania during a recent presentation to the Alaska Board of Fisheries. Then, in 2017, Fish and Game plans to treat the majority of Soldotna Creek and the two remaining lakes known to contain northern pike. “Some native fish will be killed in this section,” Vania said. Once the final treatment of rotenone has been applied, Fish and Game plans to breach a barrier between Derks Lake and the rest of the Soldotna Creek drainage, allowing the transplanted native fish back into the mainstem of Soldotna Creek and, eventually restoring the native fish populations of the entire drainage.

Land buys, surveys continue at proposed Nikiski LNG site

NIKISKI — Several reporters and industry representatives from ExxonMobil and the Alaska LNG Project visited the Kenai Peninsula Oct. 9 during a showcase of the research projects currently underway to determine whether Nikiski is a viable site for the terminus of a massive energy project. The Alaska LNG Project, a group with representatives from the state, oil companies and pipeline builders, flew several reporters to Nikiski where the group has been purchasing land and conducting geotechnical surveys near a site that could house a liquefaction plant for the project. The Alaska LNG Project concept would take gas from the North Slop near Prudhoe Bay and pipe it 800 miles to a plant site near Nikiski. Along the way, at least five domestic gas off-takes would be built on the pipeline. It is unclear exactly where the plant would be located, and Alaska LNG Project Senior Manager Steve Butt of ExxonMobil said it would take time to find the right spot. Still, the consortium has been purchasing land in Nikiski, and several trees in area near Autumn Road, where reporters were taken to see a team perform core sampling work, were labeled with large red and white “No Trespassing” signs. The area, located just east of the Agrium facility on the Kenai Spur Highway, is part of a several hundred-acre land-buy the consortium has been carrying out for months. “We’ve been dealing with more than 100 landowners,” Butt said. “We have contracts with several of them.” He said it the land currently being acquired was “in excess of 300 acres.” Ultimately, the group will need about 600 acres to build the plant, he said. The plant would include three 42.3 million-gallon LNG storage tanks and be staffed by about 200 people during the day, according to the project overview. For local landowners, the possibility of being forced to sell has loomed in recent weeks. According to the Jan. 14 Heads of Agreement between the state, the Alaska Gasline Development Corporation, TransCanada Alaska Development, and the three major oil companies — the state is willing to use its eminent domain rights “to facilitate implementation of the Alaska LNG Project.” Butt said it was early in the process to be talking about the state using eminent domain and there are other options available if the consortium cannot acquire the land it needs in the Nikiski. “If it doesn’t work here, there are other sites where we’ll have to go,” he said. “We want to work with the owners here and say ‘OK, does that work for you?’ and hopefully those folks understand that they own the land that impacts the projects, but they’re also a citizen of the state and the state owns the project.” Butt said other locations for the liquefaction plant could be on the east or west side of Cook Inlet, but would not specify. “We believe this is the right place to start,” he said. “That’s why we’re doing this geotechnical work.” In addition to core sampling near Nikiski, the consortium has hired three boats to perform underwater surveys to map areas of the Cook Inlet. In order of the consortium to scrap plans to build a facility in Nikiski, Butt said the group would have to come across “something that implies we can’t get the land we need,” or “something that we learn in the geotechnical analysis that indicates putting the plant here would be imprudent.” Butt said that ultimately, the use of eminent domain in Nikiski would be the state’s decision. “As a project entity, we don’t want to use eminent domain,” he said. “We want fair and durable relations with the community where we are going to end up, because the plant is going to be there for 30-plus years.” Another group in the area who could find themselves affected by the project, which Butt estimated could cost between $45 billion to $65 billion to build, are setnet fishermen whose beach sites line the east side of Cook Inlet. Alongside the plant, which would sit at the end of the pipeline and chill natural gas into liquid form, a jetty would be built to accommodate tankers where the gas will be stored and then exported from the state.  Between 15 to 18 tankers are expected to be in transit between the port and Asia, with one or two on call at the jetty at a time, Butt said. Butt said The U.S. Department of Homeland Security would likely get involved when decisions about access to land the near the facility became an issue. But, the project is in its early planning stages and it is not yet clear how much land, and who, will be affected by the liquefaction facility. “We don’t know and we won’t know for a couple of years,” he said. Currently the project is in a pre-design and engineering phase, it could take five to six years for construction to begin.

NTSB releases report on Rediske crash, plane may have been overloaded

After more than a year of investigation, the National Transportation Safety Board released the details of its investigation into a July 2013 plane crash that killed 10 people, including Nikiski pilot Willy Rediske. While the NTSB hasn’t released its official finding of cause for the accident, several hundred pages of documents, including photos and descriptions of passenger cellphone video documenting the crash — have been released to the public. A final report will be issued by the NTSB at a future date. The single-engine De Havilland Otter, Registered to Rediske Air Inc., of Nikiski, had nine passengers and one pilot aboard when it crashed late on a Sunday morning — killing all aboard. While there were no witnesses who saw the crash, the NTSB report contains interviews with witnesses who described the engine as having a high-pitched whine and one who said he saw black smoke coming from the plane’s exhaust plane as it took off. One witness, Janet Pope, said she heard a loud explosion after the plane took off and saw the airplane engufled in flames. Pope called 911 and tried to get to the airplane, but was unable to do so because of the heat, according to her testimony. Three videos were recovered from cell phones belonging to victims of the crash. One video, at just over 3 minutes long, shows the craft taxiing down the runway, lifting into the air and crashing about 15 seconds later then catching fire about a minute later, according to the report. The cell phone video does not record any abnormal engine sounds, according to the report. The plane was rated to carry a maximum of 8,000 pounds and the NTSB estimated the flight’s weight to be somewhere between 6,020 pounds to about 8,040 pounds, according to its weight study. However, the report clarifies that the actual weight and balance of the airplane during the flight could not be accurately determined due to limited factual data, including the destruction of much of the cargo in the post-crash fire. Six scenarios were included in the report, each generating different weights and in half of those scenarios, the plane would have been overweight. In addition to the passengers and their gear, the plane was also carrying at least 300 pounds of cargo for the lodge, though the NTSB investigator found that estimate to be too low, according to the report. The flight was destined for the Bear Mountain Lodge and included two families from Greenville, South Carolina including Melet and Kim Antonakos and their children Olivia, Mills and Ana, and Chris and Stacey McManus and their children, Meghan and Connor. On the day of the flight, the families had been scheduled to fly to the lodge on two of Rediske Air’s smaller planes, however a flight with the Otter had been canceled and Willy Rediske, president of the small aviation company, decided to use the plane to transport the group together, according to the report.

King salmon restrictions affect Cook Inlet sockeye management

The announcement of a catch-and-release fishery for Kenai River king salmon — eliminating harvest opportunity for sport anglers — triggered a restriction on hours in the East Side Setnet Fishery, one of the two commercial fishing groups in the Cook Inlet tasked with harvesting Kenai River sockeye, or red salmon. Alaska Department of Fish and Game managers said the proscriptive measures reducing the time and area available to commercial fishers in the Cook Inlet would make it difficult, if not impossible, to meet sockeye salmon escapement goals on the Kenai and Kasilof Rivers. Sockeye salmon are returning to the Kasilof River in record numbers while the Kenai River’s sockeye run is building. Typically, the set and drift gillnetters would be reaching the peak of their fishing time and area during the third week of July — but the setnetters will now be operating within the confines of a 12-hour-per week cap on their fishing time while the drift fleet is regulated by a new management plan that restricts them to three corridors on the east side of the Cook Inlet. For the setnetters, who fish from the beach, this means that they’ll likely get their nets in the water for one 12-hour period or two 6-hour periods a week. For the drifters, who fish from boats, the corridors reduce their efficiency at catching sockeye to about a quarter of what it would be if they were let loose in their former fishing area. “It will be difficult if the run returns as forecasted,” said commercial area management biologist Pat Shields. Whether the commercial fleet can be fished enough to be a useful tool in controlling salmon escapement depends on several factors. One that managers consider is run timing, typically biologist classify the salmon runs as on-time, early or late; another is the actual number of fish returning and whether or not it tracks with the number of fish predicted to return; finally, the number of Kenai River king salmon returning and whether it improves or continues poorly, both options could impact the hours available for commercial setnet fishing. On the Kasilof, setnetters play a vital role in catching sockeye bound for the river as the fish tend to be “beach-oriented” later in the season and are usually too close to shore for drifters to catch, said Aaron Dupuis, assistant area management biologist in the commercial fisheries division of Fish and Game during a Wednesday interview. Managers believe the Kasilof sockeye run is about halfway over and just about 280,000 fish have already made it up the river — meaning the final escapement could be projected at about 560,000 — well above the biological escapement goal range on the river of 160,000-340,000. “It will be very difficult, I’m not saying impossible, very difficult to keep the final escapement in the Kasilof River below (the top end of its goal),” he said. “With the number of sockeye that we believe are yet to come to the Kasilof River, we would harvest at a rate that we can’t attain with the minimal number of hours that we have in the setnet fishery.” About 310,000 sockeye have returned to the Kenai River. While managers have multiple goals they can aim for, Shields focused on the inriver goal of 1 million-1.2 million fish. Run timing models of the sockeye run on the river have predicted that it could go over the inriver goal, Shields said. “We stand a better chance of meeting that goal,” he said. “That said, with the limited number of hours again in the setnet fishery and the restricted drift fishery, I guess I have to say it would be — if the runs returns as expected — it would be difficult to keep the final passage in the Kenai River within in the inriver goal.” The east side setnets and drifters fished Thursday. An Emergency Order released Thursday opened drift gillnetting in the expanded Kenai, Kasilof and Anchor Point sections for a 12-hour period Friday — the three areas confine the drift fleet to a narrow band of fishing between the east beaches of the Cook Inlet and Kalgin Island. The setnetters could fish again on Saturday. Under the new management restrictions they would be allowed 12 hours this week when the Kenai River goes to catch-and-release fishing — then one Sunday when the new stat-week begins, they would be given 12 more hours. Shields said there had been no decision made on whether to fish the setnetters on Saturday. He also is not sure how to manage 12 hours of fishing time per week, though he said the two best options seemed to be one 12-hour period or two 6-hour periods. A six hour period carries a risk. “It would require many fishermen in the fishery to be able to move their gear while the tide is running,” he said. “That would be very difficult to do. They can plan for it somewhat but even planning for it still makes it somewhat difficult for them to do.” Fishing one 12-hour period could mean that managers choose a day to fish that would be a good one for harvesting sockeye salmon, or cause the entire setnet fleet to stay out of the water when the salmon hit the beach. “We’ll do our best to catch as many sockeye as we can with the hours that have been provided,” he said.

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