Knowles approves bills putting bonds on ballot

JUNEAU -- Alaska voters will go to the polls in November to decide the first general obligation bond package the state has had in more than 20 years.Voters will decide the fate of millions to construct eight new schools in Bush Alaska along with funding for other urban school and transportation projects statewide.Gov. Tony Knowles approved four bills July 2 during a ceremony at Clark Middle School in Anchorage, saying it would allow for nearly $800 million in construction projects to move forward. Two of the bills will go before voters Nov. 5.Voters will be asked to approve a $236.8 million school package to authorize eight new rural schools, provide planning money for five more and pay to repair 39 schools statewide.It also provides $62 million for 19 University of Alaska projects in Anchorage, Fairbanks, Juneau and elsewhere.Voters will also decide the outcome of a $226.7 million transportation bond package that includes $37.5 million for the controversial Bragaw Street extension.-- The Associated Press

Creative leadership energizes and engages the work force

A. W. "Bill" Dahlberg, the former chief executive of Southern Co., believes in having fun. At company gatherings, he has impersonated soul singer James Brown, dressed as Gen. George Patton and arrived decked out as a fortune teller complete with crystal ball.Employees at PeopleSoft Inc. remember the day that chief executive David Duffield danced the Macarena in front of 500 happy co-workers.Over at Odetics Inc., they’re still talking about the time the chief technology officer took over duty on the cafeteria cash register on St. Patrick’s Day, dressed as a leprechaun.Finally, there’s something called "Bowling with Turkeys." Hotel tradition calls for employees at the Hyatt Regency in Lexington, Ky., to wrap a 12-pound frozen turkey with electrical tape, then roll it 50 feet down the loading dock and try to turn over as many wine bottle "bowling pins" as possible. Winners get a pumpkin pie.After a professional lifetime identifying what it takes to transform ordinary organizations into extraordinary organizations, I know work can be awfully boring unless someone at the top shakes everything up.The leaders and organizations I just mentioned know it is important to engage, energize and involve people about their work. You need to lighten up and have some fun every now and then.It isn’t hard to dress up as a leprechaun, sponsor a company contest, ask people for their ideas and maybe even throw a party. And the payoff for an energized work environment is enormous: improved retention and productivity and reduced turnover.We can’t merely employ someone’s hands and tell them to leave their hearts, minds and spirits at home. Today’s workers are looking for many things in an employment relationship. They want a meaningful partnership with their workplaces. Workplaces that provide meaning and purpose and are fun, engaging and energizing will enjoy greater retention, higher productivity and lower turnover.Remember Abraham Maslow? His well-known hierarchy of needs theory said all people strive for self-actualization, which is the need for innovation and creativity. When people can reach this higher level on the job they gain greater personal fulfillment, which improves job satisfaction. Yes, you still have to pay well, but an organization that can create an energized, "higher calling" environment will have higher retention and greater productivity.Jobs and work environments using high-involvement activities provide people with autonomy, learning opportunities, meaning, purpose and a way to grow and get ahead, not to mention a host of benefits to the company as well. High-involvement activities include, but are not limited to, the use of self-managing teams, information sharing, shared goal setting, suggestion programs, brainstorming sessions, idea campaigns and motivational meetings.A survey conducted by Development Dimensions International asked 232 organizations around the world, including 81 from Hong Kong, Thailand, Philippines, Singapore and Indonesia to answer the question, "Do high-performance practices improve business performance and which practices have the greatest impact?"The findings from the survey showed significant improvements in all areas.Most noteworthy were the improvements in the areas of customer service and quality of the products and services. Furthermore, I would be so bold as to estimate that the biggest changes were not measured directly, but more implicitly. Although the survey did not measure the improvement of attitudes, retention rates, and feelings of the work force, I’m sure they improved as well.As Abraham Maslow indicated in his theory of motivation, the more freedom people have to use their thinking ability the more satisfaction they receive on the job, and the higher they move up the pyramid of needs. People do not respond favorably to overly restrictive work environments. High-involvement activities help people reach higher levels. These places engage and energize their workforce.Gregory P. Smith is president of a management consulting firm called Chart Your Course International located in Conyers, Georgia. He can be reached at 770-860-9464.

Denali maintenance issue hits Paxson lodge

Paxson Inn & Lodge owner Chester Eldridge believes paving the 136-mile Denali Highway would boost his business. He won’t be getting his wish anytime soon. In fact, matters may get worse.On July 1, the state Department of Transportation & Public Facilities abandoned summertime maintenance of the unpaved highway.Eldridgej said he’d feel it in the cash drawer. He estimates that 200 to 300 recreational vehicles pull into the lodge daily in summer, including some driving the Denali Highway."If they don’t maintain it, all the motorhomes will quit crossing" from Cantwell on the Parks Highway to Paxson, or visa versa, he said. The highway provides a nearly direct route between Denali National Park and Paxson. If the highway becomes impassable, alternative routes are hundreds of miles longer.Paxson Inn & Lodge, located at the junction of the Denali and Richardson highways, traces its history to an outpost in 1903. The current lodge was build in 1958, said Eldridge, who has owned the property for seven years.The lodge includes 18 rooms, a restaurant seating about 100 people, a gas station, bar, liquor store and a recreational-vehicle park with 22 spaces.Eldridge bought the lodge after selling a business in Delta Junction. He bought it because it was large enough to employ his family. Two daughters and two grandchildren now work at the lodge; two other grandchildren previously worked there, he said.The lodge employs 10 full- and part-time workers but fewer work in winter, he said.The largest slice of business comes from lodge rooms, he said.In summer, Alaskans account for half of lodge business while out-of-state visitors, including tour bus passengers, comprise the remainder of business, Eldridge said. The lodge is a stop for Alaskans driving from Fairbanks to Valdez for fishing or snowmachining, he said.Eldridge characterized the season so far as slow, perhaps due to lackluster fishing or fewer Lower 48 visitors venturing to the lodge. However, business picked up during the last two weeks in June, he said.Eldridge, who has lived in Alaska for 47 years, summarized his goal for the Paxson Inn & Lodge."I hope to be able to get it paid for. Then I’ll sell it and go and do something else," he said.

Company's technology converts wood wastes into fuel

A Vancouver, British Columbia, technology company is looking at possible plant sites in Alaska for a new process that converts wood biomass -- forest debris and residues -- into a liquid fuel. The process also works with agricultural biomass.DynaMotive Energy Systems Corp. of Vancouver has signed an agreement with Huskywood Services, an Anchorage-based forestry consulting and management firm, to market the technology in Alaska and Yukon Territory.Through a process known as fast pyrolysis, biomass is converted into a liquid fuel, called Bio-Oil, as well as fuel-grade "char," a charcoal-like substance.DynaMotive has a 10-ton-per-day test plant operating at the B.C. Research Center on the University of British Columbia campus in Vancouver.The company is developing a 200 ton-per-day commercial-scale plant with Canadian Forest Products (Canfor), Canada’s largest forest products company, to be sited somewhere in British Columbia.The company has also tested a 2.5 megawatt Bio-Oil power generation plant in cooperation with Orenda Aerospace Corp, a Canadian technology firm.Besides Orenda and Canfor, DynaMotive has alliances with a United Kingdom energy company, a major Brazilian sugar producer, and an international engineering company based in Argentina."This is a commercial technology. DynaMotive has come through the experimental stage," said Terry T. Brady, managing member of Huskywood Services.Brady said that fuel made in Bio-Oil plants in certain locations in Alaska could be competitive with conventional diesel and fuel oil. The same appears true in Yukon Territory.A big advantage of Bio-Oil, he said, is that it is nonpolluting and does not contain many of the harmful compounds found in conventional oil. With the move toward ultra-low sulfur diesel fuel required by the U.S. Environmental Protection Agency, Bio-Oil could potentially provide an advantage. "Both Alaska and Yukon suffer from extremely high fuel prices, yet fuel is an absolute necessity of life in a northern climate," Brady said.Alaska has a plentiful wood supply. Millions of acres of spruce bark beetle-killed trees in Southcentral Alaska, a tremendous amount of driftwood in Alaska’s Interior rivers and residues from sawmills and forest thinning in Southeast Alaska should be examined for their fuel potential, Brady said.Bio-Oil can substitute for petroleum fuels for heating and to power turbines and some internal combustion diesel engines, or it can be blended with conventional diesel to lower exhaust pollution levels."Char is also made through this process," Brady said. "This is a nearly pure carbon fuel that exceeds low and mid-grade coal in its heating value," said Brady.James Acheson, chief operating officer of DynaMotive’s U.S. subsidiary, said the company is developing a worldwide network of agents to develop the business of converting wood and agricultural wastes into environmentally friendly fuels.Huskywood has a good grasp of DynaMotive’s fast-pyrolysis technology, Acheson said. Brady recently completed a report for the U.S. Department of Agriculture on the potential for wood biomass projects in Alaska."Fast pyrolysis is a high-temperature process in which the biomass, forest or agricultural residue is heated rapidly in the absence of oxygen," Brady said. "As a result, it decomposes to form mostly vapors and aerosols and some charcoal."After cooling and condensation, a dark brown liquid is formed that has a heating value about half that of conventional fuel oil, Brady said.Because the heat value is lower than conventional fuel, more of the Bio-Oil would have to be burned to generate an equivalent amount of energy, he said. Engines and turbines can be adjusted to use the fuel, however.While the energy value is less, the cost of Bio-Oil would also be less. Brady estimates that a 100 ton-per-day plant in Southeast Alaska could produce the fuel for less than the current costs of diesel oil."This is not a complete substitute for conventional fuels in places where petroleum fuels can be delivered efficiently, but it does present an option where conventional fuel is very costly and local wood supply is plentiful," Brady said.There are other uses for the product. For example, when mixed with urea, which is manufactured at Nikiski, near Kenai, Bio-Oil could make an excellent nontoxic and noncorrosive road-deicer, Brady said.Alaska now imports tons of road salt to keep roads safe in winter, but the corrosion effects on automobiles is a big negative, he said.Laboratory research has shown that Bio-Oil mixed with urea also makes a fertilizer that releases nutrients very slowly, allowing more of the nutrient to be used by plants.This could make the fertilizer more efficient for farmers and less polluting to local water supplies because of less runoff of excess nitrogen-laden nutrients, Brady said.

Around the World

STATEMinimum wage pegged to cost of living indexANCHORAGE A bill increasing Alaskas minimum wage and tying it to the Consumer Price Index was signed July 1 by Gov. Tony Knowles.The new law is projected to directly affect more than 14,000 workers.The bill, which goes into effect Jan. 1, raises the minimum wage to $7.15 an hour and requires it to increase as inflation increases.Without the bill, a similar measure would have been placed before voters. Supporters of a minimum wage initiative collected more than 50,000 signatures to place the measure on the November ballot. The effort was led by organized labor leaders.Also on July 1, Knowles vetoed a related bill that would have allowed remote seafood processing plants to charge workers for room and board.Docking the cost of room and board from a worker’s pay has been banned since Alaska became a state and would have negated the minimum wage increase for workers in the processing plants.Pipeline cleaning halted when leak discoveredANCHORAGE -- Crews halted plans to clean an abandoned oil pipeline in Cook Inlet June 30 because of a leak in the pipe, a BP project manager said.In preparation for the cleaning, water was pumped from a barge into the pipeline June 29 to check for leaks, said Dan Ferriter of BP. But the water didn’t flow through the whole pipe. Workers then pumped air in and saw bubbles coming up about 200 feet from the barge.Crews were preparing to pump a nontoxic gel into the pipe to scrub residual oil and push debris out of the pipe’s end in Nikiski. The pipeline had periodic oil leaks and produced a 1.5-mile-long sheen in Cook Inlet last year.Ferriter said crews then abandoned plans to use the gel. Now they will assess whether to have divers fix the leak or clean the pipeline from another location beyond the leak, he said.It is unknown how long it will be before the cleaning can resume, he said.The project is expected to cost between $4 million and $7 million.Judge denies motion to break up salmon co-opANCHORAGE -- Alaska Superior Court Judge Patricia Collins has denied a motion from two commercial salmon fishermen to break up a novel vessel cooperative at Chignik.The two fishermen argued in a lawsuit against the state that they would suffer lower catches this year if the new, 77-boat co-op is allowed under new regulations to catch most of the Chignik sockeye run.But, in a ruling handed down June 28, Collins held that imposing an injunction during the fishing season would unfairly harm dozens of co-op boat owners.The Alaska Board of Fisheries in January approved a cooperative approach to managing the fishery at Chignik, on the Alaska Peninsula. The co-op means an end to the race for sockeye at Chignik. Under the plan boat owners designate a portion of the fleet to catch the fish, while all of the fishermen in the co-op share the profits.The cooperative was created in an effort to improve the poor economics of Alaska’s commercial salmon may add online apparel storeSEATTLE -- is reportedly in talks with retailers to open a clothing store on its Web site in time for the holiday shopping season.Retailers including Nordstrom and Gap Inc. may be included in the initial launch of a clothing store on the Web site this summer or fall, according to a report in The New York Times, citing unidentified sources. Other retailers could include Banana Republic and Old Navy, also under the Gap corporate umbrella.The Seattle-based Internet retailer, which sells books, music, electronics and several other products, stores, ships and sells some clothing through a relationship with, but does not have an extensive offering.Apparel is a big category online, and would make sense for Amazon, said Allyson Rodgers, an analyst with Wells Fargo Securities in Seattle.Rodgers said Amazon has matured to a point where it can add major new product lines such as this -- the first in nine months.Toyota to sell fuel cell hybrids vehicles soonDETROIT -- Toyota Motor Sales USA will lease about 20 fuel cell hybrid sport utility vehicles at the end of the year in the United States and Japan, the automaker announced July 1.The vehicles will be offered to selected companies and research facilities that have access to a hydrogen supply and service facilities.The timing is earlier than Toyota expected, the company said in a release, because of the success of testing of the FCHV-4 prototype.The announcement indicates raised stakes in the area of fuel cell vehicles for Toyota’s competitors, said David Friedman, senior analyst for the Union of Concerned Scientists in Berkeley, Calif."It means hydrogen fuel cell vehicles will finally be in the hands of the public ... really hitting the road," Friedman said.The vehicle will be based on the Highlander in the United States and the Kluger-V in Japan.The cost of the vehicles was not immediately available.-- Compiled from business wire services.

Low prices, sparse runs leave Inlet fishermen pessimistic

KENAI -- Upper Cook Inlet commercial salmon fishermen are once again facing the prospect of a dismal season.If early indications are correct, commercial fishermen will be hampered by competition from farmed salmon, a mediocre sockeye return and poor overall demand for their product.The Alaska Department of Fish and Game estimates that the entire sport and commercial sockeye harvest for upper Cook Inlet will be 2.2 million fish. Of that, about 1.8 million are expected to be taken by commercial fishermen, according to Jeff Fox, commercial fisheries biologist with the department.Fox said the harvest would be lower than average, and that commercial fishermen would likely see few emergency openings this season."There probably won’t be a whole lot of extra fishing time," he said.The department’s estimate is based on a projected total return of 3.7 million sockeye to Cook Inlet. The run is managed for an escapement goal of 1.5 million sockeye in upper Inlet streams.Last year, upper Inlet fishermen harvested about 1.8 million sockeye, one of the poorest harvests on record. According to the department’s annual commercial fishing forecast, this year’s harvest, if it goes as expected, will again be about half of the 20-year average harvest in the upper Inlet of around 4 million fish.Those numbers do not bode well for commercial fishermen, especially when expected prices are taken into account. Fish processors won’t talk prices before the season, but many in the industry believe processors will be paying historically low prices for sockeyes."You can call any of the processors, but I doubt they will give you a number. Traditionally, nobody commits themselves to a price," said Brent Johnson, a Cook Inlet setnetter. "The best I’ve heard, it might be comparable to last year, or it might be 10 cents (per pound) lower."Johnson was pessimistic. "We’re looking to see the worst year ever," he said. "I expect prices to be low, and I don’t expect to have a lot of fishing time."Paul Dale owns Snug Harbor Seafoods in Kenai. He said he doesn’t expect to pay more than last year’s price, which was about 65 cents per pound."If a person were to guess, we would have to expect that pricing wouldn’t be as high as last year. We would have to expect that the market won’t support even the prices from last year, unfortunately," Dale said.That could change slightly, based on how fisheries in other parts of the state fare, he said."There are lots and lots of indicators," he said.One other area processor, Jeff Berger of Deep Creek Custom Packing in Ninilchik, said prices for Cook Inlet sockeyes are normally based on what is paid for Kodiak and Bristol Bay fish."What the price ends up being depends on the harvest in Kodiak, Chignik and Bristol Bay," he said.Those areas haven’t been getting much for their fish, Berger said."I’ve heard rumors of very low prices," he said.Last year, fishermen in Bristol Bay got just 40 cents per pound for their sockeyes.In Kodiak, fishermen earlier this year refused to fish for five days until a processor offered them 59 cents per pound.Until the early 1990s, it was not uncommon for Cook Inlet sockeye to fetch as much $1.50 per pound. That, along with strong sockeye runs, made commercial fishing a lucrative business.However, in recent years Inlet fishermen have seen fish prices plummet.Decreased demand for Alaska salmon in Japan, combined with a glut of farmed salmon from Norway, Canada and Chile on the market, has pushed prices steadily downward.This season, fishermen may be lucky to get 60 cents per pound for their sockeyes.According to estimates by the Alaska Seafood Marketing Institute released June 16, upper Cook Inlet driftnet fishermen can expect to see a price in the neighborhood of 50 cents per pound for sockeye salmon.Many fishermen are being forced to choose between giving up the life they’ve always known, finding alternative ways to make a living in the industry or calling it quits.Some fishermen said they believe that marketing Cook Inlet salmon as a unique, high-quality product is the only way to buoy prices.A salmon branding program to test that theory was begun this year. That effort is in its infancy, and few fishermen would benefit this season.According to Gary Fandrei, executive director of the Cook Inlet Aquaculture Association, many commercial fishermen have or are on the verge of simply giving up."There’s still some optimism (among fishermen) out there, but it’s getting harder and harder to find that," Fandrei said.He said he believes a little more than half of all Cook Inlet commercial fishing permit holders will fish this year, though he added commercial fishermen who are based on the Kenai Peninsula don’t seem ready to give up just yet."Most of the people I deal with down here (on the Peninsula) are planning to fish," he said.

Feds cancel Evergreen's Adak contract

The U.S. Department of Transportation has canceled Evergreen International Inc.’s $1.5 million federal contract for Adak after the airline failed to provide promised jet service to the Aleutian Island community.Bids reopened in early July for the federal subsidy, the nation’s most costly under the Department of Transportation’s Essential Air Service program."(Evergreen) said they would provide passenger jet service to Adak and they haven’t," said Bill Mosely, spokesman for the Department of Transportation in Washington, D.C. "They didn’t do what they were expected to do."The McMinnville, Ore.-based airline was awarded the two-year contract in July 2001 based on its proposed purchase of a Boeing 727-100 passenger and cargo airplane. The "combi" aircraft is better able to handle cargo and the region’s notoriously bad weather than prop aircraft, according to a written decision last summer by the federal Transportation Department.The airline said it would provide Adak with two one-stop 2,600-mile round trips a week to Anchorage, year round, with passenger and cargo jet service.Evergreen last summer also said it would provide service to the Russian Far East, a route that would be largely underwritten by the Adak federal subsidy.But over the last year, Evergreen has only provided once-a-week mail and freight service with its DC-9 cargo jet to Adak. Peninsula Airways Inc. has been providing passenger service with prop aircraft, under an interim federal award of about $4,000 weekly. Evergreen has been paid roughly $7,000 for each of its weekly cargo flights, according to DOT’s Mosely.Jerry Rock, president of Evergreen’s Alaska operations, said the airline has actively shopped for planes, but the events of Sept. 11 and new bypass mail rules have stalled the purchase.Evergreen and a few other airlines in Alaska have been critical of new legislation affecting Alaska’s bypass mail service to rural villages. Sen. Ted Stevens, R-Alaska, says the new legislation, slated to take affect next year, is intended to close loopholes that allow carriers to transport mail without providing passenger or freight service.The U.S. Postal Service is losing about $100 million annually in Alaska, and the program faces extinction, according to Stevens.The new legislation should reduce the loss by up to 30 percent and increase passenger service to the Bush, Stevens said.But Rock says the new legislation closes the door to any new airline wanting to get into the bypass mail business, and protects incumbent mainline carriers, Air Cargo Express, Alaska Airlines, Lynden Air Cargo and Northern Air Cargo.Rock said Evergreen had hoped to use the jet intended for Adak to service other parts of Alaska with bypass mail."The legislation has held us up," said Rock. "We’re not going to go out and purchase aircraft when we are not allowed to compete fairly." Meantime, Evergreen in June filed with the U.S. Postal Service to haul bypass mail to Nome, Kotzebue and Bethel, hoping to get revenue before the legislation is enacted. It’s unclear whether Evergreen will resubmit a bid for the subsidy to Adak, or will challenge DOT’s decision.Four other carriers had bid on the two-year contract to Adak last year, but only Evergreen offered jet service. City, borough and Native leaders in the Aleutian Island community lobbied hard for jet service, and specifically Evergreen’s proposal.Now, there has been a change of heart.The Aleutians East borough, City of Adak and the Aleut Corp. have each formally asked that the service be rebid.David Jensen, chief executive officer of the Aleut Corp., said he and others are "horribly disappointed" that Evergreen has failed to live up to its contract."It’s an outrage -- and I’m being nice," Jensen said.The Aleut Corp., which now owns the abandoned U.S. Navy base at Adak, has been planning to use the airfield and deep-water port for such things as a refueling and reprovisioning facility, and as a fish processing center for the Aleutian area.Jet service would greatly help the plans for economic development in the region, Jensen said.Orin Seybert, president of Pen- Air, has been flying in the Aleutian Islands since 1955, and said he’s got a good handle on what level of service is needed.Time was, when the island was flush with some 5,000 Navy personnel, jet service made economic sense. But with a population of just a couple of hundred people now, jet service doesn’t fly financially, Seybert said.Seybert’s airline has made more than 150 flights to Adak under its interim award given last July. Seybert said his airline can handle all the cargo Evergreen is given under the contract."We could have handled all of it on our own," Seybert said.PenAir is lobbying hard for the entire Adak contract, but the Transportation Department’s new bid offering stipulates that an airline must provide service with an airplane that has at least a 60-passenger capacity.PenAir’s Saab 340Bs only have 30 seats, which Seybert points out, is a big chunk of the island’s population currently."It doesn’t seem fair," said Seybert, adding that he’s pushing legal and congressional avenues to have the 60-seat requirement changed."You gotta crawl before you can walk," Seybert said. "If the demand grows to the point it warrants a jet, we’ll get a jet. But we aren’t there yet."PenAir has been flying to Adak since December 2001 when Reeve Aleutian Airways went out of business. Reeve had operated two Boeing 727-100 combis that serviced Adak and other Aleutian destinations, as well as the Russian Far East.Reeve operated its flights with no government subsidy.

11-member state panel appointed to address salmon industry woes

ANCHORAGE -- State lawmakers have named an 11-member task force to try to solve the commercial salmon industry’s many woes.The Joint Legislative Salmon Industry Task Force members appointed June 27 will hold public hearings around the state and will try to come up with ways to help salmon fishermen, processors and communities cope with market changes caused by the increase in farmed salmon."We want to do something that makes a difference," said state Sen. Ben Stevens, R-Anchorage, who will serve as chairman of the task force. "I don’t think the task force is the answer to the problems, but I hope it can be part of the solution."The naming of the panel comes as the Alaska salmon industry, now fully engaged in another summer harvest, stands to net its poorest payoff in more than a decade.A state projection shows that the statewide salmon harvest will pay fishermen about $130 million at the docks. That’s a big drop from last year’s $216 million and only about 17 percent of the $768 million in 1988, when voracious Japanese demand for wild sockeye superheated Alaska’s fishing trade.Glenn Haight, a state Department of Commerce official, said the $120 million projection is conservative, but even a 50 percent improvement would mean a bleak year for the industry.Senate President Rick Halford and House Speaker Brian Porter appointed the task force, which includes four lawmakers and seven public members. In addition to Stevens, the members are: Rep. Gary Stevens, R-Kodiak, vice chairman. Sen. Kim Elton, D-Juneau. Rep. Bill Williams, R-Saxman. Sue Aspelund, executive director, Cordova District Fishermen United. Sam Cotten, former legislator now representing the Aleutians East Borough. Duncan Fields, Kodiak lawyer and salmon fisherman. Don Giles, president of Seattle-based Icicle Seafoods Inc., one of the state’s biggest salmon packers. John Lowrance, founder, Leader Creek Fisheries, which processes Bristol Bay salmon and Togiak herring. Robin Samuelsen, Dillingham salmon fisherman and chief executive, Bristol Bay Economic Development Corp. Gary Slaven, Petersburg commercial fisherman and former state Board of Fisheries member.The Legislature appropriated $908,000 to support the task force.The panel will hold its first meeting July 22 in Anchorage, with public hearings to come later around the state, Stevens said.The focus will be on identifying adjustments to state laws or regulations that could help the industry deal with changing world markets, he said.Task force members likely will head up subcommittees on issues such as marketing, quality control, industry financing, and harvesting and processing regulations. Those subcommittees hopefully will draw in more people with ideas or special expertise, Stevens said.While many of the state’s salmon fisheries remain blessed with large and healthy runs of salmon and some fishermen are earning decent money, other areas like Bristol Bay are facing both weak runs and poor prices this year. In Southeast, the problem has been too much salmon in recent years, creating a glut of canned pink salmon.The task force is required to make its final report to the Legislature by Jan. 31. Ideas the panel might entertain range from buying out some state fishing permits, revamping fishery rules or boosting funds for salmon marketing.

Alaska oil 'declining,' says BP's Lord Browne

Alaska is a "declining" oil province and the state needs to recognize that coming of age, BP’s Chief Executive Lord John Browne said June 28 in a sober assessment of Alaska’s prospects in the world’s petroleum industry.Browne, who talked to business, community and political leaders in Anchorage, also said a gas pipeline from the North Slope is currently uneconomic. What could help the project are government incentives, similar to those used in Canada to help its petroleum industry, he said.BP now sees Alaska as a mature oil province with limited potential to grow, Browne said. It’s a reality BP has recognized and is dealing with, and he urged Alaskans to recognize it, too.Despite that, BP has no intentions of selling its Alaska assets, Browne said. The company will also continue its current pace of capital investment, in excess of $500 million per year, over the next five years, he said."BP is here to stay. We intend to make our business successful, and we’re having to make some tough decisions" in cutting costs, he said.The company wouldn’t be doing these things if a sale was planned, Browne said.Browne also gave his endorsement to a southern route for an Alaska natural gas pipeline, through Interior Alaska."Taking the southern route is the sensible thing to do," he said in a press briefing following his talk. As for consideration of a shorter, but controversial northern route, Browne said: "We’re past that."It was the first time BP’s senior management has spoken on the debate between the southern and northern route.BP and the two other major North Slope gas owners, Exxon Mobil Production Co. and Phillips Alaska Inc., are working on reducing costs for a gas pipeline to the Lower 48 from Alaska."At the moment it is not competitive. Capital costs are $20 billion, operating costs are $20 billion and financing costs are $20 billion, a total of $60 billion," Browne said.Efforts are now under way to reduce the capital cost by $2 billion. "That would make the development viable on a range of reasonable (gas) price assumptions. That is on a pre-tax basis," he said."But that’s not enough. On that basis, the development of Alaskan gas would still not be commercially viable, because of the fiscal issues," Browne said.That makes gas development a public policy issue, requiring discussion about the amount of revenues from the project which end up going to governments, he said.Browne would not get into specifics and spoke in terms of all government fiscal impacts on the project, Alaskan, Canadian and federal."As things stand, the current distribution destroys the viability of any such development," he said.He said there were many examples where fiscal terms were rearranged to help viable projects, including U.S. tax credits to aid coal-bed methane development and Canadian tax and royalty incentives to help tar-sand projects and gas development in the Eastern Canadian offshore.Browne said the viability of continued oil production on the North Slope is critical to a gas project.His remarks about oil were sobering."This is a declining oil province. It’s too expensive. These things must be reflected in our business plan. We have to ground that plan in reality, and we have to get these things right," Browne told reporters.In his talk to community and business leaders, he said, "In terms of oil, the competitive position has to be improved.""The challenge is reflected in the cost base. Operating costs per barrel for us here are 20 percent higher than our worldwide average. And pipeline and shipping costs are four times the average," Browne said."Why is that? There are a number of interlinked reasons. Inevitably there is an added cost because the resources are being produced a long way from the markets in which they are consumed. This is nothing new.""What is new is that Alaska is now a mature and much smaller oil province. The operating systems and infrastructure were designed for much higher volumes of throughput. As production declines, that means the unit costs are higher."Examples of BP’s new strategy include discontinuing frontier exploration and focusing instead on exploration in and around existing fields, looking for smaller accumulations near existing infrastructure.BP is also reducing its Anchorage staff by 20 percent and its Anchorage contractor work force by 75 percent."We will continue to invest here based on the potential which exists," he said.

Special session nets regulatory commission another year

JUNEAU -- A one-year extension of the Regulatory Commission of Alaska apparently concludes the work of the 22nd Legislature.Lawmakers adjourned early June 28 after passing the RCA bill.The Republican majority refused to take up the second issue of the special session, an appropriation for the Pioneers’ and Veterans’ Homes.Democratic Gov. Tony Knowles, who called the special session, gave no indication that he would call the Legislature back on funding for veterans or any other issue.Democratic lawmakers were willing to have another special session on veterans, the governor said during a news conference June 28. But when Senate Republicans, who had supported a smaller appropriation last month, reversed their position, it became apparent that they were making the issue partisan, he said.As for other issues that weren’t resolved in the 2001-02 session, such as a long-range fiscal plan and a constitutional amendment on subsistence, Knowles said that it’s up to voters this fall to set the stage for future legislative action."If you take a list of all the needs that were not addressed, the work of this Legislature is not over," he said. "Their session has been adjourned, but the accomplishments fall far short."Senate Finance Co-Chairman Dave Donley, an Anchorage Republican, said that the Legislature acted on "the No. 1 constitutional priority" of preparing an annual state budget. The task of containing spending has been complicated for eight years by the governor’s cumulative proposals to increase the budget by $1 billion more than was finally approved, Donley said.And Republicans contend that it was Knowles who was playing politics in the special session."This has got nothing to do with vets," House Speaker Brian Porter said June 26, as Senate Democrats made a last stand on the issue. Porter, an Anchorage Republican, contends that Knowles was laying groundwork for an eventual U.S. Senate bid.Knowles achieved his minimum goal on the RCA issue, averting a one-year "wind-down" of the commission that would have begun June 24. That endangered consumers of public utility services, he said.The bill that was finally approved puts off the wind-down year until July 1, 2003.Senate Judiciary Chairman Robin Taylor, who originally opposed any extension, called the final RCA bill "a very workable compromise."Taylor, a Wrangell Republican and candidate for lieutenant governor, said he acquiesced on the extension because of the new ethical safeguards in the law. He also said the official record compiled during his committee’s 30 hours of testimony and deliberations this month will put the next Legislature in a better position to decide the commission’s structure.Porter and House Finance Co-Chairman Eldon Mulder, also an Anchorage Republican, persuaded the Senate leadership to remove most of Taylor’s proposed restrictions on "ex parte" or non-official communications between RCA commissioners and company executives with pending cases. The final version says generally that such communications concerning active cases should not be allowed, and commissioners are advised to be mindful of the "appearance of impropriety."The concern about appearances stems from a trip that Nan Thompson, RCA chairwoman, once took to a private lodge owned by General Communication Inc. Thompson and GCI Vice President Dana Tindall testified that no pending cases were discussed.The bill sets up a seven-member task force to do a comprehensive review of RCA operations. The group will issue a recommendation next January on whether telecommunications should be handled by a separate commission, a proposal that Taylor included in a draft of the bill June 26.But the Knowles administration, House Republican leaders and GCI immediately objected to the idea. When Taylor emerged from a closed-door Senate Republican caucus, the Telecommunications Commission was removed from the RCA bill.The final bill was approved by the Legislature with only two dissenting votes.On the veterans issue, Republicans noted that they earlier agreed to adding veterans to the name of the Pioneers’ Home system, approved a $250,000 study of veterans housing needs and set up a pilot project aimed at getting federal funds for veterans in the state-run assisted-living facilities."We have already done many things to achieve this end," said Sen. Pete Kelly, a Fairbanks Republican. "The Legislature has a lot of reasons to be proud of what it’s done for vets."But spending $2.6 million to hire more staff isn’t a pressing issue, Republicans said.Until the national secretary of veterans affairs approves the pilot project, the state isn’t ready to spend the money, said Sen. Ben Stevens, an Anchorage Republican.Meanwhile, Alaska Republican Sen. Frank Murkowski is working on federal funding of separate wings for veterans in the homes.Knowles says that will just create a bigger funding challenge for the state."There’s no operating dollars in that whatsoever, so you’re going to build more empty beds," he said.But Republicans questioned how quickly the 100 beds currently vacant could be filled, anyway.Porter said the current staff at the Anchorage home could handle 18 more residents, but the beds are vacant because of high prices.

Business Profile

Name of the company: Downtown Bicycle RentalEstablished: 1989Location: 333 W. Fourth Ave., Suite 206, Anchorage, 99501Telephone: 907-279-5293Web site: www.alaska-bike-rentals.comE-mail: [email protected] focus of services: Downtown Bicycle Rentals offers various bikes to tour Anchorage’s paved trails. Available bikes include tandems, hybrids, mountain, touring and children’s bikes. The company also rents trailers to carry children and, for children age three to six, tag-alongs, which have a single-wheel and attach to an adult’s bike. Rentals include helmets, locks and maps and are available for three hours, five hours and 24 hours. Downtown Bicycle Rentals is open daily from May through October.History of the company: In 1989 Pete Roberts was operating a bed and breakfast at Sixth Avenue and B Street and offered bikes to his B&B guests who wanted to ride the Tony Knowles Coastal Trail. The bike rental business began as demand increased. Roberts added more bikes every year, renting them from his driveway at the B&B until 1993. After the lease expired on the B&B, Roberts ran a T-shirt sales and screen-printing business until 1998. In 1999 the bicycle rental business moved to its current location.Roberts employs two other people during summer. The business is seasonal and also depends on weather conditions.The firm is especially busy in mid-June, serving out-of-towners and others attendng the Mayor’s Midnight Sun Marathon.Customers have often told Roberts the bike trip in Anchorage was a highlight of their visit. Most customers ride the 11-mile Coastal Trail.Top accomplishment of the company: Roberts attributes Downtown Bicycle Rentals’ success to his zeal for the sport and Anchorage. "I really like bikes, and I’m really enthusiastic about the Coastal Trail."Major player: Pete Roberts, owner and president, Downtown Bicycle Rental.Roberts moved to Anchorage in 1981 to attend the University of Alaska Anchorage where he earned a degree in journalism. This spring he earned a law degree from the New England School of Law in Boston.-- Nancy Pounds

July-Issue-1 2002

Shipyard unhappy with lease plan

Alaska Ship & Drydock Co. officials are unhappy with a decision by the Alaska Industrial Development and Export Authority’s board to extend its lease for the Ketchikan shipyard for three months instead of approving a long-term lease the company had sought.The short-term extension creates uncertainties for the company at its peak for bidding on ship repair contracts for 2002 and 2003, according to Doug Ward, business development manager for Alaska Ship.But AIDEA executive director Bob Poe defended the decision, saying that the authority had actually offered the company a five-year lease last year.Alaska Ship, a locally owned firm, was preoccupied at the time with a contract dispute with the state over repairs to a state ferry vessel and did not respond to the offer, Poe said.This prompted the state authority, which owns the $17 million shipyard, to consider issuing a request for proposals, or RFP, from other shipyard operators. Alaska Ship’s current lease ends July 15.Three Lower 48 shipyard operators have expressed interest in bidding on the contract if an RFP is offered, Poe said.At its June 13 meeting, AIDEA’s board voted to extend Alaska Ship’s lease three months to allow time to negotiate an agreement with either the Ketchikan Gateway Borough or the city of Ketchikan to take over the lease, and then negotiate a long-term sublease with the shipyard company."It was a difficult choice for the board, whether to go out with an RFP or follow the wishes of the city fathers and continue this company’s contract," Poe said."We have a responsibility to manage assets on a commercial basis, but we also recognize that this project is important to Ketchikan. They’re having to work hard to get some economic success. We want to do what Ketchikan wants," he said.Poe said AIDEA is anxious for the shipyard to grow because the authority needs a better return on the authority’s investment in the yard. Alaska Ship and Drydock leases the facility for only $18,000 per year, he said.AIDEA has about $4 million invested in the shipyard, Poe said. Previous investments were made by the Department of Transportation and Public Facilities, and from other sources.Alaska Ship has invested $3 million of its own in the facility, according to its president, Randy Johnson. Of that, $1 million was in startup costs in 1993 and 1994, with another $2 million spent for tools and other equipment.The company has also invested $700,000 in marketing, Johnson told the AIDEA board at its June 13 meeting.Meanwhile, the decision to limit an extension to three months puts the company in an awkward position, Ward said.One major project Alaska Ship hopes to land is a contract to perform modifications and upgrades to the Fairweather, a federal ocean-research vessel. Proposals are due July 26.Alaska Ship’s proposal may be disqualified because of the uncertainty over extension of the lease, he said.Poe acknowledged that the short-term extension would create problems for the shipyard operator, but he said that would have occurred in any event if the authority’s board had decided to go forward with an RFP.Poe credited Alaska Ship with doing a good job at the shipyard, and said the company’s success in the last eight years was what prompted interest from the three Lower 48 yards when word got out that AIDEA might put out an RFP."They made that shipyard work" despite limitations in facilities at the yard, Poe said."When the Department of Transportation and Public Facilities (which previously owned the yard) asked for proposals for operators, there were no offers from the big Lower 48 yards," he said.Alaska Ship took over the yard in 1994 after it had been shut down for two years. Two previous local operators failed.The shipyard was built by the state in the early 1980s to perform winter overhauls and repairs on state ferries.The idea was for a private contractor to operate the yard and work on other ships, building the yard’s capabilities and reducing costs for Alaska vessel owners, including the state marine highway system.The state transferred ownership of the yard to AIDEA in 1997.A problem that has plagued the shipyard is that the initial investment was inadequate to create efficiencies and to develop the ship repair business.The yard has a floating dry dock that is very efficient with large vessels, such as state ferries, Ward told the AIDEA board June 13. Consultants have long recommended the addition of a shiplift, which would allow the yard to work efficiently on smaller ships of 250 feet in length or shorter.The lack of the shiplift means the yard essentially can repair only one vessel at a time, Ward said.The shiplift would also be more efficient with smaller vessels, too. Ninety five percent of the vessels in Alaska waters are 250 feet or shorter.Alaska Ship and AIDEA have just applied for a $5 million federal grant that, when matched with local contributions and other funds, would pay the $12.5 million to add the shiplift.Ward said the yard has built a good reputation with customers since 1994, including the marine highway. There were problems with repairs to the state ferry Columbia, which Alaska Ship said were due to inadequate specifications from the state.

Weak labor market erodes consumer confidence

NEW YORK -- Consumer confidence declined in June to a four-month low, hurt by corporate scandals and concerns about jobs, a private research firm said June 25.The New York-based Conference Board said its Consumer Confidence Index fell to 106.4 this month from a revised 110.3 in May. Analysts were expecting a reading of 106.0.The industry group’s index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation’s economic activity."Weak labor market conditions, generally soft business conditions and waning public confidence in questionable business practices have helped erode consumer confidence," said Lynn Franco, director of the Conference Board’s research center.Still, she said, the figures pointed to "continued spending and moderate economic growth."The index compares results to its base year, 1985, when it stood at 100. June’s figure is the lowest since February, when consumer confidence stood at 95.0 amid congressional hearings investigating the Enron scandal.Economists said the figures remained encouraging, despite being dampened somewhat by terrorism fears and concerns about alleged corporate improprieties."The economy is in a soft spot right now, but it’s not necessarily as weak as it was last year after the terrorist attacks," said Gary Thayer, chief economist for A.G. Edwards & Sons Inc. "Consumers are still feeling better about things than they did six, seven months ago."The Conference Board said consumers’ assessment of the current economic climate was less favorable in June. Consumers rating current business conditions as good declined to 20.1 percent from 21.2 percent.Meanwhile, consumers who felt business conditions were bad rose to 19.1 percent from 18.5 percent last month, the board said.Regarding employment, those reporting jobs were currently "hard to get" increased to 23.1 percent from 21.8 percent in May. Those claiming jobs were plentiful decreased to 20.1 percent from 21.2 percent.Americans also were less optimistic about the near future. The percentage of consumers who expect business conditions to improve declined to 23.6 percent from 24.9 percent in May, the report said. Those expecting conditions to sour rose slightly from 6.8 percent to 7.0 percent this month.The jobs outlook for the next six months also weakened. Fewer consumers, 20.1 percent in June, expect more jobs to become available in the next six months, compared to 21.2 percent in May. Those expecting fewer jobs to become available rose to 14.2 percent from 13.6 percent.The Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members around the world.

Researcher travels state gathering stories about fishing days past

The call is out for old timers to share their fish stories and wisdom at a special gathering later this year. Dubbed the "Old Timers Mug Up," it will be a convening of Alaska and Pacific Northwest commercial fishing elders who helped build the salmon industry -- fishermen, processors, policy makers and managers.Event organizer Leslie Smith said the idea stemmed from her own experiences as a salmon fisherman, and listening to the stories of old timers. "Now many of them are gone, and it’s important to hear and retain the stories from those who are still around," Smith said.She added that the multicultural and multigenerational gathering will focus on the things shared by everyone in the salmon industry, which is a community in and of itself."No matter if you’re in Ketchikan or Kotzebue, everyone who is involved in the salmon industry shares a common bond," Smith said. "This will be a time to remember how fishing life used to be, mark its changes and celebrate the resiliency of fishing people. It will strengthen the idea of the fishing community as economically viable, culturally vibrant and politically empowered."The one-time event will include two components, a storytelling symposium and a seminar of the "who’s who" in the fishing industry. "(It’s about) the people who made the industry what it is today," Smith said. "It will be reflective about past challenges and how their experiences and wisdom might be applied to today’s challenges."Smith will travel to Alaska coastal communities this summer to search out "local treasures" for the Old Timers Mug Up. The event is scheduled during the Seattle Fish Expo in early November. Expo is a sponsor of the project, along with the advocacy group Fishing for the Future.For more information, contact Smith at 208-333-0919 or via e-mail at mugup [email protected] in the USAScientists at the University of Maine have been successful in spawning America’s first halibut in captivity. According to the Bangor Daily News, a 65-pound fish, part of a 70-fish brood stock taken from the Gulf of Maine, released eggs four times last month at the aquaculture research center.The facility also has several hundred larval halibut that were hatched from a small batch of eggs from the Canadian Department of Fisheries and Oceans in New Brunswick. These eggs were fertilized by the adult male fish and kept in absolute darkness under strict temperature control to simulate the cold, deep waters that are habitat for wild larval halibut.The fish were then moved to brightly lit tanks where they now are feeding on live zooplankton that was reared at the research center. Operations manager Nick Brown said the spawning event and the fact the larval fish have moved on to live feed marked a milestone in the development of a U.S. halibut aquaculture industry.The halibut project will determine the feasibility of raising halibut in land-based systems, as is also being done in Nova Scotia. Last year the U.S. Department of Agriculture earmarked $25 million to assist the University of Maine’s aquaculture programs.Coast Guard says it does enoughA Coast Guard admiral has urged Congress to derail an effort that would expand the Guard’s duties.According to the Associated Press, Rear Adm. Harvey Johnson told a transportation subcommittee that an expansion would place "unnecessary requirements on our search and rescue system that could consume our limited resources, but more importantly, possibly endanger the lives of Coast Guard personnel."Johnson said it’s the wrong time to add more tasks to his already stretched force.According to the Associated Press, spurred by the deaths of three men in a December 1998 sinking of a fishing boat in Lake Michigan, Rep. Mark Green of Wisconsin has proposed that Congress require the Coast Guard to search for a passenger boat or fishing vessel until it is found or the transportation secretary determines that a search is no longer appropriate.Green’s bill would cover the loss of, or a collision involving, passenger boats transporting at least two passengers, and fishing boats carrying at least two people.The Coast Guard also would be required to facilitate the recovery and identification of fatally injured passengers and to designate an employee to serve as a liaison between the federal government, surviving families and vessel operators.Currently, federal law authorizes but does not require the Coast Guard to aid distressed persons, vessels and aircraft. The Coast Guard conducts more than 40,000 search-and rescue missions a year but has wide discretion in deciding how many personnel, boats and aircraft to put on a case and for how long.It is not responsible for salvaging sunken vessels or recovering the bodies of those lost in marine accidents.Since Sept. 11, homeland security was added to the Coast Guard’s traditional duties of search-and-rescue, fisheries enforcement, immigration and drug law enforcement, and navigational aids maintenance.President Bush wants to roll the Coast Guard into the new Homeland Security Department and has requested $7.3 billion for the agency in the 2003 budget year, a 36 percent increase.Drowning in lawsuitsThe National Marine Fisheries Service now dedicates 10 per cent of its 2,500 staff members to lawsuits. The service, which is the federal agency that manages fish stocks in U.S. waters, has more than 100 lawsuits pending against it. That’s more than six times the number the service had six years ago, according to the Fish Information Service.In 1996, the service faced around 16 cases. Now there are 104, mainly filed by environmentalists or fishermen seeking changes in fishery management.Some observers say the lawsuits now dictate how U.S. fisheries are managed, and the service’s limited resources must now be spent on fighting lawsuits rather than doing research and enforcement.Another change worrying regulators is that the service now loses more lawsuits than it wins. An independent draft report being prepared for Congress by the National Academy of Public Administration says that before 1997, the service won 83 per cent of the cases brought against it, but by 1998, the service began losing more than it won, 23 losses and 19 wins between 1998 and 2001.Officials of the service said its own figures show the agency is actually ahead on wins, and new filings are now on the decline. In the most recent case, the service lost to environmental groups that claimed it failed to protect New England groundfish stocks.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at [email protected]

Texas firm gets first dibs on sale of CargoPort

While Williams Cos. has announced it prefers to sell all of its Alaska assets as a package versus piecemeal, a Texas-based firm has first shot at the air cargo transfer facility at the Ted Stevens Anchorage International Airport. Lynxs Alaska CargoPort is a joint venture between the Lynxs Group of Austin, Texas, and Williams Alaska Petroleum Inc.’s subsidiary, Williams Air Cargo Properties LLC.Williams Cos., the parent company of Williams Alaska Petroleum, and Lynxs Group are equal partners in the cargo port; Lynxs is the managing partner.Lynxs has right of first refusal on the venture, said Ken Lythgoe, the CargoPort’s general manager, and Jeff Cook, vice president of external affairs for Williams.Lythgoe said the Austin-based company would not immediately announce if it would exercise the option. He emphasized Lynxs is committed to the project for the long run, whether as a partner, or as sole owner."Lynxs is grounded in the cargo business and has no desire to pull out of Alaska," Lythgoe said.Lynxs runs about a dozen similar facilities across the United States, and most are partnerships with other limited liability companies.The $22 million Williams Lynxs Alaska CargoPort opened in late 2000 and was operating at near capacity less than a year later. Airlines operating at the CargoPort are Northwest Airlines Cargo, Atlas Air Inc. and United Airlines.The 105,000-square-foot commercial warehouse and cargo transfer facility has more than 500,000 square feet of tarmac, enough parking space for six Boeing 747 wide-body air freighters.A planned multimillion expansion, which would more than double the size of the facility, had been put on hold due to a slumping worldwide economy, particularly in Asia, Cook and Lythgoe said.The CargoPort currently is operating at about 85 percent capacity, said Lythgoe.Cook said Williams has been relatively pleased with the performance of the CargoPort."It’s been an OK investment and certainly provided us some value, but it didn’t fill up to capacity as we had hoped when the Asian economy tanked," Cook said.A deep downturn in the Asian economy two years ago decreased the amount of cargo landed at the airport from 13.4 billion pounds in 1998 to 12.8 billion pounds in 1999. Despite the decrease, Anchorage still led the nation in all-cargo landed weights.Lythgoe said it’s only a matter of time before the worldwide air cargo industry takes off again and enjoys healthy growth as it has for the past three decades.Industry analysts predict U.S. cargo traffic growth will average 6.4 percent a year, until 2020. And state studies show there will be a need for a four-fold increase in cargo facilities, as well as a 25 percent increase in other aviation-related facilities during the next 20 years in Anchorage.According to aircraft maker Boeing Co., the world air cargo industry is in its worst slump in more than 30 years, more from ailing Asian and domestic economies than from the impact of the terrorist attacks on the East Coast.But the slide should be short-lived, as growth levels are projected to increase to historic levels of 6 percent to 8 percent by next fall. Despite the largest dip in three decades, the Seattle-based aircraft maker still expects air cargo traffic to triple in the next 20 years.The CargoPort in the future may face competition from Chicago-based VOA Associates Inc., which wants to build a staging area and transloading facility on 40 acres of airport land near the Federal Express facility at Anchorage International.The $43 million facility would have enough parking room for a dozen of the largest wide-body freighters in service, according to the company, which has refused to release specifics on the project since it is still in the early planning stages.

Global economics drive use of foreign steel in Alaska

Alaska Republican Sen. Ted Stevens is the first to admit he doesn’t like the idea of using foreign steel to construct major projects in Alaska, including a quarter-billion dollars worth of expansion work at his namesake airport in Anchorage."We don’t like it," said Stevens of using foreign steel on major public projects in the state. "We’d like to do business with domestic producers."But Alaska’s senior senator, who has brought billions of dollars in construction projects to Alaska with his political muscle, says the ailing steel industry can no longer provide much of the material needed for those projects."We’ve lost 32 steel companies in the last three years," Stevens said. "The capacity of the (domestic) steel industry is very low."And if steel can be produced domestically, the waiting period for the material is lengthy and it’s more expensive, Stevens said."When you have deadlines to meet, you can’t stand in line and wait for it," said Stevens. "Contractors are the ones who buy it and they still have to do business on the basis on the bottom line."Stevens said he expects that most of the structural steel to be used in the proposed $12.5 billion national missile defense system project in Alaska will come from Canada, since domestic mills won’t have the capacity to meet the timeline or price requirements.Stevens points out he’s tried to help the U.S. steel industry. He and Republican Sen. Frank Murkowski, Alaska junior senator, in April tried to broker a deal with steel-state Democrats in the Senate for their support of oil drilling in the Alaska National Wildlife Refuge.The Alaska senators offered support of heath-care costs to retired steel workers and contracts with natural-gas pipeline work in return for support of drilling in ANWR.A more than 3,000-mile natural gas pipeline would have required a $5 billion order for domestic steel. The deal fell through less than two days before the ANWR vote, which was six votes short of the 60 needed to break a Senate filibuster."We tried," Stevens said. "People have to wake up."Korean-produced steel is being used for the framework at a six-year, $230 million renovation project at Ted Stevens Anchorage International Airport. Federal dollars also are bankrolling a $28 million rail station at Anchorage International, much of which also is being constructed with Korean-made steel.In addition, several thousand tons of Korean-made steel is en route for the construction of a $200 million U.S. Army hospital at Fort Wainright. The steel is expected to arrive at the Port of Anchorage in August and will be trucked to Fairbanks.A recently completed $250 million hospital at Elmendorf Air Force Base in Anchorage used Canadian-made steel in its construction, said John Killoran, spokesman for the U.S. Army Corps of Engineers in Anchorage.The use of foreign steel is allowed under the General Agreement on Tariffs and Trade, or GATT, that encourages free trade among nations, Killoran said.Instead of free trade, U.S. steel makers prefer to call it illegal dumping.Foreign producers like Korea have for years been dumping steel in the United States at the cost of American jobs and national security, said Bette Kovach, spokeswoman for Pennsylvania-based Bethlehem Steel Corp.Kovach said it would make sense to use domestic steel for federally funded projects, like military hospitals, but nothing prohibits it. And new tariffs imposed this year on foreign steel by President George Bush doesn’t cover structural products, like that used on Alaska products, Kovach said."It’s a massive problem," Kovach said.The dumping of foreign steel has driven half of the American steel makers to bankruptcy, and prices have fallen to 20-year lows, said Mike Dixon, spokesman for U.S. Steel Corp. in Pennsylvania."Imported steel has run a lot of us out of business," Dixon said.U.S. Steel, which provided structural material in everything from the Empire State Building to the Golden Gate Bridge, can’t compete with foreign makers and has stopped producing structural steel. Bethlehem Steel also quit producing structural steel a few years ago for the same reason, Kovach said.Dave Ford, business manager of the International Association of Bridge, Structural & Ornamental Ironworkers Local 751 in Anchorage, said nearly three-quarters of steel used in major projects in Alaska over the last five or six years has come mostly from Canada, where it is cheaper to buy and ship to Alaska.Ford said welders and others who work with structural steel prefer Canadian or U.S.-made product, because of its higher quality and ease of welding. From an economic standpoint, his membership prefers American-made steel."The real problem is with the pricing," Ford said.Outside of Alaska, efforts have been made to demand American-made steel.The ironworkers’ union in the Pacific Northwest, along with steel company executives, currently are fighting plans to purchase 20,000 tons of foreign steel for the bridge deck for the second Tacoma Narrows bridge and have it built by Japanese and Korean companies.In the mid-1980s, New York’s Throgs Neck Bridge between the Bronx and Queens was slated to use South Korean steel to reconstruct the roadway, but after a series of protests, steel was instead purchased from domestic mills, adding $3 million to the $33 million price tag of the project.

Petrochemical plant may die with sale

One consequence of the Williams Cos.’ June 18 decision to sell its Alaska refinery and gasoline marketing outlets may be the shelving of a plan to build a $1 billion petrochemical plant near the company’s refinery in North Pole, near Fairbanks.Williams has had the project under study for the last year and a half, and it is contingent on a North Slope natural gas pipeline being built that would supply natural gas liquids to the plant for the manufacture of petrochemical products. The company envisioned exporting the products to Asia.Without the refinery to share infrastructure, the project is likely to be less attractive to the Tulsa-based company, market analysts say.Jeff Cook, spokesman for Williams Alaska Petroleum Inc., the Alaska subsidiary, said he expects a decision to be made shortly on the future of the petrochemical plan and Williams’ possible participation in a consortium of pipeline companies to build a gas pipeline.But John Olson, an analyst with Sanders Morris Harris in Houston, Texas, said he thinks Williams will stay in the gas pipeline consortium if it moves forward. "Pipelines are their core business. They know it well," Olson said. He was less optimistic about the Fairbanks petrochemical venture, however, because it depends on sharing land and infrastructure with the refinery, which will be sold.Williams was slammed on Wall Street when investor confidence in the entire energy sector sank and federal regulators began looking into the company’s energy trading practices, a fallout of the Enron scandal.In an ill-timed development, the company was also saddled with $2.2 billion in debt after a former subsidiary, Williams Communications Group, filed for Chapter 11 bankruptcy protection.Williams’ shares fell 80 percent in value and rating agencies reduced its debt rating to near the value of junk bonds.The company will shed $1.5 billion to $3 billion in assets and possibly issue more stock to bring its debt-equity ratio down from 70-30 to 50-50, Olson said.Williams hopes to net $1 billion from the sale of its refinery, pipeline and marketing assets in Alaska and Tennessee by the end of the year, the company said in an announcement.Olson said the refineries and retail outlets are outside Williams’ core business, which is in pipelines. He thinks the Alaska assets, which include the refinery, two petroleum product terminals and 29 convenience store gasoline retail outlets, could sell for $300 million to $500 million.Williams would prefer to take its time with the sale, but heavy pressure from financial-rating agencies may push the company into selling faster than it would like, he said."Williams is a good company," Olson said. "They’re in the ditch now, but I’ve seen them in worse situations."Cook said he expects few changes in the refinery work force. Most workers in the plant went through the acquisition of MAPCO, the former owner, by Williams in 1998, and a few were there when MAPCO bought the refinery from Earth Resources in 1981, he said.The refinery was built in 1975 and 1976 by a group of Alaska and Texas investors, and was sold to Earth Resources, a Texas energy firm, soon after it started operation in 1977."An important point is that each time the refinery has changed owners there has been new investment and expansion" as new owners brought different expertise that allowed the refinery to develop new market niches, Cook said.The plant now processes about 215,000 barrels per day of crude oil to make roughly 70,000 barrels per day of petroleum products. Unused portions of the crude oil are returned to the trans-Alaska oil pipeline.Sixty percent of the plant’s output is jet fuel, which is mostly transported to Ted Stevens Anchorage International Airport for sale to air carriers. A smaller portion is gasoline, half of which is marketed through the company’s retail outlets, Cook said.Williams also makes naphtha, a petrochemical feedstock, which is shipped to Anchorage by rail and exported, and heating oil, diesel fuel and asphalt, which is sold in Alaska, he said.The company has about 500 employees in Alaska, 150 of them at the Fairbanks refinery, Cook said.Olson said Williams’ Alaska businesses were very profitable for the company, and he doesn’t expect any problems in finding a buyer.Others were less sure, however. One industry manager familiar with refining, speaking on condition his name not be used, said the Fairbanks refinery is basically a topping plant with limits on the range of products it can make. Other, larger refineries are equipped to make a wider range of products.In addition, the new owners of the North Pole refinery will be challenged to meet tight new environmental standards on diesel and gasoline, the source said.That means the ability to sell those products may shrink, making the refinery even more dependent on jet fuel sales in Anchorage, where air carriers can import foreign-made jet fuel if they get a better price.Another challenge the North Pole refinery faces is that next year a 25-year contract to buy state royalty oil at attractive terms comes to an end, state officials said.The contract, signed in 1978, guarantees the refinery the right to take up to 35,000 barrels per day of state-owned oil and has no premium price.This was the state’s first royalty oil sales contract. Since 1978 the state has asked royalty purchasers to pay a premium price. Williams has a second royalty oil supply contract signed in 1998 on which it pays a 15 cent-per-barrel premium.

This Week in Alaska Business History

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannotremember the past arecondemned to repeat it."-- George Santayana,1863-195220 years ago this weekAnchorage TimesJune 30, 1982Native leaders sign revenue agreementBy A.J. McClanahanTimes WriterAlaska Native leaders late last night gathered to sign an agreement that is expected to end a long-running dispute over revenue sharing -- an agreement that is expected to encourage development of Native regions’ natural resources.Details of the 117-page agreement, which if ratified by each region’s board could end almost eight years of litigation, have not been released by Native leaders.Byron Mallott, chairman of the Juneau-based Sealaska Corp., said without the agreement over how to interpret one paragraph of the 1971 Alaska Native Claims Settlement Act, Native corporations faced "continuing and costly litigation and uncertainty with any resources development."At issue has been section 7(i) of the act, which requires each regional company to split among all the companies 70 percent of its revenue from oil, gas, timber and other specific resources on its lands.Anchorage TimesJune 30, 1982Salmon price negotiations deadlockedBy Dave CarpenterTimes WriterWith the bulk of a record salmon run already entering Bristol Bay, Gov. Jay Hammond is urging fishermen and processors to end their dispute over a price for red salmon.But Hammond, responding to requests from some involved in the impasse, says it would be "entirely inappropriate" to use fishery management regulations to force a settlement."State management decisions should be based on the availability of fish for harvest, not on the politics of the moment," the governor said Tuesday.Meanwhile, tensions were said to be high but under control in the Dillingham area as all but a small percentage of independent fishermen continued to sit out the run today with price talks still deadlocked.The state Department of Fish and Game expects the run of an estimated 34.9 million reds to peak during a four-day period beginning Sunday.10 years ago this weekAlaska Journal of CommerceJuly 6, 1992Will Neil Bergt pull MarkAir out of its dive?By Margaret BaumanAlaska Journal of CommerceFeisty Neil Bergt may be down for the count in bankruptcy court with MarkAir, but a new cash collateral agreement with two banks and concessions by pilots assure the fight’s not over, he said."We hope to emerge from this (bankruptcy) soon," said Mike Bergt, his son and the new president of both MarkAir and MarkAir Express Inc. "We’re doing fine. MarkAir Express is setting passenger enplanement records every day."The Bergts’ optimism came on the heels of MarkAir and MarkAir Express filing for Chapter 11 bankruptcy reorganization June 8 and a merger of MarkAir management with subsidiary MarkAir Express just nine days later. The Chapter 11 proceedings, filed in the U.S. Bankruptcy Court in Anchorage, protect MarkAir from creditors while it reorganizes its finances.The elder Bergt says agreements were reached June 24 with Seattle Trust and National Bank of Alaska for a cash collateral deal under which receivables are pledged for working capital. "We just had to demonstrate that we were right; that they weren’t at risk," he said.Alaska Journal of CommerceJuly 6, 1992Income downBy The Alaska Journal of CommerceMedian household income in Alaska has declined relative to the nation, with the latest census statistics showing the state ranked second nationally in 1989, says demographer Greg Williams.In 1989, the median household income in Alaska was $41,408, up from $25,414 in 1979, Williams writes in the July issue of Alaska Economic Trends, a publication of the state Labor Department.While Alaska ranked first in this category nationally in 1979, Williams found Alaska had slipped to second nationally by 1989 with a median household income of $41,408.Williams cautioned that how Alaskans’ income fared depends on how the change in the cost of living over the decade is measured."The areas of Alaska with the lowest incomes and greatest poverty are generally the areas with the lowest labor force participation and highest unemployment," Williams said.-- Compiled by Ed Bennett.


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