This Week in Alaska Business History August 5, 2001

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 TimesAug. 15, 1981Task force recommends 3 percent coal severance taxThe Associated PressJUNEAU -- The state should slap a severance tax on coal production and alter its royalty structure to garner a bigger chunk of the revenue that will be generated as Alaska’s coal is marketed, a task force told Gov. Jay Hammond Tuesday.The Coal Policy Group recommended that the governor seek major legislation next session revising the state’s taxes and royalty structure for coal development, and encouraging the development of coal facilities and reclamation efforts.The governor said he is reviewing the task force’s suggestions and reserved further comment.Jessie Dodson, deputy executive assistant to Hammond and chairwoman of the eight-member subcommittee, said "it is essential that the state lay down a consistent, rational economic and taxing policy toward coal development now, so that the industry will have firm tax rates in place as it sets about developing Alaska’s huge coal potential."Anchorage TimesAug. 6, 1981Watt investigates Canada oil, gas trade blockBy Paul MonaghanTimes Washington BureauWASHINGTON -- Despite congressional prodding for quick retaliatory action, Interior Secretary James Watt says he’ll move cautiously before imposing sanctions against Canada for trying to block U.S.-owned firms’ investment in Canadian oil and mining.Watt told a House subcommittee today he has begun an investigation to determine if the Canadian government’s proposed new National Energy Program to "Canadianize" its energy industry violates the 1920 Mineral Land Leasing Act, which requires reciprocal treatment between the two countries.If Watt’s fact-finding procedure finds the Canadian government is illegally blocking U.S. energy investment, he could ban any Canadian investment in oil or gas exploration on federally owned land.10 years ago this weekAlaska Journal of CommerceAug. 5, 1991Sand Point airport expansion proceedsBy Margaret BaumanAlaska Journal of CommerceSand Point’s expanded airport won’t be paved with gold, but the project enlarging the facility to accommodate larger commercial aircraft will include paving over two gold mining claims.With the project now in the first stages of development to expand to accommodate Boeing 737s and 727s, DC-9s and LI-88s, talks are under way to purchase the claims, said Bob Juettner, city administrator for Sand Point.Phase 1 of the project, under contract to Herdon & Thompson of Homer, should be complete within 120 days, Juettner said. Phase 1 calls for expansion of runway dimensions to a paved area 4,000 feet by 150 feet, lighted and realigned to the prevailing winds.Bids will be let on Phase 02a as soon as the city buys out two gold mining claims on the land involved, Juettner said. The claims, staked in the early 1980s are owned by an Anchorage attorney.Alaska Journal of CommerceAug. 5, 1991Masses of Soviets visit AlaskaBy Don Byron and Tim BradnerAlaska Journal of CommerceConverting the Soviet Union from a controlled, defense-oriented economy to a system where the market makes production decisions will take some time. It won’t be done in month, or even in just a few years. According to an official of the Soviet Foreign Ministry who was in Anchorage last month, a generation will have to pass before the U.S.S.R. becomes a Western-style consumer society."A market economy is not only what’s produced, it’s a mentality," said Kiril Kassatkin, assistant director of the Department of Information in the Ministry of Foreign Affairs, Moscow. "It will take a new generation."Alaskans are the "back door" of the huge, undeveloped Soviet economy, and it’s well worth the effort by Alaska businesses to position themselves, U.S. Commerce Secretary Robert Mosbacher said in an interview last week.-- Compiled by Ed Bennett.

Quota system best solution for crabbers, but who gets what is no easy decision

In recent years, "rationalization" is a word often heard in reference to fisheries in which too many boats are targeting too few fish.In reality, it’s just a fancy word that means managers intend to create a limited entry style of management. And right now, rationalizing the world’s most dangerous fishery -- Bering Sea crab -- is one of the most controversial issues in national fishery policy. "We see great benefits to rationalization," said Dorothy Childers of the Alaska Marine Conservation Council, an environmental group. "But we want it to be done right."There’s general agreement that a quota share system for king and snow crab is the best way to proceed in order to create a slower, safer and more efficient harvest. But deciding who gets private rights to a public resource worth hundreds of millions of dollars is no easy task.Crabbers want their shares in the form of annual harvest quotas, similar to Alaska’s halibut and sablefish program. Seafood processing companies also believe they’re entitled to exclusive rights to process certain shares of the harvest. But right now, quota shares for processors are illegal and would require an act of Congress to exempt them from existing anti-trust laws.That’s the crux of a problem that’s made the people involved become, well, downright crabby.The idea advanced initially is to have a so-called "two pie system," in which processor quota shares would be parallel to vessel quota shares. Processor shares would be based on processing history and would be tradable between processors.Processors could then buy from vessels an amount of crab equal to the processing share they have. What’s currently being considered is giving harvesters quota shares equal to 100 percent of their catch history, while processors would get 90 percent or somewhat less of their crab processing history.The concept of individual processor quotas has raised the hackles of harvesters. Many claim IPQs are contrary to the Magnuson-Stevens Act, the law that governs our nation’s federal fisheries, which states that "conservation and management measures shall, where practicable, consider efficiency in the utilization of fishery resources; except that no such measure shall have economic allocation as its sole purpose."Gordon Blue of the CRAB Group, which represents nearly 100 independent vessels, believes an exclusive right to buy a quota-managed resource will restrict free trade, pre-empt future competition, and work against fishermen’s bargaining ability."It will be a throwback to a ’company store’ type scenario," Blue said. "We need to build a system that will encourage and have incentives for more than one processor in town," Blue said.The Alaska Marine Conservation Council and Blue’s group prefer a regional quota share approach assuring that product remains with processors in traditional regions. Blue also suggests that processors’ concerns could be better dealt with by providing either a one-time buy-out of excess processing capacity, or by a separate allocation system.Unisea is one of the major companies that would gain the most from crab IPQs. Vice President John Iani believes that instead of harvesters’ losing bargaining power under a two-pie system, they could be big winners."The one thing they need to realize is the old mentality of dropping the catch off at the dock and hopping on an airplane is over. Fishermen have to start sitting down with processors and looking at the market prior to the season. In the pollock fishing co-ops, for example, we meet with the fleet and decide if we’re going to make fillets or surimi, where we’re going to sell it, the kinds of prices we’re hearing."Crab fishermen have never done that before. They haven’t figured out that under a rationalized system, everything changes. They don’t have the pressure to go fishing if they don’t like the market or the price, and they need to realize what sort of advantages it gives them."But we both have to be able to do it," Iani continued. "We geared up together for these big crab seasons, and we’ve got plants and floating processors that were designed for crab. Like the harvesters, we also want compensation for the investments we’ve made. Whether it’s co-ops or quota shares, we don’t want to be left out."Allowing some crab to be sold on the open market would ensure a level playing field between harvesters and processors, said Glenn Reed, president of the Pacific Seafood Processors Association."That’s the mechanism that allows a market price to be set. Based on a 90/10 split for example, take that 10 percent out on the open market to be bid upon. I don’t see the concern as long as that mechanism exists," he said.Rod Moore of the West Coast Seafood Processors Association of Portland, Ore., offered that when it comes to negotiating prices, "both processors and fishermen are at the mercy of the world fish market; and it doesn’t really matter who has what kind of shares."Every fisherman will continue to try to sell high and every processor will continue to try to buy low, until we reach the point where the sides learn to cooperate and look at how the market works, then design their pricing strategy to meet demand, rather than supply. The trick is to set up a system that forces people to work together so that they share benefits and costs."Regardless of where they stand, all sides agree that an in-depth analysis must be done to assess the impacts of any form of crab quota share program on harvesters, processors and communities. The North Pacific Fishery Management Council is tasked with directing that complex assessment, and any major changes to the Bering Sea crab fishery won’t occur for several years.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

Unocal strikes oil twice in Cook Inlet

KENAI -- Unocal announced two new strikes off its King Salmon Platform in Cook Inlet July 25.Pumping 7,100 barrels of oil per day out of the McArthur River Field, the K-13 well has the highest production rate of any well in Inlet history, according to company spokeswoman Roxanne Sinz in Anchorage."It peaked on July 3 at 8,552 (barrels of oil per day)," she said. "At first, they come in really big and have to settle down a little bit."The find has pushed production from the King Salmon Platform, built in the late 1960s, to its highest level in almost 20 years. The well confirmed a pocket of oil in the Hemlock area on the northern flank of the McArthur River Field that could contain more than 35 million barrels of oil, the company said.Charles Pierce, vice president for Unocal Alaska, said the find was brought about by "the use of advanced drilling and analytical technologies," and the investment of $18 million in the King Salmon Platform."Part of it also has been a recent refocus on Cook Inlet oil," Sinz said. "Our capital budget doubled this year and we used modern technologies. That all helped us have good results."The new production will travel by pipeline to Trading Bay on the west side of the Inlet, where it will be mingled with oil from other wells and then shipped to the Tesoro refinery in Nikiski."We think it’s great news," said Tesoro manager Rod Cason. "Cook Inlet is right here in our back yard, and environmentally, it’s the right thing to do not to have ships carrying it out of the Gulf of Alaska," he added. "We can process and upgrade it to a finished product and it’s sold right here."He said the added Inlet oil probably won’t be reflected in prices at the gas pump, since the price of crude is tied to prices of North Slope crude, West Texas intermediate or a combination of those and other indices."The biggest savings to Tesoro and Unocal will be transportation costs."We can bring that directly to our facility," Cason said.The Tesoro refinery currently processes 55,000 barrels of oil a day, but is capable of handling 72,000 barrels."It won’t have an impact on us importing oil, since we have to keep the refinery full," Cason said.He said a Forest Oil strike that may be on line in the first quarter of the new year may be capable of producing 20,000 barrels a day, pushing total Cook Inlet crude production to 50,000 barrels a day.He said another benefit of using Cook Inlet crude is its low sulfur content, meaning it’s cleaner than oil from the North Slope."We’re very excited about this," Cason said. "We hope the community and government continues to give support for exploration, because it’s good for the economy."Unocal also announced a strike from the K-1 well, also on the King Salmon Platform, which is producing 1,100 barrels of oil a day from what is called the "G" zone in the McArthur River Field. Unocal shares working interest in the two fields with Forest Oil.

More rooms, but cyclists may fill them

FAIRBANKS -- The Fairbanks visitor industry went into the 2001 tourism season with 20 percent more rooms -- and expectations for fewer domestic travelers.However, so far the season has shown better-than-expected results compared with early season predictions, according to some industry representatives.Others aren’t so sure."It’s too soon to tell," said Deb Hickok, executive director of the Fairbanks Convention & Visitors Bureau.The most recent figures available show city bed tax receipts down 11 percent from last year while the separate Fairbanks North Star Borough bed tax climbed 31 percent."With more rooms rates tend to go down," Hickok noted, citing the change in dollar figures, but added that the results exceeded her expectations.A boost is due in August with the second annual Alaska AIDS Vaccine Ride, which last year brought about 1,300 cyclists and nearly 500 support crew and event staff to town. The event begins in Fairbanks Aug. 20 and finishes Aug. 25 in Anchorage.This summer the Interior city has 362 new hotel rooms for a total of about 2,500 rooms. Newcomers include the 140-room SpringHill Suites and the 97-room Aspen Hotel plus a 125-room addition to the Fairbanks Princess Hotel.Steve Frank, general manager and owner of River’s Edge Resort, cited a drop in business compared with last year, although it was better than he anticipated."Some of the tour companies are experiencing a little bit of a down year," he said.The drop may be due to declines in the stock market, which may have caused some people to trim their travel budget, he said."Also, a strong dollar means travel to Europe is strong," he said.Frank’s property includes a 94-room hotel property with individual cottages, a 180-space recreational vehicle park and Chena’s Fine Dining & Deck, which seats about 100 inside with additional seasonal deck seating. River’s Edge customers include independent travelers as well as group tours."Highway traffic seems to be stronger than we thought. We were fearful that gasoline prices would have an affect," he said.River’s Edge Resort should benefit from visitors to Fairbanks who are part of the Alaska AIDS ride, he said.Operators at another Fairbanks property also are anticipating the event.The Captain Bartlett Inn, which will serve as host hotel for the event again this year, is sold out during the event, said general manager Rick Ketcham. The Alaska AIDS ride also should trigger strong bookings for many other hotels in Fairbanks, he said.Despite new rooms added to the Fairbanks market, the Captain Bartlett Inn gained business this year from military activity like the Cope Thunder training exercise, Ketcham said.The future of the visitor industry in Fairbanks will feature an expanded University of Alaska museum. Architects are now designing the $31 million project, which will renovate the existing museum and add a new wing to the facility, said UA museum communications coordinator Kerynn Fisher.For the existing 40,000-square-foot museum the project will reconfigure office space as well as upgrade lab space and collections storage, she said. A 40,000-square-foot wing will be added that will house the art gallery, a multimedia auditorium and the expanded museum store."It will really elevate the museum and Fairbanks as a visitor attraction and bring our collections research leaps and bounds forward because we will have more space to work in," Fisher said.The project will go out for bid next spring with the contract awarded in May; construction is scheduled to begin later that month, she said. Completion is set for fall 2004.Another facility that could be added to the Fairbanks landscape is a proposed visitors and cultural center. The project joins the efforts of the Alaska Public Lands Information Center, the FCVB and Tanana Chiefs Conference."The audience we’re targeting is the rubber tire traffic," FCVB’s Hickok said. Through exhibits and area activity information, Hickok hopes the center will persuade visitors to stay longer or return in winter.A conceptual design has been completed that tallies the project at $39 million, Hickok said."That’s the best vision we could have, and I’m sure there will be changes," she said.The center has gained strong community support so far, Hickok said. City officials are conducting economic impact and transportation studies for three possible sites this year, she said.Proponents hope to hire a project manager and a development coordinator this year, plus study building operation management options, she said.A new charter flight from Frankfurt, Germany, is touching down in Fairbanks this summer with a stop in Whitehorse. "Our load factor is about 40 to 70 people per flight" on three flights each week, said Andy Anger, Chena Hot Springs Resort marketing director for Europe. "We’re hoping to increase the load for Fairbanks," he said.Anger is satisfied with the response so far, especially since a strong U.S. dollar hampers the European market.Preliminary plans call for Condor to continue the charter flight next year, he said.

Defense Department budget would boost Elmendorf staffing

The proposed budget for the Defense Department for fiscal year 2002, which starts in October, would add more than 200 military personnel and 30 civilians to Air Force sites in Alaska.The spending plan would add 110 military and ten civilian staffers at Elmendorf Air Force Base. Military officials say the additional personnel would include F-15 maintenance workers and an Airborne Warning and Control System flight crew.The additional manpower would improve readiness of the Air Force in Alaska, Brig. Gen. Doug Fraser, the commander of Elmendorf’s Third Wing, said in a news release.At Clear Air Force Station, a conversion from military to civilian control will result in a reduction of 13 military and a gain of 11 civilian authorizations, according to the release.Eielson Air Force Base, however, will grow if the budget is approved. Air Force officials say the Interior base will see an increase of 109 military and nine civilian positions, mostly to help maintain F-16 and A-10 jet fighters.

Chums, star of last year's season, face tough time with slow Japanese economy

Chums were the star of Alaska’s salmon season last year, when a record catch of 24 million fish -- combined with the best dock price in five years and decreased catches in Japan’s fall chum fishery -- boosted the value of Alaska’s chums to $58 million, a whopping 22 percent of the state’s total salmon catch.By far, most of Alaska’s chums hail from hatchery returns to Southeast, which has a projected catch this year of roughly 10 million fish. The total statewide projection is 15.3 million chums. Fresh and frozen chums from Alaska continue to gain momentum in the United States as a "center of the plate" fish feature, especially at family-style chain restaurants like Denny’s and TGI Fridays.Last July and August, exports of frozen chums to other countries topped 16 million pounds, up 9 million pounds from the year before. China was the top importer, taking 6 million pounds during the two-month period.But the big money in chums comes from the chum roe, or ikura, most of which goes to Japan. Early market indicators point to prices starting off lower than last year.Market watcher Bill Atkinson reported that the first ikura from operations in Prince William Sound and Southeast reached Japan, where, as usual, buyers were "proceeding with caution" until they get a better sense of the total catch. Atkinson said Japanese reprocessors offered average prices for the first product in all grades of $14.66 a pound, compared to a starting price of $15.76 a pound last season.However, with carry-over inventories, mostly from Japan’s fall, still available, sales were reportedly sluggish, and most of the ikura was actually selling at levels between $13.56-$13.93 a pound. Atkinson said Japanese buyers are pushing for wholesale prices of $12.83 for ikura from Southeast Alaska, and "can expect considerable resistance to such low prices from U.S. providers."As usual, much will depend on how the chum harvests in Alaska and Japan materialize. Runs in Prince William Sound are expected to be down this year, and Southeast’s disappointing drop off after an early surge has biologists speculating that the run there might have peaked.Japan’s fall chum harvests have declined steadily for the past five years to roughly 26 million fish, well below the whopping 70 million chums taken in 1996."Lower harvest levels will increase packer competition for chum salmon, and could result in higher ex-vessel (dockside) prices for the fish. This would, in turn, increase the packers’ ikura production costs and their offer prices to the Japanese importers," Atkinson said. Chum prices to Alaska fishermen so far appear to be averaging around 35 cents a pound.Atkinson also cautioned that Japan’s continuing economic woes mean that a reduced supply won’t necessarily equate to higher prices.To add more to the world market muddle, frozen pink salmon roe from Russia is starting to nibble away at the niche held by chum ikura. Use of pink roe increased substantially last year, and demand is growing, Atkinson said. According to some projections, imports of frozen Russian pink roe to Japan could reach as much as 10,000 tons this year.Green light for AlaskaThe second printing of the widely distributed Seafood Lovers Almanac, from the National Audubon Society’s Living Oceans Program, now ranks Alaska pollock, Pacific cod, ling cod and sablefish all squarely in the "green light" zone, according to Laura Fleming of the Alaska Seafood Marketing Institute. Alaska salmon, halibut and several other species have been getting the nod from Living Oceans from the beginning.Fleming added that the Monterey Bay Aquarium’s Seafood Watch guide for consumers also has been recently updated to reflect the Marine Stewardship Council’s certification of Alaska salmon. Fleming said the aquarium updates its list frequently and serves items on their Best Choices and Proceed with Caution lists in their restaurant."Lots of private foundation money is going into consumer education to spread this information. A recently formed group is the Seafood Choices Alliance. On their Web site you can see heavy alignment of conservation organizations in favor of wild Alaska salmon and against farmed salmon," Fleming said.Fatty fast-food fishChoosing a fish sandwich might appear to be the healthy alternative, but fast-food fish is one of the fattiest items on the menus of places like McDonald’s and Burger King.A New York Post report cited findings from Fitness Magazine that revealed that Burger King’s Big Fish Sandwich holds a hefty 710 calories and 38 grams of fat. McDonald’s Filet-o-Fish sandwich is only slightly less fat-packed, at 470 calories and 26 grams of fat.The fast-food fish is made primarily from fat-free Alaska pollock, but the sandwich patties are deep fried and laden with mayonnaise-based tartar sauce that packs about 100 calories per spoonful. As fast-food restaurants move toward adding healthier items to their menus, perhaps it’s time for them to offer broiled fish sandwiches, such as they do with chicken.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

Business Profile: Engineered Fire Systems Inc.

Name of the company: Engineered Fire Systems Inc.Established: 1985Location: 3138 Commercial Drive, AnchorageTelephone: 907-274-7973Major focus of services: Engineered Fire Systems Inc. designs and distributes fire alarm and fire suppression systems for commercial and industrial use. The firm also designs sprinkler systems, low-voltage systems like public address systems and also inspects fire prevention equipment.History of the company: Started in Alaska in April 1985, Engineered Fire Systems opened a Seattle branch office in 1989. In May 2000 United Kingdom-based Kidde PLC, a fire extinguisher manufacturer and fire protection company, purchased Engineered Fire Systems. The Alaska company reports to the North American division based in Boston.In Anchorage Engineered Fire Systems employs 25 people. The Seattle office now serves as the main office, employing 16 people. A one-person office in Fairbanks was closed earlier this year.Engineered Fire Systems has diversified its services during its tenure in Alaska. Although the firm’s core business is designing and distributing fire alarm and fire suppression systems, Engineered Fire Systems has added sprinkler work and other services. This year the company has stepped up its sprinkler work and has started a residential light security service which works with home builders to wire houses for security systems among other work. The firm is now designing a new nurse call system for Alaska Regional Hospital. Earlier this year Engineered Fire Systems worked on adding a new infant security system at Providence Alaska Medical Center.The firm also handles fire suppression systems for the telecommunications industry. In 1998 Engineered Fire Systems provided fire suppression system design through installation work at BP Exploration (Alaska) Inc.’s Milne Point camp. This year Engineered Fire Systems is finishing design for a CO2 suppression system at the Grand Coulee Dam hydroelectric plant in Washington.Top accomplishment of the company: General Manager Kenton Aikens is proud of the Alaska employees’ expertise as well as the company’s diversity of service. Aikens also notes the responsibility and pride accompanying his firm’s work, which is aimed at saving lives.Major player: Kenton Aikens, general manager, Engineered Fire Systems Inc.Aikens earned a bachelor’s degree in mechanical engineering from the University of Arizona in Tucson. He started work at Engineered Fire Systems as a summer intern in 1991 before joining the company full time as an engineer in January 1992. He was promoted to engineering manager and last January was appointed general manager.-- Nancy Pounds

Forest Service seeks public comment on number of Juneau helicopter tours

JUNEAU -- The number of helicopter tour landings on Juneau Icefield glaciers could range from none to 31,000 annually in five years under a set of alternatives proposed by the U.S. Forest Service.The agency is accepting comments on a plan that has seven options for helicopter glacier tours in Juneau. The Forest Service currently grants permits to four Juneau companies for slightly more than 19,000 landings a year, although only about 17,000 landings occur.The alternatives range from not authorizing landings to allowing a 10 percent increase a year for the next five years, for a total of 31,000 by 2006, according to Juneau District Ranger Pete Griffin.The agency has not picked a preferred alternative."We did that for a specific reason. We want folks to look at all the alternatives and tell us what they like and don’t like about all of them," Griffin said.Other alternatives would reduce landings to 1994 levels of about 12,000 or increase landings by 5 percent a year to 24,000 landings. Other options would keep the number of landings at current levels.The plan also includes a range of mitigation measures that cover restrictions on operating hours, days of operation and landing areas.The agency is sending out the draft environmental impact statement to interested parties. The document compares the alternatives and provides background about the issue. The project started in January 1999, and Griffin said the agency plans to issue a final decision in January 2002.During the initial phase of the plan, the agency heard concerns from the public about helicopter noise and its impact on Juneau residents, wildlife and recreation, said project manager Ellen Hall of Foster Wheeler Environmental Corp., the Forest Service contractor working on the study.The agency has limited jurisdiction over helicopters in Juneau but can control the number of icefield landings, she said."We’ve done as much as we could do to try to address people’s concerns given the range of authority the Forest Service actually has," she said.The deadline to submit comments on the proposal is Sept. 24 and the Forest Service plans a public meeting Sept. 6 in Juneau.Meanwhile, city consultants continue work to assess possible sites for alternative heliports in Juneau, said senior environmental manager McKie Campbell of Michael Baker Jr. Inc. The planners have identified 30 sites and are in the process of narrowing them down, he said."We’re working with the (city’s) Community Development Department to establish the number of homes affected by the noise footprint of each site," he said.The project also will evaluate sites for size, land availability, infrastructure, terrain, weather, driving distances and other issues. The intent is to pick a site north of downtown and one south of downtown, although that doesn’t mean planners will able to find an ideal spot, Campbell said.

Couple brings Great Clips to Alaska

A national franchise, Great Clips for hair, plans to open its first salon in Anchorage next month and additional salons in coming years. Operators of Great Clips, 880 Old Seward Highway, expect to open Aug. 10 in South Anchorage. The salon will be run by Anchorage franchisee Total ECLIPSE Ltd. The 1,500-square-foot salon will employ about 15 people, most of whom will work full time, said Tracy Gardner, franchise owner. Minneapolis-based Great Clips Inc. started in 1982 and began offering franchise rights the following year. The company now tallies more than 1,500 salons in the United States and Canada. Robert and Tracy Gardner live in Anchorage and operate businesses in Alaska and outside the state, she said. They sought to provide a convenience hair salon niche and research led to Great Clips, which does not require appointments. After a handful of months pitching the Alaska market, the Gardners convinced Great Clips about the potential for the Alaska market. "They were not actively recruiting up here at all," Tracy Gardner said. The Gardners, who do not have a hair care industry background, have hired a district manager to run the new operation, she said. Gardner hopes to open a training center within a year for Great Clips stylists, although the timing is based on locating suitable office space, she said. Also, Gardner, who expects other national salon operators to enter the market, aims to expand the franchise in Anchorage in coming years. "We hope to be fortunate enough to open three to four in the next 12 to 18 months," she said. Future new Great Clips salon openings will be subject to available real estate, she noted. According to the Great Clips Web site, desirable franchise locations include grocery-anchored centers, high-visibility strip malls and national discounter-anchored centers. Possible sites for new Great Clips salons include Eagle River, Fairbanks, Wasilla and possibly Kenai, she said. "We think the Alaska region is a 10 to 12 salon market, maybe more, maybe less if the people of Alaska are receptive," she said.  

Consultant warns of Canada's route influence

Canada’s potential to become an obstacle for an Alaska natural gas pipeline is being underestimated in the United States, a leading consulting firm has warned the state of Alaska.Ed Small, head of Cambridge Energy Research Associates’ Calgary office, told the Alaska Legislature’s Joint House-Senate Natural Gas Committee on July 17 that a competition is emerging between a Canadian pipeline to tap Mackenzie Delta gas and an Alaska pipeline from the North Slope."Two-thirds of an Alaska gas pipeline will be through Canada and little attention is being paid to the potential for obstruction," by Canadian federal or provincial governments, Small said. CERA is under contract to advise the state of Alaska on gas issues.Small told the legislators that if the Alaska pipeline gets to market first carrying 4 billion cubic feet per day it could push the Mackenzie pipeline project back to 2015. "That will be of significant concern to the Canadian government," he said.Feasibility studies by North Slope gas producers are working with a base case of 4 billion cubic feet per day throughput, with 3 billion cf/d as a minimum throughput.However, a Canadian gas pipeline company said that if the smaller Mackenzie pipeline, which will carry only 1 billion to 1.5 billion cubic feet per day, begins construction first, it could delay the Alaska project.John Ellwood, vice president of Foothills Pipe Lines Ltd. of Calgary, told the legislators there isn’t enough material, equipment or labor capacity in the North American pipeline industry to build both projects simultaneously. Both projects will eventually be needed to supply North American markets, however, Ellwood said.BP, ExxonMobil Production Co. and Phillips Alaska Inc., the three major North Slope owners, are engaged in a $75 million-plus study of the Alaska gas pipeline.The three gas producers told the legislative committee on July 18 they will select a route by the end of this year and have applications filed with U.S. and Canadian regulatory authorities by March 2002.Small told the committee that even with gas prices dropping, CERA still sees a "window of opportunity" for Arctic gas beginning at about 2.5 billion cubic feet per day in 2008 and increasing to 3 bcf daily by 2010 and 4 bcf daily by 2015.If demand and supply trends stay on their present course, CERA sees the Alaska highway pipeline being built first, followed by the Mackenzie pipeline, he said.However, if a recession hits the United States and slows demand growth, the order of the two projects could reverse. The smaller, less costly Mackenzie pipeline could be built first, followed by the larger Alaska pipeline, Small said.Although gas prices have come down from a spike last year, CERA is still forecasting long-term gas prices in the $4 per thousand cubic foot range, Small said. He pointed out that prices today, though lower, are still well above average prices for the last 10 years.He also said the Cambridge, Mass.-based firm has lowered its forecast for average gas prices in 2002 from $4.45 per Mcf to $3.53. A long-term price of $3 per Mcf is needed to make Arctic gas feasible to deliver, he said.An emerging competitive threat to Arctic gas, both Alaskan and Canadian, is several projects being planned to import liquefied natural gas into the United States. Four existing LNG import terminals are being brought out of mothballs and several more are in the planning stages.CERA believes LNG technology has improved to the point that liquefied gas can be imported at the same cost that Arctic pipelines can deliver gas from northern Alaska or Canada.LNG could also have an advantage in that these projects can be built more quickly and will have less of a "footprint" than a large pipeline carrying Arctic gas, he said.

This Week in Alaska Business History July 29, 2001

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 TimesJuly 29, 1981Reagan to discuss waivers with AlaskansBy Betty MillsTimes Washington BureauWASHINGTON -- President Reagan has agreed to meet with Alaska Sens. Ted Stevens and Frank Murkowski to discuss the gas line waiver package, a series of changes in federal law that are needed to secure private financing of the 4,800-mile Alaska Highway Natural Gas Pipeline.Murkowski and Stevens requested the meeting after a breakdown in the negotiations between the House and the Senate on the waiver to various federal laws and regulations sought by the sponsors of the $30 billion project.Key members of the House and Senate have been meeting in recent weeks in an attempt to work out the details of an acceptable waiver package before it was formally submitted to Congress by the president.But the House leaders have balked at the key issue, the so-called pre-commencement billing, which would allow consumers to be charged for the project before it is completed.Anchorage TimesJuly 30, 1981Stevens worried about oil tax backlashBy Karin DaviesThe Associated PressJUNEAU -- Alaska Sen. Ted Stevens said Wednesday the state’s new oil and gas tax will cost the state a bundle in lost revenue and will draw the ire of Congress.The U.S. Senate’s No. 2 ranking Republican said that instead of making it law last week, Gov. Jay Hammond should have vetoed the revisions to the state’s oil and gas taxes."If he’d have asked me, I’d have advised him to veto" the bill, Stevens said during a news conference.He said there are strong rumblings among federal lawmakers who want to bar states from imposing higher severance (production) taxes. Alaska’s recent move to boost its severance taxes from 12 1/4 to 15 percent will only fuel their efforts, he said.Stevens said that besides putting Alaska at odds with Congress the new tax will cut the oil dollars that flow into the state coffers.10 years ago this weekAlaska Journal of CommerceJuly 29, 1991AIDEA plugs financing gapBy Tim BradnerAlaska Journal of CommerceThe Alaska Industrial Development and Export Authority’s board last week approved new regulations liberalizing AIDEA’s commercial development lending programs, which will make long-term commercial financing available and help replace traditional sources of investment, like insurance companies, that have pulled out of Alaska.The agency also approved the first major loan under the new program, a $6.2 million package put together by National Bank of Alaska for the new Carrs Quality Center development in Kenai, which will total about $9.7 million in investment when Carrs’ own contribution is included. NBA will hold 20 percent of the loan, with AIDEA financing the balance in a long-term note.Alaska Journal of CommerceJuly 29, 1991700,000 likely to visit this seasonBy Margaret BaumanAlaska Journal of CommerceTourism in Alaska for the summer of 1991 appears to be up at least 10 percent, with the possibility of 700,000 visitors when all the figures are in, state tourism officials say.Early returns coming to the Division of Tourism from the Alaska Public Lands Information Center at Tok also show that while traffic over the Alaska Highway was up by 10 percent for June, the average age of tourists was down to 49 years old, compared with the old average of 55, officials said.Meanwhile, nearly $7 million is earmarked from state coffers for promoting Alaska in 1992, including $1 million to the Division of Tourism for the international market and $5.9 million to the Alaska Tourism Marketing Council for a the domestic market.-- Compiled by Ed Bennett.

Valley Hospital Foundation launched

Valley Hospital Association has inaugurated its foundation, which is geared toward fund-raising efforts. The Valley Hospital Foundation board of directors met for the first time July 9.The nonprofit group elected Linda Menard as president; Clyde Boyer, vice president; Janet Kincaid, secretary; and Craig Thorn, treasurer. Other board members include Martha Blanchett, DeeDee Jonrowe, Louise Kellogg, Harold Newcomb, Sarah Palin, Tim Thom and Jack Williams.Creation of the foundation was part of a strategic plan developed by Valley Hospital Association.The foundation board is beginning work on its own development strategy and kick-off campaign.VHA was re-created and rebuilt in 1952 through a fund-raising program, hospital officials said. Since then VHA has supported itself through minimal grant applications and without significant donations. However, the new foundation will allow for donations.

House panel approves ANWR drilling bill; future still uncertain

ANCHORAGE -- A bill that would open the Arctic National Wildlife Refuge to oil drilling cleared its first congressional committee on July 17, but the measure’s future is far from certain.The House Resources Committee, by a vote of 26-17, approved the ANWR provision as part of a Republican energy bill that would also provide financial incentives for other types of energy development.Rep. Don Young, R-Alaska, said billions of barrels of oil are under the coastal plain of the refuge, just 74 miles from the existing trans-Alaska pipeline system. Meanwhile, he said, America is sending money overseas to buy foreign oil, leaving the nation vulnerable."With modern technology, we can produce this oil for the good of this nation," Young said.Democrats on the committee tried to strike the ANWR section, Title 5, from the bill."Title 5 would end the pristine wilderness condition of the refuge and replace it with the industrial trappings of oil development -- a huge pipeline, smaller feeder pipelines, drill pads and haul roads and gathering facilities and leaky valves," said Rep. Ed Markey, D-Mass.The area that would be drilled, the coastal plain, is critical habitat for the Porcupine caribou herd, which each summer performs "one of the last great migratory miracles of nature," Markey said.The country would not need to drill in the refuge if it raised vehicle fuel efficiency standards by only two miles per gallon, he said.Young said he could hardly stand to listen to Markey’s impassioned argument."My biggest challenge today is not to either (start) crying or laughing at the last presentation. ... Mr. Markey, I do not believe you’ve ever been to ANWR, have you?"Markey has not.The move to strike the ANWR section failed 30-19. A raft of other Democratic amendments also failed. A handful of Democrats voted with the Republicans. Some Republican moderates did not vote on the final bill.Drilling opponents said they are confident the provision to open ANWR will be scuttled when energy legislation comes before the full House."This is just the opening shot," said Rep. George Miller, D-Calif., a staunch opponent to lifting a congressional ban on oil development in the refuge.

State adds oil, gas lease sales in Slope foothills

ANCHORAGE -- The state is adding extra North Slope foothills areawide oil and gas lease sales to its upcoming leasing schedule.Gov. Tony Knowles said the addition is in response to increased interest in North Slope natural gas. The extra lease sales will be added to the schedule for 2002 through 2006.During its first areawide foothills lease sale in May, the state leased more than 950,000 acres -- the most acreage in any state sale, according to Knowles.Before North Slope natural gas became a coveted commodity, the state had planned to hold one foothills lease sale before opening the area to noncompetitive exploration licensing.Future areawide lease sales are scheduled for May and will be held along with the Cook Inlet lease sales. The public process for the 2002 lease sale will start in September.

Brothers launch educational vacations for Alaska's tourists

Two Alaska-grown tourism entrepreneurs, schooled by major tourism operators in the state, are developing a new offering, Alaska Learning Vacations.Justin Ripley, who has worked in the Alaska tourism industry since 1977, leads Alaska Learning Vacations. He worked for 15 years at Denali National Park and Preserve, eventually serving as general manager of the park hotel and tour operations. His brother, Jeff Ripley, logged 13 years with Princess Tours and at one time served as Anchorage division manager. He now works with Alaska Tour and Travel, their firm that packages independent tours.The brothers are third-generation Alaskans.They have found success in building up two lodges that later were acquired by larger companies. Princess Tours acquired the Denali Windsong Lodge, and Cook Inlet Region Inc. purchased the Seward Windsong Lodge and Resurrection Roadhouse.Alaska Learning Vacations, founded in April, aims to expand the work with Elderhostel programs that the Ripleys have handled since 1996, Justin Ripley said. Those programs are for people 55 and older."We basically needed something outside Elderhostel to hit these other age groups," he said.He is targeting student groups, educators, families and others interested in a hands-on natural history and outdoor sciences trip.Current Elderhostel programs that Alaska Learning Vacations handles include visits to the Denali Foundation near the national park, the Alaska SeaLife Center, Exit Glacier and a trip aboard the Marine Science Explorer Cruise, a former Kenai Fjords Tours boat retrofitted with a science lab. Alaska Wildland Adventures also is tapped for an interpretive raft trip from Cooper Landing.Alaska Learning Vacations also can customize tours and book lodging. Such flexibility can come through working with its sister companies, Alaska Tour and Travel, the Alaska Park Connection shuttle between Denali and Seward and Trail Lake Lodge in Moose Pass.The company’s Elderhostel programs tally about 40 people, and Ripley envisions groups of 16 to 20 people for the new venture, accompanied by a van driver and tour guide with a naturalist background."I think the idea is to keep the group size small to maintain the quality of the experience," he said.Stephanie Gorder, vice president of sales at Premier Alaska Tours, another Alaska-grown company, believes there’s a market for such educational tours. The tour companies are booking visitors into each other’s packages, she said.She also is impressed by the Ripleys’ work developing Trail Lake Lodge into an Elderhostel destination and shifting their business after selling the two other lodges. "Those are the visionaries we need in the industry," she noted.Alaska Learning Vacations also works with the nonprofit Denali Foundation, which runs educational programs throughout the national park. Besides Elderhostel programs, the organization provides programs for children and their grandparents plus trips for children organized through Fairbanks social service agencies, said executive director Willie Karidis.Karidis, who recalled Ripley’s tenure at the park, credits Justin Ripley with giving back to the Denali area. Ripley has served on the foundation board."It’s a great combination of nonprofit and business because he’s very much into the aesthetics and values of the park," he said.Ripley describes the new tack of the business as more rewarding than when they operated all three lodges. The Denali lodge and Moose Pass lodges opened in 1996 followed by the Seward Windsong Lodge in 1997. The Resurrection Roadhouse restaurant was built in 1998.The company registered a peak of 200 employees spread out between Seward and Denali, he said. The lodging business was doing well when the Ripleys were approached by CIRI, he said."It’s not like we had to sell," he said.Today the Ripleys’ companies employ a seasonal peak of up to 40 people and a year-round staff of seven."We’ve been adding about a year-round person each year," he noted.He has a theory about their business philosophy: "My brother and I like the development stage more than operating something forever."Last year Ripley started Alaska Web Dynamics, an Internet design company, which takes about half of his time in the winter. The firm has about 24 clients, he said. Jeff Ripley develops search engine programs for the firm, including developing a reservation service for Alaska Tour and Travel."I think my brother and I have a goal for these small companies: to have enough economies of scale without having a large company," Justin Ripley said.

Constitutional amendment needed to stop budgetary blackmail

The purpose of the state’s Constitutional Budget Reserve fund is to provide funds for operation of state government when a particular year’s revenues are not enough to pay for state operations that year.As originally intended, withdrawals from the CBR could be made in two ways. If state revenues for the current year were less than state funds budgeted for the prior year, then the difference could be withdrawn by the Legislature with a simple majority vote. Any additional money the Legislature wanted to withdraw required a three-quarter super majority vote. For example, if the budget for one fiscal year was $1.5 billion and the next fiscal year state revenues were only $1 billion, then the Legislature could withdraw up to $500 million with a simple majority vote of each house. Any amount over $500 million would require three quarters of each house to agree.This intent was distorted by a 1994 Alaska Supreme Court decision. Now, all withdrawals from the CBR require a three-quarter super majority vote. The court’s interpretation has made a mockery of the budget process by allowing blatant budgetary blackmail by a few legislators.Because of the court’s decision, each year a small minority of legislators are able to hold the budget hostage until additional projects are funded and spending added to their satisfaction, at which time they agree to add their votes to allow the necessary withdrawal of funds.This budget blackmail has resulted in substantially more spending than the majority of legislators desired. During the 2001 session, $148.8 million to fund projects and programs was added to the budget before the three-quarter vote could be obtained. This is a whopping 24 percent of the projected CBR draw.Of the amount added, $100.6 million was for projects originally put forth by Democrats that were rejected by Republicans. However, in order to gain access to CBR funds necessary to pay for state government operations, the additional projects had to be approved.This budgetary blackmail has to stop. Alaska is facing declining oil revenues, and it is essential to exercise fiscal discipline. The Senate Finance Committee has introduced a constitutional amendment that restores the original intent of how the CBR should work. If approved, small groups within the Legislature could no longer manipulate the three-quarter vote and the majority rule principle would be returned to the budget process.Already approved by the Senate and under consideration in the House, this legislation is one of two constitutional amendments to pass the Senate this year. Such prompt Senate passage states the obvious: The American principle of majority rule must be returned to the state budget process.Majority approval of a budget is difficult enough. Republicans are committed to creating a more efficient government through reform and the elimination of nonessential services. Returning majority rule to the budget process will help protect Alaska’s fiscal future.Dave Donley is a Republican senator from Anchorage. He can be reached during the interim at 907-269-0234.

Gasline firms give senator a wish list

FAIRBANKS -- Sen. Frank Murkowski said North Slope oil companies have given him a wish list of federal legislation that would help construction of a natural gas pipeline to the Lower 48.Murkowski, R-Alaska, said July 20 that he had not yet closely reviewed the proposals and wouldn’t disclose details.The only tax-related suggestion was an "accelerated depreciation" schedule, he said. That would allow companies to reduce their federal corporate income taxes early in the pipeline’s life.The more important request, Murkowski said, was that the federal government establish a joint office to coordinate the actions of various agencies.The challenge is to figure out "how you expedite the permitting process without compromising legitimate concerns over the environment," he said.The suggested legislation was compiled by BP Exploration (Alaska) Inc., Phillips Alaska Inc. and ExxonMobil Production Co., the three largest North Slope operators, Murkowski said. The three companies are studying whether construction of a pipeline from the North Slope is feasible. They are looking at two possible routes: one following the Alaska Highway, the other down Canada’s Mackenzie River valley.Murkowski said his impression was that the requests were not "route-specific.""If anything they’re late, because this should be in the energy bill," he said.House and Senate leaders are putting together energy packages that will likely come together sometime this fall after Congress returns from its August break.Murkowski said he asked for the list about six months ago.

Gasline estimates hit $15-20 billion

North Slope natural gas producers told a state legislative committee on July 19 that the Alaska pipeline could cost $15 billion to $20 billion. Previous published estimates for the project have been in the $10 billion range."After six months of study, it’s clear to us that there are real challenges," said Ken Konrad, gas business unit leader for BP Exploration (Alaska) Inc., and one of three managers for the producer study group. With costs of this magnitude, "it’s not clear we’ll be able to develop an economic project."Konrad also said a proposed northern route, which would run offshore east from the North Slope to the Mackenzie Delta and then south to Alberta, Canada, offers some possible cost savings over the southern route.That route parallels the trans-Alaska oil pipeline to Interior Alaska and then follows the Alaska Highway southeast through Yukon Territory and northern British Columbia to Alberta.The northern route is shorter and would allow North Slope and Mackenzie Delta gas to be shipped through one system, resulting in large economies of scale. It would also eliminate the need to build a stand-alone Mackenzie Delta pipeline.The state of Alaska, however, strongly opposes the northern route, and the Legislature passed a law last spring prohibiting the commissioner of Natural Resources from issuing a right of way on state lands for the northern route.Konrad said, however, that the producers’ group is obligated by regulatory requirements to study all options for delivering Alaska gas, including a northern route.Meanwhile, an aggressive study program is under way to develop cost estimates for both northern and southern routes, and allow the producers to make a decision on a pipeline route by the end of the year, Konrad said. If the project appears feasible, applications to U.S. and Canadian regulatory agencies will be made in the first quarter of 2002.More than 100 people are now assigned by the three major producers, BP, Exxon- Mobil Production Co. and Phillips Alaska Inc., to work on the gas pipeline studies, Konrad said. Another 500 are employed by contractors working on the study for the three producers.

Missile defense office announces up to $9 million in Fort Greely construction

FAIRBANKS -- The Pentagon’s missile defense office has told Congress that the military plans to issue a contract for up to $9 million of construction work at Fort Greely. The work could proceed within weeks.In a letter sent to the House and Senate Appropriations and Armed Services committees, the Ballistic Missile Defense Organization said it was hurrying so it could have a new Pacific "test bed" ready by fiscal 2004.Lt. Col. Rick Lehner, spokesman for the missile office, told the Washington, D.C., bureau of the Fairbanks Daily News-Miner that federal law requires Congress to be notified of such contracts at least 30 days in advance.The notification was sent July 16, so the work could begin as early as mid-August, he said.According to information provided by Lehner, the construction will have several facets."The scope of work includes installing and developing two water wells; clearing trees and debris; preparing sites for test bed facilities including a missile field; and installation of the main access road," according to the description."The site preparation includes cut, fill, grading, and earthwork operations to the top of subbase for all vehicle traffic areas and top of finish grade for all other areas excluding the building footprints, which shall be graded to drain.""The construction contract is not expected to exceed $9 million," the letter to Congress stated.The money will come from funds appropriated for missile defense work in this fiscal year, the letter said.Fort Greely is near Delta Junction, about 100 miles southeast of Fairbanks.

Leisure travelers help Alaska Air Group profit

SEATTLE -- Alaska Air Group, boosted by leisure travel amid a downturn in the business travel market, handily beat analysts’ expectations and became one of the few airlines to turn a profit in an otherwise bleak quarter.For the second quarter ended June 30, the parent company of Alaska Airlines and Horizon Air Industries on July 19 reported net income of $4.7 million, or 18 cents a share, compared with $23.6 million, or 89 cents a share, in the same period last year.The airline group had revenue of $579.3 million, compared with $552.8 million in the same period last year.John F. Kelly, chairman, president and chief executive of Alaska Air Group, attributed the strong performance to an increase in leisure travelers, who helped offset a decline in business travel, and to improvements in on-time departures and arrivals.


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