Alaskaland adopts Pioneer Park name

FAIRBANKS - Alaskaland is officially now Pioneer Park.The Fairbanks North Star Borough Assembly adopted the new name with an almost unanimous vote on Oct. 25. Only Assemblywoman Victoria Foote voted against the measure, saying she wanted a more multicultural sounding name."We need to be more inclusionary," she said.The vote came after an attempt to postpone the issue was defeated. Some Assembly members said they were tired of prolonging it."We have had masses of e-mails," said Assemblywoman Bonnie Williams, a sponsor of the name-change measure. "I’ve had lots of phone calls. We’re elected to make decisions, so let’s do it."The name Pioneer Park is the historical park’s original name. It was changed to Alaskaland when it served as a focal point for the celebration of the United States’ purchase of Alaska from Russia.The park is one of the area’s main tourist attractions.But over the years many Fairbanks residents have complained about the name. They say it conjures images of roller coasters instead of rustic cabins."The pioneers are the ones who originated the park and they should be recognized," said pioneer Merrill Hakala, one of several people who testified on the issue.The Assembly’s action came despite a memorandum from borough Mayor Rhonda Boyles requesting a visitor focus group to select a new name, since the reason for the change is to make the park’s purpose clearer to tourists."If we are going to change the name of Alaskaland, I feel strongly that the new name needs to be targeted to increase visitor traffic," Boyles’ memo said.The Pioneer Park proposal called for the new name to become effective on Labor Day 2002.

Adak jet service thrown into limbo

The terrorist attacks of Sept. 11 have put Evergreen International Airlines Inc.’s plans to provide jet service to Adak and the Russian Far East in a tailspin.Evergreen in July was awarded a $1.5 million annual subsidy by the federal Department of Transportation to provide twice weekly cargo and passenger jet service to Adak, under the condition the airline would purchase a Boeing 727-100 combi or similar airplane by mid-November.Evergreen officials said the two-year subsidy intended solely for Adak would help underwrite service to the Russian Far East scheduled to begin early next year.The problem for Evergreen now is that airlines have been prohibited from flying cargo in the bellies of passenger aircraft under a new rule by the Federal Aviation Administration put in place immediately after the terrorist attacks on the East Coast.In other words, the federal government is requiring the company to fly both passengers and cargo in the same airplane, but new rules prevent that from happening."It’s a Catch-22," said Greg Thies, Evergreen’s director of marketing in Anchorage.The company was set to lease an airplane that would meet the requirements of Department of Transportation’s Essential Air Service program, said Christina Wallace, Evergreen’s director of sales in Alaska.But then came the terrorist attacks in Washington and New York."It takes a lot of coordination to bring something like this on line, and everybody here has been going full bore," said Wallace of coordinating flights to Aleutian Island communities and the Russian Far East. "Sept. 11 put everyone back a step, not just in aviation. For us it’s added another hill to climb."We are not going to lease an airplane we can’t fly," Wallace said.Exactly what the company will do next is yet to be determined."It’s still up in the air," Wallace said. "We’ve done everything we can do. Right now, we’re on hold."Evergreen and other airlines in Alaska are hopeful of some congressional help to, among other things, allow cargo and passengers on the same airplane.Sens. Ted Stevens, R-Alaska, and Daniel Inouye, D-Hawaii, authored an amendment that would give the secretary of Transportation the authority to waive any of FAA’s new restrictions, given the noncontinental states’ uniqueness and inordinately high dependence on air travel.The Adak flights could be the poster child for the amendment to the Aviation Security Bill, which passed the Senate on Oct. 11.The House version of the bill has yet to be addressed and may not be until after the first of next year, according to aides in Republican Rep. Don Young’s Washington, D.C., office.Meanwhile, the communities of Adak and Cold Bay are being served.Peninsula Airways Inc. is providing passenger service to the Aleutian Island communities, under an interim federal award of about $4,000 weekly in its turbo-prop airplane. Evergreen is being paid roughly $7,000 for each of its cargo flights with its DC-9 cargo jet.Evergreen still hopes to provide Adak and nearby Cold Bay with two one-stop round-trips a week to Anchorage, year-round, under the terms of the federal contract.Whatever happens, Evergreen will not leave the Aleutian Island communities out in the cold, Evergreen officials said."We are not going to abandon anybody in Adak or Cold Bay, period," Thies said.

In 40 years, Evergreen expands around world

From helicopters to hazelnuts and from 747s to Christmas trees, Evergreen International Airlines Inc. has grown to one of the most diversified aviation companies in the world.Founded in 1961 in a hangar at Anchorage’s Merrill Field by former crop duster and Air Force pilot Delford Smith, Evergreen International Airlines now employs more than 4,000 people at about 185 locations worldwide.The company had more than $700 million in revenues last year from its dozen subsidiaries, whose services include air cargo handling and hauling, selling and leasing aircraft, and assorted agricultural enterprises.Smith remains the sole owner."It’s the Alaska homegrown success story," said Greg Thies, Evergreen’s director of marketing in Anchorage.Smith, who lived in Anchorage throughout the 1960s, established Evergreen’s corporate headquarters in McMinnville, Ore. But the company is anchored in Alaska, with a helicopter division, an aviation services and cargo company, and an avionics retail and service business, Avionics Specialists of Alaska Inc.About 350 people are employed in Alaska by Evergreen.Evergreen holds the U.S. Postal Service contract for Southeast Alaska, flying mail in DC-9s between Seattle, Ketchikan, Sitka and Juneau.Evergreen Helicopters of Alaska holds one of the oldest postal contracts in the United States, flying mail via helicopter from Nome to the tiny northwest communities of Diomede and Wales. The postal contract, begun in 1982, is the only one that uses helicopters to deliver the mail, Thies said.Evergreen Aviation Ground Logistics Enterprises, or EAGLE, at Ted Stevens Anchorage International Airport handles more than 100,000 pounds of mail daily for the Postal Service, said Roger Kegley, EAGLE general manager. EAGLE also provides ground handling, aircraft maintenance, de-icing, cleaning and refueling for various air carriers in Anchorage.Evergreen International has a fleet of 11 Boeing 747 cargo airplanes in worldwide service. About 26 of those flights arrive and depart Anchorage weekly.Evergreen charters its Anchorage-based DC-9 airplane for cargo operations throughout Alaska, the Lower 48 and the Russian Far East.From its Anchorage base, Evergreen runs operations for five Spanish-made turboprop CASAs, running passengers and cargo throughout Central America. The airplanes are based in Panama.Evergreen’s health, safety and environmental management company is in Anchorage, a division that monitors and ensures the aviation company’s compliance with federal laws.The company operates its Aerospaciale high-altitude mountain rescue helicopter, the Denali Lama, at Denali National Park and Preserve.Evergreen Helicopters of Alaska started 40 years ago in a building that is now occupied by Dan’s Aircraft Repair Inc. The helicopter division is now across the street on Merrill Field Drive. The company’s helicopters provide firefighting, construction, oil exploration, movie filming and rescue support throughout Alaska.Evergreen’s growth soared in the 1960s and 1970s, flying soldiers and cargo to Southeast Asia during the Vietnam War era.During that time, the company also operated passenger and cargo routes to the Bush for now-defunct Wien Air Alaska. Evergreen provided helicopters and airplanes during the construction of the trans-Alaska oil pipeline and the oil exploration in the Gulf of Alaska and Prudhoe Bay.The Alaska operations laid the groundwork for the Evergreen’s expansion around the world, Thies said.Evergreen’s aviation services company provides logistics, ground handling and maintenance for carriers like United Parcel Service and the U.S. Postal Service at about 20 domestic airports. The company transports cargo for other airlines, freight forwarders and the U.S. government, including during wartime.Evergreen Air Center at Pinal Air Park in Marana, Ariz., is the largest airplane storage and maintenance yard in the world. The 1,700 acre facility caters to commercial, military and private aircraft.This summer, the company’s nonprofit Captain Michael King Smith Evergreen Aviation Educational Institution opened the Evergreen Aviation Heritage Museum in McMinnville, Ore. The museum features the HK-1 Howard Hughes "Spruce Goose" and many other historic aircraft from around the world.Beyond aviation, the company owns Evergreen Agricultural Enterprises Inc., consisting of more than 6,000 acres of farms and nurseries in Oregon’s Willamette Valley.Evergreen produces nursery plants, grass seed, cereal grains, clover seed, walnuts, hazelnuts, wine grapes and Christmas trees sold in the United States and in international markets.A subsidiary processes dried nuts, fruit, candies, cookies and chocolates under the brand name Evergreen Orchards.

Metals prices low, but mining projects still see progress

Progress is being made on several Alaska mining projects despite low metals prices.In Southwest Alaska, a summer drilling program at the large Donlin Creek gold project has confirmed more high-grade gold resources, and Novagold Resources Inc., of San Jose, Calif., says the information will allow it to develop gold resource estimates as well as a pre-feasibility development scoping study this winter.Both will be done by mid-March 2002, the company said. The scoping study could lead to an engineering pre-feasibility study, an important step in the development of the project.In Southeast Alaska, Coeur Alaska Inc. officials have told Juneau community leaders they intend to initiate a permit effort for the Kensington Mine redevelopment, a major gold project on Berners Bay north of Juneau.Kensington had been approved by federal, state and local agencies, but the permits issued are for a development plan that requires onshore tailings disposal and storage that would be too costly under low gold prices.Coeur, the project developer, has a new, lower-cost alternative tailings disposal plan, but it will require new permits. Juneau Mayor Sally Smith said she has been told the company will file for a supplementary environmental impact study in mid-November.In eastern Interior Alaska, Ventures Resource Corp., a mining exploration company, announced finding significant base metals mineralization in ore samples from two properties in the Fortymile River area, the Fish and Little Whiteman prospects.Twenty samples taken at Fish show zinc values of more than 6 percent, with five samples exceeding 20 percent and three others between 10 percent and 20 percent.In contrast, the Red Dog Mine in northwest Alaska produces ore that is 18 percent to 20 percent zinc, which is considered a good grade, according to independent geologists.Samples taken at Little Whiteman showed lead-zinc values ranged from 6 percent to 40 percent and silver values ranging to 13 ounces per ton.The company said it is preparing a drill program for both prospects for the 2002 season and is soliciting partners in the project.Independent geologists cautioned that while the prospect deserves further work, a few high-value samples dont indicate an economic mine by themselves. What is important is determining the extent of the mineralization and the range of ore grades extending through the area.Donlin Creek, meanwhile, is of great significance for its landowner, Calista Corp., the Alaska Native regional corporation for Southwest Alaska. With gold resources estimated at more than 10 million ounces, the mine would be one of the largest gold mines developed in the state if it went into production.Novagold took over as operator last year from Placer Dome, which holds the lease on the property with Calista. Novagolds strategy in its 2001 exploration program was to drill and expand the gold resource at a known high-grade zone in the ore body.Novagold announced results from its 2001 drilling in midsummer and again on Oct. 25. Both reports confirmed the presence of high-grade ore.The hope is that even with gold prices low, the high-grade zone may support a small-scale development that would ultimately expand once the mine was in production, according to Jeff Foley, a minerals geologist with Calista.Donlin Creek faces other challenges, however. The ore process that will be needed requires large amounts of electricity.A Calista subsidiary is working on a regional power development plan that would include coal-fueled power plants generating electricity, including one near Donlin Creek.Donlin Creek could be a major employer in the Calista region, an economically depressed part of the state. Since 70 percent of Native corporation mineral royalties are shared with other Native regional corporations, all Alaska Natives would benefit from Donlin Creek development.The Kensington Mine near Juneau would also become a significant local employer if the mine is developed. Estimates are that more than 200 production jobs would be created by the mine.The development plan approved under current permits provide for onshore storage of tailings behind a large earth retaining structure. The capital cost required for this makes the mine uneconomic under current gold prices, company officials said.The companys new plan involves tailings disposal in a small nearby lake and is considerably less expensive. That, along with efficiencies in operations, means the mine could be economic even with gold markets at relatively low levels.

Tourism shortfalls mean 40 jobs lost from Goldbelt Inc.

Layoffs spurred by reduced income from tourism will total 40 Goldbelt Inc. employees, including nearly half of the executive staff, corporate officials said Oct. 24.Juneau’s urban Native corporation began eliminating positions early in October to cut costs, with the last phase of layoffs set for Oct. 26. Goldbelt employs 600 people.In addition to 11 executive staff cuts, it is scaling back five positions at Goldbelt’s Juneau subsidiaries, 12 positions in Glacier Bay and 12 positions in its Seattle subsidiaries, said Gary Droubay, chief executive officer .The corporation, Droubay said, also is requiring some managers to take two weeks’ unpaid leave over the winter and cutting some management salaries by 10 percent. Droubay said Goldbelt may have to cancel its winter cruise offerings off Baja California in the Sea of Cortez because of abysmal bookings."It’s hard to quantify what we are losing," said Karen Livingston, corporate human resources manager. "This has a real human quality to it because they were not only employees but also shareholders, so to my thinking it’s been terrible. It’s still fresh and it’s been very emotional around here."The layoffs come after a slow season that came on the heels of a $3.5 million loss in 2000. Droubay said he doesn’t know yet the projected losses for this year.Goldbelt has more than 3,300 shareholders, more than half of whom live in Juneau, according to a corporate press release. The corporation operates tourism, cruise and lodging businesses in addition to managing stocks and land. Its tourism ventures include the Mount Roberts Tramway, Glacier Bay tours, Auk Nu tours and the Goldbelt Hotel.Livingston said the corporation usually hires about 350 seasonal employees whose jobs end with the summer tourist season. However, this year Goldbelt decided to make eight of its executive accounting positions seasonal also, she said."We’ve always kept these people through the winter in order to keep the talent we have even if there wasn’t much for them to do," Livingston said. "But we’ve had to find ways to cut costs, and it’s just not efficient to run things that way."She added that with new accounting software the corporation is able to do the same work with fewer people. Livingston said that some of the executive positions may be available again in the summer.Glacier Bay Lodge bookings, Auk Nu tour bookings, and Goldbelt Hotel sales were all down 10 percent this year. Droubay said the company relies heavily on independent travelers, whose numbers already were down over the summer. Terrorist events on the East Coast dealt the final blow, however, and affected cash flow across the board, he said."September definitely hurt," Droubay said. "Between the slow economy which was already there and the incident on 9-11, ... we’re just trying to hold things together right now."Livingston said the corporation has tried to help place the laid-off workers in other companies and has offered help with resumes. She said many have obtained other jobs, and Goldbelt has received inquiries from other companies looking for accounting help.

Evergreens Denali Lama rescues climbers

The number of Christmas cards Jim Hood and Ray Touzeau receive every year closely corresponds with the number of climbers they have helped rescue off Mount McKinley.The humble helicopter heroes each have a mantelful.Hood is the pilot and Touzeau is the mechanic for Evergreen Helicopters of Alaska Inc.s high-altitude mountain rescue helicopter based in Talkeetna.The duo have been a team at Denali National Park and Preserve for the past several years.Dubbed the Denali Lama by Hood a decade ago, the French-made Aerospaciale helicopter has plucked many stricken mountaineers off North Americas highest peak.Hood, 42, has been flying the Lama since 1991 and has logged about 4,000 hours in the Alaska Range.Over the years, Hood, relief pilot Francisco Orlaineta and Touzeau, along with National Park Service rangers and rescue volunteers have been credited with saving dozens of lives.Weve alleviated a lot of pain and suffering, Hood said from his home in Alpine, Wyo., where he flies rescue helicopters in the winter.One of Hoods most memorable rescues in Alaska came years ago. It involved a climber who suffered severe frostbite and likely would have died without the Lama.The former mountaineer stays in touch with Hood more than just at Christmas.He lost his feet, but he still ballroom dances, Hood said.Not all climbers are as fortunate.Too often, the helicopter has been used to remove the bodies of climbers from the 20,320-foot mountain, where 31 people have lost their lives since 1990.Hood holds two records for high-altitude rescue on Mount McKinley, one at 19,700 feet using a remote control grappling device on a long line below the helicopter that was used to grab a climber and lower him to safety. The other record was at 18,800 feet, where a rescuer was attached to the line to haul a climber off the mountain.The National Park Service pays Evergreen about $300,000 a year to provide the helicopter and three-member crew at Denali National Park and Preserve.The helicopter is used at the height of the climbing season, from mid-April through mid-July.About 1,100 climbers attempt Mount McKinley annually, but the success rate to the summit is a little better than half, according to the Park Service.Climbers on Mount McKinley and nearby Mount Foraker are charged a special-use fee of $150 per climber. The money is used to offset costs related to rescues, such as climber education programs and a high-altitude ranger station.But many climbers balk at the user fee, and some oppose the use of the Lama rescue helicopter.In a letter to the National Park Service, American Alpine Club President James Frush said the Lama helicopter should be cut out to contain the costs associated with mountain rescues in the Alaska Range.The Lama definitely has allowed some rescues to be conducted that otherwise would not have been possible, and some people who survived may have died without it, Frush wrote.But the Lama is used as a sort of safety net by some climbers, who might not attempt the mountain if the helicopter were not there, Frush wrote.Beyond saving money, reducing the rescue infrastructure in the park also sends a powerful message to climbers, particularly foreign mountaineers, that rescue services are no longer near at hand, Frush wrote.Hood strongly disagrees.Hard-core climbers dont want to pay until they are the ones up there that need some help, Hood said.The Lama is not cheap, Hood said. Without it, the national park would fill up with dead bodies.Evergreen owns three of the 33 Lamas that are in service in the United States. Two are used in the Lower 48.Mechanic Touzeau, 31, said the Lama is the only civilian helicopter to have oxygen bottles on board.The helicopters were produced through the 1960s and early 1970s. They weigh a wispy 2,600 pounds and produce nearly 900 horsepower from a single turbine engine.The high power-to-weight ratio allows the helicopter to climb at more than 1,700 feet a minute at altitude, said Touzeau, who works at Evergreens corporate headquarters in McMinnville, Ore. during the winter.The helicopter holds altitude records at more than 42,000 feet. The Lama also holds the auto-rotation record for a helicopter, where one dropped safely more than 2 miles without power.

Retirees: Research your mortgage

For most people, conventional wisdom supports the idea of paying off the home mortgage before retirement. Therefore, a retiree should be debt free, allowing income from pensions, Social Security and retirement distributions to support living expenses. From an estate standpoint, the home would be transferred to the children free and clear at death.Could there be reasons for maintaining a mortgage in retirement? Individuals with a large amount in a retirement program, individual retirement account or 401(k) in the form of securities, or paper assets, may want to consider the following:1) A balanced portfolio of paper assets to hard assets.2) Potential substantial tax burden imposed on mandated retirement fund withdrawals at age 70 1/2.3) Life in a beautiful home that could increase the size of an individual’s legacy.4) The income tax benefits of deductible mortgage interest.Instead of paying off the mortgage on an existing house, you may consider trading up to a more valuable home or purchasing a second home. The increased mortgage can be covered by an increase in withdrawals from the retirement plan. A recent article on this subject suggested $2 million as a minimum retirement plan to provide for a mortgage payment without diluting value to meet future retirement needs.The results of this transaction are a shift of capital from paper assets to real estate, retention of a deduction for income tax calculation and an improved lifestyle in retirement.In addition, by making the purchase before 70 1/2, the increased withdrawals at an earlier age will cause reduced taxes from mandatory distributions, since there will be less money accumulating in the retirement plan from which to draw.Let’s look at a simple scenario of a retiree at age 65 with $2 million in a retirement plan, and we’ll assume a 6 percent return on the investments in this plan. We’ll call our retiree Joe. Joe trades his house valued at $500,000 for a house costing $1 million and borrows $800,000, with the remainder coming from equity in his current home. The mortgage rate is 7 percent and term is 15 years.Under this example, Joe would draw the earnings each year, about $86,000 for mortgage payments and $34,000 for living expenses. The first year, he would reduce taxable income of $120,000 by the interest expense of about $55,000. At a 30 percent tax bracket, Joe would save $16,500 excluding all other factors. At 70 1/2, the amount remaining to be drawn from retirement is still $2 million and the remaining estate is in the value of the residence.If Joe hadn’t purchased the residence as proposed, his retirement nest egg would have compounded to about $2.75 million. Using the same 6 percent formula, Joe will be taxed on $165,000 in distributions vs. about $78,000 in the sixth year, a savings of $26,000 in taxes that year alone.The argument can be made that Joe would save about $105,000 in taxes if he didn’t draw from his plan since there wouldn’t be income from retirement withdrawals. That savings is only for the 5 1/2 years before 70 1/2, while the tax savings from carrying the mortgage for the next five years would be about $128,000 and savings would continue until death or repayment of the mortgage.Of course, this simple scenario about Joe, while interesting and may result in some thinking about the options, isn’t complete. All factors in a financial decision like purchasing a more expensive home need to be considered before spending the money. They include: Does the real estate fit well in Joe’s portfolio? Are there other tax issues like other earnings or other deductibles? Will Joe be in a different tax bracket during retirement? Does the investment portfolio support the decision? Does Joe want an expensive home to live in? What would be the consequences of pulling retirement funds and paying off the existing mortgage vs. maintaining the existing home and mortgage? Would Joe be better off purchasing a second home?Before planning to retire without a home mortgage, consider the scenario of Joe and the potential advantages in purchasing a larger home, retaining a mortgage on the existing home or mortgaging a second home. If you are unsure, check with your accountant or a certified financial planner.Ron Kukes is president and chief executive of First Interstate Bank of Alaska. He can be reached via e-mail at ([email protected]).

Valdez health authority seeks new hospital, sets meeting

Operators of Valdez Community Hospital have proposed building a new facility, and a public meeting is scheduled this month as part of a required state review process.The Valdez Regional Health Authority has proposed construction of a new facility to replace its current property, located in part of the former state-owned Harborview facility, said chief executive Jim Culley.That building, built in 1967, was closed and boarded up in 1997, he said.The state Department of Health and Social Services, which regulates major health care facility construction, has scheduled a public meeting for 6:30-8 p.m. Nov. 10 at the City Council Chambers in Valdez.The health authority in Valdez has proposed building a $24.7 million, 68,500-square-foot building, Culley said. That cost includes design and bonding requirements, Culley noted."If everything went well, we would break ground in late summer 2002," he said.Using that timeline the project could be finished by summer 2004, he said.Currently, the Valdez Community Hospital occupies 25,000 square feet of the former 80,000-square-foot mental health facility.A new facility would provide needed updates to Valdez area health care providers, Culley said."Most hospitals have ongoing programs of modernization," he said.The health authority decided to pursue construction when estimates for renovating the existing building climbed close to new construction costs, he said.The new, one-story facility would be larger because it would include services not currently offered at the hospital, he said. The replacement hospital could include a laundry and dietary facilities, he noted. Meals are now prepared at Providence Alaska Medical Center and flown to Valdez, he said. Other proposed services include physical therapy and mental health services.Proposed changes include approval for 11 acute care beds and 10 long-term care beds, he said. Currently, Valdez Community Hospital is certified for 15 acute care beds, which are also used for non-acute care patients.The Valdez Regional Health Authority aims to create a health care campus on 15 to 18 acres near the senior center, according to Culley. The plan includes building the new facility on city-owned land and developing the health care campus on land that includes the current Harborview facility. State officials have said the health authority could acquire the land but have not allotted money for demolition of the old building, he said."We’re trying to negotiate with the state on that," he said.If the health authority did pay for demolition, the total project would cost $26.5 million, he said.The Valdez Regional Health Authority, which operates the hospital and Valdez Counseling Center, submitted a certificate of need application June 16, he said.On Oct. 9 state health department officials notified Culley that the application was complete, kicking off the next step."Once they declare the certificate application complete, the department has 90 days to complete a review of the application," Culley said. "Then they submit an analysis and recommendation to the commissioner."The review is to be finished Jan. 8. Reviews study the community health care needs of the area that might be served by a new hospital, said David Pierce, certificate of need coordinator for the state Department of Health and Social Services. The process also will analyze the estimated number of bed days at the hospital and gauge whether the proposed facility is the appropriate size, he said.The state health department will look at the financial feasibility and staffing needs of the project, he noted."The thing we will be looking for is ’does it seem reasonable that this will be a successful endeavor?’ " he said.

Around the World November 4, 2001

STATEFort Greely site work nears completionFAIRBANKS - Initial site work at the National Missile Defense Test Bed at Fort Greely is expected to be finished soon.Lt. Col. Richard Lehner, a Missile Defense spokesman in Washington, D.C., said workers are about 75 percent finished removing the top soil and about half finished drilling water wells."That’s going to be it for this year," Lehner said.The work should be completed by Nov. 7. That means the project is on or ahead of schedule, with the next question being whether there will be government approval to begin construction in the spring."We’d like to start building five test beds there in April," Lehner said. But no contracts can be awarded until the project receives approval from the Secretary of Defense and Congress.If the project moves forward, Fort Greely will be the site of test interceptors for training and maintenance. Actual testing would be done from the Alaska Space Port on Kodiak Island.Winter slows pipeline spill cleanupANCHORAGE - The cold temperatures and snow have slowed the cleanup of oil spilled earlier this month when a man shot a hole in the trans-Alaska oil pipeline north of Fairbanks.The cleanup rate is about 700 gallons a day compared with 70,000 gallons a day immediately after the spill.In total, Alyeska Pipeline Service Co., the company that runs the pipeline, has recovered more than 171,000 gallons of fluid.That’s more than half of the 285,600 gallons of crude oil that spilled after the shooting Oct. 4 near Livengood about 75 miles north of Fairbanks. Alyeska and state officials both say that getting more than half the oil is a good cleanup.As oil recovery slows, cleanup will turn toward more aggressive steps: clearing the stained forest and removing about 3 acres of topsoil.NATIONALFedEx optimistic about earningsMEMPHIS, Tenn. - FedEx Corp. expects its second-quarter earnings to beat Wall Street expectations even without government assistance being offered to airlines to offset the Sept. 11 terrorist attacks.Alan B. Graf Jr., executive vice president and chief financial officer, said Oct. 29 that solid growth of FedEx Ground, the company’s home-delivery business, contributed to the company’s profitability this quarter.He also credited the company’s broad portfolio of services for helping offset the impact of the terrorist attacks, which hit the company’s air cargo express service the hardest.The express delivery company said its earnings are expected to range from 40 cents to 45 cents a share for the quarter ending Nov. 30.Analysts surveyed by Thomson Financial/First Call had been forecasting earnings of 35 cents a share.The estimated quarterly earnings exclude the company’s $101 million share of a $15 billion federal relief package for the airline industry.Wary Americans push down new home salesWASHINGTON - Wary about making big financial commitments, Americans pushed sales of new homes in September down to their lowest point in a year. Rising layoffs and new uncertainties raised by the terror attacks darkened the mood of prospective buyers.New-home sales dropped 1.4 percent to a seasonally adjusted annual rate of 864,000, the lowest level since August 2000, when a rate of 839,000 homes were sold, the Commerce Department reported Oct. 26.Last month’s drop came on top of a 2.9 percent decline in new-home sales in August, according to revised figures.Lockheed Martin posts profitBETHESDA, Md. - Defense contractor Lockheed Martin Corp. posted a profit for the third quarter in contrast to a loss a year ago, citing stronger sales and cost-cutting measures that shrank the company’s debt.The earnings report was released hours before Lockheed found out it had won the $200 billion contract to build the Pentagon’s new high-tech, next-generation fighter jet.Lockheed earned $213 million, or 49 cents a share, in the July-September period in contrast to a loss of $704 million, or $1.74 a share, a year earlier.No-interest financing extendedDETROIT - DaimlerChrysler AG said Oct. 26 it will extend until Nov. 19 its offer of no-interest financing on certain 2002 vehicles.The move comes nine days after General Motors Corp. said it would extend its own zero-percent finance offer to Nov. 18.Ford Motor Co. also is offering no-interest financing.Kraft plans to cut 1,000 jobsNORTHFIELD, Ill. - Consumer foods giant Kraft Foods Inc. said Oct. 26 it plans to eliminate 1,000 jobs from its work force of 117,000 through voluntary retirements based on increased benefits.The nation’s largest food company with brands like Maxwell House coffee, Oscar Mayer meats and Post cereals said the reductions are part of its continuing integration of Nabisco, the maker of Ritz crackers, Chips Ahoy cookies and Planters nuts which it acquired last December.The company said the enhanced retirement program should result in annual savings of about $80 million.WORLDJapanese beef sales plungeTOKYO - Hiromichi Murakami stands beside a glistening, 1,000-pound carcass that once was the Japanese cattle farmer’s equivalent of gold - a near perfect hunk of Matsusaka beef.Now, demand is so low it’s hardly worth trying to sell, he says."These are the worst times our business has seen since I got in, and that’s more than 30 years ago," Murakami, who owns a beef wholesaling company.For years, Japanese beef was synonymous with an almost over-the-top emphasis on quality. Cows were massaged in their barns to the sounds of Mozart and fattened up on a diet of, among other things, beer.But since the discovery last month of a cow just outside Tokyo that had developed mad cow disease, Japanese beef has been banned from many foreign markets. Cattle farmers, wholesalers, butchers and restaurateurs are looking at a domestic market that has collapsed - and may take years to recover.- Compiled from business wire services.

November-Issue-1 2001

Knowles creates task force to study cost of terrorism

JUNEAU (AP) - A new state task force will study how terrorist attacks on the East Coast will ultimately affect Alaska’s economy, Gov. Tony Knowles said Wednesday. The 11-member task force will analyze what cost businesses and industry expect to experience as a result of the Sept. 11 attacks and make recommendations on lessening losses, Knowles said.He announced the formation of the ``Task Force on Jobs and the Economy since September 11th’’ during a speech before the Alaska Chamber of Commerce in Juneau.``I have the same questions you do about what this means to tourism, oil and gas, air cargo, and other industry sectors, and I am determined that we will answer these questions to the best of our ability,’’ Knowles said.Debby Sedwick, commissioner of Community and Economic Development, and Chris von Imhof, general manager of the Alyeska Prince Hotel, will co-chair the task force. Sedwick said the state has not seen a jump in unemployment in the wake of the attacks. But she has heard fears expressed from the tourism industry.``One of the things the tourism industry wants is an infusion of cash so they can do a media campaign as some states have already done,’’ Sedwick said.Other members include Dennis Brandon of Cook Inlet Region, Inc.; Judy Brady, Alaska Oil and Gas Association; Eric Britten of CSX; Jim Jansen from Lynden; Mike Burns of Key Bank; Terese Sharp of Fairbanks; Terry Hoefferle of the Bristol Bay Native Association in Dillingham; Scott Goldsmith, University of Alaska Anchorage; and consultant Brian Rogers of Fairbanks.A report will be filed within 60 days that could include suggested legislation or administrative action to lessen the effect on jobs and businesses, Knowles said.

Anthrax scare might crimp popular North Pole holiday letter effort

ANCHORAGE, Alaska (AP) - Anthrax fears may claim an unexpected casualty this year - mail from Santa Claus.Security measures imposed by the Postal Service in response to anthrax-contaminated mail could mean the end of a popular Christmas letter effort in Alaska’s Interior that has thrilled children all over the world for nearly five decades. As many as 60,000 letters a year pass through the tiny post office in North Pole, a town of 1,570 southeast of Fairbanks. Some are addressed simply as Santa, North Pole. Each letter with a return address usually gets a personal reply and a North Pole postal cancellation mark.This year, however, piles of mail might lie unopened, as postal workers grapple with how to handle such a large volume while dealing with the ongoing anthrax danger. The bacteria has contaminated several postal facilities on the mainland, killed four people and sickened more than a dozen others.``I’m hoping our project remains consistent with other years,’’ said Raymond Clark, postmaster of the Fairbanks Post Office, where most of the letters are processed. ``So many children write letters to Santa, writing about their dreams. Getting a reply puts a twinkle in their eye. But it’s too early to tell yet what we’ll do.’’ The scare hasn’t affected the influx of Santa letters. They’re already trickling in at a rate of 100 a week, according to Clark. Now he is waiting for postal officials in Washington, D.C., to decide what to do with them. Usually they are answered by volunteers from North Pole and other Alaska cities, as well as folks from other states. But the letters aren’t being handed out to volunteers now. Clark said he isn’t even sure whether they will be opened at all.Part of the problem postal workers face in handling children’s mail is that:``These items are often addressed by kids,’’ Clark said. ``And a lot of them don’t have great writing.’’Young penmanship that might have been ignored in the past now fits the profile postal workers are warned to look for to identify a letter as suspicious.But postal officials in Alaska remain optimistic they’ll get the go-ahead from headquarters. ``We urge children to continue to write to Santa _ he’s immune to everything,’’ said Nancy Cain Schmitt, the agency’s Alaska spokeswoman. ``If Santa doesn’t answer, parents can just say he must have been really busy this year.’’Clark said another alternative is for parents to write their own Santa replies, put them in a sealed, self-addressed envelope and enclose them in another envelope addressed to North Pole Christmas Cancelation, Postmaster, 5400 Mail Trail, Fairbanks, AK 99709-9999. Postal workers need only open the outside envelope, add the North Pole cancellation and send Santa’s ``reply’’ to children. The Fairbanks post office already uses that method to cancel many parent-written letters, as well as about 150,000 Christmas cards and packages that pour in from outside the state each year. Clark said that service will continue this holiday season.Despite the anthrax threat, Eielson Air Force Base near Fairbanks is offering another alternative through a much smaller letter project. Santa’s Mailbag was started in 1954 by base weather forecasters who didn’t like seeing letters to Santa unanswered and thrown out by busy postal workers before the North Pole volunteer effort evolved.And they still don’t want to see that, said Tech. Sgt. Darrell Robertson, coordinator of the project, which handled nearly 4,500 ``letters from Santa’’ last year. ``I would hate to break the tradition,’’ he said. ``Through thick and thin, through war after war, it has gone on. We have not missed a beat.’’It’s not as enchanting as the North Pole effort: Replies are sent on a variety of form letters customized by weather office workers and their families.Also, scribbling Santa on an envelope won’t reach the base. To get a letter from this program, children must address their letters to Santa’s Mailbag, 354 OSS/OSW, 1215 Flight Line Ave., Ste. 100B, Eielson Air Force Base, AK 99702-1520. The air base replies, however, do feature those coveted North Pole cancellations.

Terrorist threats prompt unprecedented highway checkpoint

JUNEAU (AP) -- Gov. Tony Knowles ordered state civil defense workers to set up a temporary checkpoint along the Dalton Highway to scrutinize traffic near the 800-mile trans-Alaskan Oil Pipeline. The unprecedented move came in response to FBI warnings of new terrorist attacks that may be carried out in the United States within days. Though no specific threats were leveled against the pipeline, Knowles said monitoring traffic on the only road leading to the Prudhoe Bay oil fields is ’’a necessary measure.’’ The checkpoint will be in place for at least two weeks, Knowles said. It may be extended if necessary, he said. Alyeska Pipeline Service Co. and other state agencies were also ordered to step up security along the pipeline during this period of heightened alert. ’’People can be confident that that national asset is well protected,’’ Knowles said. Security workers began stopping motorists at a checkpoint established south of the Yukon River bridge, about 100 miles north of Fairbanks. The bridge structure that carries vehicles across the river also holds the pipeline and was identified by state officials as a potentially important target to guard. ’’That specific point is where the pipeline could be most vulnerable also where a large spill, if it were to happen, could cause the most damage and be the hardest to repair’’ said Knowles’ spokesman Bob King. Seven members of the Alaska State Defense Force, a 250-member volunteer civil defense force, were activated on Monday to provide the security. They will be stationed there 24-hours a day, Knowles said. An Alaska State Trooper will also be assigned to the checkpoint to check drivers licenses and vehicle registrations, said Greg Wilkinson, a spokesman for the troopers. Only about 100 vehicles per day use the highway during the winter months and most are in support of oil operations on the North Slope, Wilkinson said. The security detail will have police powers to search vehicles and detain suspicious motorists for questioning, Knowles said. The oil pipeline has been ever-present on the minds of state disaster officials since the Sept. 11 terrorist attacks in New York and Washington D.C. The pipeline makes a tempting target since it is the largest structure of its kind in the world and carries 17 percent of the nation’s oil production. There have been several threats and at least two attacks on the line during its history, but none have been the work of international terrorists. In the most recent attack, a bullet pierced the thick steel line causing more than 285,000 gallons of oil to spill. Daniel Carson Lewis, 37 of Livengood, faces both state and federal charges in the Oct. 4 incident. That attack and the Sept. 11 terrorist attacks on New York and Washington D.C. caused state officials to consider more government involvement in pipeline security. Along with the checkpoint, state aviation units have also been helping Alyeska provide aerial security along the route, King said. That will continue through this recent alert, he said. Alyeska and state officials would not elaborate on other additional security measures taken on Tuesday. Alyeska Spokesman Tim Woolston said the company’s security force has been on heightened state of alert since the terrorist attacks. ’’Certainly, there are additional steps we are taking today,’’ Woolston said Tuesday.


Responding to a national alert for heightenedsecurity against possible terrorist attack, Gov. TonyKnowles today increased Alaska State Trooper presencealong the Trans Alaska oil pipeline with the creationof a security checkpoint on the Dalton Highway justsouth of the Yukon River bridge. Seven members of theAlaska State Defense Force have been called to stateactive duty to work under the operational control ofthe Alaska State Troopers to help them accomplishthis mission."Although we have not been informed of any specificthreat to the pipeline, we know its importance tomeeting the nation’s energy needs makes it apotential target for terrorists," Knowles said."Accordingly, the Alaska State Troopers, withassistance from the State Defense Force, willestablish a security checkpoint just south of theYukon River beginning today. This checkpoint will notrestrict access to the Dalton Highway for legitimateuses, just as we are tightening security at thenation’s airports, we need to know who is accessingthe pipeline corridor, where they are going, andwhy."In addition to establishing the Yukon Rivercheckpoint, Knowles and administration officials havecontacted the Alyeska Pipeline Service Company, U.S.Coast Guard, and other public and private agencies,to ensure additional steps are taken to tightensecurity along the pipeline’s entire 800-mile lengthfrom Prudhoe Bay to Valdez. While other actions arebeing implemented as part of the national heightenedalert status, the specific operational details ofthose security measures are not being made public.Knowles noted that pipeline security was identifiedas an issue immediately following the September 11attacks, and he asked his Disaster Policy Cabinet toexamine overall homeland security issues affectingAlaska. While that report is still being finalized,Knowles thought it prudent to implement some of itsrecommendations in the wake of the national alertissued yesterday. "As part of this national alert, we know of nospecific threat to Alaska or any other part of thecountry, but I urge Alaskans to be on guard," Knowlessaid. "Alaskans have a proud tradition of respondingto challenges put before them and I am confident thatthey will cooperate with these efforts to ensure thesafety of their fellow Alaskans and the pipeline onwhich the nation depends."

Native medical center construction feeds into master site plan

Operators of the Alaska Native Medical Center are completing a handful of expansion projects at the health care facility in Anchorage.The construction effort, valued at more than $2.3 million, was funded by the Alaska Native Tribal Health Consortium, said hospital engineer Robert Wilson, a commissioned officer with the U.S. Public Health Service.ANTHC manages the medical center with Southcentral Foundation. The operators worked with an architect in 1999 to develop a master site plan with $80 million worth of improvements spread out over 10 years, he said."We’re basically systematically working to implement the master plan," Wilson said.The first year of work on the decade-long plan began in early June, he said.Construction includes renovations to the second floor day surgery, the addition of an eighth operating room, expansion of the clinical lab and adding 1,350 square feet to Quyana House, which provides living quarters for out-of-town patients and family."We’re looking at a completion date of Nov. 15 for all the projects," he said.Most of the work is finished, although expansion of the clinical lab may continue through October, he said. Work at Quyana House probably will last through November, Wilson said.Cornerstone General Contractors of Anchorage led the project, and other area subcontractors were Electric Inc., General Mechanical Inc. and Mechanical Construction & Consulting Inc.A new fiscal year began in October for the Alaska Native Medical Center, and facility operators are considering funding amounts for next year’s construction projects, perhaps totaling $1.2 million, he said."Tentatively, we’re looking at the pediatric ICU (intensive care unit) and expansion of the dining and serving area" as possible projects, Wilson said.The medical center opened in 1997, replacing an aging facility located in downtown Anchorage.According to Wilson, even though the Alaska Native Medical Center is relatively new, plans for the facility sat on a shelf for 10 years before construction began in 1993.During that time, changes in health care services led to alterations of facilities to which ANMC is now adapting, he said. Also, patient numbers have climbed since original facility plans were developed, he said.

Around the World October 14, 2001

STATEArctic Power readies for ANWR fight KENAI -- Before Sept. 11, the possibility that Congress would authorize oil and gas exploration on the coastal plain of the Arctic National Wildlife Refuge seemed remote, said former legislator Mike Navarre of Kenai."Now, because of the energy security issue ... there’s a renewed interest and maybe opportunity, in terms of strategy in the U.S. Senate particularly, that might allow some opportunities to have a vote to have ANWR legislation passed," said Navarre, a board member of the pro-development group Arctic Power. "I don’t know how many votes have changed since then. But I think some people’s -- in Congress and in the public around the country -- eyes may have been opened a little bit."Arctic Power received $2.8 million from the Legislature this year, he said. It has been spending that for advertising and to send Alaskans to lobby Congress.Navarre said this is a critical time. President George W. Bush’s energy package, which includes provisions to allow ANWR oil and gas development, has passed the Republican-controlled House. However, it has not cleared the Democratic-controlled Senate."Time-wise, they’re pushing to take it up before the end of the year," Navarre said.Oil flowing again through trans-Alaska oil pipelineFAIRBANKS -- Crude oil resumed flowing through the trans-Alaska oil pipeline Oct. 7 after workers welded over a bullet hole in the line that caused 285,600 gallons of oil to spew onto the Alaska wilderness.The pipeline, which carries about 17 percent of the nation’s oil production, or about 1 million barrels a day, had to be shut down after the line was shot Oct. 4. The line was repaired by welding a plug in place.Crews now are focusing on the massive cleanup."Our plan is to remove gross contamination before freezeup, and we anticipate it will take literally years to get the area free of contamination," said Bill Howitt, an Alyeska vice president based in Fairbanks.By Oct. 7, Alyeska had collected 88,541 gallons of spilled crude. Response officials said about two to three acres were contaminated by the spill.Daniel Carson Lewis, 37, is charged with felony assault, weapons misconduct, criminal mischief and driving while intoxicated in connection with the shooting. He is being held in Fairbanks on $1.5 million bail.Though the pipeline was shut down, tanker loading at the Valdez Marine Terminal continued using oil from storage tanks. Oil companies on the North Slope were asked to reduce their production by 95 percent during the shutdown.BP to pay state $36 million in back taxesJUNEAU -- BP Exploration (Alaska) Inc. agreed to pay the state $36 million to settle back taxes for Atlantic Richfield Co., which it bought last year, the governor’s office said Oct. 3.The funds covered the tax years of 1994-98, according to a statement issued by the governor’s office. Terms of the settlement were kept confidential."I appreciate BP’s willingness to come to the table to resolve this matter, and I am pleased with the terms of the settlement," Gov. Tony Knowles said in a statement announcing the deal.BP was granted Federal Trade Commission approval to buy Arco in April 2000. As part of the $27.6 billion purchase price, the company was required to sell Arco’s Alaska assets to Phillips Petroleum Co. out of anticompetitive concerns.Also part of the deal was BP’s agreement to resolve the company’s outstanding tax liabilities in Alaska."At the present time, we have brought BP and Arco current," said BP spokesman Ronnie Chappell.NATIONNordstrom lays off 1,600 employeesSEATTLE -- Nordstrom Inc. has laid off 1,600 employees nationwide in the past 30 days, including about 250 at the retail clothing chain’s downtown headquarters.The layoffs, representing 3.6 percent of the company’s 45,000-person work force and 7.9 percent of the corporate headquarters staff, are the result of slumping sales since the terrorist attacks Sept. 11, spokeswoman Brooke White said Oct. 2."This has been a difficult process for us," White said. "We have had to make adjustments in the past," she said. "We have had to make sure the staffing levels are right, but this is the first time in a long time -- and outside the holiday shopping season." She would not give a regional or store-by-store breakdown of the layoffs.Nordstrom has 126 outlets in 25 states, including a store in Anchorage.-- Compiled from business wire services.

State ponders investment

A citizen committee asked by Gov. Tony Knowles to evaluate possible state investment in a natural gas pipeline has reached a tentative conclusion to advise against the idea, unless there is some compelling and overriding public interest.However, the group also said that a public authority, such as the Alaska Gasline Port Authority put together by three Alaska municipalities to finance or own part of a gas pipeline, has considerable merit, as long as the authority tapped private markets for financing.The committee investigating state ownership is part of the governor’s Natural Gas Policy Council, a 28-member council formed last spring to consider state policy issues presented by a proposal to build a natural gas pipeline from the North Slope to the Lower 48.Conclusions reached by the committee at an Oct. 3 meeting in Anchorage are still tentative, and are being finalized by the group for presentation to the full gas policy council. The chairman of the state ownership committee is Bill Corbus, who heads Alaska Electric Light & Power, the Juneau electric utility.Also at the committee’s Oct. 3 meeting, the port authority presented the latest versions of its proposal to finance and build parts of the pipeline that are in Alaska, but came up against tough questioning by committee members and state Department of Revenue officials.Rigdon Boykin, with O’Melveny & Myers, a New York financial services company working with the port authority, told the committee that building a pipeline through Interior Alaska to the Lower 48, with a spur to a liquefied natural gas plant in southern Alaska, would make the project profitable.The tax-exempt status of a public authority would allow for substantial payments, about $900 million per year, to the state of Alaska and municipal governments in the state, he said.Boykin said the authority’s base case is a $22 billion project that ships about 6 billion cubic feet of gas per day from the North Slope, about half going to the Lower 48 through an all-land pipeline and half going to an liquefied natural gas plant in southern Alaska through a spur pipeline either to Valdez or Kenai.The group’s work so far has led it to conclude that a "stand-alone" pipeline to an LNG plant in southern Alaska isn’t economic because it won’t create economies of scale large enough to overcome high costs.Likewise, a pipeline to the Lower 48 is now considered uneconomic because of high costs and a now-uncertain outlook for Lower 48 prices.However, the Lower 48 pipeline and LNG export project can work well together, sharing the cost of a 52-inch trunk pipeline from the North Slope and selling gas in different markets, which mitigates risks of price volatility, he said.Gas sales contracts over five years will be difficult to get in Lower 48 markets, but long-term contracts of 20 and possibly even 30 years are possible in Asian markets, particularly if the Alaska LNG project can offer a slightly lower price to lock in long-term customers, Boykin said.The economies of scale in shipping large volumes of gas for both the Lower 48 and export sales will lower costs enough to make LNG exports profitable for the authority even with a price break. The security of the long-term export contracts will mitigate the risk if prices in the Lower 48 will drop to very low levels.The authority used an assumed sales price of $2.75 per million British Thermal Units at the LNG plant in Valdez in its analysis, Boykin said. Producers on the North Slope would be paid 75 cents per thousand cubic feet for the gas, Boykin said.On the strength of the export sales, the project could ride out gas price slumps to below $2 per Mcf in Lower 48 markets, he said.Members of the committee and the Department of Revenue questioned some key assumptions in the analysis, however.One committee member, Ron Duncan, president of General Communication Inc., questioned whether there are enough proven reserves of natural gas on the North Slope to support 6 billion cubic feet a day of gas production for the long term.Boykin said he and others from the port authority group had met with senior BP officials, and were told that more gas would be discovered on the North Slope once a pipeline is constructed, and that there is enough gas to support both a Lower 48 pipeline and an LNG export project.Bill Walker, an attorney working with the authority, told the committee that the gas producers themselves are working with a project that would begin at 4 to 4.5 billion cubic feet per day and eventually increase to 6 billion cubic feet per day of throughput.Larry Persily, Revenue deputy commissioner, told the committee that the department is skeptical whether such a large project can be financed 100 percent by debt, without a cash contribution as equity by the authority.Boykin responded that his firm has worked on several multi-billion dollar financings in the Lower 48 undertaken by municipal or state authorities, which are 100 percent debt-financed.Roger Marks, an economist with the revenue department, said his research indicates that LNG buyers in Asia are moving away from long-term contracts, to shorter-term contracts.Boykin replied that there are potential new LNG buyers in Asia who would commit long term if they could get a break in the price. He cited examples such as Enron and El Paso Natural Gas, two U.S. firms, who are building new power plants in Korea and Japan, and potential customers in China.Ken Thompson, a retired senior Atlantic Richfield Corp. executive who is a member of the advisory committee, said he questioned the viability of the port authority to build the entire project, but felt it could play an important role in owning part of a gas pipeline.Thompson said if the authority could own the pipeline from the North Slope to a hub in Fairbanks or Delta, it could ship gas to in-state users at preferential rates, lowering energy costs and encouraging industrial development based on natural gas.

Anchorage company discovers potential new drug

Arctos Pharmaceuticals Inc., an Anchorage-based start-up company formed to search for Alaska plants and other organisms with medicinal properties, may have struck gold. Maureen McKenzie, the company’s chairman and chief executive, told the Journal the firm has found an organism with both antibacterial and anti-fungal properties -- and which also might act as a powerful anti-cancer drug. "We’re about 80 percent sure it’s a new species," McKenzie said. Other antibiotics, including penicillin come from the same family of organisms, she said. "It was quite a surprise," said company co-founder Claudia Mark, who serves as the firm’s cultural historian and archivist. "It does some wild things. We’re quite excited about it." The organism, a tiny fungus, was found in a sample of sand gathered in mid-July by a diver in the shallow waters off an island in the Aleutians. Because the sample contained many organisms, it took some time to isolate the fungus. Company officials knew they had something when they grew the fungus in a petri dish with bacteria and yeast. The fungus killed everything around it, leaving a clear circle in the middle of the dish. "We may have a powerful antibiotic, a possible anti-fungal agent, and it may also be anti-tumor," Mark said. McKenzie said its anti-tumor properties are based on the way the fungus is killing the other cells, by interfering with cell division. Cancer is runaway cell division, so anything that blocks it has potential value as a medicine. The next step for the company was to determine if the fungus was a unique new specie. McKenzie said a laboratory in Vermont is working to identify it, and that so far, lab officials have told her they haven’t seen it in their research. Then comes the expensive part: identifying the molecule or molecules which cause the antibacterial and anti-fungal actions. If the molecules are different from all others -- even by one atom -- then the fungus will be patentable, McKenzie said. McKenzie said her company is working to raise the capital needed to identify the molecules. She said researchers with whom she has been working in the San Diego area told her she couldn’t afford not to carry out the study. "For the money men, it’s potentially millions of dollars," she said. "For the doctors, it’s saving lives. And for scientists, it will increase our understanding of living things." Even if the fungus or its molecules turn out not to be unique, the discovery will be good for Arctos Pharmaceuticals, said McKenzie, who has been attempting to find venture capital support with little success. "Clearly, it’s a business now," she said. "We might have to do this a number of times, but now it’s just a matter of numbers and odds. "A lot of naysayers have said these things don’t exist in Alaska, and even if they did, we would never find them," McKenzie added. "This is proof they do exist -- and that we can find them."  

Salmon farms sink prices

This may have been one of the worst seasons in history for Alaska salmon fishermen and processors.Salmon farmers, mainly in Chile, are producing at full throttle and flooding markets in the United States, Asia and Europe. Farmed salmon prices are plummeting, dragging down prices for wild salmon as well."They’ve finally glutted the salmon market," said Gunnar Knapp, a University of Alaska fisheries economist who closely follows salmon.Most of the blame is focused on Chile, where salmon farmers have increased production of farmed coho salmon by an estimated 40 percent in the last year. "They’re now suffering the consequences of declining prices. Farmed salmon prices have crashed in Japan, the U.S. and Europe," Knapp said.If there’s any good news out there for salmon, it’s that the overall productivity of the Alaska fishery appears stable, except in certain regions."We’re likely to see an overall harvest around 170 million salmon this year, up from 140 million last year," said Garon Bruce, deputy director of the state Division of Commercial Fisheries."Much of this year’s harvest is pink salmon, but overall we’re right on the five-year average," he said.One bright spot in fisheries overall is in halibut, where fishermen are doing well, Bruce said. The longer halibut fishing season has allowed for development of new, fresh halibut markets, and prices have been strong, Bruce said.The consequences of the salmon glut for Alaska fishermen are severe. Many Chilean salmon farmers are reported to be selling at below cost, Knapp said."No one expected the spike in production in Chile earlier this year," said Laura Fleming, of the Alaska Seafood Marketing Institute. "It’s having a profound effect on our industry.""A gillnet coho fishermen in Cordova two years ago was able to get $1.20 per pound for coho salmon he caught," Fleming said. "Last year, he received 60 cents per pound. This summer he got 30 cents.""Imagine your own family income being cut by half one year and then by two-thirds in the following year," she said.Alaskans who fish for sockeye salmon also felt the impact of farmed salmon this summer when processors in Western Alaska paid prices of 40 cents per pound for sockeye in Bristol Bay and 55 cents per pound in Kodiak. Those are well below last year’s prices and about half what was paid two years ago.Knapp said a significant indicator is that 15 percent of Bristol Bay sockeye fishermen with permits failed to turn up this year.Japan is flooded with farmed Chilean coho salmon, which has been priced well below Alaska sockeye salmon for some time.Alaska sockeye prices in Japan have dropped as farmed salmon has taken over the market, but the volume now purchased by Japanese importers is also so low that Alaska sockeye has become a kind of specialty item, Knapp said. Alaska used to supply the bulk of Japan’s imported salmon.Japan’s salmon farmers are also feeling the heat. Fleming said a delegation of Japanese salmon farmers went to Chile in September to ask Chile to cut back exports of farmed salmon to Japan.Meanwhile, U.S. prices for farmed Atlantic salmon, from Chile and Norway, have dropped from $2.20 per pound to as low as $1 per pound in the last two months, Knapp said.This follows a more gradual decline of farmed Atlantic salmon prices as the industry has expanded, from about $3 per pound to $2 per pound over seven years.The price drop undercuts efforts to sell frozen Alaska sockeye and coho salmon in domestic markets, Knapp said. "It’s really a rough year for anyone trying to sell Alaska frozen salmon in those markets," he said.Chris McDowell, who monitors markets for the Alaska Seafood Marketing Institute, said that while the big-money sockeye salmon industry is reeling, pink salmon fishermen are more or less holding their own.The pink salmon harvest was large, particularly in Southeast Alaska, and a $16 million purchase of canned pink salmon by the U.S. Dept. of Agriculture helped hold prices steady, McDowell said.Pink salmon prices paid to fishermen remained in the range paid last year, he said. It’s not a highly profitable fishery such as sockeye fishing has been in the past, but experienced and well equipped pink salmon fishermen can still make money if they catch enough volume, McDowell said.Some of those troll fishing for coho salmon later in the season also made out reasonably well, he said. While prices paid to gillnet fishermen for cohos are down because of farmed salmon, troll fishermen, who mainly serve a different, higher-end market, were paid prices that were generally on par with last year, McDowell said.In the bigger picture, Alaska salmon have now become a niche player in the world market, ASMI’s Fleming said. While this presents opportunities, Alaska’s salmon industry has to get its act together, she said."Even if the Chileans cut their production in half, we still have to improve our quality and respond better to market demand. We’re a niche supplier, but there are still opportunities; and it’s up to us to respond to them."McDowell said an example for the industry is that of troll salmon fishermen in Southeast Alaska who have carved out a good niche market in Europe, where wild-caught Alaska salmon is gaining distinction.The long-established Seafood Producers Cooperative in Sitka should be given a lot of credit for developing this new market, he said.Kate Troll, a fisheries consultant in Juneau who has done work on salmon marketing, said the local cooperative efforts between processors and fishermen in Cordova in selling Copper River sockeyes to high-end markets, and the "Arctic Keta" effort to sell chum salmon from the Kuskokwim, offer other examples of what can work.An important part of their success are the quality standards processors and fishermen have agreed on, and third-party verification that the standards are being met, which is important for buyers. So far, the major salmon processors have been unwilling to invest in developing uniform quality standards for the industry and in obtaining third-party inspection and verification, she said.


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