Movers and Shakers for Feb. 3

The Alaska Energy Authority board of directors appointed Curtis Thayer as AEA executive director. Thayer comes to AEA with more than 20 years of experience in the public and private sectors. Since 2015, Thayer has been the President and CEO of the Alaska Chamber since 2015. Thayer also served as commissioner of the Alaska Department of Administration and as the deputy commissioner of Commerce, Community and Economic Development. Prior to joining state government, Thayer served on the management team of Enstar Natural Gas. He also worked for Rep. Don Young as well as Sens. Ted Stevens and Lisa Murkowski. Thayer’s first day as AEA Executive Director will be Feb. 4. Alaska Department of Fish and Game Commissioner Doug Vincent-Lang named Dave Rutz as director of the Division of Sport Fish and Sam Rabung as the director of Commercial Fisheries. Rutz has worked in fisheries research and management for nearly 40 years. He spent much of his career at the department’s Division of Sport Fish as an area management biologist in the Northern and Western Cook Inlet Management area. He has also led the department’s Alexander Creek Invasive Northern Pike Removal and Restoration project and worked around the state in various research and management roles. He graduated with a bachelor’s degree with wildlife fisheries emphasis from St. Cloud State (Minn.) in 1980. Prior to accepting his new role, Rabung has been serving as section chief for the Division of Commercial Fisheries Statewide Aquaculture, Planning, and Permitting, a position he held since 2015. He has also worked in a variety of positions overseeing hatchery operations around the state. He first joined the department as a fisheries technician in 1983. Rabung graduated with honors in 1987 from Sheldon Jackson College with a bachelor’s degree in aquatic resources, fisheries science and aquaculture emphasis. Engineering, planning and consulting services firm Michael Baker International has expanded its operation in Anchorage with two new hires. Marc Luiken has joined the firm as civil/transportation engineering manager and Patrick Whitesell as Environmental Department lead. Luiken previously served as commissioner for the Alaska Department of Transportation and Public Facilities. Prior to his public service in Alaska, Luiken served 29 years with the U.S. Air Force, retiring as the Vice Commander of the 11th Air Force in 2010. His career as an Air Force fighter pilot spanned the globe with assignments in Europe, the Middle East and Pacific regions. He is a combat veteran with service in Operation Desert Storm, Operation Southern Watch, Operation Joint Forge and Operation Enduring Freedom. Before joining Michael Baker, Mr. Whitesell served as an environmental specialist at DOWL, a transportation design consultancy, for 11 years. He managed a small team and led dozens of phase 1 environmental site assessments, numerous wetland delineations and noise analyses for a range of private- and public-sector clients. Whitesell also conducted research and analysis on environmental resources including wetlands, waterways and local animal species that could be impacted from proposed projects and ensured project design processes were compliant with the National Environmental Policy Act. He previously served as an environmental engineer at Hawke’s Bay Regional Council, where he managed multiple waterway restoration and enhancement projects from initial design and scoping through construction. Rep. Don Young announced that Zack Brown will serve as press secretary in his Washington, D.C., office. Brown, a graduate of the George Washington University who most recently worked for Congresswoman Elise Stefanik, R-NY, arrives following the departure of Murphy McCollough, who returned home to Texas to serve in the Office of the Speaker of the Texas House of Representatives.

FISH FACTOR: Salmon market looks up, but many still can’t cook it

Heading into the 2019 salmon season, markets are looking good as global demand exceeds supply. That’s due in part to constraints on the world’s biggest producers of farmed Atlantic salmon — Norway and Chile. While farmed production continues to tick upwards, growth in both countries is limited as to the maximum amount of fish regulations permit them to have in the water. Chile also is still recovering from a deadly virus that wiped out millions of fish in 2016, and Norway is battling pervasive sea lice issues. All told, the days appear to be over when both countries could count on double-digit increases in production to meet setbacks in supply. “Now it appears the salmon farmers don’t have any rabbits left in the hat. They are still increasing production but not to the extent in percentage terms that it used to be,” said Andy Wink, a fisheries economist and director of the Bristol Bay Regional Seafood Development Association. Couple that with expanding salmon demand, and current market conditions create a larger niche for wild salmon, Wink said, not only in the U.S. but also in China. “Demand for salmon in China is growing in a big way,” he explained. “News reports say they expect farmed salmon consumption in China to go from 90,000 metric tons (198 million pounds) this past year to around 250,000 mt (550 million pounds) by 2025. There’s a lot of opportunity for all wild salmon.” Market watchers are awaiting the last four months of sales data, but all salmon species have been selling well and holdover inventories are not expected heading into the coming season. “We saw strong pricing on the wholesale side and volumes moved at a quick clip,” Wink said. “As far as sockeye goes, people I’ve been in touch with anecdotally say things are moving nicely even though prices are up.” Another good sign is that the value of the dollar has held steady. “For the past year the dollar has been going sideways in terms of its strength,” Wink explained. “If it moves a lot, that will have a huge impact on fish prices, but for the time being we haven’t seen a lot of change.” Demand continues to increase in the U.S. where Wink said more appreciation has grown for wild salmon in general. He pointed to Costco as a new market channel, which rolled out a national sockeye salmon program last year. That really gave sockeyes a boost, and Wink said it was clearly shown in Bristol Bay’s branding promotion that has grown from a small pilot program in a handful of stores in Boulder, Colo., in 2016 to 1,000 stores across the country and growing. “When we approach a retailer they are generally very receptive and excited to work with us,” he said. “They know their customers want wild salmon, they want to know where it comes from and that connection with the producer, and that it’s a quality product. Whether it’s from Bristol Bay or other places in Alaska, there’s great demand for that in the U.S.” Wink said the decades of hard work by Alaska’s salmon industry is really starting to pay off. “A lot of great work has been done to develop the quality of the pack, push new products and new markets are opening up,” he said. “Even though they’ve taken years to cultivate, we’re seeing a lot of those investments bear fruit now.” Fish fears A lack of knowledge about seafood is the biggest hurdle to increasing sales and U.S. consumption. That’s the main take away from one of the industry’s most popular events: the Global Seafood Market Conference held this month in California. Results of a first ever Power of Seafood Survey of more than 2,000 Americans by the Food Marketing Institute yielded some surprises about why Americans aren’t buying more seafood and revealed hurdles that prevent them from buying more. A recap of the FMI survey by SeafoodSource found that only 56 percent of Americans eat seafood twice a month, a far cry from the twice a week recommendation by the U.S. government. Just one in five adults said they meet that weekly threshold. Freshness and flavor have a major impact on seafood purchases, the survey revealed, but most shoppers said they feel “turned off” by their lack of knowledge. Nearly half of consumers said there is not enough information about how to judge quality and freshness, and 42 percent said they wanted more information about different species of fish and shellfish. Guy Pizzuti, seafood manager for the Publix supermarket chain, called consumers’ worries over evaluating freshness a “failure of the industry.” Just 29 percent of the respondents said they feel very knowledgeable about how to buy seafood; only 28 percent said they felt confident in how to prepare or season it. Buyers from major grocery chains said they can’t focus on the appeal of raw seafood; instead, they must stimulate consumers to believe they can easily cook it at home. Pizzuti added that for decades the industry has been talking about teaching consumers how to prepare seafood and it still hasn’t been figured out. Dave Wier of the Meijer chain added that the industry is “too busy telling customers what boat caught the fish instead of how to cook it.” He said they’ve taken their eye off what consumers really want and that the industry is “terrible at this and must improve quickly.” The survey found that the average seafood eater spends more on food in weekly shopping than non-eaters, and frequent seafood eaters spend even more - showing it to be a small but lucrative demographic group. Funds for saving lives Saving lives and reducing injuries is the goal of fishing safety grants available to non-profit groups, municipalities, academics and businesses involved in the fishing and maritime industries. The Fishing Safety Research Grant Program was funded in 2010 as part of the Coast Guard Reauthorization Act, and the money is finally available. “These are moneys that came to the Coast Guard first and we are partnering with them to administer these important safety training and research grants. This is the first time that these funds have been available,” saidJennifer Lincoln, co-director of the National Institute of Occupational Safety and Health Maritime Center for Safety and Health Studies. The grants will provide up to 75 percent of the costs and range from $250,000-$650,000 per grant over two years. Academics and nonprofits already involved in research and training are likely applicants, but communities and businesses also are encouraged. “They could partner with a training organization to offer training for fishermen in their area,” Lincoln explained. “There also are small business grants that include things like developing new technologies for industry. It’s those types of ideas that I would potentially expect from municipalities or businesses.” Different fishing fleets have different hazards and proposals can be targeted to what works best for a particular fishery, gear group or region. “A group of fishermen might want to focus on fatigue-related issues,” Lincoln said. “Other ideas could include improving a piece of deck equipment that is particular to a fleet. Catcher processors or the head and gut fleet might want to focus on ergonomic issues and improved processes on their vessels.” Lincoln said ideas continue to evolve on improving safety equipment such as life jackets and she expects some grants will target vessel stability training. Another potential opportunity, she said is exploring hearing protections for fishermen. February 21 is the deadline to apply in two categories: safety research and training. The “opportunity numbers” are RFA-OH-19-004 and RFA-OH-19-005. Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

Dunleavy administration pumping brakes on gasline

Gov. Micheal J. Dunleavy’s administration plans to go back to the future for a successful Alaska LNG Project. Revenue Commissioner Bruce Tangeman stressed the administration’s belief that the state-owned Alaska Gasline Development Corp. needs to shift its focus away from intense efforts to get the $43 billion gasline project approved quickly in favor of resurrecting the “stage-gate” approach favored by the state’s former producer partners during a Jan. 18 speech at the Meet Alaska oil and mining contractor trade show in Anchorage. “The (administration) transition is a great opportunity to pause and see exactly where we’re at in the process with the Alaska LNG Project specifically. It’s a good chance to reach out to our partners that we used to be involved with on a different level and see what their views are of the gasline and the LNG market — get their expertise,” Tangeman said. He added that Dunleavy is very familiar with the project from his time in the state Senate. Dunleavy and other legislators were comfortable with the stage-gate megaproject development process employed until the state took over leadership of the project in late 2016, according to Tangeman. The deliberate stage-gate process breaks overall project development into numerous stages and after each is finished a decision is made whether or not to advance to the next stage. For Alaska LNG, the decision points, or gates, were times when BP, ConocoPhillips, ExxonMobil and the State of Alaska could evaluate their desire to continue or allow the other partners go ahead without them. The companies approach former Gov. Sean Parnell about the prospect of the state being a 25 percent partner in Alaska LNG, which was appealing to the state because it was a way to participate without undue risk, said Tangeman, who was a deputy Revenue commissioner when the public-private Alaska LNG Project ownership structure was devised during Parnell’s tenure in the governor’s office. Parnell has since consulted with Dunleavy on the current status of the project since the election. “We had partners who had done this kind of work and we were going to jump on their backs and ride across the finish line to a successful, profitable project,” he recalled. ExxonMobil was leading the project at that time and the company’s Alaska LNG manager Steve Butt emphasized a need to continually focus on lowering the project’s final cost of LNG supply through optimized project design and infrastructure engineering, in turn leading to improved project economics overall. However, when oil markets bottomed out at sub-$30 per barrel prices in early 2016 — and oil-linked global LNG prices followed suit — the companies suggested to then-Gov. Bill Walker that the project could either be slowed or the state, through AGDC, could take it over. Walker, a longtime advocate for a publicly-led gasline project, quickly chose the state-led option. The Alaska LNG team at the time was wrapping up the roughly $600 million preliminary front-end engineering and design, or pre-FEED, stage of the project, which resulted in reams of environmental and engineering data and the current cost estimate of $43 billion, below the conceptual range of $45 billion to $65 billion. Under Walker, AGDC focused on marketing the project to potential customers in the Asia-Pacific region, an aspect of development Walker repeatedly said had been incorrectly ignored under the prior producer-led Alaska LNG structure. AGDC also began the multi-year process of securing federal permits for the project in April 2017 primarily using the information gathered during pre-FEED. Tangeman said interim AGDC President Joe Dubler and new board members appointed by Dunleavy are also taking time to better understand where the quasi-state agency is in negotiations with potential customers as well as the status of permitting with the Federal Energy Regulatory Commission. FERC is scheduled to release a draft environmental impact statement for the project sometime in February. Dubler, a former finance executive with AGDC, officially takes over as president of the corporation Feb. 1. The board hired him Jan. 10 immediately after firing Keith Meyer, who was hired in 2016 under Walker’s guidance for his significant experience in Lower 48 LNG and pipeline companies. AGDC secured 15 letters of interest from potential customers under Meyer’s leadership and was actively negotiating with six of them when he was let go, according to corporate management. The most notable interest has come from a consortium of state-owned Chinese corporations, which signed a joint development agreement, or JDA, with AGDC in November 2017 in front of President Donald Trump and China President Xi Jinping. The JDA outlines the prospect of the Bank of China and oil giant Sinopec Corp. becoming anchor customers and financiers of the project, with the bank debt funding up to 75 percent of the $43 billion project cost in exchange for Sinopec purchasing 75 percent of its LNG production capacity. Final JDA negotiations have been extended for six months after a Dec. 31 deadline was not met. While the administration is championing a slower approach, board chair Doug Smith also said he doesn’t want to slow any of the progress the corporation has made. Tangeman made it clear that AGDC would not be making a final investment decision on Alaska LNG in 2020 as Meyer had been pushing for, but getting a record of decision from FERC would be valuable and it’s unclear exactly how much that will cost. The state will not be leading a project into construction with as much risk as it carries now, he said. AGDC was also preparing for what executives called an “equity road show” to market the project to investors this year. They often noted the producers would be welcome investors to the project. Tangeman said Dunleavy doesn’t expect to return to the prior structure, but he would be happy with it. “We understand what took place with the price of oil, the price of gas over the last several years but we’ll be talking with (the producers) to see what the climate is now, where we are with oil at $60; what is the gas market; is there an appetite to reengage and see if we can move forward as a partnership again?” he said. “We look forward to having those discussions again. And ultimately a stage gate approach will be put in place so we know and Alaskans know exactly how we’re going to build this project.” The Legislature will also have its say, Tangeman noted. AGDC had previously stressed the need to move quickly on the project to meet a mid-2020s market demand window. BP Alaska President Janet Weiss said in an interview that a state-led project has tax advantages the IRS has recognized that could lower the cost of supply and government-to-government relationships with customers are valuable as well. The state is wrestling with the challenge of assuring it can find a competent builder for the project, something BP, which has assisted AGDC since the state took over, would need to be comfortable with before it would invest. The London oil major also agreed to key terms, including pricing, in May with AGDC to sell its share of North Slope gas into the project. Weiss said BP, which has championed the state’s project “is all about educating and figuring out how to go forward” in discussions with the administration and Legislature. Tangeman said in an interview that the potential customers AGDC is negotiating with understand some change is going to happen in the project with a change of governors but that it will survive if it is economic. He said they also understand there is still a lot of work to do. AGDC veered from the formal stage gates between pre-FEED and FEED, which the companies estimated to be up to a $2 billion undertaking of much more detailed work. “All that hard work has gotten us to a 10-yard line but I think we still have a long way to go to get to the 10-yard line,” Tangeman said, referencing Walker’s campaign metaphor for how close he believes the state is to finally building a gasline. “And I think it’s going to be important that Alaskans understand that.” Tangeman later added in an interview that, “Gov. Dunleavy doesn’t want to go that 90 yards with 100 percent of the risk on our back.” ^ Elwood Brehmer can be reached at [email protected]

Alaska management untouched under revised Modern Fish Act

Though a landmark piece of fisheries legislation will affect how many Lower 48 federal sportfisheries are managed, there won’t be many changes for Alaska. President Donald Trump signed the Modernizing Recreational Fisheries Act — known as the Modern Fish Act — into law on Dec. 31, 2018. The law revises the management framework for recreational fisheries in federal waters, heralded by supporters as a way of differentiating sportfishing from commercial fishing and providing more fishing opportunity in the recreational sector. In Alaska, though, the act won’t have much direct impact. Mike Leonard, the vice president of government affairs for the American Sportfishing Association, said it’s fair to say the provisions in the bill don’t herald many changes in the Pacific Northwest saltwater sportfisheries. The final version of the bill itself removed some of the particular provisions directly changing management strategies, but the essential purpose of the bill remains, Leonard said. “The passage of a bill itself that is focused on saltwater recreational fishing … I don’t know that Congress has ever done that,” he said. “The motivations behind this were to get a recognition within the (Magnuson-Stevens Fishery Conservation and Management Act) that recreational fishing is important but that (commercial and sport) are fundamentally different activities.” The bill inserts language into the existing MSA stating that recreational and commercial fisheries are “different activities” and science-based management approaches should be developed for both. It also instructs the federal Comptroller General to conduct a study of the allocations within the South Atlantic and Gulf of Mexico fisheries and that the National Academy of Sciences shall study the limited access privilege programs in all council-governed fisheries except for two — the Pacific Fishery Management Council and the North Pacific Fishery Management Council. The North Pacific Fishery Management Council, which governs Alaskan federal fisheries, is specifically exempt from parts of the law, in part because the catch share plans that partition the allowable catch of halibut each year are already established. Those catch share plans are working well in large part, said Andy Mezirow, a member of the North Pacific Fishery Management Council. “I think the problem with catch share plans is when there isn’t enough of the resource, which is the case in many places, or they didn’t build a catch share plan based on other ones … and then you end up with these impossible structures,” he said. “Even though we have our own challenges, they’re very different than those that gave rise to the Modern Fish Act.” Mezirow signed onto a letter raising concerns about the initial draft of the act, in part because of the act’s intention of shifting away from catch shares. In affected fisheries, the intent is to allow recreational fishery managers to allow sportfishing even without new available survey data. Advocates said this was to allow the sport sector — which they argue is an inherently different activity than commercial fishing — to continue operating when survey data is deficient. The initial version of the bill required mandatory five-year reviews of the catch share program and prohibited the establishment of more limited access privilege programs, but both requirements were toned down in the final version of the bill. The initial design of the bill would have also allowed recreational fishery managers who lacked survey data to step away from catch limits, providing more recreational opportunity. “The part that we really objected to was a component that was removed from it,” Mezirow said. “The problem was that there was some provisions in the Modern Fish Act that if they were applied to the federal fisheries in Alaska, they would create a lot of chaos. And that was the desire to step away from a catch share plan … That didn’t really resonate with us … the idea that you would do less science and give more fish away.” In Alaska, halibut is managed by the North Pacific Fishery Management Council with input from Canada via the International Pacific Halibut Commission. The way the recreational halibut fishery is managed already contains some of the principles the authors of the Modern Fish Act aimed for, including more flexibility on catch limits, Mezirow said. For example, the Gulf of Alaska charter sector has gone over its allowed quota for the past several years, but the fishery is not closed as soon as the catch limit is reached — in part because it would be a harsh restriction on the fishery, and in part because there is no in-season management for the recreational sector. The commercial sector groups largely removed their objections to the Modern Fish Act when the mandatory allocation review requirements were removed and the language allowing “alternative management measures” was refined, said Linda Behnken, the executive director of the Alaska Longline Fishermen’s Association. “(The Modern Fish Act) as first floated or introduced had a plan or included language to allow ‘alternative management’ measures in the recreational sector,” she said. “It left wiggleroom for ‘alternative’ to mean overfishing by the recreational sector. That was our primary concern with (the bill). No one was opposed to designing management measures for the recreational sector that are more well suited to their fishing, but no one supports overfishing.” Several groups in the commercial sector worked together to educate legislators and the public about the impacts of the original bill as drafted, Behnken said. The commercial sector’s main concern was if the recreational sector was not held to the same scientific data-based management that commercial fishermen are, which could endanger fishing stocks for all users. “That was where the real hue and cry came from the commercial sector,” she said. “We are all very committed to conserving this resource in the long term. That’s been a bipartisan commitment over the years to manage our fisheries with that as the highest standard.” The Modern Fish Act amends the Magnuson-Stevens Act, but does not reauthorize it. Behnken said she hopes the Senate will continue the reauthorization process in the upcoming session. Leonard said the American Sportfishing Association found the process of working with various groups on the Modern Fish Act “interesting,” as it gave stakeholders of all groups a chance to scrutinize a bill that focused solely on recreational fishing as opposed to fishing in general. The group is looking forward to working with the Senate on the MSA reauthorization in the future, he said. “This is a good start,” he said. “There were several provisions in the original Modern Fish Act that got left behind, just through the nature of working through the legislative process… I think that would likely need to get done through the MSA.” Elizabeth Earl can be reached at [email protected]


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