Slope production forecast coming up short

Alaska is facing a projected $1.6 billion budget deficit next year, but the financial picture for the current fiscal year could get a little worse if North Slope oil production figures don’t increase soon. North Slope crude oil and natural gas liquids production for fiscal year 2019 averaged 496,197 barrels per day through February, according to the state Department of Revenue. That is 5.8 percent below the average daily production forecast produced by the Department of Natural Resources of 526,800 barrels for all of fiscal 2019, which began last July 1. The delta between actual and forecasted production is notable because overall 2019 North Slope production was supposed to increase from the final fiscal 2018 average of 521,398 barrels per day. Instead, the 496,197 barrels per day of production since the start of July is also well below the year-to-date average for 2018, which was 516,870 barrels per day at the end of February 2018. Overall, the state was expected to draw roughly $700 million from savings when the fiscal 2019 budget was passed last June. Actual North Slope production in February averaged 517,227 barrels per day, while state officials calculated that production for the month would have to be about 582,000 barrels per day to stay on pace for the 526,800 barrels per day forecast for the year. It’s worth noting that the monthly calculation is largely based on historical production averages prorated by month — production peaks in winter months —as opposed to strictly being based on year-to-year situations, according to state officials. Oil taxes and royalties were expected to generate more than $2.2 billion in unrestricted revenue for the State of Alaska in the current fiscal year, according to the annual Revenue Sources Book the Department of Revenue publishes each December. The revenue projection is based on the combination of the department’s oil price forecast for the year as well as DNR’s production estimate. The price side of the equation is currently a slight but dwindling positive for Alaska’s finances, as higher than expected prices through late summer and fall have the average price for a barrel of Alaska North Slope crude at $69.85 per barrel, or about 2.8 percent more than the $67.96 per barrel forecast. However, the average realized price has gradually been falling since Alaska oil prices fell back to sub-$70 per barrel range in November. Another roughly 11,000 barrels per day of oil is produced from Cook Inlet oil fields, but Cook Inlet oil provides minimal production tax revenue and the volume doesn’t compare with North Slope production. Division of Oil and Gas Commercial Analyst Pascal Umekwe said the Revenue Department’s annual spring update to the fall forecast will likely show “a slight downward revision” for the production forecast based on the numbers from the first seven months of the fiscal year. The spring forecast is usually published in mid-March. State officials last year attributed actual production not meeting the fall forecast to unusually warm North Slope temperatures, which degrades the efficiency of production facilities designed to run most efficiently at very cold temperatures. The natural gas compressors that help reinject gas at many wells to enhance oil production are not as effective at warmer ambient temperatures — which is the primary reason for less summer production each year — and can lead producing companies to focus on extracting oil from wells that have a lower gas-to-oil ratio when things warm up. Last winter North Slope temperatures were about 14 degrees above the long-term average. This year, February temperatures at Utqiagvik averaged 4.5 degrees Fahrenheit, or 18.7 degrees above normal. The high in Utqiagvik hit 34 degrees on Feb. 28. January temperatures were still high but more in line with historical norms at 4.6 degrees above normal, according to the National Weather Service. Umekwe emphasized that production from the large, mature North Slope fields typically declines each year unless companies put significant work into turning it around. That work can come in the form of improving production facilities, “workovers” to existing wells or drilling new wells. The timing of that work can also impact oil production. He also noted that state analysts who prepare the production forecast are typically able to have just one or two meetings with company representatives to gather information prior to releasing the forecast each fall. Subsequent information for the spring update comes from publicly available data. Changes to companies’ maintenance and drilling schedules after their meetings with state officials could then play into the variance between forecasted and actual production volumes, according to Umekwe. “It is the scheduling of work, in terms of turnaround activities that were done in the summer and how production responds after that work is done. That would be a key factor as well as how temperatures in a given February compare with temperatures in a previous February,” he said. “Work being done at a production facility that dips down production for a longer period of time would be very different than work done in a similar period the previous year that wasn’t that extensive — so both the intensity of the work and the schedule of the work. When I talk about intensity, it’s intensity of the impact of that work on production.” Industry representatives noted that Eni, which operates the small Nikaitchuq field, had problems with its production facilities in late fall, which slowed production from the field. An Eni spokesman did not respond to questions in time for this story.

FISH FACTOR: Trident’s pollock noodles sweep Symphony of Seafood awards

Push that pasta aside. Noodles made from Alaska pollock are poised to become a center of the plate favorite. Alaska Pollock Protein Noodles from Trident Seafoods swept the awards at the 26th annual Alaska Symphony of Seafood new products competition in Juneau. The low carb, “flavor neutral” noodles contain 1O grams of protein per serving and can be swapped with any pasta favorites. The ready to eat item drew raves from judges and samplers from Seattle to Southeast who gave the noodles quadruple awards at the Feb. 20 bash. “That’s never happened before,” said Julie Decker, executive director of the Alaska Fisheries Development Foundation,” host of the Symphony event. “It really blew everything out of the water.” The new products played to a packed house as part of United Fishermen of Alaska’s annual legislative reception where everyone gets to sample and vote on the goods. “It’s a great chance for policy makers to mix with people in Alaska’s statewide seafood industry,” Decker said. “Sen. Murkowski gave away the grand prize. Lots of legislators were there and a number of them presented awards. A number of people from the governor’s office also attended.” The annual competition kicks off at Pacific Marine Expo in Seattle in November where the new products are judged and first place winners in three categories are announced. All other winners are kept under wraps until the Juneau event. Trident’s protein noodles took top honors in the retail category, People’s Choice awards in Seattle and Juneau and the overall grand prize. Second at retail was Wild Alaskan Salmon Jerky by Fishpeople Seafood of Portland, Ore.; Smoked Sockeye Salmon Chowder by Heather’s Choice of Anchorage took home third place. First place in the Food Service category was awarded to Alaska Cod Dumplings by Tai Foong USA, followed by Trident’s Entrée Redi pollock fillet portions. The winner in the Beyond the Plate category, which features items made from seafood byproducts, was Wild Alaska Pollock Oil by Alaska Naturals Pet Products. Second place went to Tidal Vision’scrab shell based Tidal-Tex Odor Preventer that “de-funks” footwear, camp gear and pet beds. Top winners are automatically entered into the Seafood Excellence competition at the Seafood Expo North America March 17-19 in Boston. Fishing updates Hundreds of boats are out on the water all winter throughout the Gulf of Alaska and Bering Sea targeting pollock, cod, flounders, other whitefish and more. The Bering Sea snow crab fishery is still ongoing as are openers for their bigger cousin, bairdi Tanners, in Southeast Alaska. The Tanner harvest should top 1 million pounds. Southeast crabbers also are finishing off a golden king crab fishery that has a catch limit of 76,000 pounds. A fishery for seven types of rockfish will remain open in outside waters of Southern Southeast until March 14 or until the fleet takes the nearly 112,000-pound quota, whichever comes first. A Tanner crab fishery opened in Prince William Sound on March 1; Norton Sound’s red king crab fishery opened on Feb. 25 with a winter harvest limit of 12,048 pounds. The Pacific halibut fishery opens on March 15, soon to be followed by herring fisheries. Love wild? Eat wild Fish farming does little if anything, to conserve wild stocks. In fact, aquaculture has failed to reduce the pressure on the world’s fish stocks, it has not advanced fishery conservation, and should focus more on species lower in the food web, such as clams and other bivalves. Those are the conclusions of a study published in Science Daily by researchers at the University of North Carolina, who base their findings on historical data from the World Bank and the UN Food and Agriculture Organization from 1970 to 2014. Yet the push to convince consumers that eating farmed saves wild has gotten new life by meal kit makers LoveTheWild. The Boulder-Colorado based group, which launched its oven-ready farmed salmon, trout and barramundi offerings in 2014, has announced they will be available at Whole Foods stores nationwide this month. Among their investors is actor Leonardo DiCaprio who claims that “the exploitation of our oceans has left many marine ecosystems on the brink of total collapse” and that LoveTheWild is “empowering people to take action on the crisis in a meaningful way.” LoveTheWild omits the fact that meals and oils made from wild fish are used to feed farmed fish, thereby removing more from the ocean, not less. Also, many fish are grown in packed net pens and are routinely doused with additives, antibiotics and pesticides. “There are some perceptions in the consumer market on the production and management of our wild fisheries that are misconstrued and quite frankly, wrong,” said Michael Kohan, Seafood Technical Director for the Alaska Seafood Marketing Institute. “Alaska’s fisheries support over 60,000 jobs by people whose livelihood is putting wild fish on the market for people to purchase. You support wild fish by eating wild fish.” Andy Wink, director of the Bristol Bay Regional Seafood Development Association, called the farmed saves wild push “misplaced.” “Their hearts might be in the right place but I don’t think they are thinking it through,” Wink said. “When you buy fish from a sustainably managed fishery, you’re voting with your dollars to support those who are doing things right.” Fish funds American Seafoods has issued a call for grant applications targeting community programs in Kodiak, the Aleutian and Pribilof Islands, Western Alaska Peninsula, Bristol Bay, Lower Kuskokwim, Lower Yukon, Norton Sound and regions north. A total of $45,000 will be allocated in grants that typically range from $1,000 to $7,500 each for projects that focus on hunger, housing, safety, education and cultural activities. The deadline to submit a request is April 10; the company’s Western Alaska Community Grant Board will select recipients on April 25. Grant request forms are available online at www.americanseafoods.com or by contacting Kim Lynch at [email protected] or 206-256-2659. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: 90 days is plenty of time to review Pebble EIS

Some may find it easy to pile on to the Pebble mine just because it has the perception of controversy. However, just because a project is perceived as controversial does not make it OK to change the norms of review and process. This causes all within the regulated resource community alarm and concern because a well-established process demonstrates stability and stability is the lifeblood of investment. Organizations that want to see Alaska’s economy grow have long been on record in support of fair, stable, consistent and due process for all projects in Alaska. Sen. Dan Sullivan and President Donald Trump have made permitting reform top priorities, calling the current permitting process “broken” and reform “long overdue.” Sen. Sullivan has taken a lead on this by speaking out against delay tactics that abuse the National Environmental Policy Act and by pushing legislation to establish time limits on federal permit reviews. Recently, several groups have called upon the U.S. Army Corps of Engineers to slow down the review process for the Pebble Project’s “lengthy” draft Environmental Impact Statement. This is a classic delay tactic deployed whenever a government agency is following the normal regulatory path for a project. It is called “slow rolling,” and in Alaska, this has traditionally been used by environmental organizations to slow down progress being made on resource development projects. As many in the business community understand, delay costs projects time and money. Prior to the release of the Pebble Project draft EIS, some were saying the document would not be comprehensive enough. Well, that argument went out the window the moment the document was published. The draft EIS for Pebble is about 1,400 pages, with an 80-page executive summary and another 1,600 pages of appendices. This places it at just a little above the norm for a draft EIS review document for a resource project in Alaska. Then there is the question of whether a 90-day review is an adequate amount of time for the public to review 1,400 pages, with the caveat that most members of the public tend to read through the executive summary. In the case of the Pebble DEIS, that is about 80 pages. To put this in perspective, here are some recent public comment windows: • ANWR Coastal Plain Leasing (2018): 45 days, extended by 30 days, 392 pages. • Tongass Timber Sale on Prince of Wales Island (2018): 45 days, no extension, 408 pages. • Oil Search Nanushuk Project: 45 days, extended by 30 days, 1,191 pages. • Alaska Stand Alone Pipeline Project (2017): 45 days, extended by 15 days, 1,822 pages. • Chukchi Sea OCS Oil and Gas Lease Sale 193 (2014): 45 days, no extension, 694 pages. • Point Thomson (2011): 45 days, extended by 15 days, 1,506 pages. • Red Dog Aqqaluk Expansion (2008): 60 days, no extension, 464 pages. In looking at the projects noted, the Pebble draft EIS 90-day comment window is actually longer than all of them. Three months to read, review and comment on the Pebble draft EIS is more than adequate. Surprisingly, some groups are pushing for a 270-day comment window for the Pebble draft EIS. Those of us in the resource development community know nine months will not improve the public’s opportunity for comment; rather, this will slow down Pebble’s progress and let national environmental groups like the Natural Resource Defense Council continue to flood the comment ballot box via electronic post cards. Comment window extensions beyond the norm only serve to further Alaska’s reputation as a state with great resource potential challenged by regulatory instability. If Alaska wants the resource investment community to know it is open for business, holding firm on reasonable regulatory actions is a good place to start. Rebecca Logan is the CEO of the Alaska Support Industry Alliance.

Draft EIS for Alaska LNG Project pushed back four months

Citing the state’s timeline for answering federal regulators’ questions and fulfilling data requests, the Federal Energy Regulatory Commission has extended by four months its scheduled release date for the Alaska LNG project’s draft environmental impact statement, or EIS. In a notice issued Feb. 28, FERC said it now plans to issue the draft EIS in June. The commission did not specify a date in June. The scheduled release date had been February. The delay in the draft EIS also adds four months to FERC’s schedule for the state-led project’s final EIS. In its Feb. 28 notice, the regulatory commission said the final EIS would be issued March 6, 2020, instead of November 2019. But March 2020 depends on the Alaska Gasline Development Corp. answering all of FERC’s questions in full this summer. “The revised schedule for the EIS is based upon AGDC meeting its commitment to provide complete responses to outstanding data requests on the dates it has identified,” FERC said in its notice. “Staff has revised the schedule for issuance of the final EIS based on an issuance of the draft EIS in June 2019.” FERC explained that its previous schedule of a draft EIS in February and final impact statement in November “was based upon AGDC providing complete and timely responses to any data requests.” The commission has always advised AGDC — the same as for any other project — that an EIS schedule is dependent on full information from the applicant. In its filings in January and February, the state project team reported it would submit answers and additional technical data to more than 150 of FERC’s most recent questions in several batches, starting in early March and ending in July. In a statement provided to the Alaska Journal of Commerce, AGDC spokesman Tim Fitzpatrick said, “FERC’s comprehensive analysis of Alaska LNG now includes more than 150,000 pages of environmental and engineering data, including responses to more than 1,700 FERC queries submitted since AGDC initiated this permitting process twenty-two months ago. Previous FERC scheduling changes accelerated the permitting calendar, and we believe that today’s revision does not affect the prospects for Alaska LNG. We look forward to working with FERC to complete this process and obtain the permits required to bring Alaska’s North Slope natural gas to market.” The state has been talking the past two years with potential lenders, partners and customers in China and elsewhere in Asia, but has not reached any firm deals. The state has spent close to $500 million the past several years on the Alaska LNG project and a smaller, backup project, the Alaska Stand Alone Pipeline, as hopes continue that someday a pipeline will deliver North Slope gas to Alaskans and overseas markets. “Our current plan is to step back and evaluate technical and commercial aspects of the project,” AGDC’s interim President Joe Dubler told a state Senate budget subcommittee in Juneau on Feb. 27 as quoted in an S&P Global Platts report. “If it is viable we are going to solicit world-class partners for FEED, which is front-end engineering and design.” If FERC issues its final impact statement in March 2020, the deadline for commission action on the Alaska LNG project application would be June 4, 2020, 90 days after issuance of the final EIS. Federal regulators have been working to prepare the draft EIS since the state in April 2017 submitted its application for the estimated $43 billion project to move North Slope natural gas down an 807-mile pipeline to a liquefaction plant and export terminal in Nikiski, on the eastern shore of Cook Inlet. AGDC has been working to answer hundreds of questions and data requests from FERC and other federal regulatory agencies participating in the single federal EIS for the project. The proposed Alaska LNG development, which the state took over from North Slope oil and gas producers in late 2016, also includes a gas treatment plant at Prudhoe Bay to remove carbon dioxide and other impurities from the gas stream and a 62-mile pipeline to deliver gas from the Point Thomson field to the treatment plant at Prudhoe. AGDC still owes FERC information on fire safety, spill-containment safeguards and hazard-mitigation designs at the gas treatment plant, liquefaction plant and LNG storage tanks in Nikiski. In addition, federal regulators are waiting for information from the state on pipeline crossings at active earthquake faults, and a more detailed route map showing all seismic hazards within 5 miles of the pipelines. The state team also owes FERC more information about the project’s 27-mile underwater pipeline crossing of Cook Inlet, including addressing whether tidal flow and other currents would move debris and boulders across the pipeline and, if so, how much movement is expected. The regulator also wants to know if AGDC plans to use any additional weights or supports along the underwater pipeline after construction to stabilize the line against tidal currents, and whether the seafloor is firm enough to prevent the weighted 42-inch-diameter pipe from sinking into the seabed and straining the pipe welds during construction and operations. The state gas development corporation reports it has enough funding left over from prior legislative appropriations to last through the EIS process, assuming lawmakers this session approve AGDC’s $10 million operating budget plan for the fiscal year that starts July 1. Moving past the EIS, however, would require at least several hundred million dollars for final engineering and design, which the corporation does not have. It also would require investors, binding gas-supply contracts with the North Slope producers, bankable contracts for customers to take capacity on the pipeline and through the liquefaction plant, and buyers for the LNG. ^ Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide.

St. Paul ready for takeoff with Sabrewing partnership

Small communities aren’t often able to attract investments in groundbreaking technologies. It’s even more rare when it happens to an ultra-remote island village near the edge of the Arctic; but thanks to the foresight of community leaders, the unique opportunities that isolation provides, and a little luck, St. Paul, Alaska, is on its way to becoming the center of field research for large commercial unmanned aircraft. Earlier this year, the Aleut Community of St. Paul Island, the Tribal government of St. Paul, inked a deal worth up to $43 million with Sabrewing Aircraft Co. to test, develop and ultimately purchase the company’s unmanned cargo aircraft. The partnership, officially announced Feb. 27, first calls for the Tribal government to establish the St. Paul Experimental Test Range Complex for testing Sabrewing’s Rhaegal and Wyvern vertical takeoff and landing prototype cargo aircraft. Eventually, the Tribe plans to buy up to 10 Sabrewing aircraft and form a joint-venture company with the manufacturer offering large unmanned aircraft pilot training, maintenance, leasing and other services. Sabrewing co-founder and CEO Ed De Reyes said the partnership with the tribe of St. Paul has pushed company leaders to expedite their plans. De Reyes said in a June 2018 interview with the Journal that the company was working toward completing the 4,500-mile trans-oceanic Pacific Drone Challenge this year. However, Sabrewing has since “set the Pacific Drone Challenge to the side” given the opportunity came sooner than expected to commercialize its aircraft. “In St. Paul I don’t think I’ve ever seen a place that has such a variety of capabilities (for unmanned aircraft) in one location. It sounds so weird because you never think you’d find this in the middle of the Bering Sea but it’s amazing. It is there,” De Reyes said. St. Paul is the largest of the Pribilof Islands, and sits roughly 250 miles north of the Aleutian chain in the Bering Sea. Patrick Baker, executive director of the Tribal Government of St. Paul, said the Tribe has a for-profit subsidiary that operates small unmanned aircraft — referred to as Part 107 aircraft in Federal Aviation Administration parlance — and wanted to expand that work but was not thinking about hosting a large unmanned aircraft system, or UAS, test range. Much of that work has been on small contracts with companies, universities and government agencies doing mapping and various types of environmental research. Historically, the village’s economy has revolved around Bering Sea crab and halibut fisheries. “We’re a community that’s a very resource-based community around fishing as the Tribal government. We’ve seen the trend of resource depletion, overfishing. The trend has been in decline so we’ve been looking for opportunities around diversification that also kind of fit with our mission,” Baker said. “With St. Paul and most of Alaska being challenged with logistics, we were looking to get ahead of technology, find tomorrow’s industry and we started with Part 107, training pilots, then training instructors. “We’ve found some opportunities around the 107-class aircraft but nothing quite on the same scale as the fishery resource. We feel this larger platform is the future. We feel we’re ahead — getting in at the right time; kind of building on that unique geography of St. Paul in the center of the Bering Sea.” St. Paul’s population has fallen from about 600 residents to a little more than 400 along with declines in the fisheries, he noted, as residents seek employment elsewhere. Stars align St. Paul Tribal Council President Amos Philemonoff described the last eight months as “pushing a snowball down a mountain,” adding that, “everything has just lined up perfectly. You just couldn’t ask for a better alignment of the stars.” The courtship with Sabrewing started after a Tribal government representative read a June 2018 story in the Journal profiling Sabrewing and the company’s plans to manufacture its aircraft in Anchorage. Cargo deliveries to remote communities is Sabrewing’s target market, and without the ability to legally fly its aircraft to Alaska with all the state’s opportunities in that market, Anchorage is a natural home for manufacturing its aircraft. “The more time that goes on the more sense it makes for us to be located in Anchorage,” De Reyes said in June. “I can’t think of any other place in the United States that has that unique — not only position in the aircraft industry — but that unique place in unmanned cargo (aircraft). It makes more sense than any other location that I can think of.” Sabrewing is also an associate member of the Alaska Air Carriers Association. Currently based in Camarillo, Calif., the company is focused on developing the Rhaegal first: a mid-sized aircraft with a cargo capacity of 800 pounds, a range of 360 nautical miles and a maximum altitude of 22,000 feet. Sabrewing’s aircraft are built on a composite airframe with a gas-electric hybrid power system that drives four electric motors, each turning a variable-position fan. While a hybrid system, the Sabrewing powertrain does not alternate between power sources in the way the popular Toyota Prius hybrid car does. Instead, a light, super-quick response rotary engine generates the power that is converted into electricity by the four motors in real-time. De Reyes said he believes the costs to operate and maintain a Rhaegal will be about half of what it takes to fly a traditional small cargo plane such as a Cessna Caravan, and those cost savings could translate directly into a lower cost of living in remote communities. The larger Wyvern, with a 4,400-pound payload and a 1,600-mile range, will come later, according to De Reyes. Eyeing Anchorage Company leaders are shopping for industrial space in Anchorage and hope to start putting the first Rhaegals together early next year. De Reyes said Anchorage will be more of an assembly facility as opposed to true manufacturing. The aircraft’s five major segments and other small components will be developed elsewhere and put together here. On the regulatory side, the FAA is close to approving an initial certificate of authorization, or COA, for the test range. The first COA is likely to be for a small area immediately surrounding St. Paul Island. It could be expanded soon after Sabrewing demonstrates it can operate the Rhaegal safely, De Reyes said. Ultimately, St. Paul offers approximately 126,000 square miles of relatively empty unrestricted airspace underneath the large jet traffic that starts at 27,000 feet, according to De Reyes. He and others have credited the FAA for being open to ideas for testing emerging technologies, such as unmanned aircraft, in recent years while still following the strict “safety first” mandate. FAA officials said they have been impressed in talks with St. Paul and Sabrewing leaders with their proactive approach to address regulatory issues. John “Nevada” Nevadomsky, a former director of the University of Alaska Fairbanks’ Pan-Pacific UAS Test Range Complex and Sabrewing’s new research and development director, also noted that the FAA Reauthorization bill passed by Congress last fall allows for Tribal governments to set up test ranges. UAS test ranges had previously been limited mostly to research institutions. The abundance of available airspace and inclement weather conditions afforded by the Bering Sea will help Sabrewing prove its mettle in all types of conditions, De Reyes said. The remote location also keeps the testing of proprietary technologies a safe distance away from those who aren’t supposed to see it, added De Reyes, who has worked extensively as a test pilot for numerous aircraft manufacturers. “I can’t tell you the number of projects we’ve worked on before where you’ll sit here and go, ‘Holy smokes, nobody was supposed to know about this,’ but yet, it’s in somebody’s magazine and they have data on how fast it flies and how high it flies right down to the nitty gritty,” he said. “But that’s one thing about St. Paul; when you get off the plane they know what you’re there for and if they don’t somebody’s going to find out. If you’re there to snoop it’s the wrong place to be because you’ll be invited to leave very quickly.” Education investment pays off Finally, the St. Paul Tribe’s forethought helped seal the deal from Sabrewing’s perspective. According to Baker, the Tribe has invested upwards of $1.6 million per year in profits from its businesses into STEM education materials and equipment at the community’s K-12 school to broaden students’ opportunities. De Reyes said he noticed parallels between the small south Texas town he grew up in — but had to leave to pursue his dreams in aviation — and St. Paul. “As I grow older I realize how much I miss the little town I grew up in. It’s still there but it’s not the little town I grew up in,” he described. “St. Paul, I think, will always have that same kind of community that it has now; they’re just moving forward but really recognizing this: If we put the mechanism in place to teach them here, to provide them with jobs and a meaningful living wage here in St. Paul, they’ll stay in St. Paul.” The Sabrewing partnership has brought a “buzz” to St. Paul, according to Council president Philemonoff. The excitement reaches down to the community’s youth, he said while describing a presentation Sabrewing and tribal leaders gave to the entire St. Paul student body. “Man, these kids, you could just see their faces light up — their arms shooting in the air. All we did was answer questions for a couple hours,” Philemonoff recalled. “There was this kid in front of me; he must have mouthed off 10 or 12 questions and I’ve never seen him talk before. Just amazing.” ^ Elwood Brehmer can be reached at [email protected]

Board of Fisheries to reconvene committee on hatcheries

For the first time in about a decade, the Board of Fisheries will reconvene its committee focused on the state’s salmon hatcheries. The Hatchery Committee — which actually consists of all the members of the board — is set to meet March 8, the day before the board begins its Statewide Finfish and Supplemental Issues meeting in Anchorage at the Sheraton Hotel from March 9-12. Rather than making regulatory policies, the committee meeting will focus on receiving reports from staff and hearing from the public on hatchery issues. Glenn Haight, the board’s executive director, said the committee will base its activities on a joint protocol on hatcheries developed in 2002. “The agenda shows that the department will provide a number of reports and then they were just going to open discussions not unlike Committee of the Whole,” he said. “It’s not clear to me what will come out of it. It’s an information session.” The Joint Protocol on Salmon Enhancement, signed in 2002 by the chairman of the Board of Fisheries and the commissioner of the Alaska Department of Fish and Game, outlines the authorities of the department and the board and outlines the board’s intention to hold meetings “on a regular basis wherein the department will update the board and the public on management, production and research relating to Alaska’s salmon enhancement program.” Most hatcheries in the state are run by private nonprofit organizations, funded in part by taxes paid by commercial fishermen as well as cost recovery revenue from harvests; the state also runs two sportfish hatcheries in Anchorage and Fairbanks. Their permits for egg-takes and salmon releases are administered by the state and vetted through the Regional Planning Team process. The board has the authority to regulate harvest on those returning salmon and to modify hatchery permits relating to the source and the number of eggs harvested. Sam Rabung, the director of Fish and Game’s Division of Commercial Fisheries and the former section chief for the division’s Statewide Aquaculture, Permitting and Planning office, said the committee met annually until 2008 or so. “Quite frankly, I think the board at that time just lost interest because there was nothing new or exciting happening,” he said. “In the 10 years that went by, there wasn’t an opportunity for the public to receive information, and because that information wasn’t being made available in public formats, it kind of created an information vacuum.” In a series of meetings in 2018, the board considered petitions and Agenda Change Requests from the public raising concerns about hatchery production — particularly about pink salmon production in Prince William Sound. The Kenai River Sportfishing Association, a Soldotna-based organization which advocates for sport anglers, connected its concern to an ADFG analysis showing that unexpectedly large numbers of hatchery-origin Prince William Sound pink salmon were straying into streams in Lower Cook Inlet in 2016 and 2017. The organization submitted a number of scientific papers connecting pink salmon abundance in the Gulf of Alaska to concerns about the Gulf’s carrying capacity for fish as well. Hatchery representatives and commercial fishermen countered these papers, submitting their own review saying many of the studies were flawed or incomplete, and asking the board to have a broader discussion on hatcheries before modifying permits or capping production. Division of Commercial Fisheries Chief Fisheries Scientist for salmon Bill Templin presented an analysis of the papers as well, saying many of the papers either had flaws or lacked context. The board members repeatedly voted down the requests to cap hatchery production or modify current hatchery permits, but agreed to reconvene the committee on hatcheries to open up the opportunity for more public forum on hatchery production and impacts. Hatcheries are important to many commercial fishing communities, enhancing the salmon returns to many areas. The cities of Juneau, Valdez and Craig all submitted letters in support of hatchery programs in the state, as well as a number of Native corporations and commercial fishermen in various regions. The Afognak Native Corp. submitted comments for the meeting supporting hatcheries and the reconvening of the committee, calling the Kodiak Regional Aquaculture Association’s work “critical contributions.” “We specifically request that the State support the convening of the Salmon Hatcheries Committee Meeting and Joint Protocol on Salmon Enhancement,” executive director Alisha Drabek wrote in the letter. “This Joint Protocol is particularly essential as it provides a forum for open discussion on hatchery topics to improve dialogue and transparency between the Board of Fisheries, ADF&G, fisheries stakeholders, and the public to generate statewide perspectives on issues associated with hatchery production of salmon.” Conservation and sportfishing groups submitted comments asking the board to take action with concerns about the effect of pink salmon on the ecosystem of the Gulf of Alaska. The Homer-based Kachemak Bay Conservation Society criticized Templin’s analysis of the scientific papers on the effects of pink salmon on the Gulf in its comment, saying ADFG staff menbers are not able to act in an unbiased manner on hatcheries. The group calls for an independent Hatchery Impacts Advisory Group to advise the board’s Hatchery Committee. “An independent Hatchery Impacts Science Advisory Group must be formed to determine whether release sized need to be limited by the board and/or sanctuaries for significant wild stocks need to be created,” wrote Kachemak Bay Conservation Society board president Roberta Highland in the letter. The Hatchery Committee is scheduled to meet on Friday, March 8, starting at 8:30 a.m., followed by the Statewide and Supplemental Finfish meeting starting Saturday at 8:30 a.m. Elizabeth Earl can be reached at [email protected]

On-site cannabis consumption rules delivered to Meyer

The Marijuana Control Board has approved regulations and paperwork for on-site consumption endorsements and businesses are now waiting on Lt. Governor Kevin Meyer’s signature for final approval. At its Feb. 20 meeting, the board approved the permit forms that cannabis businesses will have to complete in order to obtain an on-site consumption endorsement. The paperwork may still have amendments in the future based on industry and local government feedback, but for now, the checklist of items license holders need to apply has the Marijuana Control Board’s approval. However, businesses still can’t submit applications for the paperwork, be approved and open up their spaces quite yet. After the Marijuana Control Board approved the regulations, they were sent to the Alaska Department of Law for review. After that, they require the lieutenant governor’s signature before becoming official. Meyer has not signed them yet; his office just received the packet from the Department of Law on Feb. 28, according to Meyer’s Chief of Staff Josh Applebee. If Meyer signs off, they will take effect 30 days later and applications may be submitted. In December, Alaska became the first state to pass regulations to allow people to consume marijuana on licensed premises in a 3-2 vote of the board. It was a long-championed item by the cannabis industry, particularly those who own licenses in areas with large tourist visitation. However, concerns about public health and safety dominated the discussion for some time as the industry and the board members tried to work out how to implement regulations. Not long after the Dec. 20 vote, Gov. Michael J. Dunleavy dismissed Sitka Police Chief Jeff Ankerfelt from his public safety seat on the board and declined to nominate industry representative Brandon Emmett for another term on the board. Dunleavy instead nominated Vivian Stiver of Fairbanks, who led an unsuccessful effort to ban local commercial cannabis operations in 2017, to replace Emmett. Both Ankerfelt and Emmett voted in favor of allowing onsite consumption. With the summer tourist season coming, some businesses are hoping to have their on-site consumption areas open and available this year. The Ketchikan Gateway Borough, home to about 13,000 people, welcomes just about every Alaska-bound cruise ship every summer. As the first port a ship encounters upon entering Alaska, the city of Ketchikan can see days with 8,000 to 10,000 tourists in town. Mark Woodward, co-owner of cannabis retail shop Stoney Moose, says his store can attract about 10 percent of that influx — maybe 800 to 1,000 people per day on a busy day. Because the cruise ships don’t allow people to use cannabis on board and consuming cannabis in public is illegal, many of his customers have to resort to either smoking somewhere discreet around town or using edibles instead. “People will buy an edible and walk outside and open it up and pop it in their mouth,” he said. Opening up an on-site consumption area has always been part of the plan for his business, he said. Most Ketchikan locals will likely purchase their products and go home to consume them, so the site would be targeted mostly at the cruise ship industry. Set up in downtown Ketchikan where visitors can walk to and from the store, the shop has an advantage over others situated a little farther out of town. But it’s also a disadvantage for on-site consumption because of a clause the Marijuana Control Board included requiring businesses to be located in a freestanding building in order to allow smoking. While that may not be a problem for businesses in Southcentral Alaska, where the communities are more spread out and more buildings stand independently, it’s a huge hurdle for Southeast, where the communities are more densely developed. Woodward said he and his co-owners invested in a ventilated indoor room with the hope that on-site consumption would be allowed, but the inclusion of the “freestanding” clause negatively impacts that plan. They’d have to switch to a covered, ventilated deck instead. “We have a deck that it would be perfect,” he said. “It overlooks a salmon stream. We’re going to ventilate the deck. We have all these plans, but it’s just this unknown of can you have a freestanding building? Down here in Ketchikan, you just don’t.” The board discussed that consideration during its February meeting, noting the concern from some business owners who want to allow on-site consumption of edibles only. The freestanding requirement is a stipulation of the statewide Smoke-free Workplace Act and wouldn’t apply to an area that only allowed consumption of edibles. Board chairman Mark Springer asked if the Alcohol and Marijuana Control Office could look into developing separate forms for someone wanting to only allow edible consumption that would allow them to bypass the freestanding regulation. “We’re approving this, but it’s still going to be a work in progress, so would it be fair to say that if people in industry, people in government, have got thoughts on what all should be included in this, what would clarify it for local government, what industry might think … that they can either throw it in the marijuana mailbox or flag comments on this and it will be administratively considered,” he said. “Partly that’s because this continues to be a high-interest issue.” Elizabeth Earl can be reached at [email protected]

AGDC ready to disband if Alaska LNG a ‘no-go’

New Alaska gasline officials are prepared to break up the band if an internal review concludes the current iteration of the $43 billion Alaska LNG Project doesn’t pencil out. Alaska Gasline Development Corp. President Joe Dubler told legislators during a Feb. 27 Senate Finance subcommittee meeting that the quasi-state corporation holding Alaska’s longtime hopes for a large natural gas pipeline project is in the process of scaling back while evaluating the technical and commercial viability Alaska LNG. Dubler, who officially took the helm at AGDC Feb. 1, emphasized that Gov. Michael J. Dunleavy replaced four board members and hired him to “refocus the corporation.” “What (Dunleavy) wanted us to focus on was the Alaska LNG Project to determine if the larger project with the export capacity could meet economic hurdles without undue execution risk,” Dubler said to members of the Senate subcommittee for the Department of Commerce, Community and Economic Development budget, which AGDC falls under. “If it is (viable) we’re going to solicit world-class partners for FEED, which is front-end engineering and design and completion of regulatory efforts,” he continued. “If we do all of our work and we determine that the project does not look like it’s going to be viable we will wind the project down, close the corporation up and return all the current funds that remain to the General Fund.” The message is a sharp contrast to what former AGDC President Keith Meyer — whom Dubler replaced after leading the corporation since June 2016 — often stressed. Meyer and former Gov. Bill Walker emphasized the state would only go forward with an LNG pipeline and export plan if it was economical, but there was never an indication the corporation would give up on finding a path forward for Alaska LNG if the current plan ultimately didn’t work. Dunleavy was highly critical of Walker’s state-led gasline plan while he was in the Senate and while campaigning for governor. He has said he wants to bring Alaska’s major oil producers back into the project if the administration ultimately decides to keep it moving forward. Dubler added that AGDC has closed its office in Houston and is in the process of consolidating its main Midtown Anchorage office by nearly half. A small, one-person office in Tokyo remains open, according to Dubler. He said the corporation’s $10.1 million budget proposed in Dunleavy’s fiscal year 2020 budget should be sufficient to complete the Alaska LNG Project environmental impact statement. AGDC spokesman Tim Fitzpatrick said after Dubler’s comments that it continues to be “business as usual” at the corporation. Fitzpatrick highlighted that there is no internal timeline to complete the Alaska LNG review; it will take as long as it takes, he said. While the $10.1 million covers corporate operations such as payroll and office leases, AGDC spends additional money on the project from the Alaska LNG fund, which held $34.1 million at the end of January, according to corporation officials. That spending is largely for technical contractors hired to gather information for project permitting. To date, AGDC has spent more than $260 million on the Alaska LNG Project. Also, while the governor could veto appropriations to AGDC, disbanding it and transferring remaining Alaska LNG funds to the General Fund would require legislative approval. Corporation officials are still in commercial negotiations with several parties that signed preliminary agreements to purchase LNG, Fitzpatrick said, including the three Chinese companies that signed a joint development agreement with AGDC in November 2017 to be potential anchor customers and financiers of the project. The Federal Energy Regulatory Commission, which is writing the Alaska LNG EIS, was expected to publish a draft of the document in February; however, the agency on Thursday revised that schedule for a June release. It’s generally believed the extended partial government shutdown affected FERC’s ability to meet the original schedule in addition to having many technical questions for which AGDC is still providing answers; FERC historically has been one of the best federal agencies in terms of meeting its self-imposed permitting schedules. The revised Alaska LNG schedule calls for a final EIS to be published in March 2020 with a record of decision coming shortly thereafter. Sen. Chris Birch, R-Anchorage, who chairs the Resources Committee and the subcommittee Dubler testified to, said in a brief interview there is a general consensus among legislators that AGDC should complete its current Alaska LNG permitting effort regardless of whether or not other aspects of the project are advanced. “You might be back asking (FERC) for another LNG license down the road,” Birch said, noting that he will be interested in seeing AGDC’s updated spending plan during a presentation to the joint House and Senate Resources Committees set for March 22. On March 4, AGDC received the joint record of decision on its original, smaller Alaska Standalone Pipeline, or ASAP, project from the Army Corps of Engineers and the Bureau of Land Management. The ASAP project, estimated at roughly $10 billion, is a smaller gas pipeline plan to get natural gas off of the North Slope strictly for in-state use. ASAP includes a 733-mile long natural gas pipeline system from Prudhoe Bay to the Enstar Natural Gas Co. distribution system near Big Lake, and a 30-mile long lateral line to Fairbanks. It does not include the large LNG plant needed for gas exports, which accounts for about half of the $43 billion Alaska LNG price, but experts also doubt the economics of any trans-Alaska natural gas pipeline without the LNG export component. The ASAP decision was likely also delayed because of the government shutdown that ended in January. ^ Elwood Brehmer can be reached at [email protected]

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