Massive Point Thomson modules reach Slope by barge

Point Thomson production modules have been unloaded from barges after a 4,000-mile sea voyage from South Korea, where the units were constructed. The facilities are now moved into place in the field, where crews will spend the fall and winter hooking up and doing commissioning work. Production will begin in the first quarter of 2016. Designated as the “Initial Production System” for Point Thomson, this is seen as a phase one of field development that will produce 10,000 barrels per day of natural gas liquid condensates, a high-quality hydrocarbon similar to kerosene or diesel. Those will be shipped through a new 22-mile pipeline to a connection with the existing Badami pipeline, and then on to Pump Station One of the Trans Alaska Pipeline System. As of mid-2015 the Point Thomson owners — ExxonMobil (62.2 percent), BP (31 percent) and several minority partners — have spent $3.2 billion on the project, which is being managed by ExxonMobil. Costs are expected to reach $4 billion. The modules ranged in size from 1,500 tons to 3,000 tons, and will make up the main process facilities needed for gas separation and compression, power generation, waste heat recovery and other utility services. Natural gas produced with the condensates will be injected back underground. Eventually Point Thomson will be developed for conventional gas production if the planned Alaska LNG Project is built. About 70 percent of the $3.2 billion expenditures on the project to date have been spent in Alaska. About 99 Alaska companies have worked on various phases of the project with more than 800 people working on site and an additional several hundred working at other Alaska locations.

White House opposes US House bill to lift oil export ban

WASHINGTON (AP) — The White House said Sept. 15 it opposes a House Republican bill to lift the four-decade-old ban on crude oil exports. A decision on whether to end the ban should be made by the Commerce Department, not Congress, White House press secretary Josh Earnest told reporters. Earnest also took a shot at House Majority Leader Kevin McCarthy and other Republicans pushing to end the oil export ban, which was imposed in the 1970s as the United States responded to an Arab oil embargo that sparked inflation and prompted long lines at gas stations. Earnest accused McCarthy and other Republicans of trying to “cozy up to oil interests” by pursuing policies that benefit the oil and gas industry. He urged Republicans to support efforts to eliminate subsidies for oil and gas companies and back investments in wind and solar power and other renewable energy. Earnest was responding a speech McCarthy, R-Calif., was making in Houston Sept. 10 to promote the importance of U.S. energy production, including lifting the ban on crude oil exports. The House Energy and Commerce Committee is expected to approve a bill lifting the export ban later this week. “If there was ever a time to lift the oil export ban, it’s now,” McCarthy said in a speech to a Houston business group. “Lifting the oil export ban will not only help our economy, it will also bolster our geopolitical standing.” The oil industry has launched a lobbying campaign to lift the export ban, saying it would produce hundreds of thousands of jobs by offering additional markets for oil companies to sell their product. Republicans and some Democrats in the House and Senate have joined the push, saying an ongoing boom in oil and gas drilling has made the 1970s-era restrictions obsolete. House Speaker John Boehner, R-Ohio, said a “scarcity mindset” leftover from that era has been replaced by soaring domestic production of oil and natural gas, even as renewable energy such as wind and solar power also make gains. A report this month by the U.S. Energy Information Administration — an arm of the Energy Department — said lifting the ban would not hurt consumers at the gasoline pump. Opponents say lifting the ban would make it harder for U.S. refineries to compete internationally and could lead to job losses. Sen. Edward Markey, D-Mass., said it makes no sense to export U.S. oil when the nation still imports millions of barrels of oil a day and consumers are saving at the pump because of lower oil prices worldwide. “Low gas prices are a massive economic stimulus for American consumers and our economy,” Markey said. “Oil companies want to lift the export ban in order to tip consumers upside down and shake money out of their pockets.” The U.S should keep its oil home “to benefit our economy, not hand a multi-billion windfall to Big Oil by allowing it to be sent overseas to the highest bidder,” Markey said.

'Cadillac' tax about to hit health insurance plans

WASHINGTON (AP) — The last major piece of President Barack Obama’s health care law could raise costs for thrifty consumers as well as large corporations and union members when it takes effect in 2018. The so-called Cadillac tax was meant to discourage extravagant coverage. Critics say it’s a tax on essentials, not luxuries. It’s getting attention now because employers plan ahead for major costs like health care. With time, an increasing number of companies will be exposed to the tax, according to a recent study. The risk is that middle-class workers could see their job-based benefits diminished. First to go might be the “flexible spending accounts” offered by many companies. The accounts allow employees to set aside money tax-free for annual insurance deductibles and out-of-pocket health costs. That money comes out of employees’ paychecks, and they’re not able to use it for other expenses. Savvy consumers see it as a way to stretch their health care dollars. The catch is that under the law those employee contributions count toward the thresholds for triggering the tax. There are other wrinkles: Companies in areas with high medical costs, such as San Francisco, are more likely to be exposed to the Cadillac tax than those in lower-cost areas like Los Angeles. Ditto for employers with unionized workers who won better benefits through bargaining. Republicans in Congress and a sizable contingent of Democrats are calling for repealing the tax. Hillary Rodham Clinton, the front-runner Democratic presidential candidate, says she’s concerned and would re-examine the tax. Since it doesn’t take effect right away, it’s an issue for the next president. “As currently structured, I worry that it may create an incentive to substantially lower the value of the benefits package and shift more and more costs to consumers,” Clinton said in response to a candidate questionnaire from the American Federation of Teachers. The Cadillac tax has two purposes: to act as a brake on health care spending and to raise money for covering the uninsured. The value of employer-sponsored health insurance is tax-free to workers and tax-deductible for companies. It amounts to an income tax break worth $206 billion this year, according to the president’s budget. Many economists call that an indirect subsidy that encourages wasteful spending. They argue that if not the Cadillac tax, some other kind of limit is needed. Major Republican health overhaul plans have also proposed curbs. A recent study from the nonpartisan Kaiser Family Foundation estimated that 26 percent of all employers would face the tax in at least one of their plans during its first year, 2018. Nearly half of larger companies would face the consequences of the tax that same year, because they tend to offer better benefits. “It is a pretty broad-based tax that has a powerful effect on controlling the growth of premiums,” said Larry Levitt, a co-author of the study. “The downside is workers may see an increase in their out-of-pocket costs.” Because the tax is indexed to general inflation, which rises more slowly than health insurance premiums, over time it would affect a growing share of health plans. The Obama administration says such studies overstate the potential impact. The Treasury Department said in a statement that only “a small fraction of workers” would be affected. Regulations to implement the tax could soften some feared consequences, but proposed rules aren’t expected until late this year or early next. The Cadillac tax is 40 percent of the value of employer-sponsored plans that exceeds certain thresholds: $10,200 for individual coverage and $27,500 for family coverage. The tax is levied on insurers and plan administrators, who are expected to pass it back to employers. The 40 percent rate is well above the income tax rates that most workers face. Joe Kra of the benefits consultancy Mercer said he believes many employers will be required to make fundamental changes in their health plans to mitigate the tax’s impact. Measures such as ditching flexible spending accounts may not be enough. That would accelerate a shift to high-deductible plans that require workers to pay a bigger share of health costs before insurance kicks in. Here are some other potential twists: • The Treasury Department says it is considering an exemption for flexible spending account contributions for dental and vision care, which are two popular uses. The health care law already limited FSA contributions and without such accommodations, the Cadillac tax could lead to their demise. “A benefit that you are offering your employees so they can save money on taxes is going to wind up costing you money,” said economist Paul Fronstin of nonprofit Employee Benefit Research Institute. • Treasury is also trying to figure what do about a different kind of workplace arrangement called a “health savings account.” A growing number of workers have high-deductible health insurance that comes with tax-sheltered health savings accounts, or HSAs, that they and their employer can contribute to. But if an employee has his or her contribution deducted from their paycheck, it could potentially trigger the tax. Officials say they’re considering options.

The Bookworm Sez: How to craft a first impression

How will you be seen? That’s a big concern for you on many days: will your mode of dress impress or are you feeling frumpy? Can a strong handshake overcome onions for lunch? There are, of course, no second chances at a first impression, and in “Judge This” by Chip Kidd, you’ll learn how to make an initial splash. You can’t judge a book by its cover — or so your mother said more than once when you were growing up. But what if Mom was wrong? “First impressions,” says Chip Kidd, “are key to how we perceive the world. … And based on our first impressions, we judge things. We can’t help it.” In fact, you want your clients and co-workers to judge your product and design because, if they don’t, “… that’s a problem.” As Kidd sees it, there are two “effective and fascinating aspects of first impressions.” You want clarity when it’s essential that people immediately get your message. Nothing can be muddied. Everything must be clear-cut. Clarity is the tool to use when your message or design is technical or “no-nonsense,” but you can’t use it constantly or you risk losing attention. The other tool Kidd mentions is mystery, which is “extremely powerful” because it can tickle an audience’s fancy by making them work to get the message. It’s like an itch or a “secret code you want to crack,” and it’s “much more complex than clarity…” Again, caution is needed when using mystery; in fact, Kidd says that, in his job as a book cover designer, he tries “to create a balance between” the two design tools. Using his “Mysteri-o-meter,” a graph he created to rate the design and advertising examples he includes, Kidd explains how he (and others) may judge items in their surroundings and what, if anything, could have been done to make those items or ads different. He looks at the obviously simple (binder clips) and the complicated (a sentence in a book that led to a specific cover). He re-writes handbills, examines classic furniture, and explains why movie posters are the way they are. And then he judges them. So your ad budget just isn’t getting the results you need? That new design is tanking? “Judge This” may help you see why. And then, on the other hand, it might not. Without a doubt, it’s helpful to know the two basic design aspects you can employ to sway potential buyers, and how to better use them. You may learn to cultivate a keener eye here, and that’s always good. But the judgments and conclusions that author Chip Kidd offers are, I noticed, mostly personal. He’s spot-on with some observations but with others, I would’ve disagreed. That these things are often based on opinion is something readers will want to remember. And yet, based on a TED talk, this book is informative, lighthearted, double-quick to read, and it may open some eyes. And if that’s what you — or your design team — needs, then “Judge This” needs to be seen. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

Movers & Shakers 9/20/15

Dr. Deena Paramo of Wasilla has been appointed to the University of Alaska Board of Regents. Paramo has extensive experience in Alaska’s education system, and is currently the Superintendent of Schools for the Mat-Su Borough School District. She has previously served as an adjunct professor at the University of Alaska Anchorage, an elementary school principal, and several years as a teacher in both Glennallen and the Mat-Su. In addition to her career in education, Paramo serves on a number of boards and commissions, including the Education Commission of the United States, the University of Alaska College Advisory Board, the Foraker Group Governing Board, and the Alaska Association of School Administrators. She holds a bachelor’s degree from Texas State University, a master’s degree in education from the University of Alaska Anchorage, an education doctorate from the University of Oregon, and has obtained National Superintendent Certification. Erin Kirkland, publisher of the popular family travel website AKontheGO, and author of the guidebook “Alaska on the Go: Exploring the 49th state with children” has joined the information site About.com as their Alaska Expert. Kirkland will be in charge of creating online content for About.com’s Alaska section, telling the state’s unique stories through cultural, recreational, historical, and industry-related destinations and attractions. Her selection represents the first time About.com has secured an Alaska resident as its Expert for the travel and tourism website. The only family travel journalist based in Alaska, Kirkland’s work regularly appears in the Alaska Dispatch News, and she is a contributor for KTVA 11’s Daybreak, in addition to working on her second book, due out in December 2016. She lives in Anchorage with her husband, James, and son, Owen. The University of Alaska Foundation has selected University of Alaska Anchorage’s Tim Doebler as recipient of the 2015 Edith R. Bullock Prize. Doebler is program director of UAA’s Culinary Arts, Hospitality/Dietetics and Nutrition department and has been a faculty member for more than 25 years. The recognition includes $15,000, which can be used as the recipient sees fit and is the single largest award presented by the Foundation’s Board of Trustees each year. The North Pole graduate attended the Culinary Institute of America and the State University of New York, before returning to Alaska to earn his master’s degree from UAA. He has been a faculty member with the Culinary, Hospitality, and Nutrition Department since 1988 and became the program director three years later. Laurie Downing was named title manager of Alyeska Title Guaranty Agency. Downing has more than 30 years of residential and commercial title and escrow experience. Born in Alaska, she has worked in Anchorage and the Valley, and has been approved as an instructor by the Alaska Real Estate Commission. The 2015 YWCA Alaska/BP Women of Achievement awardees have been selected. The Women of Achievement Awards Ceremony recognizes and honors women who have demonstrated qualities of leadership and excellence in their professional and personal endeavors as well as their contributions to the larger community. This event celebrates the achievements and community dedication of ten extraordinary women. In its 26th year, it now represents an Academy of 311 women who have shaped our last 26 years and will continue to shape the next 26 years as we work to eliminate racism and empower women in Alaska. The 2015 awardees are: Pita Benz, Pita Benz L-A-B, LLC; Kelly Droop, Director of Infrastructure, CH2M; Honorable Sharon Gleason, U.S. District Court of Alaska judge; Dr. Joanie Mayor Hope, physician and managing partner, Alaska Women’s Cancer Care; Barbara Jones, municipality clerk, Municipality of Anchorage; Alison Kear, executive director, Covenant House Alaska; Dr. Joy Chavez Mapaye, associate professor, journalism and communication, UAA; Barbara Norton president and owner, Geneva Woods Midwifery & Birth Center; Sally Smith, chair, Bristol Bay Area Health Corp.; Cathie Straub, owner, Alaska Permanent Capital Management.

Walker seeking to expand gasline

Gov. Bill Walker has persuaded the state’s industry partners in the Alaska LNG Project to consider a larger pipe size that would be capable of shipping more North Slope natural gas, the governor said in a Sept. 4 interview with the Journal. Sources among North Slope producers confirmed the governor’s understanding. “If the pipe is expanded the state and the producers have agreed to share the cost of the expansion,” said Katie Marquette, Walker’s press secretary. Meanwhile, negotiations between the state and the industry partners are continuing. “We’re not as close as I wish we could be. There are a number of significant issues we have to get closure on,” the governor said. Walker is pushing for final agreements in time for a special session of the Legislature in late October. On the pipe size, a 42-inch diameter pipe is currently planned for the project, but Walker would like to see that expanded to 48 inches. The larger pipe size is seen as a contingency to be able efficiently move more gas from the Slope when that is discovered, which state geologists believe will happen once a gas pipeline in built. At 42 inches in diameter the pipeline would transport about 3.3 billion cubic feet of gas per day, a volume sufficient to manufacture about 17 million tons of LNG yearly, on average. At 48 inches, the pipeline could ship more than 4 billion cubic feet per day. The project has received permission from the U.S. Department of Energy to export up to 20 million tons of LNG yearly. Two other components of the Alaska LNG Project, the large gas conditioning plant on the North Slope and a major natural gas liquefaction plant at Nikiski, would remain at the current design capacity but can be expanded later with additional process units. Changing the pipeline’s diameter is a decision that must be made now, however, because pipe is installed in the ground only once. There were concerns that a late change in the project design could complicate the Federal Energy Regulatory Commission process now underway, but FERC has told the state it won’t be a problem, state administration officials said. “FERC chairman Norman Bay met with the governor in August in Alaska and told the governor that the change in design at this stage will not complicate or delay the federal regulatory process,” Marquette said. One complication with a larger diameter pipe is that the current plan involves high-strength steel that will allow the pipeline to operate at high pressure. There are just a handful of steel mills in the world that are equipped to make high-strength 48-inch pipe, while there are more plants able to manufacture high-strength 42-inch pipe. With fewer manufacturers able to make the pipe, the Alaska LNG planners will be in a less competitive negotiating environment, which may affect the cost of the larger pipe. The only current cost estimate for the project is $45 billion to $65 billion. There are 800 miles of pipeline planned, so the larger pipe size will be a significant cost item. Pipe size expansion is just one of the project changes Walker is pressing for but he has backed away from an earlier goal for the state to own a majority interest in the project so as to exert greater control. The governor is now willing to accept 25 percent state ownership, the current arrangement with the industry partners, he said in the interview. “My concern is not so much having control but having an agreement in place so that no one else can block the project from advancing,” Walker said Sept. 4. His earlier thinking was that by owning a majority interest the state would be in a position to keep the project moving if one of the industry projects balked at a critical point. Walker now believes this objective can be achieved in other ways, he said. To accomplish this, the governor wants an ironclad “withdrawn partners” agreement with the industry partners as a contingency in case one of the partners backs out. “The companies are pushing strongly for an agreement on fiscal certainty (on state gas production taxes) but I want a strong withdrawn-partners contract that will give me peace of mind on project certainty,” he said. The withdrawn partners contract is one of the key items now being discussed in state-industry negotiations. Another request made earlier this summer that the governor has modified is a desired change in the project routing at the pipeline’s southern end so the pipe is closer to major population areas in the Matanuska-Susitna Borough to supply gas. The project managers, led by ExxonMobil, have meanwhile settled on a more westerly route because it offers better soil conditions in crossing Cook Inlet to the planned site of a large LNG plant on the Kenai Peninsula. If the western route is chosen the governor wants assurances that a lateral spur pipeline will be built to supply gas to regional consumers. The question of who will pay for the spur as well as another spur to reach Fairbanks is still unresolved, the governor said. Marquette said it is possible that the Alaska LNG Project itself could pay for the spur lines. Alternatively the state would pay for them, she said. Walker said the matter is still being negotiated. The governor also wants a more definitive agreement on a timetable, he said. The partners are to decide on moving to final engineering in 2016 and making a Final Investment Decision in 2018 or 2019, but Walker wants more certainty on this. Meanwhile, items still being negotiated, the governor said, include the deal on fiscal terms with the state, a “must-have” for the gas producers; a gas “balancing” agreement among the producers to cover shortfalls in gas if there are operations problems in production, the withdrawn partners provision and other matters. The governor has also said he will ask the Legislature for permission for the state to take over parts of the project now held by TransCanada Corp. Under an agreement signed with the pipeline company, TransCanada now holds the state’s 25 percent share of the 800-mile pipeline and gas conditioning plant on the North Slope, with the state owning and controlling 25 percent of the large LNG plant at Nikiski through the Alaska Gas Development Corp. Under the current deal TransCanada would finance the 25 percent of the pipeline and gas plant and would ship the state’s 25 percent share of gas production through the capacity that it owns. The governor is proposing that the state own the full 25 percent, taking out TransCanada’s share. In that position the state would ship its gas through capacity it totally owns, thereby maximizing profits. However, the state would have the obligation to finance the total 25 percent of construction costs, a matter of concern to legislators given the state’s current fiscal outlook. If the TransCanada share acquisition goes forward the state will have to repay the pipeline company for its costs to date, about $110 million by one estimate, and would be obligated, in the short term, to fund several hundred million dollars as the state’s 25 percent share of final engineering costs for the project. The decision on proceeding to final engineering is likely to be made in 2016, which means the financial obligation could accrue to the state in its 2017 fiscal year, which begins next July. Meanwhile, the agreement on fiscal terms would mainly cover the state gas production tax although state corporate income taxes may wind up being included. Conceptually, what is being discussed is an agreement that taxes would not change for the duration of an LNG sales contract, which would give certainty to LNG purchasers. There are legal complications in any deal on taxes, however, because the state constitution has language barring any legislative action “binding” action by a future Legislative, in this case a change in the tax. The gas producers feel some form of contractual agreement can be constructed that would meet the constitutional requirement, but Walker said the state’s attorneys believe a constitutional amendment approved by voters is needed to really settle the matter. Progress has been made on one item, however, Walker said, a “payment-in-lieu-of-tax” agreement with municipalities and the state along the pipeline route to cover property taxes. The “PILT” would give gas project owners more flexibility in paying property tax, which under the current system would be a $1 billion per year tax burden. The companies have agreed tentatively on an alternate methodology for the PILT, he said. The negotiators are under a time crunch because the governor wants to call a special session of the Legislature in late October to ratify the gas project agreements and legislators must have 30 days notice before a special session can be called and they must have the agreements in advance. Walker wants a special session because bringing up the gas contracts during the Legislature’s regular session, which begins in January, would risk getting the complex gas issues mixed in with other issues lawmakers must deal with, such as contentious budget and revenue matters.

Unmanned systems an opportunity for UAF

FAIRBANKS — Alaska has been on the cutting edge of unmanned aircraft research for years thanks to the University of Alaska Fairbanks. The question now is, as the technology becomes commercially available, can the state monetize its position? Mike Sfraga, UAF vice chancellor for university advancement thinks so. “We see these (unmanned aircraft) systems as part of the university’s, but more importantly, as part of the state’s future,” he said to industry representatives at the Unmanned Aircraft Systems Interest Group Meeting in Fairbanks Sept. 4. UAF has spent nearly 100 years becoming the world’s leading Arctic research institution, Sfraga said, and that has melded with technology at the school’s Alaska Center for Unmanned Aircraft Systems Integration as the world focuses on opportunities in the Arctic. “What you have in the north, at least from my perspective, is one hell of a market out there and one heck of a niche to fill,” he said. Currently, the Federal Aviation Administration is issuing case-by-case Section 333 exemptions for using commercial unmanned aircraft systems, or UAS.  Nationwide, the FAA has accepted more than 3,000 applications for Section 333 exemptions since they became available in February when the agency issued draft set of regulations for small UAS operations. About 1,300 Section 333 exemptions have been granted; 10 of which are for companies in Alaska, according to the FAA UAS Integration Office. The exemptions are just for businesses that want to fly, and the number of those businesses will grow after the rule is final; the software, research, manufacturing and other UAS support sectors are already growing. A report released in 2013 by the Association for Unmanned Vehicle Systems International, still one of the most comprehensive industry forecasts available, projected Alaska to get only a fraction of the UAS industry as it blossoms, despite UAF’s work. The report predicts UAS will grow into an $82 billion per year industry nationwide by 2025 and support more than 100,000 jobs. If that projection holds for Alaska, it translates to about 140 jobs and $13 million of total economic impact. The Unmanned Vehicle Association further projects the majority of the growth will occur within three years of widespread regulated commercial use of unmanned aircraft. Marty Rogers, director of the Alaska Center for UAS Integration, or ACUASI, said the UAF research group already has about 20 full-time employees dedicated to the technology in Alaska. ACUASI is continuously flying research missions, and has been for years with FAA approval through its status as a nonprofit. The center’s team and aircraft have monitored hotspots in the 2014 Funny River wildfire on the Kenai Peninsula; aided the Russian tanker Renda and the U.S. Coast Guard icebreaker Healy on the famous January 2012 refueling mission to Nome; tracked marine debris from the 2011 Japan earthquake and tsunami off Alaska and the West Coast for the National Oceanic and Atmospheric Administration; and flown numerous marine mammal observation missions for NOAA and private firms working offshore of Alaska. “If there had been commercial opportunity, it’s very possible a commercial operation would have done this work,” Rogers said. A study done by the University of Alaska Center for Economic Development for the state Division of Economic Development analyzed the state’s position in the UAS industry. Alaska has several significant built-in advantages when it comes to attracting UAS businesses. First on the list are the UAF Unmanned Aircraft Center and the related Pan-Pacific UAS Test Range, one of six FAA-approved places to test UAS in the country. Combined, the two provide reliable access to the state’s vast airspace and experience in the technological and regulatory sides of the industry. “Unless a state has a focal point for (UAS) activity, you’re actually seeing very limited growth” in the industry, Rogers said. The state’s geography also provides ample situations in which unmanned systems are preferred for safety reasons over traditional aviation. Further, the prominence of the oil and gas industry on the North Slope and potentially offshore in the Arctic, add to the potential business opportunities for unmanned aircraft, according to the report. ConocoPhillips and BP were two of the first companies to fly commercial UAS flights with the aid of a support team for surveying offshore lease areas and Slope infrastructure in 2013 and 2014. Additionally, the industry has the support of the state Legislature — a big deal according to industry experts. Sen. Peter Micciche, R-Soldotna, and Rep. Shelley Hughes, R-Palmer, co-chair the UAS Legislative Task Force, a committee of public and private interests that serves as a focal point for all things unmanned aircraft in Alaska. Rep. Steve Thompson, R-Fairbanks, said at the conference he expects legislation to be introduced in the upcoming session to balance the opportunity and concern brought about by the new technology. “As policymakers, my colleagues and I need to reflect on how to create a regulatory system that attracts this industry while protecting the public’s concern about privacy issues,” Thompson said. Emphasizing industry at the state level is significant, as numerous other legislatures are concentrating on bills for limiting the use of UAS in their states to play to some privacy concerns of the public, those in the industry say. Where Alaska lags, however, is in the realm of incentives to draw new businesses into the state, the Economic Development Division has found. Alaska is pegged in the Association for Unmanned Vehicle Systems International study to get only a small portion of the commercialized market, particularly when compared to the UAS research that is occurring in the state now, partly because agriculture is forecast as the major industry for UAS demand, and because of the state’s business environment, according to the Economic Development report. This goes beyond Alaska’s unavoidable logistical challenges. At 9.4 percent, the state corporate income tax rate is one of the highest in country. A lack of a corporate tax has helped Arizona and Nevada siphon technology businesses away from the innovation nucleus that is California, the division report states. Tax incentives to attract UAS businesses in operations, manufacturing or software support are essentially an afterthought right now, considering the state’s multi-billion dollar deficit, Hughes said. So, Alaska will have to prioritize the mechanisms it already has to draw the growing industry north. In addition to the ever-important existing UAS knowledge bank in Fairbanks, the university is actively searching for partners to help commercialize its research, much of which applies to the unmanned aircraft industry in some way. Cathy Cahill, the Alaska Center for UAS Integration deputy director, also once worked in the Office of Intellectual Property and Commercialization at UAF. Cahill said in addition to small grants to help Alaska residents get their research and technology companies started, the Commercialization Office has attorneys to help inventors patent and bring their ideas to market. Pairing with UAF can be a mutually beneficial relationship, according to Cahill. “We’re looking for opportunities to expand our research and partners that will help our research stand out and get funded,” she said. On a broader scale, the research-centric university can provide access to experts in other fields. They might help an entrepreneur solve a problem or present a challenge of their own that becomes a business opportunity for someone partnering with the university. Cahill described a scenario in which someone with remote sensing technology could put their product to use through a UAF biologist searching for better ways to monitor wildlife and a UAS operator at ACUASI. On the financial side, the state has small business loan programs that are potentially suited to the UAS industry, Division of Economic Development Manager Ethan Tyler said. The Alaska Microloan, Rural Development Initiative Fund and Small Business Economic Development programs provide low-interest, government-backed capital for start-ups. “Some of our loans actually require a bank turn-down,” Tyler said. Those programs could fit particularly well with an emerging technology industry with an evolving regulatory framework that may make banks wary. Elwood Brehmer can be reached at [email protected]

Officials say tax credits work, but need reform

State administration officials and legislators are working on changes to the state’s complex system of oil and gas exploration and development tax credits, and State Sen. Cathy Giessel, R-Anchorage, chair of the Senate Resources Committee, says her goal is to have a proposed change ready for review by Dec. 1. An informal tax credit “working group” of legislators and various stakeholders including industry, also chaired by Giessel, met Sept. 8 in Anchorage to review status of the program. The changes, which the Legislature must make, would attempt to limit the cost of the incentive program while allowing it to continue, in some form, as a spur to new exploration and development, Giessel said. Despite its cost to the state treasury, Revenue Commissioner Randy Hoffbeck and Division of Oil and Gas director Corri Feige both told the working group the incentive program has resulted in a huge public benefit by stimulating exploration for and development of new natural gas supplies in Cook Inlet. That has alleviated earlier concerns for a regional gas shortage, both said. However, the total cost of the Cook Inlet incentives to the state treasury is now estimated at $1 billion, state Tax Director Ken Alper told the working group. However, some of those tax credits went to Inlet oil developers rather than gas developers. Still, the turnaround in regional gas supply is a big accomplishment. A few years ago former Anchorage Mayor Dan Sullivan was rehearsing for electricity winter “brown-outs” in the state’s largest city because of pending shortages of gas for power generation, and regional utilities like Enstar Natural Gas Co. were actively working on plans to import liquefied natural gas, at considerable cost, to ensure there would be adequate supply. Five years later things are a lot different, Hoffbeck said, and that’s thanks to the incentives and their effect in spurring exploration, mainly by a group of aggressive independent companies. “We now have five years of committed supply contracts and many years worth of gas believed to have been discovered. There is substantial potential (gas) supply now looking for a market,” Hoffbeck said. “The greatest constraint on production in Cook Inlet appears to be the limit of the market.” Feige, in a separate presentation, said, “The tax credit (incentive) system has done exactly what it was intended to do in Cook Inlet. It has attracted new investment and reaffirmed public confidence in Cook Inlet,” that there are additional resources to be discovered, she said. The incentives have boosted efforts by a small group of independents, allowing them to “de-risk” prospects they were evaluating. It has caused exploration to occur sooner, Feige said. That said, the program has to be looked at in a balanced way that includes its cost to the state, she said. The growing cost of the program caused Gov. Bill Walker to delay payment earlier this summer on $200 million in tax credits that had been applied for from Cook Inlet and North Slope explorers. The state would have paid out $700 million in fiscal year 2016, the current budget year, but Walker reduced that to $500 million. The state will eventually pay the other $200 million, Hoffbeck said. That will appear as a cost in the fiscal year 2017 or fiscal year 2018 budgets. For Cook Inlet, the state has paid about $1 billion in exploration and development incentives since 2007, most of that since 2013 and in refundable tax credits, or payments made directly to companies, with a small amount of credits used by companies against state tax liability, state tax director Ken Alper told the working group. An oddity in Cook Inlet is that oil producers pay no state production tax (state royalties are paid, however) but gas producers do pay a production tax, Alper said. Even though oil producers pay no tax they are still eligible for state tax credits on various development expenditures, and these are typically turned in to the state for cash refunds, Alper said. “The state reimburses producers between 20 percent and 40 percent of non-operating expenses,” Alper said. Under state law the identity of tax credit refund recipients, or details on their applications, cannot be disclosed, he said. Typically Cook Inlet companies receive much more of the state tax credit cash refunds than do North Slope explorers and developers. A preliminary final figure for fiscal year 2015, the budget year that ended June 30, is that $409 million in credits were paid to Cook Inlet operators compared with $212 million paid to firms on the North Slope. On the North Slope, oil producers do pay state production taxes and a greater share of the tax credits are taken by producing companies against tax liability, but smaller companies who are exploring and who do not yet have production, and a production tax liability, turn in their tax credits for cash reimbursement. In theory the tax credits can be sold to companies with tax liability but these are typically sold at a discount. Hoffbeck told the working group that the administration is looking at a number of possible changes to the tax credit program that could include an annual cap on funding and a pre-approval process for eligibility of expenses for tax credits. The administration may also seek to limit the “stacking” of different types of tax credits that allow firms to get as much as 65 percent to 70 percent of exploration and development expenses reimbursed. For Cook Inlet, the state may allow credits only for gas exploration and development, but not oil, he said. Other changes might include the state lending funds for development through state entities like the Alaska Industrial Development and Export Authority, or direct state participation, as a working interest owner, in an oil and gas development project, Hoffbeck said. Or, there might be some form of “hybrid” approach with the state able to convert loans to a working interest in development if there is a discovery, the commissioner said. “This approach would protect the state from dry-hole costs,” in exploration, he said.

Skagway officials demand action on copper contamination

Skagway municipal officials are worried about newly-discovered contamination in the harbor of the Southeast city and are asking the state Department of Environmental Conservation to step up enforcement actions against the owners and operators of the Skagway Ore Terminal, a facility that loads ore trucked from mines in Yukon Territory. Another state agency, the Alaska Industrial Development and Export Authority, owns the ore terminal and operates it through contractors. The main user is Minto Explorations Ltd., a subsidiary of Capstone Mining Corp, operator of a mine in Yukon. A contractor, Mineral Services Inc., or MSI, operates the terminal on behalf of Minto Explorations and AIDEA, the owner. Skagway officials believe the ore terminal to be the source of new copper contamination showing up in the harbor. Shipments of copper ore concentrates began in 2006 through the Skagway Ore Terminal, which is owned by AIDEA. A report by the DEC sent to the municipality Aug. 26, which analyzes a harbor coring program, noted increasing levels of copper found in sediments compared with corings done in 2006. The coring was done last winter by the municipality to support its federal permit applications for a port improvement project Bruce Wanstall, an official in DEC’s contaminated sites program, said the copper concentrations are above the “Threshold Effect Level,” or TEL, a level that will affect aquatic life, and have increased significantly since the 2006 sampling. A companion analysis of water samples also showed levels of copper, he said. The borings indicate that the contamination occurs across an area approximately 300 feet by 100 feet. Wanstall said that while the TEL level of copper is at a level to affect marine life it does not pose a significant threat to human health.  Still, the fact that it may be increasing is a matter of concern, he said. The recent borings not only confirmed the presence of the copper and that it is increasing. The soils survey by the municipality did not trace the path of the pollution, however. However, the proposed Gateway Skagway Project, which involves dredging and deepening the harbor, would remove the newly-discovered contamination as well as older contamination of lead and mercury that have accumulated in the harbor, Wanstall said. About 80 tons of lead and several pounds of mercury are known to be in sediments in Skagway’s harbor from earlier shipments of lead and zinc mineral ore, which have since ceased, from the Faro Mine in Yukon. AIDEA acknowledged the indications of the copper found in the soils survey, “but not at a level that would be considered hazardous,” said Karsten Rodvik, a spokesman for the authority. “These trace amounts will be removed when the harbor is dredged. AIDEA is aware of the municipality’s sensitivity and is working with the current tenant to do all we can to protect the harbor and the environment.” Municipal officials say they are not assured because the ore terminal is not under a permit or DEC regulatory framework. “Continuing discharge events are still being regularly documented at the Skagway Ore Terminal and continue to highlight the failure of ADEC (the Department of Environmental Conservation to assure that the Skagway Ore Terminal owners and operators comply with existing state laws and regulations,” Skagway city manager Scott Hahn and Chad Gubala, the city’s consultant on the port project, wrote in a toughly-worded Sept. 1 letter to the DEC. The letter asked DEC to complete its enforcement of Notice of Violations against AIDEA, Capstone and MSI; to consult with the municipality on an independent evaluation of unregulated discharges; to direct the responsible parties to complete “seal capping” of contaminated and exposed soil areas around the ore terminal, and to work with the municipality on establishing, under a permit, an integrated storm water and wastewater management system for the Skagway Ore Terminal upland area. AIDEA said Mineral Services Inc., the contractor that operates the ore terminal, “has submitted a corrective action plan (to the Notice of Violation) which was approved by the DEC.”  “Capstone and MSI will conduct a sampling plan in order to establish a baseline,” to confirm that environmental control systems are working as intended, AIDEA said in a July update to the Skagway Ore Terminal project description on its website. In a separate statement, Rodvik said the DEC’s notice of violation was addressed to MSI, the terminal operator. “While AIDEA is owner of the facility we require our tenant, Capstone, (owner of Minto Exploration,) and their operator, MSI, to be responsible for all operational and environmental issues,” he said. “AIDEA is engaged in all discussions and recommendations and is providing oversight to assure that DEC is getting the information they need. It is also important to note that Capstone and MSI have been proactive, going beyond DEC requirements. We have complete confidence in their ability.” The municipality’s ability to exert influence on the issue is complicated by the land ownership and contractual structure at the ore terminal. The municipality owns the land but has leased it to the White Pass Yukon Route Railway as part of a large lease of industrial lands the railroad holds. The railroad has sub-leased tracts to AIDEA for the ore terminal, and AIDEA has contracted with Mineral Services Inc. for operations. Despite that, strict state liability laws for controlling and cleaning up pollution apply to the owners and operators of industrial facilities, Skagway officials have said. 

Movers & Shakers 9/13/15

Bering Straits Native Corp. announced the awardees of its 2015 Young Providers Award as Heather Jackson of Shaktoolik and Nick Hanson of Unalakleet. The Young Providers Award honors young people from the BSNC region who contribute on a daily basis to the health and wellbeing of their families, communities and culture. This year, the BSNC Board of Directors has chosen to posthumously honor the late Herbie Nayokpuk and Sinrock Mary by presentation of the awards. Jackson and Hanson will be honored at the 2015 BSNC Annual Meeting of Shareholders on Oct. 3 in Nome at the Mini Convention Center. Jackson, a 20-year-old basketball enthusiast, was taught and embraces the subsistence way of life by providing for her family and the Elders year-round in her village. A young role model, Jackson encourages others to live a drug-free lifestyle. Jackson will receive the award honoring Sinrock Mary, the Queen of Reindeer, who overcame incredible personal hardship and discriminatory laws against women and Alaska Native people to become a successful business woman. Hanson, who competed on NBC’s “American Ninja Warrior,” is an active community member and suicide prevention advocate. As a positive role model, motivational speaker and Native Youth Olympic, basketball and volleyball coach, Hanson embraces traditional activities and relishes the role as a mentor of young people. Hanson will receive the award honoring Herbie Nayokpuk, also known as the Shishmaref Cannonball, who was an avid and well-known Iditarod musher. Annie Reeves has joined the Anchorage Public Library as community relations coordinator. Reeves has a bachelor’s degree in communications-public relations and a law degree from St. Mary’s School of Law. Kyle Campbell is the new finance aide for Rep. David Guttenberg, D-Fairbanks. Campbell grew up in the Goldstream Valley and has been involved in local Fairbanks community organizations for most of his life. Campbell has worked as a wilderness guide and science educator throughout the state and has earned bachelor’s and master’s degrees in biology at the University of Alaska Fairbanks. In 2009, Campbell received the Brina Kessel Medal for Excellence in Science from the UAF College of Natural Science and Mathematics for his undergraduate research on birds from Southeast Asia and the Philippines. Mike Coffey has been named Southcoast Region Director for Alaska Department of Transportation and Public Facilities. The Southcoast Region covers Southeast Alaska, Kodiak Island, the Alaska Peninsula, Aleutian Chain, and the Pribilof Islands.Coffey has over 30 years of maintenance, operations, design and construction experience with DOT. He exits his current role within the department as the chief of statewide maintenance and operations. Coffey has held a versatile range of positions at the department, including design engineer in Southeast Alaska, project engineer in Southcentral Alaska, Homer area maintenance and operations superintendent, and Northern Region maintenance manager. Coffey holds a bachelor’s degree in environmental resources engineering from Humbolt State University. Rhonda Johnson, formerly of Alaska USA Mortgage, has joined Cornerstone Home Lending Inc. as a branch manager in Kenai, reporting to Regional President Dean Johnson. She will expand Cornerstone’s presence in the Kenai, Soldotna, and Homer markets.  Tom Maloney is the new CEO of Ahtna Netiye’ Inc. Maloney is a long-standing Alaskan with more than 25 years of executive-level experience including developing corporate strategies, business development, risk management and other key leadership roles. Maloney most recently served as Alaska area manager and Government Affairs director for CH2M; one of Alaska’s largest private employers. He also led the board of the Resource Development Council for two terms on strategic issues affecting the health of Alaska’s economy including oil and gas, mining, tourism, fishery and forestry sectors. First National Bank Alaska recently promoted two banking experts and appointed two others to new positions. Jeff Livingston is First National’s newest loan officer. He joined the bank in July 2014 and previously worked in all aspects of branch management. A First National banker since 2006, Jennifer Matthews was appointed a business development officer. Aili Peyton joins Matthews with her appointment to business development officer. Peyton is an experienced banker with a family deeply rooted in the banking business. Her great-great grandfather opened an independent community bank in Minnesota in 1902, and her father still runs it today. The bank promoted John Schaff to mortgage lending director. Owner of a degree in agricultural and resource economics from the University of California-Davis, Schaff started his banking career 13 years ago as a mortgage loan originator. He’s worked in bank branch environments and as part of a national real-estate company. He transitioned into mortgage loan origination management in 2007.

Judge rules for Jewell in King Cove road lawsuit

King Cove will not get its road to Cold Bay, through the courts, anyway. U.S. District Court of Alaska Judge H. Russel Holland on Sept. 8 denied the Agdaagux Tribe of King Cove’s attempt to overturn Interior Secretary Sally Jewell’s record of decision that has prevented the construction of an emergency access road between the Alaska Peninsula communities of King Cove and Cold Bay. Jewell issued her decision Dec. 23, 2013, stating that the proposed 11-mile, gravel road between King Cove and Cold Bay would irreparably harm critical waterfowl habitat in the Izembek National Wildlife Refuge. The Tribe of King Cove filed suit against Jewell in June 2014 and the State of Alaska then joined the suit on behalf of the Alaska Native group. Holland wrote in a 38-page opinion that Congress gave the Interior secretary the option to select the no-action alternative resulting from the environmental impact statement needed to evaluate the road proposal, and thus Jewell did not violate the National Environmental Policy Act. “Given the sensitive nature of the portion of the Izembek Wildlife Refuge which the road would cross, the NEPA requirement for approval of the proposed road probably doomed the project,” Holland wrote. “Under NEPA, the secretary evaluated environmental impacts, not public health and safety impacts. “Perhaps Congress will now think better of its decision to encumber the King Cove road project with a NEPA requirement.” In 2009 Congress approved a land swap of 206 acres in Izembek, needed to build the road, for about 56,000 acres of state and Native village of King Cove Corp. land on the Alaska Peninsula. The deal was part of the Omnibus Public Land Management Act signed by President Barack Obama. Congress also paid for an emergency response hovercraft for King Cove to use across the water body of Cold Bay, but the Aleutians East Borough suspended the operation in 2011, stating the roughly $1 million in annual operating costs was too much for the small government. The road would provide an essential link for emergency services when bad weather prevents flights out of King Cove or boat travel across Cold Bay. With a paved runway longer than 10,000 feet, Cold Bay’s airport has one of the longest civilian runways in the state and is the area’s main link to Anchorage. U.S. Coast Guard helicopter medevacs, which originate in Kodiak, are the only current means out of King Cove during inclement weather. The Wilderness Society issued a statement praising Holland’s ruling and noting that no federal wilderness area has been stripped of its protection under the Wilderness Act of 1964 for the purpose of building a road. “The U.S. Fish and Wildlife Service (the lead agency on the EIS) has conducted extensive scientific studies that repeatedly demonstrate the destructive nature of this unnecessary and extremely costly proposed road,” The Wilderness Society Alaska Director Nicole Whittington-Evans said in the release.” We are very pleased by the court’s ruling, and hope that this issue can finally be resolved by all parties working together to find a non-road alternative that will address local residents’ concerns while leaving Izembek’s globally significant resources intact.” The State of Alaska has allocated money to pay for the road, estimated at about $21 million. In December, Holland dismissed four of the five claims brought against Jewell by the state and the tribe. He upheld the allegation that health and safety concerns had a connection to the physical environment in this case. Therefore, the tribe’s interests fell “within NEPA’s zone of interests,” Holland wrote. However, he found that Jewell’s selection of the no-action alternative does not need to meet the purpose and need of the proposal, which it rarely does, regardless of the project, according to Holland. Sen. Lisa Murkowski has hammered Jewell on her decision at every opportunity since it was issued. As chair of the Senate Appropriations Subcommittee on Interior and Environment, Murkowski included include a provision in the Interior budget moved in June that calls for the state and the Interior Department to negotiate a “fair trade” land exchange that would allow the state to build the road. Elwood Brehmer can be reached at [email protected]

Walker: 'significant' issues must be resolved before gasline session

Negotiations on Alaska LNG Project agreements with the state of Alaska are at a critical juncture, Gov. Bill Walker said in an interview Friday. “We’re not as close as I wish we could be. There are a number of significant issues we have to get closure on,” before legislators can be notified of a special session to ratify the gas agreements, the governor said. Walker must inform lawmakers 30 days in advance of a special session, so the notification for a mid-October session, which is the governor’s and legislators’ goal, would be mid-September. Meanwhile, negotiations on critical items will continue through the Labor Day weekend, the governor said. Among the key issues still unresolved is a “gas balancing” agreement among the three North Slope producers BP, ConocoPhillips and ExxonMobil, as well as the state, Walker said. This agreement would set out terms for handling gas supply to the LNG project if there is an upset in production or some other operational problem. Walker said a priority for the state is a “withdrawn partner” agreement that would be a contingency in case one partner decides not to move forward at a critical point, such as a decision planned in 2016 to begin final engineering, or a Final Investment Decision that could come in 2018. The governor said he doesn’t want the project halted if one partner balks, and an agreement on how other parties, including the state, would handle that if it were to happen is vital, he said. There is no agreement on fiscal terms either, a must-have for the North Slope producers, Walker said. However, there is now a general agreement on the structure of a Payment-in-Lieu-of-Tax, or PILT, that would provide an alternate way of paying property taxes imposed on the project by municipalities and the state. The PILT is part of the fiscal terms deal because the property tax, under current conditions, could impose a $1 billion annual tax burden on the project and that could vary if there are disagreements and lawsuits, which has happened with property taxes levied on the Trans Alaska oil pipeline. The governor also said that a consensus has been achieved with the producing companies on enlarging the pipe diameter from 42 inches to 48 inches, and that the industry partners would pay their respective shares of increased costs. Walker proposed enlarging the pipe diameter earlier this summer to build in more capacity for increased shipments of gas.

Shell on Arctic drilling: 'Oil will be required for a long time'

The president of Shell Oil Co. said Sept. 1 exploratory drilling off Alaska’s northwest coast is going well despite stormy weather last week that caused the company to halt operations for a few days. And in an interview with The Associated Press Marvin Odum said he expects further protests against the company’s plans for Arctic drilling like the ones in Seattle and Portland where activists in kayaks tried to block Shell vessels. Arctic offshore drilling is bitterly opposed by environmental groups that say a spill cannot be cleaned in ice-choked waters and that industrial activity will harm polar bears, walrus and ice seals already harmed by diminished sea ice. In Seattle, Shell faced protests on the water by “kayaktivists” upset over the company staging equipment in the city. In Portland, Oregon, Greenpeace USA protesters hung from the St. Johns Bridge to delay a Shell support vessel, from heading to the Arctic. “I think the right assumptions for me to make are, it’s not going to go away,” Odum said. “We saw quite a bit of very public opposition when we were in the Pacific Northwest.” Odum said he’s “110 percent ready” to work with people who want to find ways to improve drilling. “I do have an issue with those that oppose who use illegal means or put the safety of themselves or the safety of anybody associated with this operation at risk,” he said. Odum said good progress is being made on the first well off Alaska’s northwest coast. “We had a few days in the last week where we couldn’t operate because of the weather,” he said. “Now we’re coming out of that and it looks like we’re moving into a time period of good weather.” President Barack Obama this week is in Alaska rallying support for measures to combat climate change, such as limits on carbon emissions. Odum is staying in the same hotel as the president, the Hotel Captain Cook. While environmentalists praise the president for curbing greenhouse gases, they pillory him for granting Shell permission to drill in the Chukchi Sea for the first time in 24 years. The U.S. Geological Survey estimates the Chukchi and Beaufort seas hold 26 billion barrels of recoverable oil. Oil will continue to be needed as the United States transitions to more renewable energy, Odum said. “Oil will be required for a long time,” Odum said. “Let’s take a really close look at developing our own resources, control how it’s done and get all the benefits that go along with it.” Shell in two years of exploratory drilling and with up to six wells hopes to confirm a vast reservoir of oil. If it’s found, Shell could apply for production permits and move oil by undersea pipe to the Alaska shore and then overland across northern Alaska to the trans-Alaska pipeline. That could take more than a decade. Odum is confident exploration can be done safely, and the overriding factor dictating whether Shell completes an exploratory well this year will be safety. Shell is operating under strict Arctic rules put in place after the Deepwater Horizon disaster in the Gulf of Mexico. Arctic offshore drilling has been scrutinized in the courts in lawsuits brought by drilling opponents, Odum said. “It’s probably fair to say, this is the most scrutinized, analyzed project — oil and gas project — probably anywhere in the world. I’m actually sure of that,” he said. All the scrutiny, along with Shell’s own internal review, have gone into safety considerations. It’s in the company’s best interest, he said. “We can’t afford to have a problem here,” Odum said.

Marijuana board bans giveaways, ups security requirements

Alaska cannabis businesses can sell you a hoodie, so long as the transaction is being recorded in high-definition. The Alaska Marijuana Control Board covered allowable advertising strategies or retail dispensaries, as well as security protocol Sept. 1 on the second day of an extra meeting to consider draft regulations. Board director Cynthia Franklin argued Montana’s greatest mistake was allowing too much advertising for medical marijuana. Montana legalized medicinal marijuana in 2004 only to have a ballot introduced in 2014 to recriminalize it. This followed a ballooning industry that roused the ire of the state legislators and a 36 percent minority of the population who hadn’t supported legal medicinal marijuana in the first place. Because Alaska’s initiative passed with a slimmer majority, she worries liberal advertising regulations could cause the same backlash from the 47 percent of Alaskans who voted against the ballot measure to legalize marijuana. “Advertising is a very public thing,” said Franklin. “Take a long view of this industry and don’t think that we need to advertise to the max. If we go crazy…we run the risk of attracting attention not only from our state legislators but the people who voted against this.” No giveaways, no medicinal claims The board held a lengthy discussion on selling versus giving away branded merchandise like hooded sweatshirts, pens, calendars, or other popular gear. Selling branded merchandise is legal, but giving it away for free is not, though the board plans to clarify language in a later draft to make those points clear. “A marijuana retail store may not use giveaway coupons, or distribute branded merchandise as promotional materials, or conduct promotional activities such as games or competitions to encourage sale of marijuana or marijuana products,” the draft language reads. Franklin explained that the purpose of the prohibition was to prevent the kind of marketing tobacco used with product giveaways. “A time-honored tactic of the tobacco industry was to give away Marlboro Man t-shirts and candy cigarettes,” said Franklin. “They were giving away branded merchandise to encourage promotion and purchase of their products.” Board members argued that product giveaways were part and parcel of any developing business, and that the board has no place making an economic restriction. Those decisions, they argued, should be left up to business. “Should we be removing a businesses’ ability to do this marketing?” asked board member Mark Springer. “They can’t give out a calendar. A pen. A refrigerator magnet. I’m not convinced we have any place in that. That’s economic management.” Franklin responded that the public safety concerns of product giveaways, which she said could attract minors, are just as important as free market law. “I’m not really sure it’s the board’s job to make business decision in the other way,” said Franklin, “to write rules that are designed to make businesses maximize their profits.” Springer introduced an amendment to clarify the language to say, “give away for free” rather than “distribute.” The vote failed on a 2-2 tie of the five-member board, with Loren Jones recused for a conflict of interest. The cannabis industry, including growers, brokers, manufacturers, or retailers, cannot claim any therapeutic or medical benefits, a carryover from the state’s colorblind marijuana initiative, which doesn’t distinguish between medicinal and recreational marijuana. “Do we really want to invite more federal attention by saying, ‘yeah you can put whatever you want on there?’” asked Springer. Board member Peter Mlynarik brought up a lack of substantiation for medical claims that would simply be inviting too much false advertising. Members also added language that will bar advertising on college campuses or near substance abuse and recovery facilities. The high price of security Security regulations will tack on another six figures worth of capital expense for potential cannabis entrepreneurs, regulations industry leaders say are onerous reminders of the black market lens they believe the Legislature views them through. “This treats us like criminals,” said Sara Williams, owner of Midnight Greenery, regarding a regulation that requires marijuana businesses to wait three days before disposing of waste, in order for enforcement officials to inspect and log it for tracking purposes. The bulk of public comment decried video surveillance, security lighting, and transportation regulations. Draft regulations currently require extensive video surveillance, following Colorado laws. Alaska’s proposed surveillance requirements specify cameras must be placed within 20 feet of a cannabis business entry or exit, with enough resolution to “clearly identify” features, and 40 days worth of video data storage. Larry Clark, president and CEO of Valkyrie Security and Asset Protection, said the storage requirement alone, for high-resolution storage, will cost around $85,000. Comments from the public, submitted electronically in writing to the board, expressed both fear at the prohibitive cost. Board members echoed the concerns, wondering how strict the enforcement would be. “It might violate the initiative by making business infeasible,” said Emmett. “Let’s say we pass this unamended, how strict are we going to be?” Franklin said in response that enforcement, which will be under her authority as director, will not be looking to agonize over details. “My management style over my enforcement officers is, this is our community,” she said. “It’s not designed to be a ‘gotcha’ environment.” On the transport side, the board removed a part of regulation that would have required a secure lockbox be bolted to the floor of whatever car is delivering marijuana. After an amendment, the board allowed transporting in a sealed container in the trunk of a car, already required by the Anchorage Municipality for all personal use. On a cheap note, all members of the marijuana industry will be required to complete a marijuana handler’s course, to be developed later by the board, and keep it in their place of licensed business. Lastly, the board struck down a requirement of $1 million or greater in insurance coverage for any marijuana business, the unknown cost of which insurance companies have refused to tell the State of Alaska. Insurance will be required, but in no set amount. Insurance is not required by alcohol regulations, and board members again preferred to leave it in the hands of the business owners. “I don’t see it achieves any of our broader imperatives, and I do see this as an unnecessary burden,” said board chair Bruce Schulte. “I do think it’s good business policy, but it’s up to businesses to decide that. It’s just an additional layer of regulation we shouldn’t be endorsing.”

GUEST COMMENTARY: Don't be discouraged about first round of test results

Last spring, Alaska’s public schools successfully administered the state’s new computer-based English and math tests in grades 3 to 10. It represented a new 21st century tool to measure Alaska’s goal of helping our children gain 21st century skills. Our new assessment, the Alaska Measures of Progress, or AMP, assesses students in rigorous standards that prepare them academically for life after high school. Because our AMP tests are measuring higher expectations, fewer students initially will meet the standards than met our previous, less-demanding standards. It’s like comparing a baseball player hitting .300 in the minor leagues one year and .240 in the major leagues the following year. The player hasn’t declined in skill, but he’s in a more rigorous league. Under AMP, students aren’t suddenly less skilled and teachers aren’t less capable than before. But they are being asked to meet higher goals. Our message to Alaskans is: Don’t be discouraged. As educators and students gain more experience in Alaska’s standards, students’ scores will rise. In the meantime, there are several points worth noting: The tests are not pass/fail. Scores represent a point on a continuum of academic growth. Test scores do not affect grades, graduation, or promotion from one grade to another. The only consequence for students is positive: They will receive help in improving their achievement. Alaska’s public schools are charged with preparing students to meet the demands of tomorrow’s world. The Alaska Measures of Progress is how we learn if that charge is being met. Our former standards and assessments identified many students who scored at the proficient level while other indicators were telling us that they were not well-prepared academically for life after high school. Nearly two-thirds of Alaska’s job openings will require more than a high school diploma. Yet about half of first-year students at the University of Alaska had to take remedial courses in English or math. Twenty percent of Alaskan applicants could not pass the military’s English and math entrance exams, and too many could not do the math needed for union apprenticeships. In 2013, a fifth of workers in Alaska were nonresidents, collectively making $2.4 billion. We need to ensure that our students are prepared to fill those jobs. It is important for Alaskans to keep their eye on the goal: our responsibility to educate Alaskans to hold Alaska’s jobs. We have set our new expectations with that goal in mind. There is a lot of work ahead of us to keep our promise to prepare our students for success. Our teachers and our schools are ready for the challenge. Let’s stay the course with higher expectations. We owe it to our children, and we owe it to Alaska.

Producers differ on Prudhoe gas offtake increase

There’s disagreement between major North Slope producers over a proposed gas “offtake” rate from the Prudhoe Bay field that would support a large natural gas pipeline and LNG export project. The Alaska Oil and Gas Conservation Commission, a state regulatory agency, held a hearing on the matter Aug. 27. While there are differences, there is unanimous support for a determination by the commission for a gas offtake rate because it is necessary step for the Alaska LNG Project. There is concern about losses of crude oil recovery if gas is extracted from the Prudhoe field and similar worries over losses of condensate liquids in the Point Thomson field, which will also supply Alaska LNG, as gas is produced there. The commission is charged with maximizing the recovery of oil and gas hydrocarbons and must approve changes in the producers’ practices that affect that. Meanwhile, BP and ExxonMobil have applied for a Prudhoe Bay field offtake rate of 4.1 billion cubic feet per day in annual average production, which the two companies say is sufficient to guarantee enough gas for the big project to cover any upsets in production. Most of the gas for Alaska LNG Project will come from the Prudhoe Bay but some will also come from Point Thomson, a new gas field being developed east of Prudhoe. If there are any problems with Point Thomson operations, BP and ExxonMobil want to make sure they can increase the Prudhoe output to cover Alaska LNG’s needs, Bruce Laughlin, BP’s manager for reservoir development, told the commission. However, ConocoPhillips and Chevron, who are also Prudhoe producers, disagree that the offtake rate proposed by BP and ExxonMobil is justified and urged the commission to set a lower rate of 3.6 billion cubic feet per day, as an annual average. ConocoPhillips’ North Slope subsurface manager Eric Reinbold said his company believes the higher rate is unnecessary and that it is important not to “pull” the Prudhoe reservoir any more than necessary so as to not injure long-term oil recovery. “We recognize that gas sales from Prudhoe Bay will affect long-term oil liquids production, and a 3.6 billion daily offtake rate minimizes that,” he said. The companies’ estimates for potential loss of crude oil recovery were in confidential information presented to the commission, but during the public portion of the hearing, AOGCC chair Cathy Foerster pressed to get as much on the public record as possible.  Laughlin said the producers’ latest estimate for ultimate Prudhoe liquid oil recovery is 14.1 to 14.2 billion barrels, assuming current economic conditions. About 12.2 billion barrels have been produced to date, BP has said previously. While the oil recovery estimates were included in confidential data, including any differences between the two gas offtake rates, both companies said the impacts would be similar. ConocoPhillips said this isn’t certain because the estimates result from models of gas production, and argued that it would be prudent to go with the lower rate. About 75 percent of the gas needed to support throughput for the Alaska LNG Project will come from Prudhoe Bay, while the remaining 25 percent will come from other fields, the bulk of it from Point Thomson. Reinbold said Prudhoe’s needed contribution to the Alaska LNG Project is 3.3 billion cubic feet per day and that authorization for the additional 300 million cubic feet, bringing the total average daily allowance, is enough to cover any upsets at Point Thomson. “This would be enough to cover a four-month down-time at Point Thomson, which is extremely unlikely, a ‘worst-case’ event,” Reinbold said. “We’ve never been able to understand why BP really wants the 4.1 billion rate,” he said. Foerster questioned BP on that point and was told that regulatory approval for higher rates would also be an important advantage for LNG marketing, as an additional assurance to potential buyers and the financial community. “The flexibility this would give us could be a tremendous asset,” in LNG marketing, Dave Van Tuyl, BP’s Alaska regional manager, told the Commission. “We can’t discuss the details of marketing among ourselves because of antitrust, the but ability for the Prudhoe field to support higher rates, to make up for shortages creates by disruptions, could be a big advantage over competitor projects. It would also been seen favorably by lenders. It’s like an insurance policy. You hope you’ll never need it, but it’s there.” Sources familiar with the proceedings say there are other issues involved in the disagreement, one being discord among the producers over a “gas balancing” agreement for the pipeline and LNG project now being negotiated behind closed doors. This would be a contract among the companies to backstop each other in gas supply in case production upsets occur in Prudhoe or Point Thomson. The AOGCC will consider a Point Thomson gas offtake rate separately and will also weigh potential losses of liquid condensates when gas is extracted from that reservoir. The Prudhoe Bay gas offtake issue may also be connected with another matter being debated, whether a “joint-venture” marketing approach for selling LNG, where a project consortium will handle sales contracts, or “equity” marketing, where each producer markets its own share of LNG including the state of Alaska, which would own a 25 percent share of gas and LNG production under the current plan. No decisions were taken Thursday by the AOGCC — the Commission typically takes time to consider and decide on complex issues — but Foerster said the agency’s responsibility is to ensure maximum efficient recovery of hydrocarbon fluids from reservoirs and that marketing issues will not be considered. Prudhoe contains about 23 trillion cubic feet of proven gas reserves and about 12 billion barrels of oil still “in place” in the reservoir. There is a high degree of confidence in the ability of Prudhoe’s reservoir to perform, the companies have said. That’s because the gas has been produced for years along with oil from the field, and it is now injected to maintain reservoir pressure to aid oil production. Point Thomson has about 8 trillion cubic feet of proven gas reserves but because the field is not yet producing there are uncertainties as to how well the reservoir will perform.

CP announces layoffs, and new permit app in NPR-A

There’s good and bad news in Alaska’s oilpatch. ConocoPhillips announced Sept. 1 that it would lay off about 10 percent of the company’s 1,200 Alaska workers as part of a nationwide personnel reduction, all aimed at cutting costs. On the same day, however, the company said it has applied for permits for a new North Slope development project, Greater Moose’s Tooth No. 2, or GMT-2. GMT-2 is the third oil deposit in the National Petroleum Reserve–Alaska ConocoPhillips is tackling with its minority partner, Anadako Petroleum Corp. GMT-1, east of GMT-2, is now in an advanced stage of permitting, and CD-5, a project in NPR-A but adjacent to state lands and the producing Alpine oil field, is in the final construction stage and will be producing by the end of the year, ConocoPhillips spokeswoman Natalie Lowman said. Permit applications were filed Aug. 24 with the U.S. Bureau of Land Management for GMT-2, she said. Meanwhile, on the workforce reductions in Alaska, “We’ll know more in the next several weeks as we work through our formal process,” Lowman said. “Our industry is undergoing a dramatic downturn, which has caused us to look at our future workforce needs. As we have assessed the implications of lower prices on our business, we’ve made the difficult decision that workforce reductions will be necessary.” Crude oil prices have plunged in the last year from more than $100 per barrel for Alaska North Slope oil to less than $50 per barrel in recent days. Prices are edging up again but the outlook is for depressed prices to remain for a period of time, most economists say. In its second quarter results released Aug. 4, ConocoPhillips posted a loss of $179 million compared to a profit of nearly $2.1 billion during the second quarter of 2014. Year-to-date total revenue is down from $30.7 billion in the first six months of 2014 to $16.7 billion in the first half of 2015. Despite the cuts, ConocoPhillips is still working on new North Slope projects that will add production by the end of the year. Two new projects, Drillsite 2S as well as CD-5, are now in construction and will be producing by the end of this year. Another new project, I-NEWS, an expansion of the West Sak viscous oil program in the Kuparuk River field, will be producing in early 2017 at 9,000 barrels per day. CD-5 is expected to produce 16,000 barrels per day at peak, and 2S is to produce 8,000 barrels per day at peak. “We have taken several significant steps as a company to strengthen our (company-wide) position, including reducing our capital spending and future deepwater exploration program,” Lowman said. “However, the workforce reductions are necessary to become a stronger, more competitive company. We are committed to treating all our employees with respect and fairness during this process,” she said.  ConocoPhillips is still making capital investments, however. The company is spending about $1 billion to construct CD-5, with much of that money already invested, and would spend about $900 million on GMT-1, is that project moves ahead. GMT-1 is expected to produce 30,000 barrels per day at peak. No estimates are available for expected production rates at GMT-2 or a capital cost estimate, Lowman said, but the proposed development plan calls for 48 wells. In comparison, GMT-1 will have 16 wells including producers and injectors. Environmental groups are already criticizing the GMT-2 proposal, arguing that 75 acres of gravel “footprint” for a road, pipelines and production pad, will adversely affect wildlife habitat. “This development will take place in the western Arctic and occur adjacent to an important wildlife area, home to a large caribou herd and migratory birds from across the globe,” said Lindsey Hajduk, Alaska spokeswoman for the Conservation Lands Foundation, in a statement. The groups say ConocoPhillips is pushing the BLM to “fast track” the permit application when the agency is still several years away from completing a regional strategy for mitigation of impacts from onshore development. The area ConocoPhillips proposes to develop, in both GMT-1 and 2, is inland and away from coastal areas of the Beaufort Sea which are more heavily used by migrating birds than inland regions. BLM has put special restrictions in place in the coastal areas to protect wildlife, in some areas barring exploration for oil and gas. The National Petroleum Reserve–Alaska is a 23 million-acre block of federal lands in the western North Slope, west of existing large producing fields. The reserve was created in 1923, but despite extensive exploration no commercial deposits of oil and gas have been found until recently, when ConocoPhillips and Anadarko Petroleum made the discoveries at CD-5, GMT-1 and GMT-2.

Movers & Shakers 9/06/15

ANSEP alums achieve tenure-track positions Two Alaska Native Science & Engineering Program alumni will make history at the University of Alaska Anchorage as the first tenure-track Alaska Native engineering faculty members. Both Michele Yatchmeneff and Matt Calhoun recently earned their doctorates in engineering and will begin teaching engineering courses during the fall semester of 2015 to develop the next generation of STEM industry professionals in Alaska. “We’re proud of how far Michele and Matt have come,” said ANSEP Founder and Vice Provost Dr. Herb Ilisaurri Schroeder. “They exemplify the ideal ANSEP students. Their experiences, first as students and later as staff, speak volumes about the long-term impact ANSEP can have and also make them uniquely qualified to encourage other Alaskans to pursue STEM education and careers.” Dr. Yatchmeneff is a Unangax (Aleut) woman who grew up living a traditional subsistence lifestyle in rural villages along Alaska’s Aleutian chain. She discovered her love of engineering in high school while attending an engineering camp at the University of Denver, and began to immerse herself in several camps and internships. While working toward her undergraduate degree at UAA, Yatchmeneff participated in the ANSEP University Success component. After earning her bachelor’s and master’s degrees in engineering at UAA, she began working in Alaska’s construction and engineering industry, specializing in water and sewer projects in remote villages across the state. Throughout her school and work experiences, Yatchmeneff felt that there was an ongoing negative stereotype that came with her Alaska Native heritage. As a result, she returned to ANSEP in 2007 as deputy director, with the goal of motivating other Alaska Native students to earn STEM degrees and join her in combating those stereotypes. Yatchmeneff recently earned her Ph.D. in engineering education from Purdue University. “ANSEP students inspire me every day because they are knocking down barriers they don’t even realize exist,” said ANSEP Assistant Professor of Engineering Yatchmeneff. “I’m looking forward to helping students learn to navigate the university and getting them excited about their undergraduate engineering degrees.” Calhoun is an Athabaskan Indian from Homer and has been involved with ANSEP since 1999. After meeting ANSEP Founder Schroeder, Calhoun was inspired to pursue an engineering degree at UAA while participating in the ANSEP University Success component. In 2002, he was one of the first ANSEP students to graduate with his bachelor’s degree in civil engineering. From there, Calhoun was employed as a project engineer for three years before returning to ANSEP as a regional director in 2006. Calhoun actively recruited students for ANSEP pre-college components before going outside to earn his master’s in civil engineering from the University of Colorado at Boulder in 2010. This year, Calhoun earned his Ph.D. in civil engineering from the University of Alaska Fairbanks. “I truly believe Alaska needs more homegrown scientists and engineers, and I want to be part of making that happen at ANSEP and at UAA,” said ANSEP Assistant Professor of Engineering Calhoun. “Having more Alaska students with degrees is key to having a voice in the projects and research that will build Alaska’s future.” Both Yatchmeneff and Calhoun are now tenure-track faculty members at UAA. During the fall semester, Yatchmeneff will teach Introduction to Engineering as well as two sections of Engineering Economic Analysis and Operations. Calhoun will teach Introduction to Engineering as well as Properties of Materials and its corresponding lab. The two will also continue their work at ANSEP, serving as assistant engineering professors to Dr. Schroeder. ANSEP’s longitudinal model begins at the middle school level and continues through high school and into college undergraduate, graduate and doctorate programs. Yatchmeneff and Calhoun are among 146 ANSEP scholarship recipients that have graduated from the University of Alaska with bachelor’s degrees in STEM fields. There are currently more than 1,500 students in the ANSEP pipeline.   Lane Powell Attorneys Brewster H. Jamieson, Michael J. Parise and Peter C. Partnow were named as 2015 “Alaska Super Lawyers” by Thomson Reuters’ Super Lawyers magazine, in the areas of General Litigation, Business/Corporate, and Labor and Employment, respectively. This is Parise’s sixth year and Jamieson’s ninth year being named as “Alaska Super Lawyers.” Special recognition goes to Peter Partnow who was named an “Alaska Super Lawyer” for the first time. Thomson Reuters performs the polling, research and selection for Super Lawyers in a process designed to identify lawyers who have attained a high degree of peer recognition and professional achievement. No more than 5 percent of Alaska attorneys are given this honor. Mark Johnston was appointed as general manager of Municipal Light and Power. Johnston previously served as acting general manager and CFO. Johnston has also held executive and management level finance positions at the Alaska Public Utilities Commission, Alaska Commission on Postsecondary Education, Alaska Railroad Corp., and Federal Energy Regulatory Commission. He was awarded a bachelor’s degree in accounting from the University of Nevada and has been a Certified Public Accountant in the State of Alaska since 1996. Hal Hart was appointed as the new director of the Anchorage Development Services Department. The Planning and Development Services divisions will return to department–level status to increase accountability and coordination among departments. Hart most recently worked as Juneau’s Community Development director, where he promoted streamlining regulations to increase affordable housing and advanced Juneau’s economic development plan. He has also worked as a city planner in Woodinville, Wash. Hart obtained a bachelor’s degree from Central Washington University and a master’s degree in urban and regional planning from Eastern Washington University. Chugach School District Superintendent Dr. Bob Crumley has been selected by his peers as Alaska’s 2016 Superintendent of the Year. The Superintendent of the Year program, now in its 29th year, pays tribute to a school system’s top leader who exemplifies effectiveness, knowledge, leadership, ethics, and commitment. Crumley became the superintendent for the Chugach School District on July 1, 2005 and has successfully served for 10 years in this position making him one of the longest continually serving superintendents in the State of Alaska. He has had national and state recognition with the following awards:  2009 Alaska Performance Excellence Award; 2001 Malcolm Baldrige National Quality Award for Excellence in Education; and the 2000 New American High School Award. ASA will advance Crumley’s candidacy to the 2016 National Superintendent of the Year program knowing that he is highly respected by his colleagues, board members and constituents throughout Alaska. All State Superintendents of the Year will be honored in February at the 2016 AASA National Conference on Education in Phoenix, Ariz. R&M Consultants Inc. is pleased to announce Christopher Fell, LG, CPG, a senior geologist in the Earth Sciences Department, has earned his Certified Professional Geologist certification. The CPG certification is administered by the American Institute of Professional Geologists, an association dedicated to promoting geology as a profession. Fell has 11 years of experience performing environmental and geotechnical projects for private and public clients. He is currently the project and field lead for projects investigating the environmental impacts of subsurface contamination in several small Southeast Alaska communities, is performing field inspection and reporting on the status of unstable slopes along the Dalton Highway, and providing geologic/GIS quality control and assurance for terrain unit mapping in Southcentral and Northern Alaska. Fell has a bachelor’s degree in geology from the University of Wisconsin-Eau Claire. Victor Perri-Jimenez joined the Anchorage Chamber of Commerce in mid-August as its engagement membership coordinator. Perri-Jimenez came to Anchorage from the Dominican Republic in 2009. He has worked for the past three years as an international student assistant and as an education opportunity specialist at the University of Alaska Anchorage and as a departmental student coordinator for the Department of Politics and International Affairs at the London University in the United Kingdom. He held an internship with KTUU, and worked for Diálogo Newspaper in San Juan, Puerto Rico. He holds a bachelor’s degree in journalism and public communications and is currently finishing his thesis to obtain a master’s degree in International Studies and Affairs from the London University.

C-P to cut 10 percent of workforce amid crude oil price collapse

The impact of plummeting oil prices is finally hitting Alaska’s oilpatch. ConocoPhillips Alaska Inc. said Tuesday it will cut about 10 percent of its 1,200 Alaska employees. “ConocoPhillips expects approximately 10 percent of its global workforce to be impacted through workforce reductions, with the largest percentage occurring in North America. We expect Alaska to be affected as well in that 10 percent range,” company spokeswoman Natalie Lowman said. “We’ll know more in the next several weeks as we work through our formal process. Our industry is undergoing a dramatic downturn, which has caused us to look at our future workforce needs. As we have assessed the implications of lower prices on our business, we’ve made the difficult decision that workforce reductions will be necessary.” Crude oil prices have plunged in the last year from more than $100 per barrel for Alaska North Slope oil to less than $50 per barrel in recent days. Prices are edging up again but the outlook is for depressed prices to remain for a period of time, most economists say. In its second quarter results released Aug. 4, ConocoPhillips posted a loss of $179 million compared to a profit of nearly $2.1 billion during the second quarter of 2014. Year-to-date total revenue is down from $30.7 billion in the first six months of 2014 to $16.7 billion in the first half of 2015. Despite the cuts, ConocoPhillips is still working on new North Slope projects that will add production by the end of the year. Two new projects, CD-5 and Drillsite 2S, are now in construction and will be producing by the end of this year. Another new project, I-NEWS, an expansion of the West Sak viscous oil program in the Kuparuk River field, will be producing in early 2017 at 9,000 barrels per day. CD-5 is expected to produce 16,000 barrels per day at peak, and 2S is to produce 8,000 barrels per day at peak. “We have taken several significant steps as a company to strengthen our (company-wide) position, including reducing our capital spending and future deepwater exploration program,” Lowman said. “However, the workforce reductions are necessary to become a stronger, more competitive company. We are committed to treating all our employees with respect and fairness during this process,” she said.  

Alaska Supreme Court won't block Medicaid expansion

Thousands of lower-income Alaskans will become eligible for Medicaid after the Alaska Supreme Court on Monday refused to temporarily block the state from expanding the health care program. The win capped a big day for Alaska Gov. Bill Walker, who earlier flew with President Barack Obama from Washington, D.C., to Anchorage. Walker announced plans to accept federal funds to expand Medicaid coverage to thousands Alaskans after state legislators tabled his expansion legislation for further review earlier this year. Walker has proposed rolling out the expansion as of Tuesday. The Legislative Council, acting on behalf of lawmakers, sued to stop expansion. On Friday, Superior Court Judge Frank Pfiffner denied the request from lawmakers to halt expansion while a lawsuit moves forward. The Alaska Supreme Court on Monday agreed, saying lawyers for the lawmakers failed to show Pfiffner erred when denying the motion for a preliminary injunction. A spokeswoman for the attorney general's office said expansion will go on as planned Tuesday. "We are pleased the Alaska Supreme Court agreed that there is no reason to stop the state from moving forward with Medicaid expansion tomorrow. Ultimately, the Legislative Council could not show any real harm from allowing the program to move forward, and the court upheld the well-reasoned decision of Judge Pfiffner," said a statement from the Department of Law. "Hopefully, this convinces the Legislative Council that resources would be better spent working together towards the common goal of reform, instead of spending money on lawsuits," the statement said. A message left with lawyers for the Legislative Council was not immediately returned. Their office was closed Monday because of security and its proximity to the global warming conference in downtown Anchorage that featured Obama as the closing speaker. Walker has said nearly 20,000 working Alaskans will have access to health care under expansion. State-commissioned estimates released earlier this year indicate that nearly 42,000 Alaskans would be eligible for coverage under expanded Medicaid the first year and about 20,000 would enroll. The council, comprised of House and Senate legislators, voted 10-1 in August to sue Walker over his plans.  


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