Elwood Brehmer

AIDEA-Oil Search MOU eyes Pikka project

Officials at Alaska’s state development bank are in early talks to fund basic infrastructure development at the largest North Slope oil project in decades. The Alaska Industrial Development and Export Authority board of directors approved a preliminary memorandum of understanding with Oil Search Alaska LLC on Aug. 5 to investigate the viability of the authority financing road and bridge construction for the Pikka Unit project the company is advancing on the central North Slope. Oil Search Vice President of External Affairs Joe Balash said the Papua New Guinea-based producer envisions the arrangement being similar to that for the 52-mile DeLong Mountain Transportation System for the Red Dog zinc mine in Northwest Alaska, in which AIDEA took ownership of the infrastructure, sold bonds to fund construction and recouped the investment through tolls paid by the mining company. The current design for the $6.5 billion Pikka project entails 26 miles of gravel roads, approximately 70 acres of gravel pads, and more than 120 miles of pipelines. Balash said Oil Search has completed 11 miles of roads extending from the Kuparuk River field and several pads so far, with much of that work being done last winter. In the case of Pikka, AIDEA would issue the debt to purchase the roads and lease them back to Oil Search, according to Balash. He said the arrangement could help the company capture the advantage of lower-cost bond financing available through the state-owned authority. “It’s a concept that at least in the 50,000-foot view looks workable but we need to go down a considerable bit in elevation,” Balash said of the plan. The MOU calls for Oil Search to reimburse AIDEA for up to $225,000 spent from the authority’s Revolving Fund to analyze the details of the proposal. Balash worked to advance the federal permitting process for the Ambler mining district access project — another industrial-use toll road concept AIDEA is proposing to reach remote Interior Alaska mineral deposits — while an assistant Interior Department secretary in the Trump administration. He left Interior last August. At the start of 2020, Oil Search and Spanish major Repsol, its minority partner in Pikka, planned to make an final investment decision on the project by the end of the year, but the collapse of oil markets brought on by the coronavirus pandemic and a Saudi-Russian price war early in the year have forced the companies to defer sanctioning Pikka, which is expected to produce up to 135,000 barrels of oil per day at its peak, according to Balash. Last October, Oil Search filed a Pikka development plan with the Division of Oil and Gas that called for pushing the first oil date from the field up a year, to late 2022 by processing oil from the first completed pad through Kuparuk facilities while the rest of the Pikka facilities were built. Balash said Oil Search still expects to start production in 2025, even though the rest of the timeline is unclear at this point. Oil Search started the year with a “mid-$40s” per barrel long-term breakeven price for oil from Pikka based on the design at the time, he said, and the companies are working to bring that cost down to reflect the new market. Alaska North Slope oil prices have stabilized in the low-$40s per barrel of late but when the price will increase further will largely depend on the lasting economic effects of the pandemic. “Exactly what our schedule is going to look like and what our profile’s going to look like — we’re working closely with Repsol and hope to have an update later this year,” Balash told the AIDEA board. He emphasized that the Pikka project, which many industry advocates have pointed to as the genesis of a North Slope “renaissance,” could provide benefits beyond the companies. “This is not just about the Pikka development,” Balash said. “We believe we have a lot to offer the state of Alaska for a very long time —that will be a substantial and material impact on the throughput of (the Trans-Alaska Pipeline System) for a very long time.” The MOU expires in August 2021. Power line purchase Just prior to the Aug. 5 AIDEA meeting, the Alaska Energy Authority board — the same seven individuals that oversee AIDEA — approved a $15.3 million plan for the authority to purchase a 39-mile stretch of electric transmission lines damaged by the 2019 Swan Lake fire with the help of the Railbelt utilities. The complex arrangement calls for AIDEA to sell bonds to allow AEA to purchase the Sterling-to-Quartz Creek segment of transmission lines from Homer Electric Associationthat connects several utilities to the Bradley Lake hydro project. The Sterling-to-Quartz Creek segment was taken out of service in late August last year as the Swan Lake fire spread through the area and didn’t transmit power again until mid-December, for a total outage of 123 days. According to AEA, the fire damaged about one-third of the 127 support structures along the S-Q line. Homer Electric repaired five structures late last fall to put the line back into service, but another 38 still need to be replaced. AEA Executive Director Curtis Thayer said that while the authority will own the line segment, the agreement calls for the six Railbelt utilities — including HEA — to pay the debt service on the bonds relative to the proportion of low-cost Bradley Lake power they receive. Railbelt consumers will benefit from the cost sharing, according to Thayer. He first said AEA was in talks with HEA to purchase the line in late January. AEA also owns the Bradley Lake project, which it is in the process of expanding . The Sterling-to-Quartz line is owned by HEA but it largely runs through the Kenai Wildlife Refuge and does not serve HEA customers; rather, it connects to the transmission lines owned by Anchorage’s Chugach Electric Association, which start at the Quartz Creek Substation. “By having this purchase you bring the resources of the six utilities to manage and help oversee” the transmission line, he said, adding that upgrading the line could eliminate up to 40 percent line loss as power is transmitted north from Bradley Lake. “There’s both a short-term and long-term advantage to ownership of that line.” The $15.3 million includes $13.3 million to buy the transmission line and another $2 million for repairs, according to AEA documents. The transaction has been approved by the Bradley Power Management Committee — which includes the six utility managers — but must also be approved by the utility boards, Thayer said. Officials with several of the other Railbelt utilities expressed frustration with HEA over what they felt was a slow response to fix the line in the weeks after the fire subsided. HEA leaders said at the time that they were being cautious prevent exposing line crews to lingering ash pits or falling trees and also noted that strong fall windstorms storms on the Kenai Peninsula took manpower away from the Sterling-to-Quartz work. According to AEA, losing access to Bradley hydropower collectively cost Railbelt consumers an additional $13.6 million and resulted in another $2.2 million worth of water being spilled over the Bradley dam. Bradley Lake supplies up to 10 percent of the electricity needed by the Railbelt utilities. At 4 cents per kilowatt-hour, the hydroelectric dam can produce power for about half the current cost of natural gas-fired generation. “I don’t think we would be here if that fire had not occurred,” Thayer told the AEA board. Elwood Brehmer can be reached at [email protected]

AEDC: Pandemic could wipe out 20 years of growth

Anchorage could be facing a lost generation of economic growth when the ongoing impact of the pandemic is added to the lingering effects of the recession from which Alaska had just emerged. Anchorage Economic Development Corp. CEO Bill Popp said the city is likely to lose more than 11,100 jobs this year during a virtual presentation of the organization’s annual three-year economic outlook for Anchorage on Aug. 5. Those losses would take the city back to employment levels last seen prior to 2000, when employers offered about 140,00 jobs in Anchorage, according to AEDC and state Labor Department figures. Anchorage was already at the tail end of a four-year recession — in which more than 6,000 jobs were lost — that Alaska overall had began to pull out of. Popp said in January that AEDC leaders expected Anchorage to add about 100 jobs this year and officially put an end to the recession. However, the severity of the pandemic-induced recession that suddenly took hold in March could result in the “destruction of aspects of our economy” Popp said in an interview. He urged lawmakers at every level to work on finding ways to help keep businesses afloat and prevent large-scale foreclosures or evictions. “Time is the enemy,” Popp said. Unsurprisingly, AEDC officials expect the leisure and hospitality industry to be hit the hardest with the loss of more than 5,000 jobs, or 30 percent of the sector in the city. No other industry is expected to lose nearly as many jobs; retail is expected to contract by about 1,000 jobs, or 7 percent, the next largest loss overall, according to AEDC’s forecast. Passenger traffic through Ted Stevens Anchorage International Airport — a key component of the leisure and tourism sector — is expected to drop by 60 percent this year to about 2.3 million passengers with steady growth in the following years to 5 million passengers by 2023. Air cargo volumes at the airport, which is one of the busiest cargo hubs on Earth, is expected to grow slightly this year and remain in the 3 million tons per year range going forward, according to the AEDC forecast. The oil and gas industry, hit hard by very low market prices that briefly went negative in April, is not expected to show major employment losses again in Anchorage offices that were previously scaled back during the 2015-17 price downturn. AEDC is predicting the industry will lose about 300 jobs this year from approximately 2,500 before adding those positions back in 2021. In June, Anchorage had an average unemployment rate of 12 percent, down slightly from May but still far beyond the 5 to 6 percent range where it had been for many months prior. Statewide, unemployment averaged 12.4 percent in June, despite the fact that the start of commercial salmon fishing statewide helped add approximately 18,000 jobs during the month. Still, Alaska was down 37,700 jobs from a year ago, with more than 18,000 of those losses coming from Anchorage and the Matanuska-Susitna Borough, according to Labor Department data. Popp said AEDC expects the Anchorage economy to begin recovering by next year — but the re-growth is not likely to be sudden — with approximately 3,300 new jobs in 2021. By 2023, Anchorage will likely have regained nearly 7,000 jobs, according to AEDC. ^ Elwood Brehmer can be reached at [email protected]

Fund ends fiscal year with positive return, but draws reduce value

Alaska Permanent Fund managers navigated the worst market downturn in more than a decade to a small positive return by the June 30 end of the 2020 state fiscal year. The $66 billion Permanent Fund finished the 2020 fiscal year up 2 percent, a return that beat a passive investment benchmark but fell short of the Alaska Permanent Fund Corp. Boart of Trustees’ strategic return goal for the year of matching inflation plus 5 percent, or 5.65 percent, according to the year-end financial and performance reports published by the corporation. The fund had a return of 5.38 percent halfway through the fiscal year on Dec. 31. The tempered return, combined with the state’s 5.25 percent annual draw of $2.9 billion from the fund’s Earnings Reserve Account resulted in net decline in value for the seventh time in the 43-year history of the fund. Including 2020, it has a five-year return average of 6.44 percent. The Permanent Fund ended the 2020 fiscal year with a value of $64.7 billion, down from $66.3 billion a year ago. The fund has since grown to hold an unaudited value of $66.9 after markets closed Aug. 7, according to APFC figures. Alaska Permanent Fund Corp. CEO Angela Rodell said officials for the state-owned corporation are happy the fund ended the year with a positive return following the coronavirus-induced sell-off of late winter that at least temporarily cratered financial markets worldwide. “I think it highlights just how important it is to maintain discipline in volatile times. We held on to our core convictions and never lost sight of our long-term mandate,” Rodell said of the 2020 results in a formal statement. “In 2018, Senate Bill 26 was made law, enacting the POMV (percent of market value) structure. The certainty provided by knowing how much we need for short-term liabilities, while still executing our long-term investment strategy, has never been more valuable.” The Dow Jones Industrial Average peaked at 29,551 points Feb. 12 but lost nearly 40 percent of its value by late March before the rebounding on traders’ belief that the $3 trillion CARES Act aid package would protect against a total economic collapse as businesses were closed nationwide to limit the spread of COVID-19. The Dow has nearly recovered from the month of losses in the months since. It closed Aug. 7 trading at 27,433 points. Fund managers moved more than $2 billion into equities as markets bottomed out to take advantage of the anticipated recovery, according to Chief Investment Officer Marcus Frampton. “This orientation of being a long-term focused investor in the midst of the sea of short-term traders has once again accrued to the benefit of the fund’s stakeholders now that markets have subsequently regained their footing,” Frampton said. Stocks traded on public markets account for nearly 40 percent of the fund’s investments. Those public equity investments netted a 21 percent return in the final three months of the year, according to the monthly performance report. The $14.3 billion fixed income portfolio performed the best among the fund’s investment types with a 4.19 percent return for the year. APFC officials also noted that while the Earnings Reserve Account held $12.8 billion on July 1, nearly $3.1 billion of that is committed to the 2021 POMV draw for dividends and government services and another $3 billion is committed for 2022. That means about $5.3 billion in the Earnings Reserve is expected to be available for future appropriations; about $1.3 billion in the account was unrealized gains, according to the APFC. Elwood Brehmer can be reached at [email protected]

New owner: Furie going ‘back to basics’ of natural gas

It’s “back to basics” for a Cook Inlet gas producer pulled out of bankruptcy earlier this summer. Longtime Alaska oil and gas industry player John Hendrix officially took over Furie Operating Alaska LLC July 1, which all but wrapped up a complex Chapter 11 bankruptcy process that lasted nearly 11 months. Just more than a month in, Hendrix, a petroleum engineer, said he and other company leaders are focused on mining and analyzing data from Furie’s four wells and the rest of the company’s operation to better understand how production can be improved and where savings can be found. “We need to know our people; we need to know our wells and we need to know our costs,” he said in an interview. Originally from Homer, Hendrix was general manager of Apache Corp.’s operations in Cook Inlet prior to becoming former Gov. Bill Walker’s oil and gas policy adviser in 2016. The formerly Texas-based Furie filed for bankruptcy in August 2019. At the time, the company owed lenders approximately $440 million and was owed about $105 million in refundable tax credits from the State of Alaska, according to the bankruptcy petition. In 2015, Furie installed the Julius R platform over the Kitchen Lights gas field in the central portion of Cook Inlet, which at the time was the first new development platform the Inlet built since the 1980s. However, the company’s financial challenges were significant; Furie absorbed a loss of $58.5 million in 2017 despite netting $25.4 million from gas sales, according to bankruptcy court filings. The situation worsened in 2018 when the company sold $42.8 million of natural gas but took a loss of nearly $152 million. Furie lost $21.4 million in the first quarter of 2019, when a freeze-up in a gas production pipeline kept the company from supplying Homer Electric Association and Enstar Natural Gas Co. with gas for more than a month. Furie officials estimated the value of the company’s assets at between $10 million and $50 million in their initial bankruptcy filings. Furie’s contract with Enstar is currently its only firm supply contract but it has interruptible contracts with HEA and Matanuska Electric Association as well, according to Hendrix. Enstar spokeswoman Lindsay Hobson wrote via email that officials for the Southcentral gas utility look forward to working with Hendrix and continuing their relationship with Furie. “We are particularly optimistic that Mr. Hendrix’s experience in Alaska’s oil and gas industry will enhance Furie’s financial footing and overall gas supply in the Cook Inlet,” Hobson wrote. He initially won a December bankruptcy auction for Furie and with a $15 million bid through his newly formed company Hex Cook Inlet LLC, but attorneys for Furie and its largest lenders — primarily investment firms — claimed Hendrix did not subsequently negotiate the details of the deal in good faith. An attorney for Hex denied the allegations regarding the bankruptcy sale negotiations in February but said they made it difficult for Hex to obtain the financing needed to close the sale. Then in April, the Alaska Industrial Development and Export Authority approved a loan of up to $7.5 million to help fund Hex’s acquisition of Furie; negotiations with another interested buyer for Furie fell apart in April when the coronavirus pandemic sent financial markets and economies worldwide into a tailspin, sources said at the time. That reopened the opportunity for Hendrix, through Hex, to purchase Furie. According to court filings, the final foreclosure sale price was just more than $5 million, but the overall bankruptcy settlement calls for Hex to repay at least $15 million back to Furie creditors for a final cost that will likely be between $20 million and $25 million, according to Hendrix, when the details are resolved. Since taking over Furie, he said the company has overcome a couple small production challenges and consolidated its small contract workforce of about 15 employees from three contractors, two of which were Lower 48 companies, to Anchorage-based Udelhoven Oilfield System Services. Internally, Hendrix said he is working to empower employees in the belief that will help them take pride in Furies operations and strengthen their commitment to running a safe and successful company. “We want to bring ownership all the way down to the guy turning the valve,” he said. Furie previously struggled with its identity at times and shifted its business philosophy multiple times in the few years the company operated in Cook Inlet, he said. Ambitions to drill for oil — ultimately stalled by the lack of state tax credit payments, Furie officials told state regulators in prior years’ development plans — stretched Furie too thin, Hendrix said, but he stressed that won’t be happening again. He noted that the insurance needed to operate as an oil company versus solely a natural gas supplier is a $500,000 per year expense Furie is not benefitting from. Furie, which remains the Kitchen Lights Unit operating entity, is strictly a gas producer and “not an oil company,” Hendrix emphasized. He added that exploring for oil is not in the plans at this point, but could be a long-term prospect if market conditions improve and funding is available. “We’re just very realistic about what our capacity is,” Hendrix said. “You don’t promise the world if you don’t know what you have.” As for near-term changes, Furie is seeking approval from the state Department of Environmental Conservation to discharge its produced water into Cook Inlet instead of piping about 2,000 gallons per day to shore. He described the produced water as being drinkable quality and said the process of sending it to shore resulted in a frozen flow line that halted gas production in 2019 and forced Furie to purchase $17 million of gas to try to meet its supply commitments at the time. “We’re a clean gas company that makes water with our gas and the water is clean,” Hendrix said. Elwood Brehmer can be reached at [email protected]

State keeps tweaking AK CARES as rollout remains slow

Additional small businesses will be eligible for more than $155 million in pandemic aid from the State of Alaska Aug. 6 following wholesale changes to the AK CARES grant program, but whether or not the revisions will result in distribution of funds remains to be seen. Department of Commerce, Community and Economic Development officials announced July 31 that less restrictive eligibility requirements for small businesses to receive the grants would go into effect approximately seven weeks after they were first released. On Aug. 6, AK CARES grants will also be available to Alaska-based businesses with up to 50 full-time employees that have received $5,000 or less from federal government aid programs such as the Economic Injury Disaster Loan, or EIDL, and Paycheck Protection programs run through the Small Business Administration. Approximately 11,600 Alaska small businesses had received nearly $1.3 billion in aid through the Paycheck Protection Program as of July 31, according to the SBA. Commercial fishermen who held a state Commercial Fisheries Entry Commission permit either this year or last and fished in 2019 are also now eligible for the grants of between $5,000 and $100,000, as are 501(c)6 nonprofits, such as local chambers of commerce. The move to broaden eligibility came after legislators and business leaders said they heard from many small business owners who had taken small federal loans or grants this spring that proved insufficient as the economic conditions brought on by the pandemic continue. Dunleavy administration officials said some of the prior restrictions, particularly disqualifying businesses that had taken federal assistance, were put in place to assure that more businesses in need of aid would get it at some level. The AK CARES program was seeded with $290 million of the more than $1.25 billion the state received in federal CARES Act funding this spring and went live June 1. As of Aug. 3 Credit Union 1 — the lender selected to administer the grants — had received 2,542 AK CARES grant applications with requests totaling approximately $114 million; of those, 511 applications totaling about $20 million have been approved, according to the Commerce Department. Another 136 applications have been approved but the applicants have not opened a free account with CU1 needed to receive the funds, according to Commerce spokeswoman Glenn Hoskinson. State and CU1 officials have also acknowledged it has taken too long to process the applications and distribute the funds in legislative hearings on the matter, but Commerce Commissioner Julie Anderson said in a statement that the department’s new online application portal, which will be used instead of CU1’s website going forward, should speed it up from the start. The state’s new AK CARES loan application portal is at www.akcaresonline.org. Anderson said evolving federal guidance the state must adhere to for the money has challenged the process, as have incomplete applications and a lack of responsiveness by applicants to address issues with their documents. “We continue to adapt the program to assist as many businesses as we can, as quickly as we can. I expect to see significant improvements in processing times and the number of businesses we can reach as a result of the program changes,” she said. Senate President Cathy Giessel, R-Anchorage, said the Legislature is not in a position to micro-manage the aid program and needs to support the Dunleavy administration’s efforts to improve the program; but the slow distribution of funds is largely a reflection of how government agencies typically operate. “This is simply a mechanical, bureaucratic process that is just slow,” Geissel said in an interview. “I wish it were more smooth.” Anchorage Economic Development Corp. CEO Bill Popp said the changes are not all he and others were hoping for but they are very important for some business owners that have now faced roughly five months of pandemic impacts — from slower sales to forced closure. “The timing will be good for many businesses with the uptick in cases. Every little bit helps,” Popp said. The Municipality of Anchorage has also appropriated $5 million for a second round of pandemic aid grants targeting tourism and hopsitality businesses, nonprofits and arts and culture organizations in addition to the $1 million dispersed earlier this year, according to the mayor's office spokeswoman Carolyn Hall. A CU1 spokeswoman did not respond to questions in time for this story; however, the Anchorage-based lender sent a long list of the “most commonly missed items” on AK CARES applications or expense schedules to Alaska regional development organization leaders and Commerce officials on July 29. The 20-issue list highlights missing business incorporation documents; requesting amounts outside the $5,000 to $100,000 limits; a lack of tax forms; and illegible handwriting among some of the problems credit union staff are facing when working with applicants. Some applicants and other professional observers have said the first application required significant documentation, similar to what would be needed for a large loan application, rather than prioritizing the speed of the process. Elwood Brehmer can be reached at [email protected]

North Slope production beating prior years after pandemic cuts

North Slope oil production in July was stronger than it has been in years and while it’s a long ways from the “glory days” of Alaska’s oil era, every little bit helps with state budget experts forecasting a nearly $1 billion deficit this year. The final North Slope production average of 477,896 barrels per day last month was the largest for July since producers pumped about 497,300 barrels per day in 2013. About 466,000 barrels per day were produced from North Slope fields in July 2019, according to Revenue Department records. In April, Revenue Department officials forecasted an average production rate of 486,570 barrels of oil per day from the North Slope in the 2021 state fiscal year at a time when the price for Alaska oil was running less than $20 per barrel. The summer months are traditionally when producers conduct maintenance on facilities that can require them to curtail or outright stop production from time to time. Warmer temperatures can also degrade the efficiency of processing facilities engineered to operate in cold Arctic conditions to some degree. The July production boost followed a roughly six-week production curtailment period by ConocoPhillips in response to very low oil prices. The company said it would slow production by about 100,000 barrels per day in late May and resumed normal production operations in July. ConocoPhillips’ Alaska production was ultimately cut by about 40,000 barrels per day in the second quarter, the company reported last month. It also comes at a time when the small Badami oil field east of Prudhoe Bay, which has generally produced 1,000 to 2,000 barrels per day, is offline. Savant Alaska LLC asked the Division of Oil and Gas in late May to approve a production suspension from the field in light of the poor market conditions. Detailed production data for July is not yet available but the company did not produce from the field in June, according to Alaska Oil and Gas Conservation Commission records. The improved production rate could also partially be the result of ConocoPhillips’ move to curtail some of its wells. While it’s difficult to exactly quantify the impact, spokeswoman Natalie Lowman wrote via email that the company’s data and models indicate field production rates will be higher for some time after wells are shut-in. “This is called flush production and it has been seen historically in North Slope wells after production shut-ins,” Lowman wrote. However, production at the iconic Prudhoe field, which was just taken over by Hilcorp on July 1, is also running far better than recent history. Hilcorp produced an average of 287,341 barrels per day last month, more than 30,000 barrels per day greater than July 2019, according to Revenue records. This July was also the best rate for the month at Prudhoe since at least 2012 when the state began combining oil from the large field and its satellites in its production reports. State Oil and Gas analysts generally surmised it could be the result of fewer large maintenance projects scheduled during the operational transition between BP and Hilcorp, but a Hilcorp spokesman did not respond to questions in time for this story. There has been a positive rebound on the price side for Alaska producers and the state budget as well. While it’s just more than one month into the 2021 fiscal year, the average oil price of $43.38 per barrel for Alaska North Slope Crude is 17 percent greater than the state’s official forecast of $37 per barrel for the year. Whether the stronger-than-expected price holds will continue to depend on the severity of the pandemic in the world’s major oil consuming nations, analysts predict. Elwood Brehmer can be reached at [email protected]

ConocoPhillips manages profit amid pandemic

Despite facing negative oil prices and cutting production ConocoPhillips still managed to turn a profit in the first full reporting period of the global coronavirus pandemic. ConocoPhillips executives reported net earnings of $260 million in the second quarter during a Thursday morning investor call. The $260 million overall quarterly profit is a dramatic turnaround from the more than $1.7 billion ConocoPhillips lost in the first quarter when oil prices began to fall worldwide. However, ConocoPhillips lost $141 million on its North Slope operations in the second quarter. It also lost $451 million cumulatively from its Lower 48 and Canadian segments. The North American losses were more than offset by profits turned elsewhere around the globe, according to the earnings report. The company's net adjusted earnings, excluding income from asset sales and other special items, totaled a $994 million loss in the second quarter. The Houston-based global oil and gas producer generated just more than $4 billion in total second quarter revenue, which was down from $4.8 billion in the first three months of the year, but also cuts its expenses by more than 35 percent to less than $4 billion. It ended the quarter with $2.9 billion in cash reserves, down $1 billion from the first quarter and more than $2 billion over the first half of the year, according to the earnings report. CEO Ryan Lance said the result reflects the company’s strong underlying business operations and its commitment to continue work safely through the pandemic that at times has brought whole sectors of the economy to a complete halt, which has been reflected in energy markets worldwide. “We are monitoring the market closely to develop a view around the timing and path of price recovery and to guide our corresponding actions,” Lance said, the company began reversing actions to curtail production as oil prices rose late in the quarter. “Our financial strength, flexibility and portfolio diversity represent a distinct advantage that enables us to navigate and preserve value in this volatile environment.” Prices for oil on domestic markets, including Alaska, fell further in April and stayed there longer than the internationally-recognized benchmark of Brent crude. Prices on the Alaska North Slope and West Texas Intermediate oil markets went negative April 20 but stayed below $20 per barrel for weeks, while Brent prices dipped to $19 per barrel on separate occasions but rebounded afterwards. ConocoPhillips reported a second quarter average realized price of $26.81 per barrel for its Alaska oil compared to $32.32 per barrel for production from Europe and Africa. Alaska North Slope crude traded for $42.46 per barrel on Wednesday, according to the state Revenue Department. The company paid $85 million in state taxes and royalties during quarter, according to spokeswoman Natalie Lowman, who also noted that ConocoPhillips invested $223 million in North Slope capital projects, or about 25 percent of the company’s global capital spend during the period. Since mid-March, ConocoPhillips leaders announced $400 million of cuts to the company’s overall 2020 spending plan in Alaska. In early April the company told its drilling contractor Doyon Drilling that it would be laying down its North Slope drilling rig fleet indefinitely. In May, ConocoPhillips began implementing oil production cuts on the North Slope that were originally planned to peak at about 100,000 barrels per day as part of a broader strategy to curtail up to 460,000 barrels per day companywide. The North Slope cuts were reversed to start July as oil prices pushed back above $40 per barrel. Spread over the entire quarter, the North Slope production reduction averaged to 45,000 barrels per day less being produced in the second quarter — which averaged 153,000 barrels per day — compared to the first. The curtailment averaged a reduction of about 225,000 barrels of oil equivalent per day during the quarter, according to the company.   Elwood Brehmer can be reached at [email protected]

Alaska broadband deal alive as global telecom OneWeb resurrected

A partnership to bring multiple layers of broadband coverage to Alaska next year is back on following the reemergence of a London-based telecom. Representatives for OneWeb and Anchorage-based Pacific Dataport Inc. said the companies’ agreement to deploy and distribute broadband capacity across Alaska and Hawaii remains valid. OneWeb was pulled from bankruptcy earlier this month when the U.K. Department for Business, Energy and Industrial Strategy teamed with investment firm Bharti Global Ltd. to commit more than $1 billion to purchase OneWeb and restart its global satellite project. Pacific Dataport, or PDI, is a subsidiary of Anchorage-based telecom provider Microcom. In January, PDI and OneWeb announced a business partnership that would have the Alaska broadband company distribute capacity across Alaska and Hawaii on OneWeb’s worldwide network of low-earth orbit satellites, which was in-the-works when the economic effects of the coronavirus pandemic began to be felt worldwide. OneWeb filed for Chapter 11 bankruptcy March 27 after several of its large investors backed away, citing financial uncertainty created by the pandemic, which immediately halted work on its worldwide broadband project. OneWeb previously touted large international partners and investors such as fellow telecoms Hughes and Qualcomm as well as Coca Cola and Dutch aerospace giant Airbus. Hughes announced July 27 it has agreed in principle to invest $50 million in OneWeb alongside Bharti and the British government presuming creditors and regulators ultimately approve the purchase. PDI’s partnership targets large customers with the company selling wholesale broadband capacity on OneWeb’s network, which is based on a massive fleet of low-earth orbit, or LEO, satellites. Their plan originally was to begin offering capacity by the end of the year. PDI Government Affairs Director Shawn Williams said the work has been delayed by about four months, but stressed the company’s partnership with OneWeb “stands exactly where it was before the filing. If anything, it’s stronger.” He emphasized that PDI continued work on its own Alaska-focused Aurora System broadband project while OneWeb’s future was uncertain. PDI’s project is specifically targeting Alaska with geosynchronous equatorial orbit, or GEO, satellites that are launched into an orbit thousands of miles above Earth and mirror the planet’s rotation. The Aurora System will be run by Pacific Dataport. Microcom will offer small business and residential retail broadband from the system and Pacific Dataport will handle business-to-business and wholesale broadband contracts. Work on OneWeb’s LEO network was delayed by several months, according to an Alaska representative for the company, but PDI and OneWeb expect to start offering service in the state next year through both the LEO and Aurora projects. The Aurora project will offer 7.5 gigabits per second of broadband capacity through its first satellite early next year and the launch of a second satellite planned for 2022 should provide an additional 70 gigabits of bandwidth. “Everything is back on track,” Williams said. Elwood Brehmer can be reached at [email protected]

AIDEA gets green light for Ambler mining road

In approving a mining access road across the subarctic Interior, the Trump administration has signed off on another decades-long goal of Alaska development proponents. Bureau of Land Management Alaska officials signed a record of decision providing the State of Alaska right-of-way access across federal lands for the 211-mile Ambler mining district access road July 23. The road would open the roughly 75-mile-long mineral belt along the southwest portion of the Brooks Range for development of its copper, zinc, cobalt and precious metals. The area has been explored for decades but its remote location far from the road system has precluded additional work. Congress specifically contemplated the road in the 1980 Alaska National Interest Lands Conservation Act, or ANILCA, which directs the Interior Secretary to permit a right-of-way through Gates of the Arctic National Preserve to access the mining district, per other environmental regulations, when one is applied for. The state Department of Transportation began early reconnaissance work on the road under former Gov. Sean Parnell before the project was transferred to the Alaska Industrial Development and Export Authority, which applied for the right-of-way under Gov. Bill Walker’s administration. “This long-sought development of the road and mining district represents tremendous potential for economic growth, diversification, and job opportunities for Alaskans, along with revenue expected to the state and local governments for decades,” AIDEA board chair Dana Pruhs said in formal statement. Gov. Mike Dunleavy thanked President Donald Trump and Interior Secretary David Bernhardt for working to advance domestic mineral production in a prepared statement. “Nearly 40 years after Congress guaranteed access to the Ambler mining district, today’s decision allows AIDEA to move forward with the planning of a project that could create thousands of Alaskan jobs and a new source of revenue for the benefit of all Alaskans,” Dunleavy said. The members of Alaska’s congressional delegation largely echoed the governor’s sentiment in a joint statement. Trump also opened the Arctic National Wildlife Refuge to oil leasing and potential exploration — another ANILCA-designated opening for development — via a provision in the tax cut bill he signed in December 2017. Local opposition to the Ambler project from villages such as Evansville and Bettles, near where the road would connect to the Dalton Highway, has focused on the belief the road and eventual mine traffic would disrupt the migration of caribou needed for subsistence harvests. AIDEA officials are modeling their plan for an industrial toll road after the 52-mile haul road to the Red Dog zinc mine in Northwest Alaska that the authority financed in the late 1980s. And while AIDEA insists access to the road will be limited to mining activity, some also question whether the state will be able to effectively restrict access or if it will instead lead to increased sport hunting pressure. Numerous conservation groups and others have also questioned the economics of the road. Estimated in 2017 to cost between $280 million and $380 million for basic gravel construction, the final environmental impact statement, or EIS, for the road now pegs the total construction cost at approximately $520 million. They often note AIDEA has not publicly detailed its plan to coordinate road financing and construction with development of the mineral prospects needed to support the road beyond a conceptual plan. While there are more than a dozen early-stage prospects in the Ambler district, only two deposits held by Vancouver-based Trilogy Metals have been explored significantly and only Trilogy’s Arctic copper-zinc-precious metal prospect is close to be ready for permitting. Trilogy said “development of the road will unlock the world-class economic potential of the region by allowing greater access to the district and the potential development of the Arctic project,” in a company statement. Trilogy leaders previously said the company would likely start federal permitting for an open-pit mine at Arctic shortly after the road was approved. However, the junior mining company was forced to defer its 2020 summer field season because of the pandemic and it’s unclear at this point where the project stands. Elwood Brehmer can be reached at [email protected]

Alaska Air Group loses $214M in 2Q; major layoffs likely

Alaska Air Group Inc. absorbed a loss of $214 million in the first full quarter of the coronavirus pandemic and the airline company could be forced to shed up to 7,000 jobs in the coming months if the country’s overall condition does not improve soon, executives said Thursday. Brad Tilden, CEO of the Seattle-based parent to Alaska Airlines and regional carrier Horizon Air said during an earnings call with investors that the $214 million second quarter loss balloons to a $439 million loss when federal CARES Act payroll support funding is removed from the equation and called the numbers “sobering.” “It’s the largest quarterly loss in our history and it’s obviously not a sustainable result,” Tilden said, noting the company’s airlines operated at capacity levels about 75 percent less than last year during the quarter.  Alaska Air Group netted a $262 million profit in the second quarter of 2019. The company lost $232 million in the first quarter before it and other major airlines were able to substantively respond to broad travel restrictions and economic shutdowns imposed by states and local governments in March as the coronavirus gained a hold across the country. Since then, Air Group has managed to reduce its cash burn from approximately $400 million per month at the end of March to about $120 million in June, according to the quarterly report. The company has also more than $3 billion in cash reserves — including about $1 billion in CARES Act funding — since March by pulling on multiple financing levers, according to Chief Financial Officer Shane Tackett. Air Group currently has about $3.7 billion in cash on-hand with the ability to add to that total by leveraging its unencumbered aircraft and other assets to add liquidity, Tackett said. Most recently Alaska Airlines announced July 2 it had secured $1.2 billion in private loans by using 61 of its owned aircraft as collateral. Air Group is also in discussions with the Treasury Department about utilizing its popular mileage plan program as collateral for more than $1 billion in additional loans, Tackett said.  The company has signed a nonbinding letter of interest with Treasury and anticipates government officials will make a final decision on the financing in the next eight weeks, he said. Air Group stock mostly held steady in the hours immediately following the earnings call; it closed trading Thursday at $36.67 per share. The company’s stock traded in the $60 to $70 per share range for months prior to a pandemic-induced slide that started in late February. On the operating side, Alaska and Horizon’s combined revenues totaled just $421 million in the second quarter, an 82 percent drop from a year ago. The airlines collected just more than $2 billion in operating revenue in the first half of the year, compared to approximately $4.1 billion in the first six months of 2019. Alaska flew just 905,000 revenue passengers during the quarter, a drop of more than 90 percent year-over-year. Passenger traffic is down 55 percent so far in 2020. Overall operating expenses were down 63 percent year-over-year to $709 million and company executives continue to stress a strong desire to reach cash breakeven by year’s end but also believe it will take at least two years for the industry to return to 2019 activity levels.  Tilden said Alaska’s low-cost operating structure and strong market control should help the airline rebound as quickly as anyone in the industry but the long-term outlook means major domestic carrier will almost certainly have to shrink significantly before it can begin growing again. Tackett said Alaska might have to shed up to 7,000 of the airline’s roughly 23,000 workers by the fourth quarter but no specific timeline for the layoffs has been announced. Tackett emphasized that executives are searching for ways to limit the scale of involuntary furloughs. The airline has about 1,800 employees across the state of Alaska. More than 30 percent of employees have already taken a voluntary leave of absence that will continue to be offered through the end of the year, he said, and incentives are being offered for frontline workers and pilots to retire or otherwise leave the company. About 300 management positions will be cut on Oct. 1 as well, according to Tackett.  “It goes without saying that these (job cut) decisions have regrettable and meaningful impacts on employees that have invested their careers here,” he said. “While extraordinarily difficult, these actions are necessary given the realities of our business going forward.” Air Group leaders said they want to return the company to its pre-pandemic cost structure even if it means a smaller company for the foreseeable future. “There’s no doubt in our minds that we will have to be very aggressive in restructuring the company to ultimately get back into a growth trajectory and pay down this debt we’ve taken on,” Tackett said further. Air Group held a debt-to capitalization ratio of 51 percent at the end of the quarter, up from 41 percent to start the year.  The executive team has long preached that a conservative balance sheet has helped Alaska Airlines grow steadily over the past decade-plus in the highly volatile industry. Company executives took steep pay cuts in late March, ranging from a 100 percent cut for Tilden, a 50 percent pay reduction for Horizon President Gary Beck and 30 percent cuts for executive and senior vice president level management. Tilden added that the outlook for the airline industry has only again turned dismal in recent weeks as the number of coronavirus cases has again spiked across much of the country since states began reopening in May and June. “We were on a really nice clip through the July 4 weekend in terms of it seemed like every day was a thousand more customers than the previous day, but as the narrative changed and the headlines changed I do think every airline has seen a softness in bookings for future travel and that’s what’s making us nervous for August and September,” Tilden said. “The environment is a lot different than it was 30 days ago.” Elwood Brehmer can be reached at [email protected]

Final Pebble mine EIS maintains early Corps conclusions

U.S. Army Corps of Engineers officials describe the Pebble mine as one that would remove 99 miles of fish habitat at the mine site but poses little risk to the broader area in the project’s final environmental impact statement released July 23. The conclusion mirrors what was written in excerpts of the preliminary final EIS leaked to the public in February. Pebble Partnership CEO Tom Collier said both the preliminary and final documents support the company’s assertion that the mine could operate in harmony with the region’s famed salmon fisheries. “Alaskans have demanded that Pebble, and any Alaska resource development project, meet its high standards before the project could advance. Today, we have passed a critical milestone on that journey,” Collier said in a July 24 statement. He said the EIS process has been thorough and called criticism of the Corps’ work on the project “unfortunate,” insisting that the mine can be a source of year-round jobs in an area without many. The final EIS is the last step in the federal review of the project before Corps officials reach a conclusion on the key record of decision for the project: whether it is an acceptable development plan based on the issues studied in the EIS process. Pebble says it will work through state permitting over the next three years before commencing a four-year construction period for what is now planned as a 20-year mine. Project opponents contend the Corps limited its focus to environmental impacts at the mine site and ignored potential downstream effects, particularly to fisheries, in the draft EIS. They allege the process has been rushed to fit within the timeframe of President Donald Trump’s term in office following an attempt by the Obama administration to preemptively veto the project via Environmental Protection Agency authority. The EPA ultimately has the authority to reject the Corps’ decision on Pebble’s Clean Water Act Section 404 wetlands fill permit application, which triggered the EIS in 2018. Corps officials responded to concerns from the commercial fishing sector that the mine would damage the perceived quality of Bristol Bay salmon and ultimately lower its market value by noting that some of the state’s other fisheries are conducted alongside resource development. “Prices paid in Bristol Bay are nearly always lower than those paid in other Alaska salmon fisheries producing similar products, which reflects the higher transportation expense associated with Bristol Bay’s geographic location and the lack of a strong brand identity, which could boost prices,” the EIS states. “(T)he Cook Inlet salmon fisheries exist in an active oil and gas basin and have developed headwaters of Anchorage and the Matanuska-Susitna areas. The Copper River salmon fishery occurs in a watershed with the remains of the historic Kennecott copper mine and the Trans-Alaska Pipeline System in the headwaters of portions of the fishery. Both fisheries average higher prices per point than the Bristol Bay salmon fishery.” It concludes that there would be “no measurable change” in the numbers of salmon returning to the Nushagak and Kvichak rivers or in the long-term health of the commercial fisheries in the region. At the mine site, approximately 99 miles of fish habitat, part of roughly 2,200 acres of permanently impacted wetlands, would be destroyed in the combined North and South Fork Koktuli drainages, which feed the Nushagak River and support all five species of Pacific salmon. However, the expected losses of wetlands at the mine site represent just six percent of the mapped wetlands in the Koktuli, according to the document. Bristol Bay Native Corp. CEO Jason Metrokin noted the impacts of the current plan represent mining just a small portion of the copper-gold ore body and leaders of Pebble’s parent company, Vancouver-based Northern Dynasty Minerals Ltd., have long pitched additional development to investors. “Put simply, the EIS does nothing to alleviate our concerns about the myriad risks Pebble would pose to Bristol Bay’s watershed, salmon, way of life, and economy,” Metrokin said in a statement. Staff scientists for the Environmental Protection Agency, Interior Department and several state agencies were highly critical of apparent gaps related to wetlands, hydrology and fish habitat data in official comments on the draft EIS. Interior scientists went as far as to suggest the Corps should rewrite the voluminous document in light of the omissions. Corps officials said in response that the agencies’ comments would be considered alongside all others. The final EIS states that gaps in wetlands data identified by other agencies and stakeholders in the draft EIS published in February 2019 have been filled. Corps officials wrote in the EIS they do not believe it is necessary to analyze the likelihood that the mine’s proposed tailings dams could fail — a primary concern of mine opponents — because the Pebble Partnership is designing the dams differently than those that have failed at other mines in recent years and attracted global attention. “Modeling of a catastrophic, very low-probability tailings release was requested by commenters, but deemed inappropriate based on the applicant’s permeable flow-through design for the tailings storage facility (TSF) main embankment, compared with historical water-inundated TSFs that have been subject to large-scale failures,” the EIS states. Corps officials have also said in media briefings that a detailed review of the tailings dams would be done by the state under the Department of Natural Resources Dam Safety Program. DNR officials wrote in March comments on the preliminary final EIS that a full breach of a large and well-designed and operated tailings dam is very unlikely, but asserted that Pebble’s mine waste storage plan high-level and key aspects of it could be impractical. According to the comments, Dam Safety officials believe the Corps’ use of a subject risk analysis process in the preliminary final EIS to study tailings and water management pond dam failure scenarios was “based on a marginally developed, conceptual design, and the exclusion of other risks including the other relatively large, water management dams, does no represent a thorough assessment of risk from potential failure modes and potential impacts.” The pre-final EIS comments from DNR’s Dam Safety Unit also state that Pebble’s plan to move pyritic, or potentially acid-generating, mine tailings from a temporary storage facility into the pit at mine closure “does not appear to be reasonable, practicable or safe” because filling the pit would preclude accessing other parts of the deposit. Additionally, the tailings are likely to consolidate over years in a storage pond, making them more difficult and costly to extract, according to the Dam Safety Unit comments. The EIS highlights Pebble’s plan to drain and thicken the bulk tailings — which has caused critics and regulators to question whether the company can constantly treat the large volume of water — as a design element likely to limit the downstream flow of tailings in the event of a spill. However, Corps officials also acknowledge in the document that the ground waste rock may not settle as expected and it could only be confirmed if the tailings system was working as intended after about two years of operation. Additionally, the corridor identified as the least environmentally damaging route for a road to a port on west Cook Inlet needed to supply the mine remains viable despite the fact that some of the Alaska Native corporations that own land in the corridor are some of Pebble’s staunchest opponents, according to the EIS. In late May, Corps officials announced they had identified a road route along the north shore of Iliamna Lake to a port on the west side Cook Inlet as the least environmentally damaging practicable alternative, or LEDPA, for the expansive mining plan in its environmental impact statement review. Until that point, Pebble had long promoted its plan for a year-round, ice-breaking ferry across the lake to shuttle supplies and metal concentrates to and from the mine site to the north of the lake. Alaska Native village corporation Pedro Bay Corp. owns much of the land along Iliamna’s northeastern corner and along with regional Bristol Bay Native Corp. — which holds the subsurface rights to Pedro Bay Corp. property — has opposed to the project for years and insists Corps officials are discounting the fact that Pebble does not have access to the area. Army Corps Alaska District Regulatory Chief David Hobbie said in a July 20 call with reporters before the release that Pebble officials maintain they believe they can gain access to the area so the agency considers the route viable. The EIS states the Corps has determined that “even though some alternatives may not be available to the applicant at this time, the alternatives remain reasonable under (National Environmental Policy Act) guidelines and are retained in the EIS.” Economic review unlikely Opposition groups and some technical observers of Pebble’s complex plan question the economics of it, particularly given the scaled-back, 20-year mine, and have pointed to the lack of an independent economic assessment as justification for the skepticism, but Collier said in an interview that that one is unlikely to come at this point. That’s because Northern Dynasty Minerals is past the stage of seeking the retail or institutional investors that would find a public economic assessment of the project valuable, Collier said. At this point, the junior mining firm is focused on attracting a large partner to help fund development. “A major mining company isn’t going to give two wits about a PEA (preliminary economic assessment),” he said, adding any interested company would conduct its own evaluation and it would be costly for Pebble to hire the required independent analysts. Northern Dynasty ended the first quarter with $7.2 million Canadian in cash, according to its latest quarterly report. Canadian finance law prohibits the company from disclosing its internal projections, he said. Collier told the Journal in the spring of 2018 — shortly after Pebble filed its permit application — that Pebble would likely publish a PEA by the following winter. Opponents have urged the Corps to demand economic information from Pebble so it can be better known which of the development options are truly viable. Project managers for the Corps have said they would like to have the estimates but they are not required for the EIS. Editor's note: This story was updated for the Aug. 2 edition of the Journal that went to press July 29. Elwood Brehmer can be reached at [email protected]

Hardrock exploration resumes after pandemic pause

Hardrock exploration activity continues to build at some mining camps across the state as companies get back to work delayed for months by the pandemic. Tectonic Metals started drilling its Tibbs gold prospect not far to the east of the producing underground Pogo mine in the Interior July 20, company CEO Tony Reda wrote via email. The rotary air blast drilling program is first looking to expand on a discovery last year of a 29-meter seam containing more than 6 grams of gold per metric ton of ore. Reda said Tectonic has a thorough COVID-19 mitigation plan in place at its camps and company leaders are excited to learn more about their prospects. “Given our strong treasury in conjunction with the compelling targets and the untapped potential at our Tibbs and Seventymile projects, the Tectonic team has unanimously concluded that we must move forward with two drill programs this summer,” Reda said. “The truth machine is currently hard at work at our Tibbs project following up on last year’s intercept of roughly six grams per tonne over 29 meters.” Reda said in April that it was unclear at that point whether or not the drilling could be done this year. He added that two other targets will be drilled at Tibbs before work moves east to the Vancouver-based company’s Seventymile prospect near the Canadian border. Drilling at each of the near-surface prospects will cumulatively cover roughly 2,500 meters, with an average bore length of about 100 meters, according to Tectonic. The drilling will be company’s first at Seventymile, a 149,000-acre property owned by Doyon Ltd., the Interior regional Alaska Native corporation. Doyon announced in late April that it had invested $1.5 million in Tectonic, which has rights to four early-stage exploration properties in the Interior. The investment made Doyon the largest single shareholder in Tectonic with a 22 percent stake in the company. As of July 10 there were 69 active applications for hardrock exploration across the state, according to Department of Natural Resources officials, who noted that not all of the applications indicate active field work this summer. Placer miners also held 837 active operations permits and another 90 suction dredge operations have active mining permits as well. Hardrock exploration had been on the upswing prior to 2020 with estimates of about $150 million annually spent by companies searching for metals across Alaska in recent years. Department officials reported anecdotally through field inspections that higher gold prices have encouraged more placer and suction dredge activity though some operations have been idled because of travel restrictions and funding challenges, according to an email from DNR spokesman Dan Saddler. Gold prices have risen steadily over the past year to more than $1,800 per ounce. Donlin Gold temporarily suspended work and sent approximately 120 workers home from its remote upper Kuskowkim valley camp in early April as the company formulated a plan to address health and safety risks stemming from COVID-19. Workers began returning to the camp May 22 following implementation of COVID-19 mitigation strategies. Constantine Metal Resources is conducting a scaled-back $2.1 million field program at its multi-metal Palmer prospect north of Haines this summer as travel restrictions and health concerns limited exploration activity early in the year, according to a company statement. Constantine is focusing on gathering environmental data and other information to aid in permitting future underground exploration. Dowa Metals and Mining, Constantine’s partner in Palmer through Constantine Mining LLC Joint Venture, will be funding this summer’s work and take a slightly larger stake in the project as a result, according to Constantine. President Garfield MacVeigh said in a statement about the work program that despite the shorter-than-anticipated work schedule and other challenges from the pandemic the joint venture continues to make progress towards underground exploration and feasibility studies. “We also continue to be excited about the exploration potential on both the (Palmer) property as well as the immediately surrounding district controlled 100 percent by Constantine,” MacVeigh said. The state Department of Environmental Conservation last fall remanded a water discharge permit key to Constantine’s plan to excavate a roughly 1.2-mile tunnel from which the company could conduct exploration activities for review by the Division of Water following appeals from local environmental groups and others. They claim the waste management permit for groundwater discharges is insufficient because the wastewater will quickly resurface in nearby Glacier Creek, which feeds the salmon-producing Klehini and Chilkat rivers. The development includes a large water treatment facility with two settling ponds in addition to the exploration tunnel. DEC officials have yet to make a decision on Constantine’s waste management permit and while staff are working on it there is no timetable for a resolution, according to DEC spokeswoman Laura Achee. The permit decision is also in flux partly due to a U.S. Supreme Court case over wastewater treatment in Hawai’i between the County of Maui and the Hawai’i Wildlife Fund. In April the court issued a middle-ground opinion remanding that case back to the Ninth Circuit Court of Appeals for further consideration. There will be less activity in the western Brooks Range this summer as Trilogy Metals announced earlier this month that it would be deferring its summer exploration program at its Upper Kobuk mineral projects in the Ambler mining district. The company said in a July 8 statement that the combination of ongoing safety concerns regarding the possible spread of the coronavirus at its remote camps and the fact that the field work had already been significantly delayed its entire 2020 field season had been called off. Trilogy and its partner, Australian-based South32 Ltd. fund the exploration projects through their joint venture Ambler Metals LLC. Trilogy holds the Arctic copper-zinc and precious metals deposit, which is the most advanced prospect in the region as well as the nearby Bornite copper-cobalt prospect and other early-stage properties in the area. The company expects to complete a feasibility study on the Arctic prospect later this summer. A record of decision on the Ambler Mining Industrial Access Project, most commonly known as the Ambler road, is expected from the Bureau of Land Management this summer as well. The road is being pursued by the Alaska Industrial Development and Export Authority and has been met with strong opposition from many locals and others who are skeptical of the private industrial toll road concept. However, state officials insist the plan will provide access to one of the state’s premier mineral belts while also allowing the state to recover development costs through tolls. Elwood Brehmer can be reached at [email protected]

New front forms in Pebble battle over land route

A new front is forming in the ongoing battle over the Pebble mine concerning lands up to 50 miles from the proposed project site. Many opposed to the world-scale copper and gold mine insist the U.S. Army Corps of Engineers is affording the Pebble Partnership special treatment under the Trump administration, which they claim is now manifesting itself in a new transportation plan that Pebble currently doesn’t have access to develop. On May 22, Army Corps Alaska District Regulatory Chief David Hobbie announced the agency had identified a road route along the north shore of Iliamna Lake to a port on the west side Cook Inlet as the least environmentally damaging practicable alternative, or LEDPA, for the expansive mining plan in its environmental impact statement review. Until that point, Pebble had long promoted its plan for a year-round, ice-breaking ferry across the lake to shuttle supplies and metal concentrates to and from the mine site to the north of the lake. The re-route was made to alleviate some of the concerns of area residents who feared the ferry could impact Iliamna’s unique population of freshwater seals and complicate winter travel across the lake ice among other concerns, Hobbie said at the time. Pebble amended its plans to align with the Corps’ LEDPA decision and Tom Collier, CEO of the Vancouver-based junior mining firm noted the northern road route for years was the company’s preferred option — when it was officially advancing a much larger, 78-year mining plan — and the company only selected the ferry route because it was thought regulators would prefer the smaller wetlands footprint it offers. The south ferry route allowed Pebble to utilize lands owned by Alaska Peninsula Corp., which the company has an access agreement with, for the roads and ferry terminals on the north and south sides of the lake to access a port at Amakdedori on Cook Inlet. Pebble and Alaska Peninsula Corp. announced July 6 they have signed a memorandum of understanding to make APC the lead organizer of a consortium of other area village corporations to provide transportation and logistics support for the project. The companies estimate the MOU could be worth more than $20 million per year to APC during mine operations. APC leaders said the agreement would help provide locals with more opportunities to participate in the project. However, some of Pebble’s staunchest opponents hold title to the land Pebble would need access to in order to develop the northern road and port corridor. Alaska Native village corporation Pedro Bay Corp. owns much of the land along Iliamna’s northeastern corner and Iliaska Environmental LLC is a majority owner of a rock quarry at Diamond Point, the new location for the Cook Inlet port. Iliaska Environmental is owned by the Igiugig Village Council and regional corporation Bristol Bay Native Corp. owns the subsurface rights to those lands. All three have been opposed to the project for years and stress Corps officials are ignoring the fact that Pebble does not have access to the area as well as their own precedent in similar, prior instances. Pedro Bay Corp. CEO Matt McDaniel could not be reached for comment in time for this story but he wrote to Corps of Engineers Pebble project manager Shane McCoy last July to reiterate that the company “has not, and will not, consent to the Pebble Limited Partnership’s use of its lands for the Pebble project.” As such, the north route should not be considered practicable in the final EIS, McDaniel wrote. Eliminating the northern corridor option at this point would be a major problem for Pebble, as the Corps is scheduled to release the final EIS July 24. McDaniel’s 2019 letter quickly spurred a memo from the Corps to Pebble requesting an analysis of feasible northern corridor options around Pedro Bay Corp. lands, but a consultant to Pebble determined there isn’t one through the mountainous terrain. In October 2017, Hobbie signed a record of decision for an oil spill response facility proposed near Cordova and being pursued by the Native Village of Eyak that eliminated three alternative development sites because the landowners either would not sell the parcels or otherwise provide access to them for development. As such, the Corps did not consider the alternatives “practicable,” according to the decision document. As for Pebble, however, the Corps continues to advance the LEDPA despite the objections from the landowners. Hobbie said during a July 20 media teleconference that Corps officials are relying on Pebble’s assertion that the company can gain access to the northern corridor. “Since Pebble has stated it’s a practicable alternative, we’ve still considered it,” Hobbie said. Corps Alaska District spokesman John Budnik additionally wrote via email that the Native Village of Eyak did not contend it could gain access to the lands needed for the alternatives discarded in its project. Pebble spokesman Mike Heatwole wrote in an email that observers of the situation are likely confusing “preferred” with “practicable,” a legal term. “Our preferred alternative has always been the ferry route; it remains the ferry route. One of the reasons that is so is that the land owners (Alaska Peninsula Corp.) had already agreed to our access,” Heatwole wrote. “We continue to believe that the land owners will ultimately agree to the land access needed to construct the (northern) route.” Elwood Brehmer can be reached at [email protected]

Trump administration completes overhaul of NEPA regs

The Trump administration has shaken the bedrock of the nation’s environmental laws to the delight of development advocates. The White House Council on Environmental Quality on July 15 issued its final regulations to overhaul implementation of the National Environmental Policy Act, or NEPA, signed into law 50 years ago by President Richard Nixon. Administration officials contend the regulatory reforms will streamline what has become a clunky and arcane environmental review process for development projects and federal land-use decisions. It officially marks the first major change to NEPA regulations since the council first approved them in 1978. Gov. Mike Dunleavy lauded the changes during a July 16 press conference at the White House, saying the former NEPA rules had “strangled the American dream” for decades. “These long-awaited reforms are a ray of hope for those who have suffered the impacts of federal overreach in my home state,” Dunleavy said. “Lifting the regulatory burden will spur responsible natural resource development in Alaska, creating jobs and economic opportunity while still protecting the environment.” Sen. Lisa Murkowski said in a statement from her office that easing the regulatory burden for developers will be particularly important as the country attempts to recover economically from the coronavirus pandemic. “The president and his advisers deserve credit for leading the charge to update and modernize federal NEPA regulations to responsibly streamline these processes so that critical infrastructure and other important projects can be built in a timely manner,” Murkowski said. She has also been critical of the U.S. Army Corps of Engineers’ draft review of the Pebble mine project, which mine opponents say has been rushed to appease the company. Conservation advocates insist the administration is narrowing the time and scope of NEPA reviews — particularly the detailed environmental impact statements required for large projects or federal actions — to limit public involvement and understanding of the full impacts a proposed development could have. According to the White House council, the average length of an EIS is more than 600 pages and EIS reviews average 4.5 years to complete. NEPA was so transformative when it was enacted that it is often referred to as the “Magna Carta” of environmental law. In conjunction with the Clean Water and Clean Air acts, it forms the national basis for environmental protection, pollution control and land conservation. As such, the CEQ’s new NEPA regulations could be a lasting accomplishment for the Trump administration. The CEQ is hardening current guidelines for the length of an EIS. Prior NEPA regulations recommend the text of a final EIS be less than 150 pages. An EIS of “unusual scope or complexity” should be limited to 300 pages, according to the regulations; it’s 75 pages for an environmental assessment. The new regulations make those recommendations mandatory in most cases. The new language also defines reasonable alternatives, which are a required part of an EIS, as alternatives that are “technically and economically reasonable” to be in line with longstanding Supreme Court decisions, CEQ officials told the Journal. Many of the high level reforms to the parameters of an EIS were in part derived from Sen. Dan Sullivan’s Red Tape and Rebuild America Now bills, according to the senator. He said in a March interview with the Journal that one of the first conversations he had with President Trump was about the need for NEPA reform. The new regulations also limit the scope of climate impacts that a project could have to those that are direct or nearby. Other changes narrow the focus of an EIS to address the direct impacts of a project as NEPA was intended, reform advocates argue, while also aligning the regulations with settled case law. Skeptics of the new rules note that the analysis of “cumulative effects” is no longer required, which will result in the public getting only a limited view of what a development project will truly mean. “Any action that diminishes NEPA strips us of our voice in these public processes, and in doing so diminishes democracy itself,” Southeast Alaska Conservation Coalition Executive Director Meredith Trainor said in a statement responding to the CEQ announcement. However, CEQ attorneys also stress that while the regulations are intended to expedite reviews of most relatively small or simple developments, they are specifically written to ensure senior agency officials can formally deem a project particularly complex or of public significance to bypass the new page and time limitations. Federal agencies have largely ignored other, similar directives from the White House to limit the length and time of environmental reviews, so it’s unclear how closely the regulations will be adhered to. What is clear is they will be thoroughly vetted in court. Elwood Brehmer can be reached at [email protected]

Tax initiative still on as payment limit ruled unconstitutional

A Superior Court Judge agreed that the group sponsoring a voter initiative to raise oil taxes violated a state law limiting payments to signature gatherers, but ultimately ruled that the payment limit is unconstitutional. In his July 16 order, Judge Thomas A. Matthews agreed with Vote Yes for Alaska’s Fair Share that a 1998 law limiting payment to $1 per signature for initiative petition circulators violates an initiative sponsor’s First Amendment right to engage in political speech. The ruling keeps Ballot Measure 1 on the November ballot, for now at least. Alaska’s Fair Share leaders insist the group of resource industry trade associations, led by the Resource Development Council for Alaska, filed the lawsuit to stop the oil tax initiative because voters are going to approve it. “Clearly our opposition decided they can’t win at the polls so they tried to get the courts to strip Alaskans of their right to vote for Alaska’s Fair Share. We’re glad the judge rejected this attempt to disenfranchise the 39,000 Alaskans who petitioned to place Alaska’s Faire Share on the ballot,” Vote Yes campaign chair and Anchorage oil and gas attorney Robin Brena said in a formal statement. The initiative sponsors insist Alaska is one of the most profitable places in the world for oil companies to do business and lawmakers are shirking their constitutional duty to receive the maximum possible benefit for the state’s publicly owned resources because of the current oil production tax, known as Senate Bill 21. They estimate that, among other things, the Alaska’s Fair Share Act will raise approximately $1.1 billion in revenue for the state by increasing both the gross and net profit taxes on the largest North Slope fields. The initiative’s opponents contend it would drastically increase taxes on the major North Slope fields that already generate the lion’s share of state tax revenue, deterring investment by the industry that drives an outsized portion of Alaska’s economy at a time when oil companies are struggling to adjust to the second sustained oil price collapse in the last five years. Attorneys for the RDC-led group argued in front of Matthews July 7 that because Alaska’s Fair Share paid Las Vegas-based Advanced Micro Targeting Inc. $72,500 in part for help gathering signatures, and Advanced Micro Targeting advertised that it would pay petition circulators $3,500 to $4,000 per month for with the expectation that they would gather at least 480 signatures per week, Alaska’s Fair Share violated the $1 per signature limit and the roughly 29,000 signatures gathered by Advanced Micro Targeting employees should be invalidated. Brena claimed the Advanced Micro Targeting campaign workers were paid by salary for signature gathering as well as other work so it is impossible to parse out how much of their income should be allocated to what specific tasks. He also argued that even if the $1 per signature limit is constitutional it can only apply to a per signature payment scheme, which he characterized as “bounty hunting,” and not to salaried employees. Invalidating the signatures would not officially kill the initiative, but it would force Alaska’s Fair Share to gather the signatures again and keep it off the ballot until the next statewide general election in 2022. Matthews wrote in his 30-page order that he couldn’t “construe the (payment) statute to mean that monthly, hourly or salary type payments are permitted when the amount paid exceeds $1 per signature” because a plain reading of the law specifies the limit with no other qualifiers. However, he also noted that transcripts of the legislative hearings when the limit was being debated in 1998 indicate lawmakers were aware of the potential constitutionality issues but passed the law anyway. In ruling the $1 per signature limit unconstitutional, Matthews wrote that U.S. and state Supreme Court precedent requires judges to interpret restrictions on citizen participation in politics — such as a voter-driven initiative — very narrowly and generally err on the side of allowing the voters to decide an issue rather than preventing it from reaching the ballot. He added that it could practically limit the ability of sponsor to get an initiative on the ballot in Alaska because sponsors are required to collect signatures from 30 of the 40 state house districts and traversing the state is expensive. “If a circulator traveled by plane to a village to collect signatures, it is doubtful that payment of $1 per signature would be sufficient compensation — such (a) circulator would truly be a volunteer regardless,” Matthews wrote. “Whether it was made to help garner grassroots support for initiatives for to deter bounty hunting — the payment restriction under (the 1998 law) is not narrowly tailored to accomplish those goals.” Matt Singer, attorney for the industry coalition, wrote via email that the group is pleased Matthews agreed with them that Alaska’s Fair Share violated the $1 per signature limit but will likely appeal what he called an “overly restrictive” decision. “We believe the court’s holding is wrong as a matter of law and arguably strips the Legislature of any meaningful power to regulate the integrity of Alaska’s initiative process,” Singer wrote. “The authority of Alaska’s elected representatives to protect the integrity of Alaska’s initiative process must be recognized.” State attorneys representing the Division of Elections — also sued for allegedly improperly certifying the signatures that the RDC-led group claims should be invalid — stressed in oral arguments that if the Advanced Micro Targeting workers knowingly falsified their circulator affidavits submitted to the division in regards to payment they should be charge criminally under Alaska law. However, the signatures should remain valid, the state argues. Elwood Brehmer can be reached at [email protected]

Copper River Seafoods’ new building keeps product in Alaska

Copper River Seafoods is adding new seafood industry infrastructure to Anchorage and bringing a key part of its supply chain back to Alaska. The Anchorage-based seafood processor and retailer on July 9 announced the opening of its new south Anchorage cold storage facility, which the company has dubbed “Copper River Seafoods Cold.” The formerly vacant property at 6700 Arctic Spur Rd. has capacity for approximately 2 million pounds of seafood and is the only facility of its kind in the city, according to Copper River Marketing Director Kim Kostka. He said the company has had to warehouse its products that are processed in Anchorage in Seattle for at least 15 years and had been in discussions with other, slower-moving developers in the city for some time before deciding to open their own facility. The chilled warehouse brings all of Copper River’s primary business operations back to Alaska. “Bringing this function of our business to Alaska creates efficiencies and synergies to our two existing value-added plants in Anchorage as well as meeting a strategic goal that is in line with our mission values of providing economic opportunities to the residents and communities we serve,” Copper River CEO Scott Blake said in a formal statement. Company leaders have said Copper River could add up to 40 jobs when a portion of the building is eventually converted into a small cutting facility at a time when other sectors of Anchorage’s economy are shedding jobs as a result of the pandemic. “We’re trying to keep everything right here, the jobs included,” Kostka said. Storing its seafood in Seattle often meant seafood caught and processed in Alaska was sent south only to be brought back to Anchorage for packaging and eventual distribution nationwide. Founded in Cordova in 1996, Copper River Seafoods operates in most of Alaska’s major fisheries. Copper River Seafoods originally planned to hold a ribbon-cutting ceremony at the facility July 14 with Alaska business and political leaders, but the event was canceled as a precaution against coronavirus.

State teams with UAA to surge contact tracing workforce

State Health Department officials are partnering with the University of Alaska Anchorage’s Center for Rural Health and Workforce to quickly train 500 contact tracers needed to help limit coronavirus outbreaks. Rural Health and Workforce Director Gloria Burnett said Division of Public Health officials were searching for help to expand the state’s coronavirus case contact tracing capacity this spring and the UAA center had the resources to assist. “We got this call in mid-May and just hit the ground running from there,” Burnett said. “The metaphor I’ve been using is it’s like we’ve been building a ship while we’re recruiting our crew while we’re charting our course and kind of hitting storms along the way.” The Center for Rural Health and Workforce had access to a $95,000 supplemental federal CARES Act grant, which the state matched to help fund development of the contact tracing curriculum. Center staff — not being trained public health experts — were able to call on others in the UAA College of Health when drafting the 12- to 16-hour online training course. About $2.1 million has been allocated to hire contact tracers, which is what the center is focused on now. The training program is largely stabilized, according to Burnett. State officials initially hoped to train 500 contact tracers by June 30, she said, and 177 individuals had completed the training through July 10; another 480 were registered and 990 people had expressed interest in becoming a contact tracer. “We have a lot of completers and now our priority is to get them hired where as before we were just trying to get people in and registered and to complete the training. Now we’ve really shifted our priorities to getting the people that have completed so far into the system, hired and ready to go working and on-boarding with Public Health nursing,” Burnett said. The center has a budget to hire 150 of the 500 contact tracers the state wants to train for what has been dubbed the “surge workforce,” she added, but those numbers could change if Alaska’s coronavirus case counts continue to rise. “We know that everything we’re projecting is hypothetical and we really don’t know what’s going to happen and what the needs are going to be,” she said. The state also has contracts with numerous school districts for school nurses to be contact tracers as well as the Alaska National Guard in addition to the Municipality of Anchorage’s contact tracing program. The need for contact tracers has exceeded Anchorage’s capacity in recent weeks, leading Mayor Ethan Berkowitz’s administration to start naming businesses, largely bars and restaurants, where people with positive test results had visited and contact tracers were unable to reach everyone who may have been there at the same time. The move has been met with criticism by those who say the businesses and the industry in general have been unfairly targeted and likely will now suffer economically from being named. Berkowitz said in a July 13 statement that Anchorage is in the middle of a “significant COVID-19 case spike” and the city’s contact tracing capacity has been overwhelmed. “Contact tracing is critical because it allows us to know where the virus is and who has it so we can better contain It. Hospital capacity allows us to safely treat those who have become infected. We know that this public health crisis poses a threat to our jobs and businesses, and we know what works to keep safe. Mask up. Stay six feet apart. Wash hands. Keep our social bubbles small. Flattening the curve is how we stop the increase in cases. And, as we have seen in so many other states, it’s what we need to do so we don’t have to start shutting things down again,” Berkowitz said. Anchorage Health Department officials were not able to provide details on the specific needs of the city’s contact tracing program in time for this story. The Division of Public Health is using the “train the trainer” model to grow its contact tracer workforce and therefore is prioritizing the hire of individuals with some form of clinical or public health experience. Burnett said the process is intended to relieve public health nurses that have been doing the work since the pandemic began from the burden of having to onboard new tracers by hiring individuals that can quickly step into a supervisory role in the system. “It’s not going to help our public health nurses and the burnout they’re facing right now if we give them (inexperienced) tier one people to supervise. They don’t need extra work. What they need is extra support to play the same role they’re playing,” Burnett said. Division of Public Health officials overseeing contact tracing could not be reached in time for this story. When Alaska began seeing its first cases of coronavirus in March, most individuals had only been in contact with a handful of other people given broad business and travel restrictions were in place statewide, which meant the potential contacts could be traced fairly quickly, Burnett said. Now, however, some individuals who have tested positive for coronavirus have been in contact with 50 to 100 people, which makes the tracing immensely more time consuming and challenging, she said. “It’s just grown so much in magnitude and volume that we need to make sure we have more supervisors so that we can expand that pool of who their supervising and provide those lower level people with more support,” Burnett said. Individuals hired to be tracers are issued an encrypted Google Chromebook, which is dedicated to contact tracing so they can do the work remotely. The center’s program is part-time, 10 to 29 hours per week. Burnett said most tracers work four-hour evening shifts and full days on weekends. Experienced medical professionals can earn up to $27.52 per hour and inexperienced tracers are paid $17.10 per hour, a pay scale that was vetted against Lower 48 wages with an Alaska adjustment, according to Burnett. She added that despite the work being done remotely, tracers are needed statewide to take advantage of knowledge of local resources. “Local people know more about their local communities and they’re better able to communicate about the resources — they’re better able to refer if there’s support needed. For example, maybe somebody is in need of childcare in order to quarantine,” Burnett said. “The need is massive. If you’re interested, we need you.” Elwood Brehmer can be reached at [email protected]

NOVAGold files lawsuit against authors of short sale report

A co-owner of the massive Donlin gold project is back on the offensive, this time with a lawsuit against a New York firm that issued a report claiming the mine is not viable and encouraging investors to dump shares in the company. NOVAGold Resources filed the complaint against J Capital Research in New York Federal District Court June 29, which alleges J Capital’s 22-page May 28 short-sale report lied to investors on multiple fronts and led to NOVAGold losing a significant share of its market capitalization in the weeks that followed. Shares in Vancouver-based NOVAGold lost 22 percent of their value in the two weeks following the release of the J Capital report. NOVAGold stock traded at $8.42 per share on the New York Stock Exchange at the close of trading July 14, down from a pre-report price of $10.65 per share at closing May 27. The company had a market capitalization of nearly $2.8 billion as of July 14. J Capital Research founder Tim Murray authored the report and acknowledged in it that the company held a short position in NOVAGold, meaning J Capital stood to profit if NOVAGold lost value. NOVAGold claims in the complaint that J Capital’s first mistake was to step outside its lane. J Capital has previously focused its research on Chinese technology companies, according to the complaint, an assertion supported by information on the financial firm’s website, which also advertised the firm as “Making short work of over-valued companies.” “Neither its inexperience nor the ready availability of actual facts deterred JCAP. It did not care. Truth was not the goal,” the complaint states. According to the complaint, the report falsely insisted that NOVAGold management has mislead the company’s investors by claiming the $6.7 billion-plus project is economically feasible; Murray and J Capital flatly contend it isn’t. The complaint also accuses J Capital of mischaracterizing Donlin as a project “that is not feasible to put into production at any gold price” largely because of its technically challenging size and remote Western Alaska location. NOVAGold is a 50 percent owner of Donlin Gold LLC, the joint venture project company, along with mining industry giant Barrick Gold Corp. As proposed, the open-pit Donlin mine in the upper Kuskokwim River drainage would be one of the world’s largest, producing more than 33 million ounces of gold over an initial 27-year life. A 315-mile natural gas pipeline from the west side of Cook Inlet would fuel a power plant at the mine and fuel storage tanks would be built at Dutch Harbor, in addition to the very large-scale operation at the mine site. Attorneys for NOVAGold pointed to Barrick’s status as a 50 percent partner in Donlin Gold and its generally well-regarded status in the industry as evidence to the viability of the project. J Capital stressed in its report that NOVAGold continues to rely on a $6.7 billion cost estimate for the project from the last feasibility study done in early 2012. The short sellers contend the cost should be $8 billion or more, but NOVAGold notes the $8 billion figure cited in the 2012 study included the project’s all-in operating costs to comply with U.S. general accepted accounting principles, commonly known as GAAP. “These statements are false, misleading, defamatory, and they are designed to create panic,” the complaint states about J Capital’s referenced to Donlin’s cost. “NOVAGold has clearly and consistently communicated to investors that the estimated initial capital required for the project is $6.7 billion.” NOVAGold executives said shortly before the short-sale report that they are working to update the feasibility study. Attorneys for NOVAGold also highlighted several inaccurate characterizations of the planned power plant at the mine site as being illustrative of the overall nature of the J Capital report. The report asserts that the planned Donlin power plant would be the largest in Alaska, would increase power generation in the state by 40 percent and would produce enough electricity to power a city of 500,000 residents. However, the Beluga power plant owned by Chugach Electric Association is 332 megawatts and average generation in Alaska is about 800 megawatts, meaning the 227-megawatt plant run full bore would instead increase statewide power generation by about 28 percent. “In moving rapidly from one falsehood to the next, JCAP’s strategy is death by a thousand cuts. The report lobs lie after lie — both big and small — attacking the feasibility of the Donlin gold project in an effort to chip away, bit by bit, at investors’ confidence in the Donlin gold project,” the complaint states. “The resulting damage to NOVAGold’s reputation occasioned by JCAP’s false statements was inevitable and is substantial.” J Capital co-founder Anne Stevenson-Yang wrote via email that she learned of the allegations on Twitter and she doesn’t believe the complaint warrants a comment in response. “As to what (NOVAGold Chairman) Thomas Kaplan says about me/us on the company website, even I do not have the patience to read it all, so it’s hard to imagine that normal investors read this stuff,” Stevenson-Yang wrote. Kaplan issued his own 17-page response to J Capital’s report in early June, in addition to NOVAGold’s lengthy official corporate rebuttal, which included a line-by-line analysis of J Capital’s assertions. NOVAGold did not specify in the complaint what it is seeking other than requesting damages that “compensate NOVAGold for the harm incurred.” J Capital has until July 21 to submit a formal answer, according to a court summons issued June 30. ^ Elwood Brehmer can be reached at [email protected]

State seeks ways to speed CARES grant process

The Dunleavy administration’s attempt to expand eligibility for a $290 million small business aid program initially prevailed in court but those overseeing the grants are struggling to pinpoint why dispersing the funds has gone so slowly. “All of us recognize that the applications are not being processed quickly enough,” Alaska Industrial Development and Export Authority Interim Executive Director Alan Weitzner said of the AK CARES pandemic relief grant program. Through July 13, Credit Union 1 had received 2,226 AK CARES grant applications from small businesses totaling approximately $98.5 million in expenses and 253 grants totaling nearly $10.6 million had been dispersed since June 1, according to Credit Union 1 spokeswoman Jessica Gallagher. AIDEA officials have recently been in constructive discussions with AK CARES program managers at CU1, Commerce Department officials and other, experienced grant providers, in which best practices for administering such a large grant program were exchanged, Weitzner said during a teleconferenced July 14 House Labor and Commerce Committee hearing. AIDEA, the state’s development bank, was tasked with overseeing the small business grant program in spring and Anchorage-based Credit Union 1 was selected to administer it following a competitive bidding process. AIDEA is a public corporation under the Department of Commerce, Community and Economic Development. CU1 CEO James Wileman told legislators that the grant applications, which can be started through the lender’s website, are regularly submitted while missing requisite information. Credit union staff are then reliant on the applicants to be responsive to fix the form, he said, and the missing information varies widely between applicants, making it difficult to get ahead of the problem. CU1 is also awarding the grants with paper checks, which slows the process slightly versus electronic funds transfers. According to Wileman, paper checks are being used at the request of AIDEA to create an appropriate paper trail for potential future audits. CU1’s Gallagher wrote via email that lag time in processing the applications is often a result of verifying documents supporting the eligible expenses for the requested grant amount. “Since go-live (June 1), we have been in many conversations with the state about process improvements, and we are jointly looking for ways to reduce processing time required so we can serve more Alaskans as quickly as possible,” she wrote. Weitzner said AIDEA is working to change the application forms to streamline the process as much as possible for applicants and CU1 grant processors and is trying to coordinate the new applications with new, relaxed eligibility criteria for the grants. The Commerce Department announced June 17 that it was expanding the eligibility for AK CARES grants to small businesses that had also received $5,000 or less from federal pandemic relief programs such as the Small Business Administration’s Paycheck Protection or Economic Injury Disaster Loan programs. The state grants are also now open to 501(c)6 nonprofits and commercial fishermen who hold a Commercial Fisheries Entry Commission permit in-lieu of a traditional business license, Commerce Commissioner Julie Anderson said. “Thousands of (commercial fishery) participants will be able to access those funds and as we all know the fishing industry is facing some extreme hardships this year,” Anderson said, with depressed markets and poor salmon returns across much of the state. The Commerce Department eased the requirements at the behest of lawmakers and state business leaders who said many small business owners statewide were ineligible for AK CARES support because they had received small amounts of funding through a federal program but were still in need of more aid to stay open. The Dunleavy administration first limited AK CARES eligibility to small businesses that had not received federal funding to ensure the aid would be spread as widely as possible. Anderson said if business owners can return any federal aid in excess of $5,000 they would also be eligible for an AK CARES grant under the revised requirements. State Superior Court Judge Philip M. Pallenberg on July 10 denied a preliminary injunction motion filed by former University of Alaska regent and Eric Forrer against the Dunleavy administration, in which Forrer urged the court to halt the AK CARES program over his belief that the administration and lawmakers had not followed the correct process in accepting and appropriating the $290 million of federal funds that are the basis for the program. Pallenberg concluded that stopping the aid over a process dispute would cause undue harm to applicants and Forrer was also unlikely to win on the overall merits of his arguments. Anderson said the state needs to be more effective in communicating the AK CARES guidelines to potential applicants, which should help speed the process for future grants. “Our intent is to be as responsive as we can,” she said. And while it’s well understood that countless businesses and nonprofits are struggling mightily to stay afloat, it’s nearly impossible to quantify the situation in real-time, Anderson noted. She told lawmakers that there simply isn’t a good method for understanding how many businesses are on the verge of closing or have closed without waiting months to see what shows up in business licenses and changes to other records. Elwood Brehmer can be reached at [email protected]

Exploration resumes at gold prospect within national park

Drilling is back to a remote gold prospect inside Lake Clark National Park after it largely sat dormant for more than two decades. Vancouver-based HighGold Mining commenced its summer drill program at the Johnson Tract prospect on the west side of Cook Inlet June 30, according to a company statement. HighGold CEO Darwin Green said a small amount of drilling done late last summer combined with historical records formed the basis for this year’s work. The company announced in late April that it had formed a preliminary resource estimate of 2.1 million metric tons of ore with an average grade of 10.9 grams of gold equivalent per metric tonne for a resource of approximately 750,000 ounces of gold equivalent. The Johnson Tract prospect sits on Cook Inlet Region Inc., or CIRI, in-holdings within the boundaries of Lake Clark National Park and Preserve. Last year CIRI leased 20,900 acres of the property to Vancouver-based Constantine Metal Resources Ltd. for 10 years. Several Southcentral Alaska Native village corporations also own surface rights to land there, while CIRI holds the subsurface mineral rights to those areas. The multi-metal deposit is about 10 miles from tidewater near Tuxedni Bay, about 125 miles southwest of Anchorage. HighGold is also estimating the primary targets on the Johnson Tract property hold another 134,000 ounces of inferred gold equivalent resources, according to the NI43-101 Canadian regulatory mineral resource estimate report published April 29. HighGold’s work in 2019 generated numerous quality drill targets within an 800-meter radius of the high-grade (Johnson Tract) deposit mineral resource, several of which will be drilled for the first time this year,” Green said. “Focus is on expanding the mineral resource base and discovering new zones of mineralization, with early emphasis given to the northeast offset target where limited drilling by previous operators identified what is believed to be the fault-displaced continuation of the deposit. Crews are on-site, COVID-19 mitigation plans are in place, and drills are in position and ready to commence coring.” While primarily a gold deposit, Johnson Tract also contains significant amounts of silver and zinc along with smaller concentrations of copper and lead, according to the NI43-101 resource estimate. HighGold also announced July 6 that it would issue more than 6.9 million shares for a total offering of approximately $12 million Canadian to help fund its work. Anaconda mining company drilled 88 holes at Johnson totaling more than 26,800 meters between 1982 and 1995. The prior drilling revealed gold resources in excess of 10 grams per metric ton in many areas, as well as high-grade zinc and copper ore, according to HighGold. The first phase of drilling this year will utilize two diamond drill rigs on five targets around the primary Johnson deposit for cumulative drilling of 7,000 to 10,000 meters, according to HighGold. The preliminary results of that work will inform subsequent drilling later in the season. HighGold is a spin-out of Constantine, which is also exploring the Palmer copper prospect in the Chilkat River valley north of Haines. If the decision is made in subsequent years to ultimately build a mine — currently envisioned as an underground operation — CIRI could obtain a 25 percent interest in the project at that time, according to HighGold. The Alaska Native regional corporation would also receive net smelter royalties of 2 percent to 4 percent if a mine is developed. The mine would require an access road to a port, both of which would need to be built. The CIRI leases also come with access easement rights and the site has an airstrip built for the earlier exploration work, according to the company. Elwood Brehmer can be reached at [email protected]

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