CH2M Hill to pay $2.9M to settle hatchery claims

FAIRBANKS (AP) — The company that designed a new fish hatchery in Fairbanks has agreed to pay $2.9 million to settle the state's claims over alleged flaws. The Fairbanks Daily News-Miner reports ( ) that as part of the settlement reached in late May, the company, CH2M Hill Inc., also agreed to swallow as much as $2 million worth of extra work it said it performed on the hatchery. The Ruth Burnett Sport Fish Hatchery had initially been scheduled to open in 2009, but because of construction delays and problems with its water filtration system designed to remove iron and manganese, it didn't begin stocking lakes until recently. The project ended up costing roughly $50 million — about twice as much as first anticipated. The state leveled the blame at designer CH2M Hill and at the construction contractors Alaska Mechanical Inc. The settlement releases CH2M Hill from all liability from currently identified flaws in its design, but leaves open the possibility for new claims if further defects are identified, said Senior Assistant Attorney General Dana Burke. As part of the deal, CH2M Hill dismissed its claims for more money from the state for additional, uncompensated work it said it did on the hatchery. That work was estimated by the Department of Law to cost up to $2 million. The settlement allows the state to avoid taking CH2M Hill to court, which could have cost as much as $750,000. The Legislature had gone as far as appropriating the money for such an outcome, but Gov. Sean Parnell vetoed it once the settlement had been reached. The state, however, has paid out roughly $3.8 million to Alaska Mechanical for additional work needed to make the hatchery operational. The hatchery, in downtown Fairbanks across the street from the Chena River, was designed to raise Arctic char, Arctic grayling, rainbow trout and chinook and coho salmon.

Ketchikan shipyard business grows

KETCHIKAN — The development of Alaska Ship and Drydock in Ketchikan has been more than 30 years in the works. “What we’re doing today is what they proposed clear back in 1981,” company Shipyard Development Director Doug Ward said. Ward has been with Alaska Ship and Drydock, or ASD, since its inception in 1994 and also serves as the resident site historian. In 1981, the State of Alaska released its site development plan for what is now ASD on the northern edge of Ketchikan.  At the time, the state Department of Transportation was in search of a hub for year-round maintenance of the Alaska Marine Highway System ferries, Ward said. As a result, $54 million was appropriated to develop the shipyard. Of that, $38 million went in to building the first dry dock, he said. When the yard opened in 1987, it had the single dry dock capable of handling the largest of the system’s ferries, 1,000 feet of dock facing and one large shop building. “No restrooms, no indoor plumbing — nothing,” Ward said of the site’s amenities at the time. What a difference a quarter century makes. Today ASD boasts two dry docks; a towering assembly hall, which has become a landmark of sorts in Ketchikan; an operations center; and a modular fabrication hall that is under construction. Plans for another five-plus story repair hall are awaiting the $30 million needed for construction. In all, more than $130 million will have been invested in the 16-acre property. The modular fabrication hall should be done by this fall. Because the site is owned by the state Alaska Industrial Development and Export Authority, or AIDEA, any infrastructure development relies on public funding. After the initial development through the 1980s, funding began flowing for the shipyard site in the form of $25 million of federal economic disaster relief after the wood pulp mill in nearby Ward Cove closed in 1997. The idea for ASD came about in 1993. It was to be a winter repair yard for the state ferries and in summer to help maintain the Ketchikan Pulp Corp. mill. When the mill closed the disaster relief money became available. In 1999, ASD partnered with Norwegian shipyard builder Kvaerner Masa to design what the yard has become today, Ward said. It was originally meant to be a centralized location for all state ferry activity. “From the beginning this project has always been an economic development plan for the State of Alaska, and I think that’s important to note,” Ward said. AIDEA’s ownership of the property makes any investment in it an addition to the state’s portfolio, he said. Ward said sites throughout Alaska were looked at in 1999 but ASD was chosen partly because of its proximity to resources in the Pacific Northwest, along with its temperate winter climate. Portland, Ore.-based Vigor Industrial purchased ASD in February 2012. Vigor operates seven shipyards throughout the Pacific Northwest including ASD. While ASD still operates under its original name, Vigor provides it with financial stability and a workforce of some 2,000 professionals. Ward said prior to Vigor’s involvement, ASD had roughly 120 full-time employees. Since early 2012 that number has grown to 160. Of those, 98 percent are Ketchikan residents. In late, April Sen. Lisa Murkowski toured the shipyard with ASD President Adam Beck. He told the senator that with the expansion in infrastructure and new project opportunities on the horizon, ASD is looking to double its workforce to nearly 350 in the next two years. “Vigor being a non-Alaskan company and acquiring ASD from a local employer, people were rightfully concerned,” Beck said. “But it’s a win-win for us to hire local folks.” He said Ketchikan’s nature as an isolated community means hiring locally provides a certain assurance that the employees understand what life in the city is like and won’t leave after a short time. Ward said the growth ASD hopes to achieve in the near future would return the area’s wage base back to where it was before the pulp mill closed and nearly 500 jobs were lost. Beck worked for ASD from 2000 to 2005, he said, before he began working with Vigor in Seattle. He now runs four of Vigor’s shipyards and his connection with ASD made him a perfect fit to oversee the Ketchikan operation. ASD is trying to find schools to help train the employees it hopes to hire soon, Beck told Murkowski. He added that ASD has provided equipment and supplies to train some of its current employees, but will need help to expand training. “We’re willing to partner with any education establishment that’s willing to partner with us. The challenge is that we want people who are ready to put boots on the ground,” he said. “It’s time to put wire to steel and pliers in hand and train workers.” From the upper level of Alaska Ship and Drydock’s five-story assembly hall, Sen. Lisa Murkowski looks down upon the longliner F/V Arctic Prowler now under construction with ASD’s Adam Beck and Doug Ward. (Elwood Brehmer photo) Ships in the works In addition to maintaining Alaska’s ferry fleet, ASD is finishing construction of the first large fishing vessel ever built in Alaska to fish Alaska waters. The 136-foot longline vessel the F/V Arctic Prowler is in the assembly hall. The vessel will be owned by Alaska Longline Co. of Petersburg and will fish cod, sablefish and turbot in the Bering Sea and the Gulf of Alaska. The $20 million-plus Arctic Prowler is expected to hit water sometime later this summer, said ASD Project Manager Carl Smith. Designs for two “Alaska-class” day ferries are in the works. Alaska Marine Highway System General Manager Capt. John Falvey has said he hopes the vessels can be built in Ketchikan. Beck said the competitive bid process on the $118 million project should be completed by this fall. “We hope to be building (the ferries) sometime in the first quarter of 2014 if we’re able to successfully win the bid,” Beck said. Previous state ferries have been built in shipyards across the country. None have been built in Alaska. Vigor is also in the bidding process for a major Coast Guard contract that would involve multiple shipyards including ASD. The Coast Guard is interested in building over two-dozen offshore patrol cutter vessels, Vigor Vice President of Government Affairs Fred Kiga said. “$10 billion, 25 ships, over 15 years,” Kiga told Murkowski. Modular portions of those ships would be built in Ketchikan if Vigor were to win the bid, Beck said. Vigor officials are confident their hull design, one similar to a design already used in oil support services in Europe’s North Sea, will be picked from 13 bidders as one of three potential designs. Beck said the long-term Coast Guard project would assure a return on investment for future training and infrastructure development by Vigor. He added that even if the Coast Guard work is not secured, ASD has received seven requests for proposals, or RFPs, for other ship-build projects in the past year. ASD’s Ward said building the now idle M/V Susitna for the Navy is a source of pride for ASD even though its inactive status has led to criticism of the ferry as a boondoggle. “The M/V Susitna, as a Naval prototype, is an absolute success,” he said. He said Naval officials were impressed after testing the ship, and with its capabilities and the quality of its construction. Most prototypes are destined to be scrapped, Ward said. The fact that the Susitna will probably find use somewhere is a win. “The fact that (the Susitna) isn’t in operation doesn’t mean it wasn’t a success,” he said. “It drove innovation into Alaska.”   Elwood Brehmer can be reached at [email protected]

Defendants in port suit hold their ground

All three defendants in a lawsuit the Municipality of Anchorage filed March 8 over the bungled Port of Anchorage expansion project have firmly denied liability and asked for dismissal in court responses to the municipality’s claims. PND Engineers, Inc., designer of the Open Cell Sheet Pile dock system at the center of the controversy, and CH2M Hill, owner of former port consultant VECO Alaska, filed responses April 17. Integrated Concepts and Research Corp., or ICRC, filed a motion for dismissal in U.S. District Court in Anchorage April 15. ICRC was hired by the U.S. Maritime Administration, or MARAD, in 2003 to oversee the port construction. The Port of Anchorage project was at the time the first large construction project MARAD had led. CH2M Hill recently released two studies that claim PND’s sheet pile design is inadequate for use at Anchorage’s port and offer construction alternatives. The engineering firm was engaged by the municipality to conduct the studies for about $2.6 million. PND has refuted CH2M Hill’s findings claiming that the firm did not follow the same engineering criteria that PND was ordered to follow when it fabricated the sheet pile design for the port. PND’s stance continues to be that shoddy installation of the sheet piles by subcontractors caused the dock structure to not meet seismic and stability standards. The municipality originally filed suit in state court but the case has since been moved to federal District Court. Federal Judge Ralph Beistline is presiding over the case. While the suit does not specify specific damage amounts, it states the municipality has suffered “damages in excess of $100,000” because of actions by each of the defending parties. CH2M Hill and PND both ask for the case counts of negligence against them to be thrown out and request the municipality be required to pay all legal fees they incurred as a result of the suit. CH2M Hill claims it is no longer liable under VECO’s 2006 contract with PND because the statute of limitations on such an agreement has expired. Alaska law requires action over a disputed work contract be taken within three years under most circumstances. In its motion, ICRC disputes the municipality’s claim of a breach of contract by stating that it never actually entered into a contract with the municipality. Rather, ICRC purports that its role was to “provide discrete contract management assistance in support of the project,” the document states. ICRC adds that it never stepped outside the bounds of the contract it signed with MARAD. The municipality entered into a memorandum of understanding with MARAD to manage the engineering and construction of its port shortly before MARAD brought ICRC into the fold. ICRC also contends the municipality did not follow proper procedure by leaving MARAD out of the suit. “If the claims against ICRC are allowed to continue, MARAD would be a party to this litigation all but in name and in right,” the motion asserts. According to the ICRC, MARAD is obligated to pay its legal fees in accordance with the contract between the two. Lastly, ICRC states that because MARAD is largely immune from litigation because of its standing as a sovereign government agency unless a contract or law was broken. This means, from ICRC’s view, that because the municipality cannot go after MARAD for damages, ICRC is also safe. Elwood Brehmer can be reached at [email protected]

PND refutes port study, lawsuit

PND Engineers Inc. is taking issue with the results of a CH2M Hill study done for the Municipality of Anchorage that concluded PND’s Open Cell Sheet Pile bulkhead design is not suitable for the Port of Anchorage expansion project. “PND stands by our design,” company Vice President Kenton Braun said. The Anchorage-based engineering firm’s design was chosen by Integrated Concepts and Research Corp., or ICRC, for use on the roughly 6,000 feet of dock structure at the port. ICRC was named port project manager by the U.S. Maritime Administration, or MARAD, in 2003. On March 8, the municipality filed a lawsuit in state court against PND claiming its sheet pile design was faulty. The court documents referenced CH2M Hill’s suitability study several times as apparent evidence of design flaws. Braun said PND was “blindsided” by the CH2M Hill study and that after reviewing it his company is more confident than ever in their design. VECO Alaska, now owned by CH2M Hill, and ICRC were also named in the suit for alleged construction negligence. Methods used by ICRC’s subcontractors in installation of the sheet piles have been scrutinized in reviews of work done on the troubled port expansion project. PND President John Pickering said his company was contractually limited to direct conversations with ICRC —prohibiting PND from having direct communication with those handling the sheet pile. “There’s a lot of misstatements contained in that lawsuit and that’ll all come out in the process,” Pickering said. In its study conclusion, CH2M Hill wrote that, “the (Open Cell Sheet Pile) system is not adequately designed to meet the global stability and seismic displacements based on the design criteria. The study also concludes that the open cell system is adequately designed to meet initial internal stability structural design requirements, assuming it was constructed without defects. However, at the end of 50 years, it will be slightly over-stressed due to corrosion and will not meet safety standards.” According to Braun, the criteria that CH2M Hill claims the sheet pile design does not meet differ from those that PND was originally tasked with meeting. He said the municipality and ICRC consulted with multiple firms for more than two years to determine appropriate design criteria prior to PND’s involvement in the project. “You can show anything to not work by making unreasonable assumptions and changing the criteria,” Braun said. CH2M Hill has been unavailable for comment about the study. As for the corrosion problem, Braun said PND was not involved with the development of a corrosion prevention system for the sheet piles. He noted that while an electronic corrosion prevention system has been installed, it hasn’t been turned on for the several years the project has been stagnant. A March 26 presentation by PND to the municipality’s Geotechnical Advisory Committee was canceled several days prior by the municipality on the advice of its attorneys, according to Braun. The presentation was going to be PND’s opportunity to refute the suitability study’s claims, Braun said. He shared portions of the presentation meant for the municipality with the Journal. In it, PND lists six criteria that it designed the sheet pile system to meet but, as Braun claimed, CH2M Hill changed. The criteria are: the structure’s design life; its “live load” capacity, or the total amount of weight that the dock can handle at one time; the combined live load and seismic stability requirements; stability requirements in the event of sea floor scouring or over dredging; and others concerning groundwater elevation and the dock’s stability during an earthquake at specified tide levels. Braun noted CH2M Hill’s deviation from the previously agreed upon 50-year design life for the structure. In its study CH2M Hill referred to the 50-year timeframe as the “industry standard” for such projects. In the alternative design concept plans that it presented to the municipality March 8, CH2M Hill used 75 years as the standard for structure life. He said PND designed its sheet piles to last 50 years per project criteria to limit cost. Braun and Pickering both questioned CH2M Hill’s status as an unbiased third party since the municipality contracted with the company to develop design alternatives after it determined the sheet pile design is unsuitable. CH2M Hill’s was paid $2.2 million by the municipality for its suitability study and slightly more than $450,000 for its design concept work. “The municipality has said they are going to do an independent third party review (of the CH2M Hill study). However, the validity of that review will be highly dependant upon how much money they spend in doing that review,” Braun said. In a previous interview with the Journal, Anchorage Mayor Dan Sullivan said while the municipality does plan on having the study reviewed, a budget or timetable for such a review has not been established. Assistant municipal attorney Robert Owens said any reviewer will have no past or future involvement in the port controversy. “That doesn’t mean we’re going to pay another $2 million to have CH2M Hill’s work duplicated, but certainly it would be tested and evaluated,” Owens said. Braun contended that the yearlong CH2M Hill study process could not have evaluated all the essential criteria that other consultants spent several years debating prior to determining PND’s sheet pile system was appropriate for the port. “The independent reviewer needs to have access to the previous work and be able to talk to all the previous people who worked on (the project),” Braun said. He also said he wondered how a thorough review of all work would be feasible given the possibility of legal constraints put on stakeholders due to the municipality’s lawsuit. According to Owens, the ability for a reviewer to contact previous consultants hired by ICRC regarding criteria and design issues has not been discussed by municipality officials. However, he said extensive records of past work would be available. “PND’s going to hire their experts, we’re seeking a third party evaluation, and once litigation is under way (communication) becomes a little more isolated,” Owens said. Pickering returned to construction issues to sum up the mess. “If the thing had been built correctly, we wouldn’t be having this discussion,” he said.  

Amended permitting bill advances

JUNEAU (AP) — A state senator on April 8 questioned the judgment of a Senate Finance Committee co-chair in advancing an amended version of a state permitting bill. Sen. Donny Olson, D-Golovin, suggested co-chair Kevin Meyer’s judgment may be “somewhat clouded” by end-of-session pressure to move bills. The Legislature was scheduled to adjourn April 14. House Bill 77 has generated at-times intense discussion in the committee, particularly surrounding a provision that would remove the ability of individuals or groups to apply for water reservations to maintain or protect certain water levels for such things as fish habitat, recreation and water quality. Sen. Lyman Hoffman, D-Bethel, has said he believes that’s a constitutional right but Natural Resources Commissioner Dan Sullivan has said state attorneys are confident in the provision’s constitutionality. The bill, from Gov. Sean Parnell, is aimed at improving the permitting process and deals with things such as land exchanges and permitting procedures. Critics say it could hurt the public’s ability to participate in permitting decisions. The latest version of the bill, unveiled April 8, would allow for a feasibility study for a hydroelectric project at Chikuminuk Lake within a southwest Alaska state park. It includes language similar to a bill earlier proposed by Sen. Lesil McGuire, R-Anchorage. A 2002 management plan referred to the lake as one of the most scenic and remote in the park. It had been studied in the past as a possible hydro-power site with distribution lines running to Bethel but studies found such a project would not be economically feasible, the management plan says. Nuvista Light & Electric Cooperative Inc., in a presentation to legislators earlier this session, said it is seeking to build off past studies. In 2011, it received $10 million from the state to study the feasibility of the lake as a hydroelectric site. Executive director Elaine Brown said the group was denied a special use permit by the Department of Natural Resources to do geotechnical and geophysical work, such as bringing in a rig to drill bore holes in rocks. But she said Nuvista has gotten other permits to do raptor, fish and other research in the park. Olson said the changes made a controversial bill more controversial. But Meyer, R-Anchorage, characterized the changes as minor, a view echoed by co-chair Sen. Pete Kelly, and Meyer said he didn’t see the need to hold the bill over any more. Neither Olson nor Hoffman objected to the bill ultimately leaving committee but Olson, in the committee report, recommended the bill not pass. Hoffman recommended it be amended.

Multiple fisheries studies under way for Watana hydro

Editor's note: Since this issue went to press, the Alaska Energy Authority announced Wednesday that the Federal Energy Regulatory Commission had approved the 14 remaining study plans. Now, 58 studies are approved, to be conducted over the next two years. Fisheries studies are under way on the Susitna River north of Talkeetna as part of the regulatory process for the proposed Susitna-Watana Hydro project. The Susitna-Watana Hydo project’s fish and aquatic resources technical workgroup held a quarterly meeting March 26 to discuss the fisheries study plan. The Alaska Energy Authority, or AEA, is studying a 735-foot high dam on the Susitna River, above Devil’s Canyon. That would create a reservoir about 42-miles long, and have an installed capacity of 600 megawatts, although actual output year-round would likely not meet that peak value. With those details set out, AEA is now working on studies of what the dam means for the surrounding environment — including fish.  Most of the currently available information about the dam is from studies done in the 1980s. But now AEA has hired R2 Resource Consultants to assist with a new round of scientific work. Although AEA and R2 are developing the studies, in conjunction with other partners, and ensuring the plans comply with regulatory requirements, the working group brings together a variety of participants, including state and federal agency representatives and members of nonprofits, to discuss the plans. As proposed, the study plan calls for more than 50 studies, which must be approved by the Federal Energy Regulatory Commission, or FERC. Of the studies, 13 are specifically categorized as pertaining to fish and aquatic resources, although others, including two looking at in-stream flow, could also be significant in determining the dam’s impact on fisheries. AEA filed its study plan with FERC on Dec. 14. So far, FERC has signed off on 44 of the studies, and asked AEA to do further work developing the others. The National Marine Fisheries Service, or NMFS, filed a study dispute request in February regarding three of those studies, two of which are set to look at fisheries resources. AEA has also updated some of the plans as FERC requested, but was waiting for a response from FERC as of March 26. Other plans will be finalized later this spring, with an opportunity for the public, and agencies, to comment at that time. The authority has also been instructed to include input from certain federal agencies as it modifies study plans, a point that attendees emphasized at the March 26 meeting, and asked the authority to remember. At that meeting, AEA offered an update on each fish study. The plan is to look at fish distribution and abundance for all parts of the river, salmon escapement, river production, the future reservoir area, fish passages and barriers, fish harvest downstream of the proposed dam, a genetic baseline study being done in conjunction with the Alaska Department of Fish and Game, euchalon distribution and abundance, and a beluga whale study. The studies NMFS is questioning look at fish escapement and fish passage at the dam site, according to Mary Louise Keefe from R2, who provided an overview of the work. FERC had scheduled a technical conference for April 3 to discuss the proposed work, and differences of opinion. Several studies, including the salmon escapement project, are currently in the field planning stage, while some, such as the fish passage barriers work, are still being modified to meet FERC’s comments. The workgroup is also assisting with developing the studies, although it doesn’t have the final say. AEA’s Betsy McGregor reminded the agency participants that ultimately it is not a consensus process. Ultimately, AEA will be responsible for the final plan, and may or may not be able to incorporate every comment made during the meetings, she and others said. FERC has instructed the authority to include some specific participation from federal agencies. The final, approved, versions of the authority’s study plans will eventually be made public, although a timeline for that has not yet been set. Some of the research has already begun. Last year, scientists began baseline studies of the area and worked to pinpoint some study sites. AEA also has video of the area that will become a reservoir, and other parts of the river that could be affected by the dam. That’s available to the public, but must be checked out from AEA’s Anchorage office either in person or via mail. In March, some winter work was conducted, including trips to study sites, installation of some technology. In April, scientists are set to continue the study effort by working on early life history sampling using fish nets and minnow trapping to look at juveniles in the river, and catch their movement out of spawning areas and into rearing areas. Over the next few years, the working group will meet quarterly. Although the March 26 meeting was just one day, future meetings could take longer as the studies begin and there’s more to discuss. The working group’s next meeting will be a fish passage workshop in Washington, on April 9 and 10.   Molly Dischner can be reached at [email protected]  

Bids come in high for new Kodiak High School

(AP) — All three bids received to build a new Kodiak High School have come in over what the Kodiak Island Borough School District had estimated. The Kodiak Daily Mirror reports ( the project, considered the largest ever on the island 200 miles southwest of Anchorage, was budgeted at $58.5 million. The lowest bid came from Watterson Construction of Anchorage, at $61 million. Roger Hickel of Anchorage bid $63.7 million, and Omaha, Neb.-based Kiewit Building Group bid $64.2 million. The project was bid with 11 items, like a music room or running track, which could be dropped if the bids came in too high. The school board will now consider which of the 11 could be dropped to make the bids work, and submit a formal recommendation to the borough assembly.

Turnagain Pass power lines to get upgrade

(AP) — Extreme snowfall, avalanches and icing wiped out power lines across Turnagain Pass on the Kenai Peninsula again this winter, and a project is underway to replace them. Alaska Public Radio reports ( ) in all, 21 spans of the transmission line sagged to the ground during a storm. The fifteen miles being replaced this winter will add to the amount of the 90-mile line that was replaced after 2011 avalanches. A $15 million appropriation from the Legislature will pay for replacing the highest priority section of the line, through the mountains above Turnagain Arm along the Seward Highway. Chugach Electric Association Spokesman Phil Steyer says the line was built in 1962, and is badly in need of replacement.  

Federal appeals court allows railroad extension

Work on a railroad extension in Southcentral Alaska will move forward after the 9th Circuit Court of Appeals on Wednesday reversed its earlier order to halt work. The court lifted the stay on the Alaska Railroad's extension project to Port MacKenzie in the Matanuska-Susitna Borough. A three-judge panel of the court on Oct. 1 agreed with environmentalists, who argued they and the natural environment would suffer irreparable harm if the emergency order had not been issued to stop construction. Attorneys for the petitioners — the Sierra Club, Alaska Survival and Cook Inletkeeper — had argued that an environmental review by the U.S. Surface Transportation Board was inadequate and that the board "merely parroted" the purpose and need for the project articulated by the Alaska Railroad Corp. At the time, the court found there was a "serious question" as to whether the board complied with a federal environmental law, the National Environmental Policy Act or NPEA, in determining the purpose and need of the extension. "Upon further review of the record, the panel concluded that the Board's 'purpose and need' statement complied with the act and that petitioners no longer raised 'serious questions,'" the court wrote in Wednesday's decision. An official opinion will follow later. The court noted that further delay would prevent awarding construction contracts, postpone hiring and increase costs of the project — proponents saying by as much as $12 million. "Because this project is funded largely with taxpayer dollars, these increase costs of construction .... will burden the public upon continued delay," the court wrote. Justices said since they have determined the Surface Transportation Board acted within the law, that agency and not the court should "balance the justifications of planned economic progress in improved rail service against the possibilities of environmental harm." Matanuska-Susitna Borough spokeswoman Patty Sullivan welcomed the news. "We're very happy, and we knew the (Surface Transportation Board) had acted accordingly and had followed NEPA." Bob Shavelson, with Cook Inletkeeper, said there are already three tidewater ports in Southcentral Alaska. "It doesn't make sense to continue pouring hundreds of millions of public dollars into an unneeded project," Shavelson said in a statement. "Port Mac's business model rests on pie-in-the-sky assumptions, and Alaskans cannot afford another public funding disaster." Sullivan said Cook Inletkeeper is against development of any kind. "If you can't build a railroad in Alaska, where can you build one?" she said in an email to The Associated Press. The Surface Transportation Board last November gave final approval to the railroad to build and operate about 35 miles of new rail line in the borough north of Anchorage. The proposed line would run from Port MacKenzie to near Houston. The board said the proposed line would provide rail freight services between the port and Alaska's Interior and said it also would support the port's development as an export-import facility for intermodal and bulk-material resources. In September, the U.S. Army Corps of Engineers issued a permit allowing the railroad to fill in nearly 96 acres of wetlands for the line. Opponents have argued the project would open the door for shipping Alaska coal overseas, but they say that would come at the expense of local families, landowners and salmon fisheries.  

$33M upgrade expands training and adds housing

Construction of more than $33 million worth of new facilities at Kenai Peninsula College in Soldotna is moving ahead as scheduled, College Director Gary Turner said. Kenai Peninsula College, or KPC, is adding a $17.8 million student housing building along with a $15.25 million Career and Tech Center to its Kenai River Campus. The projects are expected to be finished in August 2013, just time for fall classes. “It’s a significant amount of money that’s being injected into our local economy and that’s aside from the fact that it’s going to allow the college to expand some of its most popular programs,” KPC Advancement Program Manager Suzie Kendrick said. The 19,000 square-foot Career and Tech Center will allow the college to expand its training for Alaska’s high-demand fields of oil, gas and electricity production, Kendrick said. KPC expects opening the building to have long-term workforce development implications for the state. Turner said the center will further what is already a strong process technology program at KPC. “We conduct the best training in the process tech field in the country and the major producers have told us that time after time,” he said. The interest oil companies show in the school’s students prior to their graduation is a testament to KPC’s reputation and why providing opportunities for more students with new facilities will pay off, Kendrick noted. She said the school currently has waiting lists for students hoping to get into its process technology programs. “We just had ExxonMobil here giving tests to our students hoping to hire them before BP and Conoco can,” she said. The Career and Tech Center will free up a significant amount of space in existing buildings, Kendrick said, giving the school more room to expand health services education. She said KPC is adding a firefighter-training program for the upcoming spring semester as well. The Kenai Peninsula College campus in Soldotna is situated along the scenic Kenai River and is adding student housing set to open in fall 2013. The site of the $17.8 million housing project, seen at bottom left, will have space for 96 students and six resident assistants. (Photo/Courtesy/KPC) Situated just 300 feet from the Kenai River, KPC’s student housing facility under construction at its Kenai River Campus will be the first of its kind for the college. The school also operates a campus in Homer and extensions in Seward and Anchorage. “KPC, historically, has not had residential on-campus housing available,” Kendrick said. “It will allow students who otherwise wouldn’t have been able to attend the college to attend, that’s what’s so exciting for us.” The housing will give prospective students from rural Alaska an opportunity to continue their education without having to move immediately to a large city or worry about a place to live, she said. “KPC is a great fit for students from small places. Here, they can get their feet wet and see if college is right for them,” Kendrick said. The two-story dormitory will be broken into 24, 1,030 square-foot apartments. Each apartment will have 4 bedrooms, a bathroom, full kitchen and a common area. It will be home for 96 students and 6 resident assistants. The building site is part of a wooded, 309-acre tract of land owned by the college and is within walking distance to the rest of the campus, according to KPC publications. Housing will cost each student $3,200 per semester and applications will be taken in April on a first-come first-serve basis, Turner said.  Students must first register for classes in order to be eligible for on-campus housing, he said. While initial funding for the new buildings at KPC was approved through legislative grants, Turner said all housing in the university system is self-funded and KPC housing will be no different. Plans are for the dorms and other university buildings to be rented out for training events and conferences in summer when students are gone. “There isn’t a conference center on the central peninsula and it’s been a need for many years and folks are talking about it a lot,” Turner said. “I think we can fill some of that niche through our facility.” The school has the support of the Soldotna Chamber of Commerce, he said. Turner recently announced an agreement between KPC and Alaska Christian College for the school to offer meal plan options to some of KPC’s new on-campus residents. Under the agreement, Alaska Christian College will offer breakfast, lunch and dinner to the first 30 students who apply. Meal plans will range in cost from $1,200 for 100 meals up to $1,725 for 200 meals, Turner said. The agreement is part of a long working relationship KPC has had with the school, he said, and gives students at the two colleges the “opportunity to break bread together in Alaska Christian College’s inviting dining hall.” Turner said he’s excited about the prospect of opening the new facilities and what the mean for the future of the Kenai Peninsula as a whole. “It’s a win-win-win,” he said. “That’s such a darn cliché but it’s true for our campus, for our community and for business and industry.” Elwood Brehmer can be reached at [email protected]  

Study: Port of Anchorage replacement flawed

A new federally commissioned study says the problems with the Port of Anchorage replacement go as far back as the project's design. Top engineers with CH2M Hill told the Anchorage Assembly that three of four new sections already built at the Port of Anchorage were not constructed correctly, but even if they were, they risk failure during an earthquake due to shifting earth, the Anchorage Daily News reported Saturday ( "If it starts to move, then you've got potential problems. That's what happened in the 1964 earthquake and that's the worrisome thing about the design right now at the Port of Anchorage," Don Anderson, who led the geotechnical team for CH2M Hill, told the Assembly. He indicated the three new problem sections, which cost tens of millions of dollars, might not be salvageable. But Mayor Dan Sullivan said it's not known whether the work already done will have to be ripped out entirely. Sullivan said perhaps different construction techniques and materials could make the current design more stable, he said. CH2M Hill did the year-long, $2.2 million study for the U.S. Army Corps of Engineers and the federal Maritime Administration. The engineering company also has been contracted for a second phase at a cost of another nearly $500,000. That work is expected to be completed by February or March 2013 and will lay out options for completing the port project. The existing structure probably could be made strong enough, said Larry McCallister, director of programs and project management for the Army Corps in Alaska. "The issue becomes ... how much time, how much money is available and what you really want to do to make a usable facility." The Corps suggested the study after the city asked it to take over management of the project, which had been under the Maritime Administration, a request it is still considering, McCallister said. CH2M Hill's full, 2,200 page report is in draft form and hasn't been released. It won't be finalized and made public until mid-December, after the Corps of Engineers and the city's Geotechnical Advisory Commission review and comment on it. Assembly members on Friday were hearing the conclusions for the first time. They seemed stunned. "I am going to go home and cry," Assembly member Patrick Flynn, whose district includes the port, said after the briefing.  

Nome and Kotzebue projects await bond vote

Proposed port development and improvement projects in northwest Alaska are moving forward with environmental and planning surveys, officials in Kotzebue and Nome said. A $10 million grant for the city of Kotzebue to fund study and initial construction work on the proposed Cape Blossom access road, which would link the future port site to Kotzebue, is a part of the $453.5 million in transportation projects on the proposed state bond package up for a vote Nov. 6. If approved, the money would be appropriated to the city of Kotzebue through the Department of Commerce, Community and Economic Development. In total, Kotzebue requested $28 million, with the other $18 million still awaiting approval. Chris Johnston, project manager for the Alaska Department of Transportation and Public Facilities, said initial work has been done using $4.6 million provided by the Federal Highway Administration. “This summer we went out and did environmental and engineering fieldwork. We did break-up studies along the project corridor at Sadie Creek,” Johnston said. “We went and did some bird surveys, wetland surveys, things like that.” When asked about possible port construction, Johnston clarified that all the money currently awarded is for road development only and that it must be completed before the port project is fully undertaken. The Cape Blossom site is approximately 12 miles south of Kotzebue. A 1983 state DOT study determined it to be the closest viable spot for a deepwater port relative to the city. Overall road development cost will largely depend on the route chosen, labor costs, and, most importantly, where road-base material comes from, according to a 2011 state DOT reconnaissance study on the project. Study estimates range from about $35 million for the shortest route supplied with locally sourced materials, to more than $258 million for the longest route if material must be transported in by barge. While a route final route has not been finalized, Johnston said the more direct southerly paths appear most feasible to avoid Air Force property and trim cost. “We’re looking at the southwest option,” he said. “We may go west to the upstream part of Sadie creek to save money on culverts and bridges and environmental impact.” Using local fill material is of utmost importance for the project, Jessup said, and noted that gravel resources have been located seven miles east of Kotzebue. While it’s not yet clear as to how much usable material may be available at the site, Jessop called the find “significant.” He also said the military assisted in project survey work through the Department of Defense’s Innovate Readiness Training, or IRT, program. IRT is a way to “improve military readiness while simultaneously providing quality services to communities throughout America,” according to the program’s website. The site lists the Cape Blossom project as one that the Marine Corps Reserve and Army National Guard have both already participated in. “Once a (route) recommendation is made the city is hoping the we can continue to utilize the IRT program to lower our labor costs down the road,” Jessup said. Cost estimates from the 2011 DOT study, contingent on local material sourcing, drop as much as 60 percent when IRT labor is employed for construction versus a hiring a private firm. If the project continues on its current timeline and funding is secured, Johnston said the start of construction could be on the horizon. “There’s a lot of variables, but if we’re able to award a contract in the fall of 2014 then the contractor may be able to start work that winter, assuming we get the rest of the funding we need,” Johnston said. “Or we might just build part of the road with the funding we have available.” The timetable for the Nome port and harbor expansion project is not as clear, Joy Baker, Nome’s harbormaster said. “We’re still moving forward with the studies and concept design and looking for funding and all of those steps. When you’re talking about a big project like this it’s a slow process,” Baker said. Nome applied for an appropriation similar to Kotzebue, but for more than $181 million, encompassing the entire project cost. Early port and small-boat harbor designs submitted with the grant application call for increasing the depth of the port from 22 feet to 35 feet at average low tide, along with construction of a third large dock and several smaller maintenance projects. Estimates for the large port project come it at $150 million, according to the design summary. An expansion of moorage for small boats is needed to accommodate the growing fleet of gold-dredging vessels working offshore from Nome. The design summary states three dredging craft launched from Nome in 1996, and that number had grown to 39 in 2011. The fleet doubled in just the past year, Baker said. Small-boat harbor expansion is projected to cost roughly $13 million. The Nome project would receive $10 million through the bond package, the same as Kotzebue. “It’s not approved yet, but we’re hoping,” Baker said. Elwood Brehmer can be reached at [email protected]

Eaglecrest Learning Center construction tentatively set for 2014

The Eaglecrest Learning Center, a planned building that would house a “learning school” for aspiring skiers and snowboarders next to the Eaglecrest Lodge, could open during the winter season of 2014-15, General Manager Matt Lillard told the Eaglecrest board of directors’ Planning Committee Thursday evening. Lillard presented a set of preliminary dates, which he said was provided by Engineering Director Rorie Watt, penciling out the process for the Learning Center. Next year is set to be used for planning and design of the facility, according to the preliminary dates. The project would then go out to bid in January 2014, with construction beginning in the spring and ending by about January 2015. “I would hope it would be done by opening, December 2014,” Lillard added. After sharing the dates with the committee members, Lillard said, “That’s the general timeline right now, and it leaves us a lot of time to plan, figure out exactly how the building lays itself out, and what it looks like, and what sort of energy-efficiency items we want to look after, and other things that will go in there.” Carlton Heine said he wants to be sure the Learning Center will be a profitable proposition. “As a general statement, I’d like to kind of make sure that we are looking at the characteristics of the building such that it enhances revenue with minimal increase (in) long-term operational costs,” said Heine. The Learning Center provides space for the consolidation of ticket windows and other staff-intensive parts of the ski area, Lillard responded. “That’s one of the key things that is so great about this building and what it can house is that it actually does, as it’s proposed, currently even, it creates efficiencies in how we operate,” said Lillard. David Audet, participating telephonically, asked, “Is there time, room or need, or (is it) a completely silly idea, to have any public input on maybe what some of the things this building should be used for?” “We generally know what it should house,” Lillard responded. “There’s only so many facilities that we have at Eaglecrest, and I think we probably stand a better chance of what should go in there rather than the general public. We could probably go out and get some feedback. I don’t know how valuable it would be.” According to Lillard, the Learning Center will be a city project. Eaglecrest is an enterprise fund of the city government. “This will be a city-engineered project, and … they will be assisting us through the process,” Lillard told the committee. “They will be assigning us … a project manager in the fairly near future.” Lillard added, “The good news is that most of the engineers are skiers as well, so I’m sure we’ll get someone who understands what we’re trying to do.” The passage of Ballot Proposition 1, authorizing a $25 million general obligation bond issue, in the Oct. 2 municipal election will fund the Learning Center project, with $3.5 million marked for it. Ahead of the meeting, Lillard said that the ski area’s three snowmaking guns started running late Thursday afternoon. Eaglecrest uses snowmaking guns, which combine air and water to create snow, to fill in “holes and gaps” on the grounds to ensure more even snow distribution, Lillard said. “It’s not a system, in its current capacity, that can open any terrain from top to bottom, but it does assist us in getting open earlier,” Lillard explained. This year, Eaglecrest’s snow guns are all running off Juneau’s electric power grid. None are using diesel fuel, as they have done in the past. “Before the mountain had electric power, it was always just diesel generators,” said Lillard. Eaglecrest is still aiming for an early December opening, Lillard added. “We’re still looking at Dec. 1,” Lillard said. “We’ll hope for more snow earlier.” Lillard said snowmaking is expected to last until Sunday morning, though it depends on the temperature and humidity conditions at the ski area remaining favorable for snow production.

USDA provides nearly $29M in grants for rural infrastructure

U.S. Department of Agriculture officials announced 16 rural Alaska communities will receive funding to improve health and water quality in the villages. The majority of the money will be used in Native villages to fund development of community water and wastewater disposal systems. The USDA will fund the projects through it Rural Alaska Village Grant program, Jim Nordlund, USDA Rural Development Alaska director, said. “The RAVG funding is roughly $21.8 million and will go to the Alaska Native Tribal Health Consortium on behalf of rural Alaskan communities, to provide assistance to construct drinking water and wastewater systems in Kwethluk, Toksook Bay, Eek and Lower Kalskag,” Nordlund said. “The projects will improve public health and sanitation conditions for residents of these communities that currently must collect and haul rain for drinking water and rely on portable waste containers euphemistically called “honey buckets.” The funding will be used to bring water and sewer services to 123 homes by 2015. The State of Alaska received an additional $6.2 million in grants from RAVG to upgrade wastewater infrastructure in 65 homes in Quihagak and Hooper Bay, with remaining money to be used in planning for projects in Seldovia, McGrath and Tununak, according to a department press release. Since 2009, the USDA Rural Development program has provided approximately $950 million to improve wastewater infrastructure and bring potable water into rural homes, according to figures from the departments website.

Kodiak Launch Complex expansion faces delay

KODIAK (AP) — Alaska Aerospace Corporation's plans for a new launch pad have been delayed, not canceled. In a four-hour board meeting Thursday at the Kodiak Launch Complex, CEO Craig Campbell confirmed that Lockheed-Martin's delays in finding customers for a new, larger Kodiak-launched rocket means at least a one-year delay in construction of Launch Pad 3. "Now we're projecting into the 2015 period for the launch of the Athena III," Campbell said. That timeline means construction will not begin until next summer at the earliest. Work isn't standing still on the project that has been hailed as the future of the Narrow Cape complex. Campbell told board members he's keeping the ball moving on the environmental assessment that must take place before the launch pad can be built. "We expect that to roll forward in the next couple months, then go out to a public comment period," he said. During the last session of the Alaska Legislature, Gov. Sean Parnell pledged $25 million in state support for the $125 million estimated cost of the launch pad. Financial "gates" are built in to that amount, ensuring Alaska Aerospace cannot move forward with construction and design until a contract is in hand and private financing in place. Campbell said he has added restrictions of his own and will spend no more than $1 million until Lockheed commits to a launch date and signs a contract. That amount takes the project to about 65 percent of design, but not engineering work, Campbell said. The corporation stopped deliberately short of detailed engineering in an attempt to accommodate Orbital Sciences, another space company that has expressed an interest in launching from Kodiak. Orbital's Antares rocket is designed differently than Lockheed's Athena III, and the new launch pad would need extra equipment to serve both rockets. Orbital is considering both Kodiak and Vandenberg Air Force Base in California as its West Coast launch site for the Antares, but it is not expected to decide between the two until early next year, after it launches its first Antares from a spaceport in Virginia. "I don't want to get into an engineering and design concept for a solid-based rocket only to find out Orbital is coming here with a liquid-based rocket," Campbell said. While the delay may pay off for Kodiak if another customer is willing to spend millions for permission to launch rockets from Alaska, the slow pace of development could continue if Congress drags its feet on the federal budget. The vast majority of America's space projects are at least partially funded by the federal government, and Congress' inability to pass a new defense budget means multibillion-dollar contractors like Lockheed and Orbital don't know how much they can sell. That, in turn, means those companies don't know how many rockets they need to launch from places like Kodiak. In addition, said Alaska Aerospace chief operating officer Mark Greby, companies like Orbital and Lockheed are awaiting the results of November's presidential election. President Barack Obama and Republican hopeful Mitt Romney have similar space policies, but a few percent difference in funding represents hundreds of millions, if not billions of dollars, Greby said. "In all honesty, they're all stalling to see which way the climate is going." Until that weather forecast changes, Launch Pad 3 looks to be stuck in the cold. ___ Information from: Kodiak (Alaska) Daily Mirror,  

Kotzebue airport gets $15.5 million federal grant

Federal Aviation Administration officials say the Kotzebue airport is the recipient of a $15.5 million grant for a runway safety improvement project. Officials say the FAA grant will expand runway safety areas at both ends of the longer of two runways at Ralph Wien Memorial Airport. Such safety areas protect crews and passengers if planes veer off a runway, or overrun or undershoot a runway. Officials say the Kotzebue runway project will move the 5,900-foot runway 200 feet to the east. The work also will involve removing part of a hill and moving a lagoon channel, as well as building a sea wall to protect the west end of the runway. Officials say the work is expected to start in October, with the project targeted for completion in late 2014.  

Ballot opposition group still holds money edge

JUNEAU (AP) — The group opposing a ballot measure that would re-establish a coastal management program in Alaska raised more than $683,800 in three weeks, a majority of that from big oil companies, and held a huge cash advantage heading into next week's primary. In all, "Vote No on 2" has raised about $1.5 million in what's become the most expensive race in Alaska so far this year and had more than $393,100 on hand as of Aug. 18. The Alaska Sea Party, the group behind Ballot Measure 2, has reported raising a total of more than $204,700, including about $54,600 between July 28 and Aug. 20. The bulk of the funding for Vote No on 2 has come from resource development and industry groups, though campaign manager Willis Lyford said in a statement that labor unions, local chambers of commerce and others have also voiced opposition to the initiative. During the recent reporting period, from July 28 to Aug. 18, Vote No on 2 reported raising about $683,800, with the major three oil producers in Alaska — BP Exploration Alaska, ConocoPhillips Alaska and Exxon Mobil Corp. — accounting for about $401,000 of that, in direct and nonmonetary contributions. Pebble Limited Partnership and Sumitomo Metal Mining Pogo LLC, two mining groups, each contributed $75,000. "Our fundraising results reflect the deep concern with Ballot Measure 2 among a broad cross section of businesses and industries," Lyford said. "Ballot Measure 2 is bad for jobs and bad for Alaska's economy, and those donating to us recognize that." Bruce Botelho, chairman of the Alaska Sea Party, said the opposition's fundraising "is really being driven by corporate interests," acting not on behalf of Alaskans but based upon their shareholder interests. The biggest check cut to the Alaska Sea Party during the recent reporting period was $25,000 from Robert Gillam, founder of an Anchorage-based investment firm who also has made a name fighting the proposed Pebble Mine. There are no limits to what an individual, business, union or group can give to a ballot group in Alaska. Botelho said his group went up with its first radio ads on Monday and plans a TV spot heading into Tuesday's election. Vote No on 2 began running its first ads weeks ago. Alaska had a coastal management program for decades, but it ended last year, after the Legislature and governor failed to come to terms on its reauthorization. Ballot Measure 2 will appear on Tuesday's ballot. Opponents of the measure said they're not against Alaska having a coastal management program but have a problem with the type of program laid out by the initiative. Among other things, they said it would create confusion and could hinder development. Supporters said the proposal would give the state a meaningful say on federal decisions affecting Alaska's coastal areas, help coordinate the permitting process and cut through red tape.  

Retailers looking at Alaska, residential sales up slightly

At the Anchorage Chamber of Commerce on Aug. 13, Brandon Spoerhase of Jack White Commercial gave a rundown of new developments to look out for in the future while Michael Droege of Century 21 said home sales are looking good. One new retail development will be as 45,000-square foot Gallo Center on the north side of Dimond Boulevard. Retail space should be available between $2.50 per square foot and $2.80 per square foot. Cabela’s, a large outdoor retailer, will be entering the Alaska market in South Anchorage in 2014. Spoerhase said an interesting thing about this location is that there is no sewer line to that development and the nearby Target operates using a septic system. “So it’ll be interesting to see what Cabela’s does on that,” he said. This deal is being brokered entirely by out-of-state principles between Cabela’s and Target. Spoerhase said this is “kind of” against state law and so it will be interesting to see how that develops. He said deals like this generally do eventually contact a licensee in Ketchikan or Nome, which is legal. The deal is announced but has not yet been signed. In other news from Spoerhase, Ken Brady Construction has received the go-ahead on a 176,000-square foot Wal-Mart on Debarr Road and Muldoon Road. “So that’s going to change the landscape quite a bit in East Anchorage,” Spoerhase said. Pfeffer Development is trying to do some pre-leasing on eight acres near there. Sam’s Club will soon break ground on a 145,000-square foot store and gas station at Tikahtnu Commons. This will be the center’s last big tenant because it has reached full capacity. Walgreens is investigating possibilities for a new store at the intersection of Abbott Road and 88th Avenue. A new, unnamed restaurant will also be going into the vacant Chili’s building at this location. Spoerhase said restaurants like Red Lobster and Texas Roadhouse have been looking around Anchorage but have not committed. Natural Pantry has been negotiating for six months to relocate from the University Center to a $15 million, 40,000-sqaure foot location at the corner of 36th Avenue and A Street. No deal has been signed. Massage Envy is locating to Tikahtnu Commons and is looking for a South Anchorage location. Other newcomers include AutoZone and Verizon. Old Navy and Famous Footwear will be moving out of Glenn Square. Glen Square is trying to replace that space with a single national tenant. Old Navy will head to Tikahtnu Commons. Spoerhase also addressed the office market, saying that Anchorage is healthy with an overall vacancy rate at just less than 6 percent out of about 6 million total square feet. Residential snapshot In the residential market, Droege said Alaska is doing fairly well with modest increases in sales and prices. At the end of July, the average year-to-date prices were up 4.83 percent. There were 2,588 homes sold statewide in the same year-to-date period. This is a 5.2 percent increase. There were 3,312 pending home transactions, 17.4 percent increase. New listings went up 19.7 percent through the month and 4.1 percent for the year-to-date. Droege said Alaska’s supply and demand, plus low interest rates, which popped up a bit but have generally been at record lows over time, are responsible for the average increases. During the same time period, average Anchorage residence sales prices went up 3.68 percent. Condo sales were the exception, dropping 2.59 percent for the year. Sold listings rose 10.1 percent on average for residences. Average condo sales only went up 3 percent and multiple-family sales dropped 20.9 percent. Active listings dropped 2.1 percent in Anchorage. Droege said this is because there isn’t much inventory out there but that might flatten out by the end of the year as new listings become available. New listings rose 0.7 percent in the year-to-date. Eagle River and Palmer rose in average sales by 3.63 percent and 8 percent respectively. Eagle River had a 2.5 increase in sales for the year while Palmer dropped by 19.6 percent. Both had slightly increased new listings.

Army Corps delays Point Thomson decision until November

The U.S. Army Corps of Engineers has delayed its record of decision and final approval of the environmental impact statement for the ExxonMobil-led Point Thomson gas cycling and condensate production project to at least Nov. 1. Construction this winter on the project could be in jeopardy. Previously the Corps had a target date for the ROD in September. “This is just an estimated date, as was the earlier target date,” Corps spokeswoman Pat Richardson in a statement Aug. 10. “The dates we estimate for a Record of Decision are just that – target estimates. With a permit application this large with an associated EIS and many issues to address, our target dates will move, as they have with this proposed project.” Alaska U.S. Sen. Lisa Murkowski and Gov. Sean Parnell criticized the U.S. Army Corps of Engineers for delaying the record of decision. Parnell is asking Interior Secretary Ken Salazar in intervene with the Corps to keep the project on schedule. Point Thomson is a large gas and condensate discovery 60 miles east of Prudhoe Bay. ExxonMobil and other leaseowners, BP and ConocoPhillips, plan a gas cycling and condensate production project. ExxonMobil, BP and ConocoPhillips, the owners, are planning a project to recycle gas and produce 10,000 barrels per day of liquid condensates in the first phase of a development project. The condensates would be moved to Prudhoe Bay by pipeline and mixed with crude oil in the Trans Alaska Pipeline System. Beginning construction this winter is necessary for the project to be complete and in production by 2016, ExxonMobil told a state legislative panel in Anchorage a few weeks ago. "This unexpected delay threatens to set production at Point Thomson back another year, costing the state of Alaska both jobs and millions of barrels of oil that is needed to boost throughput in the trans-Alaska oil pipeline," Murkowski said in her statement. A 500-page environmental impact statement for Point Thomson was finalized in late July and Corps officials said then they would approve the record of decision, the final step in the EIS, in 30 days, Murkowski said in her statement. A Murkowski staff member in Washington said the senator will attempt to meet with the Corps to urge action on the ROD. Murkowski is the ranking minority member on the Senate Energy and Natural Resources Committee. ExxonMobil itself was cautious in its response. “We decline to speculate on the date of issuance of the Record of Decision and the impact, if any, on the project schedule. We are working closely with the U.S. Army Corps of Engineers to provide information requested to support its work to enable issuance of the Record of Decision,” an ExxonMobil spokesman said in a statement. However, in recent briefings to state legislators in Alaska, ExxonMobil expressed concern about delays in the ROD and final approvals of federal permits tied to the EIS if those are pushed too far into late autumn because the delays could affect the winter construction season, which is vital to keeping the project on track for a startup in 2016. The company has told congressional staff in Washington, D.C., that it needs the ROD and permits in October, at the latest, to allow time to mobilize contractors and get an ice road under construction to Point Thomson, which is about 60 miles east of Prudhoe Bay on the North Slope. Other work planned for this winter include an airstrip, gravel roads and installation of vertical support members for a 22-inch pipeline. Parnell wrote a letter to Salazar Aug. 11 asking for help because of the Interior Secretary's initiative to improve the performance of federal permitting on energy projects in Alaska. "As the lead federal agency, the Corps had recently committed to issue the ROD by Sept. 21. On August 1 senior state of Alaska officials were given assurances by senior Corps and Department of the Interior officials that the Corps' Alaska District would meet that deadline," Parnell said in the Aug. 11 letter to Salazar. "State officials have been working hard over the past two years in processing approximately 100 state permits required for the Point Thomson project. The state remains ready to issue these permits as early as next month, enabling construction this winter. If the Corps does not issue its ROD on of near the original target date of September another winter construction season will be lost," Parnell wrote. The Point Thomson gas and condensate discovery was made in the 1970s but its development was delayed due to lack of a natural gas pipeline. ExxonMobil more recently developed the plan to produce the gas, strip liquid condensates, reinject the gas and then ship the liquids to TAPS through the new 22-inch gas pipeline.

Real estate funds lead the pack, but can it last?

BOSTON (AP) — The housing market may finally be coming back, with home prices rising again and mortgage rates at record lows. But there’s far greater strength in commercial real estate. Check out the recent investment returns of stock mutual funds that specialize in companies owning income-producing property, from office buildings to hotels. Real estate funds have posted an average annualized return of 33 percent over the last three years, according to Morningstar. That’s the top performance among the fund categories it tracks. Year-to-date, the funds are up nearly 17 percent. That’s about double the average return for diversified stock funds. What’s more, real estate funds provide dividend income. The stocks that these funds invest in — known as real estate investment trusts, or REITs — are required to distribute at least 90 percent of their taxable income to shareholders in order to escape corporate taxes. REITs generate income from properties they own, and often operate. Funds that specialize in REITs typically hand out quarterly payments, representing the total payout from the fund’s holdings. Investors can either take dividends as cash, or reinvest by purchasing more fund shares. REIT yields are attractive at a time when ultra-low interest rates make it hard for investors to earn much unless they’re willing to take on additional risk. The average dividend yield of a benchmark REIT index is 3.2 percent, substantially higher than the 2.1 percent yield of the Standard & Poor’s 500 index. The recent strength of REITs has not been lost on investors. Real estate funds attracted $2.9 billion in new cash through June of this year, while investors have pulled out of nearly all other stock fund groups. Real estate funds and REIT stocks have defied the broader trends in the market and the economy recently, says Rob Wherry, a Morningstar analyst who tracks real estate funds. But investors should be cautious about making any sizable investment in REITs now, given the outlook for slow economic growth. “Investors should not expect these kind of strong returns going forward,” Wherry says.   ROBUST MARKET REIT stocks have performed better than the S&P 500 in recent years because the decline in commercial real estate wasn’t as severe as the residential market crash. Offices, industrial properties, hotels and apartments weren’t overbuilt to the same degree as homes, and commercial leases and rents have held up better than home prices. The outlook remains favorable, with commercial occupancy climbing and rents increasing in most markets, says Jason Yablon, who oversees REIT investments both in the U.S. and overseas, and co-manages the Cohen & Steers Emerging Markets Real Estate fund (APFAX). Yablon expects commercial property companies this year will post earnings growth in the high single digits in percentage terms. “That’s strong against this backdrop of slow growth for the overall economy,” he says.   POTENTIAL RISKS Despite the strong outlook, REITs face risks from the European debt crisis and the looming congressional battle over cutting the U.S. debt burden. If a government bond default appears likely in Spain or Italy, U.S. banks could further tighten lending. REITs would have a harder time raising cash from banks and through the stock market to finance new projects. With interest rates low, their borrowing costs are currently modest. And any failure by Congress and the president to reach a long-term debt deal shortly after the November election could trigger automatic budget cuts so severe that they could drag the economy into recession. A shrinking economy would hurt REITs, which depend on a healthy job market to maintain a robust flow of income from office and industrial properties. If the economy weakens, health care REITs -- which own medical office buildings, nursing homes and assisted living centers -- would best withstand a downturn. Medical care is a necessity, and owners of these properties typically sign long-term leases that can lock in expected income for years.   TOP OPPORTUNITIES If the economy improves, hotel REITs are likely to outperform. That’s because hotels can raise daily room rates if a strong economy boosts demand. Given the current risks, co-managers Kay Herr and Jason Ko of the JPMorgan Realty Income fund (URTAX) favor REIT stocks that they believe have high-quality management teams and property portfolios. Those traits are likely to help REITs weather any downturn, they say. Their current favorites include Simon Property, the fund’s top holding, and Boston Properties, in the top 10. They like Simon because of its ownership of upscale malls and outlet centers catering to moderately high-income shoppers. Ko believes their spending is likely to hold up relatively well if the economic recovery stalls. The two managers like Boston Properties because of its ownership of high-end office buildings in downtown New York, San Francisco, Washington and Boston. Such offices will continue to be in demand as employers seek out highly skilled workers. Many employers are far more concerned about having access to the best talent than about finding low-cost office space. Says Herr: “It’s a knowledge-oriented economy.”


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