Arctic LNG-2 extends Russia’s reach in Asia

Russian-led ventures earlier this month announced plans for two more liquefied natural gas terminals that would double the country’s production capacity by the mid-2020s. One is in the Arctic and the other in Russia’s Far East, and both are counting on Asian buyers to take much of the LNG. Arctic LNG-2 will aim to send 80 percent of its output to Asia, Leonid Mikhelson, CEO of project leader Novatek and Russia’s richest businessman according to Forbes magazine, said after the development partners signed a final investment decision Sept. 5. And it’s not just China, which is on its way toward becoming the world’s biggest LNG consumer and is a 20 percent partner in Arctic LNG-2. Japan is a partner in the venture, too, one of the largest in the history of Japanese-Russian relations, said Japan’s Industry Minister Hiroshige Seko. “It will unite Japan and Russia even more, as well as Europe and Asia. The Japanese government will provide all necessary assistance for the realization of this project,” the minister said as company officials announced the final investment decision at the Eastern Economic Forum in Russia’s Pacific port of Vladivostok on Sept. 5. On the same day at the forum, Novatek, which holds a 60 percent stake in the $21 billion Arctic LNG-2 project, announced a joint venture with marine shipping company Sovcomflot to purchase, finance and operate a fleet of 17 new ice-class LNG carriers for year-round transit through the Northern Sea Route to buyers in Europe and Asia. The vessels will be built at the new Zvezda shipyard, developed with Russian oil and gas producer Rosneft and with assistance from South Korea’s world-leading LNG carrier shipbuilders. The $4 billion shipyard is near Vladivostok, in the Russian Far East. Novatek, which developed Russia’s first LNG project in Siberia, Yamal LNG, will benefit from extremely low-cost gas at Arctic LNG-2, helping it compete against gas from the U.S. and Canada, Wood Mackenzie analyst Nicholas Browne told Reuters. Arctic LNG-2, at 19.8 million tonnes annual capacity, is scheduled to start production in 2023, reaching full capacity by 2026. Yamal is at 16.5 million tonnes annual capacity. Global LNG production capacity this spring totaled almost 400 million tonnes per year. “Novatek is clearly driving home their ambitions to be a global LNG powerhouse,” Chong Zhi Xin, associate director of gas, power and energy at analysts IHS Markit, said to Reuters on Sept. 5. Novatek’s partners in Arctic LNG-2 are France’s Total, China’s National Petroleum Corp. and China National Offshore Oil Corp., and the Japan Arctic LNG consortium comprised of Mitsui and state-owned JOGMEC, formally known as Japan Oil, Gas and Metals National Corp. “This is an important project for Russia and follows our strategy to create capacities for LNG production,” Russian Energy Minister Alexander Novak said at the forum in Vladivostok. It’s the largest LNG development to reach an investment decision this year, said global energy consultancy Wood Mackenzie, bringing to 63 million tonnes total project commitments in the first eight months of this year as suppliers look to meet growing demand. Meanwhile, Gazprom, which operated Russia’s only LNG export terminal until Yamal started up two years ago, is looking to expand its operation in the Far East and also build a new liquefaction plant and marine terminal on the Baltic Sea. If all of the projects move ahead, Russia would push its way on the top-four leaderboard of global LNG production capacity with Qatar, Australia and the United States, a fast climb from its No. 10 spot just a decade ago. The Baltic project, which would include an LNG plant and petrochemical operation, has been estimated at almost $14 billion, with 10 million tonnes annual LNG production capacity. Prime Minister Dmitry Medvedev said last month it would be impossible to build without government support, and soon after Russia’s state development bank VEB said it would invest up to 111 billion roubles ($1.68 billion) in the project. Reuters reported this summer that Russia’s National Wealth Fund also will help finance the Baltic investment. The government is helping with Arctic LNG-2, too. Novatek will get a reported $600 million in additional tax deductions for building the port, along with the Russian government covering more than half the construction budget at the port and channel, according to reports in Norway’s Barents Observer newspaper. Novatek also will receive about $160 million in property and income tax breaks from the regional government for its investment in a $1.6 billion construction yard near Murmansk, about 1,000 miles west from the project site, where it will build 1,000-foot-long concrete and steel platforms that will be towed and installed at Arctic LNG-2, the newspaper reported. In the Russian Far East, shareholders in the Sakhalin-1 oil and gas project have decided to build their own liquefied natural gas plant and export terminal at the mainland port of De Kastri, about 150 miles from the offshore oil and gas fields. Sakhalin-1 has been producing oil for almost a decade, with production of about 200,000 barrels a day in 2017, while the partners have considered options for selling the gas. The four partners in Sakhalin-1 are Rosneft, ExxonMobil, Japan’s SODECO and India’s ONGC Videsh. The partners had been talking with Gazprom about selling or sending their gas through the Sakhalin-2 liquefaction plant, but Rosneft CEO Igor Sechin announced on Sept. 5 that the Sakhalin-1 partners would build their own LNG plant, according to press reports Gazprom, Russia’s top gas producer, leads Sakhalin-2, where the partners plan to expand production capacity from the current 9.6 million tonnes of LNG per year. Gazprom has not issued any statements about the Rosneft-led effort to build a competing LNG terminal that also would draw on gas fields offshore Sakhalin Island. Sakhalin-2 went online in 2009. The company and its partners Shell and Japan’s Mitsui and Mitsubishi have been working toward an expansion for several years but are not yet at the final investment decision stage. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

Fitch downgrades Alaska again for state budget problems

Alaska’s financial situation got a little bit tougher Thursday afternoon when Fitch Ratings downgraded a suite of credit ratings tied to state debt. Most notably, Fitch downgraded Alaska’s general obligation, or GO bond rating from AA to AA- on $724 million worth of bonds. Another roughly $1.1 billion in state appropriation bonds was downgraded from AA- to A+ and more than $1.1 billion in Alaska Municipal Bond Bank Authority resolution bonds also went from AA- to A+. Fitch gave the ratings a stable outlook. As with other ratings downgrades from Fitch and other agencies in recent years, the downgrade is tied to the State of Alaska’s continued inability to balance its budget, according to a statement accompanying the announcement. “To date, (state budget) operating revenue remains anemic, and the administration’s commitment to funding a full Permanent Fund dividend despite projected revenue loss has contributed to the enactment of a fiscal 2020 budget that includes deep cuts to core state services,” Fitch analysts wrote. “Fitch expects this will be followed by comparable actions in fiscal 2021. Despite the expenditure reductions, appropriations from the state’s Statutory Budget Reserve Fund and Constitutional Budget Reserve Fund are required to fund the dividend payment and the capital program, reflecting the state’s ongoing structural deficit.” Department of Revenue officials have said a one-notch downgrade such as this one roughly equates to a 0.25 percent increase in the interest rate on money the state borrows often through bonds for capital projects. Local governments and school districts also piggy-back on the state’s rating and use the moral obligation of the state to secure lower interest financing for their projects. The Revenue Department is looking to sell up to $700 million in revenue bonds to pay off the state’s remaining oil and gas tax credit obligation after the refundable tax credit program was ended in 2017 due to budget constraints. However, it’s unclear exactly when, or if, that bond sale will take place as the legality of the plan has been challenged and is currently under review by the Alaska Supreme Court. State debt manager and Alaska Municipal Bond Bank Authority Executive Director Deven Mitchell said via email that he was surprised and disappointed by the downgrade because even though getting to a final 2020 budget was “a painful process” the state ended up with a budget that is pretty much balanced. “The report was based on negative ‘beliefs’ and ‘potentially expected futures’ rather than the reality of today,” Mitchell said. The state’s credit rating has been on a downward trajectory since early 2016 when oil prices dropped to less than $30 per barrel and the state’s budget deficit was more than $3 billion. Alaska had sterling AAA ratings prior to 2016. Moody’s and Investors Service currently has an Aa3 (comparable to AA-) rating for the state’s GO bonds, while Standard and Poor’s has an AA rating for the state. In February, Dunleavy proposed closing the state’s roughly $1.6 billion deficit without tax increases or reducing PFD payments by drastically cutting state services and pulling local tax revenue into state coffers. According to Fitch, Gov. Michael J. Dunleavy’s desire to pay a full, statutorily calculated PFD “elevates the state’s fixed cost burden and reduces its ability to respond to future economic weakness as revenue growth is expected to be modest.” The agency’s analysts also believe that “substantial reductions” to the state’s health care and university budgets could have consequences for future economic growth in the state. A prolonged budget debate resulted in Dunleavy vetoing $50 million from the state’s Medicaid budget in addition to a $70 million cut instituted by the Legislature. Dunleavy agreed to a $25 million cut — part of $70 million over three years — to the state’s support of the University of Alaska. Dunleavy was upbeat in a statement issued late Thursday responding to Fitch’s criticisms of the state’s fiscal situation. “In reading this report, it’s clear this is the result of what has – or has not – occurred over the last several years,” the statement said. “My administration is determined to get our fiscal house in order. Alaska has struggled with fiscal imbalance for years and we must continue moving forward on necessary steps to put in place a stable and reliable fiscal plan. I continue to be optimistic for Alaska’s future: unemployment is at its lowest rate in nine years; GDP is on the rise; billions in new oil and gas investment are being made on our North Slope; the Ted Stevens Anchorage International Airport – the 2nd busiest for air cargo in the US, 5th busiest in the world – continues to expand and bring new business to Alaska. Once our fiscal house is in order, I have no doubt Alaska will once again top the rating agency charts.” Moody’s downgraded the University of Alaska’s bond ratings several notches in July following the governor’s initial $130 million, or roughly 40 percent, cut to its state budget. The agency also lowered the state-owned Alaska Industrial Development and Export Authority’s bond rating two notches — from Aa3 to A2 — in late July despite it’s generally solid financial performance because the authority is ultimately tied to the state’s budget situation, analysts wrote. AIDEA routinely finances infrastructure and real estate development projects through its roughly $1.3 billion Revolving Fund. Dunleavy proposed using a portion of the Revolving Fund to pay for other state government expenses in his original budget plan but the idea was not part of the final state budget. Elwood Brehmer can be reached at [email protected]

Nominations now open for 2020 Top Forty Under 40

Nominations now open for the 2020 Top Forty Under 40. Click here to nominate.

GUEST COMMENTARY: ‘Open for business’ means Alaska must protect Bristol Bay

Bristol Bay’s salmon fishery raised me. I spent my summers commercial fishing with my brothers and later helped my family run a seafood processing company. Today I have a young family and business of my own, Northline Seafoods, a salmon processing company that uses ultra-low-temp freeze technology and an innovative business model that allows us to pay our fishermen more for their catch. We just finished our first season in Bristol Bay, which had its second-largest commercial harvest on record. The biggest threat to the success of my business and my family’s future is the proposed Pebble mine project. Worse than the threat of the mine itself is its current permit process, which is being increasingly compromised by politics and lacks the scientific rigor and transparency that Alaskans have been promised for years. I invested in Alaska because there is tremendous economic opportunity in our fisheries, especially in Bristol Bay, where we have record-high salmon runs, intact habitat and a regional brand that commands a high market price. The value of the Bristol Bay salmon industry has increased significantly over the last decade — progress that is a direct result of financial investment and the innovative energy of Bristol Bay’s fishermen, processors, and thousands of individuals who participate in the fishery every summer. Every year, we continue to improve fish quality, reduce fish waste, increase efficiencies in processing, and grow consumer loyalty. We have only begun to scratch the surface of Bristol Bay salmon’s full economic value. Bristol Bay’s salmon fishery has been going strong for more than 130 years, and my personal stake in its economy are a solid bet on a consistent natural resource — that is, if you could take the threat of Pebble out of the picture. The Pebble mine is just a proposal at this point, yet it’s already having a negative impact on Bristol Bay’s fishery and businesses like mine. This past spring, our largest customer expressed concern about the Pebble mine and market risk to Bristol Bay salmon. The controversy and environmental threats posed by the Pebble project are a dominant theme in national news coverage of Bristol Bay salmon. As we expand distribution of our sockeye into new markets we now must also educate and inform consumers on Pebble. Consumer perception of Bristol Bay salmon cannot be defined by open-pit mines and tailing pond waste. It’s shocking to see our federal agencies turn a blind eye to all of this and instead let politics drive their analysis and decision-making. In Pebble’s permit review, the U.S. Army Corps of Engineers completely downplays Pebble’s potential impacts on Bristol Bay’s fishery, basing their conclusions on incomplete information and false assumptions. In Chapter 4 of the key document called the draft environmental impact statement, or DEIS, the Army Corps goes so far as to say that a change in the market reception of Bristol Bay fish is “not expected to occur.” I know that I’m not alone in my disappointment with the Army Corps’s DEIS; both the Bristol Bay Regional Seafood Development Association and Bristol Bay’s biggest seafood processors submitted strong comment letters to the Army Corps documenting the glaring gaps and flaws. Bristol Bay’s seafood processors went so far as to request that the Corps “withdraw the DEIS and reinitiate an analysis of the Pebble Project of the appropriate scope and depth, as required by NEPA.” I echo their request and look to Alaska’s elected leaders to restore integrity and public confidence in this flawed permitting process. Both Sens. Lisa Murkowski and Dan Sullivan have been strong champions for Alaska’s fishing industry in the past, and I appreciate Murkowski’s recent acknowledgement that the Environmental Protection Agency’s concerns with the DEIS are “substantial.” Because the Army Corps is unwilling to take an honest look at this project, we need our senators to step in and make sure our questions and concerns are addressed before any permits are issued. Alaskans deserve to know the truth, especially Alaska businesses whose assets, investments, and employees are on the line. If Alaska wants to have a healthy economy and attract new businesses like my own, we need to uphold rigorous, science-based permitting and make sure we protect places like Bristol Bay, which make Alaska — and Alaska’s economy — work. Ben Blakey lives in Sitka and is the president and co-founder of Northline Seafoods.

FISH FACTOR: Commercial Fisheries Division sorts out budget cuts

Now the shuffling begins at Alaska fisheries offices around the state as the impacts from back and forth veto volleys become clearer. For the commercial fisheries division of the Alaska Department of Fish and Game, an $85 million budget, about half of which is from state general funds, reflects a $997,000 dollar cut for fiscal year 2020. Where and how the cuts will play out across Alaska’s far-flung coastal regions is now being decided by fishery managers. “Now that the salmon season is about over we’re taking a good close look at this and what we’re going to put in the water next season. We’ve been assured we can look at our (commercial fisheries) budget in total and reduce the lowest priority projects,” said ADFG Commissioner Doug Vincent-Lang. Some layoffs are likely and vacancies and retiree positions may not be filled to save money, he added. “We’ll be consolidating different groups across the state in an effort to keep as much as we can going that is mission critical in terms of work out in the field. Because the less information we have the more precautionary we’ll become in our management,” he said. Gov. Michael J. Dunleavy’s vetoes for commercial fisheries included $258,000 for surveys and stock assessment in Southeast, $240,000 in Southcentral, $300,000 from the Arctic-Yukon-Kuskokwim Region, and $200,000 from the Westward Region. A possible list includes doing fewer or shorter surveys on Bering Sea juvenile chinook salmon, and relying on fewer weir or sonar tracking for sockeyes at the Susitna River drainage. Test line fisheries at Cook Inlet might be shortened and Tanner crab surveys at Prince William Sound could get the axe. Salmon weirs at Kodiak and Chignik may be reduced along with various groundfish stock assessment projects. Also cut by 50 percent were state travel funds for the Alaska Seafood Marketing Institute and all ADFG divisions, except for members of advisory committees, or ACs, to the boards of Fisheries and Game. “The AC travel appropriation was not vetoed with credit to the governor for seeing the value of the local citizens involvement,” said Rick Green, special assistant to the commissioner. “I’m told it will be tight but we think we can still manage the meetings.” The funding for directors of the state habitat and subsistence divisions (about $400,000) was rolled into the Office of Management and Budget, but their functions remain under ADFG. Vincent-Lang said he opted to not fill those positions and instead make the two divisions into “sections” to be able to retain more staff. “I probably would have lost two permitters out of habitat and two staff members that go out and conduct community surveys in the subsistence division just to have a director in those roles,” he explained. “There are deputy operations managers for each of those new sections. The one for habitat reports to Deputy Commissioner Ben Mulligan and the subsistence section reports directly to me. The functions of subsistence and habitat remain at ADF&G.” Seafood contest call The call is out for new seafood products for the 27th annual Alaska Symphony of Seafoods competition that will be celebrated at two gala events. The Symphony, hosted by the Alaska Fisheries Development Foundation, showcases new seafood products to boost their value and appeal to a wider range of customers. It features four categories: retail, food service, Beyond the Plate and Beyond the Egg. “Beyond the Plate features byproducts or ‘specialty’ products. We’ve had salmon leather wallets things made of chitosan from crab shells, fish oil capsules, and pet treats is another big one,” said AFDF Executive Director Julie Decker. “Beyond the Egg includes products made with roe,” she added. “It could be a paste or jarred salmon roe or pollock roe. It is some of the high value and high nutrition part of the seafood that comes out of Alaska waters and we really want to encourage more roe product development.” Decker said the Symphony event is on a mission to acquire more major sponsors for three-year commitments to provide more money and stability for the dual seafood soirees. “We need more money in order to do more with the Symphony and have more impact for the industry and the coastal communities that rely on the industry,” Decker said. Another push is to grow the competition beyond the dozen or so entries the Symphony usually receives. “They can be from a company in the state, in the U.S. or in another country. Anyone that makes anything out of Alaska seafood can enter,” Decker said. The seafood entries will be judged at Pacific Marine Expo on Nov. 20 and first place winners will be announced there on Nov. 22. Second and third place winners, plus the grand prize, will be kept secret until a Feb. 24 Juneau legislative reception. Symphony winners get a free trip to the Seafood Expo North America in Boston in March. Decker said the Symphony has even more benefits in store for its winners. “We plan to start working with retailers to get commitments that they will give retail space to Symphony winners.” Product entries are due to AFDF by Oct. 15. D.C. does salmon In what’s got to rank near the top for savvy promotions, Bristol Bay sockeye salmon will be featured for a week this month at nearly 30 restaurants in Washington, D.C., and Wegman’s locations in Maryland and Virginia. “Really they signed up very quickly. All we had to do was tell people we have this massive wild salmon fishery in Bristol Bay Alaska, the largest in the world, and we want to create a special event around that to connect people to the place that it comes from and the people,” said Andy Wink, executive director of the Bristol Bay Regional Seafood Development Association. The group, funded and operated by fishermen, was able to build “Salmon Week” based on chef and retail relationships it has cemented in recent years, and through its use of slick promotions in stores and on social media. The brand building outreach is bankrolled by a 1 percent tax on the catches of Bristol Bay’s nearly 1,600 drift gillnetters, which they’ve paid since 2007. For 2018, Wink said that added up to $3 million; the RSDA can use the money in any way it chooses. From the get-go the RSDA invested in chilling systems and infrastructure to boost overall fish quality. Processors rewarded chilling with bonuses that this year could pay fishermen $1.65 per pound or far more. Wink said chilling has been the group’s best return on investment. “From an ROI (return on investment) perspective you know that chilled fish are getting bonuses of usually 20 cents or better and it often unlocks bonuses which are far in excess of that,” he said. “These are really high returning projects for us. Last year when we added it all up, the amount of chilled fish we produced by RSDA investments almost paid for all of the funding that we would normally get through the assessment.” Why should Alaskans elsewhere care about salmon catches and quality at Bristol Bay? “In the context of the Alaska salmon industry, Bristol Bay is really a market moving fishery. In 2018 it was about half of Alaska’s total salmon value,” Wink said, adding that all but three Alaska regions are home to residents who “fish the Bay.” “I think the only borough and census areas that don’t have a Bristol Bay permit holder are Nome, Skagway and Yakutat. Every other place has some residents who own a commercial fishing permit at Bristol Bay,” Wink said. “You’d be hard pressed to find any other fishery that has that type of scale and scope to it. What happens in Bristol Bay affects the entire state in a lot of different ways.” Bristol Bay Salmon Week is set for Sept. 16-20. www.bristolbaysalmonweek.com. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Movers and Shakers for Sept. 8

Credit Union 1 promoted Victoria Worley to Risk and Compliance manager. Originally hired in 2004, Worley began at the credit union as a teller and has since held various positions such as consumer loan processor, branch manager, account recovery manager, and most recently, member assistance manager. Worley will be responsible for the daily oversight of the credit union’s compliance in regulatory and policy matters, vendor management, file maintenance, enterprise risk management, and policy management programs. Tom Hoffer has been appointed Bethel District Attorney effective Aug. 21 following former Bethel District Attorney Steve Wallace’s appointment to the Kodiak Superior Court. He previously worked in the Bethel District Attorney’s Office from 2008-12. Hoffer has been practicing law for 15 years. He recently returned to Alaska to work in the Fairbanks District Attorney’s Office after taking some time off to focus on other areas of law. John Golick has joined UIC as general manager of the Rockford Corp. Golick has nearly 30 years of experience in general and mechanical construction. His leadership roles inside of the industry have included overall management, estimating, business development and marketing. Golick has previously worked at SKW Eskimos, Inc.; Alaska Mechanical, Inc. and various other mechanical and general construction companies. Golick graduated from Dimond High School and received his bachelor’s degree from the University of Alaska Anchorage. Coffman Engineers Inc. hired Richard “Rick” Harvey, FPE at its Anchorage office. Harvey brings to Coffman more than 30 years of experience in fire protection engineering, mechanical engineering, and project management of government and industrial projects including both new facility design and renovation of existing systems. He holds a bachelor’s degree in mechanical engineering from the University of Alaska Fairbanks. He is a registered fire protection engineer in Alaska and Alberta, Canada, and is also a registered mechanical engineer in Alaska. Harvey’s background includes serving as fire protection engineer in responsible charge for clients in Alaska and Canada. He has provided program management of the fire protection program for the Federal Aviation Administration in Alaska. Northrim Bank announced several new hires: Timothy Breeden as commercial loan officer-Wasilla; Rana Hill as corporate secretary; Megan Liska as technical development manager; Wolf Toller as training manager; and Scotty Watkins as commercial lending team lead-Fairbanks. Breeden joins Northrim with 15 years of experience in the financial industry, 10 of those years as a lender. He holds a bachelor’s degree in management from Wayland Baptist University. Hill comes to Northrim Bank with more than 25 years of experience working with public and private companies with an emphasis on SEC filings and board of directors and shareholders’ meetings. Liska joins Northrim Bank with more than 16 years of experience in the financial industry. During her time at Alaska USA she developed policy, procedure, training and other materials for systems and front line related processes. Toller comes to Northrim Bank with 15 years of experience in the financial industry, 12 of that in training. He holds a bachelor’s degree from Wayland Baptist University. Toller is ISSP certified (Integrity Selling for Service Professionals) and is an active volunteer with The Reality Foundation. Watkins joins Northrim Bank with more than 13 years of experience in the financial industry. He has worked in banking in both Nome and Fairbanks. Watkins holds a bachelor’s degree from the University of Arkansas at Monticello and an MBA from the University of Alaska Southeast. Anita Halterman joined the Alaska Mental Health Trust Authority Board of Trustees after being appointed in August. Halterman, currently working as an account executive for a risk management firm, is an Eagle River resident who brings more than 30 years of experience working in federal, state and local government to the board. Halterman has a master’s degree in business administration and spent most of her career working for the State of Alaska Department of Health and Social Services. She also served as chief of staff in the Legislature. There are seven trustees that oversee the Alaska Mental Health Trust Authority. Trustees are appointed by the governor and confirmed by the legislature to five-year terms.

Dunleavy asks federal council to fast-track Southeast rare earths prospect

Gov. Michael J. Dunleavy wants federal decision makers to approve a fast-tracked permitting plan for one of Alaska’s prime metal prospects. The governor sent a letter to federal Council on Environmental Quality Chair Mary Neumayr Aug. 9 urging the council to classify the Bokan Mountain rare earth metals prospect as a High Priority Infrastructure Project. The “High Priority” designation would provide the Bokan project proponents, Nova Scotia-based Ucore Rare Metals Inc., an expedited federal environmental impact statement process aimed at ultimately accelerating development of a mine. The Bokan Mountain rare earth underground mine prospect near tidewater on southern Prince of Wales Island holds more than 4.7 million metric tons of indicated rare earth ore, according to a 2015 resource assessment by. That translates to approximately 63.5 million pounds of collective rare earth metals, which are used in a plethora of high-tech applications, from smartphones to advanced batteries and fighter jets. There are 17 minerals defined as rare earth elements, but “heavy” rare earths — such as europium, terbium, and ytterbium with a greater atomic weight — are the most sought after and are used in products that rely on high-temperature magnets. More common lighter rare earths are used in a plethora of applications including LED displays. Heavy rare earths account for roughly 40 percent of the mineralization at Bokan, according to Ucore. Dunleavy wrote in his letter to Neumayr that the state understands the country’s need for a secure supply chain of rare earths and deeming Bokan a high priority project would help to “ensure the resource is available for development in a reasonable time-frame.” “America’s dependency on a non-allied, foreign-sourced, critical metals supply chain to support national defense, green energy initiatives, and high-tech product manufacturing is an ongoing concern at both the State and Federal levels,” he wrote. In 2014, the Legislature approved the Alaska Industrial Development and Export Authority to issue up to $145 million in bonds to help finance the Bokan project. Ucore estimated in 2013 that the mine would cost about $220 million to develop. For several years, the U.S. imported all of its rare earth elements until the Mountain Pass rare earths mine in southern California reopened last year. That’s a significant concern for many federal officials and policymakers because China is still the primary source for rare earths globally and the Chinese government — already engaged in a tense trade dispute with the U.S. — could restrict the flow of these critical metals. A drop in rare earth prices in 2015 has shifted Ucore’s attention away from the mine in recent years and towards advancing the processing technologies that would be used its refining complex. Ucore leaders thanked Dunleavy for the letter in formal statements. The company is also working to develop a facility to refine the metals it mines in Ketchikan. Sen. Dan Sullivan said in a recent interview with the Journal that Defense officials told him about 90 pounds of rare earths go into each new F-35 fighter jet. He suggested China manipulates global rare earth markets to keep metal prices low enough to deter development of rare earth mines elsewhere, thus allowing the country to maintain its position as the world’s primary supplier. “A (high priority project) designation would shave significant lead time off of the development of a fully permitted project, prospectively delivering us to construction commencement in just over two years,” Ucore Chief Operations Officer Mike Schrider said. “Our fundamental objective is to establish the Bokan-Dotson Ridge resource as a shovel-ready critical mineral reserve for the rapidly expanding domestic technology and defense industry sectors that are dependent on rare earth metals.” Just four days after taking office in January 2017, President Donald Trump signed an executive order directing the council “to streamline and expedite” the National Environmental Policy Act, or NEPA, process for projects deemed to be a high priority for the nation. The order allows for governors or federal department executives to request the high priority status and specifically lists electric power grid projects as well as telecommunications systems, pipelines and transportation infrastructure as the primary types of projects that could receive the designation, but it does not explicitly list mines. According to the order, Council on Environmental Quality Chair Neumayr has 30 days to decide whether a request for a high priority listing should be granted. Schrider said in a brief interview that Ucore got a letter from Council on Environmental Quality officials Sept. 3 that Dunleavy’s request is being evaluated. A spokesman for the council did not respond to questions in time for this story. Schrider said the company is very appreciative of the governor’s efforts and Ucore is examining ways to move ahead with developing the mine at current metal prices. The next step towards developing Bokan is a detailed feasibility study of the project, according to Schrider. ^ Elwood Brehmer can be reached at [email protected]

Proposed regs on tasting rooms tighten tensions in alcohol industry

A new set of proposed regulations has split the state’s alcohol industry: breweries, wineries and distilleries that make it versus bars, hotels and restaurants that serve it. The regulations themselves don’t have anything to do with alcohol production, service or distribution. Instead, the regulations proposed by the Alcoholic Beverage Control Board published on Aug. 26 are a revision to what’s allowed on site at taprooms and tasting rooms; the new regulations clarify the definition of “other recreational and gaming opportunities.” Breweries, wineries and distilleries are allowed to sell alcohol to consumers directly in their taprooms and tasting rooms, but with a number of restrictions: no more than 36 ounces of beer or 3 ounces of liquor per person per day, no serving after 8 p.m., no seats at the bar and no games, entertainment or televisions, among other restrictions. The regulations proposed would more closely define some of the activities prohibited, including festivals, games and competitions, classes, parties (except for private parties limited to specific invited guests), presentations or performances and “other types of organized social gatherings that are advertised to the general public.” The Brewers Guild of Alaska, which represents craft beer breweries all over the state, opposes the language of the regulations as proposed for numerous reasons, said Lee Ellis, the president of the organization and the director of operations at Midnight Sun Brewing Co. For one, the guild doesn’t agree that this regulation would be the intent of the Legislature in authorizing taprooms in the first place and would disrupt a number of operations for breweries, he said. “This would make giving brewery tours not available,” he said. “(Midnight Sun Brewing) has a first Friday art event … If we promote any sort of beer release at our brewery, that would not be allowed. That would ban other sorts of marketing.” Taprooms and tasting rooms are a relatively new phenomenon in Alaska. They were not allowed in the state until 2006, when the Legislature passed a bill to authorize them with a number of regulations like the limitations on gaming. Since then, the craft brewing industry in the state has exploded. Before 2001, only a handful of breweries existed. Today, there are dozens all over the state, many with taprooms and tasting rooms of their own. Some distribute to package stores and bars, like Juneau’s Alaskan Brewing Co., while others simply sell growlers at their manufacturing location or glasses in a restaurant, like Soldotna’s St. Elias Brewing Co. Even as overall beer consumption has decreased in the U.S., craft beer consumption has increased. In 2018, craft brewer sales by volume increased 4 percent, reaching 13.2 percent of the national beer market according to the National Brewers Association. Craft “micro” beer is also more valuable than large, “macro” beer; though it’s only 13.2 percent of the total beer sales by volume, it made up more than 24 percent of the total dollar value nationally. Some of the conflict is over whether bars and taprooms draw the same customers. The Brewers Guild of Alaska says that’s not a full picture of why bars may have seen business decline since taprooms and tasting rooms began operating, as there are a number of complicated factors in the state such as an ongoing recession, Ellis said. “I would say that our customers are driven to come to our facilities for a specific reason,” he said. “I don’t know if we didn’t exist that a bar would fill that niche for them. The way that we see it is that we are drawing out a customer that might not be going out to get a beer otherwise.” Another aspect of the conflict dates back to Alaska’s regulation structure post-Prohibition. Traditionally, there are three tiers of alcohol distribution: manufacturer, distributor and retailer. With the advent of taprooms, manufacturers have been able to bypass the other two tiers and sell directly to consumers. Glenn Brady, who owns Fairbanks-area brewery Silver Gulch Brewing Co. and serves on the Alcoholic Beverage Control Board, said the three-tier system was originally intended to keep one tier from gaining too much power over another. While the regulations seem onerous, he says they may have helped set the stage for the boom in craft breweries happening all over the country. “It’s fabulous to see the resurgence since Prohibition of local manufacturers,” he said. “A lot of people are doing interesting and unique things …. That’s the good part. The difficult part of it is that some see it as the erosion (of the three-tier system, and) some see it as a zero-sum game.” The craft beer, wine and spirits stakeholder group has grown significantly since 2006, both on the manufacturer side and the consumer side, Brady said. There were compromises made then to get the bill through, including the restrictions on activities in taprooms and tasting rooms, he said. There has been a lot of discussion since the proposal was announced, but Brady emphasized that these are just proposed regulations that are out for public comment and still have to be approved by the Alcoholic Beverage Control Board before going into effect. The public comment period runs until Oct. 4, at which point staff from the Alcohol and Marijuana Control Office will compile comments for the board members to review. The proposed regulations are a revision to an existing regulation, so the Legislature does not have to be involved to deal with it; the Alcoholic Beverage Control Board could pass a revision on its own after debate. However, the last time a controversial revision to alcoholic beverage regulation came before the board in 2017, when the board debated banning distilleries from serving cocktails in their tasting rooms, the Legislature stepped in. However, the Legislature plays a key role in another large issue facing the alcohol industry in the future: a rewrite of the Title 4 statutes regulating alcohol businesses. Legislators have been debating different versions of bills to rewrite the statute for the last three years, but disagreements among legislators and in the industry have held the bills up. The rewrite was on track to pass in 2018, but a last-minute amendment by former bar owners Reps. Adam Wool, D-Fairbanks, and Louise Stutes, R-Kodiak, that would have cut the allowable amount of drinks at tasting rooms by a third (from three to two) killed the bill before the session expired. Ellis said the BGA and the Cabaret, Hotel, Restaurant and Retailers Association, or CHARR, have been meeting this summer to discuss language for the Title 4 rewrite, working toward an agreement on revisions. “We’ve had certain legislators that very much side with bars, they’re very much concerned about them,” he said. “We’ve tried for three years in a row to get this thing through. We decided we’re going to sit down this summer and decided on language we need to change.” The proposed regulations have thrown some additional difficulty into the task of resolving the conflicts in the industry, wrote Sarah Oates, the executive director of CHARR, in an email. “While I sincerely believe that setting clear and consistent expectations and requirements certainly helps prevent confusion and frustration on all sides, Alaska CHARR has not yet taken a position on whether the proposed changes are appropriate or reasonable,” she said. Elizabeth Earl can be reaced at [email protected]

Ombudsman finds Board of Fisheries violated law on Upper Cook Inlet vote

First it was scheduled to be in Kenai. Then it was yanked back to Anchorage. Now, the location of the 2020 Upper Cook Inlet Board of Fisheries meeting is up in the air again. The Alaska State Ombudsman, which investigates complaints against state agencies, found in a report released Sept. 3 that the Board of Fisheries violated the Open Meetings Act when the members voted this past January to reconsider the location for the 2020 meeting and that the manner in which the vote was taken called into question whether chair Reed Morisky and other members “acted in good faith.” The fix? They’ll vote on the location again at the upcoming work session from Oct. 23-24 in Anchorage. A confidential complaint was filed with the ombudsman’s office in May 2019, according to the report. A draft investigation was finished in July, and the Board of Fisheries responded on Aug. 15. “The Ombudsman recognizes that the decision to set a meeting location may be, in some circumstances, a purely ministerial action,” the report states. “However, in this instance, the Board itself has noted that ‘one of the most divisive issues it faces almost every year is not a regulatory subject, but rather where to hold the Upper Cook Inlet Finfish meeting.’ As such, the Board should exercise increased diligence to ensure that its decisions on this issue are beyond reproach, to include strict adherence to the Open Meetings Act.” In a response to the findings, Morisky wrote that the board will reconsider the location at the upcoming work session, when the board normally discusses locations for upcoming in-cycle meetings, and will issue notice in accordance with the Open Meetings Act. At the same time, the board will reconsider a policy previously passed that would formally set the Upper Cook Inlet meeting locations on a rotating schedule between Palmer/Wasilla, Anchorage and Kenai/Soldotna to “determine if it has any future viability,” Morisky wrote. “It is within the board’s purview to revoke a policy,” he wrote. The Upper Cook Inlet meeting location is a perpetual source of controversy. With nearly half the state’s population and large stakeholder groups in sport, commercial, subsistence and personal-use fisheries, the Cook Inlet basin is one of the most heavily fished areas in the state. The Board of Fisheries makes allocation and fisheries management decisions that are often controversial, and the Upper Cook Inlet meeting is the longest, lasting about two weeks. Stakeholders often have to travel to the location to participate in board proceedings. Kenai Peninsula residents have been asking for the Board of Fisheries to hold a meeting on the central Kenai Peninsula for at least a decade. The last time the board held a meeting there was in 1997; the meetings have been in Anchorage since. Stakeholders contend that it is more expensive and onerous for them to travel to Anchorage, where they have to pay for hotels and travel long distances through the mountains in the winter, than for Mat-Su and Anchorage residents, who can stay at home and attend the meetings. Board members have consistently voted to keep the meetings in Anchorage, citing the expense of holding it on the Kenai Peninsula or the neutrality of Anchorage as a meeting location. At the March 2018 meeting, board members voted 4-2 in favor of holding the 2020 in-cycle meeting in Soldotna and to adopt a proposed policy to rotate the meetings on a regular basis between the three major communities of the Cook Inlet basin. However, the following January at the Arctic-Yukon-Kuskokwim in-cycle meeting, Morisky raised the issue again in the middle of the meeting and called a vote, which proceeded 4-3 in favor of moving the meeting back to Anchorage. The ombudsman’s report cites the lack of public notice on the debate at the January meeting as a major reason for the finding. “Despite the paucity of the notice given of the addition of the UCI Finfish meeting location to the January 2019 meeting, interested members of the public managed to learn of the change and travel more than 100 miles to attend,” the report states. “Then, the Board Chairperson by his own admission told representatives from the Kenai/Soldotna area that the matter wouldn’t be taken up — only to introduce the matter for a vote later the same day, after they had gone. “This not only violates the spirit and the letter of the Open Meetings Act, it brings into question whether the Board Chairperson and members acted in good faith.” The composition of the Board of Fisheries has changed since the January 2019 meeting. Former board member Robert Ruffner, who lives in Soldotna and advocated for the meeting to be held on the Kenai Peninsula, has been replaced, as has board member Al Cain, who proposed the policy that would rotate the meeting locations between the three communities. Former board member Orville Huntington has moved to the Board of Game as well. The governor has appointed three new members: Marit Carlson-Van Dort of Anchorage, John Wood of Willow and Gerard Godfrey of Eagle River. ^ Elizabeth Earl can be reached at [email protected]

Deputy secretary praises state energy research, pledges more partnerships

Alaska companies and communities aiming to implement new energy technologies or just improve their energy efficiency could see more resources coming their way, according to one U.S. Department of Energy leader. Deputy Energy Secretary Dan Brouillette said during an Aug. 28 press briefing in Anchorage that he wants the department to expand its current footprint in the state and provide more help to Alaskans working with energy technologies. That help could come in the form of additional technical assistance for remote communities that need help complying with the state’s Power Cost Equalization program, for example; additional funding for local energy infrastructure projects; or more cooperative research between the University of Alaska and DOE’s 17 national laboratories; Brouillette said he hopes it all can happen. He spoke alongside Sen. Lisa Murkowski at Cook Inlet Tribal Council’s “Fab Lab” at the end of a five-day trip. Brouillette toured North Slope oil operations and visited Western Alaska villages working to integrate renewable energy technologies into their communities among other meetings. He said he wants to expand the department’s footprint in the state because the applied research done here has implications worldwide. “The lessons that I learn here are very practical and sometimes we lose sight of that. We spend a lot of money at the Department of Energy on some fantastic science, and it’s very important that we do so, but it’s also important that we take the time to come to places like this one to see the actual application of these scientific lessons and that’s what’s so exciting for us,” Brouillette said, adding that Alaska regularly leads the country in energy technology innovation. According to DOE budget documents, the department spent $9.7 million on Alaska programs in federal fiscal year 2018 and has a $16.2 million budget for grants, projects and other work in the state for the current, 2019 fiscal year, which ends Sept. 30. Much of the bump in DOE funding to Alaska was for fossil energy research and development. Last winter, the Department of Energy partnered with the U.S. Geological Survey, BP and Japan Oil, Gas and Metals National Corp. to drill a test well in the Prudhoe Bay oil field for natural gas hydrate research. It was the start of a multi-year endeavor with the ultimate goal of better understanding the viability of commercial gas hydrate production. The department’s funding for energy efficiency and renewable energy projects has increased slightly in recent years, but generally been in the $2.3 million per year range. While it’s a tiny fraction of DOE’s overall budget of more than $37 billion, Brouillette said the department’s work — combined with what other organizations do — on energy efficiency improvements in Alaska is crucial. The Federal Energy Regulatory Commission, an independent arm of the Department of Energy, on May 23 approved a first-of-its-kind, 10-year operational license for a RiverGen in-river power generation system in the Southwestern Alaska village of Igiugig. “We count on that technology; we count on that research; we count on those efforts not only for Alaska, but for the rest of the country,” Brouillette said. “Our energy efficiency program at DOE is very much looking to Alaska to solve some of the problems that we face in other parts of the country.” To that end, Murkowski said she is committed to finding ways to replace $750,000 of state funding for the Cold Climate Housing Research Center that Gov. Michael J. Dunleavy vetoed from the state capital budget as a means of reducing the state’s ongoing budget deficits. Murkowski chairs the Senate Energy and Natural Resources Committee. She stressed that the benefits of the research and building designs developed at the Fairbanks-based center stretch well beyond Alaska. “The work that Cold Climate Housing has been doing is not only important to us in Alaska; this is the facility in the Arctic,” Murkowski said. “Other Arctic nations are looking to what Cold Climate Housing is doing and saying, ‘We want to share your good ideas. We want to use some of your designs because we struggle with the same issues.’” The Cold Climate Housing Research Center is widely known for developing what are believed to be the most energy efficient northern latitude homes in the world. CCHRC founder and CEO Jack Hébert said based on prior conversations with Murkowski that she is investigating whether the center could partner with the Energy Department's national laboratories partly as a means to secure funding. "She's just doing what she can do. She believes in us and we certainly appreciate her for that," he said. However, Hébert said getting federal funding is made more difficult by the fact that the state has cut off its support. He added that the center is also looking a private sources of funding, such as nonprofit foundations. "It's tough, but we'll make our way," he said. Both Murkowski and Brouillette noted that while the center’s work is focused on northern home design, the same construction methods can be used to keep the heat out in warmer climes. Murkowski also said she is working on legislation to allow Department of Energy grants to be more easily passed through quasi-state agencies, such as the Alaska Energy Authority, to local governments and Tribes for renewable energy and efficiency projects. Additionally, Murkowski has long been working to pass an omnibus national energy policy reform package. Such legislation passed both the House and Senate in 2016, but ultimately died on conference committee negotiations. Republican Senate Energy and Natural Resources spokeswoman Tonya Parish wrote in an email that the committee has held several hearings on energy reform legislation, advancing 22 bills to the Senate floor in July. The committee is expected to hold another bill markup soon, “with continued focus on energy-related matters that can be combined into a bipartisan package,” Parish wrote. The pair visited the Kuskokwim Bay communities of Kwigillingok and Kongiganak. “Kwig” and “Kong” leaders, along with officials from other nearby villages for years have been working to not only to integrate wind power into their primarily diesel-supported power grids, but also have been trying new ways to maximize the amount of wind energy they can use through hi-tech battery storage and in-home electric thermal storage units, among others. Murkowski said the work has allowed the communities to get off of diesel-generated power upwards of 30 percent of the time. “When you’re paying $6 a gallon for your home heating fuel every percent that you can get off diesel is money ahead,” she said. Brouillette commented that he was further surprised by the interest residents of Kwig have in hydrogen energy technology. “To see that interest in such a small community (with a population of about 300), again speaks to the entrepreneurial spirit of the Alaskan people,” he said. “If we were able to assist smaller communities like Kwig all throughout Alaska, given the amount of water resources here — that would be a tremendous opportunity. He added that while wind and solar energy projects are helping to immediately reduce energy costs in rural Alaska, the opportunities that could be afforded by economic hydrogen energy “represents a future that none of us today can even imagine.” Elwood Brehmer can be reached at [email protected]

BP sale has impacts for ANWR, AK LNG

Hilcorp Energy’s pending $5.6 billion acquisition of BP’s Alaska assets has implications well beyond what happens to the oil remaining in the Prudhoe Bay field. That’s because the London-based oil major’s reach in the state isn’t limited to operations at the legendary oil field, which BP holds a 26 percent stake in. ConocoPhillips and ExxonMobil each hold a 36 percent share of Prudhoe Bay and Chevron has the remaining 1.1 percent interest. BP also holds a one-third share of the $4 billion Point Thomson gas field on the North Slope, which is operated by ExxonMobil and is a lynchpin to the proposed roughly $40 billion Alaska LNG Project. A spokeswoman for ConocoPhillips Alaska said company officials heard the same rumors leading up to the deal that everyone else in the industry did, but they have not seen the details of the transaction and could not comment on it. Additionally, BP is one of two companies — Chevron is the other — that knows the results of the only oil well drilled in the Arctic National Wildlife Refuge coastal plain. After 60 years in Alaska, BP had also become one of the largest charitable givers in the state. It contributed more than $4 million last year to education causes and nonprofits in Alaska. Houston-based Hilcorp donated $315,000 to charitable causes in the state last year, according to the companies. BP has long been a primary proponent of the Alaska LNG Project; the company was part of the consortium that started work on the plan to export North Slope natural gas in 2013 through a partnership with the state. Then, when the companies decided in February 2016 to step away from Alaska LNG amid collapsed oil and global LNG prices and let the state continue the work, BP was the first producer to formally reengage the project when it agreed to provide technical assistance to the state-owned Alaska Gasline Development Corp. starting in December of that year. That assistance preceded BP becoming the first company to sign a binding gas sales precedent agreement with AGDC in May 2018. The terms of the confidential agreement, which is still in effect, according to AGDC, include gas price and volume figures. ExxonMobil later signed a similar confidential deal with AGDC last September. Finally, in late May BP committed up to $10 million to help AGDC fund the remainder of the Alaska LNG Project environmental impact statement being analyzed by the Federal Energy Regulatory Commission. ExxonMobil also put up $10 million to finish the Alaska LNG EIS. Scheduled for completion in mid-2020, a favorable decision from FERC on the EIS is seen by most industry experts as a major step towards de-risking the project and one that could help attract investors. Under Gov. Michael J. Dunleavy AGDC leaders have said they plan to finish the FERC EIS process and pitch the project to private sector investors and operators they hope would take it over. It all appears to counter the decision to sell the company’s share of North Slope gas — estimated to be about one-fourth of the roughly 35 trillion cubic feet of available gas resources — which BP Alaska leaders regularly touted as the largest undeveloped gas resource in its broad global portfolio and one they hoped to monetize. It’s worth noting that the BP-Hilcorp transaction is subject to several state and federal approvals and isn’t expected to close until sometime next year. Economist Ed King, who worked on Alaska LNG in its early stages under former Gov. Sean Parnell’s administration, said in an interview that BP’s willingness to exit the state and sell the gas resources as part of that suggests the company didn’t have faith that Alaska LNG would be built anytime soon. “We’ve all known for a long time that it’s an economically challenging project,” King said. In the midst of the transition to state leadership of Alaska LNG in mid-2016, the international energy consulting firm Wood Mackenzie forecast that an oil company-led project would not meet the return thresholds typically required by oil companies to make it economically attractive. However, the tax exempt status a state-sponsored LNG project would enjoy along with other factors could make it viable, Wood Mackenzie representatives said to legislators at the time. BP Alaska spokeswoman Meg Baldino wrote via email that the company plans to honor the $10 million commitment. She also noted that BP would still have the opportunity to participate in Alaska LNG if it’s built, potentially as a purchaser of the project’s LNG. As for Hilcorp, AGDC spokesman Tim Fitzpatrick said the company had not engaged in recent discussions about the gasline project with the agency. AGDC officials speaking on background said Hilcorp had a positive view of the project in its early stages several years ago but also said Hilcorp had not discussed the project with them of late. Spokespersons for Hilcorp did not respond to multiple questions and requests for comment for this story. While Hilcorp’s official view of North Slope gas sales is unclear, the company should also be getting a leg up in the quest for the untapped oil many believe is below the Arctic National Wildlife Refuge coastal plain. According to BP’s Baldino, Hilcorp will get all of BP Alaska’s lease holdings within the boundaries of ANWR and the associated data, which includes the results of the KIC-1 well — the only oil well drilled in the refuge — in 1986. The longstanding leases jointly held by Chevron and BP are over much of the 92,000 acres of ANWR in-holdings that are owned by Kaktovik Iñupiat Corp., or KIC, that surround the Native village of Kaktovik on the northern edge of the 19 million-acre refuge. Arctic Slope Regional Corp. owns the subsurface rights to the acreage. The companies teamed up to drill the well about 15 miles from the village and have managed to keep the well data, and whether or not it hit oil, under wraps. Interior and Bureau of Land Management officials in Alaska have consistently said they intend to hold a lease sale for the roughly 1.5 million-acre coastal plain this year after the environmental impact statement evaluating oil and gas development in the area is complete. Congress also mandated a second lease sale in the 2017 tax overhaul legislation that carried the ANWR rider. When it comes to oil, King said he will be watching how many of the roughly 1,600 BP Alaska employees Hilcorp retains to operate Prudhoe Bay and the company’s nearby fields and prospects, which it also purchased from BP in 2014. Hilcorp is known for boosting production or at least holding it steady in mature oil and gas fields, which is partly why the company’s acquisition of BP’s Prudhoe assets was not a surprise to many industry observers. However, King noted doing so profitably usually means a smaller workforce. He surmised that the number of personnel in the field likely won’t change much and Hilcorp’s smaller corporate structure is also a way the company keeps downward pressure on overhead. “I’m really curious if they’re taking a look at some of the projects that have been on the shelf,” King said of Hilcorp’s plans for the Prudhoe field, adding that some marginally economic infield oil projects have been dismissed while BP has been the operator. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Sept. 1

Ash Grove Cement Co. hired Jay Barringer as Technical Sales representative. Barringer will work from the Bellevue sales office and his assigned territory will cover Alaska. Ash Grove Cement supplies cement to concrete producers and construction projects in many areas of Alaska. Barringer comes to Ash Grove following a successful career as an officer in the U.S. Navy. During his tenure, he completed several tours, most recently as the Operations Officer for Regional Support Organization, Pacific Northwest in Everett, Wash. Prior to that he was the First Lieutenant onboard the USS Cape St. George, followed by an assignment as the first Damage Control Assistant for the new commissioned USS Ralph Johnson. Great Alaskan Holidays, Alaska’s largest RV rental, sales, and service business headquartered in Anchorage, hired Maddy Herrin as a service writer. As a service writer, Herrin is responsible for the coordination of customer RV repair and service needs with the company’s entire sales, production and technical teams. Prior to joining Great Alaskan Holidays, Herrin held a similar position with Kendall Ford in Anchorage Bobby Alexander, chairman of the Alaska USA Federal Credit Union board of directors, has been inducted into the Defense Credit Union Council’s Hall of Honors. The Hall of Honors was established in 2000 as a way of acknowledging credit union leaders, volunteers, and staff for their significant contributions throughout the year. Most notably, it recognizes individuals who epitomize the DCUC’s philosophy of “Serving Those Who Serve Our Country.” Alexander has served on the Alaska USA Federal Credit Union board of directors since 1996, and has held the rank of chairman of the board since 2001. In addition to his considerable service to the credit union, he has an extensive service record with the U.S. Army. Alexander’s service includes two tours to Vietnam with the 5th Special Forces Group, where he was selected to be the noncommissioned officer in charge of the group’s financial section. During his time in the military, Alexander received numerous awards and commendations, and even after retiring from the U.S. Army, he returned to serve in a civilian capacity. He maintains his military connection through volunteer efforts, including as a board officer with the Association of the U.S. Army AUSA Last Frontier Chapter. Credit Union 1 announced the selection of Elizabeth Nerland as its new Marketing manager. Nerland brings more than 15 years of experience in marketing and communications to her new role, primarily in business-to-business service industry fields. Nerland is also currently an adjunct professor at University of Alaska Anchorage in its marketing degree program, where she teaches courses such as marketing media analytics, branding and content marketing, and marketing research. She has bachelor’s degrees in marketing and corporate communications from Duquesne University, and she also has an MBA from the University of Alaska.

Hilcorp’s swift growth in Alaska capped by Prudhoe purchase

Hilcorp Alaska’s $5.6 billion acquisition of BP’s assets in Alaska, announced Aug. 27, marks a “crowning achievement” for a Houston, Texas, company that has rapidly risen to become a major player in Alaska’s oil patch, after establishing a foothold in Cook Inlet seven years ago, observers say. The privately held company, founded by billionaire Jeffery Hildebrand in 1989, is known for squeezing more oil out of aging fields, a pattern seen in Cook Inlet after it began buying assets in 2012. There, the company soon became the dominant oil and natural gas producer in the Southcentral Alaska region, where it now runs a collection of offshore platforms and recently spent $90 million to upgrade oil delivery. The company’s Cook Inlet purchases attracted little attention compared to the company’s bold move in 2014, when it acquired two fields from BP, and parts of two other fields, in a $1.25 billion deal. “In Alaska, we’ve seen them double and double again, because they seized the opportunity,” said John Hendrix, former chief oil and gas adviser to former Gov. Bill Walker. “My hat’s off to them.” Hendrix said Hilcorp has strong buy-in from employees — stoked by incentives such as Hilcorp’s $100,000 bonus to all employees in 2015. “They won’t take risks,” but they also won’t burden their business with unnecessary bureaucratic delays, he said. Joe Balash, now an assistant U.S. Interior Secretary, was deputy commissioner for the state Department of Natural Resources when Hilcorp was originally hunting for deals in Cook Inlet. He said the company had bigger plans for Alaska even then. “In our very first conversations we had with Jeffery Hildebrand in Houston, when they were looking at the acquisitions in Cook Inlet, he had his eye on the North Slope,” Balash said. In 2014, Hilcorp proved itself an effective operator in the Arctic Alaska region, continuing to partner with BP on fields where both companies held stakes, he said. “They impressed BP management to the point they were obviously able to develop a relationship necessary to make a transaction like this possible,” Balash said. Hilcorp’s reputation in Alaska took a hit in 2017, after state regulators highlighted a long list of operating infractions, and a subsea pipeline in Cook Inlet leaked natural gas for months, with icy, cold water complicating repairs. But the company has taken steps to improve its operations in the state, regulators have said. The company employed more than 400 people in Alaska last year, and produced more than 75,000 barrels daily of gross oil and gas equivalent. The acquisition announced Aug. 27 cement’s Hilcorp’s position in Alaska, and will make it the second largest producer in the state when the deal is finalized, observers said. “For Hilcorp, buying BPs assets, including assuming operatorship of Prudhoe Bay, is a crowning achievement to the Alaska business they have built since 2012 to become the largest private operator in the state,” said an emailed statement from Enverus, an oilfield data services firm in Texas. How Hilcorp Alaska will integrate BP’s workforce of 1,600 employees is unknown. That workforce is vital to operating Prudhoe and conducting other work, according to an email from Hilcorp spokesman Justin Furnace. “Our plans for that workforce will develop as we determine how we will integrate the acquisition into Hilcorp’s existing operations and we receive a list of eligible employees from BP so we can begin the interview process,” Furnace said. Hilcorp’s next big move in Alaska could be at its offshore Liberty field, another North Slope acquisition from BP, in the Beaufort Sea. Hilcorp has moved rapidly in its efforts to develop the field. It hopes to launch oil production in the coming years. The field could produce up to 70,000 barrels of oil daily.

FISH FACTOR: Enthusiasm continues building for mariculture industry

Underwater and out of sight are the makings of a major Alaska industry with two anchor crops that clean the planet while pumping out lots of cash: shellfish and seaweed. Alaskans have now applied for more than 2,000 acres of new or expanding undersea farms, double the footprint from two years ago, ranging in size from 0.02 acres at Halibut Cove to nearly 300 acres at Craig. Nearly 60 percent of the newest applicants plan to grow kelp with the remainder growing a mix of kelp and/or Pacific oysters, said Cynthia Pring-Ham, aquatic farming coordinator at the Alaska Department of Fish and Game, which issues the permits. ADFG partners with the Department of Natural Resources which leases the tidal and submerged lands for farms. Currently in Alaska, 36 operators are producing primarily Pacific oysters in Southeast, Prince William Sound and Kachemak Bay. Their combined crops of about 2 million bivalves have sales topping $1.5 million from a mostly local customer base. It’s the faster growing seaweed that has spawned wider interest, especially from regions that aren’t as hospitable to growing shellfish. Alaska’s first kelp farm permits were issued in 2016 at Kodiak; 15,000 pounds of brown and sugar kelp was harvested in 2017 and sold to California food maker Blue Evolution for $10,000. Last year the Kodiak output jumped to 90,000 pounds worth more than $33,000. Now, besides kelp, 21 Alaska growers also have added dulce, nori and sea lettuce to their macroalgae or shellfish menus. It will go into a global commercial seaweed market that is projected to top $22 billion by 2024, with human consumption as the largest segment. The interest is quickly spreading to other Alaska regions. This year two kelp applications were submitted from Sand Point and queries have come from the Pribilof Islands, said Julie Decker, chair of a state mariculture task force created in 2016 by former Gov. Bill Walker to lay the foundation for “a $100 million industry in 20 years.” “People are calling from St. Paul and St. George in the Bering Sea. They are interested and want to know what they need to do to get started,” she said. “I can’t see a single downside to it,” said ADFG Commercial Fisheries Division Director Sam Rabung, who is also a task force member. Rabung, who began researching kelp in Japan in the 1980s and has worked in salmon enhancement and mariculture in Alaska for more than 35 years, called diversification into seaweed farming “the biggest change to the industry I’ve seen in the last five years.” It is getting legs for several reasons, he said. “It’s a really good fit with our existing fishery infrastructure. We have a blue workforce, an ocean workforce of fishing communities, vessels, fishermen, processors that in many cases get used in a kind of boom-and-bust manner. This gives an additional shoulder to a season,” he said. “The giant kelp that we’re focusing on in Alaska right now, the brown algae, can be used for everything from food to nutritional supplements to animal feed ingredients, biofuels, soil amendments and everything in between. We’re just at the tip of the iceberg in terms of the uses of algae,” he added. Plus, growing seaweed benefits the planet. As the “trees” of coastal ecosystems, seaweeds pull massive amounts of carbon from the atmosphere, absorbing five times more than land-based plants. But planting the earth friendly kelp fronds in the fall and plucking them in the spring is the easy part. “What do you do when you harvest them? You need to have something in place to take the product and make use of it before you ever plant your seeded lines,” Rabung said. As the fledgling algae industry develops, the task force is advocating that some growers form clusters to “really get things going.” “Getting a larger number of farms concentrated around a hub to get the synergy to create that critical mass and reduce the cost of logistics, transports, and support services that the farms need,” Rabung explained. “We need it to become a company, an industry. That’s where the state will see its biggest benefit.” At least two Alaska processors, Ocean Beauty and Silver Bay Seafoods, are involved in the new industry and buyers want product. “They need to know there is enough steady volume to make sure it’s worthwhile,” Rabung said. An early obstacle for aspiring Alaska growers, Rabung said, is financing, although the state’s revolving loan fund has made its first loan for a kelp farm. He said another is “acceptability.” “The way our statutes are written aquatic farming is the lowest priority use of coastal waters,” he said. “When we review a farm permit, we’re looking at its compatibility with existing uses as one of the criteria, such as fisheries. We can’t put farms in places that are traditional seine hook-offs or troll drags or dive fisheries or subsistence harvest areas.” Applicants also must be aware of navigational hazards and marine mammal haul outs when they are siting their farms. An online, interactive GIS map showing site areas and other data for Alaska’s entire coastline is being compiled and will help provide more information. It also can be shared with state agencies to help speed up the permitting process which has a two year backlog. “We’re kind of victims of own success because for years we’ve been building a foundation and network of people all working in the same direction. “Now the industry is stepping up and submitting applications for new farms and it coincides with staff and budget reductions at DNR,” Decker said. She added that Gov. Michael J. Dunleavy’s administration is “enthusiastic” about the mariculture industry’s potential. “We’re getting really good interest and support,” Decker said, “All the pieces are in place to move forward.” Farmer training sessions will be held next year in Ketchikan, Sitka and Kodiak and perhaps other communities, Decker said. Pink salmon payout Applications should now be in the hands of Alaska salmon fishermen and processors hurt by the 2016 pink salmon fishery failure. National Marine Fisheries Service last month approved $56.3 million in relief funds at Kodiak, Prince William Sound, Chignik, Lower Cook Inlet, South Alaska Peninsula, Southeast Alaska, and Yakutat. Funds are being distributed by the Pacific States Marine Fisheries Commission. Salmon permit holders who show losses from the pink bust will split $31.8 million based on average dockside values over even years from 2006 to 2014. Skippers are responsible for compiling data for their crews in applications that are due Oct. 31. The PSMFC will then distribute applications to crew members to apply for disaster payments through January 31, 2020. The relief funds should be in hand six to eight weeks after an application is accepted. Alaska processors also must apply by Oct. 31 to receive their share of $17.7 million in relief funds. Workers will be eligible for an equal share of 15 percent of an eligible processor’s total disaster payment. The funds also include $3.63 million for pink salmon research. Of that, $450,000 goes to Kodiak’s Kitoi Bay Hatchery for its Saltwater Marking Sampling project. The Southeast Alaska Coastal Monitoring Survey will get $680,000 to help with pink salmon forecasting research. And $2.5 million will go to the Alaska Hatchery Research Project that since 2011 has studied interactions of hatchery and wild salmon in Prince William Sound and Southeast. Details are still being worked out on distributing $2.4 million to municipalities that were affected by the pink crash. More trade taxes China will add an additional 10 percent tariff to imports of U.S. seafood products starting Sept. 1, bringing the total to 35 percent in the latest escalation in the trade war with President Donald Trump. Undercurrent News reports that frozen Alaska salmon, cod or pollock that go to China for processing into patties or portions and are then re-exported will remain exempt from the extra taxes. In total, the additional tariffs, not only on seafood, apply to $75 billion in imported goods. In response, Trump sent out a series of Twitter messages saying: “We don’t need China and, frankly, would be far better off without them. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making your products in the U.S.A.” Sales of U.S. seafood to China dropped 36 percent since the 25 percent tariff was imposed in July 2018 valued at $340 million. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

BLM issues first review of Ambler Road project

Bureau of Land Management officials have released the draft review of a proposal by the State of Alaska to build a road that would open a large swath of Interior Alaska to mineral development. The state-owned Alaska Industrial Development and Export Authority is leading the permitting and possibly eventually the financing of the long-sought Ambler Mining District Industrial Access Project, which has drawn opposition from environmental groups and some local stakeholders. Commonly referred to as the Ambler road, the 211-mile gravel road would link the remote Ambler mining district in the Upper Kobuk River drainage to the Dalton Highway near the base of the Brooks Range and the rest of Alaska’s road system. BLM identified AIDEA’s plan for the Ambler road as it’s preferred alternative for the project in the draft environmental impact statement, or EIS, released Aug. 23, but the exact route through or around Gates of the Arctic National Park and Preserve is still undecided. AIDEA applied with BLM to start the Ambler road EIS in March 2017. The one other Ambler road route considered in the draft EIS would start just north of the Yukon River bridge, near milepost 60 of the Dalton. The road would generally angle northwest for 332 miles before terminating near the Ambler River. Fairbanks would be 456 miles from the end of the road using AIDEA’s route and 476 miles from the end of the Ambler road under the alternative route. BLM dismissed the longer route because it would be nearly 60 percent longer than AIDEA’s plan and would have correspondingly more impacts to the environment and be “considerably more costly to construct,” the EIS states. Using a toll road concept, AIDEA would finance the basic gravel road — with an estimated construction cost between $280 million and $380 million — via revenue bonds that would be repaid by the mining companies that would use it to develop the multiple metal prospects in the 75-mile long mining district near the end of the road. According to AIDEA, construction and maintenance costs for the road would total between $475 million and $616 million over 30 years. The authority would return between $988 million and $1.1 billion over that time in tolls, according to its analysis, if the mines are developed. Critics have pointed to the cost of the project, and the fact that there is no guaranteed repayment method, as reasons to scrap the plan. The Wilderness Society contends the current estimate for the road does not consider some of the costs inherent to building in remote northern Alaska, such as constructing a road over permafrost. The group suggests the road could end up costing $1 billion or more as a result. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage and many residents of the area villages are concerned about impacts to caribou in the region that are an important subsistence food source. Numerous village and Tribal governments in the area of the proposed road have issued formal statements of opposition to the project. AIDEA officials insist access to the road will be restricted to mining activity because it would ultimately be paid for through tolls under the plan; there would be no public access to currently isolated hunting areas, which has been another concern of area residents worried about increased activity. The state has spent approximately $26 million of public General Fund money on predevelopment studies for the Ambler road over the years. Rick Van Nieuwenhuyse, CEO of Vancouver-based Trilogy Metals, called the road “crucial to unlocking the incredible mineral wealth” in the Ambler mining district in an Aug. 23 statement. “The development of the Ambler district will lead to generation of thousands of high-paying jobs for the residents of Alaska,” Van Nieuwenhuyse said. “I want to commend the BLM and all cooperating agencies for getting the draft EIS done and look forward to completing the permit for the road.” Trilogy Metals is exploring two multi-metal deposits in the district and Van Nieuwenhuyse has repeatedly stressed that without road access the prospects cannot be economically developed. Trilogy is preparing to start the federal permitting process for the Arctic copper, zinc and precious metal deposit shortly after permitting the road is complete, he has said. Arctic would be an open-pit mine and its expected many of the other prospects in the area would be as well if they are developed. Public comment meetings on the draft Ambler road EIS are scheduled for more than 20 communities during a 45-day comment period. “I realize the importance of this project to the State of Alaska and for the state’s ability to develop its resources and as such, I am committed to ensuring a thorough and comprehensive analysis,” BLM Alaska Director Chad Padgett said in a statement. “This can’t be done without substantive input from stakeholders.” The public comment period is scheduled to start Aug. 30 and run through Oct. 15. Elwood Brehmer can be reached at [email protected]

On the Money: Fed’s rate cuts strike savers’ pocketbooks

NEW YORK (AP) — Just when bank customers were finally getting something reasonable for their hard-earned savings, the party is coming to an end. After several years of increasing the meager interest they paid on savings accounts and certificates of deposit, banks are starting to trim their offerings to savers. The declines are slight, usually less than 0.25 of a percentage point, but the trend is certain to continue for at least the next six months to a year, experts say. Blame the Federal Reserve, which cut interest rates in July and is widely expected to cut them again this year to help insulate the economy from the Trump administration’s trade disruptions and to support the stock market. U.S. President Donald Trump has repeatedly attacked the Fed for failing to cut rates aggressively, and has used his criticism to link the Fed’s moves with outcomes of the stock market. However, while nearly all households have savings accounts, a tiny minority own the vast majority of stocks. “There’s a lot more economic certainty and thoughts of a potential economic slowdown, and that’s been driving a lot of banks to cut back on what they’re offering to customers,” said Ken Tumin, founder of banking news site Depositaccounts.com. Some banks didn’t wait for the Fed to cut rates. Earlier this summer Goldman Sachs cut Marcus’ online savings rate to 2.15 percent from 2.25 percent, while competitor Ally cut its rate from 2.2 percent to 2.1 percent. The average online-only bank now offers an interest rate of around 1.68 percent. After the Great Recession, savers looking to safely store their cash and make a modest return had few, mostly terrible options. The Federal Reserve cut its benchmark interest rate to zero and kept it that way for years. It was not uncommon to see a big bank like Bank of America or Wells Fargo offer 0.02 percent or even 0.01 percent on a traditional savings account. Even online savings accounts, which typically offer rates far higher than brick-and-mortar establishments, offered only 1 percent. Banks didn’t have to offer enticing rates because they largely didn’t need deposits. Lending slowed considerably after the Great Recession, and new regulations kept banks from lending too dangerously, so the need for deposits to fuel that lending waned. But as the economy recovered, however, and the Fed steadily raised interest rates from near-zero to 2.50 percent at its highest level, banks started offering more to savers. Banks also started offering more loans, which in turn meant the competition for deposits heated up. But that competition for deposits is now dwindling and banks are not as willing to pay for long-term deposits as they used to. For example, six months ago an average bank was willing to pay 2.24 percent for a five-year CD. That’s declined now to 2.16 percent. The decline is small, but expected to continue downward. Savers looking for new places to lock-away money and get some sort of yield should check out no-penalty CDs offered by banks like Marcus, Tumin says. While the rate is not much higher than what a customer might get in an online-only savings account, no-penalty CDs allow a customer to lock in a rate for a year. If the Federal Reserve does cut interest rates again this year or next year, at least a saver would have locked in that higher yield and there would be no penalty for pulling the money out in most cases. Lower interest rates have been good news for some, however. Big banks cut their so-called prime rate almost immediately after the Fed’s July rate cut. That means lower interest costs for borrowers, as the prime rate is typically used to determine the interest rate on credit cards. Mortgage rates have also declined, with the average 30-year fixed-rate mortgage now averaging around 3.81 percent, compared to 4.44 percent in March.

What lies ahead following Oklahoma opioid judgment

Oklahoma’s $572 million judgment against Johnson &Johnson will likely be followed by more trials and legal settlements seeking to hold a drug company accountable for a U.S. opioid crisis that has ripped apart lives and communities. The Aug. 26 ruling could help shape negotiations over roughly 1,500 similar lawsuits filed by state, local and tribal governments consolidated before a federal judge in Ohio. And as the legal cases against the opioid industry accelerate, so do concerns about how the money from verdicts or settlements will be spent. Following are questions and answers about the opioid crisis and what lies ahead. Q: Why are so many governments suing over opioids? A: Forty-eight states plus around 2,000 local and Tribal governments have sued companies in the drug industry, arguing those that make, distribute and sell the drugs are partly responsible for a crisis that has killed more than 400,000 people across the country since 2000, according to the U.S. Centers for Disease Control and Prevention. That’s including more than 47,000 in both 2017 and last year. The plaintiffs argue that drugs were improperly marketed and that companies failed to stop suspicious orders from shipping. Q: What’s the financial toll of the crisis? A: The White House Council of Economic Advisers published a report in 2017 pegging the cost of the crisis at just over $500 billion in 2015. That includes lost productivity as well as costs borne by taxpayers, such as ambulance runs, jail treatment costs, and the costs of caring for children whose parents have died from opioid overdoses. Q: What are opioids and how are they used? A: They’re an addictive family of drugs that block pain signals between the body and brain. They include prescription painkillers such as Vicodin and OxyContin, as well as illegal drugs such as heroin and illicit versions of fentanyl. Until recent decades, they were prescribed largely for pain for patients with cancer, at the end of their lives, or with acute pain, such as after surgery. Since the 1990s, there’s been a push in the medical world, partly funded by drug companies, to do better at treating pain — and opioids came to be seen as part of the solution. Q: So what’s the problem? A: Recent studies have questioned their effectiveness with chronic pain and the U.S. Centers for Disease Control and Prevention has told prescribers to be cautious about using the powerful drugs to treat patients with long-term pain. Experts say the longer patients are on the drugs and the higher the doses they receive, the more likely they are to develop addictions. Also, more people with prescriptions means more access to the drugs for recreational users and addicts. Q: What happened leading up to the Oklahoma judgment? Oklahoma’s public nuisance lawsuit against several drugmakers and their subsidiaries was the first in the wave of opioid litigation to make it to trial. Before the start of the six-week trial in May, Oklahoma reached a $270 million deal with Purdue Pharma, the maker of OxyContin, and an $85 million settlement with Teva, both of which faced criticism from state lawmakers, who argued they have control over dispersing funds. The Purdue settlement calls for about $200 million to go into a trust to fund an addiction studies center at Oklahoma State University in Tulsa. The remaining defendants, Johnson &Johnson and some of its subsidiaries, proceeded to trial. Q: What makes the cases legally complicated? A: There are dozens of defendants and thousands of plaintiffs with different interests. State and local governments are battling over control of any settlement money before any national deals have been reached. In Oklahoma, the U.S. Centers for Medicare and Medicaid Services has told the state that the federal government is entitled to a portion of Oklahoma’s proceeds from its settlement with Purdue. Several local governments refused to participate in the lawsuit against Purdue so they could pursue their own, while others have criticized how most of the settlement money from that case is being spent. Q: When did the opioid crisis begin? A: By the early 2000s, the death toll from opioids was rising and there were growing numbers of thefts of drugs from pharmacies. In 2007, Purdue paid a $634 million fine and pleaded guilty to understanding the addiction risks of the drug. But the crisis only deepened after that. Prescriptions flowed freely at “pill mill” clinics, especially in Florida, where drug dealers would get drugs and spread them around the country. Q: How widespread is the problem? A: In recent years, opioid overdoses have been the nation’s largest cause of accidental deaths, ahead of even automobile accidents. The death tolls per capita have been the highest in places with the highest prescription rates. The Appalachian region has been hardest hit. Q: Have prescriptions stopped being given out so freely? A: Yes. States have used databases to track prescriptions and prescribers, pill mills have been shut down and prescribers have become more conservative in calling for the drugs since around 2011. Government guidelines and some insurance company standards have also been tightened. But as prescription rates started falling, death rates actually rose, with more addicts using deadlier illicit versions of opioids. Preliminary data shows that the death toll declined very slightly in 2018 for the first time since the crisis began. Q: What’s next? A: The first federal trial, involving claims from Ohio’s Cuyahoga and Summit counties, is scheduled for Oct. 21. The Cleveland-based judge in that case, Dan Polster, intends to use that as a bellwether, providing decisions that could apply to other cases. Polster is overseeing most of the opioid cases and is pushing the parties to settle. Other cases in state and federal courts could be tried as soon as next year.

Alaska hospitals take advantage of tech to coordinate care

Editor's note: This article has been updated to correct the spelling of Rachel Lieber's last name and the estimated number of hospitals in Collective Medical's network.  It’s pretty easy for patients to disappear in the labyrinth of the medical system. Alaska’s hospitals are trying to make sure that it’s much harder. By late August, more than a dozen Alaska hospitals were live on a technology platform run by Collective Medical that allows them to see a patient’s medical history upon arriving at their emergency departments. That’s somewhat novel; without it, hospitals would have to gather all the information they could from the patient and request any prior information from other emergency rooms and other hospitals to put together a medical history. “For years, I have worked in emergency departments where there is a book somewhere where there are care plans for our patients,” said Dr. Keri Gardner, the chief medical officer at Alaska Regional Hospital. “That care plan, instead of just being at Alaska Regional, will now be visible to (any hospital in the network).” Alaska Regional Hospital’s Emergency Department went live on Collective Medical’s platform in early August. It’s easy to use and embedded in the hospital’s electronic medical record system, Gardner said. The providers there recognize the value in being able to see a patient’s recent emergency room visits, prescription history and other records. Collective Medical, a 10-year-old company with about 1,000 hospitals in its network around the country, collects information from hospitals’ emergency departments and runs it through its platform, sending notifications to emergency departments where a patient is also seen to provide more information. It runs through an HL-7 interface and is Health Insurance Portability and Accountability Act-compliant, said Rachel Lieber, the northwest region manager for Collective Medical. Beyond the medical side, the system also provides another notification of interest: safety threats. Assaults and threats against emergency department staff happen all over the country, including in Alaska. Lieber said the safety notifications came up fairly early in Collective Medical’s development. “Knowing how often your staff are facing assault, aggression or violence helps you know what your staff are dealing with in the workplace,” Lieber said. How a hospital deals with safety issues for staff varies from patient to patient, Gardner said. The safety flags can also help protect other patients. For example, if an incoming patient may be a threat to other people in the emergency room, he or she could be placed in a separate room, she said. “This is a big issue in Anchorage,” she said. “The health care workers who staff emergency departments are at risk. I have personally experienced and personally witnessed injuries to emergency department workers ranging from cuts and bruises to broken bones.” Gardner pointed to the leadership of the Alaska State Hospital and Nursing Home Association in getting all the hospitals in Alaska to invest in the same platform. Lieber said Collective Medical began working with providers in the state about four years ago, around the same time that ASHNHA began its care coordination initiative. Care coordination is a key reason for choosing the program, along with improving emergency department utilization, said Becky Hultberg, CEO of ASHNHA. Other hospitals in the network have documented 15 percent decreases in emergency department utilization and 10 percent utilization decreases among frequent emergency department users. “Along with improving patient care, reducing avoidable hospital admission and readmissions and (streamlining) transition to post-acute care providers are often cited by hospitals as the biggest benefits of using the Collective platform,” Hultberg wrote in an email. Gardner said another important driver of the program is cost reduction and improved value. Being able to see which procedures and prescriptions a patient has undergone recently may inform care and reduce overutilization, especially on controlled prescription drugs. Over-utilization of emergency departments at hospitals is a major issue nationally. Emergency services are one of the most expensive ways to receive health care, but studies have shown that some individuals are visiting emergency departments more than a dozen times per year. Alaska has a handful of these individuals as well, known as “superutilizers,” who are responsible for a major chunk of the emergency room costs annually. In 2016, the top 6 percent of emergency department users accounted for 23.8 percent of the charges, or about $148 million, according to the Alaska Department of Health and Social Services. Some have suggested one of the reasons individuals may be over-using the emergency departments is that they do not have adequate access to behavioral or primary care services. The Collective Medical platform works with providers of various specialties and populations, including jail clinics and behavioral health providers, which helps connect different points in the care continuum, Lieber said. “The emergency room may be the best place to interact with some individuals that are facing housing insecurity or homelessness, or are challenged by mental health disorders or substance abuse,” she said. “Sometimes the emergency room, while we want to make sure we’re using it appropriately, might also help us start conversations with individuals who may not otherwise have access to a primary care.” Whether because of health care record privacy laws or because of insular operations, hospitals and health care organizations do not always communicate. An effort like this is helpful, Gardner said. “It’s unusual to see hospitals working together at this level, and it’s refreshing to see,” she said. ^ Elizabeth Earl can be reached at [email protected]

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