Major gas line developers protest state royalty gas sales

Three oil and gas companies working on natural gas development in northern Alaska are worried they will be shut out of a proposed 4.5 billion cubic feet per day gas pipeline.They have asked the state of Alaska to sell them royalty gas as part of a plan to assure capacity if the pipeline is built. The state opened bids for North Slope royalty gas Feb. 1.North Slope gas producers who are part of the consortium planning the pipeline, however, are opposing the idea."The way this is being done creates a major economic uncertainty for the gas project. It’s a clear step in the wrong direction," said Ken Konrad, gas manager for BP Exploration (Alaska) Inc., one of three producers involved in the pipeline group.Anadarko Petroleum Corp. and Alberta Energy Co. have submitted a joint proposal to buy 350 million cubic feet/day of state royalty gas that would become available if the pipeline is built. Chevron USA Inc. submitted its own competing proposal for 375 million cubic feet/day of state-owned gas.The three companies are not part of the consortium of BP, ExxonMobil Production Co. and Phillips Alaska Inc. studying feasibility of the $17 billion gas pipeline from Alaska.Anadarko and Alberta Energy are exploring for gas in the foothills region of the North Slope, and the state fears that if access to the pipeline isn’t assured for new gas discoveries, the exploration venture will be abandoned. Chevron owns gas reserves at the Point Thomson field on the Slope and is similarly worried about access to the pipeline for its gas.The three firms are concerned about access to the pipeline because they are not part of the consortium planning the project, according to Mark Meyers, director of Alaska’s Division of Oil and Gas.At the urging of Anadarko and Alberta Energy, the state solicited bids during December for its one-eighth royalty share of gas in the existing Prudhoe Bay and Point Thomson fields on the North Slope.When bids were opened Feb. 1 there were proposals from the two companies as well as bids from Chevron, Williams Energy and Alaska Power Co., a small Interior Alaska utility.Alaska Power wants to switch its diesel-based generating plants to gas. Williams is studying the feasibility of a gas-based petrochemical plant near Fairbanks, where the company now operates an oil refinery.The producer consortium is criticizing the royalty sale, however.Mike Hurley, spokesman for Phillips, told a state legislative panel in Juneau on Feb. 5 that the proposal would dampen the economics of the project."We believe the proposed royalty sale further burdens an already economically challenged project," Hurley told the Oil and Gas Committee of the Alaska House of Representatives.The claim was challenged, however, by Meyers of the Division of Oil and Gas."We’ve asked the producers to show us their numbers. They haven’t done so. They told us to run numbers ourselves. We did that and came to a different conclusion," Meyers told the legislators.The state’s assessment is that the sale of royalty gas does no economic harm to the pipeline project itself, although it would impose some costs on gas producers like Phillips, Meyers said.But there are ways those can be mitigated, he said.If Anadarko and Alberta Energy, or Chevron, win in their effort to buy state gas, they would be able to participate if an "open season" for nominations of gas volumes is declared by gas producers’ pipeline consortium, or any consortium building the pipeline, Meyers explained.Gas pipelines are typically organized as contract carriers. An open season for gas volume nominations is declared, and the pipeline is built to handle the volumes of gas committed.Once a shipping commitment is made it must be paid for whether there is gas or not. A purchase contract with the state gives these companies an assured supply of gas to ship until they can ship their own gas, Meyers said.Phillips’ Hurley said what troubles his company as well as BP and Exxon Mobil is that the royalty gas buyers can cancel the contract as soon as they develop their own supply, giving the royalty gas back to the state. The terms of Alaska’s oil and gas leases give the state the right to switch back and forth with six months’ notice between taking its royalty in-kind, selling it to others, or leaving it with the producers to market.That leaves the producers with the obligation, under the state lease, to sell the royalty gas, shipping it through their own space on the pipeline, Meyers said.This affects the producers adversely, Hurley said. If Anadarko and Alberta Energy can discover and ship their own gas, the producers would be required to reduce their own shipments to make room for the returned state royalty gas, because of the pipeline’s limited capacity.The reduction in producer-owned gas throughput could cost BP, ExxonMobil and Phillips "several billion dollars" in reduced cash flow over 15 years, Hurley said.The alternative is to build extra capacity into the pipeline at the start. But this could add "several billion" to the front-end capital cost, he said.This expense was disputed at the legislative hearing by Alan Sharp, of AEC Marketing, a division of Alberta Energy. Sharp said there should be relatively little cost of designing the pipeline at the start to handle an extra 200 million to 300 million cubic feet per day of throughput.The royalty sale is important to Alberta Energy, he said, because the cost of reserving capacity for 350 million cubic feet/day in the big pipeline project could be around $150 million per year. To make that commitment, the security of having the state’s gas to ship is critical as a backstop, he said.Sharp also disagreed with Phillips and others in the pipeline consortium that the Federal Energy Regulatory Commission will assure fair access to the pipeline.In a Jan. 15 letter to the state filing an appeal of the decision to hold a royalty gas sale, the three companies said FERC can compel pipeline expansions in certain circumstances."We disagree with their interpretation of FERC authority," Sharp said. Alberta Energy worries that once the initial open season on the pipeline passes it will be full with the three producers’ gas for many years."If there are additional open seasons for expansions they could be structured by the producers in ways that are onerous. We need some kind of backstop," he said.

CruiseWest closes office, cuts ship from schedule

HAINES -- A longtime fixture on Southeast Alaska cruise ship schedules won’t be back this year.Citing low passenger bookings, CruiseWest announced Feb. 11 it would not operate the Spirit of Alaska in the 2002 cruise season. In addition, the cruise line is closing its Anchorage reservation office and plans to lay off 20 to 25 workers at its Seattle headquarters.The cutbacks are the result of a "miserable" fall reservation season, said company spokeswoman Maureen Camandona.Bookings for CruiseWest seven- to 10-day Southeast Alaska tours slumped after Sept. 11, and didn’t recover until January, Camandona said.Camandona wouldn’t reveal the company’s percentage drop in business compared to 2001, but said it was enough to drop the 52-passenger vessel from the schedule and transfer pending reservations on the Spirit of Alaska to its sister ship, the Spirit of Endeavor.CruiseWest formerly operated as Alaska Sightseeing-CruiseWest. The company was started in the early 1980s by Alaska tourism pioneer Chuck West.

Around the World February 17, 2002

STATEKnowles proposes 20 percent income taxJUNEAU -- Alaskans would pay a state income tax that’s 20 percent of their federal tax bill under a plan being pushed by Gov. Tony Knowles.Knowles unveiled the specifics of his $400 million tax plan Feb. 11, detailing how he would begin to chip away at an anticipated billion dollar budget deficit.The tax plan would come through a mix of taxes on cruise ship passengers, an income tax, which is $350 million of the package, and an increase of the state’s alcohol tax to a dime a drink.Majority Republicans in the Legislature have been split on what action to take this year.House Republicans have said they plan to try to craft a package of revenue-raising measures this session to begin closing the state’s deficit.In the Senate, the majority has called for a cap on state spending to be approved by voters before any major tax plan is approved.Congressional audit delays Chugach planANCHORAGE -- A final revision of the Chugach National Forest management plan was due to be unveiled last month, but a congressional audit has delayed the process.Forest Service officials say they don’t expect release of the plan until at least March.Once complete, the plan will govern management of the forest for the next 10 to 15 years, regulating everything from where snowmachines can go to which lands can be developed.The draft Chugach management plan had called for setting aside nearly a third of the forest as wilderness, including much of the Copper River Delta.Alaska’s Rep. Don Young and Sen. Frank Murkowski, both Republicans, requested an audit into how the plan was put together.In particular, Young, Murkowski and Sen. Ted Stevens, R-Alaska, have questioned whether the Forest Service can legally recommend more lands for wilderness, which would preclude development.Legislature hires federal expert on gasThe Legislature’s Joint Committee on Natural Gas hired Hogan & Hartson, a Washington, D.C., law firm specializing in energy, to advise the Legislature on federal regulatory issues related to a North Slope gas pipeline."Most of the decisions on an Alaska gas pipeline will be made in Washington, D.C., by the Congress and the Federal Energy Regulatory Commission," said Sen. John Torgerson, R-Kasilof, co-chairman of the committee. "If we want to have a seat at the table, we need to develop a level of expertise on FERC issues and congressional legislation."Karol Lyn Newman, a partner with the firm with several years of experience in all aspects of gas regulatory issues before FERC and regulatory authorities, will serve as primary contact with the committee.NATIONWeyerhaeuser bid for Willamette approvedSEATTLE -- Weyerhaeuser Co.’s hostile takeover bid for timber rival Willamette Industries came to an official end Feb. 11 as nearly all of Willamette’s shareholders agreed to Weyerhaeuser’s $6.2 billion offer.Shareholders holding 97 percent of Willamette’s stock agreed to Weyerhaeuser’s offer to buy Willamette stock for $55.50 per share, according to Weyerhaeuser’s preliminary calculations. That makes Portland, Ore.-based Willamette a wholly owned subsidiary of Federal Way-based Weyerhaeuser.After more than one year of resistance, Willamette’s board finally agreed to the acquisition last month.WORLDJapanese minister fights price drops, bad debtsTOKYO -- Japan must clean up its bad bank debts along with fighting deflation if the nation hopes for economic recovery, the economy minister said Feb. 11.Economy minister Heizo Takenaka’s comments come as the government prepares a package of policies to fight deflation.Japan has been fighting price declines as it slides into its third recession in a decade. Deflation is a dangerous obstacle to a turnaround because it brings down income and further dampens economic activity.Pressures are high from some legislators and economists for the Japanese government and central bank to do more to fight deflation, such as setting price targets. The fall in the price of land used as collateral is also a threat to the health of the banking sector.The Bank of Japan, which has set interest rates virtually at zero in an effort to pump more money into the financial system, has promised to maintain its loose monetary policy until consumer prices clearly stop falling.-- Compiled from business wire services.

State plans millions in road projects throughout Mat-Su

PALMER -- One big contributor to the Matanuska-Susitna economy this year will be the state Department of Transportation and Public Facilities. Here is a look at the projects that are projected for 2002-2003.Under construction $8.6 million for completion of the Palmer-Wasilla Highway extension. The project will extend the Palmer-Wasilla Highway south of the Parks Highway and connect with Knik-Goose Bay Road at Glenwood Avenue. This construction project is expected to be open to travel and completed by late summer. $22 million for right of way acquisition, plus $16 million for construction on the Parks Highway from Mile 37 to Mile 39, Church Street to Seward Meridian Road. This project will upgrade the highway to a four lane divided highway with frontage roads, an interchange at Hyer Road, which also serves Fairview Loop on the south, and a paved separated bike path. The majority of construction should be completed by the end of summer. $21.6 million to complete the Parks Highway project from Mile 57 to Mile 67, from the Little Susitna River in Houston to White’s railroad crossing in Willow. The project will widen and repave the highway. It includes grade separating the railroad crossing and realigning portions of the highway to straighten curves. The project is expected to be completed this year. $4.1 million to complete the Hatcher Pass Road project from the Little Susitna River Bridge to the Motherlode Lodge. The project includes rehabilitating and paving the seven-mile stretch of road. The project should be completed by midsummer.Construction to begin this year $5.5 million to pave Four Mile Road, Buffalo Mine Road, Church Road, Collier Road, Cottle Loop and Willow roads leading to the Willow State Recreation Site and Deshka Landing. The project also includes paving Hatcher Pass and Gold Cord Road leading from the end of current paving project at Motherlode Lodge to Independence Mine State Historical Park.Other paving projects include Jensen Road, Lake View Circle, Peter Zell Circle, Rue Road, Scatters Way, Schelin Spur, West Matanuska Spur and 4.5 miles of Petersville Road from the end of the existing pavement. These projects should be completed by July 2003. $5.7 million for completion of the Palmer-Wasilla Highway rehabilitation project. The project will include repaving the highway and adding turn pockets and street lights in selected locations. The project is expected to be completed by Oct. 31. $48.1 million dedicated to the Glenn Highway/Parks Highway Interchange. The project includes a grade separation of the railroad crossing. The dirt work will start in midsummer, with the majority of work completed next year. $9.9 million for the Knik-Goose Bay Road rehabilitation. The road will be repaved and shoulders widened from Glenwood Avenue all the way to Point MacKenzie Road. The road from Point MacKenzie south to Goose Bay Airport Road will receive a fresh gravel overlay. A paved separated path will be constructed from Glenwood to Settler’s Bay. The project will be completed this summer. $10.7 million for Parks Highway construction from Mile 67 to Mile 72, Whites Crossing to Willow Creek. The project includes widening the highway, resurfacing the road, developing a separated trail and replacing Willow Creek Bridge. The project may be constructed this summer if right of way acquisition and utility relocation proceeds smoothly and if funds are available to advance construction. $40 million for the Glenn Highway from Mile 100 to 109. The project will reconstruct and widen the roadway and replace the Caribou Creek bridge. $5.5 million projected for rehabilitation of the Talkeetna Spur Road from the Parks Highway to the Alaska Railroad station in downtown Talkeetna. This involves repaving, widening shoulders and constructing a separated (bicycle/pedestrian) path along 14.4 miles of road.The total amount of federal and state dollars in Mat-Su road improvements over the next year comes to $181.7 million.

North Star to build mental health facility

North Star Behavioral Health System officials are pursuing plans to build an 18-bed hospital plus a 60-bed residential treatment facility for children in Wasilla.The move comes as the Legislature calls for more in-state treatment of severely emotionally disturbed Alaska children, because as many as 425 children are sent Outside for treatment every year."It’s a big project, and we’re excited," said North Star chief executive Kathy Cronen.The health care provider, which operates two facilities in Anchorage and another in Palmer, is working to acquire land for the project in the Meadow Lakes area north of Wasilla, she said.Another provider also is trying to boost the availability of children’s mental health services. Providence Alaska Medical Center is seeking approval from the state Department of Health and Social Services to build a $25 million, 60-bed psychiatric facility in Anchorage.North Star is expanding its other facilities as well. It plans to open nine new beds at its Palmer facility in mid-February and add another nine beds this summer, Cronen said.In Anchorage the DeBarr Road facility will gain another 18 beds, she said. Although a general contractor has not yet been chosen, Cronen said construction could begin in the next 60 to 90 days with completion set for summer. North Star officials are finalizing plans including the project cost, she said.The residential facility is an important component for treatment, Cronen said."It’s our belief that what is needed is not acute care but residential beds," she said.In-state treatment is a plus, too."We feel that the best service to the state and to the children is that the child be served in state," she said.Demand for mental health care services has climbed at North Star and Providence in recent years, according to state Department of Health and Social Services certificate of need coordinator David Pierce. In 1997 admissions totaled 1,008, and by 2001 climbed to 1,382. Of those figures, Alaska Psychiatric Institute held steady at about 185 annual admissions.The total number of bed days for patients in 1997 was 15,651. Last year that figure reached 28,273. The number of bed days declined at API during that time.Both the Providence and North Star project in Wasilla contain components for children’s psychiatric services, which is the focus of a bill now before the Legislature.Senate Concurrent Resolution 21 outlines a lack of in-state psychiatric treatment services for children and aims to support development of Alaska residential treatment facilities. It acknowledges a problem and looks at solutions, Cronen said.Sponsored by the Senate Health, Education and Social Services Committee, the bill was referred to the Senate Rules Committee Feb. 6.Text of the bill reports that "on Oct. 2, 2001 Alaska’s Medicaid program funded over 300 severely emotionally disturbed Alaska children placed in out-of-state residential treatment facilities by the Department of Health and Social Services or private parties."Of the 561 beds for all types of licensed child residential treatment in Alaska, only 108 provide the same level of treatment received by severely emotionally disturbed children in out-of-state placements, the bill said.The bill’s authors hope increased numbers of in-state beds would reduce the amount the state pays for treatment outside Alaska, said Jerry Burnett, legislative assistant to Sen. Lyda Green, R-Matanuska-Susitna, who serves as chairwoman of the committee working on the bill.Patients spend less time in treatment when they are at in-state facilities plus the cost per child lower, he said. More Alaska residential mental health care facilities for children could mean more jobs for Alaskans, too, he said.The bill, which doesn’t call for funding, touts the benefits to patients’ treatment closer to home and family. It also urges the governor to direct the state Department of Health and Social Services and other agencies to work together and make it a priority to develop in-state residential care for children who would otherwise have to be place in out-of-state facilities.Some regulatory changes might be needed for some facility development, Burnett said.Cronen did not release a cost estimate for North Star’s Wasilla facility. She said construction could be finished in less than two years.North Star chose to study sites in the Matanuska-Susitna area because it would be easier to find a lot size suited to the hospital and residential treatment cottage concept there than in Anchorage, she said. The health care provider’s Palmer facility includes 12 acres.North Star officials told the state health department they believe there is a need for mental health care services in the Palmer-Wasilla area.Life Quest Comprehensive Mental Health Services of Wasilla also provides services but primarily handles outpatient treatment, said chief executive Bill Hogan. The health care provider operates a seven-bed residential treatment center for teenagers in the custody of the Division of Family and Youth Services.A new facility built by North Star in the area would probably serve younger children, he said. However, Life Quest offers counseling services in the area and could work with North Star for children’s treatment once they complete residential treatment, he said.

Frontier seeks Sept. 11 U.S. loan

Frontier Flying Service Inc. is asking for a $10 million federal loan to help it recover from the effects of the Sept. 11 terrorist attacks.The 52-year-old Fairbanks-based company is only the third airline in the nation to apply for the government’s $10 billion loan bailout offered to airlines to help with losses attributed to the East Coast attacks.In its loan application to the federal government, the company said its cargo and passenger operations saw a dramatic drop in activity following the terrorist attacks.Bob Hajdukovich, director of operations for Frontier Flying Service, said the decreased operations coupled with increased insurance costs prompted the company to apply for the loan.Hajdukovich emphasized that the company, established in 1950, is not seeking bankruptcy protection, nor are any of the airline’s 185 employees facing layoffs because of the jetliner attacks."We are a viable company,’’ he said. "We’re not going out of business."We felt like we met the criteria for the program and applied for it," said Hajdukovich, who also serves as president of the Alaska Air Carriers Association. Airlines take advantage of federal programAs of Jan. 24, 266 of the nations airlines have received more than $3.8 billion in federal aid to offset losses attributed to the Sept. 11 terrorist attacks.The Air Transportation Safety and System Stabilization Act passed by Congress in November offered $5 billion in direct aid to airlines to cover losses incurred after Sept. 11, plus $10 billion in loan guarantees. Federal Department of Transportation officials said more than 300 carriers have applied for the grant money.Only three, including Fairbanks-based Frontier Flying Service, have asked for loans.Following are Alaska-owned airlines and major carriers that operate in the state that received direct aid. 40-Mile Air Ltd.$1,516 Air Cargo Express$11,420 Air Logistics LLC$450,836 Alaska Airlines Inc.$71,561,638 Alaska Juneau Aeronautics Inc.$66,021 Alaska Seaplane Service$1,688 Alaska Skyways Inc.$15,963 Alpine Helicopters Inc.$3,496 Atlas Air Inc.$10,122,443 Bering Air Inc.$95,158 Delta Air Lines$528,876,565 ERA Aviation Inc.$204,531 Evergreen International Airlines Inc.$7,189,975 F.S. Air Service Inc.$906 Federal Express Corp.$100,679,072 Frontier Flying Service Inc.$133,589 Grant Aviation$42,848 Homer Air Inc.$8,569 Iliamna Air Guides Inc.$3,462 L.A.B. Flying Service Inc.$19,218 Larry’s Flying Service Inc.$6,811 Northern Air Cargo Inc.$235,102 Northwest Airlines Inc.$405,525,526 Peninsula Airways Inc.$196,612 Polar Air Cargo Inc.$1,277,000 Promech Inc.$74,231 Rusts Flying Service Inc.$63,999 Seaborne Aviation Inc.$13,322 United Airlines Inc.$644,086,267 United Parcel Service Co.$24,556,636 Venture Travel LLC$2,671 Warbelow’s Air Ventures Inc.$95,287 Wings Alaska$854Source: U.S. Department of TransportationShould Frontier Flying Service secure the federal loan it applied for in late January, the company would use the money to, among other things, purchase a fleet of five Beech 1900-series aircraft it has been leasing for the past three years."We want the financing package to purchase the aircraft we already have," Hajdukovich said.Insurance premiums have increased since the terrorist attacks, Hajdukovich said, adding that if the company were to purchase the fleet of airplanes instead of leasing them, the airline would be able to negotiate better insurance rates.Frontier Flying Service is required to carry the additional insurance coverage by its lessor, he said."We are required to have higher coverage than other carriers our size," Hajdukovich said."The purchase by Frontier of this fleet of aircraft will assure Frontier will continue to serve its markets for transportation needs, mail delivery, food, medicine and other life necessities,’’ the company said in its loan application. "And it allows Frontier to negotiate reasonable insurance at reasonable rates at acceptable limits."The Air Transportation Safety and System Stabilization Act passed by Congress in November offered $5 billion in direct aid to airlines to cover losses incurred after Sept. 11, plus $10 billion in loan guarantees.Some 266 of the nation’s airlines, including about 30 airlines that do business in Alaska, have been given $3.8 billion in direct grants.Frontier Flying Service received $133,589 in direct aid under the grant program.In addition to the Fairbanks-based airline, Vanguard Airlines, a small regional airline based in Kansas City, Mo., has applied for $60 million in federal loan guarantees.Tempe, Ariz.-based America West Airlines, the nation’s eighth largest, had a $380 million loan guaranteed in December by federal regulators.America West has received $98 million in a direct grant, and Vanguard, $7.2 million.As part of America West’s loan guarantee, the company had to offer a third of its common stock to the government, making it one of the airline’s largest shareholders.While airlines were quick to ask for grant money, they have balked at applying for federal loans, fearing a government stake in their companies.Hajdukovich said his company could not offer stock options to the government."We are a privately held company," Hajdukovich said. "We have nothing to offer.Hajdukovich’s father John bought the company in 1974, and remains its sole owner. The company carried a lot of debt in the 1970s and lost money over the next dozen years.Since 1987, the company has turned a profit, Hajdukovich said, adding that the year-end financial figures are not complete for 2001.Frontier Flying Service offers five daily flights between Anchorage and Fairbanks, Hajdukovich said. The company serves more than 50 communities in Alaska and is the largest commuter airline in the Interior.Hajdukovich said the bulk of his airline’s business comes in the summer months, so last year’s bottom line may not be too bad."If (the terrorist attacks) would have come in June, a lot of airlines would be out of business," Hajdukovich said.Under federal rules regarding the bailout loans, the federal government must be "compensated for the risk it assumes in making the guarantees ... (and) may consider the degree to which the government can participate in the gains of the air carrier through warrant or other equity instruments."Airlines have until June 28 to apply for the federal loans.Frontier Flying Service said in its loan application that credit from conventional lenders is not "reasonably available" to the airline because of market risks in the airline industry since the terrorists attacks.Hajdukovich said that while the events of Sept. 11 had a negative effect on the company’s ability to do business, he said the airline "is more concerned with future events."Securing the $10 million loan also would allow the company to refurbish nine other aircraft the company owns and provide needed working capital, Hajdukovich said.The airline would have seven years to pay back the loan."With the loan guarantee in place, Frontier feels confident that any risk taken by the taxpayer is more than offset by a safe and reliable transportation system in Alaska,’’ the company said in its loan application.

State, Mat-Su work to improve Hatcher Pass

PALMER -- Last April, the Matanuska-Susitna Borough was faced with a huge economic decision: what to do about Hatcher Pass. Davis Contractors was entering its third year of an agreement with the borough to develop a ski resort at the lower end of the pass.The borough had just completed a transfer of more than 3,160 acres from the state Department of Natural Resources for the development of a resort and associated real estate for future development. But after an election that shifted the political environment of the borough government, the Anchorage-based construction company informed new borough manager John Duffy that it was no longer interested in moving ahead on the proposed Hatcher Pass Ski Resort.Since then, several new developments have taken place, all of them geared directly at improving the infrastructure to the proposed resort site and nearby areas.The state Department of Transportation and Public Facilities last year widened and straightened much of the road from the entrance into the area all the way to the Motherlode Lodge. Blasting in the lower canyon of the pass last April created enough crushed rock to upgrade the road to the base area of the proposed ski resort. This year, DOT plans to complete its Hatcher Pass project by making improvements all the way to Independence Mine.The borough has begun gathering geo-technical data on the 160-acre resort location. It is now in the process of drilling test wells to determine if there is sufficient water underground to make snow. This summer, electricity will be extended all the way to the resort site. Most of the line will be run underground. Besides these two milestones, the borough has committed to a number of other goals.Borough Assembly member Jim Colver represents the Hatcher Pass District. He says one of the first things the assembly wanted to do after the election was to make sure there was, in fact, a future for a skiing area in the pass."We contracted (with the Alaska Industrial Development and Export Authority) to develop a business plan that would help us in our search for a strong private sector business partner," Colver said. "We are hoping to begin issuing requests for proposals by this July."The borough also began looking into other opportunities that would enhance the different venues Hatcher Pass has to offer. Colver says the pass is definitely a year-round attraction."We are looking at how we might be able to combine efforts with the state to look into the possibility of a visitors center for summer tourism, and use that facility as a winter lodge," he said.The one thing that has proponents of a Hatcher Pass ski development concerned is the watershed that exists within the designated site. According to Colver, the real litmus test will be whether the watershed can support a resort and a potential real estate development."We have to make sure that the groundwater, and wastewater and sewage factors will not impact the pass," Colver said. "We’re also going to need community feedback."This is a very special place. We have to be able to balance development with this very pristine environment. I think we can do that."The borough has dedicated about $1.5 million to study and develop the infrastructure this year for what it hopes will be a thriving skiing destination soon.Further up Hatcher Pass Road lies the historic Independence Mine. This year, Independence Mine will continue its renovation project. Last year, Alaska Republican Sen. Ted Stevens was able to appropriate $2.3 million from the Department of Interior budget for the restoration of the mine and the buildings that remain at the site. The Department of Natural Resources is hoping to unveil a much more accessible venue this summer.It’s important to note that visitors coming to Hatcher Pass will again have to deal with some delays on the road leading to Independence Mine.The Department of Transportation has two road improvement projects slated for this summer. The first will be a paving project from the entrance of Hatcher Pass to the Motherlode Lodge. It is scheduled for completion in July. The second project will be the Gold Cord Road widening and paving project from the Motherlode to Independence Mine. It is not expected to be completed until the summer of 2003.

Housing, retail make Valley top growth area

PALMER -- The Matanuska-Susitna Borough continues to be the leader in overall economic growth in Alaska. That growth is directly related to the continual increase in population, which totals 49 percent cumulatively over the last decade.The state Department of Labor and Workforce Development just released some preliminary numbers in overall unemployment and economic growth for last year in Mat-Su. According to state labor economist Neil Fried, the numbers are not as strong as in recent years, but they are still the strongest in the state."Economic growth came in at a healthy 3.4 percent in the Mat-Su. That’s nearly a point higher than Anchorage’s growth rate," Fried said. "A big reason for that growth can be directly attributed to the retail industry and the real estate industry."Wasilla, which seems to attract the lion’s share of retail outlets, in 2001 saw Sears move into the vacant Wal-Mart on the Parks Highway and expand its entire product line. Two other large retailers, Office Max and Home Depot are also giving Wasilla a very close look. Wasilla’s Wal-Mart still ranks as one of the chain’s top national producers.Fried says he expects more growth in the retail and services sectors. The one industry that he says may not grow at the same rate it has over the last five years is the area’s tourism industry."The (Mount) McKinley Princess Lodge and the Talkeetna (Alaskan) Lodge are both linked to outside tourism," Fried said. "Right now those two resorts are seeing lower advance reservation numbers coming in. That could mean a potential downturn in what has become a very important part of the Mat-Su’s overall economy, both in terms of revenue and employment."Another indicator that the area seems to be weathering the state’s economic downturn better than most Alaskan communities is its unemployment rate."The Mat-Su’s unemployment rate did go up to 7.7 percent, but that growth was less than both Fairbanks and Anchorage. The leap in unemployment statewide can be directly attributable to the loss of jobs in the state’s oil industry."One of the main reasons the Mat-Su economy is showing consistent growth is the real estate industry, and in particular the new housing industry. The average new home in the Mat-Su costs about $145,000 including a half-acre to an acre of land.The target market is Anchorage. More and more people who call Anchorage their workplace are opting to live in the Matanuska-Sustina area. The reasons for this migration are twofold: more home for the money and more land for the money.As Anchorage continues to run out of land, the Mat-Su continues to develop more land. The traffic count on the Glenn Highway from the Mat-Su to Anchorage also continues to grow. The latest figures show that more than 25,000 Valley residents make the commute to Anchorage daily.The Mat-Su Borough School District has had to keep up with the growth by building five new schools, most of them elementary and middle schools. Three of those schools are in the Palmer-Wasilla area. A new middle school and a high school in the Meadow Lakes area just west of Wasilla are scheduled for completion next year.Another indicator of growth is the ongoing dilemma of planning and zoning, especially in the core area of Palmer and Wasilla. The Matanuska-Susitna Borough is currently trying to develop a zoning plan for properties along the Palmer-Wasilla Highway.The highway continues to show signs of commercial development along its entire length. Just behind that development are scores of residential subdivisions. Borough planners say they are hoping that public input will help them make the decisions needed to prevent land-use conflicts in the future.There is one more growth indicator that seems to show closer ties between Anchorage and the Mat-Su area. A proposed causeway from the Port of Anchorage to Port MacKenzie is back on the drawing board. The cost of a Knik Arm crossing would be astronomical, but there seems to be support for the concept in both Juneau and Washington, D.C.Even without the bridge, planning is under way for a ferry link between the two ports. The idea of the Mat-Su area and Anchorage growing together is becoming more of a reality.

Millions destined for Delta, Shemya, Kodiak missile work

The Defense Department is moving ahead this year with construction of test facilities in Alaska related to a national missile defense system.Work will be under way at Fort Greely, near Delta, and at Eareckson Air Force Base on Shemya, in the Aleutian Islands, according to U.S. Army Major Gen. Willie B. Nance Jr., executive officer for the National Missile Defense Program.Rocket launch facilities on Kodiak Island are also being considered for the test program, but a final decision hasn’t been made, he said.Nance and Air Force Lt. Gen. Norton Schwartz, commander of the Alaskan Command, briefed the Legislature’s Joint Armed Services Committee on missile defense and other military issues Feb. 5 in Juneau.About $198 million will be spent at Fort Greely this year, $48 million at Shemya and possibly $8 million in Kodiak, Nance said.The work at Fort Greely and Shemya has been approved. At Fort Greely, it will include construction of two missile silos, facilities for launch control and power generation, and support facilities. On Shemya, an upgrade to radar facilities, data control facilities, warehouse and other support infrastructure is planned.Construction of two missile launch silos and related support facilities are being considered at the Kodiak Launch Facility operated by the Alaska Aerospace Development Corp., a state agency.A federal environmental impact statement permit process on the Kodiak project will begin in March, which is expected to take a year. The Alaska test facilities are to be ready by 2004, Nance said.If Kodiak is approved, the plan calls for test missiles to be launched at Kodiak but the tests would be controlled from Fort Greely, he said.There are also plans to do test launches from Fort Greely but more planning has to be done on safety and other issues before this moves ahead, Nance said.On Jan. 27 the U.S. Army Corps of Engineers issued a request for proposals for a construction contractor for part of the planned work at Fort Greely and on Shemya. Companies from California, Washington and Alaska are responding to the request, Nance said."The current project is to build a missile test bed, but the tests are to be robust. The prototype system is a surrogate for the real thing, involving realistic trajectories and as near-operational conditions as we can make it," Lance said.The test facilities would also become part of the operation missile defense program if that moves ahead, he said.On other issues, Schwartz said Alaska’s military bases are of tremendous strategic importance and not only in support of national missile defense.The availability of land and air space for training is significant, particularly in integrated air and ground training, Schwartz said. The Army’s transfer of a medium-weight mobile response unit to Alaska, planned for this summer, is indicative of the importance being given Alaska in defense planning.In recent months the military has placed more emphasis on planning and coordination with state and municipal emergency-response agencies, against the possibility of a terrorist attack or even emergencies caused by natural events, like an earthquake.Considerable attention is also now focused on protection of the Valdez marine oil terminal as a strategic asset, Schwartz told the committee.

Tourism prepares for a downturn

PALMER -- The Matanuska-Susitna Convention and Visitors Bureau says it is bracing itself for what could be a very slow tourism season. The Mat-Su CVB’s executive director, Julie Saupe, says early indicators are not meeting revenue projections."For the first time since bed tax collections, we are projecting a flat year," Saupe said. "Much of this growth in our bed tax revenues has been generated by the two new lodges on the northern end of the borough, the Talkeetna Alaskan Lodge and the Mount McKinley Princess Lodge. These revenues, generated largely by cruise/tour passengers, help us market all Valley businesses. We are predicting that those revenues will not meet expectations."The Mat-Su CVB conducted a poll of its membership in December. That poll revealed that most businesses have experienced a downturn in bookings or anticipate a decrease in business for the coming year because of the events of Sept. 11.According to Saupe, 67 percent of the respondents stated that they were either "stable and expecting further growth" or "strong and expecting further growth" before Sept. 11. After the terrorist attacks, 77 percent expect a negative impact, ranging anywhere from an 11 percent to a 40 percent decrease in revenues."Many in the Valley tourism industry are responding to the anticipated decrease by doing what the CVB is doing: reallocating resources into creating new markets and looking for cooperative marketing opportunities.The Mat-Su CVB plans to work the in-state market this spring to make up for some of the expected decline from out of state visitors."We’re fortunate in the Mat-Su to be so close to Anchorage and to have product that already appeals to Anchorage residents looking for adventure, whether that’s a fishing adventure, a dog mushing adventure, a rafting adventure or flight seeing," Saupe said.Another thing the CVB is doing is working with its membership to create more dynamic ways of marketing Valley tourism."We’re excited that there are businesses in the Valley that have developed package tours," Saupe said. "This will be a great addition to what we offer and get visitors and residents alike to realize that the Mat-Su Valley is an ideal base camp location. From here you can just about see everything that visitors come to Alaska for. That will be a growth area for Mat-Su."The Mat-Su CVB is also actively supporting the effort to get emergency marketing funding from the Legislature, Saupe said.

Royal Celebrity to add two railcars to its fleet

Royal Celebrity Tours expects to take delivery in March of two new railcars, which will double the size of its existing fleet. The two-level, glass-domed cars will serve Alaska Railroad visitors this summer.Miami-based cruise company Royal Caribbean Cruises Ltd. is now promoting the 80-passenger Wilderness Express railcars during a whistle-stop tour for the travel industry in East Coast and Midwest cities. Stops include Miami, St. Louis and Wichita, Kan., on the tour that began Jan. 30."We’re doubling the size of our capacity and it’s only our second year so we’re pretty excited," said Maggie Kelly, manager of Royal Celebrity Tours.The two railcars should arrive in Alaska this spring, she said.Other Alaska cruise players, Holland America Line and Princess Tours, already operate dome railcars, tours and hotels in the state.Royal Caribbean Cruises, which operates Royal Caribbean International and Celebrity Cruises, started offering its own land tour packages last year. The business line, operating as Royal Celebrity Tours, competes with similar products from Princess Tours and Holland America.Holland America runs 13 McKinley Explorer railcars in Alaska carrying 66 passengers each, while Princess operates 10 railcars each carrying 88 passengers for its Midnight Sun Express, company representatives said.One feature that differentiates the Royal Celebrity Tours’ railcars is a wheelchair elevator to the first and dome levels, she said. During the company’s inaugural visitor season the elevator was used by disabled passengers and others who felt more comfortable using the lift rather than the stairs, she noted.Built last year by Colorado Railcar Manufacturing LLC of Fort Lupton, Colo., the cars measure 85 feet long by 10 feet wide and 18 feet tall.Last year Royal Celebrity Tours started its railcar operations with two cars built by the same company and valued at a total of $5 million, company officials told the Journal.Royal Celebrity Tours, based in Seattle, was started in 2000 to handle Royal Caribbean Cruises’ land tour packages for Alaska. New railcars and land tours are ways the company can increase its Alaska business with new offerings, company officials said.The company also operates a fleet of about 20 buses.

Journal celebrates 25 years covering Alaska

Editor’s note: The first issue of the Alaska Journal of Commerce was printed 25 years ago, on Feb. 14, 1977. With the trans-Alaska oil pipeline nearing completion, those were heady days for Alaska businesses and the state’s economy.The original masthead listed Philip A. Ramos as publisher and Bert Tarrant as managing editor. The paper has changed hands several times and is currently owned by Morris Communications Corp.The top three stories from that first issue are reprinted here, in part. What’s striking about them is not how different they are from today’s news, but how similar.Survey shows Kenai wants growthKENAI - Residents of this community are more supportive of further petrochemical development than residents of the Kenai Peninsula Borough’s other four first-class cities, according to a report scheduled for release later this month.Conducted by University of Alaska’s Anchorage Urban Observatory for the borough with funding from the Outer Continental Shelf Impact Planning Grant, the survey of Peninsula residents was conducted during September and October of 1976.Results of the study show that the petrochemical industry finds its most solid base of support for future development in the cites of Kenai and Soldotna, while the least support for further oil and gas related development is in Seward. Homer and Seward tend to favor increased fishing and fish-processing development.Valdez bonds hit marketA $262 million bond offering by the City of Valdez to partially finance construction of the trans-Alaska marine terminal has been exceedingly successful.Underwriters for the tax-free municipal issue say the Marine Terminal Revenue-ARCO Pipeline Co. Project Series 1977 bonds were almost sold out within four days of their appearance on the market Feb.7.Investors will receive 5.94 percent interest on the 25-30 year term bonds."The issue was over-subscribed almost immediately," reported one broker. "Most of the bonds are being purchased Outside, but a small amount were picked up by Alaska investors."Issuance of the bonds is designed to provide funds for the purpose of paying ARCO Pipeline Co.’s share of the estimated $1,210,300,000 cost of the terminal project.Following preliminary planning for the offering, Valdez voters in October of 1974, approved the general concept of issuing revenue bonds for financing terminal construction.Nearly a year later, in September of 1975, voters approved amendments to the City Charter facilitating the bond sale.BBNC leaves Westward in darkAlthough sale of the Anchorage-Westward Hotel has been under negotiation for some time, the situation now can be considered a classic example of the left hand not knowing what the right hand is doing.At least for the next couple of weeks.By March, however, Bristol Bay Native Corp. is expected to assume ownership from Western International Hotels.Noble Dick, vice president-finance for BBNC, said last week his corporation is very close to closing the deal which would place the state’s largest hotel under Native control."The closing should come sometime in March," Dick said.Meanwhile, over at the Westward, director of sales Pat Mullin said he’s received no word about the sale and his staff is presently "selling extra hard to let customers know we’re still a Western International Hotel."Bristol Bay is currently making mortgage arrangements with the Bureau of Indian Affairs and two insurance companies, Dick said.

'Railroad lady' pushes link through Canada

Under the heading of special interests or hobbies on their resumes, most people list things like jogging, reading, or perhaps, bowling.Rep. Jeanette James lists the Alaska-Canada rail link."Yes," the North Pole Republican said, "I’m known as the ’railroad lady.’ "Since 1993, James has championed a rail and utility connection between Alaska and the rest of North America, a link that she says will benefit the military and the mining, agriculture, tourism, manufacturing and oil and gas sectors of the economy.A track running from her home district in Fairbanks to the Canadian border also would lower the cost of shipping, she says."There is a lot of potential if we have the infrastructure," said James, adding that an Alaska-Canada rail link could open mineral development including gold, silver, copper, lead, zinc, molybdenum and tin. It could also provide access to timber and to the coal field near Point Lay.The railroad’s right of way could also be used for natural gas pipelines, roads, fiber-optic cable and other utilities, she said."We have to diversify our economy so we are not dependent on oil and gas," James said.Last year, the House passed legislation sponsored by James directing the Alaska Railroad Corp. to identify and the state Department of Natural Resources to grant a right of way over state land for a 500-foot-wide rail and utility corridor from Alaska to Whitehorse, in Canada’s Yukon Territory.On Jan. 31 the bill passed the Senate Transportation Committee and has been referred to the Senate Resources Committee.Sen. Frank Murkowski, R-Alaska and a longtime rail advocate, in 2000 got $6 million in federal money for a three-year U.S.-Canadian study of a rail line’s feasibility.The Canadian government isn’t entirely sold on the continental rail network, but the idea is picking up steam, James said. The project cannot fully proceed without the support of the Canadian government, she said."There is more and more interest in British Columbia, Alberta and the Yukon," she said.The cost of building the connection in Alaska would be staggering. James estimates it would cost $2 million to $3 million a mile for the 1,150 to 1,250 miles of track needed, or $2.3 billion to $3.7 billion.That’s a bargain compared with other transportation infrastructure projects like highways and airports, and railroads are easier to build, James said."I like railroads," James said. "They are more environmentally sound, they get polluters off the roads, they leave a smaller footprint, and on top of everything else, they are fun."James’ enthusiasm for the railroad hasn’t always been met with likemindedness, especially when she was pushing for a railroad extension to Russia, via a Bering Strait tunnel."People used to rolls their eyes at me," James admitted. "Even a close friend of mine and constituent said it was the dumbest idea I’ve ever had."James believes that idea has merit, but it was a hard sell, especially when combined with the Alaska-Canada rail connection project."I think that people thought that that was too big of a bite to chew," James said, adding that the Alaska-Canada link is more palatable for most people."I think we can get this part done," James said. " I think it will happen in my lifetime. I’m 72 and my mother lived to be 92."

InvestNet unites ideas with experience

It is important, indeed vital to the health of the Alaska economy, to better link our entrepreneurs with both the talent and the money they need to succeed. Oft-repeated are the statistics on how overly dependent Alaska residents are on federal and state monies relative to other states, and how critical it is becoming to diversify and increase the number of jobs in the private sector. In order to address this need, the Knowles administration is marketing Alaska as a place for the global corporations to do business through the Department of Community and Economic Development. At the same time we need to support our local corporations with both the fiscal and intellectual capital they need to establish themselves as sustainable businesses employing Alaska residents year-round. Our experience in Alaska again and again is that the money is here, the ideas are here and most of the talent we need is here or wants to relocate here when salaries become competitive with opportunities outside. So what is missing? Why don’t more of our Great Land frontier entrepreneurs grow their ideas into fundable businesses? And of the ones who do, why do we have several start-up companies a year that resort to finding funding outside the state? The result is a loss of private sector jobs for Alaskans when they are forced to move their corporate headquarters to Seattle or Idaho. Arguably, we are geographically challenged in the sense that we are spread over vast distances, and we lack some of the standard incentives that other states use in attracting and keeping businesses, such as state income tax-based incentive programs. On the contrary, our location can be an asset. DCED is marketing Alaska as positioned more strategically than most places on the globe to do business on all three major continents, with a very well-educated population. We have identified the need for more private sector jobs and we have the ideas, money and talent to create them if we make a commitment to building Alaska businesses with the strategic networking of the intellectual, fiscal and human capital at hand. The purpose of Alaska InvestNet is to create wealth and jobs in the state of Alaska by linking Alaska’s most talented and resourceful individuals to local financial support for their diverse enterprises, creating a natural synergy in ideas and successful business development. Alaska private equity investments keep entrepreneurial talent and businesses here, and entrepreneurs build fresh economic infrastructure with sales, new jobs and enduring wealth. The initiative for Alaska’s first formalized angel networks is being catalyzed under the banner of Alaska InvestNet. Angel investors sit on the advisory boards of the companies they invest in and provide not only the money to get started, but also the invaluable advice that often rescues companies facing the inevitable challenges of growth in the marketplace. Business plan competitions are active at both Alaska Pacific University and the University of Alaska Fairbanks, and these are a proven method for incubating ideas and talent that we would like to see on all of Alaska’s university campuses. Alaska InvestNet’s signature event of the year, the Capital Investment and Manufacturing Conference, will be March 12-14 at the Hotel Captain Cook in Anchorage. Now a full three days, the fourth annual conference will include networking receptions, an Alaska entrepreneur trade show, 15 educational breakout sessions and a venture advisory panel entitled "The Deal Doctor." InvestNet is accepting business plan summaries until Feb. 15 for selection in the venture forum. For more information, visit the Web site at (www.alaskainvestnet.org). Deborah Marshall is director of Alaska InvestNet.  

Agreement to move Wasilla tracks ends at where, who pays

Nearly everyone agrees that moving railroad tracks away from Wasilla’s downtown business district would ease congestion, make driving safer and enhance the area.But exactly where to move the tracks and how to pay for the relocation are questions that remain to be answered.A city-funded study released Jan. 24 said moving the tracks is "technically feasible" and would take seven to 10 years to complete.The cost, depending on the route, would be $47 million to $62.5 million, the study said.That’s money the Alaska Railroad Corp. doesn’t have now or in the foreseeable future, said Patrick Flynn, Alaska Railroad spokesman in Anchorage."The goals of the project study are right on," Flynn said. "When you talk about improving safety, traffic flow and straightening track for more efficient run times, you’re speaking our language. Things get a little muddier you try to find out how to pay for it.""It’s not cheap, but they can be moved," said Scott Hattenburg of Hattenburg & Dilley LLC, an Anchorage-based engineering firm paid $31,800 to perform the yearlong study."The project has merit, but the numbers are so huge they (Alaska Railroad) gag on it," said Hattenburg.The relocation project, if done, would have to be broken in phases and not paid for entirely by the railroad, Hattenburg said."I think the railroad would find it more financially palatable if it were broken into smaller pieces and the burden shared," Hattenburg said.Five alternative routes were identified in the study, ranging from about six to eight miles of track relocation, and doing away with most or all of the 11 at-grade crossings in the downtown corridor.The most practical routes, Hattenburg said, are located to the south of the Parks Highway since most property to the north has been developed.It’s more than money that may derail the track relocation project, as many residents on the south side of the tracks have strongly resisted the project, at least the routes that would run by them.The city has received more than 200 comments on the relocation project, said Mayor Sarah Palin."People want the tracks moved but they just don’t want it moved by them. And that’s understandable," Palin said.Several residents have complained the city was "railroading’’ the relocation project, Palin said. But the mayor emphasized the process has been completely open to the public and no route has been favored over another by the city.For more than 20 years there have been efforts to relocate the tracks out of downtown, Palin said."This has been talked about ever since I was a child," Palin said.In a 1999 traffic study, the state Department of Transportation & Public Facilities said nearly 13,000 vehicles crossed tracks daily at Knik-Goose Bay Road. Additionally, the traffic study said, 240 school busses carry nearly 12,000 children daily over the tracks.Under state law, school buses must stop at every crossing.Some 3,200 trains pass through Wasilla annually, according to the railroad.There was a fatal accident involving a train and automobile in the mid-1980s.The Matanuska-Susitna Valley region is currently the fastest growing region in the state with an annual growth rate of more than 3 percent.According to the city-funded study, with the population growth safety concerns will only increase."We’ve got to do something," Palin said. "The problem is not going to go away."According to the city study, a new highway extension under construction should ease traffic congestion somewhat at the Knik-Goose Bay crossing.The Alaska Railroad has received $3.1 million in federal money to perform an environmental impact statement for the relocation project. But the state-owned railroad has recommended the money be put toward other projects because of the resistance from landowners and the improbability of funding the entire project anytime soon.Flynn, of the Alaska Railroad, said the money for the environmental impact study could instead go toward track and crossing improvements near Knik-Goose Bay Road, for example."That’s just one possibility," Flynn said.Palin and Flynn said the proposed Knik Arm crossing, if it were ever a reality, would greatly lessen train traffic in Wasilla.Rep. Don Young, R-Alaska, is chairman of the U.S. House’s Transportation and Infrastructure Committee and has said he is committed to funding a road and rail link between Anchorage and Point MacKenzie, a project that has a price tag of more than $1 billion, according to some estimates.

British Columbia OKs fish farm growth

VICTORIA, British Columbia -- The government of British Columbia has lifted a six-year moratorium on new fish farms.The province will begin accepting applications for new operations at the end of April, Fisheries Minister John van Dongen said Jan. 31.He said for more than four years the government has reviewed scientific work done on salmon farming.A scientific review done by the Environmental Assessment Office concluded that the environmental risks of salmon farming under existing rules were low."The high operating standards proposed by government, along with improved practices, will protect the environment and allow the industry to expand in a sustainable and responsible manner," van Dongen said.The moratorium was imposed in 1995. Alaska Gov. Tony Knowles urged British Columbia to reconsider its decision."I find it troubling that when others are questioning the safety and wisdom of salmon farming and raising serious concerns about problems such as contamination, disease and the escape of non-native species of fish, that our neighbors in British Columbia are moving forward with expansion of this industry," Knowles said.The governor said last year there were 29,000 accidental releases of Atlantic salmon from British Columbia fish farms. So far this year, there have been between 8,000 and 10,000."Salmon farms are a threat to our ocean environment and the ecology of Pacific salmon," Knowles said. "Alaska wisely took action to ban this practice a decade ago."The salmon-farming industry has come under fire from environmental groups and First Nations who argue it pollutes coastal waters with fish waste and encourages the increase in parasites that prey on wild stocks.Thousands of Atlantic farm salmon also have escaped when net cages are ruptured in stormy seas. Critics warn that farm fish are surviving in the wild to reproduce in salmon streams, displacing native fish.Salmon farmers and their allies have worked hard to develop standards and rules for an environmentally sound and sustainable industry, said Anne McMullin, executive director of the B.C. Salmon Farmers Association.McMullin estimated that British Columbia salmon farmers will invest between $50 million and $60 million annually over the next 10 years while generating as many 8,000 new, full-time jobs, largely in job-deprived coastal areas of the province. The industry will generate $2.4 billion in annual economic activity, she added.But the Raincoast Conservation Society in British Columbia said the decision indicates that the government has turned its back on the people living along the coast, as well as wild salmon. He said the decision ultimately will hurt tourism in the region."What the province has signaled today is that it is willing to do a massive expansion of this harmful industry," said Raincoast campaigner Ian McAllister.

Consultant reports higher gold content at Donlin Creek

A new assessment of the Donlin Creek gold deposit near the Kuskokwim River has upgraded the estimated quality of gold ore in the project.NovaGold Resources Inc. released results of a consultant report that indicates the average gold content of the ore is 5 grams per ton compared with an earlier estimate of 3 grams per ton.The indicated and inferred gold resource in the deposit is just more than 10 million ounces, but the higher estimate of gold content in the ore means the mine could become economically viable sooner.Tests show Donlin Creek could hold a total resource of 23 million ounces of gold, if ore of much lower quality is included, Greg Johnson, vice president of corporate development for NovaGold Resources Inc, said.If the Donlin Creek deposit is developed, it would be one of the largest gold mines developed in Alaska. It could possibly exceed resources at the Fort Knox Mine near Fairbanks.It could also mean hundreds of year-round jobs for the rural area, Johnson said. The San Jose, Calif.-based company is a partner in Donlin and hopes to begin mining in three years, he said.At 3 grams of gold per ton, the Donlin deposit is three to five times as rich as Fort Knox.It needs to be rich for development to begin, because the site is remote. Power and transportation will be a challenge, said Stan Foo of the state Division of Mining, Land and Water.More tests and an economic analysis are needed before a decision is made on whether to go forward with the project.The Donlin prospect is near the Kuskokwim River about halfway between McGrath and Bethel. Kuskokwim Village Corp. owns the surface land rights to the area, said KVC president Robert Ballow, and the Bethel-based regional Native corporation, Calista Corp., owns the subsurface rights.Established international mining company Placer Dome pulled away from the project as gold prices fell in recent years, focusing its exploration dollars around existing mines, said Johnson, a former Placer Dome employee.He and two other former employees started NovaGold and worked out a deal to continue at the Donlin Creek project, looking for high-grade ore that would make mining profitable. They bought a gravel mine near Nome and used cash from that to finance Donlin exploration.NovaGold put $2 million into exploration and development last year and will spend $8 million more this year, Johnson said.Foo said obtaining permits to begin work could take two to three years.If the economics of the project work out, 500 jobs in construction and mining could be created, Johnson said. The mine could last 10 years, he said, or 50 if more gold is discovered nearby, which is common."Those are awfully exciting numbers," said George Gardner, president of Chiulista Camp Services Inc., a subsidiary of Calista that supported the exploration with temporary help, housekeeping and catering.State labor economist Brigitta Windisch-Cole said 500 more jobs in the Bethel region would bump the area’s employment by 13 percent. And, she said, the average wage in the gold mining industry is $49,000, nearly twice that of the area."We’re lacking a Prudhoe Bay or Red Dog or Cook Inlet," Gardner said of Western Alaska. Developing natural resources is important for the cash-poor region and people."Ain’t no social program better than somebody being able to have a job," he said.The Associated Press contributed to this report.

Russian processors want piece of pinks

PETERSBURG -- A Seattle-based company wants a state permit to bring up to eight Russian fish processors into Alaska waters this summer, but U.S. processors say they will protest the entry.Global Seafoods North America wants to buy as much as 50 million pounds of pink salmon from Southeast and Prince William Sound but will need a permit from Gov. Tony Knowles to do so.If Knowles grants the permit, Global Seafoods President Oleg Nikitenko said as many as six processors would be positioned near fishing grounds in Southeast and two would go to Prince William Sound."Alaska can no longer rely on the North American market for its pink salmon. Those days are over and Alaska needs to open new markets," Nikitenko said. "I think Europe is a great new market for the fish. Eastern Europe is a great market for the fish. If Alaska won’t open the door to the new markets, then the business will die."By bringing floating processors into Alaska waters, Global Seafoods avoids duty tax, which can increase the cost of the fish by 30 percent.Nikitenko wants the pinks for the Russian market. The fish would be processed as whole frozen, whole gutless, and headless and gutless.Global Seafoods plans to pay 7 cents per pound for pinks.Last year pinks fetched 12 to 15 cents per pound at the dock and that price was considered low. But Nikitenko said Russian consumers cannot even afford to buy cheap farmed salmon, so the price of pinks needs to be low enough to make it affordable.Nikitenko said Russian consumers do not want canned salmon because they do not like the taste and they believe there is more value in a frozen fish."People are using the head and the tail for soups. If it’s a whole round fish, every housewife will buy the whole round fish hoping to find eggs inside the fish, which is an extra bonus," he said.Nikitenko knows paying 7 cents per pound is less than most fisherman want but he said he won’t impose any trip limits, which means he’ll buy as much as a fisherman can catch.He needs at least 300,000 pounds per processor per day to make it work. Nikitenko believes those without markets this summer may take advantage of his offer."Right now we have lots of phone calls from fishermen and people who call us that have no market for their pink salmon for this year and they’re happy to work with us," he said.Norquest Seafoods does not want the state to grant the permit. Company President Terry Gardiner said existing processors can handle the projected harvest for this summer.He said there are no untapped markets for pink salmon and domestic processors can’t compete with foreign boats that pay their crews third-world wages."The claim that they have a secret market for pink salmon, I believe, is totally bogus. One of the things that has reduced the value of canned and frozen pink salmon on the world market is the flood of cheap Russian pinks," Gardiner said.With a bleak market outlook for pink salmon, Icicle Seafoods President Don Giles said bringing in foreign processors could be devastating to the industry."We can weather the storm as long as we don’t have to compete with a bunch of foreign bottoms. And if we do, it’s going to create a problem for those who don’t think they have a problem right now," he said.While some processors say they can handle the projected harvest for this season, at least two companies are expected to reduce their fleets for 2002. That leaves some Southeast permit holders without a market for their fish.John Peckham, a board member of Southeast Seiners, said the Russian buyers may be a solution."As a fishermen, if you weigh everything out, it’s hard to believe that supply and demand and competition for our fish isn’t a good thing," he said.State officials will assess whether there is room for another processor and if the company has sufficient financial resources.Knowles makes the final decision on issuing the permit. Global Seafoods wants an answer by March 20 to get its processors ready.Knowles’ spokesman Bob King said the state has not received a formal permit request but is aware that it could be coming. The state already has begun a domestic processor survey to determine if there is a surplus of pink salmon that could be made available to a foreign processor.

House panel OKs $6 million for tourism

The House Finance Committee has approved a $6 million special appropriation to the Alaska Travel Industry Association to boost tourism marketing. House Bill 359 is now in the House Rules Committee, awaiting placement on the calendar for floor action in the state House.Sponsored by the Finance Committee, the bill would help market Alaska in the wake of a decline in travel and tourism following the September terrorist attacks in New York City.Property rights clarifiedSen. Loren Leman, R-Anchorage, has introduced SB263, clarifying legal rights of property-owners to make improvements on property obtained from Alaska Native corporations. Transfer of some lands has raised certain title uncertainties, which can be resolved by state law, Leman said."This legislation will help Native corporation shareholders who received property from their village corporations and were deeded only surface rights, while the regional corporations retain subsurface rights," Leman said.Some property owners have been prevented from making improvements, he said. The bill is in the Senate Labor and Commerce Committee.State mechanical inspectionsA bill that allows the state Department of Labor to collect fees to support its mechanical inspection programs has passed out of the House Labor and Commerce Committee and is now in the Finance Committee. Sponsored by the Labor and Commerce Committee, HB262 will help eliminate a backlog of elevator and boiler inspections in the state, the labor department said.Bill will prioritize budgetsRep. Fred Dyson, R-Eagle River, has sponsored a bill requiring state agencies to submit their budgets in a form that ranks the department’s priorities. The bill, HB349, was passed out of the House Finance Committee and is now in the Rules committee, awaiting floor action in the House."Budget decisions are always difficult and legislators struggle to get the information necessary to set dollar amounts that should be available for each department," Dyson said. "The Knowles administration has steadfastly resisted legislative efforts to obtain input about where budget reductions can be made or what governmental activities are optional."State laws on trustsThe Senate Labor and Commerce Committee passed out HB 157, updating state statutes relating to trusts. The bill clarifies who may provide fiduciary services in Alaska, expands who may be a trust company, establishes what a trust company’s powers are and establishes provisions for permissible activities including interstate or intrastate business expansion.The bill is now in the Senate Judiciary Committee. Rep. Lisa Murkowski, R-Anchorage, is prime sponsor of the bill.Hot springs exemptionThe House Resources Committee has approved HB263, relating to the regulation of natural hot springs. The bill exempts hot springs resorts, spas and other facilities from having to treat their naturally recycling waters with chlorine or other chemicals as long as coliform counts in the water remain low.Rep. Hugh Fate, R-Fairbanks, said the bill is intended to protect the natural character of hot springs. The bill is now in the House Rules Committee, awaiting floor action in the House.

Revenue report: Few benefits of owning stake in pipeline

JUNEAU -- Alaska has few incentives to owning a stake in a natural gas pipeline from the North Slope to the Lower 48, said a Department of Revenue report.But the report stopped short of warning against such an investment."Ultimately it’s a public policy call in terms of how much direct involvement the state should have in developing its resources," said Larry Persily, deputy director of the Department of Revenue.The report, ordered by the Legislature amid talk in the oil industry about such a project, was released Jan. 31.It concluded that Alaska does not have the money to own a great share of the project without tapping into the Alaska Permanent Fund and its financing options are uncertain.If the state owned the pipeline facilities, it could cost up to $14 billion that would not begin to show a return for seven years, the report said.Declining oil revenues have left Alaska with an $865 million deficit that is projected to grow to $1.1 billion by next year. The state’s Constitutional Budget Reserve is expected to be empty by 2004.The prospects of financing such a project through loans is unclear, the report said.Gov. Tony Knowles has asked for approval of a large general obligation bond package to pay for school construction and maintenance to public facilities.If the bond package is approved by the Legislature and voters, it could exhaust the state’s capacity to take on debt, the report said."The only way we could see state financial participation being a benefit is if there were a way under the law to seek tax-exempt financing," Persily said.The Revenue Department also concluded that oil companies do not need financial assistance and oil and gas interests interviewed for the study do not favor having Alaska as a shareholder.The industry commissioned its own $100 million study to determine whether the cost of a gas pipeline would be profitable.The oil companies’ report, which considered routes through both Alaska and Canada, has been completed.Results of the report have not been made pubic, but the industry has tentatively said neither route appears economically viable.Sen. John Torgerson, R-Kasilof, who chairs the Joint Committee on Natural Gas Pipelines, said the report will be useful in helping lawmakers to decide a course."We knew that there was going to be barriers in any direction we went," Torgerson said.But he said he had hoped the Department of Revenue would answer the most pressing question of whether Alaska should be a shareholder in the project.While the report repeatedly cautioned about the pitfalls of investing in or owning a pipeline, it never conclusively recommended one course or another."I’m certainly not going to discount anything that’s in there, but I think I would have been happy with a summary that says, ’no’ rather than ’maybe,’ " Torgerson said.

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