BP's Campbell to retire

New management will take the helm at BP Exploration (Alaska) Inc. in September.Richard Campbell, the head of BP’s operations in the state, is retiring. He is being replaced as president of the Alaska operating company by Steve Marshall, regional president of BP Scotland. Marshall worked in Alaska for BP for several years, on the North Slope and in Anchorage, from 1978 to 1986. He is a 24-year veteran with the company.Marshall’s arrival coincides with a key organizational change BP will make to consolidate six separate Alaska business units into a single organization, which he will head. Worldwide, BP is moving toward formation of larger business units to improve regional strategy delivery, the company said in a press release.Campbell plans to move to Vancouver, British Columbia, where his wife, Gabrielle, is from. The Campbells’ two daughters, graduates of Service High School in Anchorage, are attending university there."I’ve decided after 32 years with BP that it’s time to do something new," Campbell said. "We have lots of ideas, but no firm plans."In Alaska, Campbell guided BP through stormy seas in 1999 and 2000 as crude oil prices plunged to below $9 per barrel, followed by the company’s acquisition of Atlantic Richfield Co., another Alaska oil producer.BP’s ARCO acquisition sparked considerable controversy, and resulted in the sale of ARCO’s Alaska assets to Phillips Petroleum Co.Another accomplishment during Campbell’s tenure in Alaska was BP’s development of the first remotely supplied offshore oil field in the Arctic. The company’s new Northstar field, six miles offshore from Prudhoe Bay in the Alaska Beaufort Sea, begins production in October.

Even in down economy, luxury class represents a hot prospect

There are few consumer markets subject to more confusion or lack of familiarity than the luxury segment. For that reason, most marketers steer a wide berth from this lucrative category. Conventional wisdom also decrees that the luxury buyer comes out of the woodwork when times are flush but disappears when the marketplace tightens as it is today. The reality is that the luxury buyer represents unparalleled opportunity for most consumer marketers, and that opportunity transcends the volatility of the marketplace. Good times or bad, luxury buyers like to spend. What’s important is how you ask for the order. Growth in luxury sector In sheer numbers and girth, the category is growing in leaps and bounds according to data from the Luxury Marketing Council: * 3 million Americans control half of the $10 trillion in invested funds. * Americans with a net worth of more than $1 million totaling $5 million plus. * Top 5 percent of earners represented 16 percent of all income earned in 1976; in 1999, it had risen to 24 percent. * Luxury travel of $350 per person per day is up 130 percent since 1990. * The rich are building bigger houses with an average of 2,800 square feet and more of them. Most own two homes. One in four own three or more. * Luxury cars costing $40,000 or more account for 12 percent of vehicles sold, up from 7 percent in 1986. The splintering of the once homogeneous luxury sector reveals a fundamental shift in how the category is now comprised. Historically, the "traditional rich" were old, white, male and of inherited wealth. Today, this group represents the minority, having been supplanted by the "new affluents." These include the options-rich of Silicon Alley and Valley (even after the dot-com failures), entertainers, professional athletes, the new entrepreneurs, the new upper class and an exploding group of trust fund babies ($3 trillion will be passed on to this group in the next 10 years). Luxury redefined Luxury used to be defined according to traditional, European-influenced standards. More was better. Conspicuous consumption was in. J.P. Morgan spoke for class when he opined, "If you have to ask how much it costs, you can’t afford it." Luxury today is a different story. Greg Furman, founder and chairman of the Luxury Marketing Council, an international organization serving more than 150 elite purveyors of luxury products and services including the likes of Mercedes Benz, Cartier, Dunhill, Rolls Royce/Bentley and Sotheby’s, maintains that there is a new luxury ethic at play. "The new ethic," Furman says, "states that if you don’t understand or can’t say why it’s worth it, you don’t want to own it or experience it, even if you can afford it." Furman foresees a number of trends influencing the luxury sector that offer fair warning for the marketer: * The "Luxury rub" or "Gilt by association": No longer can sales staff take on the outdated and self-destructive pretense of snobbery. The tell-tale symptoms -- social X-raying and eyeball inventorying -- are fast disappearing. * Empty nesters empowered and enriched: These are the time-deprived, dual-income baby boomers who have just had their children leave the family payroll and are now ready to spend. They put a premium on time and the home. With this comes an explosion of services to the home, many of them Internet driven. "We are returning to the conventions of a hundred years ago when it was ordinary of the middle class to use servants and almost all merchandise was delivered to the home," Furman says. * Class looks mass/mass goes class: Traditional luxury vendors will increasingly have to contend with mass retailer incursions into the luxury market. For example, The Gap, Banana Republic and Target have succeeded by providing the perception, if not the reality, of luxury value at mass price. The challenge for the luxury marketer will be to maintain the aura of the brand while seeking to extend it, to maintain quality and premium perception while remaining sensitive to price. * Brand reciprocity: Luxury consumers will only be respectful of luxury brands if the favor is reciprocated. "For marketers of luxury products and services, this will mean raising the bar on customer education, justifying the value behind the price and understanding the consumer at a level of intimacy not on the radar of most luxury brands," Furman says. With the luxury market predicted to grow 25-30 percent a year, those wishing to gain a share of that burgeoning market, or protect what they already have, would be advised, Furman says, to follow classic marketing practice: * Constantly educate best customers as to the price/value equation. * See marketing as an investment, not a cost. * Stay sensitive to the equity inherent in the brand. Don’t dilute brand identity by overextending with new products and services. * Appreciate the "loyalty factor," the impact of long-term profitability from retaining and growing your best customers. * Heighten service and intelligent "one-to-one" contact with best customers. Find creative ways to meet their needs and make them feel special. * Build collaborations and partnerships with like-minded marketers. Alf Nucifora is an Atlanta-based marketing consultant.  

New generation of tankers

The first of a new generation of double-hull oil tankers dedicated to the North Slope oil trade called at Valdez on July 11. Polar Endeavour, the first of five Millennium class tankers being built by Phillips Petroleum Co., picked up its first cargo of Alaska crude oil."These vessels demonstrate our commitment to the environment and our continuing commitment to the state of Alaska," said Kevin Meyers, president of Phillips Alaska Inc., the parent company’s Alaska production subsidiary.Polar Endeavour and four sister ships still under construction are 894 feet long and carry just more than 1 million barrels of crude oil. They will cruise at 16.5 knots when loaded and 17.5 knots when empty and in ballast. Polar Tankers of Long Beach, Calif., another Phillips company, operates the vessels.The double-hull, state-of-the-art tankers had been contracted for several years ago by Atlantic Richfield Co., but Phillips assumed the commitment when it acquired the ARCO’s assets in Alaska from BP.With the Polar Endeavour now in service, four other Millennium class vessels are under construction at Northrop Grumman Litton Avondale Shipyards in New Orleans.The second vessel, Polar Resolution, will be in service in early 2002. One new vessel will be added to the fleet each year until 2005, when all five will be in operation. Each of the vessels costs about $200 million."This state of the art ship and the Millennium class tankers that will follow advance marine safety and environmental protection to levels not seen anywhere in the world," said Rear Adm. Thomas Barrett, commander of the 17th Coast Guard District."They nicely complement the world-class accident and spill prevention system already in place in Prince William Sound. This is truly a watershed event in a partnership to protect Alaska’s natural resources."The double-hull tankers are a requirement of the federal Oil Pollution Act of 1990, passed after the single-hull Exxon Valdez ran aground and spilled 11 million gallons of oil in Prince William Sound on March 24, 1989.Phillips and BP are replacing older single-hull tankers, and building double hulls in the replacement vessels several years ahead of the 2015 deadline in the federal law.The so-called Millennium class tankers are designed to withstand harsh conditions in the Gulf of Alaska, according to Dawn Patience, director of communications for Phillips Alaska Inc."(They have) been specifically built for the Alaska trade. The Gulf (of Alaska) waters are some of the more extreme conditions," she said."There is a 10-foot span between the outer hull and the inner hull, and the sides of the ship are separated from its cargo by ballast tanks and empty space. It is like a second skin around the whole tanker," Patience said.If the outer hull of the tanker is pierced, no oil would be spilled. Even if both hulls were compromised, designers expect less oil would be released than with a single-hull tanker.The tanker will make weekly 2,400-mile round trips between Valdez and Puget Sound, Wash., and also will serve California and Hawaii.The vessel is also the first tanker under the U.S. flag to combine double hulls, independent engine rooms, dual propulsion and twin-steering systems, according to a Phillips’ press release.It has a bow thruster, which enables it to maneuver in harbors without the aid of tugs. Engines in the Polar Endeavour will meet stringent air emissions standards, and the vessel is painted with a tin-free anti-fouling paint. "The performance is everything Phillips said it would be, and of course the double hull makes it the safest possible oil tanker," said Stan Jones, spokesman for the Prince William Sound Regional Advisory Council, an oil-spill watchdog group created by the 1990 law.BP has three double-hull tankers in service and plans to add three more, beginning in 2003. San Diego-based National Steel and Shipbuilding Co. has a $630 million contract to build the tankers.In another improvement to safety in Prince William Sound, radar is set to be installed near Bligh Reef as early as this summer, Jones said. The Exxon Valdez ran aground on Bligh Reef.The Associated Press contributed to this report.

Dinners make strangers into friends

Interesting people expand my horizons. When I was 12 years old growing up in Teller, I met David M. Hopkins, a geologist and the world’s leading authority on the Bering Land Bridge theory. He was on the Seward Peninsula looking for giant Redwood trees just south of the Arctic Circle -- actually he was looking for Redwood cones and pollen left in deep layers of mud from millennia past.And yes, he found Redwood pollen north of Nome. I didn’t become a geologist as a result, but it’s forever changed my mental picture of Nome. I can now see in my mind’s eye, a forest of giant trees marching down to the balmy shores of the Bering Straits or at least, Beringia. Such people increase my professional and personal net worth by giving me new ideas, new resources and a whole new forest of opportunities and perspectives. Since January, I’ve been conducting an experiment in increasing my people flow -- the numbers of people with whom I have unusually high quality conversations. To do so, I host what I call a G3 Dinner -- "G Three" for Great People, Great Time and Great Stories.The early results: It has worked with 18 people, not including the 16 with schedule conflicts who asked to be kept in mind for the future.Once a month, I go through my Rolodex and come up with seven people. I look for interesting people who would like to meet other interesting people. I then invite them to dinner. I tell them that the dinner is free and the conversation is $30, restaurant tip inclusive. I get grins and their attention.I’m quite intentional about the invitations. I make sure that I want to introduce each person to at least one other person in the group. The dinner runs from 6 p.m. to 8:30 p.m., usually on a Thursday evening. We rarely leave before 9 p.m., since people lose track of time.And how does the conversation go? It’s almost effortless in Alaska. After introductions, the first question is: "How long have you been in Alaska? Or how did you get here?" Everyone’s got a story -- usually humorous and often intending to stay only two years. And if you were born here, that’s all the more interesting.The follow-up is, "What’s your most unusual Alaska story?" Everyone has at least one of these as well, ranging from watching the wind in Unalaska blow the windsocks straight out in opposite directions at each end of the runway to living in an Alaska tree house.So what’s the business case for doing this? The best part is that there is no overt business case. People comment on how refreshing it is to sit and converse with interesting people outside of their profession or industry and not have strings attached.There is of course, mutual benefit: Attorneys, management accountants, lodge owners, stockbrokers, university professors, school administrators, program directors, sales managers and human resources directors all have intersecting interests.For dinner guests, just knowing other people in other professions is invaluable, since people turn to people they know for tips in dealing with challenges: leads on a job search, a music teacher for the kids, or news of what’s happening in other parts of Alaska. And as for me, my clients value the depth and diversity of my network. The more the merrier.Who else in the world does this? Johan Tandberg, a friend and business coach in Lund, Sweden, gets together monthly with friends for what he calls the Cafe of Life -- a reminder to take time to enjoy life. Frank and Kathy Eagle in Fairbanks host a wine tasting on Wednesdays.In London, Carole Stone hosts monthly cocktail parties for 100 people at a time. She has 14,000 people in her database and 1,000 people turn out for her Christmas Party at the Queen Elizabeth Hall. The common denominator is what coach Adam Seaman says is the belief that "good people ought not be strangers."Tim Pearson is a professional business coach and founding player of MindJazz, a company that helps teams and organizations blend creativity, collaboration and action. He can be reached at 907-562-1568 or by e-mail at ([email protected]).

Sakhalin official sees oil, gas, employment prospects improving

Sakhalin Gov. Igor Farkhutdinov visited Alaska July 11-12 to update Gov. Tony Knowles and other government and industry officials on current economic and business conditions on the Russian Far East island.Farkhutdinov, who was accompanied by his director of oil and gas resources, Galina Pavlova, said the region is experiencing slow economic growth.Speaking through a translator, the governor said oil and gas-rich Sakhalin has experienced steady increases in industrial development and declining unemployment since his last visit to Alaska in 1999. These improvements have been accompanied by a rise in the region’s standard of living and a decline in federal subsidies from Moscow.Sakhalin, which is the site of Russia’s first offshore oil projects, has an unemployment rate of less than 3 percent, but many of its 245,000 workers are grossly underemployed."Russia today has too many people involved in small-scale retail sales," he said.Farkhutdinov, who is serving his second term as governor, said he believes some six offshore oil and gas projects in various stages of development will be the impetus for economic revival of the region. International developers currently plan to spend billions in developing the region’s oil and gas resources.Alaska companies, especially Natchiq Inc., have been leaders in helping Sakhalin develop an oil support industry, train oil field workers and meet international industrial standards in order to participate in the oil and gas projects, he said.Farkhutdinov said he hopes Alaskans will continue this work and that more companies will become involved. He also cited a need for new capital investment in Sakhalin’s transportation infrastructure and timber, coal and food products industries.

Princess tests Juneau hookup; all ships to use it by midmonth

JUNEAU -- Princess Cruises is testing a new dockside electrical hookup that will allow ships to turn off their smoke-producing engines most of the time they are in Juneau.Princess is bringing four of its five Juneau-bound ships to the South Franklin Street Dock, where the electrical hookup has been installed, for 72 visits this season. Next year all five of its ships in Juneau will use that dock and the electrical system, the company said.Last year the state found 30 violations of its opacity standards from cruise ships in Juneau in a 60-day period, including six violations by Princess vessels. So far this year there have been 15 potential violations, including three by Princess, but the state hasn’t issued notices of violation yet, said Jeanette Brena of the Department of Environmental Conservation.The opacity standard generally states the plume of smoke, except for water vapor, should not reduce visibility by more than 20 percent.For some residents the plumes can be unsightly, and for the companies fines can add up to tens of thousands of dollars. But the smoke doesn’t come close to violating federal standards for air pollution that are designed to protect people’s health, the state found last year."I think we’re looking at what citizens said about visible emissions in town," said Kirby Day, Princess Tours’ director of shore operations in Juneau. "We bring people to some of the most pristine areas in the world, and that’s what they’re looking for. So I think it’s a feather in our cap."Princess engineers and subcontractors tested the new electrical system with the Dawn Princess on July 10, and it worked well, Day said. If the tests go well with each ship, Princess expected to use the system regularly starting in mid-July, he said.The company spent $4.5 million, including $2 million to retrofit four ships and $2.5 million for the shoreside equipment, which includes a new substation near the dock and a large metal gantry at the dock to bring the electric wires to plugs inside the ships."It’s not like just plugging in your car in Fairbanks," Day said.The Juneau Assembly, at Princess’ request, allocated $300,000 this year from the passenger head tax to repay some of the shoreside construction costs. The company intends to ask the city to continue to do so, Day said. Its passengers pay about $900,000 a year of the tax, he said.The Princess ships berth in town for 10 to 12 hours at a time. While they’re docked, the ships still need to run like a hotel for about 2,100 guests and 800 staff. Normally that means keeping one diesel engine running, plus an oil-fired steam boiler.And these ships do use electricity -- in one day in port about what 3,000 houses would use. On a recent visit, a lounge on the Dawn Princess glittered with lights recessed into the ceiling, under the water in decorative pools and along the steps in curving staircases. Light glowed through painted glass ceilings while guests relaxed to the strumming of an amplified guitar.Alaska Electric Light and Power, which is selling surplus hydroelectric power to the ships, estimates a ship might use 100,000 kilowatts a day, compared with the usual customer’s use of 33 kilowatts.Day said it might cost the company $4,000 to $5,000 a day for electricity, more than the $3,000 it would burn in diesel fuel if it kept an engine on.In addition, the company is building an electric-powered steam boiler near the dock that will allow its ships to turn off their oil-fired boilers, which emit a small amount of smoke. The steam is used in the ship’s galleys and to heat it.Once a ship arrives, it will take about 40 minutes to switch over to the electric system, said Bob Maddison, a technical superintendent with Princess Cruises. During that time its engines will produce smoke. The ships also will have to start two engines to leave port, and that can take about 30 minutes, Day said.Robert Reges, a member of the citizen watchdog group Cruise Control, said he anticipates a net reduction in visible emissions, but the ships still might exceed the state opacity standards, especially when they start cold engines to leave town.The state allows some leeway in opacity standards when ships are leaving port and for an hour afterward.Day said the company will soon learn what the emissions are when the ships start their engines."Once we see that, we’re going to go back to the drawing board and try to minimize that, too," he said.

Here's what halibut and salmon, farmed and wild, bring at the retail counters

Prices paid to Alaska salmon fishermen continue to make lots of headlines, so it’s interesting to look at what the fish is fetching at retail counters across the Lower 48. Urner-Barry is the primary source that most market watchers turn to because it has been tracking U.S. food commodities since the early 1900s. A glance at its retail features over the July Fourth holiday showed these price trends per pound at major supermarkets for fresh salmon, both farmed varieties and Alaska wild, which includes salmon and halibut. In New York and New Jersey, Alaska salmon "silverbrite" fillets were priced at $2.99, farmed Atlantic steaks were at $3.99 and fillets at $4.99. In the New York metro region, farmed fillets were fetching $5.99. In Philadelphia and southern New Jersey, Alaska salmon steaks were featured at $3.99. In Boston stores, boneless farmed salmon fillets were priced at $3.99-$5.99, while bone-in salmon steaks were retailing at $3.99-$4.99. No Alaska salmon was mentioned. In Chicago, Atlantic-farmed salmon fillets were fetching $4.99-$7.99. Halibut steaks were listed at $7.69-$7.99. In Florida, both farmed Atlantic salmon and wild Alaska salmon were priced at $4.49 for steaks and $4.99 for fillets. In Atlanta, farmed salmon steaks were retailing for $4.99; Alaska halibut steaks were priced at $7.99. Finally, in Los Angeles, farmed Atlantic salmon was on retail counters at $4.99 for steaks and $5.99 for fillets, while Alaska halibut was bringing $6.99-$7.99 per pound. State forecasts on mark Projections for Alaska’s annual salmon harvests have "been in the ballpark more often than not" over the last decade. That’s according to the latest Salmon Market Bulletin, which reveals that in seven of the last 10 years, Alaska Department of Fish and Game forecasts have been within 17 percent of the actual harvest. Last year’s projection missed by only 10 percent, and the Bristol Bay forecast was within 8 percent of the actual harvest. The bulletin said that according to 2001 projections, chum catches are expected to decline from three years of record and near-record volume. The statewide projection is 15 million, down from a record 24 million last year. Pink catches are expected to rebound to 93 million, though there is uncertainty about the impact of massive over-escapement in 1999. The king salmon harvest is projected at 419,000, a 15 percent improvement from last year’s weak harvests. The coho projection is 4.8 million fish, more than half of which are expected to be caught in Southeast Alaska. License to krill Krill could soon become a source of oil for the fish feed industry. According to Fisheries Information & Services, Norwegian researchers have brewed up a first batch of fish oil and fish meal using krill and will test it at several of the country’s salmon farms. Snorre Tilseth, managing director of Norsildmel, the organization for sales and marketing of all fish meal and fish oil produced in Norway, stated recently that in five years, there won’t be enough fish oil on the market for fish feed producers. "Last year 866,000 ton of fish oil went to the aquaculture industry. This year I expect the figure to increase to 900,000 tons, while the total global production will be 1.1 million tons," Tilseth told FIS.com. "It is very interesting to look at krill as a source of marine oil for future requirements. We have done research into krill before, but that was 20 years ago." However, other researchers believe that due to the present lack of adequate large-scale harvesting methods and catch preserving problems, it would be a couple of decades before krill is harvested properly. It’s estimated that there are around 200 million tons of krill and other harvestable large zooplankton in Norwegian waters. Some krill fisheries are presently carried out in Antarctic waters, where it is processed on fishing vessels and sold as krill-meal. "It is an expensive product," said Tilseth, adding that some fishermen are interested in obtaining a "license to krill." Test kit clarification Ray RaLonde offered this important clarification to last week’s article on the new paralytic shellfish poisoning field test kit: The Jellett Biotek Mist Alert kit is a yes-or-no test set at 40 microgram of PSP toxin per 100 grams of tissue, one-half the level required by the Food and Drug Administration. The portability of the kit for field application makes Mist Alert useful for screening shellfish to determine toxin levels before harvest and a valuable research tool for beach monitoring of toxin levels in shellfish. The Mist Alert does not replace the mouse bioassay test required for all commercially harvested or farmed shellfish. The mouse bioassay remains the only FDA-approved test for detection of PSP, and commercial harvesters, processors, and shellfish farmers will still be required to follow existing regulations for submitting shellfish samples to approved laboratories for toxin testing. The Alaska Department of Environmental Conservation Seafood and Food Safety Lab is the only approved laboratory in the state for PSP testing.  

Bristol Bay season looks like a disaster for salmon fishermen

It is turning out to be a disastrous year for salmon fishermen in Bristol Bay and western Alaska. The fish runs are erratic and full of surprises, as usual, but sockeye salmon market conditions are so lousy that processors are shutting down and fishermen are pulling out early.In Sand Point, Trident Seafoods decided to close its plant, leaving only Peter Pan Seafoods buying salmon from fishermen. In Bristol Bay there are fewer processors buying and the number of fishermen in the bay this year is down about 15 percent, according to Department of Fish and Game data.At the root of the problem are market conditions. Processors and Japanese importers still have frozen sockeye salmon from last year, and imports of Chilean farmed coho salmon, which compete with Alaska sockeye salmon in Japan, are increasing.Things got off to a bad start in June when fishermen in Area M, which includes communities along the Alaska Peninsula, went on strike over price offers from processors they thought were too low.Some fished and sold to a small Kodiak processor who offered 55 cents a pound, but most Area M fishermen sat out the month of June. On July 7 they agreed to start fishing, but Trident then decided to close the Sand Point plant. Fishermen in Bristol Bay accepted the 40 cents per pound offered, and the harvest, although its peak came early, may wind up close to the state’s original forecast of 17 million.Last year Bristol Bay fishermen were paid about 65 cents per pound, and the year before about 85 cents per pound. In the late 1980s sockeyes in the bay were selling for $2.50 per pound.Things don’t look as bad elsewhere said Doug Mecum, director of the State Division of Commercial Fisheries. The Copper River sockeye salmon run was twice as strong as had been expected. Although prices were lower than what fishermen hoped for, most are making up in volume what they are losing in price, he said.The chum salmon return in Prince William Sound and early showings of pink salmon there indicate that it may be a decent season for fishermen there.In Southeast Alaska, early chum returns to hatcheries are weak, raising concerns for fishermen and processors, Mecum said. Those returns are too preliminary to make predictions for the overall chum season, however. Likewise, pink salmon are just beginning to show up in Southeast waters, he said. The peak of pink fishing comes in July and August. Pink and chum salmon are the prime summer salmon fisheries in Southeast.

City, federal money, volunteer group help Fairview, Mountain View home owners

Two Anchorage neighborhoods received some help this summer from about 500 new friends. High school and college student volunteers participated in a project to renovate homes in Fairview and Mountain View using funds from a U.S. Department of Housing and Urban Development grant. The Municipality of Anchorage allocated $300,000 of a HUD municipal community development block grant toward purchasing construction materials for the project. Anchorage Neighborhood Housing Services Inc. coordinated applications from home owners for the renovations among other duties. One Anchorage business, Karluk Design, participated in the project by donating design and engineering for home improvements, which include roof and structural work. Chief executive Paul Whipple said community service projects are important to his firm, which also provided architectural design for the Mother Lawrence House several years ago. "We always try to give back to the community, and this was an excellent opportunity to do something else in Anchorage," he said. Employees from Anchorage-based Northrim Bank also donated time to the project. World Changers, a Christian faith-based organization based in Alpharetta, Ga., which handles community service projects in the United States and around the world, marks its first Alaska project with the effort. The project was to tackle exterior repairs on 37 owner-occupied houses, said Mary Jane Michael, ANHS executive director. In April the group offered applications for the project, receiving 165 which were then considered based on program eligibility, she said. Home improvements were limited to $5,000 per home, and work had to be something that could be completed in a week, she noted. Two groups of about 250 students, who had been trained in construction skills, paid their way to Anchorage, each working one week on the Fairview and Mountain View home renovations. The groups were in Anchorage June 30 to July 14. The organization chose Alaska as a new project site for 2001, said volunteer construction coordinator Jimmy Lott of Tennessee. Lott said the Anchorage project eclipses home improvement work. "We want to refurbish houses plus we want people to feel like other people care and open doors for them," Lott said. ANHS met with World Changers officials last summer as discussions began about a possible project in Anchorage, Michael said. ANHS chose to work with the group since it would "help us fulfill our mission of revitalizing neighborhoods," she said. In March the Anchorage Assembly approved allocation of the HUD funds for World Changers’ project in the city, she said. World Changers could return to Anchorage for future work, she said. "The city’s interested in renewing a contract with them," Michael said. World Changers also is interested in community service projects elsewhere in the state, she said. Michael would like to expand the neighborhood renovation program by gleaning funds from other sources. She also is pleased that World Changers helped Alaskans akin to an old-fashioned community barn-raising.

Evergreen to fly jets to Adak, Russia

Evergreen International Airlines Inc. has been awarded a federal contract to provide jet service to Adak. The $1.5 million annual subsidy announced July 9 also will allow the airline to provide service to the Russian Far East, the company said.Evergreen was scheduled to begin cargo-only service to Adak July 18 with its DC-9 cargo jet; and combined passenger and cargo service within four months once it acquires a Boeing 727-100 "combi" or similar airplane.Evergreen says it will provide Adak with two one-stop round trips a week to Anchorage, year-round. The contract, which will be renegotiated after the first year, is the nation’s most costly under the U.S. Department of Transportation’s Essential Air Service program.The Russian Far East flights are expected to begin in early 2002, according to the company.The proposed flights are welcome news to the Aleutian island community and to folks traveling to the Russian Far East, especially companies that serve the oil industry on Sakhalin Island."People are happy,’’ Adak Mayor Agafon Krukoff said of the community, which has a population of 100 to 300 residents. "The government listened to us.’’"This could be the solution we’ve been looking for,’’ said Jeff Berliner, trade specialist with the state’s International Trade and Market Development office, which has worked hard in the last several months attempting to re-establish Alaska as a Russian gateway.State Department of Transportation officials had questioned if the federal subsidy was wisely spent on tiny Adak, when more than 150 other communities qualify for the subsidy but receive none. Other state officials, including Gov. Tony Knowles, have shown strong interest in re-establishing flights to the Russian Far East.Last December, Reeve Aleutian Airways stopped flying to Adak, leaving the community without air service. Reeve had operated two Boeing 727-100 combis that served Adak and other Aleutian destinations, as well as the Russian Far East.Reeve operated its flights with no government subsidy. Alaska Airlines and Russia’s Aeroflot also operated flights to and from the Russian Far East in the past, also without the help of federal money.Evergreen officials say the two-year subsidy intended solely for Adak is essential in underwriting the cost of the service to Russia."We can’t do one without the other,’’ said Don Brugman, Evergreen’s senior director of sales for Alaska.The airline, based in McMinnville, Ore., made its announcement that it would fly to the Russian Far East July 12 at a luncheon in Anchorage.Attending the luncheon was Igor Farkhutdinov, governor of the Sakhalin region in the Russian Far East, who said he was "very encouraged’’ with the announcement by Evergreen.The departure of Reeve has forced Russian Far East passengers and freight forwarders to use a long and expensive route through Asia, a flight that sometimes takes several days because of layovers, Berliner said.Reeve’s departure also left Adak without jet service, hurting the town economically, especially the fishing industry, said Krukoff.Peninsula Airways, with prop aircraft, has provided service since Reeve’s departure. The company and three other airlines have been vying for the two-year contract.Evergreen was awarded the contract based on its proposed purchase of a 727-100 combi, which is better able to handle cargo and the region’s notoriously bad weather, according to written decision by the federal DOT.Jerry Rock, Evergreen president, said his company is shopping for planes."There are a lot of them out there, but not in combi configuration,’’ Rock said.A 727-100 combi costs about $7 million, Rock said.Reeve had 727-100 combis, but sold them to an airline in Angola. Those airplanes were not fitted with "hush kits,’’ engine silencers required for all domestic flights, except Alaska.Rock said his company’s new airplane likely would be a much more updated version of Reeve’s old 727s, built in the early 1960s.Until Evergreen gets its new plane, PenAir will continue providing passenger service, under its interim federal award of about $4,000 weekly. Evergreen will be paid roughly $7,000 for each of its cargo flights, until its new jet is purchased. At that point, PenAir will cease operations to Adak and Evergreen will receive the entire federal subsidy.The cost for a round-trip ticket to Adak will be about $1,370, said Greg Thies, Evergreen’s director of marketing.That’s $270 more than what PenAir charges, but Krukoff said residents are happy to pay the premium, since flight times are cut in half to about three hours.

Expanded missile testing program to include Fort Greely, Kodiak

WASHINGTON -- The Bush administration wants to greatly expand the number and kinds of testing it believes is needed to build effective missile defenses, and it is willing to spend billions more to do it.That view was bolstered by a successful test of the system on July 14.In a sense, military planners have gone back to the drawing board to fulfill President Bush’s goal of creating a reliable defense against ballistic missile attack on the United States, its allies and U.S. forces abroad.The Bush administration sees no less urgency in obtaining a missile defense capability. But after months of reviewing options and studying the Clinton administration’s approach, the Pentagon has decided to explore a wider range of technologies before deciding when the system could be ready for use."The focus of missile defense is no longer on deployment," said Lt. Col. Rick Lehner, a spokesman for the Ballistic Missile Defense Organization, which manages the Pentagon’s missile defense work.The focus is on testing, and lots of it. "It is going to be structured and disciplined," Lehner said.It is also going to be expensive.Intercept tests conducted during the Clinton administration cost about $100 million apiece. The Bush administration envisions more elaborate and more frequent tests.The proposed 2002 defense budget submitted to Congress on June 27 provides $8.3 billion for missile defense, a nearly 40 percent increase from the current budget. It would be expected to take tens of billions more before a system is ready for use, although the administration has provided no firm figure.For starters, the Pentagon is piecing together a plan to create a Pacific "test bed" -- a collection of test ranges from Fort Greely and Kodiak Island in Alaska to Vandenberg Air Force Base in California to Kwajalein Atoll in the Marshall Islands -- to pursue more realistic missile intercept tests.Up to now, the only flight tests of interceptors designed to shoot down long-range missiles have involved launching an unarmed target missile from Vandenberg and trying to hit it with an interceptor launched from Kwajalein. That was the scenario used by the successful July 14 test. It followed two dramatic test failures during the Clinton administration."This test is just one on a journey, one stop on a journey,’’ said Air Force Lt. Gen. Ronald Kadish, head of the Pentagon’s missile defense programs. He held a news conference at the Pentagon less than an hour after the collision of the interceptor and its target created a huge white flash in space."We will press on to the next test,’’ he said.That test, scheduled for October, may include some additional complexities, such as extra decoys aboard the target missile. In the July 14 test, just one decoy was used.The Clinton administration chose to focus the bulk of its missile defense effort on a ground-based interceptor designed to collide with a hostile missile outside the earth’s atmosphere during the midcourse of its flight. It did so because that technology is more advanced than others, such as interceptors fired from ships or lasers fired from satellites or airplanes.Defense Secretary Donald Rumsfeld has decided that the midcourse system alone is insufficient to provide global protection.He wants to build a "layered" system -- a combination of missile defense weapons. Some would be designed to attack a ballistic missile in the boost phase of its flight while it is easiest to detect, others in the descent phase and still others in midcourse. Some of these anti-missile weapons would be based on land, others at sea, others possibly aboard aircraft."As we proceed in time, and technologies are proven or disproven, we narrow down heading toward a solution," the undersecretary of defense for acquisition, Pete Aldridge, told reporters late last month.Lehner said the Pentagon is aiming for deployment sometime between 2004 and 2008, but it has no firm target date.In its new approach, the Pentagon will not only pursue different combinations of missile defense technologies -- some well advanced, some largely untried -- but also test them in ways not previously attempted.For example, the Kodiak Launch Complex on Kodiak Island would be used to launch target missiles over the Pacific. Kodiak also would have interceptors for test flights against target missiles launched from Vandenberg in California toward Kwajalein.The Pentagon also would use Fort Greely, about 100 miles southeast of Fairbanks, as a site from which to launch ground-based interceptors at target missiles fired from an aircraft.The government decided in 1995 to close Fort Greely, but the 2001 defense supplemental bill before Congress now contains language permitting the secretary of defense to retain the base for missile defense purposes.This more aggressive testing effort reflects Bush’s determination to "set aside" the Anti-Ballistic Missile Treaty, which forbids the testing of missile defense weaponry from other than fixed points on land. Thus the Kwajalein-to-Vandenberg approach is allowed, but not testing from aircraft or ships.Even more fundamentally, the ABM treaty bans any missile defense that is designed to protect an entire nation.Having declared the ABM treaty a Cold War relic, the administration plans to go ahead with testing without regard to treaty limitations, although it has not yet said definitely that it will withdraw from the treaty. It hopes to persuade the Russians to either amend it or to replace it with a new framework in which the United States, its allies and Russia could pursue missile defenses cooperatively.The treaty’s limitations are not an immediate problem because testing of the kind that would violate the limits is not likely to be ready for another year or more.

This Week in Alaska Business History July 22, 2001

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannotremember the past arecondemned to repeat it."-- George Santayana, 1863-195220 years ago this weekAnchorage TimesJuly 22, 1981Coal port plan falls throughBy Sean HanlonTimes WriterA multimillion dollar deal to export Alaska coal over the Port of Anchorage’s docks fell through Tuesday as soon as the municipality and a Korean firm got down to the brass tacks of actually building the facility.Anchorage and Sun Eel Shipping Co. Ltd. of South Korea thought they had all the elements of a project that would make Anchorage a showcase for the international use of Alaska coal. The money was right. The coal was available and so were the trains that would carry it from Healy to the port.But the deal was in jeopardy as soon as the engineers started talking about building the port itself. Sun Eel wanted to store more coal at the seaside port than the land in question could support. When the company asked the city to pay for improvements that would bolster the land and prevent the coal from sinking into the ground, the city of Anchorage backed off.Anchorage TimesJuly 22, 1981Fast photo fad comes north; first shop openBy Bill WhiteTimes WriterA Southern California popularizer of such crazes as Hula Hoops and skateboards has given birth to the newest fad: fast photographs.The idea of a photo processing store that can hand a customer color prints an hour after the film is delivered is sort of a hybrid of the popular one-day film developing and Polaroid’s instant pictures.It’s made possible by a new computerized mass production system developed in Japan, said Mike McHenry, who last weekend opened Anchorage’s first one-hour photo lab -- called Fast Foto -- with his partner, Errol Simmons, a semi-retired real estate appraiser.McHenry, a local detective, said other such labs should be dotting the Anchorage landscape soon.And indeed, a new store called 50 Minute Photo Express is slated to open in three weeks at the Northern Lights Shopping Center.Bill Lawrence, owner of that lab, said "aggressive expansion plans call for shops in most areas of Anchorage."10 years ago this weekAlaska Journal of CommerceJuly 22, 1991Tote buys third vesselTotem Ocean Trailer Express Inc. has purchased the 700-foot S/S Puerto Rico for $50 million to be the third vessel moving its cargo between the continental United States and Alaska."TOTE has been committed to the Alaska trade market for 16 years," said Robert B. McMillen, president and chief executive of the company, in announcing the purchase.TOTE purchased the ship in early July from Puerto Rico’s government-owned shipping company.The ship, to be renamed the Northern Lights, will join TOTE’s other two roll-on, roll-off trailer ships, the Great Land and the Westward Venture.Alaska Journal of CommerceJuly 22, 1991Amoco to begin drilling Galahad ProspectAlaska Journal of CommerceAmoco says it plans to begin drilling its Galahad prospect in the eastern Beaufort Sea this week."We’re hoping for a good ice year, and we’re hopeful we can do the well in one season," said Bennett Spevack, Amoco’s Alaska exploration manager.Galahad is in federal waters about 30 miles northeast of the coastal plain of the Arctic National Wildlife Refuge and about 20 miles east of the Hammerhead well.Spevack said Amoco will use a Canadian-owned Canmar floating drill rig, which is in the Canadian Beaufort Sea. "When we start operations depends on the ice conditions," he said.Galahad is on federal leases owned by Amoco, Shell and Unocal, and is in about 160 feet of water.Two years ago, Amoco drilled its Belcher well on an offshore federal lease north of the ANWR coastal plain, which is off-limits to oil and gas exploration and development.-- Compiled by Ed Bennett.

Price your home to sell

Every morning, I review the Multiple Listing Service for all new listings. It’s an easy process and much faster than anything available to the general public. Once I see something a buyer might be interested in, I will alert them via e-mail or call them right away.After all, some properties are selling very fast -- though some are not -- and the first party to see a property often gets the coveted option of making an offer on that property before it’s sold. One of the categories that I look at is "all residential properties listed for sale under $130,000." Recently I found that only 35 single-family homes, zero lot lines, townhouses and condos that qualify for Federal Housing Authority, Alaska Housing Finance Corp. or Veterans Affairs financing were listed in the MLS. Seven of them were new since July 1 and 14 had been on the market for more than 45 days.Knowing how tight this market is seems to awaken a primal part of us when setting an asking price. A seller often misinterprets what a shortage of homes for sale on the market means. Some will choose not to do the normal things sellers have to do, yet they still expect a full-price offer in three days without giving any concessions on terms or conditions.The sellers that are cleaning up, fixing things and clearing out the clutter are selling their homes faster and for more money. A simple concept -- one that is easily overlooked by buyers and sellers -- is that you have a great deal of control over what kind of market your home is in.Those sellers on the market for more than 45 days were probably thinking it was a sellers market and they would sell fast. But factors involved -- pricing, location, financing programs available, condition, age, or amenities -- have removed the benefits of a sellers market from that specific property.It works both ways. First-time home buyers regularly read off a wish list of amenities they want in a home, all for a crazy low price. But the buyers who are actually buying homes understand that they are in spirited competition with everyone else with $130,000 to spend on a home.Which brings us to the point of this article. Pricing residential real estate is somewhat of an art. It’s not a numbers-only thing. Sometimes similar homes in the same neighborhood sell for very different prices that make no sense at all. While a person can be taught pricing by the numbers relatively quickly -- which is what the "For sale by owner" market is all about -- the Midas Touch is more elusive than the 100-pound king salmon.Michael Jordan can show us the mechanics of shooting a basket, but we’re not going to fly weightlessly, change directions twice, and slam dunk the ball while being double-teamed.Here’s the good news on pricing: You only have to price the one piece of property you’re selling. You don’t have to be an expert on pricing and know all the details on every home -- just the one you are trying to sell.My recommendation is always this: Determine what you’re trying to accomplish and then research that goal specifically. Pay attention to the general numbers to make sure you’re in the correct overall range -- a real estate agent can help with that -- but then focus specifically on your house, your timeframe, your location, your finances, your amenities and so forth.For example, you may be selling what everyone is looking for but you’ve had terrible tenants in the home for the last two years. You don’t have the cash to fix it up and you can’t afford 45 days of vacancy. So your pricing, marketing and timing strategies will be different than for a rich investor. For you it’s not a "give me all your money right now market."Homes, though closer to our hearts, are just like everything else for sale. Sellers need to recognize that if they want to sell their home for top dollar, they will need to build the value of their home to the point where it commands top dollar.A few suggestions would be:* Scour it and make it sparkle and fresh.* Rent a storage unit and clear out. People need to be able to see themselves living in your home rather than how cleverly you’ve sardined yourself into it.* Get a "Broker’s Opinion of Value" from a good agent to help set the overall price range.* Pay for a pre-sale home inspection and then fix and upgrade accordingly. Make especially sure there are no surprises that can jeopardize your contract at the worst possible time.* Make it easy to show to as many people as possible. If they cannot get in to see your home, they will look at someone else’s.The more you charge or the more restrictive the terms of the sale are -- such as fewer financing programs available to a buyer of your home -- the longer it will take to sell. Be flexible. It’s not "one price fits all." Adjust your strategy as quickly and as often as necessary.Ken Jelinek is an associate broker with Re/Max Properties of Anchorage. He can be reached at 907-257-0196.

General says it's time Alaska stood on its own economic feet

Anchorage business leaders listened attentively as the commander of Alaskan Command urged them to build and diversify the state’s economy immediately before the current mainstays of oil and federal government appropriations diminish.Lt. Gen. Norton Schwartz told the July 11 luncheon meeting of the World Trade Center Alaska he was perplexed by the attitude of local people who wanted an enhancement of the quality of life, but expected someone else -- Congress or the oil industry, in particular -- to make it happen. The "broader vision" theme for the Alaska economy mirrors the group’s own mission of facilitating trade worldwide and increasing the presence of other industries in the state.Suggesting a focus on the whole of Alaska, "resisting the temptation to focus on single issues or shorter-term initiatives," the general said: "A confluence of agendas must prevail, an agenda of consensus. One that blends the needs of all in this state into action plans that are both mutually beneficial and supportive of prosperity over the long term."Schwartz listed five points that should be incorporated in the long-term plan:* Avoid fratricide with other economic engines in the state by merging the goals and objectives of the private, corporate, public and military sectors.* Make school systems at every level vibrant and strong to attract people to the state and help supply educated, intelligent personnel to emerging industries in the state.* Encourage and nurture a sophisticated work force. Bring in and retain the best and brightest people who can imagine possibilities beyond those entrenched.* Provide affordable, quality housing close to workplaces.* Stop depending on government "as a shield against hard times or tough decisions.""When viewed from Outside, a state that resists taxation, but expects a slice of the federal pie, year in and year out, to facilitate growth places longer-term partnerships at risk," he said.Alaska is and will continue to be an important strategic location for the U.S. military, Schwartz said, as it is for the multinational industries, such as Federal Express and United Parcel Service, that have located here. Depending on what happens in Korea and in bases in other countries in the Pacific over the next decade, he could see Alaska becoming even more vital to the U.S. armed forces’ deployment capabilities.Speaking in broad terms, he pointed to both the enhancement of the Army’s 172nd Brigade here and the plan to use Fort Greely for part of the missile defense plan as examples of increased military presence here."From the armed forces perspective, the days of having mountains of materials stored at different places are over," he said. "We can’t afford that now. We have a ’lean out’ inventory, almost to the extent of ’just in time’ logistics. It is very clear to me that Alaska can be a weight point for logistics."Questioned about the current state of the armed forces, he admitted that the infrastructure throughout the military system has been neglected over the last decade. While there is "more in public service than dollars," getting adequate compensation is necessary to retain quality people."You don’t want stupid people in the military," he said. "It is quality of life that gives some sort of balance to the military as a career."In no-nonsense terms, he told the audience that "oil community dollars should not be viewed as a birthright or a safety net." Instead, the general appealed for planning in the most broad, beneficial and collaborative sense."The quest begins with people of courage, conviction and foresight ... who are able to mold this melting pot of potential into a hub of global commerce that benefits every Alaskan and every sector of the business community," he concluded.

Around the World July 22, 2001

STATEAtlas Air announces purchase of competitor ANCHORAGE -- Atlas Air has announced it is buying Polar Air Cargo for $84 million, just months after each carrier began laying off pilots and ground workers in Anchorage and other cities because of the slowing U.S. and Asian economies.Atlas proposes to keep the two brands separate but would eliminate Polar’s Boeing 747-100 fleet. Atlas said it would operate Polar’s 747-400 freighters and possibly its 747-200s.The deal is pending approval by U.S. and Japanese regulators, and that could take several months.Neither Atlas nor Polar officials would comment on whether the takeover will lead to layoffs in Anchorage.Colorado-based Atlas and California-based Polar use Anchorage’s international airport as a fuel stop and a place to change flight crews on trans-Pacific routes.Atlas established a pilot domicile in the city in 1999. Polar more than doubled its employees in Anchorage during the past year. It had 94 workers as of last March, according to the state.Study finds Southeast wants fast ferry serviceJUNEAU -- Communities in northern Southeast want more frequent ferry service to Juneau and longer stops here, according to a Juneau consultant studying ways to improve the Alaska Marine Highway.Consultant Eric McDowell told the Juneau Chamber of Commerce on July 13 that outlying towns see the Capital City as the region’s hub and that local businesses should help cultivate better state ferry service.McDowell presented a summary of comments from residents in northern Southeast, spanning an area from Kake to Yakutat. The summary is part of a study for the state Department of Transportation and Public Facilities as part of its Southeast Transportation Plan.Air Force to replace generators near ANWRFAIRBANKS -- The U.S. Air Force plans to remove 10 nuclear-powered generators from Burnt Mountain, about 200 miles northwest of Fairbanks and 50 miles south of the Arctic National Wildlife Refuge.Air Force officials say the nuclear-powered generators, which provide power for the Burnt Mountain Seismic Array Observatory, are safe. But Native groups in the area asked they be removed.Denali Commision funds restoredWASHINGTON -- Appropriations for the Denali Commission to aid rural Alaska, cut in a House spending bill last month, reappeared bigger than ever when the Senate Appropriations Committee unveiled its version July 13.The Senate committee suggested spending $40 million on the commission, which Sen. Ted Stevens, R-Alaska, created in 1998 to pay for development work in Alaska’s rural communities. President Bush asked for $30 million.The Senate added language in its report on the bill asking that $5 million go toward improving "basic infrastructure and community facilities for community residents without running water or sewer systems."To date, the commission has focused on replacing fuel storage tanks and building health clinics, leaving others to deal with the water and sewer work.NATIONTesoro to buy two refineries from BPSAN ANTONIO, Texas --Tesoro Petroleum Corp. said July 17 it has agreed to buy two oil refineries and 45 service stations in Utah and North Dakota from BP PLC for $677 million.BP, formerly called BP Amoco, said the sale fit the company’s strategy of focusing its refining business away from gasoline to specialty lines such as chemicals.Tesoro said it will borrow to finance the purchase, which it expects to complete in the fourth quarter after securing regulatory approval.The refineries, in Mandan, N.D., and Salt Lake City, Utah, mainly produce gasoline. The deal also includes storage, pipelines and gasoline-marketing operations connected to the refineries.Tesoro will pick up BP-owned service stations in Utah and North Dakota. London-based BP said it will also give San Antonio-based Tesoro contracts to supply about 300 Amoco stations that are owned by independent distributors. Those stations are located in Idaho, North Dakota, Utah, Washington, Wyoming, Nevada, Oregon, Montana and Colorado.Oil supply goes up, and gas prices goes downDETROIT -- Dire predictions of $3-a-gallon gasoline this summer haven’t materialized, with many parts of the country seeing lower prices at the pump than a year ago.The reason: An unexpected abundance of supply as the oil industry rushed to cash in on the high prices.As of July 14, the national average price of gasoline was $1.51 -- down 12.8 cents since June 22. That means consumers are paying 16 cents a gallon less than a year ago, and 25 cents a gallon less than in May, according to the Lundberg Survey of about 8,000 gas stations nationwide.Tribes shut out of tobacco settlementSAN FRANCISCO -- Twenty Indian tribes have no right to any of the $200 billion the tobacco industry agreed to pay under the landmark 1998 accord between cigarette makers and 46 states, a federal appeals court ruled July 16.A lawsuit filed by the tribes in San Francisco in 1999 claimed that American Indians were counted for census data used to determine how the settlement money would be distributed in the states, but that the Indian tribes were not given any payments.The suit said that amounted to racial discrimination and a breach of the tribes’ sovereignty. The suit sought $1 billion in compensation and punitive damages from several tobacco companies.The case stemmed from a 1998 deal between the tobacco industry and 46 states in which the industry agreed to pay the states roughly $200 billion. The payments, to recoup the states’ costs to treat ill smokers, were in exchange for the states’ dropping of any legal claims against cigarette makers.But a three-judge panel of the 9th U.S. Circuit Court of Appeals said the tribes had no legal standing to sue the tobacco companies because they have not "suffered injury’’ by being excluded.WORLDNations see no need for big euro billsFRANKFURT, Germany -- A third of the countries gearing up for euro cash have opted out of printing large denomination notes, saying the big bills are too unwieldy for citizens used to more meager pocket change.Spain, Greece and Ireland have joined Portugal in not printing the 500 euro note, approximately $425, while Ireland, Portugal and Greece have also ruled out the 200 euro note ($170).Greece won’t print the 100 euro note ($85), which soars above that country’s current biggest bill -- the 10,000 drachma note, which is worth roughly $25.10.With the high-end euro notes worth so much more than bills currently circulating in some countries, many of their central banks just don’t think its worth the extra expense of setting up presses to print them.-- Compiled from business wire services.

Healy coal plant to sit until retrofit offers conventional technology

A $274 million new technology coal power plant at Healy that has been idle since early 2000 will remain shut down for the foreseeable future.Its only customer, Golden Valley Electric Association of Fairbanks, is refusing to buy power generated from the plant unless modifications are made that will cost an additional $50 million to $80 million.Mike Kelly, former president of GVEA now working as a consultant to the utility, thinks a full retrofit of the plant to use more reliable conventional technology could cost as much as $85 million.Bob Poe, executive director of the Alaska Industrial Development and Export Authority, the state development corporation that owns the facility, said GVEA and the authority are now unified on a proposal to seek additional federal funds to make the modifications, which involve retrofitting new, experimental coal-burning and emissions controls system installed in the plant."The Healy Clean Coal Plant will remain idle indefinitely unless it is retrofitted to conventional technology in a manner acceptable to GVEA," said a briefing paper prepared by the authority. Healy is about 100 miles south of Fairbanks, just north of the entrance to Denali National Park and Preserve.Meanwhile, the plant is costing AIDEA $170,000 a month in heat, utilities and minimum maintenance and $6.2 million per year in debt payments on $81 million in outstanding revenue bonds. The bonds are not guaranteed by the state of Alaska, but they are by AIDEA, an independent state corporation.The U.S. Department of Energy provided $117 million in research funds to test the new systems. The state of Alaska contributed $29 million as the state’s cash match to the federal grant, and AIDEA issued the $81 million in revenue bonds and wound up contributing another $43 million toward the plant’s construction cost, according to a briefing paper prepared by the authority. The plant was completed in November 1997.Tests did show that the new technologies lowered air pollution from burning coal but they also showed the plant could not be operated commercially, according to Kelly.GVEA operated the plant for 2 1/2 years on a contract with AIDEA, but after an agreed-on 90-day operating test in late 2000 the utility terminated its operating agreement and opted out of a power purchase agreement.Kelly said GVEA felt the new equipment in the plant presented operating problems that make the facility uneconomic compared with other means of generating power.AIDEA disagreed with GVEA initially, arguing that limited modifications and experience in operating the new equipment would solve most problems. The two parties went to court over the dispute, but then agreed to hire Duke Engineering to do an independent study of the equipment problems in the plant.Duke found that modifications were needed and that they would be more costly than first thought.Kelly said the main problems were with coal handling systems that were much more complex than conventional coal power plants. The ash handling system also presented problems."The biggest cost factor is that it took twice as many people to operate this power plant as would normally be expected in a plant of this size," Kelly said. "If we had tried to sustain operations beyond the 90-day test, there would have been major equipment problems," he said.There were also safety problems presented by the new equipment. Toward the end of the 90-day test in 1999 there was a small explosion that damaged the coal handling system and shut the plant down briefly, Kelly said."Another problem is that this is a one of a kind plant. There’s not another one like it in the world," Kelly said. The new coal-burning and emissions-control systems, developed by TRW and Babcock & Wilcox, were tested in the plant but have not been installed elsewhere.Kelly said a limited-retrofit plan proposed by Duke Engineering would cost less but would result in higher operating costs, as much as 6 to 7 cents per kilowatt-hour. A more costly total retrofit plan would cost more, but would result in lower costs, producing power for about 4 cents per kwh, he said.That is competitive with other options GVEA is looking at to provide power for future growth. One option is buying more power from Chugach Electric Association in Anchorage, which sells wholesale power to GVEA over the Anchorage-Fairbanks electric intertie.Another is to build a heat recovery unit on oil-fired generating turbines GVEA now operates at North Pole near Fairbanks.Kelly said GVEA’s board will decide by the end of this year on a long-term power supply option, to meet the utility’s expected growth. If there is no plan in place by that time to do the retrofit so that the Healy plant can produce power economically, the utility may decide to pursue its other options, he said.A potential snag in the retrofit plan, however, could be the National Park Service and environmental groups who originally opposed the plant’s construction because of possible air pollution in the Denali area. Retrofitting the plant with conventional technology could raise new concerns.Kelly said GVEA and AIDEA will soon meet with the Park Service and Trustees of Alaska, which represented environmental groups in a lawsuit over the plant, to discuss the modification plan. Briefings were also held recently for Interior Secretary Gail Norton and Environmental Protection Agency Administrator Christie Whitman when they were in Alaska.The permits issued for the plant allow for a possible retrofit because that was seen as a contingency when the plant was planned, Kelly said. That a retrofit might be needed if the new technology didn’t work as well as expected was acknowledged by all parties then, he said.

Ben Stevens tapped for Senate

JUNEAU -- Ben Stevens, the son of Alaska Republican Sen. Ted Stevens, is Gov. Tony Knowles’ pick to replace Drue Pearce in the state Senate. Knowles said he believes the younger Stevens will "usher in a new positive tone" for addressing Alaska’s problems. He referred specifically to Stevens’ positions on subsistence, a long-range fiscal plan and bridging the urban-rural divide. "I am heartened with his commitment to bring an independent mind to these issues, to work both sides of the political aisle for what’s best for all Alaskans," Knowles said. Stevens, 42, said he supports a constitutional amendment that would grant a subsistence preference for rural hunters and fishermen, thus removing a conflict between state and federal law. Knowles said Stevens is a lifelong Alaskan who worked 15 years as a commercial fisherman and has owned and managed a business providing government relations and consulting services. He was president and chief executive of the 2001 Special Olympics World Winter Games in Anchorage. His father, Ted Stevens, is the ranking Republican on the U.S. Senate Appropriations Committee and chaired the committee until control of the Senate shifted to the Democratic Party this year. Pearce, R-Anchorage, resigned her seat in June to take a job with the Bush administration in Washington, D.C. Pearce, a moderate, had also supported a subsistence constitutional amendment. Previous efforts to achieve the two-thirds vote in the Senate needed to place the measure before voters have failed, prompting a federal takeover of management of subsistence fishing on most Alaska waters. State law required Knowles, a Democrat, to appoint someone of the same party as Pearce.  

Pollock season outlook positive

It may be a poor year for salmon, but things are considerably brighter for pollock and cod fishing in the Bering Sea region.The midyear pollock season opened in June but most processors are just now gearing up, said Frank Kelty, resources manager for Unalaska.After being depressed by fishing restrictions over endangered Steller sea lions, spirits in the groundfish industry were boosted this year by higher quotas for pollock and some easing of restrictions, Kelty said.The shore-based pollock fleet is now waiting on an order from the U.S. secretary of commerce to the National Marine Fisheries Service that will open near-shore areas that were previously closed, Kelty said.That will allow shore-based boats to fish in their traditional fishing areas nearer to shore, reducing the time it takes to move fish from the fishing grounds to processing plants, he said.Halibut and sablefish landings at Unalaska are also strong this year, Kelty said. The only dark spot on the horizon is the uncertainty over crab harvests this winter. NMFS is now doing the annual summer crab stock survey, but the results won’t be known for some time, Kelty said.

Business Profile: Magic Metals Inc.

Name of the company: Magic Metals Inc.Established: 1971Location: 5440 B St., AnchorageTelephone: 907-561-7663Major focus of services: Magic Metals Inc. manufactures metal building products, either roll formed, light gauged or folded, for commercial and residential structures.History of the company: Vance Tolstrup formed the company as a general contractor, initially handling school roof projects around the state. In 1985 he purchased the first equipment for the manufacturing and installation business, although the company later discontinued its installation services.Six years ago Tolstrup purchased the company’s first computerized metal-folding machine which increased Magic Metals’ accuracy rate. Earlier this summer the company added new computerized equipment.Joan Tolstrup, Tolstrup’s wife and Magic Metals office manager, made a pitch for the company in Tukwila, Wash. to a national home improvement retailer. Home Depot chose Magic Metals as one of its Alaska vendors for its Anchorage store when it opened in the late 1990s. Magic Metals employs four full-time workers and one part-time worker year-round.The company has provided roofing for schools around the state as well as for warehouses, retailers and homes.About 70 percent of the company’s work is commercial with the remaining 30 percent coming from residential projects.Top accomplishment of the company: "I would say our top accomplishment is getting in Home Depot. That’s one of our biggest milestones," Tolstrup said. Computerized equipment also has proved to be a significant asset to Magic Metals. According to Tolstrup, the company has posted strong growth in the past three years. He calls the company the largest Alaska- owned manufacturer of metal building products.Major player: Vance Tolstrup, owner, Magic Metals Inc.Tolstrup arrived in Alaska in 1964, two weeks after the Good Friday earthquake. He first worked in Nome as a shipwright, then moved to Kodiak and next to Fairbanks, working as a carpenter. He moved to Anchorage in 1971 working as a general contractor. He spent 1975 working as a millwright during construction of the trans-Alaska oil pipeline.-- Nancy Pounds


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