Groundfish a bright spot in grim ore, forest, fish picture

There’s not much good news out there for Alaska’s mining, timber and fisheries industries, according to a panel of speakers at the Resource Development Council for Alaska Inc.’s annual conference Nov. 29-30 in Anchorage.Depressed resource commodity markets, made worse by recession, and in the case of fishing, competition from farmed salmon, make for a bleak outlook.One bright spot, however, is in the big groundfish industry in the Bering Sea, where harvests of pollock and cod have increased this year and are set to be up again in 2002, according to Frank Kelty, resource specialist for the City of Unalaska.Kelty, one of three speakers on the panel, also said crab populations are on the comeback. Adult opilio crab populations are still depressed, but juveniles are increasing rapidly."Juvenile crab populations are up 73 percent. That’s a good sign," Kelty said.It means in three or four years, opilio harvests may increase back toward historic levels. Crab has been one of the big-money fisheries in the Bering Sea, but has seen hard times because of depressed populations and harvests, he said.Halibut and sablefish, or black cod, are another bright spot for the state.The 2001 halibut season closed out with 26.4 million pounds harvested. Though prices softened toward the end of the season, fishermen still earned $200 million from halibut and sablefish this year, Kelty said.Things don’t look good for other fisheries, however. The Bristol Bay sockeye harvest is predicted to be 9 million salmon, one of the lowest levels in years, and salmon harvests in other areas of Western Alaska will remain depressed.Timber faces challenging times, too, according to Rick Rogers, vice president for land and resources for Chugach Alaska Corp.Japan, Alaska’s top customer for forest products, remains economically depressed, but fundamental changes in the nation’s construction industry also bode ill for Alaska, Rogers said.More homes are being built with western-style construction methods using two-by-four boards rather than the traditional Japanese wood-beam building.The wood-beam building that is being done is relying more on laminated, manufactured wood that uses less expensive European softwoods rather than the high quality, more expensive Alaska spruce, he said.There are also supply problems in Alaska. Restrictions on harvesting in the big Tongass National Forest have cut into the supply of available logs, although logging on private, Native-owned lands in Southeast Alaska continued, Rogers said.Alaska still has ample forest lands with good-quality timber, particularly in Interior Alaska. Much of this is owned by the state of Alaska and Alaska Native corporations, he said.For example, the Tanana State Forest in the Interior has a new timber management plan that could make available 60 million board feet of timber yearly, if markets were available, Rogers said.That’s as much as is being harvested in the Tongass this year, he said.Rogers thinks Alaskans should investigate the potential for manufactured wood products using the ample lower-quality, small-diameter trees that are available in Southcentral and Interior Alaska.This is the strategy Scandinavian forest operators are following, who are now selling in Alaska’s key market, Japan.The picture for minerals is similar. The world’s mining industry is in dire straits, but Alaska is positioned as well as can be expected given the circumstances, according to John Rense, chief operating officer for NANA Development Corp.The state has abundant prospects, a good track record with large, successful mines like Red Dog, Greens Creek, Fort Knox and the Usibelli coal mine, and a friendly state government and supportive political environment.Still, metals prices have been declining for several years in real terms. Prices for copper and zinc are at historic lows, in inflation-adjusted terms, Rense said.That is a result of fundamental changes in the economies of western nations, where technology changes have pushed almost all basic commodity prices to low levels."Commodity prices have been pushed down so the value can be taken in processing and manufacturing," Rense said. "In a macro sense, that’s a logical policy that’s politically popular because it results in a lot of jobs," Rense said.No turnaround should be expected in the basic price structure of metals markets until some major change affects these fundamentals, he said.Depressed prices and surpluses in metals markets have brought about consolidations and a general hunkering-down in the mining industry. "Managements have focused on return on capital, which means controlling costs," and concentrating on producing properties rather than exploring for new deposits, Rense said.

No cutbacks, producers say, despite low oil prices

Despite lower oil prices, Alaska’s petroleum operators are cautiously optimistic and are sticking with plans for increased spending on new projects and drilling in 2002.Steve Marshall, president of BP Exploration (Alaska) Inc., told the Resource Development Council for Alaska Inc.’s annual conference in Anchorage Nov. 29 that his company is planning $700 million in capital expenditures this year and will spend $3.5 billion over the next five years.A major project for BP next year will be a $100 million program to develop North Slope viscous, or heavy, oil resources, Marshall said.Alaska accounts for 10 percent of BP’s worldwide oil production, and the company’s production in Alaska will increase 13 percent next year with its new Northstar field now in production, he said.Responding to a question about reported offers to buy BP’s assets in Alaska by other companies, Marshall said BP is sticking with its long-range plans to increase its core assets in Alaska.The company is concentrating on work in and around producing fields and existing infrastructure, and will drill three exploration wells next year aimed at increasing reserves around the producing fields.The North Slope and the North Sea have been the two pillars of BP’s worldwide oil production for years, Marshall said, and the company now sees its large, undeveloped gas resources in Alaska as key to increasing its gas business in North America, where BP is the largest gas producer.The North Slope still has substantial potential for new oil, with an estimated 7 billion barrels of oil resource yet to be developed, Marshall said.Rick Mott, exploration manager for Philips Alaska Inc., told the RDC conference his company sees continued bright prospects for new exploration.Phillips will drill or participate in 10 exploration wells on the North Slope this winter, including five in the National Petroleum Reserve-Alaska. The company will also test three separate accumulations of oil and gas discovered in the NPR-A in previous drilling.Mott also said the company’s new Alpine field is producing more than 90,000 barrels per day on average. The field had originally been expected to produce 60,000 barrels daily.Jack Williams, Alaska production manager for ExxonMobil Production Co., said his company is proceeding with plans for a $1 billion gas recycling and condensate production project in the Point Thomson gas field, 60 miles east of Prudhoe Bay.The company hopes to have the project in production in 2006, producing 70,000 barrels per day of condensate, a liquid hydrocarbon product condensed from natural gas liquids produced with dry gas at the field. Until a gas pipeline is available, the dry gas will be reinjected into the underground reservoir, Williams said.In Cook Inlet, Marathon Oil Co. and Unocal are pushing ahead with an aggressive program to explore for gas on the southern Kenai Peninsula. The companies previously reported that exploration wells drilled in a partnership near Ninilchik were successful. Although reserve estimates were not released, plans for a gas pipeline from Kenai to the Ninilchik area are in the works, according to Chuck Pierce, who heads Unocal’s Alaska operations.Pierce told the RDC that he expects the pipeline to be in operation by November 2003. It could eventually be extended further south to Anchor Point and eventually Homer, depending on the success of other exploration wells in the area, he said.John Barnes, Marathon’s Alaska manager, told the conference that his company’s new Wolf Lake gas field began production Nov. 17, producing 3 million cubic feet per day. This is the first new gas supply brought into the Southcentral Alaska market since 1979, Barnes said.Marathon sees several other prospects for gas near the new field, which can be tapped using the infrastructure built for Wolf Lake, he said. Gary Carlson, senior vice president for Forest Oil Corp., told the conference his company’s top priority is developing its new Redoubt Shoal oil and gas field, which is now estimated to contain more than 50 million barrels of recoverable oil.Forest is spending $100 million on Alaska projects this year and will increase this to $150 million in 2001, Carlson told the RDC.

Concern for state's fiscal health a top Alaska 20-20 topic

Five hundred Alaskans, including almost one-third of the state Legislature, met in Anchorage Nov. 27-28 for the kickoff of "Alaska 20-20," an initiative by the Alaska Humanities Forum for residents of the state to chart a long-term plan for the future.The effort was to define "what kind of community we want our children to take over," said Ira Perman, who heads the Humanities Forum.Those at the conference split into working groups to tackle issues like the sustainability of the state’s economy, public services and education. Perman said the immediate effort was aimed at defining goals and benchmarks against which to measure progress in a similar gathering next year and in following years.The idea for Alaska 20-20 grew out of a meeting of 40 long-time Alaskans held two years ago. "There was an anxiety about the future that they felt, as nice as things seemed to be going then," Perman said. "The current generation of adult Alaskans have seen pretty good times. The economy was good, as was the quality of life," Perman said. "It was like a float down a river. But there were some that detected the sound of rapids ahead."Concern for the state’s economy and the fiscal structure of state government were major themes in the Nov. 27-28 conference. "You can’t have a high quality of life without a sound economy," Perman said.Ron Shoaf, an Alyeska Pipeline Service Co. senior manager and one of the participants in Alaska 20-20, said that several recent findings by a coalition of business groups he works with, through the Alaska State Chamber of Commerce, are causes for concern about the state’s future.The coalition, which participated in the Alaska 20-20 conference, also includes the Resource Development Council for Alaska Inc. and the Alaska High-Tech Business Council.One finding is that Alaska ranks 49th out of the 50 states in the rate of personal income growth. The rate of income growth in Alaska is one fourth that of the next state, ranking 48th. Most of the income growth that has occurred in Alaska can be traced to higher Alaska Permanent Fund dividends and increased government and oil industry spending, Shoaf said.Another indicator is that the amount of per capita personal income has dropped from 150 percent above the national average a few years ago to a point just above the national average, Shoaf said.One other troubling sign is that there is no growth on the state’s "under 40" population. Alaska has a high birth rate but this is being offset by high out-migration of young people in search of better employment opportunities elsewhere.Jamie Kenworthy of the Alaska Science and Technology Foundation, who headed the Alaska 20-20 session on a sustainable economy, said his group didn’t come to any clear consensus.This was no surprise, given that surveys indicate a huge disconnect between what the public thinks about the economy and what business leaders, who have their fingers on its pulse, think, Kenworthy said.A recent survey showed that business leaders are somewhat pessimistic about the next three to five years, he said. A public survey, on the other hand, showed 75 percent of respondents are optimistic."We see a larger issue, of the public not understanding the state’s economic base, and where the money comes from to run the economy," Kenworthy said."This is particularly true of people in services and education. The challenge is for people not to be confused about where the dollars that sustains jobs in the schools, business and industry come from, and how we can grow this," he said.

Bank economist forecasts steady 2002 Alaska economy

The U.S. economy should rebound from recession next year while the Alaska market could hold steady, according to one U.S. economist.Sung Won Sohn, chief economist for Wells Fargo Bank, believes that Alaska should post job growth of 1.7 percent this year and 1 percent for 2002. Sohn spoke Nov. 30 at the Sheraton Anchorage Hotel during the Resource Development Council for Alaska Inc.’s annual conference."My conclusion about the Alaska economy is that the U.S. economy may be in recession, but the Alaska economy is not," Sohn said.Sohn, who studied at the University of Pittsburgh and at Harvard Business School, once served as chief economist on President Nixon’s Council of Economic Advisers. He joined Wells Fargo in 1974. Sohn is now based in Minneapolis.He cited strengths of the Alaska economy including a relatively low unemployment rate. Major projects like a proposed national missile defense system and drilling on part of the Arctic National Wildlife Refuge could help the state, he said.Alaska may see challenges, though, in the coming year, he noted. A tight labor market restricts job increases, he said. Declining oil prices also will have an affect, Sohn said.Tourism in Alaska may see a slowdown next summer because many people are hesitant to fly following the terrorist attacks."Next spring things might be different, and they might come to Alaska anyway. Right now people are afraid to fly," he said.Alaska’s total exports could see changes due to a struggling economy in Japan, which accounts for 52 percent of the state’s exports, Sohn said.Decisions around the world affect the Alaska economy, he said. A resource-based economy is influenced by price swings for oil or seafood, he said.Nationally, Sohn expects the economy to turn around, perhaps beginning in the first quarter of 2002 and at least by midyear."I don’t believe the economy is in such bad shape," he said.One reason Sohn believes in economic rebound is due to a low U.S. jobless rate of 5.4 percent, compared with 11 percent in 1982 or 8 percent during the last recession in 1990.Also, economic stimulus by the government will help, he said.Interest rate cuts from the Federal Reserve Board also aid Americans, and Sohn expects future cuts, although interest rates could climb by the second half of 2002.Declining oil prices affect Alaska’s economy but are a boon to the rest of the country, he said."The bottom line is as you look at the U.S. economic growth you should see growth for the first quarter of next year," Sohn said, contrasting that expectation with the current recession.

December-Issue-1 2001

UAA markets the Commons for summer conventions use

University of Alaska Anchorage officials are promoting the Commons and its student housing complex as potential meeting space or as inexpensive lodging for summer event participants.The facilities would be available this summer from May 10 to Aug. 10, when most students vacate student housing. Currently, the complex totals 950 beds, although some rooms require summer maintenance. That leaves roughly 600 beds typically available at one time, said Lori Davey of Alaska Marketing Consultants, which is helping promote the service.Meeting or event participants can also use the 350-person cafeteria as well as three private conference rooms, a workout facility and a convenience store, all in the Commons."It’s a jewel of a place," Davey said.UAA completed construction of the facility in 1998 and has hosted summer groups at student housing in past years, although university officials have not promoted the facility, she said. Consequently, the facility has registered about 35 percent capacity for the past few years, she said.A new marketing effort, begun Nov. 1 by Davey and her partner, Yvette Milne, aims to boost summer capacity.Although the UAA summer meeting and lodging business brings in some revenue, the chief aim is to help finance staffing levels for the facility, she said. Davey and UAA Conference and Catering Services are aiming for occupation of 50 percent during summer.Nightly room rates start at $30 for some youth groups, $35 for UAA affiliated programs and $45 for groups not affiliated with the university. Costs can also increase if guests want linens changed daily, Davey said.Most of the rooms for conference guests are single rooms with a limited amount of double spaces. Rooms feature local telephone service, cable television, computer Ethernet connections and coffee makers.Marketing efforts are targeting delegates for in-state meetings or national convention delegates who are on a tight budget, Davey said. Other possibilities include church, sports or youth groups, wedding parties and traveling family groups.In the past, church groups and others have booked rooms at UAA student housing, Davey said."It can appeal to a lot of people," she said.At the Commons the Grand Hall totals 2,250 square feet and is available for receptions. Seating in the two major conference rooms is listed at a maximum of 72 people in Room 106 and 84 in Room 107 in the theater-style arrangement. The Canary Room seats up to 45 people.Both the Canary Room and Room 107 can open up into the Creekside Eatery dining room to accommodate a large event with seating a capacity of 340.

Around the World December 2, 2001

STATEFerry builder’s lawsuit settled for $500,000JUNEAU -- What once was a $53 million lawsuit against the state over construction of Alaska’s newest state ferry has been settled. The state will pay a subcontractor for Halter Marine Inc. $500,000 and an insurance company will chip in $750,000.Halter Marine had sought $46 million, claiming the state did too many inspections and ordered too many changes while the Kennicott was being built. That hurt other projects, the company claimed. In addition, subcontractor Jamestown Metal Marine Systems sought $7.2 million.Halter went into Chapter 11 bankruptcy proceedings last spring, and the bankruptcy trustees decided the lawsuit was not going anywhere. Jamestown then settled for the $1.25 million.The 382-foot Kennicott was built at Halter’s Mississippi shipyard for just under $75 million.Park Service gets few Glacier Bay applicationsJUNEAU -- Fewer than two dozen people have applied for compensation over commercial fishing closures in Glacier Bay, according to the National Park Service. The application period for a share of $23 million in federal funds began in September and closes Jan. 28.Incomplete or late applications won’t be accepted, park service officials have said. Program Manager Ronald Dick said he expected up to 400 applications, and he urged those who qualify to get the paperwork in early so officials can contact then to fill in missing areas if needed.A federal law closed part of Glacier Bay to commercial fishing in 1999, and by 2000 other sections only were open to certain fishermen in selected fisheries until they retire.Applicants must show a history of earnings derived from the bay’s fisheries in order to be eligible for part of the $23 million Congress appropriated to compensate people for lost future earnings.Halibut season ends with some quota leftPETERSBURG -- Ripples from the Sept. 11 terrorist attacks weakened prices at the end of Alaska’s eight-month halibut season, which closed Nov. 15 with about three million pounds of the quota remaining.Statewide totals show season landings at 95 percent of the 58.5 million pound allocation."We had some pretty poor weather the last month and a half or so. Some people felt they couldn’t get out there to finish fishing their allocations," said Jessie Garrett of the National Marine Fisheries Service.Season-end prices were in the rage of $1.60 to $1.80 a pound in Kodiak for freezer-bound halibut, while payments ranged up to $2 a pound for fresh sales, according to Alaska Fresh Seafoods owner Dave Woodruff.The Sept. 11 attacks hurt the price as the season was coming to an end."With the events of September, halibut, like other seafood products, especially high-end products , took a dive in prices," said Norquest Seafood President Terry Gardiner.In recent years, halibut prices have reached as much as $2.75 a pound.NATIONFBI issues warning to natural gas industryWASHINGTON -- The FBI has warned energy companies that Osama bin Laden may have approved plans to attack North American natural gas pipelines and facilities if he’s captured or killed, a warning that prompted a tightening of security.The warning was sent in a memo to industry security officials late last month.Attorney General John Ashcroft confirmed the warning, though he expressed some doubt that attacks would be conditioned on bin Laden’s capture or death.The alert did not single out a specific target, but referred to natural gas supplies including the more than 260,000 miles of gas pipelines and hundreds of pumping stations and other facilities.The FBI alert said the information came "from a source of undetermined reliability" and that "no additional details on how such an attack would be carried out, or which facilities would be targeted" could be learned.Trade group predicts modest holiday salesDALLAS -- The trunk of Diana Flores’ car could be a roadmap to this year’s holiday shopping season. The Dallas woman’s trunk is stuffed with Wal-Mart shopping bags.Discount stores are expected to be among the season’s strongest retailers, while department stores are expected to compete for shoppers by slashing prices.The National Retail Federation predicts holiday sales will rise 2.5 percent to 3 percent, to $206 billion, the smallest increase since 1990. But some analysts consider the trade group’s forecast too rosy considering the weak economy and a reluctance by Americans to celebrate while the country is worried about terrorism and war.WORLDCasual Corner buys Brooks Brothers chainLONDON -- British retailer Marks & Spencer is selling the venerable Brooks Brothers men’s clothing chain for $225 million in cash to the owner of women’s apparel seller Casual Corner."We think it is one of the best brands, and that was the reason we wanted it,’’ said Mark Shulman, chief operating officer of Enfield, Conn.-based Retail Brand Alliance, which hammered out the deal Nov. 22."This puts us in the men’s wear business and it is very exciting,’’ he added.The price is less than one-third of the $750 million Marks & Spencer paid for Brooks Brothers back in 1988.Brooks Brothers, whose business has been challenged by the relaxation of dress codes in the workplace, operates about 160 stores in the United States and through partnerships abroad, operates approximately 75 stores in Japan, Hong Kong, Italy and Taiwan.-- Compiled from business wire services.

Juneau laundry thrives since 1895

Gold brought most people to Juneau near the end of the 19th century, but for E.R. Jaeger it was the lure of laundry.Four generations and 106 years later, Jaeger’s Alaska Laundry & Dry Cleaners is the oldest family run business in the state.Jaeger was the youngest of a dozen children and the only one in the family with a college education, said great-grandson Neil MacKinnon, who operates the family laundry business now.At 27, Jaeger traveled from his home in Eureka, Wis., to Tacoma, Wash., to work in his brother’s laundry. After a two-year internship, he decided to open his own laundry in either Alaska or Hawaii.Alaska won by the toss of a coin.Juneau already was a booming gold town and fledgling fishing community by the time Jaeger showed up in 1895. He purchased Juneau Laundry and renamed it Alaska Steam Laundry. The laundry had been in business for about two years in a log cabin behind the Baranof Hotel.The laundry was powered by a huge steam engine, which ran washing machines and heated water. Commercial dryers had not yet been invented."Miners, prospectors and fishermen worked hard and got dirty,’’ MacKinnon said. "People had to be clean. It was the first line against disease."Jaeger’s laundry turned out to be a gold mine in more ways the one.Small amounts of gold that had washed out of miners’ pockets and clothes were routinely found in drain traps, MacKinnon said."It was certainly worth doing their laundry in those days,’’ MacKinnon said.Jaeger often grubstaked miners, and he made and lost many fortunes, MacKinnon said.Jaeger’s only child, Hazel, married Simpson MacKinnon, who took over the business early in the 20th century. The couple’s son, James Simpson "Skip’’ MacKinnon then ran the laundry until the 1970s.Neil MacKinnon, his brother John and sister Kathleen grew up with the business."Our first playpen was a laundry cart,’’ Neil MacKinnon said. "We began life by looking at the world over the edge of it.’’Neil MacKinnon had just graduated from college with a degree in mining engineering, when he was asked by his father to help with the family business in 1972. His younger siblings were still in school at the time.The laundry’s location has moved several times over the years to its present location at Eleventh Street and Glacier Avenue. Behind the laundry is a separate Laundromat. A second dry cleaning branch that features a drive-through is in the Mendenhall Valley. There are about 30 people on the laundry’s payroll.The company’s subsidiary Alaska Sterile Laundry Service is at the Lemon Creek Correction Center. The prison-operated facility cleans linen and laundry for Bartlett Regional Hospital.

Employment cases abound this U.S. Supreme Court term

When the United States Supreme Court opened its term this fall, it had a full plate of employment cases on its docket. The court has no less than 14 employment cases on its docket, and there is always the chance of the justices granting writs of certiorari to hear more employment cases during the term. Discrimination is the hot topic, but the court is also hearing its first Family and Medical Leave Act case, an old case comes back for a third time, and employee benefits are also at issue. Highlights of the cases follow.DiscriminationCompanies with arbitration clauses in their employee handbooks or policies will want to keep an eye on EEOC vs. Wafflehouse Inc. In that case, the Supreme Court will consider whether the Equal Employment Opportunity Commission retains jurisdiction to prosecute a discrimination complaint where the employee and the employer have entered into an arbitration agreement.In the appeal of a claim alleging violation of the Americans With Disability Act, the 4th Circuit Court of Appeals held that the individual employee must arbitrate his claims although the EEOC could still seek injunctive relief.In two other ADA cases, the court will determine whether a factory worker at Toyota who has suffered from carpal tunnel syndrome and tendonitis in her hands and arms after using pneumatic tools on the assembly line is covered by the Americans With Disability Act.In the second case, the court will hear whether an employer airline engaged in a sufficient interactive process to consider an employee’s request for a transfer to accommodate his back condition when the employer had a seniority system governing the transfers.Medical leaveIn the first FMLA case to reach the U.S. Supreme Court, the justices will consider Department of Labor rules requiring employers to give notice to the employee that the leave will count as FMLA leave.The claimant was working under a union contract that allowed up to seven months of medical leave. She was granted the leave, but the company did not notify her that the leave would be counted as FMLA leave.The statute allows only 12 weeks of leave, but the regulations promulgated by the Department of Labor requires the employer to designate leave, paid or unpaid, as FMLA-qualifying, and to give notice of the designation to the employee. There is a split in authority over the validity of the regulations that should be resolved by the Supreme Court.Labor lawIn a traditional labor case, the court will determine whether an undocumented alien who was fired for allegedly engaging in union-organizing activity is entitled to back pay. The claimant was discovered to have lied about his identity and was not a U.S. citizen or authorized to work in this country. The NLRB allowed an award of back pay from the time of the claim up through the discovery by the employer of the claimant’s unlawful status.Affirmative actionFederal contractors will be keeping a close eye on the Adarand case that returns to the U.S. Supreme Court for a third time. In this case, a minority-owned disadvantaged business enterprise received a bidding preference and was awarded a subcontract to construct highway guardrails. The case began in 1989.BenefitsCompanies that provide health insurance, and their carriers, will be following Great-West Life & Annuity Ins. Co. vs. Knutson. In this case, the health insurance carrier seeks recovery of benefits paid to an employee who was involved in an automobile accident and later recovered damages from a third party.The question before the court is whether such claims for subrogation fall within the provisions of actions for equitable relief authorized by the Employment Retirement Income Security Act. A second ERISA case addresses whether state laws requiring second opinions for medical necessity decisions by health maintenance organizations is pre-empted by federal law.Occupational safetyThe Occupational Health and Safety Administration’s jurisdiction is at issue in a case involving citations against a drilling company for safety violations within state territorial waters. The 5th Circuit held that the United States Coast Guard had exclusive jurisdiction over the case.Public employersIn a case which will be watched by the State of Alaska, the U.S. Supreme Court will consider whether a federal provision delaying the statute of limitations for filing state discrimination claims would apply to cases against the state that have been dismissed for violating the Eleventh Amendment precluding federal jurisdiction over such cases against states.The common law of the workplace is continuing to change. By the conclusion of the Supreme Court term next June, we should have the answers to a number of these questions.Copyright 2001 by Paul S. Wilcox. Used by permission. Paul S. Wilcox is chairman of the employment law practice at Hughes Thorsness Powell Huddleston & Bauman LLC in Anchorage. He can be reached by e-mail at ([email protected]).

Gas tops in Phillips, Conoco future

If the latest oil company merger goes through, in late 2002, the name on the Phillips Alaska Inc. building in downtown Anchorage will change once again, becoming ConocoPhillips.Phillips Petroleum Co. and Conoco Inc. agreed Nov. 18 to merge, combining two medium-size petroleum companies into what will be the third largest U.S. oil and gas company and the sixth largest in the world.Phillips itself acquired ARCO Alaska Inc., the Alaska operating subsidiary of Atlantic Richfield Co., when that company was acquired by British Petroleum.There are important implications for Alaska in the Phillips-Conoco merger.One is that the combined companies will place a major emphasis on natural gas. Conoco Chairman Archie W. Dunham said gas represents 38 percent of the combined companies’ holdings, and the goal is to increase that to 50 percent.The new company will put more emphasis on exploration and production generally, Dunham said. About 57 percent of the combined companies’ business is from these so-called "upstream" activities, and the goal is to increase that to between 60 percent and 70 percent.If a North Slope gas pipeline is built or some other way is found to commercialize stranded gas in northern Alaska, the new company will be able to add those reserves to its assets, immediately strengthening the financial position of the company.The combined ConocoPhillips would be a financially stronger partner in a possible North Slope natural gas pipeline. Some analysts have expressed concern over whether Phillips, still debt-laden from its acquisition of ARCO Alaska, could handle its share of financing a possible $17 billion gas pipeline project.The priority on gas would also strengthen Phillips’ already strong exploration program in northern Alaska, where many unexplored areas are expected to yield natural gas.A question, however, is whether combining with Conoco will cause Phillips to shift its strategy of favoring a southern, Alaska Highway route for a North Slope gas pipeline to favoring a shorter northern, offshore route that is also preferred by ExxonMobil Production Co., another North Slope producer.Conoco, after acquiring Gulf Canada last July, has large gas holdings in the Mackenzie Delta. Phillips has large gas holdings on the North Slope. This puts the merged company in the same position as ExxonMobil, which also has undeveloped gas holdings in both Alaska and the Mackenzie Delta.A single pipeline following a northern route would connect the two gas-producing regions, carrying gas from both to market more economically, preliminary findings by a study group of North Slope gas producers show.An alternate scenario is for two stand-alone pipelines, a southern route from the North Slope through Interior Alaska and into the Yukon Territory and Alberta, and a second from the Mackenzie Delta south to Alberta.In recent testimony before the Senate Energy Committee in Washington, D.C., Phillips said it favored the southern route, which is also backed by the State of Alaska.Another aspect of the merger is that Conoco has moved aggressively into gas-to-liquids development, with a $75 million test facility now under development in Ponca City, Okla., to commercialize proprietary GTL technology. Conoco has said that it intends to build its first commercial GTL plant in 2004. Phillips has no gas-to-liquids development program.Phillips, for its part, has major expertise in liquefied natural gas, or LNG, and developed proprietary LNG technology for the Kenai plant it owns with Marathon Oil. Kenai is only U.S. plant to export LNG.The combined company’s emphasis on gas liquefaction technologies will mean all three major North Slope producers, including ExxonMobil and BP, will have strong GTL development programs.Gas-to-liquids plants, which would produce high-value liquids that could be shipped through the existing trans-Alaska oil pipeline, are seen as an alternative to a conventional natural gas pipeline if a pipeline is found to be uneconomic.Conoco is no stranger to Alaska. The company was an aggressive explorer on the North Slope and discovered and developed the Milne Point field, the first of a series of smaller fields on the North Slope.In 1994 Conoco withdrew from Alaska and sold Milne Point and other holdings to BP, including a discovery in what is now the Badami field.The company was an early pioneer in development of the large viscous oil resource on the Slope, investing substantially in an early experimental production program in the large Schrader Bluff deposit, which is part of the Milne Point field.Phillips has been in Alaska for decades and was an early explorer in the Cook Inlet region. It was not prominent on the North Slope, however, until the company acquired ARCO Alaska Inc. and became an operating company on the Slope.On a national level, the merger will make the combined ConocoPhillips into the nation’s largest refiner and gasoline retailer, combining pump brands like Conoco, Phillips 66, Union 76 and Circle K.Analysts have pointed out that both companies do well playing niche markets and can now enjoy the benefits of larger economies. The estimated savings in the merger is $750 million yearly.Both companies have made recent acquisitions. Phillips bought Tosco, the nation’s largest independent refiner, last spring, and in July Conoco closed a deal to acquire Gulf Canada, which added major reserves of oil and gas in northern Canada to its own holdings in the Canadian north.Both companies are strong in the North Sea and both were pioneers there, developing new, deep-water technologies. Conoco was the first company to use a new type of one-leg platform concept in the area, while Phillips was the first company to develop an offshore platform that can be reused.Both are also part of new consortiums formed to develop large gas fields in Saudi Arabia.Phillips has a stake in the big Kashagan field in the Caspian region of Kazakhstan, a discovery some oil analysts think could rival Prudhoe Bay. Conoco has ventures in Russia, Venezuela and Vietnam.The two companies also said they will continue Phillips’ joint-venture with Chevron in chemicals and plastics, Chevron Phillips Chemicals. A natural gas gathering and processing joint venture, Duke Energy Field Service, will also be continued.

Saving for college more attractive

Most of us have seen the statistics. The average cost of a four-year private college education, including room and board, now totals in excess of $100,000.Projections are that by the time a child born this year begins college, this cost may reach $250,000.Our federal government has recognized that saving amounts of this size can be a daunting task and has created several tax-advantaged programs to help.Recently enacted tax law changes make several government approved tax advantaged education investment accounts even more attractive.There are several improved opportunities for reducing or eliminating the income tax on investment earnings from funds set aside to pay for the college education of family members.Coverdell accountsFor starters, beginning in 2002, education individual retirement accounts are looking a lot better than in earlier years.Contributions to an education IRA, renamed Coverdell Education Savings accounts, are now limited to $2,000 per year per beneficiary.Prior to 2002, the annual contribution limit was $500.In 2002, the ability to fund such accounts does not begin to phase out until a married couple reaches $190,000, or a single person reaches $95,000 in adjusted gross income for the year.For those who qualify and who plan on establishing an education fund when a child is very young, a Coverdell account should be considered.Here are some basic facts about Coverdell accounts, which go into effect in 2002: Contributions may be made only until the 18th birthday of the beneficiary; Multiple Coverdell accounts can be established for a designated child; Contributions, which must be made before April 15 of the following year, for example, by April 15, 2003 for the 2002 year, are not tax deductible; and Earnings are tax-deferred and ultimately tax-free if used to pay qualified expenses.Qualified expenses now include tuition, fees, academic tutoring, books, supplies, equipment, room and board, uniforms, transportation and supplementary items or services in connection with attendance at a public, private or religious school for kindergarten through 12th grade, as well as college.Note that eligible expenditures include Internet access and related services, as well as computer technology.Normally Coverdell account balances must be distributed by the time the beneficiary child reaches age 30, unless there is a special need such as a physical, mental, or emotional condition, including a learning disability.Failure to spend the funds in the Coverdell account on qualified expenses by the necessary date will result in the application of penalties, and income tax on the accumulated earnings of the account to the founder of the account.Section 529 plansIn my opinion, the most important new college-funding vehicle is the Section 529 plan, which is authorized in two forms: Prepaid tuition programs under which the investment account grows at the rate of inflation applicable to the state’s higher education system; and A college savings plan, which is a state-sponsored mutual fund account under which the value fluctuates based on the underlying investments.I would like to focus on the second aspect of Section 529, the college savings plan.Investments in these college savings plans are nondeductible for income tax purposes when made.Beginning in 2002, distributions from these plans are excluded from gross income for tax purposes if they are used for qualified higher education expenses, defined as tuition, books, room and board and supplies. Regardless of the state plan selected, the funds accumulated can be used to pay for qualified expenses at colleges in other states.Prior to 2002, any earnings or appreciation on the account were taxable to the beneficiary.For estate and gift tax purposes, a donor’s investment in a savings plan is a gift, which means the funds invested are removed from the donor’s taxable estate.However, the donor still retains control over the account in the following ways: The donor can change the named beneficiary, who must be a member of the donor’s family including first cousins starting in 2002, at any time without any negative tax consequences; and The donor/owner of the account can, at any time, withdraw the funds in the account, but the earnings and appreciation are taxable as ordinary income, and a 10 percent penalty must be paid on the income recognized.For wealthy individuals who wish to reduce the size of their taxable estate, Section 529 allows a huge advantage by allowing one-time contributions to college savings plan accounts of up to $50,000, or $100,000 for a married couple. A special tax election must be made to accomplish this large initial gift without negative estate and gift tax consequences.These plans allow the donor the unique opportunity to change the beneficiary designation between family members, including grandchildren.This flexibility is great, especially when dealing with children who don’t attend college, "problem children," or children who are not worthy in the eyes of the donor.Finally, an appealing aspect of the plans is the wide variety of investment options and approaches that are available in each state’s plan.It is also permissible to rollover the funds in one state’s plan to another state’s plan with no tax effect, but this can be done only once per year.The State of Alaska has sponsored its own college savings plan, and more information can be obtained from its selected investment company, T. Rowe Price.In an effort to encourage savings for education, in 2002 the government makes it permissible to fund both a Coverdell account and a Section 529 account for the same beneficiary during the same year.As with Coverdell accounts, Section 529 plan investment earnings or appreciation can become taxable and subject to tax penalties if not used for qualified expenses in the year withdrawn.Estate tax ramifications, gross income limits, marginal tax rates, the affect on the Lifetime Learning and Hope credits, and other factors, such as the effect on student financial aid options, need to be discussed with your tax and investment advisers before entering into an education funding program.Kevin Van Nortwick is a partner with Mikunda, Cottrell & Co. in Anchorage. He can be reached via e-mail at ([email protected]).

In Bush, FedEx means trip to the post office

Most rural Alaskans expecting a package from Federal Express now have to go to the post office to claim it.The United States Postal Service in June began handling FedEx deliveries out of Anchorage to most remote Alaska communities. FedEx says the new system of converting packages to priority mail saves the company money and allows better tracking and speedier service in most cases.FedEx, which began service in Alaska in the early 1980s, used to forward packages to Alaska Airlines, which in turn subcontracted to delivery services in rural communities."It was not an ideal deal for FedEx or our customers,’’ said Rick Onstott, senior manager of Alaska remote operations in Anchorage. "We had no control over the tracking of the packages.’’Now the company can track packages by accessing the postal service’s network to find out shipping and delivery status. And packages are often getting to communities quicker through the postal service, Onstott said.The company historically has lost money from Bush operations; now it’s losing less, Onstott said."It improves our bottom line and we believe it’s a better deal for our remote Alaskan customers,’’ Onstott said.The new system has drawn some criticism, but overall, customers have been pleased, Onstott said.Skagway customers, for example, used to have packages delivered to their door by subcontracted delivery services."Some customers in larger Bush communities are inconvenienced by having to go to the post office,’’ Onstott said.FedEx does not charge extra for shipping to or from Alaska, but it also has never guaranteed same-day or two-day service in Alaska, especially in the Bush where sometimes packages were delivered by whatever means possible, he said."People have assumed we handled packages all the way to a customer’s door but that has never been the case,’’ Onstott said. "In remote Alaska, we’ve never had a purple and white van come rolling up and a courier bouncing out to make deliveries.’’Large Alaska communities like Anchorage, Fairbanks, Juneau, Kodiak and Kenai are not affected by the change in shipping and will still have deliveries made by FedEx, Onstott said.FedEx customers in Barrow, Bethel, Cordova, Kotzebue, Nome, Petersburg, Unalaska/Dutch Harbor and Wrangell continue to have packages delivered to their doors by contracted delivery agents, Onstott said."Those are the communities that have seen consistent day-to-day, year-in and year-out large volumes of service,’’ Onstott said. "Other communities had sporadic volume so it made better sense to convert them to the postal service.’’Onstott said the true test of the new delivery system will come this month, where holiday packages increase 40 percent for the weeks leading up to Christmas.

This Week in Alaska Business History December 2, 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 TimesDec. 2, 1981JAL asks traffic rights here for polar flightsBy Deb DavidTimes WriterJapan Air Lines has requested Anchorage traffic rights in its over-the-pole flights between Tokyo and Europe in exchange for rights in the airline’s Tokyo-to-New York connection.If accepted, the trade-off potentially could double the number of foreign tourists staying over in Alaska, said Reyn Bowman, president of the Anchorage Convention and Visitors Bureau.The exchange was proposed during recent negotiations between Japan and the United States over rules limiting carriers’ operations in foreign countries. United Airlines and other domestic carriers want flying rights in Tokyo. In exchange, JAL wants more leeway in the United States.... "JAL’s request is really a blessing in disguise," Bowman said."Japan Air Lines flies about 32 flights a day through Anchorage, but only those between Tokyo and New York (two flights a day) have Anchorage traffic rights. This request would give all the other flights rights."Anchorage TimesDec. 2, 1981New firm to harvest Alaska bottomfishBy Deb DavidTimes WriterA new joint-venture fishing firm plans to use six processor-trawlers to harvest bottomfish next (year) in Alaska waters off the Aleutian Chain and in the Bering Sea.Joint Trawlers North Pacific Ltd. will harvest bottomfish in the United States’ 200-mile fishery conservation zone off the states of Alaska, Washington, Oregon, California and Hawaii and in the trust territories of the Pacific Islands."In Alaska we will be trawling for pollock, yellowfin, sole and cod," said Gregory A. Dahl, president of Joint Trawlers North Pacific in Seattle.He said fish will be processed on vessel processing platforms for now.The foreign-owned processing ships will be supplied with fish by American trawling vessels, which will catch fish in U.S. waters and deliver them to the processing vessels at sea.10 years ago this weekAlaska Journal of CommerceDec. 2, 1991Legislators wary of Fire Island proposalBy Bob TkaezFor the Alaska Journal of CommerceFor the second time in barely five weeks, the House and Senate transportation committees have cast wary eyes toward the Hickel administration’s construction proposals.This time the subject was port development in Fire Island or elsewhere in Cook Inlet.Paul Fuhs, Division of Economic Development director, found himself defending the credibility of a yet-to-be-completed feasibility study of Fire Island in light of Gov. Walter J. Hickel’s strong public support for a port facility there and a recent memorandum of understanding for a state purchase of land there.The memo also drew questions on a second, more general port feasibility study not expected to be completed until late spring.... Fuhs, also at the recent session, emphasized that Hickel is viewing the Fire Island proposal strictly as "a business decision. If the project doesn’t make economic sense we’re not going to build it," the governor declared, according to Fuhs.Alaska Journal of CommerceDec. 2, 1991Poles want to stay with Cold BayBy Ray TysonAlaska Journal of CommercePolish fishing companies want to continue using airport and dock facilities at Cold Bay provided their country’s fishing agreement with the United States is renewed and there are ample stocks of pollock remaining in the Bering Sea.Dave Jensen, administrative vice president for Reeve Aleutian Airways, said the deep-sea fishing company Dalmor is expected to send five 300-foot trawlers to Cold Bay in January.Dalmor and two other Polish fishing companies, Gryf and Odra, sent 24 trawlers to the Aleutian Island port last summer for fuel and supplies and to replace crew members who serve at sea in six-month shifts.Under its expired agreement with the United States, Polish trawlers fishing the Doughnut Hole in international waters could enter an "economic zone" in U.S. waters to transfer their catch to processing ships.-- Compiled by Ed Bennett.

Wealth of Steller studies barely touch theories of sea lions' decline

In 1751, Georg Wilhelm Steller published the first scientific paper on Steller sea lions. Since then, 272 papers and articles have been written about the species. To learn more about what scientists have learned about Steller sea lions over the past two centuries, check out an annotated bibliography compiled by Andrew Trites and Andrea Hunter that has just been published.It identifies areas of research that have been undertaken to date and whether they address the leading hypotheses proposed to explain the population decline in Alaska. In all, Trites and Hunter found 111 publications in scientific journals, and 161 other documents, such as technical reports, unpublished reports and dissertations.According to the first newsletter from the North Pacific Universities Marine Mammal Research Consortium, the total number of Steller sea lion articles published per decade has risen exponentially from four in the 1940s to 128 in the 1990s. Most of the studies have focused on population distribution, population dynamics, ecology, census data, nutrition and behavior. Subject areas that have received less attention include predation on Steller sea lions, captive studies, metabolism and parasitology.Only 21 percent of the 272 scientific articles contained information relevant to testing one of the 12 hypothesized causes of the Steller sea lion decline. The most frequently addressed hypothesis concerned juvenile mortality, found in 25 papers. This was followed by starvation, competition with fisheries, human predation and regime shifts. Only one of the 272 articles addressed the role that killer whale predation may be playing in the decline of sea lions.To date, more than 9,228 pages pertaining to Steller sea lions have been printed, or 1,148 pages of primary publications and 8,080 pages of other publications. The relative number of articles that address or provide significant information about hypothesized causes of the population decline are few, roughly 30 percent of the literature per decade.Sea lion statisticsSea lion census counts by the California Department of Fish and Game show total populations going from 968 animals in 1930 to 12,600 animals in 1958 to 18,400 sea lions in 1961 to a whopping 160,000 to 180,000 in 1995.Biologist Doyle Hannan, in a presentation before the CDFG, estimated the following California sea lion consumption figures in pounds for commercial species in 1995: anchovy, 4.1 million; sardine, 89.3 million; squid, nearly 155 million; whiting, 9 million; rockfish, 17.6 million; and salmon, 6.7 million.Hannan said: "The bottom line: Lots of seals and sea lions eat lots of fish. More than fishermen these days! Preservationists claim the oceans are dying, yet they are supporting huge pinniped populations. Why is it only human use of fish resources is an issue?"Agency changes otters’ listingThe U.S. Fish and Wildlife Service has decided that sea otters along the Aleutian Islands do not warrant a listing as "depleted" under the Marine Mammal Protection Act. However, the species could still be listed as threatened or endangered under the Endangered Species Act.Any listing holds the potential to constrain fishing because of increased regulations and area closures. Sea otters throughout the Aleutians have dropped about 70 percent in the past decade, researchers say.The Center for Biological Diversity petitioned the FWS to list the species as depleted in August, but the agency found there was not enough information to warrant any action.Furthermore, according to a Nov. 2 notice in the Federal Register, the FWS "determined that the statewide population of sea otters in Alaska is larger than presented in the petition," and that "the best available scientific information indicates that multiple stocks of sea otters exist in Alaska."The agency identified three distinct populations of sea otters in Alaska: those in Southeast, which are growing; those in Southcentral regions, which are either stable or growing; and those in Southwest Alaska, which are undergoing declines. Many researchers blame the decline of otters there on predatory killer whales. Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

GCI wraps up Palmer, Wasilla cable purchase

General Communication Inc. has completed its acquisition of Rogers American Cablesystems Inc., which provides cable television service in Palmer and Wasilla.The deal, worth $19 million, was finalized Nov. 19.Anchorage-based GCI received necessary approval Nov. 9 from the Regulatory Commission of Alaska.GCI acquired 100 percent of the stock of Rogers American Cablesystems, which had been owned by Canadian telecommunications company Rogers Communications Inc.Rogers in Alaska served 7,300 subscribers and had the potential to reach 10,000 homes. As a result of the acquisition, GCI totals about 130,000 basic cable subscribers and passes 191,000 homes, a figure the company said accounts for 90 percent of the state’s households.The move also would allow GCI to offer more telecommunications services in the Matanuska Susitna area, company officials said. GCI has begun work to connect the networks. The company expects to spend more than $3 million during the next two years to upgrade the plant and increase the products available to customers, according to Riley Snell, GCI vice president and general manager of cable and entertainment.

Tourism officials seeking extra funds for marketing

FAIRBANKS -- Alaska’s tourism industry needs state help to compete with international destinations for an expected drop in vacationers traveling next season, the state’s top travel industry official said.The Alaska Travel Industry Association plans to ask the Legislature for $12 million in emergency funds to market the state to vacationers, said Tina Lindgren, president and chief operating officer of the association."If we’re to compete, we are going to have to get out there and make some kind of dent," Lindgren said.While it’s hard to tell how much visitor traffic will drop next summer, a quick travel association survey conducted after Sept. 11 shows there will be losses, Lindgren said.Other popular vacation spots such as Florida, Oregon, Hawaii and Las Vegas have undertaken aggressive marketing strategies.Canada, the nearest competitor for vacationers, is also taking steps. The Canadian Tourism Commission has received $35 million in emergency marketing money to aid tourism there, Lindgren said.Fear of traveling and concerns about the nation’s economic future will keep some potential Alaska-bound travelers home, Lindgren told a group at the Fairbanks Convention and Visitor Bureau."A lot of it is about consumer confidence," Lindgren said, adding that people are saving money and planning to stay closer to home.Tourism is the second largest employer in the state and the third largest in terms of economic impact, Lindgren said. She said a 10 percent drop in visitors to Alaska equates to more than $108 million in lost expenditures in the state.But Lindgren said it’s not all bad news for Alaska destination spots. Tourism has always bounced back after major incidents that affect travel such as the Gulf War, she said.Alaska tends to be an attractive alternative to European vacations when there is a war going on, she said. Families may choose a driving vacation and Alaska could benefit from independent visitors, Lindgren said.Four major cruise ship tour companies have decided to relocate ships to Alaska from Europe and the Mediterranean and cruise lines are offering discounted fares.

Cruise lines' merger poses new questions for Alaska

Two major players in the Alaska and international cruise ship market -- P&O Princess PLC and Royal Caribbean Cruises Ltd. -- have proposed merging in a deal worth $3 billion.The move could strengthen the companies during a downturn in the travel industry.A combined new company would tally 41 ships and 75,000 berths in vacation markets like the Caribbean, the Mediterranean, the Baltic, the Panama Canal and Alaska.Last year the two companies served about 3 million customers and tallied total revenue of more than $5 billion for the one-year period ending Sept. 30.The merger, announced Nov. 20, would require regulatory and shareholder approval.The combination of London-based Princess Cruises and Royal Caribbean of Miami would allow the companies to boost business by strategic ship redeployment, enhance product offerings in existing vacation markets and gain cost savings, according to the companies.Company officials said savings could result from marketing efficiencies, improved purchasing, reduced information systems costs and by combining Alaska tour operations.They expect at least $100 million in annual savings one year after the merger is complete.Lynn Martenstein, Royal Caribbean’s vice president of corporate communications, said details of the plan regarding Alaska operations, where both companies operate, were still in the works."There’s no question Princess has a significant land tour package in Alaska, and I think that’s one of the areas we are looking at."The merger agreement also called for Royal Caribbean to deliver shareholder voting agreements representing at least 44.5 percent of the voting control of the company on or before Dec. 3, she said.In Alaska, Princess and Royal Caribbean operate separate fleets of ships, buses and railcars, while Princess operates four hotels with a fifth under construction.So far some experts from the cruise industry don’t expect many changes in Alaska as a result of the proposed merger.John Hansen, president of the NorthWest Cruise Ship Association, expects the brands operated by the companies -- Princess, Royal Caribbean and Celebrity Cruises, owned by Royal Caribbean -- to continue their proposed Alaska sailings at least for 2002."At this point, we don’t know if it will make any difference in the Alaska market," said Hansen from the organization’s Vancouver, British Columbia office."I haven’t heard any proposed changes in ship deployment. It’s still pretty early," he said.Robert Simonson, an analyst from William Blair & Co. in Chicago who tracks Royal Caribbean, agrees the companies will probably not reduce 2002 Alaska sailings. The company had increased capacity to North America rather than some European destinations in response to some U.S. travelers wanting to stick closer to home in the wake of the Sept. 11 terrorist attacks.The company repositioned a number of cruises to the Caribbean and the West Coast, Simonson said.Although Royal Caribbean has added railcars in Alaska, Simonson expects the company would also use some Princess properties here. Sharing assets could help make the company more profitable, he said."I suspect that they will try to utilize the assets Princess has for Alaska since Princess’ infrastructure is much larger up there," he said.A merged company also could book passengers on each of the three brands so travelers could secure the room they want, he said.In Alaska, Princess has developed its network of properties, from hotels to buses and railcars. Likewise, competitor Holland America Line Westours Inc. operates 13 66-passenger railcars in Alaska, 180 buses, 17 articulated lounge buses and 14 Westmark Hotels in 11 communities.In 1989, Holland America Line-Westours Inc. became a wholly owned subsidiary of the Carnival Corp., one of the largest cruise companies.Officials from Holland America Line Westours did not return phone calls by press time.Princess has 10 railcars carrying 88 passengers each, a large fleet of buses plus four hotels in Alaska with a fifth, the Copper River Princess Wilderness Lodge, set to open this summer.Last summer Royal Caribbean kicked off its Alaska land tour company, Royal Celebrity Tours, with the arrival of two 88-passenger railcars supported by a fleet of 20 buses.In August, Royal Caribbean President Jack Williams visited the state and in Anchorage announced plans to add two more railcars and increase the bus fleet to total 38 for 2002.If the merger is successful, the combined company would tally 184 sailings in Alaska served by 11 ships. Holland America Westours, expected to run 115 Alaska sailings from six ships, also implemented changes to rearranged its schedules to feature more cruises around North America.For the 2002 Alaska cruise season, Princess expects to operate six ships for a total of 104 sailings. Earlier this year the company had planned to operate five ships in the Alaska market, but in October officials altered 2002 itineraries. A sixth ship with 11 sailings was added to the Alaska market with round-trip voyages from San Francisco to the Inside Passage.This summer Royal Caribbean plans to run three ships to Alaska with 48 sailings while its other brand, Celebrity Cruises, plans to operate two ships in the state with 32 sailings.Upon completion of the merger, Royal Caribbean would represent 49.3 percent and Princess would represent 50.7 percent of the equity value of the new company, which would operate under a new name.The combined company would have corporate headquarters in Miami with another corporate office in London plus other offices in Los Angeles and Seattle.Together the companies have ordered 14 ships to be delivered in the next three years totaling another 30,000 berths.Royal Caribbean operates 23 ships with a passenger capacity of 47,400 berths. The company has six ships on order.Princess, which operates 18 ships with a total of 27,370 berths, has ordered eight new ships for future service.

Seafood, energy, minerals key to Alaska's export market

Most Alaskans know that seafood is the state’s largest export commodity. In 2000, exports of seafood from Alaska exceeded $1 billion, accounting for 42 percent of the state’s total overseas exports. Less-known perhaps, but very important, are energy and mineral exports, the state’s second and third-largest export categories respectively.Taken together, seafood, energy and minerals make up more than 75 percent of the state’s total exports and constitute the three main pillars of Alaska’s export economy. Forest products and fertilizers are two other important export sectors.Energy exportsSince the lifting of the oil export ban in 1996, North Slope oil producers have exported a portion of their production to overseas customers. In 1999, the dollar value of these exports reached $500 million. During the past year, however, BP announced its intention to ship its entire production to refineries in the Lower 48.Traditionally, BP had been the largest exporter of crude oil. This shift, while not having any appreciable impact on employment and revenue for the state, is having an impact on the bottom line of the state’s international trade statistics.In 2000, crude oil exports fell to $287 million and in the current year it is anticipated that this number will drop to zero. As a result, for the first eight months of 2001, energy sector exports of oil, gas and coal are down 57 percent from the same period last year.Liquid natural gas exports rose slightly in 2000 to $145 million. Utility companies in Japan purchase 100 percent of Alaska’s LNG exports. It is interesting to note that the first LNG imported by Japan was from Alaska. Beginning in 1969, shipments from the Phillips-Marathon Nikiski plant on the Kenai Peninsula have continued without interruption.Refined fuel product exports totaled $122 million in 2000. Williams Alaska Petroleum Inc., for example, shipped 85 million gallons of naphtha to customers in Japan and Taiwan. In addition, it sold 13 million gallons of products to buyers in Canada from its North Pole refinery outside Fairbanks.Tesoro Alaska is another exporter of refined petroleum products. The State of Alaska has recognized both companies for their successful export activities. In 1995, Tesoro received the Governor’s Exporter of the Year Award and last year Williams won first runner-up honors for the same award.Usibelli Coal Mine is the sole exporter of Alaska coal. The company ships coal to Korea Electric Power Co. under a long-term contract. In 2000, Usibelli shipped 708,000 tons to Korea with a total dollar value of $16 million, an 8 percent increase from 1999.Mineral exportsFor the full year 2000, mineral exports totaled $293 million. This represented an 18 percent decline from the previous year, mainly because of a drop in zinc prices and reduced output at Red Dog Mine while it underwent infrastructure improvements.The primary markets were Belgium, Canada and Japan. As in previous years, zinc and lead concentrates accounted for the lion’s share of the state’s exports. Quantities of silver, gold and other metals are also exported from Alaska.During the first eight months of 2001, mineral exports are up by some $2 million, or about 1.5 percent, over the same period of the previous year.Red Dog, near Kotzebue in Northwest Alaska, is the world’s largest zinc mine. Teck Cominco, a Canadian firm, owns the mining operation. To date, the company has invested more than $600 million in facilities at the mine and in 1998 the company was the recipient of the Governor’s Exporter of the Year Award.Last year, the company exported 585,000 tons of zinc and some 91,000 tons of lead. Upon completion of the mine infrastructure improvements, output is expected to increase by nearly 10 percent.Another exporter of zinc and lead is the Greens Creek Mine near Juneau. In 2000, the company exported 84,000 tons of zinc and 31,000 tons of lead. The mine is majority owned by Rio Tinto, a British company.It is not only foreign investment and overseas markets that are important to Alaska’s mineral industry. Foreign companies, mainly Canadian, have spent considerable sums on minerals exploration in the state. Records show that of the $780 million spent on exploration since 1981, about $470 million, or 60 percent, s was carried out by non-U.S. companies.Looking forward, energy and mineral exports, along with seafood, will continue to be the mainstays of the state’s export economy. These industries provide thousands of jobs and contribute significant revenues to the state as well as to the local communities in which they operate.Greg Wolf is director of the Alaska Division of International Trade & Market Development. He can be reached at 907-269-8110.

Letters to the Editor December 2, 2001

Where do tax dollars really go?Dear Editor:Laine Welch made some grave errors in her recent Nov. 12 article, "Reporter Finds Taxpayers Are Paying For Environmentalists’ Work." Ms. Welch took an unwarranted stab at environmental groups, by claiming that the federal government is funding the plaintiffs of the Steller sea lion litigation. This is incorrect.Welch correctly stated that both the Sierra Club and Greenpeace do not receive any federal funds. Both of these groups are plaintiffs in the Steller sea lion lawsuit. The third plaintiff, American Oceans Campaign, has not acquired one federal penny since 1997. The simple fact is that none of the plaintiffs is receiving federal money.More to the point, Greenpeace and the other plaintiffs in the Steller sea lion case are not "government adversaries," as Ms. Welch alleges. Rather, Greenpeace encourages the government to adhere to its own laws, and, in the case of the Steller sea lion, those laws include the National Environmental Protection Act and the Endangered Species Act. If the government does not abide by its own laws, Stellers, the North Pacific ecosystem and Alaskans are denied their basic protections.Now that you have looked at the funding for environmental groups, the Alaska Journal of Commerce should investigate the millions of taxpayer dollars that go to subsidize the large scale industrialized trawl fleet that is threatening Alaska’s marine ecosystem for short term gains. Taxpayer money also funds the enormous bureaucracy that has proven to mismanage the North Pacific groundfish fishery, which is being compromised under its watch. That is the real story.John PassacantandoExecutive DirectorGreenpeaceMail subsidy can be eliminatedDear Editor:Let me see if I’ve got this straight.The U.S. Postal Service is paid $8.98 to not handle a shipment and claims they are losing $10 million monthly in Alaska alone?Without Bypass Mail, these folks would not be paying USPS any money at all. They would rely on private shippers, who can track their shipments and deliver on time!Evelyn P. ClarkCoffman Engineers Inc.Anchorage


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