NovaGold lives on gravel waiting for gold

Despite lackluster metals markets, one Alaska-based mining company is profitable this year thanks mainly to sales of sand and gravel for industrial and real estate development.But looking to the long term, NovaGold Resources is plowing its profits back into minerals development, notably the company’s project to develop the large Donlin Creek gold mine on Calista Corp. land near the Kuskokwim River.NovaGold took over the Donlin Creek project last year from Placer Dome, a major mining company, on a farm-out agreement that allows NovaGold to earn an interest in the mine by investing in exploration. Placer still owns the lease with Calista Corp., the Native regional corporation for Southwest Alaska.Donlin Creek has an estimated 13 million ounces of gold resources, NovaGold said in its financial statement released Oct. 31.Unlike most of the other "junior" mining companies operating in Alaska, which finance their exploration out of stock sales, NovaGold owns producing assets that provide income for investment in exploration. The company purchased land and property formerly belonging to Alaska Gold Co. near Nome.The company also has no debt, and thanks to the Donlin Creek venture, has access to one of the largest undeveloped gold prospects of any junior mining company, according to NovaGold President Rick Van Nieuwenhuyse.In the latest financial report, NovaGold said revenues for the first nine months of 2001 were up 11 percent to $2.45 million compared with $2.2 million for the same period of 2000. Most of the increase is the result of sales of sand and gravel from the company’s holdings near Nome, on the Seward Peninsula.Revenues of $4 million for this year from operations at Nome are expected."Currently, two very large commercial and industrial projects related to the Nome airport and Port of Nome expansion are expected to have a favorable impact on the company next year," Van Nieuwenhuyse said.NovaGold has just concluded a program of 42 drill holes at Donlin Creek, involving 42,000 feet of drilling. Assay results have been obtained from the first 29 holes and all have intercepted significant high-grade gold mineralization, Van Nieuwenhuyse said.The project is intended to demonstrate the presence of enough high-grade gold mineralization at Donlin Creek to make a smaller-scale development possible. Placer Dome had earlier done extensive work on the entire ore body, which contains substantial amounts of lower-grade gold mineralization.Once a mine is in operation, the hope is that it can be expanded to eventually produce the low-grade ores, according to Jeff Foley, a geologist with Calista Corp., the landowner.

Economic town meetings announced

WASHINGTON -- The Bush administration will convene a series of economic town meetings around the country in coming months to assess how businesses are coping in the wake of the terrorist attacks, Commerce Secretary Don Evans said Nov. 13.Evans said that he and other members of Bush’s economic team would schedule round-table discussions in various cities and report back to the president on what more needs to be done to deal with the disruptions caused by the Sept. 11 attacks and the slumping economy.He said that those invited to participate will include small business owners, workers, economists and chief executive officers of major U.S. companies."It will be a chance to listen and to learn," Evans said in speech to be delivered to the National Association of Manufacturers. A copy of his remarks was obtained by The Associated Press.The aim will be to assess how the government’s various efforts to deal with the terrorist attacks and stimulate the economy are working and determine what more needs to be done.In his speech, Evans joined a chorus of other administration officials in urging quick congressional passage of an economic stimulus package.

Restructured plans point to opening of Kensington mine

JUNEAU -- Coeur Alaska Inc. says it has restructured its plans for the Kensington mine, a hard rock gold mine 45 miles north of Juneau, to meet environmental objections and reduce costs.Opening Kensington mine would create 325 jobs at the peak of construction, 225 jobs during operation and 180 support jobs, said Rick Richins, senior vice president of Coeur, at the Juneau Chamber of Commerce luncheon Nov. 9 at Guesthouse Inn and Suites.Construction would cost about $155 million, and the company would pay an estimated $9 million in local taxes and $21 million in local purchases during the anticipated 10-year life of the mine, plus additional expenditures during two years of reclamation after it closed, Richins said.Coeur has been working with Goldbelt Inc. and Sealaska Corp., possible subcontractors, to solve objections raised in the past to its Kensington project, Richins said. Goldbelt is Juneau’s urban Native corporation and Sealaska is the Juneau-based Southeast regional Native corporation."We have also been talking to legislators and the fishing community and are about to talk to the environmental community" about adjustments made in Coeur’s operating plans for the mine, Richins said."We have had no negative feedback so far," he said, and have made friends with commercial fishermen "who like this project better than the project currently permitted."Sarah Keeney, mining specialist with the Southeast Alaska Conservation Council, did not attend the chamber meeting and said she did not know the specifics of Coeur’s new plan."But this company has put forth so many plans, I am skeptical," Keeney said. "The devil’s in the details."The new plan would replace a previously proposed onsite work camp with bringing in workers daily by bus and boat. Without a work camp, the site would have reduced inventories of supplies and fuel and less possibilities of spills.Transporting workers and supplies would mean two to three trips a day by water bus across Berners Bay and two to three shipments of ore concentrate a month, "so we are not talking about a huge amount of traffic," Richins said.Instead of damming tailings, which are the crushed rock that results after ore is extracted, they would go into 180-foot piles near Comet Beach, sandwiched between layers of drain rock and capped. Some tailings would go to the bottom of a 40-acre muskeg called Slate Lakes and be capped when the mine closes.The company wouldn’t use cyanide at the site because it would take the gold ore concentrate elsewhere for processing, Coeur said.A tunnel connection with the historic Jualin mine would keep all mining underground. The mine would disturb 120 acres compared with 250 acres under the previous plan, the company said.Much of the work would be on patented land, which would minimize federal involvement, Coeur said.In a deal made in 1987, Coeur shared ownership of Kensington with Echo Bay Mines. Coeur subsequently bought out Echo Bay and became primary developer, Richins said. Since 1997, Coeur has spent about $20 million on environmental impact studies and permitting for the project, he said.In 1992, mining was permitted at the site with two elements that concerned environmentalists and fishermen: building a 280-foot-high dam across a creek bed to contain tailings and running a discharge into Lynn Canal.Both were "controversial," Richins said, "so we decided to redesign the project." Use of cyanide at the site was "another hot button," he said.Since 1989, the price of gold fell from $480 an ounce to $280, so Coeur would have to cut costs to make operating the mine profitable. In the past two years, Coeur has spent millions coming up with an alternate, cheaper plan, Richins said."We have good feedback from the (U.S.) Forest Service so far to carry out the permitting in 12 months," Richins said.He said the U.S. Environmental Protection Agency has been "waffling" on the subject of tailings in lake waters, claiming such waters become "not waters of the nation but a waste treatment facility."The Forest Service and the EPA could not be reached immediately for comment."It’s going to really take your continued support to push this thing through," Richins told the chamber audience, "and we won’t be bashful about coming to you and asking for it."Mike Dalessi, vice president of investments and branch manager for Salomon Smith Barney Inc., was optimistic. "I think that anything that creates jobs for the city is a good thing," Dalessi said.

Committee seeks way to bring gas to Inlet

The Joint Committee on Natural Gas Pipelines, chaired by Sen. John Torgerson, R-Kasilof, wrapped up two days of hearings in Kenai Nov. 8. The purpose of the meetings was to evaluate the supply and demand for natural gas in Cook Inlet."Natural gas will run out in Cook Inlet, and we need more to come here from different areas," Torgerson said. "All agree that if there are no changes, and we go full speed ahead, by 2015 we’ll be dry."He said if new discoveries in Cook Inlet are brought on line, the reserves could be pushed seven to 10 years further out. There are "really wide swings" in what reserves may or may not be out there, he said.Committee member Rep. Mike Chenault, R-Nikiski, said that for years petroleum companies did not seek gas, only oil. Now that they are looking for gas again, new reserves could be found.No matter how much gas is found in Cook Inlet, it will run out at some point, Torgerson said. The solution is a natural gas pipeline from Prudhoe Bay to Cook Inlet."And the sooner the better," he said. "We can’t go into the future without a plan."A gas pipeline from the North Slope to Nikiski is not the front-runner in the pipeline scramble, but a spur line from either the Alaska Highway or Prudhoe Bay to the Valdez route could be possible."It’s very, very important that natural gas come to the Kenai Peninsula and Cook Inlet basin," Torgerson said.Alaska’s vast natural gas reserves on the North Slope, estimated at more than 35 trillion cubic feet, have lacked markets in the past. But rising demand and declining supplies are likely to make their development feasible before the end of the decade.Torgerson said the Nikiski petrochemical industry would be the first to go if reserves began to dwindle. Two, and soon three, North Road plants depend on natural gas: The Phillips Petroleum Co. creates and ships liquefied natural gas to Japan, while Agrium turns gas into fertilizer. BP’s gas-to-liquid pilot plant will turn gas into synthetic crude oil once it is operational."We certainly don’t want to see our industry shut down, so timing is essential," he said.Tony Izzo, president of Enstar Natural Gas Co., showed slides of the company’s projected demand and supply for the next 15 years. By 2010, if no new natural gas is discovered or brought into Cook Inlet, one slide showed Enstar’s demand outstripping supply more than two-to-one.Enstar purchases its gas under long-term contracts with Marathon Oil Co., Chevron, Municipal Light & Power and Phillips. It has two new contracts, one with Moquakie, comprised of Anadarko and Phillips, which starts Jan. 1. The other with Unocal starts in 2004. The company supplies natural gas to 160,800 homes, Izzo said.A chart he displayed showed the supply of known gas reserves in Cook Inlet falling below Enstar’s average peak demand in 2003 and the average daily demand in 2006, if industrial use were cut in half by 2010."Putting on my Enstar hat, if pushed, I think curtailing industrial use could be considered, but that is the last thing we would like to see," Izzo said.Chris Tworek, vice president of supply management for Agrium, said bringing North Slope gas to Cook Inlet would create more jobs for Alaskans if the company expanded its Nikiski fertilizer plant.Richard Peterson, president of Alaska Natural Gas to Liquids Co., or ANGTL, spoke about transforming North Slope natural gas into synthetic crude and indicated the company would be interested in building a GTL plant in Cook Inlet.He said if the United States really wants to reduce dependence on imported foreign oil, it should look to North Slope GTL, which could add 1 million barrels a day that could be shipped down the trans-Alaska oil pipeline."This can be built in Alaska and provide jobs for Americans," he said.A GTL plant could provide steam, hydrogen and nitrogen to be used as feed stock for fertilizer plants, as well as the synthetic crude for oil refineries.He said the GTL process also can be applied to coal-bed methane, which Alaska and the nation have plenty of. "There is enough coal (methane) reserves in 38 states across the nation to make over 10 million barrels a day of synthetic motor fuels for over 200 years," he said.Mark Sexton, president and chief executive officer of Evergreen Resources of Denver, testified by telephone how his company is poised to drill for coal-bed methane, which he described as nearly identical chemically to natural gas.Sexton said Alaska has half the known coal reserves in the nation, and that the Cook Inlet area possibly holds 200 trillion cubic feet of coal-bed methane. Torgerson estimated that was probably a 1,000-year supply. However, efforts to extract the methane in the Cook Inlet basin have been unsuccessful, he said.In Sexton’s presentation, he described how the company had developed its own technology to extract the gas in Colorado. Torgerson said he was glad to see the company has had success with the technology.Evergreen acquired rights to drill for coal bed methane near Wasilla this year and has sunk several wells.Scott Heyworth, head of an initiative group to promote an all-Alaska natural gas pipeline, wants a line to Valdez where the gas would be turned into LNG for shipment to the Pacific Rim.The plan of the Alaska Natural Gas Development Authority calls for a spur line to supply Cook Inlet electric, heating and industry needs."This plan assures cheap gas to Cook Inlet," Heyworth said. "The Beaufort and highway routes have no provisions."The Beaufort Sea gas line route would ship North Slope natural gas to Canada’s Mackenzie River Delta area where it would then make its way to market. The Alaska Highway route would follow the trans-Alaska oil pipeline to Fairbanks and then follow the highway into Canada."(The all-Alaska route) is the gas line project Alaskans want to see," Heyworth said.

Bypass mail limits could ruin some carriers

Thanks to massive government subsidies, mail is what fuels the airline industry in Bush Alaska.About 35 air carriers, large and small, vie for federal money that comes from tons of mail dispatched from Anchorage and Fairbanks daily to hub communities throughout the state and then on to smaller villages.But now, federal legislation is being drafted to limit the number of air carriers that can handle Alaska mail, which includes everything from food and building materials to medical supplies.The new proposals are being pushed by large "mainline carriers" including Air Cargo Express, Alaska Airlines, Lynden Air Cargo and Northern Air Cargo.Smaller carriers say if new rules become law many of them will go out of business and passenger and cargo service to the Bush will be reduced dramatically and become more expensive.In July, legislation was drafted in the U.S. House that, among other things, allows the Postal Service to tender most mail out of Anchorage and Fairbanks only to an airline that had operated large aircraft since Jan. 1.That legislation drew heavy criticism from small operators and some Bush residents."The major carriers want a greater share of the mail, more revenue and less competition,’’ said Hank Meyers, an aviation consultant representing several of the small airlines.A Senate version of the bill, which is being drafted, will give small carriers a smaller portion of the mail, said an aide to Republican Sen. Ted Stevens, who asked not to be identified.The new legislation, due to be introduced sometime this month, would give small operators up to five years to acquire aircraft that would handle passengers and mail.Stevens secured Alaska’s current "bypass mail" law, a unique system begun in 1970 where shipments of at least 1,000 pounds are stamped air mail but never touched by postal workers and delivered to Alaskans at cheaper parcel post rates.The intent of this bypass mail system, Stevens’ aide said, was to give airlines additional revenue so that Bush communities could have passenger and freight service. In many communities, markets are too small for airlines to serve without the subsidy.Bypass mail is divided equally among all carriers in any given community. Bypass mail has spawned many cargo-only shippers who only fly bypass mail."The system needs to be repaired,’’ Stevens’ aide said. "There are too many carriers that are providing little or no passenger service.’’He said Fort Yukon, a community of less than 700 residents, is served by up to 10 air carriers daily.Steve Deaton, network planning specialist for the U.S. Postal Service in Anchorage, said more than 2 million pounds of bypass mail is tendered out of Anchorage and Fairbanks weekly. Bypass mail represents 75 percent of Alaska’s total mail volume and costs the Postal Service about $10 million monthly, he said.Over the course of a year, the Postal Service loses about $70 million on bypass mail alone, Deaton said.Congressional estimates run as high as $170 million in losses in Alaska, or 10 percent of the service’s red ink nationwide."What we charge does not cover the costs,’’ Deaton said. "If it wasn’t for mail, passenger and air freight service would be decimated. Mail is what makes the airline industry go.’’Airlines are paid $1 to $1.75 per pound shipped, depending on distance.Mail historically has been such a contentious subject between air carriers in Alaska that the airlines’ state association forbids the topic from being raised at its meetings."It’s taboo," said Fred Ciarlo, general manager of Tanana Air Service in Fairbanks.Ciarlo said legislation favoring only mainline carriers will likely sever service to many communities, especially tiny villages.Airlines like his are providing essential and frequent service to the Bush, but they can’t do it without bypass mail, he said."I’m a passenger carrier but 85 percent of my revenue is from mail,’’ Ciarlo said.As an example of bypass mail, Ciarlo said 59 pounds of milk containers strapped together has postage of $8.98 stamped on it. He is paid $60 to ship it to a village less than an hour away.Butch Hallford, Northern Air Cargo vice president in Anchorage, said that a few years ago Kotzebue was served by about four air carriers; now there are 16.Northern Air Cargo hauls about 30 million pounds of mail annually for the Postal Service, Hallford said.His company strongly supports limiting the number of airlines handling mail in the Bush."Nobody is making any money,’’ Hallford said. "The safest air carrier is the air carrier that is making money, period. There were four (airlines) making money in Kotzebue. Now there are 16 losing money. What’s that tell you about safety?"

This Week in Alaska Business History November 11, 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 TimesNov. 14, 1981Visitors’ center planned for old Federal BuildingBy Bill WhiteTimes WriterThe U.S. Park Service has proposed spending $1.7 million to convert the old Federal Building on Fourth Avenue into a visitors’ center featuring exhibits on the state and a multiprojector slide show on the different cultures in Alaska.Janet McCabe of the U.S. Park Service said the state would split the cost of remodeling the 9,000 square feet of the building the visitors center would occupy.She told the Alaska Land Use Council that the Park Service has been working with state and federal agencies on the project, which was called for in last year’s Alaska lands bill.The old Federal Building was chosen for three reasons, she said. A building already existed. The building is near hotels and stores. The building is listed in the national register of historic buildings.Anchorage TimesNov. 15, 1981Project 80s sparks construction boomBy Sean HanlonTimes WriterProject 80s, Mayor George Sullivan’s ambitious plan to build Anchorage using state oil revenues will mean a $200 million construction boom in 1982.The construction effort will involve some 150 different projects - ranging from the municipality’s new $43 million headquarters library to a $500,000 mini-city hall in Eagle River.The effort represents a continuation of the trend of ever-increasing construction work within the municipality. The money earmarked for road and drainage work alone gives one indication of the boom in construction stimulated by state oil money.In 1978, Anchorage spent $6.4 million on roadwork. Expenditures on road and drains increased to $12.4 million in 1979, $30 million in 1980 and $58 million in 1981.Although cost estimates have been made for the major projects, the exact price tags are as yet unknown."We are having a problem. Many of these projects have been estimated two or three years in advance," said Everett Diener, director of the Anchorage public works department.10 years ago this weekAlaska Journal of CommerceNov. 11, 1991Anchorage airport ramp repair called into questionBy Margaret BaumanAlaska Journal of CommerceAn inquiry into repair work on a controversial auto ramp at Anchorage International Airport has been ordered after reports that the ramp problems were not corrected.The inquiry was ordered by Keith Gerkin, deputy commissioner of the state Department of Transportation and Public Facilities.Gerkin said he was checking on concerns voiced by Dennis Nottingham, president of Peratovich, Nottingham & Drage Inc., an Anchorage engineering firm, that the size and number of reinforcing rods added to the ramp were inadequate to provide necessary support in the event of a major earthquake.Nottingham implied the method of attachment of those rods is not sufficient and questioned how much strength was developed across the joints by the repair work, Gerkin said."The overall design criteria used is minimal; the repair job is substandard," Nottingham said, after reading a report on the job specifications. "What they did is just cosmetic."Alaska Journal of CommerceNov. 11, 1991Cordova Road loses federal fundsBy Bob TkaczFor the Journal of CommerceState Department of Transportation work during the past summer to extend the Copper River Highway to Cordova may have made the project ineligible for federal highway funds, according to a Federal Highway Administration memo.Based on a DOT cost estimate of up to $95 million for a year-round road that would qualify for up to 90 percent federal funding, the 40 miles of pioneer road built during the summer would cost the state $85.5 million in FHA money. The Sept. 30 memo is from Thomas O. Willett, director of the FHA office of engineering, to Gene McCormick, deputy administrator of the agency."Very likely Alaska has already pre-empted the possible later use of federal highway funds," McCormick wrote across the top after reading the memo.- Compiled by Ed Bennett.


ANCHORAGE -- During a special tribute to Alaskas veterans before the Anchorage Chamber of Commerce today, Gov. Tony Knowles announced a new Homeland Security Initiative designed to increase Alaska’s security and preparedness against possible terrorist attacks.The five-part plan, estimated to cost about $100 million in state and federal funds, would improve the security of Alaska’s communications, transportation and public utilities infrastructure; expand the state’s ability to detect and respond to biological and chemical terrorism; and better train those who would be called on for a first response to a contaminated environment.Much of the initiative will be submitted to the Legislature for approval next year. "Make no mistake -- America is at war. Nearly everyday we receive new reports of potential terrorist acts -- nuclear, chemical, biological, radiological -- which until September 11th had been only the stuff of science fiction," Knowles said. "In addition to securing our own population, Alaska is uniquely positioned to respond to attacks elsewhere, given our geographic proximity to the Lower 48, Europe and Asia."The security initiative is the result of two months of careful analysis of Alaska’s security capacity since the Sept. 11 terrorist attacks on America. Led by state Adjunct Gen. Phil Oates, commissioner of the Alaska Department of Military and Veterans Affairs, with the governor’s Disaster Policy Cabinet, part of the initiative calls for creation of an Alaska Office of Homeland Security, to be housed within Oates department.Working with its federal counterpart, the Office will coordinate with military, federal, local, educational, and private agencies, including other states and Alaskas Canadian neighbors."There is an increased price of freedom in this new era of terrorism," Knowles said. "It will require additional Troopers and public safety personnel, increased levels of training and equipment for haz- mat teams and public health officers and increased security procedures. For the coming 18 months -- the remainder of the current fiscal year and Fiscal 2003 -- the Alaska Homeland Security initiative is estimated at about $40 million each in state and federal funds and another $15 million from other sources."The governor also used the speech, delivered on the state and federal holiday of Veteran’s Day, to recognize and honor Alaska’s veterans. Alaska is home to more than 65,000 veterans, more per capita than any state but one.Knowles presented the Governor’s Veteran’s Advocacy Award to two veterans and awarded World War II High School Diplomas to more than a dozen other veterans who left high school for service in World War II and never had the opportunity to return to obtain their high school diplomas.This year’s winners of the annual the Governor’s Veterans Advocacy Award are Anchorage residents Robert O. Bowen and Robert J. Nelson. Recommended by the Alaska Veterans Advisory Council (AVAC), the award recognizes individuals who demonstrate an extraordinary personal concern, compassion, and commitment to veteran’s causes and their families.The plaques were presented by the governor, Gen. Oates and AVAC Chairman Pat Carothers, a retired U.S. Marine colonel who at the time of his retirement was the most highly decorated marine in America. "Bob Bowens record of service to veterans and veterans causes is a mile long and twice as deep," Knowles said, citing his service in World War II and a prisoner of war for three years in a Japanese camp. He later started a Chapter of the American Ex- Prisoners of War organization in Anchorage. Recently, Bowen spearheaded the installation of the bronze statue of the rifleman on Anchorage’s Park Strip, in partnership with the AFL-CIO.Bob Nelson is a veteran of two wars -- Vietnam and the Gulf War -- and retired as a Command Sergeant Major from the U.S. Army. Currently a counselor at the Veteran’s Center, he is a former chair of the Municipal Veterans Commission and has long been a host of the Alaska Veterans Update on Channel 11. Last month, Nelson volunteered to counsel recovery workers at the World Trade Centers Ground Zero.About a dozen WWII veterans attended the ceremony with family and friends to obtain their long-awaited high school diplomas under a program began earlier this year. "For a lifetime of learning, the state is honored to confer a high school diploma upon our World War II veterans," Knowles said.Knowles also noted other recent veterans initiatives, including the newly named Eagle River Veterans’ Memorial Highway, establishment of a Veterans home page and legislation creating the Alaska Pioneers’ and Veterans’ Home system, introduced last session.Calling 2002 the "Year of the Veteran," Knowles announced he would introduce legislation next session to create an Alaska Veterans Memorial Endowment. Through the generosity of dozens of Alaska businesses, more than $125,000 in pledges already have been made to fund the endowment.Next session, the governor will ask the Legislature to match the privately raised funds with $125,000 in public money and to create the endowment in state statute. Interest earned on the endowment would be given out as small grants to make sure that memorials are ship-shape when Alaskans and tourists visit them. "Places of remembrance need to be properly maintained. For Alaskas veterans who took care of America, its time we take care of the memorials that celebrate their sacrifice," Knowles said.At the state’s veterans memorial at Byers Lake the roads leading to it are now named Medal of Honor Loop and Purple Heart Lane, the governor announced. The rest area at the memorial is now known as the POW MIA Rest Area. The signs were donated and will be dedicated next Memorial Day.

Council offers route, other advice

Twenty-eight Alaska business and community leaders gave Gov. Tony Knowles their advice on state natural gas policies, as the Natural Gas Policy Council formed by Knowles early this year wrapped up its recommendations.Not surprisingly, the council recommended the state push for a southern route for a North Slope gas pipeline through Interior Alaska instead of a northern, offshore route that is being studied as an option by gas producing companies.Knowles has endorsed a southern route that would follow the Alaska Highway into Canada.The council also affirmed a recommendation agreed on several weeks ago by one of its committees, that the state not invest in a gas pipeline.The panel also handed Knowles 42 other recommendations dealing with a range of topics from training Alaskans to environmental policies, and a lengthy, complex set of recommendations dealing with state royalty policy and regulatory authority on shipments of gas to points within the state.On state investment, Juneau businessman Bill Corbus told Knowles his committee had first thought the state owning a percentage of the pipeline might solve certain problems, such as guaranteeing access to gas for fuel.But as the committee dealing with the ownership issue held meetings through the summer, it became clear there were other ways to solve those problems, and that owning part of the pipeline wouldn’t do the job, Corbus told the governor Oct. 31.The investment would earn the state an attractive return, he said, but his committee felt that the state could do as well or better by putting its resources in other investments with less risk, Corbus said.Brian Davies, a retired British Petroleum manager, presented recommendations of the council’s environmental policy committee, which recommended adequate funding for state agencies performing oversight on the pipeline project, and a full or supplemental environmental impact statement.This was a bit of a setback for Foothills Pipe Lines Ltd. of Calgary, which has been arguing that an environmental impact statement done for the Alaska Natural Gas Transportation System in the 1970s is still valid. Foothills holds permits for the ANGTS project, which follows the Alaska Highway.Ken Thompson, a retired Atlantic Richfield Co. executive, served as chairman of a council committee considering state royalty gas policy, access to gas by Alaska communities and possible new manufacturing in the state based on natural gas.Thompson told the governor that his committee recommends the state pursue a mix of sales of royalty gas, some left with the producers and sold to other companies, to increase competition and gain the best returns.The state should also base its royalty values on actual sales of gas in the market rather than accepting a formula to determine market value, as has been done with state royalty oil, Thompson said.This should include the value of "affiliated sales" of natural gas liquids shipped along with the gas, instead of a value based only on the energy content, or heating value, of the gas, Thompson said. As state royalty policy is now constructed, the values of these affiliated sales could be left out of the royalties paid to the state, he pointed out.Thompson’s committee also made a number of recommendations on state and federal regulatory authority on a gas pipeline. The first recommendation is for the state to press to include in federal legislation a provision giving the Regulatory Commission of Alaska authority to regulate tariffs and other charges related to gas moved through the pipeline but sold in Alaska.This is similar to provisions in the federal Trans-Alaska Pipeline Act of 1973 that gave Alaska authority to regulate intra-state shipments of oil.If the state fails in securing that legislation, Thompson suggested the state seek a Joint Board of the state RCA and the Federal Energy Regulatory Commission to consider issues related to sales of gas in Alaska. Although the Joint Board would only be advisory to the FERC, it would still give the Alaska regulatory agency a formal role in considering Alaska issues, Thompson told Knowles.Mike Navarre, a Kenai businessman and former legislator, briefed Knowles on recommendations of the "Alaska-hire" and "Alaska-build" committee he headed.Navarre’s panel recommended more state funding for training but noted that construction manpower was already scarce in the state and that a gas pipeline construction project would strain the state’s skilled manpower resources further.

Alaskans committed to the future

Due to its geographic challenges, Alaska is exactly the type of environment that should best be able to take advantage of new technologies for business development, and in turn build a dynamic infrastructure that will retain vital talent.In my search for signs of alternative life forms in Alaska’s new technology, nontraditional business environment, I am heartened yet realistic about our prospects. The good news is that there are committed individuals who love Alaska and see its potential and are working hard to nurture a fledgling social entrepreneurial community here.When deciding on a graduate school, I chose the law school at Santa Clara, in the heart of Silicon Valley, primarily for the strength of its high-tech law program and the exposure that being in such a vibrant environment could afford me. Many naturally assumed that I would be led elsewhere due to the lack of depth present in Alaska in my interests: "So this means you won’t want to come back?"The reality is that I very much want to come back to Alaska and I hope the specific expertise I am able to bring back with me makes me invaluable to the mix. However, I don’t necessarily want to come back at the sacrifice of opportunities in my interests in international, entrepreneurial and technological issues. Ideally, I would like to return with my education and skills and continue to help with exciting new ventures in the state.The rhetoric on state priorities focuses on a need to diversify Alaska’s economic base from its traditional reliance on natural resources and government. Alaskans need to back up this rhetoric with the reality of a strong infrastructure for new business ventures that could constitute anything from soap to high-tech software, judging from the businesses represented at a recent InvestNet marketing seminar.The Alaska Science and Technology Foundation is a state agency that invests money to improve Alaska’s economy and its science and engineering capabilities. ASTF and its progeny are making a difference on the Alaska business landscape.Recognizing a need for know-how to help with the sophisticated nature of new venture deals, ASTF established InvestNet in 1998. Among the entrepreneurs involved with InvestNet, the only statewide capital matching network, funding sought ranges between $100,001 and $250,000 for businesses seeking equity investment of more than $1,000,000.Products include sand and gravel; real estate; bottled water; thermal environmental control systems; laser lighting products; pharmaceutical discovery; software for medical billing and human capital management; and Web-based grant-seeking services for nonprofits.With the thought that these organizations would be on the front line of any development related to technology and start-up interests in Alaska, I worked with ASTF and InvestNet this past summer. Through my work with InvestNet, I also connected with and started working for PeopleMatter LLC, a promising Alaska-based start-up company specializing in human capital management software.The irony is that Alaska itself could probably stand to be evaluated in terms of how human capital is being drained from or retained by the state.If we attempt nothing, then we can achieve nothing. But if we try and fail, we still can gain.What is it going to take to grow Alaska’s economic base? It takes bona fide Alaska "angels" to invest in homegrown enterprises rather than forcing promising Alaska start-ups to look Outside. If companies have to look Outside for venture funding, they run the real threat of having relocation dictated by outside investors. It takes those in positions to affect change within the state to create high-tech infrastructure - and high-paying, cutting edge work - as a way to attract and retain the "best and the brightest" to Alaska.It takes individuals who not only spew the rhetoric of new technology and social entrepreneurship, but individuals who are willing to get their hands dirty with the work of building that vital infrastructure. It takes people willing to step outside traditional work patterns and pursue creative problem-solving solutions to help build Alaska’s economic base.Jeanne HuangLi served as an intern at Alaska InvestNet in Juneau this summer. She can be reached via e-mail at ([email protected]).

Delta makes last flight out of Fairbanks

FAIRBANKS - Delta Air Lines has left Fairbanks, saying business there wasn’t good enough to make a profit.The airline made its last flight from the Interior city on Oct. 31, with no plans to return.The financially strapped airline, the nation’s third-largest carrier, offered its 32 Fairbanks employees a variety of options, including transfers and furloughs.On Nov. 1, Delta reported a $259 million third-quarter loss that was eased by emergency assistance from the federal government, which is doling out $5 billion to help offset industrywide turmoil since the Sept. 11 terrorist attacks.The Atlanta-based airline also said it will lay off 2,000 employees systemwide.The losses, combined with the attacks, has led to a 16 percent reduction of Delta’s systemwide operations, the company said.The company extended to its 80,000 employees a voluntary program that allowed for leave of absences, severances and retirement packages. Of those, 11,000 employees took the offer, said Delta spokeswoman Peggy Estes.Delta’s vacant ticket counter and cargo bays will cost the Fairbanks International Airport $392,000, airport officials say. No carrier has stepped in to fill the spot, said Dave Carlstrom, director of airport marketing for Fairbanks Economic Development Corp."It’s a real setback for the airport and the community," Carlstrom told the Fairbanks Daily News-Miner.The airline’s departure from Fairbanks leaves only Alaska Airlines and Frontier Flying Service offering daily flights. Northwest Airlines and Condor, a German airline, offer summer Fairbanks flights.

Railroad predicts leap in its freight revenues

The Alaska Railroad Corp. is forecasting freight revenues to be $80 million for 2001, up $10 million from a year ago.Freight revenues in 1999 were $65 million, according to Patrick Flynn, the railroad’s public affairs officer in Anchorage.Officials at the state-owned railroad would not give specifics on revenue increases, saying the information is proprietary. The railroad, however, said freight hauling increased in all categories except coal, which experienced a shipping slowdown because of a track rehabilitation project at Fort Wainwright in Fairbanks.Railroad officials expect some growth in coal shipments once the project is completed.Highlighting the growth this year was the railroad’s joint venture with Seattle-based Lynden Inc., whose subsidiary, Alaska Railbelt Marine, took over as the barge contractor in February.Goods that come to Alaska by barge and are then transferred to rail mostly include pipes, supplies and heavy equipment used in oil field operations and maintenance.The railroad said the large spike in the barge-rail service can be attributed to increased oil activity on the North Slope.Trailer-on-flatcar service increased 12 percent from last year, due largely to a new contract with Safeway Inc., which is shipping trailers on rail from Anchorage to Fairbanks. Flynn said other grocers have expressed interest in shipping similarly.The railroad nearly matched its 1999 record of pulling more than 36,000 100-ton hopper gravel cars this summer, according to Flynn.Gravel is the second largest revenue generator for the railroad behind fuel, which was shipped in record amounts this summer.

Northstar oil field begins production, to reach peak next year

The Northstar oil field, offshore from Alaska’s North Slope, shipped its long-awaited first oil to shore on Oct. 31, BP Exploration (Alaska) Inc. announced Nov. 1."We are bringing the field up very slowly, producing crude from one well," BP spokesman Ronnie Chappell said. "The current rate of production is about 3,000 barrels per day. We are making sure everything is working properly."Production at Northstar is expected to reach a peak of 65,000 barrels a day during first quarter of 2002. BP has pegged Northstar’s recoverable reserves at about 175 million barrels, though the field has an estimated 247 million barrels of high-gravity crude and nearly 500 billion cubic feet of gas in place. Gas re-injection is occurring from start-up to maintain reservoir pressure and improve recovery, Chappell said.BP has spent more than five years bringing Northstar on line.The company and Gov. Tony Knowles made a controversial deal in 1996 that traded the state’s profit share for a higher royalty rate and a commitment to hire Alaskans for the project.The project was halted for nearly a year by a lawsuit filed by several Anchorage residents who argued that BP was given a sweetheart deal. The Supreme Court sided with the state in a 1998 decision.The company also battled environmentalists to develop the field. BP received a restraining order last year barring Greenpeace activists from interfering with activities at the site.Greenpeace and a group of North Slope Natives also challenged the Northstar development in court, arguing that the Environmental Impact Statement for the project was inadequate. The lawsuit also alleged that BP did not have an adequate oil spill response plan for the project.But in late September, the 9th U.S. Circuit Court of Appeals ruled against the group.BP holds a 98 percent working interest in the field. Murphy Exploration & Production Co. holds a 2 percent working interest.The Associated Press contributed to this report.

Nurse mends emotional wounds after facing terror

JUNEAU Two months ago Ruth Perez-Matera was fleeing for her life as the World Trade Center collapsed behind her. Ruth Perez- Matera, photographed in her Juneau home on Saturday. The Juneau nurse is recovering emotionally after witnessing firsthand the terrorist attack on the World Trade Center. Although the largest terrorist attack in U.S. history did not claim the Juneau woman, the memories of Sept. 11 still haunt her. After suffering repeated nightmares and a bout of depression following the attack, Perez-Matera said she is starting to heal emotionally. But she cannot forget the carnage she saw on the streets of New York City. "It’s hard," said Perez-Matera recently from her home in downtown Juneau. "But it’s something I have to learn to live with." Perez-Matera was in the Marriott Hotel across the street from the towers when the first jet struck. At first, her mother and sister, on vacation with Perez-Matera, thought their hotel was on fire. The trio fled from their room to the lobby, where Perez-Matera, a nurse at Bartlett Regional Hospital, saw injured people staggering into the hotel and ran to help them. Then they heard the second jet plow into the other tower, and they went outside. To their horror, they saw body parts strewn in the street, and the women fled with a crowd toward a nearby park. Perez-Matera turned to look at the towers just as one began to fall, and the crowd panicked as a cloud of smoke engulfed them. Perez-Matera and her sister escaped Manhattan by running across a bridge to Brooklyn, where they took refuge in a church. They lost their mother in the chaos and spent an agonizing night searching for her before reuniting the next day. Perez-Matera spent another three days in New York before leaving the East Coast and for three nights she could not sleep. When she finally dozed off, the nightmares came. "I had a dream of a man jumping on a trampoline, and he jumped so high that he was falling. And I knew he was going to hit the ground and there was nothing I could do,· said Perez-Matera, who awoke from the nightmare yelling. In another nightmare she was inside a hospital and people missing body parts were coming to her for help, Perez-Matera said. Then there were the nightmares about explosions and bombings and terrorists. "I would dream of people coming after us with guns," she said, adding that the nightmares came almost every night for a month. She fell into a depression in the days after the attack and took some time off from work to cope with the trauma. "I lacked energy and ambition and didn’t feel like doing anything. I had a great sadness that overcame me," she said. "You have a certain amount of guilt because you’re alive and the others are dead." Her mother, Jan Perez, also had nightmares and struggled with feelings of guilt. "I felt like there was more I should have done or could have done," said Perez, who stayed in Manhattan the day of the attack to help load the fleeing people onto ferries. "I had this real deep sadness for the people who were still there working and searching for bodies. I wish I could have been there with them to help," Perez said from her California home. A Juneau counselor helped Perez-Matera work through some of her sorrow. The counselor "helped me realize a lot of the things I was going through were normal and to expect them," said Perez-Matera, noting that the nightmares have tapered off. "I’m calm. I’m feeling a lot better now," she added. But "you never get over that sadness and that trauma that you go through." Perez-Matera said the event proved the U.S. is as vulnerable as any country to terrorists. Although she considers Juneau a relatively safe place, she has come to believe attacks can happen anywhere. However, it’s pointless to panic about anthrax and other potential strikes, she said, adding that people must accept the fact that bad things happen. "Everybody is very reactive to all the things that are occurring. I think that’s wrong," she said. "I don’t think we should get overly concerned about everything because unforeseen circumstances will occur. "Emotionally and spiritually we have to be prepared for these things."

Reporter finds taxpayers are paying for environmentalists' work

In these days when lawsuits by environmental groups are hamstringing many of our nation’s fisheries, it’s interesting to learn that much of the legal bankrolling comes from the federal government.The Sacramento Bee reporter Tom Knudson recently dug deep into the realm of environmental funding in an article that began: "A major investor is helping The Nature Conservancy - America’s largest environmental group - buy land and protect species across the United States."The same benefactor is providing financial aid to the World Wildlife Fund for international conservation [and] is spending heavily to help other groups, from the American Farmland Trust to Trout Unlimited, hold conferences, post Web pages, restore habitat and sway public opinion in favor of protecting the natural world. Who is this conservation-minded patron?"You, and every other taxpayer in the United States, that’s who."It’s well known that the federal government dispenses billions of dollars in grants for foreign aid, research and other activities. But it’s not commonly known that it also distributes financial aid to environmental organizations, including activist groups that seek to influence, and even sue, the government.Just how much public money flows to environmental groups has never been calculated, partly because it springs from so many sources. Knudson wrote that more than two dozen federal entities, from the State Department to the Fish and Wildlife Service, make awards to environmental groups. But, he added, no government agency charts the total spending, identifies trends or assesses what taxpayers are getting for their money.Information gathered by The Sacramento Bee revealed: Last year, nearly $137 million flowed to 20 major environmental nonprofit groups - an average of $377,000 a day - up 27 percent from 1999. Since 1998, more than $400 million in federal money has been granted to environmental groups. Four groups - The Nature Conservancy, which last year received $37.3 million in federal funds or the most of any group, Ducks Unlimited, the National Fish and Wildlife Foundation, and the World Wildlife Fund - have gotten more than two-thirds of the money since 1998. More than 15 nonprofits received $1 million a year or more. Most large environmental groups take government grants, but some, such as the Sierra Club and Greenpeace, do not, the newspaper reported.Knudson said that more than half of the money is used to help groups purchase, restore or protect land and species. But federal records show public money also trickles into more controversial activities, such as lobbying and advocacy.Some money also helps fund government adversaries, and, as seen in Alaska’s Steller sea lion lawsuit, federally funded environmental groups also sue the government. International conservation is another huge ticket item. Last year, more than $37 million in federal funds were routed through environmental groups to programs outside the United States.Fish brain may help humansResearchers are convinced that fish brains could provide a cure for Alzheimer’s and Parkinson’s disease, as well as repair brain damage. WorldCatch reports that scientists have found that fish brains have an amazing ability to regenerate brain cells that far surpasses all mammals, including humans. They’re hopeful that the same capacity might be used to repair human brains damaged in accidents or suffering from disease.According to WorldCatch, "studies by biologist Gunther Zupanc of the University of Manchester revealed that even a seriously injured fish brain can be as good as new within four to six weeks, in stark contrast to the human brain, whose capacity for repair is almost zero. The electric fish Apteronotus leptorhynchus, also known as the brown ghost fish knife, can produce a staggering 100,000 brain cells in just two hours, O.2 percent of its total brain population."Over the past 10 years, Zupanc’s research has shown the brains of adult fish produce new cells all the time. He said it is already possible to initiate human brain cell growth in a culture by adding growth factors not normally present in sufficient quantities in the brain. Zupanc added: "If we can find the factors that drive the fish’s brain repair systems, we may be able to apply them to mammalian systems and stimulate the production of new cells."Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

Recent events show system works, Alyeska official says

The puncturing of the trans-Alaska oil pipeline by a bullet in early October and two other emergencies earlier in the summer have demonstrated the effectiveness of emergency response capabilities, David Wight, president and chief executive of Alyeska Pipeline Service Co., told the Resource Development Council Nov. 1.Alyeska operates the pipeline on behalf of North Slope oil producers who own the Trans-Alaska Pipeline System.One incident, in which a small fishing boat deployed nets in the Valdez Narrows in the path of an outbound tanker, was the first case of a real emergency in which a tanker was stopped by escort tugs accompanying it.In this case the loaded ship was halted in a distance equal to twice its length. It demonstrated the tug escort system worked, Wight said.In a second incident, a fishing tender sank with 35,000 gallons of diesel fuel. The fishing industry activated its own spill response system but the Coast Guard asked Alyeska to help.The skimmers operated by Alyeska were able to get one-third of the dangerous light hydrocarbons off the water, demonstrating that the spill recovery system really works, Wight said.In the case of the pipeline puncture, Wight said there have been about 50 known incidents of bullets being fired at the pipeline, but the Oct. 2 incident was the only case in which the pipeline was penetrated by a bullet.The company knew about the spill minutes after it occurred and began shutting down the pipeline, but public safety officials ordered response crews to remain away from the site for six hours until the person who had shot at the pipeline, who was still armed, was captured.Crews had the spill contained six hours after that, were picking up more oil than was leaking within 24 hours of the puncture and had the leak itself sealed within 36 hours, Wight told the RDC.Halting the leak was an extremely hazardous operation because the fine spray of oil from the puncture released volatile vapors that could have ignited. A substantial amount of firefighting equipment was mobilized.Wight also credited the work of emergency response crews from the villages of Minto and Stevens Village, which are in the region.Alyeska learned a lot from the event about how to improve its response to a similar incident, Wight said.The company and the state and federal agencies that oversee pipeline operations are now looking at ways of speeding the stop of a similar leak from 36 hours to 24 hours, or even 12 hours.For example, it’s working to improve the emergency clamp device that was able to stop the leak while the pipeline still contained oil under pressure.Another effort is aimed at pumping oil from undamaged adjacent segments of the pipeline at faster rates, so that fluid pressure and the flow of oil at the leak site is reduced, he said.In a review of other issues, Wight said the effort to renew the pipeline’s 30-year federal right-of-way lease is going well. Alyeska has spent four years on the renewal effort and expects to continue working on it for another year and a half. So far the renewal has cost about $35 million.The company is also making good progress in recruiting Alaska Natives and other minorities to its work force. About 16.5 percent of the pipeline work force is Alaska Native and another 13.5 percent are other minorities.This brings the total minority component of the work force to about 30 percent, which is similar to the minority composition of the state’s population as a whole.One area for improvement is in the recruitment of women, however. Women now account for about 26 percent of Alyeska’s employees, a percentage that can be improved, Wight said.A major concern of the company is training skilled workers to replace veteran employees who will soon be retiring.Much of the pipeline work force has been on the job since construction began more than 30 years ago, Wight said. Within five years, about one-third of Alyeska’s work force will be eligible for retirement.Replacing these experienced employees is now a prime concern for the company, he said. Alyeska is sponsoring 50 trainees in internships and is providing training scholarships for more, Wight said.The company is also participating in initiatives with other industries to train skilled workers. One is the Alaska Process Industries Careers Consortium, a group formed to promote training for process operators, the skilled operators who run industrial facilities.

Phillips gears up for oil exploration near Anchor Point

ANCHOR POINT - As the tungsten steel bit below the towering Nabors Drilling Rig 273 chewed nearly 3,000 foot deep in the rock and mud near Anchor Point, Phillips Alaska Inc. officials said the oil company’s Cosmopolitan Exploration Project has progressed smoothly since a planned 90-day drilling operation began Oct. 21.The 152-foot-tall derrick, shipped in from Wyoming, is the largest rig operating in Alaska, according to Paul Mazzolini, statewide exploration team leader for Phillips.While the rig is large, drilling operations and related facilities cover an area of only about 650 feet by 310 feet on the bluff overlooking Cook Inlet west of the Sterling Highway about 5.5 miles north of Anchor Point.The drill site is called the Hansen well after landowner John Hansen, who leased the surrounding 11 acres or so to the drilling partners.Using a technique called "extended reach drilling," the drill will grind its way down through the bluff about 6,800 feet before curving at a 45-degree angle to reach about three miles out under the Inlet to seek oil.Based on an updated computer analysis of data from two offshore wells drilled by Mobil and Pennzoil in 1967, Phillips geologist Bob Swenson believes drillers have a good shot at finding commercial quantities. Some oil was found at the 1967 Starichkof State No. 1 well, but the site was not developed, he said.It would take about three to five million barrels of oil to make the project viable to plan production drilling and perhaps more wells on the site, Swenson estimated.Phillips Alaska Inc. is fronting 75 percent of the cost of the exploration well, with Forest Oil Corp. picking up 25 percent and Devon Energies 5 percent, according to Phillips spokeswoman Dawn Patience.The exploration phase is expected to cost about $18 million to $23 million, she said.While saying that drilling from land, then angling under the Inlet bed, offers protection from offshore oil spills, Mazzolini noted that working so close to homes along Sterling Highway is an unusual situation.In an effort to monitor any potential effects on local water wells, 40 wells, including 21 within one mile of the derrick, were tested before drilling began, Patience said.After about six years studying the entire basin and the possibility of exploring the old Starichkof offshore well, the Hansen test site was pinpointed based on requirements that it be 500 feet from the high-water mark and at least one-quarter mile from Stariski Creek."This is a lot different from most of the wells we drill in Alaska," Mazzolini said.With most residential drinking water wells in the area tapping water 25 to 150 feet deep, he said drillers are taking the unusual step of casing the oil well with steel pipe sealed with cement down to the 700-foot level."That’s well below where any of the neighbors get water," he said.In addition, Swenson said four 30-foot wells were dug around the rig to regularly monitor for any potential contamination.Drill foreman Ray Springer said most of the 50 to 70 workers typically at the site are from the Kenai Peninsula.Springer, a retired Arco engineer and fisherman from Seldovia, now a Phillips consultant, said that 45 of his 62 workers on site last week were from the borough, with about 15 hailing from south of Nikiski.While the directional-angled method of drilling offers environmental advantages and allows a smaller footprint for the rig, Phillips officials acknowledged there are also practical and economic advantages as well.While oil is the target on this lease, drilling manager Marty Lemon said tests will be conducted for natural gas as the drill digs.Once the planned 18,500-foot drilling depth is reached about mid December, the data and samples collected will be analyzed to see if a sustained drilling operation is feasible.

Struggling commercial fishermen search for solutions

HOMER - Alaska’s fishing businesses are in a world of hurt these days, reeling from the effects of everything from fish farms to climate change, but how to resolve the myriad problems facing fishermen is a million-dollar question.Rep. Drew Scalzi, R-Homer, has some radical proposals for the state-managed salmon, crab and other fisheries, which he pitched to a state convention of commercial fishermen in Petersburg and may introduce to the Alaska Legislature in January.And in Homer, the Alaska Marine Conservation Council board of directors met to discuss a broad range of ideas about revamping federal fisheries, some of which could dramatically strengthen or work to undermine coastal Alaska fishing towns.All this talk comes under the umbrella term "rationalization," meaning efforts to increase efficiency in a notoriously inefficient industry."Rationalization is a huge word," said Alan Parks, a longtime fisherman who is the conservation council’s citizen outreach coordinator in Homer. "People really need to think about what that means."The most familiar example of rationalization in Alaska was the institution of individual fishing quotas in the halibut and black cod fisheries. Before 1995, anyone could fish for either species, which caused the fleet to get so large that federal managers reduced fishing time to two 24-hour periods a year.With IFQs, the public harvest rights were awarded to individuals, allowing them to fish whenever they wanted. That improved safety and fish quality and spread the harvest over eight months.Other results were less savory for many in the fishing industry. Processing plants lost much of their markets for frozen fish, and many fishermen who felt they deserved IFQs didn’t get them. The number of boats has dwindled, reducing the number of crew jobs.Now federal managers are considering IFQs for the big Bering Sea crab fisheries and possibly for bottomfish boats in the Gulf of Alaska. With the halibut and black cod experience behind them, many in Alaska’s fishing industry either want IFQs desperately or will fight them to death.However, IFQs aren’t the only option for rationalizing a fishery. Other options are to create fishing co-operatives in which boats, as well as processing plants, get individual quotas and can work together to wring the most money out of their harvest. That might include timing their fishing trips to coincide with the highest market demand or fishing more carefully to reduce the bycatch of unwanted species.The Alaska Marine Conservation Council doesn’t support or condemn any particular rationalization plan, but wants any plan to reflect its conservation ethic, Parks said."One of our guiding principles is that there is an intrinsic value to fishing in our coastal communities," he said, "and decision makers have the responsibility to take those intrinsic values into consideration when discussing rationalization plans."Other principles include the need to reduce bycatch of unwanted species, to protect the habitat that is crucial for the long-term health of fish and other marine animals and to convert boats to less-destructive means of fishing, such as using pots rather than bottom trawling."Bycatch, habitat protection, gear conversion - they all need to be talked about now and incorporated into rationalization plans," Parks said. "If not, you don’t really address the issues" that are casting doubt on the viability of Alaska’s fisheries.The council has about 800 members in Alaska, many of whom are coastal fishermen, Parks said.Some of the problems inherent in federal crab and groundfish fisheries are mirrored in state waters, but at least their markets are relatively strong. Salmon fishermen, on the other hand, have seen their valuable markets undercut by salmon farms, and the combination of low prices and high expenses has made salmon fisheries less viable now than at any time since the mid-1970s.Across Alaska, fishermen are scrambling to find an edge in the increasingly global salmon market.In Kachemak Bay and elsewhere, fishermen have formed cooperatives to ensure high quality and take advantage of niche markets. Scalzi thinks the Alaska Legislature could lend the industry a hand, and he has nearly a dozen bills ready for introduction that shore up the hard-pressed salmon industry.His proposals could be shot down by fishermen, the Legislature or the governor, Scalzi said, but that’s not the point of bringing up these issues. He’s trying to get people to "think outside the box.""The industry has to take a good look at the next 20 to 30 years," he said. "What we are going to need to be viable again? What are we going to do to keep canneries in remote areas? A love-hate relationship exists between canneries and fishermen, but we need each other. We have to make the business climate acceptable to processors as well as to fishermen."

Board appoints new chief executive at Valley Hospital

Valley Hospital’s operating board of directors has approved the appointment of George V. Larson as new chief executive.His contract begins Dec. 1. However, Larson probably will start his new post on the first workday, Monday, Dec. 3, said Elizabeth Ripley, Valley Hospital Association director of community health planning.The board gave Larson the nod Oct. 26.Larson will move to Alaska from Wickenburg, Ariz., where he serves as administrator of Wickenburg Regional Medical Center, an 80-bed acute care hospital. He has held similar positions in Holyoke, Colo., and Bethel, Maine. Larson, a certified public accountant, earned a master’s degree in personnel administration with a concentration in health care administration from Central Michigan University in Mount Pleasant. He received a bachelor’s degree in business administration from La Sierra University.At Valley Hospital Association Larson will lead an organization with annual revenues of $50 million and 500 employees. VHA includes Valley Hospital in Palmer, Valley Hospital Medical Center in Wasilla and home health, hospice and pharmaceutical agencies.Last February VHA compiled a task force to begin the search for a new chief executive, although work began in earnest in May, Ripley said.The organization worked with an executive search company that narrowed the list of candidates to nine, Ripley said."We interviewed five of the nine," she said, adding that on-site interviews were conducted in late September."George personifies these corporate values and brings with him the expertise to provide sound organizational leadership to our growing hospital system," said Kathleen Kelly, VHA operating board president. "From business analysis to finance and relationship building, George brings extensive skills and experience that make him an excellent match for the needs of our organization."In a statement, Larson described his new position in Alaska. "I am eager to begin my role in the leadership of this progressive health care organization and in developing a relationship with the board of directors, employees and community residents."

Timing is key to The Alaska Club's growth

Ten years ago, Andrew Eker and Tom Behan had a dream: to build a statewide network of athletic clubs in Alaska. Through a series of mergers and acquisitions, the partners have grown from owning a single location in Anchorage to 12 in Anchorage, Fairbanks, Juneau, Eagle River and Wasilla.The Alaska Club Network now has about 40,000 members and 800 full- and part-time employees. Eker projects total company revenues to exceed $24 million in 2002. The statewide network is now largely in place."We’re getting close to accomplishing that goal," Eker said.But getting there wasn’t easy. On Feb. 10, 1986, a limited partnership formed by Eker and Behan, with 50 investors, purchased the Teamsters Recreation Center in Anchorage for $9 million in an owner-financed deal. That was right around the time oil prices collapsed and the Alaska economy went into a tailspin."We really scrambled the first couple of years to get it up to where it could pay the rent," Eker said. "There were no returns right away to our investors."It was a trial by fire that taught Eker and Behan how to run a successful fitness club."You learn going up, but you learn a lot more going down," Eker said. Those lessons were never forgotten. "We’ve been in an expansion mode ever since."Eker and Behan were uniquely suited to running fitness clubs. For one thing, they both are active in sports. Behan was a handball player, while Eker enjoys skiing, biking, tennis and golf.Behan, as former president of Alaska Pacific Bank, understood financing. Eker was a real estate developer and was involved in construction and business management. Asked what he likes to do best, Eker’s eyes light up and he replies, "mergers and acquisitions."And merge and acquire he has. Here’s the list:1989: purchase of Anchorage Racquet Club Inc.;1994: purchase of the Anchorage Racquet & Fitness Club building;1995: purchase of the Fairbanks Athletic Club;1997: purchase of three Alaska Athletic Clubs, two in Anchorage and one in Fairbanks;1997: conversion of the former Alaska Builders Cache into The Alaska Club South;1998: purchase of World Gyms in Eagle River and West Anchorage; and1999: purchase of Valley Fitness Center in Wasilla.This year, the company leased a former Alaska Marketplace store in Anchorage and began converting it into a new home for The Alaska Club West, plus a new women-only facility. In October, the company announced the purchase of the two Juneau Racquet Clubs.Any business professor - and any observer of the dot-com debacle of the past year - will tell you that rapid growth, when not properly managed, can cause a company to collapse, usually for lack of cash. So how did The Alaska Club grow successfully? Eker cites a variety of reasons.Find talented peopleThe original partners, Eker and Behan, brought real estate, construction and financing skills to the table. Eker also cites two other key team members: John Marchetti, vice president of administration and finance, and Robert Brewster, vice president of operations.Those four key players have worked together to make the company grow, Eker said.Use creative financingFor each acquisition, Behan and Eker formed a limited partnership and sought investors. The original group of 50 investors now numbers about 150, most of them Alaskans; many have invested in more than one transaction, Eker said. The partnerships provide the cash needed to make a sale work.Another technique the company has used repeatedly is to offer equity in The Alaska Club to the owners of the firms they buy. This minimizes the amount of cash needed for each deal, Eker said. Owner financing has been used in several transactions as well, he said.Actual operation of the clubs is divided between two corporations: The Alaska Club Inc., which owns the Anchorage, Eagle River and Wasilla facilities; and Athletic Clubs Inc., which owns the Fairbanks and Juneau clubs. Eker is president of both.Timing is everything"If there’s anything I’ve found out in business, it’s that timing is the governing factor," Eker said. "Until the timing is right, nothing happens." He said it took five years to persuade the Teamsters to sell their Fairbanks facility; the Wasilla transaction took three years.Then there’s the timing of the fitness craze in the United States, which began about the time the partners bought their first club - and it has been growing ever since.Eker pointed out that fitness equipment generates far more revenue per square foot than tennis or racquetball. An 800-square-foot racquetball court provides exercise for four people. That same space, used for fitness, can accommodate 20 paying customers, he said.Location, location, locationWhat’s true for McDonald’s is true for fitness clubs: Location is vital."We’ve discovered that the distance people will travel for fitness is limited," Eker said. "Also, they will travel shorter distances for fitness than they will for tennis or racquetball."That explains the company’s drive for multiple locations in Alaska’s three largest cities. Eker said that opening a new location drops attendance at existing facilities at first, but in the long run it attracts people who were never customers before, for a net gain.Serve the customerEver since Day One, the company has invested heavily in upgrading the clubs it buys. In 1993, the Alaska Industrial Development and Export Authority backed an $8 million loan from National Bank of Alaska, now Wells Fargo Bank Alaska. The money was used to expand The Alaska Club’s original location, refinance existing loans and pay off the Teamsters Union, which had helped finance the original purchase."Buy it, then fix it up" could be a motto for the company because it has done so many times."Annually, we create a plan to update and upgrade," Eker said. "I think the membership appreciates it. We don’t want them to get bored. We rely on them coming back every month."Eker said he learned a lesson about the changing needs of his customers when he opened The Alaska Club South. "Parents wanted something for young people 8-14 to do," he said. "We missed the market," he freely admits. His response: Add things kids like - a rock climbing wall, a game room, a pool and a basketball court. Membership promptly took off and the club is now a success, he said.Eker said another important way he serves his customers is with what he calls "reciprocity." That means any person who signs up at any club in the state can use any other club in the network."We’re trying to create value through convenience," he said. "It’s really viewed as a value by our customers."Eker said reciprocity for Juneau will begin when the final paperwork is signed, which he expects to occur by Dec. 1.Eker pointed to the Wasilla facility as an example of how his company’s experience can turn things around."When we bought it, it had 600-800 members. It’s grown to almost 2,000 members in 18 months," Eker said. "The original owner created a nice facility and he had good intentions, but he didn’t understand the business."Eker said he’s focused now on completing the two clubs at the West Anchorage facility and is beginning the analysis of what will be required at the newly purchased Juneau clubs.And while he won’t disclose any other future plans, you can be sure he’s got more deals in the wings. He’s just waiting until the timing is right.

Brewery owners manage growth

Marcy Larson, co-owner of Juneau’s Alaskan Brewing Co., has some hard-won advice for small business operators managing growth: Be careful, pay attention to quality and make sure you’ve got strength in your home market before you expand out of state.Listen to your banker is another bit of advice."There have been many times our banker has looked at sales projections and made us scale back, to make sure we can pay our loan even if sales didn’t meet expectations," she said. "That conservative view helped us."It’s easy to dream," Larson added. "Alaska is full of optimists, and it’s real easy to get up there in the stars without knowing where the ladder is."You have to take risks. That’s business. But do everything you can to mitigate those risks."Alaskan Brewing, which makes amber, pale ales and English strong bitter that have become popular in the Alaska and the Pacific Northwest, has had brisk growth since the company started in 1986. Eighty Alaskans bought shares to help launch Alaskan Brewing, and 75 are still with the company.Since that first year, production has grown ninefold to 90,000 barrels per year. Seventy-five percent of the company’s output is now sold out-of-state, in Pacific Northwest states.The popular Alaskan Amber is now the second-best-selling microbrew in Washington state and is outsold only by Red Hook, which is helped by its part-owner, a major brewing company.


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