Uber adds more services to its app in its quest for profit

SAN FRANCISCO (AP) — Uber is cramming more services into its ride-hailing app as it explores ways to generate more revenue and finally turn a profit. The makeover announced Sept. 26 includes force-feeding its food delivery service, “Eats,” into the Uber app that millions of people use to summon a ride. That means Uber users who don’t already have the “Eats” app may now be asked whether they want to order some food in the ride-hailing app. Uber also will start making other changes to the ride-hailing app as part of its effort to create an “operating system for life,” according to company CEO Dara Khosrowshahi. “This is a big change for us, but we, as a company, have never been afraid of big changes,” Khosrowshahi said. Although Khosrowshahi didn’t mention it, Uber is under intensifying pressure to start making money. With the exception of when it has generated a windfall by selling a part of the company, Uber has done nothing but lose money since its inception, while also pioneering a way for people to easily find someone come pick them up at prices that undercut traditional taxis. With its losses still mounting, Uber’s stock has plunged by nearly 30% since pricing its shares at $45 apiece when it became a publicly held company in May. The stock gained 8 cents to $31.76 in Sept. 26 trading. In an effort to reverse its losses, Uber has been gradually raising the cost of rides and becoming more aggressive it its attempts to plumb new sources of revenue. That has included food delivery and helping passengers find other means of transportation on bikes and scooters. Uber Eats has proven popular, with revenue surging 80% during the first half of this year to $1.1 billion. But Uber remains mired in a morass of red ink, with losses of $6.2 billion during the first half of this year. Most of that setback reflected nearly $4 billion in employee stock compensation that it had to record as part of its initial public offering, but even without that accounting expense, the San Francisco company still isn’t close to making money, much to the dismay of investors. So, Uber will be rolling out a new menu of services in its ride-hailing app. It has already been testing the concept among some users in the U.S., Europe and Australia within the ride-hailing app’s map section, but now it will create a new gateway at the bottom of the app. Users of the ride-hailing app will get the new services feature, whether they want it or not, according to the company. Eats will be included in the newly created menu, and at times Uber may ask a user if they want to order some food from a nearby restaurant participating in the service. Depending on user reaction, Uber may add other services, such as a supermarket delivering groceries. In a recent research report, HSBC analyst Masha Kahn predicted Uber also could team up with department store chains, banks and digital subscription services with a variety of offers served up through the ride-hailing app. Even if Uber is able to bring in more revenue with a new range of services, it still may face a long road to profitability. It still faces a number of concerns about the safety of its services, and California recently approved a new law that could force it to end its practice of classifying its drivers as independent contracts and treat them as full-time employees instead. That could require Uber to begin paying a variety of new benefits that would dramatically increase its expenses.

Permanent Fund Corp. allocates $200M for in-state investments

The Alaska Permanent Fund Corp. is partnering with one of Alaska’s premier investment firms to put some of the capital from its $65 billion namesake fund to work closer to home. Anchorage-based McKinley Capital Management LLC will manage half of the newly formed $200 million Alaska Investment Program, which will seek in-state investments for the Permanent Fund, according to a Sept. 20 APFC statement. The Alaska Investment Program is a means of supporting growing businesses in the state but Permanent Fund Corp. CEO Angela Rodell emphasized that any investments made with the $200 million won’t get preferential treatment just because they’re in Alaska. “From my standpoint, our No. 1 and only goal is really to beat that private equity benchmark, so (the Alaska Investment Program) has to be contributive to the fund value in a positive way,” Rodell said in an interview. As with most investment funds, the APFC has return benchmarks, or standards, that its managers are expected to meet and ideally exceed. Those benchmarks vary for each type of investment and typically correlate to the amount of risk an investment entails. The private equity, or capital, investments that will be made with the $200 million demand a higher rate of return than do real estate purchases, for example, because they require accepting more risk of failure. The APFC uses a private equity benchmark established by the international firm Cambridge and Associates, which set a return goal of 12.7 percent for the just completed 2019 state fiscal year. The Permanent Fund’s roughly $8.7 billion of private equity investments beat that by netting a 19.2 percent return in fiscal 2019, according to the 2019 APFC Annual Report. Rodell said she is waiting to see what sectors of the economy the investment capital will be deployed into as the APFC Board of Trustees put few sideboards on the program beyond the return objectives and Alaska focus. “I think we’re all just really curious to see where this money is going to land and be put to work, but our goal is to make money for the (Permanent) Fund,” she said. The APFC Board of Trustees passed a resolution in September 2018 directing staff to establish the Alaska Investment Program. APFC staff had been working to set up the program in the year since, and Rodell, a former commissioner of the Alaska Department of Revenue, noted that the Alaska program will require a long-term view. She expects it will take upwards of five years just to deploy the $200 million, which says nothing about when those investments will start generating a return. “We will lose money to begin with; that is normal; that is not uncommon,” said Rodell, adding that private equity investments often follow what is called a “J-curve.” “You have to spend a lot of money before you start to see that positive cash flow return and return on investment, so the challenge with this is everybody has to be really patient. It’s not going get deployed in six months and its not going to be making money in eight months and I think that will be a challenge for people because we like our instant gratification.” McKinley Capital CEO Rob Gillam said working with the APFC is nothing new for his company, as McKinley has managed Permanent Fund assets for 22 years. McKinley leaders are excited to invest in the state because they are “bullish on Alaska,” Gillam said. He stressed that the Permanent Fund trustees’ collective decision to devote $200 million to Alaska is an indicator they believe there’s money to be made in the state, as it could’ve been put towards projects literally anywhere else on the planet. The $100 million McKinley will manage will be focused on small to midsized investments in the $2 million to $15 million range with high growth potential, according to Gillam. While no Alaska investments have been made yet, Gillam said he sees them being largely in what he calls “new Alaska,” or sectors such as renewable energy, technology and logistics, to name a few. “Those are the kinds of companies that generally don’t have access to capital and we’re going to fill that role,” he said. “There’s an enormous amount of opportunities out there.” Gillam added that McKinley leaders understand the situation a lot of Alaska entrepreneurs looking for funding face because their company — founded in 1990 by Gillam’s late father and Alaska magnate Bob Gillam — didn’t have access to capital either. “When we founded McKinley Capital 30 years ago we got exactly zero capital support from anyone and fortunately we were able to scrape together a living and build a business. Now we’re a very global business with clients all over the world and investments all over the world from places like Botswana and Nigeria to the New York Stock Exchange,” he said. “It’s wonderful that there is now an opportunity to have capital available to Alaskans that wasn’t available 30 years ago.” McKinley now manages a roughly $5 billion investment portfolio. North Carolina-based Barings LLC, a subsidiary of the financial and insurance giant MassMutual, will manage the other $100 million in the Alaska Investment Program in private credit and infrastructure sectors. In the coming weeks McKinley will put an Alaska Investment Program application portal on its website. When the money is eventually invested and hopefully starts generating strong returns, Gillam said it will create what he sees as a “virtuous cycle.” “Oil and gas come out of the ground, a royalty goes into the (Permanent) Fund, they invest it, they generate a return, the return gets, in-part, paid back to Alaskans and now when this royalty gets invested in place like Alaska — a little bit — and a return is generated and money goes back to Alaskans,” he said. Technology allows McKinley to invest successfully worldwide, but being an Alaska-based firm provides the advantage of knowing what’s going on in the state, and what opportunities arise from that, first. “There’s a little of an ‘it’s raining out there’ kind of attitude (about the Alaska economy) and we would say that there are as many opportunities in Alaska today as there were a decade ago and we just need to start looking for them,” he said. “Look at our business. Nobody would’ve thought you could’ve built a Wall Street firm 30 years ago in Anchorage, Alaska, and here we are with offices in New York and Chicago and Abu Dhabi. What business next door to you or down the street or across town or in Fairbanks or in Juneau is being built today where somebody needs growth capital that could be the next McKinley Capital 30 years from now? There’s a lot of them and hardworking people and it’s our job to find them.” Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: State has multi-year plan for fisheries priorities on federal council

Alaska’s federal fisheries for halibut, cod, pollock, flatfish, mackerel, sablefish and rockfish are economically important, both on a state and national level. They form the cornerstones of the economies of many of our coastal communities and provide numerous jobs at the fishing, processing and transportation/shipping levels. Through exports they provide a source of nutrition worldwide. As a result, decisions regarding their management are critically important to our state. Alaska shares management responsibilities for federal (3 to 200 miles) fisheries with the federal government. Decisions regarding the management of these fisheries are made via the North Pacific Fishery Management Council. This Council has 11 voting seats, of which 6 are nominated by the State of Alaska. As a result, Alaska has the opportunity to focus the work of the council on issues of import to our state and its fishermen and communities. We have spent the past several months speaking with a diverse range of user groups, delegations from our coastal communities, fishermen, processor representatives and other Alaskans to assess the issues facing them. These discussions were valuable, identifying not only the issues, but also in identifying priorities and potential solutions. Based on our discussions it is clear that many issues exist. Fortunately, we also found a willingness by many to roll up their sleeves and put in the hard work to resolve these issues. Based on these discussions we plan to focus our collective efforts in the council over the next several years on several areas, each of import to fishery participants and our coastal communities. First is to resolve long-standing issues related to the observer program for groundfish and halibut fisheries. It is critical that managers continue to have a robust observer program that provides high quality data for stock assessments and fisheries management. But the program needs to be affordable and minimize impacts on fishing and processing operations. As technologies improve, we need to better incorporate electronic monitoring systems into the program. Finding the right mix will be challenging but is critical towards ensuring catches and bycatch are accurately monitored and established limits are enforced in a manner that is economically viable for fishery participants. We also plan to focus our attention on developing a comprehensive management program for the Bering Sea and Aleutian Islands trawl cod fishery. Catch limits have declined in recent years and the pace of this fishery has grown to a point where fishermen safety and bycatch have become concerns. As we explore management alternatives for this fishery, we will consider options for rationalization of the fishery based on catch histories, protection of Bering Sea and Aleutian Islands coastal communities with shore-based processing plants, opportunities for cooperative fisheries strategies, and means to further reduce bycatch of halibut. As we develop these options, we will also need to assure that we protect existing fisheries in the Gulf of Alaska through enacting meaningful sideboards. We also plan to develop a funding mechanism for the compensated reallocation of commercial halibut individual fishing quota, or IFQ, to the charter boat sector to allow this industry relief from restrictive regulations enacted as a result of reduced allocations. This would fully implement the council’s recreational quota entity program that allows the charter industry to hold commercial quota purchased from willing sellers to allow private anglers the opportunity for more liberal harvest opportunities that mirror those of non-guided anglers. The program is based on a willing seller-willing buyer model financed by some type of charter stamp. Finally, we plan to explore options for abundance-based management options for bycatch of halibut in Bering Sea and Aleutian Islands groundfish fisheries. The allocation to directed halibut fisheries floats with abundance, where at lower abundance levels allocations are lower and at higher abundance levels allocations are higher. Halibut bycatch quotas, however, are fixed and become a larger portion of total halibut catch when abundance declines. We need to explore if there are options to float the bycatch quotas with overall abundance. We understand the complexities associated with this but need to assess the options available. Based on discussions with a wide range of users we will not begin development of a rationalization program for Gulf of Alaska trawl fisheries. While there is a consensus that there are significant issues with this fishery, there is not broad consensus on the biggest challenges facing the fishery and whether a rationalization program should be considered to address them. We would appreciate hearing suggestions from stakeholders for regulatory measures to improve management of the fisheries under the current management structure. There are many other issues including routine options such as setting annual catch limits and development of charter halibut management measures to longer term issues related to the halibut IFQ fishery and bare boat halibut charters that will require council time. We understand this and will continue our commitment to these efforts. In closing, we understand the importance of Alaska’s federal fisheries and their contribution to our coastal economies and to fishery participants in the harvesting and processing sectors. We have an excellent council team and are looking forward to working with others on issues facing these fisheries, including the priorities identified above. Doug Vincent-Lang is the commissioner of the Alaska Department of Fish and Game.

Movers and Shakers for Sept. 29

Cassi Campbell was hired as Blueprint Alaska’s first account executive. Campbell will work for the agency’s clients in a variety of capacities, including managing social media, writing and editing content, providing event support, and media relations. Campbell, a born-and-raised Alaskan, graduated from the University of Wisconsin- River Falls with a bachelor’s degree in marketing communications with concentrations in broadcast journalism and psychology in 2011 and is scheduled to complete her master’s degree in strategic communications in December 2019 from Purdue University. Her professional work experience brings unique industry knowledge to the firm after working with Matanuska Electric Association from 2012-19 and the University of Alaska Anchorage’s Matanuska Susitna College from January-September 2019. Alaska Department of Transportation and Public Facilities Deputy Commissioner John Binder was appointed chair of the National Association of State Aviation Officials. As deputy commissioner of Aviation, Binder leads Ted Stevens Anchorage and Fairbanks international airports, along with 237 state owned airports across Alaska. NASAO is dedicated to representing the interests of the states and the public before policymakers at the federal level. NASAO works closely with the Department of Transportation, the National Aeronautics and Space Administration, the Transportation Research Board and the American Association of State Highway and Transportation Officials. Samantha Cherot was appointed as Alaska Public Defender, filling the position vacated in April by Quinlan Steiner. She will serve a term of four years upon legislative confirmation. Cherot has been an Alaska resident for 32 years, and has practiced law for nearly 12 years. She graduated from California Western School of Law in 2007, and most recently worked as an assistant public defender in Anchorage. Craig Campbell was appointed to the business owner/manager seat on the Alaska Railroad Corp. board of directors, effective Sept. 11 through Oct. 3, and reappointed Oct. 3 through Oct. 3, 2024. Campbell has an extensive background in both the public and private sector, with 35 years of aerospace experience in the U.S. Air Force and Alaska Air National Guard, culminating as the Adjutant General, Alaska National Guard, retiring in 2009 at the rank of lieutenant general and simultaneously becoming Alaska’s 10th lieutenant governor. Campbell has more than 15 years of aviation consulting experience, both in the U.S. and internationally. He served as president and CEO for Alaska Aerospace for seven years, and currently serves as president for Aurora Launch Services. Retired Col. John “Jack” Anthony was appointed to the aerospace industry seat on the board of directors of the Alaska Aerospace Corp., effective Sept. 11 through July 1, 2022. Anthony has nearly 41 years of space research, engineering, operations, leadership, program management, and education experience during his career. He has 26 years of service in the U.S. Air Force, retired in the grade of colonel, and also has experience working with the National Reconnaissance Office and National Aeronautics and Space Administration. He currently supports the National Space Defense Center as a part-time advisor and serves on the Aurora Launch Services Board of Directors. Rasmuson Foundation announced three new staff members and recognized an existing staff member with a career development opportunity. Tristan Agnauraq Morgan was hired as momentum fellow. She is participating in a partnership between Philanthropy Northwest and Rasmuson Foundation to prepare individuals from underrepresented communities for careers in philanthropy with a focus on diversity, equity and inclusion. Morgan grew up in Anchorage and attended University of Alaska Anchorage where she studied art and professional writing. While in college, Morgan interned with ASRC Energy Services, a subsidiary of Arctic Slope Regional Corp. After graduating in December 2017, Morgan began work as a human resources coordinator with Denali Family Services, where she also helped organize art and indigenous youth events with the direct service staff working with children and adolescents. Josh Hemsath was hired as program fellow. Hemsath is participating in a separate two-year fellowship with the program team, our grantmaking arm. He brings more than 10 years of experience with nonprofits in Alaska and around the Pacific Northwest. He grew up in the Anchorage area and holds a bachelor’s degree in community health from Montana State University and a master’s of public administration from the University of Washington. For the last six years, Hemsath represented Pride Foundation in Alaska as its regional philanthropy officer, the sole staff member in the state. Allison Macanga was hired as administrative assistant. She moved to Anchorage from New Jersey in 2016 and previously worked in New York City and Philadelphia, with experience in radio, video, and television production, including casting for a wide variety of reality TV shows. She has a bachelor’s degree in communications with a minor in screen studies from Monmouth University. Momentum fellow and external affairs associate Emily Kwon will take part in the Philanthropy Northwest Momentum program over the next two years to help her develop further as a professional in philanthropy. Kwon studied biological sciences at Arizona State University, where she became involved with the Asian Pacific American community including the Asian Chamber of Commerce. She joined the Foundation staff in 2017 as a communications intern and recently was promoted to serve as an associate on the external affairs team. Keli Hite McGee has been appointed as administrator at The Surgery Center of Fairbanks, effective Oct. 7. Most recently, Hite McGee served as chief human resources officer at the University of Alaska. Hite McGee’s background includes more than 20 years in communication, human resources, training and coaching, change management and leadership consulting with work in industries ranging from healthcare and higher education to private, state and federal organizations. Her career started as Golden Valley Electric Association’s organizational development officer, providing change management facilitation, followed by CEO of Hites Organizational Leadership &Training, where she worked with executives and organizations in the private and public sector to manage and implement change. Past healthcare roles included serving as CEO of Alaska Heart and Vascular Institute and as interim administrator for Anchorage Women’s Clinic. She has lived in Alaska for more than 25 years in communities throughout the state and is a graduate of University of Alaska Fairbanks. Chris Yelverton was promoted to senior payments advisor with KeyBank Alaska’s Enterprise Commercial Payments Group. Yelverton joined KeyBank in December 1998 as a teller and has held several positions in the retail division including [email protected] relationship manager and area retail leader. Yelverton joined the Commercial Banking team in August 2013 and most recently served as a Relationship Manager. A lifelong Alaskan, Yelverton graduated with a bachelor’s degree in finance from the University of Alaska Anchorage and is a graduate of the Pacific Coast Banking School.

Exploration resumes for gold west of Cook Inlet

A new company is restarting exploration at a long-dormant gold prospect on the west side of Cook Inlet. Newly formed HighGold Mining Inc. started drilling at the Johnson Tract prospect in late August. The Vancouver-based mining junior also announced Sept. 23 that it had started trading on the Canadian TSX Venture Exchange. HighGold CEO Darwin Green said in a formal statement that the company is starting with approximately 2,000 meters of total drilling in eight to 10 boreholes. The data derived from that work, combined with historic drilling results, will inform the first official resources estimate of the prospect, according to Green. That document is expected to be completed early next year. The Johnson Tract prospect sits on Cook Inlet Region Inc., or CIRI, in-holdings within the boundaries of Lake Clark National Park and Preserve. Last year CIRI leased 20,900 acres of the property to Vancouver-based Constantine Metal Resources Ltd. for 10 years. Several Southcentral Alaska Native village corporations also own surface rights to land there, while CIRI holds the subsurface mineral rights to those areas. “CIRI prides itself on projects that deliver economic benefits to our shareholders while respecting and preserving the land,” CIRI CEO Sophie Minich said when the Constantine lease agreement was announced in July 2018. “With Constantine’s excellent reputation for responsible mineral exploration and development activities, we know we have chosen an ideal partner.” CIRI spokesman Ethan Tyler wrote via email that the Southcentral region Alaska Native corporation prioritizes striking a balance between developing its resources and protecting land for future generations. He added that the Johnson Tract prospect is one of CIRI's numerous land selections with known mineral potential and it has been the company's intent to develop those prospects when the economics make sense. "HighGold's management team and board of directors are a proven technical team and have a track record as trusted operators with a reputation for safety and quality work," Tyler wrote. "This, combined with CIRI's reputation of excellence and land stewardship, demonstrates CIRI's mindfulness to any public concerns regarding resource development." HighGold's Green has also been part of Constantine's executive leadership, with a focus on exploration. The multi-metal Johnson Tract deposit sits about 10 miles from tidewater near Tuxedni Bay, about 125 miles southwest of Anchorage. HighGold is a spin-out of Constantine, which is also exploring the Palmer copper prospect in the Chilkat River valley north of Haines. HighGold also took over Constantine’s Munro-Croesus gold project in eastern Ontario. According to the mining company, the lease with CIRI calls for annual payments of $75,000 for the first five years, doubling to $150,000 per year for the second half of the term. HighGold is also required to invest $10 million into the Johnson Tract prospect over the 10 years, with $7.5 million of that coming in the first six years. If the decision is made to ultimately build a mine — currently envisioned as an underground operation — CIRI could obtain a 25 percent interest in the project at that time, according to HighGold. The Alaska Native regional corporation would also receive net smelter royalties of 2 percent to 4 percent if a mine is developed. The exploration company acknowledges Johnson is a relatively small prospect, but one that has the potential for very high grades of ore based on the prior drilling work. Anaconda mining company drilled 88 holes at Johnson totaling more than 26,800 meters between 1982 and 1995 and a September HighGold investor presentation calls the area a regional opportunity “with multiple underexplored satellite prospects.” The prior drilling revealed gold resources in excess of 10 grams per metric ton in many areas, as well as high-grade zinc and copper ore, according to HighGold. If developed, the mine would require an access road to a port, both of which would need to be built. The CIRI leases also come with access easement rights and the site has an airstrip built for the earlier exploration work, according to the company. Elwood Brehmer can be reached at [email protected]

Launch of Goldbelt vessel a hallmark achievement for Homer

The largest vessel to be built in Homer hit the waves this fall in Kachemak Bay for its maiden voyage. The Goldbelt Seawolf, a 74 foot-long catamaran, launched from Homer earlier this month, headed for service in Southeast Alaska. Built by Bay Welding, the vessel is owned by Goldbelt Transportation Inc., a subsidiary of Juneau Alaska Native corporation Goldbelt Inc. The vessel, which took 11 months to build, will be used to transport workers to and from the Kensington Mine, which Goldbelt Transportation provides service to, as well as for other potential lines of business. Notably, though, the partners involved in the project were all Alaskan. Coast Wise Corp. of Anchorage designed the boat and Alaska Crane transported it from the shipyard in Homer to the water. Goldbelt Transportation made a point to choose Alaskan companies to complete the project, said Goldbelt interim president and CEO McHugh Pierre in a press release. “We place a high value on any ability we have to contribute to the local economy through the commissioning of in-state projects wherever possible,” he said. “In the same vein, we value Alaskan employment — every employee of Goldbelt Transportation that works in Alaska, lives in Alaska, and we are very proud of their hard work and continued success.” It’s a milestone for Homer, too. The small community, situated at the end of the road system on the Kenai Peninsula, has been working to build its marine trades industry for decades. Homer has had a robust commercial fishing fleet since the late 1930s and today is home to an extensive tourism and recreational fishing industry in addition to its commercial fishing fleet. All those businesses need boats, and community organizations and business leaders have been working to try to strengthen the industry there to provide them. Bay Welding recently expanded its space, which the Seawolf didn’t quite fit into, said general manager Eric Engebretson. “This boat was just a little bigger than our shop length-wise,” he said. “We had a long debate when we built the shop how big of a boat we wanted to put in there, and we missed it by a few feet. We made it work down to the inches. Which is nothing new for us; we have a history of using every square foot we can, every inch of height.” The business recently expanded its space with the anticipation of building larger boats, but not specifically the Seawolf, though they had heard of the project when they decided to expand. There is a market for bigger boats, Engebretson said, and Bay Welding can provide for that with the space it has now. It’s more expensive to provide shop space in Alaska, in part because competitors in the Lower 48 don’t have to have enclosed, heated shop space to do the same work. However, Bay Welding was able to offer a competitive bid to build the Seawolf and offered local knowledge. On top of that, workers are closer in Homer for future maintenance than Seattle workers would be, Engebretson said. There’s an ethos to doing business locally as well, he said. “Many of our companies are Alaska businesses or Alaska individuals … they appreciate the value of supporting each others’ businesses,” he said. “They identify with the fact that we’re here. There’s a repetitive motion of businesses doing business with each other that is self-perpetuating.” Homer has been positioning itself to be a center for boat work for decades. The Homer Marine Trades Association, an industry group that promotes Homer as a destination for boat work, has been marketing the city’s services and collaborating with the city harbor since 1994, trying to bring projects like the Seawolf to the area. The launch of the Seawolf was an achievement for the region, said Kate Mitchell with the Homer Marine Trades Association. “(Goldbelt is) a Native corporation that chose to keep their dollars in Alaska … they wanted that boat to be a symbol of Alaska manufacturing,” she said. The first cannery came to Homer in 1939, meaning there were boats fishing for salmon before that, Mitchell said. Lower Cook Inlet has had a strong commercial fishing industry for nearly a century, but the professional businesses providing boat services were not as developed. The industry began to grow as the town did, but fishermen long had to go to Seattle for professional services. By the 1970s, there were a handful of individual businesses working in the marine industries in Homer, but there was little collaboration. When Mitchell founded Mitchell’s Marine Canvas in 1978 — which would later become NOMAR — the business owners were still fairly siloed, she said. When she asked whether there was side work she could do on the interior of boats others were working on, she said she was met with confusion. “That’s just how oblique it was, that anybody would care what they were doing collectively,” she said. Slowly, the number of businesses serving both commercial and sportfishing boats in Homer grew. Today, the region features businesses offering services ranging from welding to upholstery to brailer bags. While there are still many seasonal jobs, the jobs in the marine trades tend to be year-round and pay fairly well, which helps to strengthen and diversify the area’s economy, she said. The main bottleneck to the marine trades industry is workforce development, as there’s a lack of interest in trades education among young people, she said. Homer Marine Trades has been working with AVTEC in Seward and with the university system to provide funding and education opportunities for individuals interested in going into the trades in an effort to grow interest. The long history of efforts to grow the business was part of why the industry group was so excited about the launch of the Seawolf. Bay Welding is a Homer-grown business that was able to compete for a large project, showing off the complete spectrum of work available in the area. “We, being these hippies at the end of the road, had the moxie to establish a marine trades association that markets Homer to the world,” Mitchell said. “I’m like a parent — I’m just proud as punch of what we’ve done.” Elizabeth Earl can be reached at [email protected]

FISH FACTOR: North Pacific council set to convene in Homer

Federal stewards of Alaska’s fisheries will meet in Homer for the first time since 1983 as they continue their pursuit of involving more people in policy maki From Sept. 30 to Oct. 10, the Spit will be aswarm with entourages of the 15 member North Pacific Fishery Management Council which oversees more than 25 stocks in waters from three to 200 miles offshore, the source of most of Alaska’s fish volumes. The NPFMC is one of eight regional councils established by the Magnuson-Stevens Fishery Conservation and Management Act in 1976 that booted foreign fleets to waters beyond 200 miles and “Americanized” the Bering Sea fisheries. “The council certainly is interested in engaging more stakeholders, particularly from rural and Alaska Native communities, and by going to more coastal communities, it allows them more opportunity for input into the process,” said Dave Witherell, council executive director, adding that in recent years the council has expanded beyond Kodiak, Juneau and Sitka to convene in Nome and Dutch Harbor. At Homer, following the lead of the state Board of Fisheries, a first ever “Intro to the Council Process” workshop will be held to make the policy process less daunting. Witherell said that came at the suggestion of the council’s local engagement committee created in 2018. “It’s quite a steep learning curve to understand all the ins and outs and goings on at a council meeting and what’s written in our analyses,” Witherell said. “We’re trying to open it up so that someone who may not follow or live and breathe the council process can still participate. We’re trying to put it out there in plain language.” Plain language is also what you’ll find on the revamped council website. All postings of meeting agendas, document overviews, etc. are in a “conversational style” and have been consolidated in one place, said Maria Davis, council IT specialist. “Some of the topics are very complex so distilling them down into two or three sentences may not be exactly what is happening, but it gives them a large overview. Then you can read the analysis if you’re really interested in a lot of the detail,” she said adding that searchable digital content is included back to 2014. “It’s so easy to find documents and it’s so easy for the staff to upload their documents,” Davis said. “There’s also a public comment portal where you can read comments and you can upload your comments for committee and council meetings under each agenda item. “It’s very user friendly and you get a return email that says thank you, your comment has been received and council members and the general public can see it immediately. It’s really been a game changer as far as accessibility for the public.” The council members know that the topics they discuss and the decisions they make affect many who are not directly involved in fishing, Davis added. “It’s also all the businesses where you live year round and the communities,” she said. “We want to hear from them and we want to make it easy and not intimidating.” The industry will get a first glimpse at potential 2021 catches of Alaska pollock, cod, sablefish, rockfish, flounders and other whitefish at the Homer meeting. www.npfmc.org More women in fish Dave Witherell stepped up to the NPFMC executive director role when after 16 years Chris Oliver moved to Washington, D.C., to take the helm at NOAA Fisheries two years ago. Witherell chose Diana Evans to be deputy director, the first woman to hold that position. Evans has worked as a fishery analyst for the council since 2002. At the Homer meeting, two women also will be newly seated to replace Theresa Peterson of Kodiak and Buck Laukitis of Homer, whose terms have expired. Cora Campbell and Nicole Kimball both have previously represented the State of Alaska on the NPFMC but they now will be industry representatives. Campbell, a former commissioner of the Alaska Department of Fish and Game, is now CEO of Silver Bay Seafoods. Kimball served for many years as federal fisheries coordinator for ADFG and now is vice president of Pacific Seafood Processors Association. Carina Nichols of Sitka was hired by Alaska Sen. Dan Sullivan as a new legislative assistant focusing on fisheries. Nichols has fished for sablefish and halibut in Southeast and salmon at Bristol Bay. She also has been a member of the council Advisory Panel. “I am glad to welcome Carina to my team in Washington, D.C. Her many years of experience both working on the water and in fisheries policy brings a depth and breadth of knowledge about the issues facing Alaska’s fisheries and coastal communities that will be invaluable in guiding my work serving Alaskans,” Sullivan wrote in an emailed message. Big Bay payday! Bristol Bay salmon fishermen are set to take home their biggest paychecks ever. The 2019 preliminary ex-vessel (dockside) value of $306.5 million for all salmon species ranks first in the history of the fishery and was 248 percent of the 20-year average of $124 million, according to an ADFG release. The 2019 sockeye salmon run of 56.5 million fish was the fourth-largest and it was the fifth consecutive year that inshore runs topped 50 million fish. The all-species harvest of 44.5 million is the second largest on record, after the 45.4 million taken in 1995. This year over 43 million of the Bristol Bay salmon harvest was sockeyes. Here are the 2019 salmon base prices at Bristol Bay with comparisons to 2018 in parentheses: sockeyes, $1.35 per pound ($1.26); chinook, $0.50 ($0.80); chums, $0.25 ($0.43); pinks, $0.05 ($0.20); and cohos, $0.55 ($0.80). The weight, harvest, and price of each species were used to estimate values and do not include future price adjustment for icing, bleeding, or production bonuses. Fish guts go plastic A 23-year-old student at the University of Sussex in England has invented a biodegradable plastic bag made from fish guts. Lucy Hughes was bothered by the “unwanted offcuts” from seafood processing that are dumped each year and discovered that red algae along the local coastline worked as a binding agent. SeafoodNews reports that Hughes used the algae to bind together the fish waste proteins into a translucent, plastic-like material that biodegrades in four to six weeks. Initial testing suggests that it is stronger, safer and much more sustainable than its oil-based plastic counterpart. Hughes plans to commercialize her product called MarinaTex. “For me, MarinaTex represents a commitment to material innovation and selection by incorporating sustainable, local and circular values into design,” she said. “As creators, we should not limit ourselves in designing to just form and function, but rather form, function and footprint.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

PFD continues to divide the GOP

On Sept. 19, Alaska Senate Republicans left a closed-door meeting in Anchorage and walked past Rep. Laddie Shaw, R-Anchorage, without a word. Shaw eventually got the news: Those Republicans had deadlocked 6-6, failing to confirm his appointment to a vacant Senate seat. The next day, the Alaska Republican Party’s central committee started a meeting in Fairbanks. Shaw was greeted by applause. The Republicans who had voted against him — and some Republican members of the House — were confronted by a resolution of disapproval. That measure failed narrowly. One year before the 2020 primary election, Alaska’s Republican Party is deeply divided on the issue of the Permanent Fund dividend, and that divide has effects that cover every Alaskan. Democrats are also split on the dividend, but they have a fraction of the power that Republicans do statewide. Last year, Alaskans sent 23 Republicans to the House of Representatives and 13 Republicans to the Senate, more than enough to secure majorities in each body and provide support for the agenda of Gov. Michael J. Dunleavy. But differences over the payment of this year’s Permanent Fund dividend prevented the creation of a pure Republican majority. The House is governed by a coalition that includes Democrats and independents. In the Senate, Republicans have named a Democrat their majority leader, and there are persistent speculation that it, too, could be governed by a coalition by the time the next Legislature convenes in January. “There’s no doubt that conversation has percolated up because of this impasse,” said Sen. John Coghill, R-North Pole, one of six senators who voted against Shaw’s confirmation. “I didn’t support (Shaw) because of the long-term economy of Alaska and how the PFD plays into it,” he said. Between 1982 and 2016, the state relied on a formula in state law to determine the amount of the Permanent Fund dividend. Starting in 2016, and every year since, the dividend has been set by legislative or gubernatorial fiat. In 2018, lawmakers agreed to cap the amount of money that can be taken from the Permanent Fund each year. That money might be spent on dividends or government services. This year, Coghill and a majority of legislators voted for a “surplus” dividend — an amount set determined by the amount of money left over after cutting the budget. Paying more, he said, would require violating the spending cap and overspending from the Permanent Fund, even though it contains enough money to do so. In the Senate, the vote for the surplus dividend was 11-9. In the House, Shaw voted with the minority in opposition. “I couldn’t support him because the Senate is so close on those issues, in my view, it would’ve been not a good thing for Alaska generally, and it certainly didn’t fit with the way the previous senator in the seat had it,” Coghill said. “It has become very clear that the position of either putting (the dividend) in the constitution or paying it out regardless of your ability to pay has become the main theme of many Republicans, and I don’t buy into that theme,” he said. Five other Republican senators — Senate President Cathy Giessel of Anchorage, Click Bishop of Fairbanks, Natasha von Imhof of Anchorage, Bert Stedman of Sitka and Gary Stevens of Kodiak — also voted against Shaw’s confirmation, but Coghill said he could only speak about his own reasons for voting no. Coghill said he does not believe the Senate is headed toward a coalition at this time. “That’s always a possibility, but guys like me are reluctant to split up the Republicans,” he said. Away from the Legislature, some rank-and-file Republicans have grown dissatisfied with the dividend positions staked out by Coghill, some of his Senate colleagues, and like-minded Republicans in the House. “We still get along, but I would say it is divisive,” said Carol Carman, a retired teacher and the Republican Party chairwoman of House District 9, which stretches from Valdez to Delta Junction. Before last week’s central committee meeting, Carman authored two motions. One was to censure Rep. Chuck Kopp, R-Anchorage, and Rep. Jennifer Johnston, R-Anchorage, for their role in creating a coalition House majority. The other was to partially censure the six no-voting senators and others in the House who failed to vote for the traditional dividend or support the governor’s proposed budget, among other matters. The second was presented by another person. Both motions failed, though the second failed in a closer vote than the first. State Republican Party Chairman Glenn Clary opposed censuring Kopp and Johnston, saying by phone that he believes such a decision should be up to district officials, not the state. That’s a change from prior practice. In 2016, under a prior chairman, the party pulled support from three Republicans who had joined the coalition. In this case, district officials opposed the censure, contributing to its defeat. Earlier this year, Rep. Gary Knopp, R-Kenai, who joined the bipartisan coalition, was censured by the party after district officials suggested it. “I’m doing my best to unify the party so we can move forward,” he said. Though Republicans are divided, he believes the situation in the state is improving rather than worsening. “What we need to do is repair relationships between all three bodies,” he said of House, Senate and the governor’s office. Carman agreed that should be the priority. “The only way we can back our governor and back the legislators who are backing our governor is to all unite,” she said.

GUEST COMMENTARY: House wastes time in attempt to deny opportunity to Inupiaq people

Environmental extremists have a secret weapon to offset the common-sense approaches to responsible development most Americans support: Ideologue politicians. Men and women whose elections are financed by some of the hundreds of millions spent by environmental non-government organizations to influence public policy. Can you imagine if Alaska’s congressional delegation put forth a bill to forbid growing apples in Washington, shut down movie-making in California, outlaw citrus farming in Florida or stop corn cultivation in Iowa? The residents of those states would become unhinged, crying foul and expressing disdain over the loss of jobs, economy and future. But, one such effort by one such politician reared its head in the U.S. House of Representatives. California Democrat Rep. Jared Huffman, a former employee of the radical environmental organization National Resources Defense Council, conjured up enough support in the chamber to pass legislation putting the coastal plain of the Arctic National Wildlife Refuge off-limits for development. Passing the House 225-193 on Sept. 12, largely along party lines, Huffman’s side claimed victory for the environment, the caribou and the indigenous way of life. Rep. Don Young stayed true to his long-time support of responsible development, voting “no” on the measure, and chiding his colleagues for wasting its time. The extremists’ emotional outpourings on ANWR preach of the sacredness of the land; it is a beautiful place, the last untouched wildlife area in North America and a place where caribou roam free. Some even recite the language of the Gwich’in, who live hundreds of miles away from where oil would be extracted. The Gwich’in call the area “Iizhik Gwats’an Gwandaii Goodlit” (The Sacred Place Where Life Begins) – a bumper-sticker slogan exploited repeatedly by the anti-development cabal. The extremists conveniently ignore the perspective of the only Alaska Native group who lives closest to the potential development, own land within ANWR, and significantly favor responsible ANWR development: the Inupiaq people of the Arctic Slope region. The federal government specifically set aside the coastal plain (often referred to as the 1002 area) as a future economic zone, understanding its location near the giant Prudhoe Bay field. Apparently, the ability for an indigenous community to improve its own economic and social well-being doesn’t make for a cute bumper sticker. Fortunately for America and its drive for energy independence and dominance, H.R.1146 is guaranteed to die as it reaches the U.S. Senate. Senate President Mitch McConnell and his majority have said as much, with Alaska’s Sens. Lisa Murkowski and Dan Sullivan leading the fight against the abominable legislation. Even if it was to pass that body, President Trump has guaranteed a veto. Realizing that ANWR is on federal lands, and therefore, subject to viewpoints and dialogue from all across America is one thing. Recognizing that Alaska’s fragile economy — driven by responsible resource development — is still worst in the nation in unemployment numbers is another. The eco-extremists — both individual, corporate and non-profit — are spending money to damage Alaska’s economy, in an area Congress set aside to help create and sustain jobs. They get away with these actions because of the volume — both in money and voice — that drowns out those of reasonable Americans. Hopefully, the House can get back to work on legislation that actually improves Americans’ lives, hopes and future, rather than appease their eco-extremist campaign funding sources with actions that would do irreparable harm to our great state. Alaska needs jobs. Alaska needs additional oil flowing through the Trans-Alaska Pipeline, and Alaska needs the voice of reason to rise up and drown out the cries of the fanatical environmental activists, who insist that wildlife be identified as more important than human life. Rick Whitbeck is the Alaska State Director for Power The Future, a national non-profit advocating for energy workers and development opportunities, while pushing back on radical green groups and the ideologues who fund them.

GUEST COMMENTARY: UA stakeholder survey reveals chance to find common ground

When Gov. Michael J. Dunleavy imposed a one-year, $136 million cut in the budget of the University of Alaska, key stakeholders — students, faculty, staff, administrators, alums, native corporations, business leaders, legislators, and others — were unified around saving higher education in Alaska. Now that it is $70 million over three years, the unity is fragmenting even though it is still a major cut that calls for a coordinated response. WayMark Analytics, a double-bottom line organization that I co-founded, recently conducted a statewide survey of key stakeholders in Alaska’s higher education system. The survey was commissioned by the Board of Regents, which was looking for a neutral outside perspective. We heard back from 3,932 people, including 732 students, 703 faculty, 1,069 staff, 445 alums, 157 business leaders, 43 tribal or Native corporation leaders, and others. On many dimensions, there is wide agreement. For example, the vast majority of respondents (more than 90 percent) see these interests as important: “Having a world-class higher education system in Alaska”; “Ensuring dependable state funding for higher education in Alaska”;” Having all relevant stakeholders work together to ensure the best possible higher education system in Alaska;” and, “Maintaining existing areas of research excellence in higher education in Alaska.” High marks also are given to: “Maintaining access to career and technical training programs at community campuses;” and, “Ensuring a cost-effective administration in Alaskan higher education.” By contrast, the respondents are deeply divided on structural issues. The Board of Regents has indicated that it is exploring a shift from three accreditations (Anchorage, Fairbanks and Juneau) for the 16-campus system to a single accreditation in order to better integrate student services and reduce administrative cost (each accreditation requires a chancellor, provost, and supporting structure). The response has been an outcry from many faculty, alums, and others focused on preserving the separate identities of the campuses. We surveyed stakeholders on these issues and they are deeply divided. A total of 50 percent responded that “Enabling each campus to have its unique identity” is important (7, 8, 9, or 10 on a 10-point scale, with 10 being “very important”), while 32 percent said it is not important (O, 1, 2, or 3 on the same scale, with 0 being “not important”). At the same time, 52 percent responded that “Having all of higher education operate as a single, integrated system with programs and courses available at campuses statewide” is important, while 35 percent said this is not important. The results are particularly important for those who had indicated “student” as their primary role, with 39 percent seeing each campus having a unique identity as important (compared to 50 percent overall), while 43 percent said it is not important. Among these same students, 61 percent indicated that operating as a single integrated system with programs and courses available at campuses statewide is important (compared to 52 percent overall), while 21 percent responded that it is not important. Three things are clear from these and other stakeholder data. First, there are areas of common ground that represent a foundation on which to build. Second, in the debate on structure, there is not a clear majority. Third, there are options that can take into account the interests of all stakeholders, but it will require skillful negotiation. It is possible to have unified accreditation while still retaining strong separate identities (sports teams, areas of excellence, administrative leadership, etc.). It is also possible to retain separate accreditations while still advancing integration (aligning academic programs, ensuring a seamless student experience, reducing administrative overhead, etc.). At a time when most of the world’s nations see higher education as one of the leading engines for innovation and growth, it is essential for Alaska to ensure that it has a world-class higher education system that is matched to its unique location. As one survey respondent commented: “To be naturally inspiring, higher education in Alaska must reflect its setting: unique, diverse, changing, resilient, and adaptable.” Another stated simply: “Globally respected, Alaska rooted.” It will take all stakeholders pulling together to make this vision a continuing reality in the years and decades to come. Joel Cutcher-Gershenfeld is a professor at Brandeis University and co-founder, WayMark Analytics.

SBA extends rural outreach program under 2017 tax bill

The U.S. Small Business Administration is strengthening its outreach efforts to business owners and entrepreneurs in Alaska. Last week, representatives from the SBA visited three communities on the Kenai Peninsula as part of the agency’s Rural Strong Initiative. The events were intended to connect existing businesses and interested entrepreneurs to the various services the agency provides in an effort to boost local rural economies. The initiative began as a regional program in the wake of the 2017 Tax Cuts and Job Act and spread to a national one this year, educating entrepreneurs about SBA services and offering fee relief for SBA-backed 7(a) loans up to $150,000 for rural counties. Rural communities often lose population because there aren’t as many economic opportunities for young people, and they leave for more urban areas. Strengthening the business climate in small towns may help keep people there, said Jeremy Field, the regional administrator for the SBA’s Pacific Northwest division. “The SBA is considered one of the best-kept secrets of the federal government,” he said. “The best part is that it’s free.” Businesses in rural areas face different challenges than urban ones do. While they may have less competition, there’s also fewer potential customers locally, less capital available and limitations on infrastructure like broadband internet. However, when it is available, businesses can expand their customer base to reach a variety of new customers without having to move to a central location. The federal government considers the entirety of Alaska outside Anchorage to be rural, but there are scales within the state. While the Kenai Peninsula communities are rural compared to many regions of the Lower 48, they are still far more developed than the villages and communities off the road system in other areas of Alaska. The most limiting factor in the most rural locations in Alaska is broadband availability, Field said. But even that is changing — the federal government is providing funding for private telecommunications providers to specifically expand into unserved and underserved areas to provide internet service. “(Not having internet today) is almost like not having a telephone in your community in the 1950s,” Field said. In addition to counseling services, the SBA acts as a backer for loans if a business owner has gone through advising. Field said those loan amounts can range from a few thousand dollars to more than a million, and a financial institution is more likely to offer a loan with assurance from the SBA. As they’ve gone into rural communities, one industry has jumped out as an opportunity: tourism. While it’s not an unfamiliar sector to much of Alaska, some rural areas have little infrastructure to support tourists and little familiarity with marketing. Since Alaska’s economy began to contract in 2014, the tourism industry has remained a growth area, particularly in communities with access to cruise ship ports. The number of cruise ship visitors in 2019 broke the state records; in 2020, cruise ship passenger visitation is expected to rise again. The Rural Strong Initiative also highlights export opportunities for small businesses. Alaska already has a long history of exporting materials both domestically and internationally, particularly in the seafood and mining industries. However, even smaller businesses are able to engage more in export opportunities, he said. Federal contracting is another opportunity area for rural areas. A percentage of all the federal government’s contracting has to go to small businesses through the 8(a) program, which gives small businesses a leg-up to compete with the larger corporations. It’s complicated and requires a lot of paperwork to account for the contract monies, which makes it a labor-intensive way to do business, Field said, but it can be a good way to get off the ground. Many of Alaska’s communities have an SBA office; Homer, Kenai, Anchorage and Wasilla all have their own offices. But if the local business counselor doesn’t have the specific expertise, he or she can connect clients to the right agency or expert to help them. In the case of farming, a local business counselor could help connect an aspiring farmer to the right U.S. Department of Agriculture agent, Field said. “If we don’t have a service that will help you, we’ll find you someone that does,” he said. The SBA also has specific advising programs, including a center for women-owned businesses and veteran-owned businesses, and a mentorship program for retired business owners to advise incoming entrepreneurs, Field said. The one industry they can’t offer any help on, though, is cannabis. Though the industry is legal in Alaska and still growing, cannabis is still a federally illegal substance and thus not eligible for federal assistance or traditional lines of business loans. That may change in the future if the federal government changes its position on cannabis, but for now, the SBA can’t help cannabis entrepreneurs, Field said. Even though Alaska is still coming out of a recession — oil prices are still far less than what they were five years ago and the unemployment rate is still the highest in the country — entrepreneurs can still take the opportunity to get off the ground. The SBA has historically given more loans in times of economic downturn, Field said, in part because of the attractiveness of the federal government backing the loans. “They feel alone — they don’t know all the things they need to be successful because nobody does,” he said. Elizabeth Earl can be reached at [email protected]

Valdez, Trustees for Alaska seek comment extension for AK LNG

The City of Valdez, which wants to see the Alaska LNG Project terminal built in its community rather than Nikiski, and an environmental legal organization have filed separate requests with federal regulators asking additional time to comment on the draft environmental impact statement for the project. Unless the Federal Energy Regulatory Commission changes the deadline, public comments on the draft EIS are due Oct. 3. The 3,800-page environmental review was issued June 28, and FERC held public meetings Sept. 9-12 in eight communities across Alaska to accept comments on the draft. Valdez and Trustees for Alaska, an Anchorage-based environmental law group reviewing the EIS for several clients, asked in separate filings that FERC extend the comment deadline 30 days past the closing date or 30 days after the state project team submits the last of detailed information requested by FERC, whichever is later. “Given the complexity of the issues involved in this massive project, the impacts that could occur to many public resources, and the key information that is still not available to the public, I am requesting that FERC extend the comment period for an additional 30 days after the applicant has provided the needed information,” Valerie Brown, legal director at Trustees for Alaska, wrote in an Aug. 29 filing with the commission. “The City (of Valdez) joins the Trustees for Alaska in their request for an extension of time,” the law firm of Brena, Bell &Walker, which represents the city, wrote in a Sept. 16 filing with FERC. “In order for the city and the public to provide meaningful comments on the DEIS (draft EIS), additional time is required for sufficient review of both recently filed information and additional information expected to be made available in the near future,” the Valdez letter stated. Trustees for Alaska, which did not identify its clients in its Aug. 29 letter to FERC, listed more than a dozen updates, reports, data sets, calculations and other items that the state project team had not submitted to FERC as of Aug. 28. The Alaska Gasline Development Corp. (AGDC), the 9-year-old state agency given the job of finishing the EIS even though there are no customers or investors for the $43 billion project, submitted hundreds of pages of additional information to FERC on Sept. 18. The filing covered many of the topics raised in the Trustees for Alaska letter, including an updated construction blasting plan, calculations of air emissions during construction, and temporary and permanent impacts to polar bear habitat. In requesting more time for public comments, the Trustees also noted that FERC on July 11 asked the National Marine Fisheries Service and U.S. Fish and Wildlife Service to consult on possible damage to essential habitat for several endangered or threatened species, including Cook Inlet Beluga whales and polar bears. “Ideally,” the Trustees wrote, the agencies’ opinions and assessments “would be available before public comments on the potential impacts of the project are due to FERC.” Under the commission’s current schedule, it would issue the final EIS in March 2020 for the state-led project to move Alaska North Slope natural gas through an 807-mile pipeline to Nikiski, on the east side of Cook Inlet, where the gas would be liquefied and loaded aboard ships for delivery to buyers in Asia. Valdez has promoted its community as a better location for the gas liquefaction plant and marine terminal, and the city’s Sept. 16 filing with FERC is one of several statements it has made on the project over the past couple of years. “It is apparent that the draft EIS fails to rigorously explore and objectively evaluate” the pipeline route and LNG terminal Valdez, the city said in a statement issued July 8. The draft “ignores the substantial advantages associated with the Valdez alternative,” the city said. The draft EIS review found insufficient reason to endorse either Valdez or the Matanuska-Susitna Borough’s Port MacKenzie over Nikiski, citing a range of factors that supported the project’s preferred site. “FERC did what they’re supposed to do, and I thought they did a fine job,” Matanuska-Susitna Borough Manager John Moosey told the Alaska Journal of Commerce in July. He said the borough accepted the outcome. The two requests to extend the public comment period were the only such filings in the FERC docket as of Sept. 23. General comments in support or opposition to the natural gas project were minimal. Several residents of Eugene, Ore., filed statements in opposition to the Alaska LNG project, arguing that methane emissions would add to greenhouse gas-induced climate change. “Please oppose this dangerous project,” one of the letters said. One letter came from Nikiski, supporting a variation of the route for the final miles of the pipeline passing through their community to the LNG plant. A few letters had come in as of Sept. 23 from Anchorage and Fairbanks residents in support of the project, economic development, and improved air quality in Fairbanks from burning gas instead of dirtier fuels. “The Alaska LNG Project will also be a new source of revenue to the state of Alaska, thus helping to provide long-term support for services to Alaskans, including our most disadvantaged,” said a letter from an Anchorage resident. John Shively, state Natural Resources commissioner from 1995-2000, also cited the economic benefits to the state and the advantages of gas as a cleaner energy for Alaskans in his letter supporting the project. The draft EIS, Shively said in his Sept. 18 letter, “concludes most project impacts would not be significant and would be reduced to minor impacts with the implementation of proposed avoidance, minimization and mitigation measures.” He also commented that “establishment of local subsistence implementation councils to identify community issues and concerns will help to ensure impacts to subsistence activities are minimal.” The draft EIS determined the North Slope-to-Cook Inlet project would damage some permafrost, wetlands and forest, but many of the effects could be reduced or eliminated if the right steps are taken during construction and operation to avoid, minimize or repair the damage. “With the implementation of various best management practices and our recommendations, most impacts on wildlife would be less than significant, but adverse impacts on some species, including caribou (Central Arctic herds) and federally listed threatened and endangered species, would occur,” the report said. Not unexpected for a project of this size, the draft listed pluses and minuses in the same sentence: “The project would result in positive impacts on the state and local economies, but adverse impacts on housing, population, and public services could occur in some areas.” In addition to the dwindling list of reports, engineering plans and other items the state project team still owed to federal regulators as of mid-September, FERC on Sept. 17 sent the state corporation a 35-page request for more information on the project’s hazard mitigation design, such as ventilation, spill containment, hazard detection, emergency response and shutdown at the gas treatment plant at Prudhoe Bay and gas liquefaction plant at Nikiski. The requests were based on reviews by FERC staff and a third-party contractor hired to specifically look at such issues. The request for additional details was expected and is common for all federally approved LNG projects. The state gasline corporation’s responses to the engineering and design questions are not due until after the close of public comment on the draft EIS but can be submitted early.

Alaska Railroad seeks to overhaul Seward cruise terminal

The Alaska Railroad is looking for a partner to help it update and expand its cruise ship facilities in Seward in order to meet ever-increasing demand in the state’s tourism industry. Railroad officials issued a request for qualifications, or RFQ, on Sept. 16 to start the process of searching for a project developer for what is estimated to be an approximately $60 million to $70 million undertaking. Specifically, the state-owned railroad wants to replace its current passenger vessel, pile-supported dock in Seward, which is 736 feet long and was built in 1966, with a floating dock capable of accommodating two vessels up to 1,080 feet in length. The plan also calls for building a new cruise passenger terminal building with space to accommodate up to 1,500 people. It’s all intended to meet the railroad’s needs for moving cruise passengers from port at the head of Resurrection Bay to other Southcentral destinations for the next 50 years. Railroad officials expect construction to begin in late 2021 and continue into the fall of 2023. However, the current facilities would need to be available for use while construction was ongoing during the May-September cruise season, according to the railroad’s project schedule. Seward is the most popular Southcentral cruise destination; cruise ships called on the small town 95 times in 2019, according to the Alaska chapter of the Cruise Lines International Association. That’s up from 2015 when 11 ships made 64 calls on Seward, according to a railroad passenger report drafted in 2017. More broadly, Alaska’s tourism industry has boomed since visitor numbers bottomed out following the Great Recession roughly a decade ago. Overall railroad passenger ridership — driven largely by visitors arriving or leaving Alaska’s Railbelt by cruise ship — increased 5 percent in 2018, according to the Alaska Railroad’s annual report. The total number of train passengers has grown steadily each year for a 13 percent increase since 2014. Statewide, leaders of the Southeast Conference, a regional economic development organization, reported that more than 1.2 million tourists visited Alaska by cruise ship this year, for 7 percent year-over-year growth. The number of cruise passengers traveling through Seward has grown in recent years as well, from 122,000 in 2013 to nearly 185,000 in 2016, according to the 2017 passenger report. Cruise passengers regularly disembark vessels in Seward, Whittier or Anchorage and board the train to Anchorage or Fairbanks where they take flights back to their home destinations. The railroad frequently contracts to pull passenger cars owned by cruise companies on those routes. What the cruise passenger facility overhaul means for the railroad’s adjacent and idled coal terminal is unclear; railroad officials could not be reached with questions in time for this story, but the need to upgrade passenger infrastructure that sits alongside now unused freight facilities is indicative of a gradual shift in the railroad’s business and Alaska’s economy as a whole. The railroad’s freight business, which is still its primary revenue line, has been on a general downward trajectory while its passenger service continues to grow. Responses to the railroad RFQ are due by Oct. 30. The project is expected to start in May 2020. Elwood Brehmer can be reached at [email protected]al.com.

New Permian pipelines will add to oversupplied gas market

U.S. natural gas supply is outstripping demand, holding down prices and prompting speculation over just how low and how long the slide will continue; one research firm predicts prices next year will be the lowest in 22 years. “It is simply too much too fast,” said Sam Andrus, IHS Markit executive director, who covers North American gas markets for the global energy analytics and research company. “Drillers are now able to increase supply faster than domestic or global markets can consume it.” Taken by itself, the U.S. production gain the past two years alone would equal the fourth-largest gas producer in the world. Though U.S. liquefied natural gas and pipeline gas exports have climbed to record highs and power plants nationwide are burning more of the fuel than ever before, even that strong growth in domestic and international demand cannot keep pace with record U.S. gas production. There was a point in August when the U.S. Henry Hub benchmark price was flirting with $2 per million Btu before moving back into the $2.50 range on Sept. 20. But that seasonal price relief for producers in advance of winter looks to be temporary, according to a Sept. 12 report from IHS Markit. Rising production and growing gas stockpiles will work together to knock down prices to an average $1.92 per million Btu in 2020, IHS Markit said. U.S. gas hasn’t averaged below $2 since 1998, according to federal data. Prices averaged almost $3.20 in 2018, dropping to an average of about $2.60 so far this year. New pipelines delivering even more Permian shale gas to market will exacerbate an already oversupplied market, the IHS report said. Permian gas output is expected to average almost 15 billion cubic feet per day in September, double of just two years ago and triple from 2010 levels, according to the U.S. Energy Information Administration, or EIA. Eventually, low prices will push companies to cut back on drilling, bringing supply and demand back into balance, IHS Markit said, forecasting a slight rebound to $2.25 for 2021. “Rising prices stimulate supply and falling prices curtail it. What is unique here is the extent of reduction required,” said Shankari Srinivasan, IHS Markit vice president of energy. The EIA predicts that U.S. dry gas production will average more than 93 bcf per day from September through the end of this year. That’s after August set a new record at more than 91 billion cubic feet, or bcf, per day. The numbers are about double what the nation produced in the mid-1980s. Part of the problem, IHS Markit explained, is that additional oil pipeline capacity out of the Permian is allowing producers there to continue expanding their oil output, adding even more associated gas to an already oversupplied market. New gas pipelines out of the Permian could add an additional 6 bcf per day to the nation’s gas supply. U.S. gas production has grown by 14 bcf per day, about 15 percent, since January 2018, outpacing the strong growth in domestic and export demand. The U.S. is now the world’s third-largest exporter of liquefied natural gas, with four LNG terminals in operation, three more under construction, and six more with regulatory permits in hand and waiting to sign up customers and line up financing before taking final investment decisions. However, through LNG exports and domestic industrial demand, U.S. gas pricing is exposed to the world economy, and a recession would make it worse, S&P Global Platts said. If the global economy goes into a recession next year, demand from U.S. power and industrial sectors would likely decline a combined 2 bcf a day — 2 percent of total U.S. demand — further knocking down prices, Platts said. “A global economic recession remains a distinct possibility next year.” S&P Global Platts Analytics sees low prices hanging around for the next five years. “This is in response to softening global market conditions, increased associated gas production and muted domestic demand-side gains,” the company’s Sept. 9 report read. Without a recession and with some market rebalancing, prices could average $2.66 over the next five years, S&P Global Platts said. It’s not just the U.S. — gas prices are down worldwide. Among the biggest drivers of low prices in Asia and Europe has been the increasing volume of U.S. gas flowing into global markets as LNG, The Wall Street Journal reported Aug. 27. Analysts expect demand from U.S. LNG export facilities to take about 12 percent of the nation’s total gas production by next summer as new facilities start up and existing plants boost their capacity. “It was inevitable,” Ira Joseph, head of gas and power analytics at S&P Global Platts, was quoted in the Journal. “There is simply too much supply coming into the market,” and exports are a way to sell the gas. The pain of low prices is hurting more than just U.S. producers. It has pushed the city of Medicine Hat, Alberta, to abandon 2,000 of its 2,600 municipally owned wells over the next three years. The town of 62,000, known as Gas City, has been losing about $2 per million Btu on the gas it produces, according to a report in the Calgary Herald. Medicine Hat has owned the wells for about a century, and this month was producing about 6,500 barrels of oil equivalent per day from shallow natural gas and oil fields in southern Alberta and Saskatchewan. The average cost of its gas production is about $2.78 per million Btu, and the spot price for gas at Alberta’s AECO hub closed Sept. 12 at 80 cents. “You don’t need a sophisticated computer model to understand this gap means the city-owned utility has been hemorrhaging money,” said a Calgary Herald columnist. Facing dismal economics — and an expected cash loss of $35 million this year from its gas and petroleum resources division, the columnist reported — the city will shut down most of its producing gas wells. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

BBNC nets two fishing companies in one deal

The Alaska Native corporation with a “fish first” principle is making its first foray back into the signature Alaska industry in roughly 40 years. Bristol Bay Native Corp. announced an agreement Sep. 17 for it to purchase Blue North Fisheries and Clipper Seafoods, two Seattle-based longline fishing companies that operate in the large Bering Sea Pacific cod fishery. BBNC CEO Jason Metrokin said in an interview that Blue North and Clipper will be merged into a new subsidiary, Bristol Bay Alaska Seafoods, when the deal closes Sept. 30. Metrokin said BBNC focuses on providing economic value and employment opportunities for its shareholders while being good stewards of the region’s land and resources, and acquiring Blue North and Clipper was an opportunity to check all of those boxes. “They’ve got experienced management and executives; they have a quality brand and they’re known for safe fishing and quality products,” he said of the fishing companies. “You add all of those things up at a time when BBNC was looking for an investment in seafood and it made tremendous sense for us to start here.” Bringing ownership of the seafood resource back to Alaska — through the Pacific cod fishing quota held by the companies — was very important to BBNC, Metrokin added. BBNC owned Peter Pan Seafoods in the late 1970s and has been out of the seafood business since, he said. The company has also formed Bristol Bay Seafood Investments LLC, a holding company for Bristol Bay Alaska Seafoods and any other future seafood forays, according to a Sept. 17 company statement. Clipper Seafoods President David Little, who will manage the merged company, said BBNC is simply a “really good fit” for Blue North and Clipper. “I’ve always believed, and I know Mike Burns, the president of Blue North feels the same way, that the Native corporations or the Native economic development corporations were always going to be the rightful owners of these seafood businesses over time and so we’ve been talking to a number of them over the years and we found that Bristol Bay Native Corp., in our opinion, is the leader of all of them and we’re really impressed with the way they run their operation and their business knowledge,” Little said. He added that senior staff at the companies will remain with Bristol Bay Seafoods. By combining the Blue North and Clipper fleets, Bristol Bay Seafoods will have a fleet of 11 large fishing vessels and it will hold 37.4 percent of the freezer longline sector Bering Sea and Aleutian Islands Pacific cod quota, according to Little. He said the freezer-longline sector holds about half of the overall harvest limit of Bering Sea and Aleutian Islands Pacific cod, which is about 175,000 metric tons this year. Set by the North Pacific Fishery Management Council and approved by National Marine Fisheries Service, or NMFS, the annual total allowable catch for the massive Western Alaska Pacific cod fishery has fallen sharply from its near-term high of 261,000 metric tons in 2012. The freezer longline sector is one of nine gear and fishing type sectors that fish for Pacific cod in Western Alaska waters. However, Little noted that cod stocks can rebound quickly and there is optimism among cod fishery managers and participants that current juvenile recruitment can lead to more harvest opportunity soon. Based on Little’s figures, Bristol Bay Seafoods would hold approximately 33,000 metric tons of Pacific cod harvest quota in 2019. According to the latest data available from NMFS, the first wholesale price for Bering Sea Pacific cod caught by freezer longline vessels averaged $1,665 per metric ton in 2017, which would translate to nearly $55 million of wholesale value for the combined Blue North and Clipper 2019 quota. Additionally, freezer longline vessels averaged $6.4 million of revenue in 2017, according to NMFS reports, or $70.4 million total extrapolated to the 11 vessels owned by the two companies. Metrokin declined to disclose a price for the deal, but he did say it “will ultimately be one of BBNC’s largest company acquisitions in our history.” Blue North and Clipper are companies that have recognizable brands, high-quality products and a presence in markets around the world, making them a sound investment despite the current down cycle in Pacific cod stocks, Metrokin said. And while freezer longline vessels cumulatively harvest thousands of tons of cod each year, Little described the freezer longline sector as a “boutique fishery” in that longline vessels can typically harvest only about 10 percent of the volume of fish that a trawl vessel can in a given day. Instead, freezer longline companies focus on quality instead of quantity. “Our fish is primarily destined for white table cloth restaurants around the world whereas a lot of trawl-caught fish is destined for fish and chips,” Little said. The Blue North and Clipper fleets are comprised of relatively new vessels, meaning there are no immediate plans to invest in new vessels or other major infrastructure, according to Little, who also said the companies’ offices are likely to remain Seattle where the fleets are based. The vessels will stay in Seattle when they’re not fishing simply because that’s where the shipyards are and large boats require lots of upkeep. Little noted that the busiest time for a fishing company’s office staff is usually when the vessels are home from the fishing grounds. “It’s important to have an office in Seattle or somewhere close to ship repair and maintenance,” he said. Metrokin said BBNC leadership is enthusiastic about getting back into the fishing industry through a fishery that takes place near the company’s region and aligns with its mission. “Every time we make a business decision we want to know what the benefits or impacts will be to fish and while this investment is outside of the Bristol Bay fishery, it still meets our value, our mantra, of fish first, so it’s very much in alignment with where BBNC is going,” he said. “It may be a stepping stone, a very large stepping stone back into the seafood sector and we’re excited about other opportunities that might present themselves down the road.” Elwood Brehmer can be reached at [email protected]


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