Justice Dept. files allegations in $350M Jones Act seafood case

Attorneys with the U.S. Department of Justice are accusing companies Kloosterboer International Forwarding and Alaska Reefer Management of secretly using a specially built rail track in Canada for years, in order to evade the requirements of a maritime shipping law called the Jones Act. The accusation surfaced in a filing submitted Sept. 17 in a case involving the two companies, which help transport Alaska seafood to the East Coast. The companies potentially face massive fines, imposed by the U.S. Customs and Border Protection. The government’s 43-page response is its first public explanation in the case brought by Kloosterboer and Alaska Reefer Management early this month in U.S. District Court in Anchorage. The two companies provide transportation and logistics services as part of the American Seafoods Group family. The companies are suing the Department of Homeland Security and its division, Customs and Border Protection, to stop the large penalty notices, which they say arrived without warning. The penalties for Kloosterboer alone total $25 million, the companies’ complaint says. Numerous other companies in the plaintiffs’ supply chain have also received notices totaling more than $325 million, their complaint says. The companies argue that the seafood has been properly shipped from Dutch Harbor in Western Alaska to the Eastern U.S. for more than 20 years, passing through the port of Bayside in Canada near the border with Maine. The companies say the penalty notices have threatened the distribution of that seafood — typically pollock caught in the Bering Sea, bound for fast-food restaurants and other outlets. Kloosterboer and Alaska Reefer say they comply with the Jones Act. The Jones Act requires that vessels carrying goods between two U.S. points be American-made and American-flagged. The companies use foreign-flagged vessels. But they say they meet a Jones Act exemption because the seafood travels briefly by rail in Canada. At issue is the rail line used to meet that exemption. The U.S. Department of Justice says “all was good” before 2012. In those years, the companies complied with the Jones Act by using the New Brunswick Southern Railway to transport their seafood in Canada, a journey of more than 30 miles, the federal response says. But in 2012, the companies “radically” altered the movement of the seafood because they believed using the New Brunswick railway was too expensive, the federal response says. Instead of using the established New Brunswick railway and moving product from one destination to another using a “through route,” the companies decided to use “a specially-built mini-railtrack, approximately 100 feet in length, that goes nowhere,” the federal government argues. That rail line is called Bayside Canadian Railway. The seafood is loaded into trucks that travel on a flat rail car, back and forth on the track, for a total of 200 feet. It’s then driven into the U.S. The “actions were not a one-time error or oversight, but rather part of a calculated and secret scheme to find a loophole in the Jones Act, which was only revealed when the government received a tip from a third party,” the federal government argues. Officials with Kloosterboer and Alaska Reefer declined a request for an interview, citing the ongoing litigation. According to a 48-page response filed on Wednesday, Kloosterboer and Alaska Reefer say the newer Bayside Canadian Railway meets the Jones Act exemption and complies with Customs and Border Protection ruling letters. The rail line is “indisputably a registered Canadian rail line; the goods are loaded onto it and travel a short distance,” the companies say. Customs and Border Protection has never said the rail line must be a certain length or connect two distant points, the companies argue. The line is part of the “through route” from Dutch Harbor to the Eastern U.S., the companies argue. “There is no practical difference between the (original railway and the newer one),” the companies argue. The only difference is the location and length, they say. The federal government says the prior ruling letters from Customs and Border Protection predated the existence of the Bayside Canadian rail line and “never sanctioned” it. It asserts that the companies did not provide adequate documentation to note the change in rail lines. The companies say they have “been transparent” about the rail line’s use. They say Customs and Border Protection has been “on notice” about the newer line since 2012. Receipts provided to the agency during those years have described thousands of shipments along the rail line, the companies say. The companies say the penalty notices themselves are unjustifiably large and were issued without proper notice. The federal government argues that the penalty notices are the size they are in part because of the length of the violations. The companies can challenge the penalty notices and explain their position through an administrative process, the federal government says. A spokesperson with Customs and Border Protection said the agency does not comment on pending litigation.

Once-heralded ‘Slope Renaissance’ projects now face uncertain futures

For several years now state officials and the leaders of Alaska’s oil industry have been touting a “North Slope renaissance” driven by large projects tapping newly discovered conventional Nanushuk oil plays across the western half of the region. In the span of less than a year, however, the future of two multibillion-dollar oil projects planned for the coming years has gone from promising to highly uncertain. Early-stage construction at ConocoPhillips’ $6 billion-plus Willow project in the National Petroleum Reserve-Alaska was stopped before it started last winter when the federal 9th Circuit Court of Appeals granted a temporary injunction to environmental and North Slope Tribal groups that previously sued to stop Willow. ConocoPhillips was expecting to dig a quarry to source gravel for permanent roads and pads to access the remote oil prospect until the mid-February ruling. The company then requested a summer resolution to the matter from Alaska District Court Judge Sharon Gleason so work could commence this winter, but Gleason issued a subsequent ruling in August invalidating the Bureau of Land Management’s environmental impact statement for Willow, the overarching environmental document that formed the basis for the agency’s approval of the development. Gleason ruled, largely based on the 9th Circuit injunction, that BLM and Fish and Wildlife Service officials under the Trump administration failed to adequately account for foreign carbon emissions stemming from Willow and did not provide sufficient specificity regarding how the development’s impacts to polar bears would be mitigated. Gov. Mike Dunleavy and Alaska’s all-Republican congressional delegation previously lauded the Biden administration for backing the Willow EIS in court filings before Gleason issued her decision. The August order has made the question, “What’s next?” unanswerable, at least publicly, for ConocoPhillips Alaska leaders. Company officials continue to review Gleason’s ruling and are moving ahead with engineering and design of Willow’s facilities in anticipation of a final investment decision, they have said. BLM and the company have until Oct. 18 to appeal the ruling. Specific flaws identified in environmental reviews are often remedied through a supplemental EIS that focuses its study on the given issues and can take as little as several months to complete. Attorneys for the groups that brought the Willow lawsuits say a resolution might not be that simple. They contend the Willow Master Development Plan contains multiple significant legal violations that might necessitate a wholly new, and likely multi-year, EIS process for the project before construction could start. First oil at Willow had been expected during the 2025-26 winter with peak production reaching upwards of 160,000 barrels per day, according to ConocoPhillips’ estimates. Pikka At Oil Search Alaska’s Pikka project on state land, the issue is money. Oil Search Alaska executives have openly acknowledged the struggles they have had in securing funding for the $3 billion first phase of the already scaled-back Pikka project. With first oil from Pikka pegged for late 2023 as recently as early 2020 and peak production once seen at rates near 120,000 barrels per day, Oil Search representatives said earlier this month the mid-sized firm — historically a gas producer in the South Pacific — is investigating every avenue it can to secure funding and move Pikka forward. However, such Arctic oil projects are rapidly falling out of favor with the large banks that traditionally fund them. Startup of the first phase of Pikka is tentatively pegged for 2025. Oil Search leaders insist they are still shooting for a final investment decision later this year but the company is also in the process of merging with fellow South Pacific producer Santos Ltd. The deal will give Santos owners a controlling share of the melded company. A Santos spokesman wrote to the Journal after the deal was formally announced that the company at this point supports Oil Search’s work to advance Pikka. The uncertainty for two of the largest oil projects Alaska has seen in decades correlates directly to the numbers underlying the omnipresent fiscal debates in the state Capitol. While its location on federal land means the State of Alaska will at best receive minimal royalty contributions from Willow to the general fund, state oil production taxes will still apply to the project. ConocoPhillips estimates Willow would generate approximately $2.1 billion for the state. Oil Search estimates Pikka would produce upwards of $7 billion for the state over a roughly 30-year life. Forecast uncertainty The state’s latest official oil production forecast published in March projects North Slope oil will steadily increase to 565,000 barrels per day by 2030 after bottoming out at approximately 460,000 barrels per day this year. Those annual estimates are 30,000 barrels per day to more than 80,000 barrels per day greater than the forecast issued late last fall when uncertainties surrounding the pandemic were still in control of oil markets. Taken at face value, nearly half of the forecast for the late 2020s could be comprised of oil expected from Willow and Pikka based on the companies’ public estimates. Longtime oil analyst and Alaska oil and gas attorney Brad Keithley said he believes the state’s production forecast is overly rosy from a budgeter’s perspective. “I’ve thought for a long time the back end (of the production forecast) is high,” Keithley said in an interview. “It may turn out to be accurate but if you were just sitting here with what we know now, with what we know about Willow and Oil Search it’s a stretch case, a big stretch case to think those production numbers are going to turn out.” Keithley is also the managing director for Alaskans for Sustainable Budgets, a nonprofit project aimed at informing the public about the state’s financial challenges. Former state petroleum economist Roger Marks said he has a hard time critiquing the state’s production forecast because “there are a lot of unknowable things out there right now,” but added, “I can imagine it staying where it is. I can’t imagine it going up too much.” Marks foresees some sort of legal resolution that will allow ConocoPhillips to move ahead with Willow eventually and said the level of future North Slope investment will likely be tied to oil prices, which have been relatively robust this year in the $70-plus range. Keithley noted that the Revenue Department’s most recent long-term price forecast calls for average Alaska North Slope crude prices to increase from the low $60s per barrel the next couple years to $71 per barrel by 2030; he suggests that’s backwards. “There’s a huge disparity between the oil price numbers that the (Dunleavy) administration is still using for the back end and what the markets are telling us the oil price numbers are going to be,” he said. According to Keithley, oil futures for the late 2020s currently indicate a return to prices in the low $60s to high $50s per barrel, which was mostly the range they were in for several years prior to the arrival of COVID-19. Pascal Umekwe, a commercial analyst with the Division of Oil and Gas involved in developing the oil production estimates, said in an interview that he could not attribute a specific volume of projected barrels in the forecast to a specific project. For one, state officials use probabilistic not deterministic models to generate a range of likely outcomes. They also are reluctant to discuss information pertaining to individual operators to prevent potential violations of state confidentiality statutes and maintain the trust of company officials who discuss sensitive business information with them. He stressed state forecasters bake the numerous risks inherent in major oil developments — regulatory and financial for ConocoPhillips and Oil Search — into their final numbers. “We’re not happy these things happen but as a result of 1,000 factors (oil projects) might not happen the way they were supposed to happen,” Umekwe said in an interview. Elwood Brehmer can be reached at [email protected]

Russia plows ahead on oil, natural gas

While the rest of the energy world deals with reluctant lenders and insurers, activist investors and pension funds turning away from fossil fuels, politicians and citizenry pushing to accelerate the transition past oil and gas — less so Russia. An example of how friendly the government remains to oil and gas development — which provided close to 45 percent of the government’s annual revenue pre-pandemic — was seen in a press release Sept. 8 by Novatek, the country’s largest independent natural gas producer. The company had won an auction — in which it was the only bidder — for licenses to explore, develop and produce from Arctic fields holding an estimated 2.9 billion barrels of oil equivalent, which includes 14.6 trillion cubic feet of gas. Novatek paid about $180 million for the 27-year licenses, or about 6 cents per barrel of potential, though certainly not all of the 2.9 billion barrels will be pumped from the ground. The fields are on the Yamal Peninsula, where Novatek in 2017 started up the country’s largest liquefied natural gas production and export terminal; where the company is building a second, even larger LNG project; and where it wants to add a third gas facility. Designs plans for the third plant, originally targeting LNG production, were switched this summer to ammonia, hydrogen and methanol production, which all require natural gas. To meet its feed gas needs — in particular to reach a final investment decision on the third plant — Leonid Mikhelson, the CEO and major shareholder at Novatek, earlier this year told the government his company needed access to more gas resources. The request was granted. Russia wants to become an even bigger player in the global LNG market, in particular profiting from export sales to Asia just as it does with its dominant position as a supplier of pipeline gas to Europe. The Warsaw Institute, a Poland-based geopolitical think tank with a focus on energy issues, reported earlier this year: “Mikhelson … has friendly ties with the Kremlin. (Russian President) Vladimir Putin has for years asked state authorities to favor the company.” But there was a problem in the area that Novatek wanted access to develop. The deposits are within the boundaries of a natural reserve, where industrial activities, including oil and gas drilling, are prohibited. According to Interfax, an independent news agency in Russia, Mikhelson asked the Kremlin to instruct the area’s regional government to change the reserve’s boundaries. The regional government obliged in May. The borders of the Yamalsky Reserve, at almost 10 million acres, frequently have been adjusted over the years following requests from oil and gas companies, according to a website of Russian government actions and as reported by the independent Barents Observer newspaper, published out of Norway. With the boxes checked off for additional gas and government support, Novatek continues to look for partners to share in the risks and help provide capital, and raise financing. Lacking access to U.S. and European lenders, due to western sanctions against Russia and banks pulling away from fossil fuel financing, particularly in the Arctic, Novatek is turning to Japanese and Chinese banks for more help. Already most of the equity partners in the Novatek-led Arctic LNG-2 project, which is under construction with a 2023 start-up date, are from China and Japan: China National Petroleum Corp., 10 percent; China National Offshore Oil Corp., 10 percent; and the Japan Arctic LNG consortium, comprised of Mitsui and state-owned JOGMEC, formally known as Japan Oil, Gas and Metals National Corp., at 10 percent. French major TotalEnergies also owns a 10 percent stake. Novatek holds 60 percent. Seeing a lack of support from European government export credit agencies, Mikhelson earlier this month said Chinese and Japanese lenders may step in where Europe is backing out, and Russian banks could boost their share to 60 percent of the debt, he said. Normally, government export credit agencies help finance projects when some of the contracts and jobs benefit their country. Shareholders in Arctic LNG-2 earlier this year approved external financing of $11 billion for the $21 billion development, with the partners to come up with their respective shares of the rest. In addition to financing from Japanese and Chinese lenders, Novatek is in talks with India’s top energy companies, Petronet LNG and ONGC Videsh, about buying a stake in Arctic LNG-2. The Indian government is pushing the country to burn a lot more gas than coal or oil to help clean up its air, and the two companies are in talks about acquiring a joint 9.9 percent stake in the venture, according to a Bloomberg news report Sept. 6, leaving Novatek at 50.1 percent. Adding partners in India to its LNG ambitions would be a smart play for Russia’s efforts to establish itself as a key supplier of the fuel in the region. Building partnerships is about sharing the wealth, and Novatek has given some of the business for the $20 billion Arctic LNG-2 project to a Chinese shipyard. The first gas liquefaction module was built at Wison Offshore &Marine’s Zhoushan shipyard in China and arrives this month at Novatek’s construction yard north of Murmansk, where it will be installed atop a large gravity-based structure before it is towed to the project site on Ob Bay in Siberia. There are analysts, however, who question the wisdom of Russia’s bet on long-term profits from fossil fuels. The Oxford Institute for Energy Studies in the U.K. published a paper in February titled, “Is This Russia’s Kodak Moment?” “In 2003, Kodak was over 100 years old, had one of the world’s most recognized brand names, employed 145,000 people, and had a turnover of US$13 billion. The company believed that digital photography would remain a niche product and decided to stick to traditional photographic film,” the paper said. “Nine years later, Kodak filed for bankruptcy.” “Is Russia similarly failing to see the accelerating changes in the global energy system brought on by climate policy and energy technology learning curves? Is it prepared for the impact of these changes on demand for Russian fossil fuel exports? As the world’s largest fossil fuel exporter (oil, gas and coal), Russia will be affected by the energy transition more than any other country.” Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He can be reached at [email protected]

Movers and Shakers for Sept. 26

The Central Council of the Tlingit and Haida Indian Tribes of Alaska hired Heidi Davis as the staff attorney for the office of the president. Davis will provide legal counsel and representation to Tlingit &Haida in the areas of tribal government, federal-tribal relations, federal-state relations, tribal jurisdiction, environmental and natural resources law and policy, economic development, employment, contracts, code drafting and compliance. Davis graduated from the University of Arkansas at Little Rock with a bachelor’s degree in criminal justice and political science. She then went on to obtain her juris doctor degree from UA at Little Rock School of Law in May 2021. Prior to pursuing her law degree, Davis worked for the State of Alaska as an in-court clerk for the Juneau Trial Courts.

OPINION: Legislature puts the ‘end’ in dividend

Until the 11th hour of the third special session of the year, Alaskans were not going to get a PFD this fall. And they still aren’t. Instead, they’ll be getting a GFSBRP. That would be the General Fund-Statutory Budget Reserve Payment. After ignoring the statutory formula for paying the Permanent Fund Dividend out of, you know, the Permanent Fund, since 2017, the final legislative compromise in 2021 abandoned both the formula that remains on the books and the namesake source of the money. Instead, majorities in both the House and Senate cobbled together $400.5 million from the General Fund and $330 million from the Statutory Budget Reserve for an estimated GFSBRP of about $1,100 per Alaskan. An argument that it is at least partially a PFD (or a PPFD) could be made because some $3 billion from the Permanent Fund was transferred into the General Fund under the percent of market value, or POMV, draw. But it is doubtful whether many legislators if any, even among this bunch, are so lacking in shame that they would line up to make that case. A trope of pieces such as this is to call on the “dictionary definition” of some term in order to make a point, so it is with reluctance to note that a “dividend” according to Investopedia is a “distribution of corporate profits to eligible shareholders.” In this reading, not only have the legislative majorities bastardized the “PF” in PFD, but they have also twisted the “D” to something other than its actual meaning. A payment from savings rather than profits is not a true dividend, and a payment that drains that savings account to nearly zero — while another account holds more than $82 billion including a greater than 20 percent profit in the past year — is the height of malfeasance from our elected officials who fancy themselves as state’s board of directors. While the legislative majorities routinely disregard the laws they find inconvenient — the statutory PFD formula, the voter-backed 90-day session limit, oil tax credit payments or per diem restrictions that kick in without a budget — they treat the POMV draw passed just a couple years as if it was carried down Mount Roberts by Moses himself carved on stone tablets. To be fair, however, it isn’t that they respect the POMV law any more than any other. They just don’t trust themselves to be responsible with that much money, which ironically is how some of them view the idea of paying Alaskans the amount called for under the statutory formula after a decade-long bull run in the equities markets. Based on what previous Legislatures did with windfall amounts of cash, that is probably a safe assumption, but not one that speaks well of those who are good at running for office but not actually good at governing. The gridlock returns for another special session called for Oct. 1 that will span the eventual distribution of the GFSBRP, to be followed not long after by the regular session in January falling in a general election year. Now that the majorities drained one savings account and lack the numbers to access another (the Constitutional Budget Reserve requires three-quarters to agree), how they will piece together the magical $1,000+ amount they’ve settled on as apparently enough to keep the pitchforks at bay is anyone’s guess. Gov. Mike Dunleavy has compromised from his campaign pledge to pay out the PFD according to the statutory formula; his political opponents may make hay out of criticizing his 50-50 plan but a wiser course would be silence when their alternative is ending the PFD entirely. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Huge Tanner crab cohort good news for Gulf of Alaska

Unlike in the Bering Sea, there’s good news for crab in the Gulf of Alaska. A huge cohort of Tanner crab that biologists have been tracking in the Westward region for three years showed up again in this summer’s survey. “We were optimistic and we did find them again. Pretty much all the way across the board from Kodiak all the way out to False Pass we found those crab and in good quantity,” said Nat Nichols, area manager for the Alaska Department of Fish and Game at Kodiak. The bairdi Tanners are the larger cousins of snow crab (opilio Tanners) found in the Bering Sea. “The very, very rough preliminary numbers look like we’ve at least hit the minimum abundance thresholds in all three areas of Kodiak, Chignik and the South Peninsula,” Nichols said. “So we’re excited about that.” The last Tanner opener was in 2020 for 400,000 pounds, the minimum abundance number for a district to have a fishery. A fleet of 49 boats participated in that fishery and averaged more than $4 per pound for the harvestable male crabs that typically weigh between 2 to 4 pounds each. “A Tanner crab is getting to be legal-sized around age four or five, and then they start to die of natural causes or age out of the population by around seven or eight,” Nichols explained. “Once they start to become legal, we can expect them to hang around for potentially three years, and there’ll be more small crab behind them so you can kind of think of this as the front edge.” The new cohort, Nichols said, is one of the largest ever. It appears to be made up of two big year classes with a broad range of sizes that could support several years of fishing. “In 2019 the estimate was 223 million and then in 2020 it was down to 108 million. Every year, that number gets smaller, because there’s pretty high mortality on smaller crab. Anybody who’s cut open a halibut stomach knows that,” Nichols said. “And a lot of those are females so they won’t be in the fishery. But the male crab are getting bigger and approaching legal size. So even though you’re seeing estimates go down quite a bit, it’s still going to turn into a pretty good number of legal grab in the water.” Several more regulatory calculations must still be met as managers move their way through the survey data before a 2022 Tanner fishery gets a green light. “But based on meeting the minimal abundance thresholds it at least opens the door for a conversation about six different fisheries,” Nichols said. “And that doesn’t even include the Semedi Islands overlap section of the Kodiak District which would be open also. Under that scenario, that would be seven different sections open.” A Tanner announcement will be made in early November for the fisheries which open in mid-January. By the way, Tanner crab is always spelled with a capitol “T” because it is named after discoverer Zera Luther Tanner, commander of the research vessel Albatross which explored Alaska waters in the late 1800s. Fishing updates Alaska’s 2021 salmon catch has topped 219 million fish, which is 15 percent better than the preseason forecast of 190 million. The two biggest moneymakers exceeded expectations the most. The sockeye haul came in at 54 million compared to the predicted 46.5 million reds. Similarly, the pink salmon catch of nearly 151 million swamped the projection by 27 million. And although the run of chum salmon was disappointing, falling about 4 million short of the 15.3 million projection, nearly 5 million chums were caught since Aug. 1, “making it one of the three largest chum harvests in the last decade,” according to fishery economist Dan Lesh at the McKinley Research Group who compiles weekly tracking reports for the Alaska Seafood Marketing Institute. The coho catch of nearly 2.3 million is 1.6 million shy of the forecast and a harvest of 244,000 chinook salmon is 25,000 less than expectations. But despite the overall bigger salmon catch, smaller fish sizes will lead to less impressive harvest totals and revenues to Alaska fishermen. Yet, with higher dock prices across the board, it will still produce a good payday. The Alaska Department of Fish and Game will release the catch totals, fish prices and overall revenues by region in early October. As salmon season draws to a close, many other fall fisheries are underway or gearing up. At Southeast, beam trawlers are on the grounds for a third go at northern pink shrimp totaling 650,000 pounds in two districts. The spot shrimp fishery opens on October 1 for 457,300 pounds, and the Dungeness crab reopens that same day for a two month fishery. Southeast’s sea cucumber fishery opens to divers on October 4 with a catch of nearly 1.9 million pounds. Diving for red sea urchins also opens with a harvest set at nearly 3 million pounds. At Prince William Sound, cod opened on Sept. 1 for pot and longline gears on boats less than 50 feet, and a fishery is ongoing for 32,600 pounds of lingcod. Chignik opens to sea cucumber divers on Sept. 20 with a 15,000 pound harvest limit. Kodiak opens for cukes on Oct. 1 with a 120,000 pound catch quota, and for 20,000 pounds at the South Peninsula. Kodiak crabbers are still pulling up Dungeness crab through the end of October. That catch is at 1.3 million pounds so far. Alaska halibut fishermen have taken 70 percent of their nearly 19 million-pound catch limit with less than 6 million pounds left to go. Homer, Seward, Kodiak and Juneau are the top ports for landings and dock prices remain at over $6 per pound, topping $7 at Homer reflecting continuing high demand for fresh fish. Alaska and West Coast catches aren’t satisfying American’s appetites for halibut and trade data show that the U.S. has imported 10.3 million pounds of Atlantic halibut from Eastern Canada so far this year valued at nearly $77 million. For sablefish, just more than half of the more than 43 million-pound catch has been landed. Fishing for pollock, cod, flounders and other groundfish continues throughout the Bering Sea and Gulf of Alaska. The Gulf pollock fishery reopened on Sept. 1. Proposed catches for 2022 groundfish is on the agenda of the North Pacific Fishery Management Council when it meets via Zoom Oct. 6-15. Foregone fish bucks As Alaska struggles to find new sources of revenue, its leaders might look to reining in the losses from fish and crab taken in federal waters (three to 200 miles out) of the Gulf of Alaska and Bering Sea that goes elsewhere. Data compiled by NOAA research economists at the Alaska Fisheries Science Center provide a breakdown of the shares of groundfish and ex-vessel (dock side) values by vessel owner state of residency. For all groundfish taken in Alaska in 2020, a 0.78 share went to non-Alaska vessels. Examples by species show that a 0.76 share of all flatfish was taken by non-Alaska vessels, a 0.69 share of Pacific cod, 0.88 for pollock, 0.69 for all rockfish, and 0.38 for sablefish (black cod). For the Bering Sea and Aleutian Islands, 0.83 of all groundfish was taken by non-Alaska vessels; including a 0.70 share of cod, 0.91 of pollock and 0.71 of sablefish. The 2020 ex-vessel value of the Bering Sea groundfish catches totaled $718.2 million. It’s less of a loss in the Gulf of Alaska where in 2020, a 0.4 share of all groundfish was taken by Outside vessels including 0.4 of all flatfish, 0.15 of cod, 0.47 of Gulf pollock, and 0.34 of sablefish. The out-of-state information plus an incredible array of user friendly data is amassed by the Alaska Fisheries Information Network APEX reporting system with annual inputs from the Alaska Department of Fish and Game, the Commercial Fisheries Entry Commission and NOAA Fisheries. It includes Stock Assessment and Fishery Evaluation reports for all groundfish and crab species, numbers and types of vessels, wholesale and dockside values and prices, landings and values by fisheries, distributions of quota share holdings, harvesting and processing employment data and much more. Find it at akfin.psmfc.org/ Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Second busy summer wraps at Donlin Gold

Bursts of canary yellow on an otherwise deep green landscape indicated Alaska’s infamously fleeting fall had arrived to Western Alaska. At Donlin Gold’s camp in the upper Kuskokwim drainage, that meant wrapping up another busy drilling season before autumn departs. The last Donlin drilling crew was boring its final hole into the bedrock underlying a valley adjacent to the camp’s rather unique runway — more on that later — when the Journal toured the world-scale gold project with Sen. Lisa Murkowski Sept. 17. The drill was turning into what could end up being the bottom of the gold mine pit. “Ahead of schedule and under budget,” Donlin Gold General Manager Dan Graham said of the 2021 summer work season. Crews drilled approximately 80 holes totaling about 24,000 meters after originally planning to do about 20,000 meters of work at the outset. Mining major Barrick Gold Corp., the world’s second largest gold producer and a 50 percent owner in Donlin with junior Vancouver-based NovaGold, has been the driving force behind two consecutive drilling-intensive years at the Donlin prospect. About 23,000 meters of core was drilled last year. A little more than 400,000 meters of drilling has been done at Donlin since major exploration started, according to Graham. The latest core samples are largely needed to improve the companies’ understanding of the ore body before making a final investment decision on the massive mine project, last priced at nearly $7 billion back in 2011. Other geotechnical-focused drilling is informing work on the mine’s tailings storage dam. As proposed, the open-pit mine in the upper Kuskokwim River drainage would be one of the world’s largest, producing more than 33 million ounces of gold over an initial 27-year life. A 315-mile natural gas pipeline from the west side of Cook Inlet would supply a power plant at the mine and fuel storage tanks would be built at Dutch Harbor, in addition to the very large-scale operation at the mine site. Donlin representatives have long said the project generally needs sustained, high gold prices because of the extensive network of support infrastructure that needs to be developed but have declined to specify what parameters they believe are needed to green-light development. The last two active drilling seasons came after a period of general dormancy at the camp from 2013 to 2018 while the company focused on permitting and gold prices were at their lowest. Spot Gold prices hit a recent peak of nearly $2,100 per ounce in mid-2020 and since have been largely in the range of $1,700 to $1,900 per ounce after bottoming out at less than $1,100 per ounce near the end of 2015. To that end, Graham said at this point the outlook is for another full season next year. Executives for Barrick and NovaGold said in a joint statement earlier this month that they are working towards an updated feasibility study, which would likely include a new cost estimate, before deciding whether or not to start construction. That decision could come in two or three years if Donlin Gold can secure its remaining requisite permits. The company received a favorable record of decision from the Army Corps of Engineers in 2018 on its environmental impact statement following a roughly six-year review. Donlin still needs approvals from state Dam Safety officials in the Department of Natural Resources for its large tailings facility. Located on land owned by The Kuskokwim Corp., the area’s consolidated Alaska Native village corporation, the Donlin Gold project exemplifies the disconnect that often occurs between local Tribes and Native corporations when it comes to development projects. More than a dozen Tribes in the region have formally opposed Donlin since the project got its overarching federal approval largely over concerns the project will harm the Kuskokwim’s salmon runs, which have already been in a general state of stress in recent years. Leaders for Donlin, TKC and Calista Corp., which holds the subsurface and royalty rights to the land and gold, insist locals’ fears often stem from being misinformed; the company will be expected to discharge water treated to a higher quality than it would be if the mine were not there at all, Donlin External Affairs Manager Kristina Woolston said. “My focus is on the region and Barrick is on board with bringing the benefits (of the project) to the region,” Graham later added. Those benefits start with up to 3,000 construction jobs during the multi-year development phase and another 1,400 expected during the life of the mine, according to Donlin Gold, but the financial benefits of Donlin would also extend statewide through the Alaska Native Claims Settlement Act Section 7(i) and 7(j) resource revenue sharing programs for regional and village Native corporations, company leaders note. Currently, Donlin employs more than 100 workers at the camp when activity is high. As an example of the work the company is doing to understand and minimize the environmental impacts of the project, Graham said Donlin commissioned first-time studies of the Kuskokwim’s Rainbow smelt run — an important spring subsistence resource — this year to get a better understanding of when and how barges supplying the mine should be sent upriver to avoid out-migrating smelt fry. For her part, Murkowski tries to talk with workers from the region when visiting projects such as Donlin to get their perspectives on how it is viewed locally, she said. It was Murkowski’s third attempt to reach the project; the first two were weathered out. Upon approach to the camp, it was easy to grasp why the senator had previously been unlucky. The broken ceiling Sept. 17 allowed for safe travel; however an 8 percent incline to the Donlin camp runway means planes are limited to one-way in and one-way out with few options to account for wind direction or other considerations. The ridges surrounding the project — similar to the one the camp is perched on — also prevent flying in low cloud cover. The uphill landing at Donlin provides a sensation this reporter had not previously experienced. “The third time’s the charm,” Murkowski remarked prior to the morning flight from Anchorage, which was held up only briefly on a “weather.” Elwood Brehmer can be reached at [email protected]

PPP still driving income for state’s banks

Compared to his, Bill Murray would envy the kind of Groundhog Day Alaska’s banks have been living. While full of work, the last year-plus has also been full of growth and profits for Alaska’s lenders. It continued in the second quarter of the year. Northrim Bank Chief Financial Officer Jed Ballard said the Small Business Administration’s uber-popular Paycheck Protection Program, or PPP, instituted early in the pandemic provided the bank with nearly 6,000 new loans totaling more than $600 million in the past year. “That was a tremendous amount of money we put into the system. For us that is several years of activity,” he said. Ballard and leaders at other Alaska banks have said the PPP loans spurred levels of activity that had loan officers working long hours and sometimes weekends while other employees took on new roles to assist where needed. “A tremendous amount of work,” Ballard said. Anchorage-based Northrim, which has branches in Southcentral, the Interior and Southeast, reported income of $8.3 million for the second quarter, which followed a $12.1 million first quarter profit. The pace at which Northrim and other banks are processing PPP loans has slowed but fees normally amortized over the life of a loan are collected up front when a PPP loan is forgiven as intended, which means the program continues to benefit banks’ bottom lines. According to Ballard, Northrim closed out roughly $130 million of forgiven PPP loans during the second quarter. Northrim’s assets grew by 4.2 percent to more than $2.45 billion in the quarter, according to its filings with the Federal Deposit Insurance Corp. The bank surpassed $2 billion in assets a year prior. Northrim’s total loans were down 4 percent to approximately $1.6 billion — a reflection of the forgiven PPP loans — but the bank had solid “core loan growth” in the period as well, Ballard said. Mortgage activity continues to be strong and PPP loans also gave Northrim access to customers it might not otherwise have secured, he added. The Alaska Housing Finance Corp. continues to publish daily interest rates for 30-year mortgages starting at 2.5 percent. Ballard noted that mortgages represented roughly half of the bank’s non-interest income for the quarter; for most banks home loans are about 10 to 20 percent of non-interest income, he said. First National Bank Alaska, the state’s largest state-based lender, netted nearly $13.7 million in the quarter, its third such period with a profit in the $13 million range following quarterly nets of $15.5 million and $14.5 million in the middle of 2020. FNBA grew its total position 8.1 percent in the second quarter to more than $5.33 billion in assets. The bank’s total assets have increased more than 16 percent over the past year. According to an earnings release, FNBA originated more than 3,000 second-round PPP loans totaling $238.1 million in the first half of the year, while other PPP borrowers have had a total of $278.8 million in loans forgiven. “The lessons learned in 2020 give us great confidence we will continue to be able to deliver the financial services Alaskans need, and to adapt to circumstances as they develop,” FNBA CEO Betsy Lawer said in a statement. FNBA representatives did not respond to further questions in time for this story. FNBA’s loan loss allowance stayed ostensibly flat at $23.5 million; Northrim was similar with a loss allowance of $14.5 million for the quarter on a $1.6 billion portfolio. Fairbanks-based Denali State Bank grew its total position by 14.3 percent in the second quarter to more than $454.2 million. The Interior community bank netted a profit of $1.33 million, nearly matching the $1.37 million earned to start the year. Elwood Brehmer can be reached at [email protected]

New climate tech fund seeks to support entrepreneurs solving climate challenges

A new wave of climate technology venture capital funds emerged during the COVID-19 pandemic, including one with ties to Alaska. The recently-announced Earthshot Ventures is spinning out from Hawaii and California-based Elemental Accelerator to invest in entrepreneurs solving climate challenges around the world. The fund raised $60 million from entities like McKinley Alaska Private Investment, who is joined by well known organizations like Emerson Collective, Microsoft, Impact Engine, and others. Similar funds were also launched over the last year and a half, including Amazon’s $2 billion Climate Pledge venture fund, Microsoft’s $1 billion Climate Innovation Fund, and Unilever’s €1 billion climate fund. These funds are investing in startups developing technologies and services that will speed up the transition to a low-carbon economy. Locally, Anchorage-based Launch Alaska, a climate technology accelerator that focuses on deployment of that technology in Alaska, has partnered with Earthshot Ventures to provide dealflow and access to their customer networks. This kind of partnership is a new, more integrated approach; Earthshot Ventures combines the best parts of the accelerator model and the fund model to create a supportive environment for scaling companies to fight climate change.  Isaac Vanderburg, CEO of Launch Alaska, says it’s crucial for Alaska to be at the forefront of the energy transition, and participating in this fund will help to do just that. “Our state has had several decades of miraculous economic progress thanks to oil and gas, but the writing is on the wall: it’s time for us to become a new kind of energy state,” Vanderburg said. “Fortunately, Alaska is developing a reputation as a world class proving ground for some of the globe’s most exciting climate tech companies. And now, we can connect the companies we work with to Earthshot Ventures for funding.”  Vanderburg said that although many of the companies that participate in Launch Alaska’s program are from outside Alaska, they spend money in the state as they work on their projects and some of them are opening satellite offices, hiring Alaskans, or buying homes. As Launch Alaska continues to operate, he hopes more and more companies will invest in the state for the long term. Additionally, the fund may be a resource to Alaska startups working in climate tech.  “Startups have the opportunity to change the trajectory of a state’s entire economy, and the companies we work with have both the ability and the aspiration to grow to thousands of jobs,” Vanderburg said. “If we can support these companies’ growth, they will offer a way for us to continue to be an energy state, just with a different kind of energy economy than we’ve grown accustomed to.” Companies in Launch Alaska’s current portfolio include Ampaire Inc, a startup developing electric aircraft from short-haul cargo to passenger transport; DASH Systems, an airdrop delivery solution tailored for remote areas; 60Hertz, an Alaska-based maintenance software to manage and monitor grid-tied and off-grid assets; and Dynamhex, a technology platform for companies, municipalities, and utilities to meet climate targets with data-driven solutions. Climate technology companies backed by venture capital raised $14.2 billion globally between January and June of 2021, and the amount of venture capital funding invested in climate technology has grown a whopping 3,750 percent since 2013. Startups seek venture funding to not just inject capital into their businesses, but also for industry connections and access to experts as they scale their companies.  “That’s part of the special sauce we offer,” Vanderburg said. “By bringing together a venture capital fund with a deployment accelerator, we’re able to help companies get traction, access funding and tap into our network within the climate tech community.” He expects that a number of the companies Launch Alaska works with will be interested in seeing if they’re a fit for the new fund. Mike Jackson, Managing Partner for Earthshot Ventures, hopes they will be.  “Launch and Elemental both know what it takes to operate in the real world, how projects get funded, how to interact with stakeholders, and how to collaborate with large energy companies,” Jackson said. “They also help entrepreneurs think through the impact they might make on the communities they serve, and how they can benefit them along with the environment by providing equity and access to clean energy.”  He said that Alaska occupies a unique position as a resource extraction state on the front lines of climate change, and that the oil and gas industry will be a big part of solving the problem. Under pressure from their governments, investors, and the public, oil companies like BP and Royal Dutch Shell have committed to reducing their emissions and have been selling off oil fields while investing in renewable energy.  Other companies, like Walmart, FedEx, Coca-Cola, Alaska Airlines, and Best Buy are committed to going carbon neutral by 2040. This means that they will rely entirely on renewable energy or offset the burning of fossil fuels with the capture and storage of carbon dioxide, and will be looking to climate technology companies to help them do it. Vanderburg said these companies have recognized the same thing Launch Alaska, Elemental Excelerator, and Earthshot Ventures have:  “The energy transition is either going to happen to us, or we can lead it,” he said. “Deploying and scaling the technologies to combat climate change is the biggest economic opportunity of our generation.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for innovation and entrepreneurship. She is the associate director for the University of Alaska Center for Economic Development, Board President for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

In-person workers are slow to return to jobs, data shows

Donald Trinks is seeing both sides of the labor problem in his restaurant: less business from travelers and not enough workers to capitalize on the business he has left. More people want to eat in his restaurant, Bart’s Drive-In in Windsor, Conn., but Trinks has to close on Wednesday and Thursday nights because he can’t find enough workers. At the same time, his catering business is down because business travel has evaporated with the surge of the coronavirus delta variant. “We do a lot of business catering, and there’s a lot less business meetings and people coming in from out of state,” said Trinks, who is also Windsor’s mayor. Connecticut is one of the mostly Northeastern states slowest to recover jobs after the pandemic. Hospitality workers and others who can’t telework are key to job recovery because, despite a sudden spike in demand for their services in a reopened economy, many are reluctant to return to the workplace. They’ve been burned by layoffs, helped by extended unemployment benefits that just expired, and face hurdles such as child care uncertainty as schools reopen and the delta variant continues to frustrate expectations. Some employers are paying higher wages or offering other incentives to lure back workers, but that may not be enough if employees, for example, can’t find child care. “You can’t pay somebody enough to show up at work when there’s a kid at home who needs care,” said Curtis Dubay, senior economist at the U.S. Chamber of Commerce. Workers also may see layoffs looming again as the delta variant prompts people to cancel business trips. In an August survey, two-thirds of business travelers said they were cutting back on trips, and most didn’t plan to reschedule. The number of jobs is down about 9 percent in Connecticut and Vermont from pre-pandemic levels as of July, and down significantly in Hawaii (8.1 percent), Illinois (6.9 percent), Maryland (6.7 percent), New Jersey (6.1 percent) and Rhode Island (6.1 percent), according to a Stateline analysis of Bureau of Labor Statistics data. “We have a clear mismatch between workers and employers, and it’s not clear what will change the situation,” said Joyce Manchester, senior economist for Vermont’s Legislative Joint Fiscal Office. Restaurants, hotels and child care centers in Vermont have struggled to find workers; some have cut operating hours, she added. Nationally, hospitality job growth halted in August and is still down 1.7 million jobs from before the pandemic, according to a federal jobs report released Sept. 3. Overall job growth was sluggish in August at 235,000, compared with an increase of more than 1 million in July, and was still 5 million jobs short of pre-pandemic levels. July data showed a record 10 million job openings, with demand especially high for in-person jobs such as hospitality, manufacturing and construction. The few states that have more jobs than they did before the pandemic are fast-growing, mostly Western states with booming economies, scenic beauty and a relatively low cost of living. Utah gained almost 50,000 jobs or about 3 percent since July 2019, and Oregon gained almost 30,000 or 1 percent. Arizona and Idaho were close behind with about 20,000 jobs added. Utah benefited from a young population less susceptible to COVID-19 and does not face the retirement issues seen in New England and other aging areas, said Mark Knold, chief economist for Utah’s Department of Workforce Services. “There’s a strong in-migration attraction because of the Rocky Mountains’ beauty and recreation,” Knold said. “It’s not just a Utah thing, it’s an intermountain West thing.” New England states have more affluent, older residents who may have decided to retire early to avoid the pandemic’s havoc, said Steven Lanza, an associate economics professor at the University of Connecticut. “In a place like Connecticut, where the population is relatively old and incomes are high, folks have realized they can do without the job,” Lanza said. Many of the historically high job openings reflect a rapid need for jobs that must be done in person, including hospitality but also manufacturing, construction and health care, said Frank Steemers, senior economist at the New York-based Conference Board, a nonpartisan labor research organization. “This is a very quick surge in demand for these in-person jobs as areas start to open up,” Steemers said. “A lot have already been rehired so the ones that are left may be thinking, ‘I can wait this out for another few months on the sidelines and see what’s happening.’” The more affluent can take advantage of remote work to cash in on high real estate values and move from expensive states, said Knold, the Utah economist. “Teleworking is a new form of work that favors the affluent who can leave California and live cheaper elsewhere,” he said. Meanwhile lower-wage workers may be stuck in colder states with fewer choices about work. The states with the highest rate of jobholders are Nebraska, South Dakota, North Dakota, Utah and Minnesota, all with more than 65 percent of adults holding jobs. Jobs per capita are down in those states but not enough to drop them much in the rankings, except for Iowa, which fell from 68 percent of adults holding jobs to 64 percent, and South Dakota, which improved slightly to take second place away from Iowa in the past two years. That’s a typical pattern for the Upper Midwest, said David Drozd, research coordinator for the University of Nebraska’s Center for Public Affairs Research. Those states have among the highest rates of two-earner couples, Drozd said, and that’s partly a cultural expectation. “It’s sometimes referred to as the Midwest work ethic. People just work,” said Drozd. “It’s a culture of hard workers as well as a financial aspect of people and families needing to work to make ends meet.” At the other end, West Virginia, Mississippi, New Mexico, Kentucky and Louisiana have the fewest jobs per capita, with between 52 percent and 54 percent of adults holding jobs. If there’s one thing experts agree on, it’s the unpredictability of what comes next. “We have no idea what things will look like in six months. It won’t be comparable to anything that’s going on now,” said Dubay, the U.S. Chamber of Commerce economist.

North Slope veteran Weiss joins gasline board of directors

Gov. Mike Dunleavy added a unique perspective to the state’s team trying to build the massive and long-sought Alaska LNG Project when he named Janet Weiss of Anchorage to the Alaska Gasline Development Corp. board of directors on Aug. 23. That’s because Weiss spent seven years leading BP’s Alaska business — and working Alaska LNG from a different angle — before the global energy giant left Alaska when its $5.6 billion sale to Hilcorp Energy closed last year. When BP left, Weiss retired from the industry, but stayed. “No plans to leave, 28 years (in Alaska), so it’s definitely home,” she said in a recent interview with the Journal. As president of BP Alaska, Weiss led the business through the first iteration of the $39 billion Alaska LNG Project: a producer-led consortium formed officially in 2014 that the state was a minority partner in and was championed first by former Gov. Sean Parnell. She also observed, from the inside, the transition in 2016 under former Gov. Bill Walker to a state-led project. That shift was largely the result of depressed oil and gas markets that caused the producers to slow their development plans and spending for Alaska LNG as well as Walker’s long-held belief that the State of Alaska should take a more active role in spurring the project on. Dunleavy said in a statement from his office that Weiss’ 35 years of experience in the oil and gas industries will be an “extremely valuable” addition to AGDC. “Like so many others, when Janet arrived in Alaska in 1986 she fell in love with our great state and its rocks and reservoirs. Janet spent her career in almost every corner of the oil and gas industry and from 2013 to 2020 she led BP Alaska as its President, while continuing to be involved in the Alaska philanthropic community. Her remarkable experience and capable leadership will be indispensable as AGDC continues its work to unlock Alaska’s natural gas on the North Slope,” he said in a statement for the Journal. Former AGDC board chair Dave Cruz, who was the longest serving member on the corporation’s board when he stepped away last year, said he believes Weiss will bring a perspective to AGDC that the state hasn’t had before and has more knowledge about what the producers need to continue progressing the project. His interactions with Weiss came at big events related to the project, such as stakeholder meetings, during his roughly seven years on the AGDC board. Cruz added that he thinks Weiss’ years in Alaska before taking over the leadership position for BP can be valuable. Weiss applied for the board after getting some encouragement from others involved in the project, she said. “She wasn’t a transplant here at the executive management level, Cruz said. “She came up through the ranks here. She understood extremely well the dynamics of the North Slope because she came up as a management person who worked her way up here. And that’s the best way for people to understand it.” A reservoir engineer by training, Weiss was BP’s vice president of resource development in Alaska before taking the lead role with the company in the state. Under Weiss, BP agreed in 2019 along with ExxonMobil to each provide up to $10 million to AGDC for completing the exhaustive AK LNG environmental impact statement, or EIS, which the Federal Energy Regulatory Commission approved in May 2020. She wrote in an email to follow-up questions that she advocated strongly for BP to help fund the EIS despite the fact that it was the state’s responsibility at that point because “that body of work was the culmination of a lot of funding and man-hours, and it best served all parties involved to complete it,” she wrote. “Keeping the opportunity moving forward.” Now, AGDC leaders are hoping to turn the project back over to private hands under the Dunleavy administration. They have said they hope to secure commitments from developers, operators and investors in the LNG and gas treatment plants by this fall, with the project’s major financial agreements coming next year. AGDC President Frank Richards has said agency officials are in confidential negotiations with a lead party to manage the gas pipeline portion of the project at least partially contingent upon the availability of federal funds for the first phase of construction. Then-ExxonMobil CEO Rex Tillerson notably said in 2015 that Alaska is its “own worst enemy” because the plan for a major North Slope gas project changes every time a new governor is elected, which has been every four years since 2002. Weiss said she believes the most important aspects of successfully developing a megaproject such as Alaska LNG are having sufficient expertise to lead the many facets of such a complex endeavor and, just as importantly, alignment amongst those expert parties on how to move forward. “There’s not one answer to all of this. Different players have different parts to play and come in at different levels of project definition,” she said of advancing Alaska LNG. “Do you have the right expertise for the various parts of the project because you can’t have a massive ‘whoops’; that’s what you can’t have. You don’t want this project to come in and cost double. Something that you think is going to be wonderful for the state turns into the biggest albatross; so you have to have the right experience and not have the ‘whoops.’” Under Walker and former AGDC President Keith Meyer, the state pushed an aggressive development timeline for the project, hoping to have it operational by the mid-2020s in order to capitalize on what they and many others noted is a window to secure long-term contracts with some of the world’s largest LNG buyers in Asia. That focus on timing was likely a point of misalignment between the state and company leaders, according to Weiss, because of how important it is to balance all of the complex — and sometimes competing — priorities of developing a project the scope of Alaska LNG. “There is a window, an opportunity, so you can see that somehow you have to figure out that level of alignment so you can have your cake and eat it, too,” Weiss said. She also went out of her way to emphasize that the many Alaskans, including Walker, who have been critical of state officials and leaders of the North Slope producers for not constructing a gas pipeline project in some form over the decades since the oil was first developed often overlook a very key factor: the gas was being put to work that whole time. The natural gas produced along with oil at Prudhoe Bay has long been injected back into the field to boost reservoir pressure and ultimately enhance oil production. In 2015, the Alaska Oil and Gas Conservation Commission approved increased gas “offtake” from the North Slope to supply the Alaska LNG project, with production expected to start in 2025 at the time. The decision was seen as a recognition by state regulators that the economic value of continuing to inject the gas for oil recovery would be bested by the value of commercializing the gas in the middle of this decade. Prudhoe Bay was originally expected to produce about 9.5 billion barrels of oil but it has now given up more than 13 billion barrels of crude, Weiss noted. “A gas project wouldn’t have worked all those years ago. That additional oil recovery was worth far more than a gas project would’ve been at the time so it’s a wonderful thing that we got that additional 3 billion barrels of recovery from what we did with the gas for all those years,” she said. ”So now is the time to see if we have a project and it works out with the field life in Prudhoe Bay.” When the AOGCC issued its decision in 2015 approving gas offtake from Prudhoe, the capital cost for Alaska LNG Project was roughly pegged at $45 billion to $65 billion. It has since been cut through multiple rounds of engineering down to about $39 billion, according to AGDC leaders. Weiss stressed that cutting the project’s overall cost of supply, which includes, but is not limited to, the immense capital expense, continues to be imperative even with the progress that’s been made. It’s something the producers each track very closely and have specific, if fluid, targets for. That cost of supply target was in the range of $10 to $11 per million British thermal units, or mmbtus, a standard unit in the LNG industry, in 2013-14 when work started in earnest on the Alaska LNG Project, according to Weiss, and it has fallen significantly since. “I remember when it fell to $8 and we really had to scramble and come up with…what are some additional levers, what can we do?” she recalled. “The bar is lower now and I’ve got to dive in there and understand — where are we?” AGDC leaders have said they believe the cost of supply for delivered gas to Asian customers from Alaska LNG is now in the $7 range. Weiss said she has an idea of what the target should be based on current market conditions but she’s “going to reserve that one” for now. To that end, there is still some confidential information Weiss has from her years with BP that she can’t use in her new role with the state gasline corporation, but much of it has an expiration date “when it’s not helpful” to BP, she said. “What’s really helpful, from my perspective from BP, is just being a participant and understanding a lot more about how these projects work,” Weiss said. “There’s less of this sensitive information than you might think because of time.” Elwood Brehmer can be reached at [email protected]

Merger may shift timing of Pikka development decision

The future of the multibillion-dollar Pikka oil project on the North Slope is unclear, but what is almost certain is that it will be changing hands for the third time in six years. Papua New Guinea-based Oil Search, which owns Pikka, announced a merger with Australian-based Santos Ltd. Sept. 10 that will collectively give current Santos shareholders 61.5 percent ownership in the new venture, according to a joint statement from the companies. Leaders of the South Pacific producers confirmed in early August that they were in negotiations and on Sept. 6 publicly extended a due diligence review period for the deal by one week. Oil Search bought into Pikka in the fall of 2017, when it agreed to an $850 million deal with then-operator Armstrong Energy and a silent minority owner to take a 51 percent stake in the project over two payment tranches. Armstrong Energy, a Denver-based explorer, had taken over the operator position at Pikka from Spanish major Repsol in late 2015. Repsol remains a 49 percent working interest owner in the project. Oil Search has since finished permitting the overall Pikka development plan and has all of the gravel laid that it needs to commence construction of the facilities for a first, scaled-back phase of the project, Oil Search Alaska Subsurface Senior Vice President Mark Ireland said during a Sept. 9 presentation to the Alaska Support Industry Alliance, a resource industry trade group. Ireland said shortly before the formal merger announcement that Oil Search leaders expected to make a final investment decision, or FID, on the $3 billion first phase of Pikka this year. “The headwinds from the merger may cause some issues (with the decision) but the team’s dedicated to delivering what we need to,” he said Sept. 9. Santos and Oil Search are similarly situated firms, according to Ireland, who said they are both primarily regional gas players that also already jointly own some assets in Papua New Guinea and are looking for opportunities to grow outside of that area. “That’s why Oil Search came here (to Alaska),” he said. Santos spokesman James Murphy, in responding to emailed questions about what the deal means for Oil Search’s Alaska assets, referenced an August statement from Santos officials that said they “would be supportive of Oil Search working towards (front-end engineering and design) and FID as publicly announced.” Oil Search Alaska spokeswoman Amy Burnett wrote via email Sept. 14 that the company’s Alaska employees were waiting to learn more about what the merger means for their work as well. Oil Search leaders stressed in the joint announcement with Santos that the merger will give their shareholders the ability to participate in a larger company with greater access to capital. “The combined entity will have the capacity to deliver on an exciting pipeline of organic growth opportunities,” Oil Search Chairman Rick Lee said. Current Santos CEO Kevin Gallagher will lead with the combined company, according to the joint statement. “The merger will create a company with a balance sheet and strong cash flows necessary to successfully navigate the transition to a lower carbon future with the combination of Santos’ leading (carbon capture and storage) capability combining with Oil Search’s ESG programs in PNG and Alaska to provide a strong foundation.” Santos and Oil Search are expected to have a combined market capitalization of approximately $15 billion. Oil Search shareholders are tentatively scheduled to vote on the merger Nov. 29 and the deal would then be effective Dec. 2 if it is approved, according to a timeline provided by the companies. Oil Search leaders slowed the pace of work at Pikka and significantly revised their plans last year after the economic realities of the pandemic forced them to cut approximately $80 million from what was a $400 million North Slope capital plan for 2020. “We were knocked flat in the dirt and had to pick ourselves up,” Ireland said of 2020. “We had planned to have a much larger facility and three drill sites instead of one but with the collapse in oil prices and issues around the pandemic we had to regroup and that’s what we did.” What resulted was the current plan for a single drill site capable of producing up to approximately 80,000 barrels per day from 43 total injector and producer wells with startup in 2025. Oil Search Alaska applied with the state as recently as mid-2019 to move its original first-oil target of late 2023 up a year to produce up to 30,000 barrels per day starting in 2022. At the time the company envisioned a $5 billion project capable of production upwards of 120,000 barrels per day. As it stands, the current Pikka plan incorporates truck-able modular facilities that will give project managers flexibility in the logistics and timing of the development, according to Ireland. Oil Search leaders have openly acknowledged the fact that the company has had a difficult time securing funding for the project and Ireland said it stems at least partly from the large banks and other lenders that will no longer finance Arctic oil and gas projects. “We’re not leaving any stone unturned and we’re making, I’ll say, good progress but it’s not an easy road to travel right now,” Ireland said of financing Pikka. Industry analysts have said the increasing reticence in the finance world towards Arctic oil and gas developments would have little impact on the largest producers on the North Slope, such as ConocoPhillips and ExxonMobil, which have other avenues for funding, but would likely impact mid-sized companies looking for large amounts of development funding such as Oil Search. At the same time, many analysts also insist that Pikka will almost certainly be developed at some point given its location on state land between ConocoPhillips’ mature Kuparuk River and Alpine oil fields and its relatively shallow, conventional Nanushuk oil resource, regardless of which company ultimately starts producing it. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Sept. 19

Col. Simon Brown II, commander of 49th Brigade, Alaska State Defense Force, was promoted to the rank of brigadier general Sept. 3 at the Curtis D. Menard Memorial Sports Center in Wasilla. Brown, a retiree from both the Alaska State Troopers and the Alaska Army National Guard as a military police officer, leads the ASDF, an all-volunteer organization part of the Alaska Organized Militia, within Alaska’s Department of Military and Veterans Affairs.

FISH FACTOR: Unobserved crab mortality unaddressed as survey shows stock crash

Alaska’s Bering Sea crabbers are reeling from the devastating news that all major crab stocks are down substantially, based on summer survey results, and the Bristol Bay red king crab fishery will be closed for the first time in more than 25 years. That stock has been on a steady decline for several years and the 2020 harvest dwindled to just 2.6 million pounds. Most shocking was the drastic turn-around for snow crab stocks, which in 2018 showed a 60 percent boost in market-sized male crabs (the only ones retained for sale) and nearly the same for females. That year’s survey was documented as “one of the largest snow crab recruitment events biologists have ever seen,” said Dr. Bob Foy, director of the North Pacific Fishery Management Council’s Crab Plan Team. Again in 2019, the “very strong” snow crab biomass was projected at more than 610 million pounds, and the catch was set at a conservative 45 million pounds for the 2020 fishery. No Bering Sea crab surveys were done that year due to the COVID-19 pandemic, but the 2021 results indicated the numbers of mature male snow crab had plummeted by 55 percent. The stock “seems to have disappeared or moved elsewhere,” said Jamie Goen, executive director of the trade group, Alaska Bering Sea Crabbers. The snow crab catch for the upcoming season could be down by 70 percent and the stock could be classified as “over-fished,” she said, adding that no decisions will be made until the data undergo more scrutiny by plan team and council scientists. ABSC estimates the closure of the red king crab fishery and a reduced snow crab catch could cost harvesters far more than $100 million. The hit will be felt by roughly 70 vessels, more than 400 fishermen, and the processors and fishing communities that rely on the Bering Sea crab revenues. The crabbers want “bold action” from federal fishery managers. They are calling on the North Pacific Fishery Management Council and NOAA Fisheries to conserve crab habitat and spawning grounds highlighted by scientists more than 10 years ago with little resulting action. The crabbers also want managers “to create meaningful incentives to reduce crab bycatch in other fishing sectors, to reduce fishing impacts on molting and mating crab, and to estimate unaccounted for bycatch from unobserved fishing mortality from bottom and pelagic (mid-water) trawl nets, as well as pot and longline gears.” Boats fishing the Bering Sea are required to have 100 percent observer coverage to track what is retained and what is tossed over the side, but it’s what is not observed that most concerns the crabbers. And what goes unseen is not factored into stock or bycatch assessments. The Magnuson-Stevens Act, the primary law governing marine fisheries management in federal waters (from three to 200 miles out), defines unobserved mortality as “fishing mortality due to an encounter with fishing gear that does not result in capture of fish.” In a February letter to the NPFMC, ABSC highlighted studies showing “that 95-99 percent of crab in the path of trawl gear go under the footrope escaping capture and some portion of those likely die after contact with the fishing gear. Given this number compared to what is observed as bycatch, the potential for unobserved mortality of crab could be millions of additional pounds of dead crab bycatch.” A February report by North Pacific council scientists, which (unsuccessfully) proposed an amendment to the management plan for crab bycatch in the Bering Sea groundfish trawl fisheries, stated: “Crab may actively escape capture from trawl gear, as they can slip under the trawl itself, or over the sweeps, but the damage from the gear results in mortality or delayed mortality due to injuries. The potential for unobserved mortality of crabs that encounter bottom trawls but are not captured has long been a concern for the management of groundfish fisheries in the Bering Sea.” (Witherell and Pautzke, 1997; Witherell and Woodby, 2005). The report said that “the majority of trawl caught crab PSC (prohibited species catch) occurs when vessels are targeting yellowfin sole. This is the case across all crab species.” Yellowfin sole is one of six groundfish species targeted by a cooperative of 18 to 20 bottom trawlers called the Amendment 80 fleet that includes seven vessels owned by Alaska Native Community Development Quota, or CDQ, groups. No CDQ trawl vessels have made shoreside deliveries in Alaska in the past ten years. The Amendment 80 boats, all of which are homeported in Seattle, range in length from 200 to more than 300 feet and contain processing facilities. They usually fish from late January through the fall and last year caught nearly 300 million pounds of yellowfin sole valued at 9 cents per pound. Each of the A80 boats employs six fishing crew, approximately 24 processing workers and seven other staff including officers, engineers and cooks. The council report said 69 percent of the crew (not including processing workers) reside in or near Seattle. Direct wages paid during 2018 were $46 million and $52 million to the state of Washington overall. In contrast, Alaska residents accounted for 3 percent to 8 percent of A80 crews and took home $2 million in direct wages. The Crab Plan Team met Sept. 13-16 to discuss the Bering Sea crab stock assessments and catches for the 2021-22 season will be announced prior to the Oct. 15 start of the fisheries. Reducing crab bycatch is not on the agenda. The NPFMC meets via web conference from Oct. 6-10 when it will set preliminary catch and bycatch levels for 2022. Dungeness update Southeast crabbers wrapped up an “average” Dungeness season for a two and a half month summer fishery that ended in mid-August. Preliminary numbers indicate the catch came in at half of last summer’s level, said Adam Messmer, Alaska Department of Fish and Game assistant manager for the region. “We ended up with just over 3 million pounds this season, which is right around our 10-year average. Last year was our second biggest year ever. We were kind of expecting a little bit more than what we caught this year. But we had a quite a bit of soft shell crab (newly molted) at the beginning of the summer. That accounts for the missed poundage,” he said. The 2020 Dungie catch of 6 million pounds was valued at nearly $10 million at the docks. Despite a smaller catch this summer, the harvest of the two-pounders was worth much more to the fleet of 205 permit holders. “Yep, it was our highest price ever averaging $4.27 per pound. That came out to almost a $13 million fishery. So that pencils out to about $63,000 per permit,” Messmer added. Southeast crabbers get another go when the Dungeness fishery reopens on Oct. 1. Dropping pots for Dungeness is ongoing around Kodiak and the Westward region until the end of October. Around 1.5 million pounds is likely to be the tally for 20 Kodiak boats, down about one million from last year. But the outlook is fairly optimistic said Nat Nichols, area manager for ADFG. “Here in Kodiak that makes three seasons in a row of over a million pounds. And I’ve heard some reports that there’s a lot of crab measuring going on and there’s a lot of crab that are just a little bit short of the stick. So that sort of gives optimism for next year,” he said, adding that fishermen also are encountering a lot of soft shell crab that are returned to the water. Over 415,000 pounds of Dungies have been hauled up at Chignik and Alaska Peninsula fishermen are having the region’s best catches, now at 1.3 million pounds. The Westward price is $4.35 per pound on average. Salmon watch Alaska’s salmon catch by Sept. 11 was on its way to 219 million fish, well greater than the forecast of 190 million. Pinks pushed up the number with a total harvest so far of nearly 151 million. Nearly 65 million were from Prince William Sound and over 45 million humpies were harvested at Southeast and over 26 million at Kodiak. The statewide sockeye salmon catch has topped 54 million; chums were nearing 11.5 million, cohos at 2.1 million; and 243,000 chinook salmon. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Trade group leaders adapt as COVID-19 again upends fall conference season

In 2020, the Resource Development Council for Alaska planned to celebrate its 41st anniversary at its yearly fall conference. The organization’s largest event, usually held the week before Thanksgiving, features 1,200 guests, 125 exhibitors and 28 high-level speakers. COVID-19 had other plans. “We did a virtual program in 2020, but we lost a lot by doing that. Where we lost out was in networking and hearing from our exhibitors,” said RDC Executive Director Marlenna Hall. Known for its diverse membership, Hall says that what makes the RDC conference unique is that it brings together leaders from Alaska’s five major industries: fishing, forestry, mining, oil and gas and tourism. Without the ability to meet in person, Hall says that her organization lost a valuable opportunity to hear both project and industry updates. A year later, RDC is once again facing the same prospect. As Alaska’s hospitals continue to struggle to combat short staffing and limited capacity caused by the current COVID-19 surge, many organizations are grappling with deciding the right course of action. “What to do about this year’s conference is probably the hardest question I’ve had to answer in my entire career,” said Alaska Miners Association Executive Director Deantha Skibinski. After polling her membership, lengthy discussions with her board, and months of planning, Skibinski has decided to move forward with AMA’s convention and trade show. Slated for Nov. 1-6 at the Dena’ina Civic and Convention Center, the event will come with some caveats. In an email sent to AMA’s membership, Skibinski outlined potential mitigation plans, including required proof of vaccination or a negative COVID-19 test, mandatory masking, and the cancelation of luncheons, breakfasts and the banquet. “From our member survey, it was very clear that whatever we decided to do, we weren’t going to make everyone happy. But we are doing our best to balance public safety with the desire many of our members have to meet in person. It is a hard tightrope to walk,” Skibinski said. Hall is in a similar position. Prior to the explosion of the Delta variant, Hall’s membership expressed their dislike for teleconferencing and advocated for an in-person event. Now, Hall isn’t sure RDC would even be able to provide the resources that people have come to expect of their conference. “Where the challenge comes in is getting the high-level speakers to participate in person because many of them come from companies which are nationally managed, and they have instituted travel bans,” Hall said. “So, for us, if we don’t have those high-level speakers, then what are people coming to us for? Today, I can’t tell you almost anything with confidence because we just don’t know what our conference might look like.” Alicia Siira, Executive Director of the Associated General Contractors of Alaska, echoed Hall’s concerns. “It’s really uncharted territory for everyone. As an organization, we want to make sure that we’re still providing value to our members, but also not just doing something because we always do,” Siira said. For now, Siira is working with her team to determine what portions, if any, of their planned conference they can move forward currently scheduled for Nov. 10-13 at the Hotel Captain Cook. Still, Siira said that things are changing every day, so it’s too soon to know what the future holds. While Hall and Siira continue to weigh their options, others have decided to postpone. “We actually made the very difficult decision just last week to go ahead and postpone our conference, which was originally scheduled for the last week of September (28-30 in Girdwood),” said Alaska Chamber President and CEO Kati Capozzi. “We were going to require vaccination or negative COVID tests, but with everything going on and our hospitals completely overwhelmed, we didn’t feel like we could have a safe and responsible in person event at this time.” Citing feedback from members, Capozzi said that the Alaska Chamber will not transition to a virtual-only conference. “We feel like it is a kind of been-there-done-that with virtual conferencing. Our members are ready for in-person, but they are prepared to wait the appropriate amount of time before we actually do meet in person,” she said. After 18 months of virtual conferencing, employees worldwide are struggling with the newly minted term “Zoom Fatigue.” Last April, Jeremy Bailenson, founding director of Stanford University’s Virtual Human Interaction Lab, wrote in an Opinion piece for The Wall Street Journal in which he outlined the five types of fatigue associated with video conferencing: general (overall tiredness), social (wanting to be alone), emotional (being overwhelmed and “used up”), visual (symptoms of stress on one’s eyes) and motivational (lacking the drive to start new activities). “I think the prevalent themes resonating throughout associations right now are uncertainty and adaptability,” said Alaska Travel Industry Association CEO Sarah Leonard, whose annual conference was scheduled for Oct. 11-14 at the Dena’ina Center. “I think this is just the world we live in right now. We’re all trying to absorb the idea that events are probably going to have to be hybrids of in-person and virtual.” However, Leonard remains optimistic that there will be safe ways to have in-person events in the near future. “I think or, at least I hope, that in the next like, three or four months, or six months, that there’s a way that we can host in person events safely, or at least with mitigating health concerns,” Leonard said. Up for another challenge As challenging as navigating the ever-changing pandemic landscape has been, for Hall, Skibinski, Siira, Leonard, and Capozzi, it’s just another opportunity to put their adaptability and ingenuity on display. When Skibinski assumed the executive director position at AMA in 2012, the organization did not have a website, social media, or even a communications strategy. They did, however, have one piece of outdated technology. “Believe it or not, our office actually had a typewriter in it,” she laughed. “AMA represented this really modern mining industry where, you know, there’s technological advances all the time. There’s always a bunch of research that’s being done to grow the industry and find efficiencies and find more environmentally friendly ways to do things. “But they didn’t have a communications plan to talk about all the good work they were doing.” Skibinski had developed a high-level knowledge about the industry from her seven years as a Projects Coordinator with RDC. However, she was reticent to take on a leadership role within the organization. “Typically, (AMA) has been led by geologists and engineers, and that wasn’t my background. So I really didn’t think that it was something I could do. But the board was confident they could teach me, so I decided to trust their faith in me,” she recalled. Although Skibinski said she has had a positive experience working in typically male-dominated trade organizations, her hesitation in pursuing upper management may speak to a more significant issue concerning women occupying positions within the C-Suite. According to a 2019 study by the U.S. Bureau of Labor Statistics, women comprise just 15.7 percent of all people employed in Mining, Quarrying, and Oil and Gas Extraction in the United States. The number is even bleaker when it comes to construction. Only 10.3 percent of those employed in the construction industry are women. Nationally, women account for 21 percent of C-Suite level executives across all occupations. “I think sometimes in trade industries there is a subtle undercurrent that can favor men over women, but I do think that is changing, and Alaska is on the pioneering end of that,” Leonard said. A testament to diversity in hiring, many of Alaska’s top trade industry groups are led by women. Besides Capozzi, Hall, Leonard, Siira and Skibinski, the Alaska Oil and Gas Association is headed by Kara Moriarty and the Alaska Support Industry Alliance by Rebecca Logan. “I feel like Alaska is a pretty progressive state, and I’ve had the good fortune of having incredible women role models since I entered into this arena,” Capozzi said. One such mentor is longtime Alaska Oil and Gas Association President and CEO Moriarty, whose organization has postponed its annual event from Sept. 2 to Jan. 12, 2022. “Kara took me under her wing and showed me the ropes, and I’d say she’s the ultimate promoter of women in business,” according to Capozzi. “I know she’s mentored a lot of us and taught us to lean in and be perfectly comfortable having a seat at the table.” A member of the Athena Society and a recipient of the Alaska Journal of Commerce Top Forty Under 40 (as have been Skibinski and Siira), Moriarty has been a role model to many and inspired a sense of collective success among her female counterparts. She’s led AOGA since 2012 after succeeding Skibinski’s mother Marilyn Crockett as president and CEO. “As industry leaders, we’re all close and each other’s cheerleaders because professionally, we’ve grown up together,” Siira said. “I think being close like that has been such an asset. But I think it’s also really important to say that we are only a few of Alaska’s mighty female leaders. There are a lot more out there.” Now, looking to the future, Siira, Hall, Capozzi, Leonard and Skibinski are poised to mentor the next generation. “We all need that person to help us understand that we can do anything we put our mind to. We need that person to pull us out of our shell and remind us not to be timid, know our stuff, and open our mouths because we have something to say, Skibinski said. “I was lucky to have a mentor like Carol Fraser (Regional Director of Sales and Marketing at Aspen Hotels of Alaska), and I hope I can do that for someone else.” O’Hara Shipe is a freelance writer and photographer based in Anchorage. She can be reached at [email protected]

Convention centers stay hopeful in 2nd year of cancellations

What was supposed to be a celebrated return to a form of normalcy became topsy-turvy as spiking COVID-19 case counts are disrupting a second fall convention season in Anchorage for event planners and those behind the scenes. Greg Spears, general manager for both of Anchorage’s city-owned Egan and Dena’ina convention centers sums up the last year-and-a-half with one word: brutal. According to Spears, his team has fielded event cancellations totaling roughly $600,000 in just the past month as the resurgent virus, fueled this time by the infamous delta variant, continues to hammer many service-based industries. Revenue from room rentals this year is trending at about twice the level of last year but is still only about half of what the Egan and Dena’ina generated in 2019, which Spears referred to as a “decent year.” He has taken the approach of doing everything reasonably possible to accommodate everyone who wants to hold in-person gatherings, whether that can still happen now or needs to wait. Once-standard policies of 60 percent deposit refunds for cancellations within 60 days and no refunds inside of 30 days before an event have been relaxed. It has mostly been around that one-month out timeframe that most event organizers have sought to postpone or outright cancel their plans, Spears said, and staff for the downtown convention centers have done their best to accommodate. “We have been very flexible the last 18-19 months because we understand the situations our clients are in,” Spears said in a Sept. 14 interview. “We’re working with every client so we can hopefully one day get their events back in the building.” While the centers have sizable reserves to draw on from years of profitability, it has not made laying off nearly 100 workers and other unforeseen obstacles any easier to navigate, he added. The Alaska Oil and Gas Association was among the first local organizations to move its annual conference back in recent weeks. Originally scheduled for Sept. 2 at the Dena’ina Center, leaders of the industry trade group decided in early August to push the event to mid-January in an attempt to keep attendees as comfortable and safe as possible while also recognizing the deeply rooted desire a growing number of people have to meet again, CEO Kara Moriarty said. Normally a gathering of about 500 people, the size of the AOGA conference also necessitated considering the potential impact on hospital capacity by holding it as once scheduled, according to Moriarty. “We also consciously made the decision not to go virtual because our audience is ready for an in-person event,” she said. Moriarty also corroborated Spears version of how the cancellations are being handled by convention center officials, saying they were in “lock-step” with each other on the decision to postpone, again. Once scheduled for May, AOGA’s conference had already been moved once this year. “(Dena’ina Center staff) were really great but we had been in communication with them the whole time,” Moriarty said. “We moved our date before they had to incur costs they couldn’t recover.” She said similar things about the guest speakers and sponsors, nearly all of whom agreed to reschedule or roll deposits to January instead of backing out altogether. “I don’t think anyone’s asked for a refund. At this point, everyone is just, ‘OK, see you in January,” Moriarty said. Alaska Federation of Natives leaders also decided in late August to push their three-day conference — one of the largest gatherings annual gatherings of its kind in the state — back to mid-December instead of committing to another wholly online event as was done last year. The AFN convention is also held at the Dena’ina Center when it is in Anchorage. Visit Anchorage CEO Julie Saupe said Outside groups that hold events in Anchorage are modifying plans as well. Some events first booked for last fall and rebooked for this year are now being pushed to 2023 or 2024 because plans for the interim years have already been made, she said. More than 1,000 people from Outside were expected to attend the IEEE Signal Processing Society International Conference on Image Processing in Anchorage Sept. 19-22, according to Visit Anchorage spokesman Jack Bonney, who wrote via email that Visit Anchorage officials are working on options with that group and others toward meetings in the city in future years. Overall, about 70 percent of the events once planned for the Egan and Dena’ina that have been altered since March 2020 have already been rebooked and more rebookings are expected, according to Bonney. Anchorage Economic Development Corp. CEO Bill Popp said his group, which holds some of the city’s largest luncheons each year, is planning for an in-person 2022 Anchorage Economic Forecast Luncheon in late January after staying virtual for its annual 3-year Economic Outlook presentation held in early August. At the time, COVID-19 cases were just starting to increase significantly across Alaska. “I think people are ready to get back in the three-dimensional world. I think that networking, collegiality are tangible benefits in the minds of most of our constituents,” Popp said. “The business community, community leadership, the public — they all want to be in the room.” Adding to the challenges for Spears have been the widespread labor and supply shortage that has hit the convention centers as well. “Restarting for the Foo Fighters concert here a couple weeks ago was just a major headache in staffing. We enlisted volunteers, took help from family and friends. I myself took on different roles checking vaccination cards and whatnot,” Spears said, adding that several members of his core, full-time staff are also currently sidelined with COVID-19 infections of their own. However, the clear pent-up demand for large gatherings at some point keeps him upbeat about what’s to come. “Our future is bright if we can get COVID under control,” Spears said. Elwood Brehmer can be reached at [email protected]

Bristol Bay king crab fishery closed for first time since ‘95

As crab numbers for most major stocks fall across the Bering Sea, the Bristol Bay red king crab fishery will be closed for the first time in decades. The Alaska Department of Fish and Game, which manages the fishery cooperatively with the National Marine Fisheries Service, announced the closure on Sept. 3. The survey numbers in 2021 estimated that the red king crab stock in Bristol Bay is below the threshold required for a fishery, following the trend during the last decade. NMFS released its 2021 survey data on Sept. 3, showing the Bristol Bay district red king crab estimated mature male biomass at 12,559 metric tons, or about 27.7 million pounds. That’s higher than 2019, but less than half of the recent 20-year average, continuing the trend of a decline in the region. “Fifty percent of legal-sized males were new hardshell crab, a decline from the 62 percent of legal-sized males that were new hardshell in 2019,” the report says. The Bristol Bay red king crab stock, the largest in the state, has been declining for years. Surveys were cancelled in 2020 due to the COVID-19 pandemic, but in the last year of survey data in 2019, the stock declined and forced managers to cut the total allowable catch, or TAC, by 12 percent to 3.8 million pounds. The stock and harvests have been declining consistently since 2013. At the same time, red king crab has remained an incredibly valuable fishery. NMFS estimated that in 2020, fishermen landed 8.5 million pounds of king crab in the state, with an estimated $50.2 million value. That number includes all species of king crab, though, not just Bristol Bay red kings. Disentangling the economic impact of the red king crab fishery is somewhat difficult without further research, said Andy Wink, the executive director of the Bristol Bay Regional Seafood Development Association. It will definitely negatively impact on the participating boats in the crab fleet, but impacts on secondary effects—such as indirect and induced jobs supported by the fishery—are harder to predict. “The specific economic impacts of this fishery closure would take more study,” he said. The 2020-21 TAC issued for the Bristol Bay red king crab fishery was the lowest on record since the 1995-96 closure, according to an economic report on the 2019 fishery presented to the North Pacific Fishery Management Council. Managers and surveyors had been saying the stock was approaching its threshold for closure, with reasons for the decline somewhat unclear. The survey from NMFS says that some possible reasons for movement in the stock in the past have been due to water temperature changes or fishery pressure, though the more recent movements seem to indicate water temperature being more likely. The economic decline in the fishery was already beginning to show in the employment figures as well. According to the economics report, hours worked by processing employees in the fishery declined about 15 percent and wages fell 5 percent between 2018 and 2019. That generally tracks with lower volumes produced. The harvest sector actually increased in 2019 by one vessel, to 56 active vessels, with about 370 active crew. Most crab stocks across the Eastern Bering Sea this year fell markedly, according to the survey data. That decline was most notable for snow crab, where mature male estimates fell by 55 percent and females by 70 percent from 2019. That was a surprise for some; TACs for snow crab increased in the Eastern Bering Sea in 2020. The results for immature snow crab are even worse: a 96 percent decline in immature females and a greater than 99 percent decline in males. “Total mature male biomass of commercial crab stocks in the eastern Bering Sea in 2021 was the lowest on record and 2021 biomass estimates continued a declining trend that began in 2015,” the survey states. Other stocks didn’t show “similar dramatic changes” since 2019, according to the survey, but the St. Matthew Island blue king crab continued to decline and Pribilof Island red and blue king crab estimates remained low. The only bright spot was Tanner crab, for which the mature female stock estimates increased. However, male mature biomass declined, especially for industry-preferred size crab, and immature Tanner crab biomass declined generally, except for those east of the 166-degree latitude line. Crab and shellfish abundance generally have been noted to be declining in recent years compared to high harvest records in the 1980s and ‘90s, with scientists still unsure about the exact cause. King crab is an iconic species for Alaska, selling for a premium and carrying a chunk of the state’s commercial fishing identity with it. Its decline parallels that of the decade-long downward slide of king salmon abundance in rivers across the state, pushing out most large-scale commercial fishing for kings. Wink noted that the Bristol Bay red king crab closures are difficult, but attest to the sustainability-focused management systems in the state. “It stings that these two iconic Alaska species (king crab and king salmon) are much less abundant than they used to be, but the strict reductions in harvests of those species is proof that Alaska walks the walk when it comes to sustainability,” he said. The North Pacific Fishery Management Council is set to meet starting Oct. 6, with committee and advisory meetings beginning Sept. 30. All the meetings are virtual. Elizabeth Earl can be reached at [email protected]

Retention efforts as important as recruiting quality employees

For leaders in business, it is no surprise that having the right person doing the right job is crucial for business performance and maintaining a competitive edge. The right hire can enhance management practices or adversely complicate them with an employee who may not be the right fit. Even with today’s perceived talent shortage, employers seem to be taking caution with new hires, often leaning on relationships and instinct. However, Gallup meta-analysis results reveal that when companies select the top 20 percent of candidates based on a scientific Gallup assessment, they frequently realize: 41 percent less absenteeism, 70 percent fewer safety incidents, 59 percent less turnover, 10 percent higher customer metrics, 17 percent higher productivity and 21 percent higher profitability. With the rapid changes in workforce demographics, organizations are experiencing a high rate of turnover and lower retention. According to the Anchorage Economic Development Corp., the recruitment of talent is the number one concern of employers. Due to a rapidly developing business environment and advancing technology, outsourcing recruitment and hiring is becoming commonplace. Today only 28 percent of business leaders are considering internal promotions and lateral movement. Outside hiring has been adopted as a standard practice due to less internal development and the immediate needs to fill positions. Business leaders are doing their best to tread waters to fill vacant positions as soon as possible and maintain the required productivity by having current staff cover vacancies; often to the detriment of morale and engagement. With such efforts, the hiring process becomes more complicated and exponentially more expensive without organizations realizing the real cost of recruitment. Having employees do more with less leads to lowered production, efficiency and customer service, which results in reduced revenues not recorded as an actual recruitment expense. Bigger picture, this leads to a tightening of the labor market while inhibiting fresh talent at the entry level positions. When firms limit internal potential for advancing lower-level entry positions, the organization is not opening doors for new talent and in some cases stagnates the succession planning process (HBR, 2019). When there is not a future vision for an employee’s professional growth and development, organizations see that the most valuable employees are hired away and the ones remaining become significantly disengaged. Directly following the initial advertisement and the extension of job interviews, the more influential recruitment efforts extend into orientation and onboarding. The development and onboarding of new hires demands an investment from leadership and the organization to retain new talent. Consistency and purpose are key elements needed to retain the highest producing and qualified candidates. Given the challenges in recruiting talent, retention should be the focus, and yes, retention begins with onboarding. According to Gallup, only 12 percent of employees strongly agree that their organization does a great job onboarding new employees. This failure gets in the way of the formation of an emotional bond between the new hire and the company, a connection that can make or break retention. From an employee perspective, onboarding involves a series of firsts: first day on the job, first time meeting a manager and coworkers, first work projects and tasks, and first opportunities to share their talents with the organization. Understanding employees’ talents and strengths is key to establishing opportunities for great firsts. Gallup continues with recommending that the transition from candidate to employee should feel like a natural handoff that continues the momentum and fuels the excitement for the new job. A thoughtful onboarding program will connect talent to employer and result in loyalty. Katie Lauwers is a senior consultant with Bradison Management Group and a certified Clifton Strengths Coach.

Session ends with an $1,100 PFD, gov calls Legislature back Oct. 1

Alaskans will get a Permanent Fund dividend this year after all but their lawmakers have again left the Capitol without making marked progress toward solving the state’s underlying financial imbalance. The state Senate approved House Bill 3003 containing funding for PFDs of about $1,100 per eligible Alaskan on a 12-7 vote the afternoon of Sept. 14, hours before the third special legislative session of the year was set to expire. The House approved the bill Aug. 30. Legislators won’t be gone for long, as Gov. Mike Dunleavy announced he will not veto the dividend amount and will instead call a fourth special session of the year to begin Oct. 1. “In a year when the Alaska Permanent Fund earned almost $20 billion, and the total value of the fund exceeds $83 billion, there are members of the legislature that would love to eliminate the PFD, and grow government, regardless of the harm it would cause Alaskans,” Dunleavy said in a formal statement. “Our state is still dealing with the economic ramifications of this virus, the distractions of employment issues, the lack of available workers and the disruptions to the supply chains. While we continue to debate the fiscal future of this state, the people of Alaska need help now. “On one hand, a veto of this half measure would seem appropriate, but at this stage of the game that would aid and abet those that don’t care about individual Alaskans, small businesses and the economy. As a result, I will not veto this partial PFD, but will call the legislature back into session October 1 to get the rest of this year’s PFD and to solve the state’s financial problems with a complete fiscal plan.” The mix of spending caps, new taxes, constitutional amendments and additional Permanent Fund draws sought in some combination by most legislators and Dunleavy to overhaul the state’s financial structure after running annual deficits for nearly a decade gained little traction. Instead, the past month was spent getting back to the PFD amount first approved by the budget conference committee back in June. At that time, the House also approved the budget with PFD of about $1,100 per person, but the supermajority votes needed to access the Constitutional Budget Reserve Fund, which the conference committee tied much of the PFD funding to, failed as some legislators demanded a PFD appropriation in line with the governor’s “50-50” plan to pay half of the $3 billion-plus that is drawn from the fund each year for dividends. Under Dunleavy’s proposal, this year’s PFD would be approximately $2,350, according to the Revenue Department. The failed CBR vote left funding for dividends of approximately $525 per person, which Dunleavy vetoed completely and called “a joke” in a press briefing after signing the budget. Officials in the Department of Revenue have long said it takes them approximately 30 days to issue dividends after the appropriation is approved by the Legislature and governor, meaning this year’s PFDs will not be issued by the traditional early October timeframe. It’s unclear what in a fourth session would push legislators in powerful positions who are also against spending more than 5 percent from the Permanent Fund each year or imposing taxes to offset the spending from larger PFDs to agree to do so. The more time the Legislature spends debating the state’s fiscal problems and the well-known options to resolve them, the more entrenched the various factions seem to become. The discord among Alaska’s elected officials also showed through in their inability to approve emergency legislation leaders of the state’s hospitals say is needed to help them provide care while severe COVID-19 infections threaten to overwhelm doctors and nurses at many of the state’s health care facilities. Dunleavy introduced legislation Sept. 2 to again allow providers the leeway to perform telehealth appointments with Alaska patients from outside the state without obtaining an Alaska license and temporarily relax other requirements, such as state background checks for traveling nurses as health care workers fight the latest surge of the virus. He said at the time that the bill was preferable to issuing another public health emergency declaration, which some legislators called for. The Senate passed the telehealth bill Sept. 10 but House Majority leaders ultimately refused to pass the legislation and instead considered it dead Sept. 13 after an amendment was narrowly approved backed largely by Republicans in the House minority caucus along with Anchorage Democrats Chris Tuck and Geran Tarr to limit hospitals’ ability to restrict patient visits during the pandemic. House Speaker Rep. Louise Stutes said in a joint statement that House coalition leaders chose not to allow the bill back to the House floor for a vote after hearing from health care workers and Department of Health and Social Services officials that the visitation amendment meant the bill would likely do more harm than good in their fight against COVID-19. Elwood Brehmer can be reached at [email protected]

What to know: Social Security retirement benefits could see big hike in 2022

Predictions that Social Security retirement benefits could be heading for a 6.2 percent hike in 2022, thanks to a bump in inflation, could lead some baby boomers to figure they’ve got one less reason to wait to claim benefits. After all, those claiming retirement benefits are going to get more money next year. Why not rush to claim at age 62 or 63 now if you’re going to get extra dough? Well, experts warn that you might want to rethink that one. Social Security retirement benefits are turning into one hot topic as we’re hearing more buzz about a future hefty cost of living adjustment next year. The cost of living adjustment, known as COLA, was a mere 1.3 percent in 2021 — raising the average benefit by about $21 for monthly payments and making it one of the lowest increases on record since 1975 when Social Security started automatic annual cost-of-living allowances. What’s ahead in 2022? Next year, we’re talking real money. Some retirees could be looking at an extra $100 a month, based on an average Social Security retirement monthly payment of $1,655.71 in July. We won’t know the official cost of living adjustment for 2022 until the Social Security Administration makes that announcement in October. The percentage is determined after the U.S. Bureau of Labor Statistics releases the September Consumer Price Index. Any increase due to COLA will show up in checks and direct deposit benefits paid in January. Right now, it looks like the cost-of-living adjustment is going to be around 6.2 percent, according to the Senior Citizens League, a nonpartisan group dedicated to protecting and strengthening Social Security benefits. Why the Social Security hike? Oddly enough, much of that higher payout can be attributed to a shocking spike in gasoline prices, according to the group. Under current law, Social Security benefits are adjusted using the Consumer Price Index for Urban Wage Earners and Clerical Workers. The Senior Citizens League notes that the index reflects the spending patterns of younger working adults who drive a lot, not retirees. As a result, the group said, the index is more heavily weighted for gasoline prices, which went up 41.8 percent in the past 12 months. A potential 6 percent bump is pretty unusual after low inflation. But there have been other years of high COLA increases. By comparison, other sizable inflation-adjustments for Social Security included: 5.8 percent for payments in 2009; 5.4 percent in 1991; 7.4 percent in 1982; and 11.2 percent in 1981. The largest increase was 14.3 percent in 1980, according to Social Security data. No Social Security cost of living adjustments were made in 2016, 2011 or 2010. Should you jump on the retirement bandwagon? If you’re thinking about retiring, an estimated 6 percent COLA hike might tempt you to throw in the towel at work and claim Social Security benefits at 62. But here’s why you don’t want to do that. Mary Beth Franklin, a renowned author specializing in unraveling Social Security intricacies, says she has heard some financial planners wonder whether it’s a good time to claim benefits now to lock in that eye-catching cost-of-living adjustment. And she uncovered something most people don’t know. Her take is that anyone who is age 62 or older in 2022 and who is eligible for Social Security will profit from next year’s COLA, even if they have not yet filed for benefits. “I worry that some people may rush to claim Social Security this year to benefit from the exceptionally large cost-of-living adjustment expected next January,” Franklin told me by email. “I’m sure most people do not realize that they automatically will benefit from next year’s COLA — even if they have not yet filed for Social Security — as long as they are at least 62 or older in 2022,” said Franklin, who wrote “Maximizing Social Security Benefits,” an online book that is available for $29.95 at MaximizingSocialSecurityBenefits.com. If there are future inflation adjustments, she noted, those who are 62 and older would see inflation adjustments baked into future payments each year until they claim benefits all the way up to when they reach age 70. She points out that the Social Security Administration notes: “You’re eligible for cost-of-living benefit increases starting with the year you become age 62. This is true even if you don’t get benefits until your full retirement age or even age 70.” You can begin to receive Social Security benefits as early as age 62, but you’re getting a far lower monthly payout if you claim benefits long before reaching a full retirement age. Those who turn 62 next year and afterward face another issue, too. Anyone who was born in 1960 or later has a full retirement age of 67. (If you were born on Jan.1, you’d refer to the previous year.) Once that full retirement age was 65. But it has been gradually moving higher. It moved to age 66 for those born in 1943 to 1954. It jumps to 66 and two months for those born in 1955 and after. It gradually climbs upward by two-month increments and it hits 66 years old and 10 months for those born in 1959. For those turning 62 in 2022 and after, the retirement benefit is reduced by 30 percent — or $300 on a $1,000 monthly payment — if that group claims at 62 instead of age 67. Each year that you wait past age 62, you get a higher payout. The Social Security Administration said it adds cost-of-living increases to your benefit beginning with the year you reach 62. And benefits then could be adjusted each year to reflect any increase in the cost-of-living as measured by the Consumer Price Index. It’s great news for some end-of-the-line baby boomers who have not yet retired or claimed Social Security retirement benefits. The cost-of-living adjustment will, of course, provide extra cash for retirees and seniors who are already collecting Social Security retirement benefits. But Franklin also warns that retirees age 65 and older need to watch out for premium hikes for Medicare Part B, which are expected to rise in 2022 and could erode some of the COLA increases in Social Security. Part B covers outpatient and diagnostic services. Its monthly premium, which is deducted from Social Security benefits, changes on a yearly basis. Franklin said the amount of the premium increase would be known in November. Ways to look at Social Security People can apply up to four months before they want their Social Security retirement benefits to start. When they’re ready to apply for retirement benefits, they can use the online retirement application at SSA.gov. In Michigan, there were nearly 1.54 million people receiving Social Security retirement benefits as of December 2020, the most recent information available. Michigan’s state population as of April 1, 2020, was at 10.1 million people. So nearly 15 percent of the population receives Social Security retirement benefits. Laurence Kotlikoff, professor of economics at Boston University, said he’s quite concerned that inflation will continue to be higher in the years ahead. If inflation continues, he said, many people are better off waiting to take Social Security past age 62 so that they ensure a larger share of their old age income is inflation-protected. “Inflation should make you more prone to being patient when taking Social Security,” said Kotlikoff, who is president of Economic Security Planning, which offers an online tool called “Maximize My Social Security” for $40 a year for individuals. Kotlikoff said even without the concerns of inflation, waiting to take Social Security closer to age 70 is the “best move by a mile for roughly three quarters of households.” He said the inflation-adjusted benefit at 70 is 76 percent higher than at age 62. If prices are going up, he said, waiting to take Social Security closer to full retirement age offers a roughly 7.6 percent hedge for each year you wait. Kotlikoff, co-author of “Get What’s Yours — the Secrets to Maxing Out Your Social Security Benefits,” notes that people can tend to live longer than they’d expect and delaying claiming Social Security benefits for as long as possible can be both a hedge against inflation and longevity. Rushing to make a move just based on the Social Security headlines could end up being the exact wrong thing to do for some in their early 60s. Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at [email protected]


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