Elizabeth Earl

Summer AK LNG fieldwork winds down

KENAI — Fieldwork in Nikiski is winding down and future plans are uncertain for the Alaska LNG Project as the summer slides into autumn. An evaluation from consulting firm Wood McKenzie presented Aug. 24 to the Legislature’s Joint Resources Committee ranked the project as one of the least economically competitive liquefied natural gas projects in the world at this time. Natural gas prices worldwide have fallen due to a flooded market, and the project as presently planned is too expensive to balance out, the report concluded. The three producer partners, BP, ExxonMobil and ConocoPhillips, responded by saying they did not want to spend any more on the Alaska LNG Project in the next phase. With the pre-front end engineering and design ongoing, the four project partners are spending approximately $30 million per month, according to figures presented to the Joint Resources Committee Aug. 24 from Project Manager Steve Butt. Costs will increase throughout the remainder of the process. The state of Alaska is now planning to take the lead role, though the technicalities of that may present challenges. Gov. Bill Walker said in an Aug. 25 press release the state plans to move forward with the project toward a January 2017 application to the Federal Energy Regulatory Commission. “The project team, which includes our industry partners, have spent several years and completed over $500 million in engineering, permitting and necessary work to complete pre-FEED,” Walker said in the press release, referring to an acronym for pre-front end engineering and design used by the project’ managers. “Now is not the time to shelve that excellent work and start again at a future date.” While the governor and state administration are addressing potential strategies for transitioning to state leadership — including whether the state can work out cost-reducing tax exemptions for the project and whether it can solicit third-party investors to help underwrite it — residents of the Kenai Peninsula are carefully watching what administrative and timeline changes would mean on the ground. Nikiski residents have lived with geotechnical and geophysical work in their area for three summers as well as more than 600 acres of land being purchased for the proposed liquefaction plant near the bluff. They have watched plans for the Kenai Spur Highway to be moved and waited for a final decision to be selected from a number of options the project managers presented to them in fall 2015 and many have weighed in on thousands of pages of documents of data compiled on the project and the environment of its proposed location, called Resource Reports, submitted to FERC. However, contractors completing the fieldwork and land purchases were coordinated through the Alaska LNG Project, LLC, a holding company that does not include the state’s Alaska Gasline Development Corporation. In the future, the state will apply for FERC approval alone, so some details remain to be worked out, said Larry Persily, special assistant to Kenai Peninsula Borough Mayor Mike Navarre, who consults on the Alaska LNG Project. Among these are getting the state included in the LNG export authorization, making North Slope gas available to the state to sell, designating the state as the sole applicant and transferring the completed technical work and purchased land in Nikiski to the state because FERC approval requires site control. “The state is either going to have to buy the land, get an auction on the land, get a consignment on the land, something so they can go to FERC and say, ‘Here’s our application, and here’s the paper that proves we have the right to use that land,’” Persily said at a public meeting held Sept. 1 at the North Peninsula Recreation Center in Nikiski. “… If the state needs to pay for it, they will probably need an appropriation from the Legislature next year because (the Alaska Gasline Development Corporation) does not have enough money to buy the land from the companies.” Although the state will take over the lead and put its name on the application, the producer partners still plan to stay involved. ExxonMobil, the partner with the most significant stake in the project, will not withdraw its support in the remainder of the pre-FEED process, said Aaron Stryk, a spokesman for the company. “We’re going to complete our pre-FEED activities — we’re committed to those deliverables,” Stryk said. “Beyond that, the future role in the development of the North Slope gas is going to be development of Prudhoe Bay and Point Thomson.” Once the pre-FEED process is complete, the company will focus on the development of the natural gas on the North Slope rather than the participation in the pipeline and liquefaction plant. The partners and the state will work on scheduling handover sessions in the fourth quarter of 2016, said Bill McMahon, senior commercial advisor for ExxonMobil, in an Aug. 25 presentation to the Joint Resources Committee. The fieldwork is nearly finished for the year, and a planned aquifer pump test will not take place. Project managers had initially planned a test in August that would draw millions of gallons of water out of the aquifers beneath Nikiski to test the area’s ability to provide water to a proposed plant during construction and in case of fires. After permitting delays, the test was pushed back to September, and with winter closing in and a lack of information about existing groundwater conditions, the test has been cancelled for this year. Some work is still going on, said Josselyn O’Connor, the community stakeholder liaison for the project. “We plan to finish installing wells and wrap-up our water quality sampling program this fall as planned,” O’Connor said in an email. The relocation of the Kenai Spur Highway remains a loose end. Persily said at the meeting the borough administration intends to ask the project managers to pick a highway route in its comments on the resource reports. “Our comment is going to be … there’s no need to stall on selecting a preferred route,” he said. The project managers have now submitted Resource Reports 1–11 and Resource Report 13, which are available for public review through the FERC website at www.ferc.gov. Elizabeth Earl can be reached at [email protected]  

Walker talks finances, LNG in Kenai

Gov. Bill Walker reiterated a call Monday for a fix to Alaska’s budget deficit while also signing into law a tax credit designed to incentivize fertilizer company Agrium to reopen its Nikiski plant. With the sponsor, Speaker of the Alaska House of Representatives Mike Chenault (R-Nikiski), looking on, Walker signed the bill after speaking at a joint Kenai and Soldotna chambers of commerce luncheon in Kenai on Monday. “This one is different than the other ones we’re doing up north,” Walker said. “This (tax credit) is one (in which) the benefit to Agrium will be three, four, five million dollars with a maximum of five years, and the benefit on the revenue side is four, five times that.” The Legislature passed the bill, HB 100, on April 17. It extends a corporate tax income credit to urea and ammonia manufacturers, who use methane from natural gas to make fertilizers and other products. Effective July 1, 2017 the company would receive a tax credit equal to Agrium’s potential gas supplier’s royalty payment to the state, making the credit budget neutral. According to the fiscal note on the bill, Agrium would consume approximately $15 million in royalty gas but only have corporate tax liability of between $3 million and $4 million. Because the bill will not allow the tax liability to drop below zero, the state’s payments would be capped there. Agrium’s return is not a given, but a representative of the Calgary, Alberta-based company said in a previous Clarion interview the company was in talks with potential gas suppliers in Cook Inlet. The company’s return to Alaska would benefit not only the Kenai Peninsula’s economy — rippling outward with added jobs and taxes to the local  government — but also around the state, Walker said. “The benefits of Agrium go far beyond the actual people doing the work,” he said at the luncheon. “It benefits Alaska significantly. And then there’s the value-added opportunity.” With the administration at work on a new fiscal plan proposal for the next Legislature to consider, Walker said he has “moved from optimistic to hopeful” about a budget fix. After the Legislature’s failure in the last session to pass any new sources of revenue for the state budget, opting instead to draw down on the state’s Constitutional Budget Reserve to fill the budget deficit, Walker issued a number of vetoes to the state’s fiscal year 2017 budget, including appropriating half the earnings of the Permanent Fund. The vetoes have not been popular, but he saw them as necessary to address the budget deficit, he said. “It will be devastating if we go through all of our savings and then sit down and try to fix this,” Walker said at the luncheon. He also participated in an afternoon worksession with the Kenai Peninsula Borough Assembly to discuss options and challenges for the budget. Assembly members asked questions about Walker’s proposals for fixing the budget, ranging from whether the governor’s administration would consider incentivizing alternative energy development to whether a budget fix could wait a year or two to see if oil prices rose again. To the latter question, Walker said he would like to wait but didn’t want to take the risk. “I’m willing to take the political risk associated with what I’m doing rather than the fiscal risk to the state’s future,” Walker said. “…if we wait a couple of years and we’re wrong and (the price of oil) doesn’t bounce back up, at that point we need probably $120 oil to fix the budget, (and) then obviously the impact will be zero dividend and income taxes multiple times higher.” Another major source of discussion was the future of the Alaska LNG Project. Since the governor’s administration announced its intention of pursuing a state-led project at the end of August, a number of questions about the future structure and execution of the project have arisen. One of the concerns among the three producer partners — BP, ExxonMobil and ConocoPhillips — was how to reduce the cost of the project. Walker said one way to do that would be to leverage the state’s position to obtain tax-exempt status for the income generated by the project and tax-exempt financing for the bonds to fund the project. Walker said in an interview that he was “very confident” the state could obtain the exemption for the pipeline from the Internal Revenue Service based on a precedent on a previous pipeline project planned for Valdez. “We’ll go through a new application process — it’s not complicated — to basically say income of the entity would be exempt from federal taxes, which is a pretty significant exemption,” he said. “It had to show it was a political subdivision of the state in order to qualify. … in our scenario, we aren’t a subdivision of the state. We are the state. So I would think it would be even clearer for the state.” If it were tax-exempt, though, one of the casualties could fall on local governments in loss of payment in lieu of taxes, or PILT. Walker assured the assembly during the Monday worksession that some form of a PILT program would exist if the project goes forward. One thing is certain, he said: The state is not giving up on the project. The producers have signaled their intention to continue their involvement, if not as partners, and approximately $600 million of preliminary work has already gone into the planning. If the project does not go forward, “I’m going to lose on the field, not forfeit in the dugout,” he said. “It’s by far the biggest get-well card in our hand by far, by magnitudes,” Walker said. “We’re in a pretty good position from the standpoint of being able to carry on where the work will be done at the end of this year, not incurring more risk at all or more financial obligations … there’s two things you need for a successful LNG project. You need gas, and you need a market. We certainly have that, so we’ll see.” Elizabeth Earl can be reached at [email protected]

Kenai Assembly passes sales tax changes

The Kenai Peninsula Borough Assembly passed a number of revisions to update and clarify the borough’s sales tax code Tuesday night. Borough Mayor Mike Navarre’s administration has been working on a comprehensive rewrite to the sales and property tax code for approximately a year, clarifying language, updating some provisions and adding others. From the rewrite came four ordinances, all of which have now been reviewed and passed by the assembly. Two of the ordinances require voter approval before they go into effect and will appear as ballot propositions in the Oct. 4 municipal regular election — Ballot Proposition 3, an increase of the maximum amount of a sale subject to sales tax from $500 to $1,000 with the exception of residential rentals; and Ballot Proposition 4, a gradual reduction of the borough’s optional senior property tax exemption. The assembly passed the third, an ordinance containing a number of updates and revisions to the property tax code, at its Aug. 23 meeting. It reviewed and passed the fourth, a similar set of revisions to the sales tax code, at its Tuesday meeting. “The intent of this ordinance is to improve the clarity of the sales tax code, make administration of the code more efficient for the sellers and the borough, and make appropriate policy changes in the code as to what is and is not taxable,” wrote Larry Persily, special assistant to the mayor, in a July 28 memo to the assembly. “Some of the exemptions and definitions have not been revisited in years and should be updated to reflect today’s commerce, which is more about services and less about goods.” Among the changes are an exemption for businesses that report less than $2,500 in annual sales; a clause allowing businesses exempt from sales taxes to not file tax returns; a requirement for businesses that don’t accept food stamps to charge sales tax on food items, capturing sales tax from snack foods, candy and soda; a requirement for nonprofits that operate an ongoing business location like a gift shop to charge sales tax; the removal of an exemption for moving freight; and a requirement for out-of-state and out-of-borough businesses operating in the borough to collect and remit sales tax to the extent possible. After review, assembly members proposed a number of amendments to the proposed ordinance. One of the major items of contention was a provision adding sales tax to flightseeing tours. In the past, flightseeing has been exempt from the same tax that applies to sightseeing tours by boat or car. Dozens of charter businesses on the Kenai Peninsula offer flightseeing tours but don’t have to pay the tourism tax that those who purchase trips on charter boats or ferries do. As the peninsula’s oil and gas fields age, the local economy may become more reliant on the visitor industry, and flightseeing tours are part of that, Navarre said at the meeting. “This is something that at least a couple of our communities would like to see and have the opportunity to collect the revenues on this in lieu of passing the tax on to someone else,” Navarre said. A question of legality arose, though. The borough’s legal department recommended removing the flightseeing tours from the ordinance, concerned about the potential for lawsuits. Assembly member Dale Bagley proposed an amendment to the ordinance to do so. He said at the meeting the legal department concerns were legitimate and he would like to see the flightseeing tax removed. “If I was a betting person, I would say there’s going to be a lawsuit over this, and I don’t think the money that would come in from this is worth the headaches of dealing with this, so I guess I’m going to err on the side of not taxing the air charters,” Bagley said. However, other assembly members disagreed, as did the mayor. Navarre said other municipalities in the state, such as Wasilla and Kodiak, tax flightseeing tours that take off and land on the same day within city limits, and if a lawsuit does come forward, the borough could win. “So I think that it’s worth the risk … the reality is that this particular type of case, I think hasn’t ever been brought up, and this particular one needs to be tested in the courts to determine whether or not we can assess this tax on flightseeing,” Navarre said. “And I think we ought to try it.” The assembly was split four to three on Bagley’s amendment, with assembly members Brandii Holmdahl abstaining because of a conflict of interest and Stan Welles absent. Although four voted yes, the amendment needed five votes to pass. Assembly member Willy Dunne proposed an amendment on the same section, this time revising it to exempt air charters and air taxi sales but include “ground-based wildlife viewing, sportfishing, hunting or other goods or services provided in combination with such air charter and air taxi sales.” Dunne’s ordinance did pass with seven yes votes, with Holmdahl again abstaining and Welles absent. Two other amendments from assembly member Kelly Cooper clarified language in two sections of the ordinance. The entire ordinance passed seven to one, with Holmdahl again abstaining and Welles absent. Elizabeth Earl can be reached at [email protected]

Walker appoints Nick Miller to MCB

Gov. Bill Walker on Wednesday appointed marijuana industry representative Nick Miller to the Marijuana Control Board. The appointment fills the seat left vacant by Bruce Schulte, the former chair of the board whom Walker ejected from the board on July 29. Miller, the chair of the Anchorage Cannabis Business Association, is in the process of opening a retail store in Anchorage. “I’m very pleased to appoint Nick to the Marijuana Control Board during this critical time in this new industry’s development,” Walker said in a press release. “Nick will do a great job complementing the existing Alaska Marijuana Industry Association’s representation on the board, and enable even broader industry perspectives.” Miller joins four other members of the Marijuana Control Board as the second industry representative alongside Brandon Emmett, who has applied for a marijuana production license in Fairbanks. The other members represent public health, the rural public and public safety, hailing from Juneau, Bethel and Soldotna, respectively. Stakeholders in the marijuana industry had expressed concern that Walker’s new appointee might not represent industry interests. There are two seats on the Marijuana Control Board to represent industry, though Emmett’s seat is technically industry/public, while Schulte’s former seat is industry. The law establishing the Marijuana Control Board provided for one person from the public safety sector; one person from the public health sector, one person currently residing in a rural area, one person actively engaged in the marijuana industry and one person who is either from the general public or actively engaged in the marijuana industry. Because Emmett is currently actively engaged in the marijuana industry, he would fill the industry requirement, and the other member could be a member of the public. Emmett represents the Alaska Marijuana Industry Association, the statewide industry group for the marijuana industry, and Schulte gave up his position as president of the association when he took the position as chair of the Marijuana Control Board. Miller represents another smaller industry group, the approximately 30-member Anchorage Cannabis Business Association, which focuses specifically on marijuana businesses in the Municipality of Anchorage. The goal of the association is to “provide two-way communication between industry participants and government officials (and) agencies,” according to Walker’s press release. Miller could not be reached for comment on Wednesday evening. His appointment runs through Feb. 28, 2016, according to the release from the governor’s office.   Reach Elizabeth Earl at [email protected]  

Sport humpy record broken twice in a day

SOLDOTNA — After 42 years, the Alaska state record for a sport-caught pink salmon was broken — twice. Thomas Salas hauled a monster pink salmon out of the Kenai River near Big Eddy in Soldotna on Aug. 22. The California resident, who said he visits the Kenai every other year or so, was originally going to throw it back when a friend told him to hang on to it. “(He) said, ‘You gotta keep it, that might be a record,’” Salas said. As it turns out, he was right. When the anglers took the fish into the Alaska Department of Fish and Game office in Soldotna the next morning, it weighed in at 12 pounds and 13 ounces and 28.5 inches long, claiming the state record from the previous 12 pound and 9 ounce fish, caught in 1974. Multiple biologists certified it and sent Salas on his way, the new holder of the state record. About three hours later, Robert Dubar brought in his own humongous pink salmon. He’d pulled the monster out of the Kenai River just downstream of Angler’s Lodge in Sterling on Aug. 23. “I thought it was hooked on a log,” Dubar said. “Then it started moving a little bit. Took about five minutes to get him to the shore.” Dubar, who is visiting the Kenai Peninsula from Incline Village, Nev., brought the pink salmon into the Fish and Game office in early afternoon. The biologists there again took its weight and measurements and certified it — 13 pounds, 10.6 ounces, 32 inches long, the new state record. Dubar said he plans to mount the monster. Salas took the news with a laugh. “Really?” he said. “Another guy caught a bigger fish?” Fish and Game certifies and seals particularly big fish caught by sport anglers through its trophy fish program. For pink salmon, the minimum weight to qualify is 8 pounds. Entries have to be weighed in the presence of witnesses and a trophy fish official on a certified scale. Catch-and-release fish can qualify for an honorary certificate as long as the angler doesn’t remove the fish from the water and someone gets a photo of it. Honorary certificates are measured by length. The previous record was held by Steven A. Lee for a 12 pound, 9 ounce pink salmon caught in the Moose River in 1974. Two other state trophy fish — a 16 pound sockeye salmon and a 97 pound, 4 ounce king salmon — were both caught on the Kenai River as well, both in the 1970s. Anglers have been catching enormous pink salmon in the Kenai River this season, said Jason Pawluk, the acting area management biologist for the Division of Sportfish in Soldotna. “I have lost track of how many pinks have been brought in this year for our trophy program, and that’s a pink over 8 pounds,” Pawluk said. The pink salmon have been consistently larger. Commercial fishermen began reporting early in the season that the pink salmon were larger, but the average has been consistently increasing throughout the season. The Kenai River experiences high even-year pink salmon runs, but these are some of the largest anglers have recalled seeing. “We’ve observed this in the inriver sport fishery and confirmed for sure in the commercial fishery,” Pawluk said. “The pound average per fish is an order of magnitude difference than it has been in previous years.” The reason for the larger size isn’t really clear. Low pink salmon runs have been a mystery in Prince William Sound, Kodiak and Southeast Alaska this year — managers have suggested ocean temperatures as a possible cause. The pink salmon have been larger than usual in Kodiak as well. Pawluk said it’s still uncertain how large the run is, but the trend in larger size is clear. “It’s possible there’s still a record fish out there,” he said. Reach Elizabeth Earl at [email protected]  

Alaska LNG Project submits second draft of resource reports to FERC

Members of the public can get another look at the results of years of fieldwork conducted by the Alaska LNG Project now in the reports submitted to the Federal Energy Regulatory Commission. The resource report drafts, which detail everything about the project from a general overview to where potential workers’ children would go to school, are the culmination of about three years of summer geotechnical and geophysical work as well as public meetings and comments. The project managers submitted the second draft of the 10 reports, totaling more than 33,000 pages, to the federal government on July 15. There are two other drafts as well, detailing reliability and safety and PCB contamination, that have not been made available yet. FERC requires the resource reports to be submitted and reviewed before beginning the environmental impact statement, or EIS, process, which the project needs before proceeding. The first drafts of the resource reports were submitted in the first quarter of 2015. These are the second draft, and after public and agency review and comments, project managers will submit them in a final application to FERC. Agencies have 60 days from the submission date to comment, and while the public can technically comment at any time, the Alaska LNG Project encourages the public to comment within that same 60-day window, said Josselyn O’Connor, community stakeholder advisor to the project. However, FERC accepts public comments at any time. Project managers originally planned to submit the second draft of the resource reports in early 2016 in time for a final application submission in late 2016. That schedule has moved back, and the timing of the final application will be up to the project partners — ExxonMobil, BP, ConocoPhillips and the state, O’Connor said. Beyond just the groundwork, the reports also try to address local concerns, O’Connor said at a community meeting held Aug. 15 in Nikiski. “If you made comments, they’re in here,” she said. One of the reports of most interest to the local community, Resource Report 5, outlines possible socioeconomic effects if the project were to go forward with placing its liquefaction plant in Nikiski. The introduction traces Alaska’s economic development from 1970–2010, focusing on oil development, the construction of the Trans-Alaska Pipeline System and ending with a comparison between Alaska’s and the rest of the country’s economies in 2010. The body of the report itself considers a broad range of socioeconomic impacts, from pressure on infrastructure to the potential additional traffic in emergency rooms because incoming workers do not have primary care physicians in the area. “Given the scale of the Project and its potential importance to the Alaska economy, the direct socioeconomic effects of the Project would also be experienced throughout the state,” the report states. “These statewide effects would include employment, fiscal and energy supply effects.” Other reports focus on the project’s effect on natural resources such as fish, wildlife, vegetation, soils, air and noise quality, geological resources and water quality. The resource reports are accessible to the public on the FERC Library, but for easier access, the Alaska LNG Project has linked them on its website. The Kenai Peninsula Borough has also linked them on its website and the Alaska LNG Project provided thumbdrives and CDs loaded with the reports at the public meeting Aug. 15. For those who could not attend, O’Connor said project managers can mail copies of the reports to those interested. “This is your chance to be heard. I will tell you that when we started this project, we looked at comments on past gas line projects,” said Philip Brinkmann, licensing manager for the project. “There’s been 40 years of plans to build this gas line, and it’s a hard gas line to build. So we will look at those comments to make sure our project is learning.” The project’s contractors are still taking soil samples in the Nikiski area near the proposed location for some of the storage tanks. Next month, project contractors also plan to run an aquifer pump test in the Nikiski area for a period of about 10 days to see the effects of their drawdown on the neighbors and surface water locations like lakes. Project managers had originally planned the pump test for August, but they are still waiting for the Alaska Department of Environmental Conservation’s permit to discharge the water into a quarry on Robert Walker Avenue, said Jeff Raun, a project advisor for the Alaska LNG Project, at the community meeting Aug. 15. There are three aquifers estimated to lie beneath Nikiski. At its peak, the proposed liquefaction facility would use about 1.4 million gallons of water per day, or about 250 gallons per minute, according to Resource Report 2, which details the project’s water use plan. The aquifer pump test would draw first out of the second underground aquifer, pumping about 350 gallons per minute for about 10 days to reflect the maximum possible need during construction. After that test, contractors will either deepen one of the wells or drill a new one down to the third aquifer and conduct a shorter but more intense test, pumping 1,000 gallons per minute for eight hours. Residents attending the meeting expressed concern about where that water would go and whether it would have any effect on the levels at Cabin Lake or Island Lake, both surrounded by homes. The water level at Cabin Lake, which is close to the center of industrial pumping in the area, declined more than other lakes further from the pumping source, according to 1981 U.S. Geological Survey research. Public concern about water levels led the contractors to plan for surface water monitoring on Cabin Lake, Raun said. Throughout the test, contractors will monitor the effects on the lake’s level and said any residents who notice a difference in their water pressure or quality should call the project managers to let them know. The Alaska LNG Project managers plan to use significantly less water than operations like Tesoro or Agrium, Raun said. After the fieldwork for the summer has wrapped up, project activities will likely be scaled back. No decision has been made yet about moving the Kenai Spur Highway to avoid the proposed facility site, and all the structures on the land the Alaska LNG Project purchased in the area have been demolished, said Matt Horneman, the deputy lands director for the project. The plan is to close the local Paragon Partners office, which has been handling the land purchasing, and relocate operations to Anchorage. Call volume has decreased significantly and closing the office will save money, Horneman said. Reach Elizabeth Earl at [email protected]

BOEM takes comments on Cook Inlet lease sale

KENAI — A few Kenai-area residents turned out Aug. 18 to offer their advice on a draft environmental impact statement for a proposed oil and gas lease sale in Lower Cook Inlet. The draft, prepared by the Bureau of Ocean Energy Management, the federal agency that oversees oil and gas leasing in federal waters, outlines a proposed sale in an area of Cook Inlet beginning south of Kalgin Island and ending at a line extending westward from Seldovia. If the Secretary of the Department of the Interior approves the plan, a lease sale would take place in June 2017. Mark Storzer, the regional supervisor for BOEM’s Office of Environment in Anchorage, said the EIS will simply set up the structure for a lease sale to take place in the future. “We always make sure to emphasize with people that this does not mean a lease sale is going to take place,” Storzer said. The current plan presents 224 blocks, each nine square miles, in the region that would be offered for lease. A number of alternatives accommodate critical habitat for endangered Cook Inlet beluga whales, threatened Northern sea otters and the drift gillnet fishery that operates in the area north of a line extending west from Anchor Point. Another alternative would offer all the area for lease but would prohibit any company from discharging drilling fluids or cuttings into Cook Inlet. The agency held multiple public hearings in the Cook Inlet region last week — one in Anchorage on Aug. 15, in Homer on Aug. 17 and in Kenai on Aug. 18 at the National Guard Armory. The meeting in Kenai drew about a dozen people, some of whom chose to wait and offer their comments online through regulations.gov. The ones who did offer comments expressed concern on a wide range of issues, from industry infrastructure to wildlife. Gary Oskolkoff, a Ninilchik resident, said he thought the proposed lease sale was “probably, for the industry, about two to three decades too early.” “There’s just not structure involved there, things really don’t exist now,” he said. “If you go out there and do some seismic work, if you want to spend money on it and make a good find out in the middle of nowhere, well, that’s going to change your perspective, but who’s going to spend the time on it? To me, it just seems like one of those things that should be held off.” Lauren Moss, a Soldotna resident, said the draft did not address potential conflicts with king salmon migration or for other large mammals. She said the draft also did not account for the effect of seismic survey noise on large mammals. “Imagine taking your kids to the grocery store to get something to eat, and then someone turns the lights off and an alarm like … a hockey horn starts to go off,” Moss said. “You can’t find your kids … that’s essentially what this is like for these whales. They use sound to see.” Most of the written comments submitted online also oppose the sale. Many of the commenters referenced the Exxon Valdez spill of 1989, which shut down the drift gillnet fishery because of the oil in the water and left deposits of oil on the beaches as well as on wildlife. Some expressed concern that more industry activity in the area would be a stress for marine wildlife already under stress with changing ocean conditions. Local conservation organization Cook Inletkeeper wrote during the initial scoping in 2014 that it would oppose any lease sales because of the risk to habitat. “This region supports vital salmon, halibut and other fisheries resources, which in turn support over a billion dollars a year in economic activity,” wrote Cook Inletkeeper Executive Director Bob Shavelson. Earlier in the process, the Marine Mammal Commission, a federal agency, opposed the lease sale on the grounds of risk to the beluga whales. The National Marine Fisheries Service also expressed this concern. “NOAA Fisheries encourages BOEM to consider mitigation strategies such as leasing deferrals in areas designated as critical habitat for the Cook Inlet beluga whale,” the agency’s letter states. BOEM took the comments during the scoping period in 2014 into account when shaping the lease sale area, Storzer said. That is why some of the areas are excluded and why some of the alternatives are proposed, he said. “One of the reasons we didn’t include any of (the area near Seldovia, Port Graham and Nanwalek) was because the communities had so much concern about subsistence,” he said. After the environmental impact statement is approved, the Secretary of the Department of the Interior can choose to hold a lease sale or delay it. When BOEM originally asked the industry if there was interest in oil and gas exploration in that part of Cook Inlet, more than one company responded positively, said John Callahan, a spokesman for BOEM. Reach Elizabeth Earl at [email protected]

Ninilchik tribe finishes Kenai subsistence season

The heads of passing boaters swiveled toward the bank, curious to see the only subsistence gillnet allowed in the Kenai River. The Ninilchik Traditional Council’s subsistence gillnet takes up about 30 feet of bank. The net swayed in the strong current, bucking when a fish struck the mesh. Though the gear made it in the water this season, whether it will make its way through the regulatory process next year is unclear yet. “Seeing any rainbows?” a boater called out to the tribal staff near the net as his boat passed. “None!” called back Daniel Reynolds, one of the designated fishers for the tribe. “Just reds.” The boaters nodded and called back good luck before navigating down the river. Gina Wiste, an environmental technician who fishes for the tribe, said the exchange was one of the kindest they’d had since their first day fishing there July 28. “It’s a mix. Some people can be really unpleasant, and some are just curious,” Wiste said. Wiste, Reynolds and Resource and Environmental Director Darrel Williams have fished for Ninilchik residents most days this summer. The tribe got permission to use a subsistence gillnet in the Kasilof River in January 2015 and ran that for the beginning part of this summer. However, though the tribe was approved for nets on both the Kenai and Kasilof rivers, the U.S. Fish and Wildlife Service only granted the permit for the Kasilof net in 2015. The federal agency issued a permit for the Kenai River net on July 27 after the tribe filed a special action request with the Federal Subsistence Board, the body that oversees subsistence activities in Alaska, amid a year-long legal tangle with the U.S Department of the Interior and the U.S. Department of Agriculture. The tribe has been working on a permit to fish with a gillnet in the Kenai since 2006. Williams said the tribe didn’t know what to expect from the special action request. “To be honest, we were all pretty surprised that it went through,” Williams said. Williams zigzagged the tribe’s boat up the Kenai River from Swiftwater Park outside Soldotna on Aug. 14. He passed lines of anglers casting for silvers and reds in the Moose Range Meadows and the yellow sign marking the end of state waters, passing into the portion of federally managed part of the river. Williams said they have tried out different portions of the river to find where is the most effective to set up. About 40 feet offshore, Williams stalled the boat and Reynolds dropped an anchor and sandbags off the bow, following it with a buoy to mark the edge of the net area. Williams guided the boat over to the shore, where Reynolds disembarked with the gear. Williams and Wiste joined him after mooring, running the 5.25 inch-mesh net out into the current. The first fish hit within six minutes. “We’re in a channel right here, and the fish like that,” Wiste said. “They head right up this way and toward the bank, and that’s where we catch them.” The tribe staff fishes for Ninilchik residents who may not be able to do it themselves. They can only harvest as many fish as people who submit permits — 25 per head of household with five additional fish per family member. So while they were allowed to harvest up to 2,000 sockeye, 50 king salmon, 50 rainbow trout and 100 Dolly Varden this year, they can only catch as many fish as the submitted permits allow. Wiste tallied each fish caught while Williams and Reynolds picked them from the net. Per regulation, she clipped each one’s dorsal fin and recorded it on the permits. They deliver the fish whole to the permit holders, who clean them at home. Regulations prohibit the tribe’s fishermen from cleaning the fish on site because it could attract bears, Williams explained. The fish are fewer and smaller on the Kasilof. Williams said some days on the Kasilof would produce less than 10 fish after several hours of netting. “These fish (on the Kenai) are so much bigger, and some people will say, ‘Those fish are huge, I can’t take any more’, ” Wiste said. “Everybody on this list has gotten fish.” Only tribal employees can fish because of the federal requirement to carry a $500,000 insurance policy. They also take samples of every king salmon they catch. “People were sort of wondering if they were going to get any (fish from the Kasilof gillnet),” he said. “That’s really what this is all about, doing something for the people.” After three hours of netting, the designated fishers had hauled in 54 salmon, all sockeye except for two coho. As of Aug. 14, the tribe had only caught one king salmon and one Dolly Varden, both of which were less than 18 inches long, according to the catch records. The Federal Subsistence Board, the body that oversees subsistence activities in Alaska, approved the nets on the Kenai and Kasilof rivers in January 2015 but the U.S. Fish and Wildlife Service did not issue a permit for the 2015 season. The permit for the 2016 season only came after legal action in the courts, and it was approved as experimental, meaning that next year’s gillnet activity hangs in the balance of federal approval. A subsistence fisheries regulation cycle is approaching this winter as well, bringing two proposals to ban the Ninilchik tribe’s gillnet in the Kenai River entirely — one from Fish and Wildlife Service itself and the other from the Cooper Landing and Hope Federal Subsistence Community. The latter complains that the net is detrimental to stocks of conservation concern. Fish and Wildlife Service managers haven’t had time to evaluate what happened on the fishery but they will do so since the fishing season ended Aug. 15, said Andrea Madeiros, spokesperson for Fish and Wildlife Service in Anchorage. “The U.S. Fish and Wildlife Service remains concerned about the use of a gillnet in the Moose Range Meadows because it is a spawning area,” Madeiros wrote in an email. Both Williams and Wiste said they were unsure what would happen for next year. Williams said he understands the conservation concerns and the tribe has carefully evaluated the net’s effects on the river’s habitat and the fish populations. The tribe brought on a fisheries biologist for advice as well. “If anything, we’re conservation minded,” Williams said. As they were packing the fish into bags to leave the site Aug. 14, Wiste said they would have to plan for more fish storage next year because more people would likely take part. What she’d really like, she said, is a fish tote. “It’s not gonna do us any good this year, since the season’s almost over,” Williams said. “Wait ‘til next year.” Reach Elizabeth Earl at [email protected]  

KPB marijuana ban petition won't be on October ballot

A citizen initiative seeking to ask voters whether commercial marijuana is legal in the Kenai Peninsula Borough outside the cities is a no-go. The borough clerk’s office finished verifying the signatures Friday and found the petition came up short. The petitioners were 62 signatures shy of the 898 they needed to qualify for the Oct. 4 general election ballot, said Borough Clerk Johni Blankenship. “They submitted 998 signatures,” Blankenship said. “We were only able to validate 836.” The petition cannot get onto the October ballot. However, it doesn’t rule it out entirely from a vote. The petitioners still have 10 days to gather additional signatures to supplement the ones they have, and if they succeed, the clerk’s office has another 10 days after that to verify them, Blankenship said. If the initiative at that point has enough valid signatures, the petition would then go to the Kenai Peninsula Borough Assembly. Assembly members would be able to decide then whether it would go to a special election or would have to go to the October 2017 ballot, she said. The clerk sent out a notice to borough assembly members and the petitioners letting them know the petition had been certified as insufficient to be placed on the ballot for the Oct. 4 regular election. The petition has been a political football for the past few months, after an ordinance that would have placed the question on the ballot failed to be introduced at the borough assembly in May. A group of citizens circulated the petition booklets this summer and turned them in on July 26, just before the borough assembly meeting. The technical deadline fell at 5 p.m. on July 21, but the petitioners requested and were granted a five-day extension, according to the letter from the clerk. Reach Elizabeth Earl at [email protected]

Upper Cook Inlet commercial fishermen near 2M salmon harvest

KENAI — Salmon are rolling into Upper Cook Inlet’s commercial fishery. The drift fleet and setnetters in Cook Inlet have been out frequently in the past two weeks and were out for extended hours Thursday. The Alaska Department of Fish and Game also opened the drift gillnet fishery in the Expanded Kenai and Expanded Kasilof Sections of the Upper Subdistrict and the Anchor Point Section of the Lower Subdistrict for an additional 12-hour period on Friday to increase harvest on the sockeye salmon bound for the Kenai and Kasilof rivers, according to an emergency order issued Thursday. The salmon harvest came in just shy of 2 million as of Tuesday, with sockeye leading the pack at 1.6 million, followed by pink salmon at approximately 244,000 fish. Silvers and chum are starting to come in as well, with about 43,000 silvers and about 57,000 chums so far, according to Fish and Game’s inseason harvest estimates. The drifters in the central district have brought in 868,959 fish so far as of Tuesday, with 648,248 sockeye and 147,740 pinks. The chum salmon are mostly coming into the central district drifters — they accounted for 43,662 of the total 56,434 caught in the Upper Cook Inlet Central district. All told, the setnetters in the Ninilchik, Coho, Kalifornsky and Salamatof sections have brought in about 629,000 fish as of Tuesday, according to Fish and Game’s data. Similar to the total, the vast majority of those are sockeye, followed in numbers by pinks and kings. Fish and Game is expecting large runs of sockeye to return to the Kenai River this year — the river is already more than halfway to its escapement goal of 1.1 million to 1.35 million fish, with 607,787 fish having passed the sonar as of Wednesday. The department widely exceeded the upper end of its escapement goal last year, putting more than 1.7 million fish into the river by the end of counts on Aug. 26, according to Fish and Game data. However, the harvest is less than would be expected from a high forecast, said Division of Commercial Fisheries Area Management Biologist Pat Shields. It looks like the run will be multiple days later than the typical midpoint this year, similar to last year’s run, he said. “Based on our forecast, the harvest so far is probably a little bit less than you would expect of this time in July,” Shields said. Prices have varied between $1.10 and $1.20 for sockeye, less than the average of $1.54 that Cook Inlet fishermen received last year. Competition and a strong U.S. dollar damaged salmon prices in the state last year, but commercial fishermen had hoped prices would improve after last year because of an algal bloom that killed millions of farmed salmon in Chile. Anne Poso, the dock manager at Snug Harbor Seafoods, said the low prices have disappointed fishermen so far. The season so far has been “tepid,” despite the fact that the third week of July should be the peak of the season, she said. “I would normally expect it to be a lot better right now,” Poso said. Sorting fish at the Pacific Star Seafoods’ dock on Thursday, dock manager Mike Johnson said the season has looked best for setnetters fishermen so far. “It’s been looking good for the shore-based guys right now,” Johnson said. “Not so much for the drifters ... The fish have all been down low, with the warm water.” In the Kenai River, Fish and Game biologists have observed the sockeye salmon migrating further out into the river than they normally do, Shields said. They are still trying to understand why, but the migration pattern could contribute to the low success rates in the sportfishery and the personal use dipnet fishery on the Kenai, he said. Because of the low success rates in the personal use dipnet fishery, Sen. Bill Wielechowski (D-Anchorage) sent a letter to Fish and Game Commissioner Sam Cotten’s office requesting a suspension of emergency commercial fishing openers on the Kenai and Kasilof rivers. Many of his constituents complained that they had traveled hours and spent days on the river with little success while Fish and Game issued several emergency commercial fishing openers last week, according to a news release from Wielechowski’s office. A representative from Cotten’s office said he was not currently crafting a response to the request. Reach Elizabeth Earl at [email protected]  

Marine jobs the dominant sector for Kenai Peninsula

KENAI — The Kenai Peninsula’s economy depends even more on the ocean and rivers than is apparent on paper. Some are obvious: commercial fishing, shipping and marine fishing guiding all depend on the ocean directly. However, others — such as fish processing, oil and gas support services and fishing gear retailers — only “touch” the water and may not be counted in a cursory glance. When added together, about 3,400 people on the peninsula work in a maritime-related profession, the most of any sector in the region, according to the 2016 Situations and Prospects report from the Kenai Peninsula Economic Development District. The annual report, which provides data and forward-looking estimates on the economy for the Kenai Peninsula, details a growing maritime sector that paid approximately $177 million in wages in 2014, the most of any industry in the region. Most of the employment is in commercial fishing — almost half the workers are self-employed commercial fishermen, as are the vast majority of the earnings, according to the report. The Alaska Department of Labor and Workforce Development would not classify some maritime-related professions, such as fish processing, as farming, fishing or agriculture — they are classed as manufacturing. That separates some of the data, said Rick Roeske, the executive director of KPEDD. Because the economy on the peninsula is relatively small compared to cities like Anchorage, KPEDD has to blend together some data for confidentiality purposes, he said. “You wouldn’t think that the peninsula manufactures a lot, but when you look at that data, 80 percent of it is fish processing,” Roeske said. Fishing is a major driver in the four largest cities on the peninsula — Homer, Kenai Soldotna and Seward. The three ports in Homer, Kenai and Seward landed 85.2 million pounds of commercial fish in 2014, with Homer leading. Homer commercial fishermen landed 74 percent of all pounds of fish that Kenai Peninsula residents harvested and earned 65 percent of the gross earnings that year, according to the report. However, other industries that depend on the sea are also growing. Cook Inlet is home to a vast number of seafaring boats, supporting a large boat service industry. More cruise ships are coming to Seward and Homer each year as well, bringing in tourism revenue and funds from the state’s commercial passenger vessel excise tax. City administrations in Seward and Homer are in the process of improving their ports. Homer recently finished a paving project to provide access to its deep water dock. The city is also in the process of conducting a feasibility study to expand the dock, which should be finished and sent to the Homer City Council for review in the fall, said Bryan Hawkins, the harbormaster. “There was a lot of survey and interviews with the customer base that use the dock now and expanding that out to other possible customers, to talk about Homer as a hub and connection point,” Hawkins said. The deep water dock currently serves as the port for the handful of cruise ships that come to Homer each summer as well as a dock for industry, as in the case of the jack-up rig Randolph Yost, which spent the month of May at the dock before Furie Operating Alaska moved it to its Kitchen Lights Unit near Nikiski to drill additional gas wells. Seward recently completed work on its harbor, replacing floats and installing lighting, said Matt Chase, the deputy harbormaster for Seward. The work was completed in April and replaced many older sections of the floats for the first time since the 1960s, he said. The city is also in the process of building a breakwater near the Seward Marine Industrial Center on the east side of Resurrection Bay, which will establish more harbor space for larger vessels, Chase said. In addition to the breakwater, the city has also been working on the uplands to lease out more space to businesses, and many have shown interest, he said. “When we started getting the permits and the rocks (for the breakwater) and the bids, it was like the gold rush was on,” Chase said. Homer and Seward saw more cruise ships arrive last year — 19 percent more for Seward and twice as many for Homer between 2014 and 2015, according to the Situations and Prospects report. Hawkins said the number of cruise ships varies from year to year but has been relatively consistent for the past few years; Chase estimated that approximately three cruise ships arrive per week in Seward. Tourism continues to grow on the Kenai Peninsula, with increasing visits and a predicted record-breaking year for 2016 amid an oil and gas downturn and a state budget crisis. Year over year for five years, guided water and land activities have increased, with sharp upticks in 2014 and 2015. Most of the industries that showed significant growth in 2015 were related to tourism, according to the report. Although guided land activities are included in those numbers, gross sales from guided water activities outpace them by more than 19 times — more than $65 million to approximately $3.4 million in 2015, according to figures from the Kenai Peninsula Borough’s finance office. The Situations and Prospects report works in complement with KPEDD’s submitted draft Comprehensive Economic Development Strategy plan, which encompasses five-year goals for the peninsula’s economy. KPEDD wants to provide information and collaborate with the various governments and organizations around the peninsula to work toward economic goals in the next few years, Roeske said. “Although we’re connected by the road and the internet, we’re all pretty focused on our own little areas,” Roeske said. “We’re going to try to get these silo groups to become more cluster groups.” Reach Elizabeth Earl at [email protected]

Oil, gas properties boost Kenai Peninsula Borough tax take by $1.1M

KENAI — The values of some oil and gas properties in the Kenai Peninsula Borough jumped in the most recent state assessment, producing about $1.1 million more for the borough in property taxes. Much of that increase comes from the Nikiski area, where the tax values for the year increased by approximately $559,991, according to the borough’s fiscal year 2017 budget. The increase allowed for a mill rate decrease for residents of Nikiski from 2.90 to 2.80 for the next year. The borough assembly approved the new mill rate at its June 7 meeting. Another portion of the increase comes from the Anchor Point Fire and Emergency Medical Service Area, which surrounds the unincorporated community of Anchor Point and reaches into Cook Inlet to include the Cosmopolitan development, where BlueCrest Energy is drilling for oil. The projected tax collection for oil and gas in the area is expected to increase by about $129,852, according to the budget. The state taxes oil and gas properties at a flat 20 mills. When the property’s value increases, so does the amount paid. The state Department of Revenue assesses the properties annually, said State Petroleum Property Assessor Jim Greeley. The increase comes from additional investment in the area, stemming from Furie Operating Alaska’s Kitchen Lights Unit northwest of Nikiski and BlueCrest’s Cosmopolitan development. The Kenai Peninsula has seen about a decade of increases in oil and gas property value, he said. “There’s been about a 10-year trend of increase in (oil and gas property) values on the Kenai,” Greeley said. “Statewide, I would characterize them as stable.” The state collected more than $125 million in oil and gas property taxes in fiscal year 2015, according to the Department of Revenue’s annual Oil and Gas Property Tax report. That is slightly less than in fiscal year 2014, when the state collected a little more than $128 million, but more than the approximately $99.2 million it collected in fiscal year 2013. The infrastructure investments by Furie and BlueCrest are the main driving forces in the increase, Greeley said. Oilfield service companies’ properties are included in the oil and gas assessments, he said. Though the Alaska LNG Project has been in the process of purchasing about 600 acres of land in the Nikiski area, it would not have an effect on the property tax values. The land is not being used for oil and gas purposes at present, said Larry Persily, the special assistant on oil and gas to Borough Mayor Mike Navarre. “Right now, it’s just undeveloped land that happens to be owned by an oil and gas venture, but it’s not oil and gas property,” Persily said. “It’s only oil and gas property if it’s used in production, exploration or pipeline.” The Alaska LNG Project will likely not materialize for a number of years — the project team is still completing its resource reports and preparing its Environmental Impact Statement to submit to the Federal Energy Regulatory Commission, which will then take some time to review the application. Workers will be conducting water tests, borehole drilling and marine work in the Nikiski area this summer, and the project will contract with demolition crews to remove 20 structures on the land the project has acquired so far, according to an emailed update from Josselyn O’Connor, the community stakeholder advisor for the project. Though the project managers are also looking at moving the Kenai Spur Highway to allow for the approximately 800-acre facility to be built, there is no planned work on the highway relocation for the summer, according to the email.  

Murkowski hosts Kenai field hearing on federal conflicts

KENAI — Sen. Lisa Murkowski visited Kenai on May 31 to hold a field hearing for the Senate Energy and Natural Resources Committee that she chairs on how federal management conflicts with local management on the Kenai Peninsula. Wildfire management drove much of the conversation, but federal land management that limits access to fishing and hunting were also major points. “We’ve got some serious work in front of us,” Murkowski said. “I think we recognize that in the past 20 years or thereabouts, the management of our public forests, or lack of management, translates to a very real threat to the health and safety of communities not only in our state but really across our nation.” A panel of five state and local leaders joined Murkowski to offer testimony on conflicts they saw in federal land management policies: Chris Maisch, state forester and director of the Alaska Division of Forestry; Mike Navarre, Kenai Peninsula Borough mayor; Cindy Clock, executive director of the Seward Chamber of Commerce; Ricky Gease, executive director of the Kenai River Sportfishing Association; and Ted Spraker, who represented the Kenai chapter of Safari Club International. The federal government is the largest landowner on the Kenai Peninsula — much of the land is encompassed by the Kenai National Wildlife Refuge and the Chugach National Forest. Murkowski said her office has gotten complaints that the U.S. Forest Service is not offering enough logging opportunities in the Chugach National Forest, making it more prone to wildfires and insect infestation. She called for the federal government to give more wildlife management authority to the state and to simplify National Environmental Policy Act documents so projects to alleviate fire danger would be easier to complete. “We need new, revised and better policies to fix all these issues, and we’re working on it,” Murkowski said. Murkowski held the meeting at Kenai’s Challenger Learning Center of Alaska to collect feedback from local stakeholders before going back to Washington, D.C. and continuing to work on a draft for a wildfire management bill. Last week, she introduced the draft to change the way federal firefighting money is withdrawn. Currently all the funds are withdrawn from one account, which takes resources away from other activities in the forests, she said. Maisch said at the hearing that the Division of Forestry expects April through late June to have greater than normal fire activity in the Mat-Su Valley and on the Kenai Peninsula. This year, there have already been 15 carry-over fires statewide, which are fires that crop up from hotspots in the areas that burned in prior years. He called for a streamlined approach to NEPA applications, which would allow federal agencies to respond more quickly to changing environmental conditions. He said he supports the draft legislation Murkowski put forward but called for a budget cap adjustment because fighting fires has become more expensive, possibly including an ability for fire managers to access funds from the Federal Emergency Management Authority under a disaster declaration. “(The year) 2004 was the tipping point for this state,” Maisch said. “We went from burning about 800,000 acres a year to now almost 2 million a year, on average. I think due to long term climate issues, we’ve seen a big change in the amount of fire on the landscape and an elongated season.” Navarre said one major contributor to fire prevention on the Kenai Peninsula has been to leverage state and federal funds into the spruce bark beetle prevention programs on the peninsula. He said when he originally put forward a plan to thin some of the trees on the peninsula during the spruce bark beetle infestation, he received opposition from some of the environmental agencies in Washington, D.C. “I recognize the need to talk to these folks about what it is going on,” Navarre said. “I met with the state forestry and met with the federal forestry and put together a task force that was a very collaborative effort to work with everybody … to try to make sure that we could identify the problem and find a way to work through it.” The peninsula has been lucky over the years to get significant funding to help alleviate the problem, but those grant programs need to be renewed to keep up the work, he said. Cooperation between the agencies has not been unduly burdensome, Navarre said later in the hearing — complaints are usually about specific issues. Local managers have been helpful and willing to cooperate with his administration, Navarre said. Some of them may have orders coming from Washington, D.C., which can cause conflicts, so the management should include local influence, he said. Murkowski also asked for feedback on access to public lands. A recent ruling on the Kenai National Wildlife Refuge that would block hunters from baiting bears on refuge lands, as well as other changes related to game, have raised concerns among hunters. Spraker, who is also the chair of the state Board of Game but was only representing the Safari Club at the hearing, said the conflicting rules between federal managers and state managers will confuse hunters. “The refuge should allow the taking of bears because this is a difficult place to hunt bears because of the dense vegetation, and the use of bait is a very successful method,” Spraker said. “It’s also been proven that hunters can be very selective, and one of the management tools on harvesting bears was not to take too many adult females. That works very well if you have a bait station and you can take your time and be selective. That’s an inconsistency between federal and state agencies that I wish we could address.” Sparker is also concerned that the refuge seems to have adopted a policy of “closed until open” for hunters rather than vice versa, he said. Moose hunting participation has declined in recent years, and unless managers can actively control predators and boost the population, the numbers of moose on the peninsula may continue to drop, he said. “Until the service’s passive management policies driven by preservationist ideology and natural diversity and biological integrity are removed, no one should have any hope that the moose population will recover,” Spraker said. Murkowski said in an interview after the field hearing that she appreciated the feedback and will keep the comments in mind as she continues to work on the legislation. “We’ll be looking at this record that we have created today and (asking), ‘How do the federal managers work with the state?’” Murkowski said. “The ability to have these fuel breaks is critically important … you’re leaving (the community) in a threatening situation, because you are not managing this land.”  

Peninsula support companies feel pinch of oil industry layoffs

KENAI — The round tables were fringed with people chatting leisurely and exchanging bits of news, like they were on lunch break. A few feet away, two young men ignored the conversation and clicked away on desktop computers. Yet another group stood on the edges of the room, pacing and waiting, their heads snapping up when the front doors opened. All heads turned as soon as Rachel O’Brien called for session participants, and all rose, shuffling slowly toward the back room of the Peninsula Job Center in unison. As soon as the door closed, the room fell silent. All the jobhunters had come for an informational session on Hilcorp’s job opportunities. There were limited seats in one session, so those who didn’t make it in time signed up for the second session, held an hour later. With the downturn in oil prices taking its toll, former oil company employees and related service companies are actively out hunting for work. About 4.2 percent of Alaska’s population worked in oil and gas jobs in 2015, according to an April 2016 report from the Alaska Department of Labor and Workforce Development. The department expects there to be about 1,000 fewer jobs in oil and gas from month to month in 2016 than in 2015, according to the January 2016 job forecast. The Kenai Peninsula was home to approximately 60 oil and gas-related businesses in 2015, according to the Kenai Peninsula Economic Development District, and many workers who are employed by companies that operate elsewhere in the state. It’s not just the direct support businesses that are feeling it, either — many other types of businesses, like hotels and restaurants, are feeling the reduction, said Rebecca Logan, the general manager of the Alaska Support Industry Alliance. “Everybody’s truly a support company for oil gas and mining,” Logan said. “We have drillers, but we also have hotels, graphics companies. … You’d be hard pressed to find a company that isn’t supporting the oil and gas industry in some way.” The support industries have been hard pressed by the oil industry contraction for more than a year now, and they have been slimming down in an attempt to compensate, Logan said. Many started with benefit and salary reductions before moving to layoffs, but lay off they did — about 2,000 employees to date, Logan said. There is no booming shale gas marketing in the Lower 48 to run to now, either, she said. “When this scenario happened before, our companies went to North Dakota and Texas,” Logan said. “There was a lot of work for them there. That is not the case now.” She said the Alliance has weighed in a number of times to the Legislature about the proposed changes to the oil and gas tax credits in the state, requesting that the Legislature leave the tax credits alone for now. The state’s Oil and Gas Competitiveness Review Board plans to issue a report on the effects of the Cook Inlet tax credits by January 2017, which would provide useful information to the Legislature, Logan said. And even with the additional revenue from reducing the tax credits, the budget deficit remains more than $3 billion, she said. “Our recommendation is to wait,” Logan said. “Get that Cook Inlet report in place, have a much better understanding of where you are. Don’t react to things to fill a budget gap, but come up with good policy that addresses the needs of the state.” The Peninsula Job Center in Kenai has seen an increase in traffic in all levels of the oil-related and support positions, said O’Brien, the Gulf Coast/Southwest Regional Manager for the job center. Every person who comes in looking for work has a unique situation, O’Brien said in an email. “We look at what other jobs may be available in or outside the local area, if the person is willing to relocate, that matches their personal needs and qualifications,” O’Brien said. “We also look at whether assisting that person with higher education or industry certifications might increase their chances of returning to (the) oilfield or another career field that will come close to replacing their lost income.” When someone is laid off, the Department of Labor and Workforce Development offers Rapid Response Services, which connects the person to resources and helps them transition back into the workforce. The program is designed to minimize impacts of income loss to the families and individuals, according to the Department of Labor and Workforce Development’s website. The job center staff will notify the local radio stations, and post flyers in the job centers and throughout the community with information about any upcoming information sessions, as well as send emails to people registered in ALEXsys — the state’s online job bank — who have a valid email address and are receiving unemployment insurance, O’Brien said. “We work with our local employers very regularly to offer informational sessions such as the one Hilcorp Alaska held here at the Peninsula Job Center this week,” O’Brien said. Reach Elizabeth Earl at [email protected]  

Furie positions jack-up for drilling at Kitchen Lights Unit

KENAI — Residents and visitors to Nikiski might notice a new silhouette on the skyline of Cook Inlet as the Randolph Yost jack-up rig moves into the neighborhood. The tall legs of the rig can be seen from the bluff in Nikiski. The rig is situated in the Kitchen Lights Unit, leased by Furie Operating Alaska. Furie has brought the rig to Alaska specifically to drill additional gas wells, and is currently planning to drill up to two this year. The jack-up rig has been docked in Homer for the last two months, and shipped out for the northern part of Cook Inlet on May 5. However, it won’t be ready to drill until roughly a month from now, around the second week of June, said Bruce Webb, Furie’s vice president. The rig still has to be outfitted, crewed, stocked, arranged and run through some preliminary tests, he said. The rig will drill two new producing wells close to the currently producing well. The reservoir of gas is centrally located — by regulation, producers are not allowed to drill new wells within 3,000 feet of an existing well. Furie had to file for an exception to the regulation, which is mostly like “checking regulatory boxes,” Webb said. Some companies will file for pool rules on a field, allowing them to operate without having to file for exceptions each time they make a new move, but Furie does not plan to file for pool rules, Webb said. “We’re a small platform and the reservoir is pretty centrally located,” Webb said. “Going for pool rules is a little bigger exercise than we are … planning.” Furie is only producing natural gas and has signed contracts with Enstar Natural Gas Co. and Homer Electric Association. With the two new wells drilled this year, the company should be able to fill its contracts until 2019 or 2020, when the market opens again, Webb said. The company plans to continue drilling exploration wells in the intervening years, though, he said. “The current permits we have out are up to two permits (to drill wells) every year for five years,” Webb said. “That’s just in case we have time to drill more than one every year. It’s easier to permit two and drill one rather than permit one and want to drill two.” One factor that could provide an outlet for more gas from Furie would be the restart of the Agrium fertilizer plant in Nikiski that closed in 2007. The Alaska Legislature recently approved a bill that would grant a tax credit to urea, ammonia and gas-to-liquid products, which would benefit Agrium with a payment equal to the percentage of the amount of royalties paid on natural gas from a state lease that is delivered to the plant to use. The tax credit would remain budget neutral by balancing the deferred tax revenue from the credit with income from royalty payments made by the gas supplier. Agrium is in talks with the gas suppliers in Cook Inlet about potential deals, as previously reported by the Clarion. However, Agrium would also have to spend a certain amount before obtaining that credit, said Larry Persily, the special assistant for oil and gas in Kenai Peninsula Borough Mayor Mike Navarre’s office. The gas supplier would have to provide a competitive price to Agrium to entice the company to reopen the plant, he said. “Agrium restarting is going to depend on finding a gas supplier who can guarantee them five years, 10 years of supply at an affordable price, and that price is going to have to be less than what Southcentral utilities are paying,” Persily said. “They’re going to have to hope that someone strikes a big reservoir and says, ‘OK, I can give you a lower price if you sign a long-term contract and buy a lot.’” The other factor in play is the future of the oil and gas tax credits in the state. The Legislature is still in discussions about whether to cut down the tax credit program, and if so, how that might look. Webb said Furie is not dependent on the tax credits, but they do accelerate the pace of development. “You can accelerate faster when you have a AAA rated partner (like the State of Alaska) with you,” Webb said. “If the tax credits go away, that just means we’ll slow down.” Reach Elizabeth Earl at [email protected]

AOOS launches portal for Cook Inlet beluga whale data

KENAI — There’s a lot of research happening on Cook Inlet beluga whales at any given time. Unfortunately, a lot of the data has stayed isolated, held by the entities that collect it. The Alaska Ocean Observing System, an organization that monitors ocean and coastal conditions, is trying to link some of the data with a new online portal called the Cook Inlet Beluga Whale Ecosystem Portal. Varying information about the endangered whales, ranging from sightings to ocean conditions in their habitats, is presented in a map available to the public on AOOS’s website. Holly Kent, the program coordinator for AOOS, said some of the information — such as the records of sightings in Cook Inlet — has never been made available to the public before. Anyone can log onto the portal and use the data, mapped like color-coded honeycomb cells, showing the frequency of beluga sightings in any one area of northern Cook Inlet, Turnagain Arm or Knik Arm. The map allows for layers to be stacked, too, juxtaposing historical data from agencies like the Alaska Department of Fish and Game with other information pertaining to beluga whales, such as water temperature and the Marine Exchange of Alaska’ ship tracking information. “(The portal) gives you more information on how the whales interact within their ecosystem, which gives you a handle on how to better manage that resource, when you’re also dealing with development going on,” Kent said. “This is the first time that agency people and resource managers have had the ability to look at all of these things in one place at one site.” The public may find it interesting, too, Kent said. The data sets are available to be downloaded for research purposes as well. “We’re just trying to make the information easier and more accessible to more people,” Kent said. “That includes agencies.” The AOOS is one of a network of ocean observation system organizations in the Integrated Ocean Observing System, spanning from Alaska along the coasts of the U.S., reaching to Puerto Rico. Though these organizations receive funding from, and are overseen by the National Oceanic and Atmospheric Administration, they function separately, Kent said. AOOS had collected significant data on the Cook Inlet beluga whales, which are considered one of eight species most at risk of extinction in the near future, according to a February announcement from NOAA. The agency recently issued a five-year plan for managing the belugas, which have an estimated population of about 340 as of 2014. The priorities listed in the plan include reducing human-generated noise in the whales’ habitat, habitat protection to encourage foraging and reproduction, research on the whales’ population characteristics, ensuring prey is available and improving the stranding response program. Cook Inlet beluga whale managers from NOAA had initiated the process of accumulating information on beluga whale sightings from different sources several years ago, said Mandy Migura, the Cook Inlet beluga whale manager for NOAA’s Alaska Region. NOAA made contact with groups such as the Joint Base Elmendorf-Richardson and the Port of Anchorage to use their data from beluga sightings, she said. “There were all these different data sets of monitoring for beluga whales, but they hadn’t actually been compiled and made available … we wanted to go for the scientific sightings so we had some quality control over what was actually a beluga,” Migura said. “I’m not going to say it’s comprehensive of every potential data set that is out there, but these are the ones for the initial effort that we got permission to use.” Migura said AOOS approached NOAA to use its data for the beluga whale portal as part of an ecosystem-based management. Although the map tool is useful, it will not be a single stop for all the information about Cook Inlet beluga whales — there are still caveats to the information available there, she said. “I think this would be one tool in our toolbox,” Migura said. “We don’t expect that’s every single sighting. Just because there’s one area that doesn’t show beluga presence, it doesn’t mean there are no belugas there. (The map shows) just positive sightings. If there are not sightings, we can’t assume that means there’s no belugas there.” The portal links together data and allows viewers to see different data points in layers, possibly illuminating connections that bear implications for the whales, Kent said. With NOAA’s data available on the portal as well as other data, agencies and researchers can network on how to best manage the whales, she said. “We have now got (NOAA’s data) out on a map, open to the public, for lots of researchers and agency resource managers to do what’s called ecosystem based management, where they can manage that resource by using the ecosystem factors,” Kent said. “They can see if there’s any kind of connections.” The Cook Inlet Beluga Whale Ecosystem Portal can be accessed at portal.aoos.org/cibw.php. Reach Elizabeth Earl at [email protected]

Federal commission questions Inlet permits over Belgua concerns

Proposed geotechnical work has raised concerns for the beluga whale habitat from the federal agency tasked with enforcing the act protecting marine mammals. The Marine Mammal Commission, an independent government agency that enforces the Marine Mammals Protection Act, has taken issue with the National Marine Fisheries Service for approving permits for oil and gas operations that may disturb several species of marine mammals in Cook Inlet. The commission asserts that the agency should not allow the permits because the cause of the decline of the Cook Inlet beluga population is still unknown. When an oil and gas operator in Cook Inlet thinks marine life might be affected by the activity, the operators apply for an incidental take permit from the federal government. The U.S. Fish and Wildlife Service and the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service share the responsibility for the permits. In this case, the geophysical and seismic activity being conducted by ExxonMobil Alaska LNG, LLC, BlueCrest Energy and SAExploration Surveys could have effects on several protected species, including the endangered Cook Inlet beluga whale population. The Marine Mammal Commission raised concerns particularly for the beluga whales because of the declining population. Vicki Cornish, an energy policy analyst and marine biologist with the commission, said the main concern is that the cause for the continued whale population decline is still unknown. “There are a number of human and natural forces that could be contributing to the continued demise of beluga whales, we just aren’t sure what the circumstances are,” Cornish said. The most recent count concluded that there are approximately 340 Cook Inlet beluga whales in the inlet, a slight increase from the previous count. The population may be stabilizing, but the Marine Mammal Commission would like to see the numbers increase and the population recover, Cornish said. It also seems the whales’ habitat may have shrunk to only occupy the northern part of Cook Inlet, while they used to roam the whole inlet, she said. “We just don’t know how much of their habitat they’re using throughout the rest of the year,” Cornish said. “There are some acoustic studies being done to try to track the beluga whales throughout the rest of the year, but that information is still being synthesized.” The National Marine Fisheries Service received an application for an Incidental Harassment Authorization, a type of take permit, for ExxonMobil’s LNG-related activities and is in the process of reviewing it. Public comment closed on March 7. If issued, the permit would authorize the incidental harassment of up to 34 beluga whales, 13 killer whales, 54 harbor porpoises and more than 4,600 harbor seals. (Incidental harrassment is defined as causing injury or disturbance by NOAA Fisheries.) Marine Mammal Commission Executive Director Rebecca Lent wrote a letter to the National Marine Fisheries Service urging the delay of any permits proposing sound-based activities until the agency can establish clear criteria that the activities would not harm more than a small number of Cook Inlet belugas. “Such a conclusion should be based on clear and consistent criteria regarding the (Marine Mammal Protection Act’s) small numbers and negligible impact requirements, the standards for which currently do not exist,” Lent wrote in the letter. Lent called on the National Marine Fisheries Service to develop a systemic plan to address the cumulative effects of all the marine activities on beluga whales in Cook Inlet. The agency has developed a draft environmental assessment of the activities, and will make the final environmental assessment available when it publishes, said Connie Barclay, the director of NOAA’s Communications and External Affairs office. “This Environmental Assessment, which analyzes multiple proposed Incidental Harassment Authorizations, is the interim step taken by NOAA Fisheries until a Draft Environmental Impact Statement can be completed,” Barclay wrote in an email. The draft includes some additional oversight measures, such as annual reports to the National Marine Fisheries Service at the end of the drilling season covering monitoring efforts, marine mammal sightings and weekly reports when in-water surveys take place. Cornish said the Marine Mammals Commission is most interested in minimizing the overall impact of activity on the whales, and possibly employing tactics like shutting down operations while whales are in close vicinity. But the risks to the whales aren’t just in the geotechnical activities — many kinds of boating traffic and marine activities pose a risk to belugas, such as commercial fishing, recreational boat traffic and changing ocean conditions. The National Marine Fisheries Service is actively monitoring the whales alongside the Marine Mammal Commission, Cornish said, trying to determine the cause for the whales’ decline and how to help them recover. The other stocks of belugas in Alaska, such as those in Bristol Bay and the Chukchi Sea, are doing well and can help provide a health baseline for biologists studying the whales in Cook Inlet, she said. “Each animal has value in the environment, and it’s hard for us as people to understand of that,” Cornish said. “All of them are connected, all of them have a role to play.”   Reach Elizabeth Earl at [email protected]

AK LNG summer fieldwork includes water tests at plant site

KENAI — The managers of the Alaska LNG Project are moving forward on field work planned for this summer, including water tests, offshore work and borehole drilling onshore in Nikiski. With only one season left before the project will go to the Federal Energy Regulatory Commission for approval, the summer field work will be more limited in scale — about a third the scale of what it was in the summer of 2015, said Jeff Raun, project advisor for the Alaska LNG Project, during a community meeting on April 14 at the Kenai Visitors and Cultural Center. Field work will begin both onshore and in Cook Inlet beginning in April, with the offshore work ending in June or July “to get out of the way of the fishermen,” Raun said. An offshore vessel will do more follow-up bathymetry work on smaller scale than the work done in 2015, filling in patches that need more information on the surface geology on the bottom of Cook Inlet, he said. Onshore, the workers will drill approximately 50 more boreholes about 150 deep, part of a requirement for any project that deals in hydrocarbons, Raun said. “The purpose of this year’s program is really to hone in on the equipment locations,” he said. “We’re getting those site-specific geotechnical data and information by drilling more holes in the proposed locations of the major equipment for the facility, and we’ll be providing that information to FERC (Federal Energy Regulatory Commission) so they can review it and say, ‘Yep, looks good.’” The one new component will be water tests. Residents have raised concerns about the proposed plant’s water use, worrying that such a large plant will reduce the amount of water available for locals. Geotechnical information has shown three aquifers beneath Nikiski, two shallower and unconfined, the third deeper and confined, Raun said. Two pump test wells will be drilled into the second aquifer and 350 gallons of water per minute will be pumped out of it for 10 days as a test, mirroring the maximum amount required during construction, Raun said. One of the wells will be converted to go deeper into the lowest aquifer and 1,000 gallons per minute will be pumped from it for 8 hours, a test for resupplying tanks during firefighting, he said. “We want to know, although we don’t believe there will be impact on the existing aquifers from this operation, but we need to test that,” Raun said. “We understand that 1,000 gallons per minute, that’s quite a draw. We want to ensure that if we ever need to draw at that rate, we’re able to do so without impacting other water users in the area.” Tweaks to the plans The proposed megaproject, consisting of an 800-mile pipeline bringing natural gas from Prudhoe Bay and Point Thompson on the North Slope to a plant in Nikiski where it will be cooled and condensed into liquefied natural gas, is now in its third year of field work but is still in the pre-FEED phase — the preliminary front-end engineering and design work. The design work proper has not even begun yet, a process estimated to take two to three years. The plans for the plant are still being tweaked, said Mike Britton, the Alaska LNG Project manager. The latest edition downsized some of the footprint for the plant, changing the number of tanks from three smaller tanks to two larger tanks and condensing the administration building, he said. With the new plans, the plant itself will take up a little more than a third of the total 900 acres of land that the project managers intend to acquire, he said. Many of the space requirements are ruled by required buffers, such as the buffer required around the LNG tanks for pools and another for potential spill hazards, and play roles in how they design the plant, he said. “Every change we make is on a cost-benefit basis,” Britton said. “If you can have A with B and using C is a little cheaper, but you can’t have C with A, then you’re restricted there.” The proposed dock will be a little different as well — it has been raised off the beach to allow access to the beach beneath it and is about 3,600 feet out into the water. Additionally, the designers are proposing to use a type of equipment for the pipeline called pipe-in-pipe, which is safer in case of leaks and allows the pipe to go straight out from the bluff to the tanker docking location, Britton said. One thing that will not change, however, is the size of the pipe. At the request of Gov. Bill Walker, the project managers spent five months investigating the option of using a 48-inch pipe rather than the originally planned 42-inch pipe. Raun said the project team officially recommended staying with the 42-inch pipe. “A lot went into that decision,” Raun said. “Our recommendation as a project team is to stay with a 42-inch pipeline. Despite months of meetings, the dozens of Nikiski residents and other locals who turned out for the meeting still grilled the project managers with questions right up until the end of the allotted 90 minutes. Most of the concerns centered around additional land acquisition and the proposed water testing. “How deep is that (third aquifer)?” a woman in the audience asked, jotting notes throughout the presentation. “I’m at 170 (feet). What’s that going to do to me?” Raun said the third aquifer is at 250 feet and said the engineers do not expect there to be an impact, but they will be measuring the effects in the area when they do the pump test. In addition, the water will be discharged into a gravel pit on Robert Walker Avenue, a move the Alaska Department of Environmental Conservation will have to review and approve. “I think in all of the conversations that the team has had with the community, water has been a very serious topic of discussion, and rightly so,” Raun said. “We’ve said that we are going to start a program to better understand what’s going on with groundwater in our area of interest.” Mike Peek is concerned about crime from the leftover, empty homes that the project has bought but not demolished yet. From his home across the street from the LNG-purchased property, he said he has seen crime pick up in that area, and with no Alaska State Troopers station and no local police in Nikiski, it is a concern, he said. He urged the project managers to carefully consider the consequences of their property purchases if they do not tear down the houses and secure the property. “Just so you know, the ones right outside that boundary (of the property you intend to buy) are the ones most impacted,” Peek said.

Cosmo drill permit filed as credits debated

KENAI — If it gets the state’s approval, BlueCrest Energy will switch its drilling operations from onshore directional drilling to an offshore jack-up rig. The company’s Alaska arm, BlueCrest Operating Alaska, applied to the Alaska Division of Oil and Gas to change its operating plan, adding an extra well and changing its drilling method. The company originally planned to drill three wells from its onshore facility near Anchor Point, drilling diagonally out into Cook Inlet to reach oil in its Cosmopolitan lease. The change in plans would bring a jack-up rig — either the Spartan 151, currently in Resurrection Bay, or a similar rig — to Cook Inlet to drill the two remaining wells and a new one for BlueCrest, according to the application. The Cosmopolitan formation has both oil and gas assets. The gas is situated above the oil, and because of the shallow depth of the gas, drilling for it from onshore is impossible. The wells drilled from the offshore rig would delineate the oil and gas formations, according to the application. However, the gas production would not begin immediately — after the wells are drilled, they would be plugged and abandoned below the lowest gas reservoir once logging and evaluation of the oil formations has been completed, according to the application. “The wells may be re-entered and developed for gas production operations under a future development and production authorization,” the application states. If approved, the company would drill one well in 2016 and the remaining two in 2017. If there are delays, two may be drilled in 2017 and the third drilled in 2018. One well has already been drilled from onshore, a hydraulic fracturing well, also known as fracking. Drilling operations would include casing and cementing, geologic evaluations, flow testing and well plugging and abandonment. If the company decides to flow test a well, it will develop a testing program. Two helicopter flights per day would support the operations at the offshore rig. The flights would come from either the Kenai or Homer airports, changing rig crews and handling cargo, according to the application. The Spartan 151 is currently docked in Seward, with its seasonal contract under negotiation, according to Spartan Offshore Drilling’s website. Furie Operating Alaska brought the rig to Cook Inlet to drill in its Kitchen Lights lease in 2011 and used it until 2015, when its permanent gas production platform was installed. BlueCrest’s president and CEO Benjamin Johnson has said the company would not be able to drill offshore if the oil and gas tax credit program were to change significantly. The expense of developing the gas limited the company’s ability to conduct operations offshore. The jack-up rig is not a permanent offshore operation, but it places wells offshore. The Legislature is currently debating a number of options to change the structure of the oil and gas tax credit regime at the prompting of Gov. Bill Walker, who has called the current tax credit system unsustainable for the state because there are no caps on how much the state will pay. One proposed bill would cut all the Cook Inlet oil and gas tax credits by 2018; another would cap repurchases at $25 million per company per year. The Legislature’s regular session was scheduled to end on Sunday, but was extended with the oil and gas tax credit bills still in limbo. With $525 million sunk into developing the Cosmopolitan field with no revenue yet — oil production is estimated to begin in April — BlueCrest representatives have spoken out strongly against the tax credit cuts. The company submitted testimony to the Legislature on a committee substitute for HB 247, one of the oil and gas tax credit bills, urging the Legislature to leave the tax credits stable so the company could continue to develop the resources even at low oil prices. Johnson testified to the House Finance Committee on April 4 that any changes should be gradual. He said the state’s investment has been a good one at Cosmopolitan because the company has done low-risk drilling on known resources — the company bought its field in 2014 from Pioneer, which was planning to operate on a former Pennzoil discovery in the area. “I want to emphasize that the state’s investment through its tax credit program has facilitated our success at Cosmopolitan,” Johnson said at the meeting. “BlueCrest is in Alaska today directly as a result of Alaska’s tax credit program.” Reach Elizabeth Earl at [email protected]  

Hatcheries made up one-third of 2015 salmon harvest

KENAI — Though hatcheries are a major part of the commercial fishing industry statewide, they’ve remained a small portion of the harvest in Cook Inlet. Fish from Alaska’s salmon hatcheries made up a third of the total commercial fishery harvest in 2015, mostly in pink and chum salmon. However, in Cook Inlet, hatchery fish made up less than 2 percent, according to a report from the Alaska Department of Fish and Game. The report, which is updated annually, provides a broad picture of the state of Alaska’s 28 producing hatcheries. Since their beginnings in the 1970s, the hatcheries have grown to be a substantial part of the fishing industry and contributed 93 million salmon to the commercial fishery last year, nearly a third of the 264 million total fish, according to the report. Cook Inlet’s hatcheries carried a total ex-vessel value of approximately $3.2 million in 2015, with approximately $1.7 million coming from sockeye and the remainder coming from pink salmon. However, Cook Inlet has the smallest hatchery value in the state — Prince William Sound led the market with a total of $79.5 million in ex-vessel value, followed by Southeast with $37.5 million and Kodiak with $4.5 million, according to the report. The commercial fisheries in Cook Inlet harvested 144,000 hatchery-produced salmon in 2015, approximately 2 percent of the total catch. Most of the return was harvested for cost recovery, approximately 2.2 million fish. One of the reasons for the smaller harvest is the recently reopened Tutka Bay and Port Graham hatcheries, operated by Cook Inlet Aquaculture Association. Both are building up their broodstock over time to reach the returns the facilities can handle. In 2015, only enough fish to fulfill broodstock and cost recovery returned to those two stocks, according to the report. Cook Inlet’s hatcheries mostly produce sockeye salmon, which garner a higher price per pound than pink and chum. Most of the hatcheries rely on pink and chum salmon, which are lower-value fish. However, Cook Inlet Aquaculture Association is in the process of diversifying its stock to include both pink salmon and sockeye. Sockeye are more expensive to raise because they must be retained in freshwater longer, requiring the hatcheries managers to overwinter them, said Mark Stopha, a fisheries biologist with Fish and Game in Juneau who wrote the report. They are more expensive to feed and run a higher risk of mortality, possibly because of the longer rearing time. Pink and chum salmon, on the other hand, can hatch in the spring and go directly to salt water, providing a faster return on investment, he said. The number of hatchery fish harvested in other fisheries is much smaller — the sport, personal-use and subsistence fisheries harvested about 275,000 salmon, rainbow trout, arctic char and grayling in 2015. The hatcheries are managed with the wild stocks as a priority, according to the report. Coded wire tags and thermal marking, which is the process of marking the earbones of hatchery fish to determine their origin and brood year, allow fisheries managers to sample returning fish during the season and estimate the total return for hatchery fish and thus more accurately estimate wild stock escapements. Straying of hatchery fish into wild fish systems has long been a concern with the programs statewide. There have been straying reports conducted on most systems where hatcheries operate, but not on Cook Inlet. Stopha said the relatively small hatchery operation did not necessitate a straying study. “I don’t know of any that have been done in Cook Inlet … and maybe that’s because we don’t have any concerns there because of the low level of hatchery production in some of the areas,” Stopha said. “I don’t think it has come up as a concern.” Fish and Game originally began evaluating all the hatcheries in the state as part of the Marine Stewardship Council certification process in 2012, but eventually reviewed them all, Stopha said. One of the main things he said he’s seen is that the hatcheries do not seem to have been damaging salmon runs. Many of the hatchery programs have enhanced the already existing stocks rather than shipping eggs in from elsewhere, he said. “I think the main thing, when I’ve looked at these over 40 years, no one just went in and put in a 100, 200, 300 million egg hatchery and said, ‘We’re just going to do it,’” Stopha said. “In truth, there’s been a lot of bad press about hatcheries over the years, and hatcheries down south have not followed the same protocols we have. 2013 and 2015 were some of the highest returns over the state.” Reach Elizabeth Earl at [email protected]    

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