Raters credit Permanent Fund for improved outlooks

The firms that evaluate Alaska’s creditworthiness mostly agree that the state’s financial picture is getting better, at least in the short-term. Analysts for Moody’s Investors Service have upgraded the state’s fiscal outlook from negative to stable, according to a May 4 credit opinion that cites stabilizing oil prices and substantial growth in Permanent Fund as reasons for the improved opinion of Alaska. S&P Global Ratings similarly revised its outlook on the State of Alaska from negative to stable in a report issued May 4 as well. Both ratings agencies also reaffirmed their general obligation ratings for Alaska, with S&P maintaining its AA- rating and Moody’s keeping its equivalent Aa3 rating for the state. Fitch Ratings also revised its outlook for $319 million in revenue bonds sold by the state-owned Alaska International Airport System from negative to stable May 5 based on a surge in cargo traffic that largely offset lost passenger revenue from the pandemic. S&P’s May 4 opinion followed an April 15 report in which the agency’s analysts concluded states with oil-centric economies and budgets are likely out of immediate harm of the pandemic’s influence on oil prices — which have returned to the mid-$60s per barrel range — but surmised Alaska’s economic recovery would likely be slower than other oil producing states. S&P analysts noted in the most recent report that with Permanent Fund income now supporting the majority of the state budget, oil revenues are likely to account for just 20 percent unrestricted state revenue in the 2022 fiscal year that starts July 1. They also wrote that while the state’s fiscal system still needs structural changes to be sustainable over the long-term, the Alaska Permanent Fund Corp. has exceeded investment return expectations in recent months to give the state more cash to play with, for now. Some lawmakers who have long been opposed to Gov. Mike Dunleavy’s plan to spend from the Earnings Reserve outside of the annual structured draws for fear it would degrade the long-term earning power of the fund have also proposed moving most of the available money in the account into the corpus of the fund to ensure it is not spent. However, S&P analysts indicate doing so might also have an unintended impact on their view of the state’s finances because it would lessen Alaska’s reserves, which currently stand at nearly 250 percent of the state’s annual unrestricted general fund budget. “We expect reserves at fiscal year-end 2021 and 2022 to be significantly better than the state’s estimates absent any transfer from the (earnings reserve account) to the Permanent Fund corpus or unexpected market downturn,” the May 4 S&P report states. The analysts added that the roughly $1 billion in federal American Rescue Plan aid Alaska is set to receive reduces the near-term need for new state revenue sources. The Permanent Fund Earnings Reserve Account, which contains the spendable income the fund generates, held nearly $14.2 billion in reserves available for appropriation by the Legislature, up from $9.8 billion last June. As of May 10, the Fund’s overall unaudited value was $78.9 billion, up approximately 21 percent since the start of the 2021 fiscal year. In general terms, fund managers need to achieve annual returns in the 7 percent range to maintain the real value of the fund over time while accounting for inflation and the annual 5 percent of market value, or POMV, draw lawmakers started in fiscal 2019. Revenue Commissioner Lucinda Mahoney said in an interview that she finds the ratings adjustments “encouraging” but emphasized that lawmakers and state officials need to keep pushing towards fiscal reforms that will improve the state’s long-term sustainability. Mahoney said she stressed the view that Alaska’s revenue streams are more diversified than they may appear in recent meetings with ratings agency analysts. While the state was long dependent on oil prices and production for its revenue picture, the Permanent Fund — through its many billions of dollars in real estate, stocks and other varied income ventures — has indirectly but substantially diversified the state’s revenue picture. “I tried to get them to think about revenues in a different light,” Mahoney said, adding that the strong market performance behind the Permanent Fund’s growth has also improved the state’s pension funds, thereby decreasing the expected long-term pension debt obligation and annual payments. Elwood Brehmer can be reached at [email protected]

The power of shopping local

During a year when many local businesses struggled, some retailers reported stable or increased revenues. John Staser of Mountain View Sports in Anchorage says that his 2020 sales turned out to be even with the year prior, and are up so far in 2021. “Alaskans really stepped up to support local businesses,” says Staser. “I noticed a change in attitude and more customers saying they want to shop local. I attribute it to how people saw restaurants struggling and some closing; it struck home that if you don’t buy from people they go out of business.” Local small businesses are the backbone of Alaska’s economy. A dollar spent at a local business has three times the impact on the economy compared to a dollar at a non-local business. Across the state, small businesses employ approximately 137,000 individuals and provide critical goods and services to residents and other businesses. According to “Buy Local: The Impact of Spending at Local Businesses in Alaska”, for every dollar spent at a local business, 63 cents stays in Alaska compared to an estimated 22 cents at non-local businesses. “It’s not only powerful, it’s doable.” Julie Gardella, an analyst at the University of Alaska Center for Economic Development and a contributor to the report, knows full well how much it takes to be a business owner; she grew up watching her father run his small business. Gardella recently placed an order with Denali Dreams in Anchorage, and was gratified by the amount of the time the salesperson spent with her, which was followed up with a sample and a handwritten note. “It was kind and so personal,” she said. “The whole experience brought me a lot of joy, plus the product is high-quality and costs the same as something I could buy at the grocery store. I’m definitely going to keep shopping there and recommend it to my friends.” Despite already knowing that shopping locally is good for the economy, Gardella admitted she was surprised by how much money leaves the state when shopping at a chain store. “The way we did the analysis showed that if each (Alaska) household switched $20 a week or $1,000 a year from a big box store or online to a locally-owned business, that would be an additional $103 million into the economy each year,” she said. “Making the change to local is not only powerful, it’s doable.” Local businesses have more intricate financial ties to their communities than chain operations do. When they need professional services like accountants or lawyers, they tend to contract with in-state firms, keeping the spending local. Because they are relatively small and nimble, local businesses are more able to stock Alaska-made products, stimulating manufacturing. While chain businesses may give to charity, they tend to spend the most money near their corporate headquarters in some other state. Local businesses, on the other hand, prefer to give to local nonprofits. All of these ties help to keep more money circulating in Alaska. Gardella says she’s seen people becoming increasingly conscious about where they spend their money, and points to the Buy Alaska program as an example of how people can find more ways to support local businesses. Formed to connect consumers to Alaska businesses to grow the state’s economy, the program includes a product directory, marketing campaigns, and recently announced a new partnership with Royal Caribbean International and Celebrity Cruises to introduce passengers to Alaskan-owned businesses in port towns that are struggling because of the pandemic. Customer service, local expertise, and competitive pricing make the difference When it comes to consumers choosing to shop local, Mike Hajdukovich, owner of Trax Outdoor Center in Fairbanks and Trax 2.0 in Anchorage wants to be clear that he’s not interested in “handouts.” “Don’t just come in just because you want to buy something local, come in because I’m better than every box store and everyone online,” he said. “Nine times out of 10, the local guys are going to bust their butts to bring up the level of service because we know that when people come through our doors, that’s our chance.” Along with customer service, Staser focuses on matching prices online. “I challenge retailers to join me,” he said. “It’s scary at first but when you get down to it you gain a customer for life and it doesn’t cost that much to do it. We need to step up and be cost competitive.” Staser says that when chain stores offer the same products at the same prices, they simply “can’t compete with a good local store,” and notes that Mountain View Sports customers can avail themselves of his 33 years of experience in the industry combined with a lifetime spent hunting and fishing. He considers a member of his staff to be one of the best guides in Alaska and makes sure that his customers are the beneficiaries of their knowledge. “We can tell them where the fish are biting that day, what our personal experiences are with the gear, what fits them and what doesn’t,” he said. “And then they can walk out of the store that day with their products in hand; it’s immediate gratification.” When it comes to locally-made products, Staser says he’ll sell everything he can get his hands on. Currently that includes products from Alpine Fit, FisheWear, and an assortment of t-shirts and jewelry. By comparison, Alaska products generally struggle to find shelf space at large chain retailers. Recently ShuzyQ moved into his store, and their added inventory of both fashionable and functional footwear has been a successful complement to outerwear and fly fishing gear. Despite a clear belief that their stores offer the best option for their customers, both Staser and Hajdukovich keep an eye on their national competitors to stay sharp. “REI is a good store, they have good stuff and they’re tough to beat…but I’m going to die trying,” says Hajdukovich. Gretchen Fauske is a marketing-minded economic developer fueled by a passion for innovation and entrepreneurship. She is the associate director for the University of Alaska Center for Economic Development, Board President for the Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

Movers and Shakers for May 16

Dr. Laurie Stuart has accepted the position of executive director at the Tyonek Tribal Conservation District. Stuart is an experienced nonprofit executive with more than 10 years of leadership roles in science education, conservation, and nonprofit management. She comes to TTCD after serving as a director at Woodland Park Zoo in Seattle, and has previously held leadership positions at the Pratt Museum in Homer and at the Alaska SeaLife Center in Seward. Stuart earned her doctorate of education from the University of Missouri, with an emphasis on sustainability, social justice, and participatory methods in natural resource management. She also holds a master’s degree from the University of Alaska Anchorage. Stuart will be following TTCD’s founding executive director Christy Cincotta. The Tyonek Tribal Conservation District is a non-regulatory, nonprofit 501c3 organization that addresses local issues through community-led conservation. The district serves diverse stakeholders and their geographic focus includes the Native Village of Tyonek, Tyonek Native corporation lands, private lands, and lands within Alaska Game Management Unit 16. Colby Swenor has joined RISQ Consulting as a strategy consultant. He will be working with both current and prospective clients, providing them with customized and comprehensive insurance programs to ensure that their risks are successfully managed. Swenor comes to RISQ following a successful 15 year career in the financial services industry and has held management positions with Wells Fargo, Key Bank, and as well as a commercial loan officer position at Alaska USA Federal Credit Union. Prior to joining RISQ he was the CFO for a large Anchorage based contracting company. Northrim Bank announced two new officers and a promotion: Jeffrey Sanford, vice president-loan officer, Kodiak Loan Production Office; Asanya Lloyd, assistant branch manager, Jewel Lake Branch; and Michelle Lozano, special credits associate officer. Sanford joins Northrim Bank with more than 20 years of commercial banking experience specializing in Alaska’s commercial fishing and seafood industry, helping customers from the Bering Sea to the Gulf of Alaska. He holds a bachelor’s degree from the University of Wisconsin Eau Claire. Lloyd comes to Northrim with six years of experience in finance, investments and lending. She holds a bachelor’s degree from the University of Technology Jamaica. Lozano started at Northrim in January 2019 and has 25 years of experience in banking and financial services. She has worked at a variety of Alaskan financial and title institutions throughout her career. Rasmuson Foundation hired Michele Brown as its newest senior fellow and Rodney Hamilton as IT operations manager. Both joined the Foundation in April. In 2020, Brown retired as president of United Way of Anchorage after 17 years of service. At the Foundation, she will continue work to prevent and solve homelessness through innovative strategies and partnerships. Hamilton, our other new team member, is a lifelong Alaskan born and raised in Anchorage. He brings a wealth of experience from 20 years of working in IT at the Alaska Native Tribal Health Consortium. Among his duties in his most recent role as ANTHC senior computer systems administrator, Rodney supported more than 3,000 users on the health organization’s network, including outlying clinics. For five years, he helped plan and address technology needs for the annual Raven’s Ball. Prior to leading United Way, Brown served seven years as commissioner of the Alaska Department of Environmental Conservation under Gov. Tony Knowles. She also served as an assistant attorney general under multiple state administrations. Brown has received numerous awards including the University of Alaska Anchorage Meritorious Service Award in 2018 and Congregation Beth Sholom’s Shining Lights Award in 2013. Her work to create a community plan to increase Anchorage high school graduation rates resulted in United Way of America’s Best Practices recognition. Ken Taylor has joined Peter Pan Seafood Company LLC as vice president of purchasing, sales and logistics. Taylor brings more than 36 years of experience in the seafood industry, including 24 years in his last role at MOWI. His extensive background includes plant management, longlining, crabbing, harvesting, processing, market development and sales management.

State could net extra $3M with royalty oil sale to Marathon

Department of Natural Resources Commissioner Corri Feige has approved a sale of the state’s oil that could net up to $3 million in additional revenue over the coming year and more importantly sets the stage for lawmakers to consider a similar five-year sale as well. Feige signed off April 22 on the best interest finding for the one-year state royalty oil sale to Marathon Petroleum Corp. that will have the state make 10,000 to 15,000 barrels of oil per day available to the Kenai refinery between Aug. 1 and July 31, 2022. The sale should represent 19 percent to 25 percent of the state’s total available royalty volume, according to the finding. DNR typically makes a small per-barrel premium on the state’s royalty oil when it is sold in-kind versus receiving an in-value payment from the producers for the state’s oil that they sell. Department officials and local refiners agree on a negotiated price differential that allows the state to capture some of the revenue lost from transportation costs when oil is otherwise shipped to West Coast refineries. In recent royalty in-kind, or RIK, oil contracts the state has generally netted $1 to $2 more per barrel than if it sold its royalty oil in-value, according to DNR; however, the state briefly lost money when oil prices and demand collapsed last year along with the onset of the pandemic. The Marathon agreement calls for an RIK differential price of $2.17 cents per barrel, meaning the state will collect incremental revenue as long as average marine transportation costs between Alaska and West Coast refineries remains greater than $2.17 per barrel. A Department of Revenue forecast projects marine transport costs will gradually climb from $3.01 per barrel this year to $3.56 by 2030. In 2016, DNR officials negotiated an RIK differential of $1.95 per barrel for a previous contract with Tesoro, a prior owner of the Kenai refinery. That five-year contract was for up to 25,000 barrels per day and was unanimously approved by the Legislature, which must pass a bill authorizing each RIK sale longer than one year. A Marathon spokesman did not respond to questions in time for this story, but the best interest finding indicates the company has agreed to start negotiations on another five-year contract that would commence in 2022. DNR officials will make up to 95 percent of the state’s future royalty oil — in the range 70,000 barrels per day — available for nomination by refiners under RIK sales. They prefer to keep a small portion available for in-value sales due to higher royalty values for certain leases and to obtain pricing and other market information from in-value sales. The Kenai refinery has a processing capacity of approximately 68,000 barrels of oil per day and generally produces about 59,000 barrels of refined products daily, according to DNR’s finding. In addition to strictly the monetary benefit, DNR’s commercial negotiators also factor in more subtle reasons for selling the state’s oil locally, such as the incremental economic benefits of processing it here rather than having it sent elsewhere. While being on the edge of Cook Inlet allows Marathon to import oil to the Kenai facility, approximately 90 percent of the oil refined there has been either from the North Slope or Cook Inlet in recent years, according to DNR. Since 1979 the state has sold 964.5 million barrels of North Slope oil through in-kind sales, according to DNR data. Elwood Brehmer can be reached at [email protected]

Mishap highlights growing foreign-flagged oil tanker traffic

An unladen oil tanker that’s part of a growing number of foreign-flagged vessels transporting Alaska crude reportedly dragged its anchor for nearly four miles in rough Gulf of Alaska seas while waiting for a pilot escort to Valdez in mid-April. The mishap ultimately resulted in a damaged windlass, or anchor winch, aboard the Bermuda-flagged tanker Stena Suede but little else, according to collated reports. However, it was enough to raise concerns from the federally mandated public oversight group tasked with oil industry activity in Prince William Sound as well as the group of marine pilots that escort large vessels through Southcentral Alaska’s often shallow, tricky nearshore waters. According to the Prince William Sound Regional Citizens’ Advisory Council, or PWSRCAC, the crew on the 810-foot Stena Suede decided to drop anchor roughly 20 miles outside of the Hinchinbrook Entrance to Prince William Sound when winds began to increase on April 14. Continually increasing winds caused the crew to reverse its course of action and attempt to pull the anchor after several hours. During the attempt to retrieve the anchor, the Stena Suede dragged it for nearly four miles — to a position 16.5 miles from Hinchinbrook Entrance — over 30 hours. After the windlass motor failed, the crew reset the anchor and worked to repair the anchor windlass, based on information from the council and a vessel tracking service. The Stena Suede eventually reached the Valdez Marine Terminal a day late on April 16 and departed Valdez April 17. PWSRCAC spokeswoman Brooke Taylor said in an interview that the attempt to anchor in the open Gulf of Alaska amplified the council’s attention to the increased frequency of foreign tankers chartered by North Slope producers to take Alaska oil to refineries across the globe. Taylor stressed that the citizens’ council mostly wants to know more about the vetting process that oil companies use before selecting a vessel operator to carry out a chartered mission. “We were very lucky that it wasn’t a worse situation,” she said, noting that the Stena Suede was unladen with crude oil but still held thousands of gallons of fuel and such situations put the crew at risk as well. “There’s less risk (with an empty tanker) but there’s still plenty of fuel and things that could hit water had this situation gone differently,” Taylor said. U.S. Coast Guard officials said during a May 6 videoconference council meeting that crew leaders on the Stena Suede asked if the Coast Guard had any objection to them “drifting” in the Gulf but did not request assistance. A Coast Guard spokeswoman did not respond to questions about the Stena Suede in time for this story. Southwest Alaska Pilots Association President Capt. Joe Martin wrote in an April 22 letter to Coast Guard Sector Anchorage Commander Capt. Leanne M. Lusk that there are just three acceptable anchorages in Southcentral waters based on the association’s best practices for large vessels. Those are at Knowles Head in Prince William Sound, east of the Homer Spit in Kachemak Bay, and in St. Paul Harbor near Kodiak. While Martin did not specifically reference the Stena Suede in his letter, he wrote that in the association’s opinion, “there is no safe anchorage to be had in the Gulf of Alaska within our pilotage area for large seagoing commercial vessels other than those listed above. This includes adjacent offshore waters. Anchoring in open waters in the Gulf of Alaska is at best imprudent, and at worst negligent, given the unpredictable environmental conditions which may be encountered at any time of the year.” Alaska marine pilots board large ships at predetermined points off the state’s coast and assist the crews in navigating the near shore waters that often have unique tides or highly unpredictable weather, among other factors. Martin also wrote in testimony submitted to the council that the Stena Suede also received damage to its bow mooring equipment but it was made satisfactory for docking at the Valdez terminal and the rest of the tanker’s voyage was uneventful. Longtime Alaska oil industry attorney and analyst Brad Keithley, who tracks Alaska crude shipments weekly, said there are indeed more foreign-flagged tankers visiting Valdez in recent months and the root cause is COVID-19. “It’s a subset of the shift in (Alaska North Slope oil) since the pandemic started,” Keithley said. The price collapse that hit Alaska producers and the state budget so hard last spring was the result of a drastic drop in demand for transportation fuel in the U.S. That forced refineries along the West Coast where Alaska’s oil is typically sent to sharply curtail production, and in turn their oil needs, pushing producers to charter foreign tankers that usually end up in China, he said. According to Keithley, Alaska producers sent an average of approximately 2 percent of their oil to foreign refineries in the years prior to 2020. Last year it jumped to 11 percent, peaking at 17 percent in the second quarter when the global oil glut was at its most severe. He said logistics dissuade the large producers from using their own tankers to make the cross-Pacific journey and therefore they often contract with third-party vessel operators to move their oil. The foreign tankers are likely to keep coming as long as demand from West Coast refineries remains subdued and it has at least temporarily stabilized at about 20 percent less than 2019 levels, Keithley said. “The pandemic certainly started this; it’s a question of whether those West Coast refineries come back up to full demand and I don’t think anyone knows the answer,” he said, noting some California refinery owners have committed to convert their facilities to renewable diesel production. A chart provided by the council indicates that as of May 6, foreign-flagged tankers have loaded in Valdez 11 times since the start of 2020 out of 279 tanker visits. Foreign tankers made just eight calls on Valdez in the three years prior. Regardless of why there are more foreign-flagged tankers calling on Valdez, Taylor said the council primarily wants to learn more about how the unique operating best practices and regulatory requirements in Alaska are communicated to the crews of chartered tankers before they start their journey here. “I’m told anchoring in open water is a technique used in many areas; it’s common practice. It’s a common practice internationally that doesn’t apply here,” she said. “Are the risk factors and the knowledge that people need to navigate our waters — are they being communicated?” Rob Kinnear, shipping manager for Hilcorp Energy’s subsidiary Harvest Midstream, said during the council board meeting that the company, which owns 49 percent of the Trans-Alaska Pipeline System, has chartered vessels when the tankers that normally make the West Coast run were in dry dock or when oil demand has waned on the West Coast. Each charter operator gets port information and vessel traffic manuals — about 800 pages of stuff — before sailing to Alaska, according to Kinnear. “Those documents are present on day one — probably 30 days out from when the vessel is going to load,” he said. The unique aspects of bringing a tanker into Prince William Sound are discussed with the vessel master in a call about a week out, Kinnear added. He said the incident involving the Stena Suede, which was chartered by Harvest, reemphasized the inbound tanker protocol. Alyeska Pipeline Service Co. spokeswoman Kate Dugan wrote via email that foreign tankers are required to have the same design features, such as double hulls, as those purpose-built for the Valdez run under the 1990 Oil Pollution Act. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: S. 1 would muzzle free speech

If you want to turn private life into political warfare, there’s a bill in the U.S. Senate just for you. It’s the Democrats’ 800-page election takeover, S. 1. Promoted as a voting and campaign reform measure, 300 pages of the bill actually contain new restrictions on your First Amendment rights to association and free speech. These provisions have been criticized by everyone from the ACLU to Mitch McConnell, but Democratic leaders refuse to budge. The bill has already passed the House of Representatives. S. 1 also seeks to nationalize election law in ways that won’t fit our unique state. I oversaw elections as Gov. Sean Parnell’s lieutenant governor. Alaska’s election rules reflect our vast land areas, diverse languages and cultures, and even the challenges of getting an ID card if you live in rural Alaska. Sadly, S. 1 will not allow for our uniqueness and diversity. It turns more power over elections to the federal government, and overrides our state’s constitution in several ways. A second challenge in the law is its effort to stifle political debate and undermine individual privacy, both things Alaskans hold dear. Under S. 1, any group that mentions a candidate in communications about legislation or public affairs could be forced to publicly expose its supporters. This will discourage Americans from joining groups that speak about the issues. It would also violate the privacy of longstanding nonprofit organizations that care about public policy and good government. Americans have a First Amendment right to privately support charities and civic groups, including through membership. Doing so should not “brand” someone as fully supporting everything that group does or advocates. A garden or gun club, an aviators’ group, or a snowmachine group might have views on parklands or air traffic control or access to public lands. Why should they have to release their membership to make their feelings known on a legislative issues? First Amendment freedom has been vital to social movements, including many that are now celebrated among our democracy’s greatest achievements. Americans who challenge the establishment have good reason to value their privacy. One of the great victories of the civil rights movement was a unanimous 1958 ruling by the U.S. Supreme Court protecting citizen privacy. It said Alabama could not force the NAACP to turn over a list of its members. The Court saw that “compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as (other) forms of governmental action.” In other words, censorship isn’t the only way the government can make a troublesome group or viewpoint disappear. If it can weaponize the law to force organizations to expose their members, it can dry up support for any group that dares to criticize the government. Soon enough, the criticism goes away, or at least gets a heck of a lot quieter. Importantly, the court’s ruling did not just apply to the NAACP or in the South. It protected the right to private giving for all Americans and from all governments. The threats to citizens today, and the chill to speech, are significantly greater. Thanks to the internet, private giving that is publicly exposed will be available for all time, to anyone, in just a few clicks. Who knows what opinions will get you “canceled” a generation from now? Even today, three out of four voters say they cannot speak openly because of how others would react to their views. S. 1 would silence us more. Sen. Lisa Murkowski courageously stood for privacy and the First Amendment freedoms of Alaskans during the 2005 Patriot Act debates. I agree with the sentiments she expressed then about the importance of “providing safeguards to protect the constitutional rights of all Americans.” She fought giving the government power to do a “fishing expedition” into our library, health and gun records. Now I’m hopeful our delegation stands together to protect our privacy, by defeating S. 1. Congressman Don Young has already voted no. Private giving is the protection that new ideas need in a democracy. History teaches us that some of them, maybe even those we regard as silly or strange today, will become the founding principles of our future. No wonder those in power want to shut them down. Mead Treadwell was lieutenant governor of Alaska from 2010-2014. He is a board member of Alaska Policy Forum and many other nonprofit groups.

GUEST COMMENTARY: HB 176 offers solution to health care shortage

Alaskans suffer from a health care shortage in most of our boroughs. It is not that we have a shortage of providers, though. We rank among the top 10 states in the country for most doctors per capita. A large part of the problem is that onerous regulations on providers make it more difficult for them to treat patients in need. But now, lawmakers are proposing a potential solution to this problem, one that would allow doctors to spend more of their time with patients and less time filling out paperwork. The Alaska Legislature is considering a bill, HB 176, that would legally define “direct health care agreements,” also known as direct primary care, as distinct from an insurance product and therefore exempt from Alaska’s insurance laws and regulations. Make no mistake: This bit of legalese would be game-changing for health care and those who depend on it in our far-flung state. HB 176 would give health care providers, including primary and specialty care providers, the legal certainty they need to see Alaskans through direct primary care, an arrangement in which patients would pay a fixed, monthly fee — on average, $25 to $85 — in exchange for round-the-clock access to their doctors. Think of it as a gym membership for health care. Under the current system, many physicians hesitate to offer DPC because they worry it will be regulated under the state’s insurance laws creating extra layers of bureaucracy to deal with, along with the inevitable higher costs. HB 176 would fix that. In turn, the benefits DPC could offer to doctors and patients would be enormous. America’s doctors spend inordinate time — half their working hours — navigating the cumbersome third-party insurance reimbursement system, time that results in 40 percent higher overhead expenses, and which could have been spent treating patients. This process also contributes significantly to physician burnout, causing skilled medical professionals to leave the practice. DPC could relieve some of this hemorrhaging. Their practices spend significantly less time on often mind-numbing paperwork, allowing them to focus more of their attention on the patients in their care. Patients, too, could benefit from increased access to DPC. One study found that DPC patients visited the emergency room 41 percent less often, admitted to hospitals 20 percent less, and needed 13 percent fewer health care services overall, compared with patients who use traditional fee-for-service primary care. DPC also increases health care affordability by improving patient outcomes. After a North Carolina county offered their public employees an option to receive care through DPC, total medical costs fell 23 percent, out-of-pocket spending decreased a whopping 46 percent, and prescription drug spending fell 36 percent. The average patient was able to save $3,120. What’s more, under DPC arrangements, providers typically spend 30 to 60 minutes with each patient, compared to just 12 to 15 minutes for fee-for-service relationships. For these and other reasons, more than 30 states have passed bills ensuring that consumers have access to DPC. Removing barriers to DPC in Alaska could be exactly what we need to expand access to quality, affordable health care. Lawmakers should pass HB 176. Not only would it give patients better access to better care, but it would also free up more of our doctors to provide it. This is our chance to help them do it. Ryan McKee is state director of Americans for Prosperity-Alaska.

GUEST COMMENTARY: Biden’s clean energy plan requires a U.S. mining renaissance

President Biden is making a big push for his American Jobs Plan. As he explained in his recent address to Congress, a large-scale U.S. transition to renewable energy could create millions of good-paying jobs, particularly if “Made in America.” That would be a great help for America’s domestic manufacturers. But there’s a catch: a potential shortage of the raw materials needed to actually manufacture these advanced technologies. A new report by the International Energy Agency makes clear that the United States will need to drastically increase its supply of critical minerals in order to manufacture everything from wind turbines and solar panels to lithium-ion batteries and electric vehicles. As the IEA explains, an insufficient supply of raw minerals could jeopardize the chances of actually manufacturing these technologies in the U.S., or deploying them globally to effectively address climate concerns. According to the IEA, the production of lithium-ion batteries alone could drive up the global demand for lithium by more than 40 times through 2040. Supplies of other key minerals — including graphite, cobalt, and nickel — would need to increase by at least 20 times as well. President Biden plans to build out America’s energy infrastructure, including an estimated 20 gigawatts of new, high-voltage power lines and a proliferation of EV charging stations. The IEA estimates that, globally, these kinds of investments will require a doubling of copper supplies in the next 20 years. Similarly, increased production of wind turbines and solar panels could boost demand for rare earth metals by as much as seven times. These new technologies are far more minerals-intensive than the systems they’re replacing. An EV uses six times the mineral inputs of a conventional car. And an onshore wind plant requires nine times more mineral resources than a gas-fired power station. Unfortunately, the United States is now heavily reliant on China and other nations for these raw materials. In fact, America’s mineral-import reliance has doubled in just the past two decades. And thanks to aggressive, mercantilist policies, China now controls 70 percent of the world’s lithium supplies, 80 percent of rare earth metals, and roughly 70 percent of the world’s graphite. A key concern is that China utilizes extremely toxic practices to extract these resources. In Inner Mongolia, Chinese mining operators have poured refining waste into a poisonous artificial lake large enough to be visible on Google Earth. And China’s Bayan-Obo dumping site consists of dangerous sludge roughly three times the size of Central Park. In contrast, America’s mining operators adhere to the world’s most stringent environmental standards. However, the permitting process for new U.S. mines can often take up to a decade. Countries such as Australia and Canada typically approve new mines in only two to three years, though, even while imposing equally strict environmental controls. To meet soaring demand and reduce imports from China, the United States must start mining more of these resources at home. The good news is that the U.S. possesses more than $6 trillion in mineral reserves. It’s time for federal policies to change in favor of U.S. mining and materials processing. Otherwise, President Biden’s clean energy agenda could fall short of its goals—and leave the U.S. dependent on China’s reckless mining industry. Michael Stumo is CEO of the Coalition for a Prosperous America. Follow him at @michael_stumo

Ucore aims to start construction of rare earths facility by ‘23

A Canadian metals exploration and technology firm has solidified its plan to disrupt China’s control over increasingly critical metal supply chains and Southeast Alaska is at the center of it. Leaders of Nova Scotia-based Ucore Rare Metals Inc. highlighted their “Alaska 2023” plan to complete a $35 million rare earth metals processing plant in Ketchikan by the end of the namesake year during a May 11 videoconference presentation hosted by the Alaska Support Industry Alliance. Ucore chose the Southeast town for its proximity to the Bokan Mountain-Dotson Ridge rare earth mine prospect on nearby Prince of Wales Island, which the company has held since 2007. CEO Pat Ryan said the schedule is “aggressive,” but the company hopes to use revenue from the metals processing facility to support development of a small underground rare earth mine. If developed today, the Bokan project would be just the second rare earth mine in the country. As it stands, Bokan is an advanced-stage prospect that the company largely set aside after a 2015 drop in prices for rare earth metals. Ucore leaders at the time shifted their focus to developing the Ketchikan SMC — in which they hope to deploy an emerging, proprietary metals separation technology dubbed “RapidSX” — to be ready to jump into the burgeoning rare earth supply chain when prices improved. It appears that time is rapidly approaching. Company leaders announced May 4 that they began testing the RapidSX technology under an agreement with a rare earth producer. They expect the design for a commercial-scale system to be ready early next year if the current tests go well, according to the May 4 statement. Ucore Vice President Mike Schrider said rare earth prices started to increase significantly last year and the company is tracking them so it is ready to restart work on the mine when metal prices justify it. With much of the resource delineation complete, Ucore can have Bokan “near shovel-ready” within 30 months of reaching a financing agreement for the mine, he said. In 2014, the Legislature approved the Alaska Industrial Development and Export Authority to issue up to $145 million in bonds to help finance the Bokan project. Ucore estimated in 2013 that the mine would cost about $220 million to develop. Company leaders said they are currently in discussions with AIDEA officials for financing the Ketchikan SMC. An AIDEA spokeswoman did not respond to questions about talks with Ucore in time for this story, but authority leaders have regularly voiced general support for developing Bokan. Ucore’s value-added rare earth plan could put Alaska on a path to help underpin the country’s clean energy revolution in much the same way the North Slope did with oil decades ago, according to Ryan. “The new oil or the new gas for the future are these critical (rare) metals,” he said. Currently, China controls roughly 80 percent of global available rare earth resources, Ryan said, which is potentially problematic given the particular need for them in electric vehicle batteries and motors. It’s because of China’s control over those markets that Ryan said Ucore is working to integrate multiple aspects of the supply chain into its business. “If we don’t do something to regain and recapture the supply chain in North America, in the U.S., it will be lost to China,” he said, insisting that Chinese government officials strategically aimed to the middle of the rare earth supply chain — processing concentrates into metal oxides —to influence the broader downstream markets. “China’s forcing people to set up (rare earth metals processing) in China,” Ryan added. Shipping concentrates to China forgoes upwards of half the total value in the supply chain, he said. The Bokan Mountain prospect holds more than 4.7 million metric tons of indicated rare earth ore, according to a 2015 resource assessment. That translates to approximately 63.5 million pounds of collective rare earth metals, according to Ucore, which are used in a plethora of high-tech applications, from smartphones to advanced batteries and fighter jets. There are 17 minerals defined as rare earth elements, but “heavy” rare earths — such as europium, terbium, and ytterbium with a greater atomic weight — are the most sought after and are used in products that rely on high-temperature magnets. More common lighter rare earths are used in a range of applications including LED displays. Heavy rare earths account for roughly 40 percent of the mineralization at Bokan, according to Ucore. The company hopes to utilize “allied” rare earth feedstock from mines in Brazil, Australia, or the Mountain Pass mine in California, among others, to supply the SMC until the Bokan mine is producing, according to Schrider, who said the feedstock supplies would eventually be blended for oxide production. The company’s economic modeling shows it can be competitive in rare earth oxide markets with its RapidSX separation technology, which uses the same metallurgical processes as traditional plants but does it on a much smaller footprint and at a much lower cost, Ryan said. He described a typical rare earth processing facility as being roughly the size of a football field, while the Ketchikan SMC would fit “in the Red Zone,” or the last 20 yards, he said. Ryan emphasized that Ucore’s biggest hurdle isn’t financing — he’s confident in what they’re developing — rather, it’s China realizing they could lose control of a valuable geopolitical tool. “When they see what’s developing, we’ll have to have our supply chain all wrapped up,” he said, stressing the company will then need political support to keep Chinese government officials from working to unravel what they’ve put together. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Copper River season set as restaurant demand returns

Alaska’s 2021 salmon officially starts on May 17 with a 12-hour opener for reds and kings at the Copper River. All eyes will be on early Cordova dock prices for Alaska’s famous “first fresh salmon of the season” as an indicator of wild salmon markets. COVID-19 closures of high end restaurants and seafood outlets in 2020 tanked starting prices to $3 per pound for sockeyes and $6.50 for king salmon, down from $10 and $14, respectively the previous year. But early signs are looking good. Heading into Mother’s Day on May 9, demand for seafood was “fanatic” said Mitch Miller, Vice President of national upscale seafood restaurants Ocean Prime in Nation’s Restaurant News. National Retail Federation President Matthew Shay said there is a lot more consumer optimism this year as more people are getting vaccinated and stimulus checks are being distributed, and friends and family are moving about more freely. Alaska’s 2021 salmon harvest is projected to top 190 million fish, a 61 percent increase versus 2020. The breakdown includes 46.6 million sockeye salmon, 3.8 million cohos, 15.3 million chum salmon, 296,000 chinook and 124.2 million pinks. Elsewhere on the fishing grounds, Alaska’s biggest herring fishery at Togiak kicked off on May 3 with two buyers and about a dozen boats on the grounds. They have a roughly 85 million-pound quota, the largest since 1993. Herring fishing continued around Kodiak for a nearly 16 million pound catch, the largest ever. Sitka’s roe herring fishery this spring produced less than half of its 67 million pound quota, taken by 18 of 47 permit holders. Southeast Alaska’s summer pot shrimp fishery opens on May 15 with a 40,000-pound catch limit. Southeast divers are still going down for a half-million pound Geoduck clam quota. A lingcod fishery opens on May 16. A 10-day pot shrimp reopens at Prince William Sound on May 10 with nearly 60 boats vying for a 70,000-pound catch. Kodiak’s Dungeness fishery opened on May 1 and so far, a fleet of about 15 boats is dropping pots around Kodiak, Chignik and the Alaska Peninsula. Last year’s Dungie catch of nearly 3 million pounds was the region’s best in three decades. Bering Sea crabbers are pulling up the last of their 40.5 million-pound snow crab quota. Crabbers also are wrapping up the season’s Tanner crab and golden king crab fisheries. Alaska’s halibut catch is nearing 3 million pounds with Seward, Juneau and Homer the leading ports for landings. Alaska halibut fishermen have a nearly 20 million-pound catch limit this year. Black cod (sablefish) catches have topped 7 million pounds with most going to Sitka, Seward and Kodiak. That fishing limit this year is 40.5 million pounds. And as always, fishing continues throughout the Gulf of Alaska and Bering Sea for a huge mix of Alaska pollock, cod, flounders and more. COVID-19 comfish impacts A drop in dock prices stemming from the COVID-19 pandemic was the biggest hit to Alaska fishermen over the past year, followed by planning and logistics disruptions. Those are just a few takeaways from a presentation compiled by McKinley Research Group economist Dan Lesh for the Alaska Seafood Marketing Institute at its May Board of Directors meeting. Other lowlights: Dockside values were down across the board due to a mix of biological factors and COVID-19 disruptions. That decreased the value of Alaska’s 2020 seafood catch by roughly 20 percent to 25 percent to an estimated $1.5 billion, and down 16 percent in export value and volume from 2019. Disaster declarations were posted for eight Alaska salmon fisheries in 2020, one of the worst years since 1970s. Alaska’s seafood industry reflected a 21 percent decline for crew licenses from 2019, and a 31 percent decline in peak employment for processing workers. For Alaska processors, costs above and beyond those normally incurred added up to $70 million, and they expect to pay more than $100 million this year due mostly to travel and quarantine expenses. Processors also saw a 50 percent decrease in workforce changes along with “reduced employee morale.” Of roughly 100 fishermen surveyed, nearly half said they received COVID-19 relief payments, not including the Paycheck Protection Program; half said they did not. Of those, 21 percent said it was due to a lack of awareness about relief payments. COVID-19 impacts are expected to be even more challenging this year, due to trade disputes, climate change impacts and increased competition, including from plant-based foods. The Alaska Department of Revenue spring forecast estimates that fisheries business and landing taxes for fiscal year 2021 will total $47.8 million, a 19 percent decrease from last year’s $58.8 million. Meanwhile, increased seafood demand and a 36 percent growth in direct-to-consumer sales to $90 billion is called “exciting” and the Alaska brand remains strong and “increasingly relevant.” Seafood surge A who’s-who of over 60 U.S. fishing companies, organizations, medical professionals and more sent a letter to Congress last week asking for support for a country-wide seafood marketing and public education campaign. The goal is to highlight the immense health benefits of eating fish and shellfish, a message backed by Americans who have sent seafood sales soaring during the COVID-19 pandemic. The group plans to resurrect a National Seafood Council, a move recommended by NOAA’s Marine Fisheries Advisory Council last July. A Seafood Council was created in 1987 as part of a Fish and Seafood Promotion Act but fizzled after five years. The mission is simple: get Americans to eat more seafood. The push gets some extra clout from new U.S. dietary guidelines that advise Americans to eat two seafood servings per week, starting with kids at six months. “Maybe we should have a contest to find a nice tag line that would identify seafood in the same way as ‘Got Milk?’ or ‘Beef, It’s what for dinner’, or the ‘Incredible Edible egg,’” said Dr. Tom Brenna, professor of pediatrics and nutrition at Dell Medical School at the University of Texas, pointing to other major U.S. food producers who back their industries to promote their products. This week’s industry letter to Congress requests $25 million in seed money to revive a more modernized Council that would eventually become industry funded. A task force led by the Seafood Nutrition Partnership has formed to lay a foundation for the Council. It will be “the most all-encompassing, consumer-facing seafood marketing campaign in our nation’s history,” SNP said in a press release. Brenna is encouraged by the seafood push. “Apparently, we have not done the kind of job that we should have in educating consumers in what they ought to be demanding for themselves and their kids,” he said in a phone interview. “We have a major effect here with seafood that we should be heralding from the rooftops.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Movers and Shakers for May 9

The Central Council of the Tlingit and Haida Indian Tribes of Alaska announced the hire of Courtney Lewis as the child welfare attorney for the Tribe’s new Seattle-based office. As the child welfare attorney, Lewis will provide legal representation to children crime victims with the local courts of jurisdiction within the Washington area, track appellate level Indian Children Welfare Act cases within Washington state and nationwide, and provide effective consultation and legal advice to the Tribe relating to ICWA and child welfare matters. She will also be responsible for preparing and presenting legal arguments in court, and monitoring decisions that may affect tribal families. Tlingit &Haida’s new Seattle-based office had a soft open in late March and is the first office to open outside of Southeast Alaska. The office will be located in the Seattle field office of Casey Family Programs, a foundation focused on influencing long-lasting improvements to the safety and well-being of children, families and communities and a long-standing partner to Tlingit &Haida. Lewis has practiced child welfare law since 2008. She was the first person to be certified in Alaska as a child welfare law specialist by the National Association of Counsel for Children. She also served as the Alaska State Coordinator for NACC from 2019-21. The Mat-Su Health Foundation hired two new employees: Chelsea Hedrick as Connect Mat-Su community resource specialist and Jeff Winell as R.O.C.K. Mat-Su community engagement coordinator. MSHF has also promoted Jessie Burbank to Connect Mat-Su community resource specialist II. Before accepting her current position, Hedrick held a temporary role coordinating a COVID-19 call line for Connect Mat-Su. She previously worked as a project coordinator with Bozeman Green Build and the Madison River Foundation, as well as an Alaskan Conservation Corp member with the Alaska Department of Natural Resources. She holds an associate of applied sciences in fisheries technology and a bachelor’s degree in political science from the University of Alaska. Before joining MSHF, Winell worked as a contact center representative at Matanuska Valley Federal Credit Union and program director with Take2 Ministries Alaska. Winell holds a bachelor’s degree in business management and ministry leadership from Cornerstone University in Michigan. Burbank will work closely with the Connect Mat-Su team to develop and maintain a database of health and social services resources within Mat-Su and will engage in outreach to develop and strengthen relationships with social service organizations, providers and programs. Before joining MSHF in 2020, Burbank worked at The Children’s Place where she assisted children and families impacted by child abuse. She graduated from the University of Alaska Anchorage with a Bachelor of Arts in psychology and a minor in women’s studies. GCI Vice President of Engineering Victor Esposito has been elected to the Society of Cable Telecommunications Engineers board of directors. SCTE, a subsidiary of CableLabs, has been a cable telecommunications leader for more than 50 years and is critical for the advancement of technology, standards and workforce education within the industry. McKinley Management, LLC announced the promotion of two of the firm’s senior team members. Kenneth P. Lenhart has been named McKinley Management’s chief operating officer. In this role, Lenhart manages the people, process and facilities for all three business units: McKinley Capital Management LLC; McKinley Alaska Private Investment LLC; and McKinley Research Group LLC (formerly McDowell Group). Lenhart joined McKinley Capital in 2011 as a portfolio associate in the firm’s Chicago office. Soon after, he became a member of McKinley Capital’s global quantitative research team, and in 2019 was promoted to director of data science. As director, Lenhart managed the data science team and was responsible for development and management of the firm’s data governance program. In 2020, Lenhart took on heading the firm’s information technology and cybersecurity department. Prior to joining McKinley Capital, Lenhart was a director of equities and quantitative research for Midwest Asset Management Inc., and worked at Deloitte Consulting as a systems analyst providing financial data model and securities expertise. He has 21 years of experience, with 18 in the finance industry. Lenhart received his MBA with concentrations in analytic finance, econometrics, and statistics from the University of Chicago, and his bachelor’s degree in economics from Northwestern University. Joseph Jacobson has been promoted to vice president, private equity of McKinley Alaska Private Investment LLC. Jacobson joined the McKinley team in 2019. In 2021, he was named head of the firm’s private equity team. In this role, Jacobson oversees the Na’-Nuk Investment Fund, L.P. and its investments, and is heavily involved in the firm’s Alaska Cargo and Cold Storage direct infrastructure investment. Jacobson brings nearly 20 years of Alaska business experience, with more than 10 in leadership roles in Alaska’s leading industries. Prior to joining McKinley, Jacobson was a senior consultant with McDowell Group, now McKinley Research Group LLC, a leading Alaska-based general services consulting group specializing in economic impact and feasibility studies for communities and projects around the state. Jacobson received his master’s degree in international relations from City University of New York City College, and his bachelor’s degree in outdoor studies from Alaska Pacific University. Jacobson works from the firm’s Anchorage headquarters. Coastal Villages Region Fund announced the promotion of Nathaniel Betz to director of Community Programs as well as the hiring of Oscar Evon as director of Regional Affairs. Betz will be responsible for managing operations and budget for economic development programming in 20 Western Alaska villages. This includes leading efforts in project management, employee coaching, data analysis and facility management. Betz has supported multiple programs that help to provide opportunities and enrich the lives of CVRF’s residents including Youth to Work and the Heating Oil program. Born and raised in Kwigillingok, Evon has a deep understanding of the unique challenges in rural Alaska, which will help him meet the needs of CVRF’s residents. Evon served as a board member from 2000-09, eventually becoming board president. He also acted as CVRF’s director of programs. Evon’s previous roles include Tribal Administrator and COVID-19 coordinator for the Native Village of Kwigillingok, office manager for Alaska Moravian Bible Seminary and community outreach coordinator for E3 Alaska. Doyon Foundation and Doyon Limited announced Tiffany Simmons as the nonprofit organization’s new executive director. Simmons will assume the role, based at the Foundation’s office in Fairbanks, effective May 17. A Doyon, Limited shareholder, Simmons is Central Koyukon Athabascan and was raised in the Yukon River communities of Koyukuk and Galena. Simmons graduated from the Galena City High School and earned a bachelor’s degree in business administration from the University of Alaska Fairbanks. She has extensive experience working with tribal members and tribal governments in various management and senior leadership positions.

FISH FACTOR: Director ‘encouraged’ by proposed ComFish division budget

The budget for Alaska’s Commercial Fisheries Division is facing no cuts for the upcoming fiscal year, assuming the current numbers make it through the Legislature. “The governor’s proposed budget is at about $72.8 million, which is a slight increase from the FY21 approved budget. And most of that increase is due to our personnel services, cost of living increases and things like that that are funded by the administration generally. And also from some additional federal funds for training and things like that. So we’re looking pretty good compared to past years,” said Sam Rabung, director of the Commercial Fisheries Division, the largest within the Alaska Department of Fish and Game, which employs just more than 640 full, part-time and seasonal workers. “We’re really relieved because we’ve been cut pretty close to the bone and any additional significant cuts would impact fisheries directly. We wouldn’t be able to do some of the assessment projects required for management and we would have to either close or severely restrict fisheries. And I think everybody understands that,” he said, adding that another bonus will be the reopening of the ADFG office at Wrangell. Rabung credited the Dunleavy Administration for taking the time to dig into the details that clearly show Alaska’s fisheries “pay their own way.” “We’re absolutely encouraged by that,” he said. “There’s been a lot of administrations that come in without knowing that the commercial fishing industry pays more into the general fund than we get out as a division to manage it. And because we don’t advertise that, it doesn’t get talked about much. “But commercial fisheries as an industry pays more into the general fund and includes other things like licenses, fees, taxes, assessments, all those things add up to significantly more than we are allocated out of the general fund.” Rabung added that most Alaskans don’t know that the Commercial Fisheries Division also manages subsistence and personal use fisheries, along with several fisheries in federal waters, such as crab. And because fish are migratory and cross jurisdictional boundaries, staff also are involved in research and policy making activities of the Pacific Salmon Commission, the Joint Canadian-U.S. Yukon River Panel and several other interstate and international fisheries bodies. Southwest AK COVID-19 survey How helpful have COVID-19 relief programs been so far to people in Alaska’s vast Southwest region? A short survey aims to find out. “We really wanted to focus on individual’s experiences, we’re not sending out to local governments, tribal governments, large organizations, things like that. We want to hear what the impacts or results of the Coronavirus was to you personally and to your family,” said Shirley Marquardt, executive director of the Southwest Alaska Municipal Conference that since 1988 has represented more than 45 communities from Kodiak to the Bristol Bay region, the Alaska Peninsula out to Adak, the Pribilof Islands and everywhere in between. “We want to learn how helpful or accessible were federal, state, local, Tribal grants or loan programs, because each community in our region has a different experience, and it’s really vitally important that we get a handle on what those were,” she said. One goal is to create a sort of roadmap to better understand the unique characteristics of an economic disaster in each community and region. “The second would be how SWAMC can better understand the grants or loan programs, or utility payments for municipalities that were most helpful,” Marquardt explained. “A lot of money went out that wasn’t accessible to a lot of folks in our region because we have such limited broadband. And you could only apply online. We want to get a better handle and understanding of how that impacted folks and how to better understand the eligibility requirements and the application process.” Marquardt said spotty or no broadband service throughout the region kept many people from accessing any benefits. “We had people who were out fishing and they couldn’t apply and they were clearly eligible and truly needed the money. And they were so frustrated because they had to wait. And some of the folks waited and then they were told it was too late,” she said. The survey, done in partnership with McKinley Research Group, will examine lessons learned and identify strategies to help Southwest communities better withstand and recover from future economic shocks. “Anyone who lives and works in those communities, has kids in school, has health care concerns, etc., we need to hear from you,” Marquardt said. Find the survey at www.swamc.org. Respondents can enter to win a $50 Visa gift card. Alaska pollock push Got an idea for making or marketing new pollock products? The Genuine Alaska Pollock Producers aims to create more awareness and demand among consumers in North America and Europe through its Partnership Program by funding new items or helping to get the fish introduced to food influencers and decision-makers at places where it hasn’t previously had visibility. “It’s our fifth round in North America and our second round in Europe,” said CEO Craig Morris. The group has so far obligated more than $5 million to “brand partners” who have created three dozen new pollock products, with $1.5 million available in the current round. “This year we want to think even bigger, bringing new partners into the program and working to identify new opportunities for more unique products, including those made with surimi and roe,” he said, adding that pollock oil and fishmeal also are in the mix. “Pollock oils for health supplements or pet food items, we want to hear all the good ideas,” he added. Morris said that “snacks” best defines the success of the new pollock products that have been funded so far, including such items as Highliner Alaska Wild Wings (a takeoff on Buffalo wings), surimi pastas and Neptune jerky (available at Amazon). And last year, 7-Eleven worked with GAPP to introduce a crispy fish sandwich during Lent in its 8,000 U.S. outlets that proved to be one of its most popular hot foods. Building on that success, 7-Eleven followed this year with grab and go fish bites: five bite-sized pieces that are panko-crusted and served on a skewer with a side of tartar sauce. GAPP is featuring a webinar on May 25 for any prospective applicants to help them through the process. Proposals are due by July 20; funding announcements will be made in early September. Find more information and application forms for its Partnership Program at www.alaskapollock.org. Price watch Contrary to usual trends, halibut and sablefish (black cod) prices have increased since the March 6 start of the fisheries. Industry watchers will be interested in knowing that dock prices are regularly posted by Alaska Boats and Permits in Homer. Halibut prices often are broken out according to weights of 10 to 20 pounds, 20 to 40 pounds and 40-up. Here’s a sampler: March 10 at Whittier, $5.50 to $5.75; March 16 at Petersburg, $5.75 straight; April 6 at Yakutat, $5.75 to $6; Seward, $5.75 to $6.15; April 17 at Homer, $6.30/$6.55/$6.85; April 22 at Sitka, $5.65 to $5.85. Black cod prices are broken into five weight categories by poundage. Prices on April 17 at Kodiak were less than 2 pounds, $1.05; 2 to 3, $2.15; 3 to 4, $2.60; 4 to 5, $3; 5 to 6, $3.65; 7-ups. $5.50. By April 19 at Homer they were less than 2 pounds, 40 cents; 2 to 3, $1.50; 3 to 4, $2; 4 to 5, $2.50; 5 to 6, $4; 7-ups, $5. On April 22 at Sitka: less than 2 pounds, $1; 2 to 3, $2.10; 3 to 4, $2.40; 4 to 5, $2.85; 5 to 7, $3.65; 7-ups, $5.50. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

CDC may allow cruises by mid-summer; Canada issue remains

The members of Alaska’s congressional delegation insist their efforts to clear the way for large cruise ships to return to Alaska waters this year are gaining momentum despite little movement of legislation likely need to finish the work. Sens. Lisa Murkowski and Dan Sullivan took to the Senate floor April 29 to pitch the rest of the body on the Alaska Tourism Recovery Act, their legislation to temporarily exempt cruises between Washington and Alaska from the 19th Century Passenger Vessel Services Act. Murkowski said an amended version of the bill first submitted in early March addresses broader cruise consumer protection concerns raised by Democrats and passing it posthaste would help salvage what can be from this year’s summer cruise season. “Back home right now people are not talking about the season for 2021 coming up; the motto is ‘get through to ’22.’ That’s an awful way to be approaching our situation,” Murkowski said, adding that she’s not trying to save the global cruise lines, but rather the businesses in Alaska that rely on their arrival. “It’s jobs; it’s livelihoods and it really is what allows our small communities to keep their doors open,” she said of the tourism industry. The CDC took another step towards loosening its restrictions on domestic cruises April 28 with a letter to industry leaders from U.S. Public Health Service Maritime Unit Capt. Aimee Treffiletti, who is leading the agency’s maritime COVID-19 response, which states that CDC officials acknowledge “cruising will never be a zero-risk activity” and provides further guidance for cruise companies submitting operating plans for review to federal health officials. “We remain committed to the resumption of passenger operations in the United States following the requirements in the (Conditional Sail Order) by mid-summer, which aligns with the goals announced by many major cruise lines,” Treffiletti wrote, adding agency officials are looking forward to reviewing the initial operating plans and moving to the next phase of the Conditional Sail Order soon. The million-plus cruise passengers that arrived to Alaska via the Inside Passage accounted for more than half of the total visitors to the state in most pre-pandemic years and provided the foundation for one of the state’s handful of growing industries in recent years. Pre-2020, the leisure and hospitality industry had become one of the state’s largest employment sectors, but lost nearly 15,000 jobs last year, according to state Labor Department figures. The lack of visitors has also hit many local governments hard. According to City and Borough of Juneau officials, the lack of cruise ship and passenger fees and taxes totaled roughly $26 million in forgone revenue last year. The PVSA requires foreign built, crewed or flagged passenger vessels sailing between U.S. ports to make at least one stop in a foreign port and cruise lines typically used a Canadian port — most often Vancouver — as a stop en route our a starting point for Alaska-bound voyages to comply. However, the Feb. 4 announcement by Canadian transportation officials that they would not be allowing large cruise ships to dock in the country’s ports again this summer disrupted plans for a return to more normal sailings. Alaska’s senators were initially critical of the Canadians’ handling of the situation and Murkowski said they have since tried to find alternatives to the outright ban but also noted that Canada “is in a different spot in terms of their vaccines,” an indication the country’s requisite officials might not be ready to ease their maritime travel restrictions. According to the Canadian government’s COVID-19 Vaccination Tracker online dashboard, approximately 34 percent of Canadians had received at least one dose of a vaccine as of May 4, compared to 44 percent of Americans and 51 percent of Alaskans, according to Centers for Disease Control and state Department of Health and Social Services data. Sullivan spokesman Nate Adams wrote in response to questions about the hurdles facing the Alaska cruise industry that flexibility from Canadian officials on their docking restrictions isn’t likely given the country’s own challenges in managing COVID-19, but it’s also imperative that the Department of Homeland Security provide clarity over what voyage options would meet the exact requirements of the Passenger Vessel Services Act while making sure operations match any potential scrutiny in Canada’s exemption process. Washington Democrat Sen. Maria Cantwell, who Murkowski had a largely positive relationship with during their years together on the Energy and Natural Resources Committee, now chairs the Commerce, Science and Transportation Committee, which has the Alaska Tourism Recovery Act but has not yet officially heard it. Murkowski spokeswoman Karina Borger wrote via email May 4 that while a request to move the bill through unanimous consent was rejected, there is general consensus among the key players that an agreement needs to be reached. According to Borger, allowing cruise ships back to Alaska is the top priority in the senator’s office right now and Murkowski is working multiple angles, including a continued dialogue with Canadian officials to see if they can “meet us halfway,” she wrote. Sullivan implored Alaskans dependent upon cruise passengers for their businesses to keep hope alive in his floor remarks. “Right now, here on the Senate floor, there’s actually been momentum and movement, and I’m confident we can get there,” Sullivan said of the Alaska Tourism Recovery Act. “Even with the CDC, we are starting to see progress with them. We are going to continue to fight and continue to try to move this. Do not give up, Alaska, on our summer tourism season. We haven’t. To the contrary, we’ve made progress. We’re not there yet.” Alaska’s state and federal lawmakers have also been critical of the CDC’s seemingly slow movement towards allowing cruise voyages in U.S. waters and Gov. Mike Dunleavy directed Department of Law officials to join a lawsuit filed by the State of Florida against the CDC last month. Murkowski praised CDC leaders for the updated guidance in a May 1 statement and said agency officials have been more responsive to the Alaska delegation and industry of late. “The CDC has committed to working with us to address any guidelines that may be too restrictive for Alaskans,” Murkowski said. “We aren’t out of the woods yet, but understanding what has to happen for cruise ships to sail is a step in the right direction.” Whether it can all come together quickly enough for the companies to be ready to sail when the time comes is still unclear. The first cruise ships of the year typically arrive in Ketchikan in the last days of April and industry representatives have consistently said they would need at least 8 to 10 weeks to re-crew and prepare the ships for sailing from the time they have clearance to sail. The last ships arrive in Southeast in September most years. On the House side, Rep. Don Young’s spokesman Zack Brown wrote that the most likely avenue to holding a semblance of a summer cruise season this year is for the CDC to lift its sailing restrictions. According to Brown, if the CDC lifts its sailing restrictions, Canada would very likely be pressured into allowing “technical calls” on its ports to satisfy the PVSA. “Congressman Young is running parallel efforts on this front, not only trying to get the CDC to lift their ban, but to convince Canadian officials to update their restrictions as well. Southeast families’ livelihoods hang in the balance,” Brown wrote. “The Congressman calls on the CDC and the Canadian government to trust the science behind vaccines and mitigation strategies and to allow the cruise season to commence in some form.” Elwood Brehmer can be reached at [email protected]

ConocoPhillips rebounds to profitability after $2.7B loss in ‘20

ConocoPhillips rebounded with a profit of nearly $1 billion in the first quarter, with $159 million of that coming from Alaska. CEO Ryan Lance said during a May 4 conference call with investors that ConocoPhillips executives are viewing 2021 as “a catalyst moment” to improve all aspects of the company’s business, similar to 2016 when oil prices reached lows of less than $30 per barrel early that year. Following the depths of that price cycle, leaders of the Houston-based producer set a companywide breakeven target of $40 per barrel of oil production. This time, ConocoPhillips leaders are focused on debt reduction to improve investor returns and driving down sustaining capital costs through supply chain and well-cost efficiencies, according to Lance. “Our entire organization is focused on improving every aspect of our underlying business to make us the most competitive in the industry: capturing additional synergies, lowering our sustaining price, increasing capital efficiency, generating free cash flow, strengthening our balance sheet, consistently delivering peer-leading return of capital to our owners and lowering emissions,” Lance said. “These are the essential keys to long-term success in the business.” The first quarter profit of $982 million is contrasted against a fourth quarter loss of $772 million and a first quarter 2020 loss of more than $1.7 billion when the combination of a Saudi-Russia price war and the global onset of the pandemic took oil prices to the lowest levels in decades. In total ConocoPhillips lost $2.7 billion last year. The $982 million translates to earnings of 75 cents per share and was on the back of more than $10.5 billion of quarterly revenue. ConocoPhillips generated no more than $6.1 billion of gross revenue in any quarter last year. The company’s stock price mostly held steady May 4 following the morning earnings release, closing at $52.57 per share. As to Alaska, where ConocoPhillips has become the predominant producer and explorer on the North Slope, the $159 million net for ConocoPhillips Alaska was the first positive quarter for the state in a year, when the company made $81 million here but lost big overall. ConocoPhillips incurred a tax and royalty bill of $227 million to the State of Alaska during the quarter, according to a company statement. The segment and companywide profits are largely the result of sustained price improvements in global oil markets. ConocoPhillips secured an average realized price of $59.56 per barrel in the first quarter for its Alaska oil, the highest price since the end of 2019. ConocoPhillips’ North Slope liquids production remained ostensibly flat at 208,000 barrels per day in the first quarter when compared to the fourth, but was down from a year ago when the company produced 217,000 barrels of oil and natural gas liquids per day. Senior Vice President of Global Operations Nick Olds said the company will restart four rigs on the Slope this year after suspending all drilling last spring and is still on track to start production late this year from its Greater Mooses Tooth-2 project in the National Petroleum Reserve-Alaska. “Our base Alaska business is performing very well and we’ve built strong momentum coming out of 2020,” he said. Facility and production costs are about 10 percent less than budget in the third and final construction season for the $1.4 billion GMT-2 drill site, according to Olds, who said production would likely start at about 10,000 barrels of oil per day and should eventually peak near 35,000 barrels per day. The company plans to eventually drill up to 48 wells on the 14-acre pad. Engineering work continues on the company’s nearby $6 billion Willow oil project — stalled by a court injunction in a lawsuit over the Bureau of Land Management’s environmental review for the development — and it remains competitive in the company’s portfolio, but a final investment decision won’t be made until the litigation is resolved, Olds said. ConocoPhillips spent $235 million on North Slope capital investments in the first quarter; the most in a year and part of a $1.2 billion capital spend companywide. Executives plan to spend roughly $5.5 billion total on capital projects this year. Elwood Brehmer can be reached at [email protected]


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