Dunleavy: Gov’t lead needed for pandemic recovery

Gov. Mike Dunleavy said he expects the state’s response to the coronavirus pandemic to ultimately benefit the beleaguered tourism industry and the economic recovery from 2020 should be led by government. The governor spoke about ways to boost Alaska’s struggling economy Sept. 24 during the Alaska Chamber’s virtual annual Fall Forum gathering. He emphasized that prior to the March economic shutdowns and travel restrictions that Alaska had a solid economic foundation with several billion dollar-plus oil projects in various stages of planning and development; large investments planned to grow the cargo business at Ted Stevens Anchorage International Airport; and record low unemployment in the state. Alaska added approximately 1,300 jobs and had an unemployment rate of 5.8 percent in February. The state’s unemployment rate was reported at 7.4 percent in August, but according to the state Labor Department the number is likely artificially low because the virus has disrupted the household surveys typically conducted to compile the data. Overall, Alaska was down roughly 37,000 jobs year-over-year in August. Tourism was one of the strongest sectors of Alaska’s economy for years prior to the pandemic, but has also been one of the hardest hit by the pandemic for a host of reasons. More than 1.3 million visitors were expected to arrive to the state via cruise ship at the start of the year; however, none of them showed up — by cruise anyway. Dunleavy said state health and administration officials crafted the state’s plans and requirements for essential industry operations, notably commercial fishing, after observing COVID-19 outbreaks in the Lower 48; he also noted that Alaska’s overall COVID-19 case and death counts have been among the lowest in the country since the start of the pandemic. Alaska’s total COVID-19 case count of 8,602 through Sept. 29 is the fifth-lowest in the country; the 1,176 cases per 100,000 residents is the eighth-lowest in the country, according to data tabulated by The New York Times. “We had watched what happened at some of the meatpacking plants down south and we didn’t want to repeat that,” Dunleavy said. State officials are now working on health protocols to restart the annual parade of cruise ships through the Inside Passage next spring, he added, acknowledging the success of the work will in part be contingent upon the efficacy and availability of a coronavirus vaccine and other treatments. “The virus is going to be with us but it’s not going to control us,” Dunleavy said. “We want to show them that we can manage this virus.” How quickly Alaska’s broader tourism sector can rebound will largely depend on when the border with Canada is reopened for leisure travel as well. The U.S.-Canada border is closed to nonessential travel through Oct. 21 — a restriction that has been extended six times since March — and Canadian ports are closed to large cruise ships until Oct. 31. Federal law requires all foreign flagged vessels traveling between U.S. ports to stop at a foreign port in between. For cruises bound for Alaska, that typically means stopping in or starting from Vancouver. While the 2021 cruise season is still many months away, Brandon Lee, consul general of Canada to Alaska said during a Sept. 29 forum discussion that the Canadian government sees the pandemic primarily as a health crisis and is taking a very conservative approach to managing it. “We’re really trying to prioritize the health of Canadians,” Lee said, adding that the border situation is evaluated “day-by-day, week-by-week.” That evaluation is driven not only by case counts in the U.S., but also by the capacity in Canada’s health system, according to Lee. Dunleavy stressed that the onus for Alaska’s broader economic recovery is on government because it was government restrictions that led to the ongoing struggles. “Government has an obligation to fix and rectify what happened during the pandemic,” he said. The best way to do that, Dunleavy said is with a “comprehensive, large, multi-year approach” to infrastructure development. He added a common refrain for his administration that Alaska has the natural resources the world wants — all that’s needed is access. When asked about the infrastructure development comments, the governor’s spokesman Jeff Turner said he was likely referring to the federal infrastructure package President Donald Trump has pushed to varying degrees throughout his term. However, Dunleavy mentioned some state-specific projects and indicated his administration is working investment angles regardless of what the feds do. The administration is currently conducting pre-development analyses road projects to access resources in the Western Susitna Valley and Interior mineral prospects through the Alaska Industrial Development and Export Authority, which is also seeking private investment for those projects. “We need to refurbish our ports. We need to finish our rail spur (in the Mat-Su Borough),” Dunleavy said. “We’re exploring these opportunities with private investors and hopefully we’ll have more to announce in the next few weeks.” Dunleavy thanked Trump for signing a presidential permit authorizing a border crossing for the proposed $13 billion Alberta to Alaska, or A2A, rail link that would add roughly 1,500 miles of track to connect Alaska Railroad tracks to those in Canada. Proponents of the general concept have long seen it as a way to export resources from Northern Canada and import products to Alaska more affordably. The A2A project is specifically aimed at exporting Alberta tar sands oil through Alaska to world markets, but the project’s backers note it could be utilized for other shipments as well. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: ASMI survey sheds light on pandemic impacts

Some surprising results are revealed in the first of a series of briefing papers showing how Alaska’s seafood industry has been affected by the pandemic from dock to dinner plates. The updates, compiled by the McDowell Group for the Alaska Seafood Marketing Institute, show that so far the amount of seafood that has been harvested is in line with previous years. “While 2020 harvests have been significantly lower in some salmon fisheries…the declines are due to weak runs rather than reduced effort or other forces that might have some connection with the pandemic,” according to the latest brief. “If we forgot about the pandemic and we just look at how much has been harvested, we’re similar to past years, so that’s a vote of confidence there,” said Garret Evridge, a McDowell fishery economist. Market disruptions and increased operating costs definitely put downward pressure on the value of all that seafood, with the price plummet at Bristol Bay being perhaps the most striking example. The preliminary value of the Bay’s fishery this year is $140.7 million (not including post-season bonuses), compared to the all-time high of $306.5 million in 2019. “And that certainly seems to be the trend across nearly all species. Generally, the pandemic has depressed prices across the board,” Evridge said. Also pushing down the value was a smaller processing work force. The extra efforts to manage and mitigate COVID-19-related risks “are believed to be the primary cause of a 13 percent overall decline reported for July 2020, a decline of 2,500 jobs from July 2019,” the September brief said. Chaotic market changes also forced workers to produce lower valued salmon products. Using Bristol Bay again as an example, where a compressed run plugged processing plants with millions of salmon, time and labor constraints meant that most of the fish had to be headed/gutted and frozen or canned instead of being trimmed up for pricier fresh or frozen fillets. “What that effectively does is it reduces the average value per pound of the Bristol Bay pack, which is particularly difficult in a year when operating costs have increased so much,” Evridge said. Those added costs aren’t going away anytime soon. There are no hard data yet but interviews with processors indicate at least $50 million has been spent so far by inshore and offshore sectors, said Dan Lesh, a McDowell senior analyst. “It’s definitely an estimate and it’s a number that’s likely to increase, not only through the end of 2020, but into 2021 and as long as this pandemic is in effect. We’re trying to communicate that the industry is sustaining real operating cost increases,” Lesh said. “The industry is taking on these costs out of pocket at the same time we are facing severe disruption in key markets and multiple pre-COVID cost burdens,” said Cora Campbell, CEO of Silver Bay Seafoods at a July 29 U.S. Senate committee hearing. “While a fraction of these costs may be reimbursed, we face significant uncertainty because there’s no specific congressional directive to support health and safety protocol costs for critical seafood supply chains,” Campbell said, adding that COVID-19 prevention measures have not been included so far in federal relief loans and funds. The McDowell team is waiting a few more months to get a better understanding of how COVID-19 has affected volumes and values of Alaska’s top export. August and September are the peak export months for Alaska seafood; for salmon, about 75 percent of annual exports (by value) occur between July and October. One advantage, Evridge said, is that global currency rates are playing in our favor. The dollar has trended weaker since February, making Alaska seafood more affordable to foreign buyers. “It’s important to focus on these bright spots,” Evridge said. “But there still is a big trade imbalance there with Russia, not to mention the ongoing trade war with China.” Overall, and despite all the difficulties, Evridge called 2020 “largely a success” for Alaska’s fisheries. “We’re still harvesting 5 to 6 billion pounds of seafood, the values are down, but we haven’t fallen off a cliff,” he said. “If you just think back to the early stages of the pandemic, we were talking about the possibility of Bristol Bay not even opening and some of the worst scenarios weren’t actually realized. So that’s a real positive.” Dinner plate update Seafood is benefitting from three major eating trends during the pandemic and they are expected to continue. “The first is the huge increase in home cooking as fewer people eat in restaurants,” said John Sackton, founder of SeafoodNews.com. “Second is the big increase in using frozen food, which is especially advantageous for the seafood industry, and third is the continued emphasis on health and diet during the pandemic.” He added that national trend tracker IRI has been reporting on changes in protein and frozen food at retail grocery, and that the trends for both frozen and fresh seafood continue to be more positive than any other category. “The continued strength of seafood consumption suggests that the strong performance of seafood at home will continue through the holidays and into the Lent season next year,” Sackton said. That’s backed up by surveys done by the Alaska Seafood Marketing Institute, which has been quickly adapting to the challenges and opportunities posed by the pandemic. “In December of 2019 before COVID, 70 percent of consumers cooked three times a week at home, and since COVID, 66 percent said they now cook at home more frequently,” said Arianna Elnes, an ASMI spokesperson. She added that for the first half of 2020 restaurant sales were $65 billion lower, while U.S. grocery store sales for all products were up $43 billion from the same time last year. To accommodate the increased interest in frozen foods and food safety, Elnes said ASMI quickly revamped its flagship “Cook it Frozen” campaign. “This focused on filling the pantry and freezers and featured at a glance cooking tips and recipe ideas to help consumers build confidence in cooking wild Alaska seafood at home,” Elnes said. “The campaign was launched in March, right at the onset of COVID, and in May frozen seafood sales at retail were up 66 percent.” ASMI also has partnered with notable chefs and dieticians on Instagram for Seafood Sundays and other cooking specials. Its survey of more than 13,000 consumers also showed that consumers want to know where there food comes from and that fishermen and farmers hold the most trust at nearly 70 percent. “We’re really trying to focus on origin,” Elnes said. “When we talk about local eating, it doesn’t just mean in terms of distance, but local as in knowing where it comes from. So we’ve launched a Choose Alaska campaign and it pitches seafood as critical to the national and global food supply chain, and it lets people know that when they’re buying Alaska, they’re supporting people’s livelihoods.” Elnes added that direct marketing by more fishermen also is on an upward trajectory. ASMI has posted a short survey to identify ways to assist with direct sales. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Ballot Measure 1 will hurt Alaska’s struggling nonprofits

COVID-19 has done a number on Alaska’s non-profit community. Most of the major fundraising events were either cancelled outright, or scaled down and conducted virtually. Millions in revenues have been lost. Every nonprofit in this state is nervous about the future. If we are going to recover, we will need more community support than ever. That means we need to defeat Ballot Measure 1. The nonprofit sector makes up a critical component of the state economy. In fact, Alaska nonprofits play a vital role in the state’s other major industries including seafood, finance, healthcare, and tourism. The nonprofit sector is woven into the fabric of Alaska in every way conceivable, delivering essential services like housing, education, and environmental protection to residents statewide. Outside of charitable individuals, Alaska’s nonprofits are funded by the oil and gas industry. In fact, it’s almost impossible to find a nonprofit partner list in Alaska that doesn’t include an oil and gas company. In the nonprofit world, we look for long-term solutions to problems. Ballot Measure 1 is a shortsighted approach to a long-term problem, and will hurt more than it is intended to help. The nonprofit I am proud to represent provides young Alaskans the tools and knowledge they need to make smart academic and economic choices as they grow into financially savvy adults. Our top corporate donors work in the oil and gas industry, and their support has helped us educate youth for decades. Ballot Measure 1 puts that support in jeopardy by increasing taxes on a struggling industry by between 150 to 300 percent. COVID-19 has already wreaked havoc on the entire statewide economy, and targeting one industry for a massive new tax will only make the situation worse. Should Ballot Measure 1 pass, not only would our economy and jobs be at risk, but Alaska’s thriving nonprofits would suffer the consequences, too. Many nonprofits are clinging to life during the ongoing pandemic. Now is not the time to create barriers for growth our state’s largest economic force. Oil and gas sets the pace in Alaska. The industry alone generates 38 percent of all wages in Alaska, and a quarter of all jobs. But those jobs are just the tip of the iceberg when it comes to the full social and economic impact of oil and gas in Alaska. From the arts, to youth and social service organizations, nonprofits across Alaska benefit from healthy, sustained oil and gas spending. The industry has funded STEM programs, food pantries, animal rescue agencies, women’s shelters — the list goes on — for decades. I’m voting No on Ballot Measure 1 this November, and I encourage my nonprofit partners to do the same. Together, we can rebuild and strengthen Alaska alongside the oil and gas industry, protecting our jobs, families, economy, and essential nonprofits. Flora Teo is the president of Junior Achievement of Alaska.

GUEST COMMENTARY: Small manufacturing firms continue to drive Alaska economy

Local manufacturing businesses and jobs have experienced a resurgence in recent years that needs to continue for our state’s livelihood and connection to the global economy. Before the pandemic, the manufacturing sector employed 11.6 million workers in the United States. During the past three years, approximately 500,000 manufacturing jobs were added to the economy. In 2018 alone, 264,000 manufacturing jobs were added, the most created in any single year in more than two decades. Locally in Alaska, there were more than 12,000 manufacturing jobs. Of those, 33 percent were employed by small firms. While manufacturers have not been immune to the hit we’ve seen many sectors take during 2020 due to the pandemic, we’re already seeing the manufacturing sector start to rebound. In fact, 29,000 manufacturing jobs were added in August 2020 alone. This is both encouraging and necessary for our region as consumers worldwide are increasingly seeking “Made in the USA” products and services. On a macro level during the past couple decades, U.S.-manufactured goods that are exported to other countries have quadrupled. Plus, nearly six in 10 U.S. export dollars come from manufacturers, establishing them as a crucial component to our role in the international marketplace. In North America specifically, the passage of the U.S.-Mexico-Canada Agreement earlier this year has and will continue to drive job creation and strengthen manufacturing in Alaska. And since the USMCA establishes a committee on small business issues for the first time in any U.S. trade agreement, it will ensure small manufacturing voices are heard. As local manufacturers are pivoting and innovating to operate in a new environment — and in some cases, switching production to support critical needs of medical equipment and personal protective equipment — it takes public and private entities working together for small manufacturing firms to succeed. The federal government is clearing red tape out of the way for small manufacturing firms by reducing regulations. During the past few years, federal agencies have issued multiple deregulatory actions for every new significant regulatory action, saving businesses billions in regulatory costs. In light of the coronavirus pandemic, many federal regulations have been temporarily lifted; and, regional advocates from the SBA Office of Advocacy are talking to businesses to explore opportunities to permanently clear some of these regulations if they have been burdensome to small firms. In the span of a week this past spring, the SBA rolled out one of the largest economic recovery programs the country has ever seen. Financing programs like the Paycheck Protection Program, Economic Injury Disaster Loan program, and traditional SBA loan programs have preserved Alaska jobs and infused approximately $1.8 billion into Alaska small businesses in 2020. With federal programs, local government, and industry and business organizations working together — combined with the ingenuity of Alaska small businesses — the manufacturing industry will prevail and ultimately thrive. Jeremy Field is the Regional Administrator for the U.S. Small Business Administration Pacific Northwest Region which serves Washington, Oregon, Idaho and Alaska.

Law Dept. seeks clarity on potentially broad impact of bond ruling

The Dunleavy administration is asking the Alaska Supreme Court to clarify whether a recent ruling invalidating a plan to sell bonds to pay oil tax credits impacts hundreds of millions of dollars worth of bonds sold for local governments across the state. Department of Law attorneys on Sept. 28 technically filed a petition for rehearing the lawsuit against the state for a legislative plan passed via House Bill 331 in 2018 to sell up to $1 billion in bonds to pay off outstanding oil and gas tax credits owed to banks and small exploration companies. The state’s tax credit obligation currently stands at $743 million, according to the Revenue Department. However, administration officials are not asking the court to reconsider its unanimous Sept. 9 ruling that HB 331 violates the Alaska Constitution’s strict sideboards on the state’s ability to acquire debt. They want to know whether the ruling applies to much of the work done by the Alaska Municipal Bond Bank Authority, which sells bonds on behalf of local governments across the state and can almost always secure a lower interest rate than the individual communities. “The State does not ask the Court to change its holding invalidating HB 331 and, by extension, directly analogous bonding schemes. But the Court’s opinion has unfortunately created significant uncertainty about debt that is structurally much different from HB 331,” state attorneys wrote in their petition. “Because the debt markets are very cautious, this uncertainty could hinder the ability of Alaska’s state and local governments to obtain reasonable access to capital programs that were not considered by the Court or addressed by the Court’s decision. The State seeks rehearing to request a limited clarification to the scope of the Court’s decision so that existing, important programs that differ significantly from HB 331 may continue to effectively operate.” Joe Geldhof, the longtime Juneau attorney active in state politics who won the case against the state, said the root of the issue is the “subject to appropriation“ clause contained in the bond materials that could ultimately put the state on the hook if a local government fails to repay its debt. Juneau resident and former University of Alaska regent Eric Forrer filed the lawsuit. It is a serious open question as to whether the bonds sold by the bond bank are impermissible under the ruling, Geldhof said, because the state is using its credit rating to secure lower-cost financing for local governments. The local government bonds used for facility and infrastructure projects are backstopped by language assuring buyers that the State of Alaska will repay the debt if need be via a legislative appropriation. Over the past decade the approach has funded 158 loans and saved $216 million statewide, according to figures in the petition. Geldhof said the ruling should deal with bond sales going forward, not bonds already sold by the state bond bank, and also accused state officials of ignoring the issue. According to the petition, the bond bank board authorized two bonds totaling $247.8 million to refinance 31 existing municipal bond issues. A sale planned for Sept. 14 — shortly after the ruling was published — to refinance 22 bonds and save $8.8 million has also been delayed. “There is 100 percent certainty that the Department of Revenue knew this was problematic,” Geldhof said. Department of Law and Revenue officials did not respond to questions in time for this story. State attorneys wrote that state corporations have a “long-established and important” practice of selling revenue bonds backed by a “moral obligation pledge.” The bonds are repaid with revenue — municipal funds in the case of the bond bank — from other sources than the state general fund and therefore meet the revenue bond exemption in the state constitution, according to the petition. “But these entities’ bonds also include, as a backstop, a non-binding pledge that if those revenues and other security for the bonds are insufficient to pay debt service, then the entity will request that the Alaska State Legislature make an appropriation to replenish a reserve fund that further secures those bonds,” state attorneys wrote. The underwriting is similar to how the bonds contemplated in HB 331 were to be structured; Revenue officials would sell bonds with the “subject to appropriation” clause that would not legally bind the state to make payments, but could impact the state’s credit rating, which the court decisively concluded made the scheme unconstitutional. Alaska Municipal League Executive Director Nils Andreassen said the Alaska Municipal Bond Bank Authority’s work on behalf of local governments is important for the financial considerations but also because of state officials’ expertise in the bond arena “That capacity just doesn’t exist for small or medium-sized municipalities,” Andreassen said. He added that the bond bank can also bundle small government bond packages together to make them more attractive to buyers and thus achieve better rates. “It’s incredibly important to keep (borrowing) costs low,” Andreassen said. Municipal League leaders would be following the case closely, he said. The Alaska Constitution requires most bonds sold by the state other than true revenue bonds be approved by voters and Geldhof said state officials have put the state’s credit rating on the line without the public’s consent with the municipal bond sale practice. Bond buyers want to know the state will backstop the debt otherwise owed by local governments often with limited financial resources, he said. “This is the politicians in bed with the money boys,” Geldhof said. Elwood Brehmer can be reached at [email protected]

Forest Service affirms preference to repeal Tongass ‘Roadless Rule’

The Trump administration continued its agenda to aggressively open more federal lands in Alaska to development activity Sept. 25 with a recommendation for a full exemption from the Roadless Rule for the Tongass National Forest. Fully repealing the Clinton-era prohibition on new roads across much of the national forest system would open all 9.2 million acres currently classified as roadless in the Tongass to potential mining, logging, and energy development, all of which are made much easier with road access in the forest’s predominantly mountainous terrain. At roughly 17 million acres, the Tongass covers the vast majority of Southeast Alaska and is by far the largest national forest in the country. The formal announcement from U.S. Forest Service officials of their preference for a full, Tongass-specific exemption from the Roadless Rule in the final environmental impact statement that examined six options — from status quo to the complete exemption — was welcomed by Alaska’s Republican leaders, but it was not unexpected. U.S. Department of Agriculture officials overseeing the Forest Service preferred a full exemption in the draft EIS review published last October. While the state Southeast timber industry interests have been trying to lift the Roadless Rule from the Tongass unsuccessfully in the courts since it was applied in 2001, Gov. Mike Dunleavy said the recommendation moves the region closer gaining improved transportation infrastructure, among other economic benefits in a prepared statement. Sen. Lisa Murkowski noted during a Sept. 25 video conference with leaders of the regional development organization Southeast Conference even though the rule covers more than 9 million acres, repealing it will only make about 168,000 additional acres of old-growth timber stands available for harvest under the current land-use plan for the Tongass. “It is about reasonable access for a wide variety of users,” Murkowski said, “It is for all pieces of the Southeast economy.” The latest iteration of the Tongass Management Plan, which guides Forest Service timber sales and other on-the-ground activities, was approved by the Obama administration in 2016. Murkowski, who chairs the Senate Energy and Natural Resources Committee and Alaska timber groups have criticized the current management plan for pushing a shift from old-growth to second-growth timber unrealistically quickly before sufficient second-growth stands are ready for harvest. Commercial fishing, conservation and some tourism groups insist Southeast’s economy has moved on from its heavy reliance on the timber industry as a fundamental driver, which mostly peaked in the early 1990s, and has moved to — at least before the pandemic — a base of tourism and fishing. They also argue the Trump administration’s policy directly contradicts the vast majority of the public that has weighed in on the issue. According to a Forest Service report detailing the nearly 270,000 comments the agency received late last year on the draft plan to repeal the Roadless Rule, 96 percent of the 15,909 unique letters supported maintaining the rule in full. They contend that no specific projects seeking exemptions over the years from the rule’s requirements in the Tongass have been denied. However, Southeast Conference Executive Director Robert Venables said the Roadless Rule has increased the cost of energy projects across the region — making some wholly unfeasible — simply by increasing access costs. Meanwhile, the federal fiscal watchdog group Taxpayers for Common Sense insists the country has lost nearly $600 million from its Tongass timber sales over the past 20 years when adjusted for inflation. Taxpayers for Common Sense totaled the Forest Service’s $632 million in costs for timber sale preparation, reforestation and road building and put that against the $33.8 million collected on a per board-foot basis by the agency from those harvests. Again, those figures are adjusted for inflation to 2018 values. Trump administration officials from other resource agencies have similarly advanced broad rollbacks of development prohibitions on federal lands in Alaska. The Bureau of Land Management has championed multiple plans to open nearly all available federal lands on Alaska’s North Slope — most notably the Arctic National Wildlife Refuge coastal plain — to oil and gas exploration and approved a 200-mile road to Interior mining prospects; the Bureau of Ocean Energy Management has promoted making 90 percent of the federal waters off Alaska available for oil leasing; and the Interior Department has twice had its agreements to facilitate a road through designated wilderness of the Izembek National Wildlife Refuge shot down in federal court. However, the action on the Roadless Rule didn’t officially originate from Washington, D.C. Former Gov. Bill Walker’s administration petitioned the USDA in 2018 to initiate the process to exempt the Tongass, on some level, from the Roadless Rule. While several attempts to legally invalidate the rule have fallen flat, Idaho and Colorado previously secured exemptions from aspects of the rule. USDA and Forest Service officials now must wait at least 30 days before singing the record of decision to make the final determination effective. Elwood Brehmer can be reached at [email protected]

Pebble CEO Collier resigns after release of tapes

Pebble Limited Partnership CEO Tom Collier resigned on Wednesday after an environmental group released secretly recorded videos of Collier and Ron Thiessen, president of Pebble parent company Northern Dynasty Minerals, discussing their connections and influence with Alaska politicians and regulators. Northern Dynasty also issued an apology to “all Alaskans," according to a statement released by the company. Northern Dynasty’s senior management and board of directors accepted Collier’s resignation, the statement said. “Collier’s comments embellished both his and the Pebble Partnership’s relationships with elected officials and federal representatives in Alaska," the statement from Northern Dynasty said. The embellishments involved Gov. Mike Dunleavy, Sens. Lisa Murkowski and Dan Sullivan and senior representatives of the U.S. Army Corps of Engineers, among others, Northern Dynasty said. “The comments were clearly offensive to these and other political, business and community leaders in the state and for this, Northern Dynasty unreservedly apologizes to all Alaskans,” the statement said. Reached Wednesday, Collier declined to comment and said he would no longer speak with news media. The Environmental Investigation Agency, an environmental group, hired individuals in August and September to pose as potential investors in the project, in online video meetings with the Pebble executives. The group released the videos on Monday. In response, Dunleavy, Murkowski and Sullivan strongly denounced the statements by Collier and Thiessen as false and embellished. The Army Corps also issued a statement on Tuesday, noting that the executives had presented inaccuracies and falsehoods, including about the permitting process. The actors for the environmental group posed as representatives of a Hong Kong-based investment firm with links to a state-owned entity in China, Northern Dynasty said. “The unethical manner in which these tapes were acquired does not excuse the comments that were made, or the crass way they were expressed,” Thiessen said in the statement. “On behalf of the company and our employees, I offer my unreserved apology to all those who were hurt or offended, and all Alaskans.” Among other statements, Collier described Murkowski and Sullivan as merely making political points when they said in August that the Corps can’t permit the mine, statements the senators denied. Collier also described his close access to the governor’s office, and said he counted Dunleavy as a friend, prompting the governor’s office to broadly reject the statements made in the videos. Former Pebble Partnership CEO John Shively will serve as Pebble’s interim CEO while the company seeks a new leader, the statement said. The proposed copper and gold project would be built about 200 miles southwest of Anchorage, near headwaters of the valuable Bristol Bay salmon fishery. Critics say it will hurt the commercial fishing industry and subsistence fishermen there. The Army Corps of Engineers is in the final stages of determining whether to issue a permit for the project that could lead to its construction. A final decision could be issued soon. President Donald Trump recently tweeted about the project, saying there would be “NO POLITICS” in the permitting decision. The Alaska Miners Association on Wednesday also condemned Collier’s comments. “Mr. Collier’s comments were clearly inappropriate and we appreciate Northern Dynasty for swiftly handling this issue," said Deantha Skibinski, the group’s executive director. "Our mining operations and projects have a superb track record of meeting the high standards set forth in the regulatory process, and we do so with a commitment to safety and environmental protection.” Shively, the state’s former Natural Resources commissioner under Democratic Gov. Tony Knowles, served as Pebble’s chief executive until 2014, when Collier took his place. Collier, a former chief of staff to Interior Secretary Bruce Babbitt, led the Pebble project through tumultuous years, including a move by the Obama administration that essentially halted the project in 2014, followed by progress under the Trump administration. Collier was scheduled to receive about $4 million from Pebble if the Corps issued a permit decision favoring the mine, and roughly another $8 million if the project survives litigation, he has said. It was unclear on Wednesday what would become of that possible bonus. “We don’t comment on personnel or contract matters related to current or former employees,” said Sean Magee, a spokesman with Northern Dynasty Minerals. Thiessen remained in job on Wednesday, the company said. Major questions loom for the project, including how Pebble will meet steep requirements set by the Corps to compensate for the environmental damage the project will cause. The United Tribes of Bristol Bay, representing 15 tribes opposed to the mine, said Collier should not be the “scapegoat” for the project, according to Alannah Hurley, the group’s director. “His resignation does nothing to address the deep-seated flaws and issues with the Pebble mine’s rigged permitting processes and political influence,” Hurley said. Thiessen, like Collier, also made statements in the videos that drew strong rebukes from Alaska leaders. Thiessen says in the videos that the company can get Dunleavy to call White House chief of staff of Mark Meadows about the project. That statement and others by the Pebble executives are not true, Dunleavy’s office said. Thiessen said Pebble is trying to work with Sullivan so the senator doesn’t say anything that could harm Pebble’s effort to receive the permit from the Corps. Sullivan’s office on Tuesday called that “yet another fabrication.” Sullivan and Murkowski have both said the mine does not meet environmental regulatory standards. They have said a record of decision supporting a permit, or a ROD, should not be issued. Robin Samuelsen, an adviser for Commercial Fishermen for Bristol Bay, representing fishermen opposed to the project, said in a statement on Wednesday he often got hit with a rod as a kid, on his behind. “And that’s what I’m asking Senator Sullivan and Senator Murkowski to do,” he said. “Take out the rod, it’s time to spank 'em. They’ve lied to you, they’ve lied to us out in Bristol Bay, they’ve lied to Alaska and they’ve lied to the world.” Shively, recently the board chair for Pebble Mines Corp., general partner for Pebble Partnership, said in the statement on Wednesday that the project is too important not to be built. “My priority is to advance our current plan through the regulatory process so we can prove to the state’s political leaders, regulatory officials and all Alaskans that we can meet the very high environmental standards expected of us,” he said.

Fed expected to keep interest rates near zero through 2023

WASHINGTON — The Federal Reserve is likely to keep interest rates pinned near zero at least through 2023, according to projections released Sept. 16 that also show Fed officials are more upbeat about the near-term prospects for the pandemic-battered U.S. economy. The central bank also began to put into effect its recently announced policy framework that will essentially maintain low interest rates longer. In its statement Sept. 16 after a two-day meeting, the Fed said it would aim to push inflation moderately above its long-held 2 percent target — once largely viewed as a ceiling — and that it won’t raise interest rates until this and other related goals are achieved. Analysts said that means it could be five years or longer before the Fed raises rates. “If you take the forecast on its face, yeah, this is years and years,” said Diane Swonk, chief economist at the accounting and consulting firm Grant Thornton in Chicago. The Fed’s brighter economic outlook reflects the stronger-than-expected recovery in the labor market and other sectors of the economy since more businesses reopened this summer, however halting and uneven that has been. More recently, however, data on job postings, small-business revenues and consumer spending suggest that the economy has been moving sideways, if not backsliding a bit, according to Opportunity Insights, a nonpartisan group based at Harvard that is tracking the economic effects of the pandemic. In June, Fed officials foresaw the unemployment rate at 9.3 percent in the fourth quarter, but government officials reported the jobless figure dropped to 8.4 percent in August from a high of 14.7 percent in April. The new projections show that officials, on average, are now looking for unemployment to end the year at 7.6 percent and to decline to 4.6 percent by end of 2022, compared with 5.5 percent in Fed policymakers’ forecast three months ago. Before the pandemic hit, the jobless rate had fallen to 3.5 percent, a 50-year low that opened more doors especially for less-educated and other disadvantaged workers. And Fed Chairman Jerome H. Powell, in a news conference Sept. 16, said he would “love to get back to that,” noting that with unemployment at that level, gains “being shared vary widely across the income spectrum. In fact more to people at the bottom end of the spectrum.” But most Fed officials don’t see unemployment returning to pre-pandemic levels until after 2023; and that’s another reason rates are likely to stay at rock bottom for years to come, said Chris Rupkey, chief financial economist at MUFG Bank in New York. “This argues for interest rates staying lower for longer to make sure the economic expansion is durable and lasting and that all those who lost their jobs this year are able to rejoin the workforce,” he said. The government’s August jobs report said that the economy has recovered about half of the 22 million payroll jobs lost in March and April, but separate data also show that some 30 million people claimed unemployment benefits in August. Fed policymakers also painted a more sanguine picture of economic growth. Three months ago, Fed officials on average saw gross domestic product, the sum of goods and services produced in the nation, falling 6.5 percent this year and then growing 5 percent in 2021. They now see GDP contracting 3.7 percent this year and expanding 4 percent in 2021. Still, Powell acknowledged that the outlook remains highly uncertain and hinges on the path of the pandemic. What’s more, he said that Fed officials made their projections based on the assumption that there will be additional fiscal support, which is not at all clear will be forthcoming. “The fiscal policy actions that have been taken thus far have made a critical difference to families, businesses and communities across the country,” he said. “Even so, the current economic downturn is the most severe in our lifetimes. It will take awhile to get back to the levels of economic activity and employment that prevailed at the beginning of this year, and it may take continued support from both monetary and fiscal policy to achieve that.” The Fed has moved aggressively to support the recovery, and its new policy approach — although in the works well before the coronavirus outbreak — could have significant long-term effects, including risks of increasing speculation and asset bubbles. The shift in strategy, which Powell announced Aug. 27, means the Fed will focus more on expanding employment and worry less about meeting its 2 percent inflation target. Inflation has been running well below that target for years, and under the new approach, the Fed would shoot for an average 2 percent inflation rate, giving it more flexibility to allow inflation to rise above that level for some time before moving to raise interest rates to avert a potential overheating in the economy. In its Sept. 16 statement, the Fed said it “will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.” And until those goals are achieved, it said, the Fed would maintain its current easy-money policies. Powell declined to say more specifically what “moderately above” means. Nor would he get pinned down on the time frame for letting inflation rise above 2 percent, saying only that it’s “not permanently and not for a sustained period.” “We are resisting the urge to try to create some sort of a rule or a formula here,” he said. The policy statement was supported by Powell and seven of his colleagues. Two voting members dissented. In their Sept. 16 projections, the vast majority of Fed policymakers see rates staying near zero through 2023, which is as far as the forecast goes. In the longer run, Fed officials expect its benchmark interest rate to rise to 2 percent to 3 percent, well below historical levels.

Cruise industry offers ideas to allow resumed sailings

Cruise companies are stepping up their pressure on U.S. health authorities to allow them to cruise again amid the COVID-19 pandemic. On Sept. 21, Royal Caribbean Group and Norwegian Cruise Line Holdings submitted health and safety protocols to the U.S. Centers for Disease Control and Prevention as part of the agency’s request for public comments about how to safely resume cruises. The protocols include testing all passengers and crew for COVID-19 before boarding, requiring masks and expanding medical capabilities on cruise ships. The cruise industry’s lobbying group, Cruise Lines International Association, sent a separate, less-specific list of recommendations to the CDC on Sept. 21, vowing that all cruise companies will require testing before boarding, masks and social distancing; improve ventilation and medical capabilities; and limit shore excursions. Sept. 21 was the final day to submit public comments to the CDC about cruising during the COVID-19 pandemic. The CDC has banned cruises in the U.S. until Oct. 1, and most cruise lines have said they will not resume cruises until at least Oct. 31. “We’ve learned a lot in six months,” said Royal Caribbean Group Chairman Richard Fain. “Our job was to find a way going forward to learn from the past, and not to repeat it.” Norwegian Cruise Line Holdings CEO Frank Del Rio said it was “absolutely” safe to resume cruises again, citing the announced protocols. “There is not one silver bullet,” he said. “It’s layer on top of layer on top of layer … We’re going to test it, make adjustments along the way.” A spokesperson for the CDC said the agency has not requested plans to resume passenger cruises from the companies. “Currently, CDC does not have enough information to say when it will be safe for cruise ships to resume passenger operations,” the spokesperson said in an email. “CDC will continue to work with cruise lines to ensure that all necessary public health procedures are in place before cruise lines begin sailing with passengers.” Carnival Corporation CEO Arnold Donald said it typically takes 30 days to get a laid-up ship running again. The 74 recommended protocols submitted to the CDC on Sept. 21 by Royal Caribbean Group and Norwegian Cruise Line Holdings were hashed out by a panel of experts, including several that used to work for the CDC. The panel said it is impossible to eliminate the risk of COVID-19 spread at sea, but with their recommendations, that risk can be minimized. The panel did not determine an infection threshold on land that would make it safe to resume cruises but instead focused on what companies can do to bolster health and safety on ships. “Getting down to zero risk is not likely,” said former Utah Gov. Mike Leavitt, who chaired the Royal Caribbean Group and Norwegian Cruise Line Holdings panel. “Therefore we have to have the component of mitigating spread and ability to respond.” Some of the recommendations include: • All passengers should be tested for COVID-19 between five days and 24 hours prior to boarding • Crew should be tested in their home countries before leaving to join a ship and then again at the end of a seven-day on board quarantine period, ideally using PCR tests. • Both passengers and crew should have their temperatures taken daily. • Cruise companies should visit only ports that agree to evacuate and repatriate sick people on board. • All ship heating and air-conditioning systems should be upgraded to MERV 13 filters, similar to those used by hospitals. • Ships should lower doctor-to-passenger ratios on board. • Crew should live in single cabins whenever possible and be allowed limited shore leave. • Passengers who don’t attest that they agree to protocols not be allowed to cruise. A protocol that was floated in March as cruise companies scrambled to try to avert a shutdown was barring passengers over 70 years old, who are particularly vulnerable to the effects of COVID-19. That was scrapped by the panel. Passengers who are at higher risk will instead be advised to consult with their doctors before cruising. Carnival Corporation, the largest cruise company in the world, endorsed the CLIA proposals, which include testing; that’s already being conducted on its Costa Cruises ships in Italy. “This has been probably the most difficult period in our industry’s 50 year history,” said CEO Donald. “We are on a path with the industry to resume cruise operations in the U.S. using the knowledge from our advisors and in full cooperation with the authorities.” Preventing COVID-19 spread on cruise ships is exceptionally difficult, health experts say. At least 110 passengers and crewmembers have died from COVID-19, at least 38 in Florida, according to a Miami Herald investigation, and at least 86 ships have been affected — approximately one-third of the global cruise fleet. Cruise companies have struggled to contain COVID-19 outbreaks among crew members on their ships during the industry’s pause. On several occasions, even after months of isolation at sea, crew members tested positive upon returning to their home countries. CDC data obtained by the Miami Herald via a Freedom of Information Act request shows at least seven ships in U.S. waters during the month of August reported COVID-19 or COVID-like illnesses to the CDC that month. Carnival Corporation and Virgin Voyages pulled their ships out of U.S. waters in June and are no longer reporting illnesses to the agency. Norwegian Cruise Line Holdings is reporting from just three of its ships.

DEC: Shortfall in spill response fund requires revenue or appropriation

State environmental regulators are seeking more money for Alaska’s spill response fund amid a comprehensive review of the requirements for petroleum producers and shippers. Department of Environmental Conservation Commissioner Jason Brune said during a Sept. 18 meeting of the Prince William Sound Citizens’ Regional Advisory Committee that he is advocating for the Dunleavy administration and Legislature to commit more funding to the state’s shrinking Spill Prevention and Response fund. The conclusion that the SPAR fund needs additional help — most likely through a general fund appropriation — comes as the state is facing a fiscal year 2022 budget deficit of roughly $2 billion. It also goes against the grain for an administration that has pushed for often deep spending cuts across state government to erase the state’s ongoing deficits and finance paying larger Permanent Fund dividends without additional taxes. Brune acknowledged the challenges inherent in asking for more money given the state’s fiscal situation but said the need for a robust SPAR fund necessitates it. He said seven positions were cut last year from the SPAR team of more than 100. “It remains a priority of mine to bring sufficient funding to SPAR,” he said to the council board. “It’s going to be a heavy lift, but it’s one I’m going to attempt to make.” Department officials declined to specify the size of the SPAR request to the Office of Management and Budget but spokeswoman Laura Achee wrote via email that they “recognize that there are funding sustainability issues for SPAR and are committed to working with the Legislature to address them.” DEC officials have also supported increasing the surcharge on refined fuel products sold in the state from 0.95 cents per gallon to 1.5 cents to help cover an anticipated revenue shortfall in the fund. The refined fuel surcharge — dedicated to the prevention account in the fund — was implemented in 2015 to further support the SPAR fund, which had largely relied on a 5-cent per barrel charge on oil produced in the state for revenue. Money from fines and settlements related to hazardous substance spills is also deposited into the prevention account. When the roughly 1-cent per gallon surcharge was put on refined products it was expected to bring in approximately $7.5 million per year, but actual revenue has been about $1 million short of that. The account held $8.5 million at the end of 2019, according to DEC’s annual SPAR report. Overall, more than $25 million was spent from the SPAR fund in fiscal 2019, including a $9.4 million capital appropriation to pay for PFAS cleanup at state-owned airports, while just $16.3 million was collected; the vast majority of which came from the surcharges. The Legislature also spent $5 million from the response account in 2018 to export contaminated oil from a Wrangell junkyard. Brune said he believes the pandemic will exacerbate the funding issue. “With COVID, people are just driving less; they’re working from home and not traveling,” meaning less fuel subject to the surcharge will be sold, he said. He also questioned whether it is appropriate for cleanup of contaminated sites to be paid for with revenue from fuel and oil surcharges given those products may not be the source of the contamination. The long-term solution for the fund is more North Slope oil production to apply the 5-cent surcharge to, Brune said. Spill regs review continues DEC officials are continuing their review of the state’s detailed Oil Discharge Prevention and Contingency Plan, or C-Plan, regulations for possible changes with twice-weekly meetings in which the statutes, regulations and proposed changes are vetted “line by line,” Brune said as well. “We want to make sure that we can justify what we have currently in the regulations,” he said. The department opened a scoping period to solicit comments on the highly technical operational and equipment requirements for companies producing and shipping oil and fuels last December. Numerous groups, including the congressionally mandated citizens’ advisory councils for Cook Inlet and Prince William Sound, expressed concern that changes could be made to weaken protections against a spill or the ability to respond to one by the decidedly pro-development Dunleavy administration. Gov. Mike Dunleavy made reducing the regulatory burden on industry a large part of his campaign in 2018 and his administration has initiated that work across state government. Comments from individuals were solidly against the prospect of changing the oil spill regulations, while associations — including the councils — and companies in the oil and shipping sectors largely suggested detailed technical regulatory amendments. The councils were established by Congress following the 1989 Exxon Valdez oil spill. Prince William Sound council spokeswoman Brooke Taylor wrote in response to questions about the spill regulation scoping that the council is encouraged by Brune’s commitment to hold an extended comment period on any changes that are proposed but is still concerned about the broader process that is in the works. Council leaders contend because DEC has chosen to make the entire 60-page regulatory package subject to review instead of proposing specific changes, the burden of the review has been shifted to the public, which must defend what is on the books rather than the department defending its changes. Brune has said he did not want to potentially taint the public’s review by having the department make its proposal public too early in the process. “Nothing in the regulations we will propose will increase the risk of an oil spill in Prince William Sound or anywhere else in Alaska,” he said to the council. DEC’s Achee wrote that there is no hard timeline for when the review will be complete as it is a “process-driven situation.” “If there are proposed changes, we will ensure that the public has plenty of time to review them and comment,” she wrote. Cook Inlet Citizens’ Regional Advisory Council members were told by DEC officials that the timeline for the review has been pushed back to at least the end of the year, according to the council. Elwood Brehmer can be reached at [email protected] (Editor's note: The original version of this story incorrectly reported that the Spill Prevention and Response team has about 30 individuals. It has more than 100.)

Movers and Shakers for Sept. 27

Northrim Bank announced the promotion of Brian Leonard to Branch Manager II at the Midtown Financial Center; the move of Christina Clayton to Assistant Branch Manager at the Wasilla Financial Center; and the hiring of Johnico Bashford-Blumer as Assistant Branch Manager at the Southside Financial Center. Leonard has been with Northrim Bank since 2011, starting his banking career at the Wasilla Financial Center. He holds a State of Alaska Insurance Producer-Life License. Leonard was awarded the Northrim Bank Customer First Service Award in 2013. Clayton has been with Northrim Bank since 2016. Before joining Northrim Bank, she had more than 30 years of experience in retail sales management. Clayton holds an occupational associate’s degree in retail management. Bashford-Blumer joins Northrim with 11 years of management experience and five years in the insurance industry. He holds an MBA from Colorado Technical University.

OPINION: A dish served cold

“When you see Sotomayor and Kagan, tell them that Lindsey said hello.” That was South Carolina Sen. Lindsey Graham to then-Supreme Court nominee Brett Kavanaugh back in 2018 as he wrapped up an epic rant as chair of the Judiciary Committee excoriating Democrats for their disgusting smear campaign intended to derail Kavanaugh’s ascent from the D.C. Circuit Court of Appeals. The unforgivable attacks on Kavanaugh were the culmination of more than 30 years of Democrats shredding the judicial appointment process beginning with the assault on Robert Bork in 1987 so notorious that “Borking” became a verb when it was turned against Clarence Thomas just four years later. Thomas, vilified by the left to this day in the worst racial terms, called it a “high tech lynching” to the chairman of the Senate Judiciary Committee back then who just happened to be current Democrat presidential nominee Joe Biden. Once they found themselves in the Senate minority under President George W. Bush in 2001, Democrats broke new ground on upending Senate traditions by filibustering D.C. Circuit Court of Appeals nominee Miguel Estrada. No appellate court nominee had ever been successfully filibustered before and Estrada eventually withdrew his name after years of failed cloture votes that drew as many as 55 votes, five shy of the 60 needed. Leaked memos revealed that one of the reasons certain Democrat groups opposed Estrada was to prevent a conservative from being the first Hispanic to make the Supreme Court. Minority Democrats would go on to filibuster nine more Bush nominees, leading to the first talk of employing the “nuclear option” to eliminate the tactic in favor of a simple majority vote. That was averted with the “Gang of 14” deal, but because the Democrats had successfully blocked so many Bush nominees to the D.C. court, President Barack Obama took the step in 2013 of nominating three judges at once to what by all measures was the least-worked panel in the country and while other courts had what were classified as “emergency” vacancies to which he hadn’t nominated anyone. The Republicans’ attempts to block Obama’s power move using the same tactics pioneered by the Democrats led then-Senate President Harry Reid to nuke the filibuster for all judicial nominees below the Supreme Court level in a vote that then-Minority Leader Mitch McConnell predicted the Democrats would regret “a lot sooner than you think.” There can be no question that Democrats regret it now, whether they will admit it or not. Republicans took over the Senate in 2014 and were therefore able to thwart Obama’s pick to flip the court with Merrick Garland to replace the late Antonin Scalia in 2016. McConnell kept his promise to make the Democrats rue their 2013 actions after Donald Trump won the presidential election by eliminating the filibuster to confirm Neil Gorsuch to the Supreme Court. Democrats protested, but replacing Scalia with Gorsuch did not change the ideological makeup of the Supreme Court. That was not the case with Kavanaugh when he was tapped to replace the long-tenured “swing vote” Anthony Kennedy and what followed was the most shameless attempt at character assassination in the history of judicial nominees even when compared against what was done to Thomas. It worked on Sen. Lisa Murkowski, who cited Kavanaugh’s temperament in voting “present” after his righteous display of anger at being labeled a gang rapist by Murkowski’s Democrat colleagues. Murkowski has unsurprisingly come out against the idea of replacing Ruth Bader Ginsburg before the November election, but that doesn’t mean she has committed to actually voting against the eventual nominee. Although she may appear bulletproof after winning as a write-in candidate in 2010 and cruising in 2016, even the proudly independent Murkowski may have to consider the fallout from siding against two consecutive conservative nominees to the Supreme Court. The Democrats retook the House in 2018, but saw their numbers in the Senate shrink after the self-destructive Kavanaugh display as they marched red state Democrats off the cliff in North Dakota, Indiana, Missouri and Florida. They made the Supreme Court a focus of the midterm campaign, and American voters responded by preventing them from taking over the Senate and denying them the power to stop Trump from replacing RBG in 2020. The Democrats’ willingness to spare no tactic in their quest for power has stiffened the spines of even once squishy Republicans like Graham and now Sen. Mitt Romney to respond in kind and yet within the confines of the powers defined in the Constitution. Contrast that with the summer we’ve just seen of Democrat voters — egged on, excused and enabled by their elected leaders — destroying American cities and causing losses totaling billions of dollars in human and economic costs. “Boy, y’all want power,” Graham told Democrats in 2018. “God, I hope you never get it.” From Bork to Kavanaugh and from Portland to New York, and from threats to add Supreme Court justices, add states and kill the legislative filibuster, the Democrats have shown and told us everything we need to know about how they wield power, and why we should hope they have no more. So to Trump’s eventual nominee: Say hello to Kavanaugh for me. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Tariff relief payment applications now open through Dec. 14

Alaska fishermen can increase their federal trade relief funds by adding higher poundage prices for 15 fish and shellfish species. While it’s welcomed, the payouts are a band-aid on a bigger and ongoing problem. Through Dec. 14, fishermen can apply to the U.S. Department of Agriculture Seafood Trade Relief Program (STRP) if their bottom line has been hurt by the Trump Administration’s ongoing trade standoffs, primarily with China. “STRP is part of a federal relief strategy to support fishermen and other producers while the administration continues to work on free, fair and reciprocal trade deals to open more markets to help American producers compete globally,” said a USDA fact sheet. The damages to fishermen are calculated as the difference with a trade tariff and the baseline without it based on 2019 catches. For cod, for example, that adds up to an extra 14 cents per pound. So, a fisherman who had cod landings last year of 375,000 pounds would multiply that by 0.14 for a trade relief payment of $52,500. Salmon fishermen can add 16 cents per pound across the board. For Alaska crabbers, 47 cents per pound can be added to 2019 catches for Dungeness, king crab, snow crab and Tanners. Geoduck divers can add 76 cents to their total poundage. It’s 10 cents for sablefish, Atka mackerel and Pacific Ocean perch, 15 cents for flounders, sole and turbot, 4 cents for herring, and an extra one penny per pound for Alaska pollock. Eligible fisherman can fill out a “2020 Seafood Trade Relief Program (STRP) Application,” found at www.farmers.gov and at USDA Farm Service Agencies. In Alaska there are three locations at Homer, Kenai and the statewide office in Palmer. Fishermen who have applied reported it was a fairly easy process and took about an hour to complete, according to a statement by the Bristol Bay Regional Seafood Development Association. While the money is a welcomed inclusion for U.S. fishermen, the relief payments do little to advance the administration’s “free, fair and reciprocal trade deals.” Since 2018, for example, the U.S. has paid a 38 percent tax on average for seafood products going to China, previously Alaska’s biggest buyer. According to the Alaska Seafood Marketing Institute, Alaska seafood products were gaining market share prior to the tariffs, with exports to China reaching their highest level in 2017 at $988 million. From 2017 to 2018 the value of Alaska seafood exports to China dropped by $204 million, the largest year-on-year drop on record. By 2019, Alaska seafood exports to China were at their lowest level since 2010, while China saw a 91 percent increase in global seafood imports during the same time period. Meanwhile, the U.S. continues to purchase increasing amounts of seafood from Russia while that country has not reciprocated since 2014 as retaliation against the U.S. and other countries for objecting to its invasion of Ukraine. Federal trade data show that through July of this year, the U.S. has purchased more than 46.3 million pounds of seafood from Russia valued at nearly $440 million, almost duty free. That’s an increase of 42.6 million pounds valued at nearly $382 million during the same time in 2019. Most of the Russian products are red king crab, snow crab, cod and sockeye salmon which are lower priced and compete directly with Alaska seafood on supermarket shelves. Another unfair deal that needs fixing is the Russian-caught/Chinese processed partnership that is growing fast. Last year, it totaled 2 million pounds in the U.S. at a cost of nearly $7 million, said economist Garrett Evridge at the McDowell Group. Most of the halibut comes in through Vancouver, British Columbia to sidestep the tariff between the U.S. and China. “It’s an amount of volume that is trending higher, and for a relatively low volume fishery and markets like the halibut market in the US, 2 million pounds is pretty material,” Evridge said. “So that’s another thing that we struggle with as we look at Alaska produced Pacific halibut. It’s just another factor that is making that competition pretty difficult.” Fish board backup The COVID-19 virus has forced the delay of fisheries meetings planned for this winter in Cordova and Ketchikan until sometime next spring. Six of the seven Board of Fisheries members voted for the delay during a special teleconference on Sept. 16 and agreed to set a schedule at a mid-October work session. New appointee McKenzie Mitchell of Fairbanks was missing from the teleconference. The BOF regulates the management of Alaska’s subsistence, commercial, sport and personal use fisheries in waters out to three miles and focuses on specific regions in three-year cycles. The heavily attended meetings, which can last a few days or weeks, were scheduled in December for Prince William Sound fisheries and January at Ketchikan for the Southeast region. Meetings on hatcheries and statewide shellfish also were scheduled in February and March. A BOF survey this summer drew 234 responses and showed that only about 20 percent favored in-person meetings; many opted for a delay, and a majority suggested trying to do at least some of the meetings virtually. At the Oct. 15-16 online work session the board will discuss holding the PWS and Southeast meetings in March, April or May of 2021, depending on the status of the pandemic, and whether or not to consider some management proposals out of cycle. Also on the agenda is the status of board nominees who have not been confirmed. Chew on this! Jerky made from Alaska pollock attracted the attention of big backers beginning at a buffet table at Fish 2.0, an annual global gathering of innovators and investors hosted by Stanford University to grow the sustainable seafood sector. “It was literally the first major set of about 200 samples that we’d ever made of the product. And the samples disappeared in a matter of minutes. It was a pretty amazing moment,” said Nick Mendoza, co-founder and CEO of Neptune, a former marine scientist turned jerky maker near Seattle. “There were oysters on the half shell and platters of cheese and all this delicious food and the jerky was gone before anything else was really touched. That was kind of the beginning of everything and put some wind in our sails to keep going forward.” The small company started out in 2018 with west coast rockfish and has since spawned a partnership with American Seafoods Company and industry trade powerhouse, Genuine Alaska Pollock Producers, or GAPP. “What really sold us on the story of wild Alaska Pollock is what an amazing, regenerative and abundant food source it is that operates sustainably at a large scale,” Mendoza said. “American Seafoods and GAPP teams brought the data to the table in approaching us about it and I was definitely on board, both because it’s a delicious, high quality product and it’s also a great story that I think resonates with people.” “The most important element in any product launch is to meet consumers where they are,” said Craig Morris, CEO for GAPP. “Neptune’s wild Alaska pollock jerky does just that in two ways: first, by tapping into the incredibly popular high-protein snacking category and second, by delivering the delicious product using e-commerce, thereby quite literally meeting buyers where they are: online.” Mendoza added that Neptune wants to become the “flagship brand for sustainable seafood snacks.” “I think it’s inspiring, both as a founder in this space, but also as someone who cares about the future of seafood in our oceans,” he said. “Not only is seafood consumption in general on the rise, but this awareness is a sort of renaissance in making sure that it is coming from a good source, and understanding what your purchases are actually supporting when you’re buying fish.” The Neptune jerky comes in four flavors and has great reviews on Amazon. Most say it’s not fishy and the texture is similar to beef products. It’s also available online and at 70 retail outlets. Use the code NEPTUNEJERKY20 for a 20 percent discount. Fish Debate is on! The Kodiak Chamber of Commerce is pleased to announce the confirmation of the Alaska US Senator candidate debate between Senator Dan Sullivan and Dr. Al Gross, it said in a Friday release. The fisheries themed debate will occur on Oct. 10 at 5:00 p.m. In an atypical manner, the debate will take place over Zoom and be live streamed to www.KodiakChamber.com, www.ComFishAK.com, and both the Kodiak Chamber and ComFish Alaska Facebook and YouTube channels, as well as statewide public radio stations. The moderator will be Rhonda McBride. Send topics or questions to [email protected] ^ Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Public seeks link between oil taxes and state services

The debate is over changing oil taxes, but much of the public seemingly wants to know how it will affect many of the services provided by state government . Lt. Gov. Kevin Meyer moderated two-hour teleconferenced public hearings Sept. 21 and 22 examining Ballot Measure 1, the initiative to substantially raise taxes on the largest North Slope fields, in which leaders of sponsor group Vote Yes for Alaska’s Fair Share and the business-centric opposition group OneAlaska Vote No on 1 fielded questions from the public about the potential pros and cons of the tax change. Callers from Southeast Alaska largely indicated in the first hearing they will be voting for the initiative and asked about how it could help restore budget cuts to things like the state ferry system, the University of Alaska and the Permanent Fund dividend. The hearings, required for any proposed law change, were intended to spur an “education and informative discussion” Meyer said, and the open question-and-answer forum quickly turned into a lively, if somewhat repetitive, debate. Chair of the Fair Share campaign and longtime Alaska oil and gas attorney Robin Brena stressed that a collapse in oil production tax revenue is the root of the state’s ever-worsening fiscal problems. The ballot measure sponsors estimate the tax change, which would raise both the gross floor and net profits tax rates on the large, mature North Slope fields of Prudhoe Bay, Alpine and Kuparuk, would generate about $1.1 billion per year in additional revenue over the long-term. The Fair Share campaign insists the current tax system, commonly referred to by its legislative name Senate Bill 21, cost the state more than $3 billion per year since it became law in 2014 and as a result Alaska receives about half of the overall oil revenue that other states collect. The drop in oil tax revenue has pushed lawmakers to start applying more than half of the money traditionally used for Permanent Fund dividends to pay for other services, which are still being cut as the state’s deficit continues to grow, according to Brena. He argued legislators heavily influenced by the oil industry have repeatedly blocked attempts to change the law in the Legislature. “There’s nothing you can do that’s better for Alaska than vote for Ballot Measure 1,” Brena said Sept. 21. “Our (oil) taxes are less than 10 percent of what they were before Senate Bill 21.” While the drop in the state’s oil production tax revenue is undeniable — overall petroleum revenue went from $4.7 billion in fiscal year 2014 to $1.3 billion in 2016 — opponents note the steep drop in oil revenue directly coincides with a major fall in oil prices. Oil went from averaging nearly $100 per barrel for several years to bottoming out at less than $30 per barrel in early 2016 as markets adjusted to the influx of Lower 48 shale production, ConocoPhillips Alaska Vice President Scott Jepsen said. Jepsen and former state Division of Oil and Gas director Chantal Walsh emphasized that at current oil prices in the $40 per barrel range the initiative would raise just $250 million, which doesn’t come close to closing the projected $2 billion budget deficit but will deter companies from investing in more oil production in years to come. “If we keep production up, we keep royalties up; that’s also tied to your PFD,” Walsh said, noting that oil royalty deposits largely form the principal of the Permanent Fund. Brena said the issue ultimately boils down to whether or not the state will call the industries’ bluff: the potential to curtail investment on the North Slope, which would increase the rate of production decline and hurt the state’s finances even worse over the long-term. Fair Share advocates believe Alaska will remain a viable oil basin with the additional taxes and if the initiative is not a viable solution, Brena suggested its opponents haven’t offered a better one. “Their solution is that we should tax ourselves to pay for the subsidies we’re paying Texas oil companies,” he said. Petroleum geologist and former Department of Natural Resources commissioner Mark Myers said the state’s poor fiscal outlook does far more to damage the economy than raising oil taxes would and the primary factors that determine companies’ decisions are “good rocks, technology and oil price.” Jepsen argued Ballot Measure 1 would “take the profitability out of doing business in Alaska.” “If this ballot measure passes, I can tell you we will not follow through with the plans we had a year ago,” he said. Other ConocoPhillips Alaska representatives have said the company will not finalize its winter drilling plans until after the Nov. 3 election. The company is scheduled to complete its final winter of work developing its mid-sized Greater Mooses Tooth-2 oil project and has applied for permits to develop its large Willow prospect, which the company estimates could produce up to 160,000 barrels per day and cost $6 billion to fully develop. Additional public hearings were scheduled for Sept. 23-24. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Alaskans should be honest with each other

As Alaskans, let’s be honest with each other this election cycle. Under current law, we face a state budget deficit of about $2.3 billion this next fiscal year — the one legislators we elect this November will face when they head to Juneau next January. That’s roughly half of projected spending. Let that sink in. Under current law, next year we are projected to receive only half the revenue we need to cover projected spending. That’s not a temporary situation. According to the Department of Revenue’s Spring 2020 Forecast, it doesn’t get any better the remainder of the decade. And we are facing it without savings. After continuously siphoning from various savings accounts to maintain spending this past decade, the remaining available to the 2021 legislature won’t cover even one-quarter of next year’s deficit. Some suggest we can balance the budget entirely with spending cuts. But again, let’s be honest with each other. Due to the intervening drop in oil prices, even immediately enacting the $600 million in spending cuts Gov. Mike Dunleavy proposed at the beginning of his term in 2019 would cover less than a third of next year’s deficit. Diverting $400 million in local property taxes to the state — another proposal made by the governor in 2019 — would increase that to about 40 percent. Even after enacting both, the state would still face an annual deficit of around $1.3 billion. The legislature wouldn’t pass the governor’s combined $1 billion proposal in 2019. While additional cuts, changes in formula-driven programs and a tightened spending cap are inevitable, it is not being honest with each other to claim that the next legislature will adopt a cuts-led approach nearly two-and-a-half times that amount. Others suggest we balance the budget largely through PFD cuts. Using that approach, however, would effectively eliminate the PFD, at great cost to both most Alaska families and the Alaska economy. Next year’s PFD is projected at $1.9 billion. The deficit is $2.3 billion. Even entirely eliminating the PFD would not cover the deficit. More importantly, relying largely on PFD cuts would cause substantial harm to the 80 percent of Alaska families falling in the state’s middle &lower income income brackets, who would bear a hugely disproportionate share of the burden as a percent of family income. Those in the top 20 percent income bracket would experience a trivial impact and non-residents, nothing. In 2016, the University of Alaska-Anchorage’s Institute of Social &Economic Research warned relying on such a massively imbalanced approach among Alaska families would have the “largest adverse impact on the economy” of the revenue options it considered. In 2017, another ISER report concluded “a cut in PFDs would be by far the costliest measure for Alaska families.” While the top 20 percent push PFD cuts relentlessly and some PFD restructuring is inevitable, especially in these times Alaskans should avoid the very alternative that hurts Alaska families and the Alaska economy most. So, being honest with each other, the reality is the time has come to adopt some additional revenue approaches that are more equitable and have a lower impact on the overall economy — in short, are more balanced — to help close the gap. One such approach is Ballot Measure 1, the oil tax initiative. At current and projected oil prices, however, that only raises about $250 million annually. While that’s a contribution, it only covers a tenth of the deficit. Additional, more personal, broader based revenue measures will be required. Being honest with each other, it will take a significant contribution from all three pieces: spending cuts (along with a tightened spending cap), PFD restructuring and additional sources of revenue to meet the state’s yawning fiscal challenge. In the Office of Management and Budget’s 2019 10-Year Plan, the Dunleavy Administration appropriately referred to that as the “balanced approach.” Listen closely. Those candidates that are being honest with Alaskans this coming cycle will talk about that approach most. Brad Keithley is Managing Director of Alaskans for Sustainable Budgets, a project focused on increasing awareness of key fiscal challenges facing Alaskans at both the state and federal levels, and developing and offering reasoned approaches in response. For more information, go to AKforSB.com.

GUEST COMMENTARY: Ballot Measure 1 proponents are making wild claims. The numbers prove them wrong.

When I served in Alaska’s Legislature, I relied on data and analysis to inform decisions. As most Alaskans know, the numbers have been tough in our state for a few years, and the resulting budget decisions painful as a result. The thing to remember about numbers is even when we don’t want to make hard choices, they persist in guiding us. If we strip away the emotion and anxiety of the moment and focus instead on what the numbers show, Alaskans should vote to reject Ballot Measure 1. Not only do the numbers demonstrate why voting no is in Alaskans’ best financial interest, but they prove how the ballot measure’s supporters are distorting the facts. Let’s examine a few examples, and clarify something. I no longer serve in the Legislature, but work full-time in the non-profit sector. I do not have a dog in this fight other than loving this state and wanting it to succeed. I am speaking up for that reason and that reason alone. No one is paying me to advocate one way or the other. For starters, it is downright false to say that Alaska has received no oil production tax revenue during the last few years. These numbers are plain to see and published by the state’s Department of Revenue. North Slope oil companies have paid state taxes every year since oil was first produced in this state decades ago. For the time period in question, Alaska received over $8.7 billion in taxes, and $13.8 billion in total revenue from oil companies since 2014. Those payments account for approximately 90 percent of Alaska’s tax revenue from business during the time period. Ballot Measure 1’s proponents also claim that during the past five years, tax credits have exceeded revenues. This is an especially gross mischaracterization. To reach this inaccurate number, they are simply subtracting the roughly $2 billion in cash credits paid or owed to companies that wouldn’t even be impacted by this tax. It’s bizarre that Ballot Measure 1’s supporters would mix up these numbers, but perhaps they are doing it intentionally. Either way, it’s inaccurate. Ballot Measure 1’s supporters falsely claim the current oil tax structure, Senate Bill 21, has failed. Again, this is proved untrue using real, publicly available numbers. Our current oil tax structure has resulted in more oil production and more revenue for the state than was projected under the old tax structure, even with the massive drop in oil price that began in 2015. In 2013, the state’s Department of Revenue projected that 2019 North Slope oil production would clock in at 425,000 barrels per day, even with oil prices over $100 per barrel. Instead, we saw production levels reach nearly 500,000 barrels per day in 2019. Doing some quick calculations, the state is more than $1.5 billion dollars to the good in total revenue versus riding the 6 percent oil production decline rate down with the old tax structure. Perhaps the most concerning and misleading argument being made by Ballot Measure 1 supporters is the notion that voting yes is some kind of silver bullet that will solve the state’s fiscal crisis. In short, it won’t come anywhere close to filling the gap, and will make the state’s finances even worse. The COVID-19 pandemic and painfully low oil prices caused North Slope producers to shut down almost all drilling on the North Slope, and significantly cut back on planned investments. That alone should put a chill down the spines of Alaskans, but the question now becomes: when does drilling and investment come back? Does it? Oil price and the ballot initiative will both drive those decisions. Even if oil prices recover, passage of Ballot Measure 1 will slow down Alaska’s North Slope recovery, and with it, the recovery of the state economy. I know we remain in a tough spot here in Alaska. We dealt with many of these same issues when I served, and the challenges just keep coming. Alaskans remain anxious about the future, for good reason. In times like this though, we must, as always, rely on the numbers to guide us, even when our hearts may nudge us in a different direction. A brave, unflinching examination of the facts proves Ballot Measure 1 is a bad idea that should be rejected by voters. Our collective recovery depends on it. Jason Grenn is a former state representative from Anchorage.

Boards of Fisheries, Game contemplate challenges of meeting season

In a fall littered with elections and other political fencing matches, two other political bodies are debating whether to meet at all or just punt until next year: the boards of Fisheries and Game. The boards, particularly the Board of Fisheries, host regulatory meetings every winter that bring stakeholders from all over the state together. Those are problem during the coronavirus pandemic, and the boards aren’t quite sure what to do about it. The Board of Fisheries, for one, is hoping that the situation will be better by the middle of next spring, when it’s still tentatively scheduling its meetings for the Prince William Sound, Southeast/Yakutat, and statewide shellfish meetings. While other governmental bodies have transitioned to meeting on Zoom and taking public comment via phone, the Board of Fisheries process doesn’t fit well into that model. For one, the stakeholders are spread all over the state, where internet connectivity isn’t always reliable or fast enough to cope with video meetings. For another, the board depends on public participation. Throughout the meeting, the board members gather comments from the public in attendance. During breaks, the public also regularly works directly with board members off the record on revisions to proposals or new language. These meetings all happen during the winter, indoors, and depending on the meeting, more than a hundred people may be gathered in a relatively small space for hours. Board of Fisheries Executive Director Glenn Haight told the board during a work session on Sept. 16 that when the staff surveyed the public about what to do, the results were mixed, but most people who attended meetings in the past were not in favor of virtual meetings. The board talked about potentially limiting attendance at an in-person meeting instead, but then staff would be faced with how to decide who got to come. On top of all that, many people who responded said they were fairly concerned about catching the COVID-19 virus as well, Haight said. “These are the middle of the winter, people in close proximity, frequent contacts with all of these participants day in, day out,” he said. “You as board members are speaking with almost everyone in the room … it’s this very organic and human interaction. It’s inconceivable, for those of us who have been to a board meeting, to get through a board meeting where no one gets sick.” The board members were divided on personal feelings but voted unanimously to pass a set of recommendations about how to scheduling meetings this winter. For now, they’ll be holding the Oct. 15-16 meeting via videoconference, at which time they’ll decide what to do about the remaining meetings in the 2020-21 meeting cycle, which are scheduled to start with the Prince William Sound meeting in Cordova on Dec. 11-17. Alaska Department of Fish and Game Commissioner Doug Vincent-Lang said the department had considered the risk to the community of Cordova in brining staff, board members, and other attendees to the community in the middle of a pandemic, especially with the limited health care resources in the small community. At the same time, though, he said it would be difficult for the department to push the meetings off entirely until next year. That would mean that the department would have to double up on meetings with those already scheduled for the next cycle, and that may not be possible with the existing budget. The board generally agreed with that assessment and generally didn’t like the idea of virtual meetings to replace full board meetings. Board member Gerard Godfrey said the quality of participation would not be the same. “Ideally, we should move forward in person if it’s possible and practical and feasible, because I think there are going to be too many essential factors lost in a virtual meeting,” he said. The board members passed a recommendation for staff to bring back recommendations for options regarding the later meetings at the October work sessions as well. Public comments were divided, with some urging the board to take up virtual meetings. The Board of Fisheries doesn’t currently have any way to telephonically or remotely participate other than submitting written comments ahead of time; neither does the Board of Game. Multiple commenters pointed out that even in a normal year, traveling to attend and participate in the meetings can be very expensive, and after a summer with a blighted economy, this year might not be possible at all. But, on the other hand, other commenters — including major fishing organizations like the Southeast Alaska Seiners, Southeast Alaska Fishermen’s Alliance, and the Sitka Tribe of Alaska — agreed with Haight and Fish and Game staff that a virtual meeting just wouldn’t work. Tina Fairbanks, the executive director of the Kodiak Regional Aquaculture Association, said in a letter that holding the full meetings virtually could exacerbate existing inequities. “Taking the process to an online format is likely to create even greater barriers to participation,” she said. “The individuals and communities likely to already be affected by barriers to participation are also likely to be disproportionately disadvantaged compared to more centrally-located, technologically advanced groups and individuals. Those that are most well versed in the board process and/or more well-connected to decision-makers will have even greater access, likely greater time, and thus greater influence on the process by the simple fact that so many others will be unable to participate in the process.” Rep. Louise Stutes, R-Kodiak, wrote in a letter to the board that she didn’t support hold the October work session either online or in person, as both have “insurmountable challenges.” She asked the board to postpone all meetings to see how the pandemic develops in the state. The board is scheduled to meet virtually on Oct. 15-16 for a worksession dealing with agenda change requests, non-regulatory proposals, and escapement goal reports from Fish and Game staff. Elizabeth Earl can be reached at [email protected]

Bank income reflects PPP loan processing

Being the conduit for large amounts of government aid helped Alaska’s banks largely weather the first months of the pandemic. The largest local banks in the state all grew their net income in the second quarter compared with the start of the year, some substantially. Anchorage-based Northrim Bank increased its net income several fold from $2.3 million to $10.4 million in the second quarter, while Denali State Bank of Fairbanks more than doubled its net profit, going from $552,000 in the first three months of the year to more than $1.4 million in the second quarter, according to figures published by the Federal Deposit Insurance Corp. First Bank in Southeast nearly doubled its bottom line for the quarter, also netting more than $1.4 million. First National Bank Alaska, the largest in-state bank, saw more modest income growth of 2.9 percent to $14.4 million, in line with recent quarters. Northrim Chief Financial Officer Jed Ballard said the bank tried to take full advantage of the “tremendous opportunity” presented by the Small Business Administration’s popular Paycheck Protection Program, which was administered by financial institutions of all sizes across the country for the SBA. “We really boxed above our weight class in terms of the volume of PPP loans that Northrim did,” Ballard said, noting the bank distributed more than 2,500 PPP loans totaling about $350 million — loans that converted to grants if businesses followed the program guidelines — which accounted for 28 percent of the more than $1.2 billion distributed statewide. Northrim holds about a 12 percent market share among Alaska’s banks, according to Ballard. The bank also attracted new customers by offering PPP loans to everyone, whether they were already Northrim customers or not, according to Ballard. It all added up to several months of weekend work for many bank employees. “It was several years worth of loans in a three-month period,” he said. “All departments of the bank kind of transitioned into the lending department. It was a great team effort all the way around.” Denali State Bank did the most PPP loans in Interior Alaska, its region, which helped drive the bank’s revenue, CEO Steve Lundgren said in an interview. He said the bottom line results for Alaska’s banks could have been greater yet if not for a general move in the industry to increase loan loss allowances, or the amount of money set aside to cover uncollected payments, which eats directly into a banks profitability. “That’s taken a big jump because we just don’t know what’s going to happen,” Lundgren said. Underlying asset growth was also strong during the quarter. Denali State Bank grew its total assets by 22 percent to $376 million, while Northrim and FNBA both grew by 19 percent. Northrim eclipsed the $2 billion mark in the second quarter while FNBA is approaching $4.6 billion in assets. The widespread negative effects of the coronavirus pandemic showed up in some, but not all of the banks’ underlying indicators. FNBA saw the total of its loans one to three months past due go from $5.7 million in the first quarter to $15.5 million in the second, which President Doug Longacre said in a prepared statement was the direct result of government-mandated economic and travel restrictions aimed at slowing the spread of the virus. FNBA loan officers were consumed by a backlog of loan modification requests and PPP applications and could not reach out to other customers in need of help before problems making payments arose, according to Longacre. “Now that we’ve moved past the flurry of loan modifications and PPP loan production, our officers are again proactively working with customers to help them mitigate potential loan payment issues. And, I’m pleased to note, our current past due loan volume is greatly improved,” Longacre said. Northrim’s Ballard and Denali’s Lundgren said their banks have not experienced the same challenges FNBA has, at least for now. Both said the situation has not been as bad as they once expected. The amount of past due loans held by Northrim fell 75 percent in the quarter to $861,000, while Denali State Bank saw its total fall 35 percent to $784,000. Total loans in nonaccrual increased 24 percent for FNBA to more than $12.7 million, while the metric generally held steady for Northrim and Denali State bank at about $15 million and $1.7 million, respectively. First Bank saw both its past due and nonaccrual totals drop significantly during the quarter. “Our delinquency and repossessions and foreclosures have just been so much better than we could’ve predicted,” Lundgren said. He anecdotally attributed part of the disparity between the downright bad raw economic indicators of unemployment and job losses and Denali’s strong performance to the belief that people who are still employed are still spending money, much of it within the state given the current risks and challenges of travel. Ballard said historically low interest rates are encouraging home and business owners to refinance mortgages and other loans, which is also a fortuitous way to save money when faced with an uncertain future. “We’ve had really just incredible, incredible production over there at our residential mortgage (department),” he said. Lundgren added that he’s seen a significant spike in home renovation projects in the Interior as well. Ballard additionally surmised that while many businesses in the state continue to struggle — particularly those in the tourism sector — for a multitude of reasons, some business owners who were able to access part of the roughly $3.5 billion of federal aid that came to the state have used that money to buy time to revamp their business. “Companies have restructured their operations to help with cash flow needs. Entrepreneurs are very resourceful,” he said. “You see this around the country. Companies are just doing business in different ways to generate revenue and meet the needs of customers.” Elwood Brehmer can be reached at [email protected]

Shell files plans to return to the Slope; ConocoPhillips awaits initiative outcome

A supermajor is looking to advance its position on the North Slope and ConocoPhillips says it will likely wait until the results of the oil tax initiative are known before planning next year’s work. Shell Offshore Inc. has applied to form the West Harrison Bay Unit in state waters just offshore from the National Petroleum Reserve-Alaska with plans to drill the area in search of oil in the coming years, according to documents submitted to the state Division of Oil and Gas. If the Dutch oil industry giant can secure a partner to share in the costs and risks of remote offshore North Slope exploration, it expects to drill exploration wells in the West Harrison Bay Unit with at least one sidetrack each in 2023 and 2024, Shell’s initial unit plan of exploration states. According the application, Shell has been trying to find a partner to work on the West Harrison Bay leases for at least a year, and the company was making progress towards that end before the coronavirus pandemic hit in late winter. As a result, Shell is asking the state for its exploration plan to be valid for five years, which would allow the company to secure a partner and better analyze the area’s development potential. Shell holds a 100 percent working interest in 18 leases covering more than 78,000 acres in the proposed unit. The wells would target the popular Nanushuk oil formation first pinpointed by the Repsol-Armstrong Energy partnership in the Pikka Unit. The shallow, conventional Nanushuk formation also forms the basis of ConocoPhillips’ large Willow oil prospect to the south of Harrison Bay and is believed by many in the industry to be prolific across much of the western North Slope. A U.S. Shell representative did not respond to questions in time for this story. Shell infamously spent more than $7 billion to drill the Burger J exploration well much further offshore in the Chukchi Sea before abandoning its domestic Arctic drilling program in 2015. The work was beset by legal challenges and protests where vessels and equipment were staged at Pacific Northwest ports, as well as the grounding of the Kulluk drilling rig near Kodiak Island in 2013 while being towed south from Unalaska.. Elsewhere on the Slope, Great Bear Petroleum Ventures and Borealis Alaska LLC have partnered in hopes of forming the Talitha Unit south of Prudhoe Bay along the west side of the Dalton Highway. In the unit application submitted Sept. 4 the small independents committed to drilling two vertical wells, Talitha A and B, over the next two exploration seasons. The Talitha A well, tentatively planned for next winter, would be approximately eight miles west of the Dalton and be drilled about 10,200 feet to the base of the Kuparuk formation, according to the application. London-based Pantheon Resources purchased Anchorage-based Great Bear Petroleum — the project operator — in 2019 along with the roughly 200,000 acres of leases Great Bear held at the time. Great Bear first started working the area in 2012 and drilled several wells targeting unconventional shale plays but largely shifted to a conventional oil focus in 2015 when oil market conditions deteriorated and new prospects appeared in 3-D seismic data, company leaders have said. Pantheon directors have said the logistical advantages of being near the haul road should help the economics of Talitha and other nearby prospects. And while companies such as Shell and Great Bear are preparing for exploration work over the coming years, the state’s largest oil producer and most active recent explorer says it is waiting to firm up its drilling plans. ConocoPhillips Alaska spokeswoman Natalie Lowman wrote via email that the company had not finalized its exploration or capital plans for next year as of Sept. 15. “Our capital plans will depend on our outlook for prices and the outcome of the ballot measure,” Lowman said in reference to the Fair Share Act, a citizens initiative to raise oil taxes that will be Ballot Measure 1 in the November election. Ballot Measure 1 sponsors stress that the tax increase will not impact project development because it would only apply to the large and more profitable North Slope fields of Alpine, Kuparuk and Prudhoe Bay; ConocoPhillips operates or has a significant stake in all three. The company typically announces its work plans for the coming winter in late summer or early fall. Last winter the company planned to drill seven exploration or appraisal wells at its prospects across the Slope; however, concerns about spreading COVID-19 in remote drilling camps and the concurrent collapse in oil prices caused the company to cut its winter work season short and indefinitely lay down its North Slope rig fleet, part of an effort to cut up to $400 million from its 2020 Alaska spending plan. Far to the south on the edge of Cook Inlet, Hilcorp Alaska is also asking Division of Oil and Gas officials to form the Seaview Unit encompassing the town of Anchor Point on the southern Kenai Peninsula. Hilcorp, the primary natural gas supplier for Southcentral utilities, drilled the 10,000-foot Seaview 8 well in 2018 that led to a gas discovery in the Tyonek formation. The company initiated permitting for a short gas pipeline within the proposed unit earlier this year to tie the Seaview pad into Enstar Natural Gas Co.’s network. According to Hilcorp’s application recently published by the Division of Oil and gas and dated July 31, the company could have production from the Seaview 8 well by Oct. 1 if all of the regulatory requirements can be met in time. A Hilcorp spokesman declined to comment on the status of the project. The company plans to drill another, shallower directional well targeting gas accumulations from the Seaview pad later this fall. BlueCrest Energy produces small amounts of oil from the Cosmopolitan development just offshore from Anchor Point, but Hilcorp’s work indicates Seaview is solely a gas development at this point. ^ Elwood Brehmer can be reached at [email protected]

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