Meatpackers cautiously reopen plants amid coronavirus fears

SIOUX FALLS, S.D. (AP) — A South Dakota pork processing plant took its first steps toward reopening May 4 after being shuttered for more than two weeks because of a coronavirus outbreak that infected more than 800 employees. Employees reporting for work in Smithfield Foods’ ground pork department filed through a tent where they were screened for fever and other signs of COVID-19. Some said they felt the measures Smithfield has taken would protect them from another virus outbreak, while others were not confident that infections could be halted in a crowded plant. Lydia Toby said she was “kind of worried” as she entered the plant before 6 a.m. for her first shift in over two weeks. Managers met employees in her department May 1 and explained they had installed dividers on the production line and would require everyone to wear masks. “I think it’s going to be OK,” Toby said. In the wake of an executive order from President Donald Trump ordering meat plants to remain open, Arkansas-based Tyson Foods was also resuming “limited production” May 4 at its pork plant in Logansport, Ind., where nearly 900 employees tested positive. And the JBS pork plant in Worthington, Minn. — just an hour east of Smithfield’s South Dakota plant — planned a partial reopening on May 6. Democratic presidential candidate Joe Biden on May 4 called meatpacking plants — along with nursing homes — “the most dangerous places there are right now.” He called for greater protections for meatpacking workers, as well as a $13-an-hour pay premium. “They designate them as essential workers and then treat them as disposable,” Biden said, on a conference call about protecting essential workers, such as meatpacking workers, that was organized by the League of United Latin American Citizens. Virginia-based Smithfield is offering COVID-19 testing to all employees and their family members, according to a text message sent to employees. The message told employees to report to a local high school to be tested. Gov. Kristi Noem said employees aren’t required to undergo tests before returning to work, though it’s strongly encouraged. Noem’s health commissioner, Kim Malsam-Rysdon, said it was Smithfield’s decision to make the tests optional. Smithfield didn’t respond to requests for comment. About 250 employees were told to report to work on Monday, according to the union that represents them. The plant employs about 3,700 workers and produces roughly 5 percent of the nation’s pork. Salaheldin Ahmed, who works in a department that has not yet reopened, said he was called in by plant management to look at changes. “They fixed a lot of things,” he said, describing how workers would be spread apart where possible. A May 1 Centers for Disease Control and Prevention report said more than 4,900 workers at meat and poultry processing facilities have been diagnosed with the coronavirus, including 20 who died. Not all states provided data. The CDC researchers cited risks including difficulties with physical distancing and hygiene, and crowded living and transportation conditions. They suggested enhanced disinfection and that workers get regular screening for the virus, more space from co-workers and training materials in their native languages. Many meatpacking employees are immigrants; a CDC report on the Smithfield outbreak found that employees there spoke about 40 different languages. The United Food and Commercial Workers union, which represents most beef and pork workers and about one-third of poultry workers nationwide, has called for stricter measures than the CDC’s, including mandating that workers be spaced 6 feet apart on production lines. It has appealed to governors for help enforcing worker safety rules. The union also wants to get rid of waivers that allow some plants to operate at faster speeds. As plants warily reopen or others operate at diminished capacity with many workers staying home sick or in fear, it’s unclear Trump’s order will guarantee an unbroken supply of meat. Tyson Foods reported record meat sales in the first quarter but warned investors May 4 that it faces continued production slowdowns. Company officials said it expected lower productivity “in the short term until local infection rates begin to decrease.” Zach Medhaug, a maintenance employee at Tyson’s pork plant in Waterloo, Iowa, said he will feel comfortable returning to work when the plant reopens, even as he fears that one of his closest colleagues may soon die from the coronavirus. Jose Ayala, 44, is in critical condition on a ventilator at the University of Iowa Hospitals and Clinics after catching the virus a month ago. Medhaug has been calling Ayala, who is medically paralyzed but may still be able to hear, encouraging him to keep fighting. Medhaug tested positive himself for the coronavirus on April 20. He said he had mild symptoms and expects to return to work later this week at the plant, which suspended production April 22. Medhaug said Tyson has made key safety changes, such as vowing to enforce rather than just encourage social distancing and providing employees with masks instead of telling them to bring their own. “That’s a huge step,” he said. “The people returning, I see them having a better chance of not getting it at all.” ^ Associated Press writers Ryan J. Foley in Iowa City, Iowa, and Dee-Ann Durbin in Ann Arbor, Mich., contributed to this report.

Movers and Shakers for May 10

Northrim Bank announced the promotion of Lindsay Atkins to Jewel Lake Branch manager; and the hiring of David Byrne as commercial loan officer in the Juneau Financial Center and Loren Olsen as vice president-Lending Branch manager. Atkins has been with Northrim for five years and has nine years of experience in the financial industry. She studied at North Idaho College and the University of Alaska Anchorage. Byrne comes to Northrim with 21 years of experience at financial institutions throughout Alaska, including Anchorage, Dillingham-King Salmon, Juneau, Kodiak and Petersburg. He holds a bachelor’s degree from the University of Alaska Anchorage. Olsen joins Northrim with 20 years of lending experience in Alaska and Montana. While earning his MBA from California State University Fullerton he worked in corporate finance. DCI Engineers, a civil and structural engineering firm, announced the promotion of John Oldfield, PE, SE, to senior project manager in its Anchorage office. Oldfield has taken on project management responsibilities for residential, warehouse, municipal, and remodel projects throughout Alaska. His current projects include the Homer Police Station, Bartlett Regional Hospital Behavioral Health Facility and Medline Warehouse. His previous engineering experience with long span steel trusses involved airplane hangars, industrial, and military facilities. Oldfield is a member of the in-house steel and aluminum technical committee.

FISH FACTOR: Virus fallout shaping value of fishing permits

The value of Alaska salmon permits is another casualty of the coronavirus with prices dropping for all fisheries across the state. There are a lot of permits for sale, and the most offers ever to lease permits, especially at Bristol Bay. The virus has changed everything, said Doug Bowen of Alaska Boats and Permits in Homer. “There’s so much uncertainty about if there will even be a salmon season here and there, and if so, what kind of a price can be expected and so on. I can’t think of one salmon permit that is going up in value. And if there are different permit values that have not gone down, it’s simply because they’re not selling,” he said. Prices for the bellwether drift net permits at Bristol Bay are all over the place, he said, but well below last year’s high of $195,000. The 2019 fishery produced the second-highest harvest of all salmon species combined, and the highest value ever to fishermen at $306.5 million. “We sold quite a few Bay permits at that price and then the market softened a bit after the excitement died down, and we sold a number of them in the $180,000 range. Since the news of the virus broke, they’ve sold in the $150,000 range, and we just sold one recently for $165,000 and then the next one for $159,000. They are all over the map but the trend is unmistakable and it’s down. And that’s the same story with all the salmon permits,” Bowen said. Bowen’s brokerage lists 26 Bristol Bay drift permits for sale of which eight are offered for lease as Emergency Medical Transfers, or EMTs, in the $18,000 to $25,000 range. That’s perhaps the most eye-raising twist in this time of pandemic: the number of EMTs listed for Bristol Bay this summer. Dock Street brokers, for example, has 18 Bristol Bay drift permits listed, of which half are EMTs; Permit Master lists similar numbers. Of the six permits on the board at Alaskan Quota and Permits in Petersburg, four are EMTs. “Folks that are down in the Lower 48 are having trouble making arrangements or either can’t or won’t travel up here and they’re leasing their permits out,” Bowen said, adding that the same applies to out of state holders of Alaska halibut and black cod quota shares. “It’s not a selling issue. It’s just a temporary arrangement that someone else can go out and use your permit for the season. This year we’re seeing more folks using COVID-19 as a reason for transferring their permit or their quota on an emergency basis,” he explained. The upturned food market also has more industry stakeholders talking about increasing canning of salmon this summer to feed the need for more shelf stable proteins. While it’s a valuable market, cans have the lowest value of all salmon products. “Not many are going out for dinner and that restaurant trade was largely responsible for some of the great prices we’ve seen for seafood here for many years,” Bowen said. “And I think it’s going to take a while for those restaurants to reopen and for folks to feel confident to go out and sit down and enjoy a great seafood dinner with Alaska salmon, halibut, or whatever. It is just the times that we find ourselves in and there’s so much uncertainty about the virus. I think that’s why you see so many permits on the market.” New tool saves fuel A new online tool helps fishermen tap into how they can make their vessels more fuel efficient. It’s dubbed the Fishing Vessel Energy Analysis Tool and it was grounds tested in longline, seine, gillnet, troll and pot fisheries. From 2015 through 2018 the FVEAT was installed on nearly 50 vessels, said Chandler Kemp, an energy consultant with Nunatak Energetics who helped design the user-friendly fuel saver. “During the course of the project, we installed data loggers and strain gauges and measured all the different types of energy loads on the vessels. The tool compiles that information and puts it in a format that that we hope will be useful to people,” he said. A user simply enters data about the boat, its fisheries and operating patterns and the readout gives estimates on what fractions of fuel go through the different loads. “For example, it will give an estimate of how much energy goes to a refrigeration or freezer system versus propulsion versus electrical loads on the boat,” Kemp explained. Outputs also include hydraulics systems and hybrid propulsion options, which Kemp said can be a fuel saver in several fisheries, notably, trolling and gillnetting. “When the propulsion engine is doing very little work and you’re idling along at a low speed, maybe even deploying some drag bags to help slow down the boat, or you’re just drifting with the net. In those cases, it can make sense to have even a little electric secondary propulsion system. That would allow you to turn off that main engine during times when the load is really low,” he said. The Energy Analysis Tool is loaded with short videos. It’s free online at the Alaska Fisheries Development Foundation website, a project partner along with Sea Grant, Alaska Longline Fishermen’s Association and Navis Energy Management Solutions. Fish voice counts Scientists who track Alaska’s fish stocks will soon get an assist from voice recognition software that can handle the rigors of an often sloppy job at sea. During yearly trawl surveys each summer in the Gulf of Alaska and Bering Sea, scientists must identify, sort and weigh hundreds of species quickly and accurately. These long-term studies are vital to keeping Alaska’s fisheries healthy and sustainable. Until 2013, scientists wrote the results on paper forms as they worked on deck, then switched to computer tablets to digitally record the data. But salt spray, rain and lots of fish slime caused the tablets to act erratically and freeze up. The solution? Voice recognition. NOAA’s Alison Vijgen is leading a NOAA team that is working with an Ohio-based company called Think A Move, Ltd, or TAM, which specializes in voice recognition software in noisy environments. Together they are developing an application for Alaska’s fish surveys. Tests so far at sea using eight different voices have worked on 350 of the most frequently encountered fish species. The response has been positive enough to get the software fine-tuned for use in surveys this summer. It will include coverage of the nearly 3,000 species found in Alaska’s waters. Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

Predictability a priority for ferry work group

Achieving consistent, dependable ferry service is the top priority for members of the Alaska Marine Highway Reshaping Work Group following their first working meeting April 30. “They just want to know that they can get from point A to point B on a reliable schedule,” Southeast Conference Executive Director Robert Venables said of the region’s residents. He acknowledged the frequency of future ferry service likely won’t be what folks want, but said it needs to be something communities and build around. Venables also chairs the state Marine Transportation Advisory Board. Sen. Bert Stedman, R-Sitka, went one step further, saying the need for predictable and reliable service is not even up for debate; it’s how the state gets there that needs to be hashed out. Stedman said ferry service needs to be a more affordable transportation option for Alaskans who don’t have the means to travel frequently by air. The Alaska Marine Highway System needs to get “back to the basics” as a system primarily for Alaskans, noting some accommodations must be made because it receives Federal Highway funding. “You’ve got to have a transportation corridor; it’s basically one of the most fundamental aspects of an economy,” Stedman said, also emphasizing that he’s open to significant changes in the system’s structure but cutting off service is unacceptable. “Isolation — that’s not much of a solution,” he said. Work group chair Adm. Tom Barrett said the first few meetings would focus on establishing the high-level objectives the group will push for. The AMHS Reshaping Group will also devise a strategy for implementing its recommendations and eventually provide the administration and Legislature with a path for how they can further the transition. Recently retired as president of Alyeska Pipeline Service Co., Barrett also served as Deputy Transportation secretary under President George W. Bush. The group was originally scheduled to meet April 16 but that meeting was cancelled for technical difficulties. An administrative meeting to set up the group was held in February. He stressed a need to simplify broad aspects of the system so its operations can be more easily adapted to varying conditions. Previous ferry system reform efforts produced recommendations that should be considered, Barrett said, suggesting they previously were not accompanied by a way to make them happen. “The heavy lift will be down in writing an implementation plan for the changes we agree to eventually,” he said. Gov. Mike Dunleavy appointed the nine-member Alaska Marine Highway Reshaping Work Group in February after his administration commissioned a study to examine ways to reform the system with a focus on reducing its annual state subsidy. The study, published in January, highlighted many of the challenges facing the system, but did not provide significant recommendations for restructuring its operations or management. The work group’s recommendations are due by the end of September for implementation in fiscal year 2023, according to the governor’s office. Former Gov. Bill Walker’s administration partnered with the Southeast Conference on a two-year study finished in 2018 that urged lawmakers to set up the system as a public corporation with an expert board of directors that could plan long-term and be largely above the political fray. The Alaska Marine Highway System is currently an agency in the Department of Transportation. That study led to a bill establishing that would have established the new structure, but it received little attention by the Legislature. Venables and Rep. Louise Stutes, R-Kodiak, stressed the common message that the current structure greatly inhibits efficient operations — in terms of spending and decision-making, among other issues — because each new governor means new leadership and often a new strategic direction. “It needs some kind of governing board where it doesn’t become a target each time the administration changes,” Stutes said. Gov. Mike Dunleavy added urgency to the desire to overhaul the ferry system last year when he proposed a roughly 75 percent cut to the system’s annual operating subsidy. The budget would have shut down the system in October after three months of service. Legislators and the governor ultimately agreed to a cut of just less than 50 percent for a $46 million appropriation that was intended to keep the system running year-round but with several-month gaps in service for some communities. A series of mechanical and structural problems among the ever-aging vessels and issues with shipyard repairs led DOT to charter private vessels to some communities as a stopgap measure last winter. Barrett questioned what the financial objective of the system should be — whether that is simply improving cost recovery or finding ways to operate within a set budget. He said the work group could meet as often as once per week as its work ramps up and he also wants to hear opinions from outside the group, such as from Tribal representatives. Barrett suggested the group might break into committees to work out the specifics of some of the broader issues facing the ferry system. ^ Elwood Brehmer can be reached at [email protected]

Alaska Air Group absorbs $232M loss in first quarter

Alaska Air Group Inc. leaders reported a $232 million first quarter loss on May 5 as demand for air travel ostensibly remains at zero. It marked the first quarterly loss for the Seattle-based parent company to Alaska Airlines and regional carrier Horizon Air in more than a decade, CEO Brad Tilden said. Tilden called the result, which was driven by a 14 percent drop in passenger revenue for the quarter, “sobering” in an investor call but said there is “no doubt” that the second quarter will be much worse. Executives chose not to forecast even near-term financial performance and business metrics given the very high uncertainty as to what lies ahead but stressed a goal of reaching breakeven cash flow by the end of the year while also admitting they do not yet know how they will get all the way there. According to Tilden, the company had a cash burn rate of roughly $400 million per month at the start of April that has been brought down to about $260 million per month currently and the hope is to get it to $200 million per month in June to continue towards the breakeven goal. The company has suspended its share repurchase and dividend programs. Alaska Air Group stock closed May 5 trading at $28.97 per share. It had largely traded in the mid-$60s per share to start the year before a pandemic-induced drop started in late February. Tilden commended airline employees’ focus on safety and caring for guests even as business has nearly ground to a halt. “In the face of one of the greatest challenges in the history of aviation our people at Alaska and Horizon are doing extraordinary work to respond to these circumstances,” Tilden said. All Alaska and Horizon passengers will be required to wear facemasks starting May 11. He added that the airlines are requiring all flight attendants and customer-facing employees to wear face masks, are encouraging passengers to self-scan boarding passes, have slowed the boarding process to reduce crowding and suspended most in-flight services in attempts to limit the spread of coronavirus. Alaska Airlines President Ben Minicucci noted the airline was one of the first major domestic carriers to feel the impact of the public response to the virus hit its business in late February as the Seattle area saw the first confirmed outbreak in the U.S. Ticket cancellations overtook new bookings on March 11 for the first time in Alaska’s history, Minicucci said, and as of May 5 the airline was mired in a stretch of 56 consecutive days of net negative bookings. Alaska has waived all of its ticket cancellation and change fees through the end of the year. He said passenger levels are starting to show “very modest” week-to-week improvement but demand is still down more than 90 percent from historical levels. Capacity at Alaska Airlines was down approximately 80 percent in April and May and that trend is expected to continue at least into June. Alaska Air Group received $992 million in federal CARES Act assistance from the federal government April 23. The aid breaks down to a $725 million payroll grant and a $267 million 10-year Treasury loan. It requires the company not institute mandatory furloughs or pay cuts through Sept. 30. Tilden said the support covers approximately 70 percent of the company’s payroll through September. The Treasury Department also took rights to buy 847,000 non-voting shares of common Air Group stock at the April 9 closing price $31.61 per share. Overall, the $2.2 trillion CARES Act allocated $50 billion for grants and loans specifically to airlines. Air Group Chief Financial Officer Shane Tackett said the company currently holds about $2.9 billion in cash and short-term investments that includes the CARES money; a $400 million draw on existing lines of credit; $425 million from a 364-day term loan and $50 million in secured financing acquired after the end of the first quarter. Air Group started the year with about $1.5 billion in cash and marketable securities. The $2.9 billion will last the company a little more than 11 months and Air Group has the ability to borrow against about $2 billion worth of aircraft it owns outright, Tackett said. Alaska and Horizon also separately applied for $1.1 billion in CARES Act loans apart from the payroll funding. “Banks and investors we’ve spoken to have indicated interest in lending against these assets with reasonable terms,” he said. Alaska Air Group also has roughly $500 million in real estate as well as its loyalty program that could both be leveraged for further liquidity, Tackett said, adding that it all totals to between $7 billion and $8 billion of collateral that holds upwards of $4 billion worth of incremental liquidity potential. He acknowledged that taking on the potential debt load is not ideal but may be needed to simply survive. “Taken together, our hands-on liquidity, our access to additional financing and our aggressive goals to reach cash breakeven results will ensure that we bridge this downturn and are prepared to rebuild our success during a recovery,” Tackett said. Air Group executives for years have stressed a desire to have an “investment-grade” balance sheet and have focused on paying down debt in the past. The company’s debt-to-capitalization ratio stood at 48 percent at the end of the first quarter, compared to 41 percent to start 2020. Tackett said Air Group’s airlines have cut discretionary spending by $50 million per month and deferred $600 million in capital spending, meaning the company’s total capital spend will be less than $175 million this year. Additionally, more than 5,000 of Air Group’s 23,000 employees have taken 60 days of voluntary unpaid leave, according to Tackett. Executive pay has been cut and management hours have also been reduced by 10 percent as well, he said. Alaska Airlines has also expects to permanently ground at least 12 mainline aircraft — likely Airbus aircraft acquired from its 2016 purchase of Virgin America — and is retraining 240 of its Airbus pilots to fly the Boeing 737 aircraft Alaska has traditionally flown. “I believe that all 23,000 of our people understand that if we can achieve a breakeven cash burn rate our destiny is squarely back in our control, which means we are also in control of building towards a better future again,” Tackett said. “It’s an objective we have to get to.” Elwood Brehmer can be reached at [email protected]

Senators: All tools on table to deal with Saudi oil glut

Alaska’s senators say the federal officials should consider all options to help buoy the country’s struggling oil industry but simply restricting imports could invite other issues. Sens. Lisa Murkowski and Dan Sullivan discussed the situation in separate interviews with the Journal. Sullivan said that limiting oil imports to the U.S. while the world is oversupplied makes sense at a “base level” but acknowledged that imposing such a restriction effectively would require accounting for a host of other factors. “All of the tools are on the table,” he said. Sullivan subsequently issued a joint statement May 4 with Republican Sens. Jim Inhofe of Oklahoma and Kevin Cramer of North Dakota urging the Trump administration to apply national security tariffs to oil imports from Saudi Arabia and Russia. The statement says the tariffs would counter the “anticompetitive behavior” of the two countries, which were embroiled in a roughly six-week oil price war that exacerbated the market impacts of the COVID-19 pandemic and ended in mid-April with a broad agreement to cut daily global production by nearly 10 million barrels. “Saudi Arabia and Russia’s continued dumping of crude is having lasting and damaging effects on American energy producers. This is intentional — Russia and Saudi Arabia are tired of competing with us and want to put American oil and gas producers out of business so the can once again dictate energy prices to the world,” the senators said. Murkowski, who chairs the Senate Energy and Natural Resources Committee, said she is wary of tariffs or an outright ban on oil imports, but echoed Sullivan in adding that “right now, all options are on the table” to deal with the oversupply of crude. “We’ve got a situation right now that is facing us that is a real challenge so how we can be creative is something that we need to look to,” Murkowski said in an interview. Both of Alaska’s senators signed a March 16 letter to Saudi leaders with 11 other senators urging the government to help stabilize oil markets but Sullivan has taken a much more direct approach since, highlighted by the May 4 statement with Inhofe and Cramer. Sullivan said he has been on several calls in recent weeks trying to improve the oil market situation with the Trump administration officials, fellow members of Congress and directly with Saudi leaders. In a two-hour call with 12 other senators Sullivan recalled telling Saudi Energy Minister Prince Abdulaziz bin Salman that there would be enough support in Congress to withdraw U.S. troops from Saudi Arabia if the country didn’t stop attempting to manipulate world energy markets. “I told the energy minister, ‘Right now you’re talking to 13 of your best friends but stand by and I promise you we will be your worst enemy if you don’t stop what you’re doing that’s hurting our constituents,’” he said. According to Sullivan, Texas Republican Sen. Ted Cruz participated in the call and noted that 54 senators voted against the administration’s last military weapons sale to the Saudis; however, Trump vetoed the Senate’s measure disapproving the sale and the Senate maintained it. Adding those 54 senators to the 13 on the call — all of whom voted in support of the arms deal — gets to a veto-proof 67 votes to remove troops from Saudi Arabia, Sullivan remembered Cruz telling the energy minister. “I’m not bluffing,” Sullivan said. “The Saudis can be very squirrely but they listen to threats to their existence and trust me, without the U.S. military protecting them there’s a major threat to their existence. The Saudi military is not formidable and couldn’t stop any of their neighbors from invading them.” The number of U.S. troops stationed in Saudi Arabia is classified, according to Sullivan, but he said that the U.S. has missile batteries there that could also be pulled. He also emphasized that he will be among many members of Congress watching the Saudis closely to make sure they adhere to the two-year production agreement. “When a country that we’ve helped and protected starts to take actions that directly negatively and significantly hurt people that I’m privileged to represent and there’s some indications that they’re doing it on purpose, for that reason, it’s a whole new ballgame,” he said further. The agreement to cut oil production by roughly 10 percent worldwide starting in May was hailed as “unprecedented” when the leaders of major oil producing countries announced it last month. Yet, oil prices continue to languish, particularly in the U.S., because the deal does not come close to counteracting the even more massive decline in daily oil demand brought on by economic shutdowns imposed to fight the spread of COVID-19. According to the International Energy Administration, worldwide oil demand fell by approximately 29 million barrels per day in April, or about 30 percent, from a year ago. The IEA expects overall oil demand in 2020 to fall by 9.3 million barrels per day, the group said in its April Oil Market Report. The price for global benchmark Brent crude has stabilized in the high $20s per barrel versus the $63 per barrel Brent oil averaged in January just prior to pandemic spreading across the globe, but prices for Alaska and Lower 48 oil have fallen even further. The prices for Alaska North Slope and West Texas Intermediate, or WTI, briefly went negative April 20 and have since recovered; however, oil in those markets continues to trade at a steep discount to Brent. As of May 4, WTI sold for $20.39 per barrel and a barrel Alaska North Slope crude went for just $14.60 despite trading at a slight premium to Brent as recently as January. Alaska economists have said that the relative isolation of the West Coast market where most oil from the state is sold from the rest of the country and a surge of oil imported from the Middle East — mainly Saudi Arabia — has depressed the price of Alaska oil even further. Before the production cut agreement in which Saudi Arabia is supposed to scale back to 8.5 million barrels per day, Saudi leaders insisted the country would increase its production to about 12.3 million barrels per day. According to a February S&P Global Platts report Saudi Arabia produced 9.7 million barrels per day in January. And even though the Russian-Saudi truce is approaching a month old, the impacts of the war are still being felt in the U.S. According to the Energy Information Administration, domestic crude stocks hit more than 527 million barrels in the third week of April, up 9 million barrels from the week prior and nearly 30 million barrels more than was stored a year ago. Stores of refined products have stabilized of late but also far exceed what was available a year ago, according to EIA data. Sullivan and Murkowski both acknowledged that roughly 40 million barrels of oil sitting in tankers off the West Coast was purchased in February and March by U.S. refiners. “As much as I want to say turn those tankers around we don’t want them here; they’re replacing Alaska crude or they’re taking up space in our limited storage — again I think we need to recognize that many of our refiners are set up to take just exactly that heavy Saudi crude and that’s what they need,” Murkowski said, while also questioning how the contracts would be resolved if the foreign oil was wholly turned away. North Slope crude generally has a slightly lighter makeup than Saudi oil and refiners can adjust to handle different oils with adequate lead-time. Sullivan and Murkowski both said they have tried to encourage other countries to fill their national oil storage systems to help ease the global oversupply. According to the IEA, which helps coordinate global oil storage, if each country with storage available were to “top off” its reserves up to 2 million barrels per day could be pulled from the market over about three months. “It’s not going to save us, but it’s not bad,” Sullivan said of the idea. Murkowski said following a call with Energy Secretary Dan Brouillette that the Energy Department has made space available to domestic producers in the U.S. Strategic Petroleum Reserve. “Lease it out so producers could offload, keep it there and basically pay to retrieve it later,” Murkowski said. She has said she will co-sponsor legislation authorizing $3 billion for the Energy Department to purchase U.S. oil to fill the SPR when Congress reconvenes. Additionally, Murkowski said Energy officials are looking into more storage for refined products. “We’re looking to what we can do to address the storage issues,” she said. Elwood Brehmer can be reached at [email protected]

ConocoPhillips to curtail Slope production by 100k per day

ConocoPhillips announced Thursday morning it will cut its North Slope oil production by about 100,000 barrels per day as the price for Alaska crude continues to flounder relative to other oil benchmarks. The announcement came as ConocoPhillips, which currently produces the most oil in Alaska, also reported a companywide first quarter loss of $1.7 billion as the global response to the COVID-19 pandemic ground economies to a halt and oil prices collapsed. Oil production will be curtailed in June at the company’s Kuparuk River, Alpine and Greater Mooses Tooth-1 fields. The large Kuparuk and Alpine fields are primarily on state lands, while GMT-1 is in the National Petroleum Reserve-Alaska. The state production tax is applied to NPR-A oil, but the state does not receive royalty revenue from production in the federal reserve. According to a company statement, the production curtailment will start in late May and how long it lasts will be determined month-to-month. ConocoPhillips 218,000 net equivalent barrels per day in the state during the first quarter. “This decision was made in response to unacceptably low oil prices resulting from global oil demand destruction caused by the impacts of the COVID-19 pandemic, combined with a global oversupply of oil,” ConocoPhillips Alaska said in a statement. “The curtailment will essentially leave the oil stored in the reservoirs, available for resumption of production at a later date. The actions ConocoPhillips Alaska is taking with this production curtailment underscore the extraordinary challenges currently facing the oil and gas industry in Alaska and elsewhere.” The cuts should not impact Trans-Alaska Pipeline System operations, according to the statement. ConocoPhillips Alaska spokeswoman Natalie Lowman said the cuts will be enacted by shutting in wells and the 100,000 barrels per day amount is largely driven by the minimum volume of oil the company needs to continue moving through its facilities at the fields to keep them operational. “We want to be able to respond quickly if market conditions improve,” Lowman said. Alaska Division of Oil and Gas spokesman Sean Clifton wrote via email that ConocoPhillips informed state officials about their curtailment plan last week and has assured them that TAPS throughput will remain sufficient. “It is likely they’ll have to bring production back up when Arctic temperatures return in fall, regardless of market conditions,” Clifton wrote. Alyeska Pipeline Service Co., which is owned by the major North Slope producers, said April 24 it had begun “prorationing,” or reducing oil throughput in TAPS by about 10 percent, or 50,000 barrels per day, to deal with a lack of oil storage capacity projected for late May in the system. Alyeska and the producers routinely slow TAPS throughput in summer for maintenance activities. While oil prices are depressed worldwide, the situation has been magnified for Alaska due to market conditions on the West Coast, where the vast majority of Alaska oil is sold. Alaska North Slope, or ANS, crude sold for $10.67 per barrel on Wednesday while West Texas Intermediate — the primary price for Lower 48 oil — sold for $15.06 per barrel and oil traded on the global Brent benchmark went for $22.54 per barrel. The spread between the ANS and global Brent prices that is now hammering Alaska was benefiting the state just a few months ago. As recently as January ANS crude was trading at a $2 per barrel premium to Brent and in prior months Alaska oil had sold for up to nearly $4 per barrel more than Brent. Transportation constraints limit the amount of oil produced east of the Rocky Mountains that can be sent west. That soft barrier has led to the development of ostensibly two oil markets in the U.S. West Coast refiners also purchase large amounts of Middle East oil and Saudi Arabia’s oil price war with Russia — that started in March and continued into mid-April — exacerbated the glut of oil available to West Coast buyers. Petroleum economists have also noted that West Coast oil demand largely comes from the transportation sector, which has been hit especially hard by government-mandated travel restrictions to slow the spread of the virus. Leaders from the world’s top oil producing nations on April 12 announced a global agreement to cut 9.7 million barrels from daily production in May, or about 10 percent of oil production worldwide. Under more normal market conditions prices would jump on the anticipation of such significant supply cuts, but the unprecedented drop in demand is overriding all other market factors. ConocoPhillips leaders have announced $400 million of cuts to the company’s spending plan in Alaska since mid-March. In early April the company told its drilling contractor Doyon Drilling that it would be laying down its North Slope drilling rig fleet indefinitely. On April 16, ConocoPhillips executives said they planned to curtail about 225,000 barrels per day of oil production from fields in the Lower 48 and Canada. A statement accompanying Thursday’s first quarter earnings report says companywide voluntary production curtailments in June will likely total approximately 460,000 barrels per day. Q1 numbers The $1.7 billion first quarter loss followed a $720 million fourth quarter and nearly $7.2 billion full-year profits. ConocoPhillips’ total revenue for the first quarter of the year was down more than 40 percent compared to the end of 2019 to just more than $4.8 billion. The overall loss translated to a loss of $1.60 per share. ConocoPhillips stock traded for $42.40 near the end of trading Thursday, on par with its prior closing price. The company’s per-share price bottomed out at $22.67 on March 18 when the first round of spending cuts was announced. It traded at around $60 per share for much of the winter. The overall quarterly loss was driven by losses absorbed in the company’s Lower 48, Canada and corporate business segments. According to the earnings report, ConocoPhillips’ Alaska operations netted the company $81 million during the first quarter. According to Lowman, ConocoPhillips paid $218 million in taxes and royalties to the State of Alaska and spent $509 million on capital projects during the quarter. The company remains on track to start oil production at its Greater Mooses Tooth-2 project on the North Slope in late 2021, according to the earnings report statement. ConocoPhillips realized an average price of $38.81 per barrel for its oil in the first quarter, down about 18 percent from an average of $47.01 for the fourth quarter of 2019. ConocoPhillips ended the quarter with $13.7 billion in liquidity compared to $14.1 billion in cash and short-term investments at the end of 2019. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for May 3

Long-time prosecutor and current Anchorage District Attorney John Novak retired, effecitve April 30. Brittany Dunlop, currently the Deputy District Attorney in Anchorage, was appointed to succeed Novak. Novak first joined the Anchorage District Attorney’s Office in 1990, giving him 30 years of experience with the Department of Law, most of it in prosecuting cases ranging from misdemeanors to murder and appearing in courts in Anchorage, Kenai, Palmer, Seward, Bethel, Dillingham, Naknek, and Unalaska. Novak also served as the Acting Palmer District Attorney, as a Special Assistant U.S. Attorney, and provided legal advice to the Department of Public Safety for many years before taking the helm in the Anchorage Office. Dunlop graduated from Lathrop High School in Fairbanks and received her bachelor’s degree in political science and government from UAA. Dunlop graduated from Hamline University School of Law in Minnesota in 2006 and returned to Alaska to serve as a prosecutor. Dunlop joined the Anchorage District Attorney’s Office in the Misdemeanor Unit in 2006 and worked her way up to supervising the Anchorage Sexual Assault Unit. She transferred to the Palmer District Attorney’s Office in 2012 where she continued her focus on the prosecution of sex crimes and domestic violence crimes until 2019, when she was promoted to Deputy District Attorney in Anchorage. Ahtna Global LLC hired Maggie Huffer, CF APMP, into the Business Development Department as its senior proposal group manager based out of Renton, Wash. She is responsible for proposal deliverables for Ahtna’s offices nationwide. She is Foundation Level certified through the Association of Proposal Management Professionals and has more than 19 years of proposal management and writing experience. Huffer’s experience includes supporting a variety of service lines such as vertical and civil construction, environmental, engineering, geospatial, range construction and sustainment, fuel services, demolition, and professional services. Morgan Miller, CF APMP, was also hired into the Business Development Department as an Anchorage-based proposal manager. Miller provides nationwide proposal support to Ahtna’s capture teams. She began working in the engineering industry in 2014. Miller earned a bachelor’s degree in economics through UAA and is Foundation Level certified through the Association of Proposal Management Professionals. Ahtna Engineering Services LLC added chemist Keather McLoone. McLoone earned bachelor’s degrees in biology and in chemistry from the University Minnesota Duluth. She has 27 years of professional experience in environmental consulting, environmental regulatory oversight, and environmental laboratory analysis. Her 20 years of environmental experience in Alaska includes sampling and oversight at numerous remote Alaska locations statewide. Ahtna Environmental Inc. hired Greg Mamikunian as a geologist based out of its Anchorage office. Mamikunian earned a bachelor’s degree in earth sciences at the University of California San Diego and an master’s degree in earth sciences from Scripps Institution of Oceanography at the University of California San Diego. Other previous experience is in applied geophysics locating faults and other geologic features using gravity, magnetics, seismic refraction and electromagnetics. He also processed marine seismic data while in Houston, Texas. The Mat-Su Health Foundation announced the hiring of three new staff members, a chief operating officer and the promotion of another. The new hires are: Ashley Peltier, director of Connect Mat-Su; Brian Tiefenbrun, Connect Mat-Su community resource specialist, and Kailey Gamble, communications specialist. Kathryn Swartz is being promoted into the position of Healthy Aging program officer. Peltier leads a team utilizing partnerships and technology to ensure delivery of quality, warm, and responsive customer service to meet individual information and referral needs and facilitate connections to service providers. She was previously director of health promotion for the American Lung Association in Alaska. Peltier earned a master’s degree in sociology from the University of North Dakota. Tiefenbrun serves as the first point of contact for Connect Mat-Su, providing resource navigation and referral tailored to individual needs. He spent the past two years as an investigator for the Office of Children’s Services where he focused on clients struggling with trauma and substance abuse. Tiefenbrun is a veteran of the U.S. Army and has also worked at North Star Behavioral Health. He earned a bachelor’s degree in psychology from American Military University. Gamble came to the foundation from the University of Alaska Anchorage where she served as communications specialist and managed the public relations, marketing, editorial and social media facets of the College of Business and Public Policy. Gamble holds a master’s degree in public relations and marketing from the University of Denver and a bachelor’s degree in English from Western Washington University. Swartz has been with the foundation for more than three years in the role of special assistant to the CEO and board liaison. She begins her new position on May 4. Swartz previously worked for the World Bank providing operational support to development projects and performing research and writing. She earned a master’s degree in international development studies and anthropology from George Washington University and a bachelor’s degree in sociology/anthropology and Spanish from Kalamazoo College. The Mat-Su Health Foundation also hired Kelly Lewis as its new chief operating officer, effective April 20. Lewis was previously CEO of her own consulting firm, specializing in leadership, management, and technical training for public and private sector clients. Prior to that she worked for the Municipality of Anchorage as director of organizational development and deputy director of property appraisal. She holds a doctorate of management in organizational leadership from the University of Phoenix, an MBA from Atkinson Graduate School of Management at Willamette University, and a Bachelor of Science degree from Lewis and Clark College. Lewis also earned a certificate in dispute resolution from Willamette Law School. First National Bank Alaska announced four hires. James Estes joined FNBA as security officer with more than 20 years in law enforcement at the Anchorage Police Department. He holds a bachelor’s degree in criminal justice, an associate’s degree in law enforcement, and an Advanced Police Certificate from the Alaska Police Standards Council. Loan Officer Marc Guevarra has been banking in Alaska for almost two decades working as a teller, branch manager and loan officer. Guevarra will be based at the Valley Centre Branch in Juneau. He received his bachelor’s degree in business administration from the University of Alaska Anchorage. Carmen Maldonado joined FNBA as a mortgage loan originator in Anchorage. Maldonado has a bachelor’s degree in organizational management and an associate’s degree in business administration. Michelle Weiss was hired as an assistant vice president. Weiss is an Accredited Mortgage Professional with a decade of experience, the president of the Alaska Mortgage Bankers Association and the director of the National Association of Professional Mortgage Women in Anchorage. Mark D. Anderson, PE, recently joined R&M Consultants Inc. as the firm’s group manager of Structural Engineering. Anderson has 40 years of Alaskan experience including structural and seismic engineering consulting services for the oil industry for the past 22 years on projects such as the Gas Compressor Vibration Mitigation project for Milne Point, Akutan Pollock Processing Plant assessment and modifications, North Pole Power Plant Expansion-Phase 1, and Pogo Mine and Quartz Hill Mine Property Access Road Bridges. Prior to that, Anderson worked for Alyeska Pipeline Service Co., where he was responsible for re-establishing the Trans-Alaska Pipeline System seismic program. Anderson has a bachelor’s and a master’s degree in civil engineering, both from the University of Idaho. He is a professional civil engineer licensed in Alaska and Washington and is licensed as a professional structural engineer in Alaska. Northrim Bank announced changes at three branches. Lindsay Atkins was promoted to Jewel Lake Branch manager; David Byrne was hired as commercial loan officer, Juneau Financial Center; and Loren Olsen was hired as vice president-lending branch manager. Atkins has been with Northrim for 5 years and has 9 years of experience in the financial industry. She studied at North Idaho College and the University of Alaska Anchorage. Byrne comes to Northrim with 21 years of experience at financial institutions throughout Alaska, including Anchorage, Dillingham-King Salmon, Juneau, Kodiak and Petersburg. He holds a bachelor’s degree from the University of Alaska Anchorage. Olsen joins Northrim with 20 years of lending experience in Alaska and Montana. He worked in corporate finance while earning his MBA from California State University Fullerton.

Coronavirus relief pushing US deficits to staggering heights

WASHINGTON (AP) — Spend what it takes, Washington said as it confronted the coronavirus. Well over $2 trillion later, it’s unclear where that spending will end. One of the lasting legacies of the coronavirus pandemic will be staggering debts and deficits on the U.S. balance sheet, with shortfalls hitting levels that would have been unthinkable just a few decades ago. It’s a fiscal clamp that is likely to persist for a generation, or even into perpetuity, with debt levels having passed the point of easy return in a capital where lawmakers are increasingly incapable, or unwilling, to constrain them. The latest, and dire, projection from the Congressional Budget Office, released April 24, states the U.S. deficits will mushroom to $3.7 trillion in 2020, fueled by the four coronavirus relief bills signed into law by President Donald Trump. A fifth bill is already in the works, and will be “expensive,” according to House Speaker Nancy Pelosi, D-Calif. The deficit for 2021 is estimated to tally $2.1 trillion, double previous CBO estimates. The report predicts a devastating hit to the economy this quarter at an annualized rate of decline of 40 percent — probably the sharpest economic shock ever — accompanied by a 15 percent unemployment rate this spring and summer. For the entire year, the economy is predicted to shrink by 5.6 percent. CBO Director Phillip Swagel cautioned that there is “enormous uncertainty” to the projections, given the unprecedented nature of the crisis, but it’s plain the economic shock is unlike anything seen since the Great Depression. “Challenges in the economy and the labor market are expected to persist for some time,” Swagel wrote in a blog post. He said the economy is likely to begin rebounding in the third quarter, but the jobless rate will remain about 10 percent by the end of 2021. On the government front, coronavirus-related figures point to red ink unparalleled since World War II. Economists generally say the most significant measure of debt and deficits is to compare it against the size of the economy, and by that measure the debt is soon to rival the record. CBO says publicly held debt will reach 101 percent of gross domestic product by the end of this year, just below the post-war high. The deficit was entrenched long before the virus, with federal revenues shrinking to well below historic averages and the spending side of the ledger rising thanks to record Pentagon expenditures and the addition of baby boomers to Medicare and Social Security. Even Washington’s few remaining spending hawks say red ink should not be a focus for now as the government faces unemployment levels not seen since the Great Depression and shutdown orders lasting well into next month or beyond. “Right now, I think the wise move for Congress is to keep the economy afloat regardless of what it costs,” said Brian Riedl, an economic and budgetary policy analyst at the free market Manhattan Institute think tank. “That being said, the budgetary cost is enormous, cannot be ignored, and makes it even more important that lawmakers begin thinking about how to fix the federal budget after this is over.” But when policymakers inevitably are forced to take on deficits, virtually none of them will have any experience in doing so. The era of successful action ended long ago, with a hard-won 1997 law that capped a decade’s worth of politically costly but ultimately effective reduction measures. In the interim, a divisive brand of politics has taken hold. No one has even seriously tried tackling the debt since a failed effort by former GOP Speaker John Boehner of Ohio and President Barack Obama almost a decade ago. Republicans are beginning to warn of the coronavirus costs now — GOP Sen. Ben Sasse on Friday called Washington’s spending habit “suicidal” — but the party passed deficit-financed tax cuts when controlling all of government in 2001 and 2017. Those twin tax bills mean that a steadily more liberal Democratic Party won’t endorse the kinds of deficit-cutting steps they endorsed in the 1990s. There’s also no agreement on what levels of debt and deficits are sustainable, and the number of deficit doves has swelled over the past decade. Those skeptical of the fiscal warnings note that the government has run large deficits for well over a decade without the predicted increase in interest rates, economic stagnation or a European-style fiscal crisis. “There’s zero reason to be concerned about the short-term macroeconomic impact of the deficit,” said Harvard University economist Jason Furman, a former economic policy adviser to Obama. “Interest rates are very low. The Fed has a lot of tools to ensure that they stay very low, and the bigger short-run macroeconomic concern is an insufficient response.” The CBO has long said that lawmakers eventually will be forced to tackle the government’s chronic financial woes, if for no other reason than the looming insolvency of Social Security and Medicare. When Social Security runs out of reserves in the next decade, the system will be able to pay only 79 percent of benefits. The problem is landing in the lap of whoever is elected in November in a race that’s been transformed by the crisis. The presumptive Democratic nominee, former Vice President Joe Biden, supported numerous deficit-reduction bills over his long career but has moved significantly to the left in hopes of uniting party progressives behind him.

With pandemic procedures in place, Copper River ready to open

With about two weeks until the Copper River salmon season, the industry is pulling together the details of how to execute a safe fishery amid the coronavirus pandemic. Hundreds of vessels and workers flood into Prince William Sound each May for a chance to harvest the first fresh wild king salmon of the year, followed by the famous Copper River sockeye and the broader Prince William Sound pink salmon fisheries. However, with limited road access and health care facilities, city and state officials have been coordinating with the fleet and stakeholders about how to safely allow in deckhands, captains, and processing workers from Outside without inviting the pandemic to Cordova as well. As of April 28, Cordova had not reported any positive tests for COVID-19, the disease caused by the novel coronavirus. With no ferry service this winter and no connection to the road system, Cordova has limited physical contact with the rest of Alaska and the Lower 48 except during the fishing season. Bringing in seafood workers from outside the area poses a risk, but not doing so means the fishery — a vital economic driver in the region — wouldn’t be able to operate as normal. Gov. Mike Dunleavy’s administration released Health Mandate 17 on April 23, offering guidelines for commercial fishermen to help control the spread of COVID-19. Fishermen often work in close quarters on boats and in harbors, as do processing workers. The mandate outlines requirements such as screening procedures for crew, quarantine for workers coming into the state, and prohibiting non-essential trips into town for non-local crew, among others. “Fishermen are very concerned and have been concerned since day one,” said Francis Leach, the executive director of the United Fishermen of Alaska. “Now that procedures have been put in place, there are a lot of questions. It’s always a learning curve. Folks are really going to have to pay attention to (the mandate).” UFA, along with other stakeholders, weighed in on the mandate prior to its release. Having the mandate helps define what fishermen need to figure out for their plans for the summer, Leach said. It also eliminates the need for every individual fishermen to submit a plan of operation. A number of fisheries are already operating, including halibut longliners, and though salmon are the largest fishery by number of employees, the UFA represents all commercial fishermen across the state. One of the hanging questions, though, is how to make sure fishermen get access to the equipment they need to comply with the mandate. One of the items required is that captains conduct temperature screenings on crewmen before boarding and “as needed to minimize risk,” according to the mandate. Right now, with the demand on personal protective equipment and medical supplies high in all areas, getting enough disposable thermometers, masks, gloves, and sanitizing materials could be a challenge. “Different sectors of the industry are working on that,” she said. “It’s very hard—you can’t just run down to the store right now and get a thermometer. At least, in Juneau you can’t.” The Alaska Manufacturing Extension Partnership, housed within the University of Alaska, is working to make more Alaska-manufactured PPE available, including face masks and sanitizing equipment, by helping manufacturers convert to making the equipment. While some is available on demand, other items can be arranged on an as-needs basis, according to the Alaska MEP. While many of the Copper River fleet’s workers live locally in Cordova, others live aboard their vessels or come to the community for the season. Cordova District Fishermen United, a trade group representing Copper River-area fishermen, is working to get clarification about whether fishermen who live aboard their vessels during the season qualify as locals and therefore can disembark and enter Cordova, said Chelsea Haisman, executive director of the CDFU. The group is also seeking clarification for what constitutes a “non-essential” trip into town. Overall, though, the mandate simplifies some of the aspects of Mandate 10, she said. “As far as the uncertainties go, a lot of it is trying to navigate the businesses around town, getting parts and groceries and things,” she said. “It’s definitely changing the way the fleet operates; it’s definitely not business as usual.” There is uncertainty among the fleet going into this season, as the COVID-19 situation is changing frequently, particularly as it regards travel to and from communities, Haisman said. However, the stakeholders have been involved in the City of Cordova incident management task forces and have been regularly coordinating with the processors to deal with the season’s challenges. Most of the fleet is concerned with how to operate the fishery without endangering coastal communities, she said. “We acknowledge the concern of communities as the season begins and we will continue doing important outreach to ensure that fishermen have the information on all state and local mandates, as well as access to resources to help them get their vessels geared up for the season,” she said. Processors have been working together this spring to try to determine best practices for worker safety while still operating in Alaska. Many salmon processors, including Cordova, operate facilities in remote communities and bring in workers from all over Alaska and Outside to work for the season. The processors have been in close communication with the state, communities and stakeholders, Leach and Haisman said. The Alaska Department of Environmental Conservation has jurisdiction over processing plants and can take enforcement actions if the operators do not comply with safety measures. Dunleavy’s Health Mandate 3, which closed bars, restaurants, and other food establishments, did not include seafood processors, as they were included in the list of essential businesses. Since the mandate came out, the DEC has received seven complaints of businesses allegedly violating the mandate, said Laura Achee, a spokesperson for the DEC. She did not specify the type of businesses. “For each, DEC responded by speaking the operator, and the operator voluntarily complied with the mandate with no further action needed,” she said. Beyond just the logistics of getting the salmon into nets, another lingering question is what will happen to them once they’re on their way to the market. Copper River king salmon are usually greeted by the red carpet of the seafood world, with a ceremony in Seattle when the first arrives via Alaska Airlines flight. In the past, the first Copper River kings have gone for $50 per pound — primarily to restaurants. And therein lies the rub: Most restaurants nationwide are currently closed for social distancing. It remains to be seen what will happen with restaurants as states and the federal government move to reopen the economy, but right now the prices Copper River fishermen are likely to see are uncertain, said Garrett Evridge, an economist with the consultant firm the McDowell Group. “In a typical year, we kind of have an establish playbook we can rely on,” he said. “Right now, because everything is changing all at once, we really struggle to understand what’s going to happen.” Grocery stores don’t typically pay as much nor charge as much for the fish, and as the season goes on, the prices for kings and sockeye usually drop as more fisheries come online. Copper River in the past has been an indicator for how prices may behave in the rest of the season, but this year it may not, Evridge said. The same is true in other regions of Alaska; what’s true in one region for prices may not be true in another this year, he said. Another factor that may affect demand for Alaska’s seafood is the negative impacts on the economy that will last beyond the end of the pandemic restrictions. Alaska’s wild-caught seafood typically commands a higher price than farmed Atlantic salmon or other comparable products. With millions out of work nationally, the economy may move into a recession, which would affect demand for a higher-price product. Retail demand has been strong, but it’s hard to say whether that will continue, Evridge said. The first announcement for the Copper River District will be issued between May 1 and May 8, according to the Alaska Department of Fish and Game. Elizabeth Earl can be reached at [email protected]

GUEST COMMENTARY: Yes, we can bring manufacturing back from China

As the toll from the COVID-19 pandemic mounts, more and more Americans are saying the same thing: “We need to bring manufacturing back from China.” This makes sense, given the tremendous disruption caused by the coronavirus. Medical supplies are on hold, since China is keeping facemasks and other equipment for their own use. Medications are delayed, because America’s drug compounds are sourced from China. And we have a shortage of hospital ventilators. The list goes on. The United States has become incredibly reliant on overseas producers for everything from antibiotics, vitamins, and auto parts to computers, steel, and military equipment. And our health is at risk because we don’t even produce facemasks, face shields, and hospital gowns. The transferring of our factories overseas has eliminated roughly 5 million good-paying manufacturing jobs over the past 20 years. And now we’re seeing the end result — an over-dependence on imports to sustain a safe standard of living. Americans are right to be troubled by this dependence; China’s strategy to dominate global manufacturing is now harming our national security, healthcare, and economic wellbeing. And we’re justifiably angry with Beijing’s deceitful behavior at the onset of the pandemic. All of this paints a picture of an aggressive competitor intent on eroding America’s prosperity and global leadership. What’s encouraging, however, is that the United States holds the power to rebuild industries that once made our nation prosperous and self-reliant. And the key to restoring our economy is bringing back the critical manufacturing needed in the 21st Century: everything from steel and renewable energy systems to medical supplies, pharmaceuticals, and wireless technologies. To do this, Congress needs to get trade policy right. The U.S. dollar remains heavily overvalued due to the ongoing demands of foreign investors in America’s financial markets. This has helped Wall Street, but it has also made the dollar uncompetitive by lowering import prices and making U.S. exports more expensive. Congress should immediately pass currency legislation introduced in the Senate last year to make the dollar more competitive. That would provide a huge boost for America’s manufacturers as they struggle against heavily subsidized factories in China. We should also rebuild our nation. To get Americans working again, Congress could launch a robust plan to fix America’s ailing infrastructure, including crumbling roads, bridges, water works, and transit systems. That effort should include strong “Buy America” provisions to ensure that tax dollars are directed to domestic companies whenever possible. Overall, Congress could enact a “Made in America 2030” plan to rebuild needed infrastructure while investing in areas crucial to national security like medical supplies, the pharmaceutical industry, and wireless networks. That could strengthen the U.S. economy while also creating millions of jobs and boosting GDP. There’s little time to waste. America must bring back key industries from China. And we must enact an ambitious trade and infrastructure program to create millions of good-paying jobs, jumpstart the economy, and make America stronger than we were before COVID. Michael Stumo is CEO of the Coalition for a Prosperous America. Follow him at @michael_stumo

GUEST COMMENTARY: Prepare now for summer wildfire, COVID-19 battles

Remember how terrible last summer’s wildfires were: the smoky skies, the traffic jams, the evacuations, the damaged homes and property? Now, imagine having to battle such fires while fighting the coronavirus at the same time! That scenario has the Alaska Division of Forestry and its national partners working hard together to plan ways to keep firefighters and residents safe, while dealing with both wildfires and the COVID-19 pandemic this summer. We need the cooperation of every Alaskan in this effort. We do not know if this fire season will be as bad as last year’s. While deep snowpack and early season prediction models hint fires may hold off a while, that can change with just a week or two of warm, dry weather. Fire managers are monitoring conditions and hoping for the best. But, as we do every year, we are also planning for the worst. We face a tremendous additional challenge this year in the form of the COVID-19 pandemic. As our number-one priority is the safety of the public and firefighters, we plan to follow as closely as possible the Centers for Disease Control anti-virus protocols and best practices on hygiene standards, social distancing, and non-essential travel. In these ways, we hope to reduce the spread of the novel coronavirus by protecting firefighters, their families, the communities where they live, and ultimately the communities they protect. We know that robust preparation helps keep firefighters safe on the job, and so we‘re taking unprecedented measures to make sure they get the training to be safe on the fire line, while reducing their risk of early season exposure to the virus. We are delaying our spring training schedule, delivering some elements online, evaluating our regular training weekly, and modifying our plans as we better learn how to reduce exposure to this unforeseen health hazard. This will be even more important as we enter active operations. Our firefighters work side by side in hot, dirty conditions, and both they and their support personnel eat and sleep in close proximity, often in remote fire camps with few amenities. We will work hard to reduce their risk from fire and coronavirus alike. Each person sidelined by illness weakens our ability to hold the line against wildfires. Last year, Alaska imported more than 5,000 firefighting personnel from the Lower 48, including 120 crews, to help during one of the busiest, longest, and most expensive fire seasons on record. While I hate to imagine what we would have done without this support, the Division and other wildfire suppression agencies are drawing up plans now for how we might have to respond to wildfires to keep Alaskans safe without robust Outside help. Because we cannot be sure of having enough resources, we Alaskans must all do our part to prevent the small fires that can quickly become big fires. Compost instead of burning grass clippings. Chip the brush pile instead of burning it. Go without campfires. Maintain mechanical equipment and ATVs in fire-safe condition. Think before doing anything that could start a fire. Report suspicious smoke early. Be a leader in your community by helping us spread the fire safety message. Use the unexpected opportunity from self-quarantine to use the Firewise program to make your property and your neighbors’ as fire-resistant and resilient as possible. For our part, we at the Division of Forestry will use every fire prevention tool available to us, including statewide burn permit suspensions, delaying prescribed fires, increasing prevention patrols through fire-prone areas, possibly implementing burn closures, and if necessary, working with the state fire marshal to ban fireworks during our driest summer months. With long experience in Alaska wildland firefighting, I know far too well that fire is an indiscriminate destroyer of property, lives, and dreams. I also believe all Alaskans understand our responsibility to our families, friends and neighbors to be ultra-cautious. On behalf of all firefighters, I ask you to do everything you can this spring and summer to protect the people and state we love by thinking, planning and acting responsibly, today and throughout the fire season. We can do it, together. Chris Maisch is the State Forester and Director of the Alaska Division of Forestry

UAA graduates some nurses early amid COVID

With the coronavirus pandemic increasing pressure on hospitals and demand for health care workers, a handful of new nurses will be launching into the field from the University of Alaska Anchorage. UAA’s School of Nursing recently graduated a handful of its senior students a few weeks early, allowing them to move into the health care workforce right away. The School of Nursing and College of Health administration offered a chance for up to 72 students in the bachelor’s and associate’s programs in good academic standing the chance to finish their last few credits on a faster timeline. They were then eligible for a temporary license from the state Board of Nursing to allow them to begin practicing immediately, provided they take the full registered nurse exam within six months. Jeff Jessee, the dean of the College of Health, said many of the eligible students were in clinicals at the local hospitals when the pandemic struck. The university administrators considered each student on a case-by-case basis to determine whether they were comfortable recommending that student for graduation and licensure, and the accreditors and state Board of Nursing worked with those recommendations. “Some of (the students) were, say, a few hours short of finishing their clinical hours that were required,” he said. “What we were able to do was start going through each of their transcripts and analyze how far along in their program they are, looking at their skills, certifications, and identifying those students whom we felt comfortable that the School of Nursing could certify that we could graduate.” The nursing students are equipped with all the skills they need to be able to treat COVID-19 in the course of the regular curriculum, even if they do not go to work in the ICU with coronavirus-positive patients right away, Jessee said. Because the graduates were working in clinicals in the area hospitals, the medical staff there knows them and their skills as they go into the workforce, he said. One of the primary reasons for the drastic measures taken by governments across the country to curb the spread of the coronavirus is to prevent health care facilities from being overwhelmed. In areas with significant numbers of infections, like New York City and Florida, hospitals are reporting concerns about being able to find enough nurses to meet their needs. However, Alaska implemented closures early and thus has not seen a significant spike in cases, leaving hospitals with enough capacity so far to handle them. The additional move of restricting elective surgeries, opening up additional capacity, has helped with those concerns and actually left some nurses without enough work so far, Jessee said. That decision has financially hit hospitals, which make much of their revenue from outpatient, elective, and ambulatory surgeries. While the restrictions have been difficult across Alaska, the moves have helped keep the state out of danger of being overwhelmed, Jessee said. “You can’t wait for this curve to shoot up, because it happens so fast; by the time you realize you’re overwhelmed, it’s too late,” he said. “That’s the really advantage Alaska has had in getting so far ahead of this … If and when we start seeing the numbers that other places are seeing, we’ll already have this capacity in place.” In addition to the early graduates, the School of Nursing is encouraging the rest of its students to obtain their Certified Nursing Assistant credentials if they do not already have them to be able to go to work in the industry. CNAs provide basic patient care, which can free up nurses in health care facilities to provide the higher levels of care they are qualified for. CNA certifications are already somewhat common in the School of Nursing; any student who has completed at least a year of an associate’s or bachelor’s program qualifies to take the exam. Jessee said many students work as they complete their nursing education program, and a CNA allows students to start working in the health care setting before graduating. The College of Health and School of Nursing, along with the entire University of Alaska system, has transitioned to primarily distance education this spring as a way to promote social distancing and prevent the spread of the coronavirus on college campuses. The School of Nursing had a head start on online courses, as the classes are already distributed to sites across the state from Kotzebue to Bethel to Ketchikan, Jessee said. The state recently designated health education as essential, and so some classes will be able to go back to face-to-face meetings, he said. While the accelerated graduation will help some graduates enter the workforce faster as their services are in high demand, the graduates of the School of Nursing never really have a hard time finding jobs, Jessee said; many are hired before they graduate. Though the university appreciates the help of the Board of Nursing and the accreditation agency to help some graduates move forward sooner, the administration is planning to be back on track with the normal academic schedule in the future. “I think we’re pretty confident that we’re going to be able to get back on track and keep our students moving through the program at the normal pace when we‘ve fully adapted to the distance courses, remote learning, those sorts of things,” Jessee said. “I think it’s this emergent situation that required us to make some adaptations right away. There may be some changes going forward, to keep the numbers (of available nurses) up, but we have a pretty good production system already. Once we adapt to the new reality, as people say, I think we’ll be back on track.” ^ Elizabeth Earl can be reached at [email protected]

Doyon acquires stake in mining company with state prospects

Doyon Ltd. has taken a direct stake in a mining company exploring for gold on its land in an area of Alaska that has seen a resurgence in interest from prospectors. The Interior Alaska Native regional corporation invested $1.5 million in Tectonic Metals Inc., a Vancouver-based firm with claims to three Eastern Alaska gold prospects, according to a joint April 20 statement. The deal makes Doyon the largest single shareholder in the Tectonic with a 22 percent ownership stake. Tectonic is working two gold prospects, dubbed Seventymile and Northway, on Doyon lands near the Canadian border. Tectonic also holds the Tibbs prospect on state land about 20 miles east of the Pogo gold mine near Delta Junction. All of the prospects are in the Tintina Gold Belt, which runs across much of Interior Alaska and into the Yukon Territory. New technologies for conducting geophysical surveys and other analyses of prior drilling data have led a handful of companies exploring for large gold deposits to revisit the eastern Tintina region that historically has been an area worked by smaller placer mining operations. Tectonic co-founder and CEO Tony Reda said the investment is unique in that it amounts to an “endorsement” in the company as a whole, not just in the prospects Tectonic is working on Doyon’s land. While the Tibbs, Seventymile and Northway projects are each years from becoming an operating mine, Reda said in an interview that having a large backer like Doyon with the ability to potentially support development of a mine if one of the projects reaches that point is also a major selling point to other investors in the inherently high-risk junior mining industry. “Having Doyon as a shareholder gives us the ability to walk into a fund’s office in New York or Toronto — Wall Street, (Toronto’s) Bay Street, Vancouver’s Howe Street, pick your street — but we get to walk in their and say this is who we are and we’re actually aligned with our Native partner and there’s not too many companies that can do that,” Reda said. The $1.5 million investment netted Doyon approximately 10.4 million shares in Tectonic, according to the statement. Tectonic was formed by Reda and other former leaders of Kaminak Gold Corp., which discovered and advanced the 5 million-ounce Coffee gold prospect between Beaver Creek and Dawson City in the Western Yukon before selling the project to the mining giant that is now Newmont Goldcorp for $520 million Canadian in 2016. Doyon CEO Aaron Schutt said in an interview that the decision to invest in Tectonic started from internal conversations about how to encourage more economic development activity across the company’s vast land holdings. Doyon is the largest private landowner in Alaska with title to approximately 11.5 million acres. Alaska Native regional corporations such as Doyon also hold subsurface mineral rights lands owned by Native village corporations in their regions. Doyon leaders liked how Kaminak Gold approached its work in the Yukon — in terms of both geology and community engagement — and that continued into Tectonics first couple summer work seasons in Alaska, Schutt said. “It doesn’t show up in early in the economics of a mining project but it does later,” Schutt said of companies that are actively involved in the communities near their projects. He added that Doyon leaders anecdotally heard positive things from First Nations officials in the Yukon about Kaminak. Reda said Kaminak offered scholarships to area students and established a local hire program among other efforts to positively impact area residents while the company was working the Coffee project. “It’s not just about finding a mine; it’s about doing it properly in a way that benefits everyone,” he said. As for the prospects, Reda said the Seventymile property near Eagle is “drill ready” and the company had plans to do so this summer before the COVID-19 pandemic took over nearly every aspect of life. Those plans are on hold for now. “Right now we’re thinking outside the box on how to make that a reality but at the same time we have to be very much compliant with the rules and regulations and obviously the safety of our employees and service providers is of the utmost importance,” he said. Tectonic acquired the Seventymile property in 2018 did its own soil sampling and geophysical surveys along with analyzing historical drilling records from the area. The company drilled the Tibbs prospect last year with promising results. “We’re also champing at the bit to get out into the field there (at Tibbs) and flesh out the discovery and figure out just how big it is,” Reda said. He also noted that by taking a direct stake in Tectonic, Doyon would reap a portion of any benefits Tectonic realizes from the Tibbs prospect even though it’s on state lands. Alaska mining industry observers estimate companies spent roughly $150 million on exploration work in 2018 and 2019, up about $50 million from several years prior. The land-use agreements for the Northway and Seventymile prospects are typically structured and the direct investment does not change them or give Tectonic preferential rights to other Doyon lands, according to Schutt, who said the regional corporation is also looking to do some early-stage mineral exploration on its lands itself this year. “It’s not even drilling, just data review,” Schutt said, adding Doyon has gotten interest from other exploration companies of late, adding further to the revived interest in the Eastern Interior’s gold potential. Doyon has previously explored for oil and gas on its lands with mixed results. Elwood Brehmer can be reached at [email protected]

Oil Search hits target in two wells but slows Nanushuk development

Oil Search had a successful exploration drilling campaign on the North Slope this winter but the company has cut spending and delayed a final investment decision on Alaska’s largest oil project in decades amid horrendous market conditions. The Mitquq-1 and Stirrup-1 exploration wells both hit oil and had flow rates better than expected, according to Oil Search’s first quarter earnings report. The Papua New Guinea-based producer is advancing the Nanushuk oil project in the Pikka Unit located on state lands between ConocoPhillips’ large Kuparuk and Alpine fields. Oil Search also said in its quarterly report that a final investment decision on the roughly $5 billion project has been deferred until market conditions improve. Company leaders had previously planned on making the decision in the second half of the year. The Nanushuk project is expected to produce up to 120,000 barrels of oil per day once it is fully developed. According to the report, Oil Search has cut its project development spending in Alaska this year by about $10 million and its exploration and appraisal budget in the state by about $70 million just in the past six weeks in response to collapsed global energy markets. The company previously planned to spend between $335 million and $415 million on exploration and development activities in Alaska this year. It spent $68.9 million on North Slope development activities, such as laying gravel for roads and drilling pads, in the first quarter, according to the report. Oil Search produces oil and natural gas from fields it operates in Papua New Guinea; the company does not yet have any production in Alaska. Companywide, the 2020 spending plan has been cut nearly 40 percent, or roughly $300 million. Last October Oil Search announced it was taking steps to move up its initial production timeline on the Nanushuk project from late 2023 to 2022 in part by utilizing oil processing facilities at Kuparuk until the Nanushuk facilities are operational. Oil Search’s operating revenue fell by 20 percent to $359 million in the first quarter compared to the end of 2019 primarily due to down oil and gas markets. Alaska North Slope oil prices have settled in the $10 per barrel range in recent days following a brief period of going negative as oil production far exceeds current demand worldwide. Managing Director Keiran Wulff said the company’s actions have put it in a good place to “weather a potentially protracted period of global disruption” brought on by the COVID-19 pandemic. “While the company is now in a robust position to withstand a sustained period of low oil prices, we are undertaking further measures to drive down breakeven costs across our business, targeting a reduction in production costs of $1-$2 (per barrel of oil equivalent), and to enhance our capital management programs,” Wulff said in a formal statement. “This will ensure we are in a good position to progress our world-class growth projects in Papua New Guinea and Alaska when market conditions improve.” The Mitquq and Stirrup exploration wells, drilled on state leases outside of the Pikka Unit, provided Oil Search with additional geologic and well productivity data from the Nanushuk oil play that will help support future development, according to the report. The Mitquq well and sidetrack well located just east of the Pikka Unit hit a net pay zone of 172 feet and consistently flowed 1,730 barrels per day during a flow test. Mitquq also hit gas and oil in the Alpine C formation across 52 feet of net pay. The Stirrup well, drilled about 20 miles southwest of Pikka, hit an oil column with net pay of approximately 75 feet in the shallow Nanushuk reservoir and flowed 3,520 barrels of oil per day during a test, which is one of the highest flow rates yet from the play for a single-stage stimulation of a vertical well, according to the report. An Oil Search Alaska spokeswoman Amy Burnett wrote via email that the company is encouraged by the results but it will be some time before the drilling results can be incorporated into the company's overall resource estimates for the Nanushuk play. Oil Search completed an $850 million buyout of Armstrong Energy and a silent owner in Pikka in 2018 to take a 51 percent operating stake in the unit. Spanish major Repsol holds a 49 percent interest in the Pikka Unit and its Nanushuk oil project. Efforts to sell a 15 percent stake in the project have also been suspended, but company leaders are continuing discussions with parties that were interested prior to the recent oil price collapse, the report states. Elwood Brehmer can be reached at [email protected]

Budget picture gets worse with TAPS flow cut

Alaska’s finances are deteriorating so fast it’s even hard for the professionals tasked with doing so to keep up. Legislative Finance Director Pat Pitney told the House Finance Committee on April 22 that the Department of Revenue’s updated spring revenue forecast — which looked bleak when it was released April 6 — is likely “very optimistic” given what happened in the interim. That’s because what started as a small budget surplus before the Legislature approved this year’s Permanent Fund dividend distribution of $1,000 per eligible Alaskan, required supplemental spending and COVID-19 gripped the world has turned into a $1.3 billion deficit this year that will likely be at least $1 billion next year, according to Legislative Finance calculations. Revenue officials revised their spring forecast downward by nearly $530 million based on Alaska oil prices generally being below $30 per barrel for the rest of the 2020 fiscal year, ending June 30. At the time, Alaska North Slope Crude was selling in the $30 per barrel range following a broad agreement by major producing countries to cut global production in May by nearly 10 million barrels per day, or about 10 percent of total oil production worldwide. However, the promise of major oil supply cuts was still not enough to offset the demand drop from a global economy idled by COVID-19 work and travel restrictions. On April 20, domestic market oil prices fell into the red with the price of Alaska oil falling by $18 in a single day to -$2.68 per barrel, which Legislative Finance analyst Alexi Painter called a “paper negative” driven by trades in the futures market. While, according to Painter, there likely was no oil actually traded at a negative price and the price quickly rebounded to $9.01 per barrel the following day, it is an apropos descriptor of the State of Alaska’s fiscal situation. Civic-minded Alaskans are very familiar with the mantra that the state needs to fix its structural budget deficit as the debates over spending cuts and taxes have dominated lawmakers’ time since oil prices started falling in late 2014. Lawmakers off all stripes have routinely been sharply criticized — and voted out of office — for supporting unpopular budget remedies. But Pitney, former Gov. Bill Walker’s budget director, briefly revisited that history to illustrate just how drastically the State of Alaska’s fiscal picture has changed in less than 10 years. She noted that the state took in nearly $9 billion of petroleum-generated tax and royalty revenue in 2012. The “very optimistic” projection for this year is just less than $1.1 billion. The 2021 budget passed in late March calls for more than $5.1 billion of state spending, but Pitney noted that both the 2020 and 2021 deficits could grow further with supplemental spending packages needed to combat the effects of the pandemic and other, more common needs, such as wildfire suppression. “That traditional revenue stream is gone and with the price volatility and the uncertainty in the demand drop the coronavirus has brought, that less than a quarter of our revenue stream and our budget needs from oil is probably something we need to get used to,” she said. Alaska oil has temporarily stabilized in the $10 per barrel range in the days since and the Revenue Department expects Alaska oil to average just $37 per barrel in fiscal year 2021. Painter noted that at $10 per barrel companies are barely able to cover the cost of transporting the oil from the North Slope to West Coast markets. “The breakeven for all oil company spending is generally around $40 (per barrel) in Alaska, so even at the forecast price of $37, which would be a substantial increase from where we are, the companies are losing money,” he said. In 2018 lawmakers thought they had solved the majority of the structural budget imbalance by approving an annual 5.25 percent of market value, or POMV, on the Permanent Fund; it drops to 5 percent in 2022. The predictable POMV draw will grow from $2.9 billion this year to nearly $3.1 billion in 2021, but the state will feel the impacts of the COVID-19 pandemic through the POMV for years to come. The lost value of the Permanent Fund from recent financial market declines means the POMV will be $47 million less than previously expected in 2022. The annual POMV revenue forgone from a poor 2020 will peak at about $300 million in 2027, according to Pitney, before the year falls out of the five-year trailing average window used to calculate the POMV. That’s all based on the fund ending fiscal 2020 with a balance of $63.1 billion and immediately returning to its historical 7 percent historical return average. As of April 27, the fund had an unaudited value of $62.5 billion, up from $60 billion at the end of March. It peaked in late January with a total balance of nearly $67 billion. On top of all that, Aleyska Pipeline Service Co. said April 24 that it had begun to cut Trans-Alaska Pipeline System throughput by about 50,000 barrels per day to deal with a lack of oil storage capacity projected for late May in the system. Reducing TAPS throughput directly translates to less money for the state, but exactly how much will be forgone is unclear at this point due to a host of ever-changing variables. What is clear is that the original fiscal year 2020 North Slope production forecast of 492,000 barrels per day — another fundamental factor in the revenue estimates — will not be met. TAPS throughput for 2020 averaged 485,583 barrels per day immediately following the throughput cut. Pitney said before Alyeska confirmed the throughput proration that the Constitutional Budget Reserve, which once held roughly $14 billion and lawmakers have relied on to backfill annual deficits, will be down to $1.4 billion by the end of June and is likely to be functionally exhausted in a little more than a year without making structural budget changes. The Department of Revenue uses the CBR to manage daily cash flow and its March 31 balance of nearly $2.2 billion includes $465 million held in the state’s General fund as short-term cash flow borrowing, according to Pitney. She added that turning to the Permanent Fund’s $16 billion Earnings Reserve Account to backfill what the CBR can’t also has long-term consequences. Each $1 billion pulled from the account — which is the spendable portion of the Permanent Fund — beyond the POMV draw translates to $50 million less available each year in perpetuity. “We have to address the structural budget deficit soon and it’s going to be continued budget reductions, but it’s also got to be new and diversified revenue sources,” she said. “Changing the dividend formula is not enough to close the structural budget deficit.” Elwood Brehmer can be reached at [email protected]

What I learned cleaning up a homeless camp

The first thing I noticed upon reaching the abandoned piles of trash alongside Chester Creek behind my apartment building were several small black and yellow boxes. They resembled the type of packaging that may contain auto fuses and I wondered what new intoxicating purpose had been discovered within them, but as I crouched down for a better look and picked one up I realized the boxes had once contained contact lenses. Then I found the contents strewn about nearby: dozens of lenses still in their unopened plastic containers. The hundreds of dollars worth of product obviously stolen from someone’s mailbox had proven of little value to the thieves and been summarily discarded. The next thing I found was the empty bottle labeled “Dirty Needles!” with the exclamation point cheerfully spiked by a heart. All around I had soon plucked about a dozen needles from the ground, carefully grabbing them by the middle through the Kevlar-lined gloves purchased with this specific risk in mind, and breaking off each tip before placing them into the first of 20 39-gallon trash bags I would eventually fill over four days. I was immediately frustrated as I tried to start with big items such as sleeping bags, pillows, foam and even a box spring but found them literally frozen solid into the ground. They would not budge and forced me to go back to picking up the more mundane trash of cans, bottles, clothes, all types of plastic (but not plastic grocery bags thanks to the Anchorage Assembly and Mayor Ethan Berkowitz!), a seemingly infinite number of batteries, empty aerosols mined as inhalants, and more needles. One lesson quickly learned about avoiding contact with human feces was to be less aggressive grabbing paper or any trash bag near a tree. The oddest thing I kept finding were the six-round loaders sold for toy cap guns, and I wondered once again what new high was being sought from such an innocuous item. I never did find any toy guns, but I did find enough toys to stock a daycare center. The toys, stuffed animals, children’s clothing and diapers that filled my bags were depressing evidence of what had been going on unchecked for months over the winter just 50 yards from my apartment balcony. Not only were an untold number of addicts in a non-stop pursuit of their next high by any means necessary, but small children in the same camp were exposed to this danger and criminal neglect. After spending a couple hours on each of the first two days on the biggest problem area, I moved a little farther downstream to the next site behind my building on the third day. This was apparently some kind of trash burn area, so the piles were at least a bit more concentrated. But without a shovel or a front-loader there was no way to even begin to clean those up other than grabbing the larger items around the edges. Day three was relatively quick work, although I couldn't remove items such as a charred shopping cart and the burnt insides of a mattress. Feeling better about my progress for the day, I spotted a Quaker Oats canister tucked under a bush. It was filled with dozens of needles, which was as disheartening of an exclamation point to the day as the handwritten label on the bottle I found to start day one. My plan for cleanup was to take care of the area immediately behind my building. I assume the land is owned by the municipality based on the fact that the maintenance crew that takes care of the landscaping at my building refuses to pick up even a McDonald’s bag in the area if it isn’t in the parking lot. The area also lies across Chester Creek from the trail so I had zero faith whatsoever that the Parks and Recreation Department would be by anytime in the next few months to take care of it. I’ve lived here for a few years now, and this area had always been a nice perk. I can be on the trail with Dakota in just a few minutes or stroll along the creek banks for shorter bathroom breaks. Every year I host a “trailgating” party for the Iditarod start through Anchorage where friends can gather for breakfast and then watch up close as the teams go by without battling the downtown crowd. The area has been off limits to me since last fall when the camps started popping up behind my building and the one next door. No longer could I stroll through the woods on my way home or walk along the creek. Last September, I heard a splashing sound coming from the creek and wondered if it was a salmon. I knew Chester Creek had salmon, but had never actually seen one despite countless walks on this trail over the years. I walked to the bank and curiosity turned into dismay as I saw what was happening. A shopping cart had been tossed into the creek and several pink salmon were struggling to get around it as they kept getting pushed by the current into the basket. After tying Dakota’s leash to a tree, I made my way down the bank and pulled the cart weighed down by leaves and other trash out, but not without crashing into the mud first. The salmon swam upstream in relief and I drug the cart up the bank and pushed it about 50 feet away. The next day I went back and sure enough it had been chucked into the creek again. As I pulled it out, some guy emerged from a tent and told me he had the cart in the creek trying to catch his girlfriend’s purse that he’d thrown in there. I told him he wasn’t allowed to have carts anymore and muscled two of them up into the parking lot, into my Tahoe and back to their home at Walmart. Not long after I used the tool on the Municipality of Anchorage website to report the budding camps. Rather than the camps being vacated, they expanded all winter to the point they had reached when I started my cleanup. After four days taking care of my small area, I walked up the small rise “next door” and literally stood still in amazement as I gazed around at the scene. An area as big as a football field along the creek is utterly ravaged by trash and burn piles. Imagining what the Environmental Protection Agency would do to a company that allowed this kind of pollution to amass at a drill site or a placer mine is easy. Fines totaling hundreds of thousands if not millions would be in order, yet this is the state the Municipality of Anchorage has allowed to develop within critical fish and wildlife habitat. Chester and Campbell creeks are protected by the state Anadromous Fish Act, and as streams that flow into Cook Inlet and eventually the Pacific Ocean they are subject to the federal Clean Water Act. The creeks and riparian areas are also home to ducks, geese and other species that are protected under the Migratory Bird Treaty Act. Pollution from plastics, human waste and other trash entering the water is obvious, as are the toxic chemicals leeching into the soil. Perhaps if the administration and the Assembly are not motivated by humanitarian reasons to get Anchorage in order, they could be inspired by the possible liability for destroying the protected natural habitat that is also the central pillar of the city’s marketing strategy. “It’s a national problem,” the mayor often says as he passes the buck when asked about the homeless problem. With all due respect, what has happened to Anchorage is a local problem that has gotten demonstrably worse from the neglect of its elected leaders over the years. When I picked up trash along the Chester Creek trail during City Cleanup in 2010, I filled three or four bags along a mile of the trail. It took a half-hour in one small spot to fill up that many in 2020. While the mayor hectors law-abiding people about getting tattoos, he gives a pass to the people who are passing out or passing the bottle without interruption at the busiest intersections in town. I didn’t clean up the creek banks behind my building so I could write a story about it. I did it so I could enjoy the area again. I know I don’t live in a fancy part of town, but I like it and I’ll be damned if I move before the people who are destroying it are forced to. There are thousands of people like me around Anchorage. We deserve to be heard, and we’re tired of hearing the same story. Andrew Jensen can be reached at [email protected]

A day in the life of an SBDC advisor and a small business owner

On March 28 at 5 p.m., Alaskans across the state retreated to their homes as Gov. Mike Dunleavy’s Health Mandate 011: Social Distancing went into effect. In a mere four weeks, the quickest spike in unemployment in Alaska’s history ensued, with more than 50,000 jobs lost. About one in seven previously employed Alaskans are now out of work. Those numbers are expected to increase as efforts to flatten the COVID-19 curve continue and businesses keep making cuts to stay afloat. Many small businesses are turning to the Alaska Small Business Development Center for assistance as they apply for federal aid and try to plan for an uncertain future. The Alaska SBDC estimates that requests for assistance increased 250 percent from an average month. Meet the Alaska SBDC’s Julie Nolen, Assistant State Director and Matanuska Susitna Director In July 2020, Julie Nolen will celebrate 11 years as an SBDC Business Advisor. She was born into small business; her family owned The Bagel Factory and Deli in Anchorage during the 1980s. Nolen grew up learning day-to-day operations from her parents while developing the beginning of a lifelong love for small business. “They’re the lifeblood of our communities,” Nolen said. “Not only do they provide jobs and essential services, they create our culture. And there’s a sense of pride that goes along with owning a business, a sense of working together for the common good… I love being able to contribute to that.” At the SBDC, Nolen excels at taking the complicated parts of running a business — from applying for loans to writing a business plan — and turning them into simple, achievable steps. Along with her full-time, busier-than-ever job, she is helping her second-grade son Alex finish up the school year at home and navigating the challenges of settling into a new working from home routine with her husband, Andy. 7 a.m. As soon as the alarm rings, Nolen grabs her phone and checks email. She begins writing responses as she makes her first cup of coffee, relishing her quiet time and the chance to get some work done before the rest of her family wakes up. 7:45 a.m. Nolen makes her son Alex’s breakfast. He likes “toad in the holes” (a slice of bread with a fried egg in the middle) and after he finishes eating she gets him started on his schoolwork. 8:15 a.m. Despite working from home, SBDC’s advisors communicate regularly. Each day begins with a visit to Google Chat’s “water cooler” feature that the team uses for internal conversations. Nolen says the morning check-in is the easiest way for them to share knowledge and stay up-to-date regarding the news of the day. One of her colleagues calls into a 4 a.m. Small Business Administration briefing every morning and updates the rest of the team on changes to federal relief programs. 8:30 a.m. Nolen checks in with the other members of the SBDC leadership team to discuss staff’s remote work schedules and how to meet the increasing demand for their services. SBDC is in the process of hiring temporary administrative staff and business advisors to serve clients. “Our advisors are working all day every day — previously we worked a standard 8 hours, but now we have to take a different approach to everything: the hours we work, the way we advise, the content of advising, how we communicate with clients and the public,” Nolen said. Pre-COVID-19, client meetings lasted 45 minutes to an hour, sometimes longer. Now, advisors try to get their clients the information they need in as short amount of time as possible without losing a personal touch. “Our clients know we’re slammed,” Nolen said. “They don’t expect the same kind of conversation we normally have, but they also know that if they really need us, we’ll give them the time. Some people are struggling right now, and if we can help them through, we will.” Many clients are facing bankruptcy and the permanent closure of businesses they’ve spent years pouring their time, money, and passion into. SBDC advisors are doing their best to help them access federal relief programs, which many business owners have found challenging to navigate. 9:30 a.m. Nolen spends the next few hours meeting with clients and following up on emails. She says she hasn’t helped someone with a business plan — previously a focus of her work — in six weeks; now, 95 percent of her time is COVID-19 related, helping businesses prepare to apply for the SBA’s Paycheck Protection Program or Economic Injury Disaster Loan Program. On Friday, April 17, the SBA announced these programs are no longer accepting applications due to expended funds. Shortly afterward, the Alaska SBDC posted on Facebook that they are confident Congress will pass another relief bill, and encouraged businesses to prepare the documents they will need to access federal relief programs, reduce operating costs and take advantage of any existing financial programs they qualify for. 1:15 p.m. Switching gears to “mom mode,” Nolen makes ham sandwiches for lunch and checks Alex’s progress on his schoolwork before diving back into advising work. 2 p.m. It’s time for dueling Zoom meetings! Nolen says Zoom meetings are a bit of a challenge when working and parenting simultaneously. “When it’s time for Alex’s second grade class Zoom meeting, it’s his chance to see his friends and teachers and he’s really excited for that kind of attention. I do my best to block out the noise,” Nolen said. “When it’s my Zoom meeting, sometimes he pops in and out — I was in a meeting with MTA executives and he was in the background, but everyone just laughed. We’re all going through it together.” Nolen says that the balance between working and teaching is really hard. She feels guilty about not being able to give him more of her time but is operating in “crisis mode” for her clients. “I feel better when I see my husband Andy coming up with fun lessons like ‘shop class’ when they work in the garage together. I don’t know how single parents can do this,” she said. 3:30 p.m. Nolen joins a meeting with Mat-Su Assemblywoman Stephanie Nowers to discuss a survey of borough businesses that will help guide COVID-19 recovery efforts. Both women serve on the Assembly’s recently revitalized economic development committee. 4 p.m. After quickly checking the news and social media to see if there are any updates about SBA programs, Nolen is ready for more client meetings. 5 p.m. While getting dinner started, Nolen tunes into the State’s COVID-19 briefing and continues to check email on her phone throughout the evening while her family settles in for movies on the couch. “I’ve been feeling a lot of anxiety, and it’s hard for me to unplug and relax; the lines between work and home feel really blurred,” says Nolan. “And, anything I don’t get done in the evening is waiting for me in the morning…we’re so busy that I’m barely able to keep up with the number of inquiries that come in overnight.” Despite her own tendency to work long after 5 p.m., Nolen has been encouraging staff to minimize overtime. “It’s not easy talking to small business owners who are worried about their futures, especially people who own seasonal businesses and might not be able to open,” says Nolen. “We’re business advisors but quickly become informal counselors. Clients talk about their troubles and we witness their suffering. A lot of clients call us in tears. We’re glad we can be there for them but we have to preserve our mental health too.” For Nolen, that means making the occasional escape to her cabin near Skwentna. “We went out last weekend, it’s snowmachine-in only and it felt so good to be out there. I put in my ear buds piping with John Prine tunes, got some fresh air… it was beautiful and I had so much fun. Just leaving work behind really recharged me.” 9 p.m. Nolen is in bed, trying to get rest before starting another day serving small businesses in Alaska. Work has been challenging, but Nolen’s overarching feeling is pride in the SBDC team. “Everyone is stepping up, everyone is helping out. When one center is overloaded another center jumps in to help. We’re meeting this challenge head on, together.” Meet Seward Brewing Company’s Co-Owner Hillary Bean Hillary Bean and Erik Slater purchased Seward Brewing Company from its original owners in 2014. Longtime members of Alaska’s hospitality industry, Bean leads operations while Slater oversees the brewery and culinary side of the business. Together they serve hundreds of visitors and locals during their five month season that runs May through September. Boasting four flagship beers — Rockfish Red Ale, Inked Out Stout, El Jefeweizen Chile Wheat, and Pinbone IPA — along with other specialty brews and what Bean says is the best burger in Alaska, more than 850 people visit the brewery per day at the height of the season. “The income we generate in the summer months sustains us for the whole year,” says Bean. “Starting two months late is a real kick in the gut when you are only open five months total.” Although they prefer to be seasonal workers, for the last three years Bean and Slater operated another restaurant in Seward, Chinooks, which is open year-round. The couple also operates employee housing for some of the brewery’s seasonal workers as a separate business. “We were planning to use the income from Chinooks to tear down the old employee housing and build something eco friendly that can be shut down in the winter,” says Bean. “Instead we’re using our savings to stay financially stable this year.” Although putting their plans for the housing project on hold is disappointing, Bean feels fortunate that she’s able to stay operational for the foreseeable future. Many businesses are facing a much more dire situation. According to a survey by the U.S. Chamber of Commerce, nearly half of businesses nationwide say they have less than six months until a permanent shutdown is unavoidable. 8 a.m. The first thing Bean does in the morning is grab her phone to read the news and scroll through Facebook, looking for COVID-19 updates, the latest from the White House, and a bit of pop culture for levity to balance a general sense of anxiety. “It’s like I’m going through the stages of grief — mad, sad, scared, resolved — but you can’t really get resolved because everything keeps changing,” says Bean. “Will we be able to open our dining room? How much is tourism going to drop this year? What does this mean for next year? I can’t even speculate right now, but I’m not banking on pulling in nearly the amount we did last year.” 9 a.m. Bean heads out for a walk around her neighborhood to keep her stress levels down, and then home to check on her 16-year-old daughter, Rowan. After answering emails, Bean logs into her bank account to see if any federal relief funds have been deposited. She applied for the PPP loan earlier this month through First National Bank Alaska, with assistance from Nolen. “I’ve limited myself to checking once a day,” says Bean. “But I’m monitoring it closely because we usually have income and without it the balance can get really low. I have about four different business plans in my head depending on what happens with coronavirus.” Although she hasn’t received federal funds yet, she knows they are on their way. “The bank’s branch manager, Melissa Schutter, called me to let me know we were approved! My husband texted our chef right away; she said she had tears of relief in her eyes knowing she would get paid in May,” Bean said. 10:30 a.m. Along with New York-style bagels for breakfast (obtained by trading flour and banana bread with a neighbor) Bean makes Slater a French press of coffee, which he drinks before heading to Seward Brewing Company. Earlier this year, a sprinkler in the brewery broke and three floors flooded, necessitating repairs to electrical panels and the elevator shaft. Bean spends some time on insurance paperwork and checks in with the brewery’s general manager. “I’m glad we’re able to take care of repairs now, during shoulder season while the town is on lockdown,” says Bean. “The busiest part of the season hits June 15 and we have 90 days to make money. The Fourth of July is definitely our busiest day of the year. It’s crazy to think we won’t have Mount Marathon and the crowds of the people coming to town for it this year, but I know the Race Committee thought long and hard before making that call.” 2:30 to 3 p.m. Bean’s daughter finishes school for the day, and they have a snack and hang out. 3:30 p.m. Bean balances the checkbook for both businesses — Seward Brewing Company and Employee Housing — as well as her personal checkbook. Once she’s done, she spends some time on her newest hobby, puzzles. “In a normal year, employees would be coming into town, I’d be getting all their paperwork going, getting the house ready for them,” says Bean. “We would be getting the brewery cleaned and ready for opening. Instead, I’ve become a puzzle nerd.” Seward Brewing Company typically employs 52 people during their operating season. Although Bean is unsure of how that number will change this year, she said it will definitely decrease. 6 p.m. “My husband is a chef and makes dinner every night, so we’ve been eating really well,” says Bean. “We try to do one big store run every two weeks and a quick trip for fresh ingredients once a week.” 7 p.m. After dinner, the family plays board games — Scrabble, Scattergories, Trivial Pursuit, (Monopoly was banned after games got too cutthroat) — and then watches a movie. 12 a.m. Bean goes to bed but lies awake until 2 a.m. watching Ancient Aliens, which she says keeps her from thinking about more somber subjects. To other business owners facing the same challenges as the Seward Brewing Company, Bean’s advice is to throw out previous years’ business plan. “I’ve heard it might take three years or more to build back up. You have to think out of the box. Keep your overhead low and payroll down to survive the next couple seasons. Whatever you are feeling right now, I can validate it. I’ve felt it myself.” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.

Upside down: Alaska crude prices chart negative territory

Market forces that not long ago pushed refiners to pay a premium for Alaska oil have been turned upside down, further depressing an already collapsed oil market and deepening the financial pain of producers and the state. Alaska North Slope crude sold for an unprecedented price of -$2.68 on April 20, a daily drop of $18.09 according to the state Department of Revenue. At prices near zero, North Slope producers are losing an average of more than $30 on each barrel and oil royalty and production tax revenue to the State of Alaska is nonexistent. Longtime Alaska petroleum economist Roger Marks noted that while the prices for Alaska and West Texas Intermediate, the primary benchmark for Lower 48 oil are shockingly low — WTI sold for -$37.63 on April 20 — the price for Brent crude stayed relatively stable at $25.57 with a daily drop of just $2.51. The price for Alaska oil rebounded somewhat April 21 to $9.01 per barrel and WTI was back to $10.01 per barrel at the end of trading. Brent is the primary benchmark price for many of the water-borne oil trades made worldwide. The name originated from the Brent oil field in Europe’s North Sea. Marks said it’s possible just a small number of “distressed” sales by sellers needing to find a place to offload their oil in a vastly oversupplied market could have contributed to driving the ANS price down further. “ANS is a pretty thin market. There’s just a few sales a month that drive the public market,” Marks said. The vast majority of ANS oil is exported from Valdez to West Coast refineries and transportation constraints limit the amount of oil produced east of the Rocky Mountains that can be sent west. That soft barrier has led to the development of ostensibly two oil markets in the U.S. Per state regulations, Revenue officials estimate daily ANS price in part via reports from Reuters and Platts reporting services. There is no instant spot price data for the ANS market as there is for more widely traded oil benchmarks. The fact that the West Coast oil demand is largely from transportation — a sector hit particularly hard by the virus-induced economic shutdown — just adds to the challenges for those selling ANS crude, Marks said. He also said much of the oil refined in state is traditionally used to produce jet fuel, for which demand has all but dissipated as well. “If you want to buy (ANS crude) you can really lowball them right now,” Marks said. Chief Department of Revenue Economist Dan Stickel said state officials have also heard reports of West Coast refiners slowing their production due to COVID-19 infections among refinery personnel. Analysts expect extremely low or even negative oil prices to be a short-term phenomenon, as prices globally have not bottomed out to the degree of U.S. oil markets that appear to be even more saturated. According to the Energy Information Administration, West Coast refineries processed an average of 1.75 million barrels per day in the week ending April 10, which was down nearly 20 percent from more than 2.1 million barrels per day a year ago. The U.S. had a 35-day supply of oil as of April 10, the most recently available data. That is up about 25 percent from a year prior, according to the EIA. Recent reports worldwide have indicated oil tankers are being used as storage vessels in some instances where traditional storage means are full. Marks said Brent futures for June are still in the $30 per barrel range, indicating buyers feel there will be at least a little more balance to oil markets as global production is scaled back. “Not that $30 is good but at least there’s the right symbol in front of it,” he said. “(Oil prices) will come back. The world’s in a very, very weird place these days on a number of fronts and oil prices are just a response to that.” Leaders from the world’s top oil producing nations on April 12 announced a global agreement to cut 9.7 million barrels from daily production in May, or about 10 percent of oil production worldwide. The spread between the ANS and global Brent prices that is now hammering Alaska was benefiting the state just a few months ago. As recently as January ANS crude was trading at a $2 per barrel premium to Brent and in prior months Alaska oil had sold for up to nearly $4 per barrel more than Brent. At the prior price plateau of $60 to $65 per barrel, each dollar to the positive netted the State of Alaska an additional $42 million over the course of a year, Tax Division Director Colleen Glover said at the time. Industry observers then attributed the positive — for Alaska — differential to increased exports from Valdez to South Korea and President Donald Trump’s re-imposed economic sanctions against Iran that restricted the country’s ability to export oil. However, Marks, Stickel and other oil industry analysts have said ANS crude has been forced to compete with more Middle East oil of late on the West Coast, particularly from Saudi Arabia. Sen. Dan Sullivan has been among members of Congress pushing the administration to respond to Saudi Arabia’s part in flooding oil markets. Trump said April 20 his administration is considering a ban on Saudi oil imports in an attempt to stabilize domestic oil prices. An oil price war between Russia and Saudi Arabia ostensibly ended with the April 12 deal, but the full effect of the drastic production cuts isn’t expected until May and the consequences of the conflict, which started after the countries couldn’t agree to a production cut in February, have already been felt. Oil imports to the West Coast averaged just more than 1 million barrels per day during the four-week stretch ending April 10, a 9 percent year-over-year increase, according to the EIA, while refiners are using much less. Stickel emphasized that even though the current price situation is a scary one for the state’s finances, it’s not nearly as bad as it would have been a few years ago. That’s because since the Legislature and former Gov. Bill Walker approved an annual structured draw from the Permanent Fund’s earnings in 2018, oil now accounts for less than 20 percent of the state’s unrestricted revenue, he said. The Permanent Fund draw provides roughly $3 billion per year to state coffers. Stickel noted that revenue from oil and gas property taxes, which generated $121 million in 2019, is stable regardless of prices. Corporate income taxes from the large producers, on the other hand, will likely be “very minimal” in fiscal 2020, he said. Oil and gas corporate taxes netted $217 million to the state last year, according to the 2019 Annual Tax Division Report. Stickel also said oil production tax calculations are made based off of monthly average prices, so a given day or cluster of days with highly abnormal prices will not dramatically alter the overall calculation. Additional provisions of the state’s blended gross-net production tax system are based off of calendar year prices, making it even less likely that the immediate situation will significantly impact state finances over the long-term. The 4 percent gross tax “floor,” — which kicks in when the gross production tax calculation is greater than the net tax payment — gradually steps down to zero if prices average less than $25 per barrel for a calendar year. ANS prices have averaged about $45 per barrel so far in calendar 2020. The Revenue Department’s official forecast published April 6 for the average price in state fiscal year 2020, which ends June 30, is $51 per barrel. Alaska oil was selling for about $28 per barrel at the time. Additionally, the state receives royalties of at least 12.5 percent of the gross value of the vast majority of oil produced on the North Slope. Royalties are calculated based on the wellhead value of the oil minus transportation costs, which average about $9 per barrel, according to the Revenue figures. “As long as prices are above that (transportation cost) level, there will be a gross value so we’ll get some royalty,” Stickel said. If prices stay extremely low much longer than expected, issues between state auditors and producers could arise from having to interpret portions of the production tax law that haven’t previously been considered, he surmised. “It’s kind of an unprecedented situation,” Stickel said. Marks added that an extended period of ultra-low ANS prices could also lead producers to curb production beyond deferring drilling and other capital expenses. “The last place you can store oil is in your reservoir,” Marks said. “You can’t shut down an oil field but you can throttle it back.” That would go against traditional state policies that typically require companies to produce what they are capable of, but Marks said it could benefit both parties to wait until prices improve — if that’s what the markets eventually dictate. ConocoPhillips announced April 16 it would be cutting production by approximately 225,000 barrels per day in the Lower 48 and Canada. Division of Oil and Gas spokesman Sean Clifton wrote in an emailed response to questions that North Slope oil production typically hasn't fluctuated with oil price swings in part becasue it is sold on futures contracts negotiated well before the oil is produced and delivered. Clifton also noted that maintaining a certain level of throughput in the Trans-Alaska Pipeline System, or TAPS, is important for the operational integrity of the pipeline and upstream assets. Leaders at Alyeska Pipeline Service Co. have said there could be operational challenges with TAPS if daily throughput consistently falls below about 300,000 barrels per day; the pipeline currently carries roughly 500,000 barrels of oil per day. Division of Oil and Gas officials are holding discussions with producers to ensure a balance between resource development, infrastructure integrity and commercial sales, according to Clifton. ^ Elwood Brehmer can be reached at [email protected]


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