New Hilcorp-Enstar gas deal adds up to rate savings

Southcentral natural gas customers could collectively save $53.6 million under the latest contract between Enstar Natural Gas Co. and Hilcorp Alaska. According to a letter containing the amended contract terms filed with the Regulatory Commission of Alaska, Enstar customers should save approximately 7 percent in gas costs from June 1 through March 2023, when the utility’s prior contract with the Cook Inlet producer was set to expire. The new terms also extend the agreement through March 2033. According to Enstar’s filing, Hilcorp “reliably delivered” 82 percent of the utility’s gas in 2019 and is expected to cover 80 percent this year. Enstar could purchase anywhere from 64 percent to 97 percent of its annual gas requirement under the new terms. The utility expects its demand to remain at roughly 33.6 billion cubic feet, or bcf, per year through 2025. The contract has a base firm quantity of 25 bcf per year. Enstar officials noted that multiple Cook Inlet producers have filed for bankruptcy in recent years. Furie Operating Alaska had its gas production halted in early 2019 when a production line froze, causing Enstar and other utilities to purchase gas elsewhere and draw on stored reserves for several months. Furie filed for Chapter 11 bankruptcy last August. “This gas supply certainty is vital at a time of growing scarcity,” the letter states. Enstar supplies gas to approximately 148,000 customers. Gas will be sold at $7.55 per thousand cubic feet, or mcf, in the first year of the contract but will vary afterwards. According to Enstar’s filing, the price for gas in subsequent years will be set through a calculation based on three price indices published by the Bureau of Labor Statistics. However, the price cannot increase more than 1.5 percent or decrease more than 1 percent in any given year, meaning the deal has an effective price ceiling of $8.89 per mcf in 2033. Prior contracts between the two had fixed price inflation rates of 2 percent to 4 percent, but “Enstar does not believe that an inflexible, always-positive inflation factor appropriately reflects how production costs increase and decrease over time,” the letter states. The agreement amends and extends a contract signed in 2016. At the time most gas contracts in Cook Inlet were five years or less. In 2018, the first year of that deal, Hilcorp sold to Enstar for an average price of $7.56 per mcf. State Sens. Josh Revak, Shelley Hughes and Senate President Cathy Giessel all urged RCA to approve the contract in comments to the commission. Hughes and Revak noted the combination of price reductions and long-term supply as needed benefits during a highly uncertain economic period and Giessel highlighted that it will ensure Alaska is developing and utilizing its own resources. “When Alaska gas is on relative price parity with imports, this use of our own resource will support the direct and indirect jobs in the resource development industry that in turn support our communities,” Giessel wrote in her comments. A public comment period for the contract is open through May 20 on the RCA website. Elwood Brehmer can be reached at [email protected]

Alaska Air starting Bristol Bay, Unalaska service with regional help

Alaska Airlines is doing what it can to fill the void in air service to Western Alaska created when Ravn Alaska suddenly grounded its fleet earlier this spring. The major domestic airline is partnering with regional carrier Grant Aviation to provide twice-weekly scheduled service to Unalaska through Cold Bay starting May 16, Alaska Airlines Regional Vice President Marilyn Romano said. Regular passenger service between Anchorage and Dillingham and King Salmon — where Alaska has historically offered seasonal jet service — will also start earlier this year. The first flights to the Bristol Bay hub communities are scheduled for May 18, according to Romano. Dillingham, King Salmon and Unalaska-Dutch Harbor are just three of the 115 communities across the state that used to be served by Ravn Alaska and its subsidiary carriers. Ravn filed for Chapter 11 bankruptcy protection April 5, grounding its fleet of 72 aircraft, following a 90 percent drop in its passenger revenue as travel halted due to the COVID-19 pandemic, according to a company statement. Alaska Airlines had partnerships with Ravn at hubs across the state and Romano said it is very difficult to watch the company suffer largely as a result of the health crisis. “It’s hard to think about the 1,300 employees for Ravn that are currently out of work and I know they’re working hard still today, as far as I’ve been told, to see how they could possibly get their operation up and running,” she said in a May 12 interview. Alaska’s moves to backfill Ravn’s service are just part of a larger effort from multiple carriers statewide, Romano noted. “Very quickly, not just Alaska Airlines, the aviation community as a whole really stepped up from both the passenger and cargo side to quickly see how these markets could be served in some way and I think what we’ve got today is most of the markets, whether they’re a (larger) Part 121 market or a Part 135 (air taxi) market, are being covered in some form or fashion,” she said, adding that many of the smaller airports Ravn served are inaccessible to Alaska’s fleet of Boeing 737 jets. That is the case for Unalaska, so Alaska Airlines is flying to the Alaska Peninsula community of Cold Bay, which has a 10,000-foot runway from its days as a military airfield during WWII. From there, Grant Aviation will take passengers the remaining roughly 150 miles to Unalaska. The Cold Bay airport has periodically been used as an emergency landing site for international flights with mechanical or other issues. The Cold Bay stop will be part of Alaska’s service to Adak farther out the Aleutian Chain, according to Romano. She said preparing for the coordinated service to Unalaska — the largest seafood port in the country — has been “a real collaboration” between the communities, airlines and state and federal Transportation officials. While the travel restrictions imposed to limit the spread of COVID-19 have decimated the airline industry worldwide, Romano said the period of very low passenger demand has provided a window for Alaska and other carriers to work out solutions to serve rural communities. “It’s been relatively calm but you never want to, if you can help it, have a community with no access to travel. There are critical needs to travel,” she said. As for Bristol Bay, Alaska first had to arrange to sublease Ravn’s ground facilities at the King Salmon and Dillingham airports before it could start service, as the airlines shared space when they both flew to the communities in years past. “We’re ready to go,” Romano said. “We’ve got our plan for moving employees around filed with the state and the communities.” Alaska will start fly to Dillingham three times per week and King Salmon twice per week briefly before ramping up to daily flights in June along with activity in the region’s commercial salmon fishery. Many Bristol Bay-area residents have long pled for Alaska Airlines to provide year-round passenger service to the region and Romany said the airline currently plans to do so this year. “They seem really happy about that in those communities,” she said. Romano added that Alaska will be flying additional charter flights in and out of Bristol Bay to move commercial fishermen and salmon processor workers as safely as possible. Many leaders and residents in rural fishing towns have expressed serious concerns about the ability to safely move seasonal workers in and out of their communities amid the pandemic. “Some of those seafood workers will actually move from a quarantine situation right onto a charter flight as opposed to scheduled service. Any level of safety that any of us can do together is going to help,” she said. Elwood Brehmer can be reached at [email protected]

Alaska delegation signs on to effort against banks shunning Arctic

Alaska’s congressional delegation is at the center of a growing cadre of Republican lawmakers pushing back on big banks that have decided not to invest in Arctic oil and gas projects. Three dozen senators and representatives signed a May 7 letter to President Donald Trump that first thanked his administration’s pursuit of American “energy dominance,” which has largely focused development of coal, natural gas and oil resources nationwide. The U.S. was the top oil producer in the world immediately prior to the onset of the global COVID-19 pandemic, with companies producing just more than 13 million barrels per day in early March, according to the Energy Information Administration. But the letter mostly urged the Trump administration to look into how the federal government can counter the group of large banks that have recently publicized policies against financing oil projects in the Arctic and select other parts of the country. Many of the same institutions are also shying away from investments in coal as well. In recent months Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and Wells Fargo have all confirmed that to varying degrees they would not be supporting future Arctic oil projects. Most of the statements have been made through the banks’ social and environmental policies. The decisions have been praised by numerous congressional Democrats, conservation groups and renewable energy advocates across the country but have made the banks a target for lawmakers from oil, gas and coal producing states. “Scoring cheap political points at the expense of American energy workers is an affront to our economic success and it must be confronted,” the May 7 letter states. The signatories included Sens. Dan Sullivan and Lisa Murkowski and Rep. Don Young. The lawmakers also questioned why lending institutions that received federal support during the 2008-09 financial crisis and will potentially benefit from participating in CARES Act programs should be allowed “to pick energy winners and losers in order to placate the environmental fringe.” “As every sector of our economy struggles to survive the COVID-19 pandemic and seeks financial stability from the federal government, environmental extremists are using the pandemic to accelerate their goal of putting American energy jobs in the grave,” the letter states. “We urge you and your administration to use every administrative and regulatory tool at your disposal to prevent America’s financial institutions from discriminating against America’s energy sector while they simultaneously enjoy the benefit of federal programs.” Sullivan helped get the ball rolling for Republicans while participating an April 24 signing ceremony for legislation to add funding to the Small Business Administration’s Paycheck Protection Program in the Oval Office. Sullivan first said the COVID-19 response aid would help many Alaskans, including those working in the oil and gas, fishing and tourism industries, through this exceptionally difficult period. He said further that he doesn’t believe the banks should be allowed to receive federal support and at the same time “discriminate against a critical sector of the U.S. economy.” “I like the idea of looking into that; you’re right. You know, that got (to) where they were pushed by the radical left, and so they’re afraid of the radical left,” Trump responded. Sullivan said in an interview with the Journal prior to the letter that it is the “irony and hypocrisy” that some of the same banks kept afloat by federal aid roughly a decade ago “still find it OK to discriminate against the energy sector, particularly our state” that goes beyond free market principles and at a minimum warrants congressional attention. He acknowledged that it’s currently unclear exactly what Congress or the administration could do regarding the banks but said his staff is working with administration officials and other congressional offices as well to find possible remedies to the situation. “If you implemented what the national Democrats want, America, as the energy superpower of the world, which we have achieved and is now being threatened, wouldn’t have a chance and the dominant powers would be Saudi Arabia, Russia; and somehow they think that would be good for our country. It’s remarkable and fundamentally frightening to me,” he told the Journal. In January, 16 Democrat senators wrote to Wells Fargo CEO Charles Scharf asking that the bank commit to not financing oil and gas exploration in the Arctic National Wildlife Refuge. Similar letters from congressional Democrats have been sent to other major bank executives as well. Alaska Oil and Gas Association CEO Kara Moriarty said Sullivan made “a really valid point” to Trump while noting that the banks have generally stated a prohibition on direct Arctic oil project financing, which does not preclude general lending to oil and gas companies that work in the region. How exactly the individual banks will decide which oil projects are acceptable and which aren’t is just one question they need to answer, she said, adding that how each institution defines “Arctic” is another. The bans on Arctic oil investments likely apply to the North Slope, as it is within the technical definition of the Arctic, Moriarty said, while also pointing out that the Arctic Council classifies the Aleutians as Arctic — and some federal agencies — have even broader definitions. “I do think it is frustrating to see these huge financial institutions in my mind arbitrarily decide that projects and financing in the Arctic is too risky because some of them have listed care for the environment and things of that nature (in policy statements) and yet they’re still investing in companies and projects in countries that have a way worse environmental record than America does and certainly Alaska,” she said. “If a bank’s risk profile doesn’t view that projects in the Arctic are going to meet their risk criteria, that’s fine, but making blanket statements that ‘we won’t be investing’ even without giving a project the benefit of the doubt is sort of like agencies saying ‘we’re never going to permit a project in the Arctic.’ How can you say that?” Wells Fargo interprets the Alaska Arctic to be the North Slope, according to spokesman David Kennedy. He wrote in an email that the bank did not have a comment on letter to Trump but clarified the bank’s policy regarding working with the oil and gas industry in the state, noting that the decision to forgo funding Arctic oil projects was part of a larger move away from all project-specific transactions in the region. The bank, which has branches in Alaska, will continue to offer general corporate credit facilities for oil and gas companies in Alaska, according to a statement from Wells Fargo. “Wells Fargo is a leading provider of credit to Alaska Native Corporations and responsible oil and gas exploration and production companies doing business in Alaska, and we want to continue those relationships long into the future,” the statement said. Moriarty said she hasn’t heard of any companies in Alaska struggling to find financing as a direct result of the banks’ decisions but that’s mostly because funding isn’t something oil companies often disclose. “We operate under some pretty strict anti-trust rules. Price and investors and who they’re getting money from and how they’re getting money for projects — that just isn’t stuff we talk about, but it doesn’t mean it’s not happening,” she said. First National Bank Alaska CEO Betsy Lawer said the large oil companies operating on the North Slope typically have lines of credit with other financial institutions to fund portions of their work. FNBA, as a community bank, instead focuses its oil industry lending on Alaska-based companies in the support service sector, Lawer said. A JPMorgan Chase spokesman declined to comment on the May 7 letter and other banks did not respond to questions in time for this story. ANWR lease sale Bureau of Land Management officials continue to inch ahead with plans for an oil and gas lease sale in the ANWR coastal plain despite historically bad dynamics in world oil markets but it remains unclear when the controversial silent auction-style sale will finally be held. BLM Alaska officials released the final version of the environmental impact statement in mid-September and BLM State Director Chad Padgett said at the time he hoped to hold a lease sale for the entire 1.6 million-acre coastal plain before the end of the year, reiterating a common theme heard from other Interior Department leaders. While a record of decision — a prerequisite to a lease sale — could have been signed by agency officials as soon as 30 days after the official Sept. 20 final EIS notice was published in the Federal Register, but 2019 ended with little word from BLM or Interior leaders about it. BLM Alaska spokeswoman Lesli Ellis-Wouters noted in an emailed response to questions that it is not uncommon for a record of decision to be issued up to several months after a final EIS is made public. “This decision will take into consideration the many important issues and potential impacts we heard during our multi-year scoping and public comment process which resulted in almost 2 million comments received,” Ellis-Wouters wrote. The commenters largely expressed concerns about impacts to subsistence lifestyles, the migratory patterns of the Porcupine caribou herd that uses the coastal plain for calving and opportunities for increased jobs and economic opportunities in the state, she added. Ellis-Wouters also noted that to comply with the 2017 tax bill, which opened the Coastal Plain to oil and gas exploration, BLM does not have to hold the first lease sale until December 2021. However, many supporters of drilling in ANWR have pushed for a sale before the end of President Donald Trump’s first term to make sure Republicans maintain control of the process. Bloomberg reported May 11 that Interior Secretary David Bernhardt said he does not think the immediate collapse of oil markets will dampen industry interest in an ANWR lease sale, which he believes will likely be held this year. Moriarty said it’s too tough to tell what industry’s response to a lease sale would be as uncertainty from the COVID-19 pandemic has made even very near-term predicting in the historically volatile industry impossible. “You’ve got to let the process work. You’ve got to make sure the EIS is defensible in court because those that oppose development of the coastal plain are going to say, ‘well, the reason they didn’t show is because of low prices’ or ‘the reason they didn’t show is because of high prices’ or ‘the reason they didn’t show is’ — it just doesn’t matter,” Moriarty said. “There’s always a reason fabricated as to why we’ll never have a successful lease sale in this price environment so the process has to continue.” It’s widely believed that a record of decision authorizing a lease sale will be challenged in court. If a record of decision advancing a sale is approved, BLM will issue a Call for Nominations to industry, which usually takes 30 days and then a Notice of Sale announcing the date will be issued following a review of industry’s submissions, according to Ellis-Wouters. ^ Elwood Brehmer can be reached at [email protected]

BROWN'S CLOSE: The Young and the Redemption

While I was hoping the next report would be from the other side, alas, I’ve enjoyed eight full weeks of quarantine here in West Anchorage. This is largely due to my own sense of caution; the Municipality of Anchorage is well into Phase 2 of reopening. On the first day that restaurants were open, I stepped out onto my front porch and into the brilliant sunshine. I took a tentative step forward, breathing in the fresh air. As detailed in Episode 1, my main source of entertainment over the last eight weeks has been my daily hour-long walk through my neighborhood; my cardio stints come from the quick weaves and dodges to avoid my neighbors. But the day restaurants opened, well that porch stepping had the added significance of being the possible first move into the world beyond my neighborhood. I could actually go to some destination, should I so choose. The man in the next driveway was climbing into his car, and I cheerily waved at him. While not one to normally greet anyone, least of all my neighbors, I was overflowing with the spirit of goodwill for my fellow man. He waved back, and promptly coughed. I dropped my hand, scandalized, and scuttled back into the dim recesses behind me. Every day now, I peer eagerly out of my windows, awaiting news of either devastation or recovery. Nevertheless, this is the third installment of series sponsored by COVID-19, preceded by "The Young and the Restless" and "2 Young 2 Restless: Covid Drift." Updates to key dramatic subplots are included below for your convenience: Workouts – I've joined three fitness challenges through work. I’ve got seven blisters and two biceps to show for it. Karate – Someone circulated a rumor that my karate sensei trained the Karate Kid. This story soon evolved into he trained the guy who trained the Karate Kid. Latest version is that he may have seen the Karate Kid once. Bottom line, the sensei’s life continues to remain shrouded in mystery. Speaking of karate – I am due to test for my “yellow-orange” belt at the end of the month. Logistics remain uncertain and I am not sure whether a virtual test will be easier or harder than an in-person test. Most students advance to black belt (i.e. master ten belts) in three years. At my rate, I can expect to become a black belt in twice that time. I advance through life at half the speed of a nine-year old. Television – I determined it was time to tackle a movie with slightly more gravitas than Alice and Wonderland (the last feature film I watched in quarantine). Netflix had The Shawshank Redemption on rotation. I’d never seen it, had no idea what the plot was, and sat down to watch it with no advance research. Upon viewing, I became unduly morose, and spent 48 hours worried about whether there was any reasonable likelihood I would one day have to stage a prison break through a hole in the sewage piping. After a few comforting episodes of Parks and Recreation, I started Hollywood on Netflix, thinking it would be a cheerful cartoonish reimagining of post-war California. It is not; I’d say the early tone of the show is cynical at best. I watched the central character’s employment struggles for about fifteen minutes, became unduly morose, and went back to Parks and Recreation. I thought a third venture was warranted, and went back to that tried and true genre of British period soap operas. Julian Fellows of Downtown Abbey fame debuted a new show over the Easter weekend and I tuned in. Sure enough, the first episode had a surprisingly affecting death scene, after which I became unduly morose and swore off new content for the foreseeable future. Reports from the front lines both locally and nationally are promising, but with an added dose of whimsy. Women can return to beauty parlors, but cannot have their hair blown dry. Nail salons may take customers, but manicurists must wear the equivalent of a moon suit to protect themselves and their customers. Gyms can hold classes, but only outside. In a nutshell: businesses may take customers, but customers should stay home. Drawing courage from the relatively tame scene locally, I stepped onto my front porch for the second time a few weeks following my neighbor’s assault. Again, I blinked my eyes against all that new bright May light, and glanced down at my phone. Per the news, giant murder hornets have arrived in the United States. I retreated again. The Egyptians understood plagues, and darned if I wasn’t going to follow their hunker down example. Sarah Brown delights in the outdoors. When she is not frolicking in nature, she can be reached at [email protected], and on Twitter @mesarahjb. “Close” is a British term for alley or cul-de-sac. For more of Sarah’s musings, visit Browns-Close.com.

LBA Committee OKs release of CARES Act funds

A committee of the Alaska Legislature approved Gov. Mike Dunleavy’s plan to spend federal coronavirus aid on May 11, but a handful of lawmakers warned that their vote might not be legal. The governor’s plan calls for $568.5 million to cities and boroughs, as much as $100 million for fishermen and fishing businesses, and $289.3 million for small businesses that have not received aid from existing federal programs. Other sections of the approved plan include $10 million to fight homelessness and $52 million for the Alaska Department of Transportation and Public Facilities. Legislative attorneys previously warned that a vote of the full Legislature is needed to legally approve the three biggest pieces of the governor’s plan. The governor has said he disagrees with that interpretation. Members of the Legislative Budget and Audit Committee agreed with the governor, citing the need to get money to Alaskans quickly, and overturned chairman Chris Tuck, D-Anchorage, to approve the plan. The plan has three main pieces: • Community aid. Cities, towns, villages and boroughs will split $568.5 million that can be spent according to rules set by the U.S. Treasury Department. Municipal officials told a legislative committee earlier this month that they believe those rules are so restrictive that much of the money cannot be spent legally. The Municipality of Anchorage said it feels differently and that Congress intended to allow cities and boroughs to use the aid to cover lost tax revenue. Rep. Mark Neuman, R-Big Lake, said he expects Congress will “continue to hear that local control is the best way” and that the issue will be resolved. • Small-business aid. The Alaska Industrial Development and Export Authority, contracting with Credit Union 1, will offer up to $289.3 million in grants to small businesses. Grants will be granted to businesses with 50 or fewer full-time employees that did not qualify for federal aid programs under the CARES Act. The loans are up to $100,000, and recipients will be subject to audits and other restrictions. The commissioner of the Alaska Department of Commerce, Community and Economic Development said nonprofits would also be eligible for grants. • Fisheries aid. The state can accept up to $100 million for aid to fishermen and fishing businesses, but right now, it is scheduled to receive only $50 million. The Alaska Department of Fish and Game will administer the aid program. Rick Green, a special assistant in the department, said the agency is “still working out the avenue the funds will take on their way down to be distributed.” Smaller pieces have involved $10 million for rental and mortgage assistance to be administered by the Alaska Housing Finance Corporation, funding for rural airports, money for the Whittier Tunnel, and cash for local transit systems. Lawmakers in the Budget and Audit Committee talked for almost three hours about the legality of approving the governor’s plan in committee rather than by the whole Legislature. “So far no one has been able to show me how this is legal. You’re all saying ignore it. Some of us are having a hard time ignoring it,” said Rep. Chris Tuck, D-Anchorage and the committee’s chairman. The budget and audit committee can make limited budget decisions on behalf of the full Legislature when lawmakers are not in session, and it normally can only increase line items already funded with federal cash. The governor’s proposal calls for creating new line items funded by the federal CARES Act. The committee cannot alter the governor’s plan, even if there is a mistake. That contributed to delays, as the administration had to rewrite elements of the plan. Legislative reluctance added further delay. A Department of Law spokeswoman said the department has no public documents explaining the administration’s position. The spokeswoman, Maria Bahr, previously said that those documents are covered by attorney-client privilege. Despite the legal questions, a majority of the committee said the state is in an emergency and action is needed quickly. “The COVID virus itself is stretching the limits of this state and the communities, and this money does need to be dissipated as soon as possible,” said Senate President Cathy Giessel, R-Anchorage. Sen. Bert Stedman, R-Sitka, said the full Legislature will eventually be asked to ratify the committee’s action. In the meantime, the money will go out to communities and programs picked by the governor. The final vote was unanimous in favor after Tuck’s opposition was defeated in a procedural vote, 3-7.

FISH FACTOR: Alaska halibut getting battered by foreign imports

Sales of Alaska’s most popular seafoods are being hit hard by markets upended by the coronavirus, but perhaps none is getting battered worse than halibut. Along with the big losses in the lucrative restaurant trade, Pacific halibut also is facing headwinds from increasing foreign imports. Starting three years ago, sales of fresh Pacific halibut to established markets on the East Coast were toppled by a flood of less expensive fish flowing in primarily from eastern Canada. Trade data show that for 2019 through February 2020, total Canadian halibut imports to the U.S. topped 15.3 million pounds for which the U.S. paid nearly $107 million. “It is taking over the eastern seaboard and also is being trucked from Boston to major middle American markets such as Chicago and Denver. It’s very hard to sell Alaska halibut to these traditional markets now. The Canadian product is cheaper and is available nearly year round,” said a marketer with more than 30 years of experience in selling halibut from Southeast Alaska, speaking on condition of anonymity. “All of a sudden, an important market that paid a good price for fresh halibut has disappeared,” he said. “Rule of thumb is generally, sell fresh make a profit, freeze halibut, lose money.” Earlier this year, fresh farmed Atlantic halibut was spotted for sale at $9.99 per pound at a Costco near Seattle. Total global production of farmed halibut is only 4.4 million pounds, of which 3.5 million comes from three farms in Norway. (The remainder is from Scotland, Canada and Iceland.) From 2019 through February 2020, the U.S. bought nearly 2 million pounds of wild caught and farmed halibut from Norway for $10.5 million. Alaska’s losses in fresh sales are combined with huge hits in the West Coast frozen market. That’s due to another newcomer: increasing imports of halibut caught by Russians and processed in China. “Halibut is not consumed by Asians nor Russians so they target the U.S. The Russian halibut is mostly fished longline, dressed collar and tail off and frozen in blocks at sea. They off load in Busan and auction it to processors for making into fillets,” he said. The fish then goes to the U.S. and Canada for resale at prices that undercut all others. “I have been calling end users and distributors trying to find placement for our Alaska product in the frozen fillet form. But the Russian product has taken over,” he wrote in an email. “I visited a customer in Vancouver and he showed me some Russian/Chinese skinless halibut fillets he had bought in the low $6s. Alaskan fillets, for reference, needed to be in the $13s to recoup costs. He mentioned that most of his customers have switched to the less expensive imported. I spent weeks calling fish and chip shops that have always used Alaskan and they prefer not to cut in house but use the imported twice frozen fillets,” he said, adding that Canada is where most of Alaska’s larger frozen halibut (60+ pounds) has gone over the last few decades.” Other market watchers agree that the appearance of Russian halibut is a new twist to conventional market trends. “We started seeing increased Russian production about a year and a half ago when it started to pop up in the data,” said Garret Evridge, a fisheries economist with the McDowell Group. “We were wondering where that volume was going, but given the difficult nature of trade data, we didn’t have a firm grasp. Now we see that some of that harvest is making its way into the U.S. It is a relatively new development,” The Russian/Chinese fish also makes an end run around trade tariffs of up to 25 percent imposed two years ago by the Trump Administration. “A lot of the product used to come in through Seattle, but since the USA imposed the duties for Chinese processed halibut coming into this country, a lot comes into Vancouver, thereby avoiding the duty,” said the marketer. The volume coming in from Russia has been tricky to track once it enters the “black box of China,” said Evridge who added, “Then our data really falls apart. But we understand that Russian Pacific halibut entering China can make its way to the U.S. through a variety of ways.” And the Russian imports are increasing. “In 2019, we saw about 2 million pounds of frozen Russian caught halibut imported into the U.S. The year prior it was 140,000 pounds. Through the first two months of 2020, we’ve imported about 420,000 pounds, so it’s trending higher. For a relatively low volume fishery and for U.S. markets 2 million pounds is pretty substantial,” Evridge said. Trade data show that the U.S. paid nearly $6.7 million for 2 million pounds of Russian caught halibut from 2019 through January 2020. The foreign fish also get the benefit of more favorable exchange rates. “The Russian ruble has weakened against the U.S. dollar by about 14 percent. If I’m a U.S. buyer, there’s a 14 percent discount. The ruble is also weak against the Chinese yuan, so if I’m a Chinese buyer, bringing that product in is relatively affordable. That’s another thing that that we struggle with,” he explained. Tariffs of up to 25 percent are in place for most seafood both coming and going to China, and Russia has not purchased a pound of U.S. seafood since 2014. Meanwhile, Alaskans have 17 million pounds of halibut to catch this year and landings so far are down 60 percent. With deflated markets and dock prices in the $3 to $4 range, there’s not much motivation to go fishing. Salmon starts! Alaska’s salmon season officially kicks off on May 14 at Copper River near Cordova with the arrival of kings and sockeyes. Other salmon fisheries will quickly follow. Alaska’s total 2020 salmon catch is projected at just less than 133 million fish, a 36 percent drop from the 208 million fish taken in 2019. The state’s largest herring fishery at Togiak in Bristol Bay opened on May 3. Icicle is the only buyer for a haul of nearly 39,000 tons of herring caught for their roe. Kodiak’s roe herring fishery is still underway with catches topping 1,500 tons. The price was reported at $300 per ton. A small, one-day-a-week herring fishery is underway at Upper Cook Inlet through May 31. The UCI’s 200 ton smelt fishery runs from May 1 through June. Dungeness crab opened around Kodiak on May 1. Southeast Alaska’s longest ongoing fishery — beam trawling for pink and sidestripe shrimp — opened on May 1 with a catch quota of nearly 1.8 million pounds. A pot shrimp fishery opens on May 15 with a 32,000-pound quota. A lingcod fishery is underway and Southeast divers are still going down for giant geoduck clams. Trollers will be out on the water this month targeting hatchery kings in several regions. At Prince William Sound a second opener for big spot shrimp was set to wrap up on May 9. The total catch by 60 boats will come in at just more than 68,000 pounds. Just more than 2 million pounds of halibut has been landed since the mid-March opener. Sablefish catches at just more than 5 million pounds also are down. The Bering Sea snow crab fishery is wrapping up with a 30.6 million-pound catch. Final prices won’t be settled until July. And as always, catches for cod, pollock, flounders and much more are ongoing in the Gulf of Alaska and Bering Sea. Get mugged Mug Updates tell Alaska fishermen how to navigate the strict COVID-19 mandates in place for salmon season. The updates are provided by the Alaska Fishermen’s Network, an arm of the Alaska Marine Conservation Council. “The purpose is to help you dip your toe in and give you a roadmap for some information to prepare for this upcoming salmon season and for fisheries that are currently ongoing,” said Jamie O’Connor, Network director and a longtime Bristol Bay fisherman. COVID puts the kibosh on parties in the boatyard, the Mug Updates advise, and include simple suggestions like using paper dishware and changing up your galley game with gloves and masks for making meals. “Basics of sanitation and hygiene are huge,” O’Connor stressed. “I think when people are putting together their grubstake, whether they’re putting in a barge order for their summer in the community or they’re going fishing, it’s important that they flag some of these little things to put in their shopping cart. It can make a world of difference.” From what she’s hearing, O’Connor said fishermen “are committed to doing things as safely as possible.” “I’m also hearing a real concern for our supply chain, and people are very aware of the important role we play as food producers,” she added. “Keeping informed is vital right now,” she said, “and we’re doing our best to make that as understandable and digestible as possible. We’re also helping people work through the decision process about whether they are able to fish this season or sit this one out.” The Mug Updates tell it straight about salmon fishing during the COVID pandemic: Play by the rules or everyone gets sent home. Find the Updates at www.akyoungfishermen.org and on Facebook. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Long-sought Railbelt utility reform becomes law

After more than five years of highly technical analysis, delicate negotiations and numerous fits and starts along the way, the path to restructuring Alaska’s once-disjointed Railbelt electric system is officially complete. Gov. Mike Dunleavy signed legislation April 29 fortifying the authorities of the Regulatory Commission of Alaska and directing the six Railbelt electric utilities to establish a new organization to plan for and manage deeply integrated utility operations. RCA Chair Bob Pickett thanked Dunleavy for signing Senate Bill 123 — spawned from recommendations the commission made in 2015 — and said it will eventually help provide Railbelt region residents with more reliable and effective power service in a formal statement. “A cooperative effort of legislative leadership, the RCA, utilities, independent power producers and other public interest representatives contributed to this successful outcome, which started in 2014 at the direction of the Legislature,” Pickett said. SB 123 passed the Senate unanimously and received broad support in the House. It codifies the work that the Railbelt electric utilities have done at the behest of the Regulatory Commission of Alaska to better integrate the long-term planning of the six utilities and provide a consistent path for renewable power producers to access the regional transmission system. “SB 123 will foster cooperation among the interconnected utilities and ensure consumer needs are efficiently and reliably met,” said Sen. John Coghill, R-North Pole, the chair of the Railbelt Electric System Committee that drafted the legislation. Renewable Energy Alaska Project Executive Director Chris Rose called the signing of SB 123 “historic,” a term used by many individuals involved in the Railbelt electric work. “Efforts to reform the Railbelt electric grid to improve coordination and efficiency among the six utilities something that people have been trying to do for decades. This is a major win for everyone,” Rose said. “It will create a better environment for renewable energy development, create efficiencies that will lower electric costs for consumers and allow Alaskans to have a say on what projects are built in the future.” In 2014, lawmakers directed the RCA to conduct a detailed examination of the issues facing the Railbelt electric grid, which stretches across the service territory of six utilities from Fairbanks to Homer that collectively have a customer base typically served by a single utility in the Lower 48. The RCA’s analysis resulted in a frank June 2015 letter to the Legislature that characterized the Railbelt electric system at the time as “fragmented” and “balkanized” and recommended the utilities be afforded time to voluntarily improve their coordination before the commission would seek to clarify its authority to direct coordinated utility operations. At its core, SB 123 mandates the Railbelt electric utilities work with other stakeholder-driven organizations to form an electric reliability organization, or ERO, that would oversee implementation of system-wide reliability standards and coordinate long-term planning amongst the utilities. It also gives the RCA explicit authority to rule on the necessity of large infrastructure projects, such as generation plants, that utilities may pursue. The primary end goal for many stakeholders is to achieve “economic dispatch” across the entire Railbelt — from Homer to Fairbanks — or consistently maximizing use of the most efficient power generation through near-constant power sales between the utilities. Currently, the limited capacity of transmission lines in the region can inhibit economic dispatch of electricity, particularly from the state-owned Bradley Lake hydropower facility near Homer that provides some of the lowest-cost power in the region. While the process of getting from the June 2015 letter to the passage of SB 123 was lengthy and included multiple setbacks, such as the scrapping of an application to jointly form a transmission company to support transmission infrastructure investments last year, utility leaders generally supported the concept. Last December the general managers and CEOs of the regional utilities signed a memorandum of understanding outlining how they would form an ERO dubbed the Railbelt Reliability Council, governed by a board comprised of utility representatives and stakeholders championing independent power producers and others. Utility leaders acknowledged the bipartisan support already behind SB 123 last fall was an impetus to developing the MOU, which calls for the reliability council’s implementation committee to have a business plan for the council ready by this December. MEA spokeswoman Julie Estey wrote via email that the committee’s work has been slowed by a couple weeks while the utilities were immersed in responding to the COVID-19 emergency, but it has not stopped. According to Estey, 11 applications for two unaffiliated implementation committee seats are currently being reviewed and the results are expected in the middle of this month ahead of a vote to finalize the committee roster. Elwood Brehmer can be reached at [email protected]

Wall Street sees the economic pain, opts to look past it

NEW YORK (AP) — Is Wall Street blind? The global economy is in shambles, the coronavirus pandemic has killed more than 249,000 worldwide and 30 million Americans have lost their jobs as collateral damage in the fight against COVID-19, with the tallies all rising by the day. Yet, the U.S stock market just rocketed to its best month in a generation. While it’s most definitely wild, Wall Street is also a collection of investors who are continually looking ahead, setting prices for stocks at the moment based on where they expect corporate profits and the economy will be a quarter or two into the future. From February into late March, investors sent the S&P 500 down by nearly 34 percent, anticipating that the number of jobless workers would explode and the economy would tumble into recession. Then in April, as gruesome economic figures confirmed those fears, investors instead focused on a few strands of optimism for the future. The S&P 500 has surged 27 percent since hitting a low on March 23, which was the same week that the government reported a record number of U.S. workers filed for unemployment benefits, nearly 6.9 million. When clients have called in recently at Villere &Co., an investment adviser in New Orleans, they usually start with one question, said Sandy Villere, a portfolio manager at the firm. “They ask: Aren’t we going into a recession?” he said. “I say, ‘Yes, but the stock market has already gone through the recession, and now it’s coming out of the recession.’” Among the reasons the market chose to look ahead: • The Federal Reserve came to the rescue, again. A famous saying on Wall Street says: Don’t fight the Fed. The central bank is doing everything it can to support the economy, from cutting interest rates to near zero to the unprecedented promise to buy even riskier corporate debt. It’s all aimed at ensuring lending markets have enough cash to run smoothly and prevent prices from going haywire. Investors say that’s eliminated the worst-case scenario for markets: a collapse reminiscent of the 2008 financial crisis. And even a deeply divided Capitol Hill has come together to send trillions of dollars into the economy, hoping to fill the cavern created by the shutdown of businesses. • Infections have leveled off in some areas, and reopenings are on the horizon. In the hard-hit state of New York, the number of hospitalizations for the virus has dropped back to where it was a month ago after peaking in mid-April. Some states around the country have laid out plans to gradually relax restrictions meant to slow the spread of the virus. Georgia has been at the forefront, already allowing barber shops, gyms and nail salons to reopen. “This is first and foremost a health crisis, so any trend lines of improvement are good, even if they’re hidden within really terrible human loss numbers,” said Nela Richardson, investment strategist at Edward Jones. • Even the terrible economic numbers contain some hopeful signs. Joe Seydl, capital markets economist at J.P. Morgan Private Bank, has noticed how most of the jobs lost in March were temporary furloughs, rather than permanent losses. “That was a relative silver lining,” he said. “We know unemployment is going to spike. When you look beneath the surface at unemployment you can look at how much is temporary.” History shows that stocks usually begin heading back up even as the economy is still heading down. The S&P 500 typically begins rising four and a half months before the economy hits bottom in a recession, according to Lindsey Bell, chief investment strategist at Ally Invest. Consider the Great Recession: Stocks began what would become the longest bull run on record in March 2009, when corporate profits were still tumbling and layoffs were still rising. The unemployment rate wouldn’t hit its peak until seven months later. However, many professional investors have been skeptical of this rally, given how much uncertainty still exists about how long the recession will last. If a second wave of infections hits, businesses could shut down again as fast as they open. Stocks are no longer cheap following their strong recent run. And worries still loom about companies defaulting on their debt after a borrowing binge left them with a mountain of $9.6 trillion in outstanding bonds. . The stock market also has a patchy history in predicting the end of recessions, just like it has predicted nine of the last five recessions, as famed economist Paul Samuelson once quipped. . After hitting a low in November 2008 shortly after Lehman Brothers collapsed during the financial crisis, the S&P 500 rallied more than 24 percent in about seven weeks. But that rally proved to be illusory, and the market gave out again, plummeting nearly 28 percent before finally hitting bottom in March. AP Business Writer Alex Veiga contributed.

As US piles up debt to aid economy, even usual critics cheer

WASHINGTON (AP) — The U.S. government has opened the spigots and let loose nearly $3 trillion to try to rescue the economy from the coronavirus outbreak — a river of debt that would have been unthinkable even a few months ago. And yet the response, even from people who built careers as skeptics of federal debt, speaks to the gravity of the crisis: Almost no one has blinked. With the U.S. economy in a frightening free-fall, they say, the government has no choice but to pour trillions into an emergency operation. Doing less would risk a catastrophe — a recession that could devolve into a full-fledged depression. And if that were to happen, the government’s fiscal health would end up far worse. What’s more, the lessons of World War II and the 2008 financial crisis suggest to many that a combination of ultra-low interest rates and eventual economic growth can keep government debts manageable and prevent a budget crisis. In a sign that investors worry more about a deep recession than about whether the government might eventually struggle to repay its escalating debt, the yield on the benchmark 10-year Treasury note remains well less than 1 percent. Many analysts say that while soaring federal debt may end up slowing an eventual recovery, there won’t be any recovery if the government doesn’t borrow and spend aggressively now. “Like most folks, I’m not especially concerned about deficit and debt now,” said Donald Marron, director of the Tax Policy Center, a Washington think tank. “Interest rates remain low. Immediate health and economic concerns must take precedence.’’ Nonetheless, the numbers are shocking. After Congress passed four programs to sustain the economy through the COVID-19 crisis, the budget deficit — the gap between what the government spends and what it collects in taxes — will hit a record $3.7 trillion this year, according to the Congressional Budget Office. On May 4, the Treasury Department announced that it will borrow $2.99 trillion in the April-June quarter, blowing away the previous quarterly record of $569 billion, set in the recession year of 2008, and eclipsing the $1.28 trillion it borrowed in the bond market in all of 2019. By the time the budget year ends in September, the government’s debt — its accumulated annual deficits — will equal 101 percent of the U.S. gross domestic product, according to the CBO. Policymakers are trying to fend off catastrophe. The lockdowns and travel curbs meant to contain the virus are battering the economy. GDP is expected to fall at a 40 percent annual rate from April through June. That would be the worst quarter on record dating to 1947. Thirty million Americans have sought unemployment benefits since the virus struck. Even before the health crisis, the government’s debt to the public, swollen by President Donald Trump’s 2017 tax cuts, amounted to more than 80 percent of GDP, highest level since 1950. The nation has been here before. In 1946, the year after World War II ended, federal debt peaked at nearly 109 percent of GDP. By 1962, the debt burden had dropped below the 1940 level of 44 percent of GDP. The surging postwar economy poured tax revenue into government coffers. In some ways, things are different now. The economy doesn’t grow as fast. From 1947 through 1962, the economy averaged a robust, debt-erasing 3.5 percent annual growth. It’s unlikely to achieve anything that impressive anytime soon. Since 2010, GDP growth has averaged just 2.3 percent annually. Economists have long worried about the consequences of big government debts. When the government takes on debt, the argument goes, it competes with private borrowers for loans. It “crowds out’’ private investment, heightens borrowing rates and threatens growth. But after the financial crisis, economists began to rethink their approach to debt. The recovery from the Great Recession, in the United States and especially in Europe, was sluggish in part because policymakers declined to juice growth with more debt. The 19 European countries that share the euro currency slid back into recession in 2011. As their economies slumped, their debt problems worsened. In the United States, rates didn’t rise much even as the economy gradually strengthened. It turns out investors have a near-insatiable appetite for U.S. Treasurys, given their status as the world’s safest investment. Their rush to buy Treasurys helped lower the government’s borrowing costs. So did persistently low inflation. In such a low-rate, low-inflation environment, the risk of piling on debt seems more manageable, at least for countries like the United States and Japan that borrow in their own currencies. “We can worry much less about the amount of debt than most economists guessed,” said Douglas Elmendorf, a former CBO director and now dean of the Harvard Kennedy School who for years has been a critic of runaway federal debt. Today’s U.S. policymakers enjoy the support of the Federal Reserve, which has been flooding the market with cash and keeping borrowing costs ultra-low. Fed Chairman Jerome Powell took the unusual step at a news conference last week of imploring Congress not to worry right now about the risk that its aggressive rescue programs will produce excessive debt. “I have long time been an advocate for the need for the United States to return to a sustainable path from a fiscal perspective,” Powell said. “This is not the time to act on those concerns. This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through.” Likewise, Olivier Blanchard, a former chief economist of the International Monetary Fund, challenged the old consensus on government debt in a speech last year: “Put bluntly, public debt may have no fiscal cost… The probability that the U.S. government can do a debt rollover, that it can issue debt and achieve a decreasing debt to GDP ratio without ever having to raise taxes later, is high.’’ Then again, the future might not be like the recent past. Mark Zandi, chief economist at Moody’s Analytics, said he thinks rates will eventually start rising as the economy regains health, perhaps in 2022 or 2023. “There’s going to be a day of reckoning,” Zandi said. “We are going to as a nation have to address these deficits and debts. We’re going to have to raise taxes. We’re going to have to restrain spending.’’ But for now, he said, “You have to respond with everything you’ve got to make sure the economy doesn’t completely fall apart.’’ “The question is not: How much does this cost? But rather: How much will debt go up if we do this, versus if don’t do this?’’ said Richard Kogan, senior fellow at the Center on Budget and Policy Priorities and a budget adviser in the Obama administration.

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 www.alaskafishradio.com 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]

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