Movers and Shakers for May 3

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

Coronavirus relief pushing US deficits to staggering heights

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

With pandemic procedures in place, Copper River ready to open

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

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

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

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

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

UAA graduates some nurses early amid COVID

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

Doyon acquires stake in mining company with state prospects

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

Oil Search hits target in two wells but slows Nanushuk development

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

Budget picture gets worse with TAPS flow cut

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

What I learned cleaning up a homeless camp

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

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

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

Upside down: Alaska crude prices chart negative territory

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

Movers and Shakers for April 26

Credit Union 1 selected Evan Mulcahy as its new director of Innovation. Mulcahy will be responsible for evaluating familiar operational issues and goals through a unique lens and using that perspective to drive change via innovation, technology and user-centered solution development. Mulcahy was previously hired by Credit Union 1 in 2013 as a staff trainer, and he later served as digital communications specialist, innovation strategist and marketing manager before pursuing other local opportunities. He rejoined the credit union in February 2020. Mulcahy is a University of Alaska Anchorage graduate with a degree in Economics. Northrim Bank announced the promotion of several employees. They are: Amber Zins, executive vice president-chief administrative officer; Cindy Fields, senior vice president-Internal Audit director; Joe Gelione, senior vice president-Commercial Loan Unit manager; Tammy Kosa, senior vice president-regional market manager, Fairbanks; Nicole Pintsch, vice president-controller of financial reporting; Terre Lefebvre, assistant vice president-merchant relationship manager; Kiersten Russell, loan officer II; Elias Wilterding, credit administration officer. Zins has been with Northrim Bank for 12 years, when she was hired as the Internal Audit manager. For the past two years, she has been the Human Resources director. Zins holds a bachelor of business administration in accounting from the University of Alaska Fairbanks and is a certified public accountant. She is currently attending the Pacific Coast Banking School at the University of Washington. She received the Northrim President’s Award in 2009. Fields joined Northrim in 2018 and has 16 years of experience in audit and regulatory compliance. She holds a bachelor’s degree from the University of Alaska Anchorage and is a certified public accountant and certified public accountant. Fields is the president of the Institute of Internal Auditors Alaska Chapter. Gelione started at Northrim in 2017 and has more than 30 years of experience in the financial sector, working in banking in Alaska for over 25 years. He holds a bachelor of business administration in finance from Stockton University. Gelione received the Northrim President’s Award in 2018. Kosa has been with Northrim since 2004 and has more than 26 years of banking experience. She holds a bachelor’s degree in international business from the University of Alaska Fairbanks. Kosa received the Northrim President’s Award in 2010. Pintsch has been with Northrim since 2007 when it acquired Alaska First Bank. She has been in the financial industry for 15 years. Pintsch holds a bachelor of business administration in accounting from the University of Alaska Anchorage. Lefebvre joined Northrim in 2003 and has more than 21 years of experience in the financial industry. She attended Roger Williams University. Russell started at Northrim in 2014 and has held a number of positions throughout the bank. She will complete her bachelor of business administration in accounting this spring from the University of Alaska Fairbanks. She also holds certificates for business and commercial lending. Wilterding has been with Northrim since 2013 where he worked in the Facilities department before moving to Credit Administration. He holds a bachelor’s degree in economics from the University of Alaska Anchorage.

Hendrix bid to acquire Furie revived with AIDEA loan

An Alaskan bid for a struggling Cook Inlet gas producer appears to be back on following revisions to a state-backed loan for the purchase. The Alaska Industrial Development and Export Authority board of directors on April 15 approved technical changes to a March 4 resolution authorizing a loan up to $7.5 million to Hex LLC, a company formed late last year by longtime Alaska oil and gas industry player John Hendrix. Hendrix, through Hex, submitted the winning $15 million bid in a December bankruptcy auction for Furie Operating Alaska, a small Texas-based natural gas producer that operates the Kitchen Lights Unit and has contracts to supply a handful of Southcentral utilities. Originally from Homer, Hendrix was general manager of Apache Corp.’s operations in Cook Inlet prior to becoming former Gov. Bill Walker’s oil and gas policy adviser in 2016. But February court filings by Hex in Furie’s ongoing Chapter 11 bankruptcy case asserted that the auction was advertised as an asset sale but conducted as an equity sale to keep Furie in control of its Inlet operations and eligible to receive outstanding refundable tax credit payments from the state. In its bankruptcy filing, Furie claimed $105 million in outstanding credits owed by the state. Uncertainties stemming from a royalty claim filed by three minority owners in the state leases that Furie operates are alleging collectively shorted them an estimated $50.7 million also prevented Hex from obtaining financing for the sale, Hex attorney David Bundy wrote at the time. Attorneys for Furie and its primary lenders countered in separate court filings that Hex did not negotiate “in good faith” during the process, an allegation Bundy disputes. With Hex unable to finance the purchase, one of Furie’s primary lenders New York-based Melody Capital Partners LP attempted an acquisition by foreclosure through a firm it formed with GFR Holdings LP of Dallas, Kachemak Exploration LLC. Melody Capital Partners was one of several lenders that collectively loaned approximately $244.5 million to Furie, according to court filings. However, Hendrix told the AIDEA board April 15 that he recently signed an agreement to acquire Furie and his company is now moving towards a June 30 closing date. An omnibus court hearing is scheduled for May 8. Hendrix and others involved in the case have declined to discuss details of the proceedings as they are ongoing, but he said to AIDEA leaders that he hopes to increase in-state employment within Furie. Sources said the global recession that has accompanied the COVID-19 pandemic and caused significant downturns in financial and energy markets largely scuttled the Kachemak Exploration proposal. Hendrix said Furie works with Alaska-based contractors, but the company’s workforce is mostly Lower 48 workers. According to a memorandum outlining the $7.5 million loan, Hex’s purchase would initially provide 15 new resident jobs on the Kenai Peninsula and support another 300 indirect jobs. “We see a great opportunity to — it’s called studying the rocks and getting back to base management,” Hendrix said to the AIDEA board, adding that he hopes to look for more drilling opportunities for oil and gas. Furie officials said in 2017 they planned to work on developing oil prospects in the Kitchen Lights gas field, but those plans were largely scuttled because of the state’s delay in repaying millions of dollars in oil and gas tax credits the company earned for its previous work, according to the company’s filings with the state Division of Oil and Gas. The company filed for Chapter 11 bankruptcy protection Aug. 9 in federal Bankruptcy Court for the District of Delaware. According to the company’s bankruptcy petition, Furie owed lenders approximately $440 million when it filed for Chapter 11 protection and was also owed roughly $105 million in refundable tax credits from the State of Alaska. The company installed the Julius R platform in the Kitchen Lights field in 2015, which at the time was the first new production platform the Inlet built since the 1980s. Furie officials estimated the value of the company’s assets at between $10 million and $50 million in their initial bankruptcy filings. The financial challenges were nearly continuous for the company, which had net gas sales of $25.4 million and absorbed a net loss of $58.5 million in 2017, according to the bankruptcy filings. The situation worsened in 2018 when the company sold $42.8 million of natural gas but took a loss of nearly $152 million. Furie lost $21.4 million in the first quarter of 2019, when a freeze-up in a gas production pipeline kept the company from supplying HEA and Enstar with gas for more than a month. Once gas deliveries resumed, Furie was only able to supply Enstar with less-than-contracted amounts for several months as well. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: State-owned oil company is a bad idea

Watching the collapse in oil prices, the gaping hole in state revenues, the cutbacks in oil company spending on new production — and the likelihood that Alaska’s future will suffer under all of the above — some suggest state government should step up to the drilling rig, put on a hard hat and get to work. It’s time that the state become a real owner, they say, just like ExxonMobil and ConocoPhillips. Just like BP has been for almost 60 years on the North Slope. The low-price opportunity awaits Alaska, they say. Watching Hilcorp struggle to raise the billions it needs to buy up BP’s Alaska assets while the collateral for the loan — the oil in the ground — isn’t worth nearly as much as it was last year, some say the state should step in front of Hilcorp, borrow and invest to pick up BP Alaska on the supposed cheap. Haven’t we learned anything in 40 years of well-intentioned but ill-conceived state investments based on the unproven theory that if we own it, the profits will come? Does anyone think this time will turn out any different? Supporters of state investment, state ownership and state control like to point to Norway, which is rich beyond Alaska’s wildest dreams. But the Norwegian government poured billions of dollars into covering its equity stake, its share of exploration and development expenses for years before ever starting to earn a serious profit a decade later. Can Alaska afford to gamble today, betting that profits may flow in 2025, 2030 and beyond? Does the state have any money to invest? Oil companies, such as ConocoPhillips and Oil Search, both active in North Slope exploration, use their profits from ongoing operations to fund new developments. They spend today’s cash flow for tomorrow’s investments. If you look at the state checkbook, there’s not enough cash coming in these days to cover next year’s schools much less investments in next year’s drill pipe. And why, if Hilcorp, with hundreds of thousands of barrels a day of actual oil and gas production spread across several fields in several states, and with years of profitable operations, is having trouble signing the deal with hesitant bankers, what makes Alaskans think that the state, with years and years and years of budget holes, with no general tax revenues, with constant political pressure to pay out an unaffordable dividend to its residents, would be able to raise billions of dollars against the same devalued oil in the ground. The state’s credit rating is OK for now, but only because the rating agencies believe we will do the right thing and raise new revenues, protect the Permanent Fund and not overspend. Turning around and borrowing billions on a bet that the state knows more than anyone else which way oil prices are heading, that the state knows the future of oil production, and that the state knows a good deal when it sees one, is sure to cause the rating agencies to wonder whether a piece of drilling pipe fell on our heads. Sure, instead of borrowing all the money to buy up BP Alaska, the state could write a check on the Permanent Fund. But due to investment losses from the crashing stock market, the fund’s earnings reserve already is in danger of falling too low to help pay for schools and other public services next year. This is not the time to overdraw the account. Instead of doubling and tripling down on oil as the sole savior of Alaska’s finances, the state should be looking to diversify our public revenues. Or we could play the slots in Vegas. Makes as much sense as an overly oil-dependent state betting solely on oil, more oil and nothing but oil. No offense to oil. Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal service in oil and gas and taxes, including deputy commissioner at the Alaska Department of Revenue 1999-2003.

Bond sale paused for Interior Energy Project

A long-awaited decision on how to increase the availability of natural gas for businesses and residents in the Fairbanks area was put on hold April 21 to allow the current unprecedented economic situation to play out at least a little more. Interior Gas Utility board members started an April 21 work session intending to vote on a resolution authorizing up to $78 million in revenue bonds to fund expansion of the utility’s small Titan LNG plant at Point MacKenzie in Southcentral Alaska. However, IGU General Manager Dan Britton said early in the videoconference meeting that he was rescinding his recommendation to approve the project given the broad financial uncertainties stemming from the COVID-19 pandemic. “I continue to believe that utility-owned liquefaction is best,” Britton told the IGU board, “but we cannot ignore the short-term realities of these unprecedented times.” The Titan LNG expansion project would have roughly quadrupled the plant’s gas liquefaction capacity from roughly 1 billion cubic feet, or bcf, to 4 bcf per year. The final investment decision was supposed to be the culmination of more than six years of work on the $330 million Interior Energy Project to get more natural gas to the Fairbanks area that started with the Alaska Industrial Development and Export Authority’s examination of a North Slope LNG plant. That plan was scrapped following a lengthy economic evaluation that concluded high North Slope construction costs would result in final gas prices to consumers that would be too expensive to entice residents and businesses to convert from wood and fuel oil and heat. IGU board members thanked Britton for not wanting to push ahead on a project that has been years in the making at a time when nearly every aspect of daily life has been disrupted. Britton’s “pause” recommendation came as oil prices worldwide — which the natural gas utility competes with through the price of fuel oil — fell to new lows. The price for Alaska North Slope crude briefly went negative April 20 and ended April 21 at $9.01 per barrel. Public commenters largely concurred with the change of plans, urging the young utility to work on ways to attract new customers that would help grow the demand base for gas when the plant is expanded and improve the economics of the project for everyone. The IGU board did not set a new date to revisit the Titan plant expansion, but some members said they hope a decision can be made soon. Britton thanked IGU staff and contractors for all the work that has already gone into the project as well. “There has been a ton of effort that has gone into this and I don’t want that to go unrecognized,” he said. IGU officials recently completed a 5.25 million-gallon LNG storage tank in Fairbanks that has increased the utility’s annual demand capacity by approximately 40 percent, according to board chair Steve Haagenson. Britton said during a March 4 AIDEA board meeting that while there has been years of study and debate over how many residents will invest the thousands of dollars — in some cases — needed to convert their homes to natural gas, he expects larger businesses, such as retail box stores, to be some of IGU’s first new customers. While residents will mostly focus on whether gas is cheaper than fuel oil or other energy sources, many business owners would sign up for gas to get rid of the inherent environmental liability in large, buried fuel oil storage tanks, he said at the time. Britton said utility leaders continue to examine new options for gas supply but he is not concerned about IGU’s ability to secure a new and larger supply of natural gas. The utility’s existing contract with Hilcorp Energy expires in 2021. In 2018 Siemens Government Technologies pitched what company representatives called a “turnkey” proposal to IGU in which the international industrial company would use modular LNG production facilities and currently undeveloped gas sourced from the Susitna Valley to deliver LNG to Fairbanks via the Alaska Railroad. However, the IGU board ultimately rejected the plan after Siemens representatives could not provide sufficient details regarding their gas supply plan. Elwood Brehmer can be reached at [email protected]

OPINION: The decline is obvious. Anchorage is ready to open.

The peak of new coronavirus cases in Anchorage came on St. Patrick’s Day less than 12 hours after Anchorage Mayor Ethan Berkowitz ordered bars, restaurants and “non-essential” businesses such as beauty salons to close. On that day the state reported 9 cases in Anchorage. Every one of those cases could be traced to before the March 16 closure and the mayor’s eventual “hunker down” order that took effect the next week on March 22. Since March 17, the state’s largest metro area with about 300,000 people has never, ever, not once, had more than 9 cases in a day. That happened on March 17, March 20 and March 23. That’s right. Anchorage has not cracked double digits for new cases in a day, even in the week after Berkowitz shut down most businesses and ordered an end to gatherings of more than 10 people at a time when every new case could be traced to before the closures. By any measure, Anchorage has been in decline since March 23. The second-highest number of new cases in a day was March 30 with 8. The average number of new cases per day from March 30 to April 21 in Anchorage is 2.7. The rolling four-day average of new cases has declined from 5.3 on April 2 to 2.3 on April 21. In seven of the 12 days from April 9 to April 21, Anchorage reported either 1 or zero new cases. The number of active cases has increased by an average of less than 1 per day from March 23 to April 20, or from 69 to 92 in 28 days. Yet despite these miniscule numbers and being situated in the capital of the state’s health care system that had nearly 1,000 available beds as of April 21, the mayor is continuing to keep his boot on the Anchorage economy while giving free rein to the criminal element of the homeless population to take over the streets and green spaces. Berkowitz announced a plan to re-open Anchorage on April 20 based on conditions of meeting a 14-day decline standard and availability of testing. Regarding testing, City Manager Bill Falsey said on April 21 that anyone who needs a test in Anchorage can currently get one. At the same time, he was unable to describe in any detail whatsoever what metric the municipality is using to measure what would constitute a 14-day decline. More troubling than the inability to articulate a metric to reopening despite the obvious decline in cases for a month and the widespread availability of tests is the mayor’s 28-day timeline between the start of Phase 1 and Phase 2. April 20 marked five weeks since Berkowitz locked down bars and restaurants and even though new cases in Anchorage were literally zero for four days of the 10 previous days, Falsey could only say it was possible we could enter Phase 1 sometime in May, or potentially seven weeks since the “hunker down” order. It is unconscionable to continue hammering businesses by requiring another four weeks to continue to measure a “decline” that has already hit zero several times and has likely been negative for at least a few of those days based on the number of recovered cases that now outnumber active cases in the state. Destroying businesses both through action and inaction is quite a feat, but the mayor is pulling it off by extending closures without evidence to support them and allowing criminals to trespass, damage and defile private property. Even Phase 1, which anticipates allowing restaurants to open for dine-in service, is unrealistic and unworkable by limiting gatherings to 20 people. No restaurant can open with a 20-person limit that would include the staff. If a business can meet the social distancing and sanitary guidelines it should be able to open regardless of what kind of business it is. If we can allow doctors to literally cut people open, we can allow people to cut hair. The purpose of this lockdown was to slow down the spread and put in place surge capacity for the health care system. Both of those goals have been achieved. The purpose was never to eradicate new cases. That is impossible, and any attempt to move the goalposts in that direction should be rejected. The longer we stay isolated, the longer we postpone the inevitable second series of new cases. The difference is we now have the infrastructure in place to handle the second wave as well as a mountain of data that will help protect vulnerable populations and established practices to prevent transmission. Thousands of people per day are visiting grocery stores, liquor stores, gas stations and fast food drive-thrus, yet we have not seen any evidence of wide community spread in Anchorage. Again, the most cases in a day we had pre-hunker down was 9. The most we’ve had in a day since is 8. That’s proof we can handle social distancing responsibly. Anchorage is ready to open, and it is ready to open now. Andrew Jensen can be reached at [email protected]

ConocoPhillips announces $200M more in Alaska cuts

ConocoPhillips will cut another $200 million from its Alaska work program this year, company executives said this morning shortly before oil prices fell to the lowest level in 18 years. The formal announcement of the spending cut comes about a week after ConocoPhillips told its North Slope drilling contractor, Doyon Drilling, to demobilize its drilling rigs and crews in an attempt to limit the spread of COVID-19. Doyon Drilling is a subsidiary of the Interior Alaska Native regional corporation Doyon Ltd. In mid-March ConocoPhillips executives announced an initial $200 million capital spending reduction but the company did not elaborate as to where the spending reductions would come from at the time. ConocoPhillips spent approximately $1.5 billion on capital projects in Alaska last year. CEO Ryan Lance said in a conference call that ongoing cuts to oil production worldwide simply have not been enough to offset the demand loss stemming from the economic shutdowns imposed to limit the spread of COVID-19. “We expect prices over the next few months — they will be weak and they will be volatile,” Lance said. On April 12, leaders from the world’s top oil producing nations announced a global agreement to cut 9.7 million barrels from daily production in May, or about 10 percent of oil production worldwide. However, vastly oversupplied oil markets have not responded. The price of Alaska North Slope Crude fell to $16.65 per barrel on Wednesday, according to the Alaska Department of Revenue, the lowest price since January 2002. ConocoPhillips leaders touted a strong and restructured balance sheet after the 2014-16 oil price downturn with a focus on being profitable at oil prices of $40 per barrel. “Current prices are well beyond our planning range and we believe these are prudent levers to exercise in the circumstances,” Lance said. Companywide, ConocoPhillips has reduced spending by $5 billion from prior expectations since early March. The company expects to curtail oil production by about 225,000 barrels per day in the Lower 48 and Canada. Chief Operating Officer Matt Fox said further estimates on oil production were not available in part because of market uncertainty. Spokesman John Roper wrote in an email that no layoffs have been announced. “We continue to monitor the market situation. But at this time, based on our current outlook, we chose to maintain organization capacity so we can resume programs in the future,” Roper wrote. In addition to ConocoPhillips’ overall $400 million capital investment cut, Oil Search Alaska said in March it would reduce development spending on its large Nanushuk oil project by $70 million this year. BP also said in late March that it was suspending its two-rig drilling program at Prudhoe Bay. Fox also said the ConocoPhillips’ exploration drilling program on the North Slope was cut short due to prevent an outbreak of the virus in remote drilling camps. ConocoPhillips Alaska leaders previously said the company planned to drill seven exploration wells in the National Petroleum Reserve-Alaska this winter. An Alaska spokeswoman did not return questions in time for this story about the company’s ongoing near-term North Slope development projects such as Greater Mooses Tooth-2 and Nuna. Look for updates to this story in an upcoming issue of the Journal. Elwood Brehmer can be reached at [email protected]

Princess and Holland America cancel 2020 Gulf of Alaska sailings

In another blow to Alaska’s struggling economy, Princess Cruises and Holland America Line are canceling Gulf of Alaska sailings for the entire season as the cruise industry grapples with the coronavirus pandemic. The Carnival-owned lines are the state’s biggest cruise ship operators. Both companies announced the cancellations Tuesday along with broader sailing delays fleetwide until July. About half the cruise voyages in Alaska this year have been canceled, including 175 involved in Tuesday’s announcement. Princess also announced that, given the already shortened summer season, the company isn’t opening five wilderness lodges it operates in Fairbanks, Cooper Landing, Denali National Park and Preserve, Denali State Park north of Talkeetna, and Copper Center. Princess will not operate bus or train excursions. Holland America has also canceled this season’s land excursions into Denali National Park and the Yukon. The company operates Westmark hotels in Fairbanks and Anchorage. Industry observers were expecting the biggest cruise season yet this year before the pandemic hit. The announcement “is devastating not just to the hundreds of businesses that rely on cruise passengers for their livelihoods, but the communities that receive a large portion of their revenue from visitor taxes and fees,” Alaska Travel Industry Association President and CEO Sarah Leonard said in a statement. Last year, Alaska’s visitor industry supported more than 52,000 jobs and created more than $4.5 billion in economic activity for Alaska, according to the association. Leonard said Tuesday’s announcement makes state and federal assistance for the state’s tourism businesses “all the more imperative.” More than a million out-of-state tourists come to Alaska on cruise ships every year — more than by any other form of transportation. Passengers on day excursions pour into jewelry stores, gift shops and restaurants around the state. They charter flightseeing trips and glacier cruises. From Seward and Whittier, they’re bused or take the train to Anchorage, where they stay in hotels, eat out and maybe travel farther north to Talkeetna, Denali and Fairbanks. Princess officials say they hope two vessels — Emerald Princess and Ruby Princess — will be able to sail later this summer round-trip to Southeast Alaska from Seattle. Holland America officials said the company hopes two vessels — Koningsdam and Eurodam — will be able to offer round-trip cruises from Seattle and Vancouver for part of the summer. “We will continue to assess these plans over the next several weeks,” Holland American spokesman Erik Elvejord said in an email Wednesday. No cruise ships will call at Whittier and a large part of Seward’s cruise traffic will be gone, industry officials say. There are now more than 601,000 fewer passengers cruising to Alaska this season, according to Cruise Lines International Association Alaska. That includes 126,000 canceled round-trips in Southeast Alaska, 246,000 others already canceled and Tuesday’s cancellations of 228,364 in Whittier and Seward. The state estimates each cruise passenger spends $624 in Alaska on average, according to the association. That’s an estimated $375 million that won’t be spent here this summer. The cancellations will also cause a direct loss of thousands of jobs, company officials said. “We deeply regret that we will not be able to employ the approximately 3,500 teammates who help show our guests the Great Land each summer,” Princess President Jan Swartz said in a YouTube video posted Tuesday. “Our thoughts are also with all of our small business partners throughout Alaska who we have supported every summer for decades,” Swartz said. “We know these decisions will have a large adverse economic impact on the state of Alaska which relies on tourism.” Princess announced cancellations of Alaska cruises of the following ships: Coral Princess; Emerald Princess; Golden Princess; Grand Princess; Pacific Princess’ Royal Princess; Ruby Princess; and Star Princess. Holland America canceled Alaska cruises on the following ships: Maasdam, Volendam, Oosterdam, Noordam and Westerdam. Nationally, the cruise industry shut down about a month ago amid the rising toll of the new coronavirus that causes the infectious disease known as COVID-19. Last week, the Centers for Disease Control and Prevention extended a “no-sail order” for 100 days. The virus has sickened hundreds of cruise ship passengers and stranded thousands — including some Alaskans — as well as infecting and isolating crew members. Dozens on cruise ships have died. “Our outlook for a restart of travel continues to slip further into summer,” Princess spokeswoman Negin Kamali said in an email. “This, combined with the reality of our short Alaska operating season, has forced us to make the extremely difficult decision to cancel our 2020 Alaska gulf cruise and cruisetour programs.” Some communities, like Fairbanks, aren’t located on saltwater but still rely on the summer surge of cruise traffic. The cruise lines advertise sternwheeler tours and gold mines as well as flights to the Arctic Circle and Yukon River. The “cross-Gulf” cruises canceled this week generally start in Vancouver and end in Seward or Whittier, but passengers can book land tours to Denali National Park or Fairbanks. “It’s bad news,” said Deb Hickok, president and CEO of nonprofit visitor marketing organization Explore Fairbanks. The organization gets 86% of its budget from reinvested hotel and motel taxes taking a hit because of the virus, Hickok said. The organization laid off employees and cut its $4.2 million budget to $2.9 million — just below the level of the state’s 2009 recession. A 2016 study found land tours make up more than 40% of summer business in Fairbanks, Hickok said. “We know it’s over 150,000 visitors. What the exact portion of that is Holland and Princess I don’t know. But I can tell you the majority for sure.” Talkeetna, the quirky Susitna Valley town with Denali views, thrums with summer visitors as cruise passengers arrive by train and bus. Chris Byrd grew up in Talkeetna and now owns the Swiss Alaska Inn, a 21-room hotel and restaurant that opened in 1976. He’s getting numerous calls a day from cruise passengers canceling room reservations. Byrd voiced a hope shared by many in the tourism industry here: Once Alaskans can start leaving home again, they’ll be the first wave of visitors helping to rebuild the state’s tourist economy. But even that isn’t certain, Byrd said. “With the way the economy is going, oilfields shutting down, you don’t know what to expect,” he said. “Typically when tourism season isn’t great you’re hoping the oil fields are running and vice versa. Both of them being down at the same time is really not helpful for the state for sure.”  

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