ARCTIC GAS Governor: Tax-exempting bond from railroad ... · Jeff Brown of Goldman Sachs said the...

Vol. 7, No. 7 $1 • www.PetroleumNewsAlaska.com Alaska’s source for oil and gas news Week of February 17, 2002

I N S I D E

Alaska Rig Report 2

Netricity hires Parsons 3

BP profits slip 46 percent 5

Oil company earnings chart 6

State defends royalty-in-kind gas sale 9

Rokeberg offers changes for royalty incentives 7

“There were so many politicians on theplatform that there were not enough promisesto go around.”

—RONALD REAGAN, FEB. 6, 1984

■ A R C T I C G A S

■ L A N D & L E A S I N G

Tour

ism

B.C

.

Environmental groups have hinted that ending the drilling bans for offshoreBritish Columbia, pictured here, could result in a series of legal actions.

Governor: Tax-exempting bond fromrailroad could help build gas pipelineConduit financing would provide tax-exempt benefit, but recourse would be againstpipeline owners, not railroad: its assets and indebtedness would not be affected

By Kristen Nelson PNA Editor-in-Chief

Last year the governor’s Alaska HighwayNatural Gas Policy Council told the adminis-tration that innovative financing would helpmove a gas pipeline project forward.

This month Gov. Tony Knowles responded —with what he and the state’s bond advisors are call-ing a “unique” opportunity— one that could lowerfinancing costs by 2 percent-age points, from 8-8.5 per-cent to 6-6.5 percent. (Seerelated story in the Feb. 10edition of PNA.)

Owners of the pipelinewould save (in 2002 dollars)more than $1 billion over thelife of the pipeline because ofthe lower financing costs.

And the state would get an additional $500 mil-lion over the life of the pipeline in higher sever-ance taxes and royalties because of the lower trans-portation costs and higher well head value forNorth Slope natural gas.

Stevens credited

This opportunity exists, Gov. Knowles told thepolicy council Feb. 7, because “when Congressapproved the transfer of the Alaska Railroad fromfederal to state ownership in 1983, it granted therailroad corporation a unique ability to issue tax-

exempt bonds to finance industrial development. “This law gives a special exemption for the rail-

road that supercedes restrictions in today’s IRScode. Since this exemption was enacted,” he said,“Congress has again acted to specifically protectthe ability of the railroad to issue such bonds. Thatwas in the Tax Reform Act of 1986.

“The visionary behind both of those provisionsis our own (U.S.) Sen. Ted Stevens, who foresaw

Half-billion dollar benefit to state

Members of the governor’s Alaska HighwayNatural Gas Policy Council had a number ofquestions about the gasline financing proposalpresented Feb. 7.

Jacob Adams asked how much of the gas linethe Alaska Railroad Corp. tax-exempt bondswould cover.

Jeff Brown of Goldman Sachs said the esti-mate is 30 percent equity, 70 percent debt for theproject, with equity coming from the privateowners, and an estimate of $17 billion for thetotal capital cost including the conditioningplant.

Mike Navarre asked if the tax-exempt financ-ing could be used for North Slope infrastructure,as well as the pipeline itself.

Neil Slotnick, deputy commissioner of the

Gov. Tony Knowles

Canada ready to lift moratoriumon British Columbia offshore

The Canadian government, in a surprising move, has offered tonegotiate the removal of its 30-year ban on oil and gas explorationof British Columbia’s offshore, but got an equally surprising low-key response from the province and industry.

Natural Resources Minister Herb Dhaliwal, less than a monthafter being named to the energy portfolio, said Feb. 11 he wouldbe open to development of the potentially prolific Queen CharlotteBasin.

“If the province feels it wants to lift its own moratorium on off-shore drilling, then it can request that the federal government dothe same,” he said. “Once B.C. makes that request, we’ll do theconsultations.”

Federal policy change

That was a clear retreat from the long-standing federal policy ofopposing offshore activity and put Dhaliwal at odds withEnvironment Minister David Anderson. Both ministers represent

Knowles introduces legislationfor railroad bonds to financeAlaska Highway gas pipeline

Calling an Alaska Highway natural gas pipeline a “nation-al interest” project, Alaska Gov. Tony Knowles sent theLegislature bills Feb. 12 to authorize the Alaska RailroadCorp. to issue up to $17 billion in tax-exempt bonds to financethe pipeline. (See story page 1.)

“Specifically,” the governor said, “this bill says that build-ing a gas pipeline is an essential purpose of the state and iscritical to the state’s health and welfare. And it also recognizesthat a necessary and proper function of the Alaska Railroad isthe ability to finance such facilities.

“In addition, the bill amends existing law to expand therailroad’s powers to issue up to $17 billion in bonds to financethe construction and maintenance of a gas line and relatedfacilities for transporting natural gas from Alaska’s NorthSlope.

see MORATORIUM page A15

see LEGISLATION page A12

Oil and gas land speculators —parasites or propellants?Roderick says speculators add to competition for leases, accelerating the pace of leasing and exploration; Boyd says some tie up valuable leases for years

By Steve SutherlinPNA Managing Editor

Some say land speculators tie up valu-able oil and gas leases and undulyoccupy the courts and state agencies;others say speculators are a vital cat-

alyst in Alaska’s oil and gaslease market.

Naysayers argue the spec-ulator doesn’t add value toleases by exploring anddeveloping it. Instead, theysell off interest in their leases in the formof working interests and production over-rides.

Ken Boyd, former director of theAlaska Division of Oil and Gas, told PNAleases are expensive to explore and devel-op. Speculators buy leases with no “realintention” of shooting seismic or drilling,

reselling interest in their leases to “den-tists in Florida.

Also, Boyd said, speculators don’t buyenough leases to cover a prospectivefield: “A one-lease oilfield in Alaska isunlikely.”

One of the worst effects of land spec-ulation is that leases are tiedup for years with no action,Boyd said.

“The state leases its landin good faith, with the expec-tation that the lease will be

explored and developed,” he said. Speculators resort to various mecha-

nisms to hang onto leases, including law-suits, Boyd said.

But Boyd said the impact of land spec-ulators is not entirely negative.

see BONDS page A12

see BENEFIT page A13

Ken Boyd

Jack Rodericksee SPECULATORS page A11

RIG REPORTA2 Petroleum News • Alaska Week of February 17, 2002

The Alaska Rig Report as of 2/14/02, active drilling companies only listed.

Contractor/ Rig Type Rig No. Field/Platform Field Operator

North SlopeDoyon Drilling Inc.Dreco 1250 UE D14 (SCR/TD) Prudhoe Bay (Niakuk) BPSky Top Brewster NE-12 15 (SCR/TD) Stacked/Endicott Is. AvailableDreco 1000 UE 16 (SCR) Prudhoe Bay BPDreco D2000 UEDB 19 (SCR/TD) Alpine PhillipsOIME 2000 141 (SCR/TD) Tarn (Going to NPR-A) PhillipsNabors Alaska DrillingTrans-ocean rig CDR-1(CT) Stacked/Prudhoe Bay AvailableDreco 1000UE 2-ES(SCR) Prudhoe Bay BPMid-Continent U36A 3-S(CT) Prudhoe Bay BPOilwell 700-E 4-ES(SCR) Milne Point BPDreco 1000UE 9-ES(SCR/TD) Prudhoe Bay BPOilwell 2000 Hercules 14E (SCR) NPR-A AnadarkoOilwell 2000 Hercules 16E (SCR/TD) NPR-A PhillipsOilwell 2000 17E (SCR/TD) Stacked/Pt. McIntyre AvailableEmsco Electro-hoist-2 18-E(SCR) Stacked/Deadhorse Pending/PhillipsOIME 1000 19E (SCR) Meltwater PhillipsEmsco Electro-hoist Varco TDS3 22-E(SCR/TD) Stacked/Milne Point AvailableEmsco Electro-hoist-2 Canrig 1050E 27-E(SCR/TD) Milne Point BPEmsco Electro-hoist-2 28-E(SCR) Stacked/Deadhorse AvailableOilwell 2000 33-E(SCR/TD) Northstar Island BPOIME 2000 245E (SCR/TD) Stacked/Kuparuk PhillipsNordic/Calista ServicesSuperior 700UE/attached 1 (SCR/CT) Prudhoe Bay BP

to Schlumberger CT Unit 7Superior 700UE 2 (SCR) Stacked/Kuparuk Pending/BPIdeco 900 3 (SCR/TD) Kuparuk Phillips

Cook Inlet Basin-Onshore

Kuukpik/H & R DrillingRigmasters 850 9 Pearl #1 (Ninilchick) Unocal

Marathon (Inlet Drilling Alaska labor contractor)Taylor Rig Glacier Rig 1 Kenai Gas Field KBU44-6 MarathonInlet Drilling Alaska/Cooper ConstructionKremco 750 CC-1 Stacked/Tyonek AvailableNabors Alaska DrillingNational 154 Stacked/Kenai AvailableWilson 120 158 Stacked/Beluga AvailableNational 110-UE 160 (SCR) Stacked/Kenai AvailableContinental Emsco E3000 273 Anchor Pt. (Cosmopolitan) Phil l ips

Cook Inlet Basin-OffshoreXTO Energy (Inlet Drilling Alaska labor contractor)National 1320 XTO-A Idle/Mid. Grd. Shoal XTO EnergyNational 110 XTO-C Mid. Grd. Shoal, Plat. C XTO EnergyNabors Alaska DrillingIDECO 2100E 429 (SCR) Osprey Platform Forest OilUnocal (Nabors Alaska Drilling labor contractor)Oilwell 2000E 51 Idle/Steelhead Platform UnocalNational 1320UE 54 Idle/Grayling Platform UnocalNational 1320UE 55 Idle/Grayling Platform UnocalOilwell 860 56 Monopod Platform UnocalDrawworks Removed 57 Idle/Granite Pt. Platform UnocalNational 1320UE 58A Idle/King Salmon Platform UnocalDrawworks Removed 58B Idle/Granite Pt. Plat. UnocalOIME SD8M 60 Idle/Bruce Platform UnocalNational 1320UE 76 Idle/Dolly Varden Plat. UnocalNational 1320UE 77 Idle/Dolly Varden Plat. UnocalIdeco 2100E 428 Stacked/Baker Platform Available

Bering Sea-Port ClarenceFairweatherDreco 147 SDC Stacked/Port Clarence AEC

Mackenzie Delta-OnshoreAkita EqutakRigmaster P400 15 Mallik 4L-38 Japex et alRigmaster E-1500 60(SCR/TD) Stacked/Swimming Pt. Petro-CanadaDreco 1250 UE 63(SCR/TD) Tuk B-2 Devon ARL Corp.

TD = rigs equipped with top drive units WO = workover operations CT = coiled tubing operation SCR = electric rig

The Rig Report was prepared by Dan Wilcox

Rig startups expected in the next 6 months:

Akita EqutakRig 60 startup expected March 2002 at Mackenzie Delta for

Petro-CanadaFairweatherRig SDC Drilling unit to be moved to McCovey prospect

in May 2002.Nordic/Calista ServicesRig 2 converting to a coil tubing rig in a JV with Dowell

Schlumberger for BP.startup expected August 2002.

UnocalRig 54 startup expected March 2002 on Grayling Platform Rig 58A startup expected Feb. 2002 on King Salmon Platform

Photo courtesy Judy Patrick

XTO Energy, Inc.

ON DEADLINEPetroleum News • Alaska A3Week of February 17, 2002

RIG REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2ON DEADLINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3FINANCE & ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5GOVERNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7ARCTIC GAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9ADVERTISER INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Index

Kay Cashman, PUBLISHER

Dan Wilcox CHIEF EXECUTIVE OFFICER

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Petroleum News • Alaska and its supplement, Petroleum Directory, are owned byPetroleum Newspapers of Alaska LLC. The newspaper is published at weekly. Several of theindividuals listed above work for independent companies that contract services to PetroleumNewspapers of Alaska LLC or are freelance writers.

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Petroleum News Alaska, ISSN 10936297, Week of February 17, 2002Vol. 7, No. 7

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ARCTIC GASNetricity hires Parsons for NorthSlope data center feasibility study

Netricity LLC has hired Parsons Engineering Inc. to study the economics andmarkets for a proposed $1 billion data center on the North Slope. The study, whichjust got under way, will take about two months, Mike Caskey told PNA last week.

Caskey is vice president of FidelityExploration and Production Co., one oftwo partners in the venture.

The facility, commonly known as aserver farm, would house a half millionweb-hosting servers in a 1 million-square-foot building, connected to clients and users by the fiber optic system thatruns the length of the trans-Alaska pipeline. It would also include construction ofa 400 megawatt, gas-fueled electric plant to power the center and an additionalfiber optic line for back up.

Modular buildings to house the data center and power plant would be con-structed in Anchorage or Nikiski, Netricity said.

Netricity is in negotiations with producers to buy natural gas from North Slopeproducers to power the facility. The center would use a maximum of 120 millioncubic feet of natural gas per day.

“We are expecting gas prices from several owners soon,” Caskey told PNAFeb. 8.

Fidelity Exploration and Production, a 75 percent partner in Netricity, is a sub-sidiary of MDU Resources Group, the parent company of Knife River Corp. whichowns Alaska Basic Industries and Alaska Sand and Gravel.

Andex Resources LLC, a 25 percent partner in Netricity, is a partner in BPExploration (Alaska) Inc.’s Slugger prospect on the North Slope. The Houstonindependent is also putting together a deal with Doyon Ltd. and the state of Alaskato explore and develop 538,000 acres in the Nenana Basin.

Billionaire financier George Soros is one of Andex’s principal shareholders. —Steve Sutherlin

“We are expecting gas pricesfrom several owners soon.”

—Mike Caskey told PNA Feb. 8.

ON DEADLINEA4 Petroleum News • Alaska Week of February 17, 2002

GOVERNMENTKnowles signs ANWR support bill

Gov. Tony Knowles signed House Bill 334 Feb. 12, providing $1 million toArctic Power and $100,000 to the Village of Kaktovik.

“These needed funds will allow Arctic Power to continue its national efforts insupport of responsible oil and gas exploration and development in ANWR,”Knowles said in a statement. “This is particularly timely as Congress is currentlyscheduled to begin debating a national energy bill later this week. It also provides$100,000 to help the village of Kaktovik host members of the media and others asthey visit the refuge.”

The governor’s office said the Arctic Power funds were originally included inKnowles’ fast-track supplemental budget along with marketing assistance fortourism and wild Alaska salmon. The governor reminded legislators of thoserequests as he signed the bill providing money to lobby to open the Arctic NationalWildlife Refuge.

PIPELINES & DOWNSTREAMShooting led to event that movedpipeline; shift 150 miles from bullethole wasn’t detected for months

A pipeline shift near Pump Station 5 was a result of maneuvers to drain oil fromthe trans-Alaska oil pipeline after it was punctured by a bullet, according to engi-neers with Alyeska Pipeline Service Co.

While the 13-inch movement wasn’t detected until four months after the bulletpierced the line on Oct. 4, the pipelinesystems did their job, regulators agree.

Nine of the “honeycomb” anchorsthat absorb energy when the pipelinemoves had to be replaced. The job tookabout six days.

“All of the movement systems thatare on TAPS worked just great,” saidRhea DoBosh of the Joint Pipeline Office. “It moved, but the absorbers and saddlesand all of the portions of the pipeline that are supposed to move worked well.”

The delay in spotting the movement does raise some questions, however.“Should some other major event have happened, could it have caused some dam-

age?” she said regulators are wondering. “If it was that major, should it have beendetected earlier? These are things we are asking, and looking at in depth.”

The JPO, which includes federal and state regulators, has been looking at whatlevel of surveillance is needed on the line, and this incident will be part of that larg-er review of “reliability centered maintenance,” she said.

The pipe moved as a result of forces from oil moving upstream when engineerswere getting ready to drain oil out of the northern part of the line in the wake of thebullet piercing, according to Mike Heatwole of Alyeska.

When five relief valves at Pump Station 5 were opened, the oil flow from thesouth reached a rate of more than 1.2 million barrels daily as it surged downhilltoward check valve 50, which is about a mile south of Pump Station 5. The valve isdesigned to close when just such a reverse-flow situation occurs, and it did, haltingthe flow. The momentum of the oil pushed the valve and adjacent piping 13 inches,crushing the energy absorbers mounted on the anchors.

There was no damage to the pipe, and engineers weren’t even aware of the inci-dent until a ground surveillance crew on a routine inspection noticed it Jan. 4,Heatwole said.

Crews replaced the anchors and used hydraulic jacks to move the pipeline backinto its regular position, he said.

—Allen Baker

While the 13-inch movement wasn’tdetected until four months after thebullet pierced the line on Oct. 4, the

pipeline systems did their job,regulators agree.

Petro-Canada shows record earnings;fourth quarter hurt by Enron issues

Petro-Canada bucked a decline in fourth-quarter earnings to post record profitsin 2001 of $904 million (Canadian), slightly above 2000’s C$893 million.

For the fourth quarter, operating earnings were C$71 million, less than a fourthof the C$287 million a year earlier. Those earnings were also less than half of theC$149 million the company made in 2001’s third quarter. The fourth quarter wasmarked by a C$15 million charge against earnings due to the bankruptcy filing ofEnron Corp.

Production totaled 205,000 barrels of oil equivalent daily for the quarter, downfrom 211,000 a year earlier but up from the third quarter’s 190,800.

Upstream profits were C$52 million, compared with C$244 million a year ear-lier. Downstream operations brought in C$48 million, down from C$66 million in2000’s fourth quarter.

Revenue for the quarter slid 39 percent to C$1.77 billion, from C$2.90 billiona year earlier. For the full year, revenues totaled C$8.69 billion, a decline of 9 per-cent from C$9.52 billion in 2000.

—Allen Baker

FINANCE & ECONOMY

Week of February 17, 2002

FINANCE & ECONOMY

Petroleum News • AlaskA A5

MICHIGANSemco restructuring bringsloss; Enstar parent exitsengineering business

Semco Energy Inc. showed a loss of $5.4 million for the fourthquarter and $6.4 million for the year as the parent of Enstar restruc-tured its business.

Even before the write-offs, fourth-quarter profits for theFarmington Hills, Mich., company were reduced $1.6 million bywarmer than normal weather in Michigan and Alaska, where it sellsnatural gas for heating and other uses.

Net quarterly income from continuing operations was $5.2 mil-lion, compared with a profit of $12.4 million a year earlier.Operating income from gas distribution shrunk to $19.6 million forthe quarter, down 29 percent from $27.8 in the final quarter of 2000.The construction services business showed a loss of $3.9 million forthe quarter, compared with a $2.8 million profit a year ago.

Semco’s restructuring charges include its decision to discontinueits engineering business, which triggered a $6.1 million write-down.

Revenues dropped 7 percent for the quarter to $132.5 million,from $142.8 million a year earlier. For the year, revenues were up 9percent to $445.8 million.

—Allen Baker

■ L O N D O N

BP profits slip 46 percent; Londongiant follows industry trend

By Allen BakerPNA Contributing Writer

BP p.l.c reported sharply lower profits for thefourth quarter, in line with the industry patternas prices pushed down earnings. London-basedBP said its pro forma earnings for the quarter

totaled $2.2 billion, down 46percent from the figure a yearearlier. By comparison, fellowoil giant ExxonMobil showed a49 percent profit decline.

“General economic slow-down, and a sharp fall in oiland gas prices, certainly madefor tough going,” commentedBP’s chief executive, JohnBrowne.

For the year, BP had profitsof $13.2 billion, down 7 percent from 2000’s $14.2billion. That came despite an increase of nearly $2.5billion in capital spending, for a total of $8.9 billioninvested.

BP did lift more oil and gas in the quarter than ayear ago.

Overall, 2001 production was up 5.5 percent froma year earlier (2 percent after adjusting for acquisi-tions), with the fourth-quarter results showing a 4percent gain after adjusting for properties that werebought or sold.

Average daily liquids flow in the fourth quarterwas 2,017,000 barrels, up 4 percent from a year agoand a 7 percent jump from the third quarter, when BPpumped 1,883,000 barrels each day.

Liquids production had been declining, but newoil from the offshore Northstar oil field in Alaska, aswell as Girassol in Angola and Qinghangdao inChina, helped the results. U.S. production was3,621,000 barrels a day, up from 3,577,000 in thethird quarter and 3,403,000 barrels a year ago.

Gas production up 13 percent

Gas production worldwide was 19,727 millioncubic feet a day, up 13 percent from a year ago and 7percent above the third quarter figure. U.S. produc-tion was down slightly, however, 8,094,000 millioncubic feet daily, a decline of 1 percent from a yearago but a drop of 7 percent from the third quarter.

Overall, exploration and production activities gen-

John Browne, BP’schief executive

■ W A S H I N G T O N , D . C .

Oil prices likely to drift until secondhalf of the year, energy watchdog saysInternational Energy Agency statistics suggest Russia not cooperatingwith OPEC’s strategy to squeeze crude oil supplies

By Bruce Stanley Associated Press Business Writer

Soft demand and a mild winter in major oil mar-kets have offset the impact of cuts in crude pro-duction and kept prices for oil and refined prod-ucts from rising, a respected survey said Feb. 8.

Due to conflicting market forces, pressure for asubstantial increase in crude prices probably won’tbuild until an incipient economic recovery picks upduring the second half of the year, the InternationalEnergy Agency said.

In fact, prices might fall before then. IEA statisticssuggest that Russia, the world’s second-biggest oilproducer, isn’t cooperating with OPEC’s strategy tosqueeze crude supplies, and an OPEC officialexpressed fears Feb. 8 of a possible rupture in rela-tions between Russia and the producers’ cartel.

The official, speaking on condition of anonymityfrom OPEC’s headquarters in Vienna, Austria, saidhe didn’t expect Russia’s cooperation, such as it is, tolast beyond March. OPEC is therefore likely to facea severe test this spring in trying to avoid a supplyglut and even a damaging price war, he said.

Global demand for oil fell to 76.3 million barrelsa day during the last quarter of 2001, down half a mil-lion barrels a day compared to the same three monthsof the previous year.

Average demand growth for the full year was thelowest since 1985, the agency said in its monthly oilmarket report.

The global economic slowdown was largely toblame, together with unseasonably warm weather inNorth America and parts of Europe.

see BP page A6

see PRICES page A6

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Prices firmed up somewhat

Members of the Organization ofPetroleum Exporting Countries have triedto shore up weak crude prices by coordinat-ing output cuts together with Russia andfour other non-OPEC producers.

The cuts took effect Jan. 1 and shaved510,000 barrels a day from world oil pro-duction, which slipped to 76.3 million bar-rels a day in January, the report said.

Although prices firmed up somewhatlate last month, they stayed within the samebroad range seen since November. The IEAsaid it doesn’t foresee a major change in oilmarkets until a widely expected economicrecovery picks up in the third quarter.

The Paris-based IEA is the energywatchdog for the Organization forEconomic Cooperation and Development, agroup of rich oil-importing nations.

Peter Gignoux, head of the petroleumdesk at Salomon Smith Barney in London,agreed with the IEA that oil prices shouldremain relatively stable until demand recov-ers.

“I think prices are caught in a vice-likerange,” of $18-$22 a barrel for U.S. light,sweet crude, he said.

Crude oil for March delivery rose 54cents to $20.18 in afternoon trading Feb. 8on the New York Mercantile Exchange.

OPEC members above quotas

The report noted that nine of the 10OPEC countries that agreed to cut their oilproduction on Jan. 1 actually did so.However, even after reducing output,OPEC members still were pumping 6 per-cent, or 1.3 million barrels a day, abovetheir new quotas.

The OPEC official in Vienna challengedthe IEA’s statistics but conceded that if theyare correct, then OPEC is doing a disastrousjob at managing its own production.

Gignoux argued that OPEC’s limitedsuccess in decreasing output last month isimpressive nonetheless. In a series of incre-mental cuts, the cartel has pared back itsproduction by more than 3 million barrels aday since January 2001.

“This is an aggressive act by OPEC.They’re cutting their own revenues,”Gignoux said.

Some non-OPEC production up

Of the non-OPEC nations that wentalong with the group’s strategy to trim sup-plies, only Norway and Mexico complied,the IEA said. Oman’s output wasunchanged in January, and Angola andRussia actually boosted production.

Russia increased its exports by about500,000 barrels a day from December toJanuary, instead of cutting its oil exports by150,000 barrels a day as it told OPEC twomonths ago it would, the IEA said.

Russia was extremely reluctant to goalong with OPEC’s reduction plan in thefirst place. Russian oil companies and gov-ernment officials have said publicly sincethen that they want to increase oil outputthis year, thereby “casting a cloud” overRussia’s future cooperation with OPEC, theagency said. OPEC’s secretary-general, AliRodriguez, hopes to visit Moscow for talksin the first week of March. The OPEC offi-cial in Vienna warned that prices couldplunge if the two sides fail to reach anunderstanding about crude output. ◆

FINANCE & ECONOMYA6 Petroleum News • Alaska Week of February 17, 2002

OIL COMPANY EARNINGSFourth Quarter 2001

4Q 2001 profits, % change from 4Q 20004Q revenues, % change from 4Q 2000,

4Q daily production, % change from 4Q 2000

profits % revenues % production %Alberta Energy AOG —Agrium AGU —Anadarko APC -$188 — $1,379 - 41 529,000BOE +9BP BPChevronTexaco CVX -$2,522 — $21,460 -33 2,014,000BBL/4,371MMCF 0/-1Conoco COC $127 -77 $8,491 -18 891,000BOE +32Evergreen EVG —ExxonMobil EOM $2,680 -49 $47,300 -26 2,527,000BBL/11,373MMCF -3/+1Forest FST —Marathon MRO -$1,074 — $6,846 -15 192,300BBL -1Murphy MUR $28.8 -69 $849 -33 70,687BBL +7Petro Canada PCZ C$71 -75 C$1,772 -39 205,000BOE -3Phillips P $162 -78 $10,000 +59 836,000BOE 0Semco SEN -$5.4 __ $132.5 __ __ __Tesoro TSO $4.0 -84 $1,279 -11 — —Unocal UCL -$29 — $1,263 -55 497,000BOE +5Williams WMB —XTO XTO —

Dollar figures in millions

BOE: barrels of oil equivalentBBL: barrels of crude oil and condensate

MMCF: billions of cubic feet of natural gas

The fourth quarter information about the companies in the chart above are either included innews briefs and stories in this section of PNA or they were reported in the Feb. 3 or Feb. 10issue of PNA.

erated $2.4 billion in pro forma earnings forthe quarter, just half of the figure a year ago.

Lower prices were the culprit, as theywere across the industry. Crude brought anaverage of $17.72 a barrel, down 37 percentfrom a year earlier. Gas sales grossed $2.28per thousand cubic feet, down 39 percent.

Refining and marketing added $392 mil-lion in earnings for the quarter on a replace-ment cost basis, about half the $792 millionbrought in a year ago. That segment showeda profit of $1 billion in the third quarterbefore adjustments.

Refinery throughput was 2,847,000 bar-rels daily, an 8 percent decline from a yearearlier as the company sold refineries inNorth Dakota and Utah to TesoroPetroleum.

Operating loss from the chemicals busi-ness, on a replacement cost basis, came to$67 million, an improvement from the $82million loss in the 2000 fourth quarter, butnot from the profits of $105 million fromthat segment in the third quarter of this year.

No big changes in 2002

As for 2002, chief executive Brownesees no big changes: “Demand for oil andgas is weaker than last year because of theglobal economy, a mild U.S. winter andreduced jet fuel demand following theevents of 11 September,” he noted in astatement.

“The crude oil market looks broadly bal-anced for the first half of 2002, if OPEC’slatest round of quota reductions offset cur-rent demand weakness. Additional OPECoil may be required in the second half of theyear to balance the market if demandimproves in line with an economic recov-ery,” Browne said. ◆

continued from page A5

BP


PRICES

By Petroleum News • Alaska

Rejane Medinger ‘Johnnie’ Burton ofWyoming has been named director ofthe U.S. Department of the Interior’sMinerals Management Service.

In announcing the appointment Feb. 7,Secretary of the Interior Gale Norton said:“Ms. Burton has the background and pro-fessional qualifications that are critical tothis challenging position. Johnnie is theright person, at the right time, to lead thisagency and the vital role it will play in help-ing the nation focus on its energy-relatedchallenges.”

Since 1995, Burton has served on thegovernor of Wyoming’s cabinet as directorof the Department of Revenue. From 1989-92 she was vice president of TCF Inc., an

oil and gas explo-ration companybased in Casper,Wyo.

Prior to that, shewas vice president ofDwights EnergydataInc., an informationcompany specializ-ing in oil and gasdatabases. Burtonwas also presidentand founder of Hotline Energy ReportsInc., which later merged with Dwights.Burton began her career in the oil and gasindustry as an oil scout in Casper, Wyo.,for Rinehart Oil News.

Burton was a member of the WyomingState House of Representatives from

1982-1988.“I am excited about leading the Minerals

Management Service at this critical time,”Burton said in a statement. “I look forwardto the challenges of this very importantposition.”

Born in French Algeria, Burton immi-grated to the United States in 1963 andbecame an American citizen in 1968. In

1958, she completed the Baccalaureat del’Enseignement Secondaire in Algiers. Shecompleted the Licence-es-Lettres, English,Diplome d’Enseignment from theUniversities of Algiers in Algeria and inParis, France, in 1962. She earned a mastersdegree in 1974 from the University ofWyoming.

Burton has two grown children.

GOVERNMENTPetroleum News • Alaska A7Week of February 17, 2002

■ W A S H I N G T O N , D . C .

Minerals Management Service director named Rejane ‘Johnnie’ Burton of Wyoming tapped to head MMS; varied background includes executive position with Casper oil and gas company

JUNEAURokeberg proposes modification ofroyalty incentives for marginal fields

Rep. Norman Rokeberg, R-Anchorage, introduced a bill Feb. 8 allowing theDepartment of Natural Resources to modify the royalty for fields, or portions of fields,which are uneconomic.

“I think it’s important that we have an incentive program in place in this state forthe development of marginal oil and gas fields,” Rokeberg said in a statement. “Wedon’t need to leave oil in the ground in Alaska. It’s important for our economy that weget as much production and revenue from our oil fields as we can.”

Rokeberg said the state has had laws to encourage production from marginal oil andgas fields, and in 1995 the Legislature passed House Bill 207 to lower state oil royal-ties to encourage production, or to raise them when economic conditions warranted it.That law, he said, has been described as unusable, unintelligible and overly burden-some, and the only effort to seek such incentives in the past seven years was denied.

He said House Bill 394 provides modification of the state’s royalty share on a slid-ing scale or other mechanism based on a change in the price of oil or gas and other rel-evant factors, including production rate, projected ultimate recovery, developmentcosts and operating costs.

“Alaska needs to be able to compete in the global market”, Rokeberg said.“Companies operating in Alaska are competing on a global basis for capital dollars toexpand exploration and production and to keep operating in Alaska. When fields areuneconomic, we need to have a workable plan in place allowing for a reduction in thestate’s royalty share if that will keep a field in production or allow for development ofa new field that might otherwise be uneconomic.”

Rokeberg said no company or person encouraged him to introduce his legislativeremedy. He said he has wanted to correct the problems created by HB 207 for years,to help the state better meet its financial obligations by encouraging the maximum useof known oil resources.

Rejane Medinger‘Johnnie’ Burton

By Kristen Nelson PNA Editor-in-Chief

Support your local environmental regu-lator, John Iani told the ResourceDevelopment Council Feb. 7, becauseif you don’t the EPA will have to

come in to enforce statutes. “And you don’t want a guy with a blue

blazer from Seattle telling you how to runyour businesses. And so I’m here to preachfor a strong DEC,” said Iani, who beganwork Oct. 10 as administrator of EPA’sRegion 10 covering Alaska, Washington,Oregon and Idaho.

“I’m happy to report that I don’t have aprepared speech from Washington, D.C.,”Iani said. There have been no “10 new com-mandments for Region 10” from EPAAdministrator Christie Whitman. “And Idon’t think that’s coming,” Iani said.

Whitman, a former two-term governor ofNew Jersey, “understands that problemsneed to be solved at the local level,” and thatmeans, he said, at the state level.

No blue blazers

Iani said he thinks it is good news forAlaska “that Gov. Whitman is trying to pushdelegation to the state. … You want — youshould want — the state to take the lead onregulating the industry here.”

That means the Alaska Department ofEnvironmental Conservation.

“I’ll take the maybe unpopular positionwith some of you by saying it’s short sight-ed to think about cutting out DEC or reduc-ing DEC… don’t forget that those statutes

require the federal government to come inand if you don’t have DEC on the groundsort of making sure that environmental com-pliance is happening, EPA’s going to comein.”

The state needs a strong “environmentalcompliance body up to speed and runningand you can’t do that if you dramatically cuta budget for them,” he said.

Iani said he thought some understoodthat, but “I think a lot think well, we’ll justget rid of that roadblock.”

“But, you know,” he said: “Seattle’s an800-pound gorilla and you don’t want tohave to run into that roadblock because pro-jects simply don’t get done. And that’s not agood result.”

DEC, EPA cooperation

Iani said he believes in “a strong partner-ship with the states.” EPA has expertise in alot of areas that the state doesn’t, he said, andthe state has expertise in areas the EPAdoesn’t. DEC and EPA “have a pretty goodpartnership,” he said: the agencies just spenttwo days planning and “prioritizing thingsbetween EPA and DEC.”

One of the top priorities for EPA Region10 is Alaska oil and gas, Iani said. And whenRegion 10 took their three priorities back toa national EPA meeting, they got a lot ofsupport. Efficient permitting is a directivefrom the Bush administration, Iani said, andRegion 10 will focus on trying to solve prob-lems at the state level and streamline permit-ting for energy projects.

Iani also asked for priorities from Alaskaindustries: “The real priorities — don’t giveus a shopping list that has 40 or 50 items onit.”

Iani, born and raised in Kodiak, workedas a legislative aide for Sen. FrankMurkowski and Congressman Don Young,practiced law, was president of the PacificSeafood Processors Association and mostrecently was vice president for corporateaffairs and general counsel for seafood pro-ducer UniSea Inc. ◆

GOVERNMENTA8 Petroleum News • Alaska Week of February 17, 2002

■ A N C H O R A G E

EPA Region 10 administratortells Alaskans to support DEC The alternative, says John Iani, is the 800-pound gorillafrom Seattle — wearing a blue blazer

PEOPLEWhiteheadnamed VPwestern slope

Phillips Alaska Inc. said Feb. 8 ithas named A.J. “John” Whitehead vicepresident of the Western North Slope,an asset area that includes the Alpineoil field and anyfields whichmight be devel-oped in theN a t i o n a lP e t r o l e u mReserve-Alaska.

Whiteheadreplaces RyanLance, who wastransferred toHouston to be the general manager ofthe company’s Lower 48 and Canadaassets.

Most recently Whitehead has beenPhillips Alaska’s vice president ofhuman resources. He has 25 years ofexperience in the oil industry, includ-ing 15 years in Alaska.

John Whitehead

Week of February 17, 2002

ARCTIC GAS

Petroleum News • Alaska A9

CANADAAdviser touts economicbenefits of pipeline

The Alberta-based petroleum industry has been urged to spreadthe word across Canada about the substantial economic benefits ofa stand-alone Mackenzie Valley gas pipeline.

Robert Marshall, a senior pipeline adviser to the Alberta govern-ment, said the strong support from the North needs to be expandedinto “support from the rest of Canada.”

He told the Association of Professional Engineers, Geologistsand Geophysicists of Alberta the project would result in directinvestment of C$8.3 billion (US$5.2 billion), mostly concentrated inthe 2004-2006 period, although direct investment spending wouldextend through to 2029, stemming from long-range field develop-ment required in the Mackenzie Delta.

Marshall said the Northwest Territories, with its limited popula-tion of about 40,000, would “need a lot of help” in the provision ofgoods and services related to pipeline development, constructionand operation.

A pipeline would open up alternative delivery means for AlbertaE&P companies as well as providing natural gas liquids as feedstockfor the province’s petrochemical sector.

A study by Calgary-based Wright Mansell Research Ltd., pre-sented by TransCanada PipeLines Ltd. to the Canadian government,calculated a Mackenzie Valley pipeline would pump C$1.28 billioninto Alberta’s Gross Domestic Product from 2002 to 2034.

The single largest item of C$434 million would occur duringpipeline construction.

In addition, the study said the project would contribute C$849million in wages to Alberta laborers and C$100 million to Albertagovernment revenues over a 32-year span.

■ J U N E A U

State defends royalty-in-kind sale at House Oil and Gas Committee

By Kristen NelsonPNA Editor-in-Chief

Producers and explorers — companies with andwithout current gas reserves — argued theirrespective sides of whether or not the stateshould be holding a royalty-in-kind sale for its

North Slope natural gas before the House SpecialCommittee on Oil and Gas Feb.5. (See Feb. 10 issueof PNA)

The state’s Division of Oiland Gas defended the sale Feb.5 and Feb. 7.

Division of Oil and GasDirector Mark Myers saidaccess to facilities was crucialfor the future well being of thestate’s oil and gas industry anda royalty-in-kind sale wouldgive a shipper guaranteed gasso it could contract for space in an open season.Myers said the division disagrees with the produc-ers’ contention that access is not an issue and notedthat bidders Chevron and Williams both had accessconcerns — Chevron for its Point Thomson gas andWilliams for gas in its foothills prospects.

Some expansion

From the design specs the producers have pro-posed, they have 0.8 billion cubic feet to 1 bcf ofexpansion capacity that could be brought on with

additional compression, Myers said: that expansioncapacity could be used to ship the state’s royalty gas.

Bonnie Robson, deputy director of the division,told the committee that while the producers onlyobjected to royalty-in-kind sales where the gas couldbe returned to the state and revert to royalty in value(gas which the producers must then ship and sell forthe state), in fact the state is allowed by lease termsto switch on six months notice. If the producers wantto end the state’s ability to switch from in-kind to in-value, she said, they are asking for royalty relieffrom the state, and should be required to demonstratethat they have an economic need for such relief.

Open season uncertain

Robson said the producers have said the royalty-in-kind sale was not needed because they did notplan to hold an open season in 2002. But that state-ment, she said, came within two weeks of one of theproducers — she would not say which one — tellingthe state there could be an open season in the secondquarter of 2002. And the pipeline consortium, shesaid, has indicated that they might hold an open sea-son in 2002, so the state has no guarantee there won’tbe an open season in 2002.

Once the open season closes, she said, the deci-sion between royalty-in-kind and royalty-in-valuewill have been made. If the state doesn’t treat this asa now or never decision, Robson said, it may be

see ADVISER page A10

Mark Myers

see SALE page A10

ARCTIC GASA10 Petroleum News • Alaska Week of February 17, 2002

■ C A N A D A

Kakfwi warns door may closeon aboriginal support

By Gary Park PNA Canadian Correspondent

Northwest Territories Premier StephenKakfwi has again turned up the heaton the Canadian government, warn-ing that aboriginal backing of Arctic

gas projects will evaporate unless his regiongets C$200 million in federal economic aid.

He said the Northwest Territories won’tbe “so openly supportive of large-scaledevelopment” without federal help toimprove roads and money for skills train-ing, social services and health programs.

“I don’t want that to happen,” he toldreporters Feb. 5 as he continued his lobby-ing for funds to help transform theNorthwest Territories into a region that ismore friendly towards resource industries.

He said Northwest Territories residents

are unhappy that all royalties from theresource sector are channeled to theCanadian government, which funds about75 percent of the Northwest Territories’budget.

“Most of the communities are in supportof oil and gas and diamond mines andpipelines,” Kakfwi said.

But there has to be evidence that thegovernment is “not just sucking money outof here,” otherwise it will be difficult to sus-tain the present positive aboriginal supportfor pipeline projects.

He said it’s time for Prime Minister JeanChretien, who has endorsed the concept ofa Mackenzie Valley pipeline for 30 years, togive more tangible evidence of his position.

“When you hesitate, sometimes the doorcloses before you get off your butt and youlose your opportunity,” he said. ◆

For all of Canada, Wright Mansell saidGDP would grow by C$40.8 billion toC$77 billion, labor income would gainC$8.2 billion and federal government rev-enues would grow between C$6.1 billion

and C$24.2 billion. Jobs, Marshall said, would be spread

through a multitude of sectors in Canada,including pipelines, oil and gas productionservices, manufacturing, construction,transportation, utilities, communications,wholesale and retail trade and business ser-vices.

—Gary Park


ADVISER

unable to sell royalty gas in-kind until 2020or 2025, when space might be available inthe line.

The producers have suggested the state

could get capacity in an expansion openseason, but, Robson said, an expansioncould be limited to companies already ship-ping, and if new companies were allowedto contract for space, the state could belimited to its royalty share of the expan-sion, perhaps one-eighth of 1 bcf. ◆


SALE

“Speculators keep oil companies on theirtoes,” Boyd said. “Speculation carries astigma, but it’s not always a bad thing.”

A common strategy for speculators is tobuy flank acreage, or acreage adjacent toother leases, Boyd said.

Frequently oil companies will overbuyto protect themselves and keep speculators

out. Over time the companies will dropexcess leases. They just stop paying rent.

The extra leasing action is not necessar-ily a windfall for the state, Boyd said. Thereal money is in royalties which are paid onproduction.

But the state has earned in the neighbor-hood of $2 billion over time on leases, hesaid.

“We can’t sit around and wait for BP todecide where we’re going to go next,” saidJack Roderick, author of “Crude Dreams, APersonal History of Oil and Politics inAlaska.”

“There will be a new wave of little guys;maybe we’ll find a new basin.”

Roderick said speculators add to thecompetition for leases which accelerates thepace of prospecting and leasing.

Roderick, who has been an oil and gaslease speculator himself, published the“Alaska Scouting Service,” a periodicmimeographed report on oil and gas leasingactivity, in the 1950s.

Roderick told PNA small investors andsmaller companies have been the catalystthat helped launch the oil industry inAlaska.

In the early days, he said, leases wereawarded by lottery rather than to the highestbidder. That structure encouraged the par-ticipation of small investors and required oilcompanies to deal with individual investorsto obtain desired acreage.

Oil companies often recruited investorsbefore a sale to enter the lottery for parcelsthe company wanted to obtain. If the smallinvestors were successful, the oil companywould develop the tract, and the investorswould get a pre-arranged override on the oilor gas produced from the lease’s wells.

The Alaska leasing program is forgivingof speculators, Boyd said. Leases are rela-

tively affordable. Often, the minimum bid is$5 per acre. Speculators frequently bid inthe $5 per acre to $10 per acre range.

The size of the lease parcels is small,with a three-mile by three-mile maximumsize; a speculator can buy in relativelyaffordable chunks of 5,760 acres or less.

But leaseholders have ongoing expens-es.

Following the initial bid, there is rent topay. The rate is $1 per acre for the first year,with an increase of 50 cents per acre eachyear until the rate reaches the maximum of$3 per year.

“The lease is yours, generally speaking,for seven years,” Boyd said.

When the leases expire, they go back tothe state. It is impossible to extend leasesnow without doing some work, Boyd said.The lessee must explore or drill and eventu-ally produce.

Speculators frequently buy on the edgeof unitized fields. The speculator’s gambleis that the lease interest can be sold for aprofit.

Some buyers base their acquisitions onextensive research; some don’t.

“Some buyers don’t have any data at all,just a hope and a prayer,” Boyd said.

Speculators often offer land to owners ofadjacent leases, perhaps trying to hang onto

an override for themselves.The override is interesting. It is a private

arrangement, which is not tracked by thegovernment, Boyd said.

While an award of a working interest isan assignment of interest in the lease that isrecorded, the state has no interest in the cre-

ation of the overriding royalty interest. Thestate knows who the leaseholders are, but itdoesn’t know who holds overrides on theleases, or how many override deals are inplace throughout the state. ◆

NEXT WEEK: PNA talks to oil and gaslease investors from Fairbanks.

THE REST OF THE STORYPetroleum News • Alaska A11Week of February 17, 2002


SPECULATORS

“Speculators keep oil companies ontheir toes.” —Ken Boyd, formerdirector of the Alaska Division

of Oil and Gas

both the value of the railroad as an eco-nomic engine to our state and the need forit to have the means to fuel that engine,”he said.

Knowles said the state has asked theproducers to “take out their pencils andgive this a close look.” The railroad needslegislative authorization to issue thebonds, and Knowles said he is preparinga bill to send to the Legislature authoriz-ing the bonding. (See story on page 4.)

Conduit financing

Neil Slotnick, deputy commission ofthe Department of Revenue, said the Cityof Valdez did this type of tax-exemptfinancing for the Valdez Marine Terminalin the 1970s. Valdez issued the bonds, he

said, but it did not put its own credit orassets at risk.

Instead, payment was guaranteed bythe pipeline owners.

“It was merely conduit financing,”Slotnick said.

Why can’t the state do the same thingtoday that Valdez did in the 1970s? heasked.

The Tax Return Act of 1986 took thistype of opportunity away from state andmunicipalities, with some exceptions,Slotnick said.

States can issue tax-exempt financing,called private activity, but that ability isvery limited. “The state could not do tax-exempt financing for a project such asthis one without a federal exception to theInternal Revenue Code,” he said.

Revenue looked for advice

After the policy council issued its

report, recommending innovative financ-ing, the Department of Revenue consult-ed with the experts it typically deals with,Slotnick said. Bond counsel Wohlforth,Vassar, Johnson & Brecht and investmentbanker Goldman Sachs brought theAlaska Railroad idea forward.

The administration knew about theexception the railroad had to issue tax-exempt bonds, Slotnick said, “but wewere not aware of how broad it reallywas, and how unique it was.”

Ken Vassar of Wohlforth, Vassar wasretained to research the legislative histo-ry, and Goldman Sachs to advise the stateon the economic structure of such a bondissue.

Provision unique

“This provision that exists in federallaw for the issuance of tax-exempt bondsby the Alaska Railroad Corp. is unique,”Vassar said. The Alaska RailroadTransfer Act includes one sentence —with no conditions attached — sayingbonds issued by the Alaska RailroadCorp. are treated as though they werebonds issued by the state of Alaska for anessential government purpose, and are nottreated as industrial development bondsor as private activity bonds, he said.

“If the railroad issues the bond, thebond is a tax-exempt governmental bond.This is a very unique provision,” Vassarsaid. “There is no other entity in the stateof Alaska, no other entity to my knowl-edge in the country, that has the ability toprovide this financing for this project atthis time with these kinds of bonds.”

And there is no limit, no volume capon this bonding ability, he said.

Before the Tax Reform Act of 1986“there were a number of exemption pro-visions for bonds for special projects andspecial issuers,” Vassar said, some insidethe Internal Revenue code and some out-side of the code. “It was the intention of

Congress when they passed the TaxReform Act of 1986 to clean that up andto eliminate those provisions. But theyleft three exceptions. And one of thesethree exceptions was a specific referenceto this sentence in the Alaska RailroadTransfer Act,” Vassar said.

“The railroad is in the absolutelyunique position to be able to issue tax-exempt bonds to provide financing for theentire pipeline through Alaska and intoCanada and to provide that financingwithout ownership responsibility,” hesaid.

Reduction in pipeline tariff

“What we’re discussing here todaymay not be the whole answer, but it’s abig part of the answer,” Jeff Brown, vicepresident of Goldman Sachs, told the pol-icy council Feb. 7. Using bonds issued bythe railroad “will drop the interest rate…on the project by about 2 percent. And it’slegal,” he said.

“The tax-exempt finance could actual-ly save in excess of a billion (dollars) pre-sent value or as much as 20 cents on thepipeline tariff or in the neighborhood of10-12 cents per Mcf to the ultimate cus-tomer, the oil company. So that certainlyis a big factor tipping the scales towarddevelopment of the project.”

Companies owning the pipeline wouldborrow money from the railroad, which inturn would borrow money from the pub-lic, Brown said. The railroad corpora-tion’s credit would be protected becauseinvestors would only have recourse to thepipeline owners.

Because the interest rate would belower with tax-exempt financing, pipelineowners will pay “in the area of $120 mil-lion a year in terms of a lower annualmortgage cost,” he said. That lowers thecost of transportation “in the area of 10-12 cents per thousand cubic feet… evenafter tax,” Brown said. ◆


BONDS

THE REST OF THE STORYA12 Petroleum News • Alaska Week of February 17, 2002

“Finally, the bill also authorizes therailroad to negotiate with producers ofnatural gas on the bond issues.

“This bill complements other incen-tives that we have proposed to get thegasline project moving, such as federalaccelerated depreciation and measuresto reduce commodity risk.”

What’s in it for the railroad?

Participating in the governor’s pressconference from Anchorage, AlaskaRailroad President Pat Gamble calledthe proposal “another in a series ofgreat, bold moves that the state hastaken in its history to further its eco-nomic development.”

The railroad has had the opportuni-ty to issue bonds, he said, but hasn’tdone so.

“I think that this is well within therailroad’s mission,” saidCommissioner of Transportation andPublic Facilities Joe Perkins, also thevice-chair of the railroad board.“What’s good for the state is good forthe railroad,” Perkins said.

The governor was asked what’s in itfor the railroad.

“Any economic development in thisstate is going to be good for the rail-road,” Knowles said. Gamble agreed:“Once this pipeline starts to go, ourexperience with the oil pipeline indi-cated that the railroad was a veryimportant part of moving major piecesof equipment up into the constructionarea. And then there’s continuing sup-

port that will follow on from that,” hesaid. The biggest impact would be dur-ing construction, but there would alsobe longer-term support, Gamble said.

“The revenue of the railroad prettywell depends on the economy ofAlaska,” said Perkins. If the state’seconomy is slow, he said, “we certain-ly see that impact on what we haul onthe railroad.”

IRS review?

Knowles was asked if this bondingproposal will be submitted for IRSreview.

“We don’t need permission from theIRS to do it,” the governor said. “Wefeel that it’s very clear… not only wasit clear in the initial legislation (trans-ferring the railroad to the state) but itwas reaffirmed through the TaxReform Act of 1986…”

Knowles did say the InternalRevenue Service may want to look intoit.

“It’s certainly their prerogative.”

Action from producers expected

Asked if the tax-exempt bondsmake a North Slope gas pipeline pro-ject pencil out, Knowles said “… whenyou put a billion-plus dollars on thetable, it should not be just a small step:that’s a big step towards making theproject work.

“I am asking the producers to lookat this, to give us a report in terms ofhow it affects the project. And whatelse needs to be done. And I fullyexpect this will begin some very pro-ductive conversations in that regard.”


LEGISLATION


Department of Revenue, said the financingwould cover “necessary aspects of a majortransportation project” and would includegas conditioning on the North Slope.

Brian Davies asked if there was a geo-graphic limit, and Brown said there were nogeographic limits to the tax-exempt bond-ing: it could be used for the Canadian seg-ment of the line as well as portions inAlaska.

Charlie Cole asked what the difference ininterest rate would be.

Project financing is blended financing fora group of companies, Brown said, and theestimated difference in project financingwill be about 2 percent. Project blendedfinancing would be 8-8.5 percent, and tax-exempt financing 6-6.5 percent.

Cole asked about benefits to the state. Slotnick said the half-billion dollar bene-

fit to the state “would be in total taxes androyalties received if this project goesthrough. And it is an increase in the size ofour taxes and royalties received as a result ofthe tax-exempt financing because by lower-ing the tariff on the transportation, it lowersthe netback cost to the well head, which iswhat we use to calculate the royalties andseverance taxes.”

Cole asked about annual benefits to thestate, and Slotnick said about $60 million ayear.

Esther Wunnicke asked for clarificationon the requirement for bonding approval bythe Legislature: why is that required if therailroad would really have no debt?

Brown said these are different types ofdebt: The railroad incurs debt for its trainsand track, and if there is no payment onthose bonds, the lender’s recourse is againstthe railroad. Conduit financing is a differenttype of bond, “what you would call non-

recourse to the railroad,” Brown said: “Ifthis project doesn’t pay, you go chase afterthe pipeline users and you don’t bother therailroad…”

But both are technically bonds of the rail-road, he said, so the Legislature has to autho-rize the issuance of the bonds, whether theyare direct recourse to the railroad or the con-duit financing which would be used for a gaspipeline.

Council member Carl Marrs, who is alsoa member of the Alaska Railroad board, saidconduit bonding through the railroad for thegas pipeline wouldn’t affect railroad bond-ing.

“However, we put $12 billion in tax-exempt bonds on the table today, I thinkCongress would have a little problem withthat for future bonding and it’s somethingthat we’ve got to understand up front goingin.

“I think this provision that we have isunique… I think we’ll have a problem keep-ing that exemption in the future.”

Marrs said it thought conduit financingfor a gas pipeline is “the highest and bestuse” of the railroad’s tax-exempt bondingauthority. “It will create a problem — andwe’ve just got to understand that going in,”he said.

Mike Navarre said he agreed with Marrs’assessment, but said the biggest benefit fromthat bonding will go to Lower 48 consumersand the federal government.

Council co-chair Frank Brown told PNAthe same thing: “This proposal … lowersfinancing, lowers the cost to build it, whichtranslates directly into a lower tariff and ben-efits everybody in the state.

“But also, a gas line going to the Lower48, the ultimate, the largest beneficiary of agas line is the Lower 48 consumers… Welose that message from time to time,” Brownsaid.

—Kristen Nelson


BENEFIT

ADVERTISER INDEXA14 Petroleum News • Alaska Week of February 17, 2002

British Columbia constituencies in theCanadian Parliament.

Preliminary estimates by the GeologicalSurvey of Canada put recoverable reservesin the area at 10 billion barrels of oil and 26trillion cubic feet of gas, although othershave rated the gas potential at 43 trillioncubic feet and calculated the returns at C$3billion annually in direct production revenueand C$15 billion in total downstream bene-fits. The federal ban was imposed in 1972 oncrude oil tankers travelling through DixonEntrance, Hecate Strait and Queen CharlotteSound from Valdez. A later federal orderprohibited drilling for an indefinite period.

British Columbia extended the moratori-um in 1982 with its own ban that includedthe Strait of Georgia between VancouverIsland and the mainland and Juan de FucaStrait between the southern tip of VancouverIsland and the U.S. mainland.

The Exxon Valdez oil spill in 1989 onlystrengthened environmental opposition tooffshore exploration and development.

Shortly after its election last May, thenew Liberal government in BritishColumbia rejected proposals for a series ofpublic meetings to assess opinion on thefuture of the offshore.

B.C. Energy Minister Richard Neufeldsaid the province did not have the patiencefor another 18 months of public consulta-tion, insisting his government would moveon the issue in an “expedited fashion.”

While welcoming the first sign of a fed-eral government willingness to review thebans, Neufeld said there would be no dis-cussions until his government completes itsreview of the region.

The key is the report, expected to bereleased this month, from a government-appointed scientific panel that is trying todetermine whether oil and gas resources can

be extracted in a way that is scientificallysound and environmentally responsible.

Even if those findings are positive,British Columbia will continue to movecautiously. Neufeld said. “The quickestway to kill any aspects of our offshore oiland gas exploration is to do things quickly,”he said.

Petro-Canada, one of three major lease-holders in the basin, along with ShellCanada Ltd. and Chevron CanadaResources, would have no interest in pour-ing millions of dollars into its 6 millionacres until the controversial issue of off-shore development had been resolved byBritish Columbians, a spokesman said.

To that end, he said, Petro-Canada hadset three prerequisites: All aboriginal landclaims must be settled; all ecologically sen-sitive areas in the region must be identifiedand set aside; and an integrated federal-provincial regulatory regime must be inplace.

Similarly, Pierre Alvarez, president ofthe Canadian Association of PetroleumProducers, whose member companies rep-resent more than 90 percent of Canada’s oiland gas output, said the industry is eager toaccess the offshore, but will stay at arm’slength from the issue until the bans are lift-ed. However, he has noted that the petrole-um industry has considerable scope toexpand its activities in British Columbia,where it employs about 35,000 workers andgenerates C$1.7 billion in provincial rev-enues.

Don Scott, mayor of Prince Rupert, saidhis community is hoping for a positivereport from the government scientific panel.

“I would look forward to both govern-ments saying they’ll lift the moratoriumsbut, even if they do, it’ll be a long timebefore any drilling is done,” he told theVancouver Province.

“I’m also hoping the First Nations andthe provincial and federal governments will

be able to come to some sort of accord onoffshore exploration so that things canmove ahead.”

But the divisions over the offshoreremain deeply entrenched.

The David Suzuki Foundation , SierraClub and Western Canada Wilderness

Committee worry that drilling, producingand transporting oil from the region will putthe environment, a profitable seafoodindustry, marine life and coastal communi-ties at risk.

They have hinted that ending the banscould result in a series of legal actions.



MORATORIUM

ADVERTISEMENTA16 Petroleum News • Alaska Week of February 17, 2002

Companies involved in Alaska’s oil and gas industry

Volume 7, No. 7February 2002

Inside

Companies involved in Alaska’s oil and gas industry

Photo by Judy Patrick

Sensa putting fiber optics to good use in Alaska

Conam tackles a diverse range of projects

DURA-BASE transforms exploration planning in Arctic

Army Navy: Outfitting oil crews in high style

Advancial Federal Credit UnionAir Logistics of AlaskaAlaska Airlines CargoAlaska AnvilAlaska Diesel ElectricAlaska Industrial HardwareAlaska Interstate ConstructionAlaska Marine LinesAlaska Railroad Corp.Alaska Rubber & SupplyAlaska SteelAlaska Stucco & Fire ProofingAlaska TelecomAlaska Tent & TarpAlaska Valve & FittingAlaska WalkFit OrthoticsAlaska West ExpressAlliance, TheAmerican MarineArctic Industrial & Automotive SupplyArctic Slope Telephone Assoc.Arctic Wire Rope & SupplyArmy/Navy StoreASCG Inspection, Inc. (AII)Avalon DevelopmentBadger ProductionsBaker Hughes InteqBaroid Drilling FluidsBearcom WirelessBrooks Range SupplyCal Worthington FordCameronCarlile Transportation ServicesCCICentral Trading SystemsChiulista Camp ServicesClarion Suites

Cleanaire AlaskaCN Aquatrain ColvilleConam Construction Continental Auto GroupCook Inlet Tug & BargeCrowley AlaskaCruz ConstructionDowland - Bach Corp.Doyon DrillingDura-Wrap ContainmentsDynamic Capital ManagementEagle EnterprisesENSR AlaskaEpoch Well ServicesEra AviationEurest Support ServicesExecutive Suite HotelF.A.T.S.FMC Energy SystemsFlight Alaska dba Yute AirFlowline AlaskaForest OilFrontier Flying ServiceGBR EquipmentGolden North Van LinesGolder AssociatesGreat NorthwestHawthorne SuitesH.C. PriceHilton Anchorage HotelInspirationsIRF GroupJackovich Jarraff Industries Judy Patrick PhotographyKenai Aviation

Kenworth AlaskaKuukpik Arctic Catering Kuukpik - Fairweather - VeritasKuukpik - LCMF Lounsbury & AssociatesLynden Air CargoLynden Air FreightLyndenLynden InternationalLynden LogisticsLynden TransportLynx EnterprisesManaged Integrity Services (MIS)Mapmakers of AlaskaMarathon Oil Co.MattracksMcLane Consulting GroupMI SwacoMichael Baker Jr.Montgomery Watson HarzaMT HousingNabors Alaska DrillingNANA/Colt EngineeringNature ConservancyN.C. MachineryNeeser ConstructionNordic Calista ServicesNorth Coast Electric Co.North Star Terminal & StevedoreNorthern Air CargoNorthern Lights/LuggerNorthern Testing LaboratoriesNorthern Transportation Co.Offshore DiversOil and Gas Supply Co.Pacific Alaska ForwardersPDC/Harris Group

Peak Oilfield Service Co.PencoPetroleum Equipment & ServicesPetrotechnical Resources of AlaskaPGS OnshorePhillips AlaskaPinkerton SecurityPSI Environmental & InstrumentationQUADCORolls Royce Energy SystemsR & R Scaffold ErectorsSchlumberger Oilfield ServicesSECORP IndustriesSecurity AviationSeekins FordSensaSnap-on IndustrialSOLOCO (DURA-BASE)Sourdough ExpressSpan-Alaska ConsolidatorsSTEELFABTesting Institute of AlaskaThrifty Car RentalTOTETotem Equipment & SupplyTri Ocean EngineeringUdelhoven Oilfield Systems ServicesUmiat CommercialUnitech of AlaskaUnited RentalsUnited Van LinesURSVopak USAWelding ServicesWesternGecoWood Group (Alaska)XTO Energy

Sensa putting fiber optics to good use in Alaska

Conam tackles a diverse range of projects

DURA-BASE transforms exploration planning in Arctic

Army Navy: Outfitting oil crews in high style

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SERVICESAccess Road/Work Surface

SOLOCO207 Town Center Pkwy.Lafayette, LA 70506-7524Contact: Keith PearsonPhone: (337) 981-5058Fax: (337) 984-9241Email: [email protected] COMPOSITE MAT SYSTEMis the world’s most advanced solution fortemporary surfaces including heavy-dutyroads, turnarounds, work and stagingareas. Its strength and durability allowsyou to work year-round in the harshestconditions. Installs and cleans up quick-ly. Its a permanent solution to your tem-porary road and work surface needs.

Air Charter & Support

Air Logistics of Alaska1915 Donald Ave.

Fairbanks, AK 99701Phone: (907) 452-1197Fax: (907) 452-4539Email: [email protected]: Dave Scarbrough (Fairbanks)Anchorage: (907) 248-3335Helicopter contract and charter ser-vices.

Era Aviation6160 Carl Brady Dr.Anchorage, AK 99502Contact: John HollandPhone: (907) 248-4422Fax: (907) 266-8383Helicopter and fixed wing contract andcharter services; scheduled airline ser-vice.

Flight Alaska dba Yute Air3600 W. International Airport Rd.Anchorage, AK 99502Contact: Richard AmelinePhone: (907) 342-3040Fax: (907) 243-2811Email: [email protected] cargo, long load, large loads,short & unimproved airstrip. Large groups up to 19 passengers,“Combi” 9 passenger and 3,000 lbcargo, 7 passenger Learjet’s, turbo prop& twin-engine safety.

Kenai AviationP. O. Box 46Kenai, AK 99611Contact: Bob or Jim BielefeldPhone: (907) 283-4124Phone: (800) 478-4124 (within Alaska)Fax: (907) 283-5267Email: [email protected] taxi services provided since 1961state wide, mostly Cook Inlet. Singleengine and twin Bonanza.

Northern Air Cargo3900 W. International Airport Rd.Anchorage, AK 99502Contact: Todd WallacePhone: (907) 243-3331Email: [email protected] free: (800) 727-2141Web site: www.northernaircargo.comNorthern Air Cargo is the largest in-stateair cargo carrier handling more than 100million pounds of freight annually withscheduled flights to 17 of Alaska’sbusiest destinations plus charter andflagstop flights to 44 additional commu-nities around the state. Northern AirCargo operates a fleet of 727 and pres-surized DC-6 aircraft.

Security Aviation3600 International Airport Rd.Anchorage, AK 99502Contact: Jason WardPhone: (907) 248-2677Fax: (907) 248-6911Email: [email protected] site:www.securityaviation.alaska.comSecurity Aviation is a professional avia-tion service specializing in safe, reliable,personalized air transportation to andfrom anywhere in Alaska, Canada, andthe Continental U.S.

Air Purification Design

Cleanaire AlaskaP.O. Box 200142Anchorage, AK 99520Phone: (907) 561-2735Toll free: (800) 478-2735Fax: (907) 563-5678Web site: www.cleanairstore.comSince 1982, Cleanaire Alaska has pro-vided Alaska the best indoor air cleaningdevices available and carbon filtrationdevices for environmental clean-up.

Architecture

LCMF139 E. 51st Ave.Anchorage, AK 99503Contact: Richard Rearick, ArchitecturalMgr.Phone: (907) 273-1830Fax: (907) 273-1831Arctic specialized architectural and engi-neering design for all structures;water/sewer, fuel and transportationsystems design; contractor support sur-veying and permitting for oil and gasdevelopment; dredging operations,remote site land and hydrographic sur-veying.

Aviation Fuel Sales

ColvillePouch 340012Prudhoe Bay, AK 99734Contact: Rick Hofreiter or John DalyPh: (907) 659-3197Fx: (907) 659-3190Web site: www.colvilleinc.comDiesel, gasoline, jet fuel, aviation gaso-line in bulk and small quantity deliveries,electronic card-lock fleet management,solid waste and recycling, steel, indus-trial gases and solid waste.

Umiat Commercial Co.2700 S. Cushman St.Fairbanks, AK 99701Contact: Mike TolbertPhone: (907) 452-6631Fax: (907) 451-8632Email: [email protected] provides lodging and fuel sales atUmiat located on the Colville River. We

are open 24 hours a day everyday of theyear.

Camps, Catering & Lodging

Alaska Tent & Tarp529 Front St.Fairbanks, AK 99701Contact: Jim HaselbergerPhone: (907) 456-6328Fax: (907) 452-5260Email: [email protected] site: www.ptialaska.net/~aktent

Chiulista Camp Services301 Calista Ct., Ste. AAnchorage, AK 99518Contact: George B. Gardner, President &GMPhone: (907) 278-2208Fax: (907) 279-8430Email: [email protected] 100% Alaska Native owned andoperated catering company on the NorthSlope, catering and housekeeping toyour tastes, not ours.

Eurest Support Services9210 Vanguard Dr., Ste. 101Anchorage, AK 99507Contact: George CuzzortPhone: (907) 344-1207Fax: (907) 344-0353Email: [email protected] site: www.compass-usa.comThe Alaska division of the worlds largestcontract food service company. Visit ourweb site at www.compass-usa.com

Hilton Anchorage500 W. Third Ave.Anchorage, AK 99501Contact: Karen ThornPhone: (907) 272-7411Toll Free: (800) 321-3232Email: [email protected] $15 million renovation of the HiltonAnchorage is complete and lodging inAlaska will never be the same again.Stay with us in the heart of downtownand visit our new Hooper Bay Café andBruins bar and lounge on the main floor.But first enjoy our stunning new lobbythat is the talk of the town.

Kuukpik Arctic Catering5761 Silverado Way, Ste. PAnchorage, AK 99518Contact: Rick MacMillanPhone: (907) 562-5588Fax: (907) 562-5898Email: [email protected]

Umiat Commercial Co.2700 S. Cushman St.Fairbanks, AK 99701Contact: Mike TolbertPhone: (907) 452-6631Fax: (907) 451-8632Email: [email protected] provides lodging and fuel sales atUmiat located on the Colville River. Weare open 24 hours a day everyday of theyear.

Cellular Communications

ASTAC4300 B Street, Ste. 501Anchorage, AK 99503Contact: Erin EalumPhone: (907) 563-3989Toll free: (800) 478-6409Fax: (907) 563-1932Email: [email protected] service cellular company providingcellular service, and equipment salesand service, maintenance, installation,

Petroleum News • Alaska DirectoryB2 Petroleum News • Alaska Week of February 17, 2002

Notice to advertisersCompanies contracted to advertise in Petroleum News • Alaska are

invited to supply color and black and white photos for this directory.Contact PNA Publisher Kay Cashman for details:

Call (907) 245-2297, email [email protected] or submit photos or slidesby mail to Kay’s attention at Petroleum News • Alaska, P.O. Box 231651,

Anchorage, AK 99523. All photos should be accompanied by a captionexplaining when the picture was taken and describing what’s in it.

About the coverA CATCO Rolligon transports

pieces of Nabors Rig 16E to alocation in the National PetroleumReserve-Alaska for explorationdrilling for Phillips Alaska Inc. Theentire rig was transported in 180loads across the frozen tundra. Thelow tire pressure of the Rolligonallows for tundra travel withoutimpacting the fragile ground. Photoby Judy Patrick.

Get your company listed in the next issueof the Petroleum Directory.

Petroleum News • Alaska’s Anchorage office, (907) 770-3506 for details.

Get in on thisdeal...

Be a part of something great.

Petroleum News • Alaska DirectoryPetroleum News • Alaska B3Week of February 17, 2002

and custom calling features.

Bearcom Wireless14572 NE 95th St.Seattle, WA 98052Contact: Stephen HullPhone: (800) 313-2327Fax: (425) 895-9119Email: [email protected] North America’s largest supplier ofMotorola radios, Bearcom offers com-plete communications solutions for shut-downs and turnarounds, including ser-vice, sales and rentals of intrinsicallysafe two way radios and accessories.

Chemicals

Baroid Drilling Fluids6900 Arctic Blvd.Anchorage, AK 99518Contact: Tom BurginPhone: (907) 275-2612Fax: (907) 275-2650Email: [email protected] is a Halliburton company, operat-ing in Alaska for over 40 years. We pro-vide a full compliment of fluid relatedproducts and services for the oil and gasindustry.

Chemical Analytical Lab

Vopak USA590 E. 100th Ave.Anchorage, AK 990515Contact: Ken LambertsenPhone: (907) 344-7444Fax: (907) 522-1486Email: [email protected] site: vopakusa.comWorld’s largest industrial chemical dis-tributor serving Alaskans since 1924.Industrial emphasis in oil & gas refining,procuring and gas treating.

Civil & Hazardous Waste

Vopak USA590 E. 100th Ave.Anchorage, AK 990515Contact: Ken LambertsenPhone: (907) 344-7444Fax: (907) 522-1486Email: [email protected] site: vopakusa.comWorld’s largest industrial chemical dis-tributor serving Alaskans since 1924.Industrial emphasis in oil & gas refining,procuring and gas treating.

Commercial Diving

American Marine Corp.6000 A St.Anchorage, AK 99518Contact: Tom Ulrich, Marine OperationsContact: Steve Stuart, Alaska RegionalManagerPhone: (907) 562-5420Fax: (907) 562-5426

Email: [email protected] site: www.amsghq.comAmerican Marine Corp. (AmericanDivers) provides full service marine con-struction/divers throughout Alaska andthe Pacific.

Offshore Divers5630 Silverado Way, A-9Anchorage, AK 99518Contact: Don Ingraham, Owner/Mgr.Contact: Leif Simcox, Owner/OperationsMgr.Phone: (907) 563-9060Fax: (907) 563-9061Email: [email protected] site:http//www.offshoredivers.comOffshore Divers is an Alaska owned div-ing contractor specializing in sub-sea oil-field work on mooring systems,pipelines, platforms and docks in CookInlet, on the North Slope and in Valdez.

Commercial Real Estate

Alaska Railroad Corp.P.O. Box 107500Anchorage, AK 99510Contact: Wende Lance, Marketing &Logistics TechnicianPhone: (907) 265-2485

Fax: (907) 265-2597Email: [email protected] Alaska Railroad Corp. offers realestate, passenger and freight services –including complete services to moveyour freight between Alaska, the lower48 and Canada.

Re/Max Properties2600 Cordova St., Ste. 100Anchorage, AK 99503Contact: Stewart Smith, AssociateBrokerPhone: (907) 257-0122Fax: (907) 277-7005Email: [email protected] and leasing of commercial proper-ty.

Communications

ASTAC4300 B St., Ste. 501Anchorage, AK 99503Contact: Erin EalumPhone: (907) 563-3989Toll free: (800) 478-6409Fax: (907) 563-1932Email: [email protected] local and long distance ser-vice, maintenance & training, consulta-

tion, installation, engineering, Centrex,custom calling features, digital crossconnect service, and digital data ser-vice.

Alaska Telecom6623 Brayton Dr.Anchorage, AK 99507Contact: Siri Bergh-KerkvlietPhone: (907) 344-1223Fax: (907) 344-1612Email: [email protected] telecommunications support tooil exploration and production compa-nies and contractors. Satellite communi-cations, voice, data, microwave,VHF/UHF radio, engineering and installa-tion.

Bearcom Wireless14572 NE 95th St.Seattle, WA 98052Contact: Stephen HullPhone: (800) 313-2327Fax: (425) 895-9119Email: [email protected] North America’s largest supplier ofMotorola radios, Bearcom offers com-plete communications solutions for shut-downs and turnarounds, including ser-vice, sales and rentals of intrinsicallysafe two way radios and accessories.

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SAN DIEGO –— This is the latest photo of Totem Ocean Trailer Express’ new Orca class vessel, the Midnight Sun, under construction atNational Steel and Shipbuilding Co., Nassco, in San Diego, Calif. This is a shot from the new cranes looking down at the aft end of the shiptaken on Feb. 6. Visible in the photo are the Midnight Sun’s four main diesel engines, one auxiliary diesel engine, propulsion and servicetransformers, and the service switchboard. Also notice the port and starboard stern castings are in place. Upon completion of the MidnightSun in July 2002 and a second Orca class vessel, the North Star, approximately six months later, Nassco will begin construction of BP’snew Alaska class double-hulled tankers.

Petroleum News • Alaska DirectoryB4 Petroleum News • Alaska Week of February 17, 2002

Michael Baker Jr.4601 Business Park Blvd., Ste. 42Anchorage, AK 99503Contact: Bud Alto, Business Unit Mgr.Phone: (907) 273-1600Fax: (907) 273-1699Email: [email protected] site: www.mbakercorp.comJuneau office: 175 Franklin St., Ste. 420Juneau, AK 99801Contact: McKie Campbell, Sr.Environmental Mgr.Phone: (907) 463-3171Fax: (907) 463-3107Email: [email protected] firm with project man-agement, permitting, fiber optic, civil,structural, mechanical, electrical, andinstrumentation services. Establishedoffices in Anchorage and Juneau providediversified staff accepting the chal-lenges, delivering excellence.

Construction Materials

Alaska Industrial Hardware2192 Viking Dr.Anchorage, AK 99501Contact: MaryAnn HartzogPhone: (907) 276-7201Fax: (907) 258-2123Email: [email protected] – Alaska largest supplier of handand power tools, contractor’s suppliesand builder’s hardware. Fast jobsite ser-vice and free local delivery.

N C Machinery Co.N C Power Systems 6450 Arctic Blvd.Anchorage, AK 99519Contact: Jeff Scott, Sales ManagerDarren Venters, Product SupportManager Vigo Anderson, Engine Power ManagerPhone: (800) 478-7000Fax: (907) 786-7580Email: [email protected] offices: Dutch Harbor, Fairbanks &JuneauCaterpillar machine and engine powerdealer with sales, rentals, parts & ser-vice for the State of Alaska.

Construction ProjectManagement

Alaska Anvil509 W. 3rd Ave.Anchorage, AK 99501-2237Contact: Frank WeissPhone: (907) 276-2747Fax: (907) 279-4088Second office: Kenai50720 Kenai Spur Hwy., Mile 24.5Kenai, AK 99611Multi-discipline engineering and designservices including construction manage-ment for petro-chemical and heavyindustrial client projects.

CCI800 Cordova St., Ste. 102Anchorage, AK 99501Contact: Mark Hylen, Vice PresidentPhone: (907) 258-5755Fax: (907) 258-5766Other Office: Prudhoe BayPhone: (907) 659-2428Web site: www.CCIAlaska.comA wholly owned subsidiary of Bristol BayNative Corporation providing construc-tion, project management and environ-mental services throughout Alaska.

Central Trading Systems15 Terra Mar Dr.Huntington, NY 11743Contact: Mike Laserson, PresidentPhone: (631) 427-8390Fax: (631) 427-8298Central Trading Systems, incorporated in1990 , is the U.S. Representative ofSovin Forms Putnik, the only officiallylicensed distributor of Russian satelliteimagery.

Managed Integrity Service (MIS)301 Arctic Slope Ave.Anchorage, AK 99518

Contact: Jeff Smith, BusinessDevelopment Team LeaderPhone: (907) 267-6236Fax: (907) 267-6480Email: [email protected] Corrosion and MechanicalIntegrity Management Services,Integrity Assessment, CorrosionEngineering, Corrosion Monitoring,Quality Program Development, andInspection Services.

Michael Baker Jr.4601 Business Park Blvd., Ste. 42Anchorage, AK 99503Contact: Bud Alto, Business Unit Mgr.Phone: (907) 273-1600Fax: (907) 273-1699Email: [email protected] site: www.mbakercorp.comJuneau office: 175 Franklin St., Ste. 420Juneau, AK 99801Contact: McKie Campbell, Sr.Environmental Mgr.Phone: (907) 463-3171Fax: (907) 463-3107Email: [email protected] firm with project man-agement, permitting, fiber optic, civil,structural, mechanical, electrical, andinstrumentation services. Establishedoffices in Anchorage and Juneau providediversified staff accepting the chal-lenges, delivering excellence.

Nana/Colt Engineering LLC700 G Street, 5th floorAnchorage, AK 99501Phone: (907) 273-3930Fax: (907) 273-3990Contact: John Minier, 273-3910NANA/Colt offers project management,engineering, design, construction man-agement, and procurement services tothe oil industry.

Yukon Engineering Services#1 Calcite Business CenterWhitehorse, YT Y1A 2V3Contact: Bruce MacLeanPhone: (867) 688-2000Fax: (867) 667-2220Email: [email protected] survey and engineering ser-vices company with global experienceand expertise in remote projects.

Contractors — General

Alaska Telecom Inc.6623 Brayton Dr.Anchorage, AK 99507Contact: Siri Bergh-KerkvlietPhone: (907) 344-1223Fax: (907) 344-1612Email: [email protected] telecommunications support tooil exploration and production compa-nies and contractors. Satellite communi-cations, voice, data, microwave,VHF/UHF radio, engineering and installa-tion.

Alaska Interstate Construction LLC(AIC)P.O. Box 233769Anchorage, AK 99523Contact: John EllsworthPhone: (907) 562-2792Fax: (907) 562-4179

American Marine Corp.6000 A St.Anchorage, AK 99518Contact: Tom Ulrich, Marine OperationsContact: Steve Stuart, Alaska RegionalManagerPhone: (907) 562-5420Fax: (907) 562-5426Email: [email protected] site: www.amsghq.comAmerican Marine Corp. (AmericanDivers) provides full service marine con-struction/divers throughout Alaska andthe Pacific.

CCI800 Cordova St., Ste. 102Anchorage, AK 99501Contact: Mark Hylen, Vice PresidentPhone: (907) 258-5755Fax: (907) 258-5766

Other Office: Prudhoe BayPhone: (907) 659-2428Web site: www.CCIAlaska.comA wholly owned subsidiary of Bristol BayNative Corporation providing construc-tion, project management and environ-mental services throughout Alaska.

CONAM Construction Co.301 W. Northern Lights Blvd., Ste 300Anchorage, AK 99503Contact: Bob StinsonPhone: (907) 278-6600Fax: (907) 278-3255Email: [email protected], gas, and mining facility; pipeline,civil, and commercial construction.

Cruz ConstructionHC04 Box 9323Palmer, AK 99645Contact: Dave or Dana CruzPhone: (907) 746-3144Fax: (907) 746-5557Email: [email protected] contractor specializing in heavycivil construction, horizontal directiondrilling for utilities. Ice road and icebridge construction throughout Alaska insupport of resource development.

Great NorthwestP.O. Box 74646Fairbanks, AK 99707-4646Contact: Buzz OtisPhone: (907) 452-5617Fax: (907) 456-7779

H.C. Price301 W. Northern Lights Blvd., #300Anchorage, AK 99503Contact: David L. MatthewsPhone: (907) 278-4400Fax: (907) 278-3255Other offices: Dallas, Texas, and interna-tional.Email: [email protected] contractor performing oilfield sup-port construction projects and otherheavy industrial projects statewide.

M.T. Housing Inc.P.O. Box 969521 W.

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