Legislature(2011 - 2012)FAIRBANKS

09/06/2011 01:30 PM LABOR & COMMERCE


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01:32:15 PM Start
01:34:41 PM HB110
01:34:42 PM Hearing to Gather Information on Alaska Hire Among North Slope Related Industries
06:45:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
= HB 110 PRODUCTION TAX ON OIL AND GAS
Heard & Held
Subject: North Slope Employment/Alaska Hire
1:30-3:30pm Location: FNSB Assembly Chambers
-- Testimony <Invitation Only> --
-- Teleconference --
5:30-7:30pm Location: Fairbanks Westmark Hotel
Public Testimony
-- Teleconference --
1:34:41 PM                                                                                                                    
              HB 110-PRODUCTION TAX ON OIL AND GAS                                                                          
^Hearing to  Gather Information on  Alaska Hire Among  North Slope                                                              
Related Industries                                                                                                              
 Hearing to Gather Information on Alaska Hire Among North Slope                                                             
                       Related Industries                                                                                   
                                                                                                                              
1:34:42 PM                                                                                                                    
CHAIR  EGAN  stated   that  Department  of  Labor   and  Workforce                                                              
Development (DOLWD)  statistics have  revealed that  employment on                                                              
the  North  Slope  is near  all-time  highs,  yet  many  qualified                                                              
Alaskans are looking  for oil industry work. So, in  order to move                                                              
forward,  more  needs  to be  learned  about  non-resident  hiring                                                              
practices in the  oil industry. During earlier  committee hearings                                                              
they  made  an  unsettling  observation  that in  2010  more  non-                                                              
Alaskans were  hired than Alaskans  for new oil industry  jobs and                                                              
that some large  construction companies on the  North Slope employ                                                              
100 percent non-residents.                                                                                                      
                                                                                                                                
He said  the committee  hoped to develop  a more complete  picture                                                              
of  employment opportunities  in  Alaska's  oil industry  and  how                                                              
together  with  the  industry they  can  insure  greater  resident                                                              
hire. This  morning the  committee would  hear invited  testimony;                                                              
public testimony would be taken this evening.                                                                                   
                                                                                                                                
1:34:55 PM                                                                                                                    
KARA MORIARTY,  Deputy Director,  Alaska  Oil and Gas  Association                                                              
(AOGA), had  a quick  power point presentation  and said  her goal                                                              
today  was to  walk through  some  results from  a McDowell  Group                                                              
study they  had commissioned  to update  their economic  analysis.                                                              
The  first portion  of  the  study had  the  resident/non-resident                                                              
hiring trends, and that is what she discussed.                                                                                  
                                                                                                                                
She said  the McDowell Group  used data  from the Alaska  DOLWD to                                                              
analyze  the residency  of  Alaska's  workforce.  The study  shows                                                              
that  non-resident employment  in  the oil  and  gas industry  has                                                              
varied only marginally  in the last decade. In fact,  in 2009 (the                                                              
most recent  year for complete  data) the non-resident  hire share                                                              
of  the workforce  was at  a five-year  low. She  noted that  this                                                              
data does  not include  workers  associated with  any of the  four                                                              
in-state refineries  or the TransAlaska  Pipeline (TAPS),  and the                                                              
reason  is   because  the  DOLWD   characterizes  those   jobs  as                                                              
something   other  than   oil  and  gas   extraction  or   support                                                              
activities.  This   is  nothing  new;  the  department   has  been                                                              
categorizing those  jobs differently for decades, and  that is why                                                              
AOGA started doing its own economic analysis.                                                                                   
                                                                                                                                
MS.  MORIARTY said  the increases  in the  number of  non-resident                                                              
jobs  in the  oil  and  gas industry  over  the last  decade  have                                                              
corresponded  with increases  in the  number of  resident jobs  in                                                              
the  industry. So,  in  other words,  more  non-resident hire  has                                                              
historically  meant more  resident  hire, as  well. Similarly,  in                                                              
every  year  where  the  number  of  resident  oil  and  gas  jobs                                                              
declined, the  number of  non-resident oil  and gas jobs  declined                                                              
too. The bottom  line is there has  never been a time  in Alaska's                                                              
history  where non-resident  hire has  gone up  and resident  hire                                                              
has gone down.                                                                                                                  
                                                                                                                                
The  next  chart  showed  the number  of  jobs  held  by  Alaskans                                                              
increased at  a higher rate than  jobs held by  non-residents from                                                              
2005 to  2009. During  that five-year  period, resident  hire grew                                                              
by 44 percent while non-resident hire grew by 35 percent.                                                                       
                                                                                                                                
MS.  MORIARTY said  the department's  methodology for  calculating                                                              
workforce  residency is  based on  Permanent  Fund Dividend  (PFD)                                                              
applications  and, as such,  produces a  conservative estimate  of                                                              
resident employment  because a new resident to  Alaska must reside                                                              
in  the state  for  a  full calendar  year  before  he  or she  is                                                              
eligible  to apply  for a PFD.  Therefore, it  could take  someone                                                              
almost  two years  to be  classified  as an  Alaska resident.  She                                                              
explained that she  asked the department to research  what portion                                                              
of workers classified  as non-residents actually  become residents                                                              
the  next year  and  they  found  that in  just  the oil  and  gas                                                              
extraction  sector  among  workers  who were  classified  as  non-                                                              
residents  in  2008, 13.5  percent  of  them became  residents  in                                                              
2009.                                                                                                                           
                                                                                                                                
She said while  PFD applications are a very reliable  indicator of                                                              
residency,  other data  can provide  another  perhaps more  up-to-                                                              
date measure.  For purposes of  the McDowell Group  study, several                                                              
AOGA members provided  detailed payroll data by  place of employee                                                              
residence  as indicated  by the  mailing address  on their  W2 tax                                                              
forms.  In  its  2009  report,  the  DOLWD  reported  non-resident                                                              
percentages  for specific  employers that  were higher by  several                                                              
percentage points  than the percentage  of W2 tax forms  that were                                                              
sent to  out-of-state addresses.  However,  talking to the  actual                                                              
companies  might reveal  higher  percentages  than the  department                                                              
indicates.                                                                                                                      
                                                                                                                                
Slide  5  showed   that  a  more  complete  picture   of  resident                                                              
participation  in  Alaska's  oil  and gas  industry  by  including                                                              
those categories not  included in the DOLWD's oil  and gas figures                                                              
such  as the  refineries  and jobs  associated  with the  pipeline                                                              
which  have   very  low  non-resident   hire  rates  as   well  as                                                              
businesses  that provide goods  and services  directly to  oil and                                                              
gas producers.                                                                                                                  
                                                                                                                                
MS. MORIARTY  said their  McDowell Group  study primarily  focuses                                                              
on  jobs and  spending. The  department  prepared a  resident/non-                                                              
resident employment  and wage analysis of 82 vendors  who were not                                                              
classified  as either  an  oil and  gas  extraction  or a  support                                                              
activity  business and  who were  not a refiner  or the  pipeline.                                                              
The chart entitled  "Oil and Gas Industry Related  Vendors - 2009"                                                              
showed  that  the  82 vendors  averaged  14  percent  non-resident                                                              
hire.                                                                                                                           
                                                                                                                                
1:41:16 PM                                                                                                                    
Regardless of the  measure used, she said it is  important to note                                                              
that  Alaska's  economy  overall  has been  and  continues  to  be                                                              
reliant  on  a non-resident  workforce.  Slide  6 showed  that  22                                                              
percent of  the private  workforce statewide  was defined  as non-                                                              
resident in 2009.  Sectors with higher non-resident  participation                                                              
include    seafood    processing,     scenic    and    sightseeing                                                              
transportation, accommodations  and metal mining. She  stated that                                                              
non-resident  hire is part  of what allows  the Alaska  economy to                                                              
grow,   which  in   turn  generates   greater  opportunities   for                                                              
residents.                                                                                                                      
                                                                                                                                
MS. MORIARTY  said there has  been a lot  of discussion  about the                                                              
new  hire rates  as provided  in  the April  2011 Alaska  Economic                                                              
Trends (page  11) that shows new  hires by industry for  the third                                                              
quarters  of 2009 and  2010, and  in 2010  the number doubled  the                                                              
yearly for  non-residents. She said  it is important to  note that                                                              
historically the third  quarter is the peak summer  season for all                                                              
employers  in  Alaska,  and  all  employers  have  a  higher  than                                                              
average non-resident  hire rate. The graph on  slide 7 illustrated                                                              
those  figures. It  showed that  annually state  government has  a                                                              
non-resident hire  rate of 7 percent.  Part of that is  due to the                                                              
fact that they  use PFD statistics, and it sometimes  takes people                                                              
two years  of living  here to be  eligible. But  in the  summer of                                                              
2010,  their non-resident  hire rate  tripled to  28 percent.  So,                                                              
this new hire  information provides a snapshot  view of employment                                                              
in Alaska  and she  said it  may be beneficial  to understand  the                                                              
long-term trends  for the third  quarter in summer  employment and                                                              
have the DOLWD further  examine the new hire rates  for the past 5                                                              
to 10 years to see if there are different trends.                                                                               
                                                                                                                                
1:43:57 PM                                                                                                                    
SENATOR  PASKVAN  asked  if  she  agreed  that  both  the  general                                                              
employment  information and  the new hire  information indicate  a                                                              
trend of increasing employment on the North Slope.                                                                              
                                                                                                                                
MS. MORIARTY  replied yes,  and it  has for  the past decade,  but                                                              
she added  that regardless of the  number of jobs in  Alaska's oil                                                              
and  gas industry,  whether they  are  held by  residents or  non-                                                              
residents, production  in Alaska  continues to decline.  With jobs                                                              
at  some  of  the  highest  rates they  have  seen  in  a  decade,                                                              
production is  at the  lowest they have  ever seen.  This suggests                                                              
that  these additional  jobs  are  not associated  with  producing                                                              
more  oil,   but  rather   maintaining  a  30   to  40   year  old                                                              
infrastructure. And  although it appears that 2012 will  be a very                                                              
robust exploration  year, it  takes at least  five to  seven years                                                              
to  bring a  field  from exploration  to  production, and  without                                                              
significant new  investment in existing  fields in the  next three                                                              
to five  years, the DOR  chart forecasts  production to be  in the                                                              
400,000 barrel range.                                                                                                           
                                                                                                                                
1:45:16 PM                                                                                                                    
In  closing,  Ms. Moriarty  said  the  U.S. Supreme  Court  deemed                                                              
Alaska's  Local Hire under  State Leases  Act as  unconstitutional                                                              
in   1978,   because  it   violated   Section   4  of   the   U.S.                                                              
Constitution's  Privileges and  Immunities Clause.  She said  AOGA                                                              
looks forward  to working with  this committee, other  legislators                                                              
and the administration  on policies that will  increase production                                                              
that will  ultimately lead to long-term  stable jobs and  the goal                                                              
that everyone would like to achieve.                                                                                            
                                                                                                                                
SENATOR  PASKVAN said  one of  the classifications  in that  study                                                              
indicates  that Repcon  and Matrix,  which  do work  on the  North                                                              
Slope,  are  not  categorized  as   oil  and  gas  jobs.  This  is                                                              
important because  they both are  reported by the DOLWD  as having                                                              
100 percent non-resident hire.                                                                                                  
                                                                                                                                
MS. MORIARTY  replied that the oil  and gas jobs are  often lumped                                                              
under "mining"  by the U.S. government,  and she didn't  know what                                                              
methodology is used.                                                                                                            
                                                                                                                                
1:47:52 PM                                                                                                                    
SENATOR GIESSEL  referred to the  slide labeled "Alaska  Residents                                                              
Employed  with Oil  and Gas  Industry Related  Vendors" (slide  5)                                                              
and asked what  kind of work the "construction  industry" performs                                                              
for the oil and gas industry.                                                                                                   
                                                                                                                                
MS. MORIARTY  replied that  it may  be building an  ice road  or a                                                              
warehouse,  but  of  those  82  vendors,  10  were  classified  as                                                              
"construction" by the  DOLWD and not oil and  gas support activity                                                              
businesses.  Their business might  be predominantly  construction,                                                              
but 80  percent of  it is oil  and gas related.   She  didn't know                                                              
who the  companies were because  that data is confidential  to the                                                              
McDowell Group.                                                                                                                 
                                                                                                                                
1:48:52 PM                                                                                                                    
SENATOR  PASKVAN asked  why  the  department says  there  is a  28                                                              
percent non-resident  hire rate  in the oil  and gas  industry and                                                              
in another  publication says  there is  a 35 percent  non-resident                                                              
hiring rate on the North Slope.                                                                                                 
                                                                                                                                
MS.  MORIARTY   replied  that  she   is  not  familiar   with  the                                                              
statistics and  would have  to see the  source of that  35 percent                                                              
number.                                                                                                                         
                                                                                                                                
SENATOR  PASKVAN   asked  what  AOGA  has  looked   into  for  the                                                              
treatment facility constraints on throughput.                                                                                   
                                                                                                                                
MS. MORIARTY replied  that an AOGA study group is  looking at that                                                              
issue, but it hasn't come back with any recommendations yet.                                                                    
                                                                                                                                
1:50:53 PM                                                                                                                    
SENATOR MENARD  said she  felt slighted that  they don't  have the                                                              
2010 information, because  this is the digital age,  and it's only                                                              
four months until the end of 2011.                                                                                              
                                                                                                                                
MS. MORIARTY responded  that according to the McDowell  Group that                                                              
was  the  most  recent  complete  data from  the  DOLWD.  She  had                                                              
checked a  few weeks ago,  but that type  of information  seems to                                                              
always have a lag,  and she didn't know when the  department would                                                              
have the 2010 data done.                                                                                                        
                                                                                                                                
SENATOR  GIESSEL  asked  if the  throughput  had  decreased  going                                                              
through the infield pipeline as well as TAPS.                                                                                   
                                                                                                                                
MS.  MORIARTY  replied  yes;  everything  is  seen  as  production                                                              
decline.                                                                                                                        
                                                                                                                                
SENATOR THOMAS said  the concept is troubling that  somebody was a                                                              
non-resident  last year,  but they  are a resident  this year.  It                                                              
seems that  people who are working  at Prudhoe Bay should  be long                                                              
term residents before  actually going to work there,  and he asked                                                              
what the  state is not  doing to create  the skill set  that would                                                              
allow residents to be hired.                                                                                                    
                                                                                                                                
1:54:57 PM                                                                                                                    
MS. MORIARTY responded  that ironically the reverse  is being seen                                                              
on  the North  Slope. She  hears a  lot from  the aging  workforce                                                              
that people  used to live here and  raised their kids  who are now                                                              
grown and  gone. They  chose to  live outside  Alaska and  are now                                                              
non-residents,  but  they are  still  working  on the  Slope.  She                                                              
remarked  that a  lot of  us came  from somewhere  else before  we                                                              
became residents, but everyone needs to be taken care of.                                                                       
                                                                                                                                
1:56:26 PM                                                                                                                    
SENATOR  COGHILL asked  if  AOGA  has been  able  to quantify  the                                                              
residents who are and are not ready to go to work.                                                                              
                                                                                                                                
MS. MORIARTY  replied that she  didn't have that  information, but                                                              
from a  business standpoint  it makes sense  to hire  someone here                                                              
who is trained rather than looking outside.                                                                                     
                                                                                                                                
SENATOR  COGHILL stated  that he  was very  concerned if  Alaskans                                                              
are being left out.                                                                                                             
                                                                                                                                
1:58:12 PM                                                                                                                    
JON  COOK, Chief  Financial  Officer, Airport  Equipment  Rentals,                                                              
Fairbanks, said they  are the largest equipment  rental company on                                                              
the  North Slope  and  in the  State of  Alaska.  They employ  120                                                              
people statewide  from Prudhoe Bay down  to Kenai; all  but two of                                                              
whom are  Alaskan residents. They  work with every  contractor and                                                              
producer  on the  North Slope.  Their  company is  unique in  that                                                              
they get workers  from the time they step off the  plane and first                                                              
show up  up North  until the time  they fold  their tent  and take                                                              
off.                                                                                                                            
                                                                                                                                
He  said his  company  is an  affiliated entity  with  one of  the                                                              
largest developers  in Fairbanks; they  have a large  portfolio of                                                              
commercial and retail  buildings as well as tracts  of raw land in                                                              
the retail shopping  district. So, the health of  the oil industry                                                              
and  the  Alaska  economy  in  general   impacts  their  equipment                                                              
business as well as their real estate holdings.                                                                                 
                                                                                                                                
1:59:38 PM                                                                                                                    
MR. COOK  explained that they  have a 95  percent local  hire rate                                                              
and  he thought  the best  way to  assure  Alaska hire  is to  use                                                              
Alaskan  businesses such  as theirs,  Frontier  Plumbing and  many                                                              
others.  Alaska has  a vastly  underdeveloped  private sector  and                                                              
consistently  ranks  last  or  next to  last  in  the  competitive                                                              
business sector  among other successful  resource states.  He said                                                              
this  discussion should  have been  started with  asking why  this                                                              
state  doesn't   have  more  successful  Alaska-based   and  owned                                                              
businesses in the economy as a whole.                                                                                           
                                                                                                                                
2:00:53 PM                                                                                                                    
He remarked  that the North  Slope has record employment  numbers,                                                              
but at sustained  prices of over $100/barrel for  the last several                                                              
years  we should  be  seeing double  or  triple record  employment                                                              
numbers.  He  just  returned  from  Texas  and  North  Dakota  and                                                              
observed that  Alaska is not  experiencing anywhere near  the kind                                                              
of  boom those  states are.  Those states  have been  consistently                                                              
building up employment;  it's unbelievable to see  what's going on                                                              
down there right now.                                                                                                           
                                                                                                                                
MR. COOK  said from his company's  perspective most jobs  they see                                                              
being  added  on the  North  Slope  are  lower skilled  and  lower                                                              
paying jobs that  do not result in any production  increases; they                                                              
are  maintenance  jobs.  Highly skilled  and  paying  construction                                                              
jobs that  accompany field  development are  lacking, and  this is                                                              
the type  of jobs that Fairbanks  companies do very well.  He said                                                              
this  imbalance  is apparent  in  his  company where  North  Slope                                                              
revenues have  declined by 50 percent  from the winter  of 2008/09                                                              
and have remained at that level ever since.                                                                                     
                                                                                                                                
Finally,  he asked  them  to consider  where  the  workers of  the                                                              
future  will  come from  and  what  jobs  should be  created  that                                                              
aren't  here   right  now.  He   thought  there  were  a   lot  of                                                              
opportunities for trade  jobs and was trying to  envision jobs for                                                              
college graduates,  many of whom "are voting with  their feet" and                                                              
not returning to  Alaska or moving to the Lower 48  where they see                                                              
greater long term opportunities.                                                                                                
                                                                                                                                
MR.  COOK emphasized  that  it's  also  imperative to  retain  the                                                              
current  residents  of Alaska.  Many  of the  problems  associated                                                              
with  keeping people  living in  Fairbanks is  that it  is a  very                                                              
expensive place to  do business, and it is a  very expensive place                                                              
to  live. Oil  companies  have  to make  a  net return  for  their                                                              
shareholders, too,  and if too much  is going to the state  or any                                                              
other area, wages or businesses are going to get squeezed.                                                                      
                                                                                                                                
2:05:38 PM                                                                                                                    
SENATOR  GIESSEL asked  if he  had sent  any of  his employees  to                                                              
North Dakota or Texas.                                                                                                          
                                                                                                                                
MR. COOK replied  yes; because the winter construction  seasons up                                                              
North have  been non-existent for  the last three years,  they are                                                              
setting up  an operation  down there right  now. The  summers have                                                              
been fairly  busy in  terms of maintenance  and turn-around  work,                                                              
but it's  not enough  to make up  for the  declines in  the winter                                                              
and  the  company  has  equipment  that  will  function  in  harsh                                                              
conditions and they must keep it working.                                                                                       
                                                                                                                                
SENATOR GIESSEL asked if they have had to lay anyone off yet.                                                                   
                                                                                                                                
MR. COOK  answered yes he  has over the  last few years;  he tries                                                              
to ship  people to other locations  before resorting to  that, but                                                              
something has to give.                                                                                                          
                                                                                                                                
SENATOR PASKVAN  said the  Bakken in North  Dakota is  exciting to                                                              
read  about and  he believed  that  type of  development would  be                                                              
part  of Alaska's  successful  future.  He asked  Mr.  Cook if  he                                                              
perceived that  Alaska is at the  initial stages of  bringing that                                                              
type of oil extraction process here.                                                                                            
                                                                                                                                
MR. COOK replied  he has talked  to new companies coming  in - not                                                              
so much on the  shale end of things. In the near  term, Alaska has                                                              
a  lot more  challenges  in terms  of  getting  water and  keeping                                                              
things heated as  well as the environmental and  permitting double                                                              
standards  the North Slope  has compared  to other  jurisdictions.                                                              
So,  the deck  is stacked  against  us right  now,  and he  didn't                                                              
think  that reversing  23 years  of  decline would  happen in  the                                                              
next 10 years.                                                                                                                  
                                                                                                                                
2:08:16 PM                                                                                                                    
SENATOR  DAVIS asked  if he  felt the  state is  getting too  much                                                              
profit from the oil industry at this time.                                                                                      
                                                                                                                                
MR. COOK  replied that  he perceived an  imbalance; not  enough of                                                              
the resource wealth  has flowed directly to the  pockets of Alaska                                                              
businesses  and  it  residents.   He  related  that  he  is  in  a                                                              
subdivision  in Texas with  "tons of  million dollar houses,"  but                                                              
in Alaska we think  that somebody is wealthy if  they make $80,000                                                              
or  $90,000 per  year.  He  thought it  was  the state's  role  to                                                              
provide infrastructure and make it possible to be competitive.                                                                  
                                                                                                                                
2:09:50 PM                                                                                                                    
KEN HALL,  Lynden Transport, said  one of the questions  asked for                                                              
this hearing  was does your company  have a policy  concerning the                                                              
hiring  of  Alaskan  workers.  At   his  company,  if  someone  is                                                              
applying  for  work,   they  must  be  present  to   fill  in  the                                                              
application,  and  an Alaskan  driver's  license  is required.  If                                                              
it's someone who  is going to be operating on the  Haul Road, they                                                              
require 10 years  of experience. Safety is paramount  to what they                                                              
do and they try to hire the very best people they can hire.                                                                     
                                                                                                                                
The  next question  asked was  what percentage  of your  workforce                                                              
are currently  Alaska residents?  In Fairbanks and  Anchorage they                                                              
are  affiliated with  the  Teamsters Union,  and  it's almost  100                                                              
percent. The  North Slope  operation is  a different matter;  they                                                              
are not a  teamster operation. Lynden hires Alaskan  residents for                                                              
the Prudhoe  Bay operation, but  with a two-on-two-off  operation,                                                              
it's just as  easy for a worker  to fly to Medford,  Oregon, as it                                                              
is  to  fly  to  Fairbanks  or  Anchorage  and  they  struggle  to                                                              
maintain a 60 to 65 percent Alaska resident ratio there.                                                                        
                                                                                                                                
2:13:13 PM                                                                                                                    
SENATOR  PASKVAN asked  if he  thought a  one-week-on-one-week-off                                                              
schedule would promote Alaska hire.                                                                                             
                                                                                                                                
MR.  HALL replied  that  the company  wouldn't  like  to do  that,                                                              
because  it's  expensive  to  transport  the  workforce  back  and                                                              
forth. Also,  two and  two is difficult  enough because  they have                                                              
to have an  overlap shift coming  on and shift going off.  The one                                                              
and one  just wouldn't be practical.  Plus, the expense  of living                                                              
in Alaska  and in Fairbanks in  particular is quite a  factor with                                                              
a number of  their employees. Unfortunately, the  labor force that                                                              
is generating their income in Alaska spends it out of Alaska.                                                                   
                                                                                                                                
He wondered  what the  actual intent was  of today's  meeting: was                                                              
it just  Alaska hire  period or  Alaska hire for  the oil  and gas                                                              
industry? He  thought the state  needed to  do more of  the actual                                                              
job creation by  keeping production levels up  and keeping healthy                                                              
mining, timber  and fishing industries.  Some of  those industries                                                              
have  been  more transient  than  others,  and  while he  is  more                                                              
familiar with  oil and gas  and mining, he  sees the trend  in all                                                              
of those industries.                                                                                                            
                                                                                                                                
2:16:21 PM                                                                                                                    
SENATOR GIESSEL asked  if Lynden does work in  Texas, North Dakota                                                              
or the Province of Alberta.                                                                                                     
                                                                                                                                
MR.  HALL  answered   yes;  they  actually  have   a  very  active                                                              
Dallas/Houston/Edmonton/Fairbanks/Prudhoe   Bay   operation   with                                                              
Fairbanks as the hub for their business in Prudhoe Bay.                                                                         
                                                                                                                                
SENATOR GIESSEL  asked if  he had  seen a  job increase  in Texas,                                                              
Alberta or North Dakota.                                                                                                        
                                                                                                                                
MR. HALL  replied that  the Alberta  area has  been busy  with tar                                                              
sands and  it has  a lot  of oil  industry there.  He has  seen an                                                              
increase  in the  Houston  area  in support  of  the North  Dakota                                                              
area.                                                                                                                           
                                                                                                                                
SENATOR PASKVAN  asked if  that was  in support  of the  shale oil                                                              
resource.                                                                                                                       
                                                                                                                                
MR. HALL  replied yes. One of  the challenges for North  Dakota is                                                              
that it's  not unlike Prudhoe Bay;  they can get stuff  there, but                                                              
it's tough to generate revenue.                                                                                                 
                                                                                                                                
2:18:33 PM                                                                                                                    
KARL GOHLKE,  Frontier Supply  Company, said  he was  representing                                                              
Bill  Livermore,  president.  Established  in  1989,  Frontier  is                                                              
still owned  and operated by Alaskans,  he said. They are  a full-                                                              
line  wholesale  distributer  of   plumbing,  heating,  industrial                                                              
piping,  water   works  and   mining  products.  Their   corporate                                                              
headquarters  is  in  Fairbanks,   but  they  have  operations  in                                                              
Anchorage   and  Guam.   They   sell  and   distribute   materials                                                              
throughout  the State  of Alaska  and  employ 65  people in  their                                                              
Alaska  and  Guam  operations. Fairbanks  and  Anchorage  are  100                                                              
percent Alaskan hire,  all with Alaskan addresses.  Two percent of                                                              
the folks  in Guam  are from Alaska.  They have always  advertised                                                              
locally for hire and will continue to do so.                                                                                    
                                                                                                                                
MR.  GOHLKE   said  their   business  focus   is  on   commercial,                                                              
industrial  and residential construction,  maintenance  and repair                                                              
and over  the last  three years  they have seen  a decline  in new                                                              
construction,  which affects  their  bottom line.  They know  when                                                              
the North Slope  is producing oil, the Alaskan  economy is strong.                                                              
The last  time he  checked, the  North Slope  was still  producing                                                              
about 580,000  gallons per  day, and he  was told 600,000  gallons                                                              
per day hadn't been seen in a long time.                                                                                        
                                                                                                                                
2:20:41 PM                                                                                                                    
He  said everyone  knows  if the  North  Slope  was exploring  and                                                              
producing new oil  and gas they wouldn't be here  today discussing                                                              
out-of-state  hire.  They  know   there  is  very  little  if  any                                                              
exploration by the  major producers and that the  pipeline is over                                                              
30 years old and  in need of repair - and they  know if production                                                              
is  not increased  they  won't need  to  worry about  out-of-state                                                              
hire at all.                                                                                                                    
                                                                                                                                
SENATOR  GIESSEL  said  if  his company  is  in  the  construction                                                              
category (Ms. Moriarty's chart).                                                                                                
                                                                                                                                
MR.   GOHLKE  answered   that  he   supplies  those   construction                                                              
companies.                                                                                                                      
                                                                                                                                
SENATOR GIESSEL noted  that the chart indicates 27  percent of the                                                              
hires  in the  category  are non-residents  and  asked where  they                                                              
would be employed.                                                                                                              
                                                                                                                                
MR.  GOHLKE  answered  he  didn't   know  since  the  construction                                                              
companies  are his  customers and  he deals  with the  pipefitters                                                              
hall and non-union folks.                                                                                                       
                                                                                                                                
SENATOR  GIESSEL   asked  if  he   knows  if  those   are  Alaskan                                                              
residents.                                                                                                                      
                                                                                                                                
MR.  GOHLKE  replied that  he  deals  with Alaskan  residents.  He                                                              
explained  how during the  heyday of  construction, they  couldn't                                                              
find enough  people from the hall  to fill the jobs. When  the box                                                              
stores started  coming and Fort  Greely started and Pogo  Mine was                                                              
going, and  when Eielson Air Force  Base and Fort  Wainwright were                                                              
building, he visited  those sites and knew some of  the folks were                                                              
coming from Washington, because the technical labor was needed.                                                                 
                                                                                                                                
2:24:31 PM                                                                                                                    
SENATOR PASKVAN  asked if  he has  discussions with his  customers                                                              
about treatment facility constrains on throughput.                                                                              
                                                                                                                                
MR.  GOHLKE replied  no; he  deals mostly  with Doyon  Associates.                                                              
Frontier  ships  direct  from  their location  here  or  from  the                                                              
manufacturer. All  they need is a  request for a quote  and a post                                                              
office box and they can make it happen.                                                                                         
                                                                                                                                
2:25:40 PM                                                                                                                    
JIM  JOHNSEN,  Vice  President,  Doyon,  Ltd. said  they  are  the                                                              
largest  private  land  owner in  Alaska.  They  have  18,000-plus                                                              
shareholders  and growing  (because  they  opened enrollment  some                                                              
years ago).  Seventy-five  percent of those  shareholders  live in                                                              
Alaska.  Doyon   has  had  27  consecutive  years   of  profitable                                                              
operation and  it is one  of the top  ten private  companies owned                                                              
by Alaskans.                                                                                                                    
                                                                                                                                
Doyon  has three  categories of  operations:  oil field  services,                                                              
government  contracting both in  and outside  of Alaska,  and land                                                              
and  resource  development on  their  own  lands. They  also  have                                                              
several tourism properties.                                                                                                     
                                                                                                                                
Focusing  on  oil field  services,  Mr.  Johnsen said  there  four                                                              
companies  in  the  area  and  three  are  Doyon  Drilling,  Doyon                                                              
Universal   Services   and   Doyon   Associated/Doyon   Industrial                                                              
(construction  company  doing maintenance  work).  Doyon  Drilling                                                              
has seven  drill rigs on  the North Slope  that on contract  to BP                                                              
and ConocoPhillips and they are all working right now.                                                                          
                                                                                                                                
MR. JOHNSEN said  Doyon's employment has waxed and  waned; in 2007                                                              
they  had about  314  employees and  that dipped  down  to 224  in                                                              
2009.  The most  recent figure  is 362  and while  they are  happy                                                              
about those  positions, the  growth is not  due to exploration  or                                                              
work that  would add  to production  and more  flow through  TAPS.                                                              
It's related to infield work overs.                                                                                             
                                                                                                                                
He  said that  Doyon  Universal  Services is  a  large company  in                                                              
terms  of employment  numbers and  those jobs  are minus 280  jobs                                                              
primarily  due to a  large decline  in the  number of  exploration                                                              
camps.                                                                                                                          
                                                                                                                                
Finally,  Doyon Associated  is in  a  joint venture  with a  major                                                              
pipeline company  in Texas that does construction  and maintenance                                                              
work. This  work is  very seasonal  but it has  had an  uptick, so                                                              
that is why their numbers are up.                                                                                               
                                                                                                                                
He  noted  that  Senator  Giessel  has  asked  consistently  about                                                              
activity  outside  of  Alaska, and  they  are  definitely  looking                                                              
elsewhere  for  acquisitions  and  business  growth  opportunities                                                              
over the next several years.                                                                                                    
                                                                                                                                
MR. JOHNSEN said  Doyon definitely has an Alaska  hire preference,                                                              
but  that is  preceded  by a  preference  for Doyon  shareholders,                                                              
then  other Alaska  Native corporations,  then  Alaskans and  then                                                              
others. Alaskan  status is  verified when folks  apply for  a job.                                                              
The  Doyon Associated  Industrial  Company actually  uses a  union                                                              
workforce  unlike the  Drilling  and Universal  Services. So  they                                                              
work  closely  with  the unions  on  recruiting  shareholders  and                                                              
training them for  these jobs. They are 90 percent  Alaska hire as                                                              
per  their employment  information  system, and  this  has been  a                                                              
pretty steady  figure. Shareholder  hire is  increasing, and  as a                                                              
result Alaska hire is trending up.                                                                                              
                                                                                                                                
2:31:10 PM                                                                                                                    
Last year the  company gave about $1.5 million  in scholarships to                                                              
the  Doyon  Foundation  for  shareholders;  they  fund  roustabout                                                              
training   programs,  security,   food   service  and   management                                                              
programs  to keep  people here  and to  prepare them  for jobs  in                                                              
their  company.  They  have  a  very  strong  partnership  at  the                                                              
University  of Alaska with  the vocational  technical programs  in                                                              
particular. They reach  out to 7th, 8th and 9th  graders, which is                                                              
often where people  make decisions that could either  make them or                                                              
break  them entering  the  workforce. For  example,  they fund  in                                                              
part a Fairbanks  math, sports, and reading camp for  7th, 8th and                                                              
9th  graders who  are  not "A"  students;  it's  called the  Smart                                                              
Program. The improvements  are staggering. They also  work closely                                                              
with  the Effie  Kokrine Charter  School  to try  to educate  kids                                                              
about   career   opportunities   and   what  they   need   to   do                                                              
academically,  physically  and behaviorally  to  prepare for  work                                                              
with  the company.  They have  very  strong employer  recruitment,                                                              
career  development  and  retention  programs;  they  support  NBA                                                              
programs  for  their  employees  and tuition  waivers;  they  have                                                              
their own  leadership program  where they  bring in scholars  from                                                              
the university  and other  companies and  universities around  the                                                              
country  to  build   management  cohorts  up.  They   were  strong                                                              
supporters and  advocates for educational tax  credit improvements                                                              
in Alaska to try to increase business investment in education.                                                                  
                                                                                                                                
MR. JOHNSEN  said they see three  big policy changes  to consider.                                                              
The  first  would  be  targeting  resources  to  the  University's                                                              
voctech  programs  including union  apprenticeship  programs  that                                                              
support industry.  The second is  to implement policies  to reduce                                                              
Alaska's  high cost  of living.  He said they  have employees  who                                                              
they hired as  Alaskans but who leave because  it's less expensive                                                              
to live outside.  A friend mentioned  that last year at  this time                                                              
there were 250 houses  on the market and today  it's 600. Finally,                                                              
they  believe  that  improving  the  tax  climate  in  Alaska  for                                                              
private investment  will result in more production  and more jobs.                                                              
Doyon believes  the decline is  not inevitable and  that something                                                              
can be done about it.                                                                                                           
                                                                                                                                
2:34:28 PM                                                                                                                    
SENATOR GIESSEL  said he indicated  a loss  of 161 jobs  over five                                                              
years and  she assumed those were  Alaskans and asked if  he hired                                                              
them back as the numbers went up.                                                                                               
                                                                                                                                
MR. JOHNSEN  replied that  it varies. They  haven't hired  back in                                                              
Doyon Universal Services;  those jobs are gone.  In Doyon Drilling                                                              
they  have. And  if you  assume a  90/10 percent  ratio and  apply                                                              
that to 161 you  get roughly 140 fewer Alaskans  working for their                                                              
company.                                                                                                                        
                                                                                                                                
SENATOR  PASKVAN said  he understands  for the  last five  years a                                                              
number of permanent  camps have been built on the  North Slope and                                                              
asked  if that is  accurate. And  has Doyon  been contacted  about                                                              
construction  activities  on  any  new  or  upgrades  to  existing                                                              
treatment facilities.                                                                                                           
                                                                                                                                
MR. JOHNSEN  replied  that he is  not aware  of any  conversations                                                              
between producers  and others with  Doyon Associated  with respect                                                              
to treatment facilities per se.                                                                                                 
                                                                                                                                
2:36:53 PM                                                                                                                    
SENATOR MENARD asked if Doyon is thinking about going global.                                                                   
                                                                                                                                
MR. JOHNSEN  answered no; they are  looking at other  locations in                                                              
the United States.                                                                                                              
                                                                                                                                
SENATOR  THOMAS  said the  chart  shows  a  decline of  about  7.5                                                              
percent for 22 years  and asked Mr. Johnsen if he  had a sense for                                                              
what  areas   have  great  promise   and  that  should   be  under                                                              
exploration.                                                                                                                    
                                                                                                                                
MR.  JOHNSEN  replied  that  he  should  ask  the  producers  that                                                              
question.   Doyon  can  gear   up  and   support  these   "primary                                                              
customers"  as  they   move  forward,  but  they   don't  have  an                                                              
independent assessment of where the industry is going.                                                                          
                                                                                                                                
SENATOR  PASKVAN  asked if  he  is  getting any  information  from                                                              
producers  that the  future will  include heavy  oil and/or  shale                                                              
oil. The  point is that the  chart includes neither heavy  oil nor                                                              
shale oil.                                                                                                                      
                                                                                                                                
MR.  JOHNSEN  replied  that  heavy  oil  is  a  priority  for  the                                                              
producers, but it's not in the chart.                                                                                           
                                                                                                                                
SENATOR PASKVAN  asked him to  explain his understanding  of shale                                                              
oil.                                                                                                                            
                                                                                                                                
MR.  JOHNSEN replied  that  he should  ask  that  question of  the                                                              
producers.                                                                                                                      
                                                                                                                                
2:40:44 PM                                                                                                                    
JAY   QUAKENBUSH,  Fairbanks   Building   &  Construction   Trades                                                              
Council, said  he would like  to see a  positive change  in hiring                                                              
Alaskans  on the  North  Slope.  He said  he  sees  much room  for                                                              
improvement, and they must work together to find a solution.                                                                    
                                                                                                                                
Even though  IBEW Local 1547  has had several Alaskan  contractors                                                              
working  electrical  and  communications  projects  on  the  North                                                              
Slope,  those projects  have been  relatively  short in  duration.                                                              
One contractor,  Norcon, Inc. (Fairbanks  and Anchorage)  has been                                                              
their most consistent  work opportunity on the North  Slope in the                                                              
oil  industry. They  have performed  construction and  maintenance                                                              
work for  most of  the 20  years he  has worked  for the IBEW  and                                                              
have maintained  at least a small  workforce year in and  year out                                                              
on the North Slope.                                                                                                             
                                                                                                                                
Reports   from  the   Alaska  Electric   Trust   Fund  reflect   a                                                              
significant downturn  from the peak  of 89 electrical  workers per                                                              
month in  July 2008 down  to an average  of 72 electrical  workers                                                              
in 2009; in 2010  it dropped more, to an average  of 42 electrical                                                              
workers  per  month.  As  of  June  2011  they  averaged  only  19                                                              
electrical  workers  per  month  for  Norcon,  Inc.  This  is  one                                                              
contractor, but it shows the trend overall for the IBEW.                                                                        
                                                                                                                                
MR. QUAKENBUSH said  they have had some success  with independents                                                              
in recent  development projects going  back five years.  The stats                                                              
show an overwhelming  downturn. But the North Slope  is not seeing                                                              
a  downturn  in  construction  and   maintenance  overall;  it  is                                                              
actually very  busy. The problem is  that the camps are  full, but                                                              
not with  Alaskan workers.  It's  hard for Alaskan  contractors to                                                              
even find bed  space in the camps,  and twice in the  last year he                                                              
has  heard  talk  of  "hot  sheeting,"  the  practice  of  workers                                                              
sharing a  bed with  someone working a  different shift.  Too many                                                              
out-of-state contractors are selected.                                                                                          
                                                                                                                                
He  said   the  oil   companies  are   always  seeking   the  most                                                              
competitive  contractor,  but  the  problem is  that  the  playing                                                              
field  is  grossly  tilted  to  out-of-state  companies  that  pay                                                              
standard  wages  and  usually  no  benefits  to  their  workers  -                                                              
substandard  in terms of  Alaska. Workers  comes from  states that                                                              
have  dealt   with  oil  production   like  Texas   and  Oklahoma,                                                              
Louisiana,  Idaho and  so forth  where people  don't have  to heat                                                              
their homes  at the cost  Alaskans do and  they don't have  to buy                                                              
food and  other commodities  at Alaskan prices.  The fact  is that                                                              
many are  not raising  their families here,  but are  taking their                                                              
earnings from Alaska and living on our jobs.                                                                                    
                                                                                                                                
MR. QUAKENBUSH  said not  enough Alaskan labor  is being  hired at                                                              
Alaskan wages  with benefits, which  in turn means there  will not                                                              
be enough  commerce for local businesses  to survive. That  is the                                                              
issue  this committee  should be  trying to  solve. To  paraphrase                                                              
former  University of  Alaska President,  Mark  Hamilton, he  said                                                              
there is a billion  dollar industry leaving this  state every year                                                              
of  non-Alaskans working  in this  state who  take their  earnings                                                              
back home to spend.                                                                                                             
                                                                                                                                
He thought the blame  should be laid clearly on  the oil companies                                                              
who hire out-of-state  contractors. It's not rocket  science; they                                                              
are  doing  it  to  maximize  their  profits,  and  if  the  state                                                              
continues to allow it to happen, "Shame on us."                                                                                 
                                                                                                                                
MR. QUAKENBUSH  said Alaska  could provide  the skilled  workforce                                                              
that the  North Slope needs  now and in  the future. Much  of that                                                              
training    now   happens   in    Fairbanks   through    certified                                                              
apprenticeship programs.  And while it might cost  the oil company                                                              
contractors more  on paper, a well-trained workforce  aware of the                                                              
challenges  of  the North  Slope  will  more  often than  not  pay                                                              
dividends with a  job done right the first time,  performed safely                                                              
and in an environmentally safe fashion.                                                                                         
                                                                                                                                
He said  that IBEW 1547  has a standard  for and means  of proving                                                              
Alaska  residency,   which  is  defined  as  "a   person  who  has                                                              
maintained his  or her permanent  home in  Alaska for a  period of                                                              
not less  than one  year or  who having  had a  permanent home  in                                                              
Alaska has  temporarily left  with the  intention of returning  to                                                              
Alaska permanently."                                                                                                            
                                                                                                                                
2:51:19 PM                                                                                                                    
SENATOR  GIESSEL said  the  "Fairbanks Daily  News  Miner" had  an                                                              
October  article  that  talked   about  the  Fort  Greely  project                                                              
suddenly  not  going  forward  and laying  people  off.  It  cited                                                              
Norcon  as the  company  providing workers  and  talked about  the                                                              
many workers  that  travel long  distances from  the Lower  48 and                                                              
union  electrical workers  who  flew up  from  Seattle. She  asked                                                              
what  percentage of  folks in  the  union hall  here are  actually                                                              
Alaska residents by his definition.                                                                                             
                                                                                                                                
MR.  QUAKENBUSH  responded that  he  couldn't  speak for  all  the                                                              
unions, but the  IBEW gets calls from people looking  for work all                                                              
the time.  The fact is they  have different hiring lists,  and the                                                              
out-of-state workers  list is called  "Book Two."  Alaskan workers                                                              
sign a  list referred  to as "Book  One" meaning  they go  to work                                                              
first. The  book in  Fairbanks is exhausted  first, and  then they                                                              
go to Anchorage,  Juneau and Ketchikan; then they go  to Book Two.                                                              
He  explained that  an  out-of-state  worker will  get  dispatched                                                              
only after all Alaskans have had a shot at the job opportunity.                                                                 
                                                                                                                                
SENATOR  GIESSEL   said  the  IBEW  website  talked   about  folks                                                              
applying from  other locals to be  accepted here and  that clearly                                                              
folks  are  being  recruited  from outside  and  are  being  given                                                              
guidance  on how  to  prepare  to come  to  Alaska  to work.  This                                                              
concerns her.                                                                                                                   
                                                                                                                                
MR.  QUAKENBUSH explained  that  that information  is supplied  to                                                              
avoid out-of-state  workers coming here looking for  the next boom                                                              
(from the gas line).                                                                                                            
                                                                                                                                
2:54:17 PM                                                                                                                    
BRETT  HELMS,  Training  Director,   Training  and  Apprenticeship                                                              
Training Program,  Plumbers and Pipefitters Local  375, said their                                                              
program  is registered  by the  U.S.  Department of  Labor. It  is                                                              
funded by  employers and is jointly  managed with equal  labor and                                                              
employee  representation.  Their   only  contribution  is  through                                                              
collectively  bargained  agreements.  Other  than book  fees,  the                                                              
program is  tuition-free to  members. The  program costs  a little                                                              
over  $1 million  per year,  which  equates to  about $40,000  per                                                              
apprentice.  They have  89 apprentices  with  33 percent  minority                                                              
and 24  percent Alaska  Native participation;  the average  age is                                                              
25.  The apprenticeship  program is  for five  years and  includes                                                              
8,000 to  10,000 hours of on-the-job  training and 1,900  hours of                                                              
classroom  instruction.  Their facility  is  approximately  15,000                                                              
square feet  and they are in the  process of doubling  the size of                                                              
the weld shop and adding classroom space.                                                                                       
                                                                                                                                
Information  for apprenticeship  opportunities is disseminated  at                                                              
least  semi-annually   to  the  registration   agencies,  minority                                                              
organizations, women's  organizations, high schools,  job centers,                                                              
and veteran organizations.                                                                                                      
                                                                                                                                
2:56:41 PM                                                                                                                    
MR. HELMS  said their application  process is year-round  and they                                                              
have had  about 450 applications.  Interviews are  done quarterly;                                                              
everyone that  is interviewed is  ranked and scored and  placed on                                                              
a "pool  of eligibles list"  from which  20 to 30 apprentices  are                                                              
selected each  year. Over the last  30 years, 70 percent  of their                                                              
apprentices, on  average, complete the  training and are  ready to                                                              
work in industry.  They don't train  for the sake of  training but                                                              
must see jobs associated with it.                                                                                               
                                                                                                                                
2:57:15 PM                                                                                                                    
SENATOR  GIESSEL  asked  what percentage  of  these  students  are                                                              
actually Alaskan residents (using Mr. Quakenbush's definition).                                                                 
                                                                                                                                
MR. HELMS replied 100 percent.                                                                                                  
                                                                                                                                
2:57:47 PM                                                                                                                    
SENATOR  THOMAS  asked  if  he  has  a  feel  for  the  number  of                                                              
pipefitter positions  that exist at  Prudhoe Bay and how  many his                                                              
union fills.                                                                                                                    
                                                                                                                                
MR.  HELMS   replied  from   their  apprenticeship   roles,  three                                                              
apprentices  are working at  Prudhoe Bay.  He deferred  the answer                                                              
to the  other question to Jim  Leiti [also with  Pipefitters Local                                                              
375].                                                                                                                           
                                                                                                                                
SENATOR GIESSEL asked  what happens to the rest of  the folks they                                                              
train.                                                                                                                          
                                                                                                                                
MR.  HELMS replied  they are  working  for local  and Alyeska  Oil                                                              
field contractors.                                                                                                              
                                                                                                                                
2:59:11 PM                                                                                                                    
TIM  SHARP, Business  Manager, Laborers  Local 942,  said he  sits                                                              
here today  not as  an apologist  for the oil  companies but  as a                                                              
supporter of the  potential of what could happen  with enlightened                                                              
forward-thinking  leadership.  His union  has  95 percent  Alaskan                                                              
resident   membership.   He  said   the  history   of   Fairbanks'                                                              
participation in  Prudhoe Bay is  mixed, especially in the  last 5                                                              
to 10 years. Fairbanks  was the closest major town  to Prudhoe Bay                                                              
during construction of  the oil field and as a result  was the key                                                              
place  for mobilizing  that workforce  in  the 70s  and 80s.  Back                                                              
then everyone knew  each other when they got on the  plane. In the                                                              
years after  and over  time, they began  noticing a  marked change                                                              
in the workers arriving  in the oil fields; they  were coming from                                                              
out-of-state  and often flying  direct from  all over  the country                                                              
to  Anchorage. It  got worse  as time  went on  and eventually,  a                                                              
charter flight originated in Anchorage.                                                                                         
                                                                                                                                
He  explained  that  in  an  effort   to  maximize  their  airline                                                              
transportation investment,  the owner company  strongly encouraged                                                              
those  few contractors  who  hired Fairbanks  folks  to get  their                                                              
people  down to Anchorage  and then  to fly  backwards to  Prudhoe                                                              
Bay  through  Fairbanks  some hours  later.  This  was  confusing,                                                              
especially  during oil spills  or in  times of quick  mobilization                                                              
needs. Though  the charter  would land in  Fairbanks twice  a week                                                              
(out  of 24  flights),  fewer and  fewer  people  got on.  Between                                                              
clearing results  of a drug test, the security  check, orientation                                                              
and  coordinating   with  the  charter   flight,  it   could  take                                                              
Fairbanks folks  one to two weeks  from the time the  contract was                                                              
called to the time  someone got to work and contractors  seemed to                                                              
lean more on  getting workers through Anchorage  whether they were                                                              
from  Alaska or  not. Now  the camps  are full  and companies  are                                                              
"hot  sheeting." At  least  3,000  more beds  have  been added  at                                                              
Prudhoe Bay in the last three years.                                                                                            
                                                                                                                                
Because  the  owner  companies   leaned  on  the  contractors  for                                                              
efficiencies  in values,  Mr.  Sharp related  that  it seemed  the                                                              
contractors  would seek  out and  import labor  from other  states                                                              
with depressed economies  to win those bids by  undercutting those                                                              
who  hire predominantly  Alaskans. It  also seemed  that with  the                                                              
number of hours  worked and the room and board  provided, it would                                                              
still pay  better for workers to  travel regularly from  places as                                                              
far  away  as  Florida,  paying  their own  airfare,  to  work  in                                                              
Prudhoe Bay  than it  would to stay  and earn  what they  could in                                                              
Texas,  Idaho and Georgia.  This  is happening  today and  is even                                                              
being done by  Alaska Native corporation subsidiaries  and Alaskan                                                              
companies.                                                                                                                      
                                                                                                                                
MR. SHARP  said in the last  two years they have  received reports                                                              
of  companies  from  economically   depressed  states  giving  the                                                              
morning  safety  meetings exclusively  in  Spanish  and that,  "We                                                              
think  things are  getting a  little out  of hand  and need  to be                                                              
looked at again."                                                                                                               
                                                                                                                                
He  said most  of the  senators  here probably  have  sat next  to                                                              
workers  on flights  heading both  north  and south  often in  the                                                              
first  class status  based on  the many  miles they  fly back  and                                                              
forth  each  year  while  taking  wages  out  of  Alaska,  drawing                                                              
unemployment benefits  from Alaska and again, while  many Alaskans                                                              
remain out of work. "The frustration in Fairbanks runs deep."                                                                   
                                                                                                                                
3:04:23 PM                                                                                                                    
MR. SHARP  said he didn't  come here today  to beat up on  the oil                                                              
companies,  because  he  realizes   they  answer  to  a  board  of                                                              
directors  and shareholders.  But  sometimes  many businesses  are                                                              
myopic in  terms of the  short dollar versus  the long  dollar for                                                              
value. Both  the owner companies  and Alaskans need to  play chess                                                              
instead of  checkers when it comes  to our mutual interest  in the                                                              
long term resource development picture for Alaska.                                                                              
                                                                                                                                
3:06:15 PM                                                                                                                    
However, he  said he believed that  BP has acknowledged  and taken                                                              
on  the  challenge  that  they   can  have  an  influence  on  the                                                              
contractors' lack  of good behavior  when it comes to  Alaska hire                                                              
even  if  it does  mean  paying  higher  wages to  support  people                                                              
living in Alaska.  If the owner companies insist  that contractors                                                              
be weighted during  the bidding process to hire  Alaskans the same                                                              
way they  are for safety  and productivity  they would be  well on                                                              
the  way toward  an affirmative  fix  to the  problem. Hiring  the                                                              
cheapest labor is  not always the best way to  save money. Whether                                                              
it's the economic  limit factor, permitting for  new fields, ANWR,                                                              
AGIA  or  ACES,   multi-nationals,  owner  companies   and  BP  in                                                              
particular are starting  to realize that without  truly partnering                                                              
with Alaska,  even  when 81 percent  of our  state's revenues  are                                                              
generated  by  them,  they'll  continually   revisit  tax  issues,                                                              
legislative pressures,  populous protest and bad  public relations                                                              
that can often negatively impact their bottom line.                                                                             
                                                                                                                                
For him,  truly partnering means  putting Fairbanks folks  back to                                                              
work  in Prudhoe  Bay  where there  are  approximately 8,000  jobs                                                              
right  now.  If  half  of  those  jobs  including  the  legacy  or                                                              
maintenance jobs  were held  by folks from  the Interior,  the oil                                                              
companies would  never lack  from support or  help when  they need                                                              
it, Mr. Sharp stated.                                                                                                           
                                                                                                                                
A number of hurdles  would need to be ironed out  and the first is                                                              
that this  model can't be built  on personalities. He  is inspired                                                              
by BP trying to  lead the way and hoped that  others would follow.                                                              
The  second  hurdle  is measuring  the  true  number  of  Alaskans                                                              
working,  and while  the  Permanent  Fund Dividend  isn't  totally                                                              
accurate, it is  a fair indicator of Alaskans  making a commitment                                                              
to this state  as opposed to the constitutional  definition of one                                                              
month with the intent to stay.                                                                                                  
                                                                                                                                
He concluded  that Fairbanks  wants and is  ready to work,  and it                                                              
is not getting  its fair share of  work in Prudhoe Bay  right now.                                                              
They support looking  at any tax when their folks  are working and                                                              
it ultimately benefits Alaskans.                                                                                                
                                                                                                                                
3:07:57 PM                                                                                                                    
In comparing  apples and  oranges, he  urged them  to look  at the                                                              
tourism  and  fishing  industries  that  are  subsidized  with  J1                                                              
student visa workers and H2B guest worker programs.                                                                             
                                                                                                                                
3:08:37 PM                                                                                                                    
SENATOR  COGHILL  said  his  concern all  along  has  been  having                                                              
qualified  people in Alaska  who are  ready to  work and  they are                                                              
not working  on the  North Slope.  But he wanted  to know  if that                                                              
was a Fairbanks  issue or an Alaska issue and if  Alaska is priced                                                              
out of the market.                                                                                                              
                                                                                                                                
MR. SHARP  replied that he  would strike  the last one.  Yes there                                                              
are  qualified Alaskans,  but  the key  is  sustainability of  the                                                              
work.  It takes  six  years to  train journeyman  pipefitters  and                                                              
electricians; you can't  turn them on and off like  tap water.  If                                                              
they had  goals to  train to, Fairbanks  members could  meet, beat                                                              
or exceed  any number. The Interior  has a huge workforce  to draw                                                              
from.                                                                                                                           
                                                                                                                                
3:10:42 PM                                                                                                                    
SENATOR  GIESSEL asked  if 95  percent  of his  folks are  Alaskan                                                              
residents.                                                                                                                      
                                                                                                                                
MR. SHARP replied yes.                                                                                                          
                                                                                                                                
SENATOR  GIESSEL  asked him  to  explain  what  he said  about  86                                                              
percent unemployment in the Interior villages.                                                                                  
                                                                                                                                
MR. SHARP responded  that Department of Labor  statistics indicate                                                              
that those  villages have between  80 and 90 percent  unemployment                                                              
and that  still restaurant  and fishing  businesses are  importing                                                              
people from Bulgaria to work on a regular basis.                                                                                
                                                                                                                                
SENATOR  PASKVAN said  one of  the things  he has  heard today  is                                                              
that  Alaskan  unions  and  Alaskan   contractors  have  qualified                                                              
employees  that are not  working at  a time  when there  is record                                                              
employment at Prudhoe. Is that accurate?                                                                                        
                                                                                                                                
MR. SHARP replied  that is correct and he invited  him down to the                                                              
union hall at call time to see for himself.                                                                                     
                                                                                                                                
SENATOR PASKVAN  asked what his  recommendation is to  promote the                                                              
hiring of Alaskan employees.                                                                                                    
                                                                                                                                
3:12:45 PM                                                                                                                    
MR. SHARP  responded a message  from the  top, and the  message is                                                              
loud and clear,  that it's important to hire Alaskans,  and if you                                                              
don't,  you  will   be  looked  at  differently.   He  added  that                                                              
residency should  be measured accurately,  arguing for  a standard                                                              
of one year or more.                                                                                                            
                                                                                                                                
3:14:04 PM                                                                                                                    
JULIE DUCKETT, Slayden  Plumbing and Heating, North  Pole, Alaska,                                                              
said they  have been in business  since 1979 and  pride themselves                                                              
on  Alaska  hire,  their  safety program  and  their  emphasis  on                                                              
training Alaska  residents. They have completed  numerous projects                                                              
on the  North Slope  for several  contractors including  equipment                                                              
shops,   nitrogen    buildings,   training    buildings,   support                                                              
facilities,  camp construction and  maintenance. Slayden  Plumbing                                                              
and  Heating provides  mechanical,  plumbing,  HBC and  mechanical                                                              
engineering  services  and  recently  expanded to  include  a  new                                                              
service  department. Slayden  strongly supports  Alaskan hire  and                                                              
it shows  in their workforce. They  advertise in local  papers and                                                              
on line  for both their  North Pole  and their Wasilla  locations.                                                              
They  use the  Associated Builders  and Contractors,  which is  an                                                              
ABC federally  recognized apprenticeship  program. They  currently                                                              
have 105  employees, a majority  of which work year-round.  Recent                                                              
projects on  the North  Slope include  contracts with  AFC Clausen                                                              
and  Criterion,  companies  that  hire  local  subcontractors  for                                                              
various trades.                                                                                                                 
                                                                                                                                
She  agreed   there  is  a   problem  with  out-of-state   workers                                                              
especially when  residents are leaving  the state due to  the high                                                              
cost of  energy. Alaska  has always  faced this  problem.  She was                                                              
more  concerned  about the  cost  of  energy  and the  decline  in                                                              
production on the  North Slope and thought people  should focus on                                                              
making Alaska more  competitive being supportive  of more training                                                              
programs for Alaskans.                                                                                                          
                                                                                                                                
3:18:16 PM                                                                                                                    
SENATOR  GIESSEL  asked  what percent  of  their  apprentices  are                                                              
Alaskans.                                                                                                                       
                                                                                                                                
MS. DUCKETT replied  that their apprenticeship program  is through                                                              
the Associated  Builders and  Contractors and  it is 93.1  percent                                                              
Alaska hire.                                                                                                                    
                                                                                                                                
3:19:53 PM                                                                                                                    
SENATOR  GIESSEL   asked  if  preference   is  given   to  Alaskan                                                              
residents in this apprenticeship program.                                                                                       
                                                                                                                                
MS. DUCKETT  replied that  some of the  companies like  the Native                                                              
corporations require Alaskan hire.                                                                                              
                                                                                                                                
SENATOR  GIESSEL   asked  what   percent  of  her   employees  are                                                              
Alaskans.                                                                                                                       
                                                                                                                                
MS. DUCKETT  replied that  the 2009  State of Alaska  non-resident                                                              
hire statistics  say they have  8.2 percent non-Alaskan  hire, but                                                              
she thought  that was  too high.  Quite a  few of their  employees                                                              
may not have qualified for a PFD in 2009.                                                                                       
                                                                                                                                
SENATOR  GIESSEL said  she  talked about  the  contracts going  to                                                              
out-of-state companies  and asked if they have  specifications for                                                              
project  labor agreements  which  would require  certain types  of                                                              
employees to be hired for them.                                                                                                 
                                                                                                                                
MS. DUCKETT replied  that they don't bid on projects  with project                                                              
labor  agreements. The  companies  they work  for  have open  shop                                                              
bidding requirements.                                                                                                           
                                                                                                                                
SENATOR  PASKVAN  asked  if  it's  fair  to  say  that  work  non-                                                              
residents perform could be performed by Alaska residents.                                                                       
                                                                                                                                
MS.  DUCKETT replied  yes; there  are  enough Alaskans  to do  the                                                              
work and good training is available.                                                                                            
                                                                                                                                
SENATOR  COGHILL asked  what barriers  to local  hire Slayden  has                                                              
seen.                                                                                                                           
                                                                                                                                
MS. DUCKETT  answered not  having enough projects  to bid  on. The                                                              
cost of living  in the Interior  is also very high  for businesses                                                              
to be able to survive.                                                                                                          
                                                                                                                                
3:24:16 PM                                                                                                                    
SENATOR PASKVAN  asked if part  of the  problem is that  there are                                                              
Alaskans  that would  accept those  high  paying jobs  in the  oil                                                              
industry, but  they don't get the  opportunity because they  go to                                                              
out-of-state employees.  The DOLWD publication says  a significant                                                              
number  of  high paying  jobs  are  filled by  non-residents  when                                                              
Alaskans are available or can be quickly trained.                                                                               
                                                                                                                                
MS. DUCKETT said she agreed with that.                                                                                          
                                                                                                                                
3:25:32 PM                                                                                                                    
PAUL  KOOP, Bright  Services, Inc.,  said they  are an  electrical                                                              
company with 10  employees. He said in the past it  wasn't hard to                                                              
find employees  and had opportunities  to work on the  North Slope                                                              
and  at one  time  he  had 22  employees.  However,  the jobs  and                                                              
contracts  that go out  of there  now are  never entered  into the                                                              
Alaskan workforce.  Jobs are  given out to  buddies who  live down                                                              
South; it's just  a transfer between divisions.  To increase local                                                              
hire he suggested  they consider giving a tax break  to people who                                                              
hire locally and  penalizing those that continue  bringing up non-                                                              
resident employees.                                                                                                             
                                                                                                                                
3:28:11 PM                                                                                                                    
SENATOR  GIESSEL  asked  what  percentage  of  his  employees  are                                                              
Alaskans.                                                                                                                       
                                                                                                                                
MR. KOOP replied 100 percent.                                                                                                   
                                                                                                                                
SENATOR PASKVAN recapped  that on September 2 TAPS  throughput was                                                              
605,160  barrels,  on  September  3 it  was  605,219  barrels,  on                                                              
September  4 it  was 585,528  barrels and  on September  5 it  was                                                              
606,578 barrels.                                                                                                                
                                                                                                                                
3:32:03 PM                                                                                                                    
Meeting recessed from 3:32 PM to 5:39 PM.                                                                                       
                                                                                                                                
5:39:57 PM                                                                                                                    
CHAIR EGAN  called the  meeting back  to order at  5:39 PM  at the                                                              
Westmark Hotel in Fairbanks. All members were present.                                                                          
                                                                                                                                
CHAIR EGAN  said they are here  to gather information,  but not to                                                              
move legislation.  He said the  Department of Labor  and Workforce                                                              
Development  (DOLWD)  statistics  reveal  that employment  on  the                                                              
North  Slope  is  near  an  all-time   high,  yet  many  qualified                                                              
Alaskans  are looking  for oil  industry  work. In  order to  move                                                              
forward,  more  needs  to be  learned  about  non-resident  hiring                                                              
practices in the  oil industry. During earlier  committee meetings                                                              
they  have made  the unsettling  observations that  in 2010,  more                                                              
non-Alaskans were  hired than Alaskans  for new oil  industry jobs                                                              
in  Alaska.  They  also  learned   that  some  large  construction                                                              
companies  on  the North  Slope  employ  almost 100  percent  non-                                                              
residents. Today  they heard from  industry, labor  and interested                                                              
members. Tonight  they will  hear from members  of the  public and                                                              
hope   to  develop   a  more   complete   picture  of   employment                                                              
opportunities  available  on  the  state's oil  industry  and  how                                                              
together greater resident hire can be ensured.                                                                                  
                                                                                                                                
5:44:36 PM                                                                                                                    
JACOB  HOWDESHELL,  Laborers Local  942,  Fairbanks,  said he  has                                                              
been  working seasonally  on the  North Slope  since he  completed                                                              
the  Laborer's   apprenticeship  program,   and  he   has  noticed                                                              
disturbing trends  in the amount of non-resident  workers employed                                                              
there  and  asked  why  more  Fairbanksans   aren't  working  when                                                              
employment is  at an  all-time high. He  said Shared  Services has                                                              
24 fully booked  flights a week  to the North Slope; two  of those                                                              
flights go to  Fairbanks and are almost two-thirds  full when they                                                              
arrive. Alaska Airlines  has regularly scheduled  flights that are                                                              
full  with  sometimes  a one  to  two  day  wait list  for  flight                                                              
availability.  In the last  two years almost  3,000 new  beds have                                                              
been added  to the North Slope,  and "hot sheeting" took  place as                                                              
recently as three  weeks ago. Producers have said  they don't have                                                              
influence over the  contractors, yet they can force  a policy that                                                              
requires all new  hires with six months experience  or less on the                                                              
North Slope to wear  an orange hardhat. He remarked  that they can                                                              
threaten to  cancel a  contract due to  safety violations  or poor                                                              
work performance,  yet they cannot  influence contractors  to hire                                                              
Alaskan workers. He  just doesn't buy it! Alaskan  workers and, in                                                              
particular,  Fairbanks  workers   need  employment  on  the  North                                                              
Slope. He thanked the committee for looking into the problem.                                                                   
                                                                                                                                
5:47:06 PM                                                                                                                    
ZEBULON  WOODMAN, Laborers  Local  942, Fairbanks,  said  everyone                                                              
knows more  Alaska hire is  needed on the  North Slope.  They know                                                              
the  trend  is  that  more  and   more  people  are  "flying  over                                                              
Fairbanks."  One   way  to  resolve  the  problems   is  to  build                                                              
incentivizes for local  hire into the oil tax  structure. The loss                                                              
to the state  treasury from lowering the tax  could potentially be                                                              
offset by  millions of  dollars circulating  in the local  economy                                                              
from  locals  working  on  the  North  Slope.  Tying  the  two  to                                                              
together  with  incentives  would   be  a  win/win  situation  for                                                              
Alaska.                                                                                                                         
                                                                                                                                
DAN KUPISZEWSKI,  Labor Economist,  said he  worked for  the State                                                              
of Alaska  from 1968 to  1978 as a  labor economist, and  when the                                                              
pipeline  started  in  1974,  he joined  the  laborers  union  and                                                              
worked  two jobs  - one  for the  state  and one  at Prudhoe  Bay.                                                              
During that  time he  saw local  people, including Native  people,                                                              
finally having decent  jobs with health insurance  and retirement.                                                              
Now  the jobs  go  to people  who  live out  of  state. Those  are                                                              
Alaska's  resources, and he  thought we  had a  deal with  the oil                                                              
companies that  they would  hire local people  and we  would share                                                              
in the profits.  This morning he went on the Internet  and tracked                                                              
a stock called BP  Royalty Trust (BPT) which had a  low of $3.94 a                                                              
share  in 1999  and  today  it's  up to  $108  and pays  a  $10.57                                                              
dividend!  The fact  is that the  oil companies  are making  money                                                              
and they need to share it with the local people.                                                                                
                                                                                                                                
5:50:49 PM                                                                                                                    
RICK BOYLES, Teamsters  Local 959, Fairbanks, said he  has been in                                                              
this state since  1975, and it's been frustrating  to see that the                                                              
Interior  with the  population base  of close  to 100,000  doesn't                                                              
have much presence  on the North Slope that has  over 10,000 jobs.                                                              
The camps  are full,  and yet  his youth  and pioneers  are asking                                                              
where to  go to work.  He wants his  kids to have  the opportunity                                                              
to work in the oil industry like he does.                                                                                       
                                                                                                                                
5:53:23 PM                                                                                                                    
JOSEPH BLANCHARD,  Fairbanks Assembly,  Fairbanks, said  he wanted                                                              
to give a  face to non-resident  workers up on the Slope.  In 1996                                                              
his father  was a  non-resident  employee; he  moved up to  Alaska                                                              
from Louisiana  to pursue a  job in the  oil industry as  a tubing                                                              
conveying  and perforations  specialist.  Mr.  Blanchard said  his                                                              
father  raised his  family  in Alaska  and  he  made his  personal                                                              
choice to further invest in Alaska as a student at UAF.                                                                         
                                                                                                                                
His concern  with some  of this  conversation  is that it  doesn't                                                              
always  necessarily   focus  on  some  of  the   real  issues  his                                                              
generation is  going to have to  face from the oil  industry. When                                                              
he  visits family  in Louisiana  he  sees Cajun-hire  initiatives.                                                              
Local hire  is a hiring sentiment  everywhere. If Alaska  wants to                                                              
nationalize its  oil, it can  make those decisions,  but otherwise                                                              
there are  constitutional issues. He  urged them to be  aware that                                                              
the folks  they call  non-resident employees  do spend  money here                                                              
and  sometimes they  have sons  who  go on  to be  leaders in  the                                                              
communities here.                                                                                                               
                                                                                                                                
5:56:02                                                                                                                       
LESLIE TEDERS,  Laborers Local 942,  Fairbanks, said she  has been                                                              
a  resident since  1968 and  started  working on  the pipeline  in                                                              
1975 and  continues  to work various  jobs in  Alaska. After  that                                                              
she worked  for Wein as a  flight attendant, and while  doing that                                                              
she heard  a lot of  conversations from  workers who  were leaving                                                              
Prudhoe  Bay saying  they couldn't  wait to get  home and  bragged                                                              
about how they didn't  have to spend any money in  Alaska even for                                                              
a  meal in  Fairbanks.  They often  mentioned  not  having to  pay                                                              
income  taxes and  that  by just  having a  post  office box  they                                                              
could  often get  a Permanent  Fund  Dividend check.  After a  few                                                              
years  with Wein, she  went back  to working  construction  on the                                                              
Slope  and living  in the  camps where  it seemed  like even  more                                                              
people   were  from   out-of-state.  She   summarized  that   it's                                                              
important  to  encourage  local  hire because  not  only  does  it                                                              
provide jobs  for individuals but  adds many dollars to  the local                                                              
economy.                                                                                                                        
                                                                                                                                
5:57:00                                                                                                                       
WILLIAM MCAMIS,  Laborers Local  942, Fairbanks,  said he  came up                                                              
to Alaska  in the  early 60s and  has seen  many changes.  Most of                                                              
them are  positive, but he  sees a trend  among the  oil companies                                                              
to not  hire residents. He  related how  he roomed with  people on                                                              
the North  Slope who  didn't even  buy their  cigarettes here  and                                                              
who went  on vacation by reporting  they were sick. He  urged them                                                              
to  continue  looking  at  hiring   policies  saying  it  isn't  a                                                              
constitutional issue, but a policy issue.                                                                                       
                                                                                                                                
JIM  LAITI, Business  Manager, Pipefitters  Local 375,  Fairbanks,                                                              
said the  committee had  heard a little  bit about the  recruiting                                                              
procedures  for their  apprenticeship  program and  the fact  that                                                              
the apprentices  are 100 percent  Alaskan residents. He  said much                                                              
of  their work  is  oil industry  related,  but  those are  mostly                                                              
projects  on  the  North  Slope or  a  maintenance  contract  with                                                              
Alyeska.  Some of it  is year-round,  but much  of their  projects                                                              
take  place  during the  summer  months.  It's both  seasonal  and                                                              
cyclical. Right now  they have very few people on  the North Slope                                                              
and they  have been talking with  BP to promote  opportunities for                                                              
more work there;  that has been encouraging. He  supported getting                                                              
more  residents  jobs  on  the North  Slope  and  just  wanted  to                                                              
provide some background.                                                                                                        
                                                                                                                                
6:03:09 PM                                                                                                                    
TANYA BROWN,  North Star  Borough School  District, said  she came                                                              
up to  Fairbanks in  1984 as  a military  dependent. She  spoke to                                                              
the impacts  that resident  jobs have  on the community,  schools,                                                              
businesses  and  families.  She   had  been  an  educator  in  the                                                              
district  for 15  years  and said  whatever  is  happening in  the                                                              
community  is seen  in  the schools.  All  children  are in  their                                                              
schools including  children from the  workers on the  North Slope.                                                              
Fairbanks has  apprenticeship programs  to prepare people  to work                                                              
and kids graduating  out of the  high schools who want  to stay in                                                              
Alaska, but they  can't get jobs. She urged them  to keep the jobs                                                              
in Alaska so the money can be kept here to support the economy.                                                                 
                                                                                                                                
6:06:00 PM                                                                                                                    
RAY WARD, Fairbanks  resident, said he was born  in Fairbanks. His                                                              
father  worked  out of  Laborers  942  and  he is  also  currently                                                              
retired out  of the  same union.  In 1974,  when he first  started                                                              
working they argued  the same issue - local hire,  and even though                                                              
he is retired, he  would still like to go back to  work out of his                                                              
local. But if he  can't, he would like his son to  be able to work                                                              
up North;  and he wants that  opportunity for his  grandkids, too.                                                              
"We're not  trying to  eliminate other  Americans, but  let's feed                                                              
our table first."                                                                                                               
                                                                                                                                
TIM BECK,  Fairbanks North  Star Borough  (FNSB), said  he travels                                                              
every once in a  while for the FNSB and finds  it interesting when                                                              
he is sitting  in the Board Room  in Seattle and hears  people who                                                              
are flying to Alaska  to work their time and come  back home where                                                              
they  talk  about building  their  new  homes. Their  flights  are                                                              
prearranged because  they work a regular schedule,  so their seats                                                              
are all first class.                                                                                                            
                                                                                                                                
MR. BECK urged  them to use these labor/management  committees and                                                              
partnerships  to ask  industry to  move forward  with natural  gas                                                              
production in  the State  of Alaska for  residential use.  He said                                                              
Fairbanks "is dying on the vine because of energy costs."                                                                       
                                                                                                                                
6:09:12 PM                                                                                                                    
MATT  COWLES,  International  Brotherhood  of  Electrical  Workers                                                              
(IBEW) 1547,  Fairbanks, said he has  been a member for  35 years.                                                              
Currently and  for the last 25 years  he has been employed  on the                                                              
North Slope  where his job  takes him from  one end of  Prudhoe to                                                              
the other  and the  increase in  out-of-state  workers "is  out of                                                              
control"  everywhere  he goes.  When  he  visits his  daughter  in                                                              
Nashville he  sees people he  has worked with  for the last  10 to                                                              
12 years  flying to the  Slope as well  as flying up  from Chicago                                                              
and Seattle.  He remembered the  "ARCO days" when  they stipulated                                                              
their  employees had  work a  "one and  one schedule"  to try  and                                                              
eliminate the possibility of living outside.                                                                                    
                                                                                                                                
MR.  COWLES said  BP  might  be able  to  meet their  numbers  and                                                              
quotes in  what they advertise  on TV about  local hire,  but they                                                              
don't rein  in the  contractor workforce  at all, and  contractors                                                              
outnumber BP's  workforce. When he  was in Louisiana for  the Deep                                                              
Water  Horizon incident,  he  saw that  BP  was told  to hire  the                                                              
local people and it was done.                                                                                                   
                                                                                                                                
He remarked that  he needs an interpreter to walk  into the dining                                                              
room at  night in  the camp he  currently lives  in, and  he heard                                                              
that Nana,  who manages the  camps, offered a $50/night  incentive                                                              
to let somebody  hot sheet someone's room. He showed  a picture of                                                              
the latest  pods that will  be built in  the Anchorage  Airport so                                                              
workers can  have a room without  going outside of  security. They                                                              
have  TV, Internet  access  and  a sign  that  says "oil  industry                                                              
workers  will receive  an  additional  discount by  showing  their                                                              
company I.D!"                                                                                                                   
                                                                                                                                
6:13:47 PM                                                                                                                    
STEVE KELLY,  Laborers Local  942, Fairbanks,  said he  first came                                                              
to  Fairbanks in  1975 and  you  had to  be a  resident of  Alaska                                                              
before  you could  get a  job on  the  North Slope,  so he  worked                                                              
locally. He  took some  specialty skill classes,  and once  he got                                                              
his  resident's card,  his first  job was  at Flow  Station 2.  He                                                              
said  the   pipeline  was  built   with  Alaskan   residents,  and                                                              
Fairbanks  used  to have  a  large labor  force  and  jobs on  the                                                              
Slope, but that's  not so now. He used to be able  to fly straight                                                              
to  Prudhoe  from  Fairbanks,  but  now you  have  to  go  through                                                              
Anchorage.                                                                                                                      
                                                                                                                                
6:14:56 PM                                                                                                                    
SHAWN LOWRY, Fairbanks,  said everyone had to come  from somewhere                                                              
and  the pipeline  brought  his family  here;  going somewhere  to                                                              
make something  of your life and  better yourself has  always been                                                              
part of  the American dream.  The key is  to go there and  to stay                                                              
there; not to go there and leave.                                                                                               
                                                                                                                                
He said  Alaska has  a skilled workforce  that fluctuates,  and it                                                              
has world class  apprenticeship programs that reach  out into both                                                              
rural and  urban communities.  If they know  the jobs  are coming,                                                              
they are more than  happy to ramp up their training  to fill them.                                                              
He recounted the  frustrations he had heard about  full planes and                                                              
people  joking about  not spending  a dime here  or paying  income                                                              
tax and  about 20  people sharing  an Alaskan  post office  box so                                                              
they  can collect  a  PFD. He  concluded  that  the committee  has                                                              
heard testimony  saying that the  North Slope has 10,000  jobs and                                                              
Alaskans just need to have a larger portion of them.                                                                            
                                                                                                                                
6:18:32 PM                                                                                                                    
SUSAN ARMSTRONG,  President,  ABC of Alaska,  Fairbanks,  said ABC                                                              
is  the voice  for the  Merit Shop  Construction  industry in  the                                                              
State of  Alaska. The Merit  Shop is based  on the belief  in free                                                              
enterprise, open  competitive bidding  and awarding of  bids based                                                              
on  cost,  quality   and  safety  regardless  of   a  contractor's                                                              
affiliation.  She said that  earlier today  the committee  had met                                                              
two  of their  members who  have worked  on the  North Slope,  and                                                              
while 100 percent  of their business and workforce  are not on the                                                              
North Slope, 96  percent are Alaskans and their  companies do have                                                              
solid Alaska hire  preferences. But as work becomes  less frequent                                                              
on the  North Slope they  have to go to  other parts of  the state                                                              
to search  for work and  it's not just  the North Slope;  it's the                                                              
rest of the economy.                                                                                                            
                                                                                                                                
6:20:00 PM                                                                                                                    
MS. ARMSTRONG  highlighted  three things.  The first was  comments                                                              
brought up by  Senator Coghill and Senator Thomas  that were based                                                              
on workforce development  and the opportunities for  training. She                                                              
said   Alaska   has   many   opportunities   for   training   like                                                              
apprenticeship  opportunities,   including  theirs  that   has  78                                                              
apprentices working  on North Slope.  A voctech funding  component                                                              
passed  in SB  84 this  year adds  dollars  to the   base  student                                                              
allocation  allowing  school  districts  to  boost  their  voctech                                                              
education opportunities  so that students can get  involved in the                                                              
crafts  and  trades and  can  be  ready  to  go outside  of  their                                                              
secondary  education and  get in  apprenticeship  programs or  get                                                              
higher  training.  This  will  make a  huge  difference,  and  she                                                              
thanked the legislature for it.                                                                                                 
                                                                                                                                
The second  issue is a policy  call. She explained that  the State                                                              
of  Alaska  provides a  preference  in  the Procurement  Code  for                                                              
Alaskan business,  but currently  there is  no preference  for the                                                              
numbers of Alaskan  resident hire. She suggested that  maybe it is                                                              
time for  a Senate  or House committee  to take  "a hard  look" at                                                              
what drafting a policy like that may entail.                                                                                    
                                                                                                                                
Finally, Ms.  Armstrong said,  the largest policy  call is  how to                                                              
get  more production  on the  North Slope,  which will  ultimately                                                              
provide more  jobs for  Alaskans and improve  the quality  of life                                                              
of our  communities. A competitive  business climate  will attract                                                              
other industry  and more businesses  to Alaska that  will continue                                                              
to provide for Alaska  families. Ms. Armstrong said  this is not a                                                              
union versus non-union  issue; it's a jobs for  Alaskans issue and                                                              
a competitive business climate for Alaska issue.                                                                                
                                                                                                                                
6:22:35 PM                                                                                                                    
DOUG  TANSY, IBEW  Local 1547,  Fairbanks,  said he  was born  and                                                              
raised  in  Alaska.  He  came  through   the  IBEW  apprenticeship                                                              
program, which has  greatly benefited him and his family;  it is a                                                              
career that he is  proud of. He has attained  several positions in                                                              
the  union  and  now sits  on  the  apprenticeship  committee  and                                                              
reported   that   currently,   15   percent   of   the   program's                                                              
participation is by Alaska Natives.                                                                                             
                                                                                                                                
An issue very troubling  to him, he said, is that  today he talked                                                              
to a friend  who is one of three  Alaskans in a 10-person  crew in                                                              
a  camp that  has 150  people at  Spy  Island in  Prudhoe Bay.  It                                                              
seems  like he  has seen  the same  thing  in the  Lower 48  where                                                              
workers  in one  part  of the  country  were  replaced by  cheaper                                                              
workers from another  region in the country or even  the world. He                                                              
said  Alaskan  dollars  stretch  further  in other  parts  of  the                                                              
country,  so it's  still profitable  for  people come  up here  to                                                              
work  and get  paid less  than  Alaskans who  need  to pay  higher                                                              
living expenses.  It didn't seem  to work in  the Lower 48  and it                                                              
probably won't work here.                                                                                                       
                                                                                                                                
6:24:30 PM                                                                                                                    
LISA  HERBERT, Executive  Director, Greater  Fairbanks Chamber  of                                                              
Commerce,  said  they  represent  a  community  with  over  48,000                                                              
employees  and  700 businesses  and  organizations.  They  provide                                                              
support  by  offering  partnerships  to  advocate  for  a  healthy                                                              
economic environment  and promoting the greater Fairbanks  area as                                                              
an attractive  place for  business and  community. It's  no secret                                                              
that the Interior  has one of the  highest costs of living  in the                                                              
state due to high energy costs.                                                                                                 
                                                                                                                                
The Chamber's  advocacy for the  interests of their  community are                                                              
based  upon the  core values  of  free enterprise,  opportunities,                                                              
healthy  community  and  responsible  business  success,  but  the                                                              
decline of  oil production  is hurting  Alaskan businesses  across                                                              
the state, especially in the Interior.                                                                                          
                                                                                                                                
In  earlier testimony,  Ms. Herbert  said John  Cook from  Airport                                                              
Equipment Rentals  stated that  North Slope  revenues are  down 50                                                              
percent for  his company  alone, and she  couldn't help  but think                                                              
that  if more  oil  was  flowing  through Alaska's  pipeline  they                                                              
would  be hearing a  different story.  But the  fact remains  that                                                              
it's  expensive  to  do  business  in Alaska  and  to  live  here.                                                              
Several  other   executives  from  the  companies   that  provided                                                              
testimony are  members of the Fairbanks  Chamber and are  proud to                                                              
say that they have 90 percent or more Alaskan resident hire.                                                                    
                                                                                                                                
MS. HERBERT  said an increase  in jobs on  the North Slope  due to                                                              
exploration does  not mean that production is  increasing and work                                                              
on  the North  Slope  right now  is  related  to maintenance  with                                                              
short-term contracts.  They must focus on getting more  oil in the                                                              
pipeline; that is the true crux of the problem.                                                                                 
                                                                                                                                
6:26:43 PM                                                                                                                    
LANCE  ROBERTS,  Fairbanks resident,  said  he supported  HB  110.                                                              
It's important  to get  more production,  and this  is one  way of                                                              
doing  it. He didn't  like the  progressive taxation  part  of the                                                              
present system.                                                                                                                 
                                                                                                                                
CHAIR  EGAN reminded  him that  the  issue before  them is  Alaska                                                              
hire and  that taxation would  be taken  up in the  Senate Finance                                                              
Committee.                                                                                                                      
                                                                                                                                
6:28:18 PM                                                                                                                    
RICHARD  L. WAGNER,  Fairbanks,  said he  was born  and raised  in                                                              
Fairbanks and  experienced the pipeline  boom/bust in the  60s and                                                              
70s. It  was like they  all came and  then they all  just vanished                                                              
within  a matter of  years after  the pipeline  was finished,  and                                                              
now Fairbanks is  pretty much like a "ghost town."  The same thing                                                              
occurred  in 1989,  although  on  a smaller  scale,  when the  oil                                                              
spill happened  in Valdez.  He stated that  if you hire  Alaskans,                                                              
they will have  the drive to want  to get the stuff  done, because                                                              
they know what it  does for the state; it brings  jobs and creates                                                              
a stable economy.                                                                                                               
                                                                                                                                
6:32:23 PM                                                                                                                    
JIM  SAMPSON,  former  Fairbanks  mayor,  said  that  when  Alaska                                                              
became   a   state   the   Constitutional   Committee   made   the                                                              
legislature's responsibility  clear, that it's for  the people and                                                              
not for  special interests  whose policies  generally are  to take                                                              
as much  out as  fast as  possible. The  issue has  been around  a                                                              
long time and it  certainly was when he was the  Alaska Department                                                              
of Labor commissioner  in the mid-80s when there was  a lot of out                                                              
migration, but now  things are reversed; oil is not  $10 a barrel,                                                              
but rather $100 a barrel.                                                                                                       
                                                                                                                                
It is  an issue  that the legislature  is going  to feel  soon, he                                                              
said, especially  in Fairbanks where  people have to stand  out at                                                              
the gas station  and fill five-gallon cans of  diesel because they                                                              
can't afford a $100  gallon delivery and a $400  bill. That's what                                                              
people had to do last year.                                                                                                     
                                                                                                                                
Thousands of  people are flying  over Fairbanks to the  Slope, and                                                              
now they're flying  out of Anchorage. What got him  "spun up here"                                                              
a  month ago  was  hearing  about the  31  sleeping  rooms at  Ted                                                              
Stevens International  Airport; they don't even have  to leave the                                                              
airport to  spend a dollar  on a cab or  on a hotel  in Anchorage.                                                              
Already  the  state  is  spinning  it the  best  way  it  can.  He                                                              
reminded  them respectfully  that  legislators' responsibility  is                                                              
to the state  and its people; it's  not to the industry,  and it's                                                              
got to be about jobs.                                                                                                           
                                                                                                                                
6:37:18 PM                                                                                                                    
At ease from 6:37:18 to 6:37:26 PM.                                                                                             
                                                                                                                                
6:37:26 PM                                                                                                                    
RYAN   PURUCKER,    Fairbanks,   said   he   just    started   his                                                              
apprenticeship  with Laborers Local  942. He  is 28 years  old and                                                              
has lived  in Alaska  for 21 of  them. He is  willing to  work and                                                              
hoping  to work  and will  feel  cheated if  someone from  out-of-                                                              
state     was     in    a     job     that    he     could     do.                                                              
A lot  of people  living here  will feel  cheated, too.  He closed                                                              
saying, "Those five-gallon  cans of gas - I've done  that before -                                                              
it's kind of a pain in the butt."                                                                                               
                                                                                                                                
6:38:54 PM                                                                                                                    
At ease from 6:38:54 to 6:39:05 PM.                                                                                             
                                                                                                                                
6:39:05 PM                                                                                                                    
CHAIR  EGAN  thanked  everyone  for  coming  to  the  meeting  and                                                              
testifying  on this  subject,  saying  it is  a  serious issue  of                                                              
interest to everyone.                                                                                                           
                                                                                                                                
6:40:48 PM                                                                                                                    
SENATOR PASKVAN thanked  everyone for showing up  today. He stated                                                              
that industry employment  is high on the North Slope  and that the                                                              
camps  are full.  They  have heard  about  hot  sheeting and  that                                                              
there   are  too   many  non-residents   and   too  many   outside                                                              
contractors. They  have heard there  is training in Alaska  and in                                                              
Fairbanks;  they know Alaska  has a  skilled workforce  that wants                                                              
to  work.  The   question  is  why  aren't  Alaskan   workers  and                                                              
contractors working?                                                                                                            
                                                                                                                                
6:43:14 PM                                                                                                                    
SENATOR GIESSEL  thanked everyone  for coming, saying  even though                                                              
she  represents  Anchorage  that   she  was  born  and  raised  in                                                              
Fairbanks.  She believes  that "as  the  Interior flourishes,  the                                                              
rest  of the  state will  also flourish."  Further,  she said  the                                                              
Province of Alberta  started 22,000 new jobs in June  of this year                                                              
alone because  of the oil sands  development and she wants  to see                                                              
that happen in Alaska with heavy oil.                                                                                           
                                                                                                                                
6:45:06 PM                                                                                                                    
Finding no further  comments, Chair Egan adjourned  the meeting at                                                              
6:45 PM.                                                                                                                        

Document Name Date/Time Subjects
09062011 Agenda.pdf SL&C 9/6/2011 1:30:00 PM
HB 110
09062011 committee packet.pdf SL&C 9/6/2011 1:30:00 PM
HB 110
sample letter Sep hearings.pdf SL&C 9/6/2011 1:30:00 PM
HB 110
Testimony - AOGA, Kara Moriarity 09062011.pdf SL&C 9/6/2011 1:30:00 PM
HB 110
Testimony - Doyon, Jim Johnsen 09062011.pdf SL&C 9/6/2011 1:30:00 PM
HB 110
Testimony - Laborers 942,Tim Sharp 09062011.pdf SL&C 9/6/2011 1:30:00 PM
HB 110
0906 Testimony - Jay Quakenbush, FBX BCTC.pdf SL&C 9/6/2011 1:30:00 PM
HB 110