Legislature(2011 - 2012)Anch LIO

09/08/2011 01:30 PM LABOR & COMMERCE


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Audio Topic
01:36:06 PM Start
01:37:05 PM HB110
01:37:14 PM Hearing: North Slope Employment and Alaska Hire
07:27:41 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: Invited Testimony
5:30 - 7:30pm: Public Testimony
-- Teleconference --
1:37:05 PM                                                                                                                    
              HB 110-PRODUCTION TAX ON OIL AND GAS                                                                          
^HEARING: NORTH SLOPE EMPLOYMENT AND ALASKA HIRE                                                                                
        HEARING: NORTH SLOPE EMPLOYMENT AND ALASKA HIRE                                                                     
                                                                                                                                
1:37:14 PM                                                                                                                    
CHAIR DENNIS  EGAN announced  the purpose of  the meeting  was to                                                               
gather information  on Alaska hire,  not the taxation  portion of                                                               
HB 110. He  reminded everyone that committees  cannot take formal                                                               
action on legislation during the Interim.                                                                                       
                                                                                                                                
CHAIR EGAN  stated that while  Department of Labor  and Workforce                                                               
Development (DOLWD) statistics reveal  that employment numbers on                                                               
the North Slope are at  an all-time high, many qualified Alaskans                                                               
are unable to  find employment in the oil industry.  In an effort                                                               
to move  forward, the committee  started a process to  learn more                                                               
about  nonresident  hiring practices  in  the  oil industry.  The                                                               
first  hearing was  held in  Fairbanks two  days ago.  He related                                                               
that  in  earlier  hearings the  committee  made  the  disturbing                                                               
observation that  in 2010 more  nonresidents than  residents were                                                               
hired for  new in-state jobs  in the oil industry.  The committee                                                               
also learned  that some large North  Slope construction companies                                                               
have hired 100 percent nonresidents.                                                                                            
                                                                                                                                
CHAIR  EGAN  advised  that  the   committee  would  hear  invited                                                               
testimony  from the  oil industry  this  afternoon and  testimony                                                               
from labor and  the interested public this  evening. Through this                                                               
process,  he  stated,  the  committee hopes  to  develop  a  more                                                               
complete picture  of employment  opportunities in the  Alaska oil                                                               
industry and to work with industry to ensure more resident hire.                                                                
                                                                                                                                
1:39:12 PM                                                                                                                    
MARK  HYLEN,   Owner,  Beacon  Occupational  Health   and  Safety                                                               
Services  ("Beacon"), briefly  outlined his  experience with  the                                                               
oil industry, starting in 1991 when  he worked on the North Slope                                                               
to pay  for college. He said  he is the current  president of the                                                               
Alaska Support Industry Alliance ("Alliance")  and he serves as a                                                               
board member  for the Alaska Process  Industry Careers Consortium                                                               
(APICC). He related  that Beacon sees many  North Slope new-hires                                                               
for  physicals, drug  and alcohol  testing, and  safety training.                                                               
Additionally, the company provides support  in the field for year                                                               
around  medical clinics,  safety professionals,  site control  at                                                               
rig sites, and onsite training within the North Slope oilfields.                                                                
                                                                                                                                
MR. HYLEN stated he would  briefly respond to the three questions                                                               
the committee specifically asked him to address.                                                                                
                                                                                                                                
1) Does your  company have a policy concerning  hiring of Alaskan                                                               
workers?                                                                                                                        
                                                                                                                                
MR. HYLEN  explained that  his company does  not have  a specific                                                               
Alaska-hire  policy,  but he  certainly  tries  to hire  as  many                                                               
Alaskans as  possible. Beacon defines an  employee's residence by                                                               
his or  her driver's  license. These  records are  maintained and                                                               
verified annually.                                                                                                              
                                                                                                                                
2)  What  percentage  of  your   workforce  are  current  Alaskan                                                               
residents?                                                                                                                      
                                                                                                                                
MR. HYLEN  informed the committee  that Beacon currently  has 225                                                               
fulltime employees;  81 percent  are considered  Alaska residents                                                               
and 19  percent are nonresidents.  The nonresidents reside  in 23                                                               
different states.  He explained  that Beacon  has had  to recruit                                                               
outside Alaska to find the needed  skill sets for its medical and                                                               
safety personnel.                                                                                                               
                                                                                                                                
3)  Recent  data  from  the Department  of  Labor  and  Workforce                                                               
Development (DOLWD)  shows that just  over half of all  new hires                                                               
in the industry  are from out of state. What  efforts do you make                                                               
to find  Alaskans to fill  job openings  in your company  and how                                                               
successful have they been?                                                                                                      
                                                                                                                                
MR.  HYLEN  outlined  Beacon's efforts  to  promote  Alaska  hire                                                               
including local advertising;  job fair participation; internships                                                               
for  students  from  the  UAA   occupational  health  and  safety                                                               
program; externships for teachers  to promote an understanding of                                                               
the industry and its job  opportunities; and no reimbursement for                                                               
travel outside  the state. He  reiterated that the  challenge for                                                               
Beacon, and the industry as a  whole, is the need for specialized                                                               
personnel  and the  lack  thereof in  the  Alaska workforce.  For                                                               
example,  Beacon primarily  uses physician  assistants (PAs)  and                                                               
EMT-3s at  its remote  site clinics  and these  professionals are                                                               
required to  have at least  five years of remote  experience. UAA                                                               
has just  recently begun to offer  a PA program and  there simply                                                               
aren't enough qualified Alaskans to  meet the demand. The same is                                                               
true  for safety  professionals;  Alaska has  just 80  registered                                                               
certified safety  professions. Until Alaska has  more medical and                                                               
safety professionals, it will be  difficult for Beacon to achieve                                                               
a higher percentage of Alaska hire.  Mr. Hylen noted that when he                                                               
was CEO at  KAKIVIK he saw similar  difficulty hiring specialized                                                               
inspectors.                                                                                                                     
                                                                                                                                
MR. HYLEN  said his perspective  is that members of  the Alliance                                                               
would prefer to recruit and  hire locally and avoid incurring the                                                               
cost associated with  bringing nonresidents to town  only to find                                                               
that they  can't pass  the physical  or drug  test or  they don't                                                               
have  the  training they  claimed.  He  observed that  APICC  has                                                               
helped create  process curriculums that are  turning out students                                                               
with the skill sets needed on  the North Slope. Operators and oil                                                               
field contractors  that sit on  the APICC board  actively promote                                                               
internships  and teacher  externships  to  encourage interest  in                                                               
potential careers in the oil industry.                                                                                          
                                                                                                                                
MR. HYLEN questioned whether Beacon  employees were being counted                                                               
in the DOLWD statistics because the  numbers don't add up. In any                                                               
event,  he  said he  has  trouble  understanding the  correlation                                                               
between resident hire and creating  more jobs in the oil industry                                                               
because,  nonresident  hire  is  clearly  part  of  the  fishing,                                                               
tourism,  construction,   and  healthcare  industries.   New  job                                                               
opportunities  in the  oil industry  will  result from  increased                                                               
throughput in  the pipeline. The  Alaska oil industry  is clearly                                                               
missing  the   economic  boom  that   other  oil   provinces  are                                                               
experiencing, he stated.                                                                                                        
                                                                                                                                
MR.  HYLEN noted  that the  Alliance's  general manager  recently                                                               
returned from  Norway where she  studied oil and  gas exploration                                                               
and production. She reported the  following: Norway has 72 fields                                                               
in  production while  Alaska  has 8;  Norway  produces 2  million                                                               
barrels/day   while   Alaska    produces   fewer   than   600,000                                                               
barrels/day; and  Norway has  230,000 people  working in  the oil                                                               
and  gas  industry,  and  the unemployment  rate  is  3  percent.                                                               
Obviously, he  said, production  leads to  jobs and  Alaska needs                                                               
more oil in the pipeline.                                                                                                       
                                                                                                                                
1:45:26 PM                                                                                                                    
SENATOR  GIESSEL  said  she's  a  nurse  practitioner  and  she's                                                               
observed that many  of the nurse practitioners and  PAs who serve                                                               
in both  rural Alaska and in  Anchorage choose to stay  in Alaska                                                               
after they were  hired from out-of-state, and  they are providing                                                               
specialty  services that  wouldn't  otherwise  be available.  She                                                               
asked if  any of Beacon's  out-of-state employees had  decided to                                                               
stay in Alaska and become residents.                                                                                            
                                                                                                                                
MR. HYLEN replied it works  both ways. After working remotely for                                                               
a number of  years some employees stay and others  decide to live                                                               
somewhere  else  during their  time  off.  It's difficult  for  a                                                               
company to deter that, he said.                                                                                                 
                                                                                                                                
SENATOR  MENARD asked  how many  years  of training  it takes  to                                                               
become a certified safety professional.                                                                                         
                                                                                                                                
MR.  HYLEN   explained  that  there   are  two  ways   to  obtain                                                               
certification:  one is  based on  a  certain number  of years  of                                                               
education and  experience before  sitting for  the test,  and the                                                               
other is a bachelor program  in safety that waives the experience                                                               
required to  sit for the  test. In  both cases it's  necessary to                                                               
have  a sponsor  who is  a safety  professional. He  related that                                                               
Beacon paid for a teacher  externship where a high school teacher                                                               
worked  on the  North Slope,  in town,  and at  Beacon's training                                                               
facility in  Kenai so he  could go  back and tell  students about                                                               
relevant job opportunities in the medical and safety fields.                                                                    
                                                                                                                                
SENATOR PASKVAN asked  if he'd heard from  qualified Alaskans who                                                               
are  upset   because  nonresidents  were  being   hired  to  fill                                                               
available jobs on the North Slope.                                                                                              
                                                                                                                                
MR. HYLEN  answered no, but  perhaps that's because  the Alliance                                                               
membership   is   composed   of   Native   corporations,   Alaska                                                               
businesses, and  union and nonunion organizations.  He added that                                                               
it  depends on  the type  of business  because there  are certain                                                               
areas of  the oil  and gas  industry that  don't have  work right                                                               
now.                                                                                                                            
                                                                                                                                
SENATOR PASKVAN asked if that type of work is cyclical.                                                                         
                                                                                                                                
MR. HYLEN replied it's cyclical with project timelines.                                                                         
                                                                                                                                
1:50:06 PM                                                                                                                    
SENATOR STEVENS  remarked that  he was  unfamiliar with  the term                                                               
"externship."                                                                                                                   
                                                                                                                                
MR.  HYLEN explained  that the  Alaska  Process Industry  Careers                                                               
Consortium (APICC)  started an  externship program  several years                                                               
ago.  Industry  solicits  teachers   that  have  an  interest  in                                                               
learning more  about the oil industry  and how it might  apply to                                                               
educating   students.    The   teacher   learns    about   career                                                               
opportunities  in the  industry  and then  promotes  them in  the                                                               
classroom.                                                                                                                      
                                                                                                                                
REPRESENTATIVE GATTO  asked what percent of  Alaskans qualify for                                                               
North Slope jobs but fail the drug test.                                                                                        
                                                                                                                                
MR. HYLEN replied he couldn't break  it out for Alaskans, but the                                                               
national average is about four percent.                                                                                         
                                                                                                                                
CHAIR  EGAN recognized  that  Representative  Saddler joined  the                                                               
committee                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GARA  asked  if  the Alliance  had  a  policy  to                                                               
educate its members to hire  Alaskans who are qualified for North                                                               
Slope jobs.                                                                                                                     
                                                                                                                                
MR.  HYLEN replied  there were  discussions about  how to  better                                                               
position Alliance  member companies for  work within the  oil and                                                               
gas industry, but  there was no policy. Now  when memberships are                                                               
renewed the  Alliance gathers information about  the total number                                                               
of employees  and Alaska resident hire  percentages. The Alliance                                                               
has also done outreach to the  oil companies to talk about how to                                                               
better  position Alliance  member companies  for work  within the                                                               
industry.                                                                                                                       
                                                                                                                                
1:54:22 PM                                                                                                                    
BILL   HURLEY,   Senior    Human   Resource   Business   Partner,                                                               
ConocoPhillips Alaska, said  he's been an Alaska  resident for 15                                                               
years and he appreciates the  opportunity to talk about workforce                                                               
development.   ConocoPhillips    is   committed    to   workforce                                                               
development  in Alaska  and  is  proud that  it  has  one on  the                                                               
highest  residency rates  in the  industry, he  stated. Over  the                                                               
last  decade  the rate  has  ranged  from  87-92 percent  and  it                                                               
currently stands  at about 88  percent. In 2011 about  83 percent                                                               
were hired from within Alaska and  about 90 percent of those call                                                               
Alaska their home.                                                                                                              
                                                                                                                                
MR. HURLEY stated that ConocoPhillips  supports the University of                                                               
Alaska  System in  regard to  workforce development.  Interns and                                                               
new hires  are recruited from  the various campuses and  over 100                                                               
UA  graduates are  currently employed  within the  company. Since                                                               
year 2000,  ConocoPhillips has invested  over $20 million  in the                                                               
University of  Alaska Foundation; a $15  million multi-year grant                                                               
was awarded  to UAA in 2008  and a $500,000 grant  was awarded to                                                               
UAF in 2011.                                                                                                                    
                                                                                                                                
MR.  HURLEY  reported  that ConocoPhillips  supports  the  Alaska                                                               
Process Industry  Career Consortium (APICC) by  hiring interns as                                                               
regular  hires;   it  participates  in  the   teacher  externship                                                               
program; it  supports the Alaska  Native Science  and Engineering                                                               
Program  (ANSEP) through  the bridge  program and  with financial                                                               
contributions;  it conducts  outreach to  local schools  with job                                                               
fairs  and  a  networking  forum;   and  it  works  with  various                                                               
departments within  the state,  labor organizations,  and private                                                               
industry  to address  workforce development.  He highlighted  the                                                               
pipeline  training   plan  committee,  the  training   center  in                                                               
Fairbanks,  the engineering  program at  Dimond High  School, and                                                               
the  new career  and technical  education  plan that  is a  joint                                                               
effort  by  the  departments  of  labor  and  education  and  the                                                               
university.                                                                                                                     
                                                                                                                                
MR.  HURLEY   stated  that   when  ConocoPhillips   has  external                                                               
postings,  it has  a practice  of conducting  additional outreach                                                               
within Alaska  that includes advertising in  local newspapers and                                                               
postings in more than 20 Alaska job centers.                                                                                    
                                                                                                                                
1:59:18 PM                                                                                                                    
MR.  HURLEY explained  that ConocoPhillips  has a  local sourcing                                                               
strategy with regard to contractor  services. In 2010, 86 percent                                                               
of   the  money   that  was   spent  on   goods,  services,   and                                                               
transportation   flowed   through  Alaska-based   companies.   He                                                               
highlighted  support   for  Arctic  Slope   Regional  Corporation                                                               
(ASRC),  Doyon,   Nabors,  Halliburton,  and  Kupik.   In  short,                                                               
ConocoPhillips is  committed to ensuring a  competitive, diverse,                                                               
and sustainable supplier base for its Alaska operations.                                                                        
                                                                                                                                
MR. HURLEY  stated that ConocoPhillips  believes that the  key to                                                               
more  opportunities   for  Alaskans  is  to   create  more  jobs.                                                               
Modifying ACES would do this.                                                                                                   
                                                                                                                                
2:01:18 PM                                                                                                                    
SENATOR  MENARD  asked  how  many  students  can  enroll  in  the                                                               
Fairbanks training facility.                                                                                                    
                                                                                                                                
MR. HURLEY offered to follow up and provide the information.                                                                    
                                                                                                                                
SENATOR  PASKVAN  asked  if ConocoPhillips  collects  information                                                               
from its subcontractors regarding  nonresident hire issues and if                                                               
that's  a  factor  in ConocoPhillips  doing  business  with  that                                                               
entity.                                                                                                                         
                                                                                                                                
MR. HURLEY replied  that information is collected  from their top                                                               
contractors and it's  included in the company's  annual report to                                                               
Alaskans. He reiterated that an  Alaska presence is a factor when                                                               
ConocoPhillips determines who can bid on their contracts.                                                                       
                                                                                                                                
SENATOR  PASKVAN  asked  if  ConocoPhillips   hired  any  of  the                                                               
subcontractors that are reported  to have 100 percent nonresident                                                               
hire and what jobs Alaskans presumably can't fill.                                                                              
                                                                                                                                
MR. HURLEY  replied he  isn't aware  that ConocoPhillips  has any                                                               
involvement on the North Slope with those companies.                                                                            
                                                                                                                                
SENATOR  PASKVAN asked  what  type of  work  those companies  are                                                               
performing.                                                                                                                     
                                                                                                                                
MR. HURLEY replied he wasn't sure but he would follow up.                                                                       
                                                                                                                                
2:04:43 PM                                                                                                                    
SENATOR  GIESSEL referred  to a  workforce  residency graph  that                                                               
Alaska  Oil and  Gas  Association (AOGA)  developed using  Alaska                                                               
DOLWD data.  It shows  that Alaska hire  increased over  the last                                                               
several years  while nonresident hire remained  stable. She asked                                                               
if some of  the 83 percent of ConocoPhillips  employees that were                                                               
hired from  within Alaska were  nonresident students  who decided                                                               
to stay in Alaska.                                                                                                              
                                                                                                                                
MR. HURLEY answered yes.                                                                                                        
                                                                                                                                
CHAIR EGAN recognized that Senator Dyson was in the audience.                                                                   
                                                                                                                                
2:06:50 PM                                                                                                                    
CLAIRE  FITZPATRICK,  Chief  Financial  Officer,  BP  in  Alaska,                                                               
thanked  the  committee  for  the   opportunity  to  address  the                                                               
questions the  committee outlined in its  letter regarding Alaska                                                               
hire.  She said  BP  thinks  about this  from  three aspects  and                                                               
believes that these  will address the questions. The  first is in                                                               
respect  to BP  employees;  the  second is  how  BP supports  the                                                               
development and training  of qualified people; and  third is what                                                               
BP can  do to influence what  their contractors are doing  in the                                                               
area of Alaska hire.                                                                                                            
                                                                                                                                
MS.  FITZPATRICK  stated  that  BP  will  always  hire  the  best                                                               
candidate for the job, but  their preference is to hire qualified                                                               
Alaskans. This  makes good business  sense. BP believes  that the                                                               
best way  to increase the number  of Alaskans working in  the oil                                                               
industry is  to increase the  level of oilfield  activity thereby                                                               
increasing  the number  and availability  of  oilfield jobs.  She                                                               
informed  the committee  that BP's  record during  the last  five                                                               
years  shows  that  it  has   consistently  employed  80  percent                                                               
Alaskans in its  greater than 2,000 person  workforce. BP defines                                                               
residency as having a primary  residence in Alaska and the intent                                                               
to stay.  This is demonstrated  by eligibility for  the Permanent                                                               
Fund  Dividend (PFD),  voter registration,  vehicle registration,                                                               
as  well as  annual employee  certification as  to residency.  BP                                                               
sends  a report  of its  Alaska  hire percentages  to the  Alaska                                                               
Department of Labor  and Workforce Development each  year, and it                                                               
publishes  the  Alaska  Hire Report  that  describes  recruiting,                                                               
training,  and purchasing  initiatives. They  also report  hiring                                                               
statistics from some of their largest contractors.                                                                              
                                                                                                                                
MS. FITZPATRICK informed the committee  that in an effort to have                                                               
a  pool of  trained Alaska  residents  for the  workforce BP  has                                                               
invested  nearly  $21 million  to  develop  Alaska education  and                                                               
workforce programs  over the  last five  years. BP  has supported                                                               
the University of Alaska's Alaska  Native Science and Engineering                                                               
Program (ANSEP)  since inception  and now underwrites  the summer                                                               
bridge program.  BP was a  founding member of the  Alaska Process                                                               
Industry Careers  Consortium (APICC) and  in the last  five years                                                               
has  supported  the  program   with  donations  and  scholarships                                                               
totaling  more  than  $900,000.  Next week  BP  will  dedicate  a                                                               
working  wellhead to  the University  of  Alaska Fairbanks  (UAF)                                                               
Process  Technology   College  for  student  training.   BP  also                                                               
supports the Alaska Association of Secondary School Principals.                                                                 
                                                                                                                                
Through  a  program  introduced  26 years  ago,  BP  has  awarded                                                               
scholarships to  650 worthy Alaska  seniors, regardless  of their                                                               
field  of study.  These  workforce  development investments  have                                                               
worked. In  the last 10 years  BP has hired 275  workers from the                                                               
technology  programs  at the  University  of  Alaska campuses  in                                                               
Kenai,  Anchorage, and  Fairbanks. This  year Alaskans  accounted                                                               
for  100   percent  of  the   recruitment  for   certain  process                                                               
technology jobs. In the last  five years the University of Alaska                                                               
System  was  among   BP  in  America's  top   five  colleges  for                                                               
recruitment for interns and graduates.  This is the result of the                                                               
university  building  exceptional   programs  with  support  from                                                               
partners like BP.                                                                                                               
                                                                                                                                
MS.  FITZPATRICK said  BP  is always  looking  for qualified  and                                                               
experienced individuals.  For example,  when the Agrium  plant in                                                               
Kenai closed BP actively recruited  and brought on 10 Alaskans to                                                               
fill experienced jobs  on the North Slope. BP  advertises in both                                                               
the Alaska  Job Bank and  nationally when  recruiting experienced                                                               
employees, but  the preference is  to hire Alaskans  because they                                                               
are committed  to the  state and tend  to stay.  They've actually                                                               
discovered  they have  better success  in retaining  employees in                                                               
Alaska  if  they were  either  educated  or  born in  the  state.                                                               
Furthermore, it's much more cost-effective to hire locally.                                                                     
                                                                                                                                
MS.  FITZPATRICK stated  that BP  sometimes has  to look  outside                                                               
Alaska  to  find   qualified  individuals.  Similarly,  qualified                                                               
Alaskans sometimes are transferred  elsewhere to fill jobs within                                                               
the company. Each year about 60  BP employees transfer in and out                                                               
but those transferring in are  offered strong incentives to stay.                                                               
These include  a special relocation  policy and an  Alaska salary                                                               
premium.  She  added  that BP's  transportation  policy  is  that                                                               
employees who  are on rotation  and choose  to live out  of state                                                               
must provide  their own transportation to  Anchorage or Fairbanks                                                               
for  rotation.  The  exception   to  this  policy  affects  eight                                                               
employees who are  members of a specialized global  team that the                                                               
company moves from field to field as needed.                                                                                    
                                                                                                                                
MS. FITZPATRICK said that BP is  continuing to look at their role                                                               
in helping to  influence their contractors with  regard to Alaska                                                               
hire. Earlier  this year BP  President John Minge met  with DOLWD                                                               
Commissioner  Bishop  to  talk about  workforce  development  and                                                               
Alaska hire.  It's a  priority for the  industry. She  noted that                                                               
the commissioner sent  letters to a number  of businesses raising                                                               
the issue  of Alaska hire and  BP was disappointed to  learn that                                                               
some  did not  respond effectively.  As a  result, BP  is in  the                                                               
process  of sending  letters to  its top  contractors to  make it                                                               
clear  that Alaska  hire is  important to  BP and  the state  and                                                               
encouraging timely  response to  these types of  requests. Alaska                                                               
hire  language  is  a  standard   contract  provision,  and  BP's                                                               
contractors  are required  to make  reasonable efforts  to employ                                                               
Alaska residents, subcontract to  Alaska-owned businesses, and to                                                               
post  job openings  in Barrow  when there  are opportunities  for                                                               
North  Slope positions.  BP's bid  packages have  always included                                                               
safety, quality,  and total cost,  and in the future  Alaska hire                                                               
will become part  of the decision process  in awarding contracts.                                                               
Contractors will  be asked to  provide specific Alaska  hire data                                                               
to support their bid package.                                                                                                   
                                                                                                                                
MS. FITZPATRICK  stated that BP  is looking for ways  to increase                                                               
opportunities for  organized labor  in the belief  that increased                                                               
competitive  bidding   will  result   in  efficiencies   for  the                                                               
business. Unbundling  some of the  work will  provide competitive                                                               
opportunities for more companies. The  leaders of the major trade                                                               
unions and their North Slope  contractors have made it clear that                                                               
they'd like  a shot at year  around work on the  North Slope, and                                                               
BP is  committed to give  them a  chance to compete.  This dialog                                                               
continues, but  three packages will  be ready in the  next couple                                                               
of months. BP will continue to  select the proposal with the best                                                               
safety,  quality,  and price,  but  it  recognizes the  long-term                                                               
value  of Alaskans  and  Alaska companies  working  on the  North                                                               
Slope and other  locations in the state. She  concluded that with                                                               
the  right  combination  of   investment,  human  resources,  and                                                               
competitive tax environment, Alaska  industry and the North Slope                                                               
oil  fields  can  continue  to  provide  training  and  jobs  for                                                               
Alaskans.                                                                                                                       
                                                                                                                                
2:16:41 PM                                                                                                                    
SENATOR PASKVAN asked  what type of work  the subcontractors that                                                               
had  100 percent  nonresident employees  were  performing and  if                                                               
there were Alaskan  contractors that could perform  that work. If                                                               
qualified  Alaskans  were  available,   he  questioned  why  they                                                               
weren't doing the work.                                                                                                         
                                                                                                                                
MS.  FITZPATRICK  replied  she  could  provide  an  example.  She                                                               
explained that  BP has hired  a highly specialized team  of about                                                               
200  people to  work  for  4-8 weeks  in  the  peak season.  This                                                               
particular company  specializes in  this activity, and  they move                                                               
that  team around  the U.S.  and perhaps  internationally. If  an                                                               
Alaska company met the qualifications  and was able to seasonally                                                               
provide that quality  of skill set for  that particular activity,                                                               
BP wouldn't look outside the state, she said.                                                                                   
                                                                                                                                
SENATOR PASKVAN  observed that the  committee was looking  at the                                                               
issue of  Alaska hire in  part because  of the April  2011 Alaska                                                               
DOLWD  report   that  indicates   that  there  are   about  3,000                                                               
nonresident  workers  on  the  North  Slope.  He  questioned  why                                                               
Alaskans weren't working those jobs.                                                                                            
                                                                                                                                
MS.  FITZPATRICK replied  she  only knows  the  specifics of  the                                                               
specialized  turnaround crew  she  described  earlier. She  added                                                               
that right  now BP  has less  than 1,000  employees on  the North                                                               
Slope.                                                                                                                          
                                                                                                                                
SENATOR PASKVAN  said his  focus is on  first, second,  and third                                                               
tier contractors  and subcontractors to  find out why so  many of                                                               
those positions are occupied by nonresident workers.                                                                            
                                                                                                                                
MS.  FITZPATRICK responded  that she  couldn't comment  on anyone                                                               
else's hiring policies.                                                                                                         
                                                                                                                                
SENATOR PASKVAN said  he hopes that BP follows  through and makes                                                               
Alaska  hire part  of  its criteria  for  hiring contractors  and                                                               
subcontractors.                                                                                                                 
                                                                                                                                
MS. FITZPATRICK responded  that in light of  her testimony today,                                                               
she anticipates that  the committee will follow up  in six months                                                               
to ask how BP is doing.                                                                                                         
                                                                                                                                
SENATOR  MENARD  asked  what  kind of  work  the  specialty  team                                                               
performed.                                                                                                                      
                                                                                                                                
MS. FITZPATRICK replied it does  technical engineering related to                                                               
start up  and shut  down of  BP's large  facilities on  the North                                                               
Slope. She reiterated  that BP has struggled  with accessing this                                                               
skillset for a short period of time during the peak season.                                                                     
                                                                                                                                
SENATOR  GIESSEL asked  Ms. Fitzpatrick  to  clarify her  earlier                                                               
comment  about union  contractors that  did not  meet the  Alaska                                                               
hire standard.                                                                                                                  
                                                                                                                                
MS.  FITZPATRICK   clarified  that   she  was  talking   about  a                                                               
conversation in  which the unions  expressed frustration  that BP                                                               
wasn't  doing as  much as  it  could to  give the  unions a  fair                                                               
chance to compete for certain aspects of work.                                                                                  
                                                                                                                                
SENATOR GIESSEL  asked if these companies  were currently bidding                                                               
on BP jobs.                                                                                                                     
                                                                                                                                
MS. FITZPATRICK  replied the answer is  yes in some cases  and no                                                               
in others. In some instances it  was that BP had bundled a number                                                               
of activities such that a  particular union didn't have the range                                                               
of skills to  bid on the bundle. BP has  since agreed to unbundle                                                               
the activities  to create  a more level  playing field  and allow                                                               
more organizations to compete for the work.                                                                                     
                                                                                                                                
SENATOR  PASKVAN asked  if  she agrees  with  the assertion  that                                                               
maintenance work  is performed  by lower  skilled and  lower paid                                                               
employees.                                                                                                                      
                                                                                                                                
MS. FITZPATRICK said  it would depend on what  the maintenance is                                                               
because it  can cover  a broad  range of  skills. She  offered to                                                               
follow up.                                                                                                                      
                                                                                                                                
2:27:05 PM                                                                                                                    
DALE  PITTMAN, Production  Manager, ExxonMobil  Alaska ("Exxon"),                                                               
said he's  lived in Alaska for  two years and his  current job is                                                               
to  oversee  the  company's  interests  statewide  including  the                                                               
ongoing development  of Point Thomson.  He thanked  the committee                                                               
for the opportunity to discuss Exxon's local hiring practices.                                                                  
                                                                                                                                
MR.  PITTMAN stated  that  Exxon has  been a  key  player in  the                                                               
development of  Alaska's oil industry, having  invested more than                                                               
$12 billion  to date. As the  unit operator at Point  Thomson, he                                                               
said that  over the last  three years  Exxon has taken  an active                                                               
role in  workforce development  and local  hiring to  support the                                                               
project  activities. In  addition, Exxon  acquired XTO  Energy, a                                                               
company  with  a long  history  of  hiring and  developing  local                                                               
talent.                                                                                                                         
                                                                                                                                
He  explained   that  the   corporation's  overall   approach  to                                                               
workforce development  is based on  a commitment to  bring sound,                                                               
economic  development opportunities  to  the region  in which  it                                                               
operates. The  pursuit of these  opportunities is based  on three                                                               
key principles: 1)  local hire, 2) training  and development, and                                                               
3) long-term  investment in education. The  strategy for creating                                                               
local  jobs includes  a  focus on  educating  and training  local                                                               
employees, contractors and  suppliers, transferring knowledge and                                                               
skills,  purchasing   local  goods   and  services,   and  making                                                               
strategic investment in the local community.                                                                                    
                                                                                                                                
MR. PITTMAN stated that Exxon has  been and will continue to be a                                                               
strong proponent  of local hire.  However, in some regions  it is                                                               
initially   difficult  to   meet   this  objective   due  to   an                                                               
insufficient pool  of experienced  candidates and  limitations in                                                               
the local  training infrastructure.  In those cases  Exxon builds                                                               
the  programs to  build the  needed skills.  He cited  an example                                                               
from Sakhalin,  Russia and related  that Exxon invests  over $100                                                               
million annually to support education worldwide.                                                                                
                                                                                                                                
2:31:33 PM                                                                                                                    
MR.  PITTMAN reported  that to  date Exxon  has spent  about $1.5                                                               
billion in  Alaska. In the  last three years they've  spent about                                                               
$700 million in direct investment  to the state economy including                                                               
contracting  with  over 170  Alaska-based  firms,  all for  Point                                                               
Thomson. Contractor costs  account for 90 percent  of what's been                                                               
spent  on that  project thus  far, and  the individual  contracts                                                               
have  specific provisions  to  maximize Alaska  hire  in all  job                                                               
categories.   Contractors   must   develop   a   local   business                                                               
development plan, which is reviewed,  approved, and monitored. On                                                               
the  North  Slope,   Exxon  also  reached  out   to  the  village                                                               
corporations  in Kaktovik  and  Nuiqsut to  maximize their  local                                                               
commerce and hire.                                                                                                              
                                                                                                                                
He  explained that  before the  Point Thomson  development, Exxon                                                               
traditionally maintained 30  Alaska-based employees in Anchorage.                                                               
That number grew to more than  180 with 75 percent residents, and                                                               
now that  the first  phase of drilling  is complete  it's dropped                                                               
back  to about  100 people.  The percentage  of residents  is now                                                               
over 80  percent. That  percentage should  increase substantially                                                               
as onsite construction resumes at Point Thomson, he said.                                                                       
                                                                                                                                
MR.  PITTMAN   informed  the  committee   that  Exxon   built  an                                                               
exceptional  safety  culture at  Point  Thomson  by working  with                                                               
local contractors to develop  safety observation and intervention                                                               
programs.  They held  several forums  focused on  safety, health,                                                               
and  environmental  performance  that included  the  contract  of                                                               
senior  management. The  working  environment is  very safe,  and                                                               
these  Alaskan  contractors  can  apply their  skills  in  future                                                               
development at Point Thomson and other facilities in the state.                                                                 
                                                                                                                                
MR.  PITTMAN  stated that  Exxon  has  addressed the  educational                                                               
component  of  its strategy  by  making  numerous investments  in                                                               
Alaska education  programs in the  last few years.  The long-term                                                               
focus is to  prepare Alaska students to meet  the ever increasing                                                               
technical  challenges  associated  with resource  development  in                                                               
Alaska.   The  corporation   is   a  founding   sponsor  of   the                                                               
acceleration academy  within ANSEP; it  is a strong  supporter of                                                               
the   University  of   Alaska  campuses   and  provides   ongoing                                                               
assistance  to the  college in  Barrow  and other  places on  the                                                               
Slope;    and     it    is    actively     evaluating    Alaska's                                                               
vocational/technical  schools and  training facilities  that will                                                               
become important  centers for recruitment as  Point Thomson moves                                                               
forward.  Exxon will  continue  to work  with  these programs  to                                                               
ensure that  future graduates will  have the necessary  skills to                                                               
meet Exxon's future direct staffing  needs. To the extent allowed                                                               
by law,  Exxon will  also continue  to encourage  its contractors                                                               
and suppliers to fully utilize the Alaska workforce.                                                                            
                                                                                                                                
MR. PITTMAN  restated that Exxon  is committed to  bringing sound                                                               
economic  development opportunities  to the  regions in  which it                                                               
operates.  It is  Exxon's  belief  that it  is  aligned with  the                                                               
state, particularly  in regard to  local hiring  practices, which                                                               
is good business for the industry,  the economy of the state, and                                                               
its residents.                                                                                                                  
                                                                                                                                
2:35:35 PM                                                                                                                    
SENATOR  PASKVAN  asked  if  Alaska  hire will  be  a  factor  in                                                               
ExxonMobil's  decision-making   going  forward  with   regard  to                                                               
employing contractors.                                                                                                          
                                                                                                                                
MR. PITTMAN  assured him it will  be a factor because  it's their                                                               
global practice. The  corporation takes a long  view and believes                                                               
that  contractors that  are hired  from out-of-state  need to  be                                                               
encouraged to  become Alaskan  and efforts must  be made  to find                                                               
Alaskans can provide the needed skill sets.                                                                                     
                                                                                                                                
SENATOR  PASKVAN pointed  out that  the Alaska  DOLWD data  shows                                                               
that the nonresident  hire numbers have been  increasing by about                                                               
200  per year.  In the  year 2000  about 1,100  nonresidents were                                                               
working on the North Slope  and now about 3,000 nonresidents work                                                               
there. He asked how to stop that trend.                                                                                         
                                                                                                                                
MR. PITTMAN responded  that it's important to  continue to invest                                                               
in the  local workforce  over the  long term  to ensure  that the                                                               
positions and skills to meet them are available in the state.                                                                   
                                                                                                                                
SENATOR GIESSEL asked how often  Alaskans are sent to other areas                                                               
to help out because of their expertise.                                                                                         
                                                                                                                                
MR. PITTMAN replied  Exxon has hired interns  from the transition                                                               
program with ANSEP  to work in operations outside  the state, and                                                               
the hope and intent is that  they will someday bring their skills                                                               
back to Alaska.                                                                                                                 
                                                                                                                                
2:39:06 PM                                                                                                                    
DOUG SMITH, President and CEO,  Little Red Services, informed the                                                               
committee that he has been in  Alaska for 27 years and has worked                                                               
in  the oil  and gas  industry for  20 years.  He explained  that                                                               
Little Red  Services is  a 25-year  Alaska oilfield  company that                                                               
provides specialty  services on the  North Slope and  Cook Inlet.                                                               
The  company  originated  in  Alaska and  now  employs  over  100                                                               
people. Their  Alaska hire policy  is to evaluate  all candidates                                                               
and to give  preferential hire to a qualified  Alaskan that meets                                                               
all the  criteria. The evaluation looks  at qualifications, skill                                                               
and  attitude.  Safety  excellence  is  expected,  and  providing                                                               
quality  services to  customers is  required, so  attitude is  an                                                               
important component. The physical  residence is verified with the                                                               
PFD  and  driver's  license  and  the  employee  has  to  certify                                                               
annually  as  to  their  residency.   There  is  no  policy  that                                                               
precludes an  employee from  moving out of  the state  after they                                                               
were hired.                                                                                                                     
                                                                                                                                
Currently,  68  percent of  Little  Red  Services' employees  are                                                               
Alaska  residents;   92  employees   are  Alaska   residents,  44                                                               
employees  are  nonresidents  residing in  15  states,  primarily                                                               
Washington.  Residency data  is tracked  every month  through the                                                               
payroll system,  and he'd very  much like  to have a  100 percent                                                               
Alaskan  workforce. In  the  last ten  years  the percentage  has                                                               
varied from 81  percent to the current low of  68 percent. In the                                                               
last year 22  employees left the company  to pursue opportunities                                                               
in shale oil; 17 of those were residents.                                                                                       
                                                                                                                                
MR.  SMITH  said  they  post  job  openings  in  trade  journals,                                                               
newspapers  and Craigslist,  and  he's always  looking for  other                                                               
avenues. He encouraged  the members to look at  the DOLWA ALEXsys                                                               
website to  get a  better feel  for how difficult  it is  to even                                                               
become an  authorized user in  order to search  for a job  in the                                                               
state system.  Furthermore, there  isn't an industry  cluster for                                                               
the oil  and gas  industry even though  it's the  state's primary                                                               
job base. Obviously, there's room for improvement, he said.                                                                     
                                                                                                                                
2:44:00 PM                                                                                                                    
MR. SMITH suggested  the committee think about  the broader issue                                                               
of Alaska  hire, which is to  bring more of the  economy home. He                                                               
pointed  out  that  the  state   employee  healthcare  plan,  the                                                               
property and casualty  insurance programs for the  state, and the                                                               
University of  Alaska insurance  program are  all managed  out of                                                               
state  by  companies  that  have  zero  Alaska  hire.  There  are                                                               
companies in Alaska  that can do these services, so  it's time to                                                               
look at  the entire comprehensive  aspect of growing  the economy                                                               
here.                                                                                                                           
                                                                                                                                
SENATOR PASKVAN said  he liked his attitude and  hopes that shale                                                               
oil comes to Alaska soon.                                                                                                       
                                                                                                                                
SENATOR  GIESSEL  said she  was  concerned  to discover  that  24                                                               
percent of the  masters, pilots, and engineers  that are employed                                                               
by the  Alaska Marine  Highway System  are not  Alaska residents,                                                               
yet they receive an Alaskan  paycheck. She asked what his company                                                               
is doing to recruit young Alaskans.                                                                                             
                                                                                                                                
MR. SMITH  replied his most  recent effort  was to meet  with the                                                               
owner of Northern  Industrial Training (NIT) to  discuss the cost                                                               
of  the  NIT  courses,  because  some  potential  employees  need                                                               
additional tanker  and hazmat endorsements.  He said  he believes                                                               
that there  are a lot  of North  Slope jobs that  residents could                                                               
fill right  now, but they need  a little help to  see the pathway                                                               
to get to those opportunities.                                                                                                  
                                                                                                                                
MR.  SMITH further  stated that  as  the industry  chair for  the                                                               
Alliance he  talks to companies  about hiring  Alaska contractors                                                               
and Alaskans, and  he recognizes that for Alaska  companies to be                                                               
hired they  have to  be competitive. They  can be  competitive if                                                               
the volume  of activity is  sufficient to maintain  the workforce                                                               
here  year  around. He  said  his  company  is working  to  solve                                                               
challenges to bring jobs back to Alaska.                                                                                        
                                                                                                                                
2:48:53 PM                                                                                                                    
STEVE  PERCY, President,  Alaska  Interstate Construction  (AIC),                                                               
explained that AIC is a  heavy civil contracting company that was                                                               
conceived,  born, and  raised on  the North  Slope 20  some years                                                               
ago. At  that time the  employment needs far exceeded  the supply                                                               
of qualified Alaska  workers, so many jobs were  filled from out-                                                               
of-state. As  the North Slope  matured, AIC  found that a  lot of                                                               
its employees  wanted to move  to Alaska, but the  company didn't                                                               
have  much  summer  work,  so it  couldn't  provide  year  around                                                               
employment. To address the issue  AIC diversified into mining and                                                               
public works about  ten years ago. In addition  to providing year                                                               
around employment,  the company  also made additional  efforts to                                                               
hire  Alaska  employees.  He  explained   that  AIC  is  a  union                                                               
contractor  so its  truck drivers,  mechanics, and  laborers come                                                               
from  the union  hall. The  company  also has  about 90  nonunion                                                               
staff, 85 percent of which are Alaska residents.                                                                                
                                                                                                                                
MR.  PERCY related  that  in the  last three  years  AIC has  had                                                               
trouble  keeping  its  large fleet  of  heavy  equipment  working                                                               
fulltime. He noted  that the company probably has  $20 million of                                                               
inventory  in Prudhoe  Bay.  Last  year their  yard  was full  of                                                               
equipment most of  the time, and the prospects  for the 2011/2012                                                               
winter  season are  even bleaker.  He said  they understand  that                                                               
there will always be peaks and  valleys in this type of business,                                                               
but extended periods  of idle time are not  sustainable. For this                                                               
reason the company has recently  made a strong push into northern                                                               
Alberta  and  hopes to  have  its  equipment working  there  this                                                               
winter. He  said his  experience is that  it's very  difficult to                                                               
get equipment back once it's been removed.                                                                                      
                                                                                                                                
For AIC to  keep its equipment in Alaska, there  needs to be more                                                               
capital  improvement projects  on  the North  Slope that  require                                                               
heavy civil  contracting work.  He noted that  in the  last three                                                               
years  AIC's  employment  statistics haven't  declined  too  much                                                               
because the  company is doing more  labor-intensive projects that                                                               
require a  lot of people, but  not equipment. It may  be time for                                                               
the  company  to   diversify  again  in  order   to  continue  to                                                               
consistently work on Prudhoe Bay, he said.                                                                                      
                                                                                                                                
2:54:51 PM                                                                                                                    
SENATOR  MENARD asked  if  the Canadians  are  sensitive to  non-                                                               
Canadian workers and contractors.                                                                                               
                                                                                                                                
MR. PERCY replied Alberta is  somewhat similar to Alaska 20 years                                                               
ago;  there is  so much  activity  there that  workers are  being                                                               
imported from everywhere.                                                                                                       
                                                                                                                                
SENATOR  GIESSEL noted  that a  Canadian  official reported  that                                                               
22,000 new  jobs were  created in  Alberta in  just the  month of                                                               
June. She  asked if AIC  is taking  its Alaska employees  when it                                                               
moves its equipment to Alberta.                                                                                                 
                                                                                                                                
MR.  PERCY replied  they will  to the  extent possible,  but it's                                                               
difficult to get  the craft across the border.  He explained that                                                               
the supervisors can go across  with a professional work visa, but                                                               
the craft doesn't qualify for that type of visa.                                                                                
                                                                                                                                
2:56:50 PM                                                                                                                    
DAVE   MCALLEN,  Statewide   Training   Director,  Alaska   Joint                                                               
Electrical Apprenticeship,  IBEW/NECA, said  he would  speak from                                                               
the perspective  of a trainer and  educator and on behalf  of the                                                               
Alaska Apprenticeship  Training Coordinator  Association (AATCA).                                                               
He explained that he's trained  over 400 of the 2,000 individuals                                                               
that  have been  trained  in AATCA  apprenticeship programs,  and                                                               
it's  his  belief  that  too   many  jobs  are  being  filled  by                                                               
nonresidents.  Obviously,  some   specialized  positions  require                                                               
experience and knowledge that isn't  available locally, but there                                                               
are many  good jobs as  welders, electricians, and  plumbers that                                                               
Alaskans  can  and  should  fill.  He said  he's  worked  in  the                                                               
oilfields and can attest that  there are many nonresident workers                                                               
on the North Slope every day.                                                                                                   
                                                                                                                                
MR. MCALLEN explained  that the program he directs is  one of the                                                               
Joint  Apprenticeship Training  Committees (JATC)  that comprises                                                               
AATCA. His particular JATC serves  the more than 60 International                                                               
Brotherhood of Electrical Workers  (IBEW) and National Electrical                                                               
Contractors Association  (NECA) contractors and  utilities across                                                               
the  state.  More  than 400  apprentices  are  currently  working                                                               
statewide in  a 4-5 year  program that  is primarily paid  for by                                                               
the self-funded training trust.  An additional 482 applicants are                                                               
on  a ready-to-go-to-work  list, but  new apprentices  are signed                                                               
based on the work demands of the participating employers.                                                                       
                                                                                                                                
MR.  MCALLEN  said  the  NECA   apprenticeship  program  has  the                                                               
interest, class  space, and resources  to double the size  of the                                                               
program if the  demand for skilled workers were  great enough. He                                                               
noted that  many of the other  crafts are in a  similar position.                                                               
Because  the  training  trust  is  self-funded,  additional  work                                                               
opportunities  would provide  increased contribution  revenues to                                                               
grow the program.                                                                                                               
                                                                                                                                
MR.  MCALLEN   said  that   to  assure   true  local   hire,  the                                                               
apprenticeship program  requires applicants  to have  been Alaska                                                               
residents  for at  least  one year.  They  recruit statewide  and                                                               
partner  with school  districts  and other  organizations in  the                                                               
belief that the local workforce,  particularly kids just entering                                                               
the workforce,  deserve a shot  at these  jobs. He noted  that in                                                               
addition to the trade apprenticeships,  the university system and                                                               
AVTEC are  available to provide  quality training and  the skills                                                               
to provide a  skilled and effective workforce.  Let's ensure that                                                               
Alaskan  workers are  given the  chance  to fill  these jobs,  he                                                               
stated.                                                                                                                         
                                                                                                                                
3:01:39 PM                                                                                                                    
SENATOR GIESSEL  noted that the  IBEW Local 1547  "2011 TRAVELERS                                                               
Report" shows  that on  3/15/2011 one member  from Local  292 and                                                               
one member from Local 46 were  voted on by members of Local 1547.                                                               
She asked  what that vote means  other than to make  them members                                                               
of Local 1547.                                                                                                                  
                                                                                                                                
MR.  MCALLEN  clarified that  while  he  is  an IBEW  member,  he                                                               
doesn't  work   directly  for  the   union;  he   represents  the                                                               
apprenticeship  that  is 100  percent  Alaskan.  He continued  to                                                               
explain that  the union accepts travelers,  who are nonresidents,                                                               
if local  union members are not  available to fill jobs.  After a                                                               
period of time the traveler can apply to join the local union.                                                                  
                                                                                                                                
SENATOR  GIESSEL  directed  attention  to  the  Travel  Committee                                                               
website for  Local 25,  which is  in the state  of New  York, and                                                               
observed  that the  tenor is  definitely  recruitment of  out-of-                                                               
state IBEW members to Alaska. She asked his impression.                                                                         
                                                                                                                                
MR.  MCALLEN replied  travelers come  to Alaska  every year,  and                                                               
he's certain they occasionally work  on the North Slope. He added                                                               
that it's  counterproductive to  the apprenticeship  program, but                                                               
he does acknowledge that there's a  lack of continuity of work in                                                               
the state.                                                                                                                      
                                                                                                                                
SENATOR PASKVAN  said the committee  has consistently  heard that                                                               
there  are peaks  and valleys  to Alaska's  employment cycle  and                                                               
that  the  extraction  process  for   shale  oil  is  more  labor                                                               
intensive. He asked  what the IBEW and other trades  are doing to                                                               
ensure that  shale development can  occur as quickly  as possible                                                               
in Alaska.                                                                                                                      
                                                                                                                                
MR.  MCALLEN replied  his job  is to  train electricians  and his                                                               
program  is  ready  and  willing   to  expand  to  meet  the  job                                                               
opportunities.                                                                                                                  
                                                                                                                                
3:08:12 PM                                                                                                                    
SENATOR GIESSEL  observed that Shell Oil  estimates that offshore                                                               
oil development  will create 54,000  jobs over 50 years  and that                                                               
the largest Community Development  Quota (CDQ) groundfish company                                                               
wants  to relocate  its maintenance  operations  from Seattle  to                                                               
Seward. She  asked if the  IBEW voices  support for this  kind of                                                               
private sector industry development.                                                                                            
                                                                                                                                
MR.   MCALLEN   replied    they're   absolutely   interested   in                                                               
development; it's not a matter of union or nonunion.                                                                            
                                                                                                                                
3:10:00 PM                                                                                                                    
VINCE  BELTRAMI, President,  AFL-CIO, stated  that the  testimony                                                               
everyone  heard  two  days  ago  in  Fairbanks  makes  it  nearly                                                               
impossible to have faith in  either the methodology or the claims                                                               
of 75  percent or  higher resident  hire. He  added that  to hear                                                               
there's a sleeping  facility being constructed at  the airport in                                                               
Anchorage for oilfield  workers to layover is an  insult to those                                                               
who are trying to address this nonresident hire problem.                                                                        
                                                                                                                                
MR. BELTRAMI  said that while  the testimony on Tuesday  from the                                                               
Alaska  Oil and  Gas Association  (AOGA) representative  was that                                                               
resident  versus nonresident  hire percentages  have been  stable                                                               
for a decade,  a more historical snapshot shows  a very different                                                               
picture.  He pointed  to  the 1997  legislative  audit report  on                                                               
industry  local  hire and  contracting,  which  showed that  from                                                               
1991-1996 industry nonresident hire  increased from 21 percent to                                                               
27 percent and remained flat  through 2003. According to the AOGA                                                               
report, the  nonresident hire percentage  increased to  more than                                                               
32 percent  by 2005, which  represents an 11 percent  decrease in                                                               
resident  hire between  1991 and  2005. The  latest DOLWD  report                                                               
shows that about 50 percent of all new hires are nonresidents.                                                                  
                                                                                                                                
MR. BELTRAMI  observed that  the issue of  methodology is  at the                                                               
core  of what  constitutes  an Alaska  resident.  It's not  clear                                                               
where and  when workers are  reported and how  they're considered                                                               
in  terms  of  job  classifications.  The  anecdotal  stories  by                                                               
Alaskans working on the North  Slope significantly contradict the                                                               
reported percentages, he said.                                                                                                  
                                                                                                                                
MR. BELTRAMI said  he'd like to see more union  and nonunion jobs                                                               
in  Alaska, but  his  perspective  is that  the  simplest way  to                                                               
ensure Alaska  hire in the  oilfields is  to rely on  the unions.                                                               
Title  29,  Chapter  7,  Subchapter  II  of  the  National  Labor                                                               
Relations  Act allows  unions to  employ a  local-hire preference                                                               
without  the constitutional  constraints that  nonunion employers                                                               
typically face.  Hiring more union-affiliated  Alaska contractors                                                               
would immediately improve Alaska  hire figures. Their methods for                                                               
assuring residency are stringent.                                                                                               
                                                                                                                                
MR. BELTRAMI  reported that most apprenticeship  programs require                                                               
at  least one  year of  bona fide  Alaska residency.  Also, union                                                               
apprentices comprise  the bulk of  apprentices registered  in the                                                               
state and have completion rates that  range from 70 percent to 90                                                               
percent.                                                                                                                        
                                                                                                                                
MR. BELTRAMI said  the bottom line is jobs for  Alaskans and this                                                               
should  be the  first question  to answer  before going  one step                                                               
further in considering  what at this point he thinks  can only be                                                               
referred to  as a bill  that gives  the state's oil  wealth away.                                                               
Presently many  good jobs are  being created in  construction and                                                               
other civil  work around the state  due to the nearly  $3 billion                                                               
annual  capital project  budgets coming  out of  Juneau. You  can                                                               
count the number  of Alaskans working on these  jobs by reviewing                                                               
required  certified  payroll  reports. State  revenues  that  are                                                               
diverted out  of the state coffer  and into the hands  of the oil                                                               
producers kill  capital construction  budgets and  the associated                                                               
jobs.  The only  way that  it  doesn't eliminate  jobs or  reduce                                                               
future  capital  budgets is  if  you  believe that  allowing  the                                                               
producers  to  retain  more  profit   will  result  in  more  oil                                                               
production.  Although, he  said, there  is absolutely  nothing in                                                               
the history of these companies'  years of producing and operating                                                               
in Alaska  that can draw  you to such  a conclusion. Even  at the                                                               
lowest historical tax rates, production did not increase.                                                                       
                                                                                                                                
MR.  BELTRAMI  said he  understands  the  importance of  the  oil                                                               
industry  to the  financial  health  of the  state,  but he  also                                                               
recognizes that  these companies  have a responsibility  to their                                                               
corporate shareholders  to maximize all potential  profit. On the                                                               
other hand,  legislators and the  Governor have  a responsibility                                                               
to the  shareholders of  Alaska's resource  wealth. He  said he's                                                               
made a  living negotiating,  and he finds  it hard  to understand                                                               
how one body  of the Legislature could conceivably  give away the                                                               
farm with no guarantees in return for giving that break.                                                                        
                                                                                                                                
MR. BELTRAMI  observed that the  Governor's recent  press release                                                               
seemed  to chastise  the  Senate  with regard  to  this bill.  He                                                               
opined  that workers  in the  state should  be insulted  that the                                                               
Governor doesn't seem to think that Alaska hire is a core issue.                                                                
                                                                                                                                
MR. BELTRAMI said it's no  longer disputed that employment in the                                                               
oil industry  is up,  but some  now contend that  this up  tic is                                                               
just  maintenance jobs.  This somehow  suggests that  maintenance                                                               
jobs  are   somehow  less  important  than   new  exploration  or                                                               
production,  which  is  ridiculous.   The  goal  is  to  increase                                                               
throughput in an  aging infrastructure, so there  are probably no                                                               
more  critical  jobs  than  maintenance.  Unless  future  capital                                                               
budgets   are  strong   and  include   large  and   medium  scale                                                               
infrastructure  projects, the  number of  net new  jobs will  not                                                               
increase  overall. Net  new jobs  will not  be created  by simply                                                               
rolling taxes back if it  doesn't create significant increases in                                                               
production.                                                                                                                     
                                                                                                                                
3:19:52 PM                                                                                                                    
SENATOR PASKVAN  asked what types  of North Slope jobs  are being                                                               
performed  by nonresidents  and  if he  believes  that there  are                                                               
Alaskan contractors and Alaskan employees that can do that work.                                                                
                                                                                                                                
MR. BELTRAMI replied there are  definitely resources in the state                                                               
to  do  a number  of  the  jobs.  One  of the  companies  handles                                                               
coating/painting, and the union definitely  has members that have                                                               
that skill  set, but it also  has members to fill  more high tech                                                               
positions. The union has upward  of $40 million in infrastructure                                                               
for its apprenticeship program,  and the union members contribute                                                               
to  these  programs; five  years  ago  the contribution  was  $10                                                               
million. Admiral Barrett with  Alyeska Pipeline Service expressed                                                               
concern  recently  about filling  high  tech  positions, but  the                                                               
union already  has those training  programs in place,  he stated.                                                               
It's just a matter of accessing the union.                                                                                      
                                                                                                                                
SENATOR  PASKVAN asked  what, other  than  painting and  coating,                                                               
were the 3,000 nonresidents doing on the North Slope.                                                                           
                                                                                                                                
MR. BELTRAMI replied  there are maintenance jobs,  some high tech                                                               
and some not,  and there are resources in the  state to train and                                                               
fill any of those positions.                                                                                                    
                                                                                                                                
3:24:57 PM                                                                                                                    
SENATOR  GIESSEL  asked  if  he said  that  in  2005  nonresident                                                               
employment on the North Slope was 32 percent.                                                                                   
                                                                                                                                
MR. BELTRAMI  replied he got  the information from the  chart she                                                               
cited  earlier, and  when he  did the  math he  came out  with 32                                                               
percent nonresident hire.                                                                                                       
                                                                                                                                
SENATOR GIESSEL  asked him to  comment on the November  2005 IBEW                                                               
newsletter that thanked  IBEW travelers that came  to Alaska that                                                               
summer to work  in the short construction season.  It sounds like                                                               
that  particular  union  was   inviting  nonresident  workers  to                                                               
Alaska, she said.                                                                                                               
                                                                                                                                
MR.  BELTRAMI  explained that  that  sometimes  happens when  the                                                               
demand exceeds  supply, but it's  actually easier for  a nonunion                                                               
Alaskan electrician  to qualify to  become a member of  the local                                                               
union and go to work ahead of travelers.                                                                                        
                                                                                                                                
SENATOR  GIESSEL asked  what  percentage of  the  workers on  the                                                               
North Slope were union members.                                                                                                 
                                                                                                                                
MR.  BELTRAMI  suggested  she  ask   the  business  members  that                                                               
represent the various crafts; he didn't know.                                                                                   
                                                                                                                                
SENATOR GIESSEL asked what crafts the AFL-CIO represents.                                                                       
                                                                                                                                
MR. BELTRAMI replied the AFL-CIO  represents all craft workers in                                                               
the  state including  public employee  sector unions  and private                                                               
sector union members.                                                                                                           
                                                                                                                                
SENATOR  GIESSEL highlighted  that  24 percent  of Alaska  Marine                                                               
Highway System  masters, pilots,  and engineers  are nonresidents                                                               
and asked  him to  help return those  specialized jobs  to Alaska                                                               
residents.                                                                                                                      
                                                                                                                                
MR. BELTRAMI replied, "You bet."                                                                                                
                                                                                                                                
SENATOR   GIESSEL  clarified   that   according   to  the   DOLWD                                                               
commissioner, the  sleeping area  at the  Anchorage International                                                               
Airport is a  private sector contract that is open  to anyone; it                                                               
was not intended to target North Slope workers.                                                                                 
                                                                                                                                
MR. BELTRAMI responded  that the flier that  was presented during                                                               
public  testimony  offered   significant  discounts  to  oilfield                                                               
workers.                                                                                                                        
                                                                                                                                
3:30:49 PM                                                                                                                    
SENATOR GIESSEL referred  to an Institute of  Social and Economic                                                               
Research (ISER)  chart showing  that in 2010,  50 barrels  of oil                                                               
were produced  per day per  North Slope worker; whereas  in 2005,                                                               
100 barrels of oil were produced  per day per North Slope worker.                                                               
She asked  him to  support Shell Oil's  offshore efforts  and the                                                               
relocation  of the  CDQ maintenance  operations  from Seattle  to                                                               
Seward. Both will create jobs.                                                                                                  
                                                                                                                                
MR. BELTRAMI  responded that he  was invited to participate  on a                                                               
panel supporting development in the Outer Continental Shelf.                                                                    
                                                                                                                                
REPRESENTATIVE  GARA  asked  if  he could  explain  the  apparent                                                               
contradiction between  the statements  that: 1) the  oil industry                                                               
is working  hard to get  its contractors to increase  the Alaska-                                                               
hire numbers;  and 2) that  DOLWD statistics indicate  that since                                                               
the last quarter  of 2009 roughly 50 percent of  the newest hires                                                               
on the  North Slope are  nonresidents. Employment numbers  on the                                                               
North  Slope and  the numbers  of  non-Alaska hire  are both  the                                                               
highest in history.                                                                                                             
                                                                                                                                
MR.  BELTRAMI   agreed  it's   a  perplexing   contradiction  and                                                               
reiterated that  it could be  due to different  methodologies for                                                               
reporting.  He   said  he  did   intend  to  follow   up  because                                                               
anecdotally  it's clearly  evident  that  long-time Alaskans  who                                                               
work on  the North Slope are  surrounded less and less  by Alaska                                                               
residents.                                                                                                                      
                                                                                                                                
CHAIR  EGAN  stated that  the  McDowell  Group was  conducting  a                                                               
report that would hopefully answer those questions.                                                                             
                                                                                                                                
3:35:09 PM                                                                                                                    
CHAIR EGAN thanked the participants and recessed the meeting.                                                                   
                                                                                                                                
5:34:01 PM                                                                                                                    
CHAIR EGAN reconvened the meeting  and stated that the purpose of                                                               
the evening  meeting was to  hear from  the public about  ways to                                                               
ensure more  Alaska hire in  the oil industry. He  encouraged the                                                               
public  to follow  legislative activity  both during  session and                                                               
the Interim at AlaskaLegislature.tv.                                                                                            
                                                                                                                                
5:38:17 PM                                                                                                                    
OSWALD JENSEN,  representing himself,  said he's only  worked ten                                                               
weeks in the last ten months,  but he's worked on the North Slope                                                               
since 1997. He stated that 85  percent of the foremen and general                                                               
foremen on the North Slope and  Cook Inlet are from out of state.                                                               
When there's  a job opening, these  non-Alaskan contractors vouch                                                               
for other nonresidents, and that's  who gets hired. "Those fellas                                                               
are gunning for  our Alaskan jobs," he stated.  He explained that                                                               
before this current job he passed  all the tests and physical for                                                               
a job with  ASRC. However, the general foreman sent  him back for                                                               
additional  tests because  he wanted  to hire  his buddy.  That's                                                               
what happened.                                                                                                                  
                                                                                                                                
MR. JENSEN  pointed out that  when an Alaska  gets a job  here he                                                               
spends  his money  here, but  a nonresident  takes his  money and                                                               
leaves the state.  He urged the committee to make  it a policy to                                                               
require  hiring Alaskans  for the  upper  positions because  that                                                               
would eventually solve the problem.                                                                                             
                                                                                                                                
CHAIR EGAN asked for what position he was originally dispatched.                                                                
                                                                                                                                
MR. JENSEN replied  he's a structural welder, one of  the best in                                                               
the state.                                                                                                                      
                                                                                                                                
5:44:18 PM                                                                                                                    
TREVOR O'HARA,  representing himself,  said he's  originally from                                                               
Bristol  Bay  and  now   works  for  CHM   Hill  as  a  workforce                                                               
                                       2                                                                                        
development manager.  He explained that he  returned this evening                                                               
to give a  personal account of the opportunity he  has to target,                                                               
train, and  hire Alaskans, particularly  from rural Alaska.   For                                                               
example, in the last four  years CHM  Hill has extended offers to                                                               
                                   2                                                                                            
150 successfully  trained graduates  from King  Salmon. Testimony                                                               
has shown  that there's a lot  of negative out there,  but at the                                                               
same time there are positive things being done.                                                                                 
                                                                                                                                
SENATOR  GIESSEL  asked  what  the   prerequisites  are  for  the                                                               
training program.                                                                                                               
                                                                                                                                
MR. O'HARA  replied applicants  need a  high school  diploma, the                                                               
ability to  pass a drug  test, a  good motor vehicle  record, the                                                               
ability  to  pass a  criminal  background  check, and  a  certain                                                               
educational  background  to  ensure  he or  she  can  handle  the                                                               
training.                                                                                                                       
                                                                                                                                
SENATOR THOMAS  asked what types  of jobs  he trains for  and how                                                               
long the training lasts.                                                                                                        
                                                                                                                                
MR.  O'HARA  replied it's  a  three-week  class covering  general                                                               
maintenance.  This includes  basic safety,  introduction to  hand                                                               
and  power tools,  introduction to  construction math,  and basic                                                               
employability  and  communication  skills. Just  three  graduates                                                               
have turned  down job offers and  the retention rate is  about 80                                                               
percent.                                                                                                                        
                                                                                                                                
SENATOR  THOMAS  asked if  he's  found  that transferable  skills                                                               
already exist with folks in that area of the state.                                                                             
                                                                                                                                
MR. O'HARA replied on  reason CHM  Hill targeted Southwest Alaska                                                               
                                2                                                                                               
is  because  it already  had  an  industry backbone.  The  people                                                               
understand hard work and the importance of a good work ethic.                                                                   
                                                                                                                                
5:48:55 PM                                                                                                                    
SENATOR PASKVAN  asked if  he'd visited Prudhoe  Bay to  see what                                                               
type of work was being done.                                                                                                    
                                                                                                                                
MR. O'HARA answered yes.                                                                                                        
                                                                                                                                
SENATOR PASKVAN noted  the statistic that's available  is that 35                                                               
percent of the 8,500 workers  in Prudhoe Bay are nonresidents. He                                                               
asked if  Alaskans could be trained  to do some of  the work that                                                               
the 3,000 nonresidents were doing.                                                                                              
                                                                                                                                
MR. O'HARA explained that  the training CHM  Hill produces skills                                                               
                                          2                                                                                     
that are  transferable to a  number of industries. In  the second                                                               
week of  class subject matter  experts from the company  serve as                                                               
instructors.  This provides  a direct  link between  training and                                                               
hiring  to  entry-level positions.  He  noted  that the  training                                                               
program wouldn't be possible without the STEP grant from DOLWD.                                                                 
                                                                                                                                
SENATOR GIESSEL asked  how long have he'd been  doing the program                                                               
and if he'd seen folks  advance from entry-level to more advanced                                                               
positions.                                                                                                                      
                                                                                                                                
MR. O'HARA replied  he started with CHM  Hill four  years ago and                                                               
                                      2                                                                                         
was  recently  promoted  to  the   manager  position.  The  class                                                               
emphasizes not being satisfied with  entry-level positions, and a                                                               
number  of   graduates  have  assumed  first   and  second  level                                                               
leadership positions.                                                                                                           
                                                                                                                                
5:53:43 PM                                                                                                                    
TOM MALONEY, President, Board  of Directors, Resource Development                                                               
Council (RDC),  Anchorage, AK, stated  that he was  testifying on                                                               
behalf of  the 78-member all-Alaskan  RDC board. He  informed the                                                               
committee that the RDC had  members in the resource industries of                                                               
tourism,  oil  and  gas, mining,  fishing,  and  forestry.  Their                                                               
primary concern is the decline  in throughput in the Trans Alaska                                                               
Pipeline System  (TAPS), given that  it's the  economic lifeblood                                                               
of  the state.  Currently  it's running  at  less than  one-third                                                               
capacity, and throughput is at  the lowest level since startup in                                                               
1977.                                                                                                                           
                                                                                                                                
MR. MALONEY  stated that the  RDC urges the Legislature  to focus                                                               
on  public  policy to  encourage  new  investment in  production,                                                               
which will  result in additional Alaska  hiring opportunities. To                                                               
illustrate the  magnitude of  the issue, he  pointed out  that in                                                               
2007 the  state forecast  that production in  2011 would  be over                                                               
800,000  barrels/day. The  actual  numbers  from January  through                                                               
August  2011 averaged  568,000 barrels/day,  which is  30 percent                                                               
less than the 2007 forecast.                                                                                                    
                                                                                                                                
Hopefully, he  said, the exploratory drilling  that's anticipated                                                               
this winter  will materialize and yield  commercial production in                                                               
the next  five to ten  years. In part  this activity is  based on                                                               
favorable  exploration  incentives  and credits,  which  help  to                                                               
mitigate risk. However, new  explorers have consistently informed                                                               
RDC that they  are counting on significant  production tax reform                                                               
if and when their exploration efforts are successful.                                                                           
                                                                                                                                
MR.  MALONEY  pointed  out that  development  drilling  had  been                                                               
virtually  flat  since 2007  and  opined  that such  drilling  in                                                               
Prudhoe Bay  and Kuparuk is the  best option for getting  new oil                                                               
into  the pipeline  in the  near term.  This will  increase state                                                               
royalties   and   Alaska   hiring  opportunities   in   drilling,                                                               
engineering,     procurement,      fabrication,     construction,                                                               
installation, logistics,  support services, and  maintenance. The                                                               
alternative will leave  the economy at risk.  He again encouraged                                                               
the committee to look at  public policy that would encourage both                                                               
investment and Alaskan jobs.                                                                                                    
                                                                                                                                
5:59:43 PM                                                                                                                    
SENATOR PASKVAN  asked if  he knew  of any  plans to  construct a                                                               
treatment facility  in the central  North Slope region;  the last                                                               
one was constructed in 1995.                                                                                                    
                                                                                                                                
MR.   MALONEY  replied   the  current   facilities  need   to  be                                                               
revitalized to generally handle less oil and more gas and water.                                                                
                                                                                                                                
SENATOR THOMAS  questioned why exploration wasn't  greater during                                                               
the 10-15 years when the tax rate was much lower.                                                                               
                                                                                                                                
6:02:46 PM                                                                                                                    
MR.  MALONEY  recalled  that during  the  Knowles  administration                                                               
there  was  a  lot  of  activity in  new  oil  fields.  He  cited                                                               
Northstar that peaked at about  78,000 barrels/day and the Alpine                                                               
facility further west that ConocoPhillips now operates.                                                                         
                                                                                                                                
6:04:08 PM                                                                                                                    
BRENDON HOPKINS, representing himself,  Soldotna, AK, said he was                                                               
born  in Alaska  and went  to work  on the  North Slope  after he                                                               
received  a process  technology  degree from  the Alaska  Process                                                               
Industry  Career Consortium  (APICC) program.  He encouraged  the                                                               
committee not to impose specific  restrictions on where employees                                                               
live  in  their  time  off   and  instead  support  career-driven                                                               
programs like APICC.  He said his experience is that  many of the                                                               
people that are educated here have  a strong tendency to do as he                                                               
did and  continue to live  in Alaska after graduation.  He agreed                                                               
with earlier testimony regarding the  success of this program and                                                               
noted that it  was a joint effort by industry  and the University                                                               
of Alaska System.                                                                                                               
                                                                                                                                
MR.  HOPKINS encouraged  the  committee to  adopt  a policy  that                                                               
stimulates development.  The Shell Oil production  prospects that                                                               
were  mentioned earlier  equate to  about 36,000  jobs. It's  not                                                               
about cutting  up the remaining  pie, it's about growing  the pie                                                               
to make sure that there's  sufficient opportunity in the state to                                                               
have jobs for future generations.                                                                                               
                                                                                                                                
6:09:17 PM                                                                                                                    
BARBARA  BACHMEIER,  representing  herself, Anchorage,  AK,  said                                                               
she's a retired  military officer who decided  to testify because                                                               
none of the testimony thus  far had mentioned recruitment efforts                                                               
that were directed  at military service members  and veterans. To                                                               
exclude this valuable and readily  available asset in Alaska is a                                                               
problem  in  the  corporate  and  small  business  cultures,  she                                                               
stated.                                                                                                                         
                                                                                                                                
MS.  BACHMEIER said  there are  many military  members and  their                                                               
families that like  living in Alaska and would like  to stay here                                                               
after retirement  or separation from the  service, but oftentimes                                                               
they need meaningful  jobs in order to stay.  These top-notch and                                                               
trustworthy  people  have skill  sets  that  are often  relevant.                                                               
These skill  sets include  specialized and  technical engineering                                                               
credentials,   analytical   and    intelligence   work,   medical                                                               
expertise,  finance   and  accounting,  CDL  and   other  driving                                                               
endorsements, and  a broad  range of  maintenance work.  She said                                                               
she doesn't  understand why  she met  somebody in  Eugene, Oregon                                                               
who was on his  way to the North Slope in order  to paint or coat                                                               
because she's  quite sure that  anybody in Alaska can  figure out                                                               
how to paint  a tank, a pipe,  a roof or vessels  if their salary                                                               
is linked to that.                                                                                                              
                                                                                                                                
MS.  BACHMEIER  stated  that  it is  terribly  wrong  to  exclude                                                               
Alaska's military  population in recruitment efforts  for jobs on                                                               
the  North Slope;  she's  testifying to  make  the committee  and                                                               
public aware  of this in the  hope that something can  be done to                                                               
remedy the situation.                                                                                                           
                                                                                                                                
6:15:10 PM                                                                                                                    
GINGER KING,  representing herself,  Anchorage, AK, said  she's a                                                               
second  generation  Alaskan  who  has been  working  in  the  oil                                                               
industry since  she was  about 20-years-old.  Currently she  is a                                                               
project  engineer  with CHM   Hill,  and  her husband  works  for                                                               
                          2                                                                                                     
Halliburton. She  graduated from the University  of Virginia with                                                               
an engineering  degree and  didn't have  any trouble  getting job                                                               
offers  here  in  Alaska.  Her  high  school  friends  that  also                                                               
received engineering  degrees all  had a similar  experience. Her                                                               
sister  received a  mentorship  with  BP while  she  was in  high                                                               
school, and  CHM  Hill offers internships and  summer mentorships                                                               
               2                                                                                                                
for  drafting. She  stated that  her experience  is that  the oil                                                               
industry is very open to Alaska hire.                                                                                           
                                                                                                                                
MS.  KING said  a primary  concern going  forward relates  to the                                                               
lack  of  new  exploration,  the  reduction  in  production,  and                                                               
declining throughput.  She'd like to  see these problems  go away                                                               
and make  sure that  she has a  sustainable future.  She observed                                                               
that the  North Slope may  have a  lot of nonresident  hires, but                                                               
she  believes   that  the  support  services   in  Anchorage  and                                                               
Fairbanks are local hires.                                                                                                      
                                                                                                                                
SENATOR  GIESSEL   thanked  her  for   the  good  news   and  for                                                               
representing the next generation.                                                                                               
                                                                                                                                
6:20:03 PM                                                                                                                    
DAN ANDERSON,  representing himself, said  his first trip  to the                                                               
North Slope  was in 1976.  He stated agreement with  the previous                                                               
testimony and surmised  that 95 percent of  the support positions                                                               
in town  are filled by  Alaskans. The  Alaska hire problem  is on                                                               
the  North Slope.  He suggested  that the  number of  nonresident                                                               
North  Slope workers  is probably  higher than  reported and  the                                                               
only  way to  find out  for  certain is  to stand  at the  Shared                                                               
Services Aviation ticket counter  and check driver's licenses. He                                                               
calculated  that 40  percent  of  the people  on  the planes  are                                                               
nonresidents and guessed that $30  million leaves the state every                                                               
year.  To  prove  that  qualified Alaskans  are  passed  over  he                                                               
explained that  he submitted an  online application  to CHM  Hill                                                               
                                                          2                                                                     
for  a procurement  position.  Even  though he  had  25 years  of                                                               
experience in procurement,  he didn't even get a  phone call. The                                                               
successful applicant lived in Washington state.                                                                                 
                                                                                                                                
MR.  ANDERSON urged  the committee  to  put teeth  in the  hiring                                                               
process to ensure  that qualified Alaskans aren't  passed over in                                                               
favor of nonresidents.                                                                                                          
                                                                                                                                
6:25:01 PM                                                                                                                    
RACHEL  PETRO, President  and CEO,  Alaska  Chamber of  Commerce,                                                               
Anchorage, AK, said the Alaska  Chamber generally supports Alaska                                                               
hire,  but more  importantly  it  supports economic  development.                                                               
Increased  economic   opportunities  in   Alaska  will   lead  to                                                               
increased opportunities  for current and future  Alaska residents                                                               
and  the  Alaska  Chamber's  economic  partners  in  the  Pacific                                                               
Northwest and across the globe.                                                                                                 
                                                                                                                                
MS. PETRO said the Alaska Chamber  selected oil tax reform as one                                                               
of its top three legislative  priorities this year and would like                                                               
the committee  to focus its  efforts on increasing  throughput in                                                               
TAPS.  The exploration  credits  and incentives  in  ACES led  to                                                               
potentially  the  busiest  exploration  in years,  and  it  seems                                                               
reasonable  to   apply  a   similar  methodology   to  increasing                                                               
production. HB 110 is a good vehicle, she stated.                                                                               
                                                                                                                                
6:27:38 PM                                                                                                                    
CHARLES  MCKEE, representing  himself, Anchorage,  AK, said  he's                                                               
lived  in Alaska  since  1967.  Although he  didn't  have a  high                                                               
school diploma  or GED, he got  a job on the  pipeline because of                                                               
his father's  Teamster connections.  He said his  experience with                                                               
the hiring practices in the  oil industry is that many base-level                                                               
jobs were filled by nonresidents.  He stated that he is currently                                                               
unemployed.                                                                                                                     
                                                                                                                                
6:35:16 PM                                                                                                                    
REBECCA LOGAN, General Manager,  Alaska Support Industry Alliance                                                               
("Alliance"), Anchorage, AK, informed  the committee that the 460                                                               
Alliance members  employ 35,000  people in  the state  of Alaska.                                                               
Recently she  examined 100 renewal applications  looking at total                                                               
workforce numbers and total  Alaskan workforce numbers. Worldwide                                                               
corporations  and  Alaskan  companies   that  had  two  or  fewer                                                               
employees were excluded from analysis.  She found 86 Alaska-based                                                               
companies   with  7,260   total  employees   and  6,266   Alaskan                                                               
employees. This represents an 86 percent Alaska-hire rate.                                                                      
                                                                                                                                
MS. LOGAN  explained that the Alliance's  very important Industry                                                               
Relations  Committee (IRC)  advocates for  its members  and works                                                               
with  the producers  to ensure  that Alliance  members understand                                                               
the producers'  procurement process and  to help members  be more                                                               
competitive.  The  IRC  also  facilitates  meetings  between  its                                                               
members and new  companies in the Alaska market. In  the last six                                                               
months  the IRC  talked to  Apache about  what it  is doing  with                                                               
Statoil and Linc.                                                                                                               
                                                                                                                                
MS.  LOGAN warned  the  committee to  proceed  with caution  with                                                               
regard to Alaska  DOLWD data. The website states  that 1) workers                                                               
can be  counted as new hires  by more than one  employer during a                                                               
quarter or  over a  four-quarter period and  2) users  should not                                                               
draw broad conclusions  about net job growth  trends based solely                                                               
on  new hire  data.  As  a former  administrator  of a  federally                                                               
registered apprenticeship  program, she  can confirm that  on the                                                               
North Slope  people move from  one employer to another.  She said                                                               
she has  difficulty believing  that 50 percent  of all  new hires                                                               
are nonresidents  because of the  way they're counted.  She looks                                                               
forward to the McDowell study.                                                                                                  
                                                                                                                                
CHAIR  EGAN added  that's why  the  Legislature commissioned  the                                                               
McDowell study.                                                                                                                 
                                                                                                                                
6:39:15 PM                                                                                                                    
MIKE KENNY,  representing himself,  Anchorage, AK, said  he began                                                               
work  on the  North  Slope  in 1970  as  a  surveyor, became  the                                                               
business representative for Teamsters Local  959 in 1992, and the                                                               
AVICC chair  in 2002. He lived  in ATCO trailers for  nearly five                                                               
years and learned a lot about  local hire. In 1980 he was working                                                               
to develop the Kuparuk Oil Field  when VECO showed up to bust the                                                               
unions. That's when he learned  about crony capitalism. Getting a                                                               
job under  that system had  nothing to  do with merit.  He warned                                                               
the  committee against  trusting data  that shows  that a  lot of                                                               
North Slope workers are Alaskans, because they're not.                                                                          
                                                                                                                                
6:44:18 PM                                                                                                                    
PAUL  D. KENDALL,  representing  himself,  Anchorage, AK,  stated                                                               
that the  cold fusion  reactor evolution has  begun. At  the same                                                               
time, the  hydrogen economy infrastructure has  been launched and                                                               
the  planet   is  being  electrified  by   new  technologies.  He                                                               
emphasized  that it's  all about  individual energy  and that  is                                                               
about to  change drastically. This  will bring true  free markets                                                               
and real individual accountability.                                                                                             
                                                                                                                                
MR. KENDALL opined that the  comments about throughput are coming                                                               
from  shills  for special  industries,  and  those are  the  last                                                               
people  everyone  needs  to  hear  from.  He  asserted  that  the                                                               
consistent  theme is  no accountability,  because  no one  talked                                                               
about  illegal  aliens  in  the  [North  Slope]  job  market.  He                                                               
suggested the committee gather and  listen to engineers to figure                                                               
out some direction.                                                                                                             
                                                                                                                                
6:52:32 PM                                                                                                                    
ED HANSEN, representing  himself, Anchorage, AK, said  he used to                                                               
work for  National Bank of Alaska,  and for many years  he's been                                                               
interested in  energy and serving  Alaska. At some point  he will                                                               
provide testimony,  but at the  moment, he's listening  on behalf                                                               
of the Governor.                                                                                                                
                                                                                                                                
6:53:46 PM                                                                                                                    
DOLLY NORTON,  President and CEO,  Cully Corporation,  Point Lay,                                                               
AK, said she is a lifelong  Alaskan who worked on the North Slope                                                               
just once, and that was enough.  She worked in the office and saw                                                               
first-hand  how  the good  old  buddy  nonresident hiring  system                                                               
worked. Managers  would call friends  in the Lower 48  to suggest                                                               
they apply  for job openings on  the North Slope, and  they'd get                                                               
hired.                                                                                                                          
                                                                                                                                
Point Lay  has qualified people to  work on the North  Slope, she                                                               
said; it's  just a matter of  looking, and it's unfair  to ignore                                                               
this. These jobs should go to  people who live in Alaska, want to                                                               
retire in Alaska,  and who live off the land.  In particular, the                                                               
young  people  need  a  chance  to  work  in  the  industry.  She                                                               
explained that  Point Lay  is the youngest  village on  the North                                                               
Slope,  and it  has  more kids  in school  than  any other  small                                                               
village on the North Slope.  Those jobs are vitally important for                                                               
the residents to  provide for their families and  for the village                                                               
to be sustainable, she stated.                                                                                                  
                                                                                                                                
6:56:37 PM                                                                                                                    
RUSSELL SNYDER, representing himself,  Anchorage, AK, said he was                                                               
born in  North Pole, graduated from  UAF, and is an  Arctic Slope                                                               
Regional Corporation shareholder. He's  worked on the North Slope                                                               
for  six  years and  has  seen  that  resident hire  numbers  are                                                               
fudged.  For example,  he was  counted when  he was  in a  Native                                                               
internship  program.  He  described   how  difficult  it  is  for                                                               
Alaskans to qualify for the higher-level management jobs.                                                                       
                                                                                                                                
MR. SNYDER agreed  with Ms. Norton that the village  of Point Lay                                                               
has  a  large  population  of young  people.  He  emphasized  the                                                               
benefit of  bringing industry into  the classroom to  train these                                                               
young people to  work in both Prudhoe Bay and  offshore. He noted                                                               
that  this morning  he  attended the  Shell  Oil presentation  on                                                               
offshore drilling  at the  Alliance meeting.  While he  found the                                                               
talk  educational,  he  was  alarmed   that  just  three  Natives                                                               
attended. He encouraged the committee  to help fund education for                                                               
young people  to work  in the  oil industry and  to push  the oil                                                               
industry   to   do   onshore   exploratory   drilling.   Offshore                                                               
exploratory drilling is more difficult to control, he stated.                                                                   
                                                                                                                                
7:00:43 PM                                                                                                                    
DEBORAH BROLLINI,  representing herself, Anchorage, AK,  said she                                                               
is testifying  as a  35-year Alaskan who  cares deeply  about the                                                               
state and her children's future.  She said she's perplexed by the                                                               
hearings on Alaska  hire since the Alaska Supreme  Court ruled on                                                               
January  17,   1986  that   Alaska  hire   was  unconstitutional.                                                               
Nevertheless, everyone  can agree that Alaska  hire is important.                                                               
It is  part of Alaska's culture,  and it is in  the best interest                                                               
of the state, business, and the economy.                                                                                        
                                                                                                                                
The  Alaska  economy is  reliant  on  the  oil industry  and  all                                                               
Alaskans benefit  regardless of  where they live.  It's important                                                               
to keep the  economies strong for the  children and grandchildren                                                               
in  the future.  Job numbers  can be  argued all  day, but  there                                                               
won't be  jobs for  children and grandchildren  if there  isn't a                                                               
safe  and operational  pipeline. She  said she  attended a  forum                                                               
last  May, and  what stood  out  was that  policy makers,  Alaska                                                               
Native  people, and  the  public made  decisions  based on  their                                                               
desire to  have a good  future for their great  grandchildren and                                                               
great-great grandchildren. If we don't  lay down our swords we're                                                               
only hurting ourselves, she concluded.                                                                                          
                                                                                                                                
7:04:27 PM                                                                                                                    
AVES  THOMPSON, Executive  Director, Alaska  Trucking Association                                                               
(ATA), said ATA  has about 200 member companies  statewide and it                                                               
supports local  hire and jobs  for Alaskans. Local hire  has long                                                               
been an  issue in Alaska, but  because U.S. citizens are  free to                                                               
travel  and  work wherever  they  choose  the many  legislatively                                                               
engineered  local-hire plans  that  have been  advanced over  the                                                               
years have been  struck down as unconstitutional.  He opined that                                                               
to   try    to   develop   a    new   legislative    plan   seems                                                               
counterproductive.                                                                                                              
                                                                                                                                
MR.  THOMPSON  observed  that  the   oil  and  gas  industry  was                                                               
receiving a  great deal more  scrutiny regarding local  hire than                                                               
any  other segment  of  industry,  and that  the  real issue  was                                                               
production. That's  the highest priority for  Alaska and focusing                                                               
on  that  priority will  increase  oil  production and  jobs  for                                                               
Alaskans and others.                                                                                                            
                                                                                                                                
MR.  THOMPSON pointed  out  that incentives  do  work. They  have                                                               
worked for  exploratory wells for  both oil and gas,  for movies,                                                               
and for  wind and solar  projects. Arguably, incentives  for more                                                               
production will  result in more production.  More production will                                                               
help fill  the pipeline, and  a full pipeline should  provide job                                                               
opportunities  for  anyone  qualified  and willing  to  work,  he                                                               
stated.                                                                                                                         
                                                                                                                                
7:07:44 PM                                                                                                                    
HAL  GAZAWAY, representing  himself, Anchorage,  AK, said  he's a                                                               
longtime Alaska who started practicing  law when the pipeline was                                                               
under construction. A  number of his clients  have connections to                                                               
the North Slope, employment, and the construction industry.                                                                     
                                                                                                                                
MR. GAZAWAY  said he's sure  the committee  is well aware  of the                                                               
difficulty in crafting any kind  of legislation that will promote                                                               
local hire and  not run of foul  of both the Alaska  and the U.S.                                                               
constitutions. He  suggested it  makes more sense  to use  the $2                                                               
billion  that ACES  produced for  a  capital improvement  program                                                               
that would  use Alaskan  contractors and  hire Alaskan  people to                                                               
work  on Alaskan  projects. This  adheres  to the  constitutional                                                               
mandate  to develop  Alaska's resources  for the  benefit of  the                                                               
people of  Alaska. He said  he appreciates that the  ten Senators                                                               
spoke to the  fact that the McDowell report is  necessary, and he                                                               
believes  that the  wisest course  is to  wait to  see what  that                                                               
analysis shows.                                                                                                                 
                                                                                                                                
7:11:59 PM                                                                                                                    
RAY  METCALFE,  representing  himself, Anchorage,  AK,  said  his                                                               
first  job on  the North  Slope  was in  1969, and  at that  time                                                               
everyone on the crew lived in  Alaska. The unions were strong and                                                               
the work schedule was  one week on and one week  off or two weeks                                                               
on and two weeks off. The  percentage of Alaska hire changed when                                                               
big  contractors  like   VECO  were  hired  to   bring  in  large                                                               
nonresident   crews.   To    keep   transportation   from   being                                                               
prohibitive, the work schedules were  changed to six weeks on and                                                               
three weeks off.                                                                                                                
                                                                                                                                
MR. METCALFE  agreed with  Mr. Beltrami that  unions do  have the                                                               
ability to screen for residency  as they dispatch. He opined that                                                               
local  hire  would  increase  if  there  were  a  stronger  union                                                               
presence on the North Slope  and preference given to those unions                                                               
that  successfully   negotiated  a   return  to   short  rotation                                                               
schedules.                                                                                                                      
                                                                                                                                
7:15:55 PM                                                                                                                    
LYNETTE   BARTOWSKI,   representing   herself,   Anchorage,   AK,                                                               
explained that the way that  nonresidents are counted as resident                                                               
hires for North  Slope jobs is that these people  are stopping by                                                               
the DMV office to get an  Alaska ID or driver's license and using                                                               
that to  prove they're a  resident. She challenged  the committee                                                               
to  look at  the  statute  related to  driver's  licenses and  to                                                               
broaden the questions  to the hiring companies as  to whether the                                                               
physical  address on  the driver's  license is  where the  person                                                               
lives fulltime.                                                                                                                 
                                                                                                                                
7:18:07 PM                                                                                                                    
CAROLYN P.  BOLAR, representing herself, Anchorage,  AK, informed                                                               
the committee  that she worked  in the  oil industry on  the TAPS                                                               
line with Standard Oil and left when  it was sold to BP. She said                                                               
that while  the focus  today is related  to jobs,  the underlying                                                               
issue is  Alaska's Clear  and Equitable  Share (ACES).  The large                                                               
oil companies  Exxon, Conoco,  and BP were  hired to  produce the                                                               
oil that  belongs to Alaska  citizens, and they are  fighting for                                                               
more   money.  They're   fighting   through  misinformation   and                                                               
political donations  to elected  officials or  those who  wish to                                                               
become  elected officials.  The $2  billion per  year that  is in                                                               
question,  while substantial,  is mere  change to  some of  these                                                               
companies, but  they're pushing  because it's  a matter  of power                                                               
and  maintaining power.  It's  just not  good  business to  allow                                                               
Alaskans to get their fair share.                                                                                               
                                                                                                                                
MS.  BOLAR  pointed  out  that   the  oil  producers  are  simply                                                               
contractors and that it's not reasonable  to act as if the oil is                                                               
theirs  and that  Alaska is  lucky to  get what's  offered. Other                                                               
countries  don't treat  contractors that  way. Instead,  they set                                                               
the price, collect the money, and then pay the contractors.                                                                     
                                                                                                                                
MS.  BOLAR said  ACES  passed  amid the  turmoil  created by  the                                                               
"Corrupt Bastards  Club" and its  funders, and it  probably would                                                               
not  have been  put  in place  were  it not  for  the disgust  of                                                               
citizens and their  mistrust of their leaders. And  it's far from                                                               
perfect, because it doesn't come  close to generating the maximum                                                               
profit  for Alaska  citizens. She  reminded legislators  that the                                                               
oath  they  took  to  join the  Legislature  said  nothing  about                                                               
getting reelected  or going along  to get along. Think  about how                                                               
you felt when you uttered those words, she stated.                                                                              
                                                                                                                                
7:22:06 PM                                                                                                                    
WINNIE  OUTWATER,  representing   herself,  Wasilla,  AK,  stated                                                               
support  for  a  stronger  union presence  on  the  North  Slope,                                                               
because  clauses   in  their  bylaws  allow   preferential  hire.                                                               
Employers need to look at the Alaskans that are trained.                                                                        
                                                                                                                                
CHAIR EGAN thanked the participants and committee members.                                                                      

Document Name Date/Time Subjects
09082011 Agenda.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Flyer targeting oil workers.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Bill Hurley, ConocoPhillips.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Doug Smith, Little Red Services.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Mike Kenny.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - NANA Development Corp..pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Ray Metcalfe.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Rebecca Logan, The Alliance.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Tom Maloney, RDC.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony of Dale Pittman, ExxonMobil.pdf SL&C 9/8/2011 1:30:00 PM
HB 110
0908 Testimony - Caroline Bolar.pdf SL&C 9/8/2011 1:30:00 PM
HB 110