09/06/2011 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB110 | |
| Hearing to Gather Information on Alaska Hire Among North Slope Related Industries | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| = | HB 110 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
FAIRBANKS, AK
September 6, 2011
1:32 p.m.
MEMBERS PRESENT
Senator Dennis Egan, Chair
Senator Joe Paskvan, Vice Chair
Senator Linda Menard
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator John Coghill
Senator Joe Thomas
Representative Scott Kawasaki
Representative Tammy Wilson
Representative David Guttenberg
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 110(FIN)
"An Act relating to the interest rate applicable to certain
amounts due for fees, taxes, and payments made and property
delivered to the Department of Revenue; relating to the oil and
gas production tax rate; relating to monthly installment
payments of the oil and gas production tax; relating to oil and
gas production tax credits, including qualified capital credits
for exploration, development, and production; relating to
certain additional nontransferable oil and gas production tax
credits; relating to the disclosure of certain tax information;
making conforming amendments; and providing for an effective
date."
- HEARD AND HELD
HEARING TO GATHER INFORMATION ON ALASKA HIRE AMONG NORTH SLOPE
RELATED INDUSTRIES
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 110
SHORT TITLE: PRODUCTION TAX ON OIL AND GAS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/18/11 (H) READ THE FIRST TIME - REFERRALS
01/18/11 (H) RES, FIN
02/07/11 (H) RES AT 1:00 PM BARNES 124
02/07/11 (H) Heard & Held
02/07/11 (H) MINUTE(RES)
02/21/11 (H) RES AT 1:00 PM BARNES 124
02/21/11 (H) Heard & Held
02/21/11 (H) MINUTE(RES)
02/21/11 (H) RES AT 5:15 PM BARNES 124
02/21/11 (H) Heard & Held
02/21/11 (H) MINUTE(RES)
02/23/11 (H) RES AT 1:00 PM BARNES 124
02/23/11 (H) Heard & Held
02/23/11 (H) MINUTE(RES)
02/25/11 (H) RES AT 1:00 PM BARNES 124
02/25/11 (H) Heard & Held
02/25/11 (H) MINUTE(RES)
02/28/11 (H) RES AT 1:00 PM HOUSE FINANCE 519
02/28/11 (H) Moved CSHB 110(RES) Out of Committee
02/28/11 (H) MINUTE(RES)
03/07/11 (H) RES RPT CS(RES) NT 1DP 2DNP 4NR 2AM
03/07/11 (H) DP: FEIGE
03/07/11 (H) DNP: GARDNER, KAWASAKI
03/07/11 (H) NR: FOSTER, MUNOZ, DICK, HERRON
03/07/11 (H) AM: P.WILSON, SEATON
03/14/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/14/11 (H) Heard & Held
03/14/11 (H) MINUTE(FIN)
03/15/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/15/11 (H) Heard & Held
03/15/11 (H) MINUTE(FIN)
03/15/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/15/11 (H) -- MEETING CANCELED --
03/16/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/16/11 (H) Heard & Held
03/16/11 (H) MINUTE(FIN)
03/16/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/16/11 (H) Heard & Held
03/16/11 (H) MINUTE(FIN)
03/17/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/17/11 (H) Heard & Held
03/17/11 (H) MINUTE(FIN)
03/17/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/17/11 (H) Heard & Held
03/17/11 (H) MINUTE(FIN)
03/18/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/18/11 (H) Heard & Held
03/18/11 (H) MINUTE(FIN)
03/21/11 (H) FIN AT 9:00 AM Anch LIO Rm 220
03/21/11 (H) Heard & Held
03/21/11 (H) MINUTE(FIN)
03/21/11 (H) FIN AT 1:00 PM Anch LIO Rm 220
03/21/11 (H) Heard & Held
03/21/11 (H) MINUTE(FIN)
03/23/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/23/11 (H) Heard & Held
03/23/11 (H) MINUTE(FIN)
03/23/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/23/11 (H) Heard & Held
03/23/11 (H) MINUTE(FIN)
03/24/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/24/11 (H) Heard & Held
03/24/11 (H) MINUTE(FIN)
03/24/11 (H) FIN AT 5:00 PM HOUSE FINANCE 519
03/24/11 (H) Heard & Held
03/24/11 (H) MINUTE(FIN)
03/25/11 (H) FIN AT 8:00 AM HOUSE FINANCE 519
03/25/11 (H) Heard & Held
03/25/11 (H) MINUTE(FIN)
03/25/11 (H) FIN AT 3:00 PM HOUSE FINANCE 519
03/25/11 (H) Heard & Held
03/25/11 (H) MINUTE(FIN)
03/26/11 (H) FIN AT 10:00 AM HOUSE FINANCE 519
03/26/11 (H) Heard & Held
03/26/11 (H) MINUTE(FIN)
03/28/11 (H) FIN AT 8:30 AM HOUSE FINANCE 519
03/28/11 (H) -- MEETING CANCELED --
03/28/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/28/11 (H) Heard & Held
03/28/11 (H) MINUTE(FIN)
03/29/11 (H) FIN AT 10:00 AM HOUSE FINANCE 519
03/29/11 (H) -- MEETING CANCELED --
03/29/11 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/29/11 (H) Moved CSHB 110(FIN) Out of Committee
03/29/11 (H) MINUTE(FIN)
03/30/11 (H) FIN RPT CS(FIN) NT 6DP 3DNP 2NR
03/30/11 (H) DP: T.WILSON, FAIRCLOUGH, HAWKER,
COSTELLO, STOLTZE, THOMAS
03/30/11 (H) DNP: GUTTENBERG, GARA, DOOGAN
03/30/11 (H) NR: JOULE, EDGMON
03/31/11 (H) BEFORE THE HOUSE
04/01/11 (H) TRANSMITTED TO (S)
04/01/11 (H) VERSION: CSHB 110(FIN)
04/04/11 (S) READ THE FIRST TIME - REFERRALS
04/04/11 (S) L&C, RES, FIN
04/08/11 (S) L&C AT 2:30 PM FAHRENKAMP 203
04/08/11 (S) Heard & Held
04/08/11 (S) MINUTE(L&C)
04/11/11 (S) L&C AT 6:00 PM BUTROVICH 205
04/11/11 (S) Heard & Held
04/11/11 (S) MINUTE(L&C)
09/06/11 (S) L&C AT 1:30 PM FAIRBANKS
WITNESS REGISTER
KARA MORIARTY, Deputy Director
Alaska Oil and Gas Association (AOGA)
POSITION STATEMENT: Discussed resident and non-resident hiring
trends in the Alaska oil industry.
JON COOK, Chief Financial Officer
Airport Equipment Rentals
Fairbanks, AK
POSITION STATEMENT: Discussed job creation issues on the North
Slope.
KEN HALL
Lynden Transport
Fairbanks, AK
POSITION STATEMENT: Discussed the state's dilemma of resident
job creation in all industries in Alaska.
KARL GOHLKE
Frontier Supply Company
Fairbanks, AK
POSITION STATEMENT: Related how his company supports local hire.
JIM JOHNSEN, Vice President
Doyon, Ltd.
POSITION STATEMENT: Discussed Doyon's hiring practices.
JAY QUAKENBUSH
Fairbanks Building & Construction Trades Council
Fairbanks, AK
POSITION STATEMENT: Discussed strengthening Alaska hire
policies.
BRETT HELMS, Training Director
Training and Apprenticeship Training Program
Plumbers and Pipefitters - UA Local 375
Fairbanks, AK
POSITION STATEMENT: Discussed his union's hiring and training
policies.
TIM SHARP, Business Manager
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Discussed ways to strengthen Alaska hire.
JULIE DUCKETT
Slayden Plumbing and Heating
North Pole, AK
POSITION STATEMENT: Focused on decline of production on the
North Slope coupled with the high cost of living in the Interior
and how non-resident hire affects its economy.
PAUL KOOP
Bright Services, Inc.
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies
especially for jobs on the North Slope.
JACOB HOWDESHELL, member
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies.
ZEBULON WOODMAN, member
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Discussed strengthening local hire policies
through incentives in the oil tax system.
DAN KUPISZEWSKI, labor economist
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies.
RICK BOYLES, member
Teamsters Local 959
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies
so his family could have the same opportunities he had.
JOSEPH BLANCHARD, member
Fairbanks Assembly
Fairbanks, AK
POSITION STATEMENT: Related how many people relocate to Alaska
to work and end up staying and becoming residents.
LESLIE TEDERS, member
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Discussed how important local hire is to
keep a strong local economy.
WILLIAM MCAMIS, member
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies.
JIM LAITI, Business Manager
Plumbers and Pipefitters - UA Local 375
Fairbanks, AK
POSITION STATEMENT: Discussed efforts to work with BP on
increasing resident hire.
TANYA BROWN
North Star Borough School District
Fairbanks, AK
POSITION STATEMENT: Focused on how training Alaskans for jobs on
the North Slope will help keep money in the state.
RAY WARD, retired
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies.
TIM BECK
Fairbanks North Star Borough (FNSB)
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies.
MATT COWLES, members
International Brotherhood of Electrical Workers (IBEW) 1547
Fairbanks, AK
POSITION STATEMENT: Supported strengthening local hire policies
especially for North Slope contractors.
STEVE KELLY, member
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Related how non-resident hire is more
prevalent now and supported strengthening local hire policies.
SHAWN LOWRY, resident
Fairbanks, AK
POSITION STATEMENT: Discussed how going somewhere to make
something and better yourself is part of the American dream, but
the idea is stay there and contribute to the community.
SUSAN ARMSTRONG, President
ABC of Alaska
Fairbanks, AK
POSITION STATEMENT: Focused on the Alaskan economy as a whole
and discussed how they believe in free enterprise, open
competitive bidding and awarding of bids based on cost, quality
and safety regardless of a contractor's affiliation.
DOUG TANSY, member
International Brotherhood of Electrical Workers (IBEW) Local
1547
Fairbanks, AK
POSITION STATEMENT: Supported using apprenticeships for strong
Alaska hire policies.
LISA HERBERT, Executive Director
Greater Fairbanks Chamber of Commerce
Fairbanks, AK
POSITION STATEMENT: Discussed how the Chamber supports local
hire by advocating for a healthy economic environment and
promoting the greater Fairbanks area as an attractive place for
business and community.
LANCE ROBERTS, resident
Fairbanks, AK
POSITION STATEMENT: Said he supported HB 110.
RICHARD L. WAGNER, resident
Fairbanks, AK
POSITION STATEMENT: Urged putting policies in place that would
provide a stable economy for Alaska as a whole.
JIM SAMPSON, former Fairbanks mayor
Fairbanks, AK
POSITION STATEMENT: Supported strong local hire policies.
RYAN PURUCKER, member
Laborers Local 942
Fairbanks, AK
POSITION STATEMENT: Discussed how he is willing to work and
hoping to work and will feel cheated if someone from out-of-
state had a job here that he could do.
ACTION NARRATIVE
1:32:15 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:32 p.m. All members were present
at the call to order.
1:34:41 PM
HB 110-PRODUCTION TAX ON OIL AND GAS
^Hearing to Gather Information on Alaska Hire Among North Slope
Related Industries
Hearing to Gather Information on Alaska Hire Among North Slope
Related Industries
1:34:42 PM
CHAIR EGAN stated that Department of Labor and Workforce
Development (DOLWD) statistics have revealed that employment on
the North Slope is near all-time highs, yet many qualified
Alaskans are looking for oil industry work. So, in order to move
forward, more needs to be learned about non-resident hiring
practices in the oil industry. During earlier committee hearings
they made an unsettling observation that in 2010 more non-
Alaskans were hired than Alaskans for new oil industry jobs and
that some large construction companies on the North Slope employ
100 percent non-residents.
He said the committee hoped to develop a more complete picture
of employment opportunities in Alaska's oil industry and how
together with the industry they can insure greater resident
hire. This morning the committee would hear invited testimony;
public testimony would be taken this evening.
1:34:55 PM
KARA MORIARTY, Deputy Director, Alaska Oil and Gas Association
(AOGA), had a quick power point presentation and said her goal
today was to walk through some results from a McDowell Group
study they had commissioned to update their economic analysis.
The first portion of the study had the resident/non-resident
hiring trends, and that is what she discussed.
She said the McDowell Group used data from the Alaska DOLWD to
analyze the residency of Alaska's workforce. The study shows
that non-resident employment in the oil and gas industry has
varied only marginally in the last decade. In fact, in 2009 (the
most recent year for complete data) the non-resident hire share
of the workforce was at a five-year low. She noted that this
data does not include workers associated with any of the four
in-state refineries or the TransAlaska Pipeline (TAPS), and the
reason is because the DOLWD characterizes those jobs as
something other than oil and gas extraction or support
activities. This is nothing new; the department has been
categorizing those jobs differently for decades, and that is why
AOGA started doing its own economic analysis.
MS. MORIARTY said the increases in the number of non-resident
jobs in the oil and gas industry over the last decade have
corresponded with increases in the number of resident jobs in
the industry. So, in other words, more non-resident hire has
historically meant more resident hire, as well. Similarly, in
every year where the number of resident oil and gas jobs
declined, the number of non-resident oil and gas jobs declined
too. The bottom line is there has never been a time in Alaska's
history where non-resident hire has gone up and resident hire
has gone down.
The next chart showed the number of jobs held by Alaskans
increased at a higher rate than jobs held by non-residents from
2005 to 2009. During that five-year period, resident hire grew
by 44 percent while non-resident hire grew by 35 percent.
MS. MORIARTY said the department's methodology for calculating
workforce residency is based on Permanent Fund Dividend (PFD)
applications and, as such, produces a conservative estimate of
resident employment because a new resident to Alaska must reside
in the state for a full calendar year before he or she is
eligible to apply for a PFD. Therefore, it could take someone
almost two years to be classified as an Alaska resident. She
explained that she asked the department to research what portion
of workers classified as non-residents actually become residents
the next year and they found that in just the oil and gas
extraction sector among workers who were classified as non-
residents in 2008, 13.5 percent of them became residents in
2009.
She said while PFD applications are a very reliable indicator of
residency, other data can provide another perhaps more up-to-
date measure. For purposes of the McDowell Group study, several
AOGA members provided detailed payroll data by place of employee
residence as indicated by the mailing address on their W2 tax
forms. In its 2009 report, the DOLWD reported non-resident
percentages for specific employers that were higher by several
percentage points than the percentage of W2 tax forms that were
sent to out-of-state addresses. However, talking to the actual
companies might reveal higher percentages than the department
indicates.
Slide 5 showed that a more complete picture of resident
participation in Alaska's oil and gas industry by including
those categories not included in the DOLWD's oil and gas figures
such as the refineries and jobs associated with the pipeline
which have very low non-resident hire rates as well as
businesses that provide goods and services directly to oil and
gas producers.
MS. MORIARTY said their McDowell Group study primarily focuses
on jobs and spending. The department prepared a resident/non-
resident employment and wage analysis of 82 vendors who were not
classified as either an oil and gas extraction or a support
activity business and who were not a refiner or the pipeline.
The chart entitled "Oil and Gas Industry Related Vendors - 2009"
showed that the 82 vendors averaged 14 percent non-resident
hire.
1:41:16 PM
Regardless of the measure used, she said it is important to note
that Alaska's economy overall has been and continues to be
reliant on a non-resident workforce. Slide 6 showed that 22
percent of the private workforce statewide was defined as non-
resident in 2009. Sectors with higher non-resident participation
include seafood processing, scenic and sightseeing
transportation, accommodations and metal mining. She stated that
non-resident hire is part of what allows the Alaska economy to
grow, which in turn generates greater opportunities for
residents.
MS. MORIARTY said there has been a lot of discussion about the
new hire rates as provided in the April 2011 Alaska Economic
Trends (page 11) that shows new hires by industry for the third
quarters of 2009 and 2010, and in 2010 the number doubled the
yearly for non-residents. She said it is important to note that
historically the third quarter is the peak summer season for all
employers in Alaska, and all employers have a higher than
average non-resident hire rate. The graph on slide 7 illustrated
those figures. It showed that annually state government has a
non-resident hire rate of 7 percent. Part of that is due to the
fact that they use PFD statistics, and it sometimes takes people
two years of living here to be eligible. But in the summer of
2010, their non-resident hire rate tripled to 28 percent. So,
this new hire information provides a snapshot view of employment
in Alaska and she said it may be beneficial to understand the
long-term trends for the third quarter in summer employment and
have the DOLWD further examine the new hire rates for the past 5
to 10 years to see if there are different trends.
1:43:57 PM
SENATOR PASKVAN asked if she agreed that both the general
employment information and the new hire information indicate a
trend of increasing employment on the North Slope.
MS. MORIARTY replied yes, and it has for the past decade, but
she added that regardless of the number of jobs in Alaska's oil
and gas industry, whether they are held by residents or non-
residents, production in Alaska continues to decline. With jobs
at some of the highest rates they have seen in a decade,
production is at the lowest they have ever seen. This suggests
that these additional jobs are not associated with producing
more oil, but rather maintaining a 30 to 40 year old
infrastructure. And although it appears that 2012 will be a very
robust exploration year, it takes at least five to seven years
to bring a field from exploration to production, and without
significant new investment in existing fields in the next three
to five years, the DOR chart forecasts production to be in the
400,000 barrel range.
1:45:16 PM
In closing, Ms. Moriarty said the U.S. Supreme Court deemed
Alaska's Local Hire under State Leases Act as unconstitutional
in 1978, because it violated Section 4 of the U.S.
Constitution's Privileges and Immunities Clause. She said AOGA
looks forward to working with this committee, other legislators
and the administration on policies that will increase production
that will ultimately lead to long-term stable jobs and the goal
that everyone would like to achieve.
SENATOR PASKVAN said one of the classifications in that study
indicates that Repcon and Matrix, which do work on the North
Slope, are not categorized as oil and gas jobs. This is
important because they both are reported by the DOLWD as having
100 percent non-resident hire.
MS. MORIARTY replied that the oil and gas jobs are often lumped
under "mining" by the U.S. government, and she didn't know what
methodology is used.
1:47:52 PM
SENATOR GIESSEL referred to the slide labeled "Alaska Residents
Employed with Oil and Gas Industry Related Vendors" (slide 5)
and asked what kind of work the "construction industry" performs
for the oil and gas industry.
MS. MORIARTY replied that it may be building an ice road or a
warehouse, but of those 82 vendors, 10 were classified as
"construction" by the DOLWD and not oil and gas support activity
businesses. Their business might be predominantly construction,
but 80 percent of it is oil and gas related. She didn't know
who the companies were because that data is confidential to the
McDowell Group.
1:48:52 PM
SENATOR PASKVAN asked why the department says there is a 28
percent non-resident hire rate in the oil and gas industry and
in another publication says there is a 35 percent non-resident
hiring rate on the North Slope.
MS. MORIARTY replied that she is not familiar with the
statistics and would have to see the source of that 35 percent
number.
SENATOR PASKVAN asked what AOGA has looked into for the
treatment facility constraints on throughput.
MS. MORIARTY replied that an AOGA study group is looking at that
issue, but it hasn't come back with any recommendations yet.
1:50:53 PM
SENATOR MENARD said she felt slighted that they don't have the
2010 information, because this is the digital age, and it's only
four months until the end of 2011.
MS. MORIARTY responded that according to the McDowell Group that
was the most recent complete data from the DOLWD. She had
checked a few weeks ago, but that type of information seems to
always have a lag, and she didn't know when the department would
have the 2010 data done.
SENATOR GIESSEL asked if the throughput had decreased going
through the infield pipeline as well as TAPS.
MS. MORIARTY replied yes; everything is seen as production
decline.
SENATOR THOMAS said the concept is troubling that somebody was a
non-resident last year, but they are a resident this year. It
seems that people who are working at Prudhoe Bay should be long
term residents before actually going to work there, and he asked
what the state is not doing to create the skill set that would
allow residents to be hired.
1:54:57 PM
MS. MORIARTY responded that ironically the reverse is being seen
on the North Slope. She hears a lot from the aging workforce
that people used to live here and raised their kids who are now
grown and gone. They chose to live outside Alaska and are now
non-residents, but they are still working on the Slope. She
remarked that a lot of us came from somewhere else before we
became residents, but everyone needs to be taken care of.
1:56:26 PM
SENATOR COGHILL asked if AOGA has been able to quantify the
residents who are and are not ready to go to work.
MS. MORIARTY replied that she didn't have that information, but
from a business standpoint it makes sense to hire someone here
who is trained rather than looking outside.
SENATOR COGHILL stated that he was very concerned if Alaskans
are being left out.
1:58:12 PM
JON COOK, Chief Financial Officer, Airport Equipment Rentals,
Fairbanks, said they are the largest equipment rental company on
the North Slope and in the State of Alaska. They employ 120
people statewide from Prudhoe Bay down to Kenai; all but two of
whom are Alaskan residents. They work with every contractor and
producer on the North Slope. Their company is unique in that
they get workers from the time they step off the plane and first
show up up North until the time they fold their tent and take
off.
He said his company is an affiliated entity with one of the
largest developers in Fairbanks; they have a large portfolio of
commercial and retail buildings as well as tracts of raw land in
the retail shopping district. So, the health of the oil industry
and the Alaska economy in general impacts their equipment
business as well as their real estate holdings.
1:59:38 PM
MR. COOK explained that they have a 95 percent local hire rate
and he thought the best way to assure Alaska hire is to use
Alaskan businesses such as theirs, Frontier Plumbing and many
others. Alaska has a vastly underdeveloped private sector and
consistently ranks last or next to last in the competitive
business sector among other successful resource states. He said
this discussion should have been started with asking why this
state doesn't have more successful Alaska-based and owned
businesses in the economy as a whole.
2:00:53 PM
He remarked that the North Slope has record employment numbers,
but at sustained prices of over $100/barrel for the last several
years we should be seeing double or triple record employment
numbers. He just returned from Texas and North Dakota and
observed that Alaska is not experiencing anywhere near the kind
of boom those states are. Those states have been consistently
building up employment; it's unbelievable to see what's going on
down there right now.
MR. COOK said from his company's perspective most jobs they see
being added on the North Slope are lower skilled and lower
paying jobs that do not result in any production increases; they
are maintenance jobs. Highly skilled and paying construction
jobs that accompany field development are lacking, and this is
the type of jobs that Fairbanks companies do very well. He said
this imbalance is apparent in his company where North Slope
revenues have declined by 50 percent from the winter of 2008/09
and have remained at that level ever since.
Finally, he asked them to consider where the workers of the
future will come from and what jobs should be created that
aren't here right now. He thought there were a lot of
opportunities for trade jobs and was trying to envision jobs for
college graduates, many of whom "are voting with their feet" and
not returning to Alaska or moving to the Lower 48 where they see
greater long term opportunities.
MR. COOK emphasized that it's also imperative to retain the
current residents of Alaska. Many of the problems associated
with keeping people living in Fairbanks is that it is a very
expensive place to do business, and it is a very expensive place
to live. Oil companies have to make a net return for their
shareholders, too, and if too much is going to the state or any
other area, wages or businesses are going to get squeezed.
2:05:38 PM
SENATOR GIESSEL asked if he had sent any of his employees to
North Dakota or Texas.
MR. COOK replied yes; because the winter construction seasons up
North have been non-existent for the last three years, they are
setting up an operation down there right now. The summers have
been fairly busy in terms of maintenance and turn-around work,
but it's not enough to make up for the declines in the winter
and the company has equipment that will function in harsh
conditions and they must keep it working.
SENATOR GIESSEL asked if they have had to lay anyone off yet.
MR. COOK answered yes he has over the last few years; he tries
to ship people to other locations before resorting to that, but
something has to give.
SENATOR PASKVAN said the Bakken in North Dakota is exciting to
read about and he believed that type of development would be
part of Alaska's successful future. He asked Mr. Cook if he
perceived that Alaska is at the initial stages of bringing that
type of oil extraction process here.
MR. COOK replied he has talked to new companies coming in - not
so much on the shale end of things. In the near term, Alaska has
a lot more challenges in terms of getting water and keeping
things heated as well as the environmental and permitting double
standards the North Slope has compared to other jurisdictions.
So, the deck is stacked against us right now, and he didn't
think that reversing 23 years of decline would happen in the
next 10 years.
2:08:16 PM
SENATOR DAVIS asked if he felt the state is getting too much
profit from the oil industry at this time.
MR. COOK replied that he perceived an imbalance; not enough of
the resource wealth has flowed directly to the pockets of Alaska
businesses and it residents. He related that he is in a
subdivision in Texas with "tons of million dollar houses," but
in Alaska we think that somebody is wealthy if they make $80,000
or $90,000 per year. He thought it was the state's role to
provide infrastructure and make it possible to be competitive.
2:09:50 PM
KEN HALL, Lynden Transport, said one of the questions asked for
this hearing was does your company have a policy concerning the
hiring of Alaskan workers. At his company, if someone is
applying for work, they must be present to fill in the
application, and an Alaskan driver's license is required. If
it's someone who is going to be operating on the Haul Road, they
require 10 years of experience. Safety is paramount to what they
do and they try to hire the very best people they can hire.
The next question asked was what percentage of your workforce
are currently Alaska residents? In Fairbanks and Anchorage they
are affiliated with the Teamsters Union, and it's almost 100
percent. The North Slope operation is a different matter; they
are not a teamster operation. Lynden hires Alaskan residents for
the Prudhoe Bay operation, but with a two-on-two-off operation,
it's just as easy for a worker to fly to Medford, Oregon, as it
is to fly to Fairbanks or Anchorage and they struggle to
maintain a 60 to 65 percent Alaska resident ratio there.
2:13:13 PM
SENATOR PASKVAN asked if he thought a one-week-on-one-week-off
schedule would promote Alaska hire.
MR. HALL replied that the company wouldn't like to do that,
because it's expensive to transport the workforce back and
forth. Also, two and two is difficult enough because they have
to have an overlap shift coming on and shift going off. The one
and one just wouldn't be practical. Plus, the expense of living
in Alaska and in Fairbanks in particular is quite a factor with
a number of their employees. Unfortunately, the labor force that
is generating their income in Alaska spends it out of Alaska.
He wondered what the actual intent was of today's meeting: was
it just Alaska hire period or Alaska hire for the oil and gas
industry? He thought the state needed to do more of the actual
job creation by keeping production levels up and keeping healthy
mining, timber and fishing industries. Some of those industries
have been more transient than others, and while he is more
familiar with oil and gas and mining, he sees the trend in all
of those industries.
2:16:21 PM
SENATOR GIESSEL asked if Lynden does work in Texas, North Dakota
or the Province of Alberta.
MR. HALL answered yes; they actually have a very active
Dallas/Houston/Edmonton/Fairbanks/Prudhoe Bay operation with
Fairbanks as the hub for their business in Prudhoe Bay.
SENATOR GIESSEL asked if he had seen a job increase in Texas,
Alberta or North Dakota.
MR. HALL replied that the Alberta area has been busy with tar
sands and it has a lot of oil industry there. He has seen an
increase in the Houston area in support of the North Dakota
area.
SENATOR PASKVAN asked if that was in support of the shale oil
resource.
MR. HALL replied yes. One of the challenges for North Dakota is
that it's not unlike Prudhoe Bay; they can get stuff there, but
it's tough to generate revenue.
2:18:33 PM
KARL GOHLKE, Frontier Supply Company, said he was representing
Bill Livermore, president. Established in 1989, Frontier is
still owned and operated by Alaskans, he said. They are a full-
line wholesale distributer of plumbing, heating, industrial
piping, water works and mining products. Their corporate
headquarters is in Fairbanks, but they have operations in
Anchorage and Guam. They sell and distribute materials
throughout the State of Alaska and employ 65 people in their
Alaska and Guam operations. Fairbanks and Anchorage are 100
percent Alaskan hire, all with Alaskan addresses. Two percent of
the folks in Guam are from Alaska. They have always advertised
locally for hire and will continue to do so.
MR. GOHLKE said their business focus is on commercial,
industrial and residential construction, maintenance and repair
and over the last three years they have seen a decline in new
construction, which affects their bottom line. They know when
the North Slope is producing oil, the Alaskan economy is strong.
The last time he checked, the North Slope was still producing
about 580,000 gallons per day, and he was told 600,000 gallons
per day hadn't been seen in a long time.
2:20:41 PM
He said everyone knows if the North Slope was exploring and
producing new oil and gas they wouldn't be here today discussing
out-of-state hire. They know there is very little if any
exploration by the major producers and that the pipeline is over
30 years old and in need of repair - and they know if production
is not increased they won't need to worry about out-of-state
hire at all.
SENATOR GIESSEL said if his company is in the construction
category (Ms. Moriarty's chart).
MR. GOHLKE answered that he supplies those construction
companies.
SENATOR GIESSEL noted that the chart indicates 27 percent of the
hires in the category are non-residents and asked where they
would be employed.
MR. GOHLKE answered he didn't know since the construction
companies are his customers and he deals with the pipefitters
hall and non-union folks.
SENATOR GIESSEL asked if he knows if those are Alaskan
residents.
MR. GOHLKE replied that he deals with Alaskan residents. He
explained how during the heyday of construction, they couldn't
find enough people from the hall to fill the jobs. When the box
stores started coming and Fort Greely started and Pogo Mine was
going, and when Eielson Air Force Base and Fort Wainwright were
building, he visited those sites and knew some of the folks were
coming from Washington, because the technical labor was needed.
2:24:31 PM
SENATOR PASKVAN asked if he has discussions with his customers
about treatment facility constrains on throughput.
MR. GOHLKE replied no; he deals mostly with Doyon Associates.
Frontier ships direct from their location here or from the
manufacturer. All they need is a request for a quote and a post
office box and they can make it happen.
2:25:40 PM
JIM JOHNSEN, Vice President, Doyon, Ltd. said they are the
largest private land owner in Alaska. They have 18,000-plus
shareholders and growing (because they opened enrollment some
years ago). Seventy-five percent of those shareholders live in
Alaska. Doyon has had 27 consecutive years of profitable
operation and it is one of the top ten private companies owned
by Alaskans.
Doyon has three categories of operations: oil field services,
government contracting both in and outside of Alaska, and land
and resource development on their own lands. They also have
several tourism properties.
Focusing on oil field services, Mr. Johnsen said there four
companies in the area and three are Doyon Drilling, Doyon
Universal Services and Doyon Associated/Doyon Industrial
(construction company doing maintenance work). Doyon Drilling
has seven drill rigs on the North Slope that on contract to BP
and ConocoPhillips and they are all working right now.
MR. JOHNSEN said Doyon's employment has waxed and waned; in 2007
they had about 314 employees and that dipped down to 224 in
2009. The most recent figure is 362 and while they are happy
about those positions, the growth is not due to exploration or
work that would add to production and more flow through TAPS.
It's related to infield work overs.
He said that Doyon Universal Services is a large company in
terms of employment numbers and those jobs are minus 280 jobs
primarily due to a large decline in the number of exploration
camps.
Finally, Doyon Associated is in a joint venture with a major
pipeline company in Texas that does construction and maintenance
work. This work is very seasonal but it has had an uptick, so
that is why their numbers are up.
He noted that Senator Giessel has asked consistently about
activity outside of Alaska, and they are definitely looking
elsewhere for acquisitions and business growth opportunities
over the next several years.
MR. JOHNSEN said Doyon definitely has an Alaska hire preference,
but that is preceded by a preference for Doyon shareholders,
then other Alaska Native corporations, then Alaskans and then
others. Alaskan status is verified when folks apply for a job.
The Doyon Associated Industrial Company actually uses a union
workforce unlike the Drilling and Universal Services. So they
work closely with the unions on recruiting shareholders and
training them for these jobs. They are 90 percent Alaska hire as
per their employment information system, and this has been a
pretty steady figure. Shareholder hire is increasing, and as a
result Alaska hire is trending up.
2:31:10 PM
Last year the company gave about $1.5 million in scholarships to
the Doyon Foundation for shareholders; they fund roustabout
training programs, security, food service and management
programs to keep people here and to prepare them for jobs in
their company. They have a very strong partnership at the
University of Alaska with the vocational technical programs in
particular. They reach out to 7th, 8th and 9th graders, which is
often where people make decisions that could either make them or
break them entering the workforce. For example, they fund in
part a Fairbanks math, sports, and reading camp for 7th, 8th and
9th graders who are not "A" students; it's called the Smart
Program. The improvements are staggering. They also work closely
with the Effie Kokrine Charter School to try to educate kids
about career opportunities and what they need to do
academically, physically and behaviorally to prepare for work
with the company. They have very strong employer recruitment,
career development and retention programs; they support NBA
programs for their employees and tuition waivers; they have
their own leadership program where they bring in scholars from
the university and other companies and universities around the
country to build management cohorts up. They were strong
supporters and advocates for educational tax credit improvements
in Alaska to try to increase business investment in education.
MR. JOHNSEN said they see three big policy changes to consider.
The first would be targeting resources to the University's
voctech programs including union apprenticeship programs that
support industry. The second is to implement policies to reduce
Alaska's high cost of living. He said they have employees who
they hired as Alaskans but who leave because it's less expensive
to live outside. A friend mentioned that last year at this time
there were 250 houses on the market and today it's 600. Finally,
they believe that improving the tax climate in Alaska for
private investment will result in more production and more jobs.
Doyon believes the decline is not inevitable and that something
can be done about it.
2:34:28 PM
SENATOR GIESSEL said he indicated a loss of 161 jobs over five
years and she assumed those were Alaskans and asked if he hired
them back as the numbers went up.
MR. JOHNSEN replied that it varies. They haven't hired back in
Doyon Universal Services; those jobs are gone. In Doyon Drilling
they have. And if you assume a 90/10 percent ratio and apply
that to 161 you get roughly 140 fewer Alaskans working for their
company.
SENATOR PASKVAN said he understands for the last five years a
number of permanent camps have been built on the North Slope and
asked if that is accurate. And has Doyon been contacted about
construction activities on any new or upgrades to existing
treatment facilities.
MR. JOHNSEN replied that he is not aware of any conversations
between producers and others with Doyon Associated with respect
to treatment facilities per se.
2:36:53 PM
SENATOR MENARD asked if Doyon is thinking about going global.
MR. JOHNSEN answered no; they are looking at other locations in
the United States.
SENATOR THOMAS said the chart shows a decline of about 7.5
percent for 22 years and asked Mr. Johnsen if he had a sense for
what areas have great promise and that should be under
exploration.
MR. JOHNSEN replied that he should ask the producers that
question. Doyon can gear up and support these "primary
customers" as they move forward, but they don't have an
independent assessment of where the industry is going.
SENATOR PASKVAN asked if he is getting any information from
producers that the future will include heavy oil and/or shale
oil. The point is that the chart includes neither heavy oil nor
shale oil.
MR. JOHNSEN replied that heavy oil is a priority for the
producers, but it's not in the chart.
SENATOR PASKVAN asked him to explain his understanding of shale
oil.
MR. JOHNSEN replied that he should ask that question of the
producers.
2:40:44 PM
JAY QUAKENBUSH, Fairbanks Building & Construction Trades
Council, said he would like to see a positive change in hiring
Alaskans on the North Slope. He said he sees much room for
improvement, and they must work together to find a solution.
Even though IBEW Local 1547 has had several Alaskan contractors
working electrical and communications projects on the North
Slope, those projects have been relatively short in duration.
One contractor, Norcon, Inc. (Fairbanks and Anchorage) has been
their most consistent work opportunity on the North Slope in the
oil industry. They have performed construction and maintenance
work for most of the 20 years he has worked for the IBEW and
have maintained at least a small workforce year in and year out
on the North Slope.
Reports from the Alaska Electric Trust Fund reflect a
significant downturn from the peak of 89 electrical workers per
month in July 2008 down to an average of 72 electrical workers
in 2009; in 2010 it dropped more, to an average of 42 electrical
workers per month. As of June 2011 they averaged only 19
electrical workers per month for Norcon, Inc. This is one
contractor, but it shows the trend overall for the IBEW.
MR. QUAKENBUSH said they have had some success with independents
in recent development projects going back five years. The stats
show an overwhelming downturn. But the North Slope is not seeing
a downturn in construction and maintenance overall; it is
actually very busy. The problem is that the camps are full, but
not with Alaskan workers. It's hard for Alaskan contractors to
even find bed space in the camps, and twice in the last year he
has heard talk of "hot sheeting," the practice of workers
sharing a bed with someone working a different shift. Too many
out-of-state contractors are selected.
He said the oil companies are always seeking the most
competitive contractor, but the problem is that the playing
field is grossly tilted to out-of-state companies that pay
standard wages and usually no benefits to their workers -
substandard in terms of Alaska. Workers comes from states that
have dealt with oil production like Texas and Oklahoma,
Louisiana, Idaho and so forth where people don't have to heat
their homes at the cost Alaskans do and they don't have to buy
food and other commodities at Alaskan prices. The fact is that
many are not raising their families here, but are taking their
earnings from Alaska and living on our jobs.
MR. QUAKENBUSH said not enough Alaskan labor is being hired at
Alaskan wages with benefits, which in turn means there will not
be enough commerce for local businesses to survive. That is the
issue this committee should be trying to solve. To paraphrase
former University of Alaska President, Mark Hamilton, he said
there is a billion dollar industry leaving this state every year
of non-Alaskans working in this state who take their earnings
back home to spend.
He thought the blame should be laid clearly on the oil companies
who hire out-of-state contractors. It's not rocket science; they
are doing it to maximize their profits, and if the state
continues to allow it to happen, "Shame on us."
MR. QUAKENBUSH said Alaska could provide the skilled workforce
that the North Slope needs now and in the future. Much of that
training now happens in Fairbanks through certified
apprenticeship programs. And while it might cost the oil company
contractors more on paper, a well-trained workforce aware of the
challenges of the North Slope will more often than not pay
dividends with a job done right the first time, performed safely
and in an environmentally safe fashion.
He said that IBEW 1547 has a standard for and means of proving
Alaska residency, which is defined as "a person who has
maintained his or her permanent home in Alaska for a period of
not less than one year or who having had a permanent home in
Alaska has temporarily left with the intention of returning to
Alaska permanently."
2:51:19 PM
SENATOR GIESSEL said the "Fairbanks Daily News Miner" had an
October article that talked about the Fort Greely project
suddenly not going forward and laying people off. It cited
Norcon as the company providing workers and talked about the
many workers that travel long distances from the Lower 48 and
union electrical workers who flew up from Seattle. She asked
what percentage of folks in the union hall here are actually
Alaska residents by his definition.
MR. QUAKENBUSH responded that he couldn't speak for all the
unions, but the IBEW gets calls from people looking for work all
the time. The fact is they have different hiring lists, and the
out-of-state workers list is called "Book Two." Alaskan workers
sign a list referred to as "Book One" meaning they go to work
first. The book in Fairbanks is exhausted first, and then they
go to Anchorage, Juneau and Ketchikan; then they go to Book Two.
He explained that an out-of-state worker will get dispatched
only after all Alaskans have had a shot at the job opportunity.
SENATOR GIESSEL said the IBEW website talked about folks
applying from other locals to be accepted here and that clearly
folks are being recruited from outside and are being given
guidance on how to prepare to come to Alaska to work. This
concerns her.
MR. QUAKENBUSH explained that that information is supplied to
avoid out-of-state workers coming here looking for the next boom
(from the gas line).
2:54:17 PM
BRETT HELMS, Training Director, Training and Apprenticeship
Training Program, Plumbers and Pipefitters Local 375, said their
program is registered by the U.S. Department of Labor. It is
funded by employers and is jointly managed with equal labor and
employee representation. Their only contribution is through
collectively bargained agreements. Other than book fees, the
program is tuition-free to members. The program costs a little
over $1 million per year, which equates to about $40,000 per
apprentice. They have 89 apprentices with 33 percent minority
and 24 percent Alaska Native participation; the average age is
25. The apprenticeship program is for five years and includes
8,000 to 10,000 hours of on-the-job training and 1,900 hours of
classroom instruction. Their facility is approximately 15,000
square feet and they are in the process of doubling the size of
the weld shop and adding classroom space.
Information for apprenticeship opportunities is disseminated at
least semi-annually to the registration agencies, minority
organizations, women's organizations, high schools, job centers,
and veteran organizations.
2:56:41 PM
MR. HELMS said their application process is year-round and they
have had about 450 applications. Interviews are done quarterly;
everyone that is interviewed is ranked and scored and placed on
a "pool of eligibles list" from which 20 to 30 apprentices are
selected each year. Over the last 30 years, 70 percent of their
apprentices, on average, complete the training and are ready to
work in industry. They don't train for the sake of training but
must see jobs associated with it.
2:57:15 PM
SENATOR GIESSEL asked what percentage of these students are
actually Alaskan residents (using Mr. Quakenbush's definition).
MR. HELMS replied 100 percent.
2:57:47 PM
SENATOR THOMAS asked if he has a feel for the number of
pipefitter positions that exist at Prudhoe Bay and how many his
union fills.
MR. HELMS replied from their apprenticeship roles, three
apprentices are working at Prudhoe Bay. He deferred the answer
to the other question to Jim Leiti [also with Pipefitters Local
375].
SENATOR GIESSEL asked what happens to the rest of the folks they
train.
MR. HELMS replied they are working for local and Alyeska Oil
field contractors.
2:59:11 PM
TIM SHARP, Business Manager, Laborers Local 942, said he sits
here today not as an apologist for the oil companies but as a
supporter of the potential of what could happen with enlightened
forward-thinking leadership. His union has 95 percent Alaskan
resident membership. He said the history of Fairbanks'
participation in Prudhoe Bay is mixed, especially in the last 5
to 10 years. Fairbanks was the closest major town to Prudhoe Bay
during construction of the oil field and as a result was the key
place for mobilizing that workforce in the 70s and 80s. Back
then everyone knew each other when they got on the plane. In the
years after and over time, they began noticing a marked change
in the workers arriving in the oil fields; they were coming from
out-of-state and often flying direct from all over the country
to Anchorage. It got worse as time went on and eventually, a
charter flight originated in Anchorage.
He explained that in an effort to maximize their airline
transportation investment, the owner company strongly encouraged
those few contractors who hired Fairbanks folks to get their
people down to Anchorage and then to fly backwards to Prudhoe
Bay through Fairbanks some hours later. This was confusing,
especially during oil spills or in times of quick mobilization
needs. Though the charter would land in Fairbanks twice a week
(out of 24 flights), fewer and fewer people got on. Between
clearing results of a drug test, the security check, orientation
and coordinating with the charter flight, it could take
Fairbanks folks one to two weeks from the time the contract was
called to the time someone got to work and contractors seemed to
lean more on getting workers through Anchorage whether they were
from Alaska or not. Now the camps are full and companies are
"hot sheeting." At least 3,000 more beds have been added at
Prudhoe Bay in the last three years.
Because the owner companies leaned on the contractors for
efficiencies in values, Mr. Sharp related that it seemed the
contractors would seek out and import labor from other states
with depressed economies to win those bids by undercutting those
who hire predominantly Alaskans. It also seemed that with the
number of hours worked and the room and board provided, it would
still pay better for workers to travel regularly from places as
far away as Florida, paying their own airfare, to work in
Prudhoe Bay than it would to stay and earn what they could in
Texas, Idaho and Georgia. This is happening today and is even
being done by Alaska Native corporation subsidiaries and Alaskan
companies.
MR. SHARP said in the last two years they have received reports
of companies from economically depressed states giving the
morning safety meetings exclusively in Spanish and that, "We
think things are getting a little out of hand and need to be
looked at again."
He said most of the senators here probably have sat next to
workers on flights heading both north and south often in the
first class status based on the many miles they fly back and
forth each year while taking wages out of Alaska, drawing
unemployment benefits from Alaska and again, while many Alaskans
remain out of work. "The frustration in Fairbanks runs deep."
3:04:23 PM
MR. SHARP said he didn't come here today to beat up on the oil
companies, because he realizes they answer to a board of
directors and shareholders. But sometimes many businesses are
myopic in terms of the short dollar versus the long dollar for
value. Both the owner companies and Alaskans need to play chess
instead of checkers when it comes to our mutual interest in the
long term resource development picture for Alaska.
3:06:15 PM
However, he said he believed that BP has acknowledged and taken
on the challenge that they can have an influence on the
contractors' lack of good behavior when it comes to Alaska hire
even if it does mean paying higher wages to support people
living in Alaska. If the owner companies insist that contractors
be weighted during the bidding process to hire Alaskans the same
way they are for safety and productivity they would be well on
the way toward an affirmative fix to the problem. Hiring the
cheapest labor is not always the best way to save money. Whether
it's the economic limit factor, permitting for new fields, ANWR,
AGIA or ACES, multi-nationals, owner companies and BP in
particular are starting to realize that without truly partnering
with Alaska, even when 81 percent of our state's revenues are
generated by them, they'll continually revisit tax issues,
legislative pressures, populous protest and bad public relations
that can often negatively impact their bottom line.
For him, truly partnering means putting Fairbanks folks back to
work in Prudhoe Bay where there are approximately 8,000 jobs
right now. If half of those jobs including the legacy or
maintenance jobs were held by folks from the Interior, the oil
companies would never lack from support or help when they need
it, Mr. Sharp stated.
A number of hurdles would need to be ironed out and the first is
that this model can't be built on personalities. He is inspired
by BP trying to lead the way and hoped that others would follow.
The second hurdle is measuring the true number of Alaskans
working, and while the Permanent Fund Dividend isn't totally
accurate, it is a fair indicator of Alaskans making a commitment
to this state as opposed to the constitutional definition of one
month with the intent to stay.
He concluded that Fairbanks wants and is ready to work, and it
is not getting its fair share of work in Prudhoe Bay right now.
They support looking at any tax when their folks are working and
it ultimately benefits Alaskans.
3:07:57 PM
In comparing apples and oranges, he urged them to look at the
tourism and fishing industries that are subsidized with J1
student visa workers and H2B guest worker programs.
3:08:37 PM
SENATOR COGHILL said his concern all along has been having
qualified people in Alaska who are ready to work and they are
not working on the North Slope. But he wanted to know if that
was a Fairbanks issue or an Alaska issue and if Alaska is priced
out of the market.
MR. SHARP replied that he would strike the last one. Yes there
are qualified Alaskans, but the key is sustainability of the
work. It takes six years to train journeyman pipefitters and
electricians; you can't turn them on and off like tap water. If
they had goals to train to, Fairbanks members could meet, beat
or exceed any number. The Interior has a huge workforce to draw
from.
3:10:42 PM
SENATOR GIESSEL asked if 95 percent of his folks are Alaskan
residents.
MR. SHARP replied yes.
SENATOR GIESSEL asked him to explain what he said about 86
percent unemployment in the Interior villages.
MR. SHARP responded that Department of Labor statistics indicate
that those villages have between 80 and 90 percent unemployment
and that still restaurant and fishing businesses are importing
people from Bulgaria to work on a regular basis.
SENATOR PASKVAN said one of the things he has heard today is
that Alaskan unions and Alaskan contractors have qualified
employees that are not working at a time when there is record
employment at Prudhoe. Is that accurate?
MR. SHARP replied that is correct and he invited him down to the
union hall at call time to see for himself.
SENATOR PASKVAN asked what his recommendation is to promote the
hiring of Alaskan employees.
3:12:45 PM
MR. SHARP responded a message from the top, and the message is
loud and clear, that it's important to hire Alaskans, and if you
don't, you will be looked at differently. He added that
residency should be measured accurately, arguing for a standard
of one year or more.
3:14:04 PM
JULIE DUCKETT, Slayden Plumbing and Heating, North Pole, Alaska,
said they have been in business since 1979 and pride themselves
on Alaska hire, their safety program and their emphasis on
training Alaska residents. They have completed numerous projects
on the North Slope for several contractors including equipment
shops, nitrogen buildings, training buildings, support
facilities, camp construction and maintenance. Slayden Plumbing
and Heating provides mechanical, plumbing, HBC and mechanical
engineering services and recently expanded to include a new
service department. Slayden strongly supports Alaskan hire and
it shows in their workforce. They advertise in local papers and
on line for both their North Pole and their Wasilla locations.
They use the Associated Builders and Contractors, which is an
ABC federally recognized apprenticeship program. They currently
have 105 employees, a majority of which work year-round. Recent
projects on the North Slope include contracts with AFC Clausen
and Criterion, companies that hire local subcontractors for
various trades.
She agreed there is a problem with out-of-state workers
especially when residents are leaving the state due to the high
cost of energy. Alaska has always faced this problem. She was
more concerned about the cost of energy and the decline in
production on the North Slope and thought people should focus on
making Alaska more competitive being supportive of more training
programs for Alaskans.
3:18:16 PM
SENATOR GIESSEL asked what percent of their apprentices are
Alaskans.
MS. DUCKETT replied that their apprenticeship program is through
the Associated Builders and Contractors and it is 93.1 percent
Alaska hire.
3:19:53 PM
SENATOR GIESSEL asked if preference is given to Alaskan
residents in this apprenticeship program.
MS. DUCKETT replied that some of the companies like the Native
corporations require Alaskan hire.
SENATOR GIESSEL asked what percent of her employees are
Alaskans.
MS. DUCKETT replied that the 2009 State of Alaska non-resident
hire statistics say they have 8.2 percent non-Alaskan hire, but
she thought that was too high. Quite a few of their employees
may not have qualified for a PFD in 2009.
SENATOR GIESSEL said she talked about the contracts going to
out-of-state companies and asked if they have specifications for
project labor agreements which would require certain types of
employees to be hired for them.
MS. DUCKETT replied that they don't bid on projects with project
labor agreements. The companies they work for have open shop
bidding requirements.
SENATOR PASKVAN asked if it's fair to say that work non-
residents perform could be performed by Alaska residents.
MS. DUCKETT replied yes; there are enough Alaskans to do the
work and good training is available.
SENATOR COGHILL asked what barriers to local hire Slayden has
seen.
MS. DUCKETT answered not having enough projects to bid on. The
cost of living in the Interior is also very high for businesses
to be able to survive.
3:24:16 PM
SENATOR PASKVAN asked if part of the problem is that there are
Alaskans that would accept those high paying jobs in the oil
industry, but they don't get the opportunity because they go to
out-of-state employees. The DOLWD publication says a significant
number of high paying jobs are filled by non-residents when
Alaskans are available or can be quickly trained.
MS. DUCKETT said she agreed with that.
3:25:32 PM
PAUL KOOP, Bright Services, Inc., said they are an electrical
company with 10 employees. He said in the past it wasn't hard to
find employees and had opportunities to work on the North Slope
and at one time he had 22 employees. However, the jobs and
contracts that go out of there now are never entered into the
Alaskan workforce. Jobs are given out to buddies who live down
South; it's just a transfer between divisions. To increase local
hire he suggested they consider giving a tax break to people who
hire locally and penalizing those that continue bringing up non-
resident employees.
3:28:11 PM
SENATOR GIESSEL asked what percentage of his employees are
Alaskans.
MR. KOOP replied 100 percent.
SENATOR PASKVAN recapped that on September 2 TAPS throughput was
605,160 barrels, on September 3 it was 605,219 barrels, on
September 4 it was 585,528 barrels and on September 5 it was
606,578 barrels.
3:32:03 PM
Meeting recessed from 3:32 PM to 5:39 PM.
5:39:57 PM
CHAIR EGAN called the meeting back to order at 5:39 PM at the
Westmark Hotel in Fairbanks. All members were present.
CHAIR EGAN said they are here to gather information, but not to
move legislation. He said the Department of Labor and Workforce
Development (DOLWD) statistics reveal that employment on the
North Slope is near an all-time high, yet many qualified
Alaskans are looking for oil industry work. In order to move
forward, more needs to be learned about non-resident hiring
practices in the oil industry. During earlier committee meetings
they have made the unsettling observations that in 2010, more
non-Alaskans were hired than Alaskans for new oil industry jobs
in Alaska. They also learned that some large construction
companies on the North Slope employ almost 100 percent non-
residents. Today they heard from industry, labor and interested
members. Tonight they will hear from members of the public and
hope to develop a more complete picture of employment
opportunities available on the state's oil industry and how
together greater resident hire can be ensured.
5:44:36 PM
JACOB HOWDESHELL, Laborers Local 942, Fairbanks, said he has
been working seasonally on the North Slope since he completed
the Laborer's apprenticeship program, and he has noticed
disturbing trends in the amount of non-resident workers employed
there and asked why more Fairbanksans aren't working when
employment is at an all-time high. He said Shared Services has
24 fully booked flights a week to the North Slope; two of those
flights go to Fairbanks and are almost two-thirds full when they
arrive. Alaska Airlines has regularly scheduled flights that are
full with sometimes a one to two day wait list for flight
availability. In the last two years almost 3,000 new beds have
been added to the North Slope, and "hot sheeting" took place as
recently as three weeks ago. Producers have said they don't have
influence over the contractors, yet they can force a policy that
requires all new hires with six months experience or less on the
North Slope to wear an orange hardhat. He remarked that they can
threaten to cancel a contract due to safety violations or poor
work performance, yet they cannot influence contractors to hire
Alaskan workers. He just doesn't buy it! Alaskan workers and, in
particular, Fairbanks workers need employment on the North
Slope. He thanked the committee for looking into the problem.
5:47:06 PM
ZEBULON WOODMAN, Laborers Local 942, Fairbanks, said everyone
knows more Alaska hire is needed on the North Slope. They know
the trend is that more and more people are "flying over
Fairbanks." One way to resolve the problems is to build
incentivizes for local hire into the oil tax structure. The loss
to the state treasury from lowering the tax could potentially be
offset by millions of dollars circulating in the local economy
from locals working on the North Slope. Tying the two to
together with incentives would be a win/win situation for
Alaska.
DAN KUPISZEWSKI, Labor Economist, said he worked for the State
of Alaska from 1968 to 1978 as a labor economist, and when the
pipeline started in 1974, he joined the laborers union and
worked two jobs - one for the state and one at Prudhoe Bay.
During that time he saw local people, including Native people,
finally having decent jobs with health insurance and retirement.
Now the jobs go to people who live out of state. Those are
Alaska's resources, and he thought we had a deal with the oil
companies that they would hire local people and we would share
in the profits. This morning he went on the Internet and tracked
a stock called BP Royalty Trust (BPT) which had a low of $3.94 a
share in 1999 and today it's up to $108 and pays a $10.57
dividend! The fact is that the oil companies are making money
and they need to share it with the local people.
5:50:49 PM
RICK BOYLES, Teamsters Local 959, Fairbanks, said he has been in
this state since 1975, and it's been frustrating to see that the
Interior with the population base of close to 100,000 doesn't
have much presence on the North Slope that has over 10,000 jobs.
The camps are full, and yet his youth and pioneers are asking
where to go to work. He wants his kids to have the opportunity
to work in the oil industry like he does.
5:53:23 PM
JOSEPH BLANCHARD, Fairbanks Assembly, Fairbanks, said he wanted
to give a face to non-resident workers up on the Slope. In 1996
his father was a non-resident employee; he moved up to Alaska
from Louisiana to pursue a job in the oil industry as a tubing
conveying and perforations specialist. Mr. Blanchard said his
father raised his family in Alaska and he made his personal
choice to further invest in Alaska as a student at UAF.
His concern with some of this conversation is that it doesn't
always necessarily focus on some of the real issues his
generation is going to have to face from the oil industry. When
he visits family in Louisiana he sees Cajun-hire initiatives.
Local hire is a hiring sentiment everywhere. If Alaska wants to
nationalize its oil, it can make those decisions, but otherwise
there are constitutional issues. He urged them to be aware that
the folks they call non-resident employees do spend money here
and sometimes they have sons who go on to be leaders in the
communities here.
5:56:02
LESLIE TEDERS, Laborers Local 942, Fairbanks, said she has been
a resident since 1968 and started working on the pipeline in
1975 and continues to work various jobs in Alaska. After that
she worked for Wein as a flight attendant, and while doing that
she heard a lot of conversations from workers who were leaving
Prudhoe Bay saying they couldn't wait to get home and bragged
about how they didn't have to spend any money in Alaska even for
a meal in Fairbanks. They often mentioned not having to pay
income taxes and that by just having a post office box they
could often get a Permanent Fund Dividend check. After a few
years with Wein, she went back to working construction on the
Slope and living in the camps where it seemed like even more
people were from out-of-state. She summarized that it's
important to encourage local hire because not only does it
provide jobs for individuals but adds many dollars to the local
economy.
5:57:00
WILLIAM MCAMIS, Laborers Local 942, Fairbanks, said he came up
to Alaska in the early 60s and has seen many changes. Most of
them are positive, but he sees a trend among the oil companies
to not hire residents. He related how he roomed with people on
the North Slope who didn't even buy their cigarettes here and
who went on vacation by reporting they were sick. He urged them
to continue looking at hiring policies saying it isn't a
constitutional issue, but a policy issue.
JIM LAITI, Business Manager, Pipefitters Local 375, Fairbanks,
said the committee had heard a little bit about the recruiting
procedures for their apprenticeship program and the fact that
the apprentices are 100 percent Alaskan residents. He said much
of their work is oil industry related, but those are mostly
projects on the North Slope or a maintenance contract with
Alyeska. Some of it is year-round, but much of their projects
take place during the summer months. It's both seasonal and
cyclical. Right now they have very few people on the North Slope
and they have been talking with BP to promote opportunities for
more work there; that has been encouraging. He supported getting
more residents jobs on the North Slope and just wanted to
provide some background.
6:03:09 PM
TANYA BROWN, North Star Borough School District, said she came
up to Fairbanks in 1984 as a military dependent. She spoke to
the impacts that resident jobs have on the community, schools,
businesses and families. She had been an educator in the
district for 15 years and said whatever is happening in the
community is seen in the schools. All children are in their
schools including children from the workers on the North Slope.
Fairbanks has apprenticeship programs to prepare people to work
and kids graduating out of the high schools who want to stay in
Alaska, but they can't get jobs. She urged them to keep the jobs
in Alaska so the money can be kept here to support the economy.
6:06:00 PM
RAY WARD, Fairbanks resident, said he was born in Fairbanks. His
father worked out of Laborers 942 and he is also currently
retired out of the same union. In 1974, when he first started
working they argued the same issue - local hire, and even though
he is retired, he would still like to go back to work out of his
local. But if he can't, he would like his son to be able to work
up North; and he wants that opportunity for his grandkids, too.
"We're not trying to eliminate other Americans, but let's feed
our table first."
TIM BECK, Fairbanks North Star Borough (FNSB), said he travels
every once in a while for the FNSB and finds it interesting when
he is sitting in the Board Room in Seattle and hears people who
are flying to Alaska to work their time and come back home where
they talk about building their new homes. Their flights are
prearranged because they work a regular schedule, so their seats
are all first class.
MR. BECK urged them to use these labor/management committees and
partnerships to ask industry to move forward with natural gas
production in the State of Alaska for residential use. He said
Fairbanks "is dying on the vine because of energy costs."
6:09:12 PM
MATT COWLES, International Brotherhood of Electrical Workers
(IBEW) 1547, Fairbanks, said he has been a member for 35 years.
Currently and for the last 25 years he has been employed on the
North Slope where his job takes him from one end of Prudhoe to
the other and the increase in out-of-state workers "is out of
control" everywhere he goes. When he visits his daughter in
Nashville he sees people he has worked with for the last 10 to
12 years flying to the Slope as well as flying up from Chicago
and Seattle. He remembered the "ARCO days" when they stipulated
their employees had work a "one and one schedule" to try and
eliminate the possibility of living outside.
MR. COWLES said BP might be able to meet their numbers and
quotes in what they advertise on TV about local hire, but they
don't rein in the contractor workforce at all, and contractors
outnumber BP's workforce. When he was in Louisiana for the Deep
Water Horizon incident, he saw that BP was told to hire the
local people and it was done.
He remarked that he needs an interpreter to walk into the dining
room at night in the camp he currently lives in, and he heard
that Nana, who manages the camps, offered a $50/night incentive
to let somebody hot sheet someone's room. He showed a picture of
the latest pods that will be built in the Anchorage Airport so
workers can have a room without going outside of security. They
have TV, Internet access and a sign that says "oil industry
workers will receive an additional discount by showing their
company I.D!"
6:13:47 PM
STEVE KELLY, Laborers Local 942, Fairbanks, said he first came
to Fairbanks in 1975 and you had to be a resident of Alaska
before you could get a job on the North Slope, so he worked
locally. He took some specialty skill classes, and once he got
his resident's card, his first job was at Flow Station 2. He
said the pipeline was built with Alaskan residents, and
Fairbanks used to have a large labor force and jobs on the
Slope, but that's not so now. He used to be able to fly straight
to Prudhoe from Fairbanks, but now you have to go through
Anchorage.
6:14:56 PM
SHAWN LOWRY, Fairbanks, said everyone had to come from somewhere
and the pipeline brought his family here; going somewhere to
make something of your life and better yourself has always been
part of the American dream. The key is to go there and to stay
there; not to go there and leave.
He said Alaska has a skilled workforce that fluctuates, and it
has world class apprenticeship programs that reach out into both
rural and urban communities. If they know the jobs are coming,
they are more than happy to ramp up their training to fill them.
He recounted the frustrations he had heard about full planes and
people joking about not spending a dime here or paying income
tax and about 20 people sharing an Alaskan post office box so
they can collect a PFD. He concluded that the committee has
heard testimony saying that the North Slope has 10,000 jobs and
Alaskans just need to have a larger portion of them.
6:18:32 PM
SUSAN ARMSTRONG, President, ABC of Alaska, Fairbanks, said ABC
is the voice for the Merit Shop Construction industry in the
State of Alaska. The Merit Shop is based on the belief in free
enterprise, open competitive bidding and awarding of bids based
on cost, quality and safety regardless of a contractor's
affiliation. She said that earlier today the committee had met
two of their members who have worked on the North Slope, and
while 100 percent of their business and workforce are not on the
North Slope, 96 percent are Alaskans and their companies do have
solid Alaska hire preferences. But as work becomes less frequent
on the North Slope they have to go to other parts of the state
to search for work and it's not just the North Slope; it's the
rest of the economy.
6:20:00 PM
MS. ARMSTRONG highlighted three things. The first was comments
brought up by Senator Coghill and Senator Thomas that were based
on workforce development and the opportunities for training. She
said Alaska has many opportunities for training like
apprenticeship opportunities, including theirs that has 78
apprentices working on North Slope. A voctech funding component
passed in SB 84 this year adds dollars to the base student
allocation allowing school districts to boost their voctech
education opportunities so that students can get involved in the
crafts and trades and can be ready to go outside of their
secondary education and get in apprenticeship programs or get
higher training. This will make a huge difference, and she
thanked the legislature for it.
The second issue is a policy call. She explained that the State
of Alaska provides a preference in the Procurement Code for
Alaskan business, but currently there is no preference for the
numbers of Alaskan resident hire. She suggested that maybe it is
time for a Senate or House committee to take "a hard look" at
what drafting a policy like that may entail.
Finally, Ms. Armstrong said, the largest policy call is how to
get more production on the North Slope, which will ultimately
provide more jobs for Alaskans and improve the quality of life
of our communities. A competitive business climate will attract
other industry and more businesses to Alaska that will continue
to provide for Alaska families. Ms. Armstrong said this is not a
union versus non-union issue; it's a jobs for Alaskans issue and
a competitive business climate for Alaska issue.
6:22:35 PM
DOUG TANSY, IBEW Local 1547, Fairbanks, said he was born and
raised in Alaska. He came through the IBEW apprenticeship
program, which has greatly benefited him and his family; it is a
career that he is proud of. He has attained several positions in
the union and now sits on the apprenticeship committee and
reported that currently, 15 percent of the program's
participation is by Alaska Natives.
An issue very troubling to him, he said, is that today he talked
to a friend who is one of three Alaskans in a 10-person crew in
a camp that has 150 people at Spy Island in Prudhoe Bay. It
seems like he has seen the same thing in the Lower 48 where
workers in one part of the country were replaced by cheaper
workers from another region in the country or even the world. He
said Alaskan dollars stretch further in other parts of the
country, so it's still profitable for people come up here to
work and get paid less than Alaskans who need to pay higher
living expenses. It didn't seem to work in the Lower 48 and it
probably won't work here.
6:24:30 PM
LISA HERBERT, Executive Director, Greater Fairbanks Chamber of
Commerce, said they represent a community with over 48,000
employees and 700 businesses and organizations. They provide
support by offering partnerships to advocate for a healthy
economic environment and promoting the greater Fairbanks area as
an attractive place for business and community. It's no secret
that the Interior has one of the highest costs of living in the
state due to high energy costs.
The Chamber's advocacy for the interests of their community are
based upon the core values of free enterprise, opportunities,
healthy community and responsible business success, but the
decline of oil production is hurting Alaskan businesses across
the state, especially in the Interior.
In earlier testimony, Ms. Herbert said John Cook from Airport
Equipment Rentals stated that North Slope revenues are down 50
percent for his company alone, and she couldn't help but think
that if more oil was flowing through Alaska's pipeline they
would be hearing a different story. But the fact remains that
it's expensive to do business in Alaska and to live here.
Several other executives from the companies that provided
testimony are members of the Fairbanks Chamber and are proud to
say that they have 90 percent or more Alaskan resident hire.
MS. HERBERT said an increase in jobs on the North Slope due to
exploration does not mean that production is increasing and work
on the North Slope right now is related to maintenance with
short-term contracts. They must focus on getting more oil in the
pipeline; that is the true crux of the problem.
6:26:43 PM
LANCE ROBERTS, Fairbanks resident, said he supported HB 110.
It's important to get more production, and this is one way of
doing it. He didn't like the progressive taxation part of the
present system.
CHAIR EGAN reminded him that the issue before them is Alaska
hire and that taxation would be taken up in the Senate Finance
Committee.
6:28:18 PM
RICHARD L. WAGNER, Fairbanks, said he was born and raised in
Fairbanks and experienced the pipeline boom/bust in the 60s and
70s. It was like they all came and then they all just vanished
within a matter of years after the pipeline was finished, and
now Fairbanks is pretty much like a "ghost town." The same thing
occurred in 1989, although on a smaller scale, when the oil
spill happened in Valdez. He stated that if you hire Alaskans,
they will have the drive to want to get the stuff done, because
they know what it does for the state; it brings jobs and creates
a stable economy.
6:32:23 PM
JIM SAMPSON, former Fairbanks mayor, said that when Alaska
became a state the Constitutional Committee made the
legislature's responsibility clear, that it's for the people and
not for special interests whose policies generally are to take
as much out as fast as possible. The issue has been around a
long time and it certainly was when he was the Alaska Department
of Labor commissioner in the mid-80s when there was a lot of out
migration, but now things are reversed; oil is not $10 a barrel,
but rather $100 a barrel.
It is an issue that the legislature is going to feel soon, he
said, especially in Fairbanks where people have to stand out at
the gas station and fill five-gallon cans of diesel because they
can't afford a $100 gallon delivery and a $400 bill. That's what
people had to do last year.
Thousands of people are flying over Fairbanks to the Slope, and
now they're flying out of Anchorage. What got him "spun up here"
a month ago was hearing about the 31 sleeping rooms at Ted
Stevens International Airport; they don't even have to leave the
airport to spend a dollar on a cab or on a hotel in Anchorage.
Already the state is spinning it the best way it can. He
reminded them respectfully that legislators' responsibility is
to the state and its people; it's not to the industry, and it's
got to be about jobs.
6:37:18 PM
At ease from 6:37:18 to 6:37:26 PM.
6:37:26 PM
RYAN PURUCKER, Fairbanks, said he just started his
apprenticeship with Laborers Local 942. He is 28 years old and
has lived in Alaska for 21 of them. He is willing to work and
hoping to work and will feel cheated if someone from out-of-
state was in a job that he could do.
A lot of people living here will feel cheated, too. He closed
saying, "Those five-gallon cans of gas - I've done that before -
it's kind of a pain in the butt."
6:38:54 PM
At ease from 6:38:54 to 6:39:05 PM.
6:39:05 PM
CHAIR EGAN thanked everyone for coming to the meeting and
testifying on this subject, saying it is a serious issue of
interest to everyone.
6:40:48 PM
SENATOR PASKVAN thanked everyone for showing up today. He stated
that industry employment is high on the North Slope and that the
camps are full. They have heard about hot sheeting and that
there are too many non-residents and too many outside
contractors. They have heard there is training in Alaska and in
Fairbanks; they know Alaska has a skilled workforce that wants
to work. The question is why aren't Alaskan workers and
contractors working?
6:43:14 PM
SENATOR GIESSEL thanked everyone for coming, saying even though
she represents Anchorage that she was born and raised in
Fairbanks. She believes that "as the Interior flourishes, the
rest of the state will also flourish." Further, she said the
Province of Alberta started 22,000 new jobs in June of this year
alone because of the oil sands development and she wants to see
that happen in Alaska with heavy oil.
6:45:06 PM
Finding no further comments, Chair Egan adjourned the meeting at
6:45 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 09062011 Agenda.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |
| 09062011 committee packet.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |
| sample letter Sep hearings.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |
| Testimony - AOGA, Kara Moriarity 09062011.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |
| Testimony - Doyon, Jim Johnsen 09062011.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |
| Testimony - Laborers 942,Tim Sharp 09062011.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |
| 0906 Testimony - Jay Quakenbush, FBX BCTC.pdf |
SL&C 9/6/2011 1:30:00 PM |
HB 110 |