The bottom line: operating reports of the Alaska Native regional corporations the 13 regional corporations had combined: revenues of more than $2.5 billion in 2003.

• Author: Stricker, Julie
• Position: Alaska Native Business News

Editor's Note: As this article went to press, Carl Marrs announced his resignation effective on or about Dec. 31, 2004.

Since their creation three decades ago, Alaska's Native regional corporations have had their ups and downs, but play an increasingly important role in Alaska's economy.

The corporations generate billions of dollars in revenues and are among the state's top private employers, according to the state Department of Labor and Workforce Development.

Their reputation as strong businesses is opening ever-bigger doors. Anchorage-based Chugach Alaska Inc., which pioneered a hugely successful business in government contracting, was named the 38th largest Department of Defense employer in 2003 on the heels of winning contracts worth billions. The other corporations have followed its example, and government-contracting enterprises are among their most profitable subsidiaries.

Also in 2003, Cook Inlet Region Inc., and a consortium of Alaska's other 11 regional corporations, spear headed a partnership with MidAmerican Energy Holdings, 80 percent of which is owned by billionaire financier Warren Buffett, to propose a $6.3 billion natural gas pipeline from the North Slope to Canada.

The group later withdrew its application after it clashed with the governor's office over the terms of the deal, but CIRI President and CEO Carl Marrs is adamant that the pipeline is a key to Alaska's future.

"We're still working on that aspect of it, trying to put a deal back together that would allow for an independently built pipeline," Marrs says. "The governor has to make a choice on whether he wants a producer-owned and -operated line or an independently owned and -operated line.

"We're trying to bring all that back together. Whether we're successful about that is still up in the air." Marrs expects a decision in October. The 12 Alaska-based regional corporations reported profits of $128 million in fiscal 2003 on overall revenues of more than $2.5 billion. Two corporations, Bering Straits Native Corp. and Koniag, reported losses in fiscal 2003. In addition, the corporations contributed millions of dollars toward nonprofit and scholarship funds.

The corporations were created under the 1971 Alaska Native Claims Settlement Act, which settled aboriginal land disputes that were blocking construction of the trans Alaska oil pipeline. In return, Alaska Natives received $963 million and 44 million acres of land, the conveyance of which is still ongoing.

Under ANCSA, 12 regional and more than 200 village corporations were formed, with the onus of improving the social and economic conditions of their shareholders. About 80,000 Alaska Natives enrolled in the corporations. The 13th Regional Corp., which serves Natives outside Alaska, was created later. It did not receive any land.

Three of the largest corporations in terms of overall revenue, Arctic Slope Regional Corp., Chugach Alaska Corp. and Cook Inlet Region Inc., were also rocked by shareholder unrest and discord on their boards of directors.

ARCTIC SLOPE REGIONAL CORP.

Arctic Slope described 2003 as "difficult" in the face of a sharp decline in earnings. The Barrow-based corporation had just $5 million in profits on $1.03 billion in revenues, a margin of less than one percent. Of that, $4.5 million was paid out as dividends, about half of the 2002 payout. Angry shareholders met in Barrow earlier this summer to demand maim" changes to the company.

Oil-field services, petroleum refining and marketing, technical services and engineering and construction subsidiaries generate the bulk of ASRC's revenue. Of those, energy services showed a loss, while the other sectors increased, ASRC says its losses were due to a slowdown of exploration and oilfield construction on the North Slope, the costs of reorganizing under-performing subsidiaries, lower equity investment earnings, and a decrease in oil royalty income, as well as higher legal expenses and higher taxes. Its 2002 income also was bolstered by a $20 million payment from its wireless holdings, which was not repeated in 2003.

The $8 million in royalty payments Arctic Slope received from its part ownership in the Alpine oil field offset many of its losses.

In response, ASRC, which is owned by 7,200 shareholders of Inupiat descent, cut costs by consolidating administrative costs and established two new business ventures. It pledged to focus more on profitability instead of revenue growth in the future.

CHUGACH ALASKA CORP,

Chugach...