CapEx funding: demand is strong across the board.

• Author: Stricker, Julie
• Position: FINANCIAL SERVICES

With all the talk out of Juneau this spring about shrinking revenue and budget deficits, it's tempting to look in the rearview mirror to see if Chicken Little is about to overtake the car.

And while low oil prices are causing their share of problems on a state level, they're proving to be a boon to many Alaskans, bank officials and others say. While they don't expect a boom year, demand for capital funding is strong across the board in the healthcare, fishing, mining, and tourism industries. Several oil and gas projects on the North Slope are also looking strong, such as ExxonMobil's Point Thomson. Overall oil and gas expenditures are expected to be about $3.8 billion, according to a forecast by ISER, the Institute of Social and Economic Research at the University of Alaska Anchorage.

Darren Franz, Alaska regional banking manager for Wells Fargo, says any gloom and doom forecasts are off the mark.

"The real challenge here is how long these $50 [per barrel] prices last," Franz says. "The economy in Alaska has not been growing by leaps and bounds, but there's certainly been steady growth."

"Just look at Arctic Man," he adds. "I think there were twenty thousand people out there running around. It's not depressing out there. They burn more fuel at Arctic Man than you do in your house."

In fact, Alaska is growing, and demand for capital funding has been strong for years, he says.

"We've been doing a little over half a billion dollars in new loans every year," he says. "I think most Alaska businesses are actually quite healthy and really poised for opportunities that come down the pipe. Even the state has $15 billion in their general savings account from a lot of good years. I do think there are tons of things that are going to happen in upcoming years."

Fishing, Healthcare, Tourism

This year, strong demand is coming from the fishing industry as forecasts call for one of the biggest Bristol Bay sockeye salmon harvests in the past twenty years. The Alaska Department of Fish and Game predicts 54 million sockeye will return to the region this summer. Strong returns are also expected for Kodiak and Southeast Alaska.

"Fishing continues to be strong and were continuing to see investment in that area," Franz says. "Lots of new boats."

Fishermen are buying Individual Fishing Quotas and processors are expanding operations in Naknek, for instance, he says. "That had been virtually a ghost town. Now there are several processors there."

Franz says foreign...