A Foundation in Power: Energy support sector provides important diversification opportunities for ANCs.

• Author: Simonelli, Isaac Stone
• Position: ALASKA NATIVE

A well-diversified portfolio is a cornerstone of success for Alaska Native corporations determined to fulfill their missions of providing meaningful benefits to their shareholders. Both Chugach Alaska Corporation and Koniag have found fertile ground for diversification within the energy service sector, even as big changes occur on the North Slope.

The energy service sector is a broad umbrella that covers everything from oil spill response and equipment fabrication to electrical work and security system design. Basically, it's an assortment of businesses that fill the variety of needs of the oil and gas industry, as well as those in the renewable energy sector.

"We look at Koniag as more than just a multi-generational business, but as an organization that can provide benefits to our shareholders, our Alaskan Native owners, forever," Koniag CEO Ron Unger says. "And in order to stay on track we need to continue to grow."

Unger explains that diversification is key in allowing the corporation to provide ongoing benefits and opportunities, from shareholder dividends and Elder benefits to educational opportunities and scholarships.

"In order to fund those, we need ongoing earning sources, so diversifying those sources is really critical for us," Unger says.

Chugach takes a similar stance.

"Keeping Chugach's businesses healthy and profitable is a pillar of our mission statement, as the stability and success of our operating companies enables us to provide jobs, benefits, and opportunities to our shareholder community," says Chugach President and Chief Operating Officer Daniel Fenza.

An Evolving Oilfield

Without a doubt, 2020 was a particularly challenging year for most businesses, including those in the energy service industry--and on the North Slope there were also significant changes unrelated to the pandemic.

"The Alaska energy services market experienced a generational transition with BP Alaska selling its North Slope and TAPS ownership stakes to Hilcorp Alaska," Fenza says.

It was announced in 2019 that Hilcorp would be purchasing all of BP's Alaska interests for $5.6 billion. BP had started working in Alaska in 1959, producing more than 13 billion barrels of oil.

The energy service sector was additionally impacted by North Slope crude prices hitting historic lows due to the global crude oil supply dispute and reduced demand due to the COVID-19 pandemic, Fenza explains.

"Despite these circumstances, both Chugach Alaska Services [CAS] and All...