Egan concerned about jobs for Alaskans

Juneau senator plans hearings on nonresident hire for North Slope jobs in interim; wants to see investment in Alaska, Alaska jobs

Steve Quinn

For Petroleum News

Dennis Egan wants to talk jobs. The Juneau Democratic senator is well positioned to lead the discussion.

Egan, the son of Alaska’s first governor under statehood, Bill Egan, joined the senate in 2009 to fill an unexpired term vacated by Kim Elton.

In his first full term in the Senate, Egan serves as the chairman of the Senate Labor & Commerce Committee.

He’s also the current gatekeeper of HB 110, Gov. Sean Parnell’s bill designed to restructure the state’s oil tax structure.

Egan says he’s not against certain changes that may benefit the oil industry, such as scaling back the progressive surcharge oil companies pay as oil prices increase.

But first he wants to understand why oil patch jobs are going to nonresidents at a time when employment is rising.

Recently, he was upset to learn how oil and gas jobs rose to 12,900 workers — a 5 percent year-over-year increase — but 50 percent of the new jobs went to non-Alaskan residents.

Egan sounded off at the news in May, wondering, “Why are these new jobs going to Outsiders?”

Egan also cited a January Department of Labor report that stated:

“A significant number of high paying jobs are filled by nonresidents when Alaskans are available or can be quickly trained. Many of these are permanent year-round jobs, not just seasonal, short-term or one-time. Alaska has many workers that commute from outside the state on a regular basis to their jobs in Alaska.”

Egan says he’ll be holding hearings throughout the state during the interim to get answers.

He discussed his plans with Petroleum News.

Petroleum News: What will the focal point of the hearings be?

Egan: I want to focus specifically on resident hire versus nonresident hire. I want to focus on whether people who claim residency, but are not residents. I was talking to (former chief of staff to Sen. Bert Stedman) and he said we do have some money in the budget now to hire a contractor to put the numbers together and give us information over and above numbers provide by the Department of Labor.

We want to know who is hiring whom, where they are located, where the job positions are. We are going to get into all of that stuff. We will take testimony during those hearings. It’s a preliminary plan and it could change, but right now we are thinking of at least Fairbanks, Anchorage and Kenai, where the bulk of the Alaskans who go to work in the oil patch live. I’m sure there will be other locations where we conduct hearings as well.

Petroleum News: What would you like to learn?

Egan: We really want to learn how many Alaskans are employed in the oil industry. We have gotten complaints from different labor organizations saying, hey, we are having a hell of a time getting dispatched to the slope because they are being, I guess, replaced … by people who are not residents, and there are not a lot of them being dispatched out of the halls. We are going to look at how many companies are going around hiring unions. We had one person come in and talk to me, saying he’s worked on the slope for years, he’s a welder and certified but now he’s having a hell of a time being dispatched.

Petroleum New: It’s difficult to enforce local hire.

Egan: It is difficult to enforce, but it’s sure not difficult to encourage.

Petroleum News: ACES received three committee assignments, but not Labor & Commerce. Did you request to have this bill in your committee?

Egan: Yes, I did.

Petroleum News: What made you request this bill?

Egan: It was from a hearing we had in Labor & Commerce on resident hire and HB 110 was brought up. We did get statistics from the Department of Labor and we are thinking if the governor wants to give the oil companies additional tax breaks and the oil companies aren’t saying where this money is going to be utilized, we want to be more certain it’s going to be resident hire and the money is going to stay here in Alaska.

Petroleum News: The counter argument is how can you expect that from a company that has a global outlook when they make their business decisions?

Egan: There are a whole bunch of companies that have global outlooks. One of them is Coeur d’Alene (Mining Corp.). They have mines all over the world. We just had a meeting with Dennis Wheeler, the CEO of Coeur d’Alene mines, last week. They are claiming 70 percent resident hire. They are a brand new facility (Kensington Mine in Juneau). If they can do that — and those are specialized positions — why can’t other people? Half of Greens Creek, they have mines everywhere, but they have a real focus on hiring residents.

I’ll never forget my conversation with Dennis when they were getting things ready (to start production last year). He said, ‘we are bringing up all these people, we train them for six months, but their wives hate it, so they stay for six months and then they boogie.’ Well, they get locals and train them through the University of Alaska Southeast and the mining training programs. They are not leaving. They are buying houses here; they have kids in the school system. They are contributing to the economy in other ways than just their salaries.

Egan: Members of the Resources Committee will be involved in some of these hearings we’ll have as well. You have to remember the Resources Committee said they weren’t going to hear the bill until we had hearings on who is being hired in the oil patch.

They thought the issue was great enough. You’re right. How do you force someone Like Repcon or Matrix Services to not have 100 percent nonresident hire? But as a lifelong Alaskan myself, we can impress upon them how important it is to hire Alaskans.

Here’s an example, a pipefitter who has worked on the slope for 40 years and now he’s having trouble getting dispatched because of different union things and non-union contacts?

There is enough disparity and enough concern among resident Alaskans that I think it behooves us to hold those hearings. I’m not pointing to anything we’ve already decided. I have no preconceived notion but it’s important enough for the state to hold these hearings.

When we get into it, I’m sure other issues for nonresident hire will come up, which is fine as far as I’m concerned. To me and people on my committee, it’s about hiring as many Alaskans as we can.

Petroleum News: So this is not a matter of burying the bill in the Senate?

Egan: We are not trying to trash anyone. We have legitimate concerns about employment. We are absolutely not trying to bury the bill. When it goes out of Labor & Commerce, Resources will be taking it up and then it will go to Finance, though maybe there will be some modifications to HB 110, but that’s Resources and Finance talking about credits. What my committee is going to do is look at employment specifically. Wouldn’t you get (upset) if you’re sitting here in Juneau and you can’t get dispatched and you see these guys … I mean here we have companies like Repcon with 100 percent nonresident and Matrix Services 100 percent nonresident.

Petroleum News: Will you give these companies a chance to testify?

Egan: Absolutely. We’ll afford industry a chance to testify as well. We are not out to get anyone. We just want to find out why.

Petroleum News: As a member of the Finance Committee, what other issues are there?

Egan: I’m concerned about giving more credits to the oil industry and not have the industry tell us what they are going to do with the credits they take. Are they going to invest in Alaska’s oil patch or are they going to invest it in Libya? I don’t have a clue. If we are going to give credits, I think we should be afforded the opportunity of hearing from industry what they are going to do with those credits and how they are going to reinvest those credits in the state of Alaska to further our industry or the people’s resource to get it out. It’s not like they aren’t getting tax credits now. In presentations we had before Senate Finance this year, it was close to $3.2 billion in tax credits. We are all concerned about it.

Petroleum News: You’ve watched resource development, specifically oil, become a political hot potato. Some say it cost your father his re-election. Do you see this debate changing the makeup of the decision makers in 2012?

Egan: I think that people are more attune to what’s going on in Alaska rather than make it into a petty fight. It’s not a petty fight at all. In the state constitution, we have the best constitution in America. It’s our oil. It’s not their oil. Right? We own it. It would be criminal of me not to protect the public’s interest as best as I can. Hopefully, we make the right decision. Just because other individuals propose different pieces of legislation, I’m remiss in not saying whoa we are not getting the best bang for our buck for the citizens of Alaska. One of the best emails I got was someone saying, ‘you’re a jerk. Get off your ass and pass HB 110.’ Then in the next paragraph he says, don’t forget the education bill. You have to fully fund the base student allocation and you really should fund it at 125 percent. I’m thinking. Hold it now. How are we going to pay for it? You want us to pass HB 110, but you want us to fully fund education. That just drove me nuts.

Petroleum News: Would you like to see a Part II to HB 110, in other words, here’s what the state needs cut in taxes and here’s how it will pay for it?

Egan: I’m not the expert in that. It’s very complicated. To be honest with you, I admire the people who are involved in it deeply and are experts. I think HB 110 can be restructured and we can come to some sort of agreement before the end of the next regular session. I agree that something has to be tweaked at least in the tax structure itself. As far as progressivity, that’s something we have to look at. I do think decoupling has to be looked at. The way it’s structured now, we are going to give away our gas. It’s our gas. Again, maybe it’s an infantile argument, but it’s ours, not theirs. It’s not like hydro. It’s a finite resource. When it’s gone, it’s gone.

There are all kind of opportunities here. We should be exporting, but we first should take care of Alaska. I don’t like spending $4 a gallon for diesel.