Natural resource development key to Native corporations' success: providing benefits to shareholders, and income to the businesses.

When the Alaska Native Claims Settlement Act (ANCSA) was passed in 1971, it conveyed approximately one-ninth of the state's land to 12 regional Native corporations and 200 local village corporations. This land, much of which is rich in timber, oil, gas and minerals, has been used by the corporations to create a sustainable economy for its shareholders through natural resource development.

For some corporations, the development of natural resource industries on its lands still makes up a major portion of the bottom line. For others, this development provided a base from which the corporation could grow, expanding into other non-resource related business areas. Three Native regional corporations, Arctic Slope Regional Corp. (ASRC), Cook Inlet Region Inc. (CIRI), and Sealaska Corp. have a long history of developing Alaska's natural resources on their lands. Though each corporation utilizes these resources in different ways, they all share in the wealth, and the benefits, that natural resource development provides.

ARCTIC SLOPE REGIONAL CORP.

According to Richard Glenn, ASRC vice president/lands, over the years, ASRC has advocated in favor of environmentally responsible resource development of its lands and other North Slope lands, such as those owned by the state and federal government.

"Resource development is the only significant 'non-government' economic engine on the North Slope," said Glenn. "In fact, the presence of resource development allows for tax revenues to be forwarded to the North Slope Borough, our home-rule municipal government. So, in addition to providing an economy of its own, there would be significantly less government services, like health clinics, fire and police services, and local education for North Slope Borough residents if there was no resource development."

ASRC lands host significant potential for oil, gas, coal and minerals. In 2006, natural resource income contributed about one-sixth of ASRC's net income, with $20 million of that $120 million coming from development of ASRC's lands at Alpine. "Of our subsidiary companies, all but one-quarter of the consolidated income stream ($90 million out of $120 million) is related in one way or another to resource development, in activities such as oilfield construction, engineering, operations, refining and sales," said Glenn.

Though natural resource development can be controversial, Glenn says that the corporation works diligently to allow debate on development issues and to work out a solution that provides the greatest good for shareholders and residents in an affected area. "We think our lands are big enough to host exploration, development and subsistence," he said. "While I would say that the majority of our shareholders are in favor of environmentally responsible development, there is never complete agreement on any development issue."

According to Glenn, the North Slope Borough permitting process provides an effective forum for citizen debate on development issues, and also provides for advocacy of mitigation, and other steps to reduce or compensate residents for negative effects of natural resource development. "We continue to strive for a balance that protects subsistence while allowing for exploration of resource potential," said Glenn.

In addition to providing economic benefits to the corporation and its shareholders, Glenn believes that natural resource development provides other benefits as well. "Resource development brings the only significant economy into our region within the grasp of the young people in our villages," he said. "Job opportunities in government services and tourism are simply not enough to keep the people of the North Slope gainfully employed.

"In addition, resource development in our region offers the potential for secondary economies, support-industry niches, and circulation of resource-related paychecks back into our villages, stores and other local businesses," he added.

Though there are relatively few Alaska Natives involved in oilfield production and operations at the Alpine field at the present time, Glenn believes that there is the potential to create a number of shareholder jobs. "Alpine's existence marks an opportunity for careers, not just seasonal jobs, within our region," he said. "And if the western Arctic coal resources are developed economically, its development could represent an increase in employment opportunities for North Slope residents and other shareholders in an area that is currently facing job shortages."

COOK INLET REGION INC.

Cook Inlet Region Inc., or CIRI, has been involved in resource development on its lands since shortly after they were conveyed to the company in the mid-1970s. "As a lessor of oil and gas leases on the Kenai Peninsula, our lands have been under development successfully for the past 30 years, and we continue to enter into new leases today," said Keith Sanders, senior vice president/land and legal affairs.

In the beginning, the royalty income on CIRI's lands made up more than half of the corporation's annual revenue. Today, natural resource development income makes up less than 10 percent of the company's overall corporate revenue. "Last year, out of $97 million in overall revenue, about $6.5 million was made up of resource revenue," said Sanders. "Seventy percent of that is shared with other Native corporations as part of the ANCSA 7(i) agreement."

As the largest private landholder in Southcentral Alaska, with more than 600,000 acres of surface land and 1.3 million acres of subsurface land, CIRI makes it a priority to promote responsible resource development, considering the potential economic, environmental and cultural impacts of its projects. "We try to respect village surface lands and subsistence issues while meeting our main priority to our shareholders overall, which is the responsible development of our lands to bring income and growth to the company," said Sanders.

CIRI's commitment to responsible development extends to the companies to which it leases land. "We are very vigilant to make sure that the companies we lease to are environmentally responsible," said Sanders. "Not only in that they follow the law, but in that they are financially solvent enough to correct any mistakes that they may make."

According to Sanders, CIRI's success in natural resource development is the result of the corporation's early commitment to realize a profit from its lands. "Early on, Margie Brown realized the value of our lands on the Kenai Peninsula for oil and gas development, and fought for ANCSA and for fair royalties through litigation," he said. "By winning these royalties, CIRI got its first real seed money, which allowed us to grow and develop into other areas.

"This has allowed us to provide jobs to our shareholders, because as the lessor, we require our leaseholders to make an effort to hire our shareholders and use shareholder-owned companies in connection with their development operations," Sanders added. "It has also enabled us to provide economic opportunities, as well as direct economic benefits in the form of dividends to our shareholders."

SEALASKA CORP.

In Southeast Alaska, natural resource development helps Sealaska Corp. meet its goal of providing a sustainable economy for its shareholders. For more than 25 years, the corporation has been harvesting and marketing standing timber on its lands, including spruce, hemlock and cedar. Approximately one-quarter of this timber is sold stateside, with the rest marketed overseas to Japan, South Korea and the People's Republic of China (PRC). The company is also looking at the potential for mineral exploration on its lands.

Like other natural resource monies, the profits from these sales benefit not only the corporation, but also other ANCSA regional and village corporations. "As the landowner, we keep 30 percent of the net revenue, and 70 percent is split among the other regional corporations, and then village corporations," said Chris E. McNeil Jr., president and CEO, Sealaska Corp. "Over the years, this has enabled us to distribute $306 million to other Native corporations." A reciprocal obligation, Sealaska also has received natural resource revenues from other corporations including CIRI, Doyon, ASRC and NANA.

With this money, Sealaska has provided many benefits to shareholders, including dividends and scholarship funds. They also use their profits to invest in the care of their lands, investing substantial funds in stewardship responsibilities. "One thing that is not well understood is that after cutting an area, there is tremendous re-growth of the natural species," said McNeil. "One of our greatest expenditures is thinning this growth--taking the 3,000 trees that grow per acre and thinning it to the right 300."

According to McNeil, Sealaska also takes great care to respect the rights of the people living on the land, including those living subsistence lifestyles. "We are very circumspect and respectful of people's subsistence rights," said McNeil, who adds that sharing the land has never been a major issue. "We are also very careful to comply with all federal and state laws and the Forest Practices Act, and we have a dam good record, overall, in terms of taking care of the land."

Investing in natural resources also has enabled Sealaska to take care of its people. "One of the greater successes we've had is employment of our shareholders in this area," said McNeil. "More than 50 percent of our regional employees and contractors are shareholders, which makes a really strong impact on the local economy, particularly in the villages where this land is located.

"It's a truly striking accomplishment," he added. "We're not only providing our shareholders with a sustainable future and economic benefits, but also we're empowering our shareholders and building capacity as well."