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Cold Weather: oilfield contractor expands its outlook.

To stay afloat in the wake of Alaska's contracting oil industry, Cold Weather Contractors decided it was time to broaden its service base here and to look for business overseas.

Founded by William McLaughlin in 1983, Cold Weather's bread and butter has been constructing and maintaining ice and gravel pads and roads for oil companies on Alaska's frigid North Slope. Its client list included all the major oil companies, and the company's track record for supporting exploratory drilling and other field operations in the Arctic has been impressive.

In 1984, for example, Cold Weather was selected to build the ice roads, a 5,000 foot lighted ice airstrip and a drill pad for Chevron's KIC No. 1, the only exploratory well ever drilled on the now forbidden coastal plain of the Arctic National Wildlife Refuge (ANWR). However, just as many other contractors who serve Alaska's oil industry, Cold Weather is being pinched severely as North America's most prolific oilfield at Prudhoe Bay lapses further into decline, taking with it the massive cash flow that has fueled the state economy since the 1970s.

Adaptability Essential

"There have been a lot of changes on the North Slope in the past two years," notes Barry Perkins, marketing director for Cold Weather. For Alaska's premier ice and gravel road builder, the crowning blow came last year when the company lost a major maintenance contract with Arco Alaska Inc., which operates the Kuparuk River oilfield and the eastern half of Prudhoe Bay. That contract represented about 60 percent to 65 percent of Cold Weather's business.

Says Perkins, "The emphasis of our market is changing. To stay alive, we have to refocus like everyone else. We have to decentralize. We have to look into other markets because the oil industry is not there. I don't think the general population realizes how much work has decreased on the Slope."

Nevertheless, Cold Weather has managed to improve its revenue picture, moving up the New 49ers' ladder of profitability -- from $14.1 million in gross revenues in 1990 to $16.9 last year. Perkins says 1992 represents Cold Weather's year of expansion, adding that the company is looking to increase revenue and its 250-person employment base by 40 percent during the next year to 16 months.

New Operations

Cold Weather is looking to do environmental cleanup at various military sites around the state. Explains Perkins, "It's all in keeping with the trend in industry. It will be good exposure and will help us."

In addition, Cold Weather has moved into the civil construction business, hoping to capture a portion of $1.4 billion in state highway funds that will be spent over the next five years. Says Perkins, "We would like a small portion of that. The feeling in our market is that there are lot of mom and pop operations looking to consume a lot of the small projects. What Cold Weather is looking at is something between the small and the big operations. We've got the capabilities, and we've got the equipment."

Cold Weather also wants to expand into Alaska gold, silver and coal mining operations, including Greens Creek, Fort Knox, Echo Bay and Wishbone Hill.

Overseas Opportunities

Cold Weather would like to tap into business on Sakhalin Island, where Marathon, McDermott and Mitsui have formed a joint venture to develop offshore fields estimated to contain 730 million barrels of oil and 14 trillion cubic feet of natural gas.

Says Perkins, "You've had diplomats in Alaska soliciting contractors that can go over and help in that endeavor because they have the know-how. We haven't got a commitment here yet, but we're looking at it."

Here To Stay

Even though Cold Weather, like many other Alaska contractors, has found it necessary to follow the oil business overseas, the company has no intention of pulling up stakes in Alaska.

Cold Weather donates about $300,000 a year to various groups in Alaska, and many of its employees serve as board members and support such organizations as the Alaska Support Industry Alliance, Anchorage Symphony Orchestra, KAKM public television, United Way, the YMCA and the Boys and Girls Club. The company also financed the production and distribution of a 28-minute video supporting the opening of the ANWR coastal plain to oil exploration and development. Sent to some 10,000 congressmen, government officials and business leaders around the country, the video won a national Telly Award.

Says Perkins, "There's no way in the world that government contracts, government spending is going to take up the slack left by the oil industry; but we've made the commitment to stay, in spite of less work in our traditional arena. If you go down the list of contractors, you'll find that everyone is pretty much hurting."

"You're looking at oil companies that have stopped drilling and exploring. I think there is a message there, but I'm not sure the state realizes what the message is. These oil companies can take their toys and go to Columbia and South Yemen and to Russia and not have the problems and inconsistencies," Perkins adds.

Editor's Note: Since this story was written, Cold Weather Contractors has given up the last of its Arco North Slope contracts as unprofitable, and the company is working on a possible liquidation sale of its equipment. The firm, which at its peak employed 200 workers, now has six employees in Anchorage. President and chief executive Bill McLaughlin says Cold Weather is still in business and intends to continue on a much smaller scale.
COPYRIGHT 1992 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:The New 49ers; Cold Weather Contractors
Author:Tyson, Ray
Publication:Alaska Business Monthly
Article Type:Company Profile
Date:Oct 1, 1992
Words:919
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