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The return of Harold Heinze.

The Return Of Harold Heinze

Formerly head of a major oil producer's Alaska subsidiary, Heinze has been summoned back to Alaska as the governor-appointed steward of Alaska's resources.

After a 25-year career in the oil business, which carried him from petroleum engineer to the head of two Atlantic Richfield subsidiaries, Harold Heinze, at age 48, wasn't about to sit on a comfortable retirement package for the rest of his life. "I was prepared to grow a little more, but probably I looked a little further afield than people might have thought," says Heinze.

Heinze thought running a manufacturing plant in America's heartland, possibly in Kansas or Iowa, might be fun as well as challenging. He considered working in the education field or possibly somewhere on the "fringe" of government.

"Frankly, it all sort of stopped one day in about the middle of November when Wally tracked me down," says Heinze. The newly elected governor, Walter Hickel, wanted the former Arco Alaska chief to be his commissioner of natural resources.

Heinze could not be found. He and his wife, Vicky, were somewhere in New Zealand celebrating their 25th wedding anniversary. Messages were left with Heinze's realtor, whom he called periodically to check on the sale of the family home in California.

"I called my realtor one night as we were getting ready to move from the south island to the north island of New Zealand. He said there was no news on my house, but he added that the whole state of Alaska was looking for me," Heinze recalls.

Following a telephone conversation with Max Hodel, the governor's chief of staff, Heinze had pretty much decided to take the job. "Within five minutes of hanging up the phone and talking with my wife, I was probably 90 percent there in terms of wanting to do it. After talking with the governor a few days later ... I knew I wanted to play," says Heinze.

Heinze explains the commissioner's job offered exactly what he was looking for in a second career, what he calls the "Four Es" -- energy, economics, education and the environment. Says Heinze, "It was this wonderful blend. Not only would I be using a lot of things about Alaska I've treasured over the years in being here, but also in terms of the broad things I had set out for myself."

He recalls the only hard decision he had to make about the new job had to do with his commissioner's salary. While $79,000 a year is a lot of money to many wage earners, it represented about a quarter of what he received as president of Arco Transportation Co.

"Fortunately, my circumstances with leaving Arco are such financially that I could afford to take this job. But I assure you it was an interesting conversation I had with my financial adviser," says Heinze.

Actually, Heinze had decided to leave Arco months before Hickel was elected or he was offered the commissioner's slot. The former oil man explains that "the pyramid does narrow at the top" for the handful of corporate executives who are vying for the number one job, the presidency of Atlantic Richfield.

Says Heinze, "As things narrowed down, one of the problems in working for a very good corporation is that as they make choices, you compete against very good people. As they looked down the road, they didn't see me as competitive, and they offered me the opportunity under very amicable terms to see if I wanted to strike out and do something else. Fundamentally, they wanted my slot to try and develop somebody else so that in the future they were positioned well."

Heinze says he left Arco with no regrets and a comfortable retirement package, which kicks in at age 55. He also held 25,000 shares of company stock options worth about $1.5 million. By mid-April, Heinze had sold his remaining stock, formally ending his financial ties to Arco.

"I think that does eliminate all the conflicts I know of with Arco. To this point, I've been very careful to avoid any real decision that was an Arco-based decision ... but I still have some ethical restraints on me, and I'm very sensitive to that," says Heinze.

For example, the commissioner explains, it would be inappropriate for him to take part in any pending state litigation involving oil companies that he was party to as an Arco employee. "Obviously, it would be unethical for me to participate in discussions of legal strategy on this side," says Heinze.

Heinze was a logical choice for natural resources commissioner, fitting nicely into Hickel's so-called "owner-state" concept, in which Alaska state government is cast as sort of a public corporation with more than 100 million acres of land and a half-million stockholders, or Alaska residents. A free enterpriser at heart and by training, Heinze views himself as a kind of landowner, a role he says is mandated by the state constitution and suits his no-nonsense management style.

Says Heinze, "A fair amount of this department is concerned with basically operating the state's business related to land and water, and in the vast majority of ways, it's no different than if you were running a business to do that same mission and task. A private landowner would never sit there just to administer his own lands; he'd do something with it. He might enjoy it in a recreational sense, he might build a cabin, he might sell it to others."

Ken Boyd, deputy director of DNR's Division of Oil and Gas, says Heinze has the ability to quickly sort out complicated details. He explains, "You don't have to groom him. He's a quick study and doesn't need a lot of briefing. He's completely comfortable with the technical jargon of oil."

Bill Van Dyke, petroleum manager for the oil and gas division, has served under four governors and seven commissioners since joining the division in 1978. A former petroleum engineer for Gulf Oil, Van Dyke says his new boss is a good listener and "likes to get right to the point. He wants to see things happen and doesn't want to take two or three years to do it."

Adds Van Dyke, "From a technical standpoint, from the business standpoint, he knows more about oil and gas than any of those previous commissioners. He knows most of the history behind the issues ... and doesn't require a lot of background information to get to the decision point. That will serve the state well in the long term. I think he'll be able to maximize the return to the state from its oil and gas resources, recognizing there also are environmental and social concerns."

A 1964 graduate of the Colorado School of Mines, Heinze first came to Alaska in 1969 with Arco as an engineer to work on the newly discovered Prudhoe Bay oil field. He quickly moved through the ranks in Alaska and in the Lower 48, returning to Alaska in 1983 as president of Arco Alaska Inc., the state's biggest private employer and second largest oil producer. In 1987, Heinze was transferred to Long Beach, Calif., where he became president of Arco Transportation, a position he held until his retirement from the company last summer.

As the top man at Arco Alaska, Heinze gained a reputation as a tough and outspoken executive, especially when it came to environmentalists. He once publicly described them as "aggressive extremists and activists who operate under the disguise of environmentalists and environmental organizations." His opponents found him "crude" and "exasperating" at times. Heinze has since toned down his rhetoric considerably and is now quick to differentiate an "environmentalist" from a "conservationist."

"Conservation means the wise use of the land as opposed to an environmentalist, which in the Alaska setting pretty much has become a preservationist. Before people used to get them all mixed up, but I think the public tends to see the difference now. Clearly, I work for a governor who is strongly into conservation, and I'm proud to be a part of that," says Heinze.

The commissioner, in fact, says he has "no problems in regard to the environmental areas" of his job, which include the state park system. "Ten million acres of state land is set aside in parks and refuges, and I think that's great. I'm not bothered by that at all."

Against a backdrop of declining oil production, which currently generates about 85 percent of state income, Heinze is on a fast track to push "high benefit" projects that will help sustain the treasury in future years. The sale of North Slope natural gas and development of new oil fields are at the top of the list.

But the commissioner also wants to see more coal exports, hard-rock mines, hardwood manufacturing, winter tourist facilities and world-class visitor attractions. "Clearly, the challenge during these four years is to try and generate at least as much of these as we can to generate new streams of revenue for the state," says Heinze.

Meanwhile, Heinze and two other key Hickel appointees -- Revenue Commissioner Lee Fisher and Chief of Staff Hodel -- were among 33 former officers and directors of three failed Alaska banks named in a $56 million lawsuit brought against them in early April by the Federal Deposit Insurance Corp., which claimed they made improper real estate loans. Heinze served on the board of United Bank Alaska in the mid-1980s when faltering world oil prices launched Alaska into a severe economic recession, crushing numerous banks as well as other businesses around the state.

Heinze says he's not taking the FDIC suit lightly and has retained the Anchorage law firm of Bogle and Gates to represent him. With his legislative confirmation hearings not yet wrapped up (as of early May), the commissioner had to be concerned by the negative publicity surrounding the lawsuit.

Says Heinze, "You better take it very seriously any time the federal government comes after you. But in terms of the bank I worked with as an officer, I have no regrets. There's a lot of information and facts to come out, and I feel I have very competent counsel."

If Hickel were elected to a second term, Heinze says he would consider serving a second term as commissioner, if asked. It appears that his days in the oil patch are over, though.

Says Heinze, "I'm pretty well satisfied with the career I had in industry, and I think I would find it very hard to duplicate that same feeling of accomplishment. I don't think you get to do that twice. And that's why I'm just as happy I'm doing something different. I know a little more about forestry and agriculture and parks and mining. Fortunately, I have some good people who I can sit down with and explain things to me."

PHOTO : Harold Heinze says his position as commissioner largely entails overseeing state business related to land and water.
COPYRIGHT 1991 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:former head of Arco Alaska Inc. is now Alaska's commissioner of natural resources
Author:Tyson, Ray
Publication:Alaska Business Monthly
Article Type:Biography
Date:Jun 1, 1991
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