WELCOME! To our newest investors: AEDC Attends 2nd Quarter, 2006 Art International International Hartig, Rhodes, Hoge & Lekisch, P.C. POB Montgomery and Company Air Cargo Association AEDCAEDCconnections To our newest Executive Conference Th e Newsletter of Board member: Anchorage Economic Douglas M. North, Development President of Alaska in Beijing Corporation Pacifi c University Re-Newing Investors: 1st Quarter 2006: Bob Poe, AEDC President/CEO, will attend the coming through Anchorage. Poe believes that International Air Cargo Association’s (TIACA) “between talking about the capabilities of ANC WHAT’S INSIDE Long Term Th inking ACS Media, LLC executive conference in Beijing, China on April 9- and the capabilities of the Anchorage economy and Alaska Communications Systems, Inc. 11th. Linda Close, Marketing Director of the Ted business community, we’ll have a great ‘one-two Needed On Alaska Oil Taxes Alaska Cargoport, LLC Stevens International Airport (ANC), will also be in punch.’” page 1 Th is editorial provided by BP Alaska Alaska Regional Council of Carpenters attendance. TIACA’s meeting is visited by almost all Alaska Regional Hospital of the air cargo airlines around the world, and many In December of 2005, Poe and AEDC Board Long Term Th inking Th ere is great concern that the Petroleum Why then the disincentive to invest from the Alaska USA Federal Credit Union of the airports that court air cargo business will be Member Dennis Mitchell of Lynden International Needed on Oil Taxes there as well. traveled to China to attend a large trade and Production Tax (PPT) being considered by Legislature? Alaska is already one of the most Alyeska Resort industry show in Shanghai. As part of his current the Alaska Legislature is too high and will expensive places in the world to produce oil. BP Exploration (Alaska), Inc. discourage North Slope development, leading Assuming even the governor’s 20/20 PPT is put Th ere is a lot of excitement surrounding this trip, Poe will be traveling to Shanghai and Qingdao page 2 Brown Jug, Inc. conference because of the bilateral agreement made to follow up with contacts made at that show. to further oil production decline. Th e Senate into place, Alaska will become the area with the Cook Inlet Region, Inc. between the United States and China on July 24th, President’s Letter Resource Committee recently proposed a highest marginal tax rate in the U.S. And, at the Davis Constructors & Engineers, Inc. 2004. Th e agreement awarded a total of 222 weekly By developing new relationships with Chinese 25 percent tax rate on oil companies’ profi ts governor’s 20 percent rate and a $40/barrel oil Denali Alaskan Federal Credit Union all-cargo routes. Of the 111 U.S. routes currently logistics companies, and by nurturing established Economic Snapshot (SB305); while the House version of the bill price, the state will generate billions of dollars Doyon Universal Services JV awarded, 62 will include Anchorage. Th ree major relationships, Anchorage could see signifi cant proposes a 20 percent tax (HB488). Both bills more from the oil industry by 2012 than it Dynamic Properties, Inc. Chinese cargo carriers: China Eastern, China Cargo, benefi ts. Th is trip represents the chance to do just increase the tax when the price of oil raises above would with current oil production taxes. Eklutna, Inc. and Air China currently come through Anchorage. that. According to Poe, “Th e fi rst thing people page 3 a certain level, and have pared back some of the It is likely that of the 111 routes awarded to China, a notice when visiting China is how incredible the Federal Express Corporation industry incentives off ered in the Governor’s Certainly a higher tax has the potential to signifi cant percentage will come through Anchorage country’s economic growth has been; the idea that AEDC Grant for Global original 20/20 version (20 percent tax and 20 increase state revenue for the immediate future, Flint Hills Resources Alaska, LLC in the next few years because it is important for Anchorage will be a major trading hub for goods Logistics Facility tax credit on capital investments). but for how long, and at what cost? With Horizon Lines of Alaska, LLC cargo businesses to have a concentration of activity, shipped between China and the U.S. – that’s declining oil production and the risk of a shorter Hotel Captain Cook and Anchorage is strategically ideal for hosting that phenomenal.” What is the impact of North Slope oil oil future in Alaska, is a money grab from a Hughes, Bauman, Pfi ff ner, concentration. page 4 Gorski & Seedorf LLC production decline on the longevity of Alaska’s shrinking oil pie today the better solution? Please contact Hallie Bissett at hbissett@aedcweb. economy? Already, the North Slope is not Kiewit Building Group Mixing a Little Business Poe and Close are both going to work with Chinese com for more information. drawing suffi cient investment – not for lack Th e priority for the state should be to encourage Koonce Pfeff er Bettis, Inc. with Pleasure carriers to help them understand the benefi ts of of oil, but for lack of profi table ways to extract industry to invest – to grow the economic pie.. KPMG some of the remaining reserves: $2 billion to As representatives of the people, our legislators Kumin Associates $3 billion a year is needed to reduce the current have a responsibility to maintain the stability of Marsh USA, Inc. AEDC STAFF page 6 decline rate of 6 percent to 3 percent. At 6 Alaska’s oil business and keep Alaska attractive McDowell Group, Inc. percent decline, Alaska’s oil business will last to all investors. Maximizing the value of our Robert G. Poe Michelle Dickson, Jennifer Pringle Taylor Rachel Kenshalo Hallie Bissett Christa Hernandez Northern Air Cargo President & CEO PHR Marketing Director Communications Logistics Director Executive Assistant Providence Alaska about 25 years. At 15 percent decline – the resources means more than just maximizing Pacifi c Tower Properties Human Resources Director Medical Center Expansion natural decline rate without any investment – short term revenues. Oil left in the ground Penco Properties and Finance Director it is estimated that our oil business will be gone would be a shameful waste of our resources. Rise Alaska, LLC in just 10 years. (See lower chart) Superior Plumbing & Heating page 7 Th e Strategy Biz, Inc. Th ere are more than 17 billion barrels of reserves yet to be produced within existing fi elds – more Totem Ocean Trailer Express, Inc. “Iditarod” Press Trip than the total historical production of the Slope VECO Alaska, Inc. Successful altogether. But the easy-to-recover oil is behind Wilder Construction Co. 1,900 New Jobs us; the remaining reserves include heavy, viscous for Anchorage oil that demands new technology and more THANK YOU! 900 West Fifth Avenue, Suite 300 complex operations to be developed and will Anchorage, AK 99501 have higher unit production costs. Investment To Rick Morrison for the use of his vehicle during our (907) 258-3700 page 8 is essential to keep oil fl owing into the pipeline. Iditarod Press Visit www.aedcweb.com It’s estimated that $100 AEDC Attending billion will be required To Wells Fargo for the use of International Air Cargo their Board room at our Conference from the industry to fully February Board meeting. develop this known resource. AEDC is a private nonprofi t corporation (IRS code 501(c)(6)), operating since 1987. It exists to encourage growth and diversity in the Anchorage economy, promote a fa- vorable business climate and improve the standard of living of Anchorage residents. Funding sources for the corporation are municipal and state grants, contracts, and private contributions. For permission to reproduce any part of this newsletter, 8 please call (907) 258-3700. 1 BOARD OF DIRECTORS ECONOMIC SNAPSHOT EX-OFFICIO MEMBERS LEGISLATORS Anchorage Population Johnny Ellis 278,241 278,018 Senator, EDC 269,831 “Iditarod”–Th emed Press Trip Successful Alaska State Legislature AEDCA Ben Stevens Senator, During the fi rst week of March, AEDC hosted a group of journalists from around the world as ey were allowed Alaska State Legislature 2004 2005 up close, as th Letter from the President 2003 they learned about Anchorage’s business advantagese Last and Gre amett R awithce” a wide range of our investors. got to experience “Th Ethan Berkowitz Afterwards,Afterwards, tthehe jjournalistsournalists got to experience “Th e Last Great Race” up close, as they were allowed • Between 2004 and 2005, Anchorage’s population Representative, grew by 0.8%. By all accounts AEDC’s annual economicth forecast luncheon this year was the best ever. Not into the chute at the start of the Iditarod. Alaska State Legislature year of uninterrupted job growth and anticipating its • Anchorage has enjoyed ten consecutive years of only had Anchorage completed its 17 population growth. Lesil McGuire 18th, but our speaker – past Labor Secretary Robert Reich – was outstanding. Th e great thing • Since 2000, Anchorage’s population has grown by Th e journalists were Jerry Ao, New York Bureau Chief Representative, 17,958 residents. 05.04.06 09:34 for Chinese newspaper Jiefang Daily; Robert Mottley, FuW (9) Seite 42 Schwarz(01) (0) Alaska State Legislature about attracting a world class speaker like Robert Reich was that everyone had an enjoyable and Seite 42 Mittwoch, 29. März 2006 Nr. 24 Ausland Finanz und Wirtschaft Feature Writer for American Shipper magazine; and Immobilien verkauft informative lunch; AEDC’s challenge will be to match him at our next event. Karstadt-Quelle Alaska – heimliche Drehscheibe der Globalisierung 2nd Quarter Hotel Room Gross Sales Anchorage ist drittgrösster Frachtflughafen der W Mark Dittli, U.S.