Aaron Schutt on Doyon, Limited’s Growth and Planning for the Next Hundred Years

This feature on Aaron M. Schutt, Doyon, Limited President and CEO, originally appeared as the cover story of Native Business Magazine’s January/February 2019 “Energy” print edition

Aaron Schutt, a Koyukon Athabascan and an enrolled member of the Native Village of Tanana, never really saw working for an Alaska Native Corporation in the plans, which is to say that he definitely didn’t envision himself holding the top office of Doyon, Limited — one of the top ten Native corporations in the state.

Schutt studied civil engineering at the University of Colorado Boulder before transferring to Washington State University, where he earned his Bachelor of Science degree in civil engineering. He then continued on to obtain a Master of Science degree in civil engineering from Stanford University.

“At the end of my master’s program, Stanford professors want you to get a Ph.D., and I was considering that,” Schutt told Native Business Magazine. “My twin brother was having a great time in law school so I flipped a coin and ended up going to Stanford Law School.”

Aaron Schutt, President & CEO of Doyon, Limited, shares a laugh with Trimble Gilbert, 2nd Chief of the Doyon region. (Photo courtesy Doyon, Limited)

After graduation, Schutt began a career in law, clerking for Alaska Supreme Court Justice Alexander Bryner and working in private practice at two national law firms with Alaska offices, where he represented tribal and Alaska Native Claims Settlement Act (ANCSA) corporation clients in transactional and business matters.

Then, in 2006, then-president & CEO Orie Williams convinced him to come work for Doyon, where he quickly rose through the ranks. From 2008 to 2011, he served as Senior Vice President and Chief Operating Officer, and in 2011, Schutt became president & CEO himself, taking the helm of a corporation that runs more than a dozen companies across several different industries.

READ MORE: Meet Doyon, Limited’s President and CEO Aaron Schutt

Doyon, Limited was established in 1972 after President Nixon signed ANCSA into law, and as part of the act, Alaska Native Corporations were authorized to select and receive title to 44 million acres of public land in Alaska, as well as receiving $962 million as a cash settlement. Doyon, Limited’s land entitlement was roughly 12.5 million acres in Alaska’s interior — an area roughly the size of New Hampshire and Vermont put together. Its vast land holdings make it the largest private landowner in the state of Alaska and one of the largest in the United States.

“In the early 1980s, many native corporations struggled dramatically,” Schutt said. “They handed these for-profit businesses 12.5 million acres and some money to start a business to people who very much lived a subsistence lifestyle in village communities across Alaska. They had a strong sense of values, a very strong work ethic, and some other advantages, but very little business acumen.”

As a result, Doyon, like other Native corporations, soon found itself on the verge of bankruptcy.

Doyon, Limited focuses on oil field contracting, government contracting, and natural resource development. (Photo courtesy Doyon, Limited)

That all changed in the 1980s, after Senator Ted Stevens — Alaska’s longtime senator who served from 1968 until 2009 — persuaded Congress to change the internal revenue code to allow native corporations to sell their net operating losses. As a result, Doyon recapitalized the company with those net operating loss sales.

“That’s what revitalized our company, and we’ve had an unblemished string of profitable years and consistent growth since that time,” Schutt says. “One of the lessons we learned was to be conservative and more disciplined about the businesses we got into. That was way before my time but it is an important story for things generally, and for Doyon specifically.”

Another turning point for the company came during Schutt’s tenure as Senior Vice President of Operations and Chief Operating Officer. Doyon’s management team concluded that their diversified businesses needed to be more focused in a few core areas. As a result, the corporation shed its non-core assets, allowing it to focus on oil field contracting, government contracting, and natural resource development.

“We’re really focused on growing those segments and doing what we do well — not chasing every deal that comes in the door,” Schutt said. “That’s allowed us to spend more time on the analysis of what our market’s going to look like five years from now, not just tomorrow, and where we can be effective in that market. That’s been key to our success in the last 10 years of Doyon — really understanding our market, growing it, and keeping that competitive advantage.”

The energy industry has long been one of these core areas. In 1982, Doyon formed Doyon Drilling, Inc. as a joint venture between Doyon, Limited and Nugget Alaska, Inc. This was during the lucrative early days of the exploration of Prudhoe Bay, which houses the largest oil field in North America. In 1993, Doyon Drilling became a wholly owned subsidiary of Doyon, Limited.

“Prudhoe Bay was the reason for the Alaska Native Claims Settlement Act,” Schutt said. “They needed to settle Native land claims to develop that field and the pipeline that goes all the way from the north to the south in Alaska, and it crosses an immense stretch of Doyon’s region in Alaska’s interior.”

Eliza Jones and Dewey Hoffman prepare for the keynote address at the 2018 Doyon, Limited annual meeting of shareholders. (Photo courtesy Doyon, Limited)

Schutt describes Doyon drilling as the corporation’s most successful business, and today the company operates eight of “the most unique oil and gas land drilling rigs specially designed to drill oil wells in extreme conditions,” according to Doyon Drilling’s website.

Doyon Drilling also claims a great record on innovation with regard to its rigs.

“Doyon Drilling has a fantastic story about how it became the leader in the arctic drilling market in North America and Alaska specifically,” Schutt said. “They’ve always anticipated what would be the next best mousetrap in the market with land rigs.”

“We had the first rigs that were on these large trailers that could be moved up on the north slope rather than taken apart and reassembled,” Schutt said. “We had the first self-propelled single module rigs and lots of other technical innovations.”

The latest of these, Schutt says, is North America’s largest land rig in the Edmonton area, which the company expects to be able to drill anywhere from 35,000 horizontal feet to 40,000 horizontal feet in some circumstances.

“There’s a lot more capability in that rig than in others and we’re seeing that change in the market on the north slope where surface infrastructure is harder to permit, because you don’t want to have the environmental impact of surface development,” Schutt said. “You can use existing roads, pads and pipelines, and reach out further, which is a time saver for all of us.”

In addition to just pure revenues generated from their businesses, Doyon also has a significant impact on employment for the wider community, but particularly for Doyon’s shareholders. One example Schutt cites as a great example of this is Doyon Drilling’s roustabout program, which offers free training to Doyon shareholders who apply and are selected.

The roustabout program is a great way for shareholders with an interest in oil and gas careers but have no prior experience working on an oil rig to enter the industry by performing a variety of job tasks on the rig, including proper loading and unloading, general maintenance and cleaning, and providing vital support for the drill floor crew.

“Every rig, the roustabouts are 100 percent Doyon shareholders, and that’s an industry like many other industries where people work their way up from entry level to senior positions that pay very well based on the job training and formal training through their employer rather than Voc-ed or college,” Schutt said. “We’ve had that program in place for 30 years or more and that’s been very successful in creating these careers for people.”

“Many end up leaving us for better jobs in the oil fields, but some are still at very senior positions in our company,” Schutt continued. “But we’ve created these economic employment opportunities through that program and our emphasis is on employing and promoting our shareholders within Doyon Drilling.”

Doyon has a significant impact on employment for the wider community, but particularly for Doyon’s shareholders. Doyon Drilling’s roustabout program offers free training to Doyon shareholders who apply and are selected. (Photo courtesy Doyon, Limited)

While Doyon Drilling’s roustabout program certainly has a long-term record of success, similar programs exist in Doyon’s other companies, and in total Schutt says that about half of the corporation’s employees are also Doyon shareholders, including half of the company’s executives, roughly a third of its senior management, and more than half of its supervisors. In total, the corporation employs 175 shareholders out of 350 employees.

“These jobs would be anything from in the office executive jobs, HR and accounting jobs, jobs out in the field, and basically anything on a rig,” Schutt said. “We have Doyon shareholders from the tool pusher down to 100 percent of the roustabouts.”

According to Schutt, when he started at Doyon in 2006, they were a medium sized, Alaska-only business with operations mostly in the oil field. Over the last 12 years, though, they’ve grown to become a large Alaska business and a medium-sized regional business in the northwest with operations all over the country.

“We’re growing outside of Alaska, and we’re looking to make major investments,” Schutt said. “One of our themes in the last two years at Doyon has been transformation. We’re protecting and growing our core, but we know we need to do some investment outside of Alaska because the market is so small up here.”

While the corporation sees some growth potential in their core oil fields business in Alaska, they are also particularly interested in expanding into the utilities space as a counter to the volatility of the oil field. Schutt says that the assets that the corporation finds attractive are other utility assets that have an ability to invest significant capital with a stable return on equity and stable job potential. The company is currently in the final stages of buying a small crude oil pipeline in interior Alaska and is on the hunt for other utility assets in Alaska and elsewhere that match that profile.

As the company looks to the future, there are other key challenges that Schutt says it is grappling with and preparing for. One of these is the challenge of getting data and technology to the remote areas where oil rigs operate.

Schutt has worked at Doyon since 2006. (Photo Courtesy Doyon)

“The use of technology in the oil field, like many other industries, has rapidly accelerated in the last 10 years,” Schutt said. “The use of data in the oil field is just tremendous and growing, and everyone in the industry — even if you’re a camp provider — has to understand that and embrace it and figure out how to get data out in the middle of nowhere in the middle of an arctic winter, for example, to make sure that our clients and other contractors can do their jobs safely and efficiently.”

He says that another major challenge that Doyon’s companies are working to overcome is the changing preferences with younger generations when it comes to careers.

Historically, the typical schedule for all of Doyon’s north slope oil fields is a period where employees will work 12 hours a day for 14 or 21 days in a row, followed by an equal amount of time off where they can go home.

“From the 1970s to the 2000s, a lot of people in Alaska had those schedules and that was their career and they made a lot of money and they were very happy with that,” Schutt said. “We’re not seeing that same enthusiasm from our youngest employees, and a lot of people don’t like that environment where they’re gone from home.”

“We seem to overcome it, but for example, we don’t see nearly the number of applications for open jobs that we did 20 years ago for those same jobs,” he said.

One of the other major challenges Doyon has to face as it looks toward the future is the tension between other Tribal groups and Native groups in Alaska that oppose energy development like the drilling and natural resource exploration work that is central to Doyon’s business. Schutt sees this as a balancing act that requires a heavy focus on maintaining proactive external communication.

Doyon has a significant impact on employment for the wider community, but particularly for Doyon’s shareholders. Doyon Drilling’s roustabout program offers free training to Doyon shareholders who apply and are selected. (Photo courtesy Doyon, Limited)

“We’re very cognizant of how we talk to shareholders about protecting fish and game resources, subsistence opportunities, and generally being good environmental stewards,” he said. “We talk to our shareholders about how clean our energy industry is here in Alaska compared to other places in the world that are also in, especially, the oil business.”

“Our environmental standards on the north slope are the best in North America and probably close to the best in the world in terms of trying to prevent environmental impact, whether that’s surface use, or spills, or the standards we operate under,” he said.

Schutt touts Doyon’s advanced systems designed to protect health, safety and the environment. And he says that he understands that hydrocarbons are not renewable resources and that global warming is real and affecting everyone. That’s why he says Doyon, Limited takes a long-term view and is trying to diversify some of their interests into other areas.

“We really do spend a lot of time and effort trying to protect everything we have here in Alaska,” he said.

At the end of the day, Schutt sees his long-term approach as fundamental to Doyon’s strategic planning.

“Our mandate is to be here for a very long time, so that’s a lot of pressure to do that well,” he said. “We can’t just focus on the next quarter’s earnings; we have to make sure we’re here for the next hundred years.”