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Expenses mount at Pogo Agency, contractor charges to produce EIS are more than $1 million, total spending for gold project will total more than $300 million Patricia Jones Petroleum News Contributing Writer
State and federal agencies producing the 1,000-page draft environmental impact statement for the Pogo gold mine have billed the developer more than $1 million for permitting expenses.
But the $1 million plus in costs to agencies for the EIS, released in mid-March, is only a drop in the bucket for development expenses of the Pogo gold mine 38 miles northeast of Delta Junction.
So far, Teck Cominco has spent $78 million on the property, including the agency permitting process expenses, said Karl Hanneman, Teck’s Alaska regional manager.
The company has so far spent $9 million for environmental baseline and permitting costs, he said, and another $13 million for engineering and a feasibility study.
Surface exploration has cost $16 million and underground exploration $17 million. Purchasing and transporting camp infrastructure along an ice road cost $14 million, and maintenance and project management has run another $9 million.
Teck Cominco expects to spend between $200 million to $250 million to construct the underground hard-rock gold mine and processing facilities at the remote site. Housing for the 300-person work force and an all-season 50-mile road will also be constructed.
Additional gold could prolong life All will be built to operate the gold mine for roughly 11 years, according to the current plan of operation. The mine’s processing facilities are being sized so it could operate longer if additional gold is found in the area, Hanneman said.
“With an underground mine, you have to design the working to access the ore that you know is there,” he said. “Parts of the mill processing and recovery are sized, so if we do an expansion, we will not have to rebuild the whole building. It won’t be outfitted for future expansion from the start.”
Pogo’s underground gold deposit is estimated to contain 5.5 million ounces of gold, worth $1.8 billion at today’s market prices of $330 per ounce. Additional field exploration has been conducted on the large claim block in past years, but not recently.
“Certainly there will be more exploration in the future,” Hanneman said. “That will start sometime after the mines starts operating.” State agency permitting charges In Alaska, state agencies directly bill developers for state expenses incurred in an extensive permitting process. A memorandum of agreement is signed initially, with an estimated budget for state employees’ time and travel expenses, said Ed Fogels, Department of Natural Resources project manager for the Pogo gold mine.
“We agree on how the process will go, and come up with a ballpark figure on how much time we will spend on the project and what it will cost for personnel,” Fogels said. “As we go, we bill the company for personnel and travel costs.”
Since Teck-Pogo submitted its initial permit application in August 2000, state agencies have billed the company $234,000, Fogels said. That includes work conducted by DNR, as well as the Department of Environmental Conservation, the Department of Fish and Game and the Department of Law.
“If we were not reimbursed, we would not have the staff to do this,” Fogels said. “It’s either devote public funds to do this or let the company foot the bill.”
The reimbursement process does not compromise the objectivity of state agency’s review of the project, he added.
“They’re not buying a permit from us,” Fogels said. “It’s clearly stated that the reimbursement does not entitle you to permits. We’re not pre-deciding this.” Feds bill for contractor work Federal agencies do not directly bill developers for employee costs or time. Rather, they establish a similar memorandum of agreement that gives developers the cost of hiring a third-party consultant to produce the EIS.
In this case, Michael Baker Jr. Inc., served as the umbrella third-party contractor, said Bill Riley, mining coordinator for the region 10 office of the Environmental Protection Agency, lead agency on the Pogo EIS.
“Different Alaskan experts signed on as experts,” he said. “A lot of analysis went into that — a lot done by Teck. We check it out, modify and tweak it as they went along.”
Originally, EPA budgeted $320,000 for the third-party contractor cost related to the Pogo EIS, Riley said.
“Frankly, that was a very optimistic number — these are pretty large undertakings,” he said. “We went over the initial budget by a significant amount.”
He declined to say how much EPA’s contractor went over the estimated budget, saying that number should be obtained from Teck.
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