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By Wilhelm Borchers

IN all special branches of the chemical and metallurgical industries, in which large electric furnaces became necessary for carrying out new processes or for the improvement of old ones, the development of the electric furnaces took place on much the same lines. The endeavors to make a success of a new idea brought forth many ingenious designs, which, however, almost without exception, furnished the proof that the safest and shortest way to practical success is the utmost simplicity of construction of the necessary apparatus. Our knowledge of the qualities of materials for building electric furnaces and of the constituents of the furnace-charges, especially their electric conductivity and their chemical affinity . towards one another at high temperatures, is still far from being complete, and from this fact we must conclude that the smaller the number of elements in the construction of a furnace, the fewer the number of unreliable factors both in the construction and in the operation of the electric furnace. This conclusion deserves special attention when an electric furnace for making steel has to be chosen from the constantly growing number of inventions, inasmuch as the chief con¬stituent of steel, the element iron, is a substance which in its liquid phase has so great an affinity fir those elements which are to be removed from the charge, that it is very difficult to comply with the following conditions: 1, to beat the refining-slag to the highest point of its chemical activity ; to prevent the iron from entering the slaw, or, where this cannot be done, to make it enter so that it finally appears in the end-product

Jan 1, 1910

By John V. Beall

Since the U. S. Metals Refining Co. works was established, around the turn of the century, near the town which is now called Carteret, N. J., it has grown to be a major producer of refined copper and the main source of that special brand known as "oxygen-free high-conductivity copper." Owing to the complex metallurgical problems arising from handling a variety of raw materials such as copper concentrate from Matahambre, Cuba, copper and brass scrap from the New York area, and domestic blister copper, the organization is geared from top management down through its 2000 employes to maintain a high degree of flexibility in plant operation. The Company is a subsidiary of The American Metal Co. Charges for the smelter furnaces, one reverberatory furnace and one blast furnace, are made up in. bedding bins so that they may be tailored to the production of a constant grade of blister copper. The reverberatory furnace smelts the .sulphide charge, which may be a blend of ten different materials but principally the Cuban concentrate, and the matte from the process is poured into a converter. This reverberatory is 80 by 20 ft, silica lined with a slag bottom, fired by pulverized coal, and continuously side-charged from the top by bottom-dump cars which keep the side walls covered. It produces a 40 to 50 per cent copper matte. The fuel-charge ratio is 4.35 tons of solid charge per ton of coal. The furnace has a capacity of 10,000 tons of charge per month and produces from 5000 to 6000 tons of slag per month which must be disposed of. About 5000 tons of converter slag is produced monthly and returned molten to the reverberatory furnace. The converter gases go through a spray chamber to a Cottrell precipitator and thence to the flue system. Smoke from the

Jan 1, 1948

By E. M. Murphy

(Presented by invitation at a meeting of the Spokane Local Section of the Institute, Feb. 17, 1912.) EIGHT years ago the Hecla mine, a lead-silver producer, situated at Burke, Idaho, was producing ore from but two levels, the 300- and the 600-ft. All hoisting was done with a 12- by 16-in. slide-valve, double-reel, hoist. The hoist was being worked to its capacity and was unsuitable for hoisting from greater depths. As the work of opening a new level was about to be started, it became necessary to remodel the then-existing equipment or install a new hoist. The recent advent of electricity from Spokane had made available a cheaper power than steam. By a series of tests conducted throughout the Coeur d'Alène district, it was found that it cost $109 per year to generate a horse-power with steam. Electric power was to be had for $50 a horse-power per year. It was decided to substitute for the engines a motor-drive, of sufficient capacity to operate from the 900-ft. level, and ultimately install an entirely new hoist. After disconnecting the engines, installing a new shaft, and making a few minor changes, a 300-h-p., 2,300-volt, 514-rev. per min., variable-speed motor of the induction type was geared to the reel-shaft. The reels were supplied with 3/8 by 4-in. flat rope, and the duty of the hoist was about as follows: Cage, 1,700; ore, 2,600; car, 1,400; rope, 2,250; total, 7,950 pounds. The Bristol ammeter chart, Fig. 1, shows the combined current-consumption of the hoist- and mine-motors. The large intermittent load is clearly shown ; this produced harmful fluctuations in the voltage of the long, lightly-loaded, 60,000-volt transmission-line from Spokane to the Coeur d'Alènes. The power company received no compensation for the increased cost of producing power for this intermittent or fluctuating load. In order to protect its system from similar excessive

Sep 1, 1912

COUNCIL OF ECONOMICS OF AIME Formerly Mineral Economics Division Established as a Division December 15, 1948 Established as a Council February 26, 1957 Douglas Donald, Chairman Sheldon Wimpfen, Vice-Chairman (Mining) A J Phillips, Vice-Chairman (Metals) E Connaughton, Vice-Chairman (Petroleum) J S Vanick, Contact AIME Director A H Lindley, Jr Secretary-Treasurer Lehman Brothers 1 William Street New York 4, N Y COUNCIL OF EDUCATION Formerly Mineral Industry Education Division Established as a Division January 15, 1932 Established as a Council February 26, 1957 L E Shaffer, Chairman J D Forrester, Vice-Chairman O Cutler Shepard, Past Chairman , Contact AIME Director

Jan 1, 1959

COUNCIL OF ECONOMICS, AIME Formerly Mineral Economics Division Established as a Division December 15, 1948 Established as a Council February 26, 1957 Sheldon P Wimpfen, Chairman John D Ridge, Vice-Chairman (Mining) A J Philips, Vice-Chairman (Metals) Warren B Davis, Vice-Chairman (Petroleum) COUNCIL OF EDUCATION, AIME Formerly Mineral Industry Education Division Established as a Division January 15, 1932 Established as a Council February 26, 1957 James D Forrester, Chairman Charles V Kirkpatrick, Vice Chairman (and Chairman-elect) Lysle E Shaffer, Past Chairman Truman H Kuhn, Secretary-Treasurer Colorado School of Mines Golden, Colorado John S Bell, Contact AIME Director

Jan 1, 1960

By John V. Beall

Early this year at the University of Arizona in Tucson, a survey was made of student opinion about the minerals industry. Over 100 of the three page questionnaires were completed and these were analyzed by the following categories: 40 Mining Engineering students, 20 Geological Engineering with 2 Geophysical Engineering students, 15 Geology students, 7 Metallurgical Engineering, 26 Underclassmen, 29 Graduate students and a composite of 84 total students. Not all of the results of the survey were predictable. After graduation there is a strong preference toward going to work in the mineral industries. The next most popular options, but trailing the first choice greatly, was graduate work or employment in another industry. A smattering of other choices were for teaching, government or research. None checked the box for drop out.

Jan 1, 1971

By MARSHALL D. DRAPER

CHINA is one of the large producers of the world's tin. About 95 per cent of the total Chinese production comes from the Kotchiu district in the southern part of the province of Yunnan. Yunnan occupies the southwestern part of China, bordering on Burma,. Siam and. French Indo-China. From the British port of Hong Kong,' small steamers sail southwest at about four-day intervals, reaching Haiphong in French Indo-China in two or three days. This, one of the principal ports in Indo-China, is a modern French city of some 50,000 population which, with its tropical surroundings, has much natural beauty. It is a few miles from the sea on the Red River, which has its source in China. Both at Haiphong and Hanoi, the capital of Indo-China, sixty-three miles north of Haiphong and also on' the Red River, there are foundries, shipyards, machine shops, cement and brick plants and various similar industries.

Jan 1, 1931

By L. H. Simons, H. H. Spain

I NT RODUCTION Theory indicates that linear water-floods should exhibit scaling and stabilization properties in both oil-wet and water-wet porous media'. Experimental verification of these proper-ties in oil-wet media was obtained some time ago', and more recently, Perkins', employing a high permeability unconsoli dated sand and a low oil-to-water viscosity ratio, has obtained flooding data in a water-wet medium which follow the pattern of scaling and stabilization. Also, Root and Calhoun3 have found similar trends in the displacement of gas by liquids from unconsolidated sands. In general, however, the experimen-tal evidence appears still somewhat conflicting since scaling and stabilization of water floods in water-wet media has not been observed in most of the studies to date'.".'. The purpose of this paper is to provide a more comprehensive picture of waterflood behavior in water-wet media and to corroborate the validity of the scaling and stabiliza-tion concepts. The need for differentiating between the intrinsic nature of water-oil displacements inside a porous medium and perturbating secondary end effects is discussed, pertinent experimental procedures are outlined and the results of flooding tests conducted at low and at high oil-to-water viscosity ratios on con- solidated, water-wet Alundum cores are analyzed. END EFFECTS IN WATER-WET MEDIA Outlet End Effects The peculiar feature of the outlet end effect in water-wet cores is that it not only results in an excessive wetting phase saturation at the outflow face,'.' but that it also retards the moment of water breakthrough: i.e., causes an undue delay in the appearance of water in the produced effluent. Conditions existing in a water-wet core when water first arrives at the outflow face are schematically shown in Fig. 1. At this flooding stage the saturation distribution, Fig. la, has not yet been distorted by the outlet end effect. A water-invaded pore at the outlet core face, opening into the oil-filled void space between the end of the core and the end plate of the flooding cell, is illustrated in Fig. lb. The curvature of the water-oil interface is concave toward the outlet, and the pressure on the water side of the interface is lower than on the oil side by an amount equal to a certain capillary pressure (Fig. lc). Before the water (of this particular pore) can be produced from the core, it is apparent that the pressure in the water phase must exceed that in the oil outside the core. Accordingly. when water first reaches the outlet face, it will not leave the core but will accumulate inside, and only oil will be produced. Eventually, as the water injection is continued. sufficient pressure is built up in the water to reverse the curvature of the interfaces in the outlet pores, and only then will water be produced from the core. This stage, illustrated in Fig. 2. corresponds to the conventional "water breakthrough" observed in flooding experiments. For purposes of discussion, it is convenient to distinguish between the flooding stage at which water first arrives at the outlet face of a core (Fig. 1) and the stage at which water is first produced from the core ( Fig. 2). The former will be referred to as "water arrival" and the latter water breakthrough. In oil-wet media

By Walter W. R. May

FOR more than 25 years a few business men who represent virile private enterprise in the Pacific Northwest have been trying to awaken the community to the potential benefits of an open Columbia River. No threat of government com- petition then hung over the industry, which was adjusted to state regulation. Numerous sites were engineered and the findings were laid before the operators of heavy industry in the East, Middle West, and South -even of Europe. These engineering data became, if not the basis, the inspiration upon which the U. S. Army Engineers eventually were to "build the Columbia River Bible" - their great document known as House Document 103, the report on the Columbia River and minor tributaries.

Jan 1, 1940

By K. A. Pauly

(Wilkes-Barre Meeting, June, 1911.) COMPRESSED air has been and is still very extensively used in connection with mining-operations, but its application in the past has been almost entirely confined to supplying power to underground machinery. Its introduction was due to the difficulty of taking care of the steam which is exhausted underground, rather than to any advantage in efficiency to be gained by its use. The ease with which electric power may be carried to the remotest parts of the mine and the high efficiency of the electric motor have long been appreciated by mine-operators, and electric power is now extensively used underground in the more recent developments, while many of the compressed-air engines in the older workings are being rapidly replaced by electric motors. Recently, however, it has been suggested to use compressed air for driving the large shaft-hoists, the air for the engines being supplied by electrically-driven compressors, and an installation of this character is being erected at Butte; Mont. It is the object of this paper to compare the compressed-air system of hoisting with the various electrical systems, from the stand-points of first-cost and cost of operation. However, before entering into a discussion of the various systems, it will be well to consider briefly the conditions affecting the choice of a system of hoisting in which electricity is the ultimate source of power. The power required by a mine-hoist is extremely intermittent and fluctuates between very wide limits, the all-day average consumption of power not exceeding from 5 to 15 per cent. of the maximum demand during hoisting. The cost of supplying power for such a fluctuating load is necessarily higher than that for supplying an equal amount of

Dec 1, 1911

By J. C. Detweiler

THE Jacksonville plant of Humphreys Gold Corp., operating under leases from National Lead Co. and Rutile Mining Co. of Florida, recovers rutile, ilmenite, zircon, and monazite from an ancient beach deposit containing about 2.5 pct of these minerals in combination. The location of the plant is unique, being situated about ten miles from the center of Jacksonville, Fla., surrounded by a thriving suburb. Two four-lane highways pass within 1 ½ miles of the plant. An expressway now under construction will pass over the tailing pile, within 500 ft of the mine office. The elevation at the plant site is approximately 50 ft above sea level. This is one of two mines producing titanium minerals and zircon in Florida. Another mine is also operated by Humphreys at Starke, about 50 miles southeast of Jacksonville. The Jacksonville deposit extends about six miles in a north-south direction, averaging approximately one half mile wide and twenty ft thick. Values begin at the surface over most of its length and ter-

Jan 1, 1952

Separates of all the Technical Publications published in 1931 are available at Institute headquarters. All the papers are on file in public, university and technical libraries, and when so indicated in the list, may be found in the Transactions. Copies of these papers have been mailed to those members of the Institute who are registered in the different classes: A-Metal Mining; B-Milling and Concentration; C-Iron and Steel Division; D-Nonferrous Metallurgy; E-Institute of Metals Division; F-Coal Division; G-Petroleum Division; H-Nonmetallic Minerals; I-Mining Geology; K-Mining Administration; L-Geophysical Prospecting. Other members may obtain copies by writing to the Secretary. Additional copies are sold at the rate of I cent per page; minimum charge, 25 cents. Metal Mining Tech-nical Publi- Title Author Meeting TRanb. cation Volume No. and Page* 411-A.43 Ventilation at the Portovelo Mines, J. P. Harmon New York. T31, 83 Ecuador (18) Feb., 1931 425-A.44 Use of Models for the Study of Mining P. B. Bucky New York, Problems (28) Feb., 1931 Milling and Concentration 375-B.32 Ball Mill Studies, I (53) A. W. Fahrenwald New York, H. E. Lee Feb.. 1931 401-B.33 Experimental Flotation of Oxidized H. S. Gieser New York. Silver Ores (9) Feb., 1931 410-B.34 Flotation of Minor Gold in Large-scale E. S. Leaver New York, Copper Concentrators (32) J. A. Woolf Feb., 1931 414-B.35 Effect of Particle Size on Flotation A. M. Gaudin New York, (23) J. 0. Groh Feb., 1931 H. B. Henderson 416-B.36 Ball Mill Studies, 11.—Thermal A. W. Fahrenwald New York. Determinations of Ball Mill Effi- G. W. Hammar Feb., 1931 ciency (13) H. E. Lee W. W. Staley Iron and Steel Division 38QC.59 Open-hearth Steel Process as a Prob- E. R. Jette New York, C31, 80, 111 Iem in Chemical Kinetics (34) Feb., 1931 381-C.60 Thermodynamic Study of the Phasial Yap, Chu-Phay New York. Equi1ibriain the System Iron-car- Feb., 1931 bon (26) 382-(3.61 Influence of Dissolved Carbide on the Yap, Chu-Phay New York, Equilibria of the System Iron-car- Feb., 1931 ban (19) 383-C.62 Research on Blast-furnace Slags. R. S. McCaffery New York, Three papers (88) Co-workers Feb., 1931 384-C.63 Statistical Analysis of Blast-furnace K. S. McCaffery New York, C31, 60, 70 Data (13) R. G. Stephenson Feb., 1931

Jan 1, 1931

By D. L. King, C. D. Rubert, R. W. Christy, B. A. Schepman

R. W. Christy (Manager of Sales, Sanitary Engineering Equipment, Link-Belt Co.) and C.D. Rubert (Barrett, Haentjens & Co.) — Messrs. King and Schepman have presented an excellent paper which outlines the general practice in the design of thickener mechanisms. Lifting devices, controls, special applications and underflow pumping arrangements have been reviewed in detail. Pumping arrangements were illustrated which eliminate the need for an expensive tunnel beneath the thickener floor. Most of those illustrated have the common feature of a relatively long underflow suction line extending from the hopper floor to the pump located on the bridge at the periphery of the tank. The authors limit these arrangements to comparatively dilute or thin slurrys. It is implied that dense and coarse concentrates, which are difficult to pump, cannot be handled unless a tunnel is constructed. Fig. 1 shows an underflow pump arrangement which negates the need for a tunnel but which permits the operator to convey a heavy dense slurry. The pump is mounted directly on the fixed hoist platform and the impeller is located at the base of the steel center column. Priming water is not needed. The column

Jan 1, 1963

By T. Sekimoto, T. Kokubo, M. Yamamoto, K. Masuda, T. Moro, H. Sakamoto

The choking-free cyclone was developed primarily to remove solid particles suspended in a slurry containing fibrous materials, such as municipal solid waste. This cyclone is characterized by a screw conveyor at the underflow side of the cyclone. The screw conveyor has a hollow rotational shaft for air supply and is driven by a variable speed motor for discharge control. Even if the underflow discharge is highly concentrated, this type of cyclone can be stably operated without nozzle choking. High classification efficiency similar to that of a conventional cyclone can be obtained as a result of air introduction through the hollow rotational shaft. The recovery of organic matter and the removal efficiency of inorganic matter were actually improved by the application of this cyclone to municipal solid waste. After applying this cyclone to the desliming of fine sand, sand product of low water content was recovered.

Jan 1, 1980

By Robert S. Dewey

AS a result of drilling operations during 1943, West Texas again added sufficient new oil reserves to replace the oil produced during the year, but failed to maintain its position in currently available reserves because the deeper discoveries will require years for development. Drilling failed to provide the additional oil necessary to meet the increase in current and anticipated market demand. Although 13.3 per cent of the total footage drilled was in wildcat exploration, the ratio of oil discoveries to total wildcats was less in 1943 than in 1942, but comparable to that in 1941. Of the 732 field wells completed, 270 were at Slaughter, 55 at Wasson, 45 at Mascho and 31 at North Cowden. As of Dec. 31, 1943, there were 361 drilling wells including 71 wildcat and 290 field wells; 19.7 per cent were wildcats. It is anticipated that the percentage of wildcats of the total wells will be higher during 1944 than in either 1942 or 1943. Tables 3 and 4 present a three-year comparison of drilling activity and illustrate the downward trend of development that has been in effect during that time. Because of development lag in the deeper Ordovician fields, several years elapse before 2 sufficient number of wells is completed to give a substantial producing rate. As these new oil reserves cost more to find, and will cost more to produce on a barrel basis than the oil marketed during the year, their reserve replacement value to the industry is less in money. Costs While complete costs for deeper drilling are not yet available for analysis, it is evi- dent from the data on drilling rates to comparable depths, contract prices, and general increases in costs, that the cost of drilling has risen approximately 20 per cent during the year. One representative drilling contractor estimates that the average drilling time on a 5000-ft. field well has increased nearly one third and that out-of-pocket costs have increased a dollar per foot. Three major factors contribute to this increased cost: (I) less experienced labor, (2) deterioration in mechanical equipment and expendable material, and (3) increased contract prices. In the past, when there were more drilling rigs than wells to be drilled, some contractors would cut their drilling profit to keep their personnel and rigs working. As this practice is no longer necessary, the contract prices are adjusted upward to assure a profit. On deep and difficult drilling, contracts are let on a cost plus basis. A number of mechanical difficulties have become evident. Inferior quality of steel used in drill pipe and rock bits has added appreciably to drilling time and cost. Contractors are experiencing delay in obtaining repair work and repair parts for prime movers. As the length of drilling time required an shallow-field wells has not increased in proportion to that on deeper wells, it seems that the medium-sized drilling rig is better adapted mechanically than the heavy one to the work imposed. One of the main deficiencies in the heavy rig equipment is inadequate pump capacity. Drilling Mud The increasing amount of deep drilling has emphasized the importance and relationship of good mud to efficient and suc-

Jan 1, 1944

By Robert S. Dewey

AS a result of drilling operations during 1943, West Texas again added sufficient new oil reserves to replace the oil produced during the year, but failed to maintain its position in currently available reserves because the deeper discoveries will require years for development. Drilling failed to provide the additional oil necessary to meet the increase in current and anticipated market demand. Although 13.3 per cent of the total footage drilled was in wildcat exploration, the ratio of oil discoveries to total wildcats was less in 1943 than in 1942, but comparable to that in 1941. Of the 732 field wells completed, 270 were at Slaughter, 55 at Wasson, 45 at Mascho and 31 at North Cowden. As of Dec. 31, 1943, there were 361 drilling wells including 71 wildcat and 290 field wells; 19.7 per cent were wildcats. It is anticipated that the percentage of wildcats of the total wells will be higher during 1944 than in either 1942 or 1943. Tables 3 and 4 present a three-year comparison of drilling activity and illustrate the downward trend of development that has been in effect during that time. Because of development lag in the deeper Ordovician fields, several years elapse before 2 sufficient number of wells is completed to give a substantial producing rate. As these new oil reserves cost more to find, and will cost more to produce on a barrel basis than the oil marketed during the year, their reserve replacement value to the industry is less in money. Costs While complete costs for deeper drilling are not yet available for analysis, it is evi- dent from the data on drilling rates to comparable depths, contract prices, and general increases in costs, that the cost of drilling has risen approximately 20 per cent during the year. One representative drilling contractor estimates that the average drilling time on a 5000-ft. field well has increased nearly one third and that out-of-pocket costs have increased a dollar per foot. Three major factors contribute to this increased cost: (I) less experienced labor, (2) deterioration in mechanical equipment and expendable material, and (3) increased contract prices. In the past, when there were more drilling rigs than wells to be drilled, some contractors would cut their drilling profit to keep their personnel and rigs working. As this practice is no longer necessary, the contract prices are adjusted upward to assure a profit. On deep and difficult drilling, contracts are let on a cost plus basis. A number of mechanical difficulties have become evident. Inferior quality of steel used in drill pipe and rock bits has added appreciably to drilling time and cost. Contractors are experiencing delay in obtaining repair work and repair parts for prime movers. As the length of drilling time required an shallow-field wells has not increased in proportion to that on deeper wells, it seems that the medium-sized drilling rig is better adapted mechanically than the heavy one to the work imposed. One of the main deficiencies in the heavy rig equipment is inadequate pump capacity. Drilling Mud The increasing amount of deep drilling has emphasized the importance and relationship of good mud to efficient and suc-

Jan 1, 1944

Jan 1, 1962

By J. F. Wilson

An experimental investigation has been made of gas-driven slug displacements in a system of high gas saturation to evaluate the process for use in a California reservoir. Fluid compositions, temperature, pressure and core permeability duplicated reservoir conditions as closely as possible. The temperature was above the critical of the slug materials. The slug composition required for 100 per cent oil recovery in the linear flow systems was found to agree with that determined from equilibrium phase studies. A qualitative theory for the slug displacement of two-phase systems is proposed and found to be in general agreement with the observed flow behavior. The theory predicts that the length of the reservoir fluid-slug transition Zone will increase with increased initial gas saturation and decrease with increased oil swelling accompanying the composition change from reservoir oil to the critical composition. The precipitation of small amounts of an asphaltic phase during the formation of the transition zone had no adverse effects on the flow behavior of otherwise miscible systems. INTRODUCTION Despite the large number of recent publications relating to oil recovery by miscible displacement, little information is available concerning the behavior of crude oil-natural gas systems at conditions likely to be encountered in field application. The laboratory data reported here were obtained during an investigation of the possibility of using a gas-driven LPG slug in a partially depleted California reservoir. Seven gas-driven slug displacements employing slugs of different compositions and sizes were made in 26- to 27-ft long sandstone cores. The equilibrium phase behavior of the systems was also determined. The features of primary interest in this study are the following. 1. Data were obtained on the displacement of reservoir fluids at reservoir conditions. 2. A high gas saturation existed in the long cores at the start of the displacements. 3. The temperature of the studies was above the critical of the slug materials. 4. A comparison between the flow behavior and equilibrium phase behavior, as illustrated by a pseudo-ternary phase diagram, is afforded for a system of considerable complexity. THEORY Phase Behavior The use of the pseudo-ternary phase diagram to illustrate the phase behavior in miscible displacements has been discussed by Clark, Schultz and Shearin. Sie-vert, Dew and Conley and Arnold, Stone and Luffel' have presented both phase equilibrium and flow data for true ternary systems. For the true ternary, the application of the theory is straight-forward; for a reservoir system represented as a ternary, the theory undoubtedly gives a qualitatively correct picture. One purpose of this investigation was to see if the pseudo-ternary phase diagram could be used to predict with reasonable accuracy the conditions necessary for miscible displacements with actual reservoir systems. MiscIBLE Displacement of Two-Phase System A large number of papers "I3 have treated the miscible displacement of a single-phase fluid from both an experimental and a theoretical viewpoint. However, the normal field application of the process will be in a partially depleted reservoir. Often the state of the system will be such that the mobility of the gas phase is greater

By Eugene Stephenson

CRITICAL analyses of the work expended in producing oil by the utilization of gas energy have appeared in the publications of Shaw,1 Pierce and Lewis,2 and Herold,3 authors who have ably discussed the factors which must be taken into consideration in comparing energy consumed per barrel in various wells which are flowed by means of gas-lift. However, two distinct phases of oil production are concerned with the ratio of gas energy consumed to oil produced. One of these phases is the gas-lift, which utilizes the differential gas pressures for the purpose of flowing oil, whether these pressures be natural reservoir pressures or be induced by artificial compression of gas or air. The other phase has to do with prorating oil production in pools which are operated either as units, or are subject to such restrictions as those imposed at Oklahoma City by the Corporation Commission, or, by similar controlling groups in other fields. An abundance of literature is available relative to the problems of flowing wells by gas-lift, but the first suggestion that the energy of the gas within the oil and gas pool might serve as a basis for proration, appeared in the timely article by McWilliams.4 Much of the. dissatisfaction with proration in certain fields is because some operators feel that besides the hazard to the wells which accompanies the test, the method of allocating production on the basis of the "potential" gage is inequitable and gives some operators a distinct advantage over others.5 The most severe penalty may be exacted from the most progressive operators or those who attempt to produce their oil with a minimum quantity of reservoir gas. If :no difficulties ever

Jan 1, 1931

By Walter J. Mead

By American tradition, if not by rational decision, publicly owned natural resources have been transferred to private industry for processing. The process of transfer requires specific determination of the price which the patentee, buyer, or lessee must pay to the government in exchange for the right to develop a resource, and selection of the patentee, buyer, or lessee from among several possible contestants. Pricing of natural resources owned by the government presents a set of problems quite different from ordinary commodity pricing. Natural resources in situ are not homogeneous commodities. Within any class of natural resources, specific leasable parcels will differ in value by reason of location and accessibility, as well as quality and quantity. Thus, there is no "going price;" every lease within a specific resource class will have a different value. To complicate further the pricing and buyer selection problems, competition may not be reliable. Natural-resource markets are characterized by oligopsony conditions. In a significant number of cases, as will be shown later, there has been only one bidder for a given lease, and in most lease sales the number of bidders is equal to or less than three. As a further complication, there is great uncertainty regarding the value of specific resources, even among the best-informed buyers, as well as within the leasing agency. In some instances, particularly with regard to oil and gas resources, there may be uncertainty about the presence of resources, as well as the quantity and quality of any resources contained in the tract offered for lease. In other cases, such as oil shale and some deep ocean minerals where new technologies are involved, the presence of the resource is clearly established. There may be a relatively high degree of knowledge about the quantity and quality of the resource, but there is great uncertainty concerning the cost of production. These problems in total make it difficult for the leasing agency to appraise accurately the resource to be leased, as well as for the potential bidder to calculate a bid price that will yield him a normal profit. The pricing goal of the federal government as the seller or lessee may be to capture the economic rent; that is, the price of a resource might equal its discounted present value. A required price substantially above this amount would either generate no bids, or, in the long run, would bankrupt the buyer. A price below this amount is a disguised subsidy to the lessee. A subsidy to mineral lessees, as to any other economic interest group, as a minimum should be justified by a clear showing of net external benefits from the economic activity. In the case of timber sales by the U.S. Forest Service, the Forest Service Handbook asserts that "the aim in national forest stumpage appraisal is to determine market value,"8 and "market value" is equated to "fair market value." Regarding minerals, there is no reference in legislation or regula-

Jan 1, 1976