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By W. A. Ver Wiebe

Under the impetus of new demands caused by the war, the oil and gas industries of Kansas established new records during the year 1942. In all, 1513 test wells were drilled, which is somewhat of a drop from the figure of 2113 for 1941. The 1513 tests yielded 800 new oil wells, 85 new gas wells, and 628 dry holes. Thus there was an increase in two categories, the gas wells and the dry holes. Considering that last year only 592 dry holes were completed out of a much larger total, the figure of 628 dry holes causes some concern among local operators. The increase in unsuccessful tests illustrates once more the fact that each year it is becoming harder to find the remaining oil pools. When the figures are broken down, it appears that western Kansas accounted for 1177 tests, of which 689 were oil wells, 33 gas wells, and 455 dry holes. The total potential daily initial production uncovered by the successful wells amounted to 753,178 bbl. of oil and 619,734,000 cu. it. of gas. The figures for new initial production indicate a substantial drop from last year's figure of 1,691,000 bbl., and the figures on gas are slightly higher. In 1941 the new gas as based on a daily potential was 508,000,-000 cu. ft. In eastern Kansas, 336 wells were drilled. Among these in were oil wells, accounting for a daily initial potential production of 16,199 bbl. The new gas wells numbered 52 and added 253,725,000 cu. ft. per day to the gas potential production of the state. The remaining tests, 173 in number, were dry. It is interesting and perhaps significant that about half (630) of the wells drilled in western Kansas were drilled by the independent operators. Among the large companies, the Cities Service Oil Co. drilled 163 wells; the Stanolind Oil and Gas Co., 52; the Skelly Oil Co., 39; the Continental Oil Co., 48; and the Shell Petroleum Co., 21 wells. In eastern Kansas the independent operators drilled 297 out of the total of 336 wells. Among the major oil companies the Cities Service Oil Co. drilled 19; the Phillips Petroleum Co. 7; and the Sinclair-Prairie Oil Co., 6 wells. The figures based on relative percentages of dry holes to successful oil or gas wells are revealing. In western Kansas almost one half of all wells drilled by the independent operators were dry holes. The major oil companies drilled approximately 547 wells in western Kansas, of which 379 were successful in finding either oil or gas. It thus appears that the major companies fared better than the independents. In eastern Kansas the major companies drilled 39 wells, of which 29 were successful in finding commercial quantities of oil or of gas. No less than 329 wildcat test holes were put down in western Kansas and 105 in eastern Kansas, or 434 in all, during 1942. Considerably more than half of these were drilled by independent operators; 223 in western and 99 in eastern Kansas. An exploratory hole 56 mile or more from production is regarded as a wildcat well in Kansas. On a percentage basis, about 80 per cent of wildcat wells were failures. In western Kansas only 20 per cent found either oil or gas. The failures were about equally distributed among the major

Jan 1, 1943

By W. A. Ver Wiebe

Under the impetus of new demands caused by the war, the oil and gas industries of Kansas established new records during the year 1942. In all, 1513 test wells were drilled, which is somewhat of a drop from the figure of 2113 for 1941. The 1513 tests yielded 800 new oil wells, 85 new gas wells, and 628 dry holes. Thus there was an increase in two categories, the gas wells and the dry holes. Considering that last year only 592 dry holes were completed out of a much larger total, the figure of 628 dry holes causes some concern among local operators. The increase in unsuccessful tests illustrates once more the fact that each year it is becoming harder to find the remaining oil pools. When the figures are broken down, it appears that western Kansas accounted for 1177 tests, of which 689 were oil wells, 33 gas wells, and 455 dry holes. The total potential daily initial production uncovered by the successful wells amounted to 753,178 bbl. of oil and 619,734,000 cu. it. of gas. The figures for new initial production indicate a substantial drop from last year's figure of 1,691,000 bbl., and the figures on gas are slightly higher. In 1941 the new gas as based on a daily potential was 508,000,-000 cu. ft. In eastern Kansas, 336 wells were drilled. Among these in were oil wells, accounting for a daily initial potential production of 16,199 bbl. The new gas wells numbered 52 and added 253,725,000 cu. ft. per day to the gas potential production of the state. The remaining tests, 173 in number, were dry. It is interesting and perhaps significant that about half (630) of the wells drilled in western Kansas were drilled by the independent operators. Among the large companies, the Cities Service Oil Co. drilled 163 wells; the Stanolind Oil and Gas Co., 52; the Skelly Oil Co., 39; the Continental Oil Co., 48; and the Shell Petroleum Co., 21 wells. In eastern Kansas the independent operators drilled 297 out of the total of 336 wells. Among the major oil companies the Cities Service Oil Co. drilled 19; the Phillips Petroleum Co. 7; and the Sinclair-Prairie Oil Co., 6 wells. The figures based on relative percentages of dry holes to successful oil or gas wells are revealing. In western Kansas almost one half of all wells drilled by the independent operators were dry holes. The major oil companies drilled approximately 547 wells in western Kansas, of which 379 were successful in finding either oil or gas. It thus appears that the major companies fared better than the independents. In eastern Kansas the major companies drilled 39 wells, of which 29 were successful in finding commercial quantities of oil or of gas. No less than 329 wildcat test holes were put down in western Kansas and 105 in eastern Kansas, or 434 in all, during 1942. Considerably more than half of these were drilled by independent operators; 223 in western and 99 in eastern Kansas. An exploratory hole 56 mile or more from production is regarded as a wildcat well in Kansas. On a percentage basis, about 80 per cent of wildcat wells were failures. In western Kansas only 20 per cent found either oil or gas. The failures were about equally distributed among the major

Jan 1, 1943

By Franz Fohr

On July 27, 1919, there passed away a simple, unassuming gentle-man, who, throughout his life, allowed his intense modesty to keep him-self in the background and during his later years effaced himself so thoroughly that but few of his acquaintances knew aught of him. Yet he was one of our accomplished metallurgists, who did good work in the practice of his profession and lived an upright life. Now that he is no longer with us Franz Fohr cannot plead to be overlooked, and those who fondly remember him will be gratified by his receiving his due. Franz Fohr was born, Sept. 7, 1838, in Mannheim, Germany. Of his ancestry, education, and early career we know scarcely anything. We do not even know just when he came to America, or. what led him hither. The first record of his professional work in this country, found among his papers, shows that from July, 1870, to Jan. 1, 1872, he was superin-tendent of the Newark Smelting & Refining Works, then owned by Ed-ward Balbach & Son. At that time the Balbach works at Newark, established in 1850, and the Selby works at San Francisco, established about 1866, were the only important silver-lead refineries in the United States. Mr. Fohr may have been associated with the Balbachs for some time before he became superintendent of their plant or he may have come from Germany but a short time previously. At all events, it is certain that he was at that time an experienced and accomplished metallurgist. After leaving Newark and going to San Francisco, he soon formed a connection with Thomas H. Selby & Co. Early in 1874-this firm sent him to New York to procure information respecting the manufacture of white lead. His engagement in New York terminated on-Jan. 31, 1875. During 1875, Mr Fohr spent some time at Silver Islet and in the Lake Superior copper region, but of his work there no record remains. In the latter part of 1875, or early in 1876, he associated himself as metallur-gist with the Boston Silver Co., operating at Saint John's, Summit County, in which William L. Candler, of Boston, was the moving spirit. That company was developing its mine in 1875. At the end of that year it "had about 800 tons of ore on hand, about three-fourths of which is dress-ing ore, to be concentrated in its very systematic establishment and to be smelted into pig lead." Evidently Mr. Fohr was engaged for the latter purpose. Henry A. Vezin, erudite and painstaking, was the mechanical engineer for the company. In the fall of 1876, Anton Eilers took his family for the first time so far West as Denver and Mr. Fohr went with them. I do not think that Mr. Eilers had any connection with the Boston Silver Co., save possibly in a consulting capacity, but he visited Saint John's and the enduring friendship among Eilers, Fohr, and Vezin, which terminated only with their deaths, dated from that time.

Jan 12, 1919

By Goodman, Richard E.

A complete rational analysis for design of excavation slopes and loaded rock masses is a desirable but perhaps unattainable goal. Irregular external and internal boundary conditions, poor understanding of failure criteria for large masses of rock, capricious material properties, and the importance of indeterminate forces and inaccessible and virtually un- sampleable rock defects emphasize the importance of experience in this aspect of rock engineering. The experience must be correlated with geological factors. In certain regions the accumulation of such experience through the observation of existing rock slopes in various formations constitutes an important aspect of studies for design of rock excavations.

Jan 1, 1969

By AIME AIME

PRODUCTION of nickel in Cuba, a new source of this metal, has been started by the Nicaro Nickel Co., subsidiary of the Freeport Sulphur Co. Construction of the Nicaro plant in Oriente Province, Cuba, and of a refinery at Wilmington, Del., has been "substantially completed," according to Langbourne M. Williams, Jr., president. The initial rate of output is less than capacity operation, which will be reached when "the customary problems incident to the commencement of full- scale production are eliminated." The plant in Cuba for the treatment of the extensive nickeliferous ores of that region, and the refinery, were built by Nicaro for the account of the Defense Plant Corp. construction has been under way for eighteen months. The plants, when operating at capacity, are expected to increase America's sup-

Jan 1, 1944

By Thomas A. Simpson, Tunstall R. Gray

The Birmingham district first produced steel from Alabama hematite ores in 1899. Since then, the district generally produced more than 6.0 million gross tons of ore a year to the late 1950's. Production has declined since then to an annual rate of about 1.5 million gross tons. Reserves calculated for the district are sufficient to last many years. Mining in the district is now confined to Woodward Iron Company's Vance and Pyne mines. The rocks exposed consist of about 15,000 feet of consolidated Paleozoic sediments with a thin veneer of unconsolidated Cretaceous sediments in the Vance area. The district is characterized by a distinctively parallel and subparallel, slightly arcuate series of faults and joint systems. In view of available information, it seems reasonable to conclude that the Birmingham red ores are of sedimentary origin, modified to a small extent by diagenetic replacement after original deposition.

Jan 1, 1968

By Alfred H. Bell, George V. Cohee

Illinois produced 146,788,000 bbl. of oil in 1940, or nearly 11.0 per cent of the total for the United States, and ranked fourth among the oil-producing states. Its production was only slightly less than that of Oklahoma, which produced 11.5 per cent of the national total. Illinois' production in 1940 represents an increase of 55 per cent over the previous year, when it amounted to 94,912,000 barrels. The development of the Devonian limestone in the Salem and Centralia fields is largely responsible for the increase in production during 1940 Production from the Devonian limestone in these two fields was estimated to be 36,698,000 bbl., or 25 per cent of the state's total production (Table I). The increase in production during June, when the state's daily average production attained a peak of 518,200 bbl. for the week ending June 29, was due to the Devonian production at Centralia (Fig. I). The initial production of the best Devonian wells in the Centralia field was as high as 12,000 bbl. in 24 hr. Daily average production in IIIinois for 1940 was 400,000 bbl. of oil, but actually daily production fluctuated widely during the year. At the beginning of 1940 daily production was approximately 330,000 bbl. During the first hali of the year it in-creased irregularly to the peak in June mentioned above and as the prolific Devonian producing areas were drilled up, the state's daily production declined rapidly during July and continued to decline, although more slowly, until the end of the year, when the daily production was approximately 325,000 bbl. The daily average production per well in the new fields at the end of the year was approximately 40 bbl. (Fig. I). Oil from the Devonian was also produced in the Bartelso field, Clinton County, the Sandoval field, Marion County, and the Irvington field, Washington County, bringing the estimated total production from the Devonian limestone to about 26 per cent of the state's total production, The remainder was obtained largely from the Mississippian system. About 2 per cent of the total was from Pennsylvanian and Ordovician strata. The decline in the Devonian limestone production has been so rapid that the 1941 output from this system will probably be only a small fraction of that of 1940 unless large new reserves are discovered. The "Trenton" (Ordovician) limestone has been tested in two wells in the Centralia field and both were small oil producers at a depth of about 4000 it. The "Trenton" also was found productive in the Salem field at a depth of 4500 ft. (Table 5). The initial production of the discovery well, which was completed shortly after the end of the year, was 130 bbl. on pump. Other wells drilled early in 1941 had initial productions averaging 172 barrels. The outlook for 1941 is for a continuation of drilling activity in Illinois, but at a declining rate (Fig. I, upper curve). The most active area at the end of 1940 was in the deep basin area in Wabash, Edwards, White, and Hamilton Counties.

Jan 1, 1941

By Alfred H. Bell, George V. Cohee

Illinois produced 146,788,000 bbl. of oil in 1940, or nearly 11.0 per cent of the total for the United States, and ranked fourth among the oil-producing states. Its production was only slightly less than that of Oklahoma, which produced 11.5 per cent of the national total. Illinois' production in 1940 represents an increase of 55 per cent over the previous year, when it amounted to 94,912,000 barrels. The development of the Devonian limestone in the Salem and Centralia fields is largely responsible for the increase in production during 1940 Production from the Devonian limestone in these two fields was estimated to be 36,698,000 bbl., or 25 per cent of the state's total production (Table I). The increase in production during June, when the state's daily average production attained a peak of 518,200 bbl. for the week ending June 29, was due to the Devonian production at Centralia (Fig. I). The initial production of the best Devonian wells in the Centralia field was as high as 12,000 bbl. in 24 hr. Daily average production in IIIinois for 1940 was 400,000 bbl. of oil, but actually daily production fluctuated widely during the year. At the beginning of 1940 daily production was approximately 330,000 bbl. During the first hali of the year it in-creased irregularly to the peak in June mentioned above and as the prolific Devonian producing areas were drilled up, the state's daily production declined rapidly during July and continued to decline, although more slowly, until the end of the year, when the daily production was approximately 325,000 bbl. The daily average production per well in the new fields at the end of the year was approximately 40 bbl. (Fig. I). Oil from the Devonian was also produced in the Bartelso field, Clinton County, the Sandoval field, Marion County, and the Irvington field, Washington County, bringing the estimated total production from the Devonian limestone to about 26 per cent of the state's total production, The remainder was obtained largely from the Mississippian system. About 2 per cent of the total was from Pennsylvanian and Ordovician strata. The decline in the Devonian limestone production has been so rapid that the 1941 output from this system will probably be only a small fraction of that of 1940 unless large new reserves are discovered. The "Trenton" (Ordovician) limestone has been tested in two wells in the Centralia field and both were small oil producers at a depth of about 4000 it. The "Trenton" also was found productive in the Salem field at a depth of 4500 ft. (Table 5). The initial production of the discovery well, which was completed shortly after the end of the year, was 130 bbl. on pump. Other wells drilled early in 1941 had initial productions averaging 172 barrels. The outlook for 1941 is for a continuation of drilling activity in Illinois, but at a declining rate (Fig. I, upper curve). The most active area at the end of 1940 was in the deep basin area in Wabash, Edwards, White, and Hamilton Counties.

Jan 1, 1941

By Norman Weiss

THE need for more efficient utilization of labor in the metal-mining industry has been the subject of several recent editorials in the mining press, and one attractive possibility for such improvement lies in the designing of future milling plants particularly with economy of man-power in mind. We are accustomed to think of mill design as the selection and coordinated arrangement of process equipment, but if labor is to be efficiently utilized it must be given early consideration in planning the new mill. There are three good reasons for economizing in labor: (I) to reduce costs, not only in the form of wages but also in housing, hospital, welfare, and other obligations that a company accepts when a new man is added to the payroll; (2) to prepare for recurrent periods of manpower shortage, during which a well-designed plant can manage to get along with skeleton crews; (3) because a milling plant that must depend upon an inordinately large labor force for its operation and maintenance is certain to be inefficient in other respects, for many of the shortcomings in design that make necessary the excessive use of labor are generally not corrected merely by having too many men. A simple example of this is a poorly designed ore-feeding system: if this is inadequate to the extent that one man must be constantly unclogging feed chutes, it may help the situation to put two men or three at this task instead of one, but the feed rate will still be inconstant. First of the factors that affect labor saving is the location of the mill. This is often determined by transportation costs alone, and as a result the mill may be placed close to the mine regardless of the nature of the terrain. The designer must then adapt his layout to the conditions, favorable or not. This happens often at small properties, where capital investment may seem more important than operating expense. In most instances, however, a mill site carefully selected for the advantages it gives the designer in laying out the plant is the most economical in the long run, even if it involves a slight increase in cost of ore haulage. Given some freedom of choice, the design engineer may be able to find just the piece of ground that provides the proper gradient for the needs of the flowsheet, permits installation of essential yards and trackage, and perhaps supplies an excellent site for a tailing dam. Further justification for having placed the mill not too close to the mine sometimes emerges only years later as an opportunity to treat ores from other properties. When it is known from the beginning that the new mill will serve a number of scattered mines, a free choice of mill site is naturally stimulated. The most important single factor in limiting the labor requirements of a mill is its materials-handling system for bring-

Jan 1, 1946

By AIME AIME

ALL sessions of the Mining Geology Committee at the Annual Meeting this year were held jointly with other groups, a plan that seemed to work out to the satisfaction of every one. Certain of these sessions are reported in this issue by others; the ones held on Wednesday are covered here. Ten papers, as published in the February M&M, were on the program for the Wednesday morning session, held jointly with the Society of Economic Geologists. Mr. Eckel made a brief presentation of his paper, on which there was no discussion, and Mr. Peoples presented that of which he was a joint author. D. M. Fraser then discussed a gravimeter survey for chromite in Cuba, which blocked out some 50,000 tons of ore, and F. G. Wells told of work on chromiferous sands in Oregon.

Jan 1, 1943

Jan 1, 1924

By B. M. Burchfiel

CALIFORNIA possesses such an abundance of ceramic materials other than clays, that she is quite independent of other states and foreign countries so far as these materials are concerned. Certain users import some feldspar, silica, and allied minerals, but they do so from choice and not necessity. Production is largely for home consumption, so the total volume of ceramic materials produced is comparatively small. Many small deposits of the materials here under discussion are worked by individuals, and their output sold to individual grinding companies or users. The data given here shall be confined to the larger deposits and developments because they give a truer picture of typical deposits, operations, and materials.

Jan 1, 1936

Cooperation will be the keynote of the meeting of the Institute that will be held in New York on February 17 to 20. Arrangements are being made for two joint sessions with the Canadian Mining Institute, on the same day, which therefore will be known as Canadian Mining Institute Day. On the afternoon of Wednesday, February 19, there will be a joint session with the American Institute of Electrical Engineers. Besides, we will receive six or eight papers through the National Research Council, four of which will be presented at the National Research Council Session. In March, at the next meeting, of the Canadian Mining Institute, there will be an American Institute of Mining Engineers Day. The plan is to have the same subjects discussed at both meetings, but by different speakers. One speaker on each subject will represent the Canadian Mining Institute, and one speaker the American Institute of Mining Engineers. The Canadians and the Americans who will speak in Canada are expected to attend the discussion in New York. In addition the discussion at the New York meeting will be sent to Canada in printed form, so that the Canadian discussion will be a continuation of the former. At the joint session with the American Institute of Electrical Engineers, there will -be presented six very important papers on the subject of Electric Welding, one by the Chairman of the Electric Welding Research Committee of the National Research Council, another by the Chairman of the Metallurgical Sub-committee of that same Committee, and a third by Comfort A. Adams, President of the American Institute of Electrical Engineers and Chairman of the Welding Committee of the Emergency Fleet Corporation. We will receive six or eight papers through the National Research Council. These papers are results of recent investigations and represent the last word in their respective subjects. The excursion on Thursday, February 20, will be to Newark Bay to visit the Federal Shipyard where the first, electric-welded ship is being built. Philip W. Henry is chairman of the excursion committee of arrangements.

Jan 1, 1919

The 128th meeting of the American Institute of Mining and Metallurgical Engineers constituted a two weeks trip through the Great Northland of Ontario and Quebec and was a most memorable occasion. The last visit of the Institute to Canada was made in 1907 when the mines, which now have brought world wide fame to some of the camps, were not yet dis-covered. The party reached its greatest numbers at Porcupine where 167 visitors and nearly one hundred local members participated. Five members of the party from the States were on the previous trip in 1907. They were Mr. and Mrs. L. D. Huntoon, John Stevenson and son and E. F. Eurich. The Minister of Mines for the Province of Ontario attached his private car to the "Mining Engineers' Special" and made the complete trip through Ontario. This was a happy incident in many ways and gave the visitors an opportunity to discover a spirit of mutual accord between the Minister and mining industry that might well be emulated elsewhere. Two compartment cars and one standard Pullman with the Institute members from New York and the metropolitan district were attached special to the 6.15 p.m. Lehigh Valley train from New York, Sunday, Aug. 19, en route to Toronto, where was held the first session of the Institute's 128th Meeting.

Jan 9, 1923

By AIME AIME

EUGENE McAULIFFE will be the fifty-ninth man elected President of the Institute. Looking back to the first President, David Thomas, and reading Dr. Raymond eulogy of him, written eleven years after lie had served his term, we cannot help but feel that Mr. McAuliffe is much the same type of man. Like Mr. Thomas. Mr. McAuliffe takes office in his middle seventies the first President was 76 and our new chief will be 75. Dr. Raymond said A Mr. Thomas: " .. those of us who attended the first few meetings of the Institute ... will bear witness that his indomitable agility, activity and

Jan 1, 1941

By W. A. Clark, E. H. Dresser

ORE from the Minnesota iron ranges is transported from the mines to the loading docks on Lake Superior over four different railways: the Great Northern, Northern Pacific, Soo Line, and Duluth, Missabe and Iron Range, with hauls varying from 60 to 110 miles. For this service a large amount of specialized equipment is used. The steel ore cars are of the hopper type, 24 ft. long, to dump into alternate pockets of the docks, these pockets being 12 ft. long to correspond with the 12 or 24-ft. spacing of the boat hatches. The more recently con-

Jan 1, 1941

By H. W. Morse

THE CHAIRMAN (H. W. MORSE).-Gentlemen, for the first time in the history of the American Institute of Mining Engineers, we have a full session on the subject of leaching-especially on the leaching of copper ores.. This branch of metallurgy is rather in its infancy. We have had one big plant running for a year or more, and pretty successfully; and another one which will be started in February or March, the New Cornelia. We have another one at Garfield for the Utah company, which is just designed and construction begun; and from several other points come reports of interesting test work. The first paper on the program this evening is one of some of the test work on the New Cornelia ore by myself and Mr. H. A. Tobelmann. LAWRENCE ADDICKS, New York, N. Y. (written discussion).-The Ajo proposition has had, as I understand it, two great advantages: it has not been obliged to measure leaching against flotation or some other metallurgical process, and it deals with a copper content high enough

Jan 12, 1916

By Grover R. Castle

INTRODUCTION "Project Financing" or "Project Loans" have become increasingly popular in recent years, and commercial banks are being asked to consider more and more of such financing. However, the analysis of this type of loan is quite different from the analysis of a loan to a financially sound corporation based on the company's balance sheet. For this reason Chemical Bank did a study of project loans in an attempt to be more sophisticated in our approach to them. As part of this study, we examined 29 project financings for which information was available. In this article I shall describe project loans and set forth the guidelines we developed, as an aid to credit officers who might have occasion to analyse this type of financing. DEFINITION OF "PROJECT FINANCING" OR "PROJECT LOAN" The terms "project financing" and "project loan" commonly describe the various methods that banks and institutional lenders use to finance the construction of new projects on a basis whereby payout is anticipated from the revenue stream generated by the project. A project financing often involves a loan to a new entity formed specifically to own the project. The analysis of a project loan proposal is quite different from the analysis of other term-loan proposals since it involves a credit decision based on the review of a projection or forecast rather than of historical earnings and/or it involves the reliance on contractual obligations of third parties. Lenders are asked to assume the added risks associated with project loans because: 1. Project financing may permit a company to obtain additional leverage. It is possible for companies to arrange financing on a project basis that could not be arranged as a direct borrowing. For example, a company may not be permitted to borrow more money directly, due to a limitation in a bond indenture. However, a project financing can sometimes be negotiated on a basis not prohibited by the indenture. 2. Often the sponsors of, or the stockholders in, the project are seeking an off-balance-sheet financing. For example, 11 of the 29 projects in our study were arranged on an off-balance-sheet basis and one showed on the balance sheet as a deferred income item. An off-balance-sheet financing, for the purpose of this article, is a financing which does not show as a direct liability on the balance sheet of the sponsors of or stockholders in a project. 3. Projects are often located in a foreign country. The financing is arranged so that the lenders assume the political risk on the loan because many companies rightly believe that this arrangement affords a degree of insulation from political risk not otherwise obtainable. 4. Many projects are jointly owned by several sponsors. This form of financing lends itself well to a situation where a new entity is formed to own a project and do the borrowing. Project loans can be used to finance a variety of activities including development of iron-ore deposits and associated pelletizing plants; development of coal reserves; construction of pipelines, alumina plants, fertilizer plants and refineries; etc. The specific areas of analysis can be quite different, depending upon the type of project being financed. It is important, therefore, to classify the proposal according to the type of project, and also by the nature of the financing - nonrecourse financing, financing covered by a guarantee of completion and financing supported by an undertaking lasting for the life of the financing. I will discuss each of these types in more detail later, but first, I should like to make some

Jan 1, 1985

By Robert T. DeGavre

INTRODUCTION The $645 million financing for Inco Ltd's Soroako nickel project in Indonesia not only represents a significant human achievement but also there are certain important lessons that can be derived from Inco's experience in financing the project. The paper will not present a technical assessment of the project since Inco Ltd. submitted a series of papers on this subject at the international Laterite Symposium as part of the 108th Annual Meeting of the AIME in February 1979. BRIEF HISTORY OF THE SOROAKO PROJECT Table 1 summarizes the milestones achieved in the Soroako project and its financing. Exploration Phase A contract of Work was signed on July 27, 1968 by the Republic of Indonesia and F.T. International Nickel Indonesia (P.T. Inco) covering an extensive area of over 25,000 square miles on the two southeastern arms of the island of Sulawesi. The Contract provides that P.T. Inco has the sole responsibility for financing the project and determining the terms on which the financing should be obtained, that P.T. Inco has the right to receive and hold outside of Indonesia foreign exchange revenues and to freely dispose of such revenues, and that Indonesians have the right to purchase up to 20% of the equity of P.T. Inco over a period following start of production. P.T. Inco began field investigations in the Contract Area in August 1968. Preliminary reconnaissance sampling with portable drills broadly outlined areas of favorable laterite terrain which were then systematically sampled on surveyed grids. By early 1971 sufficient exploration work had been completed to indicate that the laterite deposits near Soroako could sustain a major nickel-producing plant (figure 1). Pilot plant studies in 1970 and 1971 at Inco's research station in Port Colborne, Ontario, using two bulk samples of Soroako ore material, also confirmed that the ore could be upgraded and treated for the recovery of its metal values. Feasibility Phase Encouraged by the results of its exploration program and pilot-plant work, Inco Ltd. commissioned Toyo Engineering Company of Japan in August 1971 to prepare a capital cost estimate for a relatively small nickel project called "Stage I". Stage I was to be a single-line pyrometallurqical process plant with an annual capacity of approximately 15,000 metric tons of nickel contained in 75% nickel sulphide matte (see Figure 2). Electric power was to be supplied by a thermal power station. It is important to recognize that Inco's strategy was to develop the Soroako ore deposits in several stages: first, construct a small project to gain experience and to reduce the initial capital outlay and then later expand in one or more steps to a much larger project to achieve maximum economies. The strategy reflected both Inco's financial position in 1971 as its sales and earning dropped sharply and the difficulties previously experienced by Inco in trying to launch in the late 1960's very large "greenfield" nickel projects in New Caledonia and Guatemala. Toyo's Project Development Study was completed. in January 1972. Based upon Toyo's cost estimate for physical facilities, Inco estimated the total capital cost of Stage I to be $115 million. For the next several months, Inco ran numerous in-house financial feasibility studies, using as inputs Toyo's cost estimate and the results of its exploration and pilot plant programs. In September 1972, Inco completed a project feasibility study which was based upon a capital cost estimate of $135 million. The feasibility study was immediately made available to potential partners and lenders. Partner Negotiations The Japanese nickel market had from the outset been central to Inco's planning for the Soroako project. That market had been growing dramatically at rates in excess of 20% per annum during the 1950's and 1960's. Japan had established, for rational security and other reasons, a domestic

Jan 1, 1985

By D. V. Carter, Dan C. Williams, John R. Coombs

Exploration was active in East and East Central Texas during 1944. Ten oil fields were discovered during the year, of which four show promise of development. The discovery wells of the Sand Flat and Tyler, South fields were drilled to a depth greater than 10,000 ft., and the latter field now produces from the Pettit at a depth of 9890 ft. The Sand Flat well was plugged back to the Paluxy. The other two fields are Glen Rose producers near 8000 ft. The Pickton field produces from the Bacon Lime and Winnsboro from the Rodessa section. The Eylau field, Bowie County, was significant as the first Smackover production in Texas. Magnolia drilled a test in the Concord field, which topped salt. The most extensive and significant development in the district was the Carthage gas-condensate field. It expanded from the 8000 acres of last year to an estimated 190,000 acres, or about 300 sq. miles, and is not defined as yet. The first oil production in the Carthage area was made from the Travis Peak in 1944 in the Rogers Lacy's Cameron Lumber Company well No. I, on the northwestern side of the field. The New Hope field, Franklin County, scored the largest number of completions during 1944 with 24, bringing its total number of wells to 27. Two more pays were opened and produced as dual completions with the older horizons. The Manziel field, Wood County, had 19 new wells added during the year, for a total of 29, while the Pittsburgh field, Camp County, reached a total of 23 wells by completing 14 new ones. Material shortages and drilling restrictions dropped the total number of producing wells completed in the district from 171 during 1943 to 141 for 1944. Abandonments increased from 531 during 1943 to 609 for 1944. Of this number, 479 were in the East Texas field. Subsidy payments had very little effect in the district and it was mostly a few of the old fault-line fields that had any wells to fall within the requirements for subsidy payments. The prices of crude oil remained constant in the district except for increases as a result of subsidy payments. Production and Probation Wartime demands called for increased allowables for many fields, consequently the condensate and oil production for 1944 increased to 190,016,180, which is up 6.9 per cent over 1943. The East Texas field, of course, remained the principal producer of the district, accounting for 134,768'499 bbl. during the year, or 71 per cent of the district total production of condensate and oil. The field topped its own 1943 production by 4.8 per cent and became the first field in the world to produce 2 billion barrels of oil. The Hawkins field remained the second largest oil producer in the district, with 13,317,088 bbl. for the year, a drop of 6.8 per cent from 1943, while Van field was third with 11,635,708 bbl. The

Jan 1, 1945