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By P. B. Baxendell

The appraial of producing properties and profitability ntzalysis of a proposed capital expenditure are based on the same principles. In both problems a projection of future cash income is. cornpared to one or more capital expenditures. Several different methods have been in use either to compute a price to obtain a given earning power on the investment or to compute the earning power which will result from a given capital expenditure. One of these, the "Average Annual Rate of Return" method, computes in a simple manner the ratio of the present value of the future earnings after amortization to the present value of the undepreciated balances of the investment over the life of a project. This method, not well known generally, appears to have some rather unique advantages in reducing the computation work required, eliminating trial-and-error solutions, and providing a more accurate answer when applied to oil industry investments subject to the unit-of-production basis of amortization. Its derivation is given and its versatility demonstrated in the solution of certain everyday investment problems. A number of charts, useful in applying this method to profitability analysis and appraisal work, are provided. The current trend in the market values of producing properties is shown. INTRODUCTION Making sound capital expenditure decisions requires an objective means of measuring the productivity of individual investment proposals. Since the best measure of the economic worth of such proposals is their ability to produce profits, it is common practice to grade proposed capital expenditures according to their annual earning power as a percentage of the outstanding capital. The same principles which govern the determination of the rate of return of proposed capital expenditures also apply generally to the problem of determining the appraisal value or purchase price of income-producing oil and gas properties. Both problems are of prime importance in the producing phase of the oil business, where management is faced daily with decisions to drill or not to drill certain development wells, or with the determination of the appraisal value of producing properties. The common feature in both problems is that a projection of future cash income is compared with a known or estimated capital investment to determine itsiearning power or annual rate of return. In the case of development drilling, the cost of the proposed well can usually be estimated with a fair degree of accuracy and the problem consists of finding the rate of return on the invested capital. In the case of appraising producing properties, on the other hand, the desired rate of return is usually known in advance and the problem consists of determining the purchase price which, for the given income projection, results in the fequired rate of return. Certain accounting procedures common to the oil and gas producing business make these two problems and their solutions somewhat different from corresponding problems in other industries, and, in certain ways, simpler. The main difference is in the amortization policy which, for oil and gas production, is frequently on a unit-of-production basis, compared to the amortization on a time basis used in many other industries. The purpose of this paper is to discuss briefly the various methods currently in use for the measurement of productivity of invested capital in producing properties and, in more detail, the derivation and application of what will be called the "Average Annual Rate of Return Method". This rather interesting and not too well known method has some very definite advantages in the solution of many problems common to the oil industry. For the sake of simplicity, federal income tax considerations have been disregarded in the examples used, since they do not affect the principles involved. The use of the production payment route in the sale or purchase of producing properties, which has been amply covered in many other publications, has also not been included in this analysis. METHODS FOK MEASUKING THE EARNING POWER OF INVESTED CAPITAL, Of the many different methods used to measure the earning power of invested capital, four are applicable to oil or gas production ventures. Depending on whether these four methods utilize one or two interest rates, and whether a fixed amortization pattern is used, they may be classified as follows.

By G. R. Mansfield

THE geologic structure of the Idaho phosphate field has an important bearing on the classifica-tion and the exploitation of the lands that contain phosphate. Maps and structure sections1 recently made available show that the phosphate is mainly preserved in downfolded or downfaulted areas. Since the phos- phate beds are generally rather soft and lie between harder and thicker formations they have been forced to adjust themselves to these formations during epochs of disturbance of the earth's crust, so that they are frequently affected by minor folds and by faults which may help exploitation by producing undue thickness at certain places or may hinder it by cutting out the phosphate at other places where according to expecta-tion it should be present. A particularly important structural feature which affects both the distribution and the exploitation of the phosphate beds is the great Bannock overthrust by which one or more slices or blocks of the earth's crust have been pushed over other blocks like ice cakes on a pond. Thus in this region a great flap of folded rocks lies across other rock structures for a distance of approximately 35 miles. Most of the commercially accessible phosphate deposits, shown in the maps that accompany the report cited, are in this flap, which con-stitutes the upper block of the overthrust. In some places, however, the phosphate in the lower block is also accessible. In both blocks post-phosphate rocks exposed at the surface here and there indicate that phos-phate beds may lie at greater or less depth below. The presence of the Bannock overthrust beneath much of the area reported is known by the occurrence of windows in the upper block both within the quadrangles mapped and in areas farther west. The portions of the lower block exposed in these windows show stratigraphic dis-cordance with the surrounding formations. The depth of the fault plane at most places, however, can be told only by drilling or actual mining. Some of the folds in the upper block are relatively deep and it seems fairly certain that the phosphate that may originally have been present in their deeper parts has been removed by thrust faulting. The estimates of phosphate reserves in folds liable to be affected by the Bannock overthrust may therefore need ultimate revision depending on the depth of this fault plane, as it may subsequently be ascertained.

Jan 1, 1928

By W. Hurst

The authors of this paper, in substituting values in a material balance equation associated with a gas reserve and a water drive, cannot find sustainment of what the gas in place should be; therefore, their conclusion is that this type of problem dealing with gas reservoirs is insoluble. They have introduced the word, "cybernetics," based on the work of Norbert Wiener, that further extends this line of reasoning, namely, to the effect that the system is a "black box", and that the gas reservoir and aquifer can take on infinite aspects 'based upon their past performance, to quote the authors. The inference is that this black box is an unknown. which permits in computer programming to subscribe as many variables as possible to observe by adjustment of one to another those combinations of conditions that fit field behavior. This may satisfy those in this discipline whose dedication is to programming, but to the others this is a comparison to the rationalization of the combinational results of the throwing of dice—a probability procedure. In reservoir engineering we are more direct. We learn from the examination of individual we'll and field data exactly what is in this black box. I now come to the impasse that has confronted these authors in their machine calculations. In this I have reproduced from their own production data (Tables 1 and 2 of their paper) pressure vs cumulative gas produced. shown as Figs. D-1 through D-5. A perusal of any of these five plots, for the corresponding fields in the Po Valley, shows the straight-line relation of pressure vs gas produced, evidencing pressure depletion. The point I make is that in their fundamental production data, there is no variance from a straight line that can support a water drive.

By J. B. Clark

In 1933, R. paris1 published a phase diagram for the entire Mg-Ca-Zn system. He reported the existence of a ternary intermetallic phase, Mg5Zn5Ca2, which formed a quasi-binary with the magnesium solid solution. Since then, no extensive work has been reported on the system. Recently however, indications of the existence of a second ternary in-termetallic phase in equilibrium with the magnesium solid solution led to a reinvestigation of the solid phase equilibria involving the magnesium solid solution. The 335°C (635°F) isothermal section was chosen for study. Metallography and powder X-ray diffraction were selected as the best mutually corroborating methods for determining the solid phase constitution. Seventy-six alloys were prepared from singly sublimed (99.95 pct) magnesium, electrolytic (99.95 pct) zinc and USP calcium. The analyses of some of the alloys are shown in Fig. 1. The alloys were melted in a graphite crucible under a chloride flu and chill cast in a split graphite mold. Dif-fusion couples (see Fig. 2) were prepared by casting molten Mg-20 wt pct Zn alloy around a cylinder of Mg-30 wt pct Ca alloy. The alloy samples and the diffusion couples were sealed under argon in Pyrex vials and annealed in a furnace capable of controlling within 1/2°C of 335°C. At the conclusion of the anneal, the alloy samples were quenched in ice water and the diffusion couples were air cooled. Procedures standard for magnesium alloys were used for metallographic examination. Powder X-ray diffraction patterns were taken on a G. E. camera with a 14.32 cm dim using nickel-filtered copper radiation. The redetermined 335°C (635°) section of the Mg-Ca-Zn phase diagram is shown in Fig. 1. TWO ternary intermetallic phases, designated w and

Jan 1, 1962

By Khosrow Bakhtar

A series of nineteen shear tests were performed on fractures 1 m2 in area, generated in blocks of sandstone, granite, tuff, hydro- stone and concrete. The tests were conducted under quasi-static and dynamic loading conditions. A vertical stress assisted fracturing technique was developed to create the fractures through the large test blocks. Prior to testing, the fractured surface of each block was characterized using the Barton JRC-JCS concept. The results of characterization were used to generate the peak strength envelope for each fractured surface. Attempts were made to model the stress path based on the classical transformation equations which assumes a theoretical plane, elastic isotropic properties, and therefore no slip. However, this approach gave rise to a stress path passing above the strength envelope which is clearly unacceptable. The results of the experimental investigations indicated that actual stress path is affected by the dilatancy due to fracture roughness, as well as by the side friction imposed by the boundary conditions. By introducing the corrections due to the dilation and boundary conditions into the stress transformation equation, the fully corrected stress paths for predicting the strength of fractured blocks were obtained.

Jan 1, 1984

By Willard P. Ward

The numerous direct processes which have been patented and brought before the iron-masters of the world, differ materially from that now introduced by Mr. Wilson. After a careful examination of his process, I am convinced that Mr. Wilson has succeeded in producing good blooms from iron-ore, and I think that I am able to point out theoretically the chief reasons of the success of his method. Without going deeply into the history of the metal, I may mention the well-known fact, that wrought-iron was extensively used in almost all quarters of the globe, before pig or cast-iron was ever produced. Without entering into the details of the processes by which this wrought-iron was made, it suffices for my present purpose to say that they were crude, wasteful, and expensive, so that they can IE employed to-day only in a very few localities favored with good and cheap ore, fuel, and labor. The constructiou of larger furnaces and the employment of higher temperatures led to the production of a highly carbonized, fusible metal, without any special design on the part of the manufacturers in producing it. This pig-iron, however, could be used only for a few purposes for which metallie iron was needed; but it was produced cheaply and with little loss of metal, and the attempt to decarbonize this product and bring it into a state in which it could be hammered and welded was soon successfully made. This process of decarbonizatioa, or some modification of it, has successfully held the field against all, so-called, direct processes up to the present time. Why ? Because the old-fashioned bloomeries and Catalan forges could produce blooms only at a high cost, and because the new processes introduced failed to turn out good blooms. Those produced were invariably "red-short," that is, they contained unreduced oxide of iron, which prevented the contact of the metallic particles, and rendered the welding together of these particles to form a solid bloom impossible. The process of puddling cast-iron, and transforming it by decarhonization into wrought-iron has, as everybody knows, been in successful practical operation for many years, and the direct process referred to so closely resembles this, that a short description of the theory of puddling is not out of place here.

Jan 1, 1884

By A. R. Denison

The area discussed in this report comprises a group of 38 counties lying in the northeast corner of Texas. It covers all, and extends beyond, the borders of what is commonly described as the East Texas Basin. It includes two major oil fields, Van and East Texas; two major gas fields, Bethany and Waskom; and a number of fields, both oil and gas, of lesser importance. All commercial oil production comes from beds of Upper Cretaceous age and almost exclusively from the basal member, the Woodbine sand. Gas is produced from both Upper and Lower Cretaceous beds with the newer production from the older beds. East Texas Field This field continued as in 1932 and 1933 to dominate the drilling and production situation throughout the oil business. A total of 3681 producing wells was completed in this field during 1934. This is an increase of 1215 over the 2466 producers completed during 1933. Total wells

Jan 1, 1935

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Jan 1, 1938

By O. G. Lellep

Modern shaft kilns in Europe are fully mechanized and burn cement of acceptable quality at 700,000 Btu per bbl and lime at 3.2 million Btu per net ton. Rotary kilns for cement have increased in thermal efficiency by using exit gas heat for preheating incoming raw material and by recovering heat from outgoing clinker in air-quench coolers. The dry process Lepol or ACL kiln has the lowest fuel consumption, 580,000 to 630,000 Btu per bbl, and very low dust loss, about 1 pct weight of clinker. The Holdebank-Gygi system reaches 720,000 Btu per bbl. The calcinator kiln for the wet process consumes 1.1 million Btu per bbl. IN every country economic circumstances prescribe the method used to produce a commodity at lowest cost. In Pennsvlvania a man's wages for working 4 hr buys a ton of coal wholesale; in Germany a laborer must work 40 hr, or ten times as long. In western Europe, therefore, conservation of fuel is of primary importance, and recent practices of burning lime and cement differ from those employed in the United States. 'This Paper presents data collected during a trip through western Europe in 1953. Considered uneconomical, shaft kilns for burning

Jan 1, 1955

By R. Salter, C. K. Chase

Although Asarco's Silver Bell Unit, 40 miles west of Tucson, Ariz., is known primarily for copper production, molybdenite is also produced as a byproduct in the 8000 tpd flotation mill. The Silver Bell ore comes from two pits approximately two miles apart. Copper mineralization is essentially chalcocite resulting from two to three-fold secondary enrichment in a highly altered zone. A typical porphyry copper deposit, Silver Bell ore is of medium hardness. The ore consists of about one part molybdenum to 65 parts of copper. In the copper concentrate which is the starting point for separate molybdenum recovery, the ratio is also one part molybdenum to 65 of copper. Molybdenum mineralization is primary. Enrichment is not evident but it is notable that the molybdenite is more common in the more siliceous, harder rocks. The actual molybdenite occurs as diversely oriented flakes of fairly constant grain size, mostly in fractures associated with quartz veins. Most of the mineral appears unoxidized; secondary coatings on the molybdenite flakes are fortunately rare. In May 1962 a modified, improved version of the molybdenite circuit was put into operation.

Jan 7, 1964

Jan 1, 1970

Jan 1, 1968

By Herbert Clark Hoover, Lou Henry Hoover

SINCE the Sixth Book has described the iron tools, the vessels and the machines used in mink, this Book will describe the methods of assaying1 ores; because it is desirable to first test them in order that the material mined may be advantageously smelted, or that the dross may be purged away and the metal made pure. Although writers have mentioned such tests, yet none of them have set down the directions for performing them, wherefore it is no wonder that those who come later have written nothing on the subject. By tests of this kind miners can determine with certainty whether ores contain any metal in them or not ; or if it has already been indicated that the ore contains one or more metals, the tests show whether it is much or little ; the miners also ascertain by such tests the method by which the metal can be separated from that part of the ore devoid of it ; and further, by these tests, they determine that part in which there is much metal from that part in which there is little. Unless these tests have been carefully applied before the metals are melted out, the ore cannot be smelted without great loss to the owners, for the parts which do not easily melt in the fire carry the metals off with them or consume them. In the last case, they pass off with the fumes ; in the other case they are mixed with the slag and furnace accretions, and in such event the owners lose the labour which they have spent in preparing the furnaces and the crucibles, and further, it is necessary for them to incur fresh expenditure for fluxes and other things. Metals, when they have been melted out, are usually assayed in order that we may ascertain what pro- portion of silver is in a centumpondium of copper or lead, or what quantity of gold is in one libra of silver ; and, on the other hand, what proportion of copper or lead is contained in a centumpondium of silver, or what quantity of silver is contained in one libra of gold. And from this we can calculate whether it will be worth while to separate the precious metals from the base metals, or not. Further, a test of this kind shows whether coins are good or are debased ; and readily detects silver, if the coiners have mixed more than is lawful with the gold ; or copper, if the coiners have alloyed with the gold or silver more of it than is allowable. I will explain all these methods with the utmost care that I can.

Jan 1, 1950

By M. ROWE, H. E. Gilliland, L. BARNES

The authors of this paper are to be commended for a clear exposition of a timely subject. However, some important conclusions, in addition to those presented in the paper, can be drawn from the results of their elaborate and rather complete numerical computations. First of all, the major part of the calculations presented in the paper are for semi-infinite slabs of oil shale (the authors designate this as Model I) and a question must be posed — Are these elaborate computations needed to arrive at realistic estimates of the shale oil displaced. Consider the model of Lauwerier* that corresponds to the authors Model I if thermal conduction parallel to the fracture be neglected. If one also neglects the finite (but relatively small) heat capacity of the material in the fracture, it is easily shown from Lauwerier's solution that the cumulative oil production would be:

Jan 1, 1969

By H. Morgolin, M. A. Greenfield, P. A. Farrar

In attempts to correlate mechanical properties with microstructure, it is desirable to determine the effect of ß grain size. Determination of 6 grain size is not a problem where a has precipitated at ß grain boundaries. However, in alloys which have been processed to produce an equiaxed a +ß structure the ß grain size is difficult to determine because ß grain boundaries do not etch. The ß grain size can sometimes be laboriously determined by searching for grains which have some a! outlining the 6 grains. This difficulty of ß grain size determination in equiaxed a + ß alloys can be overcome by heating below the ß transus temperature for a short time and water quenching. Fig. 1 shows the starting equiaxed a + ß structure of the Ti-5.25A1-5.5V-0.9Fe-0.5Cu alloy used in this investigation, and Fig. 2 shows the microstructure of the same sample water-quenched after heating 1 min at 1675"F, which is 25°F below the 0 transus. The heavily etched microstructure consists of some equiaxed a! in a structure showing considerable amounts of transformed ß. The ß grain

Jan 1, 1969

By R. G. Burdick, W. R. Peters

Shallow underground voids resulting from early coal mining and other resource recovery activities over the past several decades are now being recognized as a significant cause of ground subsidence problems. Uncertain knowledge of abondoned coal mines also imposes potential hazards in current underground mining operations, since water inundation or the release of methane gas is a serious hazard when mine excavation operations break into an abandoned mine. Requirements for detecting and mapping subversive manmade tunnels in previous work has led to the development of a surface-operated automatic earth resistivity survey system and associated computer data reduction process for military applications. Field demonstration tests of this system have resulted in successful detection of tunnels at depth-to-diameter ratios greater than 10 to one. Under the sponsorship of the Bureau of Mines, a similar high-resolution earth resistivity system was designed and constructed for use as a potential means of detecting abandoned coal mine workings. The hardware and software aspects of third new system are described together with applications of the method for surveying and mapping abandoned coal mine workings. Field tests are presented to illustrate the detection of both air-filled and water-filled mine workings.

Jan 1, 1984

By F. Weinberg, L. MacAulay

DAVIS,' in an investigation of solute redistribution along molten rods of dilute silver in tin, concluded that at horizontal temperature gradients below approximately 5°C per cm very little convective mixing takes place. Cole and winegard2 observed temperature oscillations in horizontal melts of tin, with temperature gradients of several deg per cm. They associated the temperature oscillations with the presence of convective flow in the melt. At temperature gradients less than 1°C per cm they did not detect convective flow. In the present work, direct measurements of con-vective flow in liquid tin have been made using a radioactive tracer technique. The results indicate that extensive convective flow occurs at temperature gradients below those previously reported. The apparatus used to determine the extent of con-vective flow is shown in Fig. 1. The graphite boat Fig. l(a), has two rectangular channels both of which contain molten tin. Radioactive Ag110 in the form of Sn-0.2 pct Ag alloy was introduced at the end of one channel, by rotating the cylinder shown. A series of fixed thermocouples were positioned along the center of the second channel to determine the temperature gradient. It was assumed that the two channels had identical temperature distributions. The graphite boat was inserted into a vycor tube which was surrounded by a multiple winding tube furnace as shown in Fig. l(b). The tin was melted in an argon atmosphere. The distribution of Ag110, as a function of position along the boat at a given time after introduction of the ~g"', was determined with the

Jan 1, 1970

By E. J. Haug, K. L. Clifford, K. L. Purdy

St. Joe Minerals Corp.'s Southeast Missouri Mining and Milling Division produces lead, zinc and copper sulfide concentrates at three of its operations. The Viburnum and Fletcher mills have been described in previous papers. The new Bushy Creek mill, dedicated in May of 1973, is an updated version of the Fletcher mill incorporating 8.5 m3 (300 cu ft) lead and zinc

Jan 2, 1979

By O. T. Berge

Development and production from open cut mines continued its vigorous growth trend during the year 1968. Material handling and transportation were again exposed to the use of larger equipment with shovels, trucks and front end loaders leading the way. Highlights of World Mining Activities Africa: The Anglo American Corp. opened a new high-grade copper mine in Zambia during the year. In Angola, the Companhia Minera do Lobita planned a 3 million ton iron ore production for 1968 from new mines which will ultimately produce 5 million tons per year. A feasibility study of Bethlehem Steel Co., for the development of large high- grade iron ore reserves in Gabon, was in final stages of completion this year and Pickands Mather and Co. continued its investigation of iron ore deposits along the Ivory Coast.

Jan 2, 1969

By L. D. Jaffe

IN previous metallographic work on titanium and its alloys, difficulty has been encountered in distinguishing spheroidal particles of titanium hydride, dispersed in a-titanium, from other phases that may be present, such as p-titanium. This problem is common in examination of commercial unalloyed titanium.' In the course of an investigation of the Ti-H phase diagram, it was noted that titanium hydride, dispersed in a matrix of a-titanium, showed strong optical anisotropy when examined under polarized light. With sensitive tint illumination, particles of the hydride, when the stage is rotated, changed from bright yellow to bright blue in color. Since P-titanium is cubic, it showed no color change on rotation, remaining dark gray or blue-gray. Although a-titanium is hexagonal, it showed only a minor color change, going from pale pinkish-blue to pale purplish-blue. These colors could be modified somewhat by adjustment of the illumination. They were observed in specimens mechanically polished, both without etching and after etching with hydrofluoric acid-nitric acid mixtures in either water or glycerine. The strong color change of the hydride seems to offer a simple method for its metallographic identification. Optical anisotropy of titanium hydride is inconsistent with its accepted face-centered-cubic structure.' Samples of iodide titanium containing 6 to 40 atomic pct deuterium were prepared for diffraction studies. After deuterating and slow cooling' the samples were held 21 % hr at 400 °C, water quenched, held 61 hr at 100°C and quenched, then held 64% hr at 255 C and quenched. Debye ex-posures with MoKa X-rays and 1.111A neutrons were made at room temperature of samples as-deuterated and after the 100" and 255°C treatments. Table I shows the lines observed, in addition to those attributable to a-titanium. These data show that the hydride phase was not cubic, but probably tetragonal. The titanium atoms appeared to form a body-centered-tetragonal lattice complex, two titanium atoms per cell, with approximate dimensions: a = 3.12A, c = 4.18A, and c/a =1.34A. This is equivalent to a face-centered-tetragonal complex, four titanium atoms per cell, with approximate dimensions: a = 4.42A, c = 4.18A, and c/a - 0.946A. The presence of the 2.98 and 1.81A neutron lines indicates that the true Bravais lattice is not identical with this lattice complex, but may be primitive tetragonal with dimensions some multiple of those of the complex. The relative intensities of the hydride and a-titanium X-ray lines as functions of overall composition indicated that the hydride, presumably in equilibrium with the a at 100" to 255"C, contained more than 62 atomic pct H. Acknowledgments The experimental work covered in this report was done at Brookhaven National Laboratory, through the courtesy of D. Gurinsky. The cooperation of J. Sadofsky, 0. Kammerer, A. McReynolds, and A. Cendrowski is gratefully acknowledged.

Jan 1, 1957