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By Koert D. Burnham, John G. Broughton

WOLLASTONITE in Essex County, New York, occurs as a typical contact mineral in a series of rocks metamorphosed by anorthosite. Sole current use is in various types of electric welding fluxes. Its uniform lathlike shape suggests its use as a specialized filler.

Jan 1, 1944

By Carl Lee

WITH the modern trend toward motor drive in coal mines, more careful forethought should be given to future layouts than has usually been done in the past. Both top and bottom equipment of future new mines is likely to differ radically from those of a decade ago. No one is able to predict very far ahead, but provisions can be made to allow for uncertainty. One thing stands out: the mine of the future will be laid out for long life compared to that of the small mine of the past, where an inexpensive top plant, simple equipment, a small timbered shaft, small cars, light rail, hand loading and mule haulage all contributed to a short economical life.

Jan 1, 1933

By J. F. Emig

The Burns Harbor Plant was designed to produce and process large ingots into plate, hot rolled sheet, cold rolled sheet and tin plate. Rimmed ingots, in particular, are poured 96" to 106" high and weigh up to 85,000 lbs. During the latter part of 1970, a quality problem was encountered involving white line "sliver" defects on the surface of cold rolled, low carbon, rimmed steel sheet. Sheets containing these defects are not desirable for exposed automotive items because of the possibility of opening during forming or becoming more apparent after forming. Metallographic work located and identified two basic types of inclusions within the white line defects: (1) complex oxides consisting largely of iron and manganese oxides and (2) scale-type iron oxide. The presence of these oxides strongly suggested that the-white line defects were resulting from an unsound, unclean rim zone.

Jan 1, 1972

By H. P. Greenwald

Those interested in the early developments and experiments, both in the United States and abroad, that led to modern rock dusting, will find an excellent summary in a paper by George S. Rice,13 published in 1914. The period from 1914 to 1924 was one of intensive experiment on coal-dust explosions in the United States; abroad, war activities and rehabilitation stopped this work over a large part of that decade. American findings were published by the Bureau of Mines, particularly in Bulletins 167 and 268. It is convenient to consider that in the United States rock dusting to prevent coal-dust explosions in mines was initiated in 1924 with the publication of tentative specifications.17 This was followed in 1925 by an investigation of methods and costs12 and approval by the American Engineering Standards Committee of a Recommended American Prac-tice.18 Approximately 13 years have elapsed since this approval, and inasmuch as changes in rock-dusting practice in the United States have been evolutionary, it is necessary to consider this entire period as "recent" in some phases of the work. There have been no official changes in the Recommended American Practice since its approval. This paper reviews as briefly as possible knowledge acquired since the issue of the earlier papers mentioned, through experience in mines and experiments conducted by different organizations engaged in the promotion of mine safety. Size of Rock Dust The Recommended American Practice states that the dust shall be 100 per cent minus 20-mesh and 50 or more per cent minus 200-mesh. Results of large-scale tests on the relative effectiveness of rock dust of different sizes were published by the Bureau of Mines15 in 1933 and are reproduced here as Fig. 1. The limiting curve of this figure shows that

Jan 1, 1940

By H. P. Greenwald

Those interested in the early developments and experiments, both in the United States and abroad, that led to modern rock dusting, will find an excellent summary in a paper by George S. Rice,13 published in 1914. The period from 1914 to 1924 was one of intensive experiment on coal-dust explosions in the United States; abroad, war activities and rehabilitation stopped this work over a large part of that decade. American findings were published by the Bureau of Mines, particularly in Bulletins 167 and 268. It is convenient to consider that in the United States rock dusting to prevent coal-dust explosions in mines was initiated in 1924 with the publication of tentative specifications.17 This was followed in 1925 by an investigation of methods and costs12 and approval by the American Engineering Standards Committee of a Recommended American Prac-tice.18 Approximately 13 years have elapsed since this approval, and inasmuch as changes in rock-dusting practice in the United States have been evolutionary, it is necessary to consider this entire period as "recent" in some phases of the work. There have been no official changes in the Recommended American Practice since its approval. This paper reviews as briefly as possible knowledge acquired since the issue of the earlier papers mentioned, through experience in mines and experiments conducted by different organizations engaged in the promotion of mine safety. Size of Rock Dust The Recommended American Practice states that the dust shall be 100 per cent minus 20-mesh and 50 or more per cent minus 200-mesh. Results of large-scale tests on the relative effectiveness of rock dust of different sizes were published by the Bureau of Mines15 in 1933 and are reproduced here as Fig. 1. The limiting curve of this figure shows that

Jan 1, 1940

By C. E. Reistle, G. L. Nye

The East Texas field is in Smith, Rusk, Gregg, Upshur and Cherokee counties, Texas. The discovery well was completed Sept. 8, 1930, near the eastern limit of the field. Within less than one year the new field became the dominant factor in the world production of crude oil. On Aug. 16, 1931, eleven months after completion of the discovery well, there were 1644 wells in the field, and the average daily production was 584,475 bbl. Since that time the number of wells has increased to 8195 on Oct. 1, 1933, and the field has produced 385,979,691 bbl. of oil. The geology of the East Texas field has been discussed by Lahee,1 Levorsen,2 Minor and Hanna3 and others, and it will not be discussed in detail here. The field is a structure of the monocline type on the westward dipping homocline between the Sabine uplift and the East Texas geosyncline. Production is obtained from the Woodbine group, which has been truncated and then sealed by the Austin chalk, which rests unconformably upon it. The oil-saturated part of the sand lies bettween a sub-sea depth of 3050 ft. on the east side of the field, where the Woodbine sand stops and the Austin chalk rests directly upon older formations, and a sub-sea depth of 3320 ft., which was the average depth of the water table in the sand at the time the field was discovered. The field is about 40 miles long and has an average width of approximately 4 1/2 miles. The area within the proven limits of the field is close to 116,580 acres and the normal Woodbine water underlies nearly 62,000 acres on the western side of the field at the present time. The field is unusual in several respects: (1) the tremendous size of the reservoir system and the quantity of oil in place; (2) the large area of the oil and water contact, which makes water movement possible into the oil-bearing part of the structure; (3) the absence of free gas within the main producing sand of the field. Changes in the reservoir pressure during the production history of the field have been greatly affected by

Jan 1, 1934

By John W. Cabot

The fact has long been known, that the temperature at which steel is made and cast bears a very important relation to the molecular condition of the cast ingot. But until quite recently this fact has not received the consideration which its importance seems to justify. That the ingots from a very " hot " blow in the Bessemer converter, for instance, would not roll as well as those made at a lower temperature, was observed very early in the development of the process; but the further investigation of the effects of varying temperature from "hot" to "cold," has not been carried out with that degree of fulness which has been accorded to the effects on the rolling of the chemical elements, and other conditions in the manufacture. In the following pages will be presented the results of an investigation of this subject, undertaken with the view of determining how far the influence of temperature extends, through how great a range its effects can be traced, and what temperature in the making and casting will give the best results in the rolling of the ingots. In the series of observations forming the basis for the conclusions arrived at, while it was not possible to get the full chemical analysis of every heat considered, a complete record of each, in other details, was made, and a large number of these were averaged together to

Jan 1, 1886

By E. B. Hunt, T. M. Geffen, C. R. Stewart, V. J. Berry

Laboratory data .show that the gas-oil ratio performance of non-uniform porosity limestones produced by solution gas drive is sensitive to producing rate and to fluid properties. Nan-uniform porosity limestones are those for which laboratcry solution and external gas drive tests yield considerably different relative permeability ratio characterislics. The oil recovery performance by solution gas drive depends directly on the number of gas bubbles formed. Laboratory rates of pressure decline, which are 100 to 10,000 times greater than normal field rates. cause the formation of an unusually large number of gas bubbles. This results in abnormally high oil recovery efficiencies. Since it is impractical to reproduce the number of bubbles formed under field conditions, laboratory solution gas drive data on non-uniform porosity limestones are therefore not directly applicable to field operations. However, certain laboratory data can be used to make a conservative estimate of field performance. The concepts presented in this paper indicate the possibility that increased field oil recoveries may he obtained from non-uniform porosity limestones by rap- idly reducing reservoir pressure for a short interval of time. It has yet to be established that significant improvements in oil recovery from such reservoirs can he realized by varying the pressure decline rate within limits possible in the field. However, the possibility that recovery may be increased in this manner warrants further study. INTRODUCTION Limestone reservoir rocks can be divided into two general classes according to the nature of their pore space. One class has a comparatively uniform pore system composed mainly of voids between grains of the rock (intergranular type porosity). The other class, in addition to having intergranular porosity, has a secondary pore system composed of combinations of solution cavities, fractures, etc., and is considered to have non-uniform porosity. It has been shown in a previous publication' that the laboratory measured gas-oil flow behavior of uniform type porosity limestones is essentially the same for a test simulating a field solution gas drive as for one simulating an external gas drive. For non-uniform porosity type limestones a significant difference in gas-oil flow behavior was found. More efficient behavior was

Jan 1, 1955

By G. Carman Ridland

Front Range, Colorado: The majority of the rocks comprising the Front Range of Colorado are pre- Cambrian schists, gneisses, and intrusives which have been elevated to form part of the Southern Rocky Mountain physiographic province. The region is noted mainly for its production of gold and silver, but ores of tungsten, fluorspar, uranium, copper, and iron have been worked. Geological literature describes pitchblende and other radioactive minerals occurring at Jamestown, Boulder County; Central City, Gilpin County; and Lawson, Clear Creek County (fig. 1). These three adjoining counties cover most of the highly mineralized section of the Front Range which extends from James- town to Breckenridge. As far as the writer is aware, uranium has been found only in the portion north-east of Lawson.

Jan 1, 1950

By Edward Keller

In a paper, entitled A Uniform Method for the Assay of 'Copper Material for Gold and Silver,' A. R. Ledoux invited the assayers of this country to contribute to a symposium, in which the results of their assays of given samples of copper-matte and metallic copper would be made comparable. This symposiun 2 appeared about one year thereafter; and through it and its discussion, first became generally known the fact that the gold-yield by the all-fire method of assaying is usually higher than by the so-called combination (wet and dry) method, in which nitric acid is employed as a solvent for the copper. In the publication alluded to, the supposed cause of gold-losses in the latter method was declared to be the solvent action of copper nitrate, or of the reduction-products of the nitric acid, upon the gold. Up to a very recent date, gold has been held to be insoluble in pure nitric acid. (The solvent action of any chlorine present in the nitric acid must here properly be disregarded as belonging in the realm of carelessness.) Among later allusions to this topic, W. R. Van Liew3 ascribes the solution of the gold in the combination-assay entirely to the action of nitrous acid at the high reaction-temperature of copper and nitric acid; F. B. Flinn4 believes the low result in gold to be due exclusively to mechanical losses—finely-divided gold penetrating through the filter-paper—but presents no experimental data confirmative of this belief; and 0. Pufah]5 attributes the solubility of' the gold in some coppers to the presence of selenium—a view which appears to be shared by many as-

Jan 1, 1913

By A. Eilers

The use of the bag-house for filtering out fumes produced in certain metallurgical operations is not new in America. There are no patents in force at this time, to my knowledge, which might hinder such use. Up to about 25 years ago the bag-house was only employed in connection with either zinc-works, which produced the oxides, to be sold for paint, or as an auxiliary in extracting lead from high-grade oxidized ores and from galena-concentrates in the Missouri and neighboring lead-regions; this work being then done in the Scotch or American hearths and in very low slag-furnaces, in all of which was produced an excessive amount of oxides which were also finally sold as paints. The literature1 on the above is abundant in text-books and periodical publications. The first large bag-house to be used permanently in connection with lead blast-furnaces was erected, as far as I am aware, about 1887 at the Globe smelting Co.'s works at Denver, Colo., under the Lewis-Bartlett patents. The brick flue, running from the blast-furnaces to the bag-house, was only a few

Jan 1, 1913

By F. W. Bradley

This chapter on the Alaska Juneau mill is intended to make clear that "choice of methods," or the selection of proper methods, is the first essential step in launching a new enterprise; and to illustrate that when entering into new country where local conditions and physical features are new or strange to an engineer, he should respect the practices already adopted and followed in meeting peculiar conditions in these new countries that may seem strange to a casual visitor. For example, Americans going into Malay Peninsula with their most up-to-date machinery for drilling placer prospect holes found their cost to total about $3 per foot; by adopting native methods, it was found the same work could be done for 50 cents per foot. Also, those not used to frozen road conditions in a country of arctic climate might scrape the snow off such a road and cause unending road troubles into the following spring and summer; while natives understanding local conditions would leave the snow on the road. So in the neighborhood of Juneau, Alaska, where successful gold-milling operations had been going on for

Jan 1, 1932

By Herbert Banks Johnson

DURING the past 10 or 12 years very little information has been made generally available concerning the commercial possibilities of separating materials by means of static electricity; and yet during that same period important improvements have been made in various branches of the science of electricity, which, when taken together, and applied to electrostatic separation, have resulted in important improvements in that art as well. For example, much improvement has been made in high-voltage electrical equipment such as full-wave vacuum-tube rectification and improved mechanical rectification. Great strides have likewise been made in the development of insulators for high-voltage work, not only in the materials used but also in the design of the insulators themselves. Again, in another field, the development of air-conditioning equipment has improved the technique of controlling the surface condition, through drying or humidifying, of the various materials that are passed through the electrostatic separator. In many authoritative publications and textbooks, the electrostatic separation process is declared to require a balance far too sensitive for general commercial application. For example, one publication1 in the past has referred to an unfavorable effect on the process caused by varying atmospheric conditions such as humidity. Some2 have even gone so far as to state that sunlight and shadows may seriously affect the separating efficiency of the process. Such statements may have been true in the early development of the art, when the source of static electricity was derived from a friction disk machine, such as the Wimshurst. The Blake Mosher equipment and the work of Huff in applying motor- generator sets, transformers and mechanical rectification overcame much of this kind of objection to the commercial application of the electrostatic separating process. Another objection made periodically is that it is generally considered necessary to feed the particles into the electrostatic field in a stream that

Jan 1, 1938

By Hoyt Gale

RECENT work on borate deposits near Kramer, in the extreme southeast corner of Kern County, California, is of special interest to those who are making a study of the mode of origin of the borate minerals colemanite and ulexite. A valuable clue to the mode of origin of colemanite in its present known deposits is given in a paper by W. F. Foshag1, of the United States National Museum. Colemanite is found in or near original deposits of ulexite, from which it is supposed to have been derived by a change in the rate of movement or the character of the ground water. Indications that an alteration of this sort had produced colemanite were first recognized by the writer' in specimens collected in the Kramer district in 1920, and sent to W. T. Schaller, at U. S. Geological Survey, for identification. The identity of the two borate minerals in these specimens was not at once determined, but the relations of the minerals as seen in the specimens afforded a manifest clue to the origin of the deposits. Similar specimens were obtained by the writer from deposits in death Valley soon after he had examined the deposits near Kramer. After studying the specimens submitted to him Dr. Schaller wrote as follows: "I have finally positively identified the boron minerals you sent me with your letter of Sept. 27. The `white fibrous mineral like ulexite' is ulexite; the harder nodules' in the clay are colemanite, apparently formed from the ulexite as a result of leaching, with recrystallization in place-a theory that Foshag is working on." The present paper is a report on the facts observed at. the deposits near Kramer, and some general observations on the geological relations noted, which, unfortunately, still form only a very incomplete record.

Jan 2, 1926

By Edward C. J. Urban

ESSENTIAL requirements for ensuring safe working atmospheres in underground metal mines are planned systems of ventilation and provision for effective distribution of sufficient volumes of air by auxiliary equipment. Investigators1 in the past have suggested that quantities of air supply ranging from 300 to 800 cu. ft. of air per minute per man underground are necessary, to establish adequate general ventilation. These fundamentals are just as important as the use of water in dust suppression, control of blasting, the use of personal protective equipment, frequent inspection of working areas and education of employees in good dust-prevention practice. During the past two years the necessity for direct control of the underground working environment has become particularly urgent. The increase in production rate, with two-shift and three-shift operation replacing the single shift, has complicated the problem of dealing with excessive concentrations of blasting fumes and gases, carbon dioxide and monoxide, heat and oxygen deficiency. Although previous industrial hygiene programs had given consideration to these factors, they were generally regarded by mine operators as secondary to the control of dust hazards. Today, blasting smoke in a mining area means delayed production because the miner cannot return to his work place after a short interval. Smoke on the haulage level means a safety hazard and exposure of the underground employees to excessive concentrations of atmospheric contaminants. Exposure to the moderately excessive concentrations of carbon dioxide and monoxide found in metal mines has caused physiological disturbances and a decreased capacity for work; deficiency of oxygen, in some cases to as low as 3 per cent, has resulted in fatalities. During the past 10 years the Saranac Laboratory2 has been associated with the iron mines in the Upper Peninsula of Michigan and Wisconsin in developing and maintaining an industrial hygiene and silicosis-prevention program. At present, about 35 underground iron-ore mines are operated full time in this area. With two exceptions, all of them are ventilated by main fan installations installed either on surface or underground. ,The types of mining used in these mines may be classified either as sublevel cave, radial top slice or sublevel stope, and the procedures commonly employed in the ventilation of these three types are described in Figs. 1 and 2. A number of different methods of mine ventilation had been in use in this area when the study was started. Natural ventilation had proved unsatisfactory. The wide variation between low air volumes during the summer months and higher volumes during winter led to unpredictable conditions that were difficult to control. In the majority of the mines two separate shafts or openings to surface are utilized in

Jan 1, 1943

By W. T. Read, W. Shockley

THE subject of this chapter is the application of the dislocation theory to two problems of physical metallurgy where the theory has been able to give definite predictions that subsequently have been verified by experimental observations. Much of the history of dislocation theory has consisted of the explanation of already established results on the basis of ad hoc assumptions. Scattered bits of fundamental theory were formulated as needed-in particular explanations. The result had the appearance of a hodgepodge of ingenious ideas and exciting but possibly artificial speculations. The review article by Koehler and Seitz in this volume gives an excellent picture of the breadth, diversity, and flexibility that have made dislocation theory attractive to speculative theorists, although occasionally bewildering to others. Since 1950, there have been two developments, which have helped to establish dislocation theory, on the one hand, as a systematic coherent body of theory and, on the other, as a means of making predictions that can be tested experimentally and thereby guide experiment into more fruitful channels. The first and easier of these developments has been the systematic derivation of the classes and properties of dislocations from fundamental crystallographic concepts. An example of one phase of this development is the rigorous treatment of

Jan 1, 1954

By M. C. Leverett

THE dynamic behavior of a multiple fluid system is completely describable in terms of driving forces and resistances to flow. The latter are proportional to the vis-cosity of the fluid under consideration and inversely proportional to a property of the system termed the " effective permeability" to that fluid, a property therefore defined by this relation. Since three phases are usually present in oil reservoirs, it is essential to know the effective permeabilities to the several fluid phases, and the relationship between the composition of the fluid in the pore space and that of the flowing stream, in order to handle satisfactorily certain problems of oil production. In this regard, there are many unknown factors and parameters, and many that can be evaluated only indi-rectly. However, it is expected that work along lines similar to this present under-taking will help materially in solving these problems. Previous workers in this field have inves-tigated the two-phase systems, water-gas,1 water-oil2 in unconsolidated sands, and water-gas3 in consolidated sands. The ex-tension of the study of the flow of hetero-geneous fluid systems from two to three phases involved only slight changes in technique. The apparatus used in the present work, except for slight changes to be described, was that used by Leverett in his water-oil experiments.2 Correlation and interpretation of data were made by methods analogous to those used in two-phase work. The relative permeability to a phase-the effective permeability divided by the permeability of the system to a homogeneous fluid-was employed through-out in correlating the rate of flow of that phase with the composition of the pore space. Quantitative measurements of two inde-pendent physical properties of the system were required to determine the composition of the pore space. As in the two-phase work, the fraction of water was determined electrically. The gas fraction was deter-mined by measuring changes in volume accompanying measured pressure changes. Suitable account was taken of the solubility of the gas in the liquid phases, and of the vapor pressure of the water phase. Since this work was exploratory in nature, no attempt was made to obtain highly accu-rate numerical results. Reasonable precision and reproducibility were sought.

Jan 1, 1940

By R. A. Morse, P. M. Bridges, L. E. Wilsey, Howard N. Hall, P. L. Terwilliger

Theoretical and experimental investigations of a constant pressure gravity drainage system are reported. Experimental data are presented to show that recovery to gas breakthrough by gravity drainage is inversely proportional to rate. The gravity drainage reference rate, which is numerically equal to the so-called "maximum theoretical rate of gravity drainage" is shown to have no particular significance from a recovery standpoint. Before this rate can be used as a basis of comparison for recoveries, it is necessary that the relative permeability and capillary pressure characteristics and displacing fluid viscosities be identical for the systems compared. A method is presented by which accurate prediction of the performance of a gravity drainage system can be made. Close agreement between experimental and calculated drainage performance shows that steady state relative permeability and static capillary pressure data can be used to describe fluid displacement behavior. The very wide range of liquid recoveries before gas breakthrough which result from production rate variation alone demonstrates the importance of this factor in planning depletion of a gravity drainage reservoir. Calculated results are presented which show that little additional recovery can be expected from a high pressure gravity drainage system between the times of gas breakthrough and attainment of such high gas/liquid ratios as to make further pressure maintenance impractical. INTRODUCTION It bas been recognized for some time that gravity forces play an important part in the recovery of oil from some types of reservoirs. Field experience has shown that under certain conditions, gravity drainage can result in very high oil recov- eries. Qualitative reasoning has led most engineers to the general conclusions that: (1) Where gravity drainage is important, the reservoir pressure should be maintained by gas injection at the crest of the structure to prevent shrinkage of the oil in place and to keep a low viscosity so the oil can drain at the fastest possible rate. (2) Recovery by gravity drainage is rate sensitive. A survey of the literature indicates that while considerable work has been done on the effects of gravity in oil production problems, no satisfactory method of calculating the performance of gravity drainage reservoirs has been reported.1,2,3,4,5 In the absence of any proven method of calculating reservoir performance, the level at which pressure should be maintained and the rate of production for most efficient operation has been open to debate. The limits and general character of the recovery us rate relationships are apparent from the following: As rates of production approach zero, oil will drain by virtue of its own weight fast enough that the saturation distribution is always approximately the same as the original static capillary distribution. That is, at the gas-oil contact the liquid saturation goes from 100 per cent to a value of perhaps 10 to 30 per cent in a very short distance, so that as production continues. a relatively sharp gas-oil contact moves down-structure, leaving a very low residual oil saturation in the originally oil saturated zone. At very high rates of production, the oil that drains by virtue of its own weight is negligible and recovery will approach that of a horizontal gas drive, leaving a much higher residual oil saturation. At intermediate rates of production. recovery should be between these extreme*. Despite the lack of quantitative methods, tentative agreement had been reached on the question of optimum producing rate. It has been generally concluded that rather sharp decrease in recovery would occur at rates of production above the "maximum rate of gravity drainage" and hence this rate should not be exceeded. The "maximum rate of gravity drainage" is defined as the rate of production from a 100 per cent

Jan 1, 1951

By L. E. Wilsey, R. A. Morse, P. L. Terwilliger, Howard N. Hall, P. M. Bridges

Theoretical and experimental investigations of a constant pressure gravity drainage system are reported. Experimental data are presented to show that recovery to gas breakthrough by gravity drainage is inversely proportional to rate. The gravity drainage reference rate, which is numerically equal to the so-called "maximum theoretical rate of gravity drainage" is shown to have no particular significance from a recovery standpoint. Before this rate can be used as a basis of comparison for recoveries, it is necessary that the relative permeability and capillary pressure characteristics and displacing fluid viscosities be identical for the systems compared. A method is presented by which accurate prediction of the performance of a gravity drainage system can be made. Close agreement between experimental and calculated drainage performance shows that steady state relative permeability and static capillary pressure data can be used to describe fluid displacement behavior. The very wide range of liquid recoveries before gas breakthrough which result from production rate variation alone demonstrates the importance of this factor in planning depletion of a gravity drainage reservoir. Calculated results are presented which show that little additional recovery can be expected from a high pressure gravity drainage system between the times of gas breakthrough and attainment of such high gas/liquid ratios as to make further pressure maintenance impractical. INTRODUCTION It bas been recognized for some time that gravity forces play an important part in the recovery of oil from some types of reservoirs. Field experience has shown that under certain conditions, gravity drainage can result in very high oil recov- eries. Qualitative reasoning has led most engineers to the general conclusions that: (1) Where gravity drainage is important, the reservoir pressure should be maintained by gas injection at the crest of the structure to prevent shrinkage of the oil in place and to keep a low viscosity so the oil can drain at the fastest possible rate. (2) Recovery by gravity drainage is rate sensitive. A survey of the literature indicates that while considerable work has been done on the effects of gravity in oil production problems, no satisfactory method of calculating the performance of gravity drainage reservoirs has been reported.1,2,3,4,5 In the absence of any proven method of calculating reservoir performance, the level at which pressure should be maintained and the rate of production for most efficient operation has been open to debate. The limits and general character of the recovery us rate relationships are apparent from the following: As rates of production approach zero, oil will drain by virtue of its own weight fast enough that the saturation distribution is always approximately the same as the original static capillary distribution. That is, at the gas-oil contact the liquid saturation goes from 100 per cent to a value of perhaps 10 to 30 per cent in a very short distance, so that as production continues. a relatively sharp gas-oil contact moves down-structure, leaving a very low residual oil saturation in the originally oil saturated zone. At very high rates of production, the oil that drains by virtue of its own weight is negligible and recovery will approach that of a horizontal gas drive, leaving a much higher residual oil saturation. At intermediate rates of production. recovery should be between these extreme*. Despite the lack of quantitative methods, tentative agreement had been reached on the question of optimum producing rate. It has been generally concluded that rather sharp decrease in recovery would occur at rates of production above the "maximum rate of gravity drainage" and hence this rate should not be exceeded. The "maximum rate of gravity drainage" is defined as the rate of production from a 100 per cent

Jan 1, 1951

By John J. McCabe

INTRODUCTION Over the years, Congress has written into the Internal Revenue Code various provisions aimed at lessening at least one financial burden faced by taxpayers in the mining industry - the federal income tax burden. These provisions include the election to deduct exploration expenses, the election to defer deduction of development expenses, and the percentage depletion deduction. Careful tax planning from the very beginning of a mining venture is essential in taking maximum advantage of these tax benefits. A major decision to be made is the choice of organizational structure. (For a more detailed discussion of this subject, see McCabe, John J., "Developing Structures for Investments in Mineral Property," New York University Institute on Federal Taxation, 42 NYU 24, 1984). One such structure is the use of multiple corporations, with mining activities conducted by one corporation and nonmining activities, such as manufacturing, financing and administration, conducted by the other corporation. This technique, which will be discussed in detail below, can be particularly advantageous in delaying recapture of previously deducted exploration expenses and in maximizing depletion deductions. TAX BENEFITS IN MINING Exploration Subject to certain restrictions discussed below, exploration expenditures (i.e., expenditures paid or incurred during the taxable year for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development state of the mine are deductible at the election of the taxpayer (Section 617(a)).* Were it not for this option, exploration expenditures would be required to be capitalized and recovered through depletion, after production begins. Exploration of a mineral deposit can be very costly and may not result in commercial production for some time. If the taxpayer has income to he offset by the deductions, a mining venture can usually be structured in such a way as to allow the offset of mining losses against the other income. With today's high interest rates, this election can be quite valuable in present value terms. Corporate and noncorporate taxpayers are subject to different restrictions on this tax benefit. Corporations may elect to deduct only 85 percent of eligible exploration expenditures (Section 291(b)). (The Tax Reform Act of 1984 reduced this to 80 percent effective for expenditures after December 31, 1984, in taxable years ending after such date). The remaining 15 percent (20 percent after December 31, 1984) is capitalized and recovered at the same rate as five-year ACRS property (Section 291(b)). Individual taxpayers are not subject to this 85 percent rule; however, any amount deducted in excess of ten-year straightline amortization is a tax preference item for individuals (Section 57(a)(5)). Individuals may avoid the tax preference by electing to capitalize exploration expenditures and amortize them over ten years (Section 58(i)). In order to prevent the taxpayer from, in effect, converting ordinary income into capital gain by selling property that has given rise to exploration expense deductions, the Code requires recapture of such deductions upon the occurrence of certain events (Section 617): 1. Upon disposition of the property, adjusted exploration expenditures are recaptured to the extent of gain realized on the disposition (Section 617(d)). 2. If the property is leased, the lessor is disallowed any depletion deduction until his adjusted exploration expenditures have been recaptured in the form of foregone depletion deductions (Section 617(c)).

Jan 1, 1985