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By R. P. Killmeyer, B. S. Gottfried, J. T. Wizzard

The US Department of Energy's Coal Preparation Branch has developed a computer program to calculate the performance characteristics of coal washing devices. This program uses specific gravity analyses of the clean coal and refuse streams as input, and generates dependent and independent performance criteria for the washer. Partition curves are internally represented in a functional form by a Weibull function. Comparisons are made between performance criteria calculated by hand and the performance criteria calculated by the program for 120 different dense medium cyclone tests. Results show that the computer program gives results in close agreement with hand-calculated values while greatly reducing the amount of time involved in performing the analyses.

Jan 1, 1984

By W. J. Wrazej

THE measurements on the formation of multi-layered scales on pure iron1 and the metal -lographic examination of the produced layer of FeO, Fe,O,, and Fe2O3 shown in micrographs2 throw much interesting light on this apparently well-known subject. Professor Paidassi announced2 that in a few months7 time further results are going to be published with regard to the growth of Fe2O3 and Fe2O3 layers on an Armco iron as a function of temperature. Because of the very thin layers of Fe2O3 which are shown by Paidassi (Fig. 10 of ref. 2) when samples were scaled in air at 700°C for 4 hr and because this is not in agreement with the present author's previous observations, the following experiment was recently carried out. Polished cylindrical samples 13/64 in. in diam and 1/4 in. long from electrolytic iron used for spectro-graphic work (Hilger, H.S. Iron rods, F.693) and an Armco iron sample 1/4 in. in diam of the same length were suspended in a muffle furnace on Nichrome wire and annealed in air for 4 hr at 700°C 5OC. Because of the known easy peeling off of the Fe2O3 layer which is mainly in the form of powder (purple red dust on the surface) the samples were protected against any draft and shock. After annealing, the samples were cooled in air and placed in the mount-

Jan 1, 1954

TO THE, BOARD OF DIRECTORS OF THE AMERICAN INSTITUTE OF MINING AND METALLURGICAL ENGINEERS Gentlemen -The following report covers briefly some of the more important activities of the Institute during the year 1923. In my report for the year 1922, I drew attention to the falling off in membership of the Institute due to the depressed condition of the mining industry in several lines and the inability of many of our members to find profitable employment in mining or its associated branches. A number who were unemployed during 1922 established connections during 1923, but a still greater number have been forced to resign or drop their membership during 1923 Fortunately, the number dropped is not so great as in the previous year. The Employment Service conducted by, the four Founder Societies bears witness to the trend in business For the young men just out of college, there are plenty of opportunities at small salaries, there are plenty of opportunities for them as laborers; but for the mature members, those of experience, there are few calls During the last eighteen months, our Employment Service has been able to place only six of our members out of every hundred engineers for whom it has found work. Another loss which this Society has suffered, but which is not felt so keenly by our sister societies, is in its foreign members. The A. I M. E. has always had a large foreign membership, but of recent years exchange has been so heavily against many European and South American coun¬tries that a large number of members residing abroad have been compelled to relinquish their membership Almost invariably these members express keen regret because of the necessity that confronts them, and almost invariably the writers express hope that present conditions will not last long and that they will soon be able to ask for reinstatement. Having stated the darkest side of the picture first, it may now be drawn to your attention that in spite of these losses the number of persons applying for membership was decidedly encouraging. From the quality point of view, the membership has not gone back¬ward The Membership Committee has declined to recommend many

Jan 1, 1923

By W. C. Wright

A PRACTICAL program of education for workers of the mining industries is being formulated by the Federal Board for Vocational. Education in cooperation with the States in which this industry is a dominant one. The Federal Government last year passed a law, known as the Federal Vocational Education Act, that provides for the promotion of vocational' education and for cooperation with the States in the promotion of such education in agriculture and trades and industries and in the preparation of teachers of vocational subjects. More than 1,000,000 men in the continental United States are employed in mines and quarries. The following table, from the-1910 Census Report, shows the relative importance of mining and manufacturing pursuits: Manufactures Mines and Quarries Employees 7,405,313 1,109,410. Capital $18,428,269,706 $3,380,525,841 Value of product $20,672,051,870 $1,238,410,322 Of the more than 1,000,000 men employed in mining, almost three-fourths are engaged in the, production of bituminous and anthracite coal; one-fifth, in the production of copper, iron, lead, zinc, and other metals; and the remainder in getting out structural and miscellaneous materials from quarries. The meeting of the needs of the coal-mining industry, therefore, is the problem of greatest importance in the point of numbers to be served. Moreover, the dangers in coal mining are greater than in metal mining. Practically all States have set up educational and technical standards , for the position of foreman, boss, superintendent, etc., and every applicant for these positions must have a certificate of competency. The qualifications, too, are becoming increasingly difficult in the field of technical information. In some States, every miner must have a certificate, which is issued by the mine examining board. only after an oral examination.

Jan 1, 1919

By Walter H. Ortel, George B. Wallace

INTRODUCTION A greater understanding is required about the factors which control tunneling operations if we are to meet the expected demand for tunnels. Much of the needed information can best be achieved by the proper use of instrumentation and advanced engineering concepts. Tunnel measurements and their analysis may prove to be the key which will give the insight necessary to understand the relationship of rock, tunnel supports, and linings. There are three main areas which can be improved through the use of tunnel instrumentation. First, and of prime importance, is safety for men and the project. When unstable conditions occur, sets become distorted. Even without measurements, it is sometimes possible to tell when trouble is approaching. In effect, the set acts as a load cell. Distortions in the set indicate reinforcements may be required to maintain stability. Additional sets or rock bolts, if they are placed soon enough, may provide this stability. However, when large rock displacements occur in short periods of time, it could be too late. Figure 1 is an example of the difficulties encountered in stopping moving rock. To stop the movement and possible failure, large props were placed above the spring line and the massive concrete gravity buttress was constructed along the legs. Rock bolts from the buttress deep into the rock were also used in an attempt to stabilize the rock mass. However, this work is for a highway tunnel and eventually these props and buttresses must be removed.

Jan 1, 1971

By R. Agarwal, S. Boshkov, M. T. Wane

The majority of the work done in the field of rock mechanics uses as a basis for analysis the classical linear theory of elasticity. Most workers in rock mechanics realize that removing the assumptions of homogeneity and isotropicity will bring the analysis of stress-strain relationships for geologic materials closer to reality. However, the algebra involved in reducing these restrictions is usually heavy. It is the purpose of this paper to relax the condition of isotropicity to that of orthotropicity and examine the sensitivity of this change for some simple geometries. In addition some necessary relationships between stress and strain for orthotropic materials will be developed. The recent years have seen an increasing interest in the field of rock mechanics. This is amply demonstrated by the number of articles appearing in the technical literature. The majority of these articles use as a basis for analysis the classical linear theory of elasticity. In addition, the assumptions that the material under consideration is elastically homogeneous and isotropic reduce the number of constants necessary to write an analytical relationship between stress and strain to two, e.g., Young's modulus and Poisson's ratio. Most workers in the area of rock mechanics realize that removing the conditions of homogeneity and isotropicity will bring the analysis of stress-strain relationship for geologic materials closer to reality. However, the algebra involved in analysis without imposing these restrictions is usually heavy. It is the purpose of this paper to relax the condition of isotropicity to that of orthotropicity and examine the sensitivity of this change on stress concentration for some simple geometries. In addition, it is shown that the expression for maximum stress concentration for some simple geometries considered can be further simplified if further assumptions are made. The maximum stress concentration, under these additional simplifying assumptions, is shown graphical1y. In the linear theory of elasticity, generalized Hooke's law assumes the following form

Jan 1, 1965

By Dennis V. D’Andrea, Robert C. Steckley, William C. Larson, Richard A. Dick

A fragmentation experiment was performed in cooperation with Duval Corporation in a porphyry copper molybdenum deposit near the Sierrita pit south of Tucson, Ariz. A 10-hole test blast was detonated to establish relationships between blasthole spacing and the resulting fragmentation. Blastholes were 9 in. in diameter and 110 ft deep. The 10 blastholes contained a total of 17,400 lb of aluminized slurry blasting agent in 50-ft columns with 60 ft of stemming. Blasthole spacings of 25, 20, and 15 ft were tested. Diamond drill core examination was the primary method used to determine the condition of the rock before and after blasting. Topographic surveys were used to measure the rock swell produced by the blast and a fragment size distribution was obtained for the rubblized material on the surface. The rubble zone at the surface was ideal for in situ leaching. Fragmentation to depths of 110 ft was excellent from the 15- to 20-ft blasthole spacing patterns. Good breakage was also produced by the 25-ft pattern although the effects of the blast were not as obvious. In situ leaching tests were not conducted. However, based on size consideration only, all three blasting patterns produced adequate breakage for successful leaching.

Jan 1, 1974

By W. R. Wawersik, A. M. Starfield

The classical approach to room-and-pillar mine design in flat-lying, tabular ore bodies limits itself to the special case of an extensive and uniform system of pillars. Each pillar is then assumed to carry the same load, and this load is readily calculated from the extraction ratio e and the weight of the overburden : average pillar stress = [ ] where H is depth below surface, p is average density of overburden, and g is acceleration due to gravity. The average pillar load does not, in this case, depend on the mechanical properties of either the pillars or the surrounding rock mass. The only relevant physical property of the pillars is their compressive strength, (i.e., the maximum load-carrying ability) and the criterion for design is that the average pillar stress should not exceed this strength. The wider the pillar, the greater its strength, and the design of the system is concerned with reconciling this increase in strength to the requirements of roof control so as to optimize extraction.l Any departure from a uniform distribution of pillar loads invalidates the classical approach. Such departures may, for instance, be brought about by: (1) a nonuniform layout of pillars and remnants resulting from selective mining, (2) variations in geology which result in gross changes in the properties of part of the seam or the host rock, (3) deliberate use of abutment support in narrow panels, and (4) the use of yielding pillars for local roof support in conjunction with barrier pillars to carry the overburden load.

Jan 1, 1972

By Frank E. Briber

In the years ahead, the industrial minerals producer will face several major challenges. Not only will he have to market increasing quantities of his product economically, but he will have to do so from lower grade deposits that are farther away from the marketplace. At the same time, he will have to comply with more regulations controlling the handling and disposal of waste products and get along with relatively less available labor than he has at present. Accordingly, industrial minerals developments of the next 30 years will be directed primarily toward helping the producer meet these challenges. There will be greater raw materials usage, new processes, new marketing practices affecting plant location, size and complexity, and maximum automation-all aimed at producing more materials at lower cost. Processes To Make the Most of Materials In future processes for industrial minerals, there will be great emphasis on more or total use of the initial raw materials or plant feed stock. This approach will result in the application of more and more concentration methods to the treatment of industrial minerals-both conventional processes and new ones that might be developed in conjunction with pyro-processing. High-intensity and electrostatic separation are certainly two areas which will see greater use in the field.

Jan 6, 1969

By Marshall Pease, R. J. Brandon

A UTILITY that has a large consumption of coal must insure an adequate and sound supply of fuel. The Detroit Edison Co., which has an annual coal consumption of about four million tons and spends approximately $32 million a year for coal, including freight charges, has developed a program for fuel procurement and for evaluation and selection of fuel for reliable and efficient plant operation. Fuel Procurement Coal Purchasing Division: The Fuel Supply Div. of the Purchasing Dept. combines all of the procurement functions in one group, which must maintain adequate stocks of fuel. In addition to its usual purchasing duties, the division also governs transportation, follow-up, invoice and freight bill, in cooperation with the Accounting Dept. The Fuel Div. is comprised of the fuel agent, an assistant fuel agent, a coal buyer and five coal clerks, who follow the movement of each car, initially approve freight bills and invoices, and file claims whenever there is a shortage of one ton or more. The fuel agent reports directly to the purchasing agent of the Company, and all major programs are planned jointly with the chief purchasing officer. The apparent individuality of the fuel section is necessary because of the tremendous volume of coal cars handled each day, sometimes as many as 500, which must be handled promptly to complete the fastest possible move from the mines to the plants. Determining Annual Coal Volume: Through the combined studies of a Production Dept. Load Committee and the Controller's office, accurate predictions of coal requirements for any given year are provided the Fuel Dept. from 12 to 15 months in advance. This is divided into the requirements of all individual power plants and central heating plants. This in turn determines the quantity and quality for plants whose specific fuels vary with the type of equipment installed. In the Detroit area, which has a high industrial load, early estimates of annual coal consumption usually are resolved at the end of the year within 4 or 5 pct of the original plan. Operating in a highly developed industrial area eases the task of estimating primary output; and, with the residential demands increasing in a steady and fairly well-defined pattern, the overall coal schedules are not subject to radical changes during any given year. Selecting Suppliers: At any time, but especially during or before an emergency, the coal supply factor must be made secure. This is particularly true in the procurement of utility fuel. There are always extreme quantities of so-called "bargain" coal available during the buyers' markets, such as recently prevailed. These opportunistic offerings may be considered a means of averaging down overall price, rather than as a steady and dependable supply source. Coal is purchased on contract from mine operators and sales agents who have proved reliable. They are not opportunists who desert for higher dollars in times of duress; they do not fail to fulfill contracts when markets rise or overship when markets dip. The progressive operator today who is willing to expend capital to improve quality and service deserves much more consideration than a matching of short-term pennies. When a company has a high volume of annual needs, all phases of the mine supply must be considered. The mine must be able to produce the quality required at a fair price and be able to sell oversizes of coal in enough volume to screen sufficient nut and slack. It must crush coal and sell mine run at prices in line with competitive nut and slack and be willing to do so when there is no demand for prepared sizes. Determining Price: The public utility is in direct competition with any of its customers who can, if savings are guaranteed, generate their own power. Today, to a greater extent than ever before, private industry must do a better overall job than Government-controlled operations. The price of coal must be realistically balanced with the price paid by almost all industries and the railroads as well. The supply-demand ratio in coal is not difficult to discern. There is access at all times to Govern-

Jan 1, 1952

By Orville R. Lyons, A. C. Richardson

THE Coal Division of Battelle Memorial Institute, during the course of an investigation conducted for a coal producer, carried out extensive sampling of the fine-coal section of a preparation plant. The information obtained during the testing period was used to evaluate the overall plant operation and provided the basis for. recommended changes in the plant flowsheet. Included in the information were data for the results obtained when using a Bird centrifuge to dewater the particular coal being treated. At the completion of the investigation, the coal producer gave Battelle permission to publish the operating data for the Bird centrifuge in order to make this information available to the coal industry. The authors wish to take this opportunity to express their appreciation to this company and its officials for their willing cooperation in the matter of publication. Description of Preparation Plant: The preparation plant on which the data were obtained is primarily a jig plant. The coal being washed is a low inherent moisture, friable, Pocahontus-type. The washed coal from the jig is dewatered and sized at 1/4 in. by a Parrish-type dewatering and sizing screen. The minus 1/4-in. coal and the underflow water from the shaker screen flow to a sludge tank where, after the coal settles, the coal is conveyed by a flight conveyor into a pump sump. The pump, a 300-gpm sand pump, delivers a mixture of fine coal and water to a Bird centrifuge which produces a dewatered cake and an effluent. At the time when the investigation was made, the centrifuge effluent was returned to the sludge tank and the cake product was mixed with a coarser size of coal prior to loading into railroad cars. The semiclarified water from the sludge tank overflowed into a pump sump from which it was pumped to the jig. As originally designed, the preparation plant was intended to operate with a closed water system but it was found, soon after operations started, that for various reasons this could not be done. In order to provide for removal of excess water from the system and to aid in maintaining the desired minimum percentage of solids in the circulating water, the plant was operated to provide from the sludge tank a continuous overflow of water and fine solids that was sent to waste. The centrifuge feed represents approximately 35 tons per hour of minus 1/4-in. coal in the form of a pulp averaging 38 pct solids. Sampling Procedure: In order to obtain basic data for determining the relationships existing in the fine-coal section of the preparation plant, samples were obtained for: (1) the centrifuge feed, (2) the centrifuge cake, (3) the centrifuge effluent, and (4) the circulating water. The sampling was arranged to start on a Monday, in order to begin operations with a sludge tank full of fresh water, and was continued long enough to allow sufficient time for fine solids to build up within the water system or for a two-day, four-shift operating period. All samples were taken at half-hour intervals except when plant stoppages occurred. After a stoppage the plant was

Jan 1, 1951

By Orville R. Lyons, A. C. Richardson

THE Coal Division of Battelle Memorial Institute, during the course of an investigation conducted for a coal producer, carried out extensive sampling of the fine-coal section of a preparation plant. The information obtained during the testing period was used to evaluate the overall plant operation and provided the basis for. recommended changes in the plant flowsheet. Included in the information were data for the results obtained when using a Bird centrifuge to dewater the particular coal being treated. At the completion of the investigation, the coal producer gave Battelle permission to publish the operating data for the Bird centrifuge in order to make this information available to the coal industry. The authors wish to take this opportunity to express their appreciation to this company and its officials for their willing cooperation in the matter of publication. Description of Preparation Plant: The preparation plant on which the data were obtained is primarily a jig plant. The coal being washed is a low inherent moisture, friable, Pocahontus-type. The washed coal from the jig is dewatered and sized at 1/4 in. by a Parrish-type dewatering and sizing screen. The minus 1/4-in. coal and the underflow water from the shaker screen flow to a sludge tank where, after the coal settles, the coal is conveyed by a flight conveyor into a pump sump. The pump, a 300-gpm sand pump, delivers a mixture of fine coal and water to a Bird centrifuge which produces a dewatered cake and an effluent. At the time when the investigation was made, the centrifuge effluent was returned to the sludge tank and the cake product was mixed with a coarser size of coal prior to loading into railroad cars. The semiclarified water from the sludge tank overflowed into a pump sump from which it was pumped to the jig. As originally designed, the preparation plant was intended to operate with a closed water system but it was found, soon after operations started, that for various reasons this could not be done. In order to provide for removal of excess water from the system and to aid in maintaining the desired minimum percentage of solids in the circulating water, the plant was operated to provide from the sludge tank a continuous overflow of water and fine solids that was sent to waste. The centrifuge feed represents approximately 35 tons per hour of minus 1/4-in. coal in the form of a pulp averaging 38 pct solids. Sampling Procedure: In order to obtain basic data for determining the relationships existing in the fine-coal section of the preparation plant, samples were obtained for: (1) the centrifuge feed, (2) the centrifuge cake, (3) the centrifuge effluent, and (4) the circulating water. The sampling was arranged to start on a Monday, in order to begin operations with a sludge tank full of fresh water, and was continued long enough to allow sufficient time for fine solids to build up within the water system or for a two-day, four-shift operating period. All samples were taken at half-hour intervals except when plant stoppages occurred. After a stoppage the plant was

Jan 1, 1951

By John T. Schamaun

Recent applications of explosives and blasting agents to rubble rock have led to requirements for more elaborate design and analysis methods. In most blasting uses, it is necessary not only to fracture the rock, but also to move the broken rubble in a predictable manner. Many in situ extraction techniques require rubblization to take place in a confined region where rock motion is a predominate factor in creating a permeable broken bed. In this paper, two analytical methods are presented which describe the large rubble motion during blasting. These methods provide the blast designer with a tool for evaluation and further refinement of blasting patterns and timing sequences. In both these methods, the rock medium is represented by a series of discrete, discontinuous regions. The use of discontinuous techniques rather than the classical continuum methods, results in better approximations to the rubble motion. These regions are set in motion by pressure loads from the explosive. The motion of these regions is then calculated numerically using interaction laws between regions in contact. The basis for these models or methods is presented along with the background for selecting explosive pressure loads and rock mass material behavior. Typical examples, including both cratering and bench blasting geometries, are discussed which illustrate the use of these models to predict rubble motion. Such engineering representations appear to provide a practical method for use in predicting rubble motion and a tool for design evaluation of blasting in confined geometries.

Jan 1, 1984

Until the end of 1960, the small primary aluminum industry in Australia was run by the government. The entire operation was at Bell Bay on the north coast of Tasmania. It consisted of an alumina plant and smelter, owned jointly by the Commonwealth and the State of Tasmania. Apparent domestic demand that year was about 48,000 long tons; 11% thousand came from Bell Bay; the rest was imported. By March 1964, Australia had two fully integrated aluminum companies. The government has stepped out of the picture and the key word of the industry from bauxite to metal is "growth." Present annual capacity of the two companies for making aluminum metal totals 92,000 long tons a year. Australian demand is about 60,000 tons. By 1968 Australian consumption should be 90,000 tons and by 1970 it is expected to reach 107,000 long tons per year. Export markets for bauxite, alumina and metal are developing.

Jan 10, 1964

By J. M. Silliman

Isometrical drawing and clinographic projection are generally preferred to perspective drawings for representation of small objects or complicated mechanisms, as they present to the eye a sufficiently accurate picture of the object, while they possess great advantages over perspective in the simplicity and rapidity of execution, and the facility they give for taking measurements directly from the drawings.

Jan 1, 1882

By O. C. Ralston

THE use of copper sulfate for improving the flotation behavior of sphalerite is probably at least 15 years old. The original discovery of its activating influence is somewhat obscure. The story goes that in the mill at Mascot, Tenn., its favorable action was discovered by accident, early in 1914, as follows: The original laboratory test work on a sphalerite ore gave favorable flotation results, but after a mill had been built the flotation concentration of the ore was very unsatisfactory. In diagnosing the probable reasons, one fact pointed out was that the laboratory test machine had been constructed of bronze whereas the commercial machine allowed pulp to come in contact only with wood and iron. A plate of sheet copper was hung in the flotation machine and results immediately improved. At first fanciful explanations of electrolytic and electrostatic behavior were given credence, but when the copper plate was removed and a small amount of copper sulfate substituted in the pulp an even more favorable result was obtained. Toward the end of 1914 copper sulfate was also adopted in the acid flotation circuit of the Butte and Superior Copper Co. Just who is responsible for the original discovery the present writers do not know: It seems strange that in that era of flotation litigation this discovery was not patented. While for pragmatic purposes it may be sufficient to know that the mere addition of copper compounds to a flotation pulp is sufficient to activate the flotation of the sphalerite, for scientific purposes it is quite desirable to know more about how the action takes place. It is the purpose of this paper to present certain evidence dealing with the mechanism of the beneficial effect. The description of the effect as activation in contradistinction to depression is now common in both the English and German languages. It makes no assumptions as to whether the zinc sulfide surfaces have been filmed with copper compounds. In fact, the principal differences of opinion expressed in the literature deal with whether there is an actual formation of CuS (or even Cu2S) on the surface of the sphalerite.

Jan 1, 1929

By W. J. Whiten

Current developments in one type of crushing and screening model is reviewed and general design techniques and policies are proposed for the control of crushing plants.

Jan 1, 1984

By Byron S. Gottfried, Guan Qi Zhao, John W. Tierney

Equations for predicting the performance of vacuum filters and centrifuges used for coal dewatering are presented. These equations are the basis for a dewatering module which has recently been added to the Coal Preparation Plant Simulator developed at the University of Pittsburgh under the sponsorship of the Department of Energy. The module provides for mechanical degradation in the centrifuge; loss of fines to centrate or filtrate; changes in size and gravity distribution; changes in ash and sulfur content; as well as final moisture content of the dewatered product. Inputs to the module are the flow rate of the coal to be dewatered, a washability analysis of the coal, and parameters describing the operation of the vacuum filter or centrifuge. Typical results obtained using the module are presented. There are adjustable parameters which can be varied to match plant operation or experimental data if desired.

Jan 1, 1983

By William P. Lohden

INTRODUCTION It is recognized that, for a variety of reasons, some companies in the mineral industry today are by no means cash-rich and, in fact, are reporting a growing proportion of long-term debt in their capital structures. A review of recent balance sheets of small, medium-size, and some larger companies, indicates that a fair number still have substantial positions in cash equivalents such as U.S. government issues and other short-term money market instruments. In part, this paper concerns itself with companies which have sufficient cash and equivalents and/or cash generation to internally finance mining projects or expansions but which, for some reason, choose to borrow funds. Misconceptions which appear to frequently underlie so-called "leveraging" decisions are explored in this paper. Also considered arc' those circumstances under which any company, including one that is cash rich, should consider borrowing for a project in an amount beyond what would otherwise be necessary based upon its internal financing ability. I do not attempt to cover the raising of equity capital in public markets in this paper. OVERALL RETURN ON INVESTABLE CASH If you approach an individual with an investment which can be financed from savings, or by borrowing at a rate higher than one is earning on savings, that individual will quickly tell you that to pay interest at a rate higher than is being earned on savings would reduce overall income. Assuming that additional investment opportunities are not currently being considered, the individual concludes that a draw-down on savings, leaving a cushion for contingencies suited to individual circumstances, is the correct financial decision. For reasons discussed later, the simple mathematical logic leading to this conclusion tends to become obscured at the corporate level. When Leveraged Studies Are Inappropriate or Premature Surprisingly, I have heard of a number of companies that could afford to finance an investment solely with internal funds, which have made DCFROR (i.e. discounted-cash-flow rate-of-return) studies not only on a 100% equity basis but also on a leveraged basis. Certainly, a leveraged study would be appropriate if additional projects were competing for more capital than was available internally. Often, however, other projects are not far enough along to warrant a leveraged study and there is some danger that a project may be undertaken because it has an estimated acceptable rate of return, on a leveraged basis, that is not ultimately earned because some of the other projects are postponed or abandoned and borrowing is less than expected. For the above reasons, until it has been determined that (1) borrowing is a reasonable certainty for a particular project and (2) the timing and amount to be borrowed has been determined within a reasonable range of accuracy, I believe it is inappropriate and misleading to calculate DCFROR for a project other than on a 100% equity basis. Even when there are several projects currently competing for funds and borrowing will be required to finance one or more of them, using the common yardstick of calculating DCFROR on a 100% equity basis is a safer method to initially evaluate and compare the attractiveness of the projects. Many companies, whether they would have to borrow or not, will reject projects that on a 100% equity basis do not meet their minimum rate of return standards. Some companies which have to borrow will undertake a project provided the project's DCFROR on a leveraged basis meets its minimum return standards. The danger of this approach is that even moderate shrinkages of estimated cash flows could plunge return below

Jan 1, 1985

By Earl Oliver

This paper is based on the formula that the petroleum industry is sick—find the cause, eliminate it, and the industry will get well. There is perhaps no difference of opinion that the cause is overproduction, actual or potential. But that, again, is a result rather than a cause. The problem is to study the influences that serve to keep production and consumption out of balance. Production control is a popular theme and a natural one at this time when the whole world is unstable; but production control in its popular sense means little more than the application of emergency measures while danger threatens. Economists differ as to the effectiveness of these, most of which are designed to alleviate and not to cure, but we assume there are none who question the wisdom of promoting conditions under which economic forces are permitted to operate freely in bringing about stable conditions. The petroleum industry suffers from two classes of economic ills that serve to promote overproduction; namely, those which are common to all industries and those which are peculiar to this industry. It is of the latter I wish to speak. Strange to say, government is responsible in large part for this latter class of ills that affect the petroleum industry and we are coming to recognize that only through the assistance of government can they be corrected. Instability of the petroleunl industry, in so far as human agency was involved, had its inception in 1875 when a Pennsylvania jurist, called upon to make a decision for which there was no precedent and fancying he noted some resemblance between the so-called fugitive nature of oil and gas and that of wild game, made mention of that resemblance. Other courts being impressed by the analogy enlarged upon it, and gradually fixed upon oil and gas a legal status in certain important respects similar to that of wild game. Although later the courts abandoned this analogy, certain practices that developed out of that early concept have continued to this day and are largely responsible for the industry's present plight. Thus, instead of ownership in place that is characteristic of private property generally, the law of capture was applied to oil and gas. Now, the rapid and wasteful depletion of game

Jan 1, 1932