CHAPTER 8 LESSONS FROM THE PAST: THE MINING COMPANY EXPERIENCE AND APPLICATION TO OIL AND GAS EXPLORATION AND DEVELOPMENT
| Jurisdiction | United States |
(Nov 1980)
LESSONS FROM THE PAST: THE MINING COMPANY EXPERIENCE AND APPLICATION TO OIL AND GAS EXPLORATION AND DEVELOPMENT
Amax Inc.
Greenwich, Connecticut
INTRODUCTION
For many years westerners have held the view that hardrock miners belonged in the mountains, and that oil people worked only "out in the sediments" in the valleys and plains beyond the mountains. The Overthrust Belt oil and gas play has changed that perception and oil people are now combing the hills along with more traditional prospectors.
The organizers of this Institute recognize that miners have been working for many years in the region of the Overthrust Belt, and felt that it might be useful to include a paper on the mining experience. There are many differences between the work of oil and gas explorers and producers and that of miners, but there are also similarities, particularly in terms of access problems and land use conflicts.
I will use my own company's experiences to develop the theme of "lessons from the past". I have dropped the word "hard" from the title written in the program because it suggests we have had a difficult time working in the Rocky Mountain region. That isn't the case, as I hope will be clear at the conclusion of this paper.
To provide background for the discussion of "lessons learned" I will devote the early part of this paper to a description of AMAX's activities in the Rocky Mountain region, and to a generalized discussion of typical hard rock exploration and mining projects, and how they have changed in character and complexity since 1960. Then I will discuss some of the lessons I think we have learned as a result of our work in the region, illustrating various points with examples from AMAX projects. Finally, I will try in each "lesson" to generalize our experience and suggest why such a lesson may be of use to oil and gas explorers and developers.
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BACKGROUND ON AMAX
AMAX is an international natural resources and mineral development company headquartered in Greenwich, Connecticut. The Company's diversified interests are managed by four operating groups: the Molybdenum, Nickel, Tungsten and Specialty Metals Group; the Base Metals Group; the Energy Group; and the Industrial Minerals and Resources Group.
Separate units carry out exploration and mine evaluation, environmental services, and engineering and technology. In addition, AMAX has a 50 percent interest in Alumax, a major aluminum company based in San Mateo, California.
The AMAX activities which are the focus of this paper and which will provide examples of our experience include exploration projects, mine development and mine operations.
Exploration
AMAX Exploration has been actively exploring for hard rock minerals in the Rocky Mountain States for many years. They have emphasized the search for molybdenum and base metals, but in recent years they have become more interested in geothermal resources and precious metals. Climax Molybdenum also maintains an active exploration staff which works primarily on molybdenum in the Colorado Mineral belt and on certain prospects elsewhere in the western U.S. and Canada. Much of our exploration has been done on National Forest lands, but we have recently been more active on Bureau of Land Management (BLM) land.
AMAX Coal has also been active in the Rocky Mountain region, and has engaged in exploration in Montana, Wyoming, Colorado and Utah.
Mine Development
Several of our prospects have progressed to the bulk sampling, test mining, feasibility stage, and we have succeeded in bringing two major molybdenum mines into production in the Rockies during the past 20 years. Our Kirwin copper deposit near Meteetsee, Wyoming is on "hold", and we are in the feasibility/ permitting stage at the Mount Emmons Project.
Mount Emmons, a project of the 70's and 80's is a proposed molybdenum mining venture. The Mount Emmons deposit is located in Gunnison County in southwest Colorado, three miles west of the town of Crested Butte and 31 miles north of the city of Gunnison. The deposit is within the Colorado Mineral Belt and lies under Red Lady Basin on the south side of Mount Emmons.
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AMAX discovered the deposit in 1976. Subsequent test drilling, from both surface and underground locations within the old Keystone Mine, has indicated 155 million tons of molybdenum ore with a molybdenum disulfide content of approximately 0.44 percent.
The Mount Emmons deposit will be recovered by underground mining methods. Surface facilities will include an administration building, other structures near the underground mine, a mill for removing molybdenite from the ore, a rail system for ore transport to the mill, a water slurry and recovery system for carrying tailing to a storage area and electrical transmission lines.
Various sizes for the Mount Emmons Project are being considered but, present plans call for a 20,000 ton-per-day operation.
Manpower needs may change as the mine plan is developed, but current projections indicate the total number of AMAX employees and outside temporary construction workers could peak in 1987 at 1,195. The operations work force should peak and level off in 1993 with up to 1,489 employees. Current estimates are that limited production could begin in 1988 with full scale production by 1991. The mine life could be for 30 years or more. And, as is typical of developmental projects of this nature, a total investment could reach up to one billion dollars.
Before recommending final sites for facilities and choosing technologies to be used at the Mount Emmons Mine, AMAX is conducting extensive environmental and socio-economic studies. The information they provide is allowing the company to design a project with minimal effects on the environment and surrounding communities. One of the most extensive and innovative of the environmental studies is on air quality. AMAX has conducted an extensive tracer study to determine air flow and pollutant dispersal characteristics at various locations, using complex field studies, computer modeling and a new method: physical modeling. Since conventional air quality measurement techniques did not allow for air movement in complex terrain, AMAX researchers in conjunction with Colorado State University created precise scale models for use in wind tunnels and air drainage chambers to simulate real world conditions. This aspect of the research at the Mount Emmons Project is advancing the state of the art in air quality studies.
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MINING OPERATIONS
Urad Mine
The AMAX Urad Mine which is near Berthoud Pass, some 50 miles west of Denver, was first opened in 1914 by the Primos Mining Company. It was a small operation, producing about 450 tons of molybdenum disulfide concentrate during the World War I years. After the war, it was closed and production was not resumed until World War II under the ownership of Molybdenum Corporation of America. During the World War II period, it produced approximately 200 tons of raw ore per day.
In 1963, AMAX acquired the property and spent four years redeveloping the mine to accommodate the panel cave system of mining perfected at the Climax Mine. We reopened the mine in 1967 at a 5,000 ton per day production rate. The concentrator tailings ponds, and water reservoirs were located immediately adjacent to the mine. From 1967 until the fall of 1974, when the ore reserves were depleted, the Urad Mine produced approximately 14 million tons of molybdenum ore. After the mine was closed, we began an extensive reclamation program with primary emphasis on reclaiming the tailing ponds which contained about 99 percent of the 14 million tons produced as a residual from the milling operation. In addition, we removed the mill building and reclaimed all of the surface area occupied by the mill and adjacent facilities, and constructed a large culvert to divert peak flood waters and, thereby, assure the stability of the reclaimed tailing dams.
Henderson Mine
In connection with our mining activities at the Urad Mine, AMAX geologists became interested in the similarity between the geology of the Urad area and that of the Climax Mine near Leadville, Colorado. They reasoned that, because of the similarities, there was the possibility of another molybdenum ore deposit at depth within the vicinity of the Urad mine. A deep drilling program was authorized and, in 1965, the final exploratory hole detected a massive molybdenum orebody some 3,000 feet below Red Mountain. Further geologic studies determined that this new ore deposit was, in fact, distinct from the Urad mineralization, separated both geographically and in geologic time of origin. Further exploration revealed a 300 million ton orebody which was named after Robert Henderson, a former Resident Manager at the Climax Mine and Vice President of Western Operations for the Climax Molybdenum Company.
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Development of the Henderson Mine began in 1967. After ten years and a $500 million plus investment, production began in July, 1976. At the time of its opening, the Henderson Mine represented the largest privately-financed project in Colorado's history.
Because of engineering, economic and environmental considerations, the Henderson Mine required innovative planning. The result was a mine located on the eastern side of the Continental Divide, with a 9.6-mile railroad haulage tunnel connecting with a 4.8-mile surface railroad from the tunnel portal to the mill site on the western side of the Divide. Ore from the Henderson Mine is transported over this railroad to the mill site at the current rate averaging about 28,600 tons per day.
The Henderson ore body is more than 3,000 feet below the Urad ore body and was held at the time of discovery partly by patented lode claims, and partly by unpatented lode claims. The tailing pond area in the Williams Fork River Valley...
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