helium

The value of mining in Arizona

Without minerals, we would not have electricity, food, or shelter. Minerals make today’s technology-based life possible, but that’s something many of us take for granted. We want the benefits from those minerals, but some want mining of minerals to be in somebody else’s neighborhood.  The importance of mining has long been recognized:

If we remove metals from the service of man, all methods of protecting and sustaining health and more carefully preserving the course of life are done away with.  If there were no metals, men would pass a horrible and wretched existence in the midst of wild beasts…  -Georgius Agricola, in De Re Metallica, 1556.

For Arizona, it is not just metals.  Arizona produces sand and gravel, limestone for cement production, coal for electrical generation, and a variety of industrial minerals which contribute almost $2 billion to Arizona’s economy (see here).

Arizona has a long history of mining.  There is archeological evidence that cinnabar, coal, turquoise, clay, pigments, and other minerals were mined in Arizona beginning at least 3,000 years ago. (See A History of Mining in AZ by the Arizona Mining Association.)

According to the Arizona Mining Association, Arizona currently produces 68% of domestically mined copper.  With that copper production comes by-product molybdenum, gold, silver, platinum, and rhenium.  Incidentally, The Sierrita Mine south of Tucson is currently the onlydomestic producerof rhenium, a metal used in high-temperature, super-alloy turbine blades for jet aircraft and other land-based turbines.  The Sierrita plant processes output from other mines on a toll basis. It may soon be joined by a second rhenium plant at the Kennecott (Rio Tinto) mine in Utah.

The direct and indirect economic impact of copper mining on Arizona’s economy is about $4.6 billion annually.  That includes $3.2 billion in personal income,  $500 million in state and local government revenues, and 49,800 high-paying jobs for Arizonans. Average labor income of mining company employees (including benefits) is $108,000 per worker vs. $47,000 for all Arizona workers.  If we add in non-metallic, non-fuel, minerals, then Arizona produced about $8 billion worth of mineral products in 2012 according to the U.S. Geological Survey.  Arizona ranks second, after Nevada, in value of total mineral production.  The U.S. total value of mineral production was about $76 billion which supported more than 1.2 million jobs in 2012.

Arizona is endowed with great mineral resources as shown on the map below prepared by the Arizona Geological Survey.

mineralmap

Currently ASARCO and Freeport-McMoRan Copper & Gold are the two biggest copper producers in the state.  ASARCO operates three mines and a smelter. According to the Southern Arizona Business Coalition, in 2012 ASARCO paid wages and benefits of $215.8 million, property, severance, and sales taxes of $47.2 million, and employed 2,198 people in Arizona. Freeport operates mines in Safford, Morenci, Bagdad, Miami, and Sierrita.  They paid wages and operational spending of $860 million in 2012, taxes of $274 million while employing 7,600 people directly and indirectly employing an additional 30,000 people.

In addition to past and current mining, there are many projects on the horizon, some in the exploratory stage, others navigating the byzantine regulatory permitting process.  (See my posts: Mining and the bureaucracy and How NEPA crushes productivity)

Perhaps the largest project is that of Resolution Copper near the town of Superior just west of the famed Globe-Miami mining district and just north of ASARCO’s Ray mine.  This is a bold undertaking because the orebody is 7,000 feet below the surface.  Resolution says that at peak production, this mine will be the largest copper mine in North America, producing over one billion pounds of copper per year.  Resolution estimates that over the 64-year life of the mine, the project will generate $61.4 billion in economic value, provide $20 billion in tax revenues, and provide 3,700 permanent jobs.

The Rosemont copper mine south of Tucson is nearing the end of its long journey through the regulatory maze, and mine construction may begin early next year.  This mine will generate 2,900 Arizona jobs and inject $19 billion into Arizona’s economy and pay $404 million in local taxes over its 20-year projected life.  The mine expects to produce 243 million pounds of copper per year.

Curis Resources is developing an in-situ copper mine near Florence, Arizona.  In this project, instead of mining rock, Curis Resources “seeks to dissolve copper minerals from an underground deposit by introducing water with a lowered-pH (making it slightly acidic).This low-PH, water-based solution dissolves the copper and allows it to be pumped to the surface through a continuous loop water treatment system.”  This deposit, lying 400-to 1200 feet below the surface contains approximately 2.84 billion pounds of copper.

Curis estimates that over the projected 28-year life of the project, it will generate $2.2 billion in economic activity for the state of Arizona, $1.1 billion in economic activity for Pinal County, $325 million in taxes and royalties for Arizona government, and $1.46 billion in increased personal income in Arizona, 170 direct jobs at the project site in Florence, and 681 jobs in the state of Arizona.

TheI-10 copper deposit, located along Interstate 10 between Benson and Willcox, Arizona, is being investigated as another in-situ copper leaching project by  Excelsior Mining Corporation, a Canadian junior company. They estimate the deposit currently contains an indicated oxide copper resource of 3.21 billion pounds and an additional inferred oxide copper resource of 0.88 billion pounds.

Wildcat Silver Corporation is in the exploration stage of its Hermosa Project which is evaluating the silver-manganese potential in the historic Hardshell mining district near Patagonia in Southern Arizona. Their preliminary economic assessment estimates a measured and indicated resource of 236 million ounces of silver and an inferred silver resource of an additional 79 million ounces.  Project life is estimated at 16 years.  Wildcat estimates that annual production will be 4.1 million ounces of silver, 233,000 tons of manganese carbonate, 20,187 tons of zinc cathode, and 960 tons of copper.

Copper Creek is an old mining district located on the east bank of the San Pedro River and on the western slope of the Galiuro Mountains about 75 miles northeast of Tucson. The property has been acquired by Redhawk Resources, a Canadian junior mining company that plans to develop an underground mine for copper, molybdenum, and silver.  Redhawk estimates a resource of 7.75 billion pounds of copper, 150 million pounds of molybdenum, and 32 million ounces of silver.

The Oracle Ridge mine is a small, underground copper mine in the Santa Catalina Mountains just north of Tucson. The mine was operated intermittently, most recently from 1991-1996. The mine is being developed by a junior Canadian mining company, Oracle Ridge Copper (project website).  The company anticipates employing about 200 people to run the mine which has a projected life of 11 years. The mine will produce 140 tons of concentrate (about 30% copper) a day which will be trucked off the mountain and transported to a smelter.

In northern Arizona, near the Grand Canyon are over 1,300 known or suspected breccia pipes many of which contain uranium oxide as well as sulfides of copper, zinc, silver, and other metals. According to the Arizona Geological Survey, “Total breccia-pipe uranium production as of Dec. 31, 2010, has been more than 10,700 metric tons (23.5 million pounds) from nine underground mines, eight of which are north of Grand Canyon near Kanab Creek.”  This area is mired in fears of contamination of the Colorado River (see Uranium mining and its potential impact on Colorado River water) and a 20-year, million-acre mineral entry withdrawal by the Department of the Interior.

In northeastern Arizona there is potential for a major potash deposit. American West Potash has recently delineated, a considerable resource estimated at  158 million metric tons of sylvinite (a mixture of sodium and potassium chloride, not to be confused with sylvanite, a gold telluride), with about 16 million metric tonnes of K2O; and inferred resources of 560 million metric tonnes of sylvinite with just over 66 million metric tons of K2O in the Holbrook Basin, about 30 miles east of Holbrook, Arizona.

The Holbrook Basin area also holds potential for helium and shale oil resources.

Arizona currently has three producing gold mines and several other prospects being actively explored for gold (see here).

“In 2011, the state of Arizona led the United States in the production of gemstones. Arizona has long been famous as a producer of turquoise, peridot and petrified wood. Gemstones such as azurite, chrysocolla and malachite are associated with the Arizona’s many copper deposits and have a long history of being produced there. Agate, amethyst, garnet, jade, jasper, obsidian, onyx, and opal have all been found in Arizona and used to make gems.” – Geology.com

As you can see, besides currently producing mines, Arizona holds future potential that will add jobs and economic value to the local, state, and national economy – if they can get through the bureaucratic regulatory maze.

Remember, the value of mining is not just the money, it is in providing the products we need to keep our civilization going.  If it can’t be grown, it has to be mined.

Arizona CO2 production could enhance American oil supply

Arizona State Geologist Lee Allison points out on his blog that a new study commissioned by the U.S. Chamber of Commerce says more oil can be recovered from existing wells by using carbon dioxide enhanced production. The Chamber report says that carbon dioxide based enhanced oil recovery (CO2 EOR) accounts for nearly 6% of U.S. onshore oil production, or 350,000 barrels a day, but it could be expanded to produce a potential of 4 million barrels a day of oil for 50 years from existing U.S. oil fields.

Much of the carbon dioxide could come from Arizona. In my post: Helium potential of Arizona may help fill shortage I point out that “Some of the richest helium-bearing gas in the world was produced from fields completed specifically for helium in northeastern Arizona in the 1960s and 1970s.” Carbon dioxide is a major byproduct of helium production.

According the Chamber report, CO2 EOR could produce almost as much oil as primary or secondary production.

“In the first phase of the oil field’s productive life, called primary production, the well is produced without the addition of anything to the oil containing formation. The natural pressure from the earth is the mechanism for the oil to flow to the wellbore. Depending on the characteristics of the rock formation, primary production can result in the recovery of up to 20% of the oil originally in the rock. This means that at least 80% of the oil may remain in the rock unless additional technology is used to increase the recovery.

“Usually, the next step in the oil field life cycle is the injection of water into the oil-bearing formation to maintain reservoir pressure, which produces more oil… This is called secondary recovery or water flooding. The water used for this step is largely recycling the water that is produced as part of the oil production operations. Water, typically saltwater, exists in the formation with the oil and natural gas. This water is separated and collected during production and reinjected into the oil-bearing formation to slow pressure decline. As oil fields age, they produce more water as a percentage of the total fluids recovered. The addition of secondary recovery has the potential to recover a further 15% to 20% of the original oil in place.

“Even after primary and secondary recovery, a significant amount of oil still exists in the rock formation. CO2 EOR is a type of tertiary oil recovery that can recover even more oil from these existing wells and reservoirs. In CO2 EOR, carbon dioxide is pumped into the oil-bearing rock formation to recover even more oil. CO2 EOR has the potential to recover an additional 15% to 20% of the original oil.”

The Chamber report goes on to explain how the CO2 EOR process works:

“The CO2 EOR process is primarily a function of how CO2 interacts with oil which is determined by the property of miscibility, when multiple liquids can mix together completely becoming one homogenous liquid. For example, water and vinegar are completely miscible. By contrast, water and oil are immiscible; they do not combine at any proportion. CO2 at a supercritical pressure and temperature is completely miscible with oil; it will combine completely.

“An analogous example of how this process works in oil production could be a frying pan coated in grease. When the pan is rinsed with water, some of the oil remains because oil and water are immiscible. If a solvent, such as dish soap, is applied to the pan, the solvent combines with the grease and the grease is more completely removed from the pan. In CO2 EOR, the CO2 combines with the oil and helps move it through the rock pore spaces, enabling greater recovery of the oil in place.”

A 2011 Department of Energy report estimates that CO2 EOR could provide 137 billion barrels of additional technically recoverable domestic oil, of which 67 billion barrels are economically recoverable at an oil price of $85 per barrel.

Kinder Morgan is carrying out an expanded evaluation program of the St. Johns field in preparation for producing CO2 and shipping it east via pipeline.

CO2-oil-recovery

See also:

The importance of minerals to our economy and national security

Petroleum and Natural Gas Potential of the Paradox Basin

Arizona may become a major producer of potash

Helium potential of Arizona may help fill shortage

Helium-fields-in-AZAccording to a story in the Arizona Daily Star: “The United States is running out of helium.” However, as pointed out by Arizona State Geologist Lee Allison, Arizona has helium resources that could help fill the gap.

Helium is used in many industrial applications such as in the manufacture of optical fiber and LCD screens, in medical imaging, and in welding.

A report (OFR 03-05) from the Arizona Geological Survey: “Review of helium production and potential in Arizona” is instructive (summary here, full report here):

Some of the richest helium-bearing gas in the world was produced from fields completed specifically for helium in northeastern Arizona in the 1960s and 1970s. All production came from fields in Apache County (Figure 1). Three fields were located in the Holbrook Basin south of the Defiance uplift about 35 miles northeast of Holbrook. One field was located in the Four Corners area north of the Defiance uplift near the small community of Teec Nos Pos. Helium-rich gas was discovered in the Dineh-bi-Keyah oil field on the northeastern flank of the Defiance uplift in the late 1960s but was not produced until 2003. Helium concentrations range from trace amounts up to 10% in the Holbrook Basin and Four Corners area. Both areas have good potential for additional discovery and production of helium. Helium content in gas is generally considered to be of commercial interest when the concentration is above 0.3%. Most of the helium produced in the United States is extracted from natural gas from fields in Wyoming, Utah, Colorado, New Mexico, Kansas, Oklahoma, and Texas. The extracted helium is processed into a crude helium product, which varies from 50% to 80% helium, and is ultimately purified to a Grade-A helium product, which is 99.995% or better. Most helium is shipped as a liquid to distribution centers in trucks from where it is sold as bulk liquid helium or gasified and compressed into tanks and small cylinders for delivery to end users.

On the Colorado Plateau in NE Arizona, helium is found in Paleozoic age sediments. According to AZGS, “There appears to be a correlation between … diatremes [volcanic pipes that consist mainly of breccia] and other deep-seated intrusive rocks and the presence and production of helium. Helium is often associated with carbon dioxide which is produced from wells for use in petroleum recovery. Helium is also a byproduct of oil and gas production.

Helium has two potential sources within the earth. First, it could be primordial. i.e., it was part of the original formation of the planet. The deep Precambrian crystalline rocks beneath the sediments on the Colorado Plateau could provide this source.

The second source is radioactive decay of uranium and thorium in the Earth’s crust. The isotopic composition of helium in Arizona indicates that most was derived from radioactive decay.

The Arizona Geological Survey estimates that the potential for additional helium discovery in the Colorado Plateau is very good. In fact, one geologist said the potential in the Four Corners region was “enormous.”

See also:

Petroleum and Natural Gas Potential of the Paradox Basin

Arizona may become a major producer of potash

Gold in Arizona

Old mines of the Tucson Mountains

Oracle Ridge Mine on Mount Lemmon