5.

district, as on the Comstock Lode, there were rather sharp intrinsic or geologic limits to the ore bodies; the rich iron ores of the Lake Superior district were formed by a process related to the groundwater table and thus tended to bottom abruptly; the Comstock vein system, an upward-branching, tabular candelabra, is typical of fractures formed and filled at shallow depths: rich and intricate near the surface, barren and simple a few thousand feet below.

In the Lake Superior iron district, the old-age stage of mining has been replaced by the youth of a new production-history curve, representing a technologic breakthrough that created an enormous resource out of the dense, iron-bearing rock called taconite, previously worthless. The new production-history curve will also pass through maturity to exhaustion.

As with a district, so with the mineral resources of a nation. The complete cycle of petroleum production in the United States, including Alaska (Fig. 3), is well past its temporal midpoint, although it may be only about halfway in terms of the total quantity of crude oil ultimately to be recovered. As in the case of the Lake Superior iron ore, a second production-history (depletion) curve, representing synthetic crude oil from oil shale, tar sands and coal, starting in the late mature stage of the first cycle, will greatly extend the availability of liquid hydrocarbons and truncate the primary cycle so that it will not have an old-age stage. The synthetic-crude curve may span a considerable period of time, perhaps as much as a hundred years, but it will follow a course similar to all the others.

Strategic importance of depletion forecasting

Whether multiple for a single end-product such as iron and oil,

and

6.

7.

whatever their shape, depletion or production-history curves must begin at zero and end at zero; they do not represent, either singly or in sum, reproducible events. The fact that somewhere near the midpoint of its run, such a curve must begin an inevitable decline makes simple trend projections based on exponential rates of increase in the production of any nonrenewable resource in the short term hopeful, in the intermediate term quixotic, and in the longterm absurd.

On the other hand, an industrialized nation must have a continuing inflow of mineral and energy resources at reasonable costs in order to maintain its standard of living and national strength. Consequently, it is of great importance to try to forecast availability and costs of the vital industrial resources. Because both availability and cost, in the case of nonrenewable resources, depend significantly on depletion rates and on the control of those resources, national materials strategies need to be based solidly on forecasts of depletion rates for both domestic and foreign reserves.

Major factors in depletion forecasting

In forecasting depletion of domestic reserves, one must (1) analyze the intrinsic or geologic limits of the resource of concern, (2) estimate the reserves of that resource available over a range of costs with technology constant, (3) analyze the effects of foreseeable technological improvements and innovations, (4) estimate the future demands for the resource over a range of prices, and (5) estimate the extent to which the demand will or can be satisfied by (a) foreign sources, (b) recycled material, and (c) substitute materials.

Reserves are never completely known until exhaustion has occurred; at any moment before exhaustion, reserve figures involve judgment as

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8.

well as measurement. With technology constant, costs of exploitation

tend to increase exponentially with increasing depth, increasing distance from markets, and increasingly hostile environments for exploration and extraction; increasing cost of exploitation widens the gap between intrinsic limits of oil-in-place or metal-in-place and the economic limits that determine reserves. Of course, technology is rarely constant. New technology can increase reserves if it results in lower costs, increased demand or more efficient utilization; it can decrease reserves if it favors a competing resource.

Government intervention in the market, control of prices and end

uses, restriction of imports or exports, imposition of environmental and health constraints, and withdrawal of areas from mineral development, can increase or decrease domestic reserves. Government mineral-appropri

ation and taxation policies also affect reserves.

Depletion forecasting is based not only on geologic and production information, but also on forecasts of demand, technology, and political

action.

Definitions of resources, reserves, depletion, and other terms

Before going further, it is necessary to define some important terms as they are used in this paper. They do not agree in every case with definitions used by other authors.

A natural resource is a material or energy flow occurring in nature which can be exploited by man at a profit. Although profit calculations commonly are made in monetary terms, the ultimate basis of profit in resource utilization is the amount of work that can be gotten out of, or in exchange for, a unit quantity of a natural material, related to

9.

the amount of work required to find, recover, transport and process the material (or to convert the natural energy flow) into usable form. By this definition, naturally occurring useful material in concentrations too lean, too deep, or too distant to be exploited economically, would not be called a resource, although it might be termed a potential re

source.

A nonrenewable resource is a material, occurring in nature and exploitable at a net work profit if found in sufficient concentration, which cannot be renewed at a rate meaningful to man. Trees and fish are renewable resources because they grow at rates and in quantities adequate to supply many men indefinitely; renewable resources are sometimes called income resources. are formed at rates so slow as to represent no renewal as a resource for man; they are nonrenewable resources, sometimes also called fund Nonrenewable resources result from geomechanical and geochemical concentrations of useful material, and they range widely in the degree of concentration. When a society has only simple exploitative technology, such concentrations must be high to constitute resources; but with sophisticated technology, much lower concentrations may merit the term resource, for they can be developed at a profit.

Coal and iron ore, on the other hand,

resources.

Reserves are measured or estimated resources.

Proved or measured reserves represent material that can be extracted

at a profit under existing economic conditions and with available technology, and which has been measured within small margins of geologic error by properly spaced drill holes or other openings. Even this category contains an element of judgment and risk. It is the only reserve category on which delivery commitments and plant investment should be based.