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By C. P. Watson

It is perhaps significant that a few years ago the sessions held here were chiefly occupied with production. In the last two years these sessions have been concerned with production curtailment, unitization and conservation, notwithstanding that production in the United States in 1929 reached a total in excess of 1,000,000,000 barrels. A study of the leading producing units in the United States shows that Oklahoma, Texas and California in 1929 yielded 84 per cent. of the total production from 33.5 per cent. of the total number of producing wells. Production in the United States in 1929 showed an increase of 107,000,000 bbl. over the 1928 figures. This increase in itself perhaps is not enough to have caused the serious situation that is now confronting the industry. However, taking into account the gradual encroachment on the consumption of fuel oil through the greater utilization of natural gas, probably we have reached the point in the United States where prices will determine to a large extent,' in 1930, the amount that will be produced. In the states of Texas, Oklahoma and California, the most significant developmcnt of 1929 has been the desire of operators to reach some agreement to bring production more or less in control with the estimated demand. In November, production in California, particularly in the Santa Fe Springs field, was drastically cut to meet a certain requirement. Similarly, in Texas, the Yates field has been developed and has been producing under an agreement on the part of the operators; and more recently in Oklahoma City, serious efforts have been made to keep produetion in line with consumption. For the year 1930 we can see nothing in sight except drastic curtailment. This is a matter that I am sure is occupying the attention of all the leaders of the industry.

Jan 1, 1930

By AIME AIME

NOTWITHSTANDING the metropolitan appearance of M. L. Haider, the present Chairman of the Petroleum Division, he is not a native New Yorker, but was born at Mandan, N. Dak., Oct. 1, 1904. He began his travels at an early stage in life and after attending the University of Southern California for two years he spent two additional years at Stanford University and was graduated in 1927. After a few months as an analytical chemist for the Portland Cement Co. he became research engineer in the natural gasoline department of the Richfield Oil Co. where he remained for approximately two years before taking a position with the Carter Oil Co. in Oklahoma. He was chief engineer for this company for three years before being trans-

Jan 1, 1945

By Owen F. Jensen

CONSTRUCTION of a ground-water supply includes many operations, which do not end with completion of facilities. Evaluations must be made of the quality of water in various areas and the history of production. Following an analysis of geologic, hydrologic, and chemical data there must be an exploratory drilling program and a study of resulting information. When the well is completed a continuous survey of operating records and basic data is necessary, since designs for future wells are varied as more data becomes available for those already completed. As the following discussion must be limited to a single undertaking, the customary procedure will be outlined for development and construction of a ground-water supply in which more than three wells are involved. Parts of this procedure are applicable for all ground-water supplies. Three possible sites were selected for construction of a paper mill. The problem was that the industry daily required approximately 15 million gallons of water of the best quality available; however, if water of the best quality were not available in the desired amount, water of a poorer quality could be used up to half the required amount, about 7 million gallons. In the preliminary survey approximately 1500 to 2000 square miles were covered for each site. Collected data consisted of several hundred electric logs of oil and gas wells; reports by the U. S. Geological Survey on ground-water resources of localities in and near the area; unpublished records of several hundred water wells including chemical analyses of the water produced and drillers' logs of the wells; records of periodic water-level measurements made in observation wells by the USGS; topographic maps drawn up by USGS and by army engineers; and highway and county road maps. A preliminary report based on study and evaluation of these data was presented to the client, recommending the site with the most favorable and economical ground-water conditions. The study indicated that water of the quality and quantity desired could be developed. In this particular area there were indications that the aquifer could be separated into two zones con- taining water of different chemical character. This chemical character varied somewhat with area, but principally with depth, a factor which later proved an economic advantage in design of the well field. After studying the preliminary report, the client weighed other economic factors as well as ground-water advantages and selected a plant site. Authority was given to proceed with detailed study of the chosen area. Evaluation of preliminary data concerning the area indicated that it should be supplemented with additional information derived from actual exploratory drilling and testing. A flexible plan of exploratory drilling was devised so that data obtained as each test hole was drilled could be correlated with existing data and additional test holes could be located and drilled accordingly. Specific data to be obtained from each test hole were: samples of all formations penetrated; the driller's descriptive log of formations; electric logging surveys; one or more samples of water from selected water-bearing formations; temperature; and water levels and their recovery after periods of production. The area studied in such detail was approximately 400 square miles. Choice of location for the original test holes was based on the preliminary study. The pattern for these test holes was designed to require a minimum number of holes and to allow for interpolation of data between two, three, and four holes. Geologic, hydrologic, and chemical data gathered after completion of the first four test holes showed that the north section was the most desirable in the area, which was then reduced from the original 400 square miles to about 150 square miles for more detailed and intensive study. On the basis of findings from the current test a tentative well field was laid out and a drilling program devised. One test hole was located on the actual plant site and later developed into a small pilot production well equipped with a deep well turbine pump. Water from this well was used for general construction requirements. Another test hole drilled near the pilot production well and adjacent to the proposed route of the well-collection system was used during the pumping test of the pilot production well to determine the degree of interference. From the data thus obtained, calculations were made to determine the coefficients of transmissibility and storage. Three additional holes

Jan 1, 1955

Michigan College of Mining and Technology, Houghton, Mich W. O Hotchkiss, President. Copies of the Engineering Research Bulletins of the College of Mining and Metallurgy are sent free upon request to those who ask to be placed on the mailing list. From the complete list

Jan 1, 1933

IN general in making such powders, all kinds of gravel, tuff, washed river silt, and similar earths whose grain is fine and lean by nature are good for this operation of casting, either by themselves or in mixture because they are disposed to receive the metals well on account of a certain dryness which they possess. Many kinds are also compounded by means of art. Of these, I shall proceed to tell of all those that experience [119] has taught me to recognize as good. But first I desire that we return to speak of the natural ones because they are real earths and can always be had wherever one may be, and in the necessary quantity. They please me greatly because they are easy to reduce on account of their disposition. A loam is made from these and mixed by beating with wool-cloth cut- tings, spent wash ashes, and horse dung. This is made into cakes and dried. These are then put to bake in a furnace or in some other way and, in fact, are baked very well. Then it is pounded and sifted with a fine sieve, or it is ground in a potter's color mill, or by hand on a porphyry with water, to the fineness that the craftsman desires, or as fine as he can make it. When it has been ground it is again drained free from water and dried out with fire. Then as much magistery of salt is taken as will moisten it. It is dried and pounded again and passed through a sieve. When it has been made as desired in this way it is moistened again before use with water, urine, or vinegar just enough so that it holds together when it is squeezed in the fist. Then, when it has been brought to this point, it is moulded as you will hear. Powders are also made of crushed brick, tripoli, vine ashes, tiles, and glazed drainpipes, or burned emery, calcined tin, straw, and of burned paper and horse dung as well as of young ram's-horn ashes and many other things. The goodness of all these depends on three things; namely, on receiving the metal well, on being so fine as to be almost impalpable, and on their being made .with a magistery that renders them hard and strong when they are dry. In addition to these powders I have used another when I needed it, and it has succeeded well every time I made it. To make this. I have taken I two parts of pumice and one of iron scale and ground them on the por-

Jan 1, 1942

By Sheldon P. Wimpfen, Ralph H. Sweefser

FOR centuries the pumping of water has been one of the chief problems to be overcome by the persistent men who win the mineral wealth of the world. Profitable operations have often been forced to suspend activities as the mine penetrated well below the water table or when sudden rushes of water were encountered. To operate below the local water level requires continuous pumping equal in volume to the amount of water flow¬ing into the mine workings. Often the water to be removed exceeds the tonnage of valuable material produced. To be above local water level is a valuable asset. Modern mining practice permits nothing short of the extraction of the last pound of profitable ore from a mineral deposit. In the days before the development of mechanical and electrical power as we know it today. water in any quantity was a major

Jan 1, 1948

By William Y. Holland, Roger M. Cook

In view of the increasingly widespread deterioration of concrete structures as the result of the interaction of the alkalies sodium and potassium released by hydration of portland cement and susceptible rocks and minerals in aggregates, it is believed that a paper summarizing the geographic distribution of these aggregates will be of interest to producers and users of concrete, concrete products, and concrete-making materials. THIS paper reviews the problem of alkali-aggre-gate reaction in concrete and describes the geologic and geographic occurrence and distribution of alkali-reactive sand and gravel in western United States. It includes no discussion of crushed stone or synthetic aggregates. Most deposits of sand and gravel are accumulations of particles of rocks and minerals from a variety of sources, and it is not unusual for at least one or two varieties of the rocks to contain some form of reactive material. Examination by petro-graphic methods of many sands and gravels, as well as manufactured aggregates, has shown that a comparatively high proportion of the deposits does contain, in greater or lesser degree, rocks and minerals known to be deleteriously reactive with the alkalies of cement. Fortunately the amount of reactive materials is commonly less than that necessary to cause deleterious effects in concrete. As investigation of unsound concrete structures progresses, it becomes evident that the alkali-aggre-gate reaction is even more widespread than supposed, Figs. 1 and 2. Even though some parts of the country appear at present to be immune, further investigations will probably show that the effects of alkali-aggregate reaction can be seen in many structures in these areas, although only on a small scale in most of them. Many concrete structures will, of course, have lived their useful life before disintegration from this cause is serious, and in others the alkali-aggregate reaction may never become significant even though the microscopic evidence of reaction is present. The alkali-aggregate reaction first was reported to be a cause of deterioration of concrete in 1940 when Stanton1 described expansion of concrete pavements in California. Similar expansion and deterioration of concrete was recognized during succeeding years in concrete structures located in many parts of the country, but particularly in the western states. A number of concrete laboratories2 became interested in the problem. It was soon determined that only certain combinations of aggregate and cement caused the alkali-aggregate reaction to take place, and moreover that the reaction progresses only in the presence of water. Further research proved that cements containing more than 0.60 pct total alkalies (pct Na,O + 0.658 x pct K2O), when used with aggregates containing appreciable amounts of reactive ingredients, caused the reaction to take place, usually with subsequent deterioration of the concrete. During the last few years this limitation has been adhered to in both government and private construction as the maximum allowable alkali content of cement to be used with aggregates of known alkali reactivity. Because of this limitation, it appears that deleterious reaction either has been reduced or eliminated in many recently built structures in which it probably would otherwise have occurred. Recent tests have shown that the degree of expansion obtained with any particular cement-aggre-gate combination depends not only on the alkali content of the cement but also upon the relation of this alkali content to the amount and degree of reactivity of reactive constituents in the aggregate.' In laboratory mortar bars, opal and cements with alkali content of as low as 0.2 pct (as equivalent of Na2O) have produced deleterious expansion as the result of alkali-aggregate reaction. These experiments demonstrate that aggregates containing even 0.1 pct of opal are deleteriously reactive. It was soon determined that alkali-silica gels were formed by the interaction of the alkalies of the cement and the reactive aggregate, Figs. 3 and 4. Osmotic or swelling pressures produced by the continued hydration of these gels cause expansion of the concrete with resulting cracking, warping, and dislocation. Evidence of the alkali-aggregate reaction can be seen by a petrographic study of the deteriorated concrete. Among the first structures studied by this method was Parker Dam on the Colorado River, California-Arizona. In the concrete from this dam pebbles of rhyolite, andesite, siliceous limestone, and chalcedonic chert were found to be reactive.

Jan 1, 1954

By W. F. Stowasser

Robert E. Hagen (Oliver Iron Mining Div., U. S. Steel Corp.)—Mr. Stowasser and his associates are to be congratulated on their achievements in developing the design of a pilot agglomerating plant, based on information obtained from experiments made in a laboratory sinter pot, and subsequently constructing and successfully operating this plant. In his Transactions article, May 1955 (vol. 201) Mr. Stowasser stated that the output of his heat treating strand was about 2 Lt per sq ft of grate area per day and that the fuel consumption was 0.7 to 0.8 million Btu per Lt of product. If it is assumed that the burning zone extends from the back of the ignition furnace to the beginning of the recuperation windbox, only about 1/3 of the grate area over the windboxes is utilized for burning pellets, and the actual rate at which partially dried pellets are burned is about 6 Lt per sq ft of grate area per day. It may be interesting to compare the above operating data with that obtained at the Extaca plant, where taconite concentrate is treated on a conventional sin- tering machine using limestone or hydrated lime additives with no recuperation of heat. The entire windbox area is used for burning, and a production rate of 2.5 Lt per sq ft of windbox area per day has been attained at a fuel consumption of 1.8 to 2.0 million Btu per Lt of product, the latter being considerably in excess of that reported by Mr. Stowasser, partly because a circulating load of returns amounting to 28 to 30 pct of the machine feed is used and because no attempt is made to recuperate heat from the waste gases. With the high capital and labor costs prevailing today, it seems that future development of the downdraft grate pelletizing process should be directed toward taking advantage of the high burning rate of predried pellets and increasing capacity, perhaps at the expense of fuel economy, by decreasing the proportion of grate area utilized by ancillary functions. For example, eliminating the cooling zone and using this area for burning would increase the proportion of grate area available for burning from 33 to 50 pct of the total windbox area, and a proportionate increase in capacity would result.

Jan 1, 1956

H. W. Turner, San Francisco, Cal. (communication to the Secretary*): This excellent paper apparently represents the results of extensive observation and experience among the mines of the Mother-Lode, but I strongly question its relegation of the dioritic intrusions to the period of fissuring and ore-deposition. The dioritic rocks referred to are evidently those areas represented by Ransome in the Mother-Lode folio1 as meta-diorites, and, as he says, are merely basic facies of the great granodiorite batholite of the Sierra Nevada. If followed downward I venture to predict that these meta-diorite areas would be found to connect with the great batholite, and to be in fact mere apophyses of it. I see no reason for supposing that these apophyses were intruded into the Mother-Lode slates at a period later than the intrusion of the granodiorite in general. The period of fissuring was subsequent to this intrusion; the basic granodiorite or quartz-diorite areas of the foot-hill region are themselves fissured extensively; and the fissures were filled with quartz, apparently during the same general period of the formation of the Mother-Lode veins. Prichard and Ransome2 both refer to the deposition of quartz in the same lode at different periods resulting from a reopening of the fissures. Some time since, I saw in the stopes of the

Jan 1, 1904

E. O?C. Acker Truman H. Aldrich Walter H. Aldridge Anson W. Allen John H. Allen W. Lawrence Austin W. S. Ayres David Baker John Henry Banks Alonzo F. Bardwell Robert Bentley Andrew A Blair Walter M. Brodie Fredrick Burbidge H.H. Burden Charles Butters

Jan 1, 1939

By R. S. MACPHERRAN

TRENDS in the manufacture and use of cast iron are decidedly toward specialization, alloy iron, and increased strength. Old handbooks list only one kind of cast iron, with a tensile strength of 15,000 lb. Recent A.S.T.M. specifications show that from 50,000 to 60,000 lb. per sq. in. can now regularly he guaranteed. The use of alloy iron, heat-treated iron, and even nitrided cast iron, is rapidly growing and all kinds are improving in quality. Iron for operation at high temperature and corrosion-resisting irons have also been developed. Only a few years ago cast iron was "cast iron," but now there are almost as many kinds of cast iron as there are foundries making it

Jan 1, 1936

Elected Died 1895 *ABBOTT, AI ATTHUR 1908 1882 *ABBOTT, ARTHUR V 1906 1905 * ABE, MASAYOSHI 1909 1903 * ADAMS, CHARLES C. 1905 1906 * ADAMS, JOHN C. 1913 1905 * ADAMS, WILLAMS 1909 1903 * ADAMS, W. EDWARDS 1910 1884 *ADDY, MATTHEW 1896 1906 * AFFLECK, WILLIAM A. 1911 1889 * AKERS, WILLIAMS 1906 1905 * ALABASTER, RUPPERT C. 1911 1899 * ALBERGER, LOUIS R. 1911 1894 *ALLEN R B 1896 1905 * ALLEN, R. SCOTT 1906 1874 * AMIOT, H. 1892 1886 *AMSLER, CARL 1894 1898 ** ANDRSON, JOHN W 1905 1895 *ÅNGSTROM, CARL 1901 1887 * ARCHBALD, JAMES 1910 1900 * ARLETT, GEORGE H 1906 1895 *ARMSTRONG, JOHN F 1898 1882 *ARNOLDS, HUGO 1886 1875 *ASHBURNER, CHARLES A 1889 1872 *ASIIBURNER, WILLIAM 1887 1883 *ATKINS, C M , JR 1885 1905 * AUSTEN, PETER T 1907

Jan 1, 1917

Elected Died 1895 *ABBOTT, AI ATTHUR 1908 1882 *ABBOTT, ARTHUR V 1906 1905 * ABE, MASAYOSHI 1909 1903 * ADAMS, CHARLES C. 1905 1906 * ADAMS, JOHN C. 1913 1905 * ADAMS, WILLAMS 1909 1903 * ADAMS, W. EDWARDS 1910 1884 *ADDY, MATTHEW 1896 1906 * AFFLECK, WILLIAM A. 1911 1889 * AKERS, WILLIAMS 1906 1905 * ALABASTER, RUPPERT C. 1911 1899 * ALBERGER, LOUIS R. 1911 1894 *ALLEN R B 1896 1905 * ALLEN, R. SCOTT 1906 1874 * AMIOT, H. 1892 1886 *AMSLER, CARL 1894 1898 ** ANFERSON, JOHN w. 1905 1895 *ÅNGSTROM, CARL 1901 1887 * ARCHBALD, JAMES 1910 1900 * ARLETT, GEORGE H 1906 1895 *ARMSTRONG, JOHN F 1898 1882 *ARNOLDS, HUGO 1886 1875 *ASHBURNER, CHARLES A 1889 1872 *ASIIBURNER, WILLIAM 1887 1883 *ATKINS, C M , JR 1885 1905 * AUSTEN, PETER T 1907

Jan 1, 1917

By AIME AIME

IN times of stress nations pick strong men to lead them. Similarly the Coal Division selected forceful Larry A. Shipman, fuel engineer for the Southern Coal and Coke Co., Knoxville, Tenn.. to lead it through the year 1945. He was born in Indianapolis May 13, 1891. Following graduation from a technical high school in that city Larry began his fuel career approximately 35 years ago attached to one end of a scoop shovel, firing locomotives for the Pennsylvania Railroad. At the end of two years he transferred to the New York Central Lines and held these jobs successively: locomotive fireman, engineer, fireman instructor, supervisor of instructors, and fuel engineer.

Jan 1, 1945

By Lawrence F. Schubert

Instrumentation is not a stranger to the minerals processing industry. In fact, very few plants now exist that haven't to one extent or another adapted operations to instrumentation. But with the rapid growth of such controls has come the need for effective departments composed of men trained to maintain and repair the instruments; here is where many firms fall short. The importance of the role an instrument department should play is underscored by the omnipotent effects which instruments often exert over an operation. Reserve Mining Co. is an example: while instrumentation at this taconite plant represents approximately 2% of the process equipment cost, a breakdown of instruments may result in the ineffective use (or complete shut-down) of the other 98% of plant investment.

Jan 7, 1966

By J. E. Hanlon, S. R. Butler, R. J. Wasilewski

It is known that stoichiometric NiTi transforms to a structure of lower symmetry near room temperature. The present investigation deals primarily with the changes in the electrical and magnetic properties which occur at the transformation. The effects of composition and various heat treatments on electrical properties are also discussed. In recent investigations by Purdy and Parr,' Wang et a1.,2 Dautovich and Purdy,~ Dautovich et a1.,4 and the authors, ~,' NiTi has been observed to undergo a martensitic phase transformation from the ordered CsCl (B2) structure to one of lower symmetry. The crystal structure of the low-temperature modification is still not completely worked out. This transformation occurs near room temperature for the stoichiometric composition. The thermodynamic, elastic, crystallographic, and microstructural characteristics of this transformation for some compositions have been previously reported.'-= In the present investigation, the changes in the electrical transport properties and magnetic susceptibility of NiTi when it undergoes the martensitic phase transformation have been measured. The approximate composition range covered is 48 to 52 pct Ti.* *All compositions are given in atomic percent._____________________ EXPERIMENTAL PROCEDURES AND RESULTS 1) Sample Preparation. The NiTi alloys were prepared from iodide titanium (>99.92 pct Ti) and vacuum-premelted carbonyl nickel (>99.95 pct Ni) by repeated arc melting under gettered argon and casting in a water-cooled copper mold. After the cast buttons were hot-forged at 800" to 950°C, the oxidized surface was removed by grinding and etching. Samples were cut from the worked polycrystalline buttons. After fabrication, the samples were annealed 1 hr at 900°C and water-quenched. The composition of the alloys was assumed to be the same as in the initial feed. This assumption was supported by material balance checks on 100-g arc-melted buttons which demonstrated quantitative recovery to within k0.02 pct. The oxygen content of the alloys was '150 ppma (weight) and the carbon content was 30 to 50 ppm. 2) Electrical Resistivity and Hall Effect. The electrical resistivity was measured over the composition range 48 to 52 pct Ti for temperatures varying from 4.2"K to 900°C. The high-temperature and many of the low-temperature experiments were carried out using conventional 4-probe dc techniques.7 The Hall coefficient and ac resistivity were measured at 20 cps using the apparatus shown schematically in Fig. 1. The equipment is basically an ac potentiometer: The resistive or Hall voltage of the sample is balanced by a comparison voltage provided by a dividing network across a standard series resistance. The off-balance signal is amplified by a Tektronix 122 amplifier and detected by a Princeton Applied Research (PAR) phase-sensitive detector. The precision of the resistivity and Hall coefficient measurements is i0.1 and i3 pct, respectively. The uncertainty in the data is increased by i2 pct from the precision limits because of uncertainty in dimensions and possible end effects. The temperature dependence of the electrical resistivity and Hall effect for a stoichiometric (50.0 pct Ti) NiTi sample are illustrated in Fig. 2. Above 75"C, this sample has essentially the B2 structure, while below about 0°C it is completely in the low-tempera-

Jan 1, 1968

By R. Dawson Hall

LONG regarded as nearly worked out, the anthracite region still shows promise of a hundred years of life, for means are being found to get bottom, top, pillar, and other coal that earlier generations disregarded as too expensive to mine. Rock drivages and, still more, machinery are making it possible to get such coal. Mechanical methods enable the owner of thin beds to mine these with profit, and the miner recognizes that he must permit the use of machinery or the inexorable laws of economics will deny him opportunity to work. E. L. Dana, Jr., well outlines this situation, which in the past year became definitely established. Stripping also is recovering, safely and inexpensively, coal that past generations regarded as too hazardous and costly for mining.

Jan 1, 1935

[Pumps: oil-well: plunger: essential parts, G26, 130; 74, 828 improved type, 74, 846 leakage, 74, 837 operating cycle, 74, 833 Uren design, G26, 145 sucker-rod failures, G26, 136 sucker-rod stress, 74, 835 sucker rods, 74, 830, 832 tubing, 74, 833 tubing difficulties, G25, 138; 74, 836 Olivite, 73, 337 valve and seats, 74, 832 Punching: Monel metal, 78, 86 nickel, 78, 86 Punjab. See Indian Empire. PUPIN, M. L biography, M26, 113 John Fritz medalist, 1931, M81, 499 recipient of Washington Award, M28, 155 PURDY, R.: Discussions: on Relative Efficiencies of Domestic Fuels in Relation to Their Costs and Their Advantages 108, 353 on Uses on Coal in the Ceramic Industry, 108,389,398]

Jan 1, 1936

By W. R. Phibbs

THE Columbia Steel Corporation, organized in 1922, and taken over by the United States Steel Corporation on Feb. l, 1930, is operating one blast furnace at Ironton, Utah, which was started on April 30, 1924, and is producing approximately 14,000 tons of pig iron per month. Half of the pig iron produced is basic iron and is used in its own plants at Pittsburg and Torrance, Cal. The ore for the blast furnace is shipped from Desert Mound, Utah, near Cedar City, in the southern part of the' State, approximately 231 miles from Iroaton. The ore is a hematite, disseminated with magnetite, the chemical analysis showing approximately 12 to 20 per cent magnetite, and under the micro- scope the ore has the appearance of a magnetite.

Jan 1, 1930

By Grover R. Castle

INTRODUCTION "Project Financing" or "Project Loans" have become increasingly popular in recent years, and commercial banks are being asked to consider more and more of such financing. However, the analysis of this type of loan is quite different from the analysis of a loan to a financially sound corporation based on the company's balance sheet. For this reason Chemical Bank did a study of project loans in an attempt to be more sophisticated in our approach to them. As part of this study, we examined 29 project financings for which information was available. In this article I shall describe project loans and set forth the guidelines we developed, as an aid to credit officers who might have occasion to analyse this type of financing. DEFINITION OF "PROJECT FINANCING" OR "PROJECT LOAN" The terms "project financing" and "project loan" commonly describe the various methods that banks and institutional lenders use to finance the construction of new projects on a basis whereby payout is anticipated from the revenue stream generated by the project. A project financing often involves a loan to a new entity formed specifically to own the project. The analysis of a project loan proposal is quite different from the analysis of other term-loan proposals since it involves a credit decision based on the review of a projection or forecast rather than of historical earnings and/or it involves the reliance on contractual obligations of third parties. Lenders are asked to assume the added risks associated with project loans because: 1. Project financing may permit a company to obtain additional leverage. It is possible for companies to arrange financing on a project basis that could not be arranged as a direct borrowing. For example, a company may not be permitted to borrow more money directly, due to a limitation in a bond indenture. However, a project financing can sometimes be negotiated on a basis not prohibited by the indenture. 2. Often the sponsors of, or the stockholders in, the project are seeking an off-balance-sheet financing. For example, 11 of the 29 projects in our study were arranged on an off-balance-sheet basis and one showed on the balance sheet as a deferred income item. An off-balance-sheet financing, for the purpose of this article, is a financing which does not show as a direct liability on the balance sheet of the sponsors of or stockholders in a project. 3. Projects are often located in a foreign country. The financing is arranged so that the lenders assume the political risk on the loan because many companies rightly believe that this arrangement affords a degree of insulation from political risk not otherwise obtainable. 4. Many projects are jointly owned by several sponsors. This form of financing lends itself well to a situation where a new entity is formed to own a project and do the borrowing. Project loans can be used to finance a variety of activities including development of iron-ore deposits and associated pelletizing plants; development of coal reserves; construction of pipelines, alumina plants, fertilizer plants and refineries; etc. The specific areas of analysis can be quite different, depending upon the type of project being financed. It is important, therefore, to classify the proposal according to the type of project, and also by the nature of the financing - nonrecourse financing, financing covered by a guarantee of completion and financing supported by an undertaking lasting for the life of the financing. I will discuss each of these types in more detail later, but first, I should like to make some

Jan 1, 1985