Oil group sets standard

One might say things in the mining industry look hopeless: metals prices are low; exploration budgets have been slashed; junior mining companies have either disappeared into the woodwork or turned to the Internet; many geologists have been driven out of the industry; and money for those projects that remain is harder to secure.

On the other hand, the industry can be optimistic about the future: standards of living and technological advances continue to move forward; a growing world population will require still more natural resources; the commodity downturn has showed some signs of a turnaround; some of the best people in exploration and mining have remained; and the trough has forced companies to work smarter.

One of the significant contributions of the Bre-X fiasco is that the industry is now held accountable by the financial community. This, in turn, has lead to internal checks and a closer examination of how the industry conducts exploration. But this scrutiny opens the door for the mining industry to change the way it does business by demonstrating that it can rebuild tattered investor confidence.

Exploration methods can benefit from principles developed by the oil industry 20 years ago, when independent contributions from all disciplines (geologists, geophysicists, geochemists and engineers) to the exploration program began to be integrated into a single image. The measurement by the oil industry of the earth’s physical properties began years ago, under circumstances similar to those that exist now in the mining industry. This standardization allowed for rapid decision-making and efficient drilling.

Current geological logging practices in the oil industry allow for consistency among geologists and prevent biases according to a particular geologic theory or model. In the past, interpretations varied dramatically between geologists, primarily because they were unconstrained in their thinking. It soon became apparent that errors in interpretation became greater. Investors began to lose faith in this traditional approach, as it left itself open to discrepancies and, eventually, fraud.

Investors demanded that oil companies create permanent records of the sub-surface — records that could be re-examined at a later date for verification. The practice of logging oil exploration holes for physical properties began in the 1930s and 1940s.

The cost benefits were immediately recognized, and every hole drilled by the oil industry since has been so logged. Physical properties of rocks are used daily to constrain geological interpretations of holes and, more important, to determine co-relations between holes. Today, borehole tools have advanced such that very narrow holes can also be evaluated.

The mining industry can benefit from such practices and methods, particularly when core is lost or during percussion drilling. For mining companies, permanent sub-surface records can improve knowledge of the hole. For investors, it can ensure companies remain accountable.

This year, the “optical tele-viewer” was introduced to the industry. It provides “digital core,” recording an accurate visual representation of the inside of the hole. This practice, long mandatory in the oil sector, could go a long way toward restoring investor confidence in the mining industry.

By no means does the measurement of physical properties replace geology, but the resulting improvement in interpretation could allow for more thorough exploration. This physical information generally does not change over time and can be re-interpreted in terms of new theories of exploration. In other words, by constraining the geology, a more sophisticated interpretation emerges.

The oil industry has led the way in integrating geoscience, essentially blazing a trail for the mining sector. Over 10 years, more than 20 international oil companies spent a total of $25 million to develop the Gocad 3-D modeling software. The research arm of Noranda contributed significantly to the development of the mining aspects of the software. New applications continue to be found for this program, which is the basis for the most significant visualization packages in the oil industry today. The software provides sophisticated project management and visual rendering of all data sets, including the relation of each set to the others.

Imagine being able to look at all data sets at once in three dimensions when planning a series of drill holes, or compiling years of accumulated historical data into a single up-to-date model that would enable explorers to decide what to do next, and where to do it. In addition, this integration could help explain budgets and be used to explore for similar deposits.

The opportunity is here for the mining industry to evolve. Thanks to the oil consortium and this software, mining companies can receive maximum value for their exploration expenditures. Constrained 3-D earth models built and shared by geologists, geophysicists, geochemists and engineers will enable the mining industry to take its next step forward.

— The author is manager of geophysical services for Waterdown, Ont.-based Quantec Geoscience.