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In_Situ_Policy.tex
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@ -147,6 +147,8 @@ PhD candidate of Economics, University of Wyoming
\input{Sections/Profit.tex} \input{Sections/Profit.tex}
\input{Sections/Extended_Production.tex} \input{Sections/Extended_Production.tex}
\input{Sections/Results.tex} \input{Sections/Results.tex}
\input{Sections/Conclusion.tex}

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Sections/Abstract.tex
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Uranium mining in Wyoming – the state with the largest known uranium ore reserves – embraces traditional methods like open-pit and underground mining alongside in-situ recovery (ISR), a less intrusive technique involving solution injection for uranium extraction. Historically, traditional mining contributed substantially to the State's economy, providing jobs and revenue. However, ISR's emergence signifies a shift toward more environmentally friendly practices, aiming to reduce surface disturbance and environmental impact. Despite its overall efficiency, one of the most expensive and time-consuming issues facing in-situ uranium recovery today is the legal and regulatory requirements for groundwater restoration. To potentially enable the future utilization of groundwater found in the mining vicinity, after completing in-situ recovery (ISR) mining operations, as per the regulatory guidelines of groundwater restoration, the operators must restore the water quality in the mining area to its original levels for various elements such as metals, metalloids, anions, and total dissolved solids. However, we argue that in-situ uranium recovery wellfields operate within an exempted portion of an aquifer and therefore, pose a low potential health risk. In this paper, we will develop an analytical model with a representative mining operator as the agent. Focusing on the four active mining operations in Wyoming, we use a primary survey instrument to collect data on various cost parameters and calibrate the remaining parameters of interest. Feeding our analytical model with the primary survey and the calibrated data, we perform a cost-benefit analysis of the legal and regulatory groundwater restoration framework in Wyoming, taking account of the current as well as the potential future uses of the groundwater. The findings could have potential policy implications as a reduction in the regulatory burden related to groundwater restoration could lead to cost savings and social welfare gains. Uranium mining in Wyoming – the state with the largest known uranium ore reserves – embraces traditional methods like open-pit and underground mining alongside insitu recovery (ISR), a less intrusive technique involving solution injection for uranium extraction. Historically, traditional mining contributed substantially to the State's economy, providing jobs and revenue. However, ISR's emergence signifies a shift toward more environmentally friendly practices, aiming to reduce surface disturbance and environmental impact. Despite its overall efficiency, one of the most expensive and time-consuming issues facing in-situ uranium recovery today is the legal and regulatory requirements for groundwater restoration. To potentially enable the future utilization of groundwater found in the mining vicinity, after completing in-situ recovery (ISR) mining operations, as per the regulatory guidelines of groundwater restoration, the operators must restore the water quality in the mining area to its original levels for various elements such as metals, metalloids, anions, and total dissolved solids. However, we argue that in situ uranium recovery wellfields operate within an exempted portion of an aquifer and therefore, pose a low potential health risk. In this paper, we will develop an micro economic model with a representative mining operator as the agent. Focusing on five active mining operations in Wyoming, we use a primary data on various cost parameters to provide in sights into operator choices. Preliminary cost-benefit analysis from operation data suggest the legal and regulatory groundwater restoration reduce total welfare. Second, we use this model to inform a time series regression which models short and long-run supply elasticities. The findings could have potential policy implications and provide economists with a framework to evaluate other types of in situ operations.

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Sections/Background.tex
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@ -12,25 +12,19 @@ In situ (in place) mines, leave the uranium ore body in the ground, and instead
For Wyoming in situ mines the lixiviant is a mixture of native groundwater with typical additives such as carbon dioxide, oxygen, and sodium bicarbonate \citep{gregory2015,kehoe2023}, but international mines primarily use acidic lixiviants such as sulfuric acid \citep{worldnuclearassociation2024}. The acid or base dissociates the uranium from a sandstone roll front where a historic oxidation reaction deposited the ore \citep{wilson2015}. For Wyoming in situ mines the lixiviant is a mixture of native groundwater with typical additives such as carbon dioxide, oxygen, and sodium bicarbonate \citep{gregory2015,kehoe2023}, but international mines primarily use acidic lixiviants such as sulfuric acid \citep{worldnuclearassociation2024}. The acid or base dissociates the uranium from a sandstone roll front where a historic oxidation reaction deposited the ore \citep{wilson2015}.
The lixiviant within a wellfield is pumped from the recovery wells to a plant that contains an ion exchange process. Vessels inside the plant contain ion exchange resin beads that attract uranium ions in the groundwater. Groundwater from the uranium wellfields is passed through the ion exchange beads, which bind the uranium. Once the groundwater leaves the ion exchange vessels, it is refortified with oxygen and carbon dioxide and reinjected into the mining aquifer within the wellfields. The pressure of the injection wells keep the solution within a closed loop in the aquifer. The resin beads, when fully loaded with the uranium, are transferred out of the ion exchange vessel and then stripped of the uranium in a process called elution. Clean resin beads are then transferred back to the ion exchange vessels for re-use. \citep{wichers2024a} The lixiviant within a wellfield is pumped from the recovery wells to a plant that contains an ion exchange process. Groundwater from the uranium wellfields is passed through the ion exchange beads, which bind the uranium. Once the groundwater leaves, it is refortified with oxygen and carbon dioxide and reinjected into the mining aquifer within the wellfields. The pressure of the injection wells keep the solution within a closed loop in the aquifer. The resin beads, when fully loaded with the uranium, are transferred out of the ion exchange vessel and then stripped of the uranium in a process called elution. Clean resin beads are then transferred back to the ion exchange vessels for re-use. \citep{wichers2024a}
This process is repeated, cycling the groundwater between injection and recovery wells until uranium recovery rates becomes subeconomic, and the well grouping is retired. A single recovery facility serves a system of wells. As some wells are retired, others may be added further along the roll front, until all economically recoverable uranium is extracted, and the operation is ended. This process is repeated, cycling the groundwater between injection and recovery wells until uranium recovery rates becomes subeconomic, and the well grouping is retired. A single recovery facility serves a system of wells. As some wells are retired, others may be added further along the roll front, until all economically recoverable uranium is extracted, and the operation is ended.
%A common well system for in situ mines is referred to as a five spot. A five spot pattern exists when four injection wells are drilled in a rectangle, with a single recovery well in the center. These wells are shallow typically less than 100 ft deep. A piping system, often constructed with PVC pipes, brings the extracted water to processing facility and then back to the injection wells. This piping network is removed after operation are closed, and wells are capped. %A common well system for in situ mines is referred to as a five spot. A five spot pattern exists when four injection wells are drilled in a rectangle, with a single recovery well in the center. These wells are shallow typically less than 100 ft deep. A piping system, often constructed with PVC pipes, brings the extracted water to processing facility and then back to the injection wells. This piping network is removed after operation are closed, and wells are capped.
In comparison to traditional mining methods in situ operations create minimal ground disturbance, do not produce tailings, and avoid expose of miners to elevated radon levels linked to lung concern \citep{nationalacademyofsciences1999}. In comparison to traditional mining methods in situ operations create minimal ground disturbance, do not produce tailings, and avoid expose of miners to elevated radon levels linked to lung concern \citep{nationalacademyofsciences1999}. The chemical injected into the groundwater, are commonly used in household without direct health risk, in Wyoming the most commons lixicant is sodium bicarbonate (baking soda).
There are multiple environmental advantages of this method of uranium recovery. The chemical injected into the groundwater, are commonly used in household without direct health risk, in Wyoming the most commons lixicant is sodium bicarbonate (baking soda). Rather than removing large volumes of earth only minor holes are created that are capped after completion.
The \ac{SDWA} requires that in situ mine can only operate on \emph{exempt aquifers}. These are aquifers that the \ac{EPA} has identified as not being a suitable source of public drinking water. Either because the aquifer is already highly polluted, or because there are too few people in the area to make use of it. Once exempt, a aquifer can never be used as a public drinking water source. The \ac{SDWA} requires that in situ mine can only operate on \emph{exempt aquifers}. These are aquifers that the \ac{EPA} has identified as not being a suitable source of public drinking water. Either because the aquifer is already highly polluted, or because there are too few people in the area to make use of it. Once exempt, a aquifer can never be used as a public drinking water source.
Other rules by the \ac{NRC} mandate that in situ mines restore the groundwater after operations are completed. Samples of groundwater are taken before the mine starts operation. These samples are tested for a array of dissolved solid levels. The rules require that thirteen different water constituent levels are returned to pre-mine levels. Other rules by the \ac{NRC} mandate that in situ mines restore the groundwater after operations are completed. Samples of groundwater are taken before the mine starts operation. These samples are tested for a array of dissolved solids. The rules require that thirteen different water constituent levels are returned to pre-mine levels.
In a typical restoration, multiple steps are taken to reduce post-mining increases in aquifer chemical constituents. The first stage of aquifer restoration is a groundwater sweep. The entire pore volume of groundwater within a wellfield is brought to the surface and injected into deeper layers through disposal well. The groundwater sweep process draws in native groundwater from outside the mining zone with lower dissolved solids refills this pore space \citep{saunders2016,yang2023}. Other projects manage the produced water using evaporation ponds, or water treatment followed by surface discharge \citep{wyomingdepartmentofenvironmentalquality2018}. If surface discharge is applied, the constituent concentration of the water must be tested before being applied to the ground \citep{wyomingdepartmentofenvironmentalquality2018}. In a typical restoration, multiple steps are taken to reduce post-mining increases in aquifer chemical constituents. The first stage of aquifer restoration is a groundwater sweep. The entire pore volume of groundwater within a wellfield is brought to the surface and injected into deeper layers through disposal well. The groundwater sweep process draws in native groundwater from outside the mining zone with lower dissolved solids refills this pore space \citep{saunders2016,yang2023}. Other projects manage the produced water using evaporation ponds, or water treatment followed by surface discharge \citep{wyomingdepartmentofenvironmentalquality2018}. If surface discharge is applied, the constituent concentration of the water must be tested before being applied to the ground \citep{wyomingdepartmentofenvironmentalquality2018}.
Next, the water is run through reverse osmosis filtration and water treatment processes to reduce pollutants to allowable levels. Once these thresholds are reached, monitoring wells are used to track mineral content in a quarter mile buffer around the operation. If the decline rate of these factors is shown to be stable, the restoration is complete. \citep{internationalatomicenergyagency2016,saunders2016}. Because each individual dissolved solids must be restored to pre-mine levels, some constituents are reduced below starting levels, as additional sweeps and filtering is used to remove the most difficult to extract pollutants. This was the case in the Smith Ranch Wyoming operation where radium levels in the groundwater were lower than baseline after restoration \citep{ruedig2015}. Next, the water is run through reverse osmosis filtration and water treatment processes to reduce pollutants to allowable levels. Once these thresholds are reached, monitoring wells are used to track mineral content in a quarter mile buffer around the operation. If the decline rate of these factors is shown to be stable, the restoration is complete. \citep{internationalatomicenergyagency2016,saunders2016}. %Because each individual dissolved solids must be restored to pre-mine levels, some constituents are reduced below starting levels, as additional sweeps and filtering is used to remove the most difficult to extract pollutants. This was the case in the Smith Ranch Wyoming operation where radium levels in the groundwater were lower than baseline after restoration \citep{ruedig2015}.
\hl{Negative externalties of restoration, positive of production, coase contained costs}

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Sections/Conclusion.tex Normal file
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@ -0,0 +1,7 @@
\section{Conclusion}
In situ mining is a modern mining method which has reduced the ecological externalities associated with mineral recovery. We provide preliminary evidence that the current regulatory framework surrounding in situ operations reduces economic welfare.
We contribute to the literature by providing a micro economic model of in situ mining, which will eventually be used to perform a sensitively analysis, of different mines, both current and planned. Informed by this model We also estimate short and long run supply elasticities of uranium miners.
Current and future work is valuable for policy makes and economists, in developing a policy framework that balances the costs and benefits from this new form of extraction.

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Sections/Data.tex
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@ -1,23 +1,23 @@
\section{Data} \section{Data}
The technical feasibility reports of uranium mines in Wyoming are reviewed to create a data set of mine operation plans. The type of data reported varies, based on the jurisdiction of the companies headquarters, and the phase in development of the cite. Projects under the purview of the \ac{NRC}. In total the technical reports of 15 Wyoming in situ operations were reviewed. Of these only five provide sufficient cost estimates for analysis \footnote{Seven projects are in the preliminary evaluation phase, or are otherwise not required to provided economic estimates by the State of Wyoming. Three projects are in the development stage and provide geologic data, as well as exploration costs, but not operating plans. The remaining five projects provide enough data to establish a net present cost estimate of groundwater Restoration.}. These projects have some spatial diversity coming from five different counties and at least to major different uranium plays. The technical feasibility reports of uranium mines in Wyoming are reviewed to create a data set of mine operation plans. The type of data reported varies, based on the jurisdiction of the companies headquarters, and the phase in development of the site. Projects under the purview of the \ac{NRC}. In total 15 Wyoming in situ operations were reviewed. Of these only five provide sufficient cost estimates for analysis \footnote{Seven projects are in the preliminary evaluation phase, or are otherwise not required to provided economic estimates by the State of Wyoming. Three projects are in the development stage and provide geologic data, as well as exploration costs, but not operating plans. The remaining five projects provide enough data to establish a net present cost estimate of groundwater Restoration.}. These projects have some spatial diversity coming from five different counties and at least two major uranium plays.
The \ac{CNSC} requires mines to provide technical reports before beginning operation. These reports include a schedule of mine operation, with project drilling, restoration, and labor costs in each year, along with forecasted revenues from uranium recovery. While not all Wyoming mines are required to report this information, four operating projects in the State are fully or partially owned by a Canadian mining company such as Cameco. The \ac{CNSC} requires mines to provide technical reports before beginning operation. These reports include a schedule of mine operation, with projected drilling, restoration, and labor costs in each year, along with forecasted revenues from uranium recovery. While not all Wyoming mines are required to report this information, four operating projects in the State are fully or partially owned by a Canadian company such as Cameco.
The operations with these fillings include the Gas Hills Project , the Lost Creek Project, the Shirley basin project, and the Moores Ranch Project \citep{moores2021,westernwaterconsultantsinc2024,westernwaterconsultantsinc2024a,malensek2022}. The final report comes from a \ac{NRC} surety bond filling for the Strata Ross Project \citep{strataenergyinc.2010,strataenergyinc.2010a}. The operations with these fillings include the Gas Hills Project, the Lost Creek Project, the Shirley basin project, and the Moores Ranch Project \citep{moores2021,westernwaterconsultantsinc2024,westernwaterconsultantsinc2024a,malensek2022}. The final report comes from a \ac{NRC} surety bond filling for the Strata Ross Project \citep{strataenergyinc.2010,strataenergyinc.2010a}.
The \ac{NPV} of each category of cost and revenue is discounted with a baseline assumption of 10\% private return. A cash flow model for each mine is created, that allows \ac{NPV} to be calculated by adjusting the variables of uranium price, restoration costs, internal return rate, operating costs, and up front costs. This can used to create sensitivity analysis of profits. The \ac{NPV} of each category of cost and revenue is discounted with a baseline assumption of 10\% private return. A cash flow model for each mine is created, that allows \ac{NPV} to be calculated by adjusting the variables of uranium price, restoration costs, internal return rate, operating costs, and up front costs. This can used to create sensitivity analysis of profits.
To compare restoration costs of in situ mines to the value of land affected by the mine, assessed land value data in Wyoming was collected \citep{wyomingdepartmentofrevenue2024}. The map of these parcels was overlaid with the geologic distribution of uranium in the State \citep{eia2020a}.
To compare restoration of in situ mines to the value of land effected assessed land value data in Wyoming was collected \citep{wyomingdepartmentofrevenue2024}. The map of these parcels was overlaid with the geologic distribution of uranium in the State \citep{eia2020a}. To provide additional information about the potential starting groundwater quality, total dissolved solids of wells less than 200 feet deep was collected, and values were interpolated to create a spatial distribution of initial dissolved solid levels. This is important because aquifers with initially low groundwater quality have a lower restoration cost. For example, Australia has similar aquifer restoration rules as the U.S. but the initial groundwater quality is so low that in practice no restoration is required \citep{commonwealthofaustralia2010}. A map of this data is created in \cref{MAP}.
To provide additional information about the potential starting groundwater quality, total dissolved solids of wells less than 200 feet deep was collected, and values were interpolated to create a spatial distribution of initial dissolved solid levels. This is important because aquifers with initially low groundwater quality have a lower restoration cost. For example, Australia has similar aquifer restoration rules as the U.S. but the initial groundwater quality is so low, that in practice no restoration is required \citep{commonwealthofaustralia2010}. A map of this data is created in \cref{MAP}.
\begin{figure}[htp] \begin{figure}[htp]
\centering \centering
\caption{Wyoming Uranium Reserves and Water Quality} \caption{Wyoming Uranium Reserves and Water Quality}
\label{MAP} \label{MAP}
\includegraphics[width=0.6\textwidth]{./Images/TDS_Wyoming.pdf} \includegraphics[width=0.6\textwidth]{./Images/TDS_Wyoming.jpeg}
\end{figure} \end{figure}
As will be seen in the cost comparison, the uranium resources in Wyoming are located in rural areas where land is cheap. However, they are also situated on top of relatively clean aquifers. From an economic perspective a clean but unused aquifer should not be treated differently than a highly polluted aquifer. However, this higher groundwater quality leads to high restoration costs to be applied. As will be seen in the cost comparison, the uranium resources in Wyoming are located in rural areas where land is cheap. However, they are also situated on top of relatively clean aquifers. From an economic perspective a clean but unused aquifer should not be treated differently than a highly polluted aquifer. However, this higher groundwater quality leads to high restoration costs.
For use in the time series regression, two sets of data are collected from the \ac{EIA} uranium marketing series, the contract price of uranium is collected iteratively going back to 1992\footnote{Source of \citep{eia1993,eia1994,eia1995,eia1996,eia1997,eia1998,eia1999,eia2000,eia2001,eia2002,eia2003,eia2004,eia2005a,eia2006a,eia2007a,eia2008a,eia2009a,eia2010b,eia2011a,eia2012a,eia2013,eia2014a,eia2015b,eia2016a,eia2017c,eia2018a,eia2019a,eia2020b,eia2021a,eia2022b,eia2023b}}. The weighted average contract price is prefered over the spot market price, since this more closely aligns with long run expectation of uranium price. Uranium concentrate production and total the total inventories of yellow cake held by power plants are provided by the \ac{EIA} \citep{eia2024}. For use in the time series regression, two sets of data are collected from the \ac{EIA} uranium marketing series, the contract price of uranium is collected iteratively going back to 1992\footnote{Source of \citep{eia1993,eia1994,eia1995,eia1996,eia1997,eia1998,eia1999,eia2000,eia2001,eia2002,eia2003,eia2004,eia2005a,eia2006a,eia2007a,eia2008a,eia2009a,eia2010b,eia2011a,eia2012a,eia2013,eia2014a,eia2015b,eia2016a,eia2017c,eia2018a,eia2019a,eia2020b,eia2021a,eia2022b,eia2023b}}. The weighted average contract price is preferred over the spot market price, since this more closely aligns with long run expectation of uranium price. Uranium concentrate production and total inventories of yellow cake held by power plants are provided by the \ac{EIA} \citep{eia2024}.

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Sections/Extended_Production.tex
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@ -1,4 +1,5 @@
\section{Profit Function} \section{Profit Function}
We begin by developing a micro economic model of in situ mine profit in \cref{EQPROFITALL}.
\begin{equation} \begin{equation}
\label{EQPROFITALL} \label{EQPROFITALL}
\pi=\sum_{t=0}^{T}\left[\left( P_{ur} \cdot \left(W_{t}^{\alpha}-W_{t-1}^{\alpha}\right)-\left(C_{Drill}+C_{Res}\right)\cdot\left(W_{t}-W_{t-1}\right)\right)\frac{1}{(1+r)^t}\right]-C_{Facility} \pi=\sum_{t=0}^{T}\left[\left( P_{ur} \cdot \left(W_{t}^{\alpha}-W_{t-1}^{\alpha}\right)-\left(C_{Drill}+C_{Res}\right)\cdot\left(W_{t}-W_{t-1}\right)\right)\frac{1}{(1+r)^t}\right]-C_{Facility}
@ -11,11 +12,11 @@ Assuming neither constraint binds the optimal number of wells to drill is \(W_{T
\section{Extended Production} \section{Extended Production}
We next evaluate how restoration requirements effect the total profits of specific wells in a in situ operation. In this analysis the choice to drill a production well in the uranium roll front has been made, making capital investment sunk. The operating cost of the well is assumed to be constant. The extraction rate of a single will group, must stay in a certain range to keep a constant pressure gradient in produced aquifer. This limits the choice of pumping rates and makes this assumption within the realm of possibility. We next evaluate how restoration requirements effect the total profits of specific wells in a in situ operation. In this analysis the choice to drill a production well in the uranium roll front has been made, making capital investment sunk. The operating cost of the well is assumed to be constant. The extraction rate of a single will group, must stay in a certain range to keep a constant pressure gradient in the produced aquifer. This limits the choice of pumping rates and makes this assumption within the realm of possibility.
The rate of uranium production of a well is assumed to follow an exponential decline curve, a method frequently used in oil and gas production \citep{mccain2017}. This model predicts the uranium extraction rate of the well as a function of the original extraction rate, and the total time of production. In each production cycle where lixivant is injected into the reservoir a portion of the remaining uranium is dislocated in to the water, which is then brought to surface. As more uranium is extracted there is less remaining uranium to be dissociated slowing extraction rate. This makes a exponential decline curve model a plausible method of matching uranium production declines in wells. The rate of uranium production of a well is assumed to follow an exponential decline curve, a method frequently used in oil and gas production \citep{mccain2017}. This model predicts the uranium extraction rate of the well as a function of the original extraction rate, and the total time of production. In each production cycle where lixivant is injected into the reservoir a portion of the remaining uranium is dislocated in to the water, which is then brought to surface. As more uranium is extracted there is less remaining uranium to be dissociated slowing the extraction rate. This makes a exponential decline curve model a plausible method of matching uranium production declines in wells.
Under the assumption no operating costs, and a exponential decline curve the marginal choice of producers is whether or not to drill a well, and not inter well production changes are made based on prices \citep{anderson2018}. However, in the current setting operating costs cannot be assumed to be low, but they are assumed to be constant. This means that the optimal time to operate a set of uranium recovery wells is a choice variable of the producer. The total profits of a uranium well are modeled in \cref{EQPROFIT}. Under the assumption of no operating costs, and a exponential decline curve the marginal choice of producers is whether or not to drill a well, and not inter well production changes are made based on prices \citep{anderson2018}. However, in the current setting operating costs cannot be assumed to be low, but they are assumed to be constant. This means that the optimal time to operate a set of uranium recovery wells is a choice variable of the producer. The total profits of a uranium well are modeled in \cref{EQPROFIT}.
\begin{equation} \begin{equation}
\label{EQPROFIT} \label{EQPROFIT}
@ -35,18 +36,19 @@ The effect on the opertaing life of a uranium well induced by the restoration co
\label{TIMEDIFF} \label{TIMEDIFF}
\Delta T^{\star}=\frac{\ln(C_{op}-r C_{Res})-\ln(C_{op})}{D} \Delta T^{\star}=\frac{\ln(C_{op}-r C_{Res})-\ln(C_{op})}{D}
\end{equation} \end{equation}
A few points can eb taken from \cref{EQINDWELL}. First the operating time of well increases as the uranium price increase, or the ore grade (\(q_{i}\)) of a well increase. This is intuitive since both values increase returns. The faster the decline rate, the shorter the operation life of a well as the resource is depleted sooner. A few points can be taken from \cref{EQINFWELL}. First the operating time of a well increases as the uranium price risese, or the ore grade (\(q_{i}\)) of a well increase. This is intuitive since both values increase returns. The faster the decline rate, the shorter the operation life of a well as the resource is depleted sooner.
The most interesting term is the subtraction of \(\ln(C_{op}-r C_{Res})\). As either the cost of restoration of the private discount of the firm increases, the well operating life increase. This is because the restoration cost introduces a new incentive. The restoration costs must be paid after the well stops producing uranium. By producing the uranium for slighly longer, this large cost can be avoided. The most interesting term is the subtraction of \(\ln(C_{op}-r C_{Res})\). As either the cost of restoration of the private discount of the firm increases, the well operating life increase. This is because the restoration cost introduces a new incentive. The restoration costs must be paid after the well stops producing uranium. By producing the uranium for slighly longer, this large cost can be avoided.
The magnitude of discounted value of the restoration costs compared to the current operating costs decide if a well should remain in operation. In fact if the discounted restoration costs is larger than operating cots, then the well will never cease operation. Even if no uranium is produced, the avoided restoration costs are worth more than net present cost of operating the well in perpetuity. If the discounted restoration costs is larger than operating cots, then the well will never cease operation. Even if no uranium is produced, the avoided restoration costs are worth more than net present cost of operating the well in perpetuity.
This effect may explain one perplexing data point. In 2018, uranium prices were \$28 dollars per pound which is well bellow the expected profit thersholds of the observed mines. However, a single Wyoming operation remined open, which declining produciton. This would be consistent with the mine running existing wells as a means to avoid restoration costs. It is not clear that this operation would never shut down, but the added incetive to avoide these costs can explain the temporry conounce udner low uranium prices. This effect may explain one perplexing data point. In 2018, uranium prices were \$28 dollars per pound which is well below the expected profit thersholds of the observed mines. However, a single Wyoming operation remained open, whith declining production. This is consistent with a mine running existing wells as a means to avoid restoration costs.
This result is calibrated Wyoming mine operation plans. We use the Strata Ross project as a baseline in situ operation, due to the high data granularity. The decline rate of the average well is calculated to be 0.316, based on a five year operation time with 80\% total recovery. These wells have a discounted total operating cost of 1.7 million dollars, and a restoration costs of 1.8 million dollars. Applying \cref{TIMEDIFF} yields a increase in operating time of 4 months. This operation has the lowest restoration costs of any of the five identified projects, since there is lower calcite in the surrounding aquifer. A counter factual example is created where the average restoration cost of other projects is applied to the Strata Ross Project. In this counterfactual the average increase in well operation time is one year and three months. This result is calibrated to Wyoming mine operation plans. We use the Strata Ross project as a baseline in situ operation, due to the high data granularity. The decline rate of the average well is calculated to be 0.316, based on a five year operation time with 80\% total recovery. These wells have a discounted total operating cost of 1.7 million dollars, and a restoration costs of 1.8 million dollars. Applying \cref{TIMEDIFF} yields a increase in operating time of 4 months. This operation has the lowest restoration costs of any of the five identified projects, since there is lower calcite in the surrounding aquifer. A counter factual example is created where the average restoration cost of other projects is applied to the Strata Ross Project. In this counterfactual the average increase in well operation time is one year and three months.
\emph{Change in Production} This optimal operating time is used to calculate the total change in well production because of the restoration costs, based on the profit function \cref{PRODCHNG}.
\begin{equation} \begin{equation}
\label{PRODCHNG}
\Delta Q =\int_{T_{1}^{\star}}^{T_{1}^{\star}+\Delta T} q_{i}\cdot e^{-rt}\,dt \Delta Q =\int_{T_{1}^{\star}}^{T_{1}^{\star}+\Delta T} q_{i}\cdot e^{-rt}\,dt
\end{equation} \end{equation}
\begin{equation*} \begin{equation*}
@ -57,8 +59,7 @@ This result is calibrated Wyoming mine operation plans. We use the Strata Ross p
\label{EQPROD} \label{EQPROD}
\Delta Q = \frac{C_{op}}{D\cdot P_{ur}}\left(1-\frac{C_{op}}{C_{op}-r C_{Res}}\right) \Delta Q = \frac{C_{op}}{D\cdot P_{ur}}\left(1-\frac{C_{op}}{C_{op}-r C_{Res}}\right)
\end{equation} \end{equation}
Finally this is used to calculate the dead weight loss due to this inefficient operating plan in \cref{DWL}.
\emph{Total Profit Change}
\begin{equation} \begin{equation}
\Delta \pi_{w}=\Delta Q\cdot P_{ur}-\Delta T\cdot C_{op} \Delta \pi_{w}=\Delta Q\cdot P_{ur}-\Delta T\cdot C_{op}
\end{equation} \end{equation}
@ -68,6 +69,7 @@ This result is calibrated Wyoming mine operation plans. We use the Strata Ross p
\end{equation*} \end{equation*}
\begin{equation} \begin{equation}
\label{DWL}
\Delta \pi_{w}=\frac{C_{op}}{D}\left[1-\frac{C_{op}}{C_{op}-r C_{Res}}-\ln(C_{op}+r C_{Res})+\ln(C_{op})\right] \Delta \pi_{w}=\frac{C_{op}}{D}\left[1-\frac{C_{op}}{C_{op}-r C_{Res}}-\ln(C_{op}+r C_{Res})+\ln(C_{op})\right]
\end{equation} \end{equation}

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Sections/Introduction.tex
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@ -1,7 +1,7 @@
\section{Introduction} \section{Introduction}
Uranium mines generate uranium oxide that is necessary to support the 390 operating nuclear reactors, supplying 10\% of the worlds energy \citep{worldnuclearassociation2024}. Uranium recovery facilities establish contracts with nuclear power plants to purchase set quantities of uranium in future years \citep{camecocorporation2024}. Uranium mines generate uranium oxide that is necessary to support the 390 operating nuclear reactors, supplying 10\% of the worlds energy \citep{worldnuclearassociation2024}. Uranium recovery facilities establish contracts with nuclear power plants to purchase set quantities of uranium in future years \citep{camecocorporation2024}.
The uranium mine industry, essential for nuclear energy, has undergone a technological innovation that shifts the method of recovery. Some companies have begun extracting uranium from groundwater aquifers. This in situ method was first tested in Wyoming at the Shirley Basin uranium project during the 1960’s \citep{mudd2001,worldnuclearassociation2022b}. This less intrusive extraction method has become the dominate means of uranium recovery the United States. Wyoming produced uranium entirely with conventional mining methods, until the early 1990s but now all mines use in situ techniques \citep{energyinformationadministration2023a}. The uranium mine industry, has undergone a technological innovation that shifts the method of recovery. Some companies have begun extracting uranium from groundwater aquifers. This in situ method was first tested in Wyoming at the Shirley Basin uranium project during the 1960’s \citep{mudd2001,worldnuclearassociation2022b}. This less intrusive extraction method has become the dominate means of uranium recovery the United States. Wyoming produced uranium entirely with conventional mining methods, until the early 1990s but now all mines use in situ techniques \citep{energyinformationadministration2023a}.
While in situ operations do not create as much surface disturbance, the process does increase the amount of dissolved constituents in groundwater. Some of these constituents can be toxic when consumed at high enough concentrations, such as selenium, and uranium. As a result rules propagated by the \ac{NRC} and \ac{EPA} create constraints on in situ recovery projects. While in situ operations do not create as much surface disturbance, the process does increase the amount of dissolved constituents in groundwater. Some of these constituents can be toxic when consumed at high enough concentrations, such as selenium, and uranium. As a result rules propagated by the \ac{NRC} and \ac{EPA} create constraints on in situ recovery projects.
@ -11,7 +11,7 @@ We seek to answer two questions relevant to policy makers. How do producers of u
To answer the first question a micro economic model of uranium in situ mining is created. This is used to inform a time series regression that estimates the short run and long run supply elasticities of uranium mining. This model is calibrated using production plan data from five Wyoming mines. The calibration is still a work in progress, but average values are used to provide preliminary results. To answer the first question a micro economic model of uranium in situ mining is created. This is used to inform a time series regression that estimates the short run and long run supply elasticities of uranium mining. This model is calibrated using production plan data from five Wyoming mines. The calibration is still a work in progress, but average values are used to provide preliminary results.
To determine if the current in situ regulations are efficient, the cost of regulatory compliance is estimated for each mine. Then assessor data on land values in uranium bearing regions is collected. Under a hedonic pricing model, the value of amenities such as aquifer quality are captured in land sale prices \citep{rosen1974}. By comparing these costs to the value of land in a typical mine, it is found that the net present cost of compliance are 4.3 times larger than the total land value. To determine if the current in situ regulations are efficient, the cost of regulatory compliance is estimated for each mine. Then assessor data on land values in uranium bearing regions is collected. Under a hedonic pricing model, the value of amenities such as aquifer quality are captured in land sale prices \citep{rosen1974}. By comparing these costs to the value of land in a typical mine, it is found that the net present cost of compliance are 4.5 times larger than the total land value.
A qualitative review of the regulatory impacts are also provided, which will be built into a quantitative analysis in later work. The structure of in situ mines makes externalities caused by nearby aquifer contamination unlikely. On the other hand, the recovery process required by the \ac{NRC} and \ac{EPA} does create some minor externality costs. A qualitative review of the regulatory impacts are also provided, which will be built into a quantitative analysis in later work. The structure of in situ mines makes externalities caused by nearby aquifer contamination unlikely. On the other hand, the recovery process required by the \ac{NRC} and \ac{EPA} does create some minor externality costs.

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Sections/Results.tex
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@ -1,12 +1,13 @@
\section{Results} \section{Results}
\subsection{Restoration Cost and Value} \subsection{Restoration Cost and Value}
The results from the \ac{NPV} model of the five observed mine operations, find an average aquifer restoration costs of 15 million dollars per mine. This can be compared to the expected economic benefits of restoration to determine if the current rules balance costs and benefits of aquifer quality. The results from the \ac{NPV} model of the five observed mine operations find an average aquifer restoration costs of 15 million dollars per mine. This is equivalent to \$4.3 dollars per pound of uranium\footnote{When production is discounted bya rate of 10\% per year.}. This can be compared to the expected economic benefits of restoration to determine if the current rules balance costs and benefits of aquifer quality.
Ideally a hedonic model would be estimated that uses the sale price of the land affected by in situ mining. While hedonic models have been frequently applied in the context of surface water \citep{lansford1995,vasquez2013,poor2007,petrie2007} or groundwater access in agriculture \citep{hornbeck2014,gebben2024,stage2003}, only a few studies have evaluated the economic costs of groundwater water quality \citep{mukherjee2014,guignet2015}. These place estimates of the cost to decreased groundwater quality between 0.3\% of land price for a mild increases in salinity for farms, up to 15\% residents relying on groundwater with nitrogen over the \ac{EPA} drinking water standards. Unfortunately there is not enough data to complete a hedonic model of uranium in situ mines. Ideally a hedonic model would be estimated that uses the sale price of the land affected by in situ mining. Unfortunately there is not enough data to complete a hedonic model of uranium in situ mines.
In lieu of a formal hedonic model, the average land value that overlays a identified uranium resource is calculated. The market value as reported by Wyoming county assessors averages \$239 per acre. This value is weighted by total acreage, so a single large ranching plot such as the one containing the Christen Ranch Mine is weighted higher than small home plots. The average leased area of in situ project is 13,750 acres, making the median expected land value of the leased land 3.29 million dollars\footnote{The leased land is an over estimation of total affected land since much of a lease is used for exploration. For example, the Shirley Basin project has an area under pattern of 283 acres, but a lease area of 3,536 \citep{schiffer2023}}. Since the cost of aquifer restoration is 4.5 times larger than the entire expected land value it is not plausible that the current restoration rules are efficient. %While hedonic models have been frequently applied in the context of surface water \citep{lansford1995,vasquez2013,poor2007,petrie2007} or groundwater access in agriculture \citep{hornbeck2014,gebben2024,stage2003}, only a few studies have evaluated the economic costs of groundwater water quality \citep{mukherjee2014,guignet2015}. These place estimates of the cost to decreased groundwater quality between 0.3\% of land price for a mild increases in salinity for farms, up to 15\% residents relying on groundwater with nitrogen over the \ac{EPA} drinking water standards
In lieu of a formal hedonic model, the average land value that overlays a identified uranium resource is calculated. The market value as reported by Wyoming county assessors averages \$239 per acre. This value is weighted by total acreage, so a single large ranching plot such as the one containing the Christen Ranch Mine is weighted higher than small home plots. The average leased area of a in situ project is 13,750 acres, making the median expected land value of the leased land 3.29 million dollars\footnote{The leased land is an over estimation of total affected land since much of a lease is used for exploration. For example, the Shirley Basin project has an area under pattern of 283 acres, but a lease area of 3,536 \citep{schiffer2023}}. Since the cost of aquifer restoration is 4.5 times larger than the entire expected land value it is not plausible that the current restoration rules are efficient.
Externalities were also considered. If the groundwater pollution spreads to nearby homes the restoration requirements can reduce social costs. However, the geochemistry of in situ mining, makes this scenario unlikely. The chemical process that bound the uranium to produced sandstone, continues once the constituents flow from the mine zone. Geologic models of water flow from a in situ mine indicate that the flow occurs at around 1,000 feet over a hundred years, or half a mile in 400 years \citep{roshal2006}. Further with time the aquifer is restored naturally, and total dissolved solids are reduced \citep{borch2012,hu2011}. While casing leaks of uranium wells have occurred no pollution increases farther than a quarter mile away from a uranium mine has been identified by the \ac{NRC} \citep{leftwich2011,wright2013,nuclearregulatorycommission2014}. Externalities were also considered. If the groundwater pollution spreads to nearby homes the restoration requirements can reduce social costs. However, the geochemistry of in situ mining, makes this scenario unlikely. The chemical process that bound the uranium to the produced sandstone, continues once the constituents flow from the mine zone. Geologic models of water flow from a in situ mine indicate that the flow occurs at around 1,000 feet over a hundred years, or half a mile in 400 years \citep{roshal2006}. Further with time the aquifer is restored naturally, and total dissolved solids are reduced \citep{borch2012,hu2011}. While casing leaks of uranium wells have occurred no pollution increases farther than a quarter mile away from a uranium mine has been identified by the \ac{NRC} \citep{leftwich2011,wright2013,nuclearregulatorycommission2014}.
Interestingly, two potential negative externalities were identified for the restoration process. After being treated the groundwater can be disposed of by surface irrigation. In one instance, water with elevated levels of selenium moved up the food change, increasing selenium levels in grass, grass hoppers, and finally to toxic levels in birds \citep{ramirez2002}. Second the sweeping of groundwater, lowers the aquifer which affects neighbors using groundwater. One rancher who leased his land to a uranium operation reported a decline of the water table at his nearby well of 100 ft \citep{lustgarten2012}. Interestingly, two potential negative externalities were identified for the restoration process. After being treated the groundwater can be disposed of by surface irrigation. In one instance, water with elevated levels of selenium moved up the food change, increasing selenium levels in grass, grass hoppers, and finally to toxic levels in birds \citep{ramirez2002}. Second the sweeping of groundwater, lowers the aquifer which affects neighbors using groundwater. One rancher who leased his land to a uranium operation reported a decline of the water table at his nearby well of 100 ft \citep{lustgarten2012}.
@ -28,15 +29,17 @@ On the other hand uranium mining creates some positive externalities. First the
\subsection{Uranium Supply Elasticity} \subsection{Uranium Supply Elasticity}
%The model predicts the total quantity of uranium concentrate produced in the U.S. each year. Uranium operations make decisions about expanding capacity in stages. First, existing projects respond to prices immediately, by increasing exploration rates and extraction at operating wells. Next, the exploration expenditures lead to new production wells. It takes time for the in situ wells to reach full capacity, so the response in uranium production caused by a uranium price shift is expected to occur over time. Further, operators factor in the available uranium inventories of nuclear power plants when making investment decisions. If uranium stockpiles are large, then powerplants will augment newly produced uranium with these reserves. %The model predicts the total quantity of uranium concentrate produced in the U.S. each year. Uranium operations make decisions about expanding capacity in stages. First, existing projects respond to prices immediately, by increasing exploration rates and extraction at operating wells. Next, the exploration expenditures lead to new production wells. It takes time for the in situ wells to reach full capacity, so the response in uranium production caused by a uranium price shift is expected to occur over time. Further, operators factor in the available uranium inventories of nuclear power plants when making investment decisions. If uranium stockpiles are large, then powerplants will augment newly produced uranium with these reserves.
The change in uranium production is estimated as a function of uranium price, using yearly lags in uranium production, a one-year lag of total uranium inventories, and a time trend. The time trend prevents a spurious regression that attributes correlated trends with casual changes to supply \citep{granger1998}. It also incorporates long run trends in mineral depletion due to extraction. Two lags in uranium production are included in the final model\footnote{This selection is based on the \ac{AIC} \citep{akaike1974}. Two lags minimize the \ac{AIC} score.}. One difficulty in estimating uranium supply is the possibility of endogeneity.
An instrumental variable method is utilized. We apply the West Texas Intermediate price of oil as an instrument, following past literature \citep{kahouli2011,mason1985}. A change in the demand for energy will affect both the price of oil and uranium, but a change in the price of oil does not plausibly change the operating cost of uranium recovery operations. The estimate from these models is provided in \cref{REG}.
The change in uranium production is estimated predicted as response to uranium price, using yearly lags in uranium production, a one-year lag of total uranium inventories, and a time trend. The time trend prevents a spurious regression that attributes correlated trends with casual changes to supply \citep{granger1998}. It also incorporates long run trends in mineral depletion due to extraction. Two lags in uranium production are included in the final model\footnote{This selection is based on the \ac{AIC} \citep{akaike1974}. Two lags minimize the \ac{AIC} score.}. One difficulty in estimating uranium supply is that prices are affected when uranium supply shifts. For example, if a new mining technology lowers operating costs, the quantity of uranium produced by mines will increase, which in turn lowers the market price of uranium.
An instrumental variable method is applied. We apply the West Texas Intermediate price of oil as an instrument, following past literature \citep{kahouli2011,mason1985}. A change in the demand for energy will affect both the price of oil and uranium, but a change in the price of oil does not plausibly change the operating cost of uranium recovery operations. The estimate from these models is provided in \cref{REG}.
\begin{table}[!htp] \begin{table}[!htp]
\centering \centering
\caption{Uranium Supply Estimate} \caption{Uranium Supply Estimate}
\label{REG} \label{REG}
\includegraphics[width=0.7\textwidth]{./Images/UR_Supply_Reg_Table.png} \includegraphics[width=0.7\textwidth]{./Images/UR_Supply_Reg_Table.png}
\end{table} \end{table}
The results from \cref{REG} provide insights into the production decision of Wyoming operations. The effect on production over time matches the dynamics expected from uranium recovery operations. Based on model one, uranium companies can add to production in the same year that prices increase. However, the largest effect occurs two years following the price change, as exploration from the previous year leads to new production wells becoming operational. Finally, after three years existing production declines as resources are extracted. The previous years inventories levels reduce current production as an alternative source of mined uranium. The results from \cref{REG} provide insights into the production decision of Wyoming operations. The effect on production over time matches the dynamics expected from uranium recovery operations. Based on model one, uranium companies can add to production in the same year that prices increase. However, the largest effect occurs two years following the price change, as exploration from the previous year leads to new production wells becoming operational. Finally, after three years existing production declines as resources are extracted. The previous years inventories levels reduce current production as an alternative source of mined uranium.
Because the response of uranium production to price shocks is dynamic, the cumulative effect over time is provided in \cref{IMPACT}. The value on the y axis is the percentage of a price increase that translates to production. For example, if a 1\% increase in uranium price expands production by 0.7\% this value is 70\%. Because the response of uranium production to price shocks is dynamic, the cumulative effect over time is provided in \cref{IMPACT}. The value on the y axis is the percentage of a price increase that translates to production. For example, if a 1\% increase in uranium price expands production by 0.7\% this value is 70\%.
@ -46,3 +49,6 @@ Because the response of uranium production to price shocks is dynamic, the cumul
\label{IMPACT} \label{IMPACT}
\includegraphics[width=\textwidth]{./Images/Price_Shock.jpeg} \includegraphics[width=\textwidth]{./Images/Price_Shock.jpeg}
\end{table} \end{table}
When an increase in uranium price occurs, uranium producers increase output with a peak extraction rate two years after the price change. A sustained 1\% increase in uranium price translates to a 0.66\% increase over the long term.
Recently, uranium prices have surged, going from \$35.65 per pound in 2020, to \$90 in 2024. The model estimates this will lead to a doubling of Wyoming uranium production, if these prices are sustained.