Simplified illustration of detecting an anomaly in the Earth's magnetic field caused by buried steel drums (in the northern United States, facing west).
A magnetometer detects local buried iron objects because the object causes the (locally) uniform magnetic field of the Earth to strengthen or weaken depending on the size, orientation, and magnetic characteristics of the object.  Most of the normal field distortion is the result of an induction effect on the earth's magnetic field by that particular iron object; however, many objects may have a residual permanent magnetism which may interact with the induced field, affecting the magnitude of the overall magnetic anomaly.  These variations coupled with variations in the object's orientation with respect to the earth's field (as well as the state of corrosion of the object) make absolute calibration for certain sized targets difficult, if not impossible.  Obtaining relative changes across the site are far more important than obtaining absolute values.  In addition, due to the weakening or strengthening effect of the object on the (locally) uniform magnetic field of the Earth, a response over one target produces both positive and negative distortions; such data can yield very complicated contour maps.  Oftentimes, to increase the map's readability, these contour maps are converted to anomaly maps with shading patterns used to distinguish two or more levels of anomaly magnitude.
On the other hand, large masses of drums may be detected easily to depths of 10-40 feet.  The magnetometer can only sense ferrous materials such as iron and steel; other metals like copper, tin, aluminum, and brass are not ferromagnetic and cannot be located with a magnetometer (but may be found with a metal detector).

Several different types of magnetometers are available.  Some require the operator to stop and take discrete measurements (by positioning the instrument and pressing a button) which are compared to a base station reading; these systems are generally proton magnetometers.  Fluxgate magnetometers permit the acquisition of data continuously as it is carried across the site.  The continuous coverage is obviously more suitable for mapping complex and large burial sites.  The effectiveness of magnetometer results can be reduced or inhibited by interference (noise) from time-variable changes in the earth's field and spatial variations caused by magnetic minerals in the soil or iron debris, pipes, fences, buildings and vehicles.  Many of these problems can be minimized by careful selection of the type of instrument and field procedures used for the survey.

For example, the gradiometer configuration (two sensors mounted vertically) was designed to overcome large scale diurnal intensity changes in the earth's magnetic
field; this design may also be used to minimize the lateral effects of nearby fences, buildings, etc.  Without the need for a base station, the gradiometer permits the operator to concentrate on specific areas or targets of interest.  Because of these operational advantages, Geosphere generally employs a highly sensitive fluxgate gradiometer system for most surveys.
Looking for more drums beneath the surface with the magnetometer
Magnetometers measure variations in the magnetic field of the earth.  Whether on the surface or below, iron objects or minerals cause local distortions or anomalies in this field.  Originally designed for mineral exploration, magnetometers are now used in the environmental field for locating buried steel drums, tanks, pipes, and iron debris in trenches and landfills. 

A magnetometer's response is proportional to the mass of iron in the target.  In a relatively "clean" area, a single drum may be theoretically detected to a depth of 20 feet from the surface.  In practice, however, numerous smaller, near-surface iron objects will obscure the weak deeper target. A more realistic maximum depth of detection is 5-10 feet.

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