Document 15xzBDK8pGGmd39NB22QpRRwm

FROM (NAME ft LOCATION) OATE SU8JCCT REFERENCE TO J. R. Savage - General Office February 8, 1971 CC: APPROPRIATION REQUEST - CEA 2417 MCS 1016 (AR0CL0R DISTILLATION; Messrs. R. McCutchen BrVE C o r1 ew E. Wheeler W.B. Papageorge H.S. Bergen T. Gossage/P. Benignus W. W. Lorenz A.J. Koenig WGK WGK The draft of Appropriation Request 2417 is attached for your review and comment. Appropriate contributions have been requested from Lav;, Patent, Distribution, etc. md attachment J. R. Savage pS\N 25201" STLCOPCB4060595 t-> ro\jJ ro -= ROUGH DRAFT To: Mr. E. J. Bock President MONSANTO COMPANY APPROPRIATION REQUEST February 1, 1971 cc: Messrs. J.M. Depp P. J. Dowd J.J. Kerley L.F. Steinbach C.J. Smith TITLE: MCS 1016 (AROCLOR) DISTILLATION (Specialty Products Business Group) NEW FIXED CAPITAL REQUESTED: $820,000 DIVISION: Organic Chemicals PLANT: W. G. Krummrich REQUEST NO: CEA 2417 FORECAST NO. FIRST LISTED IN THE CONSTRUCTION FORECAST: I - SUMMARY A key part of Monsanto's announced program for control of PCB's (polychlorinated biphenyls) is the introduction of a new dielectric fluid which will be less persistent if released to the environment. This project provides for a fractionation system to adapt existing Aroclor manufacturing facilities at the Krummrich Plant to produce MCS 1016. This new fluid will replace Aroclor 1242 for sale to capacitor manufacturers. The new product differs from Aroclor 1242 in that it contains a minimum of the more persistent highly chlorinated homologs. Therefore, any fluid lost from scrapped capacitors is. unlikely to accumulate in the environment to a harmful or measurable level. DSW 252015 STLCOPCB4060596 Page 2 I - SUMMARY (Cont d) The high chlorine fraction left from making MCS 1016 will be further processed to make Aroclor 1254 and 1260, which will be sold as transformer askarel fluid. This is a closed system.application with an incineration and reclamation service available to close the loop. Monsanto tests have shown MCS 1016 to be fully equivalent to Aroclor 1242 as a capacitor impregnant. Customer tests presently underway might lead to minor product revisions but these would be within the capabilities of the equipment as installed. While this project is presented as non-earnings, it does provide tankage to permit consolidation of all Aroclor production at Krummrich with the Anniston unit to be mothballed. The resulting improvement in costs, together with the recent price increase, has more than compensated for the manufacturing costs entailed in the new product. The overall financial effect of the PCB program on total dielectrics is shown in Appendix A. Central Engineering has reviewed this request and its comments are incorporated in those sections where it has shared responsibility. The Group Vice-President has reviewed this project and recommends approval. Recommended by H. TT. Minckler, General Manager Organic Division DSW 252016 STLCOPCB4060597 Page 3 11 " premises Since liquid Aroclors have been reported by some researchers to be harmful to wild life and persistent in the environment, they are being withdrawn from "open system" applications. However, as to the applications where Aroclor safety and electric stability are irreplaceable, we believe and have indicated to regulatory agencies, concerned legislators, and the public that "closed system" applications pose no threat to the ecology. The capacitor application is an intermediate case, since the capacitor is sealed for its long useful life, but may eventually leak when junked or incinerated. Thus, a less persistent dielectric fluid would be further insurance against accumulation in the environment. It has been found that isomers containing five or more chlorine atoms per molecule are the persistent components in chlorinated biphenyl. While Aroclor 1242 contains three chlorine atoms per molecule on the average, 5 - 8$ is chlorinated to five or higher. This is also true of corresponding competitive products made overseas. The new fluid, MCS 1016, will be fractionated to reduce the persistent components by an order of magnitude. A light ends cut may also be '' ' made to return to a similar average chlorine content. The key premise of this project is that a ten-fold reduction in the potential entry of PCB's to the environment via scrapped capacitors is an adequate solution to this aspect of the PCB problem at this time. DSW 252017 STLCOPCB4060598 Page 4 II - PREMISES (Cont'd) This project is to provide facilities to produce a nominal 50M lbs/year of MCS 1016 based on a 10$ light ends forefcut by fractionation of Aroclor 1142. Facilities will also be provided for the manufacture of Aroclors 1221 and 1242. Production of these products will be discontinued at Anniston to reduce total manufacturing cost and avoid large expenditures there for PCB control. Central Engineering has based its process design and capital estimate on the data given in the revised Project Scope Report dated December J>0, 1970. Sufficient information was available to develop a reliable cost estimate. ' III " alternate courses A. Alternate Processes For MCS 1016 A continuous refining system was considered instead of the batch system selected, however, the required flexibility of being able to take a forecut called for the batch system. Crystallization was also considered, but this was felt to be impractical due to the low temperatures and high viscosities involved with this product. B. Alternate Products For Capacitor Dielectrics Alternate products, based on Aroclor chemistry or new chemistry, are being explored. However, any product which does not closely mimic Aroclor in electrical performance, even if superior, would require redesign of capacitors by our customers, and would thus require more lead time than is acceptable for a response to the PCB problem. We will continue to pursue this alternate and it may become a reality in a few years. ,,ro.,5 DSW 252018 STLCOPCB4060599 Page 5 III - ALTERNATE COURSES (Cont'd) C. Abandon The Capacitor Aroclor Business This alternate has been explored with the Corporate Management Committee in arriving at our present PCB strategy and was rejected because the electrical industry has no viable alternate. IV - MARKET Forecasted requirements for capacitor fluid are as follows: Domestic 1971 28,200 1972 26,000 1973 27,000 1974 28. 000 Export 3,627 4,500 4,700 4,750 Total 31,827 30,500 31,700 32,750 1975 29,000 4,850 33,850 The market for capacitor fluid is confined to a small number of firms with General Electric and Westinghouse dominant. Aroclor impregnated capacitors occupy a distinct niche in the total capacitor market having advantages in such uses as fluorescent ballasts, motor running, and power-factor correction. The market for capacitor Aroclor is therefore sensitive to business conditions in such industries as construction and air conditioning. A negative factor in the growth of capacitor Aroclor will be the increasing use of polypropylene film in capacitors, since less Aroclor is required to impregnate such units, although the resulting Improvement in cost/performance ratio should lead to an increase in units sold. A careful assessment of capacitor technology leads to the forecast figures shown above. , DSW 252019 STLCOPCB4060600 Page 6 IV -MARKET (Cont1 d) Monsanto has had no domestic competition in capacitor Impregnants, since Aroclor 1242 is fire resistant, has a good dielectric constant, pricing has been kept realistic, and service, quality and technical service have been stressed. However, the PCB problem has created real concern among the capacitor manufacturers, and it is essential that Monsanto show leadership in developing capacitor fluids free of ecological implications. Thus, MCS 1016 will be brought into the market place replacing Aroclor 1242 completely as soon as possible, with other products in the wings for introduction if necessary. . V - TECHNOLOGY . The proposed project involves batch fractionation of Aroclor 1142 which will be produced in existing and modified existing facilities at the W. G. Krummrich Plant. The overhead product (MCS 1016) is expected to be a less persistent material than Aroclor 1242, for which it will be a substitute. The system can be operated on a semi-continuous basis, if a light ends forecut is not required. Research has made several runs in bench scale equipment, and one short production run was made at Mound Laboratories. /~a"Tentative Process Report has not been issuedj; therefore. Engineering worked closely with Research to obtain the necessary design data. It Is believed that sufficient information Is available to properly size equipment. /i* < 0 AJ Dsw 252020 STLCOPCB4060601 V - TECHNOLOGY (Cont'd) Page 7 A risk exists as to whether the improvement in persistence provided by MCS 1016 will be sufficient to permanently allay the concerns of customers,regulatory agencies and the public, even though biodegradation studies to date are reassuring. ' The system will be capable of making a second-generation product, MCS 10^2, which will be further reduced in environmental persistence, but which would require redesign of capacitors. A technical risk at this time is in the use of a stainless steel oolumn and condenser to be relocated from Chocolate Bayou. Materials technology personnel in Texas have inspected the column and found the internals in good condition, and the condenser has been Inspected and pressure tested.. at t a l.ocal shop in Texas. Therefore, the risk is minimal. ' VI - SIGNIFICANT CONTRACTS There are no significant contracts affected by this project. , VII - PATENT SITUATION (to be supplied by Patent Department) VIII - EARNINGS While this is presented as a non-earnings project, it is pertinent to examine the continuing effect on dielectric fluid earnings of the actions taken since adoption of the PCB plan. DSW 252021 STLCOPCB4060602 VIII - EARNINGS (Cont1 d) Page 8 Increase in Unscheduled Capacity cost due abandonment of plasticizer and other open system uses 0. 6//lb. Increase in fixed and budgeted cost due to this project 0. Wlb. Increase in labor cost for this project and to cover reclamation service and consolidation at WGK 0. 2^/lb. Cost reduction at Anniston resulting from mothballing Net Cost Increase (0. 5^/lb. ) 0. 7^/lb. The recent price increase of 2//lb. has covered this cost increase as well as some of the non-recurring costs for Research on biodegradation, toxicology and plant clean-up methods. Appendix A shows profitability of the dielectric fluids. ' IX - CAPITAL ' A. Scope of Project This project proposes to install facilities in Dept. 246 at WGK Plant to produce MCS-1016 polychlorinated biphenyl. The nominal capacity will be 50 M lbs/year with a 10^ forecut. Facilities will also be included to produce Aroclors 1221 and 1242 now produced at Anniston. DSW 252022 STLCOPCB4060603 Page 9 CAPITAL (Cont'd) Major process equipment items include a 30-plate sieve tray distillation column, column condenser, still pot, direct fired reboiler, and a residue surge tank. In addition, a lime slurrying system and a column vacuum jet system will be installed. Of the above, the distillation column and column condenser are existing and will be relocated from Chocolate Bayou. The direct fired reboiler is existing at WGK and will be relocated to Dept. 246. An additional absorber, filters, and storage tanks will be installed and modifications to existing chlorinator systems made to produce the Aroclors/1221 and 1242 now manufactured at Anniston. All general utilities are available within the Dept. 246 battery limits. This project will provide a relocated fuel oil tank and pump for the column reboiler standby fuel. Finished goods storage will be In five existing. 20,000 gallon tanks and three new 20,000 gallon tanks to be installed on this project. Raw material storage facilities are existing. Page 10 IX - CAPITAL (Cont'd) B. Estimate Capital Installed Machinery & Equipment Buildings . Total Capital Divisional Expense Dismantling Repairs Relocations & Modifications Taxes Total Divisional Expense . $ 820 M --- $ 820 M $ 30 M J' 5 M 2oJT; 3. 5 M $ 70 M CEP Expense $ 5M The capital figure was obtained from a firm equipment list, instrument list, rougl>>iping take-off and a preliminary electric motor list. The estimate has a confidence level of + 10$. The dismantling estimate allows for the dismantling of the fractionation column, column condenser and a pump at Chocolate Bayou and a section of existing control panel in Dept. 246 at WGK. Repair costs cover repairing of insulation on the column and column condenser, and pump repairs. The relocation and modification estimate covers, dsVM 252024 nozzle modi float ions, on existing tanks in Dept. 246, and modifications to existing piping. . STLCOPCB4060605 Page 11 IX - CAPITAL (Contd) C. Project Status Supporting research work for the basic process is continuing to define parameters for customer needs. Project pre-approval has been received to proceed with definitive design and commitment of long delivery equipment and initiation of field construction. fc^u . Design is now underway. Project completion is scheduled for June, 1971. . X - LEGAL / XI - PERSONNEL One additional operator per shift will be needed to operate this equipment. ( XII - RISK EVALUATION No additional hazards to personnel or property over that of the present Installation are involved. It was concluded that the major incident which could occur wosfPcT DSW 252025 STLCOPCB4060606 Page 12 XII - RISK EVALUATION (Cont'd) be rupture of a tube in the reboiler furnace. The repair cost was estimated at approximately $5M. The time for accomplishing repairs was estimated at one week on an expedited basis. This would result in a BI loss of approximately $ 50 M. The foregoing is an excerpt from Pre-Project Loss Prevention Report No. 70-37 dated July 30, 1970. XIII - POLLUTION AND TOXICITY PROBLEMS The new area will be curbed, trenched and sumped to prevent contamination of the sewer stream. . The vapor stream to the ejector system will be cooled, minimizing the discharge of polychlorinated biphenyls to the atmosphere. . XIV - INTERNATIONAL ASPECTS , The primary purpose of this project is to modify domestic capacitor Aroclor. A similar project may be required at the Newport (U. K. ) / Aroclor unit, although contract fractionation may be an attractive alternate. Since there is competition outside the U.S., similar actions by the other suppliers will be needed to produce a real reduction in losses to the environment In the rest of the world. DSW 252026 STLCOPCB4060607 Page 15 XV - CORPORATE DISTRIBUTION REVIEW XVI - FINANCE DSW 252027 STLCOPCB4060608 Page 14 APPENDIX A ' This analysis compares actual financial performance in 1969, the last full year free of significant impact from the PCB problem, with the 1971 budget. Subsequent years will approximate the 1971 situation, except for growth, until different products are introduced. DIELECTRICS " DOMESTIC Actual Yr '69 Net Sales ($M) Cost Of Goods Sold Gross Profit $ 5,685 3,283 2,40(T SARE - division Operating Income -- Division 1,203 "17197 Corp. Investment Charges & Excess SYD Net Income (A.T.) 246 528" Sales Quantity M Lbs Unit Price Unit Cost Unit Margin 39,974 . 142 . 082 . 060 U.S. EXPORT Net Sales Cost Of Goods Sold Gross Profit SARE - Division Operating Income - Division Corp. Investment Charges/lncl Exc SYD Net Income (A.T. ) 1,186 743 230 siy~ 17 Sales Quantity M Lbs Unit Price Unit Cost ' Unit Margin 7,579 .156 . 098 .058 Budget Yr 71 $ 7,728 4,299 3,429 1,051 S737B- 359 r;0`26 44,575 173 .096 . 077 1,333 906 --42T~ 200 22/ 64 ;------9T~ 8,063 . 165 .112 . 053 qS\N 252028 STLCOPCB4060609 APPENDIX A (Cont'd) Page 15 GROSS PROFIT Domestic U. S. Export / NET INCOME (A.T. ) Domestic U.S. Export DOMESTIC AND U.S. EXPORT Fixed Investment Inventories Other Assets Gross Investment - $ Return On Gross - $ Actual Yr *69 Budget Yr '71 Margin On Sales % 42.2 37.4 44.4 32.4 9.3 7.5 8.2 . 6.8 Return On Investment (Net Income A.T. ) 6,274 852 1,298 a,T04" 8,056 815 1,469 1137337 7. 4 10. 8 DSW 252029 STLCOPCB4060610