Document EvamRD5o5GZz02pRVEmGRYdjV

CIRCULATE IN TURN TO- 11. Bergen KuniaesB Group Director J, 1.. Ledbetter - Controller J. Mason - Asst. Coneral Manager H. L. Mi.nckle - Genere.1 Manager T. K. Smith, Jr.- Group Vice President RETURN TO: W W. Lorenz 'To be distributed after review is complete.) Messrs. H. L. Mlnckler J. Mason J. L. Ledbetter H. S. Bergen F. J. Holzapfel D. B. Hosmer J. R. Savage--" R. E. Howard C. W. Roos T. M. Patrick O. DeGarmo E. S. Robson J. R. Sayers G. L. Bratsch R. M. Stovall G. K. Oberhausen MONSANTO COMPANY ORGANIC CHEMICALS DIVISION REQUEST NO.: CEA 2417 LOCATION! W. G. Krummrich Plant CONSTRUCTION FORECAST NO.I 3018 FIRST LISTED }N THE. CONSTRUCTION PROGRAM: October 1, 1970 TITLE: MCS 1016 (Arcelor) Distillation (Sped lty p/oducts Business Group) v AMOUNT! $820 000 REVIEWED BY: DATE MmriL JS//6/-7/ Vt-ub- TO BE SUBMITTED FOR FINAL APPROVAL TO: Mr. E. J. Bock, President DATE SUBMITTED DATE APPROVED 3/22/71 MONS 042 IT 1 MONSANTO COMPANY APPROPRIATION REQUEST TO! Mr. E. J. Bock Preside nt March 1, 1971 Messrs. J. M. Depp P. J. Dowd J. J. Kerley L. F. Steinbach C. J. Smith T. K. Smith TITLE! MCS 1016 (AROCLOR) DISTILLATION (Spe pialty Products Business Group) (4 (2 (3 (2 (1 (1 NEW FIXED CA, f ITAL REQUESTED: $820,000 DIVISION! Organic Chemicals PLANT: W. G. Krummrich REQUEST NO: CEA 2417 FORECAST NO. 3018 FIRST LISTED IN THE CONSTRUCTION FORECAST: October 1, 1970 I. SUMMARY A key part oE Monsanto's announced program for control of PCB's (polychlorinated biphenyls) is the introduction of a new dielectric fluid which 'fill 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. Tiis new fluid will replace Aroclor 1242 for sale to capacitor manufacturers. The new product differs from Aroclor 1242 in that it contains minimum of tie more persistent highly chlorinated homologs. Therefore, aiy fluid lost from scrapped capacitors is unlikely to accumulate ip the environment to' a harmful or measurable level. tThe high chi' rine fraction left from making MCS 1016 will be further procu ssed to make Aroclor 1254 and 1260, which will be sold as tranp former askarel fluid. This is a closed system application with an inci deration and reclamation service available to close the loop. HONS 042142 Page 2 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 pproject is presented as non-earnings, it does provide tankage to Pt rmit consolidation of all liquid Aroclor production at Krummrich with the Anniston unit to be mothballed. The resulting imp rovement 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 Engl peering has reviewed this request and its comments are incorporhted in those sections where it has shared responsibility. The Group Vice-President has reviewed this project and recommends approval. -rLC/ZVXI---- ,--------------er, General Manager HONS 042143 Page 3 l II. PREMISES Since liquid Aroclors have been reported by some researchers to be harmful :o some species of wild life and persistent in the environment, they are being withdrawn from "open system" applicati However, as to the applications where Aroclor safety and electric stability ace irreplaceable, we believe and have indicated to regulatory gencies, concerned legislators, and the public that "closed sys :em" applications pose no threat to the ecology. While the capacitor application is a closed system, since the capacitor ii sealed for its long useful life, it may eventually leak when jinked 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* of the total 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 nearly eliminate the persistent components resulting in a product 10 times better from an environment standpoint. A light ends cut may also be made to return to a similar average chlorine content. The key premise of this project is rhat this substantial reduction in the potential entry of persistent PCB's to the environment via scrapped capacitors is a responsible solution to this aspect of the PCB environmental challenge. This projec: is to provide facilities to produce a nominal 50ff lbs/year of MCS 1016 based on a 10% light ends fore-cut by fractionation of crude Aroclor. Facilities will also be provided for those Aroclors formerly made only at Anniston. Production of these products will be discontinued at Anniston to reduce total manufacturing cost and terminate expenditures there for PCB process improvements. Central Engineering has based its process design and capital estimate on the data given in the revised Project Scope Report dated December 30, 1970. Sufficient information was available to develop a reliable cost estimate. hqns 042144 Page 4 III. ALTERNATE COURSES Alternate Processes for MCS 1016 A continuous refining system was considered Instead of the batch system seleoted, 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. Alternatk 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 1242 in eleotrical 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. 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 rjequirements for capacitor fluid are as follows: (000 lbs)| 1971 1972 1973 1974 1975 Domestic Export - 28,200 3,627 26,000 4,500 27,000 28,000 4,700 __4_,_7_5__0 29,000 4,850 Total 30,500 31,700 32,750 33,850 The market for capacitor fluid is confined to a small number of firms with General Electric and Westinghouse dominant. MQNS 042145 Page 5 Aroclor imp('egnated capacitors occupy a distinct niche in the total oapao;itor market having advantages in such uses as fluorescent ballasts, mi<j>tor running, and power-factor correction. The market for capacity r Aroclor is therefore sensitive to business conditions in such indpistries as construction and air conditioning. A negative factor in th e Bhort-term growth of capacitor Aroclor will be the lncreas }.ng use of polypropylene film in capacitors, since loss. Aroclob is required to impregnate such units, although the resuiting imiprovement 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. Monsanto has had no domestic competition in capacitor impregnants. Advantages of Aroclor are fire resistance, good dielectric constant, reasonable price, and service, quality and technical service. 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 in capacitors completely as soon as possible, with other products developed for introduction as rapidly as technically and commercially feasible. V. TECHNOLOGY The proposed project involves batch fractionation of crude Aroclor 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 ban be operated on a semi-continuous basis, if a light ends forecui1t 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 Replort has not been issued; therefore, Engineering worked closely wit|h Research to obtain the necessary design data. It is believed that sufficient information is available to properly size equipment. The fractionator will be capable of making a second-generation product, Mas 1043, which will be further reduced in environmental persistence, when capacitors have been redesigned. A technical risk at this time is in the use of a stainless steel column 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 a local shop in Texas. Therefore, jthe risk is minimal. MQNS 0421<*6 VI. SIGNIFICANT CONTRACTS There are nb significant contracts affected by this project. VII. PATENT SITUATION No problems of patent infringement are associated with the manufacture, use or sale of MCS 1016 or MCS 1043. Monsanto hae no patent position with respect to these MCS products, and it is cpnsidered unlikely that any preferred position can be establis hed. VIII. EARNINGS While this Jis presented as a non-earnings project, it is pertinent to examine jthe continuing effect on dielectric fluid earnings of the aotions| taken since adoption of the PCB plan. IncreajiBe in Unscheduled Capacity cost due to' abandonment of plasticizer and other open system uses 0.6C/lb. Inorease in fixed and budgeted cost due to this project 0.44/lb. Increase in labor cost for this project and to cover reclamation service and consolidation at WGK 0.2t/lb. Cost reduction at Anniston resulting from mothballing . (0.50/lb.) Net Cost Increase ^ 0.7/lb. ) The recent price increase of 2t/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. mons 042147 Page 7 ) IX. CAPITAL A. Scope of Project This project proposes to install facilities in Dept. 24 at WGK Plant to produce MCS^1016 polychlorinated biphenyl. The nominal capacity will be 50M lbs/year with a 108 forecut. Facilities will also be included to produce Aroclors 1221 and 1242 now produced at Anniston. Major process equipment items include a 30-plate sieve tray distilJ ati'on col`umn, col'umn cond' enser, still pot, direct fired reboi or, 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. 24 An add tional absorber, filters, and storage tanks will be installed tp produce the Aroclors 1221 and 1242 now manufactured at Anniston tAll ge: eral utilities are available within the Dept. 246 battery liml ts. This p;poject will provide a relocated fuel oil tank and pump for th` e column reboiler standby fuel. Finished goods storage will be in eight existing 20,000 gallon tank) and three new 20,000 gallon tanks to be installed on this project. Raw maiterial storage facilities are existing. B. Estimate Capital nstalled Machinery & Equipment uildings rotal Capital Divisional Expense iismantling Repairs Relocations a Modifications Taxes I'otal Divisional Expense CEl) Expense $820M $820M $ 30M 7.5M 20M 3.5M $ 70M $ 5M HONS oeii4*8 Page 8 The ca|pital figure was obtained from a firm equipment list, instrv}]Iment list, rough piping take-off and a preliminary electrical njci tor list. The estimate has a confidence level of + lot. 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 nozzle modifications on existing tanks in Dept. 246, and modifications to existing piping. 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 Resign and commitment of long delivery equipment and initiation if field construction. Design is now underway. Projec: completion is scheduled for June 1971. . X. LEGAL It is under tood that the construction of the facilities covered by this req est will result in a further lessening of any tenvironment l effects of PCB's. No unusual legal problems are anticip ted in connection with the construction of these tfacilities. XI. PERSONNEL One additional operator per shift will be needed to operate this equipment. MONS 042149 Page 9 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 would 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 business interruption loss of approximately $50M The foregoing is an excerpt from Pre-Project Loss Prevention Report No. 7io--37 dated July 30, 1970. XIII. POLLUTION AND TOXICITY PROBLEMS The new areU will be curbed, trenched and sumped to prevent discharge tc| the sewer in the event of a spill or equipment failure. The vapor ream to the new ejector system will be cooled to essentially (eliminate the possible discharge of polychlorinated biphenyls tcf the atmosphere. XIV. INTERNATIONAL ASPECTS The primary purpose of this project is to modify domestic capacitor Aioclor. A similar project may be required at the Newport (U.P.) Aroclor unit, although contract fractionation may be an attractive alternate. Since there I 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. XV. CENTRAL DISTRIBUTION REVIEW The new fractionation system for the Krummrich Plant will not generate any new distribution problems. No change in freight classification is anticipated, and existing rate structures on Aroclor 1242 will be applicable to the new product. KtONS 0<*2150 Page 10 XVI. FINANCE The present project provides distillation equipment to produce a new product (MCS 1016) designed to provide a composition giving a ten-fold reduction in potential for entry of poly chlorinated biphenyls into the environment upon scrapping electrical capacitors. This project is a part of Monsanto's overall plar to reduce threats to the ecology from the Aroclors. The measures provided by this project are believed to be adequate for the present since biodegradation studies to date are reassuring. However, the request recognizes the possibility that these efforts may not be sufficient to allay the concerns of outside croups and agencies. The new system allows for this by providing design capability for a second generation product, further redicing environmental persistence, but such a product would require redesign of customer's capacitors. Consideration was given to abandoning the capacitor Aroclor business but that approach was rejected since the electrical industry ha< no viable alternative capacitor fluid. Monsanto's strategy is to show leadership in developing fluids free of ocological J mplications. The product line_i.a_budgeted for an HOI of(lO^Bli^in 1971, which compares with 7.4JpROI in 1969, the last full yiiar free of the impact of the PCB"problem. There are no unusual Treasury, Accounting or Tax Department problems anticipated in connection with this project. MOMS 042i51 Page IX I APPENDIX A This analyses 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 Budget Yr '71 Net Sales (SM) Cost of GO'ods Sold Gross P it'ofit SARE - Di\j-;ision Operatilg Income - Division Corp. Inve Btment Charges & Excess 'SYD Net Incime (A.T.) $ 5,683 3,283 2,400 1,203 l,i$7 246 " 52 6 $ 7,728 4,299 3,f5'9 1,051 359 ...rr?2? Sales Qua:jtity M lbs Unit Pr Unit Co^ t Unit Ma.fgin 39 ,974 .142 .0 82 .060 44,575 .173 .096 .077 U.S. Export Net Sales Cost of Goods Sold Gross Profit SARE - Division Operating Income - Division Corp. Investment Charges/Incl Exc SYD Net Income (A.T.) 1,186 743 " "475 230 213 17 " 1,333 906 427 200 227 64 ...... SI Sales Quantity M Lbs Unit Price Unit Cost Unit Margin 7,579 8,063 . .156 .165 .098 .112 .058 .053 Gross Profit DUo.Sm. eEs:3ti ort Marqin on Sales t 42.2 37.4 44.4 32.4 Net Income (A.T.) Domestic U.S. Export 9.3 7.5 8.2 6.8 MQNS 042152 Domestic and U.S. Export ' Fixed Investment Inventories Other Assets Gross Investment - $ Return on Gross - % Page 12 I Actual Yr '69 Budget Yr '71 Return on Investment (Net Income A.T.) 6,274 832 1,298 8,404 8,056 813 1,469 rloTBF) 7.4 10.8 hqns Ml53