Document M640L8bnjVQB3dL3VVNXJOLa

To: Mr. E. J. Book President MONSANTO COMPANY APPROPRIATION REQUEST February 1, 1971 cc: Messrs. J. M. Depp 4 P.J. Dowd (2 J. J. Kerley (3 L.F. Stelnbach 2 C.J. Smith (1 TITLE: MCS 1016 (AROCLOR) DISTILLATION (Specialty Products Business Oroup) NEW FIXED CAPITAL REQUESTED: $820,000 DIVISION: Organio Chemicals PLLAANNTT: W. 0. Krummrloh REQUEST NO: CEA 2417 FORECAST NO._____]301^ FIRST LISTED IN THE CONSTRUCTION FORECAST: (9 dt 1,1^ "I O I - SUMMARY A key part of Monsanto's announced program for control of PCB's (polychlorinated biphenyls) is the introduction of a new dielectric fluid which will be less persistent if released to the environment. This project provides for a fractionation system to adapt existing Aroclor manufacturing facilities at the Krummrloh Plant to produce MCS 1016. This new fluid will replaoe Aroclor 1242 for sale to capacitor manufacturers. The new product differs from Aroclor 1242 in that it contains a minimum of the more persistent highly chlorinated homologs. Therefore, any fluid lost from scrapped capacitors is unlikely to accumulate in the environment to a harmful or measurable level. MONS 038956 Page 2 I - SUMMARY (Cont'd) The high chlorine fraction left from making MCS 1016 will be further processed to make Aroclor 1254 and 1260, which will be sold as transformer askarel fluid. This Is a closed system application with an Incineration and reclamation service available to close the loop. Monsanto tests have shown MCS 1016 to be fully equivalent to Aroclor 1242 as a capacitor lmpregnant. Customer tests presently underway might lead to minor product revisions but these would be within the capabilities of the equipment as Installed. While this project Is presented as non-eamlngB, It does provide tankage to permit consolidation of all)$rbclor production at Krummrlch ' with the Anniston unit to be mothballed. The resulting Improvement In oosts, together with the recent price lnorease, 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 Qroup Vice-President has reviewed this project and recommends approval. Recommended Dy H. T7. Minekler, General Manager Organic Division HONS 038957 Page 3 IX - PREMISES Since liquid Aroclore have been reported by some reeearehere to be ^ - s, harmful to^wlld 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 eoology.CJfhe capacitor application Is an Intermediate 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 moleoule are the persistent components In chlorinated biphenyl. While Aroclor 1242 contains three chlorine atoms per molecule on the average, 5 - 8#Ale chlorinated to five or higher. This Is also true of corresponding competitivvee products made overrsseeaas. The new fluid, MCS 1016, will be fractionated to reduce the persistent-^. i la A*TM ja components by--en rder-of-magnitude. A light ends cut may also be made to return to a similar avreerage chlorine caonnttent. The key premise of this project Is that -a ten-fuld reduction In the potential MU rf* entry of^PCB's to the environment via scraappppeedd_-jCcaa,ppaac cItitooprsp Is anna afltqiia** ,ccr--jcpcA/ <? 1 * t_ solution to this aspect of the PCB prnhl am nt - thie-H-mf^ L RUNS 038958 This project Is to provide facilities to produce a nominal 50H lbs/year /of MCS 1016 based on a 10J< light ends fore-cut by fractionation of. Aroolor'MHift') Facilities will also be provided for cSe-manufaitupe ' mho-- Production of these products will be discontinued at Anniston to educe total manufacturing cost and aurald- !f- _ ., . . . -& J*rge_Sxpendltures there for PCB central, ' Central Engineering has based its process design and capital estimate on the data given In the revised Projeot Scope Report dated \ December 30, 1970. Sufficient information was available to develop a reliable cost estimate. Ill - AI/TERNATE 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 ii'P- mimic Aroclor^ln 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. MONs 038959 Pag 5 III - ALTERNATE COURSES (Cont1d) C, Abandon The Capacitor ArocXor 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 mi 27,000 1974 28. 000 Export 3,627 *,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 Westlnghouse 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^rowth 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 aw**/ In cost/performance ratio should lead toi an increase In units sold. A careful assessment of capacitor technology leads to the forecast figures shown above. 0389b0 KONS 1 Page 6 a IV -MARKET (Cont' <J) Monsanto has had no domestic competition In capacitor lmpregnants, since ArwjrQT- i good dielectric constant, -prising "tias-Peaj , quality and technical service . iTjirr Vtnn -ftn-r-1 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 ylJLl be brought Into the market place replacing Aroclor 1242^pompletely as soon as possible, with other products Inwtwgs for Introduction V - TECHNOLOGY The proposed project Involves batch fractionation of Aroelo__r________ which will be produced In existing and modified existing facilities at the W. 0. Krummrlch Plant. The overhead product (MCS 1016) Is expected to be a less persistent material than Aroclor 1242, for which It will be a substitute. 7 The system can be operated on a seml-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 Issued; therefore, Engineering worked closely with Research to obtain the necessary design data. It Is believed that sufficient Information Is available to properly size equipment. 033961 mons V - TECHNOLOGY (Cont'd) Page 7 The eastern will be capable of making a second-generation product. MCS 1043^ which will be further reduced In environmental persistence I . a * in___ a J- f -ax.. 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 oolumn and found the Internals In good condition, and the condenser has been inspected and pressure tested at a local 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. 03&96* VIII - EARNINOS (Cont1d) 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 0.4^/lb. Increase In labor cost for this project and to cover reclamation service and consolidation at WOK 0.2^/lb. Cost reduction at Anniston resulting from mothballing Net Cost Increase (0.5//lb. ) 0.7^/lb. The recent price Increase of 2l/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 WOK Plant to produce MCS-1016 polychlorinated biphenyl. The nominal capacity will be 50 H lbs/year with a 10% forecut. Facilities will also be Included to produce Aroclors 1221 and 1242 now produced at Anniston. HONS 038963 Page 9 XX - 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 reboller Is existing at WOK and will be relocated to Dept. 246. An additional absorber, flltere, and storage tanks will be Installed and-modlflcatlona--to--exlsting-chlorl-nator-syetems-made to produce the Aroclors 1221 and 1242 now manufactured at Anniston. All general u ;llltles are available within the Dept. 246 battery limits. This project will provide a relocated fuel oil tank and pump for the column reboller standby fuel. Finished goods storage will 20,000 gallon tanks and three new 20,000 gallon tanks to be Installed on this project. Raw material storage facilities are existing. Oib'6'* MON* Page 10 IX - CAPITAL (Cont'd) B. Estimate Capital Installed Machinery & Equipment Buildings Total Capital Divisional Expense Dismantling Repairs Relocations A Modifications Taxes Total Divisional Expense $ 820 M --- $ 820 M $ 30 M 7.5 M 20 M 3. 5 M $ 70 M CEP Expense $ 5M The capital figure was obtained from a firm equipment list, Instrument list, rougfyfrlplng take-off and a a\ preliminary electric motor list. The estimate has a confidence level of + 10Jt 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 WOK. 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. 5 X 038965 Page 11 IX - CAPITAL (Cont'd) C. Project Statue Supporting reeearch work for the baelc 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. Design is now underway. Project completion Is scheduled for June, 1971. X - LHOAL XI - PERSONNEL One additional operator per shift will be needed to operate this equipment. XII - RISK EVALUATION No additional hazcrds to personnel or property over that of the present Installation are Involved. It was concluded that the major Incident which could ooeae would HONS 038966 Page 12 XIX - BISK EVALUATION (Cont'd) occur would be rupture of a tube In the reboller furnace. The repair cost was estimated at approximately $5M. The time for accomplishing repairs was estimated at one weeJtjon an expedited basis. This would result In a f}3r loss of approximately $ 50 m. The foregoing Is an excerpt from Pre-Project Loss Prevention Report Ho. 70-37 dated July 30, 1970. XIII - POLLUTION ANP TOXICITY PROBLEMS The new area will be curbed, trenched and sumped to prevent <&lmfcna%%on e the sewer stemcm*l~ The vapor^s^ream^ t^the ejector system will be cooled,- minimising the^dlschargeTof 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.) Aroolor 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. Q3^67 HONS Fags 13 XV - CORPORATE DISTRIBUTION REVIEW XVI - FINANCE 038968 HONS 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 lg9 Net Sales ($M) Cost Of Ooods Sold Oross Profit * SARI - division Operating Income - Division Corp. Investment Charges lc Excess SYD Net Inoome (A.T. ) 5,683 32,,2480?0, 1,2?3 1,197 246 526 Sales Quantity M Lbs Unit Price Unit Cost Unit Margin 39,974 .142 .082 .060 U.S. EXPORT Net Sales Cost Of Ooods Sold Oross Profit SARE - Division Operating Income - Division Corp. Investment Chargee/Incl Exc SYD Net Income (A.T.) 1,186 743 4B- 17 --97 Sales Quantity M Lbs Unit Price Unit Cost Unit Margin 7,579 .156 .098 .058 Budget yr ,71 * 7,728 4,299 3,*2 1,051 2,378 , ?L59 T7ES 44,575 173 .096 .077 1.333 906 --427" 200 " 227 64 ----- 9T- 8,063 .165 .112 .053 MONS 038969 APPENDIX A (Cont'd) Psge 15 OROSS PROFIT Domestic U.S. Export NET INCOME (A.T. ) Domestic U.S. Export DOMESTIC AND U.S. EXPORT Fixed Investment Inventories Other Assets dross Investment - $ Return On dross - % Actual Yr '69 Budget Yr '71 Margin On Sales % 42.2 37.* 44.4 32.4 g-3 7-5 8.2 6.8 Return On Investment (Net Income A.T. ) 6,274 832 1,298 8,4U4'' 8,056 813 1,469 107337----- 7.4 10.8 HONS 038970