Document aBYKpx3BGdEVayy18NK93ML4R

Interoffice Communication to P. E. Markey - Houston From H. D. Garrison Date March 18, 1980 subject Quarterly Reforecast of Production, Cost Variances, and Raw Material Requirements - First Quarter, 1980 The subject reforecasts are attached. Explanations of the reforecasted numbers are contained in the notes following each reforecast form. ----------- H. D. Garrison is Enc CC + enc: RDG-REL-WCK-DWC-JJL-RJA-JAD-JHB-JRH-JWW 000009380 CCR . sfe.. Quarter REFORECAST OF PLANT PRODUCTION Year Plant MOM WC-2-7a Notes: 1) The first quarter VCM production variance resulted from above-budget mechanical stream factor and favorable oxychlorination operating condi tions . 2) The first quarter EDC production reflects an increase of 9.5 MM lbs. above that required for the projected VCM production. 3) The incinerator HC1 production deficit for the first quarter is due to 1) the lack of routine light ends burning, and 2) the fact that the vent from the direct chlorination reactor has been diverted to atmosphere for safety considerations. CCR 000009332 ................. RLT 'CAST OF PLANT VARIASll COSTS "`1) . . Quarter -- -Yct'ir -------- Plant VCM WC-2-7b Notes: Fixed Costs 1) Payroll - The first quarter unfavorable variance is due primarily to greater than budget salaried payroll and casual employees retained after turnaround for pipe fabrication work and platform repair on the HC1 column. 2) Maintenance Materials and Contract Costs - This first quarter unfavorable variance is due primarily to charges from the December, 1979 turnaround ($43.3 M) and the painting/insulation items in the extraordinary budget being worked on in the first quarter. These extraordinary items were budgeted equally throughout the year; therefore, favorable variances are projected in the second, third, and fourth quarters. 3) Miscellaneous - This unfavorable variance for the first quarter reflects unbudgeted core samples taken around the old copper pit. 4) Taxes, Insurance, and Depreciation - The first quarter favorable variance reflects depreciation and amortization less than budget. This variance is not forecasted to continue in the remaining quarters. CCR 000009334 WC-2-76 Notes: Variable Costs 1) The net favorable variance shown for the first quarter VCM IPA is due almost entirely to favorable steam and natural gas efficiency variances, which, it is anticipated, will be partially offset by unfavorable efficiency variances in these same areas in the second and third quarters. Steam and natural gas efficiency variances in the VCM area are expected to be favorable again in the fourth quarter of 1980 (based on first quarter experience) leading to a net favorable efficiency variance for the year. 2) Favorable chlorine, ethylene, and steam efficiency variances were the primary causes of a net favorable efficiency variance in the EDC IPA for the first quarter. These efficiency improvements over budget can be attributed almost entirely to improved performance of the oxychlorination section of the plant. Based on this first quarter performance, a less significant net favorable efficiency variance is again predicted for the second quarter EDC IPA. The second quarter improvement over budget is less the result of steam efficiency and more related to chlorine and ethylene efficiencies, as compared to the first quarter. The third quarter EDC IPA is forecast to yield a net unfavorable efficiency variance due to inefficiencies in utilities usage associated with the turnaround. The fourth quarter EDC IPA is predicted to essentially follow budget. 3) Acid concentration and continuous light ends burning was budgeted for the first quarter of 1980. The fact that these operations were not instituted has caused the unfavorable variance in the incinerator IPA for the first quarter. Routine light ends burning is expected to begin in early April and operation of the concentration unit is projected for mid-second quarter. CCR 000009385 \'AJOR RAW KAHRIAL RLQUIREMCMT5f 1 -------------------- -Quarter w Fxfc-w1 ~....... Year ---------- Plant VO-M.--------- - WC-2-7C Notes: 1) The quarterly reforecast for raw materials is: Quarter, 1980 First Second Third Fourth Ethylene (lbs./lb. VCM) Chlorine (lbs./lb. VCM) 0.4687 0.6562 0.4735 0.4763 0.6750 0.7089 0.4705 0.6751 2) Chlorine requirements include chlorine from Georgia-Pacific toll processed to VCM. 3) Incremental EDC production in the first quarter was essentially equally balanced by reduced transfers of HC1 to the incinerator and the Methyl Chloride Unit. Improvements in chlorine plus HC1 efficiencies then resulted in reduced chlorine requirements. The chlorine requirements for the second, third, and fourth quarters are forecast as budgeted. 4) Favorable efficiency variances yielded a lower ethylene requirement for the first quarter. Some continuation of this situation is predicted for the second quarter. Third and fourth quarter ethylene requirements are shown as budgeted. CCR 000009337