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(conoco) Interoffice Communication to From Date subjt R. E. Lehmkuhl R. y. Ferrell November 10, 1983 Information Requested from the Lake Charles Chemical Plant for Development of the Inventory Procedure Exhibit to the Definitive Agreement In response to your memo dated November 7, 1983, storage facilities for raw materials, finished products, processing chemicals, and materials and supplies are as follows; I. II. III. rv. V. VI* VII. Storage Tanks Main Warehouse AFE Warehouse (Exclusively for Capital AFE's) Ethylene Heater Parts Yard Process Chemicals Storage Shed ("Blue Building") SAIA Warehouse (Public Warehouse) Various Satellite Areas at Respective Units (Minor Processing Chemicals) 1. INVENTORY TAKING PROCEDURES AND FREQUENCY Storage Tanks A. Alcohol - Finished and Crude On the last day of each month, a pumper hand-gauges all "dead" tanks. Between midnight and 3:00 AM on the first day of the following month, all "live" tanks are hand-gauged. 8. Alcohol - Intermediates Automatic gauges are used, due to the nature of this product, to determine inventory levels. Alkyl concentration in the "ATE" tanks are determined from laboratory analytical data. C. Ethylene Ethylene inventories are calculated daily by mass balance on the ethylene distribution system. Between 3:00 AM and 5:00 AM on the first day of the following month, readings on all by-product tanks (butadiene, LAO, etc) are recorded using either automatic gauge or gauge glass. Readings are converted to gallons by utilizing appropriate strapping tables. D. Normal Paraffin All tank Inventories are calculated daily using automatic gauges. A 2nd controller will read "dead" tanks between 8:00 PM and CCR 000017096 R. E. Lehmkuhl November 10, 1983 Page Two 10:00 PM, while "live" tanks are recorded between 3:00 AM and -4:00 AM. The same procedure Is used to calculate end of month Inventories. Kerosene, LPA Solvent, and paraffin samples are taken on the first workday to determine API gravities. E. Methyl Chloride and TO Methyl Chloride storage tanks are pressurized; therefore, sight glasses are used to determine inventory levels. A 2nd Controller will read "dead" tanks between 8:00 PM and 10:00 PM, while "live" tanks are read between 3:00 AM and 4:00 AM daily. The same procedure is used to calculate end of month inventories. Also, utilizing hand guages, similar procedures are used to calculate ETO volumes. F. CDRTM Product Is stored in sea containers or railcars. Sea containers which have been loaded or unloaded are weighed at end of month. Q, Alumina Product is stored in vessels and weighed daily, 2. MASTER LIST OF STORAGE TANKS, WAREHOUSES, ETC. A. Comprehensive List of Storage Tanks is Attached. B. Main Warehouse Approximately 10,000 items valued at $2.5MM. C. AFE Warehouse Used for storage of equipment/material purchased exclusively for Capital AFE's. D. Ethylene Heater Parts Yard Approximately 29 items valued at $420M. E. Process Chemical Storage Shed and Various Statellite Areas Primarily consist of 16,500 lbs. of nickel catalyst valued at $156M. F. SAIA Warehouse 2,138 drums of Alcohol and Alfonics valued at $659M. CCR 000017097 R. E. Lehmkuhl November 10, 1983 Page Three 3. OFFSITE STORAGE - INVENTORY CONTROL Terminal Inventories are not controlled by LCCP personnel; however, we do monitor inventories at the SAIA Warehouse, Part of Lake Charles and Refinery Dock Tanks, A* SAIA Warehouse SAIA's book inventory is reconciled to LCCP's books on a monthly basis. A physical Inventory is taken annually. B. Port of lake Charles Gauge readings are received approximately three times per week and at end of month. C. Refinery Dock Tanks Tanks are gauged by Refinery personnel and a computer printout is sent to LCCP daily and at end of month. D. Ethylene Storage Caverns (Domes) Product volumes transferred to these storage domes are based on daily mass balances on the ethylene distribution system. These volumes are recorded on our books and compared monthly to volumes provided by Union Texas Petroleum. Differences are noted but are not reconciled until a dome is emptied. At this time, accumulated differences are reviewed and settle ment of significant variances are negotiated. 4. A "Kardex Inventory System," per se is not utilized at LCCP. However, materials, supplies, spare parts, etc., stored in the main warehouse and ethylene heater parts yard are controlled by "WITS" (Warehouse Inventory Tracking System), a very modern and reliable computerized subsidiary ledger. Inventories are reconciled monthly to the general ledger (739 Report). A physical inventory is taken annually (historically at September 30) and all corresponding adjustments are made immediately. The last physical inventory was conducted on September 30, 1983. Please contact me if I can be of further assistance in this matter. 7 R. T. Ferrell mbr Attachments cc: REL RDG MJS - Houston OADeB LRB MOB PDC DWF PRA JEL - LCCP RWS - LAB Plant CCR 000017098 CM rH ,I - -- 9 T/MK- rtuu&eA-- CaMari 1 ; 4 -Zot _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ a ALS. ) ibl 6: W/C.G 4 ft v|* 2 3 T- Z53 4 5 V Jr i loc> I A zCt ( i i i 6 7 CMTM /s -srr, =,*1 f <?(/rr 4 y < zo V? ft V 4-k i & f[j; ; mC/& 8j 9 10 11 I1 1 s 12 i i ! 13 ij i i 14 1 IS it ! 16 ! i ii i ii 17 i 18 19 [j i !i j 20 , i 21 i i I 1 ! l 1 ; : 22 i i i 1! i 23 1i ii 1 1 || ii 24 i 23 i i i ii i li 26 i 27 26 29 30 31 32 33 34 35 36 37 ) ' i 1 1i 1 i 1 1i: i ! ] J :11 li i \ ii | :i .' j i ij i i i i i i i i j \ ii i ! i i i .i i ;j ! i 1 ,;;:; ~ttt i , --i-- ! 1i----------i----- -- i i i 1 : i! ii i1 i ;i i! i! 1 ;! i j i i Ii I i! 1 ! c cr nonni7 09 3 l| : | ; ! | i [ ! :! 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