Document wKKJxLKyanLEaopNKRpdeBL0B
To: J. R. Pavao - Houston
FAXED 8-3-84
Interoffice Communication
From: Date:
J. W. Ware August 3, 1984
Subject: VISTA RELATED COSTS, 1985 OPERATING BUDGET, VCM PLANT
VIS1A
The following cost areas have been identified as those which have been affected by the formation of Vista:
1) Natural gas pricing 2) Conoco refinery dock charges
3) LCCP steam plant clearances 4) Conoco railroad spur maintenance charges
Each area is discussed below.
Natural Gas Pricing
As a result of improved natural gas Vista, a favorable variance will be budget basis the VCM Plant will pay gas over the next fiscal year.
pricing obtained realized. Using $324.7M less for
for 1985 natural
Gas Price $/MM BTU $/MM SCF
1985 Gas Consumption, MSCF
1985 Cost, $M
Pre-Vista Vista
Variance
3.75 3.40
0.35
3.79 3.44 0.35
927,729 927,729
3,516.1 3,191.4
324.7
Conoco Dock Charges
This charge is a clearance to the business area.
LCCP Steam Plant Clearances
This clearance dropped from a 1984 budget figure of $595.OM to a 1985 budget figure of $428.OM, due to the exclusion of depreciation. Addition of depreciation to this figure when such costs are available will significantly increase this clearance.
Conoco Railspur Maintenance
This has been allocated to the VCM Plant in the amount of $30M for the 1985 fiscal year and must be considered a new cost resulting from the formation of Vista.
CUM 000005616
Please note that as a result of favorable natural gas pricing for Vista, the cost of steam to the VCM Plant from LCCP will be lower. This favorable variance has not been included due to the fact that LCCP has already considered this change in their natural gas calculation.
^_) LOlOlCXr2_.
J. W. Ware Plant Superintendent
br CC:
RTF-RAC
CUl-l 000005617
To: R. A. Conrad & B. Ratliff
Interoffice Communication
From: Dote:
J. W. Ware July 30, 1984
Subject: CLOSING INVENTORY DATA & PRICES
VISTA
At the date of this writing, following completion of Vista closing activities at the VCM Plant, heavy ends appears to be the only material with a volume and pricing basis which is extraordinary*
Valuation of Current Inventory of Heavy Ends
Two tanks inventoried for closing contain heavy ends. Some amount of the material in each tank is off-specification. All of the heavy ends material represents a liability, the off-specification representing a greater liability since it must be disposed of as hazardous waste. The on-specifica tion material is transferred to PPG, such transfer being accomplished at a cost to Conoco/Vista.
The off-specification material disposal costs will be based upon the most recent relevant invoice, specifically invoice No. 20090 dated 5-21-84 from Rollins Environmental Services. Total invoice divided by pounds disposed of yields a cost per pound of $0.3731.
The cost to transfer on-specification material to PPG is based upon a formula, such formula adjusting the transfer price using product analysis of EDC plus 1,1,2 trichloro ethylene. The analysis will be that of a sample taken from inventory at closing. This analysis yielded an EDC/1,1,2 content of 29.6%, leading to a product transfer price of 2.92 C/lb.
All heavy ends contained in T-405 tank are considered offspecification. An amount in the bottom of T-452 tank (verified by tank gauging) is also considered off-specification. The remainder in T-452 tank is considered on-specification. Volumes along with pricing support documentation are itemized in the closing data transmitted via D. Couch to Don Tooman.
Valulation of VCM Finished Product For purposes of valuing finished products, operating data from July through December, 1983 must be used. The average analysis (PPG data used) of heavy ends shipped to PPG during this period was 34.8% EDC/1,1,2. Using this average analysis and the current PPG pricing formula a heavy ends transfer price of 2.34 C/lb. is obtained.
JCOlOctre--
J. W. Ware Plant Superintendent br cc: Delton Couch - Ponca City
CWH 000005619