EPA-2W2-74-042a
JUNE 1976
ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES:
The Primary 1, 3 Butadiene Subcategory of the
Organic Chemical Industry
QUANViTY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Water Planning and Standards
Washington, D.C. 20460
x
V
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This document is available through the
National Technical Information Service,
U.S. Department ol'Commerce
5285 Port Royal Road, Springfield, Virginia 22161
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EPA-230/2-74-042a
ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES:
THE PRIMARY 1, 3 BUTADIENE SUBCATEGORY
OF THE ORGANIC CHEMICAL INDUSTRY
Stephen A. Singer
June 1976
Prepared for
Office of Water Planning and Standards
Environnental Protection Agency
Washington, D. C. 20460
U.S. Environmental Protection Agency
Region V, Library
230 South Dsarborn Street
qo, Illinois 60604
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ACKNOWLEDGMENTS
A great deal of cooperation has been received during the conduct of
this project. Jack Surat-Wala of Chem Systems, Inc., provided the process
economics information upon which the impact analysis was based. Ruth
Wilbur, of the Economic Analysis Section, EPA provided assistance in
computer programing the financial shutdown model. Special acknowledment
goes to David Thayers of El Paso Products Company who voluntarily provided
the Agency important information on industry structure and market trends.
The actual data collect, impact analysis, and report writing was completed
by Stephen A. Singer of the Economics Analysis Section. Final thanks goes
E. Faye Minick for providing clerical support for this project and to Richard
C. Insinga for his supervision of this project.
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Preface
The attached document is a study prepared by the Economic Analysis
Section of the Office of Water Planning and Standards of the United States
Environmental Protection Agency (EPA). Its purpose is to provide a basis
for evaluating the potential economic iinpact of effluent limitations
guidelines and standards of performance established by EPA pursuant to
sections 302 (b) and 306 of the Federal Water Pollution Control Act.
The process economics information provided in this report is based
upon work completed for EPA under purchase order Number WA-6-99-1910-A
from Chem Systems, Inc.
11
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Table of Contents
Section Page Number
Acknowledgments i
Preface ii
Table of Contents iii
Executive Summary 1
Industry Structure 4
Present Situation 4
Projected Demand or Consumption 13
Projected Supply 13
Projected Supply Demand Situation 22
Prices 25
Specific Plant by Plant Projections 25
Economic Impact Analysis 29
Methodology 29
Impact Analysis 59
Conclusion 89
Footnotes 90
Bibliography 91
iii
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Economic Analysis of Effluent Guideline
For the Primary I, 3 Butadiene Industry
Executive Summary
I. Introduction
In the Federal Register, (40 F.R. 34409) of August 15, 1976 the
EPA indicated its intention to modify the methodology used to develop
effluent limitations for major organic products segments, specifically
the production of 1, 3 butadiene by the oxidative dehydrogenation
process. This Economic Analysis examines the potential economic impact
of these guidelines. There is general agreement that BPCTCA guidelines
for 1977 are attainable with nominal impact. The questions raised have
been on the potential impact of the BATEA standards for 1983 and the New
Source Performance Standards. This is the topic at which this study is
directed.
II. Industry Structure
A. Butadiene Production Processes Description
Butadiene is made by essentially three processes. The first
process, called the co-product process, produces butadiene along
with the production of ethylene. The second two processes make
butadiene as primary product. The Houdry process, dehydrogenates
butane to butene and butadiene. The second process, the Qxidative
dehydrogenation process uses the butene produced by the Houdry pro-
cess to make butadiene.
B. Current Supply
As can be seen in the table below primary butadiene production
accounts for approximately 65% of present capacity, with co-product
production accounting for the rest. Present capacity stands at
4.059 billion pounds per year.
Summary of Current Nameplant Capacity
Source Percent Million Ibs. of capacity
Co-product 35.22 1470
Primary 63.78 2539
Houdry 16.31 662
Oxidative-
dehydrogenation 47.47 1927
Total 100% 4059
Source: Ericsson estimate, 1974
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C. Current Consumption Components
Butadiene is primarily consumed in the production of synthetic
rubber, i.e. SBR and Polybutadiene. Present consumption is put at
4.0 billion pounds per year.
Summary of Current Consumption Components
Million of Ibs./yr Percent
SBR 2109 52.42
Polybutadiene 724 18.00
Nitrile 139 3.46
Neoprene 280 6.96
AdiponitrileAlMDA 390 9.69
Plastics & Resins 381 9.47
Total 4023 100.00%
Source: Ericsson - 1974
D. Imports and Exports of Butadiene
Imported butadiene is almost totally co-product produced. Because
its price is below primary produced butadiene it is generally sold first.
Net imports were approximately 300 million pounds per year for 1972 and
are expected to increase at 3-4% per year.
Ill* Industry Projections
A. Projected demand and consumption
Projected demand for butadiene is expected to grow at between 3-4%
per year between 1975-1985. Four forecasts, SRI, Ericsson, Exxon, and
El Paso, were considered. (See Table V). Given the difficulties in
forecasting demand the fact that all four estimates are within the small
range 5600 +_ 300 million Ibs. for the 1984 estimate of demand, gives
credence to the estimates.
B. Projected Supply
Expections for the future supply of butadiene varied widely among
the four projections. The basis for this disagreement is due to: (1)
different projections of ethylene capacity and (2) how much butadiene
this capacity will produce (See Table VI). Ericsson estimates which
take into account only presently planned ethylene expansions and a
moderate shift to heavier feedstocks, projects that 1984 nameplate
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butadiene capacity will be equal to 5.7 billion pounds per year,
including 2.60 billion pounds of primary capacity and 3.1 billion pounds
of ethylene capacity. Contrasting with this is El Paso's estimates
which includes presently planned ethylene capacity increases and an
estimate of unannounced additions to ethylene capacity. El Paso
estimates nameplate capacity at 8.1 billion pound per year, including
2.7 billion of primary capacity and 5.4 billion of co-product capacity.
Table VIII summarizes these different projections and
delineates clearly the differences in assumptions. The EPA
estimate in this table has been calculated through a syn-
thesis of the projections and other contacts with industry. It
indicates that total potential production for 1984 should be
approximately 6.7 billion pounds per year. This is comprised of
2.6 billion pounds of primary production and 4.1 billion pounds
of co-production production.
C. Projected Supply - Demand Situation
A major industry contention has been that the supply demand
situation by 1984 will still be relatively tight. And thus the
Qxidative dehydrogenation capacity will be necessary to meet 1984
demand. Our analysis has not indicated this. Instead out analysis
has indicated, as described in table IX that total butadiene
excess capacity projected for 1984, will be as large as the total
primary capacity. In effect, out analysis indicates little room for
primary production by 1984.
IV. Economic Impact Analysis
Two types of impact analysis were considered. First, a macro
analysis was performed. This examined the forecasts for total industry
supply and demand for the early to mid 1980's. This analysis indicated
that by the mid-1980's little primary butadiene would be required.
The second level of analysis was a financial shut-down analysis based
on financial profiles of model producers using the oxidative-dehydro-
genation process. The conclusion here was the same as above, primary
producers will close by the 1980's. Thus the impact of imposing
BATEA controls on the industry is not significant given the baseline
closures.
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INDUSTRY STRUCTURE
Present Situation
Butadiene Production Processes Descriptions
Co-product production processes
The cracking of hydrocarbons, e.g. naptha, gas oil,
condensate, ethane, propane, etc. to make ethylene produces
butadiene as a by-product or as it is referred to now as a co-
product (1). The amount of butadiene produced, i.e. the butadiene/
ethylene ratio (B/E Ratio), is dependent on first the feedstock
that is used and second the severity of the cracking process. The
heavier the feedstock i.e. more gas oils and naptha, the greater
will be the B/E ratio.
A second process that produces butadiene as a co-product is
the coking of heavy petroleum distillates (2). This process con-
tributes such a small fraction of the total butadiene produced that
it can be ignored.
Primary Butadiene Production
Four processes exist corrmerically to produce butadiene as a
primary product.
The first primary production process to be considered is the
dehydrogenation process developed by Dow (3). The process is a
cyclical dehydrogenation process of n-butene feedstock to butadiene
using a calcium-nickel-phosphate catalyst. At the present time all
primary production has stopped using this process.
The sepond primary process is the Houdry dehydrogenation pro-
cess (4). It is also a cyclic process that operating under a high
vaccum, dehydrogenates n-butane to a mixture of n-butene and butadiene.
A chromo-alumina catalyst is used.
The third primary process is the Qxidative dehydrogenation
process designed and licensed by Petro-Tex Co. (5). In this process
n-butene and butadiene are produced in a Houdry section. The two are
separated and the n-butene is then fed into an Qxidative dehydrogenation
unit. Here the n-butene is mixed with heat, a compressed air/stream
mixture and passed over a catalyst. The C4 components are then extracted
and the butadiene is purified. It is the most widely used process.
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The final process is the Qxidative dehydrogenation process
designed by Phillips (6). This is a two stage process. In the first
stage an almost pure n-butane feedstock is dehydrogenated to produce
n-butene and butadiene. In the second stage Phillips puts the re-
covered n-butenes into an Qxidative dehydrogenation process similar
to the process described above. This process is only used by Phillips
at the present time.
The Phillips process differs from the Petro-Tex process primarily
in that the Petro-Tex process can be added on to the Houdry process.
This contracts with the Phillips process which requires greater modi-
fications of the entire butadiene plant.
Current Supply or Production Capacity
Table I gives a detailed description of the present butadiene
nameplate production capacity. Variation in the Ericssion, El Paso
and the Stanford Research Institute estimates are generally due to
recent changes in the industry. Recent acquisition of the license
for the Petro-Tex process by Copolymer, Firestone, and Neches, and
the error in estimating their new capacity explain part of this
variance (7). In addition some of the variance can be explained
simply by the difficulty inherent in estimating nameplate capacity.
The three estimates are close enough (less than 3% difference) that
a good estimate of total current capacity would be 4100 jh 50 million
Ibs. per year.
In addition one see that this capacity is composed of 35% +_ 1%
co-product capacity and 64% + 2% primary butadiene capacity. Finally,
it is seen that of the primary butadiene capacity, the dominant
portion, 73% + 2% is Qxidative dehydrogenation capacity and the
remainder 27% ± 2% is Houdry process capacity.
Current Consumption Components
As can be seen by Table II a majority (49-52%) of butadiene is
used to produce SBR elastomer which is used primarily in manufacturing
passenger automobile tires (8). Thus SBR consumption is primarily
determined by the consumption of passenger tires. Three factors
suggest a decrease in demand of passenger tires. First these is the
increased trend towards radial tires. Radial tires get better mileage
and consume less SBR then bias-ply and belted-bias tires. Secondly
the increase in price of gasoline has decreased mileage driven and
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Table I
Butadiene Naroeplate Capacity (millions of Ibs./year, 1974)
ProcesSj/Plant
Ethylene Co-product Process
1. Dow Chemical USA,
Bay City/Midland
Freeport/Cyster Creek
Plaqueinine
2. Exxon,
Baton Rouge
Bayton
3. Gulf Oil,
Cedar Bayou
4, Mobil Oil,
Beaumont, Texas
5. Monsanto,
Chocolate Bayou
6, Puerto Rico Olefins,
Penuelas
7« Shell Cheiriical,
Deer Park
Norco
8. Allied Chemicals
9. Standard Oil (Indiana),
Alvin
10. Union Carbide,
Penuelas
Seadrift
Taft
Texas City
(1975)
(1975)
Source of Estimates
(1975)
(1975)
S.R.I.
110
24
86
340
100
50
82
Ericsson
135
(1978)
340
(1979)
(1976)
50
(1975)
El Paso
125
35
90
138
340
170
130
50
82
120
120
125
198
265
80
90
330
154
44
88
44
210 200
280 200
(1979) 370
(1975) 80
(1979) 200
315 345
160
50
75
60
Tbtal Ethylene Co-product Capacity
1413
1450
1385
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Coking Co-product Capacity
1. Getty Oil,
Delaware City/
Total Co-product Capacity
Primary Houdry Process
1. Arco Chemical
Channelview
2. El Paso Natural Gas,
Odessa
3. Firestone,
Orange
4. Petro-Tex Chemical,
Houston
5. Phillips Petroleum,
Borger
Total Houdry Capacity
Primary Oxidative-dehydrogenation
Capacity
1. Copolymer Rubber,
Baton Rouge
2. Firestone,
Orange
3. Neches Butane,
Port Neches
4. Petro-Tex Chemical,
Houston
5. Phillips Petroleum,
Borger
Total Oxidative-Dehydrogenation
Capacity
Additional undifferentiated
Primary Capacity
20
1433
280
200
55*
220*
42*
797
128
165*
640
660*
242*
1835
115*
20
1470
140
205
55
220
42
662
140
(1976)
165
720
660
242
1927
20
1405
280
200
55*
220*
42*
797
128
140
165*
640
660*
242*
1835
125*
Total Primary Butadiene Capacity
2747
2589
2747
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SUMMARY
Process
Total Co-product Capacity
Total Primary Butadiene
Capacity
Total Oxidative-dehydro-
genation Capacity
Total Houdry Capacity
Total Butadiene Capacity
S.R.I.
1433
2747
1835
797
4180
Source of Estimate
Ericsson El Paso
1470 1405
2589 2747
1927
662
4059 4152
1835
797
% Co-product of Total
% Primary of Total
% Qxidative + undiff.*
of Primary
34.28
65.72
36.22
63.78
33.84
66.16
70.99 74.43 70.79
Numbers in parentheses are dates of completion for planned but uncompleted capacity.
*S.R.I. and El Paso Estimates put higher total primary capacity for these plants but
does not differentiate between Houdry and Qxidative dehydrogenation capacity.
Chemical Economic Handbook, Stanford Research Institute, Menlo Park, California
pp. 620.5022G-J
Letter from Lial F. Tischler of Engineering - Science, Inc. to W.L Miller, EPA,
10/6/75 pp. 4, 5.
Update of Butadiene Position Study by John C. Mahan, Senior Corporate Planner,
El Paso Products Co., Odessa, Texas, Table VI.
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increased trend towards radial tires. Radial tires get better mileage
and consume less SBR then bias-ply and belted-bias tires. Secondly
the increase in price of gasoline has decreased mileage driven and
thus increase the replacement time. Finally there has been an overall
shift to smaller cars and therefore smaller tires which require less
rubber.
The second largest end use of butadiene is in polybutadiene
synthetic elastomers (9). Polybutadiene elastomers are used primarily
in the manufacture of passenger cars and truck tires. Again the same
factors influencing the general tire industry affect polybutadiene
consumption.
The third major end use of butadiene is the production of neoprene
(polychloroprene)(10). Neoprene elastomers are used where resistance to
weathering, oil, abrasion, heat, oxygen, ozone, and solvents are important.
One such use is weather stripping in automobiles.
The fourth major use for butadiene is the production of adiponitrile
(11). It is dehydrogenated to yield hexamethylenediamine (HMDA) which
DuPont uses as a raw material for Nylon 66, and Nylon 612. Nylon 66 is
used almost totally for nylon fibers for carpets, apparel, tire cord,
etc.
The final major use of butadiene is in the production of ABS
resins (12). These are increasingly being used in the production of
automobiles instruments panels, consoles, and arm rests, and in pipe
applications.
Imports and Exports of Butadiene
Table III gives imports and exports of Butadiene for the last
five and four years respectively. Imported butadiene is almost
totally ethylene co-product produced. As can be seen by Table III
imports and export represent a minor component of total supply and
demand. The El Paso report and other conversations with industry
indicates that imports are sold before primary produced butadiene
because it is generally cheaper (13). Thus U.S. demand for domestic
production should be calculated by subtracting the projected net
imports from the total U.S. consumption.
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Table II
Butadiene Consumption (millions of Ibs./year)
Source of Estimate
E.R.I. (1973)
Ericsson (1974)
El Paso (1974)
Product
Elasteners
1. SBR
2 . Polybutadiene
3 . Nitrile
4 . Neoprene
Adiponi tr i le/KMDA.
(for Nylon 66)
Plastics & Resins
1. ABS Resins
2. Other Styrene-
Butadiene Resins
Others
Total
Millions
of Pounds
1980
742
121
308
360
184
204
111
4010
Percent
49.38
18.50
3.02
7.68
8.98
4.59
5.89
2.77
100.00
Millions
of Pounds
2109
724
139
280
390
381
-
4023*
Percent
52.42
18.00
3.46
6.96
9.69
9.47
-
100.00
Millions
of Pounds
1980
720
115
300
409
409
210
180
4100
Percent
48.0
18.0
3.0
7.0
10.0
5.0
5.0
4.0
100.00
*There is an error in the total presented, here by Engineering-Science, Inc.
Sources:
C.E.H. p. G20.5022 M
Tischler letter, p. 9
El Paso, Table III
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Table III
Imports and Exports of Butadiene
Inports
Year Millions of Ibs.
1970 120
1971 135
1972 430
1973 415
1974 (Ericsson) 706
Exports
Year Millions of Ibs.
1970 50
1971 40
1972 28
1973 70
Sources: C.E.H. p. 620.5023A
Tischler letter, p. 8
11
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Table IV
Net Import Balance
Year Millions of Ihs.
1970 70
1971 95
1972 402
1973 335
1974 (550)
1975 (350)
1976 (300)
1977 (400)
1978 (470)
1979 (490)
1980 (510)
1981 (530)
1982 (550)
1983 (560)
1984 (590)
1985 (610)
Number in parentheses are estimates made by El Paso.
Source: El Paso, Table III.
12
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Projected Demand or Consumption
Table V gives the estimated demand and demand components
for butadiene for the years 1975 through 1985. The SRI projections
are only given for 1978. These projections are biased upward as they
were made before the reaction to the price increase subsequent to the
1974 Arab oil embargo. Thus they do not reflect the impact this had
on consumption of butadiene. The Ericsson and Exxon demand estimates
are more conservative. They take into account the impact of the oil
embargo. Furthermore the Ericsson data is lower due to Ericsson's
accurate prediction of the slump in demand for Butadiene for 1975. It
appears that a accurate estimate of the demand growth rate for 1975-85
is between 3-4% as Ericsson, El Pasco, and Exxon predict as opposed to
4-5% as SRI predicts.
It is interesting to note that Rubber industry predictions of
future demand for tire and non-tire uses of SBR, Polybutadiene, and
Nitrile are much more optimistic than Ericsson, SRI, or El Paso (14).
Ericsson and Exxon make similar long term estimates of demand for
butadiene for 1984. They both put it at 5.3 billions Ibs. Extrapolating
Ericsson's 1984 figure back to 1980 and SRI's 1978 figure forward to
1980 one gets a estimates of demand of 4.6 billions pounds and 5.2
billions pounds respectively. Again the Ericsson data agrees with
the Exxon estimate and is probably closer to the true 1980 estimate.
The El Paso demand projections are also higher than the Ericsson
and Exxon projection. This is partially due to the over optimism
present in the prospects for new car sales in the El Paso estimates.
In addition conversations with neoprene and adiponitrile users indicate
that El Paso projection for Neoprene and Adiponitrile consumption
growth rates are overly optimistic (15). For these reasons their
demand estimates are judged to have an upward biased.
In any case, the projected butadiene demand of Exxon, Ericsson,
SRI and El Paso are within the range 4600 +_ 300 million Ibs/yr for
1978 or with in approximately 6.5% of each other. For 1984 the El
Paso, Exxon, and Ericsson projected demand estimates are within the
range 5600 ± 300 or approximately 5.4% of each other. Given the
difficulties in forecasting demand, the estimates appear close enough
for our use.
Projected Supply
The projected supply of butadiene is described by Table VT. El
Paso, Ericsson, and SRI are in agreement that by 1976 no further
increase in primary capacity is expected. The real question of future
supply of butadiene turns on the projected co-product supply when in
13
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Table V
Projected Butadiene Consumption
(Millions of Pounds, annual growth rate)
Year Product
1975 SBR
Polybutadiene
Nitrile
Neoprene
Miponitrile
Total P&R
ABS
Other S-B-R
Total
1976 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total
Source of Estimate
S.R.I. Ericsson Exxon
N.A.
N.A.
N.A.
N.A.
N.A.
Fl raso
1976
726
119
333
440
186
210
N.A. 3,500 N.A. 4185 3.5
2025
768
123
350
478
262
237
N.A. 3,800 8.57 4366 3.5
14
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Year Product
S.R.I.
Ericsson
Exxon
Fl Paso
1977 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total
1978 SBR
Polybutadlene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total
N.A.
530
680
360
320
N.A.
2250 (2-3)
880 (3-4)
145 (3-4)
375 (4)
(8)
(14-15)
(9-10)
4860 (5)
2039
791
127
368
440
510
326
258
N.A. N.A. 4,100 7.89 4555 3.5
2164 2061 0.9
844 820 3.6
152 132 3.8
309 383 9.9
422 544 6.2
439
360 12.0
280 7.2
4330 3.4 4,250 3.66 4730 3.5
15
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Year Product S.R.I.
1979 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABE
Other S-B-R
Total N.A. N.A.
1980 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total (5200) (5)
Ericsson Exxon Fl Paso
2083
851
137
399
579
366
303
N.A. M.A. 4400 3.53 4883 3.7
2330 2105
930 877
164 141
334 414
474 615
503
420
325
4600 3.5 4500 2.27 5078 3.7
16
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Year Product
S.R.I.
Ericsson
Exxon
Fl Paso
1983 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total N.A. N.A.
1984 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total N.A. N.A.
2165
979
153
464
732
512
397
N.A. N.A. 5100 4.08 5639 3.7
2366 2190 0.9
1131 1012 3.6
192 157 2.8
390 481 3.8
598 775 5.9
658
580 8.3
422 6.7
5335 3.6 5300 3.92 5875 3.7
17
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Year Product. S.R.I.
1981 SBR
Polybutadiene
Nitrile
Weoprene
Adiponitrile
Total P&R
ABS
Other S-E-R
Total I! .A. N.A.
1982 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total II. A. N.A.
Ericsson
N.A. N.A.
N.A. N.A.
Exxon El Fasc
2121
908
148
431
653
467
548
4700 4.4 5274 3.7
2137
935
150
448
692
504
372
4900 4.25 5455 3.7
18
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Table VI
Forecast of Butadiene Capacity
(millions of Ibs)
Estimation
Ericsson S.R.I.
Year Process Case I B/E = 0.066 Case II B/E = 0.078 B/E =0.10 Fl Paso
1974 Primary Production 2589 2747 2747
Houdry Process 662 797 797
Cxidative Process 1927 1835 1835
Co-product Process 1470 1433 1405
Total Capacity 4039 4180 4152
1976 Primary Production 2747 2759
Houdry Process 797 797
Qxidative Process 1835 1835
Co-product Process 1800 1937
Total Capacity 4500 4696
1980 Primary Product 2589 (Est.) 2589 (Fst.) 2747 2759
Houdry Process 662 662 797 797
Oxidative Process 1927 1927 1835 1835
Co-product Process 2100 2300 3500 3537
Total Capacity 4700 4900 6200 6296
1984 Primary Production 2589 2584 2759
Houdry Process 662 662 797
Qxidative Process 1927 1927 1835
Co-product Process 2665 3131 5387
Total Capacity 5254 5720 8146
Sources: Tischler letter p. 12
El Paso, Table VIII
C.E.H. p. 620.5021F
19
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Year Product S.R.I.
1985 SBR
Polybutadiene
Nitrile
Neoprene
Adiponitrile
Total P&R
ABS
Other S-B-R
Total N.A.
Ericsson
Exxon
Fl Paso
2219
1049
162
498
819
625
449
N.A.
5500 3.77 6101
3.7
Note; Annual growth rates are the compound rates of growth to achieve estimate.
Numbers in parentheses are average annual percent change.
N.A. indicates that the estimate was not given for this year.
Sources: C.E.H. p. 620.5022M
Tischler letter p. 10
Conversation with Gene Debreczni, Exxon Corp., 10/02/75
El Paso, Table IV
20
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turn is dependent on two factors. First, the projected ethylene
capacity and, second the butadiene/ethylene ratio (B/E ratio) of
this capacity. The butadiene/ethylene ratio depends on the trend
in feedstocks for ethylene, and secondly, the estimation of the B/E
ratio for each of these feedstock.
Speculation over the future ethylene capacity referred to in
the Engineering Sciences Co. (16) submission of Petro-^Tex and Phillips
Petroleum is not as divergent as Engineering Science indicates. SRI
estimates ethylene nameplate capacity for 1978-80 at about 36,000
millions pounds, based on announced expansions plans as of December
1974 (17).
Compare this with Ericsson's estimate that ethylene nameplate
capacity for 1978 will be 36 billion and 42 billion for 1984 and it
appear that there is fairly close agreement on announced ethylene
capacity for 1980. The wide divergence between Ericsson's 1984
and the El Paso estimate for 1984 comes in Ericsson's failure to
consider unannounce Ethylene expansion. In Ericsson's attempt to
arrive at as conservative an estimate as possible, he assumed that
1984 co-product production will include only present capacity and
presently announced future capacity. It is this unannounced capacity,
while highly speculative, that makes the El Paso Products estimates
more reasonable.
Table VII
Unannounced Ethylene Co-Product Capacity
(millions of pounds/yr)
Year Million of Ibs.
1979 160
1980 510
1981 910
1982 1350
1983 1830
1984 2360
1985 2940
Another major source of divergence in the predictions is the
difference in opinion over the future B/E ratio. One source of
divergence in the estimates of the total B/E is the difference in
the estimated B/E ratio for a given feedstock. Ericssons B/E ratio's
tend to be lower than SRI.
As for as the trend towards feedstock it appears that the
industry is definitely moving towards constructing plants that have
great flexibility in the feedstock they uses. In addition a survey
of industry opinion seems to indicate a significant trend toward
21
-------
the use of heavier feedstocks in ethylene production which mean
higher B/E ratios. Ericsson's conservative assumption of increase
of heavy feedstock to 28% in 1984 is much more conservative then
other industry opinions indicated. Combining this with his
conservative estimates of the B/E ratio of Ethane, Propane, Off-
gas and heavy feedstocks explains why this B/E ratio for this
conservative Case I is entirely too low. The second case where
heavy feedstocks increase to 36% of the total feedstocks is a
better estimate. SRI estimate of a B/E of 10% is too high an estimate
and it due to the fact that the estimate was made before the rapid
changes in the petro chemical industry brought on by the Arab embargo.
Thus Ericsson second case of a B/E ratio of approximately 8%
appears to be a good estimate (although this 1984 capacity estimate
is still too low due to this lack of projected unannounced ethylene
capacity). In conclusion our analysis seems to indicate that a good
estimate of the overall butadiene/ethylene ratio for 1984 approximately
0.08.
Analysis of the above estimates and other conversations with
industry indicate that the growth rate for ethylene capacity for 1978-
1984 will be 7-9%. Based on a 1974 ethylene capacity of 24.78 billion
pounds per year, announced plans for ethylene capacity expansions due
to be completed by 1978-79, and an expected ethylene expansion rate for
1978-84 of 8%, one obtains the prediction that 1984 ethylene capacity
will be approximately 57 billions pounds. This will give a co-product
butadiene capacity of 4.11 billion pounds. This is summarized in Table
VTII below.
Projected Supply - Demand Situation
Addressing the future need for primary capacity, it is out con-
clusion that very little of the US butadiene demand will be met by
primary produced butadiene by 1983. Instead most of the demand will
be met by the co-product produced butadiene. Out analysis will be for
1984 since all the projections are for that year and it is by 1984 that
the impact of the BAT guidelines will be felt.
Demand for 1984 was taken from Ericsson's estimate of 5.3 billion
Ibs. This estimate did not have the upward bias that El Paso and SKE
did. In addition one must remember that all the estimates are within
5 1/2% of each other, so this appear like a fairly safe estimate.
Three estimates of 1984 supply are considered (see Table IX) . First,
there is Ericsson's (Case Two) estimate of 5.58 billion pounds for 1984.
Secondly there is El Paso's estimate of 1984 production of 7.36 billion
pounds. Finally there is the EPA estimate of 1984 production capacity
of 6.734 billion pounds. Comparing these supply estimates with the
estimated 1984 net domestic demand indicates that the majority of demand
22
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Table IX
Butadiene Supply - Demand Situation
(Billions of Ibs.)
Total Butadiene Production Capacity
Primary Production Capacity
Co-product Production Capacity
U.S. Total Consumption
Projected net imports
Net Domestic Demand
Excess Capacity
Ericsson
(Case II)
Supply Assumption
El Paso
5.58
2.46
3.12
5.30
0.60
4.7
0.88
7.36
2.62
4.74
5.30
0.66
4.70
2.66
EPA
6.7
2.62
4.11
5.30
0.66
4.70
2.0
Sources: See Text
23
-------
Table VIII
Sunnary Tab .e
Ethylene Capacity (Billions of Ibs)
1978 Ethylene rfchylene Coproduct Primary Total
1984 Butadiene/ (announced Capacity Growth Capacity Growth Operating Coproduct Primary Operating Primary Productit
Ericsson
(Case I)
(Case II)
0.066
0.078
24.0
24.0
36.0
36.0
11. 1%
11.1%
42.0
42.0
2.6%
2.6%
95.24%
95.24%
2.64
3.12
2.58%
2.58%
95%
95%
2.46
2.46
5.10
5.58
El Paso 0.321* 24.8* 36.9* 10.8%* 65.6* 11.2%* 88% 4.739 2.759 95% 2.621 7.36:
*
EPA 0.08 24.7 36.0 10.79 57.13 8.0% 90% 4.11 2.759 95% 2.621 6.73^
* estimated by EPA
-------
Little primary produced butadiene will be required. In fact the EPA
estimate indicates that by 1984 the total required primary production
could be met by the Houdry capacity alone.
Prices
Butadiene pricing in the United States has traditionally been
based on the economics to produce butadiene by butane/butene dehydro-
genation. With the United States market dependent on butadiene imports,
pricing in Western Europe and Japan has normally been based on the
United States price with an appropriate factor for freight and terminal
expenses.
While no additional grass-roots dehydrogenation facilities will
be built in the U.S. during the study period, the economics of producing
butadiene in existing dehydrogenation units will establish a pricing floor
through 1980. The prices in Western Europe and Japan, where all butadiene
is recovered from steam cracker C4 streams, will still reflect the U.S.
price and related freight and terminal expenses. The cost plus return
(CPR) value is 21.6
-------
Table X
Price of Butadiene
Price
Year (unit sales value C/lb)
1965 10.3
1966 10.0
1967 9.5
1968 8.8
1969 8.4
1970 8.4
1971 8.3
1972 7.8
1973 8.1
1977 19.7
1980 21.1-25
1985 14.4-21
Sources; U.S. Tariff Cotmission
Energy and Hydrocarbons in the U.S. to 1985, The Pace
Co., 1/74.El Paso p.8
Chem Systems, estimate
26
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Table XI
PROJECTED BUTADIENE DEHYDROGENATION CAPACITY
(Thousand Metric Tons/Yr)
Conpany Plant Location 1975 1980 1985
Arco Channelview, Texas 127
Copolymer Baton Pouge, La. 64
El Paso Odessa, Texas 91 91 91
Firestone Orange, Texas 100
Neches Butane Port Neches, Texas 273
Petro-Tex Houston, Texas 386 260
Phillips Borger, Texas 120 60 60
Total 1,161 557 151
Arco currently has two dehydrogenation units with a combined capacity of 127,000
MT/year. The company intends to shut down one unit when their initial olefins
plant comes on-streatn in 1977. A new extraction unit is included in their olefins
complex. The second dehydrogenation facility will be phased out during the 1980-
85 period.
Copolymer has current dehydrogenation capacity of 64,000 Ml/year and has recently
unproved the process yield by converting to oxidative dehydrogenation processing.
This will effectively increase, plant capacity to 73,000 Mr/year. Copolymer has no
plans to convert its unit to extraction of butadiene from steam cracker streams in
the near future. However, it is projected that this will occur in the 1980-85
period as the capacity of the plant is further increased to 85,000 Mr/year.
El Paso has 91,000 MT/year of butane/butene dehydrogenation capacity at Odessa,
Texas. Approximately one-half of the plant output is sold to General Tire who
have a SBR plant also located in Odessa, Texas. This facility is one of two which
may not be shut down during the study period. With the location of Odessa in
West Texas it is unlikely that steam cracker C4 streams can be economically moved
from the Gulf Coast to provide an incentive for butadiene recovery. The butadiene
and styrene produced locally are consumed by General Tire. Continued operations
of these facilities through 1985 are more linked to General Tire's plans than
availability of steam cracker by-product streams.
27
-------
Firestone has 100,000 Mr/year of C4 dehydrogenation capacity. The company
intends to convert these facilities to process ethylene by-product C4 streams
by 1980. The revised plant capacity will be increased to 115,000 MF/year.
Necheg Butane a joint venture of Texas-U.S. and B.F. Goodrich, has a butadiene
capacity of 364,000 MT/year. Approximately 75 percent of this is based on C4
dehydrogenation while the remainder is based on the extraction of butadiene f ran
steam cracker by-product C4 streams. By the end of 1976, 10 percent of their
output will be based on ehtylene by-product. This trend will continue and by
1980, Necbes Butane plans to have fully converted their facility to extraction
of by-product butadiene. The future plant capacity will be approximately
400,000 Mr/year.
Petro-Tex the largest butadiene producer, has 386,000 Mr/year of butadiene
capacity. Petro-Tex has the advantages of purchasing their butanes and butenes
from Tenneco, one of their parent companies, at an attractive price. This,
coupled with the use of a depreciated unit, offers low butadiene production costs.
The company claims that the process is competitive with extraction of butadiene
from ethylene by-product. Nevertheless, Petro-Tex intends to convert the plant
to extraction of butadiene from ethylene by-product. The company plans to have
one-third of their capacity converted to extraction of by-product butadiene by
1980 with full conversion by 1985. However, they may have difficulty obtaining
sufficient quantities of the steam cracker C4 crude stream in the 1980-85
period. With full conversion, the plant capacity will be increased to 455,000
MC/year.
Phillips has a butadiene capacity of 120,000 Mr/year. While Phillips would
like to switch the entire operation to the extraction of by-product butaditene,
it is more likely that the company will convert about one-half of their facility
and maintain the remainder on C4 dehydrogenation. The logistics of the steam
cracker streams from the Gulf Coast to Borger and the availability of internal
supplies of butane will enable Phillips to continue current operation for an
extended time period. In addition, the new Phillips olefins project is based
on the steam cracking of natural gas liquids, which will be a marginal source
of butadiene. By 1985, it is assumed that Phillip's butadiene capacity will
include 60,000 Mr/year based on C4 dehydrogenation.
28
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ECONOMIC IMPACT ANALYSIS
Our conclusions that by the middle 1980's no primary produced butadiene
will be required indicates that no producers will be using this process in
1983. Thus no producer will install BATEA control technology at that time.
Thus the marginal impact of the BATEA technology will be minimal. This section
will analyze the economic impact from a micro-economic view point as contrasted
to the macro view that was taked before.
Methodology
A financial break-even analysis was used here to analyze the impact on
the oxidative dehydrogenation producers of the 1983 BATEA guidelines.
Two model size firms were considered. The small firm's annual production
was set at 110 million Ibs per year. The large firm's annual production was set
at 880 million Ibs per year. Model financial profiles were generated for these
two firms based on the information provided to EPA by Chem Systems, Inc.
Table XIII summarizes the assumptions and basis for our calculation of
a cash flow for the two model firms. Two alternative assumptions were made
about feedstock costs. The high feedstock cost case is the one in Table XIII.
The low feedstock case is 70% of the total raw material cost. This range Chem
Systems, Inc. indicated would cover most of the possible feedstock costs.
A final note about the depreciation expenses. Conversations with Chem
Systems and industry have indicated that most of the plants are fully de-
preciated. For this reason depreciation is treated as a cash flow for main-
tenance. That is, the depreciation charge is the extra maintenance cost to
keep the fully depreciated equipment operable.
Below are the projected Model Financial Statements for the two model
firms given the two feedstock costs (see Tables XIV a through XIV t). Pro-
jections have been made for mid-1975, 1977, 1980, 1982, and 1985. From these
five projections overall cash flow trends for the four cases considered were
established. The equations for the annual cash flow trends are presented
below.
Table XII
Annual Cash Flow Equations
Case Years Equation
Large producer-
High cost 1975- Annual Cash flow = -3.4 (Date) +296
29
-------
Case Years Equation
Small producer-
High cost 1975-80 Annual Cash flow = -0.7(Date)+57.2
Small producer-
Low cost 1975-80 Annual Cash flow = -0.64(Date)+54
Small producer-
High cost 1980- Annual Cash flow = -0.28(Date)+23.5
Small producer-
Low cost 1980- Annual Cash flow = -0.40(Date)+34.8
These cash flow trends generate the following cash flows for the four cases
considered (see Table XV). The projected cash flows were then discounted to find
the present value of the firm for each year. Thus in the case of large producers
with low feedstock costs, the present value of the firm was calculated for the
years 1976 through 1996 by discounting to the given year all the succeeding positive
cash flow. This yields the data listed in Table XVI.
The discount rate used for this analysis was 10%. This yield a 20% pre-tax
cost of capital which is roughly the lowest acceptable return in this industry.
Also calculated for each of these years was the estimated salvage value
of the plant. Estimating the true market salvage value of the plants was very
difficult. The large plant are all multi-product plants and where it is re-
latively easy to switch the equipment to production in another process. In that
case the salvage value of the plant will be very high. In addition conversations
with Chem Systems, Inc. have indicated that current primary butadiene capacity
can easily be converted to extraction of the C4 streams containing butadiene,
which will be increasingly available from ethylene co-product producers. Based
on these considerations Tables XVII and XVIII provide the salvage value estimates.
At a minimum salvage value is equal to working capital. Higher estimates of
salvage value include percents of the replacement cost of the facilities.
These estimates of the salvage value and the discounted cash flow were
plotted to determine the point where the discounted cash flow becomes equal to the
salvage value. At this point the firm will just be breaking even, and discounted
cash flows below that will close the firm. As can be seen in figure 1 the small
producers are projected to close sometime between 1977 and 1980 depending upon
their feedstock costs. This is highly dependent on our assumptions about price
increases for feedstocks and utilities. Thus if prices do not increase as rapidly
as projected, the rate of decrease in the cash flow will decline and the projected
discounted cash flow curve will "flatten out". This could potentially move the
estimated shut-down date back several years but clearly will not change the funda-
mental conclusion that the small producers will close due to trends in the industry.
Moving to the large producers one notices that they are projected to close
between 1980-85. In this case if feedstock and utility cost do not escalate as
projected, these firms may stay open past the 1980's. The important conclusion
to draw from this is that given the best current trends for utility costs and
30
-------
SMALL PRODUCERS
SALVAGE VALUE
DISCOUNTED CASH FLOW
-LOW FEEDSTOCK COSTS
DISCOUNTED CASH FLOW i
-HIGH FEEDSTOCK COSTS
1984 1985 - - 1986 1987 1988 1989 1890
1976 1977 1978 1979 198° 1981
Figure 1
-------
LARGE PRODUCERS
WITHOUT BATEA TECHNOLOGY
t±^T DISCOUNTED CASH FLOW
±| -LOW FEEDSTOCK COSTS
SALVAGE VALUE
DISCOUNTED CASH FLOW—
-HIGH FEEDSTOCK COSTS E
j 100.0
1976 1977 1978 1979 1880 W81 1982 1983 1984 1985 1986 1987 1988
1990
Figure 2
-------
Table XIII
Assumption for
Financial Analysis
Item
Capacity
Quantity
110 million
Price
Scale
Factor
Inflation Rates
1975-801980-
Raw Material Cost
n-Butylenes 55,556 MT $123.4 1.0 8.4 6.5
O-X-D Catalyst
Other Chemicals $450,000 1.0 8.4 6.5
Acetonitrile 80,000 Ibs $0.28 1.0 8.4 6.5
OJ
U)
Utilities Costs
Power 20.3 million KKH 1.2<= 1.0 17.6 5.9
Cooling 7.480 million MGAL 3.0C 1.0 12.1 5.4
Fuel 275,000 MMBTU 200C 1.0 10.3 4.9
Steam 970,000 Mlbs 320C 1.0 9.3 5.7
Operating Costs
Labor 17 men $14,600/yr 0.0 8.0 5.5
Supervision 5 men $19,600/yr 0.0 8.0 5.5
Maintenance Material
and Labor 4% of Battery Liinits Capital Cost
Overhead Expenses
Direct Overhead 35% labor plus supervision
General Plant 65% operating cost
Insurance 1.5% of replacement cost of total fixed capital
Depreciation 5% of replacement cost for Battery Limits Capital Cost +3.3% of replacement
cost for Off-site capital costs
Interest 10% of replacement cost for working capital
-------
Investment (Replacement Costs)
Battery Limits Capital Cost
(includes BPT Control Costs)
Off-sites Capital Cost
Working Capital
Butadiene Market Price
OJ
*».
20.0 million 0.65 9.5 6.5
11.0 million 0.7 9.5 6.5
6.0 million 1.0 9.5 6.5
21.64/lb
2.6
2.7
-------
Table XIV a
Plant
Model Income Statement
Butadiene fron 0X0 Process
Location u. s. Gulf Coast (Mid-1975)
Capacity 110 MM 3bs/yr (small)
High feedstock costs
Investment (Replacement Costs) MM
Battery Limits Capital Cost
Off-sites Capital Costs
Total Fixed Capital
Working Capital
Total Fixed and Working Capital
Sales ( @ 21.6 Clb for butadiene)
Expenses
Raw Material Costs
Utilities
Total Operating Costs
Labor
Supervision
Maintenance Material and Labor
Overhead Expenses
Direct Overhead
General Plant Overhead
Insurance, Property Taxes
Depreciation
Interest
Total Cost of Production
Net Income before Tax
Net Income after Tax
Cash Flow
6.000
23.76
7.328
4.122
1.146
1.766
14.362
8.966
4.662
(20.000)
(11.000)
(31.000)
0.248
0.098
0.800
0.121
0.745
0.300
1.183
0.600
35
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Table XIV b
Model Income Statement
Plant Butadiene fron OXQ Process Low feeds-cock costs
Location u. s. Gulf Coast (Mid-1975)
Capacity 110 MI Ibs/vr (small)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (20.000)
Off-sites Capital Costs (11.000)
Total Fixed Capital (31.000)
Working Capital 6.000
Total Fixed and Working Capital
Sales ( @ 21.6 Clb for butadiene) 23.76
Expenses
Raw Material Costs 5.129
Utilities 4.122
Total Operating Costs 1.146
Labor 0.248
Supervision 0.098
Maintenance Material and Labor p.800
Overhead Expenses 1.766
Direct Overhead 0.121
General Plant Overhead Q.745
Insurance, Property Taxes p.300
Depreciation 1.183
Interest 0.6QP
Total Cost of Production 12.163
Net Income before Tax 11.597
Net Income after Tax 6.030
Cash Flow
36
-------
Plant
Table XIV c
Model Income Statement
Butadiene frcm 0X0 Process
Location U. S. Gulf Coasr (Mid-1975)
Capacity 880 MM Ibs/yr (large)
Hidi feedstock costs
Investment (Replacement Costs) MM
Battery Limits Capital Cost
Off-sites Capital Costs
Total Fixed Capital
Working Capital
Total Fixed and Working Capital
Sales ( @ 21.6 £lb for butadiene)
Expenses
Raw Material Costs
Utilities
Total Operating Costs
Labor
Supervision
Maintenance Material and Labor
Overhead Expenses
Direct Overhead
General Plant Overhead
Insurance, Property Taxes
Depreciation
Interest
Total Cost of Production
Net Income before Tax
Net Income after Tax
Cash Flow
48.000
190.080
58.624
32.976
3.437
14.457
109.494
80.586
41.905
(77.275)
(47.158)
(124.430)
0.248
0.098
3.091
0.121
2.234
1.866
5.436
4.800
37
-------
Plant
Table XIV d
Model Income Statement
Butadiene fron 0X0 Process
Location u. s. Gulf Coast (Mid-1975)
Capacity 880 MM Ibs/vr (larcre)
Low feedstock costs
Investment (Replacement Costs) MM
Battery Limits Capital Cost
Off-sites Capital Costs
Total Fixed Capital
Working Capital
Total Fixed and Working Capital
Sales ( @ 21.6
for butadiene)
Expenses
Raw Material Costs
Utilities
Total Operating Costs
Labor
Supervision
Maintenance Material and Labor
Overhead Expenses
Direct Overhead
General Plant Overhead
Insurance, Property Taxes
Depreciation
Interest
Total Cost of Production
Net Income before Tax
Net Income after Tax
Cash Flow
48.000
190.080
41.037
91.907
98.173
51.050
(77.275)
(47.158)
(124.430)
32.976
3.437
14.457
0.248
0.098
3.091
0.121
2.234
1.866
5.436
4.800
38
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Table XIV e ,
Model Income Statement
Plant Butadiene from 0X0 Process High feedstock costs
Location U. S. Gulf Coast (Mid-1977)
Capacity 110 MM Ibs/yr (snail)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (23.980)
Off-sites Capital Costs (13.189)
Total Fixed Capital (37.169)
Working Capital 7.194
Total Fixed and Working Capital
Sales ( @ 22.8 Clb for butadiene) 25.060
Expenses
Raw Material Costs 8.611
Utilities 4.996
Total Operating Costs 1.363
Labor 0.2895
Supervision 0.114
Maintenance Material and Labor 0.959"
Overhead Expenses 4.017
Direct Overhead 0.215
General Plant Overhead 0.886
Insurance, Property Taxes 0.558
Depreciation 1.639
Interest 0.719
Total Cost of Production 18.987
Net Income before Tax 6.073
Net Income after Tax 3.158
Cash Flow
39
-------
Plant
Table XIV f
Model Income Statement
Butadiene f ran 0X0 Process
Location u. s. Gulf Coast (Mid-1977)
Capacity 110 MM Ibs/vr (small)
Low feedstock costs
Investment (Replacement Costs) MM
Battery Limits Capital Cost
Off-sites Capital Costs
Total Fixed Capital
Working Capital
Total Fixed and Working Capital
Sales ( @ 22.8
for butadiene)
Expenses
Raw Material Costs
Utilities
Total Operating Costs
Labor
Supervision
Maintenance Material and Labor
Overhead Expenses
Direct Overhead
General Plant Overhead
Insurance, Property Taxes
Depreciation
Interest
Total Cost of Production
Net Income before Tax
Net Income after Tax
Cash Flow
7.194
25.060
6.028
4.996
1.363
4.017
16.404
8.656
4.501
(23.980)
(13.189)
(37.169)
0.2895
0.114
0.959
0.215
0.886
0.558
1.639
0.719
40
-------
Table XIV g
Model Income Statement
Plant Butadiene from 0X0 Process High feedstock costs
Location u. S. Gulf Coast (Mid-1977)
Capacity 880 MM Ibs/vr (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (92.980)
Off-sites Capital Costs (56.542)
Total Fixed Capital (149.522)
Working Capital 57.522
Total Fixed and Vforking Capital
Sales ( @ 22.8 Clb for butadiene) 200.640
Expenses
Raw Material Costs 68.888
Utilities 39.968
Total Operating Costs 4.123
Labor 0.2895
Net Income after Tax 36.522
Cash Flow
Supervision Q.H4
Maintenance Material and Labor 3.719
Overhead Expenses 17.427
Direct Overhead p.215
General Plant Overhead 2.680
Insurance, Property Taxes 2.243
Depreciation 6.534
Interest 5.755
Total Cost of Production 130.406
Net Income before Tax 70.234
41
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Table XIV h
Model Income Statement
Plant Butadiene from 0X0 Process Low feedstock costs
Location U. S. Golf Coast (Mid-1977)
Capacity 880 MM Ibs/yr (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (92.980)
Off-sites Capital Costs (56.542)
Total Fixed Capital (149.522)
Working Capital 57.522
Total Fixed and Working Capital
Sales ( @ 22.8 Clb for butadiene) 200.640
Expenses
Raw Material Costs 48.222
Utilities 39.968
Total Operating Costs 4.123
Labor 0.2895
Supervision 0.114
Maintenance Material and Labor 3.719
Overhead Expenses 17.427
Direct Overhead p.215
General Plant Overhead 2.680
Insurance, Property Taxes 2.243
Depreciation 6.534
Interest 5.755
Total Cost of Production 109.756
Net Income before Tax 90.884
Net Income after Tax 47.260
Cash Flow
42
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Table XIV i
Model Income Statement
Plant Butadiene from OXD Process High feedstock costs
Location U. S. Gulf Coast (Mid-1980)
Capacity 110 MM Ibs (small)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (3.15)
Off-sites Capital Costs (17.3)
Total Fixed Capital (48.8)
Working Capital 9.4
Total Fixed and Working Capital
Sales ( @ 24.5 Clb for butadiene) 26.950
Expenses
Paw Material Costs H.Q26
Utilities 6.694
Total Operating Costs 1.768
Labor 0.365
Supervision 0.144
Maintenance Material and Labor 1.260
Overhead Expenses 5.151
Direct Overhead 0.173
General Plant Overhead 1.149
Insurance, Property Taxes 0.732
Depreciation 2.152
Interest 0.940
Total Cost of Production 24.639
Net Income before Tax 2.311
Net Income after Tax 1.201
Cash Flow
43
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Table XIV j
Model Income Statement
Plant Butadiene fron OXD Process Low feedstock costs
Location U. S. Gulf Coast (Mid-1980)
Capacity 110 MM Ibs/yr (small)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (31.5)
Off-sites Capital Costs (17.3)
Total Fixed Capital " (48.8
Working Capital 9.4
Total Fixed and Working Capital '"'
Sales ( @ 24.5 Clb for butadiene) 26.950
Expenses
Raw Material Costs 7.713
Utilities 6.694
Total Operating Costs 1.768
Labor 0.365
Supervision 0.144
Maintenance Material and Labor 1.260
Overhead Expenses 5.151
Direct Overhead 0.178
Total Cost of Production 21,331
Net Income before Tax 5.619
Net Income after Tax 2.922
Cash Flow
General Plant Overhead 1.149
Insurance, Property Taxes 0.732
Depreciation 2.152~
Interest 0.940
44
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Table XIV k
Model Income Statement
Plant Butadiene from 0X0 Process High feedstock costs
Location U. S. Gulf Coast (Mid-1980)
Capacity 880 MM Ibs. (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (121.7)
Off-sites Capital Costs (74.167)
Total Fixed Capital " (195.867)
Working Capital
Total Fixed and Working Capital 75.2
Sales ( @ 24.5 Clb for butadiene) 215.6
Expenses
Raw Material Costs 88.208
Utilities 53.552
Total Operating Costs 5.377
Labor 0.365
Supervision Q.144
Maintenance Material and Labor 4.868
Overhead Expenses 22.688
Direct Overhead 0.178
General Plant Overhead 3.495
Insurance, Property Taxes 2.938
Depreciation 8.557
Interest 7,520
Total Cost of Production 169.825
Net Income before Tax 45.775
Net Income after Tax 23.803
Cash Flow
45
-------
Table XIV 1
Model Income Statement
Plant Butadiene from 0X0 Process Lew feedstock costs
Location U. S. Golf Coast (Mid-1980)
Capacity 880 MM Ibs (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (121.7)
Off-sites Capital Costs (74.167)
Total Fixed Capital (195.867)
Working Capital 75.2
Total Fixed and Working Capital
Sales ( @ 24.5 Clb for butadiene) 215.6
Expenses
Raw Material Costs 61.746
Utilities 53.552
Total Operating Costs 5,377
Labor 0.365
Supervision 0.144
Maintenance Material and Labor 4.868
Overhead Expenses 22.688
Direct Overhead 0.178
General Plant Overhead 3.495
Insurance, Property Taxes 2.938
Depreciation 8.557
Interest 7.520
Total Cost of Production 143.363
Net Income before Tax 12.231
Net Income after Tax 37.553
Cash Flow
46
-------
Plant
Table XIV m
Model Income Statement
Butadiene from OXO Process
Location u. s. Guld Coast (Mid-1982)
Capacity
110 MM Ibs/yr (small)
High feedstock costs
Investment (Replacement Costs) MM
Battery Limits Capital Cost
Off-sites Capital Costs
Total Fixed Capital
Working Capital
Total Fixed and Working Capital
Sales ( @ 25.8 *lb for butadiene)
Expenses
Raw Material Costs
Utilities
Total Operating Costs
Labor
Supervision
Maintenance Material and Labor
Overhead Expenses
Direct Overhead
General Plant Overhead
Insurance, Property Taxes
Depreciation
Interest
Total Cost of Production
Net Income before Tax
Net Income after Tax
Cash Flow
10.662
28.425
12.506
27.899
0.526
0.274
(35.728)
(19.622)
(55.35)
7.463
1.995
0.406
0.160
1.429
5.935
0.302
1.297
0.830
2.440
1.066
47
-------
Table XIV n
Model Income Statement
Plant Butadiene from 0X0 Process Low feedstock costs
Location U. S. Gulf Coast (Mid-1982)
Capacity 110 MM Ibs/yr (small)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (35.728)
Off-sites Capital Costs (19.622)
Total Fixed Capital (55.35)
Working Capital 10.662
Total Fixed and Working Capital
25.8 *lb for butadiene) 28.425
Expenses
Raw Material Costs 8.754
Utilities 7.463
Total Operating Costs 1.995
Labor 0.406
Supervision 0.160
Maintenance Material and Labor 1.429
Overhead Expenses 5.935
Direct Overhead 0.302
General Plant Overhead 1.297
Insurance, Property Taxes 0.830
Depreciation 2.440
Interest 1.066
Total Cost of Production 24.139
Ifet Income before Tax 4.286
Net Income after Tax 2.229
Cash Flow
48
-------
Table XIV o
Model Income Statement
Plant Butadiene fran 0X0 Process High feedstock costs
Location U. S. Gulf Coast (Mid-1982)
Capacity 880 MM Ibs/yr (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (138.044)
Off-sites Capital Costs (84.121)
Total Fixed Capital (222.165)
Working Capital 85.296
Total Fixed and Working Capital
Sales ( @ 25.8 Clb for butadiene) 227.040
Net Income before Tax 35.373
Net Income after Tax 18.394
Cash Flow
Expenses
Raw Material Costs 100.048
Utilities 59.704
Total Operating Costs 6.088
Labor 0.406
Supervision 0.160
Maintenance Material and Labor 5.522
Overhead Expenses 25.827
Direct Overhead 0.302
General Plant Overhead 3.957
Insurance, Property Taxes 3.332"
Depreciation 9.705"
Interest 8.530
Total Cost of Production 191.667
49
-------
Table XIV p
Model Income Statement
Plant Butadiene fran 0X0 Process Low feedstock costs
location U. S. Gulf Coast (Mid-1982)
Capacity 880 MV1 Ibs/yr (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (138.044)
Off-sites Capital Costs (84.121)
Total Fixed Capital (222.165)
Working Capital 85.296
Total Fixed and Working Capital
Sales ( @ 25.8 <=lb for butadiene) 227.040
Expenses
Raw Material Costs 70.034
Utilities 59.704
Total Operating Costs 6.088
Labor 0.406
Net Income before Tax 65.387
Net Income after Tax 34.001
Cash Flow
Supervision o.ieo
Maintenance Material and Labor 5.522
Overhead Expenses 25.827
Direct Overhead 0.302
General Plant Overhead 3.957
Insurance, Property Taxes 3.332
Depreciation 9.706
Interest 8.530
Total Cost of Production 161.653
50
-------
Table XIV g
Model Income Statement
Plant Butadiene frou OXO Process High feedstock costs
Location U. S. Gulf Coast (Mid-1985)
Capacity 110 MM Ibs/yr (small)
Investment (Replacement Costs) MM
Battery Limits Capital Cost ... (43.157)
Off-sites Capital Costs . (23.702)
Total Fixed Capital (66.859)
Working Capital 17.878
Total Fixed and Working Capital
Sales ( @ 28 £lb for butadiene) 30.800
Expenses
Raw Material Costs 15.107
Utilities 8.793
Total Operating Costs 2.391
Labor 0.477
Supervision 0.188
Maintenance Material and Labor 1.726
Overhead Expenses 7.148
Direct Overhead 0.355
General Plant Overhead 1.554
Insurance, Property Taxes 1.QQ3
Depreciation 2.948
Interest 1.288
Total Cost of Production 33.439
Net Income before Tax -2.639
Net Income after Tax -2.639
Cash Flow
51
-------
Table XIV r
Model Income Statement
Plant. Butadiene from 0X0 Process Low feedstock costs
Location u. 5. Gulf Coast (Mid-1985)
Capacity 110 MM Ihs/vr (small)
investment (Replacement Costs) MM
Battery Limits Capital Cost (43.157)
Off-sites Capital Costs (23.702)
Total Fixed Capital (66.859)
Working Capital 12.878
Total Fixed a,r»o K'o rkxng Capital
Sales • a eib for butadiene) 30,800
Expenses
Raw Jfetarial Costs 10.575
Utilities 8.793
Total Operating Costs 2.391
labor 0.477
Supervision p. 188
Maintenance Material and Labor 1,726^
Overhead Expenses 7,3.48
Direct Overhead p.355
General Plant, Overhead 1.554
Insurance, Property Taxes 1,PQ3
Depreciation 2.948
Interesr, j.t288
Total Cost: of Production 28,90?
Net Inccrrs before Tax U29_3_
Net Incests after T?(X 0^934
Cash Fla-j
52
-------
Table XIV s
Model Income Statement
Plant Butadiene from 0X0 Process High feedstock costs
Location U. S. Gulf Coast (Mid-1985)
Capacity 880 MM Ibs/yr (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (166.748)
Off-sites Capital Costs (101.613)
Total Fixed Capital (268.361)
Working Capital 103.024
Total Fixed and Working Capital
Sales ( @ 28 Clb for butadiene) 246.400
Expenses
Raw Material Costs 120.856
Utilities 70.344
Total Operating Costs 7.335
Labor 0.477
Supervision 0.188
Maintenance Material and Labor 6.670
Overhead Expenses 31.175
Direct Overhead 0.355
General Plant Overhead 4.768"
Insurance, Property Taxes 4!o"25~
Depreciation 11!725
Interest 10.302
Total Cost of Production 229.71
Net Income before Tax 16.69
Net Income after Tax 8.619
Cash Flow
53
-------
Sales ( @ 28 *lb for butadiene) 246.400
Expenses
Raw Material Costs 84.600
Table XIV t
Model Income Statement
Plant Butadiene from OXQ Process Lew
Location U. S. Gulf Coast (Mid-1985)
Capacity 880 MM Ibs/vr (large)
Investment (Replacement Costs) MM
Battery Limits Capital Cost (166.748)
Off-sites Capital Costs (101.*613)
Total Fixed Capital (268! 361)
Working Capital 103.024
Total Fixed and Working Capital
Utilities 70.344
Total Operating Costs 7.335
Labor 0.477
Supervision 0.188
Maintenance Material and Labor 6.670
Overhead Expenses 31.175
Direct Overhead 0.355
General Plant Overhead 4.768
Insurance, Property Taxes 4.025
Depreciation 11.725
Interest 10.302
Total Cost of Production 193.454
Net Income before Tax 52.946
Net Income after Tax 27.532
Cash Flew
54
-------
Table XVI
Project Cash Flows ($1VM)
without: BAT
Year
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
Large-Low
-0.5
2.0
4.5
7.0
9.5
12.0
14.5
17.0
19.5
22.0
24.5
27.0
29.5
32.0
34.5
37.0
39.5
42.0
44.5
47.0
49.5
Large-High
anall-Low
Small-High
0.2
3.6
7.0
10.4
13.8
17.2
20.6
24.0
27.4
30.8
34.2
37.6
41.0
0.4
0.0
0.8
1.2
1.6
2.0
2,
2.
3,
4,
4
8
44
08
4.72
5.36
6.00
-0.02
0.26
6.54
6.82
1.
1
.10
.8
2.5
3.2
3.9
4.6
55
-------
Table XVI
Discount Cash Flew without BATEA
Ln
Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
Large Producers
Lew Feedstock Costs High Feedstock Costs
297.9026306
276.0695895
254.5217661
233.3575173
212.6194643
192.3549604
172.6166226
153.4629141
134.9587934
117.1764371
100.1960412
84.10671247
69.0074583
55.008267
42.23143
30.8127
20.903
12.67
6.3
2
189.915065
165.4611833
142.0679815
119.8533128
98.94812528
79.49791698
61.6643522
45.627058
31.58562
19.7618
10.402
3.78
0.3
Small Producers
Low Feedstock Costs
25.32204731
21.46894146
17.89882384
14.6431376
11.73661958
9.2186664
7.131876
5.25764
3.6196
2.244
1.16
High Feedstock Costs
15.15143648
11.72381831
8.69313146
6.1034794
4.003866
2.44874
1.4986
0.754
0.26
0.4
-------
Table XVII
Salvage Value Estimates
Small Producers
Work Capital Work Capital
Year Working Capital +25% Total Fixed +10% Total Fixed
1976 6.57 15.1 9.8
1977 7.2 16.5 10.92
1978 7.86 18.01 11.92
1979 8.64 19.8 13.104
1980 9.42 21.6 14.3
1981 10.03 23.0 15.2
1982 10.64
1983 11.40
1984 12.15
1985 12.91
1986 13.75
1987 14.60
1988 15.54
1989 16.58
1990 17.71
1991
1992
1993
1994
1995
57
-------
Table XVIII
Salvage Value Estimates ($MM)
Large Producers
Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
Work + 10%
Working Capital Fixed Capital
52.56
57.6
63.0
69.0
75.6
.5
.7
.3
80.
85.
91.
97.3
103.6
110.3
117.5
125,
133.
.1
.3
141.9
66.18
72.5
79.3
86.9
95.2
101.4
107.9
115.0
122.5
130.44
138.9
Work +25.0%
Fixed Capital
86.61
94.9
100.3
113.7
124.6
136.7
141.3
150,
160,
170.
181.75
Work +50%
Fixed Capital
120.7
132.2
137.6
158.5
173.0
184.8
196.8
209.6
223.3
237.2
253.2
58
-------
feedstock costs, this analysis indicates that these firm will no longer be able
to operate.
Impact Analysis
It was assumed for this analysis that BPCTCA technology was in place.
BPCTCA capital and operation and rnaintence cost were included in the baseline
calculation above. BPCTCA technology was assumed to be an activated sludge
bio-treatment system.
Four alternative levels of BATEA control technology were considered for
analysis. Cost were provided by the Effluent Guidelines Division. These
alternatives are outlined below.
Level I
1. Steam stripping of the most concentrated wastewater stream.
2. Combining the stripper bottoms with the remaining wastewater
for activated sludge bio-treatment.
3. Activated carbon adsorption of the bio-system clarified effluent.
Level II
1. Steam stripping the entire butadiene plant wastewater.
2. Activated sludge bio-treatment of the stripper bottoms.
3. Activated carbon adsorption of the bio-system clarified effluent.
Level III
1. Steam stripping of the most concentrated wastewater stream.
2. Combining the stripper bottoms with the remaining wastewater for
activated sludge bio-treatment.
Level IV
1. Steam stripping the entire butadiene wastewater.
2. Activated sludge bio-treatment of the stripper bottoms.
The capital cost for these four levels was calculated for 1983 based on
an assumed rate of inflation of 9.5% for 1975-80 and a 6.5% inflation for
1980-83. In addition a conversion factor of 0.6 was used to scale the capital
control costs (see Tables XIX through XX). Tables XXI-a through XXI-h show the
operation and maintenance cost for 1975 for the four levels of control technology.
These capital costs and operation and maintenance costs were all provided by a
59
-------
contractor for Effluent Guidelines Division of EPA (20). Tables XXII
and XXIII inflate the operating costs to 1983 and the years after that.
These operation and maintenance coats and the capital costs where then
subtracted from the base cash flows to generate cash flow after BAT
technology is installed. These after BAT cash flows are present in
Tables XXIV-a through XXIV-j. The cash flows are the same for 1976
through 1982 for all the cases considered and differed only for 1983
and beyond.
The cash flows including BATEA were then discounted as before.
This provides the projected net discount cash flow for the cases con-
sidered above. The discounted cash flows are listed in tables XXV-a
through XXV-d. Plotting these against the estimated salvage value of
the plant (see figure 3 and 10) one obtains an estimate of the projected
shutdown date for the plants.
60
-------
Table XX
Capital Costs (BATEA only)
Year 1983
Production 110 MM Ibs/yr Small Producers
Level I Level II
Stripper 1,173,166 2,707,307 .
Carbon 6,497,537 5,234,127
Total 7,670,703 7,941,434
Level II Level III
Stripper 1,173,166 2,707,307
61
-------
Table XIX
Capital Costs (BATEA only)
Year 1983
Production 880 MM Ibs/yr Large Producers
Level I Level II
Stripper 4,085,202 9,427,391
Carbon 22,625,738 18,226,289
Total 26,710,940 27,653,680
Level III Level IV
Stripper 4,085,202 9,427,391
62
-------
Table XXI a
Operations Maintenance
Year 1975
Production 110 MM Ibs/yr Level
Steam
Electric
Cooling & Wash Water
Fuel
Chemicals & Nutrients
Carbon Make-up
Trucking
Op. Labor
Maintenance L &M
Supplies
Laboratory & Supervisor
G and A
Insurance & Taxes
Stripping
169,583
7,333
4,583
55,000
4,583
30,000
43,186
4,583
12,339
30,000
12,339
373,529
Adsorption
4,583
22,000
3,667
55,000
917
180,583
30,000
170,844
23,833
51,253
30,000
68,338
641,018
Total Operating Costs 1,014,547
63
-------
Table XXI b
Operations Maintenance
Year 1975
Production 880 M4 Ibs/yr Level I
Stripping Adsorption
Steam 1,356,666 36,666
Electric 58,666 176,000
Cooling & Wash Water 36,667 29,333
Fuel 440,000 440,000
Chemicals & Nutrients 36,666 1,444,666
Carbon Make-up
Trucking
Op. Labor 30,000 30,000
Maintenance L &M 150,381 594,912
Supplies 36,667 183,333
Laboratory & Supervisor 42,966 178,474
G and A 30,000 30,000
Insurance & Taxes 42,966 237,965
2,261,645 3,454,682
Total Operating Costs 5,716,327
64
-------
Table XXI c
Operations Maintenance
Year 1975
Production 110 MM Ibs/yr
Steam
Electric
Cooling & Wash Water
Fuel
Chemicals & Nutrients
Carbon Make-up
Trucking
Op. Labor
Maintenance L &M
Supplies
Laboratory & Supervisor
G and A
Insurance & Taxes
Stripping
678,333
29,333
18,333
220,000
18,333
30,000
37,017
9,167
14,230
30,000
28,474
1,113,223
Level II
Adsorption
5,500
4,583
2,750
34,833
7,333
112,750
30,000
137,624
18,333
41,287
30,000
55,050
480,043
Total Operating Costs 1,593,266
65
-------
Table XXI d
Operations Maintenance
Year 1975
Production 880 MM Ibs/yr Level II
Steam
Electric
Cooling & Wash Water
Fuel
Chemicals & Nutrients
Carbon Make-up
Trucking
Op. Labor
Maintenance L &M
Supplies
Laboratory & Supervisor
G and A
Insurance & Taxes
8,294,183 2,363,366
Total Operating Costs 10,657,549
Stripping
5,426,666
234,667
146,667
1,760,000
146,667
30,000
297,456
73,333
49,576
30,000
99,152
Adsorption
44,000
36,667
22,000
278,667
58,667
902,000
30,000
479,235
146,666
143,710
30,000
191,694
66
-------
Table XXI e
Operations Maintenance
Year 1975
Production 880 MM Ibs/yr Level III
Stripping
Steam 1,356,666
Electric 58,666
Cooling & Wash Water 36,667
Fuel 440,000
Chemicals & Nutrients 36,666
Carbon Make-up
Trucking
Op. Labor 30,000
Maintenance L &M 150,381
Supplies 36,667
Laboratory & Supervisor 42,966
G and A 30,000
Insurance & Taxes 42,966 *
Total Operating Costs 2,261,645
67
-------
Table XXI f
Operations Maintenance
Year 1975
Production 110 MM Ibs/yr Level III
Stripping
Steam 169,583
Electric 7,333
Cooling & Wash Water 4,583
Fuel 55,000
Chemicals & Nutrients 4,583
Carbon Make-up
Trucking
Op. Labor 30,000
Maintenance L &M 43,186
Supplies 4,583
Laboratory & Supervisor 12,339
G and A 30,000
Insurance & Taxes 12,339
Total Operating Costs 373,529
68
-------
Table XXI g
Operations Maintenance
Year 1975
Production 880 MM Ibs/yr Level IV
Stripping
Steam 5,426,666
Electric 234,667
Cooling & Wash Water 146,667
Fuel 1,760,000
Chemicals & Nutrients
Carbon Make-up
Trucking
Op. Labor 30,000
Maintenance L SM 297,456
Supplies 73,333
Laboratory & Supervisor 49,576
G and A 30,000
Insurance & Taxes 99,152
Total Operating Costs 8,294,183
69
-------
Table XXI 1
Operations Maintenance
Year 1975
Production 110 KM Ibs/yr Level jy
Stripping
Steam 678,333
Electric 29,333
Cooling & Wash Water 18,333
Fuel 220,000
Chemicals & Nutrients 18,333
Carbon Make-up
Trucking
Op. Labor 30,000
Maintenance L &M 37,017
Supplies 9,167
Laboratory & Supervisor 14,230
G and A 30,000
Insurance & Taxes 28,474
Total Operating Costs 1,113,223
70
-------
Table XXIII
BATEA Operating Costs for
Large Producers ($MM)
Year Level I Level II Level III Level IV
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
10,859,306
11,565,161
12,316,896
13,117,495
13,970,132
14,878,190
15,845,273
16,875,215
17,972,210
19,140,291
20,384,410
21,709,397
23,120,508
20,246,145
21,562,145
22,963,685
24,456,324
26,045,985
27,739,974
29,542,007
31,462,238
33,507,283
38,00^,799
38,004,799
40,475,111
43,105,993
4.296
4.576
4.873
5.190
5.5275
5.887
6.270
6.677
7.111
7.573
8.065
8.590
9.148
15.756
16.78
17.87
19.03
20.27
21.59
22.99
24.48
26.08
27.77
29.58
31.50
33.55
-------
Table XXII
BMEA Operating Costs for
Ehiall Producers ($MM)
Year
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
Level I Level II
1.927,335 3.026,727
2.052,612 3.223,465
2.186,032 3.433,990
2.328,124 3.656,134
2.479,452 3.93,782
2.640,616 4.146,878
2.812,256
2.995,053
3.189,731
Level III
0.7096
.756
.805
.857
.913
.972
1.035
1.10
1.17
1.25
1.33
1.419
1.511
Level IV
2.11
2.25
2.40
2.55
2.72
2.90
3.06
3.29
3.50
3.73
4.00
4.23
4.50
-------
Table XXIV a
Projected Cash Flow with BAT
Large Producers - Low Feedstock Costs
Year Level I Level II Level III level IV
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1.155
4.622
8.03
11.384
14.684
17.935
-5.569
34.5
37.0
39.5
42.0
44.5
47.0
40.5
0.044
0.955
7.938
-15.899
34.5
37.0
39.5
42.0
44.5
47.0
49.5
1.973
4.889
7.823
10.73
13.613
16.4725
19.31
22.127
24.924
23.619
34.5
37.0
39.5
42.0
44.5
47.0
49.5
1.73
5.97
7.97
12.72
6.82
34.5
37.0
39.5
42.0
44.5
47.0
49.5
73
-------
Year
Table
Projected Cash Flow with BAT ($WI)
Large Producers - High Feedstock Costs
Level I
Level II
Level III
Level IV
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986 1.81
1985 5.527
1984 9.224
1983 8.819
1982 20.6 20.6
1981 24.0 24.0
1980 27.4 27.4
1979 30.8 30.8
1978 34.2 34.2
1977 37.6 37.6
1976 41.0 41.0
20.6 20.6
24.0 24.0
27.4 27.4
30.8 30.8
34.2 34.2
37.6 37.6
41.0 41.0
74
-------
Table XXIV d
Projected Cash Flew with BAT ($m)
Small Producers - High Feedstock Costs
Year Level I Level II Level III Level IV
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982 0.82
1981 1.10
1980 1.8
1979 2.5
1978 3.2
1977 3.9
1976 4.6
0.82 0.82 0.82
1.10 1.10 1.10
1.8 1.8 1.8
2.5 2.5 2.5
3.2 3.2 3.2
3.9 3.9 3.9
4.6 4.6 4.6
75
-------
Table XXIV c
Projected Cash Flow with BAT ($M>1)
Small Producers - Low Feedstock Costs
Year Level I Level II Level III Level IV
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982 2.4
1981 2.8
1980 3.44
1979 4.08
1978 4.72
1977 5.36
1976 6.00
0.395
0.844
0.168
2.4 2.4 2.4
2.8 2.8 2.8
3.44 3.44 3.44
4.08 4.08 4.08
4.72 4.72 4.72
5.36 5.36 5.36
6.00 6.00 6.00
76
-------
Table XXV a
Projected Discounted Cash Flow
for Small Producers
Low Feedstock Costs
Year Level I Level II
1976 22.8073344 22.8073344
1977 18.674816 18.674816
1978 14.79424 14.79424
1979 11.1936 11.1936
1980 7.904 7.904
1981 4.96 4.96
1982 .4 .4
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
Level III
23.4040337
19.33781522
15.5309058
12.01211755
8.81346395
5.9705155
3.522795
1.24755
1.1995
0.395
Level IV
22.8073344
18.674816
14.79424
11.1936
7.904
4.96
2.4
77
-------
Table XXV b
Projected Discounted Cash Flow
for Small Producers
High Feedstock Costs
Year Level I Level II
1976 14.79080062 14.79080062
1977 11.3231118 11.3231118
1978 8.247902 8.247902
1979 5.6C878 5.60878
1980 3.4542 3.4542
1981 1.838 1.838
1982 0.82 0.82
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
Level III level IV
14.79080062 14.79080062
11.3231118 11.3231118
8.247902 8.247902
5.60878 5.60878
3.4542 3.4542
1.838 1.838
0.82 0.82
78
-------
Table XXV c
Projected Discounted Cash Flow
for Large Producers
High Feedstock Costs
Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
Level I Level II Level III
159.316322 166.0912346 179.0528955
131.4624803 141.213094 153.3921061
104.2916447 115.12566 128.6578957
77.87960525 89.9174 104.9532175
52.3106725 65.686 82.39246384
27.678525 42.54 61.1027376
4.08725 20.6 41.225264
-18.3475 22.91696
2.235 15.6644
7.156
1.81
Level IV
168.0917846
141.213094
115.12566
89.9174
65.686
42.54
20.6
79
-------
Table XXV d
Projected Discounted Cash Flow
for Large Producers
Low Feedstock Costs
Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
Level I
243.3953515
215.4392795
187.154755
158.5052833
129.4503148
99.9447942
69.37628913
49.93921015
35.5602335
23.195815
13.12535
5.6615
1.155
Level II
220.7597292
190.288588
159.2095422
127.4550469
94.95005215
61.61116906
27.3457434
7.949174
8.83314
0.9946
0.044
Level III
276.796322
252.5514689
228.390521
204.3228011
180.3586679
156.509631
132.7884789
109.209421
95.10046779
77.9738531
62.052059
47.49117667
34.4651963
23.169107
13.82123
6.6647
1.973
Level IV
238.837227
210.3746966
181.5274407
152.2527119
122.5030132
92.22557023
61.3617447
29.846383
25.58487
14.2943
7.027
1.73
80
-------
Figure 3
SMALL PRODUCERS
1976
1977
1978
1979
1980
1931
1982
1983
1984
1985 -
1986
1987
1988
1989
Iflfln
-------
- Figure 4
SMALL PRODUCERS
It-li!,
illiH-c
i. o -• r >: i j i.
MM
MM
IIM
MM
M I LI
IJ l_l I .
1 II M J I
J I M LJ I
M 1 M M
Mill
M M I
M I
I I I M M M
I : I i i I I l
f I I I f 1 I LI
I i II T II h
T i i r'"i i n
M '
ISCOUNTE
I'-CLf L I.U.L
i-LLLU I
: I M I »r I M
_,— ^-.-r-pj-y.-l—pj [-
IT rr
TTTTI ITT
>M i i T n i i VTI
i r r
II II t ! I I I i M I i i I | M
rr >Tn ITT i rri n i irr
r i n i" rrr i i IT rj'n n
M M I.
U 1.1 I
i.LM 1 i
. 1
I I. LI '.'.J.i ' '
I t i I U-1. M l
nr r r rr i TTI T "rr rrn "i r
Ti-rrnTTl iTrrrn r
i-n-ri-f-n
4jHf>ifhU^S-.hhJ:
I .t U. L l J.J.J,.'
M
i nzj4Xfi-4Ji''!"i'i'!"
I , I f [ « ) t ! I I I I I i
rtTTrrt rt-rrrrrr
EEDSTOCK COSTS
DISCOUNTED CASH FLOW
1978
1980
1981
1982
1983
1984
1985
- 1986
1987
1988
1989
1990
-------
1
s
_ Figure 5
SMALL, PRODUCERS
1976 1977 1978 1979 188°
igfll
1982
1983
1984
1985 - - — 1986 1987
TIME
198a
1989
1990
-------
...Figure 6
SMALL PRODUCERS
WITH BATEA TECHNOLOGY
DISCOUNTED CASH FLOW
-LOW FEEDSTOCK COSTS
SALVAGE VALUE
DISCOUNTED CASH FLOW
-HIGH FEEDSTOCK COSTS
1980 1BB1
1982
1983
1984
1985
1986
1987
1988
-------
Figure 7
LARGE PRODUCERS
WITH BATEA TECHNOLOGY
:£ DISCOUNTED CASH FLOW
-LOW FEEDSTOCK COSTS
SALVAGE VALUE
DISCOUNTED CASH FLOW
+ J-HIGH FEEDSTOCK COSTS
1976 l«
1978 1979
1980 1981
1982
1983 1984
1985
1986 1981 1988 1989 199o
-------
Figure"8
LARGE PRODUCERS
WITH BATEA TECHNOLOGY
ra
DISCOUNTED CASH FLOW
-LOW FEEDSTOCK COSTS
SALVAGE VALUE
DISCOUNTED CASH FLOW
-HIGH FEEDSTOCK COSTS ±r
1976
1978
1979
I960
1981
1982
1983
1984
1985
1986
1981
1988
1989
1990
-------
SALVAGE VALUE. DISCOUNTED CASH FLOW ($MM)
-------
Fixjure 10"
LARGE PRODUCERS
S
2
300. 0
u
Q
W
H
O
o
en
200. 0
en
100.0
WITH BATE A TECHNOLOGY
E DISCOUNTED CASH FLOW
35 -LOW FEEDSTOCK COSTS
SALVAGE VALUE
DISCOUNTED CASH FLOW
-HIGH FEEDSTOCK COSTS
1976
1977 1978
1979
1980 1981
1982
1983 1984
1985 1986 1981 1988
\98fl 1990
-------
Conclusions
If figures 3 and 4 (with BATEA) are ccrrpare to figures 1 and
2 (without BATEA) one notices that the impact is not very substantial.
At the most the imposition of BATEA control costs cause the plants
of close several years early.
The important observation is what happens if the picture improves
for the primary producers. In this case the discounted cash flow curve
for Level III and IV will flatten out and thus the firm will operate
longer. But with Level I and Level II technologies, it is almost as-
sured that the firms will eliminate these processes due to the high
control cost involved.
89
-------
Footnotes
1. Chemical Economic Handbook Stanford Research Institute, Menlo
Park, California p. 620.5022B
2. Ibid p. 620.5022C
3« A Statement to the Environmental Protection Agency Relative to
tne Eff luent lamitation for the Oxidation-Dehydrogenation of n-Butene
to Produce I, 3 Butadiene prepared for Petro-Tex Chendcal Corp.
and Phillips Petroleum Co. by Engineering-Science, Inc. Austin,
Texas p. II-3.
4. Ibid p. II-3
5. Op. cit. CEH p. 620.5022A
6. Ibid p. 620.5022A
7. Letter from L.B. Feldcamp of Baker & Botts to W.L. Miller
Environmental Prtoection Agency 9/10/75.
8. Op. cit. CEH p. 620.50220
9. Op. cit. CEH p. 620.5022P
10. Ibid, p. 620.5022R
11. Ibid p. 620.5022S
12. Ibid p. 620.5022T
13. Op. cit. El Paso, Table III
14. Conversations with Harry Durity, Firestone Co., 9/29/15, and Nick
Adams Rubber Manufactures Ass., 9/26/75.
15. Conversation with Paul Kcwser, Dupon Corp., 10/15/75.
16. Letter from L.F. Tischler, Engineering Science, Inc. to W.L.
Miller, EPA, 10/6/75 p. 11.
17. Op. cit. CEH p. 648.50520
18. Letter from P.D. Pruessner, Petro-Tex Corp. to Allen Cywin, EPA,
6/19/75.
19. Op. cit. Engineering-Science.
20. Submission of Gulf South Research Insitute to W. Lamar Miller,
January 5, 1976.
90
-------
Bibiliography
1. Chemical Econatiic Handbook, Stanford Research Institute, Menlo
Park, Ca.
2. A Statement to the Environmental Protection Agency Relative to the
ETrluent Llinitatibns for the Qxidat^ve-Dehydrogenation of n-Butene
to"Produce 1, 3 Butadiene prepared for Petro-Tex Chemical Corp. and
Phillips Petroleum Co. by Engineering Science, Inc., Austin, Texas.
3. Letter fron R.D. Pruessner, Petro-Tex Corp. to Allen Cywin, FPA,
6/19/75.
4. Letter from Larry B. Feldcarrp, Baker & Botts Co. to W.L. Miller,
EPA, 9/10/75.
5. Letter from L.F. Tischler, Engineering Science, Inc. to W.L. Miller,
EPA, 10/6/75.
6. A Survey of the World's Butadiene Industry 1975 edition, Ericssion
Chemical Services, Houston, Texas.(Portions sutmitted by P.L.
Ericsson to Sammy Kg, EPA, 9/11/75).
7. Raw Waste Loads Associated with the Manufacture of Butadiene from
C4 Hydro Carbons prepared by Roy F. Vfeston, Inc. West Chester, Pa.
11/25/74.
8. Conversations of Steve Singer, EPA, to Paul Houser, Dupont Co.,
10/15/75.
9. Conversation of Steve Singer, EPA with Bob Pruessner, Petro-Tex
Chemical Corp., 9/25/75.
10. Conversation of Steve Singer, EPA with Gene Debreczni, Exxon Corp.,
10/2/75.
11. Conversation of Steve Singer with John Dosher, Pace Consultant Co.,
9/10/26/75.
12. Conversation of Steve Singer with Nick Adams, Rubber Manufactor
Association, 9/26/75.
13. Conversation of Steve Singer with Harry Durity, Firestone Co., 9/29/75.
14. Update of Butadiene Position Study by John C. Mahan, El Paso Products
Co./Odessa, Texas, 12/18774"!
15. Letter from B.F. Ballard, Phillip Petroleum Company, to Allen Cywin,
EPA, 6/22/75.
16. Submission of Gulf South Research Institute, Baton Rouge, La. to
W.L. Miller, EPA, 1/5/76.
17. 1, 3 Butadiene through the Oxidative-Dehydrogenation Process, Chem
Systems, Inc., New York, New York for EPA, Order Number WA-6-99-1910-A.
91
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