relatively low installed cost and generally require a minimum know how and attention to operate. As stated earlier, many of the installations covered by the proposed bill are made up of multiple units of smaller size totaling the proposed heat input level of 50 million Btu per hour. It is estimated from ABMA statistics that 42,000 such units in operation today would be affected by this bill. Many of these units have been installed since 1950 and these units still have economic life remaining, considering that the average boiler life of this type is over 30 years. In addition to the package factory assembled units described above, there is also a significant number of installations of field erected boiler units with heat inputs of around 300 million Btu per hour and greater. Certain of these field erected installations have greater flexibility with regard to coal firing capability, but conversion would be accomplished only at considerable expense. The proposed bill refers to conversion of existing plants for coal firing capability. It should be understood that the term conversion in the industry means taking the same basic boiler unit and modifying or changing out the burner assembly for the applicable fuel. While expensive, the usual conversion process associated with gas/oil conversion still represents only a small percent of the total boiler plant cost. In the case of package boilers described earlier, for technical reasons over ninety percent cannot be converted from gas/oil firing to coal firing. The basic boiler units were not engineered for coal firing and therefore cannot be used as such. Such technical design problems as small combustion Revised 7/17/75 chambers, close tube spacing and inadequate space for coal firing equipment are just a few of the technical problems which prevent these existing units from being converted. Conversion of those few package boilers able to be converted would be accompanied by a significant output reduction, which could render the conversion uneconomic and result in unacceptable output levels for the boiler plant. Even with conversion, other constraints include the significant additional space needed to accommodate the coal and ash handling facilities, which in some installations will simply not be available, and the additional construction and operating manpower which would have to be recruited and trained. Since "conversion" of the majority of packaged boiler unit installations is not technically feasible, nearly all of these installations would 1. For the same capacity output, coal-fired equipment, on Revised 7/17/75 2. The size of coal-fired equipment for a given output is substantially larger and weighs significantly more. Therefore the structures in which these boilers are installed are usually not designed to accommodate the coal boiler, coal storage or coal and ash handling equipment. 3. Technician personnel at these locations are untrained in coal-fired equipment. 4. Transportation and distribution facilities to deliver coal to the boiler site are generally not available. 5. Substantial additional space and cost for the necessary ancillary equipment to meet EPA stack emission regulations, which are significantly more difficult with coal firing, are required. Even if we could solve the technical and availability problems associated with the building, equipment and necessary facilities, it is important to consider the economic impact associated with the proposed legislation. At the 50 million Btu heat rate input level, approximately 42,000 units in about 17,000 individual plants would have to be converted at an estimated cost of 68 billion in 1975 dollars. The current value of the gas/oil equipment in these plants is estimated at $7 billion or one-tenth the cost of replacement of coal-fired equipment. One of the major problems meeting the intent of S.1777 is the requirement for substantial capital. The estimated $68 billion indicated would be over and above the capital necessary to meet environmental requirements on most of these installations. To put this in perspective, the current fuel consumption of oil and gas/oil fired equipment for the "non-utility" boiler units which would be impacted by S. 1777 as proposed, is 3.2 million barrels per day oil equivalent. This is about 17 percent of our current annual consumption of oil and gas/oil equivalent (20 million barrels per day oil equivalent). At the proposed impact level of 50 million Btu input heat rate, replacement of 17,000 installations (about 42,000 units) with coal-fired equipment costing $68 billion, would reduce the barrels per day equivalent by 2.2 million or 11 percent. If the proposed impact level of plant size were increased from a firing rate of 50 million Btu to 300 million Btu per hour heat rate, however, the number of affected installations would be reduced from 17,000 to about 300 plants (42,000 units to 400 units) and the magnitude of the capital investment would be reduced by 92 percent to $5.4 billion or one-twelfth the capital costs associated with the 50 million input level. This is still a significant capital expense, but is substantially reduced from the magnitude indicated by the proposed legislation. The 300 million Btu input rate would reduce the barrels per day equivalent consumption in such installations by 50 percent of that being consumed today or 1.6 million barrels per day. The level of 300 million Btu appears substantially more feasible in terms of economic trade offs than the proposed 50 million Btu firing rate. Table 1 lists other levels of heat rate and their impact on capital investment. Another factor to be considered is the available industry manufacturing capability to handle the proposed bill. At the 50 million input level, 42,000 units would have to be replaced. The current manufacturing capability of the equivalent size gas/oil units is estimated at 1500 units per year. The equivalent number of coal-fired units would be less due to the increased size and labor content for this equipment. Therefore existing manufacturing capability is a small fraction of that required to meet the time schedule and quantity of units to be replaced at the low plant input size level of 50 million Btu heat rate. As estimated minimum of one to three years is required to engineer properly designed coal-fired equipment in package sizes and gear up to a substantial increase in production capacity. However, even given this, the incentive for such capacity build up is limited due to the short range "bubble" impact of the proposed program. The impact of a short term "bubble" opportunity is not considered a viable investment opportunity for stable long term growth. Even at the 300 million Btu level a substantial increase in plant capacity would be required following the development leadtime. Regarding new plants, a similar evaluation of the practicality of technology and economics exists. The problem is magnified exponentially depending on the level of heat input rate established. The proposed 50 million Btu level would invoke serious economic hardship not only on plant owners but also on the boiler manufacturing industry. Some boiler manufacturing firms who now supply package boilers and ancillary equipment for gas/oil firing would be forced out of business. Other firms would be required to invest millions of dollars in development and re-tooling to meet the substantial changes in the requirements established by this bill. At the 50 million Btu level plant owners would be required to spend excessive sums of money for power plants to meet the requirements. The scale Revised 7/17/75 |