Stauffer Stauffer Chemical Company

CHEMICALS.

Westport, Connecticut 06880/ Telephone (203) 226-1511/ Cable "Staufchem"

Your Aide, Mr. Richard Grunde, was kind enough to allow us to present our views on Senate Bill 1777, National Petroleum and Natural Gas Conservation and Coal Substitution Act of 1975.

We

Stauffer Chemical Company is a diversified chemical manufacturing company with 75 locations in the United States. are dedicated to conservation and have an active program. We are not against conversion of boilers to coal, but feel some impossible conditions would be set by S. 1777 as proposed. A preliminary estimate indicates the capital cost to Stauffer could be as high as $200,000,000.

We have the following comments and recommendations:

1. The time allowed for conversion to coal, (by
January 1, 1980) is too short. Engineering manpower
and boiler equipment can just not be obtained that fast,
nor can the necessary coal supplies be developed and
transportation equipment be obtained. A longer period
of time must be allowed for conversion, and we would
suggest doing the least efficient steam use boilers
first and the more efficient ones last on a graduated
time scale to get maximum benefits as early as practical.
2. Section 105 (g), Definitions defining "major industrial
installation" is inconsistent with the purpose of the bill,
in that "burners and other combustors of fuel" are included
for industry. Industrial process equipment, such as direct
fired exchangers, distillation columns, and cracking units
are typically direct fired and not suitable for coal firing.

2. (continued)

A steam boiler may be a very minor part of fuel use at a location. The criteria for definition should be "fossil-fuel fired steam generating Boilers".

3. We recommend that the size of the steam generating unit, not the number of units at a location should be the criteria for requiring conversion, and suggest it apply to units not less than 100 million BTU/hour per boiler with not less than 300 million BTU per hour for one location.

The American Boiler Manufacturers Association has presented data which indicates at 300 million BTU/hour per location the cost will be 11 billion dollars for an 8% decrease in oil use, equivalent to 1.4 billion dollars for each 1 percent, whereas at the 50 million BTU/hour per location the cost will be 68 billion dollars for an 11% decrease in oil use. The additional 3% improvement is at a cost of 19 billion dollars for each 1 percent.

4. We suggest that the increasing costs and threatened shortages of other fuels are incentives enough to convert facilities to coal in an orderly fashion. The constraints placed on the use of coal burning facilities by needlessly strict environmental controls are a very significant detriment.

5. Potential coal availability in adequate quantities is already highly questionable because of delays in obtaining approval for development of new mines.

6. We support the comments of the American Boiler Manufacturers Association regarding Major Industrial Installations starting on page 4 of their submission of June 30, 1975.

In conclusion we wish to express our thanks to you and Mr. Grunde for allowing us to present our comments.

Very truly yours,

STAUFFER CHEMICAL COMPANY

DMG/sw

D. M. Greeno

Director, Energy Management

Energy Conservation has recently been given the high national priority that it has long deserved. United States Gypsum Company wholeheartedly supports this development as a matter of Company economics as well as of national independence from foreign petroleum suppliers.

Various legislative proposals are being considered for inclusion as possible elements of a National Energy Program. Among these are proposals to legislate mandatory conversion of major fuel burning installations to coal as the only acceptable primary fuel. Depending on the specifics of any such proposals, enactment of legislation to this effect, if it applied to all process fuels rather than solely to boiler fuels, could have extremely serious consequences on this Company's ability to continue to operate at a majority of existing locations; and it is this matter that I would like to address in this letter.

The reasons for the above mentioned ominous coal conversion consequences are many; but they lend themselves to being broken down into two major categories: technological limitations and economic constraints.

Technological Limitations

Technologically, the knowledge and equipment exist to allow conversion of U.S. Gypsum's major fuel burning processes to utilize coal, but an important distinction must be made. Converting U.S. Gypsum Co. plants to burn coal does not necessarily imply converting, i.e., making modifications to, already existing equipment. This is especially true in relation to the majority of Company kiln "conversions" most notably those used in the production of gypsum wallboard. It is not possible to enable a presently operating direct-fired kiln, for instance, to employ steam coils (which will be discussed shortly) for drying simply by modifying the existing kiln. To "convert" a direct-fired kiln to steam coil kiln would involve actually replacing that kiln with a completely redesigned, new wallboard kiln. Whenever the term "converting a kiln" is used or referred to in this letter, then, this distinction must be kept in mind.

In addition to gypsum wallboard rock dryers, kettles, and kilns, U.S. Gypsum Co. operates rotary kilns for the production of lime, furnaces/kilns used to manufacture refractories and bricks, steam generators/boilers used in paper making, kilns and dryers used in the manufacture of wood fiber board products, slag-melting cupolas for making insulation products, and other smaller fossil fuel combustors. Each of these would present special, unique problems if a need arose to convert to coal. However, since the Company's major expenditure of fuel takes place in the wallboard kilns, it is these that will primarily be discussed in this letter.

And it is the wallboard kilns that pose the biggest problem in any "conversion" to coal utilization. More than three-fourths of the fuel consumed in the production of prefabricated gypsum products gypsum lath, sheathing and wallboard being foremost among these takes place in the drying kiln where the pre-formed wet board has roughly 99.5 percent of its moisture removed before being sold. Because strict quality constraints preclude acceptance of combustion product depositions or discoloration of any sort on the finished board, the only proven practical method of utilizing coal as the drying heat source in these kilns is indirectly through employment of steam coil kilns. In the past steam kilns were common within the gypsum industry; but for a number of reasons, they have been abandoned in favor of directfired gas and/or oil kilns.

The steam kilns required erection and operation of large industrial
steam generators/boilers to provide the steam for the kilns. These
boilers were able to be completely eliminated with the direct-fired
kilns, reducing capital requirements and plant operating costs.

Steam kiln production rates were far below those able to be achieved
with the newer kilns, a direct-fired kiln being able to dry at least
50 percent more board than a steam kiln of equivalent size. Convert-
ing to direct-fired kilns therefore contributed to achieving major
increases in plant production capacities.

Maintenance costs were able to be significantly reduced with the
new kilns.

The development and refinement of sophisticated gas/oil firing
controls permitted increased process automation, freeing personnel
to perform other plant tasks.

The steam kilns were far less thermally efficient than their
direct-fired replacements, requiring approximately 40 percent more
energy to dry each thousand square feet of board.

From a Company standpoint, and it appears from a standpoint of national well-being, the two most damaging considerations associated with these technological limitations of converting to steam coil kilns would be related to the overall increased energy consumption and serious production capacity losses that would result from the need to make such a conversion to coal.

There can be little disagreement with the obvious facts that increased energy consumption is undesirable from a Company cost standpoint and is directly contradictory to the well-publicized national goal of conserving energy. The loss of productive plant capacity which would result from

converting to steam kilns is also most undesirable. For U. S. Gypsum Company, it means reduced sales, increased unit costs and reduced Company profits. For the nation this reduced capacity poses serious and far-reaching problems, which were well summarized in a 1974 study by the Stanford Research Institute for the Federal Energy Administration, U.S. Department of Commerce and U.S. Bureau of Mines. Entitled Industrial Energy Study of the Concrete, Gypsum, and Plaster Products Industries, the report states:

"There are no comparable products that might replace gypsum
without increased cost to the building industry and loss of
valuable performance characteristics, such as fire resistance.
The possible replacement products would be sheet metal, or rigid
plastics panels, or concrete block, or poured-in-place concrete.
The first two would have greater energy costs in production, and
the last two would have greater dollar costs in erection. Neither
light steel nor sheet plastic can provide the fire resistance of
gypsum board . . . It is reasonable to state that the bulk of
the gypsum products produced is of key significance to the
building industry; reduced supplies could only increase the
effects of limited supply that occurred in past years and raise
the costs of construction further."

Economic Constraints

The economic considerations which so severely constrain USG's capability to convert its major fuel burning equipment to coal center around the enormous capital requirements necessary to make such a conversion.

The size, age, processes, and complexity of U. S. Gypsum Company's plants vary substantially; and, of course, the costs of completely converting any given plant to coal would vary depending on its respective "mix" of these variables. Nevertheless, "ballpark approximations" can be generated for representative plants, one new plant and a second older plant, to give some idea of the order of magnitude of capital expenditure that coal conversion would entail.

A new USG board plant might be roughly ten years old with a
gross plant capitalization of 13 million dollars and a net
(after depreciation) capitalization of 9.5 million. Just to
provide the coal handling and combustion equipment necessary
to permit burning coal as a primary fuel would cost at least
ten and one-half million dollars if it were done today. This
represents more than 80 percent of the total plant gross
capitalization and 110 percent of the net, an amount which
would certainly prove too high to warrant the expenditure.
If the costs of providing acceptable (according to today's
standards) pollution control equipment were added to this
amount, as would be necessary to permit operation, the possi-
bility of being able to continue to operate that plant would
be that much further out of reach.