INDUSTRIAL AND ENGINEERING CHEMISTRY
Nitrogen’s Future. In the October REPoRTs (advertising section page 5 ) we commented on the future of government nitrogen plants. More information has come to our attention regarding their postwar disposition. One of the biggest factors in the sale of these units to private customers is: How much are they worth? If all ordnance plants are to be sold to present operators, there will be strong competition for postwar civilian markets between the former dominant suppliers and the new factors in the field. If this happens, the sale value of the plants decreases to industry, for the cost of fixed nitrogen is greatly dependent on the rate a t which a plant is run. Then, too, the costs of making ammonia in the ordnance plant is not uniform. Costs may vary, depending on the process used, from 28 to 50 dollars per ton. Amortization costs of government plants, which cost about 300 dollars per ton-year to build, are almost the same as the cost of ammonia production itself. These same amortization costs and, by the same token’, the value of the plant in a sale, vary, depending on the rate of plant production possible. It would be convenient if the whole problem could be resolved merely by selling the plants a t cost, less amortization, to the present operators. However, it will not be so simple as that for several reasons. First, there is the problem of economic advantage to the present operators, many of whom have benefited from the freely given “know how” and technological advances developed since the first World War by the regular producers of fixed nitrogen. This would constitute a penalty to the regular producers for, as a whole, they took the financial risks and are still supporting research and market developments, a production cost that some of the newcomers will not have. If the ordnance plants are sold at some fraction of the dollar, the taxpayer will be setting up in business firms that will compete with plants built during peacetime and being amortized a t a normal rate. Nitrogen and its product, ammonia, are the basis of many important chemicals. One of the outstanding authorities on the wartime use of ammonia is credited with the remark that “we cannot have a technologic civilization without an ammonia plant.” This makes the problem of what to do with the government plants even more pressing. We must have adequate capatity to make ammonia; plants must operate or they become obsolete, and yet the ability of the United States
to consume nitrogen is not up to the amount that can be made and imported. Scientists should give serious consideration to the development of ammonia compounds and its offsprings. That is the only sure way out of the dilemma. In the meantime, there is the real problem of what to do with the plants now in existence. The older factors in industry have not made many public suggestions because they have been too busy with war jobs, but a few thoughts have been advanced. One of the suggestions requires the integration of ordnance plants with private plants already existing. Another is a complete study of the requirements of various regions for fertilizer, methanol, and formaldehyde. Plants sold will tie in with this need. At present, however, all conversion has stopped because of the increased need for war material, There will be no conversion until the situation so improves that the war will receive no setbacks. When the “go-ahead” signal is finally given, it is expected that all producers will start from scratch in the race for the postwar dollar. This is necessary. Otherwise there would be constant jockeying for advantageous positions, a situation which would impair the war effort and might engender disregard for geographic and industrial needs. However, government-owned plants are “fleets in being”, so far as private enterprise is concerned. As a consequence, these plants giye credence to the possibility of government dominating the nitrogen picture. This factor is a stumbling block to the integration of ordnance plants into private business. Penicillin Units. Penicillin production is proceeding at a rate which renders percentage comparisons as well as production totals meaningless. Thus the total output of the new antibiotic agent during 1944 is placed a t more than 1600 billion units, a quantity which is eighty times the 21 billion units produced in 1943 when drug and chemical manufacturers were striving t o meet urgent military demands through experimental processes. Since then, thanks to chemistry and to the cooperative labors of government and industry, the Cinderella of Science, if we may borrow the analogy applied to penicillin by Robert D. Coghill, has emerged from Petri dishes and Erlenmeyer flasks to the full splendor of modern mass production. (Continued on p a g e 8)
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The penicillin unit was adopted several years ago by N. G. Heatley and other co-workers of H. W. Florey at Oxford University to denote a specific quantity of the active penicillin ingredient necessary to inhibit the growth of an area of bacteria. The unit served well in those early researches of the Oxford group, and i t was subsequently adopted by the medical profession on both sides of the Atlantic. Use of the unit by manufacturers, however, was less satisfactory, especially when penicillin production mounted to billions, tens of billions, and hundreds of billions of units. The need for a less unwieldy measurement rod, therefore, became obvious for gaging production, shipments, and supplies. From Fred J. Stock, chief of the Drugs and Cosmetics Branch, Chemicals Bureau, War Production Board, we learn that use is being made of at least one other unit for measuring penicillin production. Addressing a recent meeting of the American Pharmaceutical Manufacturers Association, Stock employed the term “packages” alternately with “units” in estimating national production of the antibiotic. The package is equivalent to 100,000 units, and it enabled WPB to estimate January production of penicillin, for example, at 3,000,000 packages, or 300 billion units, Use likewise was made of the designation “vial” which contains 100,000 units. Owing to its high potency, penicillin probably will not enter commercial activity in ounces and pounds as do the sulfonamides and other chemotherapeutic products. The potency of penicillin, on the other hand, may prove to be a factor in the adoption of other measuring units for it in commerce as well as in medicine. With so many manufacturers in the field, penicillin potency is not now stabilized a t any uniform figure. It is, however, increasing. One year ago the average potency of the drug was 100 to 200 units per milligram. Through the selection of better mold strains and constant improvement of extraction, purification, and avoidance of contamination in process, penicillin potency is now all in excess of 350 units per mg., and a high percentage ranges in potency from 800 to 1100 units per mg. It is not unreasonable to expect that the new League of Nation’s standard of 1666.6 units per mg. as an international measure will be attained. Increasing the potency of penicillin is an accomplishment which ranks equally with the feat of the drug and chemical industry in establishing processes for its production within two years’ time. I n the light of these accomplishments, the matter of establishing a sales and production unit for penicillin might appear secondary. Yet the new industry has much to gain by adopting a less wieldy and more understandable unit; the reduction figure represented by the new penicillin package is a step in the right direction.
Growth of Co-op, It would be difficult to find an industrial group more powerful under state and federal laws and blessed with more privileges than the agricultural cooperative association, an idea originally launched many years ago for the purpose of extending to the farmer the benefits of organized buying and selling. However, it haa spread far beyond such things as cotton, grain, hogs, or tobacco. The cooperatives found that they could broaden their profitable operations into a number of fields with which the farmer had dealt formerly as an individualfertilizers and feedstuffs-and they were daunted not one whit by the fact that the sale of fertilizer traditionally is a business of slim profits or no profits at all. The reason for the howling success of the co-op, of course, is not hard to find. For one thing, the cooperative associations are exempt from the payment of federal income taxes, including the profit-absorbing excess profits tax, and these exemptions alone are virtually an unbeatable competitive factor. That is not all. The cooperatives are also immune from prosecution under the antitrust laws, another decided advantage over privately operated industry. This immunity from prosecution is probably envied by industry, especially the petroleum companies who are beginning to feel the inroads of the co-op into their business. According to a recent report, the co-ops as a gfoup are now the largest independent operators in the 011 industry. They are said t o own nine gasoline refineries, a lubricating oil plant, an sviation gasoline plant, oil-compounding plants, pipe lines, barges, oil wells, etc. The co-op may soon become a world power t o reckon with. Representatives of eight foreign countries and domestic cooperatives recently voted in Chicago to organize an international cooperative association in petroleum and food, as well as a credit agency to finance it. Probably the most important development of the eooperative idea is the plan that was proposed some time ago to project the co-op as a huge industrial unit with P holding company and numerous producing and manufacturing subsidiaries. Under this scheme it would reach back t o raw material sources for the production of fertilizers, €or example, and provide its own phosphate rock, sulfuric acid, ammonia, nitric acid, etc., manufacture them into finished goods and market them t o the farmer. A number of cooperatives would have t o agree t o finance the plan, and the soundness of the idea has been questioned. The giant among cooperatives, however, is proposed in literature which has been distributed widely in Washington. This co-op would produce everything needed by the farmer from cradles to tombstones. The existing co-ops, for that matter, are not industrial pigmies. One of the older organizations, Grange League Federation, in a recent year handled goods valued at 117 million dollars. Private industry ie not seeking to put the cooperative out of business, and spokesmen for fertilizer manufacturers state frankly that they have no quarrel with such enterprises working in their territory. Business asks only that it be placed on an equal footing with the co-op which enjoys such tremendous competitive (Continued on page 14)
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Oil Tail. I n Brazil the gasoline and Diesel oil shortages behooved some ingenious scientist to develop a substitute fuel for the Diesel motor. Results were succewful and, so the story goes, 15 gallons of Diesel fuel were made from a plentiful native source of supply-alligator tails. Eight tails per 15 gallons. (Continued on page IO) 8
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advantages as tax exemption and antitrust law immunity, It is necessary to cite but one instance to show how unfairly these advantages work. A fertilizer manufacturer found himself in direct competition with a cooperative, and out of every hundred dolIars received as gross income, he had to pay 74 dollars in taxes; the cooperative paid no federal taxes and only a nominal property levy, It is the judgment, of far-seeing officials of the cooperatives themselves, as well as of industrial executives, that the present expansion movement in the co-op idea is not a healthful one because tax savings, somewhat inflated in wartime, are being used for this expansion. The tax exemption also is a t public expense, and all of us, including the tax-paying corporation and individual, have t o suffer for the competitive advantages enjoyed by the cooperative association.
A Future Ceiling on Petroleum Prices. An impressive number of petroleum experts are of the opinion that the future will see the United States more and more dependent upon imports of crudes to fill the requirements of this country. Perhaps they are wrong and again they may be correct, but we must admit that what they tell us in the light of present information makes for a logical story. There are also some plausible reasons for believing that crudes and even finished petroleum products can be imported into this country from South America and the Middle East a t fairly low price levels; if this is so, i t means that domestic production can hardly command higher prices than imported oil. This will be ceiling number one on domestic producers. The reason most frequently given for the appropriation of some thirty million dollars of government funds (which is not “chicken feed” as research expenditures go even in this day and age) t o investigate several sources of fuels, such as the utilization of natural gas by the FischerTropsch process, coal, shale, oil sands, and even forest and agricultural products, was the fear held by many and most eloquently expressed by Harold Ickes when he stated “America will not be able to oil another war,” From a purely technical point of view we know that we can produce fuels even in large quantities from raw materigls other than petroleum. What we do not know are exact costs under large-scale operating consumption, but indications are that in some instances, at least, they are not so far out of line but what they will place a price ceiling on petroleum sometime in the postwar period. Certainly such processes will constitute a guarantee against any runaway markets for crude. At the moment fuel produced by the Fischer-Tropsch process from cheap natural gas seems the most logical first competitor of petroleum, with the hydrogenation of coal next in line, but the final answers must come from research work. The program of polymerizing natural gas to make petroleum products is highly attractive, but the number one question is: What are our reserves of natural gas, and how long will they last? There is little question but what, for the long-term pull, our main reliance must be on coal or shale. (Continued on puge IS) 14
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Petroleum Chemicals. Aside from their major utilization as fuel and for motive power, crude petroleum and natural gas are important and growing sources for materials essential to synthetic organic chemical processes. They are also sources for elemental carbon colloidally dispersed in rubber compounds and of hydrogen needed in various hydrogenation procedures. From ethylene via ethyl sulfate we obtain an amount of ethyl alcohol that is now equivalent to half of the country’s prewar requiremente. The hydrocarbon chemist, not content with these developments, has come through with even more startling contributions to the field of organic chemistry, nearly all of which are vital to the war. The latter accomplishments make an imposing list. They include toluene for explosives, ethylbenzene for the styrene monomer going into GR-Srubber and polystyrene resin, as well as isobutane, cumene, isoheptenes, isopentane, and iso-octane for aviation gasoline. Hydrocarbons used in synthetic rubber in addition t o ethylbenzene are butadiene for Buna types and isoprene for Butyl. Methyl ethyl ketone, a solvent and intermediate, is derived largely from petroleum gases through butylenes. Ethylene glycol, an established antifreeze, and methanol, a source for formaldehyde as well as a radiator coolant, are other essential chemicals obtained wholly or partly from natural gas. * According t o authorities in the industry, some 175 organic chemicals are obtained from petroleum in the stages of crude, intermediate, and finished materials. A few years ago only a handful of petroleum-derived chemicals were in commercial use; the hydrocarbon chemist’s contention that oil and gas some day would supply that number of chemicals was usually met with tolerant and eyebrow-raised skepticism. The U. S. Tariff Commission, however, has recently supplied factual data to support the enthusiast in the petroleum trade. In a report which separates such products from cyclic or coal tar derivatives, the Commission shows that production of “chemical raw materials derived from petroleum” during 1943 amounted to 1,564,914,665 pounds, and that of this quantity, 1,067,058,199 pounds were sold with a value of $34,435,706; the result is the surprisingly low unit value of 3.2 cents per pound. Butadiene looms up large in such a report; the 1943 output of the rubber grade (1,a-butidiene) was 103,091,279 pounds, and this amount was made in a year when we leaned rather heavily upon alcohol for this GR-S constituent, The Tariff Commission figures follow: CHEMICAL RAWMATPIRIALS DERIVBD FROM PETROLPJUM, U. 8. PBODUCTION AND BALES,1943 Product Total “Crudes” fsom petroleum Crse lio aoid Naogthenic acid Hydrharbona 18-Butadiene, grade fot rubber dthylene CChyarooarbona C4 hydroMvbona All other
Produotion, Salsa. Unit Pounds Pounds Value 1,664,914,665 1,067,06S,l99 $0.032 13 916 900 17:.34 1:.192 103 091 279 160:224:356 394 620 200 668’496’079 2oi:zza:s30
.... ....
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97,608,861
0.214
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Not shown in the above compilation is toluene, production of which amounted to 164,000,000 gallons last year compared with 43,000,000 gallons in 1942; in the oil industry it is asserted that 90% is supplied from petroleum, the remainder of CHsCsHscoming from coke-oven sources. Data are not available on the more complex hydrocarbons. It is known, however, that a number are available to the chemical industry in varying degrees of purity. Additional items will be offered after the war, among them propylene, isobutylene, butenes, n-hexane, n-heptane, iso-octane, and various olefin polymers. These are in the category of “transportable” materials. Not transportable are raw materials such as ethylene, and this will account for the fact that chemical manufacturers utilizing it for synthetic organic chemicals erect their plants at the source in West Virginia and Texas, in addition t o processing hydrocarbons which are shipped to them from refineries. New plants to use the petroleum industry’s great resources are also under construction, and others are projected for postwar. The strikingly low unit costs obtained in petroleum processing, we learn, are due t o the large volume of materials processed. Costs, however, are increased when purity requirements are raised to meet the needs of organic chemical manufacture. This means that the chemical industry will have to foot the bill when special purification is called for in hydrocarbon intermediates. I n the words of a petroleum technologist who can also keep his eye on the economic factors involved: “Postwar additional hydrocarbons will be available, and the organic chemical industry can write the ticket if it is prepared to pay the price.’’
Post-invasion Picture. F. C. Crawford, president of Thompson Products Inc., toured the battlefields as part of his assignment as chairman of the Board of Directors of National Association of Manufacturers. He brought home a startling picture of the war front. Portions of his report indicate the immensity of the planning that went into the effort and the immensity of the job yet to be done. He reports seeing an idle stock pile of 300,000 telephone poles carried into France for use because the General Staff thought that the Germans would destroy the poles then standing in the invasion countries. The expectations failed to materialize, and the pile is just waiting there in France, mute testimony to the thoroughness of planning of our Army. We used the captured supplies of the Germans, including 2,000,000 tons of frozen meat and complete warehouses of medical supplies; and, as Crawford reveals, two thirds of Patton’s artillery was made up, eventually, of captured and repaired German 88’s. The final story Crawford told of shdrtages brings home to us the need for more production. He visited a 240mm. gun behind the lines that had been rationed t o three shells a day. 22
