Research and Invention in the Petroleum Industry Modern combination unit for thermal cracking.
W
ITH the possible exception of kerosene, wax, and a few "proprietary stand-bys" no one of the hundreds of products marketed by the petroleum industry 20 years ago would be acceptable to today's purchasers. There has been a constant refinement and improvement, not only in automotive fuels and lubricants, but also in fuel oils, asphalts, insecticides, medicinal products, greases, and in the hundreds of other special products purveyed to consumers and to other industries. The refining industry could not have met the demands for improved quality without a great research effort, and, indeed, regardless of quality, it could not have met the demand for increased quantities, had not research shown the way.
Pan American Refining Corp.
BRUCE K. BROWN1 Standard Oil Co. (Indiana) 910SouthMichiganAve.,ChicagoIll.
MagnitudeofResearchin the Petroleum Industry
In 1914, when the rapidly increasing use of automobiles threatened a fuel shortage, the average yield of gasoline from crude oil was about 18 per cent, whereas that of gasoline in all refineries in 1038 was about 45 per cent and yields of 70 to 75 per cent could be obtained in modern refinery units. While these improvements in yields of gasoline were in the process of making, great economies were effected in the consumption of fuel In 1925 the refinery fuel 1 A statement made by Bruce K. Brown, at the request of the Joint Patent Inquiry sponsored by the National Association of Manufacturers, National Industrial Conference Board, and American Engineering Council.
tSruce K. Brown consumption averaged 1,045,000 B. t. u. per barrel of crude oil, and by 1037 this had been reduced to 554,000 B. t. u. Catalytic processes for cracking, re-forming, and hydrogenating petroleum to produce still greater yields of still better motor fuels are just now coming into commercial use. Had not research provided the "cracking processes", more than twice as much crude oil would be required to produce the fuel necessary to opeiate the Nation'* automobiles and the country's present crude reservco would be entirely inadequate for American life. In 1038 the petroleum industry is re-
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ported to have employed 51)33 research workers of whom about 45 per cjnt were technical executives and scientifically trained workers, the remainder being laboratory assistants and other supernumeraries. The petroleum industry was second in the research field, being "topped" only by the chemical industry which employed 0542 research workers. The growth of research effort in the petroleum industry has been more rapid than in most industries, having expanded 639 per cent in 11 years and having risen from "seventh largest" to "second largest". For every 10,000 wage earners in the petroleum refining industry there are 563 research workers—almost twice as many as in the chemical industry which is reported to have the next highest concentration. It is difficult to estimate accurately the total annual cost of this research because such statistics as are available from the various companies are not reported on identical bases. Some companies include in their research expenditures only such research as applies to refining, omitting reference to vahiable and growing researches on Tvious phases of the production of crude oil, whereas other companies include costs of research in production methods. Some companies include as 'Refinery research" all of the technical work done to improve existing plant operations, whereas in other companies in which the research function has been entirely divorced from manufacturing only those expenditures which have been directed at future development? are classified as "research ex-
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348 penditures". Prefaced by the above qualifying statements, it may be stated that 13 major oil companies reported research expenditures as follows: 1936 1937 1938
$12,000,000 14.300.000 16.700,000
Much good petroleum research is done in the laboratories of small refiners and research work on methods and apparatus for the production of crude oil is conducted by companies who serve both crude oil producers and integrated oil companies. In addition to the petroleum research done by units of the oil industry there is a considerable amount of research always in progress which Isfinancedby entrepreneurs who hope to sell the developments to the industry. Many of the most important refining proeexlures, such, for example, as the Gray treating, the hydrogénation, and the Dubbs cracking processes, had their origin in research sponsored by organizations having no direct relationship with the producing, refining, or marketing of petroleum products. Bearing these factors in mind, the writer believes that more than $20,000,000 was being expended in 1939 in research by or for the oil industry. The importance with which this research effort is regarded by tlie management of the oil industry is indicated by the fact that the total of the 1938 research budgets of four major oil companies represented a grand average of 1.3 per cent of the ne revenues from the sale of their products (Τ. Ν. Ε. C.'s figures). Petroleum refining L· the largest manu facturing operation in which chemist and chemical engineer play vital parts. The chemical industry, which provides the traditional field for the practice of these professions, is a very small manufacturing operation when compared to the oil refin ing industry. Nowhere else can the
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chemical engineer handle such large quan tities of materials. Nowhere else can the chemist conduct his operations upon such a grand scale. The geologist and the geophysicist also find that the demand for more and more petroleum provides by far the greatest single field for their activities.
Achievements of Research in the Petroleum Industry Scientific methods—geology, seismog raphy, micropaleontology, aerial photog raphy—have replaced hunches, "doodle bugs", and the like in the search for oil. In 1922, 22 oil pools rated at "a million barrels" were discovered. Of these pools, geologists were credited with the discovery of 14, whereas "random drilling" ac counted for 8. On*» hundred and forty-four such pools were discovered in 1938 and, of these, "random drilling** accounted for only 2; geologists were credited with 78 j>ools and geophysicists with 64. By geophysical methods the depth, slope, and type of underground strata are determined and the probable presence of oil-bearing strata is predicted. Older methods applied the torsion balance to determine small differences in gravita tional forces and the magnetometer to plot differences in the earth's magnetic field. While these methods are still used they have been superseded in large measure by seismic methods, in which the reflection by subsurface strata of earth waves produced by surface explosions is determined. Re cently gravity methods have achieved new prominence with the development of highly sensitive gravity meters. Geochemicd methods are now coming into vogue. These methods, according to their proponents, actually locate oil and gas fields by the minute seepage of gas from such fields through thousands of feet of overlying strata. Surface earth sam ples are analyzed for waxes, liquid oils,
Vol. 18, No, 8 hydrocarbon gases, and other component· by instruments so accurate that, for ex ample, a few parts of ethane per billion may be determined. The development of drilling equipment in combination with the very rapid ad vancement of the physical sciences has enabled the industry to bring up oil from depths below the earth's crust which were unthought of a few years ago. Up to 1926 the deepest well that had been drilled reached down 8046 feet. At present wells have been drilled as deep ae 15,004 feet, opening up new oil areas which were en tirely unavailable. Furthermore, as a result of improved technique, it is possible to drill holes "straight down" regardless of the subsurface conditions encountered, or alternately to drill holes at a definite angle depending on the needs of the situation. When advisable it is possible to remove the oil by lowering a pumping mechanism, motor and all, to the bottom of the well instead of operating the power unit from the surface of the ground. All sorts of chemical operations can be conducted thousands of feet below the surface. Flow of oil may be stimulated by treating the oil-bearing structure with chemicals a mile below the surface. A great variety of cementing operations to strengthen the walls, to prevent seepages, or to hold the casing in place can likewise be conducted, not only at the bottom of the well, but at any point the driller desires. Explosives, are used on occasion, not only in "bulk" form to break up bottom hole formations and stimulate flow, but also to drive "bul lets'* through the casing at any desired point to give access to intermediate forma tions. Control of drilling by sensitive physical and chemical methods has been highly developed. Wells arc "logged" continu ously by electrical methods by which the strata through which the drill is passing can be continuously determined. Other "logging" methods, using almost every
Seismic surveying is used to map extent of known oil fields as well as to find new ones.
Western Geophysical Co.
New petroleum research laboratory.
conceivable physical and chemical property of the formations, are being used or are the subject of research and development. Approach of the hole to oil-bearing strata is detected by continuous analysis of the drilling mud to determine its hydrocarbon oil and gas content using instruments so sensitive that releasing a few cubic centimeters of gas at one aide of a large room will produce an off-scale deflection of the recorder at the other side of the room. Vast progress has been made in improving the efficiency of production operations. Under older methods only a small fraction of the oil potentially available—perhaps 20 per cent of the oil present in the producing formations—could be brought to the surface. Exemplifying modern methods, 18,600,000 barrels have been produced from one 11-year-old field in Texas in which "lepressuring", by pumping the stripped gas back into the oil formation, was used from the start. Under older methods the field would have been exhausted at about 7,500,000 barrels. As it is, it is still producing and a final total of about 21,000,000 barrels is eventually expected. 8omewhat similarly, some of the most abstruse phenomena of phase relations have been applied to the operation of natural gas wells, and gasoline recovery has been increased greatly while wastage of gas has been eliminated. Not long since only a few physical chemists knew much about the "retrograde condensation sone" where compressed gases can be partially liquefied by reducing pressure or by heating. Now many natural gasoline plants are so operated and the term is common parlance in the industry. The technical advances in refining have been such that, in contrasting 1025 with 1038, the same capital invested in a refinery results in a plant which will produce
Standard Oil Co. of California at Richmond
twirr as much gasoline. Individual unite for distilling and cracking oil are in use, which from the standpoint of their fuel, power consumptions, and capacity for producing products are the equivalent of hundreds of units of the type in use 25 years ago. In 1913, the first cracking units would handle about 200 barrels of charging stock per day "on stream" and could be operated only one day without shutdown for cleaning or repairs. In 1025 the best units would handle about 2500 barrels per day and would operate continuously for as many as 20 days. At pissent units are in operation for as long as 100 days without shutdown and handle 35,000 barrels of crude per day. Each crude oil differs somewhat from every other crude, requiring special methods of treatment and producing finished products of varying qualities. A study of a great number of crudes available in the United States has resulted in the cataloging of information from which the refiner can produce at will a fuel, lubricant, or other product having the desired qualities. High sulfur crude, once the bugaboo of every refiner, can be handled satisfactorily frob, the technical standpoint. Such crudes can be treated by special methods to produce gasoline having fuel qualities as good as that produced from the best of crudes. Waste gases formerly burned at the torch are now "condensed19 by polymerisation and aikylation processes to produce very high quality motor fuel. The oil technologist, not satisfied with the types of lubricants available from natural crude sources, now separates out the types of hydrocarbons bert suited for lubricating purposes by processes of extraction with selective solvents, and to produce "supeiiubricants" he may synthe» sise lubricating otle from natural gases and
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refinery gases. Isobutylene, a normally gaseous hydrocarbon present in the gaseous by-products of refining operations, has been found useful for many purposes. By processes such as polymerisation and hydrogénation or alkylation it can be converted to the highest quality of aviation gasoline or to automotive fuel of very high antiknock quality. By other types of polymerization processing, isobutylene can be converted to synthetic lubricating oil* to compounding agents which impart improved properties to natural lubricating oil, to resinous materials, to rubber substitutes, or to plastic solids. Chemicals such as ethylene glycol, ethyl alcohol, acetone, and glycerol can be and are made from waste gases of the industry. Petroleum technology is just now at the point where it is bocoming dissatisfied with the motor fuels which can be produced from crude by normal processes and is on the verge of a development in which motor fuels will be built up from elementary hydrocarbons, at* pure or relatively pore compounds. It so happens that an automobile fuel containing large quantities of aromatic hydrocarbons is of advantage in presentday automotive engines. Procetroleum research wherein the raw materials worked upon are, for the most part, complex hydrocarbon mixtures rather than pure compounds. A method developed for cracking a California fas oil cannot be directly applied to a midcontinent gas oil. A process of dewaxing a "residual stock" cannot be used on "overhead stock" without considerable collateral research work. Numerous other examples could be cited. Frequently a research group develops an invention for one specific purpose or to treat one type of oil, only to find that after the results have been patented and published some competing refiner is able, after further researches, to make an even more beneficial use of the invention (usually under license} in its own operations. The patent situation existent in the oil industry, particularly in the refining and producing divisions, is a live one because of the vast technological changes in progress. In foc+, most patent monopo-
April 25, 1940
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Left. Pilot plant treating butane to produce butadiene for synthetic rubber. Photograph by courtesy of the Universal Oil Products Co. Below. Plant for recovery of gasoline from natural gas by retrograde condensation and returning gas under pressure to the original subsurface formation. Courtesy of Tide Water and Seaboard Oil Co*.
lies in the oil industry do not merely "lapse" at the end of the 17 years of life allotted to a patent by the law, nor do many patents "die" as the result of judicial fiat. Most petroleum patents become moribund an 1 valueless long before they expire because the technical art advances so rapidly that the average invention of 10 or 12 yean» ago has been &ui>erseded by another better development. The petroleum industry's experience with and use of the patent system may or may not be unique. Certainly its patent problems and the methods for solution vary somewhat from those employed in other industrie*. In an attempt to portray briefly some of the most important point* there are set forth below ten specific features of the patent situation in the petroleum industry. 1. Only a minority of the patent monopolies with which the industry must cope arise from patentable developments within the major unite of the industry. A study of the patents of interest to the petroleum industry indicated that out of 1605 patents issued in 1938, the source of the patentable inventions was as follows: United States oil companies (refiners ard producers) 577 Foreign oil companies 67 Companies selling refining equipment 60 United States and foreign companies not in the oil business 418 Licensing companies 219 Individual inventors 236 Others 28
2. Total patents issued to one large company each year average two thirds patent per trained research worker. 3. Most impoitant refining developments are completely disclosed in the technical press as soon as, or shortly after, adequate patent protection has been obtained by the filing of patent applications. Such publications usually refer to the patent protection and the author companies nave relied on the patent laws to prevent unauthorised use of lue developments. 4. The research unit of one of the major oil companies filed 587 patent applications during 1932-37 and of these 137 were found by the Patent Office to conflict with pending or later filed applications for patents submitted by competitors. This illustrates the interlocking of all research directed at subject matter important to the general public. Since the various research units of the industry have had identical objectives—the improvement of the quality and decrease in cost of fuel»
and lubricants—it is not strange that in many instances the objectives have been obtained by discovering similar process improvements; hence the large number of Patent Office interferences. The almost uniform practice of the oil companies has been to settle such conflicts amicably by crosslicensing and providing that the patent claims of both lnterferents can be maue available to third parties upon reasonable terms. Having settled, between themselves, any differences as to their respective rights to use the process the two contracting parties can and frequently do exchange unpatented technica1 data pertinent to its operation. 5. No important process has been developed in recent years by any company or group of companies which has not been offered freely to competing companies at a royalty which represented only a small fraction of the savings to be obtained by its use and without restrictions as to the price at which the resultant product shall be sold.
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Ε DIΤ Ι Ο Ν
This deriel which is shown by courtesy of the Texas l o . is mounted on a submersible Ι Μ ret» in the Cîulf" of Mexico off the snore of Louisiana. It represents the type of derrick employed in the petroleum industry of today tor drill lg oil wells offshore.
The availability of patented processes under license is not an empty legal gesture. Almost invariably the development of an important refinery process is followed by the appointment of one or more refinery construction firms or licensing companies as active agents for the sale of the patent tights and technical information relative to the process. Hence a newcomer in the petroleum refining business may purchase a custom-built refinery properly designed and equipped with the most recent developments. 6. The total patent royalties collected from all refiner licensees in any recent year have never equaled the research expenditures of the refining companies in such year. This is apparent to anyone familiar with petroleum patent licensing and petroleum research expense. 7. The complicated processes used by the industry are not within the compass of any one patent and, in fact, are not usually within the compass of the patents of any one company. A modem cracking unit as large, as costly, and as complicated as a fair-sized steamship may embody the inventive features of a hundred or more patents. The public may know that a somewhat similar situation prevails in a $15 radio receiving set. but the complexities of chemistry . nd engineering involved in the operation of a $4,000,000 unitary device f^t uiaking gasoline, kerosene, fuel oil, coke, and asphalt from a crude hydrocarbon mixture containing several hundred separate chemical compounds have not been sufficiently appreciated. The patentable inventions included as inherent in such a device may include thermometers, pyrometers, flowmeters, gages, alloys, tube structures, insulating materials, heat and power circuits, pumps, and a variety of other different devices—all in addition to ten or more separate patentable processes or catalysts—the whole representing a conception almost as complicated as the human body. Faced with this situation the oil industry has been forced in many instances to adopt a system of patent licensing
somewhat different from that used in the mechanical industries— namely, "licensing by definition". 8. Licensing by definition makes it possible for a company desiring to practice a process to acquire a patent license under the te»*ms of which it is licensed under all of the patents of the licensor which might be infringed by the practice of the process. In 7 we have explained that the operation of one piece of refinery equipment—for example, a cracking unit—may involve the use of a plurality of inventions relating to processes, apparatus, and, sometimes, products. A company desiring to practice a process developed in whole or in part by someone else is not content to secure a license under one patent when a plurality may be involved. Further, the licensee is not desirous of studying a whole group of patents to form an opinion on which separate patents he may want to use. A license by definition grants a licensee a right to make so many gallons or barrels of product per day or year under all of licensor's patents, and sometimes under future improvement patents. Referring back to that ubiquitous substance, isobutylene, it will be recalled that it may serve as a "building block1' to construct any one of a variety of products—motor gasoline which may sell for about 1 cent per pound ex refinery or a synthetic plastic which might sell for about $1.00 per pound. Assuming a patented process for the manufacture of isobutylene from refinery gas (and there are such processes), it is obvious that the plan of "licensing by definition" has sound advantages for both licensor and licensee. The holder of a patent on the manufacture of isobutylene would be willing to grant a license to use the process as a step in manufacturing motor gasoline at a much lower rate than he would grant the manufacturer of a synthetic plastic; provided, of course, that the definition license clearly sets forth that it applies only to the use of the process as a step in making motor fuel. 9. The principle of the "fully paid" hcense ÎB not unique with the petroleum
Vol. 18, No. 8 industry but has been highly developed by it. A licensee acquiring a "fully paid" license makes one lump sum payment for such license and thereafter is not accountable to hie licensor in any way except his obligation to pay an additional royalty should he make larger use of the process than that for which he paid. When licensee are granted on this basis the fee is computed by first agreeing on the probable average annual production of the refining unit in question. The royalty per unit of product multiplied by the expected annual production provides an estimate of the annual return which might be expected by the patent-holding licensor. In lieu of taking his chances in recovering such a royalty for 17 years or for the remaining life of the patent, the licensor sets the fee at an amount equivalent to form 3 to 5 years of the expected annual revenue. The licensee pays this, either cash down or in installments, and thus obtains the perpetual right to manufacture that amount of product each year. Licensors have liked this plan because, although it concèdes a tremendous discount from the possible royalty return, it also changes such return from a hazard to a certainty. Licensees like it because of the financial saving and because they are not subject to any control or supervision from the licensor, who is sometimes a competitor. 10. With two exceptions, licenses for a given process are almost invariably granted by the licensor at uniform rate· to every applicant. The first exception is that sometimes the proposed licensee has patent rights which are important to the licensor. Frequently the licensee sells such patent rights in return for a reduced rate under the licensor's dominating patents. The second "exception" is not really an exception, but arises out of a common and accepted "method of doing business". Just as "paidup" licensee have become standard in the industry, so have "slidingscale" licenses. Broadly speakiii*. when a refiner buys his first licensed unit for a given process, he not only buvs a patent license but also the full technical information necessary to construct the unit and operate the process. When he buys the second unit, he gets only the patent license plus intervening technical improvements. Hence, it is customary for the royaltv to be higher for the first unit (or the first 100,000 barrels of product per year) than for the second. In other words, just as the unitary capital and operating costs of large-scale operations are usually less than for small-scale, no also the unitary royalty costs may be less. Conclusion In conclusion, we retuns to the beginning—the petroleum industry, rated as the Nation's fifth largest, stands second in its employment of research and research workers. The industry has developed rapidly and its technology changes frequently. While refinery units are built to run 10 or 20 years, many of them be
April 25, 1940 come technically obsolescent after 5 years. Methods of finding, producing, and trans porting oil change kaleidoscopically. Starting as a business of "rendering" simple petroleum products from crude it was once no more complicated than the rendering of vegetable and animals oils, but is now approaching the scientific technique of a chemical specialty business. Patents have been important to it and have promoted its rapid advance. Not all research of value to the petro leum industry L> done inside the industry— much comes from outside. Conversely, not all research done by the petroleum industry io of narrow value to it alone, since much of its own research is primarily a service to other industries and to customers. Not all petroleum research is pawntprotected. Probably 30 per cent of the research funds air extended in making
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minor improvements in plant operations and in pnxlucts, improvement* which, while extremely important to the indus try and the public, are not of a patent able nature. Additional research ex penditures are made in pure scientific studies and to obtain data on funda mental properties of hydrocarbons and metals—data which are necessary to the perfection of new processes and new ap paratus. Little of patentable natuie comes from such work. Nevertheless, a considerable proportion of the industry's research expenditures leaus to patentable developments useful to the industry generally. These patent able inventions are freely published, and are actively licensed to others at reason able royalty rat«*s. Many such develop ments have been widely adapted under license, and the resultant cost and quality benefits to the public have been great.
Getting German Periodicals E. J. Crane
The Ohio State University, Columbus, Ohio
355 All this has been done and is being done in reliance on our patent system. Should the patent system be under mined or should patent Licensing be im peded by unnecessary and impractical requirements, to that same extent will the petroleum industry necessarily abandon cooperative developments and revert to the use of "secret processes". This will inevitably slow down the past and current rapid pace of technical development in the industry.
Acknowledgment The writer takes this opportunity to thank W. B. Plummer, J. K. Roberts, G. L. Parkhurst, and George E. Dewey of Standard Oil Co. (Indiana) for the assist ance given him in preparing this state ment.
Elimination of Belt Static W. F. Schaphorst 45 Academy St, Newark, N . J.
CURRENT German scientific and teehnical periodicals can be obtained with little delay in spite of war conditions. Some libraries are getting German jour nals with little or no delay or interruption; other libraries are getting nothing from Germany. Chemical Abstracts deals di rectly with German publishers and its copies are coming through regularly by mail. Most libraries obtain foreign periodicals by dealing with agents. Some agents are making shipments which seem to be ~oniing through all right; other agents are piling up in Germany copies of periodicals corresponding to American subscriptions. This holding of copies in Germany is understood to be for the most part on instructions from American librarians. The purpose, of course, is to avoid the risk of loss under present shipping conditions. librarians naturally feel concern about the maintenance of complete files for long time use. They have to weigh this con cern against the current needs of American investigators and scholars, ί should like to emphasise the importance of these cur rent needs in the hope that the balance may more often be tipped on the side of taking some risk in order to get periodicals now. Publication it the means of coop ération among scientists and scholars, and progress depends a good deal on cooperation. When scientists, for example, have to get along without complete knowledge of the published results of other scientists the handicap is considerable. Damage done by the lack of publications during the war period would be irreparable, whereas damage done by occasional losses of copies οι periodicals could be repaired by modern photoprinting methods, if missing copies could not be claimed from publishers or agents.
There is perhaps some risk of possible bombings and fires in allowing periodicals to accumulate in Germany. The useful life of a published scientific paper of merit may cover many years, but usually the period of greatest useful ness is that which follows immediately after the appearance of the paper. Do not American scientists have a responsi bility both to the Nation and to the world to move forward effectively during j resent world conditions? It is hoped that their need for present courageoui cooperation by librarians will be increasingly recog nized. Librarians are cooperative folks, as Chemical Abstracts has good reason to know. Probably no one outside the li brary realises fully what great care must be exercised to maintain complete sets of periodicals. Still we hope for active effort to secure current copies of journals. The library associations have a commit tee, organised the day after war broke out, which is endeavoring to obtain special British guarantees for shipments of Ger man journals and books υ America, but none lias been obtained so far. However, attempted shipments seem to continue to come through. It is indeed worthy of effort to endeavor to establish and main tain the principle that materials of research having no relation to war riiall continue to pass freely, regardless of country of origin or destination.
IT is possible to prevent the formation of static electricity in belts by making the belt a good conductor of electricity or by using a belt that is a good conductor in the first place. If the belt were made entirely of metal there would be no static. Static difficulties are never experienced in a machine that is made wholly of metal. It is only when nonconductors are present that such difficulties arise. Powder manufacturing companies are exceedingly careful and are successful in preventing the formation of static. Re search engineers of one large powder manu facturing company found that a graphite solution is very effective as a preventive of static. This is because graphite is an excellent conductor of electricity. An other powder manufacturing company uses 50 per cent glycerol and 50 per cens water. This solution is all right so long at its application is continued and the belt is maintained in a moist condition and not allowed to become dry. By applying frequently, belts are maintained in a proper, moist condition. Static electricity is generated by belt slippage and by the continuous making and breaking of contact between the belt and the pulleys. It is also generated by friction of the belt with surrounding air. The potential or voltage is always highest halfway between he pulleys. Thus when combs are used, they should be placed at the midpoint of the belt. Use a high-grade, pliable, high friction belt, which will not slip, which has good conductivity, and which is smooth on both sides, and serious static troubles will never be experienced. It is preferable to use a high quality two-ply belt because both sides of double belts are always •nooth.
