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Northern Cheyenne - Coal
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Northern Cheyenne - Coal
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Bradley H. Patterson Files (Ford Administration)
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Minority businesses
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The original documents are located in Box 4, folder "Northern Cheyenne - Coal" of the
Bradley H. Patterson Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
-
THE WHITE HOUSE
WASHINGTON
14, Cleegua Cade
Su said;
10 would vot
appove the next Knewing wated
stip actual)
N.C. r Companies
all togrebs,
No movement
(EISs memory) FORD
A PROPOSAL
To
DEVELOP A PRELIMINARY BUSINESS PLAN
For
THE DEVELOPMENT OF COAL RESERVES AND RELATED
INDUSTRY ON TRIBALLY OWNED AND CONTROLLED
LANDS
On
THE NORTHERN CHEYENNE RESERVATION
Submitted By
THE NORTHERN CHEYENNE TRIBAL COUNCIL
Lame Deer, Montana
February, 1974
TABLE OF CONTENTS
Project Objectives
1
Duration
3
Project Area
4
Area Problems
8
Related Studies and Projects
9
Relationship to Economic Planning
10
Project Procedures
11
Coordination
12
Development Impact
13
Follow Up and Need for EDA Funding
15
Appendix A
16
PROJECT OBJECTIVES
The objectives of the proposed project are to develop alternative plans for the
management of the Northern Cheyenne Tribe's coal resources, evaluate these
alternatives and to prepare a preliminary business plan in sufficient detail to
obtain additional funds for business development purposes. The Northern
Cheyenne Tribe is facing a situation which could, if not managed intelligently,
cause the destruction of its tribal community and the effective desolation of
the Northern Cheyenne Reservation. Geologist Joseph B. Rollins of Billings,
Montana estimates that the 433, 434 acre Northern Cheyenne Reservation
contains one of the largest deposits of coal in the United States.
Mr. Rollins estimates that a minimum of three to four billion tons of mineable
low sulfur coal are contained within the reservation boundaries. Several coal
companies have conducted extensive exploration on 227,733 acres of the
reservation and have indicated a strong interest in entering into coal production
leases. However, the proposed leases do not provide adequate protection for
the tribal community or sufficient land restoration guarantees to insure that the
tribe will not be victimized by commercial exploitation without regard for its
long run social and economic interests.
The tribe recognizes its obligation to facilitate the orderly development of
its coal resources in light of the country's continuing energy needs. Its leaders
further recognize that uncontrolled exploitation of these resources would result
in the destruction of their community and people as has been the case with
many tribes whose lands were developed by petroleum interests and money paid
to tribes and individuals who did not have sufficient preparation or guidance
to realize any lasting benefits.
The Tribal Council proposes to explore alternative development plans for its
coal resources without regard to the particular organization or group which
may participate in this development. In particular, it proposes to explore
the water, transportation and power requirements implied by the orderly
development of its coal reserves. Based upon these evaluations it will develop
a business plan for tribally owned and operated coal mining, electric power
generation, transportation and coal conversion operations which may be
situated on the approximate 205,701 acres not presently encumbered by ex-
FORD & LIBRARY GERALD
ploratory permits or coal leases. These development plans will be evaluated
in terms of their immediate social and economic impact as well as their long
run implications for the tribe's continued growth and development as a
potentially significant economic and cultural entity in the otherwise isolated
and economically depressed southeastern area of Montana.
- 1 -
The proposed study will contain the following major elements:
An analysis of the socio-economic characteristics of the Northern Cheyenne
Tribe.
A preliminary survey of the water and other natural resources situated on and
around the reservation.
A preliminary development plan for a strip mine, an electric generation plant,
coal conversion plants and alternative transportation systems.
After the Tribal Council has reviewed the relevant data and evaluated the alternate
plans, a "Plan of Action" will be developed for use by the tribe in pursuing the
development of its coal resources.
The tribal Council believes that it has assembled an outstanding project team to
perform the proposed studies and to assist in developing and eventually executing
a viable business plan which will enable the Northern Cheyenne Tribe to attain a
quality of life commensurate with its resources and heritage.
The Northern Cheyenne intends to change Indians' historic roll of passive subservience
to agencies who are charged with the administration of trust responsibility for the
benefit of the Indian tribes and who in the past have evidenced little more than
apathy toward this responsibility. In Montana, North Dakota and South Dakota
there are six reservations which are home for approximately 25,000 Indian people
and encompass approximately 5.6 million acres of trust land. If the Northern
Cheyenne are successful in the proposed undertaking the tribe intends to share their
experience and to work with other Indian tribes to assist them in implementing the
Federal Government's presently announced policy of "self determination" for Indians
and Alaska natives.
FORD
LIBRARY
- 2 -
DURATION
The proposed project is planned for completion within a three month period
commencing on or about April 1, 1974. This schedule assumes that a majority
of the data required presently exists and that the project team possesses the
necessary expertise to assemble and analyze these data along with relevant
construction, production and market information. To this end, the Tribal
Council has solicited the engineering and management services of The M. W.
Kellogg Company, Gilbert & Associates, Community Development & Construc-
tion Corporation and The Big Eagle Energy Company, an Indian owned and
controlled management company, to perform the required work. Appendix A
presents a brief description of these companies and their senior personnel who
are available to the proposed project.
- 3 -
PROJECT AREA
The regional map on the following page locates the 433, 434 acre Northern
Cheyenne Reservation in relation to the states of Montana, Wyoming and
South Dakota.
Table I on Page 6 summarizes the reservation population and labor trends. The
economic plight of the reservation is reflected by the 25 percent unemployment
rate. This factor is compounded by the under employment of the 780 residents
who perform seasonal work. The magnitude of the under employment is further
evidenced by the low per capita income of $1,819. The major employment
sectors are:
Government
40%
Industrial
15%
Agricultural
10%
Logging
6%
Miscellaneous
29%
Fifty-five percent of the reservation population is less than 19 years of age.
This compares with a Montana population distribution of individuals less than
19 years of age of less than 40 percent. Consequently, the presently high
25 percent unemployment rate will increase or the reservation youth, after
graduation, must migrate from the reservation in quest of gainful employment
opportunities. Unless the coal resources of the reservation are developed the
future employment outlook for the youth of the reservation is bleak.
Educational attainment is another indicator of the relative problems facing the
tribe. The median education attainment by the reservation resident 25 years of
age or older is 9.4 years compared with 12.3 years for the average Montana
resident. The low educational attainment is not a severe handicap for the
majority of the jobs needed for the development and distribution of the coal.
However, the cost of training these individuals to the skill level necessary to
maintain and safely operate complex and sophisticated equipment would be
increased significantly.
The closest major retail market is Billings, Montana with a population of 63,000.
The 105 miles to Billings effectively precludes the majority of the tribal population
from frequent visits to the only major retail center within a reasonable distance
of the reservation.
The reservation is landlocked with the nearest railroad terminal located at Coal-
strip which is 22 miles from Lame Deer. Lame Deer, the Tribal Headquarters
- 4 -
POTENTIAL COAL
PRODUCTION IMPACT
9
PRODUCTION LEASE AREAS
3
10
CREEK
1
MINERAL OWNERSHIP AREAS
lame deer
EXPLORATION AREAS
12
SW
13
LAWE
HISTORIC
ashland
AND
CREEK
2*
CULTURAL
1
SITE OF HEADCHIEF-YOUNGMULE FIGHT
(HISTORIC MARKERS BY CHEYENNES)
2
IMPORTANT EARLY CAMPSITES
3
EARLY TRADING POST AND BEEF ISSUE
busby
CORRAL SITE
4
BATTLE SITE-NELSON MILES, TROOPS AND
CHEYENNE SCOUTS, FIGHT LAME DEER'S
BAND OF SIOUX
5
BIRNEY DAY SCHOOL
6
CEMETERIES
7
MENNONITE MISSON
8
IMPORTANT FASTING PLACE
9
POSSIBLE BLACKFEET RAIDER FORTIFICATIONS
10
CAMP MERRITT
11
CUSTER EXPEDITION CAMPSITE
12
stamp
CHIEF LAME DEERS GRAVE
13
ST. LABRE MISSION
BIG HORN
ROSEBUD CO
/
6#
birney
village
BERALD R.FORD LIBRARY
7
8
DEPARTMENT of INTERGOVERNMENTAL RELATIONS
"The preparation of this map was financed in port through a comprehensive
DIVISION
planning grant from the Department of Housing and Urban Development, under
of PLANNING and ECONOMIC DEVELOPMENT state of montana
the provisions of Section 701 of the Housing Act of 1954,as amended."
and
contract no. CPA-MT-08-00-0059(500.2)
date: Sept. 30,1973
NORTHERN CHEYENNE TRIBAL COUNCIL
prepared by
WIRTH ASSOCIATES
NORTHERN CHEYENNE PLANNING STUDY
billings,montana
associate consultant
INTERMOUNTAIN PLANNERS
billings,montana
socio-economic analysis of potential coal development
o
1
2
3
4
5
10mi.
12
miles city
roundup
12
baker
"
forsyth
#7
YELLOWSTONE
sarpy
crk.
312
colstrip
..
hardin
SOUTH DAKOTA NORTH DAKOTA
billings
RIVER
NORTHERN
ashland
ENTER
212
CHEYENNE
BIGHON
RESERVATION
broadus
318
5
PRYOR MINS.
ARWDER
"
WHITE
212
decke
MONTANA
A
NIIOHOIS
/
WYOMING
sheridan
GERALD LIBRARY R. FORD
lovell
powell
REGIONAL MAP
Oareas of potential strip mining
railroads
The preparation of this map was financed in part through a comprehensive planning grant from the Department
of Housing and Urban Development, under the provisions of Section 701 of the Housing Act of 1954, as amended:
contract no. CPA-MT-08-00-0059 (500.2)
Sept. 30,1973
NORTHERN CHEYENNE PLANNING STUDY
socio-economic analysis of potential coal development
0 5 10 15 20 25 30
60miles
NORTHERN CHEYENNE - PAST & PRESENT POPULATION & LABOR TRENDS
1965
1966
1967
1968
1969
1970
1971
1972
1973
Total Resident Indian Population
2219
2292
2534
----
2564
2486
2683
2926
Total Under Age 16
867
1089
----
1043
----
1169
1058
1176
1322
Total 16 and Over
1352
1203
----
1491
----
1395
1428
1507
1604
Not in Labor Force - 16 and Over
912
603
----
811
----
608
563
563
559
Available Labor Force
440
600
----
1
680
----
787
865
944
1045
Employed
284
456
----
504
----
509
*557
691
780
Unemployed
156
144
----
176
----
278
308
253
265
Unemployment Rate
35.5
24.0
----
25.9
----
35.3
35.6
26.8
25.3
The total number of enrolled Northern Cheyenne Tribal members as of April 1973 was 3,644.
Source: Northern Cheyenne Tribal Office
and population center for the reservation has a resident population of 650.
Currently there is no public transportation serving Lame Deer even though
Highway 212 bisects the reservation. The nearest scheduled bus service is
45 miles away and the nearest scheduled air service is at Billings. A private
airstrip is located adjacent to the reservation at Ashland which is situated 22
miles from Lame Deer. There was no paved road access to the reservation
prior to 1955.
New community and recreation centers, housing, water and waste treatment
facilities, schools, arts and crafts centers and library have been constructed
since 1969 and have helped to ease the almost complete lack of public
facilities.
Until a solid economic base is generated, the tribe will continue to lag in the
availability and access to educational, social, cultural and recreational
amenities and the public facilities generally expected as part of our American
life. Many of the public facilities and social amenities taken for granted in
other areas of the nation are non-existent on the Northern Cheyenne Reservation.
The reservation is encompassed within the confines of the Big Horn Economic
Development District. By virtue of its reservation status, its unemployment
rate (25%) and low per capita income ($1,819) it is classified as a Title IV
Redevelopment Area.
The reservation economy is inextricably effected by the geography of the region.
Distances, sparse population, limited rainfall, topographical barriers and com-
plete lack of public transportation have all contributed to the isolation and lack
of economic vitality faced by the reservation residents. The vast tribal coal
resources in this era of a national energy crisis could be the means by which
the historical stagnation could be reversed and permanent job opportunities
created.
- 7 -
AREA PROBLEMS
The development of the Northern Cheyenne Reservation has historically been
isolated from the economic activity of the region. The sparseness of the region's
population, the distance from any wholesale or retail market centers, geograph-
ical and topographical barriers and lack of any significant industrial base has
prohibited the development of a viable industrial economy. The lack of trans-
portation facilities, high freight rates for both raw material and finished goods
and the inadequate transportation network have also inhibited industries from
locating on or near the reservation.
Consequently, the economy of the reservation and the region have been dependent
upon its agrarian and forest resources and the transient tourist. The employment
opportunities and wage rates associated with these seasonal industries have had a
significant depressive effect on the economic development of the reservation.
The number of employment opportunities associated with these industries has not
been sufficient to provide enough job opportunities for the tribal population.
These factors account for the 25 percent unemployment rate and the under-
employment which is reflected in the tribe's low per capita income.
Development of the vast coal reserves on the reservation could alleviate the
economic plight of the Northern Cheyenne.
Area problems cannot be eliminated unless a rational development program is
initiated which is compatible with the heritage and culture of the people. It
will be possible to develop a stable economy by developing tribal coal resources.
Unless this development and the economic activity generated is compatible
with the needs and desires of the Cheyenne people, future problems and
repercussions could be worse than those presently experienced. Therefore,
careful planning and evaluation of viable alternatives is essential to the
survival and healthy growth of the Northern Cheyenne community.
FORD
LIBRA
- 8 -
RELATED STUDIES AND PROJECTS
Several concurrent "overview studies" are underway to evaluate the social and
environmental impact of coal development on or near the reservation. These
studies were initially directed toward evaluating the environmental impact of
power generating developments being constructed and planned immediately
adjacent to the reservation.
The bulk of these studies have been undertaken under OEO and HUD grants to
the Tribal Council. OEO funded the Northern Cheyenne Indian Project on
July 8, 1973. The project objective is to gather basic data under the auspicies
of the Tribal Council to permit evaluation of the social and environmental impact
of the region's coal development on the tribe. These data will assist the Tribal
Council with their determination of policies, programs and projects to mitigate
the impact of these developments on the Cheyenne community.
A progress report was issued on June 21, 1973, which summarized the status of
the HUD financed Northern Cheyenne Planning Study - A Socio-Economic
Analysis of Potential Coal Development. The basic thrust of this study is also
concerned with projecting the "effects" of regional coal resource development.
This study was confined to a broad-based "macro" analysis of the potential impact
of coal development.
Neither of the studies has addressed itself to defining development plans and the
potential costs and benefits associated with various alternatives whereby the
Tribal Council could rationally select a plan of action. This proposed study
would define the costs and benefits associated with various alternative means
of developing the Northern Cheyenne coal reserves. The existing OEO and
HUD studies will be beneficial in the Tribal Council's assessment of the social
and environmental aspects of the proposed plans. However, the financial and
return on investment data that will be compiled and analyzed in the proposed
study is an absolute prerequisite for the Tribal Council to proceed with the intelligent
development and management of the Cheyenne coal reserves.
- 9 -
RELATIONSHIP TO ECONOMIC PLANNING
As is described in the related studies and project coordination sections, the
proposed project will assemble and analyze relevant social and economic data
and engineering, production and market information, and with policy guidance
from the Tribal Council, prepare a specific "Plan of Action" which will enable
the Northern Cheyenne Tribe to evaluate its opportunities and obtain the necessary
development funds. The studies previously described along with public documents,
including environmental impact studies prepared for nearby coal development
projects, and a review of the extensive work being performed by the Office of
Coal Research, administered by the Department of the Interior, should enable
the project team to effectively coordinate its findings with overall economic
planning efforts in the region. As was previously indicated; the reservation
status, high unemployment (25 percent) and low per capita income has caused
the area to be designated as a Title IV Redevelopment Area.
GERALD
- 10 -
PROJECT PROCEDURES
The proposed project will be coordinated by the Tribal Council through its office
in Lame Deer, Montana. A member of the Council will be appointed as Project
Coordinator. He will be responsible for making available all of the data avail-
able to the tribe through the previously mentioned related studies, reports re-
leased by the Bureau of Indian Affairs, and other commercial and economic data
available to the tribe by virtue of the extensive coal exploration and watershed
studies conducted on or near the reservation.
The project will be organized into two major work efforts. The social, legal,
environmental and policy issues will be explored and documented for review by
the Tribal Council under the direction of Mr. George Crossland (Osage; L.L.B.,
University of Chicago). After the Tribal Council has reviewed the alternative
plans, Mr. Crossland will supervise the preparation of the final report which will
embody the recommended plan of action for the development and management of
the Northern Cheyenne's coal reserves.
The engineering, production and market studies necessary to evaluate alternative
plans for coal mining, power generation, coal conversion and transportation will
be conducted under the direction of Mr. Jack Nutting, Executive Vice President,
Community Development & Construction Corporation. In this undertaking, Mr.
Nutting proposes to utilize the engineering and management services of The M.
W. Kellog Company, and Gilbert & Associates, along with select experts in the
field of geology, transportation, marketing and economic planning.
Mr. Nutting has over thirty years of experience in the design, construction and
operation of major mining, power generation and transportation projects, including
the Wabush Mines in Labrador This project was commenced in 1959 and com-
pleted in 1964. It contains an iron ore mine, a crushing and consentration plant,
a town for 3,000 people, an airport, 67 miles of railroad, a harbor, storage and
handling facilities, the "Twin Falls" hydro-electric plant, 117 miles of high
voltage transmission lines and was completed at a cost of approximately $265
million.
The Erie Mining Company project in Hoyt Lakes, Minnesota, a new town developed
for the project, contains 100 miles of railroad, a 22 million ton production iron ore
mine, a 150 MW coal fired steam generating electrical power plant, and a harbor
facility, with a completion cost of approximately $365 million. In addition to these
projects Mr. Nutting had major responsibility in the design and development of a
significant portion of two new towns, Columbia, Maryland, and The Woodlands.
The Woodlands is approximately 28 miles north of Houston, Texas, and is planned
to be home for approximately 150,000 people, provide jobs for 40,000, and repre-
sent a $3 billion investment when completed.
A more complete description of the experience and capabilities of the proposed
project organization is presented in Appendix A.
- 11 -
COORDINATION
The basic responsibility for the coordination of this study will be the Tribal
Council. The Council presently has representation on the Economic Develop-
ment District Board of Directors. It also sponsors and has administrative
control over several programs under the OEO, Department of Labor, H EW
and H UD which are concerned with the overall socio-economic development
of the reservation.
In a letter dated November 9, 1973, Governor Thomas L. Judge stated:
I have directed all state agencies to assist the Northern
Cheyenne Tribe in its efforts to thoroughly research all
of the ramifications of coal developments on the reser-
vation. The executive departments of state government
will make available to you all technical assistance re-
quested by the Northern Cheyenne Research Project,
subject only to the manpower budgetary limitations.
Consequently, no lack of coordination is anticipated in undertaking this study
based upon the commitment of the Tribal Council, the Governor and his
respective control over all agencies which will be involved in the analysis and
evaluations of the proposed study.
-- 12 -
DEVELOPMENT IMPACT
The gross value of the reservation agricultural and forest products produced
by tribal members on the reservation in 1972 was approximately $1,460,000.
An additional $1,487,000 was generated by non-indians residing on the reser-
vation. Forty-three of the resident reservation Indian population were cate-
gorized as farm or ranch operators. Three were classified as managers of an
agricultural enterprise while 210 were classified as part-time operators or
laborers.
An indication of the beneficial effect of coal development on the local economy
can be seen by comparing the employment impact at similar coal operations.
For a nominal sized operation, approximately 150 personnel would be employed
with an average salary of $10,500 per annum. This employment would generate
a payroll of about $1.4 million per year, assuming 90 percent of the employees
live on the reservation.
The addition of 135 workers, earning an additional $1.4 million per year, would
increase the average per capita income of the tribe by $478 to $2,297. These
135 new jobs would be almost totally male employment and would for all practical
purposes. eliminate the present 25 percent unemployment.
The following table describes the economic impact of 100 new industrial jobs
in a typical economy as computed by the United States Chamber of Commerce.
Obviously the same multiplier effects cannot be expected in the reservation
economy; however, the economic benefit will be significant.
Economic Impact of One Hundred New Industrial Jobs
359 more people
91 more school children
$710,000 more personal income per year
100 more households
$229,000 more bank deposits
3 more retail establishments
97 more cars registered
65 more employed in secondary services
$331,000 more retail sales per year
The proposed study will estimate the potential income which could be derived
from the orderly development and sale of the tribe's coal resources. The form
- 13 -
of the product taken to market will significantly effect the potential economic gain.
The full range from selling bulk coal to selling electricity, petroleum substitutes
and ammonia-fertilizer will be explored. In any event, it is safe to assume that
sufficient income to raise the standard of living to our national norm could be
easily achieved with minimal development of the tribe's estimated $15 billion
of low sulfur coal reserves.
Coal bearing formations underlie all the Northern Cheyenne Reservation. Coal
beds crop out on the Tongue River and Wibaux shale members of the Fort Union
Formation. Coal also occurs in the underlying Lance formations, but does not crop
out within the boundaries of the reservation. Total thickness of the formations
exposed on the reservation is about 2,000 feet. Within this zone there are
probably ten significant coal beds that vary in thickness from a few inches up to
40 feet or more, see Potential Coal Production Impact & Land Ownership map
on the following page.
The predonimant use for coal in Montana at the present time is for fuel in the
generation of electric power. Federal Power Commission forecasts an increase
in power- demand in Montana from 1,460 megawatts to 2,590 megawatts in 1980,
and to 4,700 megawatts in 1990. It is also apparent that Montana coal is an
excellent prospect for export. There are three distinct reasons which make the
strippable coals of Montana particularly attractive. First is the relative low cost
of coal recovery. Information received from the State Department of Intergovern-
mental Relations indicates that the cost of a ton of coal mined in eastern Montana
averages out to about two dollars per ton. The second reason is the low sulfur con-
tent of Montana coal which makes it attractive for burning as fuel in locales where
the burning of high sulfur coal is prohibited. The low sulphur advantage offered by
Montana coal may, however, diminish in years to come.
At present there are three producing coal mines in the Northern Cheyenne area.
The following table presents the estimated annual tonnage exported from the
respective mines to markets outside of Montana:
Annual Volume Exported
Colstrip
4.3 Million Tons
Kleenburn
1.0 Million Tons
Decker
3.5 Million Tons
Based upon the above coal production exports and the projected continuing
increase in electrical power demands, it is obvious that the approximate 5 billion
ton reserve of low sulfur coal situated on the Northern Cheyenne Reservation could
have a significant and lasting economic benefit to the regional economy if developed
in an orderly and non-destructive manner.
- 14 -
FOLLOW UP AND NEED FOR EDA FUNDING
To the extent possible, the Tribal Council has selected a project organization
which collectively has the technical and management expertise to assist it in
the following-up and implementing the proposed project's plan of action.
However, it is expected that during the proposedproject, additional needs
and resources will be identified to assist the Northern Cheyenne Tribe to
organize to pursue the resultant business plan. Even though the tribe currently
has limited funds, it has demonstrated its willingness and ability to pursue
projects and activities which its leaders believe are in the best interests of
the tribe and the preservation and development of its human and natural
resources.
The Tribal Council is requesting 100 percent funding of the proposed project.
This request is necessary because of the limited money available to the Council
to conduct the tribe's business and the increasing demand for service and
assistance voiced daily by members of the tribe in need. As can be seen from
the description of the Northern Cheyenne, provided in this proposal, the tribe
does not have sufficient funds to pursue the proposed project on its own.
However, it will make available all existing data and personnel who are not
otherwise committed for the furtherance of the proposed project.
- 15 -
APPENDIX A
EXPERIENCE AND CAPABILITIES
The enclosed materials provide a brief description of the experience and
capabilities of the proposed project organization.
The Community Development & Construction Corporation brochure describes
the current activities being supervised by Mr. Jack Nutting.
The M. W. Kellogg Company's experience and capabilities are presented
along with their letter proposal describing the proposed work to be performed
jointly with Gilbert Associates, Inc. Gilbert Associates, a process and power
engineering and consulting company, is briefly described in the enclosed
annual report and brochure.
The Big Eagle Energy Company is a Texas corporation formed by its President
and Director, George Crossland, Esq., to provide planning, management and
financial advisory services to Indian tribes and Alaska native organizations
interested in preserving and developing their human and natural resources.
Mr. Crossland (Osage; L.L.B, The University of Chicago) has extensive experience
in assisting tribes to protect and enforce their rightful claims to land and resources
held in trust by the United States Government for their benefit. As a water resources
attorney for the Bureau of Indian Affairs and later as an independent consultant,
Mr. Crossland has observed the need of tribes for assistance in planning, financing,
developing and managing their own resources. He, therefore, formed Big Eagle
along with his associate, Gene A. Keluche, to assemble and direct the efforts of
a multi-disiplinary team of specialists on an as-needed basis to provide assistance
under contract with Indian tribes and Alaska native organizations.
Mr. Keluche (Wintun; M.B.A., Harvard Graduate School of Business Administration)
has extensive experience in the financing, development and direction of business
enterprises engaged in education, community planning and real estate development.
In addition to his duties as a Director and Consultant to Big Eagle, he is President
of Terradevco, Inc., a firm specializing in the design, development and operation
of conference and resort communities. Terradevco is currently a co-venturer in
the development and operation of conference and resort communities valued at
$25 million in Houston, Texas, and Colorado Springs, Colorado.
As indicated in the Project Performance Section, senior project personnel will be
provided by the above companies to perform the proposed work under the direction
of the Northern Cheyenne Tribal Council.
- 16 -
THE M.W. KELLOGG COMPANY
A
Division of Pullman Incorporated
1300 THREE GREENWAY PLAZA EAST
TELEPHONE
HOUSTON, TEXAS 77046
CABLE ADDRESS
(713) 626-5600
MONOLOGG-HOUSTON
February 21, 1974
TELEX: 76-2556
E.H. HOFFING
COMMERCIAL VICE PRESIDENT
Mr. Jack Nutting
Community Development &
Construction Corporation
1919 Two Shell Plaza
Houston, Texas 77002
Dear Mr. Nutting:
During meetings in your office on February 18 and 19, 1974, you
explained your interest in undertaking a study of means whereby coal de-
posits located in the Cheyenne Indian Reservation near Ashland, Montana,
might be utilized to the optimum benefit of the Cheyenne people. You have
further explained that you are developing a plan under which several con-
cepts for coal utilization would be reviewed from a technical viewpoint, fol-
lowing which definitive feasibility studies could be undertaken for certain
selected options.
We understand that it is your intent to identify a project, or proj-
ects, over which the Cheyenne Tribe will maintain dominant control, which
will enable the Cheyenne people to attain a higher quality of life, and which
will tend to preserve the characteristic of the Cheyenne land.
We have discussed with you several means by which this resource
might be developed to achieve the stated aims. In view of the present prob-
lems relating to supply of domestic fuels, there is no doubt that the coal lo-
FORD
cated on this Reservation is a valuable resource. The task you are under-
taking is that of determining a suitable plan by which the Cheyenne might re-
LIBRA
ceive optimum benefit from utilization of this resource.
In our discussion we have considered the possibility of coal pro-
duction by surface mining plus land restoration; we have considered the pos-
sibility of on-site electric power generation; and we have also considered the
possibility of "up-grading" the coal by conversion to ammonia, a chemical
fertilizer. We have recognized that the question of water supply might be a
dominant consideration in evaluation of the various alternative possibilities.
THE M. W. KELLOGG COMPANY
Mr. Jack Nutting
- 2 -
February 21, 1974
Community Development
& Construction Corp.
We understand that it is your interest that Kellogg and Gilbert As-
sociates undertake the task of determining the dimension of the water supply
problem, and also that we undertake the task of conducting a technical re-
view of the power generation concept and of the coal conversion concept.
Accordingly, we propose a preliminary study program to include the following:
A. Water Supply - By Kellogg or Gilbert Associates
1.
Conduct a review of documents already in the Tribal Council's
possession concerning water supply.
2.
Conduct a review of information available from State and
Federal authorities concerning water supply.
3.
Prepare a report which would summarize the results of these
reviews.
B. Power Generation (Approximately 50 MW) - by Gilbert Associates
1.
Determine the raw material requirements (coal and water) for
a power generation plant.
2.
Determine manpower requirements for construction and operation.
3.
Estimate the overall plot requirement, including on-site coal
storage.
4.
Review environmental aspects, to include air and water pollu-
tion control.
5.
Prepare a brief description of the facility.
6.
Prepare an "order-of-magnitude' cost estimate.
C. Coal Conversion to Ammonia (Approximately 1000 Tons Per Day) -
by M. W. Kellogg
1.
Determine the approximate raw material (coal and water) re-
quirements for a coal conversion plant (plant capacity to be
mutually agreed upon).
THE M. W. KELLOGG COMPANY
Mr. Jack Nutting
- 3 -
February 21, 1974
Community Development
& Construction Corp.
C. Coal Conversion to Ammonia (Approximately 1000 Tons Per Day) -
by M. W. Kellogg - (Continued)
2. Determine other operating and construction requirements, - man-
power, catalysts, chemicals, etc.
3. Estimate the overall land requirements for such plant, including
on-site storage requirements.
4. Review air and water pollution control aspects.
5. Prepare a brief description of the facility envisioned.
6. Prepare an "order-of-magnitude" cost estimate.
Kellogg and Gilbert Associates are prepared, upon receiving your
authorization, to proceed with studies A, B and C; we believe that all studies
could be completed in three months. We are prepared to undertake these
studies on a "Lump Sum" basis as follows:
for Study A
$ 10 000
for Study B
$ 10 000
for Study C
$ 30 000
This proposal is contingent upon agreement on terms and conditions
to be included in a mutually acceptable contract.
It should be emphasized that the scope of this proposed study is
limited to a preliminary review of the subjects itemized above, and that more
definitive studies will be required before final determinations are made con-
cerning the utilization of this resource.
This proposal is valid for your acceptance by May 21, 1974 after which
date it may be subject to review.
We sincerely appreciate the opportunity to present this proposal, and
we hope that we will have the pleasure of working with you on this project.
Very truly yours,
EH Heljing
E. H. Hoffing
gaz
PART I - INTRODUCTION TO KELLOGG
The M. W. Kellogg Company, a division of Pullman Incorporated with headquarters in Houston,
Texas, offers worldwide services in process and engineering design, procurement, financing
arrangements and construction - individually or in combination - to the oil-refining,
petrochemical, chemical, biochemical, waste-control, power and other industries.
Kellogg's achievements and capabilities include:
The first integrated, multi-process refining unit, a forerunner of today's modern refineries.
A major role in the initiation and development of the fluid catalytic cracking (FCC)
process - a process of high merit in today's refineries. Kellogg has maintained a
predominant position in the FCC process, as evidenced by more than half of the world's
FCC capacity being based on Kellogg technology.
Development of process and mechanical designs for economical, large-scale production of
ammonia. The innovative integration of process and mechanical designs resulted in
significant changes in ammonia manufacturing and distribution practices the world over.
Kellogg added to its overall fertilizer capabilities with the Kellogg-Lopker phosphoric
process.
The world's largest single-train, natural gas liquefaction plant using a cryogenics process for
helium recovery. Kellogg also has capabilities in the transportation, storage and
revaporization of liquefied natural gas (LNG).
The world's largest ethylene plant and total naphtha cracking centers (which crack naphtha
to give ethylene and provide a base for other petrochemicals).
The Kel-Chlor® process for economic production of chlorine from waste hydrogen chloride
without production of by-product caustic.
Development of new processes for supplementing the world's dwindling energy supplies.
Substitute natural gas (SNG) production from naphtha, molten-salt coal gasification and the
fuels-refinery concept based on heavy oil cracking are examples of such processes developed
by Kellogg.
Licensing of Kellogg process technology in basic engineering-design packages for use by
other contracting firms. These packages provide detail on critical features of design to insure
proper interpretation of the process, mechanical, safety and operational requirements.
KELPLANS (Kellogg Planning and Analysis Systems), a linear-programming technique to
select the design alternative that maximizes return on investment.
Utilization of third-party technology through the licensing of others' processes.
Development of management capability to process, engineer, procure and construct
complex projects, which cost, in total, as much as $1 billion. This overall project
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management capability includes broad experience in multi-national financing and worldwide
procurement.
KELLOGG INTERNATIONAL CORPORATION
Kellogg International Corporation (KIC) was established in 1949 to serve the chemical,
petrochemical and petroleum refining industries in the United Kingdom, on the Continent and in
the Middle East and Africa.
Located in Kellogg House, London, KIC is a major member of the Kellogg group of companies. KIC
performs the same engineering, procurement and construction functions in the United Kingdom
that The M. W. Kellogg Company handles in the United States.
KELLOGG CONTINENTAL
Kellogg Continental (KC) is an Amsterdam-based affiliate with worldwide experience and capability
in the engineering, procurement and construction of plants for the petroleum refinery,
petrochemical and chemical process, fertilizer and related industries.
The name is derived from The M. W. Kellogg Company, under which KC functions, and Continental
Engineering, from which the majority of KC personnel came.
KC is a world leader in fertilizer plant technology. Its engineers have had extensive experience and
success in designing Stamicarbon urea plants and other processes, including the world's largest
calcium ammonium nitrate plant.
The Kellogg companies worldwide employ over 3,000 people, primarily engineers and technical
specialists.
PULLMAN INCORPORATED
In 1944 Pullman Incorporated acquired The M. W. Kellogg Company. The acquisition strengthened
both organizations and expanded Kellogg's economic base for its increasing worldwide activities.
Pullman Incorporated operates in two fundamental industrial areas: transportation equipment and
engineering construction. Through Pullman-Standard, Trailmobile, Pullman Transport Leasing and
Trailmobile Financing Company, Pullman Incorporated manufactures, sells and leases railroad and
highway transportation equipment.
Through the Kellogg companies and Swindell-Dressler Division, Pullman handles various engineering
and construction operations. Kellogg is concerned with the design, engineering and construction of
complex installations, especially petroleum refining and petrochemical facilities. Swindell-Dressler
and its affiliates serve the mining, metallurgical and ceramic industries and engage in civil and public
works, including pollution control projects.
Pullman Incorporated also serves clients through its extensive solid-waste pollution control and
sanitary-landfill and reclamation projects.
The Pullman Annual Report, included in Part VI, gives an overview of the organization's various
services and financial strength.
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GERALD
LIBRARY
PART II - KELLOGG EXPERIENCE
Jobs executed by the Kellogg companies worldwide provide diversified experience which accounts
for the company's reputation as a worldwide engineering and project-management contractor.
RECENT MAJOR PROJECTS
PUSRI, Indonesia
Kellogg is designing an ammonia/urea project including offsites and solids handling facilities for P.
T. Pupuk Sriwidjaja Industri Petrokimia (PUSRI) in Indonesia. As prime contractor Kellogg is
responsible for the entire project, known as PUSRI II. The company is cooperating with various
third-party licensors and utilizing worldwide procurement. The project has an approximate capital
value of $84 million, based on multi-national financing.
The project consists of a grassroots, 600-metric-ton-per-day ammonia unit, 1,150-metric-ton-per-day
urea unit and offsites including extensive material handling, storage and marine-loading facilities.
Kellogg is providing all engineering, procurement and construction supervision for the ammonia
plant and offsites.
Kellogg, as project coordinator, is administering the subcontract for the urea unit, which employs
the Mitsui Toatsu process.
Located near Palembang, Sumatra, the plant is adjacent to and integrated with an existing, smaller
ammonia/urea facility known as PURSI I. The new complex will be self-sustaining in respect to all
utilities, including electric power.
As general contractor Kellogg is providing the following additional services:
Direct maintenance-and operation of the plant until performance guarantees are met.
Training of PUSRI engineers and purchasing representatives in Kellogg's home office.
Arrangements for training a number of PUSRI personnel in maintenance and operating
problems in an operating ammonia plant.
Training of PUSRI maintenance personnel in vendors' shops.
Onsite training programs for PUSRI operators.
GCRALD FORD LIBRARY
Bandar Shahpur Fertilizer Complex
Kellogg set many precedents as managing contractor for Iran's first petrochemical/fertilizer
complex. Kellogg designed, engineered and constructed the 1,000-metric-ton-per-day ammonia
plant within the six-plant facility. The company also had responsibility for the
following: procurement of all bulk materials for all units; transportation of all identifiable materials
purchased by process vendors; design, procurement and construction of all plants and offsites
(except the 108-mile pipeline); and overall coordination of all design activities.
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In order to take advantage of competitive worldwide markets, Kellogg helped the client spread
financing for the complex among six nations: United States, United Kingdom, Germany, Italy,
France and Japan.
Owned by Shahpur Chemical Company Limited, the grassroots complex is located at Bandar
Shahpur on the Persian Gulf. Besides the ammonia plant, the complex includes a
1,500-metric-ton-per-day sulfur recovery plant, a 1,320-metric-ton-per-day sulfuric acid plant, a
500-metric-ton-per-day urea plant and a diammonium phosphate/triple superphosphate plant.
The construction site was on 80 acres of reclaimed tidal flats. Site preparation required $4.2 million
worth of fill and 6,700 92-foot concrete piles. Kellogg built a dock system to accommodate the
freighters which bring in raw materials and carry away end products. The company prepared living
quarters for the workers and trained construction personnel. The job required over 5,000 employees
and took more than 12 million man-hours to complete.
IVP (Instituto Venezolano de Petroquimica) El Tablazo
Kellogg is handling two major contracts for Venezuela's huge, $1.2-billion petrochemical complex
on Lake Maracaibo. One contract names Kellogg overall general contractor for all offsite facilities.
This represents the largest single contract ever awarded Kellogg. The other contract is for complete
design and construction of the basic feed unit for the petrochemical complex, a
245,000-metric-ton-per-year olefins plant.
Kellogg is providing the support facilities for a multitude of process units at the project site. These
include a port facility, with liquids and solids handling and loading systems; an electric-power and
steam plant with a 110-megawatt capacity; and a utility distribution system. Waste disposal, water
treatment, cooling towers and pollution control will be provided. Kellogg also will build roads,
buildings and other general facilities. The massive, $100-million support system is designed not only
to serve the process units being built at the present time, but also to permit 100-percent expansion
for service to future developments on the project site.
Kellogg-designed support facilities will serve the following process units:
Natural gas liquids plant
Olefins plant
Caustic chlorine plant
Ammonia and urea facilities
Low-density polyethylene plant
Polystyrene plant
Monovinyl and polyvinyl chloride plant
Polyisoprene/methanol plant
Additional units now in planning stages will produce ammonia, high-density polyethylene,
propylene derivatives, ethylene oxide and integrated aromatics.
Korea Oil Corporation, Wulsan, Korea
Kellogg was managing contractor for Korea's major petrochemical complex, which went into
operation in 1972. The company designed the key feed unit, a naphtha cracker having a capacity of
150,000 metric tons per year of ethylene. Kellogg also had responsibility for mechanical design,
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procurement and construction of four other process units and for all offsite facilities. The four
additional process units, which were licensed from others, were as follows:
Butadiene extraction
Toluene dealkylation
Cyclohexane extraction
Pyrolysis gasoline hydrotreatment.
Local labor, working under Kellogg's control, constructed the petrochemical complex. While
utilizing worldwide procurement, Kellogg purchased much of the equipment and materials in Japan.
Transco Terminal Company, South New Jersey
Among Kellogg's recent cryogenic experience is a current design project for a liquefied natural gas
(LNG) receiving terminal in South New Jersey. Owned by Transco Terminal Company, the
grassroots facility will include the following process units:
LNG receiving and unloading system
LNG storage
Fractionation to remove heavy hydrocarbons
Substitute natural gas (SNG) production
LNG vaporization
Blending of LNG vapor, fractionation and SNG product
Send-out facilities
Support facilities include:
Steam boiler plant
Control house
Water wells and water treatment
Administration and service buildings
Compressor house
Power generation
Kellogg is responsible for design, engineering and engineering procurement for the project. This
terminal will be the first in the United States to deliver standard pipeline gas from an LNG facility.
A Kellogg-designed fractionation unit will reduce the LNG Btu content to that of gas used in
homes. Blending of LNG fractionator overhead gas, LNG vapor and SNG will produce the final
product.
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KELLOGG OPERATIONS
Kellogg operates on a concept of individual profit centers. Each center is accountable by results and
has authority for decision-making within its area of activity. These centers, each of which is directly
responsible to the president of the company, are Western Hemisphere, Eastern Hemisphere, Far East
and the power piping and chimney operations.
The M. W. Kellogg Company (Western Hemisphere operations) and Kellogg International
Corporation (Eastern Hemisphere operations) have the same operating philosophy. Each
department of either company can and does handle complete projects by itself. When desirable, one
office can execute part of the project for the other. In addition to complete project execution,
Kellogg also is involved in design-only, research-only and construction-only projects. It is equipped
to procure project materials on a worldwide basis and to assist clients in arranging multi-national
financing for projects Kellogg intends to execute.
These strong areas of discipline are welded together efficiently and effectively by project
management to complete total projects and complexes.
Often Kellogg is chosen overall manager of a project - coordinating the efforts of other contractors
involved - but also is selected to design and construct a portion of the project.
A GENERALIZED PROJECT
The following section discusses Kellogg's operating procedures. It mentions the various
departments' contributions within the context of a generalized project.
Research and Development
When Kellogg utilizes its total facilities, it begins with research and development of a process.
The company's Research and Engineering Development (R&ED) personnel include chemists as well
as chemical and mechanical design engineers. These people develop new processes, optimize known
processes and design, build and operate pilot plants to test their findings.
Sales and Proposals
Kellogg's Sales Department is decentralized to better serve its clients. Sales offices are maintained in
four North American cities to provide closer contact and greater convenience to client
organizations. Through frequent contact, sales representatives ascertain client requirements and
respond to client requests for assistance. Throughout the bidding phase of a project, Sales is the
primary contact with the client organization.
Kellogg markets its processes through proposals to potential client companies. Proposals - and
subsequent contract brochures - are developed in the Proposals Management Department. This
central material-gathering and writing effort assures the quality presentation that is standard at
Kellogg.
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Project Management
The key to Kellogg's organization is project management. The Project Department is designed to
give direct senior management support to the project manager, the company's primary contact with
the client. The project manager is responsible for satisfactory execution of the project in accordance
with the contract. He is selected for an assignment based on his background, experience and
availability.
Kellogg generally assigns a project manager during the proposal or study phase of a project and
keeps him in charge through final acceptance. *This system provides continuity between the
pre-contract phase and actual project execution.
At Kellogg, job execution is project oriented. Using the task force concept, the company calls on
personnel from all the various departments and disciplines necessary for the type of project and
scope of Kellogg's work. The project manager, who has overall responsibility for the job, is
supported by a responsible manager assigned to the project for each major function - engineering,
procurement and construction. These managers are the key members of the task force and remain
assigned to the team until work is completed.
Shortly after he is assigned to a project, the project manager prepares a detailed project plan and
coordination procedure. This document specifies each task-force participant and his responsibilities.
The plan, based on Kellogg's standard procedures, is modified to suit the client and particular job
conditions.
Upon award of a contract, the project manager presents his plan at a "kickoff" meeting, which is
attended by client representatives and Kellogg personnel who have significant responsibility on the
project. During this meeting, the basic operating philosophy is established. This discussion also
insures complete understanding between the client and Kellogg.
Scheduling
The project manager's prime responsibility is to complete his project on time and within budget.
Kellogg uses the Critical Path Method (CPM) for planning and scheduling. CPM is a management
tool that allows comprehensive planning. It also gives realistic information for overall completion
dates of the activities involved in each project. This tool enables management to take corrective
action at the appropriate time.
CPM gives a graphic representation of all activities required to complete a project. Kellogg's
scheduling methods are centered about this "Management Control Logic Network" diagram. The
diagram is updated continuously to reflect current information received from the line organizations.
The project manager uses this diagram for overall control and forecast of project objectives and
performance. Issued monthly, the updated diagram is accompanied by a written analysis.
A schedule engineer, functionally reporting to the project manager, is assigned to each project. He
reviews plans and schedules with the line organizations and project management. He also integrates
manpower availability, materials deliveries and construction requirements, in accordance with the
overall project schedule. Since the schedule engineer analyzes performance for effect on established
objectives, he is the logical person to forecast potential trouble areas which might affect the overall
schedule.
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Cost Control
Technical and cost control responsibility at Kellogg is vested in the individual performing the work.
However, his concentration on a limited segment of the job may limit his ability to recognize and
interpret the significance of a change in terms of the overall project or objectives of the client.
Kellogg uses the cost engineer to provide this interpretation.
Kellogg places responsibility for cost control with the project manager. The cost engineer, as a
member of the project team, coordinates the overall cost-control and reporting activities; performs
the technical audit of key documents; maintains detailed up-to-date records of estimated,
committed and projected costs; and prepares all cost reports on the project.
Process Phase
The process phase is the first activity on most Kellogg projects. Simultaneous with this comes
detailed planning within outlines developed in the proposal phase. At this point, the task force is in
full operation, as management, engineering, construction and other personnel contribute their
talents and knowledge to achieve project ends.
Process Engineering prepares designs for all Kellogg processes and performs economic studies,
licensing investigations, estimates, new process development, start-up and operating procedures and
consulting services. Many of the staff have spent their careers working with certain processes. These
specialists, who have made many major contributions in their specialties, closely follow process
development in their fields.
Among its duties, Process Engineering develops process flow diagrams, process heat and material
balances and other critical data. It releases critical data for equipment that must be delivered early
in the construction phase on a priority basis to Design Engineering.
Analytical Engineering
When Process Engineering completes its job, a "process release" marks the beginning of the
planning/analytical cycle of design. Engineers from the Project Systems Department convert process
data into complete engineered systems, recorded on Piping & Instruments (P&I) Diagrams. Skilled
in the fields of fluid mechanics, thermodynamics and control, they also develop, optimize and
engineer all utility (such as steam and water) and auxiliary (such as relief valve and blowdown)
systems. They develop these systems from the standpoints of economics, operability, safety and
maintenance. Systems engineers also are responsible for insuring that the effluent-liquid, solid,
vapor and noise levels of the complete project fall within established environmental limits.
During this phase, personnel from Operating's Technical Services group review the analytical
designs. This review insures a successful start-up and operation. They then develop an operating
philosophy and write the Operating Instructions Manual. This manual and other reports issued by
Technical Services personnel help all design groups keep abreast of operating problems and resultant
design and operating changes. Full operating services are utilized at the end of construction.
Equipment engineers insure that operating conditions fit the commercially available equipment and
materials. They integrate process and utility requirements, considering, for example, utility balances
and waste-heat recovery. Systems engineers consider information such as line size or pressure drop,
changes in which may allow use of more economical pipe or exchangers.
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A procurement manager is assigned to each project. He has total responsibility for the procurement
program and reports directly to the project manager. Having established specific project plans for
purchasing, inspection, expediting and traffic, the procurement manager administers both budget
and schedule control relative to procurement activities for all materials. He follows shop progress on
critical equipment and, where necessary, exerts pressures to maintain vendor-promised deliveries.
Design
Kellogg uses its engineering know-how to optimize plant layout design. With early issues of P&I
Diagrams, Kellogg initiates its layout effort. Equipment location and layout of civil, piping and
instrument engineering are done on scale models.
Kellogg uses models as a design tool. These models, built to scale, establish the geography of a plant
and include every significant physical detail. Also, the models provide the basis for important
integration of engineering and construction specifications and requirements.
Remote computer terminals and a drawing "Digitizer" also are employed to help Engineering use its
time and personnel to the fullest. The Digitizer, which makes drawings by computer from rough
isometrics, eliminates human keypunch errors and generates summaries and bills of materials, which
previously had to be done by hand.
Final Engineering
Completed models are used at "planning release" for detailed engineering, primarily piping, civil and
electrical. This final engineering cycle produces detail drawings that are used for the supply,
fabrication and field erection of bulk items, such as foundations, structures, pipe, instrumentation
and electrical.
Engineering prepares preliminary and final requisitions, which are sent to Procurement. Purchasing
personnel order bulk commodities, select qualified subcontractors and administer subcontracts.
Expediting, Inspection and Traffic personnel monitor vendor progress, either at a fabricator's shop
or from home office. These people assure delivery of materials in advance of specific construction
requirements. Traffic specialists are responsible for economical routing of materials and equipment
for vendor's plants to job sites. Meanwhile, inspectors make regular checks of vendor's performance,
techniques and quality control, as well as handling physical inspection of equipment.
Throughout the project, Kellogg maintains a series of controls: budgets for dollar control;
schedules for time control; and design and material specifications for quality control. The project
manager oversees project coordination and control.
Construction
Both Engineering and Procurement provide their services to Construction. Delivery to Construction
of drawings, budgets and material listings initiates home-office construction efforts. Equipment and
material deliveries accelerate field activities. Construction personnel strive for thorough pre-planning
and scheduling, experience supervision in the field and detailed cost control.
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Field performance is checked continuously. Construction supervisors periodically compare
predicted costs with schedules and budgets to insure that the project is completed on time, within
budget and without sacrificing quality.
Construction management selects key personnel to build the plant. This takes place at the project's
beginning, since these persons are an essential part of the task force. Drawn from Kellogg's pool of
seasoned resident construction managers, engineers, superintendents and administration personnel,
these key men form a closely knit team. The resident manager and part of his team report to
Houston for briefing. Here they participate in the thorough planning job that allows Kellogg to
complete preliminary work well in advance of its actual need. They review the construction plan in
detail, contributing their personal experience and knowledge of construction practices.
Preliminary schedules and plans are formulated using the latest information on predicted material
and equipment deliveries. The planning phase, including detailed construction schedules, is
completed. After the project starts, the resident construction manager and home-office
Construction management continuously evaluates the field's performance in the areas of progress,
cost and work quality.
In establishing construction methods, the Construction Department develops a complete action
plan, using both general requirements for sound construction and its own specific techniques. Every
aspect of the construction job is considered. Rigging studies help in selecting equipment and in
planning derrick foundations, guy line deadmen and vessel lifting lugs. Construction personnel
establish the degree of field assembly and lay out field fabricating shops to provide production-shop
economy. Construction roads, utilities and temporary buildings are planned to optimize traffic.
Liaison with Design groups is maintained to assure cognizance of construction requirements.
Installation procedures applicable to the quantities and types of materials employed are developed.
This planning, completed long before it is needed, helps Kellogg organize highly its construction
jobs.
Construction Engineering develops new techniques and adapts new equipment to field needs to
reduce construction costs. This group prepares recommendations for ASA and ASME code
committees. It also establishes the criteria for training and qualifying craft personnel.
The participation of the Tool and Equipment Section of the Construction Department in any
project may be three-fold: Advisory, through planning and technical assistance; functional, through
tool and equipment recommendations and purchases; and operational, through its custodianship of
Kellogg's construction equipment.
Data gained from previous projects and knowledgeable personnel are used by Construction
management in formulating a program for new projects.
Kellogg and its subsidiaries throughout the world own over $4 million of construction equipment at
new cost value. The facilities for repairing and storing equipment between assignments are
maintained at South Houston, Texas and Wigan, England.
The technique of using field man-hours as its basic cost-control mechanism was developed by
Kellogg for its lump-sum business. The method proved so valuable, it now is used on all jobs. It
provides an accurate picture of labor costs and construction progress at any date. Each construction
job is analyzed in terms of unit functions. From feedback from many construction projects, the
man-hours required for each function have been established as "budget units." The quantities
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associated with each of these units multiplied by the budget-unit value make up the total man-hour
requirement for each such aggregation of units. Budget units are assigned to all measurable units of
work in order to develop a man-hour budget for the entire job, thus providing an objective basis for
assessing costs and progress at any point in time.
After field activity starts, Construction management predicts total man-hours and costs, which are
measured against established budgets at weekly intervals. These totals are published monthly.
Before any predictions are made, the job is studied thoroughly to determine the effect of actual site
conditions on labor conditions and costs to complete the project.
During the engineering phase, a "Path of Construction" is developed based on anticipated material
and equipment delivery lead times and erection time of major items. When the Path of Construction
has been formulated, a Preferred Delivery Sequence List is prepared to assist the Engineering and
Procurement Departments in scheduling their work to best suit construction objectives. Thereafter,
inter-departmental liaison is continuous to insure efficient progress.
Job schedules are based on the man-hours required to accomplish each task. Construction maintains
a staff that breaks down schedules developed by Kellogg's Scheduling Department into separate
units. Construction's staff assigns man-hours and calculates time spans for each unit job. These
specific schedules depend in part on field deliveries, handled by Procurement, and drawing
deliveries, from Design Engineering.
Labor
Kellogg maintains a high work-continuity rate. The company has labor agreements, covering the
United States and Canada, with international offices of all major unions concerned with
construction. Kellogg also negotiates labor agreements for individual projects, when the situation
warrants.
At the local level, labor relations are a major function of the resident managers. Kellogg's labor
relations group in Houston provides experience, advice and assistance in reaching quick agreements
on potential jurisdictional and labor practice problems.
The labor relations manager holds a pre-job conference, attended by the resident manager and by
both local and national union representatives, to prevent potential problems.
Start-up
Near the end of construction, Operating personnel make a "built-as-per-design" check at the
construction site. They assist Construction personnel in pre-commissioning including such
unit-preparation activities as line and vessel flushing, catalyst loading and rotating-equipment
checkout.
Commissioning, or start-up, of a plant is the primary responsibility of Operating personnel. They
turn on the plant circuit by circuit, bringing in all utilities (air, electricity, steam and water). Slowly,
they bring the unit up to specifications and to capacity.
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Kellogg Operating personnel develop and conduct training programs for client operators. These
programs include both formal and on-the-job training, including emergency procedures. Also, if
operating problems arise on completed projects, Kellogg provides assistance when requested by
clients and former clients.
Technical Services personnel act as "watchdogs" during start-up, as field Operating personnel handle
the actual commissioning.
When the end product is being produced to specifications and in quantity, the plant is turned over
to the client.
FORD DEPARTMENT
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ANNUAL REPORT 1972
GILBERT ASSOCIATES, INC.
GERALD R. FORD
Financial Highlights
Gilbert Associates, Inc. and Subsidiary
1972
1971
Total Revenues
$35,259,986
$27,921,730
Net Income
2,413,265
1,974,822
Earnings per Share
1.44
1.19
Dividends per Share
.338
.325
Book Value per Share
7.49
6.24
ig-Term Debt
4,414,844
2,138,026
Shareholders' Equity
$12,561,767
$10,396,833
Return on Average Shareholders' Equity
20.9%
20.5%
Return on Average Total Capital
16.8%
17.3%
GILBERT ASSOCIATES, INC.
Mailing Address
P.O. Box 1498, Reading, Pennsylvania 19603
Offices
525 Lancaster Avenue, Reading, Pennsylvania
Telephone (215) 376-3873
Morgantown Road, Green Hills, Pennsylvania
Telephone (215) 775-2600
1700 Market Street, Philadelphia, Pennsylvania 19
Telephone (215) 564-0832
439 Cottage Street, Springfield, Massachusetts 011
Telephone (413) 785-1954
PMB 5259, Ibadan, Nigeria
Subsidiaries
GAI-Tronics Corporation
340 Morgantown Road, P.O. Box 31
Reading, Pennsylvania 19603
Telephone (215) 376-2848
Commonwealth Services Inc.*
300 Park Avenue
New York, New York 10022
To our Shareholders
Telephone (212) 935-2700
Commonwealth Associates Inc.*
1972 can best be described as a very busy,
209 E. Washington Avenue
Jackson, Michigan 49201
event-filled year of continued growth and
Telephone (517) 787-6000
prosperity. Consolidated revenues increased 26%
*Acquired February 1973; Not included in financial statemer
from $27,921,000 in 1971 to $35,260,000. Earnings
rose from $1,974,800 to $2,413,200; up 22%
resulting in a per share increase from $1.19 to $1.44
Annual Meeting-May 4, 1973, 11:00 A.M. E.D.T.
(adjusted for the 2 for 1 stock split of May, 1972.)
at Gilbert Associates, Inc. Green Hills Building,
Morgantown Road, Green Hills, Pennsylvania.
The backlog of work under contract increased from
Transfer Agent and Registrar-Irving Trust
$43,600,000 at year-end 1971 to $67,800,000 at
Company, One Wall Street, New York, New York.
December 31, 1972. Significant new commitments are
reviewed in the brief division reports which follow.
The second building at our Green Hills location was
fully operational by late summer, relieving the
crowded conditions imposed by our continued
growth in personnel. The permanent staff increased
during the course of the year from 1426 to 1685
(18%). Recruiting continues to be a major effort
with outstanding requests for personnel averaging
over 150 in recent months.
Negotiations with Computer Sciences Corporation
in late fall resulted in the signing of a memorandum
of understanding on December 21 for the purchase
of Commonwealth Services, Inc. and its subsidiaries.
In past years it has been customary to illustrate out
Closing took place on February 28, 1973. The
photographs of major projects engineered and desi
combined family of companies as of that date was
But our projects are really the products of the talen
employees. The illustrations on the pages which fo
comprised of approximately 2700 personnel.
on Gilbert's greatest resource
its people. Rodin
Those familiar with the engineering fraternity
background for our people to exemplify their thou
serving the utility industry will recognize
contribution to the success of our Company.
Commonwealth as a long established firm with an
excellent reputation in the design of conventional
power plants and transmission and distribution
systems. The primary engineering group,
Commonwealth Associates, Inc., located in
Jackson, Michigan, serves the east-central area of
the United States, adding geographic diversity to
the other basic advantages of increased size and
capability of the combined firms.
A joint marketing effort resulted in a commitment
for the initial design phases of an 1100 MW nuclear
plant for Commonwealth quite recently; an excellent
example of the synergism we envision as resulting
from the joining of the two firms.
Continued growth is the key phrase describing the
outlook for 1973. Commonwealth has begun a
50,000 sq ft addition to the 195,000 sq ft Jackson,
Michigan office. Gilbert's subsidiary, Gai-Tronics
is rapidly outgrowing its facility in Reading. A new
17 acre site is currently under negotiation and plans
are underway to complete a new 40,000 sq ft plant
within a year. It also appears likely that a further
expansion of corporate headquarters at Green Hills
must be committed before the end of 1973.
Our opportunities for service are numerous and
many-faceted. The management of our combined
companies, with the continued support of our
shareholders and the dedication of our employees,
is committed to making the most of them.
J. R. Stoudt
May, 1973
Utilities Division
The electric utility industry trend toward nuclear
generation as a prime means to meet increasing
world-wide demands for electrical power is reflected
in a review of our major projects during 1972.
Under design were six domestic nuclear units
totaling 5,910,000 KW (kilowatts) and four
overseas nuclear units comprising 3,615,000 KW,
which in total amounted to over 70 percent of our
design workload. During the year, the Division
began work on its first two BWR (boiling water
reactor) designs and, as part of a balance of plant
optimization study, its first HTGR (high
temperature gas-cooled reactor) design. All other
nuclear units in design or under construction are
the PWR (pressurized water reactor) type.
Although utilities will be placing greater reliance
on nuclear power, fossil units will continue to be
required for some time. Six domestic fossil fueled
units, including a combined cycle unit, were under
design in 1972. These fossil units totaled 3,640,000
KW and were all oil fired. Due to the balance of
payment problems and the rapidly rising price of oil,
the Division expects a resurgence of coal fired plants
and intends to be active in the design of
such facilities.
Nuclear and fossil, domestic and foreign generation
projects under design totaled more than 13,000,000
KW (13,000 MW).
Plant startups in 1972 consisted of two units whose
ratings totaled 1000 MW, both of which were
domestic and fossil fueled. In addition, a 240 MW
combustion turbine plant began operation,
providing peaking power to the client company.
Five other combustion turbine units, all rated at
about 20 MW, were also installed.
A highlight of the Utilities Division's Transmission/
Distribution activities during the year was
completion of construction on the new double
circuit 500 KV (kilovolts) transmission towers
designed by the Division, the first of their type in
the nation. Connecting our client with an adjacent
utility, these towers carry pairs of lines that
previously had to be carried on two separate towers.
As a result, land requirements for rights-of-way
were significantly reduced.
Construction Services Division
Since environmental regulations are encountered
at the earliest stages of design, changes in the
regulations can affect a project beginning
construction or even when construction is well
underway. Three major projects which were
scheduled to begin construction in 1972 are
experiencing licensing delays. They are two 600
MW fossil units, one 260 MW combined cycle
unit and a 21/2 mile EHV transmission line spanning
the Delaware River. Construction of all three
projects is tentatively scheduled to begin in
mid-1973.
Environmental regulations delay some projects and
give impetus to others. Construction management of
air pollution control projects for several electric
utility clients increased in 1972, a trend which is
expected to continue.
Four major Construction Management projects
were completed during the year: a 400 MW fossil
unit, a 600 MW fossil unit, a 240 MW combustion
turbine station consisting of four 60 MW units, and
a transmission project consisting of three 500 KV
lines and a 230 KV line.
In order to better assist clients in cost control on
capital projects, a Computerized Construction
Management System was developed in 1972 in
conjunction with the Computer Applications
Division. This system combines a number of
separate computer routines, such as construction
accounting, cost estimating, scheduling, and cash
flow, into a comprehensive management system.
The Division's Safety Services Department,
involved primarily with electric utility clients, is
proceeding to penetrate the remainder of the
industrial market. Strict enforcement of the
Occupational Safety and Health Act (OSHA)
should spur a demand for the wide range of safety
consulting and engineering services offered by the
Division.
Industrial Division
Industrial environmental protection projects
continued to increase during 1972 in the areas of
both wastewater treatment and air pollution control.
The projects were initiated for a full range of
manufacturing industries, including non-ferrous
metals, food processing, automotive, pulp and
paper, and chemical processing. Wastewater
treatment projects during the year numbered 38 and
air pollution control assignments 21.
With rising industrial concern about fuel shortages
and rapidly increasing energy costs, the division
completed several major energy conversion studies
that are expected to lead to design projects during
1973 in the steel, automotive and paper industries.
The energy conversion projects include resource
recovery and utilize industrial solid or gas wastes,
such as packing wastes, wood chips and by-product
gases for fuel in a combination disposal and steam/
electric generation facility.
The Division received two of the five U.S. Army
Corps of Engineers' contracts awarded to Gilbert
following the flood caused by Tropical Storm Agnes.
These involved engineering to restore the 18 miles
of Wyoming Valley levee system to pre-flood
condition. The Valley includes Wilkes-Barre,
Pennsylvania and some of the other communities
most damaged by the flood.
Industrial boiler projects remained a strength,
especially in the steel, chemical and food processing
industries. The Division's proven ability to achieve
optimum energy balance (maximum fuel to energy
conversion efficiency) in boiler system design is
expected to result in continuing project assignments.
Other activities of the Division included the
completion of final design for an automated single
base propellant plant contracted for the U.S.
Government.
Sewage system design work increased in 1972 as
municipalities began to comply with the Federal and
State Governments' higher sewage treatment
standards. The division is working on expansion or
upgrading of facilities in 12 communities and new
facilities for 4 others, which, when totaled, will be
capable of serving 250,000 people. The new
facilities under design are characterized by a trend
towards tertiary treatment and regionalization,
Environmental Divis
where a group of municipalities join to more
effectively use their available resources and to gain
priority for federal funding.
While most Federal money is designated for water
pollution control projects, continued population
increases will require new or expanded potable
water supply systems. The past year saw the startup
of our Ibadan, Nigeria water supply project serving
a population of 2 million, and the beginning of
construction of a water supply system here in the
United States, which could ultimately produce
20 MGD (million gallons a day) for more than
100,000 people.
In the wake of Tropical Storm Agnes and the
resulting "Great Flood of 1972," the Division was
awarded three separate contracts by the U.S. Army
Corps of Engineers, in addition to two contracts
received by the Industrial Division. These flood
damage and flood protection studies provide the
basis for offering Flood Plain Management as a new
service available to concerned municipalities.
The Division's solid waste management contracts
during 1972 involve the concepts of both
regionalizing and recycling. Design work included
4 regional sanitary landfills for solid waste disposal-
2 of which have received permits and are in operation.
Presently, efforts are underway to integrate the
boiler expertise of the Industrial Division with the
solid waste management services presently offered,
resulting in an energy recovery system that provides
electricity or steam as a by-product of solid waste
disposal, while recycling valuable resource materials.
Since site selection has become an environmental
issue, the Division's Planning Group has received
increasing work from industrial and utility clients
for site selection studies and preparation of
environmental impact statements. In addition, the
group currently has 11 comprehensive plans for
communities in Pennsylvania in various stages of
completion.
"There were 2 new operations consulting clients
added in 1972, bringing the total clients thus served
to 36. The Operations Consulting group is involved
in sewage rate evaluations and recommendations,
in addition to assisting municipalities with the day
to day operations of treatment plants. An Industrial
Waste Surcharge Study prepared by the group for
the City of Reading resulted in a formula that
equitably charges companies for discharging high
strength wastes into the sewage system. It is expected
that many other municipalities will place implement
surcharges on industrial wastes in the near future.
J
GILBERT ASSOCIATES, INC. AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended December 31, 1972 and 1971
1972
1971
Income:
Engineering and consulting revenue
$32,062,377
$25,309,772
Communication equipment sales
3,197,609
2,611,958
35,259,986
27,921,730
Costs and expenses:
Engineering and consulting costs
20,332,438
16,297,334
Communication equipment costs
1,634,436
1,369,614
Selling, general and administrative expenses
6,996,468
5,105,158
Depreciation and amortization
293,240
176,703
Interest expense
200,322
119,400
29,456,904
23,068,209
Income before provision for taxes on income and minority interest
5,803,082
4,853,521
Provision for taxes on income, currently payable:
Federal (Note 1)
2,346,319
1,976,554
State
670,603
584,340
Foreign
16,331
44,328
3,033,253
2,605,222
Income before deduction for minority interest
2,769,829
2,248,299
Minority interest in subsidiary's income (Note 1)
356,564
273,477
Net income
2,413,265
1,974,822
Retained earnings, January 1
5,884,180
4,449,754
8,297,445
6,424,576
Cash dividends (per share of Class A and Class B common stock:
1972, $.338 and 1971, $.325)
565,465
540,396
Retained earnings, December 31
$ 7,731,980
$ 5,884,180
Net income per average number of shares of Class A
and Class B common stock outstanding during the year (Note 5)
$1.44
$1.19
The accompanying notes are an integral part of the financial statements.
GILBERT ASSOCIATES, INC. AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
for the years ended December 31, 1972 and 1971
1972
1971
Source of funds:
From operations:
Net income
$2,413,265
$1,974,822
Items not requiring funds:
Depreciation and amortization
293,240
176,703
Minority interest in subsidiary's income
356,564
273,477
Funds provided from operations
3,063,069
2,425,002
Net proceeds from sale of common stock
320,534
112,878
Increase in long-term debt
2,442,054
1,300,000
Other, net
5,894
16,478
$5,831,551
$3,854,358
Use of funds:
Expenditures for property, plant and equipment
3,711,492
1,574,988
Decrease in long-term debt
165,236
105,867
Cash dividends (including dividends paid by subsidiary to minority stockholders)
691,700
661,776
*Increase in working capital
1,263,123
1,511,727
$5,831,551
$3,854,358
*The increase in working capital is accounted for by the following:
Increase in cash and short-term investments
164,083
347,280
Increase in accounts receivable and unbilled revenue
970,359
1,181,918
Other changes, net
128,681
(17,471)
$1,263,123
$1,511,727
The accompanying notes are an integral part of the financial statements.
GILBERT ASSOCIATES, INC. AND SUBSIDIARY COMPANY
CONSOLIDATED BALANCE SHEET
December 31, 1972 and 1971
1972
1971
ASSETS
Current Assets:
Cash
$ 1,108,003
$ 1,096,542
Short-term investments, at cost and accrued interest (approximates market)
753,534
600,912
Accounts receivable
4,839,519
3,882,898
Unbilled revenue
3,470,679
3,456,941
Inventories, at lower of average cost or market:
Finished goods
150,195
129,056
Work in process
138,436
95,183
Materials and parts
376,407
293,268
Other current assets
209,581
252,434
Total current assets
11,046,354
9,807,234
Property, plant and equipment, at cost (Notes 2 and 3)
Land
313,482
224,377
Buildings
6,714,213
3,437,534
Furniture and equipment
1,942,112
1,491,897
Leasehold improvements
10,818
286,538
8,980,625
5,440,346
Less accumulated depreciation and amortization
1,005,873
874,552
7,974,752
4,565,794
Excess of cost of investment in subsidiary over equity
in net assets at date of acquisition (Note 1)
539,754
539,754
$19,560,860
$14,912,782
The accompanying notes are an integral part of the financial statements.
LIABILITIES
1972
1971
Current liabilities:
Accounts payable
$ 578,479
$ 554,434
Federal, state and foreign income taxes
534,078
637,385
Accrued expenses
162,090
166,382
Contractual billings in excess of recognized revenue (Note 1)
117,874
131,421
Current maturities of long-term debt (Note 3)
155,025
81,927
Total current liabilities
1,547,546
1,571,549
Long-term debt (Note 3)
4,414,844
2,138,026
Contingencies (Note 4)
Minority interest in subsidiary (Note 1)
1,036,703
806,374
STOCKHOLDERS' EQUITY
Capital stock (Note 5):
Class A common stock, nonvoting, par value $1 per share:
Authorized: 3,000,000 shares;
Issued: 1972, 1,299,489 shares-1971, 629,492 shares
1,299,489
629,492
Class B common stock, voting, par value $1 per share:
Authorized: 3,000,000 shares
Issued and outstanding: 1972, 377,829 shares-1971, 203,838 shares
377,829
203,838
Capital in excess of par value (Note 5)
3,155,869
3,679,323
Retained earnings
7,731,980
5,884,180
12,565,167
10,396,833
Less 100 shares of Class A common stock held in treasury, at cost
3,400
-
12,561,767
10,396,833
$19,560,860
$14,912,782
The accompanying notes are an integral part of the financial statements.
Notes to Consolidated Financial Statements
2. Acquisition of Assets of Gai Realty Corp:
In September 1972, the company purchased land and an
office building from Gai Realty Corp. for $650,000 in cash. All
of the assets purchased were previously being utilized by
the company under long-term lease agreements.
3. Long-Term Debt:
Long-term debt at December 31, 1972 consists of the
following obligations for which land and buildings with a
net book value of $6,303,858 are pledged as collateral:
1. Accounting Policies:
Principles of Consolidation: The consolidated financial
Gilbert Associates, Inc.:
statements include the accounts of the company and its
$38,346 due monthly to 1987, with decreasing
subsidiary. The company owns all of the outstanding
amounts payable to 1992, including
Class A voting stock of Gai-Tronics Corporation, the
interest at rates not exceeding 71/4%
$4,531,397
subsidiary, and 20% of its outstanding Class B nonvoting
Gai-Tronics Corporation, $852 due monthly
stock. The excess of cost of investment in the subsidiary
to 1977, including interest at 6½
38,472
over equity in net assets at the date of acquisition is not
Total long-term debt
4,569,869
being amortized since, in the opinion of management,
Less portion due within one year included
there has been no decrease in value.
in current liabilities
155,025
$4,414,844
Recognition of Revenue: The company recognizes revenue
on contracts entered into for engineering and consulting
4. Litigation
services as the work is performed. Costs and expenses are
On May 3, 1972, the company was made a third party
charged to operations as incurred. Losses, estimated to be
defendant in an action brought by an electric utility
sustained upon completion of contracts, are charged to
company against the manufacturer of equipment for a
income in the year such estimates are determined.
project for which the company provided engineering
services. The utility is seeking approximately $10,000,000 of
Depreciation and Amortization: The companies provide for
actual damages and approximately $20,000,000 of punitive
depreciation principally on the straight-line composite
damages from the manufacturer. In the Third Party
method utilizing the guideline lives suggested by the U.S.
Complaint, the manufacturer seeks to have the company
Treasury Department. Amortization of leasehold
made liable for whatever amount may be recovered by the
improvements is over the lives of the leases or useful lives,
utility from the manufacturer plus $300,000. The company
whichever are shorter.
denies any negligence as engineer on the project and plans
to defend the action by appropriate methods.
Retirement Income Plan: The company and its subsidiary
maintain a noncontributory trusteed Retirement Income
Local trial counsel for the company advises that the
Plan covering substantially all employees. Pension plan
company's maximum exposure to liability under the Third
expense charged to consolidated income for the years 1972
Party Complaint is approximately $10,517,000. The company
and 1971 amounted to $780,464 and $637,350, respectively.
has professional liability insurance in the amount of
These amounts include current service cost and
$10,500,000 for personal injuries or property damage
amortization of prior service cost over a 30-year period.
suffered as a result of an accident caused by any
The company's policy is to fund pension cost accrued
negligence on its part. The company's insurance carriers
under this plan. The assets of the plan exceed the
are providing a defense but reserving any rights they may
actuarially computed value of vested benefits under the plan
have based upon matters which are not within the terms
at December 31, 1972. The consolidated unfunded prior
and provisions of the policies and endorsements. At this
service liability at December 31, 1972, was approximately
time, the company is unable to ascertain whether or not
$1,020,000.
it could potentially have any material uninsured liability.
Investment Tax Credits: Investment tax credits are
The company is involved in other pending litigation arising
recorded as a reduction of the provision for federal taxes
in the ordinary course of business as to which, in the
on income in the year allowable for tax purposes. Such
opinion of management, no material liability affecting the
credits were $98,627 in 1972 and were immaterial in
company's financial condition or the results of its
amount in 1971.
operations is expected to result.
5. Capital Stock and Capital in Excess of Par Value:
The changes in capital stock and capital in excess of par
value during 1972 and 1971 were as follows (the number
of shares of common stock is equivalent to the dollar
amount changes since par value is $1 per share):
Common Stock
Class A
Class B
Capital in Excess
Nonvoting
Voting
of Par Value
1972
1971
1972
1971
1972
1971
Balance at beginning of year
$629,492
$625,430
$203,838
$205,160
$3,679,323
$3,569,185
Sale of common stock
8,452
2,740
312,082
110,138
Conversion of stock, net
30,974
4,062
(30,974)
(4,062)
Two-for-one stock split effected in the
form of a 100% stock dividend
639,023
196,513
(835,536)
Balance at end of year
$1,299,489
$629,492
$377,829
$203,838
$3,155,869
$3,679,323
No holder of Class B stock (Class B stockholders must be
active employees of the company) may sell or transfer
such stock until first having extended an offer of sale to
the company. Except for the voting privileges, the Class A
FORD
and Class B common stock are identical. On February 25,
1972, the authorized common stock of the company was
GERALD
increased to 3,000,000 shares of Class A common stock
THRAKE
and 3,000,000 shares of Class B common stock, prior to a
two-for-one stock split effected in the form of a 100% stock
dividend. At no time may the combined issued and
outstanding shares of Class A and Class B stock exceed
3,000,000 shares.
6. Subsequent Event-Acquisition of
Commonwealth Services Inc.
the 52 weeks ended March 31, 1972, and the 39 weeks
On February 28, 1973 the company acquired all of the
ended December 29, 1972, revenues were $20,066,000 and
outstanding stock of Commonwealth Services Inc.,
$16,308,000 and net income was $1,405,000 and $1,122,000
a wholly-owned subsidiary of Computer Sciences
respectively.
Corporation, for $15,000,000 in cash (proceeds of a bank
loan) and a 6% convertible subordinated debenture in the
In 1973 the company intends to issue additional shares of
principal amount of $9,000,000. This acquisition will be
Class A common stock in order to repay the $15,000,000
accounted for by the purchase method whereby the
loan. Based upon the average market price of such stock
purchase price will be allocated to the net assets acquired.
during February 1973, approximately 400,000 shares would
The excess of cost of investment over net assets
have to be issued to realize net proceeds equivalent to
at date of acquisition will be ratably charged to operations
the bank loan. Had the acquisition been made as of
over the succeeding forty years.
January 1, 1972, and had the 400,000 additional shares of
Class A common stock been outstanding, consolidated
Commonwealth is a design engineering firm providing
revenues and net income on a proforma basis (unaudited)
services principally in the electric utility field. Audited
would have approximated $57,118,000 and $3,510,000 ($1.69
financial statements of Commonwealth reflected net assets
per share), respectively, for 1972. Had the debenture been
of approximately $7,768,000 at December 29, 1972, including
converted to Class A common stock at January 1, 1972,
working capital of $2,662,000. Net assets of Commonwealth
the proforma net income per share (unaudited) would
at the date of acquisition approximated $7,096,000. For
have approximated $1.63.
Report of Independent Certified Public Accountants
To the Stockholders and Board of Directors
Gilbert Associates, Inc.
We have examined the consolidated balance sheet of Gilbert Associates,
Inc., and subsidiary company, as of December 31, 1972 and the related
consolidated statements of income and retained earnings and changes
in financial position for the year then ended. Our examination was made
in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such
other auditing procedures as we considered necessary in the
circumstances. We made a similar examination of the consolidated
financial statements for the year ended December 31, 1971.
In our opinion, subject to the outcome of litigation described in note 4,
the aforementioned statements present fairly the consolidated financial
position of Gilbert Associates, Inc., and subsidiary company at
December 31, 1972 and 1971 and the consolidated results of their
operations and the consolidated changes in their financial position for
the years then ended, in conformity with generally accepted accounting
principles applied on a consistent basis.
Lybrand, Ross Bros. & Montgomery
Philadelphia, Pennsylvania
February 9, 1973
Note 6 as of February 28, 1973
Thousands of dollars
2500
Netincome & Dividends
2000
1500
Income
1000
500
Dividends
1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972
Millions of dollars
A
B
C
D
36
Revenues
Source of Income in 1972
32
:
A Private Industry in the U.S.-73.7%
28
B Foreign Industry and Foreign
Governmental Agencies-17.6%
24
C Municipal and Other Local Authorities
in the U.S.-5.7%
20
D Federal Governmental Agencies-3.0%
16
12
8
4
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1750
Employee Growth
1500
1250
A
BCDEFG
1000
Use of Income in 1972
FORD
750
A Payroll and Fringe Benefits-59.0%
give.
500
B Other Operating Expenses-17.8%
c Taxes and Depreciation-10.1%
250
D Retained Earnings-5.2%
E Outside Services-3.7%
F Rentals-2.6%
year end
1965
1966
1967
1968
1969
1970
1971
1972
G Dividends-1.6%
TEN YEAR SUMMARY
GILBERT ASSOCIATES, INC. AND SUBSIDIARY
1972
1971
1970
Results for the Years
Total Revenue
$35,259,986
$27,921,730
$23,818,750
Income Before Income Taxes
and Minority Interests
5,803,082
4,853,521
3,822,600
Federal, State and Foreign Income Taxes
3,033,253
2,605,222
2,057,784
Minority Interests
356,564
273,477
205,683
Net Income
2,413,265
1,974,822
1,559,133
Dividends Paid
565,465
540,396
456,825
Year-end Position
Working Capital
9,498,808
8,235,685
6,723,958
Property, Plant and Equipment, Net
7,974,752
4,565,794
3,183,987
Long-term Debt
4,414,844
2,138,026
943,893
Retained Earnings
7,731,980
5,884,180
4,449,754
Shareholders' Equity
12,561,767
10,396,833
8,849,529
Per Share of Common Stock
Income Before Income Taxes
and Minority Interests
3.47
2.92
2.31
Federal, State and Foreign Income Taxes
1.81
1.57
1.24
Minority Interests
.21
.16
.13
Net Income
1.44
1.19
.94
Dividends to Shareholders
.338
.325
.275
Shareholders' Equity (Year-end)
$
7.49
$
6.24
$
5.33
Miscellaneous Data
Number of Employees
1,685
1,426
1,200
Shares Outstanding (Year-end)
1,677,218
1,666,660
1,661,180
Shareholders of Record (Year-end)
1,146
834
875
182
193
209
219
279
469
955
11105'956
1,194,720
1,190,520
11188,72
1,188,720
11302,18
1,661,180
394
440
547
674
816
934
1,099
1.20
$
1.26
$
1.46
$
1.84
$
2.16
$
2.58
$
4.67
$
*0835
.125
200
220
220
.24
.275
60'
229
.42
.55
151
99'
6L'
90'
60'
80'
.11
.15
.18
.16
.17
888
d4
.64
99'
98'
1.24
33
9L
86'
1.30
1.31
1.59
2.19
1,321,250
1,503,820
1,730,726
2,1877087
2,560,422
3,353,163
7,747,221
11154'481
11215'131
11449137
2,282,015
2,660,903
3,347,446
608'209
900,685
96L'698
166,044
145,469
192,583
264,136
1,283,089
1,967,295
982'04
1,254,299
1,493,276
1,869,714
2,364,977
3,000,157
6,651,743
99,626
146,534
238,223
237,636
237,744
306,184
376,050
98'76
3496'95
492,127
6476644
308'773
685,072
1,062,593
644912
101,472
96,862
132,709
178,466
217,086
215,903
1882199
4592175
574,951
761,338
762'480
1,061,504
1,663,680
345,856
903'612
111636,04
1,541,691
15549,71
1,963,662
22942'16
55072'452 $
9'323'866 $
7,801,293 $
98838,345 $
$12,985,021
$16,725,303
170,972
1963
1964
1965
1966
1967
1968
1969
Management Consulting Division
As business decisions become more complex and
involve increased financial commitments, this
Division responds to high level corporate problems
of client company management with a variety of
specialized services, many of which are directed
specifically to the electric utility industry.
The continuing trend nationally of utility rate
regulatory and other commission problems has
accelerated the development of key members of a
portion of the Division's staff as professional
witnesses to provide expert testimony on behalf of
clients before court and regulatory agencies.
The Division has developed its depreciation,
valuation and cost of service activities in depth.
During the year it undertook both rate of return
and antitrust assignments. Its expertise is being
recognized by an increasing number of utility and
industrial clients. Gilbert's client companies,
through use of these services, participated in some
20 rate relief applications with state and federal
commissions in the past year. To accomplish this,
there were significant increases in the staffs of the
five departments concerned.
In 1972 the Division continued its development and
adaption of EDP systems designed to enhance its
traditional services of providing client management
with information upon which to make decisions. The
key to these systems is speed and flexibility-
enabling computer routines to be custom fitted to
client needs, yet retaining sufficient standardization
to minimize the cost to the client. EDP systems have
been developed for depreciation and valuation
analyses, financial modeling, cost of service studies
and accounting systems.
Most services of the Division are available
internationally, and, during 1972, those most active
overseas were those relating to accounting systems
and financial modeling. Projects in these areas
were conducted during 1972 in Taiwan and the
Philippines.
In addition to assistance provided utility and
industrial clients, the Division, through its
Transportation Services Department, is becoming
involved with problems of municipal and regional
transit systems in planning for the advent of the
rapid transit and mass transit needs of urban
centers and urban fringe areas.
Advanced Development Projects
A recent addition to the corporation, this
organization is charged with the responsibility of
promoting corporate growth through the
development of new engineering/consulting
services, processes, products and markets. The
initial effort has been in the development of
advanced technology for economically converting
coal energy into electric energy by means of
environmentally clean processes.
As a result of this effort, the Fuels Technology
Group received a contract to provide the U.S.
Department of the Interior's Office of Coal Research
(OCR) with technical and engineering services
directed toward development of commercially
attractive processes for the conversion of coal to
electric power. Functioning as an extension to the
OCR staff, the group is responsible for technical
and economic review and evaluation of applicable
work performed under OCR authorization, and for
making recommendations for channeling efforts
into areas holding greatest potential for success of
the overall program. Emphasis presently is being
placed on the areas of low Btu gasification systems,
combined and advanced cycles, magnetohy-
drodynamics (MHD) and fuel cells.
Computer Applications Division
The Computer Applications Division applies the
systems approach to diverse industrial and
environmental situations, utilizing the computer as
part of the plant operating system or as a monitor
of environmental conditions.
Two of the jobs received in 1972 apply the systems
approach to steel production plants. The first is a
power demand control and dispatch center real time
computer system, and includes purchase of
hardware, debugging, and supervision of
installation. Approximately 300,000 KW of power
will be economically apportioned by the computer
among the various steel plant facilities.
The second project for the steel industry involves
preparation of specifications for a real time billet
tracking and identification system for a primary
mill. It will involve operator cathode ray tube
displays, keyboard inputs, billet marking and
outputting of hard copy reports.
In the environmental systems area, the Division is
developing services in batch and real time
management and monitoring of water resources
and supply systems, air basins and waste effluents.
Central Division
Just as the service industries nationally are
The Systems group, maintaining a separate
experiencing rapid growth, the service departments
computer center, continues to handle Gilbert's
grouped within this Division are growing to serve
internal financial, accounting and production control
the expanded needs of our engineering staff and
services, and has been expanding its list of outside
clients.
clients for retail merchandising, inventory control,
Since quality assurance became mandatory for
and accounting services.
nuclear power plants several years ago, the
As design projects become more complex, Gilbert
responsibilities of the Division's Quality Assurance
contracts are frequently including authorization to
Department have increased at a tremendous rate.
construct scale models for three dimensional
Charged with assuring that plant designs are
visualization. During the past year the Division's
constructed to specifications, the vigilance of the
Model Shop assisted the engineering staff with
quality assurance function is helping our clients to
several such assignments, including structural
assure that a high degree of safety and reliability is
assembly and piping layout models for generating
incorporated into the design and construction of
plants.
nuclear power plants. The Division is performing
Increased environmental concerns of regulatory
quality assurance on all domestic nuclear projects
agencies has initiated a trend toward use of
designed by Gilbert. Similar work is being done on
topographic models, often detailing entire counties
two 800 MW domestic fossil units that are
or larger geographic areas. As a result, the Model
currently under design.
Shop was called upon to construct several regional
Another rapidly growing area within the Division
topographic models for use in environmental
is the technical writing group, which is providing
planning work.
assistance to our engineering staff beyond the
One of the most intriguing projects completed in
strictest sense of technical writing. Most of the
1972 was a full scale model of a reactor coolant
assistance involves problems peculiar to nuclear
pump motor, measuring 28 ft. high and weighing
power plants, such as licensing, test procedures and
approximately one ton. Accurate in every detail, the
system descriptions.
model was used at a nuclear plant construction site
During 1972, the Division's Laboratory performed
to determine procedures for installation of the
many residential water analyses following the
actual motors.
flooding conditions locally in the aftermath of Trop-
ical Storm Agnes. In addition, it has been receiving
an increasing amount of analysis work from the
Industrial Division as part of various pollution
control projects.
In another area of activity, the Division's
Engineering Data Processing group began using a
new computer in 1972, the IBM 370 Model 155.
This computer has a larger memory and can work
at three to four times the speed of our previous
IBM computer, offering significant advantages to
the group in its engineering problem solving tasks.
GAI-Tronics Corporation
With increased industry-wide concern about
improving safety, security and efficiency in
operations, the ability to* directly communicate by
voice throughout work areas has rapidly gained
importance.
To help meet industry's diverse requirements,
GAI-Tronics Corp. continued to expand its product
line of high performance voice communication
equipment during the year. Principal additions
consisted of a Mine Page Phone bearing U.S.
Bureau of Mines Permissible Rating, a new five
tone Multi-Tone Generator, and an Inductive Loop
Paging System.
The Mine Page Phone is used principally as a
communication device for underground mines. It
consists of a self contained unit containing a
handset, amplifier, speaker and battery combination
using complete solid state circuitry. Large numbers
of these units can be connected together by means
of a two conductor cable thus permitting speaker
paging of all units and separate voice communication
via the microphone and receiver in the handset.
This device is also being used at construction sites
and within the plant complex where a self contained
portable unit is desired.
The Multi-Tone Generator also uses solid state
circuitry entirely and now embodies five separate
and distinct alarm or signalling tones for use as an
operational or alarm system.
The Inductive Loop Paging System is finding
principal usage as a result of OSHA (Occupational
Safety and Health Act of 1970) regulations that
limit the amount of time that personnel may work
in areas having noise levels exceeding 90 dB. The
sound barriers associated with the headset reduce
the noise level impinging on the user's ears and
also have a small audio receiver built into them so
that a paged signal can be heard.
Corporate Philosophy
To consistently provide professional services of
the highest quality in all areas of our competence.
To always serve with integrity, the best interests
of our clients and society.
To seek fair compensation for services rendered
but in no way permit profit or loss to influence
the character or adequacy of the work performed.
To foster an atmosphere which permits employees
to attain the highest degree of fulfillment
consistent with their talents.
To merit and reward the confidence of our
shareholders to the fullest extent possible within
the framework of the preceding tenets of corporate
philosophy.
Officers and Directors
James R. Stoudt*
President
Herbert C. Schweikart*
Executive Vice President
H. Leon Frantz*
Vice President and Treasurer
Robert H. Laws*
President,
Commonwealth Services Inc.
Augustus M. Minton*
Executive Vice President,
Commonwealth Services Inc.
Edward M. Davis*
Vice President
Edward C. Edgar*
Vice President
Robert E. Frick
Vice President
Alexander F. Smith*
Vice President
Bruce A. Berlin*
Staff Counsel and Assistant Secretary
Patrick M. Politz
Controller
Dorothy M. Haas
Secretary
*Board of Directors
GriertAssocias.Inc/engers and consultants
MA
AND
QUES
services for
the electric
utility industry
TWO 1100 MW NUCLEAR UNITS
TEN 1100 MW NUCLEAR UNIT CONCEPTUAL STUDY
1100 KV TOWER
TWO 600 MW FOSSIL UNITS
FORD LIBRARY
500 KV TOWER
serving the
electric
utility
NOW AND N THE FUTURE
industry
Man's quest frequently seems to point to
impossibilities. But dreams develop into ideas,
and ideas become the nucleus of designs
which serve man's needs.
Gilbert Associates translates ideas into designs
which serve man. Together with our
subsidiaries, we are a group of professionally
related engineering and consultant firms
organized to provide planning, design,
construction management, and management
consulting services to the electric utility
industry.
With assignments completed in every state and
in more than 30 foreign nations, our project
experience includes major power generation
facilities, extensive energy transport systems,
and complex service functions unique to the
electric utility industry.
Established at the turn of the century and
growing in scope and diversity, the combined
Gilbert/Commonwealth Companies constitute one
of the largest consulting engineering
firms in the country.
FORD & GERALD LIBRARY
Since the era of nuclear generation began,
AR
Gilbert has provided site selection,
environmental and safety reporting, design
engineering and construction management
services for single and multiple unit nuclear,
projects to 2500 MW capacity.
We are experienced in the use of various
reactor types-PWR, BWR, HTGR-under a
wide spectrum of design criteria, including
that imposed by unusual geographic,
environmental and regulatory conditions,
such as the threat of earthquakes,
hurricanes or aircraft impact.
OSSIL
For almost 70 years Gilbert has
contributed to the advancing
technology of fossil-fuel
generation. Our design
experience includes mine mouth
generating stations, oil/coal dual
fueled systems, computerized
controls and various cooling
systems.
Services range from feasibility
studies, site selection and
environmental evaluations
through engineering and design,
to full construction management,
with a complete scope of
in-house supplemental services.
Our total project capability is
directed toward systems
efficiency and reliability, with
strong emphasis on
environmental considerations.
UNID
Gilbert has been involved in the engineering design and construction
management of combined cycle units and combustion turbine
installations. We are continuing to assist our clients in making
optimum use of the units relatively quick installation time to
provide peaking capacity and fill gaps caused by delays in base
load plant construction, as well as to help lower transmission costs
via decentralization and to lower reserve requirements.
In addition, we have been active in the planning and development of
advanced cycle units to improve thermal efficiency.
Increasing loads, system reliability: and the need for
aesthetically acceptable design have brought about
new technology in the realm of transmission and
distribution. Gilbert s staff is fully versed in its
application.
Our experience includes assignments on projects.
calling for 765 KV lines and 500 KV double circuit
lines and towers, wide span river crossings, tower
spotting by computer; and selective clearing and
erosion control of right-of-way land.
New technology; similarly applied to HV and EHV
substations, has resulted in aesthetic low-profile
architecture and highly efficient modular design:
Construction
Management
Transmission
Management
Substation
Consulting
Nuclear
Safety
ENGINEERING RESOURCES
Flexibility in responding to the needs of our
clients and their projects is accomplished
Mechanical
by drawing upon our manpower reservoir
of diverse engineering disciplines and
specialties. Gilbert will select an optimum
Piping
combination of technical and management
skills to staff your project organization.
Structural
Technical
Publications
Chemical
Environmental
Regulatory
S!
GERALE FORD 1
Computer
Applications
Instrumentation
& Control
Electrical
Civil/Hydraulic
Architectural
Heating. Ventilating
and Air Conditioning
Quality Assurance
Plant Layout
Estimating
Drafting
SUPPORT SERVICES
Site Evaluation
natural characteristics
demography, access and land use
site development cost estimates
Feasibility Studies
nuclear safety analysis
economic
public reaction considerations
engineering
environmental impact
ecological
heat disposal
Architectural
generating stations
Procurement
service centers
specifications
substations
quotation requests
dispatch/control centers
evaluation of proposals
aesthetic design alternatives
recommendations to client
letters of intent
Plant Service Systems
bills of material
water supply
purchase orders
Regulatory Agency Liaison
transportation access
expediting
fuel handling
environmental reports
waste treatment and disposal
environmental impact statements
Construction Management
environmental protection
licensing assistance
construction supervision
PSAR/FSAR
resident engineering
Model
construction accounting
piping
Quality Assurance
resident inspection
structural
design audit
field liaison
HVAC
vendor inspection
labor relations
design checking
resident inspection
surveying
architectural
administrative audit and documentation
estimating and cost control
site plan
materials selection
OSHA compliance
procurement audit
FORM
topographic
contracts
display/public relations
metals joining consultation
CPM scheduling
Startup & Testing
test program development
test procedure preparation
operating procedure preparation
field startup and testing services
operations consulting services
IBM
370
SUPPORT SERVICES
Manufacturer Print Control
Laboratory
Reprographics
'endor Drawing Control
boiler water analysis
offset
centralized receiving, recording, distribution
cooling water analysis
diazo
computerized expediting
fuel analysis
xerox
ash analysis
microfilm
Management and Operations Consulting
wastewater analysis
camera
depreciation/valuation
stack sample analysis
contact
operations research
insulating oil analysis
lubricating oil analysis
Modifications
rate/regulatory
corporate financial modeling
scale analysis
stack emission controls
cost and load analysis
backfitting cooling systems
personnel training
fuel conversions
continuing technical services
waste treatment and disposal
accounting and administrative systems
coal gasification
Computer Applications
direct digital plant control
data logging
SCADA systems
environmental monitoring
dispatch and control software
Alabama Power Company
Lake Superior District Power Corp.
American Electric Power
Manila Electric Company
Service Corporation
Metropolitan Edison Company
rkansas Power & Light Company
Mississippi Power Company
Atlantic City Electric Company
Missouri Public Service Company
Baltimore Gas and Electric Company
National Electricity Board
Braintree Electric Light Company
National Power Corporation
Burlington Electric Light Company
- -The Philippines
Cambridge Electric Light Company
NEGEA Service Corporation
CFE Mexico
New Bedford Gas and
The Cleveland Electric
Edison Light Company
Illuminating Company
New Jersey Power & Light Company
Columbus and Southern
New York State Electric
Ohio Electric Company
& Gas Corporation
Comision Federal de Electricidad
Northeast Utilities Service Company
-Mexico
Northern States Power
Concord Electric Company
Ohio Edison Company
Conemaugh Owners Group
Pacific Power & Light
The Connecticut Light
Pennsylvania Electric Company
and Power Company
Pennsylvania Power Company
Consolidated Edison Company
Pennsylvania Power & Light Company
of New York, Inc.
Philadelphia Electric Company
Construccion de Centrales
Portland General Electric Company
Electricas de Pereira
The Potomac Edison Company
The Dayton Power and Light Company
Potomac Electric Power Company
Delmarva Power and Light Company
Public Service Company of Colorado
Duquesne Light Company
Public Service Electric and Gas Company
Edison Electric Institute
Public Service of New Hampshire
Electric Council of England
PJM Interconnection
Electricite de France
Rochester Gas and Electric Corporation
lectricity Corporation of Libya
Ryuku Electric Power Corporation
Empresa de Energia Electrica
-Okinawa
Empresa Nacional Calvo Sotelo-Spain
Salt River Project-Agricultural
Empresas de Municipales de Cali
Improvement and Power District
Empresas Unidas de Energia
Saxton Nuclear Experimental Corporation
Electricas de Bogota
South Carolina Electric & Gas Company
Ente Nazionale per l'Energia
Southern California Edison Company
Elettrica-Italy
Southern Company, The
Exeter and Hampton Electric
Southern Electric Generating Company
Federal Power Commission
Taiwan Power Company
Florida Power Corporation
Terminor, S.A.-Spain
Florida Power and Light Company
Tokyo Electric Power Company, Inc.
General Public Utilities Corporation
Toledo Edison
Georgia Power Company
United Gas Improvement Company
Gulf Power Company
-Luzerne Electric Division
The Hartford Electric Light Company
United Nations International
Holyoke Water Power Company
Atomic Energy Agency
Homer City Owners Group
United States Government
Iberduero, S.A.
USAID-Iran Electric Company
International Atomic Energy Agency
USAID-Lagos, Nigeria
International General Electric Company
USAID-Government of Western Nigeria
Iran-Ministry of Water and Power
Army, Department of The
Iran Electric Authority
Marine Corps
Jacksonville Electric Authority
Navy, Department of The
Jamaica Public Service Company
Corps of Engineers
Jersey Central Power & Light Company
Utilities Development Finance
PARTIAL CLIENTS
The Kansai Electric Power Co., Inc.
Corporation
arachi Electric Supply Corp., Ltd.
Wellsboro Electric Company
Kentucky Utilities Company
Western Massachusetts Electric
Keystone Owners Group
Company
Korea Electric Company
Westinghouse Electric
Kyushu Electric Power Company, Inc.
International Company
serving the
electric
utility
NOW AND IN THE FUTURE
industry
Historically, man's quest has required increasing amounts of
energy to explore the unknown and bring his dreams to fruition.
The task faced by utilities is enormous: to generate and deliver
sufficient electricity to meet ever increasing demands without
endangering our environment. The responsibility is awesome. Having
grown with the electric utility industry, Gilbert recognizes and
assumes a similar responsibility. We are actively engaged in the
assessment and development of new efficient methods to generate
electricity-coal gasification, MHD, advanced cycles, and others.
And we are constantly investigating means and techniques to
improve environmental systems. Clearly, our role is to help utilities
meet the challenges of today and the future by providing
professional services of the highest quality wherever and
whenever they may be needed.