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Propylene via Propane Dehydrogenation

#TEC003B

Technology Economics Economics Propylene via Propane Dehydrogenation 2013

Abstract Propylene has been established as a major component of the global olefins business, second only to ethylene. Globally, the greatest volume of propylene is generated as a by-product in steam crackers and through the fluid catalytic cracking (FCC) process. With ethane prices falling in the USA due to the exploration of shale gas reserves, the low price of ethylene produced from this raw material has given ethane-fed steam crackers in North America America a feedstock advantage. This has put naphtha-fed steam crackers at a disadvantage, with many of them shutting down or revamping revamping to use ethane as feedstock. Nevertheless, the propylene output rates from ethane-fed crackers are negligible. This, combined with the rise in propylene demand, has resulted in a tight propylene market. For this reason, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of great interest to the petrochemical marketplace. Such processes include: Metathesis, Propane Dehydrogenation (PDH), Methanol-toMethanol-toOlefins/Methanol-to-Propylene Olefins/Methanol-to-Propylene (MTO/MTP), High Severity FCC, and Olefins Cracking. Among those, MTO/MTP and PDH stand out due to their use of low-cost raw materials. In the US, some major companies, including including Dow Chemical, are building PDH plants to take advantage of shale gas, the fastest growing source of gas in the country. In Middle East, the propane output is expected to be capable of supplying not only domestic needs, but also the demand from China, where many PDH projects are scheduled to go on stream within the next few years. In this report, the production production of propylene through the dehydrogenation dehydrogenation of propane is reviewed. Included in the analysis is an overview of the technology and economics of a method similar to the UOP Oleflex TM process, a technology selected by Dow Chemical to produce propylene at its production site in Texas. Both the capital investment and the operating costs are presented for plants constructed on the US Gulf Coast and China. The economic analysis presented in this report report is based upon a plant plant fully integrated with a petrochemical petrochemical complex complex and capable of producing 550 kta of polymer-grade polymer-grade propylene. The estimated CAPEX for such a plant on the US Gulf Coast is about USD 490 million. While China presented the lowest CAPEX, the USA presented presented the most advantageous operational margins, margins, due to the rise of shale gas, which lowered propane prices, justifying Dow`s Dow`s choice for a new PDH plant in Texas. Although China still depends on imported propane from Middle East, being subjected to shortages of supply, the historical operational margins are high enough to explain the number of PDH planned projects in the country. country. The attractiveness of each area is proven by the calculated internal rate of return of more than 25% per year in both regions.

Copyrights © 2013 by Intratec Intratec Solutions LLC. All rights reserved. Printed in the United States of America.

#TEC003B

Technology Economics Economics Propylene via Propane Dehydrogenation 2013

Abstract Propylene has been established as a major component of the global olefins business, second only to ethylene. Globally, the greatest volume of propylene is generated as a by-product in steam crackers and through the fluid catalytic cracking (FCC) process. With ethane prices falling in the USA due to the exploration of shale gas reserves, the low price of ethylene produced from this raw material has given ethane-fed steam crackers in North America America a feedstock advantage. This has put naphtha-fed steam crackers at a disadvantage, with many of them shutting down or revamping revamping to use ethane as feedstock. Nevertheless, the propylene output rates from ethane-fed crackers are negligible. This, combined with the rise in propylene demand, has resulted in a tight propylene market. For this reason, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of great interest to the petrochemical marketplace. Such processes include: Metathesis, Propane Dehydrogenation (PDH), Methanol-toMethanol-toOlefins/Methanol-to-Propylene Olefins/Methanol-to-Propylene (MTO/MTP), High Severity FCC, and Olefins Cracking. Among those, MTO/MTP and PDH stand out due to their use of low-cost raw materials. In the US, some major companies, including including Dow Chemical, are building PDH plants to take advantage of shale gas, the fastest growing source of gas in the country. In Middle East, the propane output is expected to be capable of supplying not only domestic needs, but also the demand from China, where many PDH projects are scheduled to go on stream within the next few years. In this report, the production production of propylene through the dehydrogenation dehydrogenation of propane is reviewed. Included in the analysis is an overview of the technology and economics of a method similar to the UOP Oleflex TM process, a technology selected by Dow Chemical to produce propylene at its production site in Texas. Both the capital investment and the operating costs are presented for plants constructed on the US Gulf Coast and China. The economic analysis presented in this report report is based upon a plant plant fully integrated with a petrochemical petrochemical complex complex and capable of producing 550 kta of polymer-grade polymer-grade propylene. The estimated CAPEX for such a plant on the US Gulf Coast is about USD 490 million. While China presented the lowest CAPEX, the USA presented presented the most advantageous operational margins, margins, due to the rise of shale gas, which lowered propane prices, justifying Dow`s Dow`s choice for a new PDH plant in Texas. Although China still depends on imported propane from Middle East, being subjected to shortages of supply, the historical operational margins are high enough to explain the number of PDH planned projects in the country. country. The attractiveness of each area is proven by the calculated internal rate of return of more than 25% per year in both regions.

Copyrights © 2013 by Intratec Intratec Solutions LLC. All rights reserved. Printed in the United States of America.

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Contents About this Study...................................................................................................................................................................8 Object of Study.....................................................................................................................................................................................................................8 Analyses Performed...........................................................................................................................................................................................................8 Construction Scenarios ..............................................................................................................................................................................................................8 Location Basis...................................................................................................................................................................................................................................9

Design Conditions..............................................................................................................................................................................................................9

Study Background ............................................................................................................................................................ 10 About Propylene...............................................................................................................................................................................................................10 Introduction....................................................................................................................................................................................................................................

10

Applications....................................................................................................................................................................................................................................

10

Manufacturing Alternatives .......................................................................................................................................................................................11 Licensor(s) & Historical Aspects ...............................................................................................................................................................................13

Technical Analysis............................................................................................................................................................. 14 Chemistry ..............................................................................................................................................................................................................................14 Raw Material ........................................................................................................................................................................................................................15 Technology Overview ...................................................................................................................................................................................................16 Detailed Process Description & Conceptual Flow Diagram...................................................................................................................17 Area 100: Purification and Reaction.................................................................................................................................................................................17 Area 200: Product Recovery .................................................................................................................................................................................................17 Key Consumptions.....................................................................................................................................................................................................................18 Technical Assumptions ...........................................................................................................................................................................................................18 Labor Requirements..................................................................................................................................................................................................................19

ISBL Major Equipment List..........................................................................................................................................................................................22 OSBL Major Equipment List .......................................................................................................................................................................................24 Other Process Remarks .................................................................................................................................................................................................25 PDH-Integration Alternatives...............................................................................................................................................................................................25 Technology Advances..............................................................................................................................................................................................................25 Catalyst Regeneration System ............................................................................................................................................................................................26

Economic Analysis ............................................................................................................................................................ 28 Project Implementation Schedule.........................................................................................................................................................................29

2

Capital Expenditures.......................................................................................................................................................................................................29 Fixed Investment......................................................................................................................................................................................................................... 29 Alternative OSBL Configurations.......................................................................................................................................................................................30 Fixed Investment Discussion ...............................................................................................................................................................................................32 Working Capital............................................................................................................................................................................................................................ 32 Other Capital Expenses ...........................................................................................................................................................................................................33 Total Capital Expenses .............................................................................................................................................................................................................33

Operational Expenditures...........................................................................................................................................................................................33 Manufacturing Costs.................................................................................................................................................................................................................33 Historical Analysis........................................................................................................................................................................................................................ 34

Economic Datasheet......................................................................................................................................................................................................34

Regional Comparison & Economic Discussion....................................................................................................... 37 Regional Comparison....................................................................................................................................................................................................37 Capital Expenses.......................................................................................................................................................................................................................... 37 Operational Expenditures......................................................................................................................................................................................................37 Economic Datasheet.................................................................................................................................................................................................................37

Economic Discussion.....................................................................................................................................................................................................38

References............................................................................................................................................................................ 40 Acronyms, Legends & Observations .......................................................................................................................... 41 Technology Economics Methodology ...................................................................................................................... 42 Introduction.........................................................................................................................................................................................................................42 Workflow................................................................................................................................................................................................................................42 Capital & Operating Cost Estimates......................................................................................................................................................................44 ISBL

Investment............................................................................................................................................................................................................................

44

OSBL Investment......................................................................................................................................................................................................................... 44 Working Capital............................................................................................................................................................................................................................ 45 Start-up Expenses ....................................................................................................................................................................................................................... 45 Other Capital Expenses ...........................................................................................................................................................................................................46 Manufacturing Costs.................................................................................................................................................................................................................46

Contingencies ....................................................................................................................................................................................................................46 Accuracy of Economic Estimates............................................................................................................................................................................47 Location Factor..................................................................................................................................................................................................................47

Appendix A. Mass Balance & Streams Properties.................................................................................................. 49 Appendix B. Utilities Consumption Breakdown .................................................................................................... 52

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Appendix C. Process Carbon Footprint..................................................................................................................... 53 Appendix D. Equipment Detailed List & Sizing...................................................................................................... 54 Appendix E. Detailed Capital Expenses .................................................................................................................... 62 Direct Costs Breakdown...............................................................................................................................................................................................62 Indirect Costs Breakdown ...........................................................................................................................................................................................63

Appendix F. Economic Assumptions ......................................................................................................................... 64 Capital Expenditures.......................................................................................................................................................................................................64 Construction Location Factors............................................................................................................................................................................................64 Working Capital............................................................................................................................................................................................................................ 64 Other Capital Expenses ...........................................................................................................................................................................................................64

Operational Expenditures...........................................................................................................................................................................................65 Fixed Costs ...................................................................................................................................................................................................................................... 65 Depreciation...................................................................................................................................................................................................................................

65

EBITDA Margins Comparison...............................................................................................................................................................................................65

Appendix G. Released Publications............................................................................................................................ 66 Appendix H. Technology Economics Form Submitted by Client.................................................................... 67

4

List of Tables Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration) ...................................................................................9 Table 2 – Location & Pricing Basis..............................................................................................................................................................................................9 Table 3 – General Design Assumptions.................................................................................................................................................................................9 Table 4 – Major Propylene Consumers................................................................................................................................................................................10 Table 5 – Raw Materials & Utilities Consumption (per ton of Product)...........................................................................................................18 Table 6 – Design & Simulation Assumptions...................................................................................................................................................................19 Table 7 – Labor Requirements for a Typical Plant........................................................................................................................................................19 Table 8 – Main Streams Operating Conditions and Composition .....................................................................................................................22 Table 9 – Inside Battery Limits Major Equipment List ................................................................................................................................................22 Table 10 – Outside Battery Limits Major Equipment List.........................................................................................................................................24 Table 11 – Catalyst Advances....................................................................................................................................................................................................26 Table 12 – Base Case General Assumptions.....................................................................................................................................................................28 Table 13 – Bare Equipment Cost per Area (USD Thousands)................................................................................................................................29 Table 14 – Total Fixed Investment Breakdown (USD Thousands)......................................................................................................................29 Table 15 – Working Capital (USD Million)..........................................................................................................................................................................32 Table 16 – Other Capital Expenses (USD Million)..........................................................................................................................................................33 Table 17 – CAPEX (USD Million)...............................................................................................................................................................................................33 Table 18 – Manufacturing Fixed Cost (USD/ton) ..........................................................................................................................................................33 Table 19 – Manufacturing Variable Cost (USD/ton) ....................................................................................................................................................34 Table 20 – OPEX (USD/ton).........................................................................................................................................................................................................34 Table 21 – Technology Economics Datasheet: Propylene via Propane Dehydrogenation at US Gulf........................................36 Table 22 – Technology Economics Datasheet: Propylene via Propane Dehydrogenation in China............................................39 Table 23 – Project Contingency...............................................................................................................................................................................................46 Table 24 – Criteria Description..................................................................................................................................................................................................46 Table 25 – Accuracy of Economic Estimates...................................................................................................................................................................47 Table 26 – Detailed Material Balance and Stream Properties................................................................................................................................49 Table 27 – Utilities Consumption Breakdown.................................................................................................................................................................52 Table 28 – Assumptions for CO2 e Emissions Calculation .......................................................................................................................................53 Table 29 – CO2 e Emissions (ton/ton prod.)......................................................................................................................................................................53 Table 30– Compressors Specifications................................................................................................................................................................................54 Table 31 – Drivers..............................................................................................................................................................................................................................54 Table 32 – Heat Exchangers .......................................................................................................................................................................................................55 5

Table 33 – Pumps .............................................................................................................................................................................................................................58 Table 34 – Columns.........................................................................................................................................................................................................................59 Table 35 – Utilities Supply...........................................................................................................................................................................................................60 Table 36 – Vessels & Tanks Specifications..........................................................................................................................................................................60 Table 37 – Indirect Costs Breakdown for the Base Case (USD Thousands)...................................................................................................63 Table 38 – Detailed Construction Location Factor ......................................................................................................................................................64 Table 39– Working Capital Assumptions for Base Case............................................................................................................................................64 Table 40 – Fixed Cost Assumptions.......................................................................................................................................................................................65 Table 41 – Depreciation Value & Assumptions ..............................................................................................................................................................65

6

List of Figures Figure 1 – OSBL Construction Scenarios...............................................................................................................................................................................8 Figure 2 – Propylene from Multiple Sources ...................................................................................................................................................................12 Figure 3 – Propane Dehydrogenation Reaction Network.......................................................................................................................................14 Figure 4 – US Natural Gas Production History and Forecast (Trillion Cubic Feet) ....................................................................................15 Figure 5 – Process Simplified Flow Diagram....................................................................................................................................................................16 Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram.................................................................................................................20 Figure 7 – Continuous Catalyst Regenerator Simplified Scheme.......................................................................................................................27 Figure 8 – Project Implementation Schedule .................................................................................................................................................................28 Figure 9 – Total Direct Cost of Different Integration Scenarios (USD Thousands)...................................................................................31 Figure 10 – Total Fixed Investment of Different Integration Scenarios (USD Thousands)..................................................................31 Figure 11 – Total Fixed Investment Validation (USD Million) ................................................................................................................................32 Figure 12 – OPEX and Product Sales History (USD/ton) ...........................................................................................................................................35 Figure 13 – EBITDA Margin & IP Indicators History Comparison .........................................................................................................................35 Figure 14 – CAPEX per Location (USD Million)...............................................................................................................................................................37 Figure 15 – Operating Costs Breakdown per Location (USD/ton).....................................................................................................................38 Figure 16 – Methodology Flowchart....................................................................................................................................................................................43 Figure 17 – Location Factor Composition.........................................................................................................................................................................47 Figure 18 – ISBL Direct Costs Breakdown by Equipment Type for Base Case .............................................................................................62 Figure 19 – OSBL Direct Costs Breakdown by Equipment Type for Base Case ..........................................................................................62 Figure 20 – Historical EBITDA Margins Regional Comparison ..............................................................................................................................65

7

About this Study This study follows the same pattern as all Technology

Analyses Performed

Economics studies developed by Intratec and is based on the same rigorous methodology and well-defined structure (chapters, type of tables and charts, flow sheets, etc.).

Construction Scenarios

This chapter summarizes the set of information that served

The economic analysis is based on the construction of a

as input to develop the current technology evaluation. All

plant inside a petrochemical complex, in which propane

required data were provided through the filling of the

feedstock is locally provided and propylene product is

Technology Economics Form available at Intratec’s website.

consumed by a nearby polypropylene unit. Therefore, no storage for product or raw material is required. Additionally, the petrochemical complex supplies most utilities.

You may check the original form in the “Appendix H. Technology Economics Form Submitted by Client”.

However, since the Outside Battery Limits (OSBL) requirements– storage and utilities supply facilities –

Object of Study

significantly impact the capital cost estimates for a new venture, they may play a decisive role in the decision as to

This assignment assesses the economic feasibility of an

whether or not to invest. Thus, this study also performs an

industrial unit for propylene production via propane

analysis of the OSBL facilities impact on the capital costs.

dehydrogenation implementing technology similar to the

Three distinct OSBL configurations are compared. Those

UOP Oleflex TM process®.

scenarios are summarized in Figure 1 and Table 1.

The current assessment is based on economic data gathered on Q3 2011 and a chemical plant’s nominal capacity of 550 kta (thousand metric tons per year).

Figure 1 – OSBL Construction Scenarios Non-Integrated

y d u t S s i h t t u o b A | c e t a r t n I

8

Partially Integrated

Fully Integrated

Petrochemical Complex

Petrochemical Complex

Products Storage

Products Consumer

Products Consumer

ISBL Unit

ISBL Unit

ISBL Unit

Raw Materials Storage

Raw Materials Storage

Raw Materials Provider

Grassroots unit

Unit is part of a petrochemical complex

Most infrastructure is already installed

Source: Intratec – www.intratec.us

Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration)

Storage Capacity

(Base Case for Evaluation)

Feedstock & Chemicals

20 days of operation


Not included

End-products & By-products


Not included

Not included

All required

All required

Only refrigeration units

Utility Facilities Included

Control room, labs, gate house, Support & Auxiliary Facilities

maintenance shops,

(Area 900)

warehouses, offices, change house, cafeteria, parking lot

Control room, labs, maintenance shops,

Control room and labs

warehouses


Location Basis Regional specific conditions influence both construction and operating costs. This study compares the economic Table 2 – Location & Pricing Basis

performance of two identical plants operating in different locations: the US Gulf Coast and China. The assumptions that distinguish the two regions analyzed in this study are provided in Table 2.

Design Conditions The process analysis is based on rigorous simulation models developed on Aspentech Aspen Plus and Hysys, which support the design of the chemical process, equipment and OSBL facilities. The design assumptions employed are depicted in Table 3.

Table 3 – General Design Assumptions Source: Intratec – www.intratec.us

Cooling water temperature

24 °C

Cooling water range

11 °C

Steam (Low Pressure)

7 Bar abs

Refrigerant (Propylene)

-45 °C

Wet Bulb Air Temperature

25 °C


9

Study Background About Propylene

While CG propylene is used extensively for most chemical derivatives (e.g., oxo-alcohols, acrylonitrile, etc.), PG propylene is used in polypropylene and propylene oxide

Introduction

manufacture.

Propylene is an unsaturated organic compound having the

PG propylene contains minimal levels of impurities, such as

chemical formula C3H6. It has one double bond, is the

carbonyl sulfide, that can poison catalysts.

second simplest member of the alkene class of hydrocarbons, and is also second in natural abundance.

Thermal & Motor Gasoline Uses Propylene has a calorific value of 45.813 kJ/kg, and RG propylene can be used as fuel if more valuable uses are unavailable locally (i.e., propane – propene splitting to

Propylene 2D structure

chemical-grade purity). RG propylene can also be blended into LPG for commercial sale.

Propylene is produced primarily as a by-product of petroleum refining and of ethylene production by steam

Also, propylene is used as a motor gasoline component for

cracking of hydrocarbon feedstocks. Also, it can be

octane enhancement via dimerization – formation of

produced in an on-purpose reaction (for example, in

polygasoline or alkylation.

propane dehydrogenation, metathesis or syngas-to-olefins plants). It is a major industrial chemical intermediate that serves as one of the building blocks for an array of chemical and plastic products, and was also the first petrochemical employed on an industrial scale.

Chemical Uses The principal chemical uses of propylene are in the manufacture of polypropylene, acrylonitrile, oxo-alcohols, propylene oxide, butanal, cumene, and propene oligomers.

Commercial propylene is a colorless, low-boiling,

Other uses include acrylic acid derivatives and ethylene –

flammable, and highly volatile gas. Propylene is traded

propene rubbers.

commercially in three grades: Polymer Grade (PG): min. 99.5% of purity.

Global propylene demand is dominated by polypropylene production, which accounts for about two-thirds of total propylene demand.

Chemical Grade (CG): 90-96% of purity. Refinery Grade (RG): 50-70% of purity.

Applications The three commercial grades of propylene are used for different applications. RG propylene is obtained from d n u o r g k c a B y d u t S | c e t a r t n I

10

refinery processes. The main uses of refinery propylene are in liquefied petroleum gas (LPG) for thermal use or as an octane-enhancing component in motor gasoline. It can also be used in some chemical syntheses (e.g., cumene or isopropanol). The most significant market for RG propylene is the conversion to PG or CG propylene for use in the production of polypropylene, acrylonitrile, oxo-alcohols and propylene oxide.

Table 4 – Major Propylene Consumers Polypropylene

Mechanical parts, containers, fibers, films

Acrylonitrile

Acrylic fibers, ABS polymers

Propylene oxide

Propylene glycol, antifreeze, polyurethane

Oxo-alcohols

Coatings, plasticizers

Cumene

Polycarbonates, phenolic resins

Acrylic acid

Coatings, adhesives, super absorbent polymers


Manufacturing Alternatives Propylene is commercially generated as a co-product, either in an olefins plant or a crude oil refinery’s fluid catalytic cracking (FCC) unit, or produced in an on-purpose reaction (for example, in propane dehydrogenation, metathesis or syngas-to-olefins plants). Globally, the largest volume of propylene is produced in NGL (Natural Gas Liquids) or naphtha steam crackers, which generates ethylene as well. In fact, the production of propylene from such a plant is so important that the name “olefins plant” is often applied to this kind of manufacturing facility (as opposed to “ethylene plant”). In an olefins plant, propylene is generated by the pyrolysis of the incoming feed, followed by purification. Except where ethane is used as the feedstock, propylene is typically produced at levels ranging from 40 to 60 wt% of the ethylene produced. The exact yield of propylene produced in a pyrolysis furnace is a function of the feedstock and the operating severity of the pyrolysis. The pyrolysis furnace operation usually is dictated by computer optimization, where an economic optimum for the plant is based on fee dstock price, yield structures, energy considerations, and market conditions for the multitude of products obtained from the furnace. Thus, propylene produced by steam cracking varies according to economic conditions. In an olefins plant purification area, also called separation train, propylene is obtained by distillation of a mixed C3 stream, i.e., propane, propylene, and minor components, in a C3-splitter tower. It is produced as the overhead distillation product, and the bottoms are a propaneenriched stream. The size of the C3-splitter depends on the purity of the propylene product. The propylene produced in refineries also originates from other cracking processes. However, these processes can be compared to only a limited extent with the steam cracker for ethylene production because they use completely different feedstocks and have different production objectives. Refinery cracking processes operate either purely thermally or thermally – catalytically. By far the most important process for propene production is the flu id- catalytic cracking (FCC) process, in which the powdery catalyst flows as a fluidized bed through the reaction and regeneration

phases. This process converts heavy gas oil preferentially into gasoline and light gas oil. The propylene yielded from olefins plants and FCC units is typically considered a co-product in these processes, which are primarily driven by ethylene and motor gasoline production, respectively. Currently, the markets have evolved to the point where modes of by-product production can no longer satisfy the demand for propylene. A trend toward less severe cracking conditions, and thus to increase propylene production, has been observed in steam cracker plants using liquid feedstock. As a result, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of high interest to the petrochemical marketplace. Such processes include: Olefin Metathesis. Also known as disproportionation, metathesis is a reversible reaction between ethylene and butenes in which double bonds are broken and then reformed to form propylene. Propylene yields of about 90 wt% are achieved. This option may also be used when there is no butene feedstock. In this case, part of the ethylene feeds an ethylene-dimerization unit that converts ethylene into butene. Propane Dehydrogenation. A catalytic process that converts propane into propylene and hydrogen (byproduct). The yield of propylene from propane is about 85 wt%. The reaction by-products (mainly hydrogen) are usually used as fuel for the propane dehydrogenation reaction. As a result, propylene tends to be the only product, unless local demand exists for the hydrogen by-product. Methanol-to-Olefins/Methanol-to-Propylene. A group of technologies that first converts synthesis gas (syngas) to methanol, and then converts the methanol to ethylene and/or propylene. The process also produces water as by-product. Synthesis gas is produced from the reformation of natural gas or by the steam-induced reformation of petroleum products such as naphtha, or by gasification of coal. A large amount of methanol is required to make a world-scale ethylene and/or propylene plant. High Severity FCC. Refers to a group of technologies that use traditional FCC technology under severe conditions (higher catalyst-to-oil ratios, higher steam injection rates, higher temperatures, etc.) in order to maximize the amount of propylene and other light products. A high severity FCC unit is usually fed with 11

gas oils (paraffins) and residues, and produces about

These on-purpose methods are becoming increasingly

20-25 wt% propylene on feedstock together with

significant, as the shift to lighter steam cracker feedstocks

greater volumes of motor gasoline and distillate by-

with relatively lower propylene yields and reduced motor

products.

gasoline demand in certain areas has created an imbalance of supply and demand f or propylene.

Olefins Cracking. Includes a broad range of technologies that catalytically convert large olefins molecules (C4-C8) into mostly propylene and small amounts of ethylene. This technology will best be employed as an auxiliary unit to an FCC unit or steam cracker to enhance propylene yields.

Figure 2 – Propylene from Multiple Sources

Naphtha NGL

Gas Oil

Steam Cracker

Refinery FCC Unit

RG Propylene

d n u o r g k c a B y d u t S | c e t a r t n I

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Propane

PDH

Ethylene/ Butenes

Metathesis

Methanol

MTO/MTP

Gas Oil

High Severity FCC

C4 to C8 Olefins

Olefins Cracking


CG/PG Propylene

Licensor(s) & Historical Aspects The continuous rise in petroleum prices, in addition to the increase in world demand for propylene, led the chemical industry to innovate in the development of production routes utilizing sources other than oil. In this context, the recent success of shale gas exploitation in the US is playing a key role in the shift to natural gas as a source of feed to olefins production. This happens because natural gas

Specifically in the USA, four PDH projects have already been announced. The largest of such projects, carried out by Dow Chemicals, a 750 kta Oleflex TM plant, is scheduled to go on stream in 2015. China built its first unit PDH in mid-2010, but has six plants currently under construction and three more in the engineering design stage, all scheduled to start operating in 2013 or 2014, increasing its production capacity in 5,070 kta.

comprises, besides methane, C2-C4 paraffins, such as propane, which is increasingly being used in production of propylene by dehydrogenation process. Paraffin dehydrogenation for the production of olefins has been used since the 1930s. During World War II, catalytic dehydrogenation of butanes by a chromia-alumina catalyst was used to produce butenes, which were then di merized to octenes and hydrogenated to octanes to yield highoctane aviation fuel. In the late 1980s, Houdry extended the application of chromia-alumina catalysts to the dehydrogenation of propane to propylene. Commercial interest in propane dehydrogenation (PDH) has been increasing. Numerous plants dedicated to the process are currently under construction outside the United States and some are planned to be constructed in the US. There are already five l icensed technologies: CATOFIN® from Lummus Technology; Oleflex™ from UOP; Fluidized Bed Dehydrogenation (FBD) from Snamprogetti/Yarsintez; STAR process® from Krupp Uhde; and PDH from Linde/BASF. The main differences between those technologies center on the type of catalyst and regeneration methods used; the design of the reactor; and the methods used to achieve better conversion rates (e.g., operating pressure, use of diluents, and reaction temperatures). By the end of March 2012, there were at least 16 propane dehydrogenation units in operation, with an aggregate capacity of 5,260 thousand metric tons per annum (kta). Plans for increasing propylene capacity to 12,590 kta through 13 propane dehydrogenation units have also been announced, scheduled to start-up between now and 2015.

13

Technical Analysis Although higher process temperatures increase the

Chemistry

propylene yield, they also provoke thermal cracking reactions. Those reactions generate undesirable by-

Propane dehydrogenation is an endothermic equilibrium

products and consequently increase purification costs

reaction generally carried out in the presence of a noble- or

downstream.

heavy-metal catalyst such as platinum or chromium. The following equation shows the propane dehydrogenation

Therefore, PDH reaction temperatures usually range

reaction:

between 500 and 700°C, while reaction pressures are near atmospheric pressure. Typical thermal cracking side reactions are shown in Figure 3.

Propane

Propylene

Hydrogen

Overall yields of about 90 wt% of propylene are claimed by licensors of the commercially available PDH technologies. The propylene conversion is favored by higher temperatures and lower pressures.

Figure 3 – Propane Dehydrogenation Reaction Network

– CH4 cracking

CH3 – CH2 – CH3

CH2 = CH2

C2H2n+2

Dehydrogenation

CH3 – CH = CH2

Oligomerization

CH2 = CH – CH2 – CH3

Aromatization

CH3 – CH – CH2 – CH = CH2

Dehydrogenation

–

CH3

CH2 = CH – CH2 = CH3

Alkylation

Polymerization

R CnH2n

Side Chain Aromatization

s i s y l a n A l a c i n h c e T | c e t a r t n I

14

CnH(n+y)

Coking Side reactions increase with temperature and conversion Coke

Source: Encyclopedia of Hydrocarbons, Volume II

The large amounts of shale gas reserves in the US are

Raw Material

considered to be capable of supplying ethane to crackers

The feedstock to a PDH process unit is propane. Propane is recovered from propane-rich liquefied petroleum gas (LPG) streams from natural gas processing plants. Propane may also be obtained in smaller amounts as a by-product of petroleum refinery operations, such as hydrocracking and fluidized catalytic cracking (FCC). As natural gas offerings in the USA are significantly increasing due to the rising exploitation of shale gas,

for many years. According to the forecast from the US Energy Information Administration (EIA), in 2035, about half of the natural gas production in the US will be from shale gas. This, along with the increasing trends in both propylene demand and propane supply, makes the PDH process an attractive chemical route to evaluate, not only in the US, but also in China, where feedstock propane imported from Middle East is available at low prices, allowing attractive margins for PDH processes.

propane and ethane prices are decreasing. This changes both ethylene and propylene industrial production by prompting new steam crackers to use ethane as feedstock and causing existing naphtha crackers to shut down (or to be reconfigured to crack ethane). Such a shift to lighter feedstock in crackers reduces both ethylene production costs and propylene output as a by-product, since cracking ethane does not yield propylene as occurs with cracking naphtha. However, in certain regions, propylene production must compete with the use of propane. Propane prices may be elevated in cold countries where it is used as fuel for transportation and for domestic heating. Therefore, PDH units may have elevated raw material costs in Western Europe countries during the winter due to the demand for propane as fuel.

Figure 4 – US Natural Gas Production History and Forecast (Trillion Cubic Feet) Non-associated onshore

Associated with oil

Coalbed methane

Alaska

Non-associated offshore

Tight gas

Shale gas 30

History

Forecast

25 20 15 10 5 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Source: US Energy Information Administration (EIA) A OE2012

15

In the product recovery area, the reactor effluent is se nt to a

Technology Overview

cryogenic system, where a hydrogen-rich stream is separated from the hydrocarbon stream. This hydrogen

The process is separated into two different areas: the

vapor stream is recovered at 85 to 93 mol-% hydrogen

purification and reactor area; and the product recovery area.

purity. The hydrocarbon liquid stream is then sent to a

The purification and reaction area consists of four radial-

selective hydrogenation unit (SHP) to eliminate diolefins

flow reactors, charge and interstage heaters, and a reactor

and acetylenes.

feed-effluent heat exchanger. It also comprises cooling, compression and drying of reaction effluent as well as the

The product mixture then goes to a deethanizer, where

Continuous Catalyst Regenerator (CCR) unit.

light hydrocarbons and hydrogen traces – resulting from selective hydrogenation – are removed, so it is possible to

The CCR is an apparatus that continuously regenerates the

recycle the unreacted propane to reactors without

catalyst used in the dehydrogenation of propane. In PDH

impurities.

process, the catalyst is placed in moving beds in such a way that it continuously passes through the four radial reactors

The last separation step occurs in the propane-propylene

before being sent to the regeneration unit, which

(P-P) splitter, where PG propylene product is acquired as

regenerates the catalyst and returns it to the top of the first

vapor and propane liquid returns to the reaction area.

reactor. This entire scheme works independently of reaction, i.e., if regeneration stops, reaction will continue to occur normally, but without catalyst regeneration.

Figure 5 – Process Simplified Flow Diagram

Hydrogen-rich stream

Propane

Area 100: Purification & Reaction

Area 200: Product Recovery

Recovered Propane


16


Light Ends Fuel PG Propylene

17

Key Consumptions

Table 5 – Raw Materials & Utilities Consumption (per ton of Product)


18

Labor Requirements

Table 7 – Labor Requirements for a Typical Plant



19

Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram


20


Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram (Cont.)


21

Table 8 presents the main streams composition and operating conditions. For a more complete material balance, see the “Appendix A. Mass Balance & Streams Properties” Detailed information regarding utilities flow rates is provided in “Appendix B. Utilities Consumption Breakdown”. For further details on greenhouse gas emissions caused by this process, see “Appendix C. Process Carbon Footprint”.


22

ISBL Major Equipment List Table 9 shows the equipment list by area. It also presents a brief description and the construction materials used. Find main specifications for each piece of equipment in “Appendix D. Equipment Detailed List & Sizing”.

23

OSBL Major Equipment List The OSBL is divided into three main areas: storage (Area 700), energy and water facilities (Area 800), and support & auxiliary facilities (Area 900).


24

Table 10 shows the list of tanks located in the storage area and the energy facilities required in the construction of a non-integrated unit.

25



26

Figure 7 – Continuous Catalyst Regenerator Simplified Scheme


27

Economic Analysis The general assumptions for the base case of this study are

In Table 12, the IC Index stands for Intratec chemical plant

outlined below.

Construction Index, an indicator, published monthly by Intratec, to scale capital costs from one time period to another.

Table 12 – Base Case General Assumptions

This index reconciles price trends of the fundamental components of a chemical plant construction such as labor, material and energy, providing meaningful historical and forecast data for our readers and clients. The assumed operating hours per year indicated does not represent any technology limitation; rather, it is an assumption based on usual industrial operating rates. Additionally, Table 12 discloses assumptions regarding the project complexity, technology maturity and data reliability, which are of major importance for attributing reasonable contingencies for the investment and for evaluating the overall accuracy of estimates. Definitions and figures for both contingencies and accuracy of e conomic estimates


can be found in this publication in the chapter “Technology Economics Methodology.”

Figure 8 – Project Implementation Schedule

Basic Engineering Detailed Engineering Procurement Construction Total EPC Phase

s i s y l a n A c i m o n o c E | c e t a r t n I

28

Start-up


Project Implementation Schedule

“Appendix E. Detailed Capital Expenses” provides a detailed

The main objective of knowing upfront the project

After defining the total direct cost, the TFI is established by

implementation schedule is to enhance the estimates for

adding field indirect costs, engineering costs, overhead,

both capital initial expenses and return on investment.

contract fees and contingencies.

breakdown for the direct expenses, outlining the share of each type of equipment in total.

The implementation phase embraces the period from the decision to invest to the start of commercial production. This phase can be divided into five major stages: (1) Basic Engineering, (2) Detailed Engineering, (3) Procurement, (4)

Table 14 – Total Fixed Investment Breakdown (USD Thousands)

Construction, and (5) Plant Start-up. The duration of each phase is detailed in Figure 8.

Capital Expenditures Fixed Investment Table 13 shows the bare equipment cost associated with each area of the project.

Table 13 – Bare Equipment Cost per Area (USD Thousands)


Table 14 presents the breakdown of the total fixed investment (TFI) per item (direct & indirect costs and


process contingencies). For further information about the components of the TFI, please see the chapter “Technology Economics Methodology.”

Indirect costs are defined by the American Association of Cost Engineers (AACE) Standard Terminology as those

Fundamentally, the direct costs are the total direct material

"costs which do not become a final part of the installation

and labor costs associated with the equipment (including

but which are required for the orderly completion of the

installation bulks). In other words, the total direct expenses

installation."

represent the total equipment installed cost.

29

The indirect project expenses are further detailed in “Appendix E. Detailed Capital Expenses”.

Alternative OSBL Configurations The total fixed investment for the construction of a new chemical plant is greatly impacted by how well it will be able to take advantage of the infrastructure already installed in that location. For example, if there are nearby facilities consuming a unit’s final product or supplying a unit’s feedstock, the need for storage facilities significantly decreases, along with the total fixed investment required. This is also true for support facilities that can serve more than one plant in the same complex, such as a parking lot, gate house, etc. This study analyzes the total fixed investment for three distinct scenarios regarding OSBL facilities: Non-Integrated Plant Plant Partially Integrated Plant Fully Integrated The detailed definition, as well as the assumptions used for each scenario is presented in the chapter “About this Study.” The influence of the OSBL facilities on the capital investment is depicted in Figure 9 and in Figure 10.


30

Figure 9 – Total Direct Cost of Different Integration Scenarios (USD Thousands)


Figure 10 – Total Fixed In vestment of Different Integration Scenarios (USD Thousands)


31

Working Capital Working capital, described in Table 15, is another significant investment requirement. It is needed to meet the costs of labor; maintenance; purchase, storage, and inventory of field materials; and storage and sales of product(s). Assumptions for working capital calculations are found in “Appendix F. Economic Assumptions”.

Table 15 – Working Capital (USD Million)


Figure 11 – Total Fixed Investment Validation (USD Million)


32


Other Capital Expenses Start-up costs should also be considered when determining

Table 17 – CAPEX (USD Million)

the total capital expenses. During this period, expenses are incurred for employee training, initial commercialization costs, manufacturing inefficiencies and unscheduled plant modifications (adjustment of equipment, piping, instruments, etc.). Initial costs are not addressed in most studies on estimating


but can become a significant expenditure. For instance, the initial catalyst load in reactors may be a significant cost and, in that case, should also be included in the capital estimates. The purchase of technology through paid-up royalties or

Operational Expenditures Manufacturing Costs

licenses is considered to be part of the capital investment. The manufacturing costs, also called Operational Other capital expenses frequently neglected are land

Expenditures (OPEX), are composed of two elements: a fixed

acquisition and site development. Although these are small

cost and a variable cost. All figures regarding operational

parts of the total capital expenses, they should be included.

costs are presented in USD per ton of product. Table 18 shows the manufacturing fixed cost.

Table 16 – Other Capital Expenses (USD Million)

To learn more about the assumptions for manufacturing fixed costs, see the “Appendix F. Economic Assumptions”

Table 18 – Manufacturing Fixed Cost (USD/ton)

Source: Intratec – www.intratec.us Source: Intratec – www.intratec.us

Assumptions used to calculate other capital expenses are provided in “Appendix F. Economic Assumptions.” Table 19 discloses the manufacturing variable cost

Total Capital Expenses

breakdown.

Table 17 presents a summary of the total Capital Expenditures (CAPEX) detailed in this chapter.

33

Economic Datasheet Table 19 – Manufacturing Variable Cost (USD/ton) The Technology Economic Datasheet, presented in Table 21, is an overall evaluation of the technology's production costs in a US Gulf Coast based plant. The expected revenues in products sales and initial economic indicators are presented for a short-term assessment of its economic competitiveness.


Table 20 – OPEX (USD/ton)


Historical Analysis Figure 12 depictures Sales and OPEX historic data. Figure 13 compares the project EBITDA trends with Intratec Profitability Indicators (IP Indicators). The Basic Chemicals IP s i s y l a n A c i m o n o c E | c e t a r t n I

34

Indicator represents basic chemicals sector profitability, based on the weighted average EBITDA margins of major global basic chemicals producers. Alternately, the Chemical Sector IP Indicator reveals the overall chemical sector profitability, through a weighted average of the IP Indicators calculated for three major chemical industry niches: basic, specialties and diversified chemicals.

Figure 12 – OPEX and Product Sales History (USD/ton)


Figure 13 – EBITDA Margin & IP Indicators History Comparison


35


36

Regional Comparison & Economic Discussion Regional Comparison Figure 14 summarizes the total Capital Expenditures

Capital Expenses Variations in productivity, labor costs, local steel prices, equipment imports needs, freight, taxes and duties on imports, regional business environments and local availability of sparing equipment were considered when comparing capital expenses for the different regions under consideration in this report. Capital costs are adjusted from the base case (a plant constructed on the US Gulf Coast) to locations of interest by using location factors calculated according to the items aforementioned. For further information about location factor calculation, please examine the chapter “Technology Economics Methodology.” In addition, the location factors for the regions analyzed are further de tailed in “Appendix F. Economic Assumptions.”

(CAPEX) for two locations.

Operational Expenditures Specific regional conditions influence prices for raw materials, utilities and products. Such differences are thus reflected in the operating costs. An OPEX breakdown structure for the different locations approached in this study is presented in Figure 15.

Economic Datasheet The Technology Economic Datasheet, presented in Table 22, is an overall evaluation of the technology's capital investment and production costs in the alternative location analyzed in this study.

Figure 14 – CAPEX per Location (USD Million)


37

Figure 15 – Operating Costs Breakdown per Location ( USD/ton)


n o i s s u c s i D c i m o n o c E & n o s i r a p m o C l a n o i g e R | c e t a r t n I

38

39

References

s e c n e r e f e R | c e t a r t n I

40

Acronyms, Legends & Observations AACE: American Association of Cost Engineers

NGL: Natural gas liquids

C: Distillation, stripper, scrubber columns (e.g., C-101 would

OCT: Olefin Conversion Technology

denote a column tag) C2, C3, ... Cn: Hydrocarbons with "n" number of carbon atoms C2=, C3=, ... Cn=: Alkenes with "n" number of carbon atoms CAPEX: Capital expenditures CC: Distillation column condenser CCR: Continuous catalyst regenerator CG: Chemical grade CK: Distillation column compressor CP: Distillation column reflux pump CR: Distillation column reboiler CT: Cooling tower CV: Distillation column accumulator drum E: Heat exchangers, heaters, coolers, condensers, reboilers

OPEX: Operational Expenditures OSBL: Outside battery limits P: Pumps (e.g., P-101 would denote a pump tag) PDH: Propane dehydrogenation PG: Polymer grade PP: Polypropylene P-P: Propane-Propylene PSA: Pressure swing adsorption R: Reactors, treaters (e.g., R-101 would denote a reactor tag) RF: Refrigerant RG: Refinery grade SB: Steam boiler SHP: Selective hydrogenation process

(e.g., E-101 would denote a heat exchanger tag)

Syngas: Synthesis gas

EBIT: Earnings before Interest and Taxes

T: Tanks (e.g., T-101 would denote a tank tag)

EBITDA: Earnings before Interests, Taxes, Depreciation and

TFI: Total Fixed Investment

Amortization EIA: Energy Information Administration F: Furnaces, fired heaters (e.g., F-101 would denote a furnace tag) FCC: Fluid catalytic cracking

TPC: Total process cost V: Horizontal or vertical drums, vessels (e.g., V-101 would denote a vessel tag) WD: Demineralized water X: Special equipment (e.g., X-101 would denote a special

IC Index: Intratec Chemical Plant Construction Index

equipment tag)

IP Indicator: Intratec Chemical Sector Profitability Indicator

Obs.: 1 ton = 1 metric ton = 1,000 kg

ISBL: Inside battery limits K: Compressors, blowers, fans (e.g., K-101 would denote a compressor tag) KPI: Key Performance Indicator kta: thousands metric tons per year LPG: Liquefied petroleum gas MTO: Methanol-to-Olefins MTP: Methanol-to-Propylene

41

Technology Economics Methodology Intratec Technology Economics methodology

From this simulation, material balance calculations are

ensures a holistic, coherent and consistent

performed around the process, key process indicators are

techno-economic evaluation, ensuring a clear

identified and main equipment listed.

understanding of a specific mature chemical

Equipment sizing specifications are defined based on

process technology.

Intratec's equipment design capabilities and an extensive use of AspenONE Engineering Software Suite that enables

Introduction The same general approach is used in the development of all Technology Economics assignments. To know more about Intratec’s methodology, see Figure 16. While based on the same methodology, all Technology Economics studies present uniform analyses with identical structures, containing the same chapters and similar tables and charts. This provides confidence to everyone interested in Intratec’s services since they will know upfront what they will get.

Workflow

the integration between the process simulation developed and equipment design tools. Both equipment sizing and process design are prepared in conformance with generally accepted engineering standards. Then, a cost analysis is performed targeting ISBL & OSBL fixed capital costs, manufacturing costs, and overall working capital associated with the examined process technology. Equipment costs are primarily estimated using Aspen Process Economic Analyzer (formerly Aspen Icarus) customized models and Intratec's in-house database. Cost correlations and, occasionally, vendor quotes of unique and specialized equipment may also be employed. One of the overall objectives is to establish Class 3 cost estimates 1 with a minimum design engineering effort.

Once the scope of the study is fully defined and understood, Intratec conducts a comprehensive

Next, capital and operating costs are assembled in Microsoft

bibliographical research in order to understand technical

Excel spreadsheets, and an economic analysis of such

aspects involved with the process analyzed.

technology is performed.

Subsequently, the Intratec team simultaneously develops

Finally, two analyses are completed, examining:

the process description and the conceptual process flow diagram based on:

a.

The total fixed investment in different construction scenarios, based on the level of integration of the plant

y g o l o d o h t e M s c i m o n o c E y g o l o n h c e T | c e t a r t n I

42

a.

Patent and technical literature research

b.

Non-confidential information provided by technology

with nearby facilities b.

plant location

licensors c.

Intratec's in-house database

d.

Process design skills

The capital and operating costs for a second different

Next, all the data collected are used to build a rigorous steady state process simulation model in Aspen Hysys and/or Aspen Plus, leading commercial process flowsheeting software tools.

1

These are estimates that form the basis for budget authorization, appropriation, and/or funding. Accuracy ranges for this class of estimates are + 10% to + 30% on the high side, and - 10 % to - 20 % on the low side.

Figure 16 – Methodology Flowchart

Study Understanding Validation of Project Inputs Patent and Technical Literature Databases

Intratec Internal Database

Non-Confidential Information from Technology Licensors or Suppliers

Bibliographical Research

Technical Validation – Process Description & Flow Diagram

Vendor Quotes

Material & Energy Balances, Key Process Indicators, List of Equipment & Equipment Sizing

Pricing Data Gathering: Raw Materials, Chemicals, Utilities and Products

Capital Cost (CAPEX) & Operational Cost (OPEX) Estimation

Construction Location Factor (http://base.intratec.us)

Economic Analysis

Aspen Plus, Aspen Hysys Aspen Exchanger Design & Rating, KG Tower, Sulcol and Aspen Energy Analyzer

Aspen Process Economic Analyzer, Aspen Capital Cost Estimator, Aspen InPlant Cost Estimator & Intratec In-House Database

Analyses of Different Construction Scenarios and Plant Location

Project Development Phases Information Gathering / Tools

Final Review & Adjustments


43

Capital & Operating Cost Estimates

Process equipment (e.g., reactors and vessels, heat exchangers, pumps, compressors, etc.) Process equipment spares

The cost estimate presented in the current study considers a process technology based on a standardized design

Housing for process units

practice, typical of a major chemical company. The specific design standards employed can have a significant impact

Pipes and supports within the main process units

on capital costs. Instruments, control systems, electrical wires and other The basis for the capital cost estimate is that the plant is

hardware

considered to be built in a clear field with a typical large single-line capacity. In comparing the cost estimate hereby presented with an a ctual project cost or contractor's estimate, the following must be considered: Minor differences or details (many times, unnoticed) between similar processes can aff ect cost noticeably. The omission of process areas in the design considered

Foundations, structures and platforms Insulation, paint and corrosion protection In addition to the direct material and labor costs, the ISBL addresses indirect costs, such as construction overheads, including: payroll burdens, field supervision, equipment rentals, tools, field office expenses, temporary facilities, etc.

may invalidate comparisons with the estimated cost presented.

OSBL Investment

Industrial plants may be overdesigned for particular

The OSBL investment accounts for auxiliary items necessary

objectives and situations.

to the functioning of the production unit (ISBL), but which perform a supporting and non-plant-specific role. OSBL

Rapid fluctuation of equipment or construction costs

items considered may vary from process to process. The

may invalidate cost estimate.

OSBL investment could include the installed cost of the following items:

Equipment vendors or engineering companies may provide goods or services below profit margins during

Storage and packaging (storage, bagging and a

economic downturns.

warehouse) for products, feedstocks and by-products

Specific locations may impose higher taxes and fees,

Steam units, cooling water and refrigeration systems

which can impact costs considerably. Process water treating systems and supply pumps In addition, no matter how much time and effort are devoted to accurately estimating costs, errors may occur

Boiler feed water and supply pumps

due to the aforementioned factors, as well as cost and la bor changes, construction problems, weather-related issues, y g o l o d o h t e M s c i m o n o c E y g o l o n h c e T | c e t a r t n I

44

Electrical supply, transformers, and switchgear

strikes, or other unforeseen situations. This is partially considered in the project contingency. Finally, it must

Auxiliary buildings, including all services and

always be remembered that an estimated project cost is not

equipment of: maintenance, stores warehouse,

an exact number, but rather is a projection of the probable

laboratory, garages, fire station, change house,

cost.

cafeteria, medical/safety, administration, etc.

ISBL Investment The ISBL investment includes the fixed capital cost of the main processing units of the plant necessary to the manufacturing of products. The ISBL investment includes the installed cost of the following items:

General utilities including plant air, instrument air, inert gas, stand-by electrical generator, fire water pumps, etc. Pollution control, organic waste disposal, aqueous waste treating, incinerator and flare systems

Working Capital

Cash on hand. An adequate amount of cash on hand to give plant management the necessary flexibility to 2

For the purposes of this study, working capital is defined as

cover unexpected expenses (estimated as a certain

the funds, in addition to the fixed investment, that a

period – in days – of manufacturing expenses).

company must contribute to a project. Those funds must be adequate to get the plant in operation and to meet

Start-up Expenses

subsequent obligations. When a process is brought on stream, there are certain one The initial amount of working capital is regarded as an

time expenses related to this activity. From a time

investment item. This study uses the following

standpoint, a variable undefined period exists between the

items/assumptions for working capital e stimation:

nominal end of construction and the production of quality product in the quantity required. This period is commonly

Accounts receivable. Products and by-products

referred to as start-up.

shipped but not paid by the customer; it represents the extended credit given to customers (estimated as a

During the start-up period expenses are incurred for

certain period – in days – of manufacturing expenses

operator and maintenance employee training, temporary

plus depreciation).

construction, auxiliary services, testing and adjustment of equipment, piping, and instruments, etc. Our method of

Accounts payable. A credit for accounts payable such

estimating start-up expenses consists of four components:

as feedstock, catalysts, chemicals, and packaging materials received but not paid to suppliers (estimated

Labor component. Represents costs of plant crew

as a certain period – in days – of manufacturing

training for plant start-up, estimated as a certain

expenses).

number of days of total plant labor costs (operators, supervisors, maintenance personnel and laboratory

Product inventory. Products and by-products (if

labor).

applicable) in storage tanks. The total amount depends on sales flow for each plant, which is directly related to

Commercialization cost. Depends on raw materials

plant conditions of integration to the manufacturing of

and products negotiation, on how integrated the plant

product‘s derivatives (estimated as a certain period – in

is with feedstock suppliers and consumer facilities, and

days – of manufacturing expenses plus d epreciation,

on the maturity of the technology. It ranges from 0.5%

defined by plant integration circumstances).

to 5% of annual manufacturing expenses.

Raw material inventory. Raw materials in storage

Start-up inefficiency. Takes into account those

tanks. The total amount depends on raw material

operating runs when production cannot be

availability, which is directly related to plant conditions

maintained or there are false starts. The start-up

of integration to raw material manufacturing

inefficiency varies according to the process maturity:

(estimated as a certain period – in days – of raw

5% for new and unproven processes, 2% for new and

material delivered costs, defined by plant integration

proven processes, and 1% for existing licensed

circumstances).

processes, based on annual manufacturing e xpenses.

In-process inventory. Material contained in pipelines

Unscheduled plant modifications. A key fault that

and vessels, except for the material inside the storage

can happen during the start-up of the plant is the risk

tanks (assumed to be 1 day of manufacturing

that the product(s) may not meet specifications

expenses).

required by the market. As a result, equipment modifications or additions may be required.

Supplies and stores. Parts inventory and minor spare equipment (estimated as a percentage of total maintenance materials costs for both ISBL and OSBL).

2

The accounting definition of working capital (total current assets minus total current liabilities) is applied when considering the entire company. 45

Other Capital Expenses

Uncertainty in process parameters, such as severity of operating conditions and quantity of recycles

Prepaid Royalties. Royalty charges on portions of the plant are usually levied for proprietary processes. A

Addition and integration of new process steps

value ranging from 0.5 to 1% of the total fixed investment (TFI) is generally used.

Estimation of costs through scaling factors

Site Development. Land acquisition and site

Off-the-shelf equipment

preparation, including roads and walkways, parking, railroad sidings, lighting, fencing, sanitary and storm

Hence, process contingency is also a function of the

sewers, and communications.

maturity of the technology, and is usually a value between 5% and 25% of the direct costs.

Manufacturing Costs Manufacturing costs do not include post-plant costs, which are very company specific. These consist of sales, general and administrative expenses, packaging, research and development costs, and shipping, etc. Operating labor and maintenance requirements have been estimated subjectively on the basis of the number of major equipment items and similar processes, as noted in the literature.

The project contingency is largely dependent on the plant complexity and reflects how far the conducted estimation is from the definitive project, which includes, from the engineering point of view, site data, drawings and sketches, suppliers’ quotations and other specifications. In addition, during construction some constraints are verified, such as: Project errors or incomplete specifications Strike, labor costs changes and problems caused by weather

Plant overhead includes all other non-maintenance (labor and materials) and non-operating site labor costs for services associated with the manufacture of the product.

Table 23 – Project Contingency

Such overheads do not include costs to develop or market the product. G & A expenses represent general and administrative costs incurred during production such as: administrative

Plant Complexity

Complex

Typical

Simple

Project Contingency

25%

20%

15%


salaries/expenses, research & development, product distribution and sales costs. Intratec’s definitions in relation to complexity and maturity

Contingencies

are the following:

Contingency constitutes an addition to capital cost

Table 24 – Criteria Description

estimations, implemented based on previously available y g o l o d o h t e M s c i m o n o c E y g o l o n h c e T | c e t a r t n I

46

data or experience to encompass uncertainties that may

Simple

incur, to some degree, cost increases. According to recommended practice, two kinds of contingencies are assumed and applied to TPC: process contingency and

Complexity

Typical

Complex

impact of absent technical information or the uncertainty of

complexity of the process are decisive for its evaluation. Errors that occur may be related to:

Regular process

temperature or pressure, more instrumentation

Process contingency is utilized in an effort to lessen the

information gathered, its amount and the inherent

known processes

Several unit operations, extreme

project contingency.

that which is obtained. In that manner, the reliability of the

Somewhat simple, widely

New & Maturity

Proven Licensed

From 1 to 2 commercial plants 3 or more commercial plants


Accuracy of Economic Estimates The accuracy of estimates gives the realized range of plant cost. The reliability of the technical information available is of major importance.

A properly estimated location factor is a powerful tool, both for comparing available investment data and evaluating which region may provide greater economic attractiveness for a new industrial venture. Considering this, Intratec has developed a well-structured methodology for calculating Location Factors, and the results are presented for specific regions’ capital costs comparison.

Table 25 – Accuracy of Economic Estimates

Intratec’s Location Factor takes into consideration the differences in productivity, labor costs, local steel prices,

Reliability

Accuracy

Very

equipment imports needs, freight, taxes and duties on

High

imported and domestic materials, regional business

Low

Moderate

High

+ 30%

+ 22%

+ 18%

+ 10%

- 20%

- 18%

- 14%

- 10%

environments and local availability of sparing equipment. For such analyses, all data were taken from international statistical organizations and from Intratec’s database.


Calculations are performed in a comparative manner, taking a US Gulf Coast-based plant as the reference location. The final Location Factor is determined by four major indexes:

The non-uniform spread of accuracy ranges (+50 to – 30 %,

Business Environment, Infrastructure, Labor, and Material.

rather than ±40%, e.g.) is justified by the f act that the unavailability of complete technical information usually

The Business Environment Factor and the Infrastructure

results in under estimating rather than over estimating

Factor measure the ease of new plant installation in

project costs.

different countries, taking into consideration the readiness of bureaucratic procedures and the availability and quality

Location Factor

of ports or roads.

A location factor is an instantaneous, total cost factor used for converting a base project cost from one geographic location to another.

Figure 17 – Location Factor Composition

Location Factor

Material Index Domestic Material Index Relative Steel Prices Labor Index Taxes and Freight Rates Spares Imported Material Taxes and Freight Rates Spares

Labor Index Local Labor Index Relative Salary Productivity Expats Labor

Infrastructure Factor Ports, Roads, Airports and Rails (Availability and Quality) Communication Technologies Warehouse Infrastructure Border Clearance Local Incentives

Business Environment Factor Readiness of Bureaucratic Procedures Legal Protection of Investors Taxes


47

Labor and material, in turn, are the fundamental components for the construction of a plant and, for this reason, are intrinsically related to the plant costs. This concept is the basis for the methodology, which aims to represent the local discrepancies in labor and material. Productivity of workers and their hourly compensation are important for the project but, also, the qualification of workers is significant to estimating the need for foreign labor. On the other hand, local steel prices are similarly important, since they are largely representative of the costs of structures, piping, equipment, etc. Considering the contribution of labor in these components, workers’ qualifications are also indicative of the amount that needs to be imported. For both domestic and imported materials, a Spare Factor is considered, aiming to represent the need for spare rotors, seals and parts of rotating equipment. The sum of the corrected TFI distribution reflects the relative cost of the plant, this sum is multiplied by the Infrastructure and the Business Environment Factors, yielding the Location Factor. For the purpose of illustrating the conducted methodology, a block flow diagram is presented in Figure 17 in which the four major indexes are presented, along with some of their components. .

y g o l o d o h t e M s c i m o n o c E y g o l o n h c e T | c e t a r t n I

48

49

s e i t r e p o r P s m a e r t S & e c n a l a B s s a M . A x i d n e p p A | c e t a r t n I

50

51

n w o d k a e r B n o i t p m u s n o C s e i t i l i t U . B x i d n e p p A | c e t a r t n I

52

Appendix C. Process Carbon Footprint The process’ carbon footprint can be defined as the total

The assumptions for the process carbon footprint

amount of greenhouse gas (GHG) emissions caused by the

calculation are presented in Table 28 and the results are

process operation.

provided in Table 29.

Although it is difficult to precisely account for the total emissions generated by a process, it is possible to estimate the major emissions, which can be divided into:

Table 29 – CO2 e Emissions (ton/ton prod.)

Direct emissions. Emissions caused by process waste streams combusted in flares. Indirect emissions. The ones caused by utilities generation or consumption, such as the emissions due to using fuel in fu rnaces for heating process streams. Fuel used in steam boilers, electricity generation, and any other emissions in activities to support process operation are also considered indirect emissions. In order to estimate the direct emissions, it is necessary to


know the composition of the streams, as well as the oxidation factor. Estimation of indirect emissions requires specific data, which depends on the plant location, such as the local electric power generation profile, and on the plant resources, such as the type of fuel used.

Equivalent carbon dioxide (CO2e) is a measure that describes the amount of CO2 that would have the same global warming potential of a given greenhouse gas, when measured over a specified timescale. All values and assumptions used in calculations are based on data provided by the Environment Protection Agency (EPA) Climate Leaders Program.

Table 28 – Assumptions for CO2 e Emissions Calculation


53

Actual gas flow rate Inlet (m3/h)

g n i z i S & t s i L d e l i a t e D t n e m p i u q E . D x i d n e p p A | c e t a r t n I

54

Table 32 – Heat Exchangers

Design gauge pressure (barg)

Shell design temperature (deg C) Shell material

CS

Tube design gauge pressure (barg) Tube design temperature (deg C)

55

Table 32 – Heat Exchangers (Cont.)

Shell design temperature (deg C) Shell material Tube design gauge pressure (barg) Tube design temperature (deg C)


56

CS

Table 32 – Heat Exchangers (Cont.)

Shell design temperature (deg C) Shell material

CS

Tube design gauge pressure (barg) Tube design temperature (deg C)

57

Casing material Design gauge pressure (barg) g n i z i S & t s i L d e l i a t e D t n e m p i u q E . D x i d n e p p A | c e t a r t n I

58

Design temperature (deg C)

CS

59

Design gauge pressure (barg) Design temperature (deg C)


60


Table 36 – Vessels & Tanks Specifications (Cont.)



61

Appendix E. Detailed Capital Expenses Direct Costs Breakdown Figure 18 – ISBL Direct C osts Breakdown by Equipment Type for Base Ca se


Figure 19 – OSBL Direct Costs Breakdown by Equipment Type for Base Case

s e s n e p x E l a t i p a C d e l i a t e D . E x i d n e p p A | c e t a r t n I

62


63

Appendix F. Economic Assumptions Capital Expenditures

Working Capital

For a better description of working capital and other capital expenses components, as well as the location factors methodology, see the chapter “Technology Economics

Table 39– Working Capital Assumptions for Base Case

Methodology.”

Construction Location Factors

Table 38 – Detailed Construction Location Factor


Table 40 – Other Capital Expenses Assumptions for Base Case

s n o i t p m u s s A c i m o n o c E . F x i d n e p p A | c e t a r t n I

64


Operational Expenditures Fixed Costs

The goal of depreciation is to allow a credit against manufacturing costs, and hence taxes, for the nonrecoverable capital expenses of an investment. The depreciable portion of capital expense is the total fixed investment.

Fixed costs are estimated based on the specific characteristics of the process. The fixed costs, like operating

Table 41 shows the project depreciation value and the

charges and plant overhead, are typically calculated as a

assumptions used in its calculation.

percentage of the industrial labor costs, and G & A expenses are added as a percentage of the operating costs. Table 41 – Depreciation Value & Assumptions Table 40 – Fixed Cost Assumptions


Figure 20 – Historical EBITDA Margins Regional Comparison


65

Appendix G. Released Publications The list below is intended to be an easy and quick way to

CONCEPTUAL DESIGN

identify Intratec reports of interest. For a more complete and up-to-date list, please visit the Publications section on

Membranes on Polypropylene Plants Vent Recovery:

our website, www.intratec.us.

The Report evaluates membrane units for the separation of monomer and nitrogen in PP plants,

TECHNOLOGY ECONOMICS

similar to the VaporSep® system commercialized by MTR.

Propylene Production via Metathesis: Propylene production via metathesis from ethylene and butenes,

Use of Propylene Splitter to Improve Polypropylene

in a process similar to Lummus OCT.

Business: The report assesses the opportunity of purchasing the less valued RG propylene to produce

Propylene Production via Propane Dehydrogenation: Propane dehydrogenation (PDH) process conducted in moving bed reactors, in a process similar to UOP OLEFLEX™. Propylene Production from Methanol: Propylene production from methanol, in a process is similar to Lurgi MTP®. Polypropylene Production via Gas Phase Process: A gas phase type process similar to the Dow UNIPOL™ PP process to produce both polypropylene homopolymer and random copolymer. Polypropylene Production via Gas Phase Process, Part 2: A gas phase type process similar to Lummus NOVOLEN® for production of both homopolymer and random copolymer. Sodium Hypochlorite Chemical Production: Sodium hypochlorite (bleach) production, in a widely used industrial process, similar to that employed by Solvay Chemicals, for example. Propylene Production via Propane s n o i t a c i l b u P d e s a e l e R . G x i d n e p p A | c e t a r t n I

66

Dehydrogenation, Part 2: Propane dehydrogenation (PDH) in fixed bed reactors, in a process is similar to Lummus CATOFIN®. Propylene Production via Propane Dehydrogenation, Part 3: Propane dehydrogenation (PDH) by applying oxydehydrogenation, in a process similar to the STAR PROCESS® licensed by Uhde.

the PG propylene raw material used in a PP plant.

Appendix H. Technology Economics Form Submitted by Client

Chemical Produced by the Technology to be Studied Define the main chemical product of your interest. Possible choices are presented below. Choose a Chemical

Acetic Acid

Acetone

Acrylic Acid

Acrylonitrile

Adipic Acid

Aniline

Benzene

Butadiene

n-Butanol

Isobutylene

Caprolactam

Chlorine

Cumene

Dimethyl Ether (DME)

Ethanol

Ethylene

Bio-Ethylene

Ethylene Glycol

Ethylene Oxide

Formaldehyde

HDPE

Isoprene

LDPE

LLDPE

MDI

Methanol

Methyl Methacrylate

Phenol

Polypropylen e (PP)

Polybutylene Terephthalate

Polystyrene (PS)

Polyurethanes (PU)

Polyvinyl Chloride (PVC)

Propylene

Propylene Glycol

Propylene Oxide (PO)

Terephthalic Acid

Vinyl Chloride (VCM)

If the main chemical product of your targ et technology is not found above, please check the "Technology Economic Form - Specialties" .

Chemical Process Technology to be Studied Identify the mature chemical process technology you would like us to assess. Intratec considers mature technologies the ones already used on a commercial scale plant. Technology Description

Propane dehydrogenation technology similar to UOP Oleflex E. g. technology for propylene production from methanol - similar to Lurgi MTP

Commercial Scale Unit. Inform the exact location of one commercial scale plant under operation. Plant Location:

I don't know I know the location of a commercial plant:

Yanbu, Saudi Arabia

If there is no commercial scale plant based on the technology of your interest, you are referred to Intratec's Research Potential advisory service at www.intratec.us/advisory/research-potential/overview

Industrial Unit Description

Plant Nominal Capacity

Operating Hours

Inform the plant capacity to be considered in the study. Provide the main product capacity in kta (thousands of metric tons per year of main chemical product). Plant Capacity

150 kta

Operating Hours

300 kta Other (kta)

Inform the assumption for the number of hours the plant operates in a year.

8,000 h/year Other (h/year)

550

Analysis Date Define the date (quarter and year) that will be considered in the analysis. Our databases can provide consolidated consolidated values from the year 2000 up to the last closed quarter, quarter-to-date values are estimated. Quarter

Year

Q3

2011

Storage Facilities Define the assumptions employed for the storage facilities design. Products

20 days Other

By-Products

20 days Other

0

Raw Material s

20 days Other

0

0

Utilities Supply Facilities The construction of supply facilities for the utilities required (e.g. cooling tower, tower, boiler unit, refrigeration unit) impacts the capital investment for the construction of the unit. Consider construction of supply facilities ?

Yes

No

General Design Conditions General utilities and environmental conditions that may be relevant to the process simulation are presented below. Provide other assumptions assumptions if you deem necessary. Specification

Unit

Default Value

User-specified value

Cooling water temperature

ºC

24

DSPEC1

Cooling water range

ºC

11

DSPEC2


bar abs

7

DSPEC3

Steam (Medium Pressure)

bar abs

11

DSPEC4

Steam (High Pressure)

bar abs

28

DSPEC5

Refrigerant (Ethylene)

ºC

-100

DSPEC6

Refrigerant (Propane)

ºC

-40

DSPEC7

Refrigerant (Propylene)

ºC

-45

DSPEC8

Dry Bulb Air Temperature

ºC

38

DSPEC9

Wet Bulb Air Temperature

ºC

25

DS10

Industrial Unit Location The location of an industrial unit influences in prices for both construction and operation of the unit. In this study, the economic performances of TWO similar units erected in different locations are compared. The first plant is located in the United States (US Gulf Coast) and the second location is defined by YOU. Plant Location

I would like to keep the plant location confidential. Country (or region) to be considered.

China

E.g. Louisiana (USA), China or Saudi Arabia. Please define only one location.

Plant Location Data Provider

I will use Intratec's Internal Database containing standard chemical prices and location factors (only for Germany, Japan, China or Brazil). I will provide location specific data. Please fill the Custom Location topic below.

Custom Location Description. Describe both capital investment and prices at your custom location. A) Capital Investment. Provide the relative capital cost at your custom location in comparison to the United States (U.S. Gulf Coast) Custom Location Relative Cost (%) 130% means that the capital costs in the custom location are 30% higher than the costs in the United States.

B) Raw Materials Prices. Describe the raw material prices to be considered in the custom location. Item Description

Price Unit

Price

Raw1

RU1

RP1

Raw2

RU2

RP2

Raw3

RU3

RP3

E.g.

Propane

USD/metric ton

420

C) Product Prices. Describe the products prices to be considered in the custom location. Item Description

Price Unit

Price

Prod1

PU1

PP1

Prod2

PU2

PP2

Prod3

PU3

PP3

E.g.

Polypropylene

USD/metric ton

1700

D) Utilities Prices. Describe the utilities prices to be considered in the custom location. Item Description

Price Unit

Price

Electricity

UP1


UP2

Steam (High Pressure)

UP3

Fuel

UP4

Clarified Water

UP5

Util6

UU6

YP6

Util7

UU7

UP7

Util8

UU8

UP8

E) Labor Prices. Describe the labor prices to be considered in the custom location. Item Description

Price Unit

Price

Operating Labor

USD/operator/ hour

LP1

Supervision Labor

USD/supervisor/hour USD/supervi sor/hour

LP1

F) Others. Describe any other price you deem necessary to be considered in the custom location. Item Description

Price Unit

Price

Other1

OU1

OP1

Other2

OU2

OP2

Other3

OU3

OP3

E.g.

Catalyst

USD/metric ton

5000

Other Remarks If you have any other comments, feel free to write them below: Co m m en ts:

Complementary Files Along with this form, you may also upload any other chemical document deemed relevant for the description of the project, such as articles, brochures, book sections, patents, etc. Multiple files may be uploaded. If you are filling this form offline please upload this form and any complementary files at www.intratec.us/advisory/technology-economics/ order-commodities

Non-Disclosure Period & Pricing You can keep your study confidential or get discounts, by allowing Intratec to disclose it to the market as a publication, after an agreed non-disclosure period, starting at the date you place your order. Choose an Option

6 months

24 months

36 months

Never Disclosed

Non-Disclosure Period

Price

6 months

$8,000 (9 x $899)

Save 84%

24 months

$28,000 (9 x $3,111)

Save 44%

automatically, in equal and pre-defined installments

36 months

$40,000 (11 x $3,636)

Save 20%

- Every 15 days, an installment will be charged to your

Never Disclosed

$50,000 (13 x $3,846)

- Payment of our advisory service is conducted

credit card or PayPal account.

Pay Less! Benefit From a 5% Discount Inform us the email address of the Intratec Agent that introduced you to our advisory services you will benefit from a 5% discount on the total price of your service. To know more about Intratec New Business Development Agents, please visit www.intratec.us/be-our-agent. Intratec Agent Email

Evaluate our Intratec Agent. Your opinion will be kept confidential.

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