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by Pınar Özbayby Pınar Özbay Nihal PayzaNihal Payza
Zeynep PekişenZeynep Pekişen Deniz Uğurlar Deniz Uğurlar
ISOPROPYL ALCOHOL PRODUCTION PLANT
CHIPA
Information about...Information about... Isopropyl AlcoholIsopropyl Alcohol IPAIPA Manufacturing Processes Manufacturing Processes Process SelectionProcess Selection Market ResearchMarket Research Design Capacity of IPADesign Capacity of IPA Process Flow DiagramProcess Flow Diagram Economical EvaluationEconomical Evaluation
Purchased Equipment CostPurchased Equipment Cost Capital Investment CalculationsCapital Investment Calculations Total Product Cost CalculationsTotal Product Cost Calculations Cash Flow CalculationsCash Flow Calculations Profitability AnalysisProfitability Analysis Break-Even PointBreak-Even Point
AssumptionsAssumptions SummarySummary
Isopropyl AlcoholIsopropyl Alcohol
• Flammable , colorless liquid with a strong and pleasant odor
• Miscible with water , ethanol , acetone and benzene
ApplicationsApplications
• Pharmaceuticals ,pesticides ,coatings
• As cleaning agents used on electronic devices
• Anti-freeze agent in fuel
C3H7OH
IPAIPA Manufacturing Processes Manufacturing ProcessesDirect Hydration
combination of water and propylene with acidic cation exchange resin catalyst
Indirect Hydration Reaction of propylene with sulfuric acid with a heterogenous polymeric acid catalyst
Acetone Hydrogenation of acetone
Advantages of Advantages of Direct HydrationDirect Hydration
Thermally stable polymeric catalyst High product quality improvement Cost effective Environmental friendly High selectivity of IPA
Process SelectionProcess SelectionProcess for producing isopropyl alcohol, US 5,763,693
COMPAREDPROPERTIES
Section 3.2.1Patent no:
US 4,352,945
Section 3.2.2Patent no:
US 6,833,483
Section 3.2.3Patent no:
US 4,760,203
Section 3.2.4Patent no:
US 5,763,693
Raw materials (4) 10 9 10 10
End product (10) 10 7 10 10
Conversion (8) 9 3 10 9
Reactor Type (5) 10 10 10 10
Catalyst type (6) 10 10 10 10
Purity of products (7) 5 10 10 10
Environmental Effects (6) 10 10 10 10
Operating Conditions (6) 10 10 10 10
Data Availability (10) 5 5 3 10
Energy Consumption (6) 5 5 5 8
Complexity of the proces(9) 5 7 3 8
Economic aspects (8) 3 3 3 7
Total 626 597 631 728
Market ResearchMarket ResearchLargest producers around the world : Shell, ExxonMobil, Sasol and Dow
(72%)ARKEM KİMYA in Turkey : %34 of total market share
Design Capacity of IPADesign Capacity of IPA
• TUIK DATATUIK DATA
3 Year Moving Data of IPA Consumption in Turkey
0.E+00
4.E+06
8.E+06
1.E+07
2.E+07
2.E+07
2.E+07
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
years
kg
3 Yearmoving
•Reasons of fluctuation Reasons of fluctuation
•Decrease in demand for IPA•Economis crisis•New substitute chemicals as ethyl alcohol•Consumption data taken from ARKEM Kimya consistent with TUIK data
Design Capacity of IPADesign Capacity of IPA
log
log 1
i
Turkey
GDP
GDPN
•Year difference calculation between countries
• Population, GDP, growth rates and consumption of countries
• Calculation of future population and GDP of Turkey )(
)(
)1(
)1(reffuture
reffuture
reffuturereffuture
populationpopulation
GDPGDP
• Calculation of consumption of Turkey per capita reference year: 2005
futureTurkeyTurkey populationcapitanconsumptionconsumptio )/(
• Final design capacity of Turkey
i
TurkeyTurkeyTurkey PPP
PPPnconsumptiocapacity
i
futureTurkeyiTurkey GDP
GDPcapitanconsumptiocapitanconsumptio ,)/()/(
Design Capacity of IPADesign Capacity of IPA
• Consumption Projections of IPA
•3 year investment (2009-2010-2011)
•2 year ramp up (2012-2013)
•1st year 0.5 * capacity
•2nd year 0.9 * capacity
•3rd year full capacity
• 14 year operation (2012-2025)
0.E+00
5.E+07
1.E+08
2.E+08
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
years
kg/year
expo model
linear
poly
log
Austria
France
Germany
Greece
Italy
Spain
Switzerland
England
Turkey
Series13
The best fit Logaritmic model
full capacity of IPA in 2025 43,000 tons/year
Process Flow DiagramProcess Flow Diagram
propane
90% IPA
10% water
water
propane
propane
96% propylene
4% propane
Mixer
Direct Hydration Unit (Packed Bed)
• No side reaction
•X = 0.75
• adiabatic rxn at 80atm
• T : 418 423
•Sulfonated ion exchange resin
Centrifugal Compressors
Efficiency : 0.75
Pumps
Efficiency :0.7
Distillation
Ttop:337K
Tbottom:348
•Propylene recycle to mixer
•Bottom: propane
Gas-Liquid Separator
T: 354 K
•Top: Propane
•Bottom: IPAIPA + 10% water
Extraction
T: 410K
Extraction agent: propane
•Top: Isopraponal, water, propane
•Bottom: Water recycle to mixer
3 6 2 3 2( )C H H O CH CH OH
Purchased Equipment CostPurchased Equipment Cost• Heat exchangers Type of material-Carbon Steel Heat transfer area-500.8m2
Type factor for fixed tube sheet
• Compressors & Expanders Required power Type-Centrifugal
• Pumps Volumetric flow rate Pressure & Pressure adjustment factor
Material adjustment factor (cast iron)
• Reactor Type-Fixed bed jacketed type Construction material-Stainless Steel Capacity-98m3 @80 atm
• Distillation Diameter- 0.8m Number of stages-50 Type of material-Carbon Steel•Extraction Diameter-1.5m Height-8m Type of material-Carbon Steel• Mixer Type-Rotary,Double Cone Volume-7m3
Type of material-Carbon Steel
• Valve Nominal Diameter-0.13m Type-Pressure regulators for gases and liquids
• Storage Tanks & Flash Drum Volume-9.12m3
(for flash drum)
PastatValueIndex
esentatValueIndexCostPurchasedCostesent
PrPr
Chemical EngineeringPlant Cost Index
Total Purchased Equipment CostTotal Purchased Equipment CostCost ($)
Reactor R101 PBR 2,178,715.875
Distillation Column C101 Stainless Steel 210,609.201
Extraction Column C102 Stainless Steel 325,354.904
Heat Exchanger E101 Shell and Tube 155,227.375
Heat Exchanger E102 Shell and Tube 155,227.375
Heat Exchanger E103 Shell and Tube 155,227.375
Compressor K101 Centrifugal 174,297.270
Compressor K102 Centrifugal 305,020.222
Expander K103 Centrifugal 14,234.277
Compressor K104 Centrifugal 21,787.159
Compressor K105 Centrifugal 1,234,605.662
Compressor K106 Centrifugal 1,742,972.700
Pump P101 Centrifugal 1,815.597
Pump P102 Centrifugal 4,538.991
Pump P103 Centrifugal 3,195.450
Pump P104 Centrifugal 7,988.625
Pump P105 Centrifugal 1,888.220
Pump P106 Centrifugal 4,720.551
Pump P107 Centrifugal 4,212.184
Pump P108 Centrifugal 10,530.460
Storage Tank F101 Carbon-Steel Tank 72.382
Storage Tank F102 Carbon-Steel Tank 36.192
Flash Drum V101 Carbon-Steel 29,049.545
Valve A101 Control 4,357.432
Mixer M101 Rotary, Double Cone 38,824.324
6,886,610.770
Equipment
Total Purchased Equipment Cost
• Fixed capital investment : Direct costs + Indirect costs
• Total capital investment : Fixed capital investment + Working capital investment
Direct, Indirect costs and Working capital investment are calculated by multipyling with a certain fraction of purchased equipment cost
Fraction of delivered purchased equipment
cost for fluid processing plant
Multiplication of fractions with purchased
equipment cost (million $)
Direct Costs
Delivered purchased equipment cost 1.100 6.887
Purchased equipment installation 0.470 3.560
Instrumentation&Controls(installed) 0.360 2.727
Piping (installed) 0.680 5.151
Electrical systems (installed) 0.110 0.833
Buildings (including services) 0.180 1.364
Yard improvements 0.100 0.758
Service facilities (installed) 0.700 5.303
Total direct costs 27.271Indirect Costs
Engineering and supervision 0.330 2.500
Construction expenses 0.410 3.106
Legal expenses 0.040 0.303
Contractor's fee 0.220 1.667
Contingency 0.440 3.333
Total indirect costs 10.908
Fixed capital investment
(direct cost + indirect costs)38.179
Working capital investment 0.890 6.742
Total capital investment 44.921
TPC =TPC = Manufacturing cost + General Expenses
Raw materials Operating labor Operating supervision Utilities Maintenance and repairsOperating suppliesLaboratory charges Royalties (if not on lump-sum basis) Catalysts and solvents
Taxes (property)Financing (interest)InsuranceRent Depreciation
Variable cost + Fixed charges + Plant overheadAdministrationDistribution & sellingResearch & Development
= Price($/kg)* Annual amount = Price($/kg)* Annual amount
day330operator
8h
h
$
day
shifts
shifts
operators ofnumber costlabor operating Annual
Utility FacilitiesRange
(%)
Typical
Unit
Real Cost
($)
Fixed-Capital Investment 100 38,179
Steam Generation 2.6 - 6.0 3 1,145
Steam Distribution 0.2 - 2.0 1 0,382
Water Supply, Cooling &
Pumping0.4 - 3.7 1,800 0,687
Water Treatment 0.5 - 2.1 1,300 0,496
Water Distribution 0.1 - 2.0 0,800 0,305
Electric Substitution 0.9 - 2.6 1,300 0,496
Electric Distribution 0.4 - 2.1 1 0,382
Gas Supply & Distribution 0.2 - 0.4 0,300 0,115
Air Compression & Distribution 0.2 - 3.0 1 0,382
Refrigeration & Distribution 1.0 - 3.0 1 0,382
Process Waste Disposal 0.6 - 2.4 1,500 0,573
Domestic Waste Disposal 0.2 - 0.6 0,400 0,153
Communication 0.1 - 0.3 0,200 0,076
Raw Material Storage 0.3 - 3.2 0,500 0,191
Final Product Storage 0.7 - 2.4 1,500 0,573
Fire Estinguishing System 0.3 - 1.0 0,500 0,191
Safety Installation 0.2 - 0.6 0,400 0,153
Total Utility Cost 39951 1,231
TOTAL PRODUCT COST
WITHOUT DEPRECIATION
Item
Defaul
t
Factor
Basis
Basis Cost
(million$/
y)
Cost
(milli
on$/
y)
Raw materials 9,68
8
Operating labor 0,82
5
Operating
supervision 0,150
operating
labor0,825
0,12
4
Utilities 1,23
1
Maintenance
and repairs0,060 FCI 38,599
2,31
6
Operating
supplies0,150
maintena
nce&rep
air
2,3160,34
7
Laboratory
charges 0,150
oprating
labor0,825
0,12
4
Royalties 0,010 TPC 20,4710,20
5
Catalysts 1,28
1
Variable
Cost
16,
140
Taxes(property) 0,020 FCI 38,5990,77
2
Financing(interes
t)0,000 FCI 38,599
0,00
0
Insurance 0,010 FCI 38,5990,38
6
Rent 0,000 FCI 38,5990,00
0
Fixed
Charges
1,1
58
Plant
overhead
0,60
0
lab&sp
rvision
&main
3,2641,9
59
Plant
overhead
1,9
59
Mnufacturin
g Cost
19,
256
Administration 0,200
labor&sp
rvision&
main
3,2640,65
3
Distribution&Selli
ng0,050 TPC 20,471
1,02
4
R&D 0,040 TPC 20,4710,81
9
General
Expense
2,4
95
Total
Product Cost
without
Depreciation
20,
471
•Unit price 267.9 $/kg•Total catalyst cost during the roduction life: 12.812 million $
• 5-year MACRS depreciation method is used• The investments at the beginning of 2009, 2010 and 2011 are calculated
FCI2009=FCI*0.15*construction inflation rate0
FCI2010=FCI*0.35* construction inflation rate1
FCI2011=FCI*0.50* =construction inflation rate2
• Total Annual Value of IPA = price ($/kg) * annual amount(kg/y)
= 1.17 * (43*10^6) = 50.31*10^6 $/y
• 1st and 2nd years -> operating rates are 0.5 and 0.9 respectively
• Lastly, Annual TPC is calculated
•WCI value is calculated with respect to the sum of these FCI values including inflation
• Total Capital Invesment = FCI + WCI
•Cash Flow CalculationCash Flow Calculation
Total Product Cost EvaluationTotal Product Cost Evaluation Plant Age Land FCI WC+Startup TCI Operating Rate Annual Sales TPC w/o deprn
2009 -2 -0.73 -5.73 -6.45
2010 -1 0.00 -13.36 -13.63
2011 0 0.00 -19.09 -6.93 -26.79
2012 1 0.00 0.00 -3.92 0.00 0.50 25.16 -13.09
2013 2 0.00 0.00 0.00 0.00 0.90 45.28 -20.32
2014 3 0.00 0.00 0.00 0.00 1.00 50.31 -22.50
2015 4 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2016 5 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2017 6 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2018 7 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2019 8 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2020 9 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2021 10 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2022 11 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2023 12 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2024 13 0.00 0.00 0.00 0.00 1.00 50.31 -4.30
2025 14 0.73 0.00 6.93 0.00 1.00 50.31 -4.30
SUM -46.87 674.15 -103.18
Total Total Cash FlowCash FlowIn order to find annual cash flow, 5 years MACRS depreciation
method is used
After calculating depreciation values, cash flow can be obtained with corresponding equations
Gross Profit = Annual Sales – TPC w/o dep’n – dep’n –startup costs
Net Profit = Gross Profit * (1- tax rate)
Cash flow = Net Profit + Depreciation
Total Cash Flow = Annual Cash Flow – Planned Investments(0)
dj = FCI * depreciation factor j
Cumulative Cash Flow EvaluationCumulative Cash Flow Evaluation
DatePlantage
Annual depr’n
Annualdepr’n
Annual GrossProfit
Annual NetProfit
Annual operating cash flow
Total annual cash flow
Cumulative cash position
factor 1/y 106 $/y 106 $/y 106 $/y 106 $/y 106 $/y 106 $/y
2009 -2 -6.45 -6.45
2010 -1 -13.63 -20.08
2011 0 -26.79 -46.87
2012 1 0.20 7.84 0.30 0.19 8.04 8.04 -38.83
2013 2 0.32 12.55 12.41 8.07 20.62 20.62 -18.21
2014 3 0.19 7.53 20.28 13.18 20.71 20.71 2.50
2015 4 0.12 4.52 22.85 14.85 19.37 19.37 21.87
2016 5 0.12 4.52 22.39 14.55 19.07 19.07 40.94
2017 6 0.06 2.26 24.18 15.72 17.97 17.97 58.91
2018 7 25.96 16.87 16.87 16.87 75.78
2019 8 25.47 16.56 16.56 16.56 92.34
2020 9 24.97 16.23 16.23 16.23 108.57
2021 10 24.47 15.90 15.90 15.90 124.48
2022 11 23.95 15.57 15.57 15.57 140.05
2023 12 23.42 15.23 15.23 15.23 155.27
2024 13 22.89 14.88 14.88 14.88 170.15
2025 14 22.34 14.52 14.52 14.52 184.67
SUM 1.00 39.22 295.87 192.32 231.53 184.67
Graphical representation shows that in 2014 the plant starts to make profit
Time Value of Money not included Return on Investment (ROI) mar=0.15 ROI=29% > mar=15%
Payback Period (PBP)
PBP=2.37 < PBPref=3.99 Net Return (NR)
NR= 6.406*106 > 0
Profitability Analysis Profitability Analysis
Pr
100
Ni
Net ofit per Year
NROI
Total Capital Investment
100
NFlowCashOperatingAnnual
InvestmentCapitalFixedPeriodPayback 0.837
0.837 /refar
PBPN m
0.837FCI
TCI
InvestmentCapitalTotalmN
ofitNetAnnualturnNet AR
Pr
Re
Time Value of Money included with Discrete Cash Flows and Discounting
Net Present Value interest rate, i=0.15 NPW=44.492 > 0
Discounted Cash Flow Rate of Return (DCFR) by trial error DCFR 29 % > 15%.
Time Value of Money included with Continuous Cash Flows and Discounting
Profitability Analysis Profitability Analysis
N
Ni
FlowCashNetNPV
111
0
111
N
Ni
FlowCashNetNPV
1reffi e 1mr
arm e 0.15 1
0.14
mr
m
e
r
ln( 1)r i ln(0.2888 1) 0.25r
Date Plant Age Present worth factor
Total annual cash flow Present worth of annual
106$ cash flows, 106$
2008 -3 1.521 0 0
2009 -2 1.323 -6.452 -8.533
2010 -1 1.15 -13.63 -15.675
2011 0 1 -26.786 -26.786
2012 1 0.87 8.037 6.989
2013 2 0.756 20.618 15.591
2014 3 0.658 20.714 13.62
2015 4 0.572 19.367 11.073
2016 5 0.497 19.069 9.481
2017 6 0.432 17.974 7.771
2018 7 0.376 16.873 6.343
2019 8 0.327 16.556 5.412
2020 9 0.284 16.233 4.615
2021 10 0.247 15.904 3.931
2022 11 0.215 15.568 3.346
2023 12 0.187 15.225 2.846
2024 13 0.163 14.876 2.418
2025 14 0.141 14.519 2.052
Net present worth 106$ 44.492
> rm= 0.14
PROFITABLEPROFITABLE
Break-Even PointBreak-Even PointCapacity
eCyclohexanper
CostVariableCostFixedCapacity
eCyclohexanper
IncomeSale
• Break-Even Capacity 41,517 tons/year• Production Capacity 43,000 tons/year
• Production Capacity > B.E Capacity Profit
Investment in 3 years 2009 – 15% 2010 – 35%
2011 – 50% No additional planned investment such as plant replacement Salvage value is taken as zero Start-up expense 10% of FCI Construction inflation rate 2% Product price inflation rate 0% TPC inflation rate 2% Two-year ramp-up production rates 2012 – 0.5 2013 – 0.9
2014 – 1.0
5-year MACRS Depreciation Method mar = 0.15
Assumptions for Economic EvaluationAssumptions for Economic Evaluation
As a summary . . .As a summary . . .
Total annual Cash Flow184.67million $
43,000 tonnes per year
CHIPA
Isopropyl Alcohol
Result A profitable IPA Manufacturing Plant
90% IPA as end product
Break-Even Capacity 41,517 tonnes/year
Pay Back Period 2.37 years
THANK
YOU
FOR YOUR
ATTENTION