by Pınar Özbay Nihal Payza

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


US 6,833,483


US 4,760,203


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


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 ,)/()/(


• 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



Compressor K101 Centrifugal 174,297.270


Expander K103 Centrifugal 14,234.277


Compressor K105 Centrifugal 1,234,605.662

Compressor K106 Centrifugal 1,742,972.700

Pump P101 Centrifugal 1,815.597








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

• Direct, Indirect costs and Working capital investment are calculated by multipyling with a certain fraction of purchased equipment cost

• Fixed capital investment : Direct costs + Indirect costs

• Total capital investment : Fixed capital investment + Working capital investment

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 Default Factor Basis Basis Cost (million$/y) Cost (million$/y)

Raw materials 9,688

Operating labor 0,825

Operating supervision 0,150 operating labor 0,825 0,124

Utilities 1,231

Maintenance and repairs 0,060 FCI 38,599 2,316

Operating supplies 0,150 maintenance&repair 2,316 0,347

Laboratory charges 0,150 oprating labor 0,825 0,124

Royalties 0,010 TPC 20,471 0,205

Catalysts 1,281

Variable Cost 16,140

Taxes(property) 0,020 FCI 38,599 0,772

Financing(interest) 0,000 FCI 38,599 0,000

Insurance 0,010 FCI 38,599 0,386

Rent 0,000 FCI 38,599 0,000

Fixed Charges 1,158

Plant overhead 0,600 lab&sprvision&main 3,264 1,959

Plant overhead 1,959

Mnufacturing Cost 19,256

Administration 0,200 labor&sprvision&main 3,264 0,653

Distribution&Selling 0,050 TPC 20,471 1,024

R&D 0,040 TPC 20,471 0,819

General Expense 2,495

Total Product Cost without Depreciation 20,471

•Unit price 267.9 $/kg•Total catalyst cost during the production life: 12.812 million $

• The investments at the beginning of 2009, 2010 and 2011 are calculated including inflation rate...

FCI2009=FCI*0.15*construction inflation rate0

FCI2010=FCI*0.35* construction inflation rate1

FCI2011=FCI*0.50* =construction inflation rate2

• Sales 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

• Annual TPC is calculated according to these data.

• Total Capital Invesment = FCI + WCI

Cash flow calculationCash flow calculation

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


In order to find annual cash flow, 5 years MACRS depreciation method is used

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

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 NPV=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

1mrarm e

0.15 1

0.14

mr

m

e

r

ln( 1)r i ln(0.29 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

> ram= 0.14

PROFITABLE PROFITABLE

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% warum? 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 in order to reduce risk 2013 – 0.9

2014 – 1.0

5-year MACRS Depreciation Method warum? mar is taken as 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

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by Pınar Özbay Nihal Payza