Techonology Economics: Polypropylene via Gas Phase Process

Polypropylene
via Gas Phase
Process

#TEC004B
Technology Economics
Polypropylene Production via Gas Phase Process
2013

Abstract
Polypropylene is a thermoplastic polymer with low specific gravity, high stiffness, relatively high temperature resistance and good
resistance to chemicals and fatigue. These exceptional properties, combined with this material’s versatility have made it one of the
most widely used polymers, second only to polyethylene in terms of global demand. The global market for polypropylene was
over 50 million metric tons in 2011 as it was utilized in a broad and diverse range of end-uses from injection molding applications
to film and sheet, raffia and fiber, among others.
Growth in polyolefin consumption will be largely driven by the rapid economic development of numerous transition countries in
the Asia Pacific region, Central Europe, the Middle East and South America. On the supply side, the shift in global steam cracker
production toward lighter, natural gas-based feedstock is increasingly limiting by-product propylene output. The resulting tight
supply of propylene has led to higher propylene and polypropylene prices, which are encouraging investments in alternate
propylene sources, as the on-purpose technologies. High propylene feedstock prices also rendered the construction of standalone polypropylene plants infeasible, making upstream integration indispensable for most of the new polypropylene projects.
Gas phase polypropylene production technology is the fastest growing route for producing polypropylene homopolymers and
random copolymers. In this report, the production of polypropylene through the polymerization of propylene via a gas phase
process is reviewed. Included in the analysis is an overview of the technology and economics of a method similar to the Dow
UNIPOL TM process. Both the capital investment and the operating costs for plants erected on the US Gulf Coast are presented.
The economic analysis presented in this study is based on a 400 kta polypropylene plant. Two scenarios are analyzed: a standalone unit, obtaining feedstock at market prices and a plant integrated upstream with a propylene source, acquiring feedstock at a
transfer price, below market average. The economic feasibility of both scenarios is presented and the actual market conditions for
polypropylene production are discussed.
Propylene elevated market prices in the USA make it unprofitable to operate a stand-alone PP unit in that country. However, when

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1

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

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

Study Background ........................................................................................................................................................ 10
About Polypropylene............................................................................................................................................................................................................10
Types of Polypropylene Resins ...........................................................................................................................................................................................10
Applications.................................................................................................................................................................................................................................... 11

Polypropylene Manufacturing........................................................................................................................................................................................11
Types of Process........................................................................................................................................................................................................................... 11
The Role of Catalyst in Process ...........................................................................................................................................................................................12

Licensor & Historical Aspects ...........................................................................................................................................................................................13

Technical Analysis......................................................................................................................................................... 14
Chemistry.......................................................................................................................................................................................................................................14
Raw Material ................................................................................................................................................................................................................................14
Technology Overview...........................................................................................................................................................................................................15
Detailed Process Description & Conceptual Flow Diagram.......................................................................................................................16
Area 100: Purification & Reaction.....................................................................................................................................................................................16
Area 200: Resin Degassing & Pelleting .........................................................................................................................................................................17
Area 300: Vent Recovery........................................................................................................................................................................................................ 17
Key Consumptions ..................................................................................................................................................................................................................... 18
Technical Assumptions ........................................................................................................................................................................................................... 18
Labor Requirements.................................................................................................................................................................................................................. 18

ISBL Major Equipment List.................................................................................................................................................................................................23
OSBL Major Equipment List ..............................................................................................................................................................................................26
Other Process Remarks ........................................................................................................................................................................................................27
Improvements in Fluidized-Bed Polymerization Technology ........................................................................................................................27
Propylene-Polypropylene Integration Alternatives...............................................................................................................................................28

Economic Analysis ........................................................................................................................................................ 29
2

General Assumptions............................................................................................................................................................................................................29
Project Implementation Schedule...............................................................................................................................................................................30
Capital Expenditures..............................................................................................................................................................................................................30
Fixed Investment......................................................................................................................................................................................................................... 30
Working Capital............................................................................................................................................................................................................................ 32
Other Capital Expenses ...........................................................................................................................................................................................................32
Total Capital Expenses ............................................................................................................................................................................................................. 33

Operational Expenditures ..................................................................................................................................................................................................34
Manufacturing Costs................................................................................................................................................................................................................. 34
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
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 ................................................................................................. 54
3

Appendix C. Process Carbon Footprint ................................................................................................................. 55
Appendix D. Equipment Detailed List & Sizing................................................................................................... 56
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

Operational Expenses ...........................................................................................................................................................................................................65
Fixed Costs ...................................................................................................................................................................................................................................... 65
Depreciation................................................................................................................................................................................................................................... 65

Appendix G. Latest & Upcoming Reports ............................................................................................................. 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 – Locations & Pricing Basis ..................................................................................................................................................................................................9
Table 3 – General Design Assumptions .......................................................................................................................................................................................9
Table 4 – Polypropylene End-uses................................................................................................................................................................................................11
Table 5 – Catalyst Advances..............................................................................................................................................................................................................12
Table 6 - Raw Materials & Utilities Consumption (per ton of product)................................................................................................................18
Table 7 – Design & Simulation Assumptions.........................................................................................................................................................................18
Table 8 – Labor Requirements for a Typical Plant..............................................................................................................................................................18
Table 9 – Main Streams Operating Conditions and Composition..........................................................................................................................23
Table 10 – Inside Battery Limits Major Equipment List...................................................................................................................................................23
Table 11 - Outside Battery Limits Major Equipment List ...............................................................................................................................................26
Table 12 – Base Case General Assumptions...........................................................................................................................................................................29
Table 13 - Bare Equipment Cost per Area (USD Thousands)......................................................................................................................................30
Table 14 – Total Fixed Investment Breakdown (USD Thousands) ..........................................................................................................................30
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) ................................................................................................................................................................34
Table 19 – Manufacturing Variable Cost (USD/ton)..........................................................................................................................................................34
Table 20 – OPEX (USD/ton)................................................................................................................................................................................................................34
Table 21 – Technology Economics Datasheet: Polypropylene via Gas Phase Process on the US Gulf Coast.........................36
Table 22 – Technology Economics Datasheet: Polypropylene via Gas Phase Process in Client-Defined Location ...........39
Table 23 – Project Contingency......................................................................................................................................................................................................46
Table 24 – Criteria Description.........................................................................................................................................................................................................46
Table 25 – Accuracy of Economic Estimates .........................................................................................................................................................................47
Table 26 – Detailed Material Balance & Stream Properties..........................................................................................................................................49
Table 27 – Utilities Consumption Breakdown ......................................................................................................................................................................54
Table 28 – Assumptions for CO2e Emissions Calculation.............................................................................................................................................55
Table 29 – CO2e Emissions (ton/ton prod.)............................................................................................................................................................................55
Table 30 – Compressors .......................................................................................................................................................................................................................56
Table 31 – Heat Exchangers ..............................................................................................................................................................................................................56
Table 32 – Pumps......................................................................................................................................................................................................................................57
5

Table 33 – Separation Equipment.................................................................................................................................................................................................58
Table 34 – Special Equipment .........................................................................................................................................................................................................58
Table 35 – Utilities Supply...................................................................................................................................................................................................................58
Table 36 – Reactor....................................................................................................................................................................................................................................59
Table 37 – Columns.................................................................................................................................................................................................................................59
Table 38 – Vessels & Tanks..................................................................................................................................................................................................................59
Table 39 – Indirect Costs Breakdown for the Base Case (USD Thousands) ......................................................................................................63
Table 40 – Detailed Construction Location Factor............................................................................................................................................................64
Table 41 – Working Capital Assumptions (Base Case) ....................................................................................................................................................64
Table 42 – Other Capital Expenses Assumptions (Base Case) ...................................................................................................................................64
Table 43 – Other Fixed Cost Assumptions ..............................................................................................................................................................................65
Table 44 – Depreciation Value & Assumptions ....................................................................................................................................................................65

6

List of Figures
Figure 1 – OSBL Construction Scenarios .....................................................................................................................................................................................8
Figure 2 – Polypropylene from Multiple Sources...............................................................................................................................................................13
Figure 3 – Process Block Flow Diagram.....................................................................................................................................................................................15
Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram.....................................................................................................................19
Figure 5 – Project Implementation Schedule.......................................................................................................................................................................29
Figure 6 – Total Direct Cost of Different Integration Scenarios (USD Thousands) ......................................................................................31
Figure 7 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) .......................................................................32
Figure 8 – Total Fixed Investment Validation (USD Million)........................................................................................................................................33
Figure 9 – OPEX and Product Sales History (USD/ton) ...................................................................................................................................................35
Figure 10 – EBITDA Margin & IP Indicators History Comparison..............................................................................................................................35
Figure 11 – CAPEX per Location (USD Million).....................................................................................................................................................................37
Figure 12 – Operating Costs Breakdown per Location (USD/ton) .........................................................................................................................38
Figure 14 – Methodology Flowchart...........................................................................................................................................................................................43
Figure 15 – Location Factor Composition...............................................................................................................................................................................47
Figure 16 – ISBL Direct Costs Breakdown by Equipment Type (Base Case).....................................................................................................62
Figure 17 – OSBL Direct Costs by Equipment Type (Base Case) ..............................................................................................................................62

7

About this Study
This study follows the same pattern as all Technology
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.).
This chapter summarizes the set of information that served
as input to develop the current technology evaluation. All
required data were provided through the filling of the
Technology Economics Form available at Intratec’s website.

Figure 1 – OSBL Construction Scenarios

Non-Integrated

Partially Integrated

Products Storage

Products Storage

ISBL Unit

ISBL Unit

Raw Materials
Storage

Raw Materials
Provider

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

Object of Study
This assignment assesses the economic feasibility of an
industrial unit for homopolymer polypropylene (PP)
production via gas phase process, implementing
technology similar to the Dow UNIPOL process.

Petrochemical Complex

The current assessment is based on economic data
gathered on Q3 2011 and a chemical plant’s nominal
capacity of 400 kta (thousand metric tons per year).

Source: Intratec – www.intratec.us

Analysis Performed

Location Basis

Construction Scenarios

Intratec | About this Study

The economic analysis is based on the construction of a
plant partially integrated to a petrochemical complex. A
nearby unit continuously provides polymer-grade (PG)
propylene. Thus, no storage for propylene is required.
However, since there are no polypropylene consumers in
the complex, the product must be stored in warehouses
and silos. Facilities for supplying the required utilities are
also included in the analysis.

8

Since the Outside Battery Limits (OSBL) requirements–
storage and utilities supply facilities – significantly impact
the capital cost estimates for a new venture, they may play a
decisive role in the decision as to whether or not to invest.
Thus, in this study two distinct OSBL configurations are
compared. Those scenarios are summarized in Figure 1 and
Table 1.

The regional comparison analysis is performed for two
similar units operating on the US Gulf Coast. The main
difference between the two units is the price assumption
for PG propylene.
While the base case considers a stand-alone polypropylene
plant, obtaining PG propylene at average market prices,
available at Intratec database, the alternative scenario
defined by the client (referred as “Client-Defined”)
approaches a unit, which is integrated to an upstream
propylene plant, obtaining feedstock at a transfer price,
provided by the client, lower than market price.
The remaining prices are assumed to be the same. The
assumptions that distinguish the two scenarios analyzed in
this study are provided in Table 2.

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

Storage Capacity (Area 700)
Feedstock & Chemicals

20 days of operation

Not included

End-products & By-products



All required

All required

Utility Facilities Included (Area 800)
Support & Auxiliary Facilities
(Area 900)

Control room, labs, gate house,
maintenance shops, warehouses, offices,
change house, cafeteria, parking lot

Control room, labs, maintenance shops,
warehouses


Design Conditions
Table 2 – Locations & Pricing Basis
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
Cooling water temperature

24 °C

Cooling water range

11 °C

Steam (Low Pressure)

7 bar abs

Wet Bulb Air Temperature

25 °C

USD/manhour
Supervisor

USD/man-

Salaries

hour

Intratec | About this Study


9

Study Background
About Polypropylene
Polypropylene (PP) is a thermoplastic material formed by
the reaction of polymerization of propylene, resulting in a
macromolecule that contains from 10,000 to 20,000
monomer units. As a thermoplastic, PP is capable of
melting and flowing (in a reversible physical transformation)
when subjected to increases in temperature and pressure,
assuming a specified form when those conditions cease.
Based on its exceptional mechanical and thermal
properties, it is suitable for applications in fibers, injection
molding, thermoforming, film and blow molding.
In a qualitative approach, PP is a colorless, translucent to
transparent solid with a glossy surface, with very good
resistance to chemicals (except for hydrocarbons and
chloride compounds), greater scratch resistance than other
polyolefins, good environmental stress cracking resistance,
good processability via injection molding and extrusion,
and a low moisture absorption rate.
Polypropylene annual consumption worldwide exceeds 50
million tons, with an expanding market in its core
applications as well as in inter-material substitution. The
use of polypropylene has increased at rates slightly faster
than one of its main competitor materials, polyethylene;
while linear low and high density polyethylene are growing
faster than polypropylene, low density polyethylene drags
down overall polyethylene growth.

Intratec | Study Background

The discovery of polypropylene homopolymer is generally
credited to the independent work of Karl Ziegler and Giulio
Natta, in 1954. The organometallic catalyst system used
became known as Ziegler-Natta catalysts, still one of the
most remarkable components of PP production. Natta was
able to synthesize polypropylene and, additionally,
associate the resulting polymer high melting point with the
distribution of methyl groups along the carbon chain.

10

Phillips Petroleum was developing the polypropylene
technology concurrently with Natta’s work and Phillips was
awarded the composition of matter patent in the US in
1983. Polypropylene producers around the world
celebrated on March 1, 2000 – the day the Phillips’ patent
expired.

Unlike the symmetrical ethylene molecule, for example, the
way each propylene monomer unit links to the other
generates polymers with distinct characteristics. Those
structural chains can be summarized as follow:
Atactic. The pendant methyl groups are attached in a
random manner on the polymer backbone chain. At
room temperature, atactic polypropylene is a waxy and
tacky solid.
Isotactic. All the methyl groups are on the same side
of the winding spiral chain molecule. Since it is
difficult to completely control the polymerization
reaction, isotactic polypropylene always presents
atactic content. It is important to keep such content to
a minimum, to provide a higher stiffness and a wider
spectrum of applications.
Syndiotactic. The pendant methyl groups are
attached in an alternating pattern on the polymer
backbone chain. It is soft and clear, in addition to
having a good gloss, but its production costs are high
when compared to the other existing structural chains.
Only isotactic polypropylene has the requisite properties of
a useful commodity plastic material. Compared with HDPE
or LDPE, its higher stiffness at lower density and superior
working temperature when not subjected to mechanical
stress are key factors to isotactic polypropylene’s
preferential use in certain applications. However, recently,
technological improvements in the catalyst system allowed
the synthesis of crystalline syndiotactic polymer.
Commercially, this kind of polypropylene is produced with a
metallocene catalyst system. Companies involved in
syndiotactic PP production claim that it has enhanced
properties, but a more detailed evaluation is yet to be made
for a proper comparison with isotactic PP. This kind of
information will be fundamental to determining the real
competitiveness of such material, through the balance of
better properties and its higher cost. Until now, the low
molecular mass atactic PP had only a few commercial
outlets for adhesives and roofing materials.

Types of Polypropylene Resins
Polypropylene production advances in both the
manufacturing process and catalyst allowed the creation of

three major types of resins: homopolymers, random
copolymers and impact (or block) copolymers. All PP
processes are capable of producing homopolymer and
random copolymer PP, and all require one or more
additional reactors to produce impact copolymer.
Homopolymers. Produced through polymerization of
propylene in the presence of a stereospecific catalyst,
homopolymers have an isotactic index in the range of
92-99%. As stiffness and resistance to impact are
directly dependent on the equilibrium between the
atactic and isotactic fractions, they are more rigid and
have better resistance to high temperatures than
copolymers, but with inferior impact strength below
0°C. Thus, this kind of polymer is indicated for high
temperature applications such as hair dryer, sterilizers,
irons, coffee makers and toasters. Woven bags, fine
denier fibers, windshield washer tanks and shrouds for
fans toasters can also use homopolymers.
Random copolymers. Random copolymers are
obtained by copolymerization of propylene with
ethylene or higher olefins (e.g. butene-1), which
represents from 1.5 to 6 wt% of the product. Those
molecules are randomly dispersed along the carbon
chain by their addition during the reaction; the
resulting product offers improved impact strength and
clarity, as well as a softer feel. Typical applications of
random copolymer are films, injection-molding and
blow-molding. Typical applications are battery cases,
blow-molded bottles, bumper filler supports, interior
trim, glove boxes, package trays and window
moldings, video cassette boxes, office furniture,
disposable containers, boxes and appliance housings.

Applications
This combination of physical, chemical, mechanical, thermal
and electrical properties explains polypropylene’s
immediate industrial application and continuous growth. In
terms of current global representativeness, polypropylene is
the second largest consumed plastic material after
polyethylene (PE) and before polyvinyl chloride (PVC).
Furthermore, PP processes are able to improve polymer
properties through orientation, i.e., the previously
mentioned methyl groups’ distribution. This unique aspect
is only found in a limited number of the other major plastics
(e.g. PET), and contributes to expanding the range of
polypropylene applications.
Table 4 lists polypropylene end-uses, as well as respective
examples, considering all the spectrum of grades that can
be produced – varying methyl groups’ distribution,
copolymers and additives employed.

Table 4 – Polypropylene End-uses

Film and sheet

Food packaging

Injection molding

Automotive components

Fibre

Medical garment and carpets

Blow molding

Bottles

Extrusion and piping

Civil piping

Raffia

Sports fabrics and bags


Polypropylene Manufacturing
Types of Process
In order to properly explain the technology involved in PP
manufacturing it is useful to define some concepts about
the forms in which propylene polymerization is conducted.
Traditionally, the following are the most representative:
Hydrocarbon Slurry or Suspension. Consists of using
a liquid inert hydrocarbon diluent in the reactor to
facilitate transfer of propylene to the catalyst, the
removal of heat from the system, the
deactivation/removal of the catalyst as well as


Impact copolymers. Similar to random copolymers,
impact copolymers use olefins other than propylene
for polymerization. The main difference is that
polymerization of those olefins occurs in another
reactor, forming a dispersed phase within the PP
matrix. Copolymers content in this kind of material
ranges from 5-25% and its large rubber content serves
to improve impact strength. This characteristic suits
impact copolymer for use in automotive and appliance
parts, industrial products and as compounds
blendstocks. It’s used by automakers for door panels,
quarter-panel trim, lower trim, doors, seat shields,
pillars, headers, rib cartridges, head impact and air
bags.

11

dissolving the atactic polymer. The range of grades
that could be produced was very limited. (The
technology had fallen into disuse).
Bulk (or Bulk Slurry). Uses liquid propylene instead of
liquid inert hydrocarbon diluent. The polymer does
not dissolve into a diluent, but rather rides on the
liquid propylene. The formed polymer is withdrawn
and any unreacted monomer is flashed off.
Gas Phase. Uses gaseous propylene in contact with
the solid catalyst, resulting in a fluidized-bed medium.
Hybrid. Uses a slurry loop reactor followed by a gas
phase reactor, combining the bulk slurry and gas
phase processes.

The Role of Catalyst in Process
Technology for polypropylene manufacturing has kept pace
with the catalysts’ evolution. Traditionally, because of the
technical breakthrough that each one represented,
polypropylene catalysts are divided into generations. Table
5 depicts those advances, although this division may vary,
since the recognition of a breakthrough is, to some extent,
subjective. The plants built in the 1960s and 1970s using
hydrocarbon slurry process (based on the first generation
catalyst) were very cost-intensive because of the large
amount of equipment required for handling the solvent
related steps, the large space and complicated plot plans.

Also, labor requirements, energy inefficiency and catalyst
poor activity (1kg of polypropylene produced per gram of
catalyst) made production costs very high. In addition, PP
produced had very narrow range of applications due to its
poor properties.
Despite such high production costs, hydrocarbon slurry
process remained economically feasible in the following
years due to the advances in catalyst (second generation).
However, the introduction of the third generation enabled
the production of polypropylene via bulk slurry and via gas
phase in the late 1970`s.
Both processes presented much lower capital and
operating costs, since the steps related to hydrocarbon
solvent became unnecessary, simplifying plot plans and
significantly reducing space required. Third generation
catalyst provided yields of 12-15 kg of polypropylene per
gram of catalyst.
The fourth generation took polypropylene production to
the level of about 30kg of PP produced per gram of catalyst
employed. Such catalysts are currently the most popular in
the industry and have already achieved mileages as high as
120 kg of PP per gram of catalyst. The fifth and sixth
generations of catalysts are not still fully developed and
considerable effort is being to enable them to be fully
commercialized. Meanwhile, fourth generation catalysts are
still the most widely used in polypropylene production

Table 5 – Catalyst Advances

1st (1957-1970)

3TiCl3AlCl3/AlEt2Cl

0.8–1.2

88–91

2nd (1970-1978)

TiCl3/AlEt2Cl

3–5

95

3rd (1978-1980)

TiCl4/Ester/MgCl2 + AlEt3/Ester

5–15

98

20–60

99

50–120

99

5–9 x 103 (on Zr)

90–99

5–9 x 103 (on Zr)

90–99

TiCl4/Diester/MgCl2 + AlEt3/silane three
th

dimensional catalyst granule architecture

4 (1980) RGT
TiCl4/Diether/MgCl2 + AlEt3 three dimensional

catalyst granule architecture

12

Metallocenes

Zirconocene + MAO

Multicatalyst RGT (Reactor

Mixed catalysis: ZN + radical initiators, ZN +

Granule Technology)

single site (catalysts)


.

Figure 2 – Polypropylene from Multiple Sources

Propylene

Polypropylene
(PP)

Bulk Phase Processes
LyondellBasell
Spheripol
Mitsui HYPOL II
ExxonMobil PP
Process
Gas Phase Process:
Fluidized Bed Reactor
Dow Unipol™
Gas Phase Process:
Stirred Bed Reactor
Lummus
Novolen®
INEOS Innovene™

JPP Horizone
Gas Phase Process:
Multi-zone Circulation
Reactor
LyondellBasell
Spherizone
Hybrid Process
Borealis Borstar


Olefin polymerization in gas phase fluidized-bed reactors
has been recognized as being among the most economical
methods of manufacturing commodity polymers, including
polyethylene (PE), polypropylene (PP) and ethylenepropylene rubber (EPR). In the 1960s, BASF developed a gas
phase, mechanically stirred polymerization process for
making PP. In that process, the particle bed in the reactor
was either not fluidized or not fully fluidized.

In 1968, the first gas phase fluidized-bed polymerization
process, i.e., the UNIPOL™ Process, was commercialized by
Union Carbide to produce polyethylene. This process was
quickly licensed to other manufacturers. In the mid-1980s, it
was further extended to produce polypropylene.
The features of the fluidized-bed process, including its
simplicity and superior product quality, made it widely
accepted all over the world. As of today, the fluidized-bed
process is the dominant means of producing PE (especially
LLDPE), as is one of the two most widely used technologies
for producing PP.


Licensor & Historical Aspects

13

Technical Analysis
Chemistry
The main reaction that occurs in the polymerization of
propylene to polypropylene is shown in the following.

Propylene

Polypropylene

A Ziegler-Natta catalyst is utilized to achieve this. The
original catalyst for propylene polymerization was
aluminum alkyl and titanium trichloride, but much work has
been done to find better catalysts. The main objective is to
enable a controlled polymerization reaction with a narrow
molecular weight distribution of the product and enhanced
properties, as well as an increase in the catalyst productivity
(or mileage), defined as the kilograms of PP produced per
gram of catalyst.
The continuous back-mixed reactor operates at about 33 –
35 bara and contains a fluidized bed of granular
polypropylene with a trace of catalyst. Temperature is mild
(65 – 80ºC) and is controlled by adjusting the temperature
of the cycle gas returned to the reactor. An overall yield of
about 99+ wt% of propylene is expected.

Intratec | Technical Analysis

Raw Material

14

In terms of raw materials, polypropylene is the largest
downstream derivative made from propylene. Typically, PP
manufacturers use polymer grade (PG) propylene, with 99.5
wt% purity, as feedstock. Due to the high cost related to
transport of highly pressurized or refrigerated liquids,
propylene produced or purchased from local steam
crackers, FCC units or even on-purpose plants tends to be
most cost-effective. In some cases, propylene is refined to
achieve a purity compatible with the sensitivity of the
catalyst system and/or to avoid the accumulation of inert
substances.
The major PG propylene feed impurity is propane. Similar
to other inert components such as methane, nitrogen,
ethane and other higher alkanes, propane works as a
diluent to reduce polymerization rate, not having any other

adverse effect. Thus, the use of the propylene feed as
polymerization monomer is more impacted by the levels of
trace impurities, which affect the activity and
stereospecificity of propylene polymerization catalysts,
rather than specifically by the propane content.
The polymerization catalysts are sensitive to certain
impurities, including the oxygen, carbon monoxide, carbon
dioxide, water, and alcohols potentially present in the
various feed streams.
Based on the typical purity of raw materials available on the
US Gulf Coast, the following topics summarize the raw
materials and respective purification facilities required to
protect the catalyst against the effects of impurities.
Ethylene, Nitrogen, and Hydrogen: Filtration
Propylene: Two fixed bed dryers, one operating, one
on standby, for removal of water and other polar
impurities.
The purification steps included in the process are primarily
considered to be guard beds for spike protection. Bed life
between regenerations is relatively long (measured in
months, not days).

Technology Overview
The process is separated into three different areas:
purification & reaction; resin degassing & pelleting; and vent
recovery.
Fresh propylene and the other raw materials fed to the unit
are passed through the purification facilities, in which trace
quantities of impurities are removed. The purified raw
materials are then fed to the reaction system.
Only one reaction system, consisting of a fluidized bed
reactor, a cycle gas compressor and cooler, and product
discharge tanks, is required to produce homopolymer and
random copolymer. The raw materials and a recycle stream
from the vent recovery system are fed continuously to the
reactor. The cycle gas compressor circulates reaction gas
upward through the reactor, providing the agitation
required for fluidization, backmixing, and heat removal. No
mechanical stirrers or agitators are needed in the process
reactors. The cycle gas leaving overhead from the reactor
passes through the cooler that removes the heat of
reaction. Catalyst is continuously fed to the reactor.

Resulting granular polypropylene is removed from the
reactor by the discharge tanks and sent to a purge bin
where residual hydrocarbons are stripped with nitrogen
from the resin and are sent to the vent recovery system.
The purged resin is sent to the pelleting system.
The vent gas is processed to separate hydrocarbons and
nitrogen purge gas, which is returned to the process. The
condensed components are separated into a propylene
stream, which is returned to the reaction system, and a
propane stream.
Solid additives are metered and sent to the pelleting
system. The resin and the additives are mixed, melted and
pelleted in the pelleting system. The pellets are dried,
cooled and sent to product blending and storage.

Figure 3 – Process Block Flow Diagram

Recovered Propylene

Recycled Nitrogen

PG Propylene

Area 100
Purification &
Reaction

Area 200
Resin Degassing &
Pelleting

Unreacted
Monomer

Area 300
Vent Recovery

Fresh Nitrogen


Polypropylene


Catalyst &
Chemicals

15

16


17


Key Consumptions

Table 6 - Raw Materials & Utilities Consumption (per ton
of product)

Table 7 – Design & Simulation Assumptions


Labor Requirements

Table 8 – Labor Requirements for a Typical Plant

Non-Integrated Plant

7

1

Partially Integrated Plant

7

1



18



Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram

19


Figure 3 – Inside Battery Limits Conceptual Process Flow Diagram (Cont.)

20


P-303A/B




21



22


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.”

ISBL Major Equipment List
Table 10 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.”


Table 9 presents the main streams composition and
operating conditions. For a more complete material
balance, see the “Appendix A. Mass Balance & Streams
Properties.”

23

24


25


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).

26

Table 11 shows the list of tanks located in the storage area
and the energy facilities considered in the construction of a
non-integrated unit.

27


28


Economic Analysis
General Assumptions
The general assumptions for the base case of this analysis
are outlined below.

Table 12 – Base Case General Assumptions

In Table 12, the IC Index stands for Intratec chemical plant
Construction Index, an indicator, published monthly by
Intratec, to scale capital costs from one time period to
another.
This index reconciles prices trends of 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 do not
represent any technology limitation; rather, it is an
assumption based on common 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 economic estimates
can be found in this publication in the chapter “Technology
Economics Methodology.”


Figure 5 – Project Implementation Schedule

Basic Engineering
Detailed Engineering
Procurement
Construction

Start-up


Intratec | Economic Analysis

Total EPC Phase

29

Project Implementation
Schedule
The main objective of knowing upfront the project
implementation schedule is to enhance the estimates for
both capital initial expenses and return on investment.
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)
Construction, and (5) Plant Start-up.
The duration of each phase is detailed in Figure 5.

installation bulks). The total direct cost represents the total
bare equipment installed cost.
Table 14 shows the breakdown of the total fixed investment
(TFI) per item (direct & indirect costs and process
contingencies).
“Appendix E. Detailed Capital Expenses” provides a detailed
breakdown for the direct expenses, outlining the share of
each type of equipment in total.

Table 14 – Total Fixed Investment Breakdown (USD
Thousands)

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)



30

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.”
Fundamentally, the direct costs are the total direct material
and labor costs associated with the equipment (including


After defining the total direct cost, the TFI is established by
adding field indirects, engineering costs, overhead, contract
fees and contingencies.

It is important to emphasize that capital expenditures for
the propylene plant are not included in the present study.
Indirect costs are defined by the American Association of
Cost Engineers (AACE) Standard Terminology as those
"costs which do not become a final part of the installation
but which are required for the orderly completion of the
installation."

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 two
distinct scenarios regarding OSBL facilities:

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

Non Integrated Plant

Alternative OSBL Configurations

Plant Partially Integrated

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.

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 6 and in Figure 7.

Figure 6 – Total Direct Cost of Different Integration Scenarios (USD Thousands)



31

Figure 7 – Total Fixed Investment of Different Integration Scenarios (USD Thousands)


Table 15 – Working Capital (USD Million)



Other Capital Expenses

32

Start-up costs should also be considered when determining
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.).

Figure 8 – Total Fixed Investment Validation (USD Million)


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
licenses is considered to be part of the capital investment.

Other capital expenses frequently neglected are land
acquisition and site development. Although these are small
parts of the total capital expenses, they should be included.
A summary of other capital expenses is presented in Table
16. Assumptions used to calculate them are provided in
“Appendix F. Economic Assumptions.”

Total Capital Expenses
Table 16 – Other Capital Expenses (USD Million)

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



Table 17 – CAPEX (USD Million)

33

Operational Expenditures
Table 18 – Manufacturing Fixed Cost (USD/ton)

Manufacturing Costs
The manufacturing costs, also called Operational
Expenditures (OPEX), are composed of two elements: a fixed
cost and a variable cost. All figures regarding operational
costs are presented in USD per ton of product.
Table 18 shows the manufacturing fixed cost, while Table 19
details the manufacturing variable cost breakdown.


To learn more about the assumptions for manufacturing
fixed costs, see the “Appendix F. Economic Assumptions.”
Table 20 shows the OPEX of the presented technology.

Table 19 – Manufacturing Variable Cost (USD/ton)
Table 20 – OPEX (USD/ton)


Historical Analysis


Figure 9 depicts Sales and OPEX historic data. Figure 10
compares the project EBITDA trends with Intratec
Profitability Indicators (IP Indicators). The Basic Chemicals IP
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.


Economic Datasheet

34

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.

Figure 9 – OPEX and Product Sales History (USD/ton)




Figure 10 – EBITDA Margin & IP Indicators History Comparison

35

36


Regional Comparison & Economic Discussion
Regional Comparison
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 detailed in “Appendix F.
Economic Assumptions.”

Figure 11 summarizes the total Capital Expenditures
(CAPEX) for the locations under analysis.

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 12.

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.


Intratec | Regional Comparison & Economic Discussion

Figure 11 – CAPEX per Location (USD Million)

37

Figure 12 – Operating Costs Breakdown per Location (USD/ton)



38

39


Intratec | References

References

40

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

LLDPE: Linear Low Density Polyethylene

C: Distillation, stripper, scrubber columns (e.g., C-101 would
denote a column tag)

OPEX: Operational Expenditures
OSBL: Outside battery limits

C2, C3, ... Cn: Hydrocarbons with "n" number of carbon
atoms

P: Pumps (e.g., P-101 would denote a pump tag)

CAPEX: Capital expenditures

PDH: Propane dehydrogenation

CC: Distillation column condenser

PE: Polyethylene

CP: Distillation column reflux pump

PG: Polymer grade

CR: Distillation column reboiler

PP: Polypropylene

CT: Cooling tower

PSA: Pressure swing adsorption

CV: Distillation column accumulator drum

PVC: Polyvinyl chloride

E: Heat exchangers, heaters, coolers, condensers, reboilers
(e.g., E-101 would denote a heat exchanger tag)

R: Reactors, treaters (e.g., R-101 would denote a reactor tag)
ROCE: Return on the capital employed

EBIT: Earnings before Interest and Taxes
SB: Steam boiler
EBITDA: Earnings before Interests, Taxes, Depreciation and
Amortization

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

EPR: Ethylene-propylene rubber

TFI: Total Fixed Investment

F: Filter(e.g., F-101 would denote a filter tag)

TPC: Total process capital

FCC: Fluid catalytic cracking

V: Horizontal or vertical drums, vessels (e.g., V-101 would
denote a vessel tag)

HDPE: High Density Polyethylene
IC Index: Intratec Chemical Plant Construction Index
WD: Demineralized water
IP Indicator: Intratec Chemical Sector Profitability Indicator
ISBL: Inside battery limits

X: Special equipment (e.g., X-101 would denote a special
equipment tag)

K: Compressors, blowers, fans (e.g., K-101 would denote a
compressor tag)
Obs.: 1 ton = 1 metric ton = 1,000 kg
kta: thousands metric tons per year
LDPE: Low Density Polyethylene

Intratec | Acronyms, Legends & Observations

VOC: Volatile organic compounds

41

Technology Economics Methodology
Intratec Technology Economics methodology
ensures a holistic, coherent and consistent
techno-economic evaluation, ensuring a clear
understanding of a specific mature chemical
process technology.

Introduction
The same general approach is used in the development of
all Technology Economics assignments. To know more
about Intratec’s methodology, see Figure 14.
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
Once the scope of the study is fully defined and
understood, Intratec conducts a comprehensive
bibliographical research in order to understand technical
aspects involved with the process analyzed.
Subsequently, the Intratec team simultaneously develops
the process description and the conceptual process flow
diagram based on:

42

Non-confidential information provided by technology
licensors

c.

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.
Next, capital and operating costs are assembled in Microsoft
Excel spreadsheets, and an economic analysis of such
technology is performed.
Finally, two analyses are completed, examining:
a.

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

b.

The capital and operating costs for a second different
plant location

Intratec's in-house database

d.

Equipment sizing specifications are defined based on
Intratec's equipment design capabilities and an extensive
use of AspenONE Engineering Software Suite that enables
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.

Patent and technical literature research

b.
Intratec | Technology Economics Methodology

a.

From this simulation, material balance calculations are
performed around the process, key process indicators are
identified and main equipment listed.

Process design skills

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 13 – 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

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

Analyses of
Different Construction
Scenarios and Plant Location

Project Development Phases
Information Gathering / Tools


Final Review &
Adjustments

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


Vendor Quotes

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

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
practice, typical of a major chemical company. The specific
design standards employed can have a significant impact
on capital costs.
The basis for the capital cost estimate is that the plant is
considered to be built in a clear field with a typical large
single-line capacity. In comparing the cost estimate hereby
presented with an actual project cost or contractor's
estimate, the following must be considered:
Minor differences or details (many times, unnoticed)
between similar processes can affect cost noticeably.
The omission of process areas in the design considered
may invalidate comparisons with the estimated cost
presented.
Industrial plants may be overdesigned for particular
objectives and situations.
Rapid fluctuation of equipment or construction costs
may invalidate cost estimate.
Equipment vendors or engineering companies may
provide goods or services below profit margins during
economic downturns.
Specific locations may impose higher taxes and fees,
which can impact costs considerably.

Housing for process units
Pipes and supports within the main process units
Instruments, control systems, electrical wires and other
hardware
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.

OSBL Investment
The OSBL investment accounts for auxiliary items necessary
to the functioning of the production unit (ISBL), but which
perform a supporting and non-plant-specific role. OSBL
items considered may vary from process to process. The
OSBL investment could include the installed cost of the
following items:
Storage and packaging (storage, bagging and a
warehouse) for products, feedstocks and by-products
Steam units, cooling water and refrigeration systems


Process water treating systems and supply pumps

44

In addition, no matter how much time and effort are
devoted to accurately estimating costs, errors may occur
due to the aforementioned factors, as well as cost and labor
changes, construction problems, weather-related issues,
strikes, or other unforeseen situations. This is partially
considered in the project contingency. Finally, it must
always be remembered that an estimated project cost is not
an exact number, but rather is a projection of the probable
cost.

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:

Boiler feed water and supply pumps
Electrical supply, transformers, and switchgear
Auxiliary buildings, including all services and
equipment of: maintenance, stores warehouse,
laboratory, garages, fire station, change house,
cafeteria, medical/safety, administration, etc.
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
For the purposes of this study, 2 working capital is defined as
the funds, in addition to the fixed investment, that a
company must contribute to a project. Those funds must
be adequate to get the plant in operation and to meet
subsequent obligations.
The initial amount of working capital is regarded as an
investment item. This study uses the following
items/assumptions for working capital estimation:
Accounts receivable. Products and by-products
shipped but not paid by the customer; it represents
the extended credit given to customers (estimated as a
certain period – in days – of manufacturing expenses
plus depreciation).
Accounts payable. A credit for accounts payable such
as feedstock, catalysts, chemicals, and packaging
materials received but not paid to suppliers (estimated
as a certain period – in days – of manufacturing
expenses).
Product inventory. Products and by-products (if
applicable) in storage tanks. The total amount depends
on sales flow for each plant, which is directly related to
plant conditions of integration to the manufacturing of
product‘s derivatives (estimated as a certain period – in
days – of manufacturing expenses plus depreciation,
defined by plant integration circumstances).

Cash on hand. An adequate amount of cash on hand
to give plant management the necessary flexibility to
cover unexpected expenses (estimated as a certain
period – in days – of manufacturing expenses).

Start-up Expenses
When a process is brought on stream, there are certain onetime expenses related to this activity. From a time
standpoint, a variable undefined period exists between the
nominal end of construction and the production of quality
product in the quantity required. This period is commonly
referred to as start-up.
During the start-up period expenses are incurred for
operator and maintenance employee training, temporary
construction, auxiliary services, testing and adjustment of
equipment, piping, and instruments, etc. Our method of
estimating start-up expenses consists of four components:
Labor component. Represents costs of plant crew
training for plant start-up, estimated as a certain
number of days of total plant labor costs (operators,
supervisors, maintenance personnel and laboratory
labor).
Commercialization cost. Depends on raw materials
and products negotiation, on how integrated the plant
is with feedstock suppliers and consumer facilities, and
on the maturity of the technology. It ranges from 0.5%
to 5% of annual manufacturing expenses.
Start-up inefficiency. Takes into account those
operating runs when production cannot be
maintained or there are false starts. The start-up
inefficiency varies according to the process maturity:
5% for new and unproven processes, 2% for new and
proven processes, and 1% for existing licensed
processes, based on annual manufacturing expenses.

In-process inventory. Material contained in pipelines
and vessels, except for the material inside the storage
tanks (assumed to be 1 day of manufacturing
expenses).

Unscheduled plant modifications. A key fault that
can happen during the start-up of the plant is the risk
that the product(s) may not meet specifications
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.


Raw material inventory. Raw materials in storage
tanks. The total amount depends on raw material
availability, which is directly related to plant conditions
of integration to raw material manufacturing
(estimated as a certain period – in days – of raw
material delivered costs, defined by plant integration
circumstances).

45

Other Capital Expenses
Prepaid Royalties. Royalty charges on portions of the
plant are usually levied for proprietary processes. A
value ranging from 0.5 to 1% of the total fixed
investment (TFI) is generally used.
Site Development. Land acquisition and site
preparation, including roads and walkways, parking,
railroad sidings, lighting, fencing, sanitary and storm
sewers, and communications.

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.
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.
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
salaries/expenses, research & development, product
distribution and sales costs.


Contingencies

46

Contingency constitutes an addition to capital cost
estimations, implemented based on previously available
data or experience to encompass uncertainties that may
incur, to some degree, cost increases. According to
recommended practice, two kinds of contingencies are
assumed and applied to TPC: process contingency and
project contingency.
Process contingency is utilized in an effort to lessen the
impact of absent technical information or the uncertainty of
that which is obtained. In that manner, the reliability of the
information gathered, its amount and the inherent
complexity of the process are decisive for its evaluation.
Errors that occur may be related to:

Uncertainty in process parameters, such as severity of
operating conditions and quantity of recycles
Addition and integration of new process steps
Estimation of costs through scaling factors
Off-the-shelf equipment
Hence, process contingency is also a function of the
maturity of the technology, and is usually a value between
5% and 25% of the direct costs.
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

Table 23 – Project Contingency
Plant Complexity

Complex

Typical

Simple

Project Contingency

25%

20%

15%


Intratec’s definitions in relation to complexity and maturity
are the following:

Table 24 – Criteria Description

Simple

Complexity

Typical

Somewhat simple, widely known
processes
Regular process
Several unit operations, extreme

Complex

temperature or pressure, more
instrumentation

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.

Table 25 – Accuracy of Economic Estimates

Reliability

Accuracy

Very

Low

Moderate

High

+ 30%

+ 22%

+ 18%

+ 10%

- 20%

- 18%

- 14%

- 10%

High


The non-uniform spread of accuracy ranges (+30 to – 20 %,
rather than ±25%, e.g.) is justified by the fact that the
unavailability of complete technical information usually
results in under estimating rather than over estimating
project costs.

Location Factor

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.
Intratec’s Location Factor takes into consideration the
differences in productivity, labor costs, local steel prices,
equipment imports needs, freight, taxes and duties on
imported and domestic materials, regional business
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:
Business Environment, Infrastructure, Labor, and Material.
The Business Environment Factor and the Infrastructure
Factor measure the ease of new plant installation in
different countries, taking into consideration the readiness
of bureaucratic procedures and the availability and quality
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.

Relative Steel Prices
Labor Index
Taxes and Freight
Rates
Spares
Taxes and Freight
Rates
Spares


Relative Salary
Productivity

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

Readiness of
Bureaucratic
Procedures
Legal Protection of
Investors
Taxes


Figure 14 – Location Factor Composition

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 15 in which the
four major indexes are presented, along with some of their
components.

48

(kJ/kg K)
Liquid Thermal
Conductivity (W/m K)
Liquid Heat Capacity
(kJ/kg K)

Intratec | Appendix A. Mass Balance & Streams Properties

Gas Heat Capacity

49

50


51


52


53


54

Intratec | Appendix B. Utilities Consumption Breakdown

Appendix C. Process Carbon Footprint
The process’ carbon footprint can be defined as the total
amount of greenhouse gas (GHG) emissions caused by the
process operation.
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:

The assumptions for the process carbon footprint
calculation are presented in Table 28 and the results are
provided in Table 29.

Table 29 – CO2e 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 furnaces 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.


Intratec | Appendix C. Process Carbon Footprint

Table 28 – Assumptions for CO2e Emissions Calculation

55

56

Intratec | Appendix D. Equipment Detailed List & Sizing

57


58


59



Table 39 – Vessels & Tanks (Cont.)

60

61


Appendix E. Detailed Capital Expenses
Direct Costs Breakdown
Figure 15 – ISBL Direct Costs Breakdown by Equipment Type (Base Case)


Intratec | Appendix E. Detailed Capital Expenses

Figure 16 – OSBL Direct Costs by Equipment Type (Base Case)

62


63

Intratec | Appendix E. Detailed Capital Expenses

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
Methodology.”

Table 41 – Working Capital Assumptions (Base Case)

Construction Location Factors

Table 40 – Detailed Construction Location Factor


Table 42 – Other Capital Expenses Assumptions (Base
Case)
days of all labor

Intratec | Appendix F. Economic Assumptions

costs

64


Operational Expenses
Fixed Costs
Fixed costs are estimated based on the specific
characteristics of the process. The fixed costs, like operating
charges and plant overhead, are typically calculated as a
percentage of the industrial labor costs, and G & A expenses
are added as a percentage of the operating costs.

Table 43 – Other Fixed Cost Assumptions



Intratec | Appendix F. Economic Assumptions

Table 44 – Depreciation Value & Assumptions

65

Techonology Economics: Polypropylene via Gas Phase Process

Techonology Economics: Polypropylene via Gas Phase Process

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