Technology Economics: Sodium Hypochlorite Chemical Production
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Technology Economics: Sodium Hypochlorite Chemical Production

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Intratec Solutions LLC, the unrivalled provider of techno-economic assessments for chemical and allied industries, is proud to announce the publication of Sodium Hypochlorite Chemical Production.

Intratec Solutions LLC, the unrivalled provider of techno-economic assessments for chemical and allied industries, is proud to announce the publication of Sodium Hypochlorite Chemical Production.

This report analyzes industrial bleach production through the chlorination of caustic soda in packed columns, a widely used process similar to the employed by Solvay Chemicals. Key technical information, such as process description, flow diagrams, heat and material balances are also provided. Both the capital investment and the operating costs for plants erected on the US Gulf Coast and in Brazil are presented.

The economic analysis presented in this report is based on a plant integrated upstream with a chlor-alkali plant and capable of producing 250 kta of bleach. The estimated CAPEX for such a plant on the U.S. Gulf Coast is USD 33 million. Such location presented not only a lower CAPEX when compared to Brazil, but also exhibited lower operational expenses, revealing itself as the most competitive area.

To know more please visit: http://www.intratec.us/publications/sodium-hypochlorite-chemical-production

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Technology Economics: Sodium Hypochlorite Chemical Production Technology Economics: Sodium Hypochlorite Chemical Production Document Transcript

  • Sodium Hypochlorite Chemical Production
  • #TEC007B Technology Economics Sodium Hypochlorite Chemical Production 2013 Abstract Sodium hypochlorite is the active constituent in chlorine bleach (also known as liquid bleach, “Javelle water” or simply bleach), a strong oxidizer and bleaching agent. Known since 1789, bleach has been widely used since the 1930s and is an excellent disinfecting agent that is employed in water treatment, cleaning and laundry operations, clinics and hospitals, and residences for disinfecting kitchen and bathroom surfaces. Although household bleach demand has been historically larger in terms of volume, since it is more diluted, industrial bleach demand is superior (on a dry basis). As household market grows basically at the same pace as the population, increased water consumption and shortage of fresh water resources makes water treatment the largest bleach application and the fastest-growing segment. Additionally, transport and handling safety concerns have direct public opinion towards the use of sodium hypochlorite rather than chlorine gas in water treatment, which represents a significant market expansion potential. Sodium hypochlorite chemical production is a well-established process in the industry, whose operation principle is already employed for preventing chlorine emissions in chlor-alkali plants. In this report, we review industrial bleach production through the chlorination of caustic soda by chlorine gas in packed columns. Included in the analysis is an overview of the technology and economics of a widely used process, similar to the employed by Solvay Chemicals, for example. Both the capital investment and the operating costs for plants erected on the US Gulf Coast and in Brazil are presented. The economic analysis presented in this report is based on a plant integrated upstream with a chlor-alkali plant and capable of producing 250 kta of bleach. The estimated CAPEX for such a plant on the U.S. Gulf Coast is USD 33 million. Such location presented not only a lower CAPEX when compared to Brazil, but also exhibited lower operational expenses, revealing itself as the most competitive area. Copyrights © 2013 by Intratec Solutions LLC. All rights reserved. Printed in the United States of America.
  • This Publication Was Not a Publication… … It was actually an advisory service ordered by one of our clients, now disclosed to our readership with his consent. It results from the innovative concept, designed by Intratec for leading companies in the chemical and allied sectors who have asked for more affordable and reliable studies to plan their investments. Intratec’s strategy works by charging clients lower-than-market fees to conduct a technology advisory service with the understanding that such studies may be released, after an agreed upon period of time, as publications. Available through well-known sales channels such as Amazon, Google Books and HP MagCloud, our publications can be purchased by any interested reader. In short, our clients receive traditionally expensive studies for a fraction of the cost, and our readers get unprecedented access to real professional publications at steep discounts. How Readers Benefit? From academics to industry executives, our readers benefit by gaining access to real consulting cases, released for the first time to the market as one-of-a-kind publications at affordable prices. Through our university discount policy, students and faculty members will be able to become familiar with challenges faced by industry for a price similar to a usual textbook. How Clients Benefit? While traditional consulting firms charge their clients hundreds of thousands of dollars, Intratec offers, from the convenience of a web browser, a much better advisory experience for a price 80% lower than market. What is Technology Economics? Advisory services targeting investments on new chemical units, answering: What is the process? What equipment is necessary? What are the raw materials and utilities consumptions? What are the operating and capital expenses? In which locations is this technology more profitable? Each new assignment comprises of a study structured like this publication, valuable spreadsheets and broad support. ii
  • Consulting as Publications at a Glance Reshaping the Advisory Industry 1) Our publications are accessed and attested to by a huge audience . . . 2) . . . including potential clients who like the publication structure . . . 3) . . . and order advisory services based on the same format. 4) If our clients agree, their advisory services are disclosed as publications. Everyone Benefits from Cost Sharing & Online Experience 1) Readers purchase our publications at steep discounts online . . . 4) . . . because they were actually consulting cases . . . 3) . . . requested online by the initial client . . . 2) . . . who shared the costs with the readers. For a better understanding of our innovative concept, please visit www.intratec.us. iii
  • Terms & Conditions Information, analyses and/or models herein presented are prepared on the basis of publicly available information and non-confidential information disclosed by third parties. Third parties, including, but not limited to technology licensors, trade associations or marketplace participants, may have provided some of the information on which the analyses or data are based. Intratec Solutions LLC (known as “Intratec”) does not believe that such information will contain any confidential information but cannot provide any assurance that any third party may, from time to time, claim a confidential obligation to such information. The aforesaid information, analyses and models are developed independently by Intratec and, as such, are the opinion of Intratec and do not represent the point of view of any third parties nor imply in any way that they have been approved or otherwise authorized by third parties that are mentioned in this publication. The application of the solutions presented in this publication without license from the owners infringes on the intellectual property rights of the owners, including patent rights, trademark rights, and rights to trade secrets and proprietary information. Intratec conducts analyses and prepares publications and models for readers in conformance with generally accepted professional standards. Although the statements in this publication are derived from or based on several sources that Intratec believe to be reliable, Intratec does not guarantee their accuracy, reliability, or quality; any such information, or resulting analyses, may be incomplete, inaccurate or condensed. All estimates included in this publication are subject to change without notice. This publication is for informational purposes only and is not intended as any recommendation of investment. Reader agrees it will not, without prior written consent of Intratec, represent, directly or indirectly, that its products have been approved or endorsed by the other parties. In no event shall Intratec, its employees, representatives, resellers or distributors be liable to readers or any other person or entity for any direct, indirect, special, exemplary, punitive, or consequential damages, including lost profits, based on breach of warranty, contract, negligence, strict liability or otherwise, arising from the use of this publication, whether or not they or it had any knowledge, actual or constructive, that such damages might be incurred. Reader shall indemnify and hold harmless Intratec and its resellers, representatives, distributors, and information providers against any claim, damages, loss, liability or expense arising out of reader’s use of the publication in any way contrary to the present terms and conditions. Intratec publications are the product of extensive work and original research and are protected by international copyright law. Products supplied as printed reports or books should not be copied but can be included in schools, universities or corporate libraries and circulated to colleagues to the extended permitted by copyright law. Products supplied digitally are licensed, not sold. The purchaser is responsible for ensuring that license terms are adhered to at all times. PDF documents may be supplied watermarked with the customer’s name, email and/or company. Digital documents are supplied with an enterprise license and can be shared by all employees and on-site contractors of a single organization. Members of the organization may make such copies as are necessary to facilitate this distribution. An enterprise license does not permit sharing with external organizations. Reader agrees that Intratec retains all rights, title and interest, including copyright and other proprietary rights, in this publication and all material, including but not limited to text, images, and other multimedia data, provided or made available as part of this publication. 1
  • Contents About this Study .............................................................................................................................................................. 8 Object of Study.............................................................................................................................................................................................................................8 Analyses Performed...................................................................................................................................................................................................................8 Construction Scenarios ..............................................................................................................................................................................................................8 Location Basis ...................................................................................................................................................................................................................................9 Design Conditions......................................................................................................................................................................................................................9 Study Background ........................................................................................................................................................ 10 About Sodium Hypochlorite............................................................................................................................................................................................10 Introduction.................................................................................................................................................................................................................................... 10 Applications.................................................................................................................................................................................................................................... 10 Water Treatment.......................................................................................................................................................................................................................... 11 Manufacturing Alternatives ..............................................................................................................................................................................................11 Chemical Production ................................................................................................................................................................................................................ 11 Electrochemical Production.................................................................................................................................................................................................11 Licensor(s) & Historical Aspects......................................................................................................................................................................................12 Technical Analysis......................................................................................................................................................... 13 Chemistry.......................................................................................................................................................................................................................................13 Raw Material ................................................................................................................................................................................................................................13 Technology Overview...........................................................................................................................................................................................................14 Detailed Process Description & Conceptual Flow Diagram.......................................................................................................................15 Area 100: Reaction & Product Discharge ....................................................................................................................................................................15 Area 200: Bleach Filtration....................................................................................................................................................................................................16 Key Consumptions ..................................................................................................................................................................................................................... 16 Technical Assumptions ........................................................................................................................................................................................................... 16 Labor Requirements.................................................................................................................................................................................................................. 16 ISBL Major Equipment List.................................................................................................................................................................................................18 OSBL Major Equipment List ..............................................................................................................................................................................................19 Other Process Remarks ........................................................................................................................................................................................................20 Alternative Designs.................................................................................................................................................................................................................... 20 Product Storage and Handling...........................................................................................................................................................................................20 Economic Analysis ........................................................................................................................................................ 22 2
  • Project Implementation Schedule...............................................................................................................................................................................23 Capital Expenditures..............................................................................................................................................................................................................23 Fixed Investment......................................................................................................................................................................................................................... 23 Working Capital............................................................................................................................................................................................................................ 26 Other Capital Expenses ...........................................................................................................................................................................................................26 Total Capital Expenses ............................................................................................................................................................................................................. 27 Operational Expenditures ..................................................................................................................................................................................................27 Manufacturing Costs................................................................................................................................................................................................................. 27 Historical Analysis........................................................................................................................................................................................................................ 27 Economic Datasheet .............................................................................................................................................................................................................28 Regional Comparison & Economic Discussion.................................................................................................... 30 Regional Comparison............................................................................................................................................................................................................30 Capital Expenses.......................................................................................................................................................................................................................... 30 Operational Expenditures......................................................................................................................................................................................................30 Economic Datasheet................................................................................................................................................................................................................. 30 Economic Discussion ............................................................................................................................................................................................................31 References....................................................................................................................................................................... 33 Acronyms, Legends & Observations....................................................................................................................... 34 Technology Economics Methodology................................................................................................................... 35 Introduction.................................................................................................................................................................................................................................35 Workflow........................................................................................................................................................................................................................................35 Capital & Operating Cost Estimates ............................................................................................................................................................................37 ISBL Investment............................................................................................................................................................................................................................ 37 OSBL Investment ......................................................................................................................................................................................................................... 37 Working Capital............................................................................................................................................................................................................................ 38 Start-up Expenses ....................................................................................................................................................................................................................... 38 Other Capital Expenses ...........................................................................................................................................................................................................39 Manufacturing Costs................................................................................................................................................................................................................. 39 Contingencies ............................................................................................................................................................................................................................39 Accuracy of Economic Estimates..................................................................................................................................................................................40 Location Factor..........................................................................................................................................................................................................................40 Appendix A. Mass Balance & Streams Properties............................................................................................... 42 Appendix B. Utilities Consumption Breakdown ................................................................................................. 44 Appendix C. Process Carbon Footprint ................................................................................................................. 45 3
  • Appendix D. Equipment Detailed List & Sizing................................................................................................... 46 Appendix E. Detailed Capital Expenses................................................................................................................. 48 Direct Costs Breakdown ......................................................................................................................................................................................................48 Indirect Costs Breakdown ..................................................................................................................................................................................................49 Appendix F. Economic Assumptions...................................................................................................................... 50 Capital Expenditures..............................................................................................................................................................................................................50 Construction Location Factors ...........................................................................................................................................................................................50 Working Capital............................................................................................................................................................................................................................ 50 Other Capital Expenses ...........................................................................................................................................................................................................50 Operational Expenditures ..................................................................................................................................................................................................51 Fixed Costs ...................................................................................................................................................................................................................................... 51 Depreciation................................................................................................................................................................................................................................... 51 Appendix G. Released Publications ........................................................................................................................ 52 Appendix H. Technology Economics Form Submitted by Client ................................................................. 53 4
  • List of Tables Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration) ......................................................................................9 Table 2 – Location & Pricing Basis ....................................................................................................................................................................................................9 Table 3 – General Design Assumptions .......................................................................................................................................................................................9 Table 4 – Raw Materials & Utilities Consumption (per ton of Product)...............................................................................................................16 Table 5 – Design & Simulation Assumptions.........................................................................................................................................................................16 Table 6 – Labor Requirements for a Typical Plant..............................................................................................................................................................16 Table 7 – Main Streams Operating Conditions and Composition..........................................................................................................................18 Table 8 – Inside Battery Limits Major Equipment List......................................................................................................................................................18 Table 9 – Outside Battery Limits Major Equipment List .................................................................................................................................................19 Table 10 – Base Case General Assumptions...........................................................................................................................................................................22 Table 11 – Bare Equipment Cost per Area (USD Thousands).....................................................................................................................................23 Table 12 – Total Fixed Investment Breakdown (USD Thousands) ..........................................................................................................................23 Table 13 – Working Capital (USD Million) ................................................................................................................................................................................26 Table 14 – Other Capital Expenses (USD Million) ...............................................................................................................................................................26 Table 15 – CAPEX (USD Million)......................................................................................................................................................................................................27 Table 16 – Manufacturing Fixed Cost (USD/ton) ................................................................................................................................................................27 Table 17 – Manufacturing Variable Cost (USD/ton)..........................................................................................................................................................27 Table 18 – OPEX (USD/ton)................................................................................................................................................................................................................27 Table 19 – Technology Economics Datasheet: Sodium Hypochlorite Chemical Production at US Gulf ....................................29 Table 20 – Technology Economics Datasheet: Sodium Hypochlorite Chemical Production in Brazil..........................................32 Table 21 – Project Contingency......................................................................................................................................................................................................39 Table 22 – Criteria Description.........................................................................................................................................................................................................39 Table 23 – Accuracy of Economic Estimates .........................................................................................................................................................................40 Table 24 – Detailed Material Balance and Stream Properties ....................................................................................................................................42 Table 25 – Utilities Consumption Breakdown ......................................................................................................................................................................44 Table 26 – Assumptions for CO2e Emissions Calculation.............................................................................................................................................45 Table 27 – CO2e Emissions (ton/ton prod.)............................................................................................................................................................................45 Table 28 – Heat Exchangers Specifications ............................................................................................................................................................................46 Table 29 – Pumps Specifications....................................................................................................................................................................................................46 Table 30 – Columns Specifications...............................................................................................................................................................................................46 Table 31 – Utilities Supply Specifications.................................................................................................................................................................................47 Table 32 – Vessels & Tanks Specifications ................................................................................................................................................................................47 5
  • Table 36 – Indirect Costs Breakdown for the Base Case (USD Thousands) ......................................................................................................49 Table 34 – Detailed Construction Location Factor............................................................................................................................................................50 Table 35 – Working Capital Assumptions for Base Case................................................................................................................................................50 Table 36 – Other Capital Expenses Assumptions for Base Case...............................................................................................................................50 Table 37 – Other Fixed Cost Assumptions ..............................................................................................................................................................................51 Table 38 – Depreciation Value & Assumptions ....................................................................................................................................................................51 6
  • List of Figures Figure 1 – OSBL Construction Scenarios .....................................................................................................................................................................................8 Figure 2 – Household Bleach Applications.............................................................................................................................................................................10 Figure 3 – Industrial Bleach Applications .................................................................................................................................................................................10 Figure 4 – Sodium Hypochlorite Electrochemical Production .................................................................................................................................11 Figure 5 – Process Block Flow Diagram.....................................................................................................................................................................................14 Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram.....................................................................................................................17 Figure 7 – Alternative Bleach Production ................................................................................................................................................................................21 Figure 8 – Temperature Dependency in Bleach Degradation ..................................................................................................................................21 Figure 9 – Project Implementation Schedule.......................................................................................................................................................................22 Figure 10 – Total Direct Cost of Different Integration Scenarios (USD Thousands) ...................................................................................25 Figure 11 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) ....................................................................25 Figure 12 – OPEX and Product Sales History (USD/ton) ................................................................................................................................................28 Figure 13 – EBITDA Margin & IP Indicators History Comparison..............................................................................................................................28 Figure 14 – CAPEX per Location (USD Million).....................................................................................................................................................................30 Figure 15 – Operating Costs Breakdown per Location (USD/ton) .........................................................................................................................31 Figure 16 – Methodology Flowchart...........................................................................................................................................................................................36 Figure 17 – Location Factor Composition...............................................................................................................................................................................40 Figure 18 – ISBL Direct Costs Breakdown by Equipment Type for Base Case ................................................................................................48 Figure 19 – OSBL Direct Costs Breakdown by Equipment Type for Base Case..............................................................................................48 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. You may check the original form in the “Appendix H. Technology Economics Form Submitted by Client”. Figure 1 – OSBL Construction Scenarios Non-Integrated Partially Integrated Products Storage Products Storage ISBL Unit ISBL Unit Raw Materials Storage Raw Materials Provider Object of Study This assignment assesses the economic feasibility of an industrial bleach production through the chlorination of caustic soda by chlorine gas in packed columns implementing technology similar to that used by Solvay Chemicals. The current assessment is based on economic data gathered on Q1 2012 and a chemical plant’s nominal capacity of 250 kta (thousand metric tons per year). Analyses Performed Construction Scenarios Intratec | About this Study The economic analysis is based on the construction of a plant partially integrated to a chlor-alkali plant, in which feedstocks are locally provided but sodium hypochlorite must be stored to be sent outside the plant. Therefore, storage is only required for the product. Utilities supply facilities must also be built, since there is no utility supply from the chlor-alkali plant. 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, this study also performs an analysis of the OSBL facilities impact on the capital costs. Two distinct OSBL configurations are compared. Those scenarios are summarized in Figure 1and Table 1. Chlor-Alkali Plant Grassroots unit Unit is part of a chlor-alkali plant Source: Intratec – www.intratec.us Location Basis Regional specific conditions influence both construction and operating costs. This study compares the economic performance of two identical plants operating in different locations: the US Gulf Coast and Brazil. The assumptions that distinguish the two regions analyzed in this study are provided in Table 2.
  • Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration) Storage Capacity (Base Case for Evaluation) Feedstock & Chemicals 20 days of operation Not included End-products & By-products 20 days of operation 20 days of operation All required All required Utility Facilities Included 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 Source: Intratec – www.intratec.us Design Conditions Table 2 – Location & 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 Wet Bulb Air Temperature 24 °C Source: Intratec – www.intratec.us Intratec | About this Study Source: Intratec – www.intratec.us 9
  • Study Background About Sodium Hypochlorite clinics and hospitals, and at residences for disinfecting kitchen and bathroom surfaces. Introduction Figure 2 and Figure 3 depicts the breakdown of sodium hypochlorite applications for the two available product classes (household and industrial) in the United States. Although household demand has been historically larger in terms of volume, on a dry basis, industrial demand is superior. The so-called industrial sodium hypochlorite is also employed for other medium to large scale applications. Sodium hypochlorite (NaClO), a salt of hypochlorous acid, is the active constituent in chlorine bleach, a strong oxidizer and bleaching agent. Sodium hypochlorite is invariably produced and used in aqueous solutions and is also known as liquid bleach, “Javelle water” or simply bleach. It is industrial practice to establish definitions of sodium hypochlorite strength in order to characterize the product. The term “available chlorine” is often used and is a measure of the oxidizing capacity of a chemical relative to that of pure Cl2. Sodium hypochlorite contains about 95.3 wt. % of available chlorine. From this definition, a common term used is “trade percent of available chlorine” which expresses the weight of available chlorine in grams per 100 mL of NaClO solution. Additionally, strength can be simply measured as the weight percent of sodium hypochlorite in solution. Bleach solutions are corrosive, light yellow in color, with strong chlorine smell. Two types are available commercially, according to the NaClO content: Household: 5-6 wt. % purity Figure 2 – Household Bleach Applications 2% Laundry Bleaching 18% Sanitizers Spa and Residential Pool Treatment 80% Source: Intratec – www.intratec.us Industrial: 10-15 wt. % purity Sodium hypochlorite is mainly produced through chlorine contact with diluted caustic soda (NaOH). The process is similar to that used for preventing chlorine emissions in chlor-alkali plants (chlorine scrubbing). Intratec | Study Background Applications 10 Sodium hypochlorite is the most remarkable of all hypochlorite forms and has been widely used since the 1930s. Nowadays, it is the most used hypochlorite bleach, accounting for about 92% of global use. The remaining 8% refers to calcium hypochlorite. Figure 3 – Industrial Bleach Applications Industrial Water Treatment Large Swimming Pool Treatment Commercial Laundry Bleach 4% 4% 4% 5% 5% 45% Liquid Detergent 33% Textile Bleaching Chemical Uses Sodium hypochlorite is an excellent disinfecting agent that is used in water treatment, cleaning and laundry operations, Source: Intratec – www.intratec.us
  • Hypochlorite solutions are comparatively safer than chlorine and often chosen in bleaching, disinfection, biofouling control, and odor control applications. Due to chlorine toxicity, transportation or handling accidents tend to direct public opinion against its use. Despite bleach higher cost, these factors have increased bleach popularity. Conversely, although regulatory compliance is simplified when using bleach, due to its corrosive nature, safety hazards are not eliminated. also involves brine electrolysis. It is often called bulk production. Paper and textile bleaching with concentrated hypochlorite has been substituted by chlorine dioxide (ClO2), since the latter is less harmful to fibers and generates a brighter product. This market share is likely to reduce in the near future. Electrochemical Production Water Treatment One of the advantages of sodium hypochlorite use in drinking water treatment plants is the ability to both disinfect and maintain a residual level of disinfectant throughout the distribution system. In the U.S., nearly 31 % of such units use purchased sodium hypochlorite, 63% use chlorine gas, and the remaining use calcium hypochlorite or generate sodium hypochlorite on-site. Chemical production principle of operation is the same as that employed to mitigate chlorine emissions, i.e., chlorine reaction with diluted sodium hydroxide solutions. Packed columns or reactors are used for this purpose. The process is able to produce bleach solutions of concentration near 0 wt. % to about 16.5 wt. %. The electrochemical production consists of the electrolysis of dilute brine to produce chlorine and caustic. Chlorination reaction (the same as in chemical production) is then conducted to yield NaClO on-demand. A simplified flow diagram of the process is shown in Figure 4. Figure 4 – Sodium Hypochlorite Electrochemical Production Hydrogen Usually, bleach is delivered to water and wastewater treatment plants at concentrations in the range of 10 to 15 trade percent, to minimize transportation costs. However, the most common is 12.5. Depleted Brine Electrochemical Cell Off-Gas Manufacturing Alternatives Bleach may be produced by batch or continuous process, depending on its particular use or market demand. Two main types of manufacturing processes can be distinguished: chemical production and electrochemical production. Chemical Production The chemical process relies on the acquisition of chlorine and caustic soda feedstock from external sources, in contrast with the electrochemical process for bleach, which Water Brine Caustic Soda Chlorine Reactor Low Strength Sodium Hypochlorite Source: Intratec – www.intratec.us Intratec | Study Background Sodium hypochlorite usage should increase along with population growth, per capita water consumption and shortage of fresh water resources, for example. A growing application in desalination plants is algae proliferation control and desalted water treatment. 11
  • This kind of production is often called on-site generation system (OSG) or on-site electrochlorination (OSE), and avoids storage of chlorine and caustic soda. The sodium hypochlorite is generally produced in lower strengths (e.g. 0.7 – 0.9 wt. %) and stored in smaller tanks; however, industrial bleach can also be generated. Local chemical costs may be a more decisive factor when selecting on-site generation, rather than aspects of safety or convenience. Desalination plants in the Middle East already operate large scale sodium hypochlorite facilities based on seawater electrolysis. There are multiple suppliers with multiple configurations of OSG systems. Variations may include: chemical composition of electrodes, configuration, energy requirements, and water and salt quality. Licensor(s) & Historical Aspects Early sodium hypochlorite manufacturing plants relied on batch processes. At the time, the amount of NaOH added to the reactor was calculated rather than adjusted by process controllers, which led to improper reaction pH. Furthermore, the absence of temperature control was another process constraint. Both of these aspects caused increased sodium chlorate (NaClO3) content in the product, an undesirable contaminant, especially in drinking water. Continuous processes became more common in the 1970s, when pH and temperature controls were adopted to minimize chlorate formation. Batch processes are still used, but also rely on better reaction conditions control. Intratec | Study Background Nowadays, the majority of bulk production in the U.S. is done through Powell Fabrication & Manufacturing, Inc. Systems. Over 120 units have been built since the mid1960s and the company claims that Powell technology accounts for near 70% of the sodium hypochlorite produced in North America. 12 Chemical production processes contrasts with those verified for OSG systems in terms of diversity. Since the basic principle of the process is already employed in chlorine scrubbers, some companies use their own expertise to build the bleach manufacturing units.
  • Technical Analysis Chemistry Raw Material The main reaction occurring in the chlorination of caustic to hypochlorite is shown in the following: The raw materials to a sodium hypochlorite plant are chlorine and sodium hydroxide, the main co-products of a chlor-alkali facility. Chlorine and caustic soda may be locally supplied or purchased in railroad car quantities and stored. NaCl + NaOCl + H2O Chlorination Reaction However, the formed sodium hypochlorite (NaOCl) tends to decompose through the reactions below: NaOCl NaCl + ½ O2 Oxygen Release 3NaOCl Chlorine dry vapor is the preferred form for production, either transported by pipelines from the chlor-alkali plant or stored and shipped to the sodium hypochlorite unit as liquid. In this form, chlorine is at least 99.5 wt. % pure, with minor amounts of O2, N2, CO2 and water. Other sources of chlorine are wet gas from electrolytic cells or tail gas (also called sniff gas or vent) from a liquefaction process. In the latter case, large content of O2, N2, CO2 and H2 are expected, and carbonate solids formation in the reactor could be a constraint. For the use of tail gas in large scale bleach production, liquefaction efficiency reduction may be necessary, which can be an additional issue. 2NaCl + NaClO3 Sodium Chlorate Formation All reactions are exothermic, which demands a careful temperature control, since sodium hypochlorite is very sensitive to decomposition. Temperature must be maintained below 35 °C in the process. Control of pH through proper excess caustic is also an important aspect since chlorate is formed below pH values of about 10. At pH values higher than 13, on the other hand, the increased ionic strength of the solution acts to accelerate degradation. Both stored and sold bleach solutions necessarily have their pH adjusted between 11.8 and 13 to maximize stability. Sodium chlorate formation is the main pathway to NaClO degradation, while oxygen release is generally very slow and has little influence on the overall decomposition. However, it may be troublesome in idle pumps, instruments and piping. Caustic can be used in both 32 and 50 wt. % purity. The presence of contaminants in caustic is more critical to the end product quality. Depending on its production process, caustic may contain high quantities of sodium chloride (NaCl), like that from diaphragm electrolytic cells. Bleach strength is determined by caustic concentration and dilution is invariably necessary, often with soft water. Moreover, the maximum NaOH concentration should not exceed 20-22 wt. % to avoid salt (NaCl) precipitation. The use of initial sodium hydroxide in superior concentrations is only wanted to yield low salt bleach. Small amounts of such solutions are sold for special applications, but the salt generated is usually not removed. Intratec | Technical Analysis 2 NaOH + Cl2 13
  • Technology Overview The process is separated into two different sections: Reaction & Product Discharge; and Bleach Filtration. The simplified block flow diagram presented in Figure 5 summarizes the process. The chlorine absorption system can be divided into two parts: in the first, a packed column is operated with a safe excess of caustic soda to prevent reduction in pH; the second part, in turn, receives the liquor from the first column to be postchlorinated, until the desired bleach concentration is reached. This technique prevents sodium hypochlorite decomposition. The second part of the system is very similar to the first and conducts the rest of the chlorination reaction. The bleach product is then sent to the filtration steps. Bleach filtration is necessary to meet product quality requirements and is often the last step before storage. Backwash water containing spent filter aid can be further processed. Firstly, caustic soda is diluted with water in a first buffer tank, along with first column bottom stream. The resulting solution is then recycled through the first recycle pump and cooled before reaching the top of the column. Chlorine is diluted with air and fed into the bottom of both columns. Flow to the second part of the system is established when the finished product is being sent to storage, in the second part of the system. Figure 5 – Process Block Flow Diagram Off-Gas to Scrubber Air Chlorine Caustic Soda Area 100 Reaction & Product Discharge Area 200 Bleach Filtration Bleach to Storage Water Backwash Water to Disposal Intratec | Technical Analysis Source: Intratec – www.intratec.us 14
  • 15 Intratec | Technical Analysis
  • Technical Assumptions All process design and economics are based on world-class capacity units that are competitive globally. Assumptions regarding the thermodynamic model used, reactor design basis and the raw materials composition are shown in Table 5. All data used to develop the process flow diagram was based on publicly available information. Table 5 – Design & Simulation Assumptions Table 4 – Raw Materials & Utilities Consumption (per ton of Product) Source: Intratec – www.intratec.us Labor Requirements Table 6 – Labor Requirements for a Typical Plant Intratec | Technical Analysis Source: Intratec – www.intratec.us 16 Source: Intratec – www.intratec.us
  • Source: Intratec – www.intratec.us Intratec | Technical Analysis Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram 17
  • Table 7 presents the main streams composition and operating conditions. For a more complete material balance, see the “Appendix A. Mass Balance & Streams Properties” Intratec | Technical Analysis Detailed information regarding utilities flow rates is provided in “Appendix B. Utilities Consumptions Breakdown”. For further details on greenhouse gas emissions caused by this process, see “Appendix C. Process Carbon Footprint”. 18 ISBL Major Equipment List Table 8 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”.
  • OSBL Major Equipment List Table 9 shows the list of tanks located on the storage area and the energy facilities required in the construction of a non-integrated unit. Intratec | Technical Analysis The OSBL is divided into three main areas: storage (Area 700), energy & water facilities (Area 800), and support & auxiliary facilities (Area 900). 19
  • 20 Intratec | Technical Analysis
  • Figure 7 – Alternative Bleach Production Caustic Soda Water Caustic Dilution Tank Chlorine Reactor Off-Gas Outlet Bleach Level Transmitter Analyzer Source: Intratec – www.intratec.us Source: (Kenneth & Lewis, 2010) Intratec | Technical Analysis Figure 8 – Temperature Dependency in Bleach Degradation 21
  • Economic Analysis The general assumptions for the base case of this study are outlined below. Table 10 – Base Case General Assumptions In Table 10, 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 price trends of the fundamental components of a chemical plant construction such as labor, material and energy, providing meaningful historical and forecast data for our readers and clients. The assumed operating hours per year indicated does not represent any technology limitation; rather, it is an assumption based on usual industrial operating rates. Source: Intratec – www.intratec.us Intratec | Economic Analysis Figure 9 – Project Implementation Schedule 22 Source: Intratec – www.intratec.us Additionally, Table 10 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.”
  • Project Implementation Schedule “Appendix E. Detailed Capital Expenses” provides a detailed breakdown for the direct expenses, outlining the share of each type of equipment in total. The main objective of knowing upfront the project implementation schedule is to enhance the estimates for both capital initial expenses and return on investment. After defining the total direct cost, the TFI is established by adding field indirect costs, engineering costs, overhead, contract fees and contingencies. 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. Table 12 – Total Fixed Investment Breakdown (USD Thousands) The duration of each phase is detailed in Figure 9. Capital Expenditures Fixed Investment Table 11 shows the bare equipment cost associated with each area of the project. Table 11 – Bare Equipment Cost per Area (USD Thousands) Source: Intratec – www.intratec.us Fundamentally, the direct costs are the total direct material and labor costs associated with the equipment (including installation bulks). In other words, the total direct expenses represent the total equipment installed cost. Source: Intratec – www.intratec.us Intratec | Economic Analysis Table 12 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.” 23
  • 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." This study analyzes the total fixed investment for two distinct scenarios regarding OSBL facilities: Non-Integrated Plant Plant Partially Integrated The indirect project expenses are further detailed in “Appendix E. Detailed Capital Expenses” Alternative OSBL Configurations The total fixed investment for the construction of a new chemical plant is greatly impacted by how well it will be able to take advantage of the infrastructure already installed in that location. 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 10 and in Figure 11. 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. Figure 10 – Total Direct Cost of Different Integration Scenarios (USD Thousands) Intratec | Economic Analysis Source: Intratec – www.intratec.us 24
  • Figure 11 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) Source: Intratec – www.intratec.us Working Capital Working capital, described in Table 13, is another significant investment requirement. It is needed to meet the costs of labor; maintenance; purchase, storage, and inventory of field materials; and storage and sales of product(s). Assumptions for working capital calculations are found in “Appendix F. Economic Assumptions”. Source: Intratec – www.intratec.us Intratec | Economic Analysis Table 13 – Working Capital (USD Million) 25
  • Other Capital Expenses 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.). Table 15 – CAPEX (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. Source: Intratec – www.intratec.us The purchase of technology through paid-up royalties or licenses is considered to be part of the capital investment. Manufacturing Costs 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. Operational Expenditures 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 16 shows the manufacturing fixed cost. Table 14 – Other Capital Expenses (USD Million) To learn more about the assumptions for manufacturing fixed costs, see the “Appendix F. Economic Assumptions” Table 16 – Manufacturing Fixed Cost (USD/ton) Source: Intratec – www.intratec.us Source: Intratec – www.intratec.us Intratec | Economic Analysis Assumptions used to calculate other capital expenses are provided in “Appendix F. Economic Assumptions.” 26 Total Capital Expenses Table 15 presents a summary of the total Capital Expenditures (CAPEX) detailed in this section.
  • Table 17 discloses the manufacturing variable cost breakdown. Table 17 – Manufacturing Variable Cost (USD/ton) Economic Datasheet The Technology Economic Datasheet, presented in Table 19, 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. Source: Intratec – www.intratec.us Table 18 shows the OPEX of the presented technology. Table 18 – OPEX (USD/ton) Source: Intratec – www.intratec.us Figure 12 depictures Sales and OPEX historic data. Figure 13 compares the project EBITDA trends with Intratec Profitability Indicators (IP Indicators). The Basic Chemicals IP 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. Intratec | Economic Analysis Historical Analysis 27
  • Figure 12 – OPEX and Product Sales History (USD/ton) Source: Intratec – www.intratec.us Intratec | Economic Analysis Figure 13 – EBITDA Margin & IP Indicators History Comparison 28 Source: Intratec – www.intratec.us
  • 29 Intratec | Economic Analysis
  • 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.” Intratec | Regional Comparison & Economic Discussion Figure 14 – CAPEX per Location (USD Million) 30 Source: Intratec – www.intratec.us Figure 14 summarizes the total Capital Expenditures (CAPEX) for two locations. Operational Expenditures Specific regional conditions influence prices for raw materials, utilities and products. Such differences are thus reflected in the operating costs. An OPEX breakdown structure for the different locations approached in this study is presented in Figure 15. Economic Datasheet The Technology Economic Datasheet, presented in Table 20, is an overall evaluation of the technology's capital investment and production costs in the alternative location analyzed in this study.
  • Figure 15 – Operating Costs Breakdown per Location (USD/ton) Intratec | Regional Comparison & Economic Discussion Source: Intratec – www.intratec.us 31
  • 32 Intratec | Regional Comparison & Economic Discussion
  • Intratec | References References 33
  • Acronyms, Legends & Observations AACE: American Association of Cost Engineers SB: Steam boiler ANSI/NSF: American National Standards Institute/National Sanitation Foundation T: Tanks (e.g., T-101 would denote a tank tag) TFI: Total Fixed Investment C: Distillation, stripper, scrubber columns (e.g., C-101 would denote a column tag) CAPEX: Capital expenditures E: Heat exchangers, heaters, coolers, condensers, reboilers (e.g., E-101 would denote a heat exchanger tag) TPC: Total process capital V: Horizontal or vertical drums, vessels (e.g., V-101 would denote a vessel tag) X: Special equipment (e.g., X-101 would denote a special equipment tag) EBIT: Earnings before Interest and Taxes EBITDA: Earnings before Interests, Taxes, Depreciation and Amortization F: Filter (e.g., F-101 would denote a filter tag) FRP: Fiberglass-reinforced plastic IC Index: Intratec Chemical Plant Construction Index IP Indicator: Intratec Chemical Sector Profitability Indicator ISBL: Inside battery limits K: Compressors, blowers, fans (e.g., K-101 would denote a compressor tag) kta: thousands metric tons per year OPEX: Operational Expenditures Intratec | Acronyms, Legends & Observations ORP: Oxidation-reduction potential 34 OSBL: Outside battery limits OSE: On-site electrochlorination OSG: On-site generation systems P: Pumps (e.g., P-101 would denote a pump tag) PVC: Polyvinyl chloride R: Reactors, treaters (e.g., R-101 would denote a reactor tag) Obs.: 1 ton = 1 metric ton = 1,000 kg
  • Technology Economics Methodology Introduction The same general approach is used in the development of all Technology Economics assignments. To know more about Intratec’s methodology, see Figure 16. While based on the same methodology, all Technology Economics studies present uniform analyses with identical structures, containing the same chapters and similar tables and charts. This provides confidence to everyone interested in Intratec’s services since they will know upfront what they will get. Workflow 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: a. 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. 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. Intratec | 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. 35
  • Figure 16 – Methodology Flowchart Study Understanding Validation of Project Inputs Patent and Technical Literature Databases Intratec Internal Database Non-Confidential Information from Technology Licensors or Suppliers Bibliographical Research Technical Validation – Process Description & Flow Diagram Capital Cost (CAPEX) & Operational Cost (OPEX) Estimation Construction Location Factor (http://base.intratec.us) 36 Material & Energy Balances, Key Process Indicators, List of Equipment & Equipment Sizing Pricing Data Gathering: Raw Materials, Chemicals, Utilities and Products Intratec | Technology Economics Methodology Vendor Quotes Economic Analysis Aspen Plus, Aspen Hysys Aspen Exchanger Design & Rating, KG Tower, Sulcol and Aspen Energy Analyzer Analyses of Different Construction Scenarios and Plant Location Project Development Phases Information Gathering / Tools Source: Intratec – www.intratec.us Final Review & Adjustments Aspen Process Economic Analyzer, Aspen Capital Cost Estimator, Aspen InPlant Cost Estimator & Intratec In-House Database
  • 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 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 Intratec | Technology Economics Methodology 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. 37
  • 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. Intratec | Technology Economics Methodology 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). 38 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.
  • 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 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 21 – Project Contingency Plant Complexity Complex Typical Simple Project Contingency 25% 20% 15% Source: Intratec – www.intratec.us Intratec’s definitions in relation to complexity and maturity are the following: Table 22 – 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 Source: Intratec – www.intratec.us Intratec | Technology Economics Methodology Other Capital Expenses 39
  • 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 23 – Accuracy of Economic Estimates Reliability Accuracy Very Low Moderate High + 30% + 22% + 18% + 10% - 20% - 18% - 14% - 10% High Source: Intratec – www.intratec.us 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 location factor is an instantaneous, total cost factor used for converting a base project cost from one geographic location to another. 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. Figure 17 – Location Factor Composition Location Factor Intratec | Technology Economics Methodology Material Index 40 Domestic Material Index Relative Steel Prices Labor Index Taxes and Freight Rates Spares Imported Material Taxes and Freight Rates Spares Source: Intratec – www.intratec.us Labor Index Local Labor Index Relative Salary Productivity Expats Labor Infrastructure Factor Ports, Roads, Airports and Rails (Availability and Quality) Communication Technologies Warehouse Infrastructure Border Clearance Local Incentives Business Environment Factor Readiness of Bureaucratic Procedures Legal Protection of Investors Taxes
  • Labor and material, in turn, are the fundamental components for the construction of a plant and, for this reason, are intrinsically related to the plant costs. This concept is the basis for the methodology, which aims to represent the local discrepancies in labor and material. Productivity of workers and their hourly compensation are important for the project but, also, the qualification of workers is significant to estimating the need for foreign labor. On the other hand, local steel prices are similarly important, since they are largely representative of the costs of structures, piping, equipment, etc. Considering the contribution of labor in these components, workers’ qualifications are also indicative of the amount that needs to be imported. For both domestic and imported materials, a Spare Factor is considered, aiming to represent the need for spare rotors, seals and parts of rotating equipment. The sum of the corrected TFI distribution reflects the relative cost of the plant, this sum is multiplied by the Infrastructure and the Business Environment Factors, yielding the Location Factor. For the purpose of illustrating the conducted methodology, a block flow diagram is presented in Figure 17 in which the four major indexes are presented, along with some of their components. Intratec | Technology Economics Methodology . 41
  • 42 Intratec | Appendix A. Mass Balance & Streams Properties
  • 43 Intratec | Appendix A. Mass Balance & Streams Properties
  • 44 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: Table 27 – 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. Source: Intratec – www.intratec.us 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. Source: Intratec – www.intratec.us Intratec | Appendix C. Process Carbon Footprint Table 26 – Assumptions for CO2e Emissions Calculation 45
  • 46 Intratec | Appendix D. Equipment Detailed List & Sizing
  • 47 Intratec | Appendix D. Equipment Detailed List & Sizing
  • Appendix E. Detailed Capital Expenses Direct Costs Breakdown Figure 18 – ISBL Direct Costs Breakdown by Equipment Type for Base Case Source: Intratec – www.intratec.us Intratec | Appendix E. Detailed Capital Expenses Figure 19 – OSBL Direct Costs Breakdown by Equipment Type for Base Case 48 Source: Intratec – www.intratec.us
  • 49 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 35 – Working Capital Assumptions for Base Case Raw Materials Inventory Construction Location Factors Table 34 – Detailed Construction Location Factor Supplies and Stores Source: Intratec – www.intratec.us Intratec | Appendix F. Economic Assumptions Table 36 – Other Capital Expenses Assumptions for Base Case 50 Source: Intratec – www.intratec.us Source: Intratec – www.intratec.us
  • Operational Expenditures 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 37 – Other Fixed Cost Assumptions Source: Intratec – www.intratec.us Source: Intratec – www.intratec.us Intratec | Appendix F. Economic Assumptions Table 38 – Depreciation Value & Assumptions 51
  • Appendix G. Released Publications The list below is intended to be an easy and quick way to identify Intratec reports of interest. For a more complete and up-to-date list, please visit the Publications section on our website, www.intratec.us. TECHNOLOGY ECONOMICS Propylene Production via Metathesis: Propylene production via metathesis from ethylene and butenes, in a process similar to Lummus OCT. Propylene Production via Propane Dehydrogenation: Propane dehydrogenation (PDH) process conducted in moving bed reactors, in a process similar to UOP OLEFLEX™. Propylene Production from Methanol: Propylene production from methanol, in a process is similar to Lurgi MTP®. Polypropylene Production via Gas Phase Process: A gas phase type process similar to the Dow UNIPOL™ PP process to produce both polypropylene homopolymer and random copolymer. Polypropylene Production via Gas Phase Process, Part 2: A gas phase type process similar to Lummus NOVOLEN® for production of both homopolymer and random copolymer. Intratec | Appendix G. Released Publications Sodium Hypochlorite Chemical Production: Sodium hypochlorite (bleach) production, in a widely used industrial process, similar to that employed by Solvay Chemicals, for example. 52 Propylene Production via Propane Dehydrogenation, Part 2: Propane dehydrogenation (PDH) in fixed bed reactors, in a process is similar to Lummus CATOFIN®. Propylene Production via Propane Dehydrogenation, Part 3: Propane dehydrogenation (PDH) by applying oxydehydrogenation, in a process similar to the STAR PROCESS® licensed by Uhde. CONCEPTUAL DESIGN Membranes on Polypropylene Plants Vent Recovery: The Report evaluates membrane units for the separation of monomer and nitrogen in PP plants, similar to the VaporSep® system commercialized by MTR. Use of Propylene Splitter to Improve Polypropylene Business: The report assesses the opportunity of purchasing the less valued RG propylene to produce the PG propylene raw material used in a PP plant.
  • Appendix H. Technology Economics Form Submitted by Client Appendix H. Technology Economics Form Submitted by Client
  • Chemical Produced by the Technology to be Studied Define the main chemical product of your interest. Choose a Chemical Sodium Hypochlorite E.g. Acrylonitrile butadiene styrene (ABS), Methyltert-butylether For the purpose of our studies, chemicals in the list below are considered to be commodities and are offered under a special pricing policy. To order studies on these chemicals access www.intratec.us/advisory/technology-economics/order-commodities. We consider acetic acid, acetone, acrylic acid, acrylonitrile, adipic acid, aniline, benzene, butadiene, chlorine, n-butanol, iso-butylene, caprolactam, cumene, ethanol, ethylene, bio-ethylene, ethylene glycol, ethylene oxide (EO), formaldehyde, HDPE, isoprene, LDPE, LLDPE, methanol, methyl methacrylate, MDI, phenol, polybutylene terephthalate, polycarbonate (PC), polyethylene terephthalate (PET), polypropylene (PP), polystyrene (PS), polyurethanes (PU), polyvinyl chloride (PVC), propylene, propylene glycol, propylene oxide (PO), terephthalic acid and vinyl chloride (VCM) to be commodities. Chemical Process Technology to be Studied Identify the mature chemical process technology you would like us to assess. Intratec considers mature technologies the ones already used on a commercial scale plant. Technology Description Chemical production from Sodium Hydroxide and Chlorine similar to Solvay chemical process. E. g. technology for propylene production from methanol - similar to Lurgi MTP Commercial Scale Unit. Inform the exact location of one commercial scale plant under operation. Plant Location: I don't know I know the location of a commercial plant: If there is no commercial scale plant based on the technology of your interest, you are referred to Intratec's Research Potential advisory service at www.intratec.us/advisory/research-potential/overview Industrial Unit Description Inform the plant capacity to be considered in the study. Please provide the main product capacity in kta (thousands of metric tons per year of main chemical product) Inform the assumption for the number of hours the plant operates in a year. Plant Nominal Capacity Operating Hours 150 kta 300 kta Other (kta) 8,000 h/year Other (h/year) 250 Analysis Date Define the date (quarter and year) that will be considered in the analysis. Our databases can provide consolidated values from the year 2000 up to the last closed quarter, quarter-to-date values are estimated. Quarter Q1 Year 2012
  • Storage Facilities Define the assumptions employed for the storage facilities design. Products 20 days By-Products 20 days Other Raw Materials Other 20 days Other 0 Utilities Supply Facilities The construction of supply facilities for the utilities required (e.g. cooling tower, boiler unit, refrigeration unit) impacts the capital investment for the construction of the unit. Consider construction of supply facilities ? Yes No General Design Conditions General utilities and environmental conditions that may be relevant to the process simulation are presented below. Provide other assumptions if you deem necessary. Specification Unit Default Value User-specified value Cooling water temperature ºC 24 DSPEC1 Cooling water range ºC 11 DSPEC2 Steam (Low Pressure) bar abs 7 DSPEC3 Steam (Medium Pressure) bar abs 11 DSPEC4 Steam (High Pressure) bar abs 28 DSPEC5 Refrigerant (Ethylene) ºC -100 DSPEC6 Refrigerant (Propane) ºC -40 DSPEC7 Refrigerant (Propylene) ºC -45 DSPEC8 Dry Bulb Air Temperature ºC 38 DSPEC9 Wet Bulb Air Temperature ºC 25 DS10 Industrial Unit Location The location of an industrial unit influences in prices for both construction and operation of the unit. In this study, the economic performances of TWO similar units erected in different locations are compared. The first plant is located in the United States (US Gulf Coast) and the second location is defined by YOU. Plant Location I would like to keep the plant location confidential. Country (or region) or region to be considered. Brazil E.g. Louisiana (USA), China or Saudi Arabia. Please define only one location. Plant Location Data Provider I will use Intratec's Internal Database containing standard chemical prices and location factors (only for Germany, Japan, China or Brazil). I will provide location specific data. Please fill in the Custom Location topic below.
  • Custom Location Description. Describe both capital investment and prices at your custom location. A) Capital Investment. Provide the relative capital cost at your custom location in comparison to the United States (U.S. Gulf Coast) Custom Location Relative Cost (%) 130% means that the capital costs in the custom location are 30% higher than the costs in the United States. B) Raw Materials Prices. Describe the raw material prices to be considered in the custom location. Item Description Price Unit Price Raw1 Chlorine RU1 USD/metric ton RP1 Raw2 Caustic Soda RU2 USD/metric ton RP2 Raw3 E.g. RU3 Propane RP3 USD/metric ton 420 C) Product Prices. Describe the products prices to be considered in the custom location. Item Description Prod1 Sodium Hypochlorite Price Unit PU1 USD/metric ton Price PP1 Prod2 PU2 PP2 Prod3 PU3 PP3 E.g. Polypropylene USD/metric ton 1700 D) Utilities Prices. Describe the utilities prices to be considered in the custom location. Item Description Price Unit Electricity USD/metric ton Price UP1 Steam (Low Pressure) UP2 Steam (High Pressure) UP3 Fuel UP4 Clarified Water USD/m3 UP5 Util6 Air UU6 USD/Nm3 YP6 Util7 Cooling Water UU7 USD/m3 UP7 Util8 UU8 UP8 E) Labor Prices. Describe the labor prices to be considered in the custom location. Item Description Price Unit Price Operating Labor USD/operator/hour LP1 Supervision Labor USD/supervisor/hour LP1 F) Others. Describe any other price you deem necessary to be considered in the custom location (e.g. chemicals, catalysts, etc.) Item Description Price Unit Price Other1 OU1 OP1 Other2 OU2 OP2 Other3 OU3 OP3 E.g. Catalyst USD/metric ton 5000
  • Other Remarks If you have any other comments, feel free to write them below: Com men ts: Retrieve from Intratec's Internal Database any values for Brazil that may be necessary in the report and were not provided in the form. Complementary Files Along with this form, you may also upload any other chemical document deemed relevant for the description of the project, such as articles, brochures, book sections, patents, etc. Multiple files may be uploaded. If you are filling this form offline please upload this form and any complementary files at www.intratec.us/advisory/technology-economics/order-commodities Non-Disclosure Period & Pricing You can keep your study confidential or get discounts, by allowing Intratec to disclose it to the market as a publication, after an agreed non-disclosure period, starting at the date you place your order. Choose an Option 6 months 24 months 36 months Never Disclosed Non-Disclosure Period Prices Intratec Agent Special Offer 6 months $18,000 (9 x $1,900) Save 70% 24 months $38,000 (11 x $3,282) Save 37% automatically, in equal and pre-defined installments 36 months $50,000 (13 x $3,654) Save 17% - Every 15 days, an installment will be charged to your Never Disclosed $60,000 (15 x $3,800) - Payment of our advisory service is conducted credit card or PayPal account. Pay Less ! Benefit From a 5% Discount Inform us the email address of the Intratec Agent that introduced you to our advisory services and benefit from a 5% discount on the total price of your service. To know more about Intratec New Business Development Agents, please visit www.intratec.us/be-our-agent. Intratec Agent Email Evaluate our Intratec Agent. Your opinion will be kept confidential. Unsatisfied Knowledge about Intratec offerings and presentation skills Kindness and Helpfulness DOWNLOAD EXAMPLES OF FILLED FORMS HERE. DOWNLOAD A PDF VERSION OF THIS FORM HERE. NEED ASSISTANCE ? SEND AN EMAIL TO sales@intratec.us. v.1-mar-13 Neutral Satisfied
  • Technology Economics Standardized advisory services developed under Intratec’s Consulting as Publications innovative approach. Technology Economics studies answer main questions surrounding process technologies: - What is the process? What equipment is necessary? - What are the raw materials and utilities consumption rates? - What are the capital and operating expenses breakdown? - What are the economic indicators? - In which regions is this technology more profitable?