110614-Unit Cost Approach to Estimating Operational Materials Budget

Author : Rufran C. Frago, P. Eng., PMP®, CCP, PMI-RMP®
Revision: November 9, 2014

TABLE OF CONTENTS
Page 1 of 43 Unit Cost Approach to Estimating Operational Materials Budget
Author: Rufran C. Frago, P. Eng., PMP®, CCP, PMI-RMP®
PAGES
TABLE OF CONTENTS ......................................................................................................................... 1
ABOUT THE AUTHOR ......................................................................................................................... 3
TABLE OF FIGURES ............................................................................................................................. 4
DISCLAIMER ......................................................................................................................................... 4
1. ABSTRACT .................................................................................................................................. 5
2. INTRODUCTION ......................................................................................................................... 6
3. EXTERNAL POWER ................................................................................................................... 7
3.1.1. CALCULATION OF THE AVERAGE EXTERNAL POWER COST ............................................................ 8
3.2. STEAM POWER PLANT’S CHEMICAL CONSUMPTION ....................................................................... 9
3.3. SCENARIO 1: IN-HOUSE TURBINE POWER AT MINIMUM LOAD ...................................................... 10
3.3.1. UNIT COST TO OPERATE THE IN-HOUSE BOILER AT MINIMUM LOAD ............................................ 10
3.3.2. COST STEAM (VARIOUS WORKING PRESSURES) AT MINIMUM LOAD .............................................. 11
3.3.3. COST OF IN-HOUSE TURBINE POWER AT MINIMUM LOAD (FIGURE 1) ............................................ 13
3.3.4. DAILY FUEL CONSUMPTION AT MINIMUM LOAD ............................................................................ 14
3.4. SCENARIO 2, IN-HOUSE TURBINE POWER AT FULL LOAD ............................................................. 14
3.4.1. UNIT COST TO OPERATE THE IN-HOUSE BOILER AT FULL LOAD ................................................... 15
3.4.2. COST OF STEAM (VARIOUS WORKING PRESSURES) AT FULL LOAD ................................................ 16
3.4.3. COST OF IN-HOUSE TURBINE POWER AT FULL LOAD (FIGURE 2) .................................................. 18
3.4.4. DAILY FUEL CONSUMPTION AT FULL LOAD ................................................................................... 21
3.5. UTILITY WATER COST (FIGURE 9) ................................................................................................. 22

3.6. BOILER FEEDWATER COST (FIGURE 10) ........................................................................................ 25
3.6.1. COST OF DEMINERALIZED WATER ................................................................................................. 25
3.6.2. COST OF RECOVERED CONDENSATE .............................................................................................. 26
3.6.3. COST OF BOILER FEEDWATER (BASED ON EXTERNAL POWER) ....................................................... 27
3.6.4. COST OF BOILER FEEDWATER (BASED ON TURBINE) ..................................................................... 27
4. APPENDIX ................................................................................................................................. 28
5. CONCLUSION ........................................................................................................................... 39
6. BIBLIOGRAPHY ....................................................................................................................... 42
7. INDEX ........................................................................................................................................... 43

ABOUT THE AUTHOR

TABLE OF FIGURES
Figure 1 - Turbine Power at Minimum Load Mass Flow Diagram .......................................................... 28
Figure 2 - Turbine Power at Full Load Mass Flow Diagram .................................................................... 28
Figure 3 - Sample Pressure-Enthalpy Diagram ........................................................................................ 29
Figure 4 - Sample Enthalpy-Entropy Diagram ......................................................................................... 30
Figure 5 - External Power Billing Record ................................................................................................ 31
Figure 6 - Chemicals Consumption Summary .......................................................................................... 32
Figure 7 - Turbine Power at Minimum Load (Given Data) ...................................................................... 34
Figure 8 - Turbine Power at Full Load (Given Data) ............................................................................... 36
Figure 9 - Utility Water (Given Data) ....................................................................................................... 38
Figure 10 - Boiler Feedwater (Given Data) .............................................................................................. 38
DISCLAIMER
The information included in this article is for learning purposes only. Quantity, values, amount, and
rates were either gathered from published industry sources, professional notes, personal experience,
empirical values, calculations, and extrapolations. Information about costs, maintenance, operations,
and/or other performance criteria/attributes is not a representation of any entity, agency, or company.

1. ABSTRACT
As a Cost Engineer, if there is a choice between two production methods, the favored method
would be the one involving the lowest total cost. In order to effectively make the selection on this
basis, operational unit cost benchmarks must be calculated and identified. This short dissertation
will introduce the unit cost method of obtaining the total material (or process) cost applied to a
Steam Power Plant or any similar installation. We will refer to process media in this paper as
materials.
Cost saving questions such as: if we use our in-house Turbine power for nine months instead of
an external third party power, how much can we save? How about if we use it for a year? We can
also focus on loss questions such as: We have a big leak on our LP steam line since yesterday.
What is the dollar amount of what we'll be losing if this stays like this for a week before getting
fixed? Questions similar to the aforementioned are common and as a Plant or Cost Engineer, we
should be able to give a prompt response and a sound basis on where our answers came from.
Only the basic set-up of a Steam Power Plant will be discussed here as the detailed discussion
of a more complex installation is too broad for the purpose of this paper. Subjects in this write up
include calculation of the Total unit cost to operate a boiler at minimum load (also at full load), unit
cost of boiler feedwater, unit cost of Superheated (SH) steam, MP steam and LP steam; in-house
Turbine base export power unit cost, etc.
Suffice it to say, that enough information can be gleaned in the succeeding pages which will
provide even a new Plant, Process or Cost Engineer to carry on with the task of reviewing
operational cost, assigning budget, and recommending viable actions of improving plant
performance. This will be an excellent approach to problem solving and better decision making.

2. INTRODUCTION
It was always a challenge to bring together an easy method of calculating a Steam Power Plant
operational budget and so I thought, it must be a fitting subject to recommend an approach. I used
a similar method several years ago and believe, it is still applicable to all of today’s installations.
What I am presenting here is a template on unit cost calculation that will facilitate the preparation
of a company’s operational, manufacturing, or production budget.
In the following example, let us use a fictitious but life-like XYZ 1.63 MW Steam Power Plant
where a high pressure boiler produces the 64B superheated steam at 300 deg C to drive the in-house
turbine. If the saturated steam produced in a boiler is exposed to a surface with a higher
temperature, its temperature will increase above the evaporating temperature. This steam is
described as superheated by the number of temperature degrees through which it has been heated
above saturation temperature (Sarco, 2014).
The unit cost approach presented here was borne out of my experience and familiarity of a
steam power plant I worked in some twenty-seven years ago (1986-87) where I prepared the
production budget for the succeeding year.
The cost engineer’s basic knowledge of the power plant processes and interdependencies will
be another vital tool in coming up with a useful result. In the succeeding pages, we will need to
collate XYZ’s most recent one year power and chemical consumption information, identify flow
rates, pressure, temperature, enthalpies and other parameters either through the Operation Manual
or through any plant monitoring devices coupled with an understanding of the famous Mollier
Chart.
One of the major duties of a plant manager is to optimize operation while still able to reduce
operating costs. In order to do this, one has to have unit cost benchmarks that can help quantify and

compare gains and losses on the same footing. Regardless of whether the steam power plant is
supporting the public electrical needs or supporting the organization’s own manufacturing needs, an
annual operational budget is ultimately required to be included in the overall financial plan of the
company. This approach can provide the essential and accurate benchmarks needed.
3. EXTERNAL POWER
The very first unit cost item that needs to be identified in assessing the overall operational cost
of the plant is the source of power to run it. While we can go straight to the unit rate cost
calculation of various materials, it is good to start with the external power source.
There are two main category of power source.
• External (e.g. Government grid, third party provider, etc.)
• Internal Source (e.g. In-house Turbine Power Generator, in-house back-up emergency
Diesel Driven Generator, etc).
Most companies use both sources in accordance with their operating criteria and requirements.
The XYZ Chemical Company discussed here owns a 1.63 MW Steam Power Plant that supplies
steam and power to all its processes. Normally, the plant runs on its own power most of the year
except during any of the following events:
• Steam Power Plant Turnaround/Inspection
• Steam Power Plant upset
• Scheduled Production Shutdown
• Unscheduled Production Shutdown
• During Steam Power Plant Start-up
• During minimum load

Shown on Figure 5 is a tabulation of XYZ power consumption from its external source
covering the period of January 2007 to September 2007. The quantities can be derived from this
nine month period for us to calculate the total consumption for the whole year. We can then use the
values to extrapolate and calculate for the fundamental unit rate of each production material.
3.1.1. CALCULATION OF THE AVERAGE EXTERNAL POWER COST
Based on XYZ’s nine (9) month power consumption (Figure 5 )
Total Bill
Average Power Cost = -----------
Energy Total
86,375 C$
= ----------------
1,407,000 KW-HR
= 0.0614 C$/KW-HR
Total Bill C$ (12 Months)
Projected Budget for 2007 = ----------------------
9 Months (1 Year)
1,036,505
= ---------
9
= 115,167 C$

of 43 Unit Cost Approach to Estimating Operational Materials Budget
Notes:
None of the values used in Figure 5 came from any existing reference source. The values were
all logical values derived arbitrarily from the various industrial power cost averages in Canada that
ranges from 0.04C$/KW-HR to 0.08 C$/KW-HR and shown here just for the purpose of presenting
the calculation method and the subject unit cost concept.
From the above calculation, we found that our average unit cost rate is C$0.0614 per KW-HR.
3.2. STEAM POWER PLANT’S CHEMICAL CONSUMPTION
Chemical consumptions of a steam power plant points to the use water softening and
demineralization chemicals in removing impurities, such as calcium, magnesium, iron and silica
which can cause scale. Treatment methods include lime softening, ionic exchange, reverse osmosis,
and electro-dialysis. Which treatment is most appropriate depends on the water supply quality, the
purity requirements of the boiler, and to some extent - the budget (Fegan, 1997) and (BoilerBurner,
2014).
Second source of cost information vital to assessing the power plant’s operational cost or
operational budget is found in the Chemical Consumption record (Figure 6). Calculation of the
Total Projected Cost of Chemicals based on XYZ Corporation 9-month chemical consumption
(Frago, 1986-88).
2007 Projected Cost of Chemicals = C$71,000
Calculation of the Total Projected Cost of Chemicals based on XYZ Corporation 9-month
chemical consumption plus 10% consumption contingency.
2007 Projected Cost of Chemicals (+10%) = C$78,000

3.3. SCENARIO 1: IN-HOUSE TURBINE POWER AT MINIMUM LOAD
What is minimum load anyway? It is defined as the load required to sustain operation of the
Steam Power Plant without exporting to users. It is the load on standby operation ready to supply
when needed (Figure 7).
Since there will be times when the plant will have to run at minimum load or what operation
sometimes called a “running standby mode”, it is prudent to establish the materials and power unit
cost in such condition. The amount of information that can be derived from this scenario is
relatively immense. For one, it can give the manager the needed quantification of operating cost
during standby mode, identifying losses attributed to waiting cost.
To proceed clearly with the calculation, we will derive the pertinent unit costs gradually into
the following components:
• Unit cost to operate in-house boiler at minimum load
• Cost of Steam (various pressures) at minimum load
• Cost of in-house Turbine Power at minimum load
• Daily Fuel Consumption at minimum load
3.3.1. UNIT COST TO OPERATE THE IN-HOUSE BOILER AT MINIMUM LOAD
a) Fuel Cost
= 671 Li/HR x 0.0589 C$/Li
= 39.52 C$/HR

b) Feedwater Cost
= 11 CuM/HR x 0.2624 C$/cuM
= 2.89 C$/HR
Note: See calculated unit cost for feedwater (Section 3.7.3)
c) Total Cost to Operate Boiler
= 39.52 C$/HR + 2.89 C$/HR
= 42.40 C$/HR
3.3.2. COST STEAM (VARIOUS WORKING PRESSURES) AT MINIMUM LOAD
a) Total heat required (Qt)
= m kg/HR x h KCal/Kg
= 8800 kg/HR x 667.17 KCal/Kg
= 5,871,096 KCal/HR
where : enthalpy = h = h1 = h2 = 667.17 KCal/Kg
Reference 1: Operation/Process Manual
Reference 2: Mollier Charts

b) Cost of Steam per KCal
42.40 C$/HR
=
5,871,096 KCal/HR
= 0.000007 C$/KCal
c) Cost of Superheated (SH) Steam
= 0.000007 C$/KCal x 667.17 KCal/Kg
= 0.0048 C$/Kg
c) Cost of Low Pressure (SL) Steam
= 0.000007 C$/KCal x 568.95 KCal/Kg
= 0.0041 C$/Kg

3.3.3. COST OF IN-HOUSE TURBINE POWER AT MINIMUM LOAD (FIGURE 1)
a) Low Pressure (SL) Steam to Deaerator
= m3 kg/HR
= 2300 kg/HR
b) SH steam to convert to SL steam
Given SH to SL relationship (Figure 1 and/or Operation Manual)
m2 SH KG/HR = Fc x m3 SL KG/HR
where, Fc is a conversion factor taken from operation.
in this case, Fc = 0.7987
= Fc x m3 SL Kg/HR
= 0.7987 x 2300 Kg/HR
= 1837 Kg/HR
c) Superheated Steam (SH) to Turbine; m1 SH
= 8,800 Kg/HR - 1837 Kg/HR
= 6,963 Kg/HR
d) Steam Cost to Operate Turbine
= 6,963 Kg/HR x 0.0048 C$/Kg
= 33.55 C$/HR

e) Cost of In-house Turbine Power at minimum load
33.55 kg/HR
=
627 KW
= 0.0535 C$/KW-HR
Please see Figure 1 to understand m3.
3.3.4. DAILY FUEL CONSUMPTION AT MINIMUM LOAD
= 671 Li/HR x 24 HR/day
= 16,104 Li/day
3.4. SCENARIO 2, IN-HOUSE TURBINE POWER AT FULL LOAD
What is Full Load? Full load or full plant operations means full production of all process plants
and auxiliaries (Figure 8).
Defining the unit cost during full plant operation is very important as we can bring to forth the
“base export cost” of what the plant is producing, be it process steam or generated power. In order
for us to have the best appreciation as to the information we are trying to put together; we can refer
to the unit cost of our External Power as a reckoning point.

Generally, the unit cost of power coming from outside is usually relatively more expensive than
the unit cost of power we produce in-house otherwise, there will some nagging questions
surrounding why a company will build own Power Plant in the first place. Of course, there are other
factors like reliability; i.e. there are options to run another unit when one is not available, perhaps
political connections (reminding us why an organization, especially a government agency, is able to
build the plant without a proper business case) and many more.
We will derive the pertinent unit costs gradually into the following components:
• Unit cost to operate in-house boiler at full load
• Cost of Steam (@ various pressures) at full load
• Cost of in-house Turbine Power at full load
• Daily Fuel Consumption at full load
3.4.1. UNIT COST TO OPERATE THE IN-HOUSE BOILER AT FULL LOAD
a) Fuel Cost
= 1,453 Li/HR x 0.0589 C$/Li
= 85.6 C$/HR
b) Feedwater Cost (Figure 10)
= 19.24 CuM/HR x 0.2624 C$/cuM
= 5.05 C$/HR
c) Total Cost to Operate Boiler
= 85.6 C$/HR + 5.05 C$/HR
= 90.61 C$/HR

3.4.2. COST OF STEAM (VARIOUS WORKING PRESSURES) AT FULL LOAD
a) Total Heat required per hour, (Qt)
1) SH Steam
= m kg/HR x Enthalpy KCal/Kg
Note: Look for the m and enthalpy value at Figure 8.
= 15,542 kg/HR x 667.17 KCal/Kg
= 10,369,156 KCal/HR
2) SH Saturated Steam
= m kg/HR
x Enthalpy KCal/Kg
Note: Look for the m and enthalpy value at Figure 8.
= 2,783 kg/HR x 659.13 KCal/Kg
= 1,834,359 KCal/HR
3) Total heat required per hour (Qt)
=
10,369,156 KCal/HR + 1,834,359 KCal/HR
= 12,203,515 KCal/HR

b) Total Cost of Steam per Kcal (Superheated and Saturated)
90.6 C$/HR Note: see Section 3.4.1
=
12,203,515 KCal/HR
= 0.000007 C$/KCal
c) Cost of Superheated (SH) Steam
= 0.000007 C$/KCal x 667.17 KCal/Kg
= 0.0050 C$/Kg
d) Cost of Superheated (SH) Saturated Steam
= 0.000007 C$/KCal x 659.13 KCal/Kg
Note: See enthalpy value at Figure 8
= 0.0049 C$/Kg
e) Cost of Medium Pressure (SM) Steam
= 0.000007 C$/KCal x 648.94 KCal/Kg
= 0.0048 C$/Kg

f) Cost of Low Pressure (SL) Steam
= 0.000007 C$/KCal x 568.95 KCal/Kg
= 0.0042 C$/Kg
3.4.3. COST OF IN-HOUSE TURBINE POWER AT FULL LOAD (FIGURE 2)
a) Amount of SH Steam to convert to SM
Given SH to SM relationship (Ref: Mass Flow Diagram & Operation data)
mSH KG/HR = Fc x m3 SM KG/HR
where, Fc is a conversion factor taken from operation.
in this case, Fc = 0.955
b) m5 SM to Production less m4 SM from Preheater = m3 SM
m3 SM = m5 SM KG/HR - m4 SM KG/HR
m3 SM = 3,644 KG/HR - 345 KG/HR
= 3,299 KG/HR
c) Superheated Steam to reducing station; m2 SH
= Fc x 3,299 Kg/HR
= 0.955 x 3,299 Kg/HR
= 3151 Kg/HR

d) Superheated Steam (SH) to Turbine; m1 SH
= m SH Kg/HR - 3151 Kg/HR
= 15,542 Kg/HR - 3151 Kg/HR
= 12,391 Kg/HR
e) Steam Cost to Operate Turbine @ Full Load
= 12,391 Kg/HR x 0.0050 C$/Kg
= 61.39 C$/HR
f) SL to Production
= m SL Kg/HR - m7 SL Kg/HR
= 8,996 Kg/HR - 2300 Kg/HR
= 6,696 Kg/HR
g) Cost of Extracted SL (bound to Operating Units)
= 6,696 Kg/HR x 0.0042 C$/Kg
= 28.29 C$/HR
h) Steam Cost to Operate Turbine @ Full Load
= Steam In C$/HR - Steam Out C$/HR
= 61.39 C$/HR - 28.29 C$/HR
= 33.10 C$/HR

i) Cost based on Gross Turbine Output
33.10 C$/HR
=
1630 KW
= 0.0203 C$/KW-HR
j) Cost based on Turbine less Turbine Auxiliaries
Given (From Operation Manual)
Turbine Auxiliaries 115 KW
33.10 C$/HR
=
1630-115 KW
33.10 C$/HR
=
1515 KW
= 0.0218 C$/KW-HR

c) Cost based on Turbine less Turbine and Boiler Auxiliaries
Given: (From Operation Manual)
DESCRIPTION POWER
Boiler Auxiliaries 320 KW
TOTAL 435 KW
33.10 C$/HR
=
1630 - 435 KW
33.10 C$/HR
=
1195 KW
= 0.0277 C$/KW-HR (Export base cost)
3.4.4. DAILY FUEL CONSUMPTION AT FULL LOAD
= 1,453 Li/HR x 24 HR/Day
= 34,869 Li/Day

3.5. UTILITY WATER COST (

3.6. FIGURE 9)
The plant’s utility water supplies the feed for the soft water processing whose output is required
by the boiler. It also supplies a big part of the cooling water requirement of the Steam Power plant
not to mention potable water. Regardless of what the utility water is for, the simple knowledge of
the source’s total flow rate, the required power to pump, and the unit cost of power, is enough to
calculate the unit cost of utility water.
The approach for calculating the unit cost for Utility Water and Boiler Feedwater in this section
and succeeding section is provided as guide for anyone who desires to learn how operational unit
cost calculation works. Other utility materials associated with the Steam Power Plant not yet
mentioned are:
• Softened Water
• Cooling Water
• Waste Water
• Potable Water
• Nitrogen (if the company has its own Nitrogen plant), and
• Process air
a) Based on External Power Source
0.0614 C$/KW-HR x 28 KW
=
70 cuM/HR

1.72 C$/HR
=
70 cuM/HR
= 0.0246 C$/cuM
b) Based on Turbine
0.0277 C$/KW-HR
x 28 KW
=
70 cuM/HR
0.78 C$/HR
=
70 cuM/HR
= 0.0111 C$/cuM

3.7. BOILER FEEDWATER COST (FIGURE 10)
To proceed with the Boiler’s Feedwater operating cost calculation, we need to understand
where our supply is coming from and other related cost. In this case, the feed comes from a
Demineralization Plant. It takes in Utility water, treats it with chemicals and becomes “boiler
feedwater”.
The cost of power pertaining to running the Demineralization plant was already considered
when we estimated the In-house Turbine power cost. Note that the injection rates in the succeeding
examples were taken from an Operation Manual.
3.7.1. COST OF DEMINERALIZED WATER
a) Cost of Chemicals
Chemicals
Unit Cost
(C$/Kg)
Injection Rate
(Kg/cuM)
Cost
(C$/cuM)
HCl
0.1737
1.2400
0.2153
NaOH
0.3929
0.5267
0.2069
TOTAL
0.4223

b) Total Cost of Demi-water (based on External Power)
Utility Water 0.0246 C$/cuM
(Figure 9 - Utility Water
(Given Data))
Chemicals 0.4223 C$/cuM (See Section 3.7.1)
TOTAL 0.4468 C$/cuM
c) Total Cost of Demi-water (Based on Turbine)
Utility Water 0.0111 C$/cuM
Chemicals 0.4223 C$/cuM
TOTAL 0.4334 C$/cuM
3.7.2. COST OF RECOVERED CONDENSATE
a) Cost of Chemicals
Chemicals
Unit Cost
(C$/Kg)
Injection Rate
(Kg/cuM)
Cost
(C$/cuM)
HCl 0.1737 0.4000 0.0695
NaOH 0.3929 0.0218 0.0086
TOTAL 0.0780
b)
Total Condensate Cost 0.0780 C$/cuM

3.7.3. COST OF BOILER FEEDWATER (BASED ON EXTERNAL POWER)
DESCRIPTION UNIT RATE
50% Total Cost of Demi-Water
0.2234 C$/cuM
50% Total Cost of recovered condensate
0.0390 C$/cuM
TOTAL
0.2624 C$/cuM
3.7.4. COST OF BOILER FEEDWATER (BASED ON TURBINE)
DESCRIPTION UNIT RATE
50% Total Cost of Demi-Water
0.2167 C$/cuM
50% Total Cost of recovered condensate
0.0390 C$/cuM
TOTAL
0.2557 C$/cuM

4. APPENDIX
Figure 1 - Turbine Power at Minimum Load Mass Flow Diagram
Figure 2 - Turbine Power at Full Load Mass Flow Diagram

Figure 3 – Pressure Versus Enthalpy Diagram

Figure 4 – Enthalpy Versus Entropy Diagram

Figure 5 - External Power Billing Record
Historical XYZ Corporation Billing Record (External Power)
January 2007 to September 2007
MONTH
ENERGY
(KW-HR)
DEMAND
(KW)
TOTAL BILL
(C$)
UNIT COST
(C$/KW-HR)
Jan-07 119,000 630 8,607 0.0723
Feb-07 173,250 1,638 10,646 0.0614
Mar-07 169,750 882 10,186 0.0600
Apr-07 143,500 1,512 8,535 0.0595
May-07 238,000 1,588 17,281 0.0726
Jun-07 138,250 1,613 7,660 0.0554
Jul-07 154,000 1,588 8,430 0.0547
Aug-07 138,250 1,633 8,121 0.0587
Sep-07 133,000 1,310 6,910 0.0520
1,407,000 12,394 86,375 0.0614

Figure 6 - Chemicals Consumption Summary
XYZ Chemical Consumption Summary
January 2007 to September 2007
Item
No.
Materials
Unit
Cost as
of Sep07
(C$/Li)
Total
Consumption
(Jan/Sep07)
(Li)
Actual
Average
per Month
(Li)
Projected
Consumption
for 2007 (Li)
Cost
Projection
for 2007
(C$)
Plus 10%
Adjusted
Cost
Projection
for 2007 (C$)
1 HCl
0.1737 95,386.00
10,598.44 127,181.33 22,087.22 24,295.94
2 NaOH
0.3929 34,225.00
3,802.78 45,633.33 17,930.42 19,723.46
3 NaOCl
0.5098 396.00
44.00 528.00 269.16 296.08
4 N2H4
3.1155 247.10
27.46 329.47 1,026.44 1,129.08
5 Na3PO4*
0.5028 37.00
4.11 49.33 24.80 27.28
6 NH4OH
0.3934 168.50
18.72 224.67 88.38 97.22
7 H3PO4
1.2900 934.00
103.78 1,245.33 1,606.53 1,767.18
8 Urea*
0.2467 14,580.00
1,620.00 19,440.00 4,796.65 5,276.31

9 N7350
5.8976 649.95
72.22 866.60 5,110.84 5,621.93
10 N39L/SN
4.1397 190.00
21.11 253.33 1,048.72 1,153.59
11 N321
4.5223 600.00
66.67 800.00 3,617.88 3,979.66
12 N8374
16.1899 228.50
25.39 304.67 4,932.54 5,425.79
13
Mogul
WS164
4.3236 425.40
47.27 567.20 2,452.32 2,697.55
14
Mogul
WS141
3.3184 257.00
28.56 342.67 1,137.12 1,250.83
15
Mogul
AG412
7.0109 248.60
27.62 331.47 2,323.88 2,556.27
16
Mogul
AG472
7.9455 212.60
23.62 283.47 2,252.29 2,477.52
TOTAL Projected Cost of Chemicals (C$) = 70,705.17 77,775.69
Note : * Item in Kgs unit
Notes:
The values of the nine month materials consumption column were all assumed consumptions. The unit pricing was referred
to an old study note that the author prepared while working with a large Oleo-chemical Plant in Asia (1987). Quantities were
roughly adjusted using an escalation factor of 2.5 on the basis of the 2007 and the 1986 Canadian exchange rate. No
confidential value was used anywhere in this article. The main purpose of this table in this write up is not “pricing accuracy”
but to illustrate that the summary monitoring table should supports the “unit cost approach” being presented.

Figure 7 - Turbine Power at Minimum Load (Given Data)
a) Heavy Fuel Oil (specific cost) 0.0589 C$/Li
b) Turbine Load
DESCRIPTION POWER
Boiler Auxiliaries 264 KW
Water preparation 56 KW
WC Pro-rata for Turbine 70 KW
Waste Water 75 KW
N2 Production 57.7 KW
Instrument/Process Air 59 KW
Total Load 626.7 KW
c) Steam Generation
Steam Quality m UoM
Enthalpy
(KCal/Kg)
SH Steam 8,800 KG/HR 667.17
SH Saturated Steam - KG/HR
Medium Pressure Steam - KG/HR
LP Steam
(from reducing stations) 2,300 KG/HR 568.95

d) Fuel Consumption unit rate 671 Li/HR
e) Boiler Feedwater Consumption
(BFW)
11 CuM/HR
Notes:
All mass flow rate values were derived from the author’s old process work notes while working with
a large Oleo-chemical Plant in Asia (1985-88) making them unique and distinct from the existing
installation the author worked on.
The process schematics in the presentation were revised for ease of presentation. No confidential
value was used anywhere in this article.

Figure 8 - Turbine Power at Full Load (Given Data)
a) Heavy Fuel Oil (specific cost) 0.0589 C$/Li
b) Turbine Load 1630 KW
c) Steam Generation Table
Item
No Steam Quality m UoM
Enthalpy
(KCal/Kg)
1 SH Steam 15,542.0 KG/HR 667.17
2 SH Saturated Steam 2,783.0 KG/HR 659.13
3 Medium Pressure Steam (from reducing
stations)
3,644.0 KG/HR 648.94
4 Medium Pressure Steam
(from pre-heater)
345.0 KG/HR 648.94
5 Low Pressure Steam (from Turbine) 8,995.8 KG/HR 568.95
6 Low Pressure Steam to Deaerator 2,300.0 KG/HR 568.95
d) Fuel Consumption unit rate 1453 Li/HR
e) BFW Consumption 19.24 CuM/HR
Again, please note that enthalpy values are available and can be found using any of the
references below.
• Process and Operation Manual
• Mollier Charts (p-h, t-s, p-s diagram). See example on Figure 3 and Figure 4 where the
working temperature (300 deg C) and working pressure (64B) of the SH Steam were

identified from operation records and manuals. The parameters were then plotted on the
p-h and h-s diagrams to find the enthalpy relating to them.
• The enthalpies of the SH Saturated, MP and LP steam can be found the same way. For
ease of presentation, they were all given here. In the field, plant engineers have to look
for them as described above.
• Conversion: 1 BTU=1055 J, 1B=1 x 10^5 Pa and 1Kg = 9.8 N

Figure 9 - Utility Water (Given Data)
a) Utility Water Flow rate 70 cuM/HR (Comes from Operating Manual)
b) Cost of External Power 0.0614 C$/KW-HR (Section 3.1.1)
Turbine Power Export Cost 0.0283 C$/KW-HR (Figure 2)
c) Power Required
DESCRIPTION POWER
Deepwell Pump 13 KW
Utility Pump 15 KW
TOTAL 28 KW
Figure 10 - Boiler Feedwater (Given Data)
a) HCl 0.1737 C$/Kg
b) NaOH (50% Concentration) 0.3929 C$/Kg
c) Recovered condensate is 50% of BFW
d) Utility Water based on average external power cost of 0.0614 C$/KW-HR
is calculated to be 0.0246 C$/cuM
Note: Refer to Figure 6.

5. CONCLUSION
As can be seen from the presentation, we’ve managed to establish some of the main components
required in calculating the operational budget of a steam power plant. The approach is not complicated
and requires minimum knowledge of the plant’s processes.
We’ve touched essential subjects such as Base Export Cost of our own in-house Turbine Power and
its Production Cost; thus identifying export profitability and implies potential savings that can be
derived from using one rather than the other, not to mention opportunities of having a more reliable
power plant that can continuously support production. Knowing the unit material cost of the plant will
give us a better and accurate perspective on the plant’s losses and gains in terms of dollar values.
Average External Power Cost of any plant can be found by monitoring consumptions and the total
amount paid. Such data will give the company an accurate reference basis when calculating the
advantages and profitability of running through own power.
Monitoring and summarizing the plant's chemical consumption in accordance to the format shown in
the table will provide the information required in the subsequent calculation. If no history is available,
one will have to rely on certain assumptions or schedule, such as a production schedule.
The approach presented can help upcoming cost engineers and plant engineers to improve their
effectiveness, efficiency and excellence in managing their steam power plant. The sample calculation
can be used in a similar way (if not exactly the same way) in assessing any other process plant.
If one needs to know certain process parameters as enthalpies (h), the reference abounds. If it is not
available in the operation manual of the plant, one can ask the power plant process operator, or check the
internet, or get a reference book like Perry’s Chemical Handbook, etc.

The unit calculation we gathered can now be used for our Annual Operational Budget. This is the
reason why the title of this report is “Unit Cost Approach to Preparing a Steam Power Plant Operational
Material’s Budget”.
Once we know how much Medium Pressure Steam, Low Pressure Steam or Power is planned to be
generated or consumed for the whole year, we will know exactly the budget we need. If production
wants to calculate their own operational budget, they know they have good data coming from us as they
take the cost of their steam usage into consideration.
One question we’ve briefly touched in Section 1 asking the potential savings of operating under
XYZ’s own power for 9-months can now be answered quite quickly as we now know exactly the
difference between the external power and the in-house turbine’s unit cost. We will then simply multiply
the difference with the power consumption projection we’ll come up with.
To clarify:
From the calculated External Power of C$0.0614 and the calculated In-house Turbine of C$0.0283,
we can see that using the turbine will give us a saving advantage of C$0.0357 per KW-HR. Using this
value, we can surmise that by simply coming up with any projected consumption or actual consumption,
we can readily calculate the benefit which is C$0.0357 multiplied by the KW-HR consumption. For
example, if the 9-month consumption is 2,000,000 KW-HR, the savings involved is C$0.0357 multiplied
by 2,000,000 giving us C$71,400 in savings.
We will use the very same approach when dealing with cost issues involving the other process
media. One can compare production cost of boiler feedwater using external source and in-house turbine.
The other production processes required to produce an end product like gycerine or fatty acid which uses
LP steam somewhere can make a similar comparison or merely, just to come up with their own base
production cost.

A more comprehensive and detailed report on various process materials surrounding this subject is
good to have in the future. Be familiar with the method, put them to work, and they can make the life of
a plant engineer easier.

6. BIBLIOGRAPHY
BoilerBurner. (2014). Water Softener. Retrieved from www.cleanboiler.org:
http://www.cleanboiler.org/Eff_Improve/Operations/Water_Softener.asp
Fegan, B. (1997). CIBO Energy Efficiency Guide. Retrieved from www.heatandpowerproducts.com:
http://www.heatandpowerproducts.com/steam.html 3/2005
Frago, R. (1986-88). Author's Old Notes on Chemical Consumptions and Equipment Rating.
Philippines.
Hills, R. (1989). Power From Steam. Cambridge University Press, ISBN 0-521-45834-X.
Kiameh, P. (2002). Steam Power Plant Handbook.
Martinez, I. (2009). Mollier (Pressure versus Enthalpy Diagram). Retrieved from
http://webserver.dmt.upm.e: http://webserver.dmt.upm.es/~isidoro/dat1/Dia_ph_H2O.jpg
Sarco, S. (2014). Superheated Steam. Retrieved from www.spiraxsarco.com:
http://www.spiraxsarco.com/Resources/Pages/Steam-Engineering-Tutorials/steam-engineering-principles-
and-heat-transfer/superheated-steam.aspx
Steingress, F. a. (2003). High Pressure Boilers 3rd Edition . American Technical Publishers. ISBN 0-
8269-4300-4. Retrieved from Frederick M. Steingress, Harold J. Frost and Darryl R. Walker
(2003). High Pressure Boilers (3rd Edition ed.). American Technical Publishers. ISBN 0-8269-
4300-4.
Timmerhaus, P. a. (n.d.). In P. a. Timmerhaus, Plant Design and Economics for Plant Engineers Third
Edition (p. 194).
Toolbox, T. E. (2009). Mollier for water and steam (Enthalpy versus Entropy Diagram). Retrieved from
www.engineeringtoolbox.com: http://www.engineeringtoolbox.com/mollier-diagram-water-d_
308.html
Wikipedia. (2014). Baseload Power Plant. Retrieved from http://en.wikipedia.org:
http://en.wikipedia.org/wiki/Base_load_power_plant
Wikipedia. (2014). Boiler. Retrieved from http://en.wikipedia.org: http://en.wikipedia.org/wiki/Boiler
Wikipedia. (2014). Superheated Steam. Retrieved from http://en.wikipedia.org:
http://en.wikipedia.org/wiki/Superheated_steam

7. INDEX
ABOUT THE AUTHOR .................................. 3
Average External Power Cost ........................... 8
Average Power Cost ........................................ 8
base export cost ............................................... 14
benchmarks ....................................................... 7
Billing Record ................................................ 30
Chemical Consumption record ......................... 9
Chemical consumptions .................................... 9
conclusion ....................................................... 38
Condensate Cost.............................................. 25
Cooling Water ................................................. 22
Cost of Demi-water ......................................... 25
Cost of In-house Turbine Power ..................... 14
Cost of Low Pressure (SL) Steam ................... 12
Cost of Steam .................................................. 10
Cost of Steam per KCal .................................. 12
Cost of Superheated (SH) Steam .................... 12
cost of utility water ......................................... 22
Cost saving questions ........................................ 5
Cost to Operate Boiler .................................... 11
Daily fuel consumption ................................... 21
demineralization ................................................ 9
DISCLAIMER .................................................. 4
External Power .................................................. 7
External Power Source .................................... 22
Feedwater ........................................................ 24
Feedwater Cost................................................ 11
Fuel Cost ......................................................... 10
Full load .......................................................... 14
Gross Turbine Output ..................................... 20
identifying losses ............................................ 10
INTRODUCTION ............................................ 6
minimum load ................................................. 10
operating cost .................................................. 10
optimize operation ............................................ 6
own power ....................................................... 38
Potable Water .................................................. 22
potential savings.............................................. 39
Process air ....................................................... 22
Process and Operation Manual ....................... 35
production cost ................................................ 39
Projected Budget ............................................. 8
reducing station ............................................... 18
reliability ......................................................... 15
SH Steam to convert to SM ............................ 18
Softened Water................................................ 22
standby operation ............................................ 10
Steam Generation ............................................ 33
superheated ....................................................... 6
TABLE OF CONTENTS .................................. 1
TABLE OF FIGURES ...................................... 4
Total heat required .......................................... 11
Total Projected Cost of Chemicals ................... 9
Turbine Load ................................................... 33
Turbine Power ................................................. 10
two main power source category ...................... 7
unit calculation ................................................ 39
utility water ..................................................... 22
Waste Water .................................................... 22

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