PPT "Preliminary design of Jet Fuel production" asg4- Economic Analysis

PRELIMINARY DESIGN OF JET FUEL PRODUCTION

FROM RENEWABLE ESTER AND FATTY ACID

Albert Santoso – Anissa Permatadietha-‐ Hermawan-‐ Laksita Utami-‐ Maryam Mardiyyah

CONTROL AND INSTRUMENTATION

DESIGN

PIPING & INSTRUMENTATION !

6

Universitas Indonesia

Figure 6.8 Piping and Instrumentation Diagram (P&ID)

1 Universitas Indonesia

CHAPTER 6 CONTROL AND INSTRUMENTATION DISIGN

6.1 Process Control Process control systems of the plant play an important role in this whole jet

fuel production process. Process control aims is to maintain smooth production

process and product quality. Process control in a plant is needed to ensure that the

processes that occurred, all the variables such as temperature, pressure, level, and

more is in control properly. Some process control objectives to be achieved are,

a. Avoiding dangerous circumstances that may occur in the operation (safety)

b. Maintaining the quality of the resulting product

c. Keeping the equipment is working in a range of operating conditions

d. Keeping operations and various byproducts produced run in accordance with

environmental standards

e. Monitor and diagnose the operation

f. Keeping operations running optimally so keep the plant gains

Chemical industry typically uses dynamic variable or subject, so that the control

system is needed to anticipate the variables that can change over time.

6.1.1 Storage Tank Control System Yields from the reactors will depend on the composition of

input material (output from the storage).Control system of

storage tanks are needed for the specific component in the

storage tank to be maintained precisely and safely

delivered to the next process. Process control systems

being installed in the storage tank, for both CPO and

methanol, are Level control and flow rate control. Level

indicator system let the valve in the outer of storage to be

opened and closed when certain level of storage tank is accomplished.

Figure 6.1 PID arrangement

at storage tank

STORAGE TANK!

2


The set-point in the storage tank is the desired level in the tank and the

controlled variable is the level in the tank. The sensor is the level indicator on the

tank and changes in the inlet flow rate are disturbances to the process. The level

controller compares the measured level with the set-point for the level in the tank and

makes a change to the control valve.

Fluid component is about to be transferred to the process where it went out the

storage tank to the reactor. Furthermore the flow controlled is needed. Flow controller

compare the measured flow rate with the specific flow rate (flow rate set-point) and

open or close the control valve accordingly.

6.1.2 Reactor Control System

The overall process of our jet fuel production is using two reactor, fixed bed

reactor for the trans-esterification process and fluidized bed reactor for the thermal

cracking process. In the first reactor the operation condition is kept at temperature of

30oC with 1 bar pressure. Process control systems being installed in the fixed bed

reactor is the level control. The level controller let the valve opening based on the

indicator of the desired level.

Figure 6.2 PID arrangement at trans-esterification reactor

For the second reactor, other than LIC system implemented, it also use the

temperature control. Thermal cracking process conducted in the temperature of 350oC

and 17 bar of pressure. The temperature control is needed to maintain the desired

temperature in order to thermal cracking to happen.

REACTOR!3


Figure 6.3 PID arrangement at thermal cracking reactor

6.1.3 Heat Exchanger Control System

Heat exchangers are the main components that require temperature

control. Heat exchanger is used to exchange heat between the main product with

steam / cooling water. Heat exchangers instruments being used in our jet fuel plant

are heater and condenser. Process control in the heat exchanger has a similar system

of controls for each heat exchanger. Controlled variable is the temperature of the

main product output of the heat exchanger. The parameter controlled to attain the

desired condition is the flow rate of steam or cooling water into the heat

exchanger. Temperature is one of the important variables to be controlled.

Heater is used to heat the component fluids to desired temperature for the

specific purpose. The temperature control system consists of temperature transmitter

and temperature controller is used to maintain the condition. The sensor is the

temperature transmitter (TT) located in the product line. The temperature controller

(TC) compares the measured temperature with its set-point and makes changes to the

control valve on feed stream.

Figure 6.4 PID arrangement at heat exchanger

3


Figure 6.3 PID arrangement at thermal cracking reactor

6.1.3 Heat Exchanger Control System

Heat exchangers are the main components that require temperature

control. Heat exchanger is used to exchange heat between the main product with

steam / cooling water. Heat exchangers instruments being used in our jet fuel plant

are heater and condenser. Process control in the heat exchanger has a similar system

of controls for each heat exchanger. Controlled variable is the temperature of the

main product output of the heat exchanger. The parameter controlled to attain the

desired condition is the flow rate of steam or cooling water into the heat

exchanger. Temperature is one of the important variables to be controlled.

Heater is used to heat the component fluids to desired temperature for the

specific purpose. The temperature control system consists of temperature transmitter

and temperature controller is used to maintain the condition. The sensor is the

temperature transmitter (TT) located in the product line. The temperature controller

(TC) compares the measured temperature with its set-point and makes changes to the

control valve on feed stream.

Figure 6.4 PID arrangement at heat exchanger

HEAT EXCHANGER !

4


Condenser is used to condense vapor into liquid. The temperature control

system similar to the one used in heater.

6.1.4 Flash Drum Control System

Flash drum is derived from distillation process because of its similar trait in

separating vapor-liquid process using different volatility of component. In the flash

drum the lighter component is in the gas phase and the other is already in the form of

liquid as the result of previous process. Process control systems being installed in the

flash drum are the level controller and pressure controller.

Figure 6.5 PID arrangement at flash drum

Pressure controller is used in behave of the vapor on the flash drum. The

certain amount of pressure measured is transmitted and to the controller and changes

the opening of the valve resulting in the vapor component to travel through the next

step, separate it from the previous components. Moreover the level indicator system

is used to maintain the flow of liquid component.

6.1.5 Compressor Control System

Pressure controller is used in the compressor.

Figure 6.6 PID arrangement at compressor

FLASH DRUM & COMPRESSOR!

4


Condenser is used to condense vapor into liquid. The temperature control

system similar to the one used in heater.

6.1.4 Flash Drum Control System

Flash drum is derived from distillation process because of its similar trait in

separating vapor-liquid process using different volatility of component. In the flash

drum the lighter component is in the gas phase and the other is already in the form of

liquid as the result of previous process. Process control systems being installed in the

flash drum are the level controller and pressure controller.

Figure 6.5 PID arrangement at flash drum

Pressure controller is used in behave of the vapor on the flash drum. The

certain amount of pressure measured is transmitted and to the controller and changes

the opening of the valve resulting in the vapor component to travel through the next

step, separate it from the previous components. Moreover the level indicator system

is used to maintain the flow of liquid component.

6.1.5 Compressor Control System

Pressure controller is used in the compressor.

Figure 6.6 PID arrangement at compressor

DISTILLATION

COLUM

N!

5


6.1.6 Distillation Control System

Distillation purpose is to separate a component from the mixture, due to cost

process efficiency, based by the boiling point of it component.

Figure 6.7 PID arrangement at distillation column

The distillation column is using Pressure indicator control, the temperature

control system, and level controller. The temperature control system consist of

temperature transmitter, temperature controller, and flow controller. TT Transmit

signals of the temperature in the distillation column. It connected with TC where

operating temperature in the tank knows and later connected to the Flow Control of

steam. The level controller is used to set the valve opening based on level indicator of

the fluid in the distillation column. It maintains the component fluids resulted out

from the process.

6.2 Piping and Instrumentation Diagram

Plant piping and instrumentation diagram (P&ID) can be shown through

Figure 6.8. This figure will show P&ID for whole process of jet fuel production.

ECONOMIC ANALYSIS

The lifetime of jet fuel plant is 20 years

Building Period is 1 year, start in 2014

Production start from 2015

Operate in continuous system

Production capacity reaches out about 660,000 barrel per

month/7,920,000 barrel jet fuels per year.

1 USD is approximately equals to IDR 11,363.64

ASSUMPTIONS!

CEPCI!Year CEIndex 1995 381.1 1996 381.7 1997 386.5 1998 389.5 1999 390.6 2000 394.1 2001 394.3 2002 395.6 2003 402 2004 444.2 2005 468.2 2006 499.6 2007 525.4 2008 575.4 2009 521.9 2010 550.8 2011 585.7 2012 607.9894898 2013 631.1272318 2014 655.1455073 2015 680.0778261 2016 705.958973 2017 732.8250568 2018 760.7135605 2019 789.6633934 2020 819.7149456 2021 850.9101443 2022 883.2925124 2023 916.9072288 2024 951.8011921 2025 988.0230854 2026 1025.623445 2027 1064.654729 2028 1105.171394 2029 1147.229968 2030 1190.889129 2031 1236.20979 2032 1283.25518 2033 1332.090938 2034 1382.785197 2035 1435.408684

y = 20.519x -‐ 40674 R² = 0.91111

0 50 100 150 200 250 300 350 400 450 500 550 600

Cost In

dex

Year

0

200

400

600

800

1000

1200

1400

1600

CTCI=CTPI+ CWC

With

*  CTCI= cost of total capital investment *  CTPI= cost of total plant investment includes cost of total bare module, cost of site, cost of buildings and cost of offsite facilities *  CWC= cost of working capital

TOTAL CAPITAL INVESTMENT!

CTPI=CTBM + Csite+ Cbuilding + Coffsite facilities + Ccontigency + Ccontractor fee

TOTAL PLANT !INVESTMENT!

10


C = C + C

where,

C = C + C + C + C + C + C

In which, each components can be summarized by Table 7.3. Table 7.2 Components of Total Capital Investment (TCI)

Components Description C Total permanent investment

C Funds to cover operating costs required for early plant’s operation

C Cost for total bare module of plant equipment

C Cost for site preparation and development

C Cost for building

C Cost for offsite facilities, including utility facilities (steam, cooling water, generator for back-up electricity source) and waste treatment facilities.

C Cost for contingencies (unanticipated costs incurred during plant construction)

C Cost for contractor fee

7.2.1 Total Bare Module Cost (𝐂𝐓𝐁𝐌)

The total bare-module cost refers to the summation of bare-module costs for

all items of process equipment, including fabricated equipment, process machinery,

spares, storage tanks, and surge tanks. Bare module cost is the purchase cost of

process unit, which is include installation cost. The cost of installation is estimated

using factored-cost methods based on f.o.b (free on board) purchase cost of each

equipment. The factors is already covered the direct expenses (direct field material &

labor) and the indirect expenses (freight to delivery, insurances, and taxes).

The purchase costs of classes of the most frequently used equipment are

collected in the form of correlating equations. The prices are given in terms of

appropriate key characteristics of the equipment, such as sqft, gpm, lb/hr, etc.

Although graphs are easily read and can bring out clearly desirable comparisons

between related types of equipment, algebraic representation has been adopted here.

(7.1)

(7.2)

With

CTBM!No

Equipment Profile Quantity Spare

Number of Unit

Price per unit (US$)

Purchase Price per unit (US$)

Reference Basis Cost at

2015 (US$) Module Factor

Total Module Factor

Bare Module

Cost (US$) Code Name Year CE Index

A Reactor

1 R-01 Fixed bed reactor 6 6 $316,908 $1,901,447 Seider, 2003 2000 395.6 $3,268,787 4.2 2.1 $332,694 G-01 CaO regenerator 1 1 $270,555 $270,555 Seider, 2003 2000 394 $467,000 4.16 4.16 $602,431

2 R-02

Fluidized bed reactor 4 4 $2,336,413 $9,345,651

West Virginia, Univ.Pub. 2002 395.6 $16,066,152 4.2 2.94

$47,234,487

G-02 Zeolite regenerator 1 1 $319,829 $319,829 Seider, 2003 2000 394 $552,052 4.16 4.16 $522,432 B Distillation 1 T-01 Flash distillation 1 1 $463,442 $463,442 Seider, 2003 2000 394 $799,941 4.16 4.16 $3,327,754

2 T-02 Tray distillation 1 1 $2,681,404 $2,681,404 Seider, 2003 2000 394 $4,628,333 4.16 4.16 $19,253,86

6 C Partial Condenser 1 V-01 Flash drum 1 1 1 $147,207 $147,207 Seider, 2003 2000 394 $254,091 3.05 3.05 $774,978 2 V-02 Flash drum 2 1 1 $89,629 $89,629 Seider, 2003 2000 394 $154,708 3.05 3.05 $471,859 3 V-03 Flash drum 3 1 1 $79,318 $79,318 Seider, 2003 2000 394 $136,910 3.05 3.05 $417,575 4 V-04 Flash drum 4 1 1 $94,566 $94,566 Seider, 2003 2000 394 $163,229 3.05 3.05 $497,849 5 V-05 Flash drum 5 1 1 $79,342 $79,342 Seider, 2003 2000 394 $136,951 3.05 3.05 $417,701 6 V-06 Flash drum 6 1 1 $42,314 $42,314 Seider, 2003 2000 394 $73,038 3.05 3.05 $222,767

D Storage Tank

1 TK-01 Methanol storage tank 1 1 $169,838 $169,838 Wallas, 1990 1985 325.3 $335,067 4.2 4.2 $1,491,280

2 TK-02 CPO storage tank 6 6 $135,109 $810,654 Wallas, 1990 1985 325.3 $1,694,767 4.2 2.1 $3,559,011

3 TK-03 Glycerol storage tank 1 1 $32,792 $32,792 Wallas, 1990 1985 325.3 $68,556 4.2 4.2 $287,934

4 TK-04 Jet fuel storage tank 1 1 $302,761 $302,761 Wallas, 1990 1985 325.3 $632,958 4.2 4.2 $2,689,425 5 TK-05 CO2 storage tank 1 1 $158,091 $158,091 Wallas, 1990 1985 325.3 $330,508 4.2 4.2 $1,388,134

6 TK-06 Light alkane storage tank 1 1 $211,373 $211,373 Wallas, 1990 1985 325.3 $441,900 4.2 4.2 $1,855,978

E Compressor - Expander 1 C-01 Expander 1 1 1 2 $12,658 $25,316 Seider, 2003 2000 394 $43,698 2.15 1.935 $84,556 2 C-02 Compressor 1 1 1 2 $147,146 $294,293 Seider, 2003 2000 394 $507,974 2.15 1.935 $982,930 3 C-03 Expander 2 1 1 2 $11,549 $23,099 Seider, 2003 2000 394 $39,871 2.15 1.935 $77,149 4 C-04 Compressor 2 1 1 2 $4,005 $8,011 Seider, 2003 2000 394 $13,828 2.15 1.935 $26,756

No Equipment Profile

Quantity Spare Number of Unit

Price per unit (US$)

Purchase Price per unit

(US$) Reference

Basis Cost at 2015 (US

$)

Module Factor

Total Module Factor

Bare Module

Cost (US$) Code Name Year CE Index

F Pump 1 P-01 Centrifugal pump 1 1 1 2 $15,963 $31,925 Seider, 2003 2000 394 $55,106 3.3 2.97 $163,665 2 P-02 Centrifugal pump 2 1 1 2 $7,525 $15,051 Seider, 2003 2000 394 $25,979 3.3 2.97 $77,158 3 P-03 Centrifugal pump 3 1 1 2 $5,745 $11,491 Seider, 2003 2000 394 $19,834 3.3 2.97 $58,908 G Heat Exchanger 2000 394 1 E-01 Heater 1 (Shell&Tube) 1 1 $158,195 $158,195 Seider, 2003 2000 394 $273,058 3.17 3.17 $865,594 2 E-02 Condenser 1 (Shell&Tube) 1 1 $441,978 $441,978 Seider, 2003 2000 394 $762,891 3.17 3.17 $2,418,366 3 E-03 Condenser 2 (Shell&Tube) 1 1 $246,797 $246,797 Seider, 2003 2000 394 $425,992 3.17 3.17 $1,350,395 4 E-04 Heater 2 (Shell&Tube) 1 1 $52,955 $52,955 Seider, 2003 2000 394 $91,405 3.17 3.17 $289,755 5 E-05 Cooler 1 (Shell&Tube) 1 1 $104,496 $104,496 Seider, 2003 2000 394 $180,369 3.17 3.17 $571,770 6 E-06 Condenser 3 (Shell&Tube) 1 1 $58,367 $58,367 Seider, 2003 2000 394 $100,747 3.17 3.17 $319,368 7 E-08 Condenser 4 (Shell&Tube) 1 1 $133,610 $133,610 Seider, 2003 2000 394 $230,622 3.17 3.17 $731,071 8 E-09 Cooler 2 (Shell&Tube) 1 1 $297,741 $297,741 Seider, 2003 2000 394 $513,927 3.17 3.17 $1,629,148 9 E-10 Heater 3 (Shell&Tube) 1 1 $39,997 $39,997 Seider, 2003 2000 394 $69,039 3.17 3.17 $218,852

10 E-11 Condenser 5 (Shell&Tube) 1 1 $35,619 $35,619 Seider, 2003 2000 394 $61,482 3.17 3.17 $194,897 11 E-12 Condenser 6 (Shell&Tube) 1 1 $59,998 $59,998 Seider, 2003 2000 394 $103,562 3.17 3.17 $328,293 12 E-13 Condenser 7 (Shell&Tube) 1 1 $27,330 $27,330 Seider, 2003 2000 394 $47,174 3.17 3.17 $149,541 13 E-14 Condenser 8 (Shell&Tube) 1 1 $37,250 $37,250 Seider, 2003 2000 394 $64,296 3.17 3.17 $203,818 H Hot Utility 1 E-16 Boiler 1 1 $307,070 $307,070 Seider, 2003 2000 394 $530,028 2.19 2.19 $1,160,762 I Cold Utlity 1 E-15 Cooling Tower 1 1 $1,878 $1,878 2000 394 $3,241 4.19 4.19 $13,579 2 P-04 Centrifugal pump 4 1 1 2 $6,143 $12,287 Seider, 2003 2000 394 $21,208 3.3 2.97 $62,987 3 Fan Power 1 1 2 $149 $299 Seider, 2003 2000 394 $516 2.15 1.935 $998

TOTAL Equipment Cost

$34,410,796 CTBM $106,943,

626

CTBM!

CTCI=CTPI+ CWC

TOTAL CAPITAL !INVESTMENT!

Capital Component Amount Parameter Fixed capital (CTPI) CTBM $106,943,626 calculated Csite $16,041,544 15% of CTBM Cbuilding $21,388,725 20% of CTBM Coffsite facilities $5,347,181 5% of CTBM Ccontingency $16,041,544 15% of CTBM Ccontractor fee $3,208,309 3% of CTBM CTPI $168,970,930 sum above Working capital (CWC) $31,093,073 17.6% of CTPI Total Capital Investment (CTCI) $200,065,003 CTPI + CWC

BENCHMARKING!

$ Feedstock TCI Capacity (bpy) I (/barrel)

Delta Airlines Inc. Crude Oil $150,000,000 17,16 million $8.74 Pertamina Crude oil $30,000,000,000 10,81 million $ 2,142,857,

UOP Honeywell (Green Jet Fuel)

Camelina, Tallow, Jathropa, Algae Oil $208,000,000 17,82 million $11.67

Sinopec’s Zhenhai Refining & Chemical Co.

Cooking oil $9,851,400 14,000 $703.67

Renewable Jet Fuel Plant (ours)

Crude Palm Oil (CPO) $200,065,003 7,92 million $25.26

VARIABLE COST!Direct Material Cost!

Material Amount used Note Total supply Unit Price per unit (IDR) Supplier Price per

unit (USD)

Purchase price (US

$) Note Annual

Expense ($)

CPO 107555.5556 kg/h Storage time :

1 week 18069333.33 kg IDR 5,700 PTPN V (Riau) $1 $9,063,575

Supply per

week $471,305,884

Methanol 15565.20774 kg/h Storage time :

1 week 3301.71 L IDR 6,000 CV Berlian

Jaya (surabaya)

$1 $1,743 Supply

per week

$90,652

Zeolite 17848.72 kg

4 times regeneration

26773.08 kg IDR

113,890

Pingxiang pangtai Industrial Co., Ltd.

$10 $268,328 Supply

per month

$3,219,939 Regeneration

per week

Calcium Oxide 198385.29 kg

4 times regeneration

297577.94 kg IDR 1,300 CV Makida

tunggal Perkasa

$0 $34,043 Supply

per month

$408,515 regeneration

per week

Potassim carbonate 35697.44 kg

Zeolite : Potassium carbonate (2:1, w/w)

118049.08 lbs

Soap Goods (Free

Shipping For Large Bulk

Orders (1000 Lbs or more)

$2 $245,542 Supply

per month

$2,946,505

TOTAL $477,971,495

VARIABLE COST!Direct Operating Labor!21


Table 7.8 Number of operator needed (continuous process)

Type of process Number of operator

per section Number of section

Number of Operator Needed

Reaction (also covers generator unit) 2 2 4

Separation 2 8 16 Storage 2 2 4 Boiler 2 1 2 Cooling tower 2 1 2 Control 2 6 12

Total Operator (per shift) 40 Operators needed 200

Now, it is obvious that we will have 200 operators in our plant. Each operator

is paid for 168-hr/week and 52-weeks/year or a total of 8736-hr/year. The annual cost

of direct wages and benefits (DW&B) is obtained from:

DW&B, $ yr = (operators shift)(⁄ 5⁄ shifts)(2080 hr yr − operator)($/hr)⁄

According to Riau Gubernatorial Decree 2013 (SK Gubernur provinsi Riau),

the minimum wage in Dumai is IDR 1,490,000.This decree officially implemented

since January 1, 2013. There are three types of worker that will directly relate to our

operation, besides operator, the other to will be technical and labor. The wages of

labor will be least higher than UMK Dumai which is IDR 1,600,000. The engineering

personnel or technicians will receive IDR 1,800,000 and operator will receive IDR

2,300,000. Therefore, the amount of operator’s wages and benefit (DW&B) is about

$0.33 per hour. In that case, the annual cost of direct wages and benefits (DW&B) is

obtained as much as $582,912

To obtain the total annual labor-related operation cost, O, we should

considered the amount of salaries and benefits for supervisory and engineering

personnel and also operating supplies and services. Overall calculation of total annual

labor-related operation cost in our jet fuel company will be elaborated in table below.

(7.10)

Basis UMR (IDR) UMR ($) UMR ($) /yr

Year UMR (IDR) 2015 Operator 2013 IDR 2,300,000 IDR 2,760,000 $243 $2,915 Technical 2013 IDR 1,800,000 IDR 2,160,000 $190 $2,281 Labor 2013 IDR 1,600,000 IDR 1,920,000 $169 $2,028

Annual DW&B $582,912 Direct salaries and benefit $87,437

Operating supplies & services $34,975 Technical assistance $11,405 Control laboratory $10,138

Total labor-related operation annual cost $726,866

VARIABLE COST!Utility Cost!

Hot and Cold Utility Cost Water Price Needs (m3/year) Cost

Start up water IDR 4,000 IDR 25 IDR 100,320 Makeup water IDR 4,000 IDR 2,920 IDR 11,680,000

TOTAL IDR 11,780,320 $1,037

Electrcity Utility (PLN and steam turbine)

PLN Electricity Price

Needs (kWH/year) Cost

Plant and domestic IDR 765 IDR 182 IDR 138,924 $12

Steam turbine

Fuel Price Needs (L/year) Cost for Steam Generator IDR 9,000 IDR 18,250,000 IDR 164,250,000,000

$14,453,995

Total Electricity Cost $14,455,032

Total Utility Cost $14,456,069

FIXED COST!Indirect Labor!

Position Number of Person

Salary per Month (IDR)

Total Salary per Month (IDR)

Total Salary per Year (IDR)

Director 1 IDR 22,000,000 IDR 22,000,000 IDR 264,000,000 Vice director 1 IDR 18,000,000 IDR 18,000,000 IDR 216,000,000 Plant Manager 1 IDR 15,000,000 IDR 15,000,000 IDR 180,000,000 Deputy of Plant Manager 1 IDR 12,000,000 IDR 12,000,000 IDR 144,000,000 Finance and Admin Manager 1 IDR 15,000,000 IDR 15,000,000 IDR 180,000,000 Supply Chain Superintendent 1 IDR 10,000,000 IDR 10,000,000 IDR 120,000,000 HSE Superintendent 1 IDR 10,000,000 IDR 10,000,000 IDR 120,000,000 Maintenance Superintendent 1 IDR 10,000,000 IDR 10,000,000 IDR 120,000,000 Engineer of Maintenance 8 IDR 8,000,000 IDR 64,000,000 IDR 768,000,000 Operation Superintendent 2 IDR 10,000,000 IDR 20,000,000 IDR 240,000,000 Technology Superintendent 2 IDR 10,000,000 IDR 20,000,000 IDR 240,000,000 Process Engineer 8 IDR 8,000,000 IDR 64,000,000 IDR 768,000,000 Finance Supervisor 1 IDR 8,000,000 IDR 8,000,000 IDR 96,000,000 Employee 5 IDR 2,500,000 IDR 12,500,000 IDR 150,000,000 HR&GA Supervisor 1 IDR 8,000,000 IDR 8,000,000 IDR 96,000,000 Employee 5 IDR 2,500,000 IDR 12,500,000 IDR 150,000,000 Outsource (Cleaning, Driver, Security) 40 IDR 1,500,000 IDR 60,000,000 IDR 720,000,000 External Supervisor 1 IDR 8,000,000 IDR 8,000,000 IDR 96,000,000 Employee 2 IDR 2,500,000 IDR 5,000,000 IDR 60,000,000

SUBTOTAL IDR 4,728,000,000 Grant IDR 1,418,400,000

GRAND TOTAL IDR 6,146,400,000

$540,883

FIXED COST!Maintenance Cost!

Wages and Benefit (MW&B) $24,934,258 Salaries & benefit (engineers & supervisory personnel) $6,233,565 Materials and services for maintenance $24,934,258 Maintenance overhead $1,246,713

Total Annual Maintenance Cost $57,348,794

FIXED COST!Safety and Environmental Cost!

Environmental Cost COD 60000mg/L Mass Flow (kg/h) 768.1 Organic Removed (kg/h) 46.0 Annual Organic removed (kg) 364013.1 price /kg $0.22 Total Price $80,083

Safety Cost

Type of Equipment Price Quantity Cost

Fire Alarm IDR 2,030,000 20 IDR 40,600,000 Fire Hydrant IDR 4,534,000 15 IDR 68,010,000 Fire Extinguisher IDR 1,904,000 30 IDR 57,120,000 Safety Shower IDR 11,748,000 8 IDR 93,984,000

Lightning Protection IDR 3,000,000 10 IDR 30,000,000 PERSONAL PROTECTION EQUIPMENT Safety Helmet IDR 30,000 300 IDR 9,000,000 Face Protection IDR 60,000 250 IDR 15,000,000 Goggle IDR 30,000 300 IDR 9,000,000 Dust Mask IDR 40,000 300 IDR 12,000,000 Ear Flag IDR 8,000 300 IDR 2,400,000 Boots IDR 210,000 300 IDR 63,000,000 Safety Shoes IDR 322,000 300 IDR 96,600,000 Gloves IDR 63,000 200 IDR 12,600,000 Safety Belt IDR 288,000 100 IDR 28,800,000 Spectacles IDR 42,000 200 IDR 8,400,000 Raincoat IDR 440,000 100 IDR 44,000,000

TOTAL IDR 590,514,000 $51,965

FIXED COST!Property taxes, Insurance, Royalties Cost!

Property Taxes and insurance $14,790,377 Insurance anf employee benefit $6,486.16 TOTAL $14,796,864

Royalties $7,395,189

PRODUCTION COST!!

Variable Cost

Raw Material Cost $477,971,495 Direct Operating Labor $726,866 Utiliy Cost $14,456,069

TOTAL VARIABLE COST $493,154,430 Fixed Cost

Indirect Labor $7,529,540 Maintenance Cost $59,531,269 Safety and Environmental Cost $132,048 Property taxes and Insurance Cost $14,796,864 Royalties Cost $7,395,189 Depreciation Cost $12,968,258

TOTAL FIXED COST $102,353,168 DIRECT PRODUCTION COST $595,507,597

General Expense Sales Expense $163,764,589 Direact research $7,860,700 Allocated research $818,823 Administrative expense $3,275,292 Management incentive compensation $2,047,057 TOTAL GE $177,766,462

ANNUAL PRODUCTION COST $773,274,059

PRODUCTION COST!Plant Annual Direct Production Cost!

Capacity Plan Variable Cost Fixed Cost Annual Direct

Production Cost Year Capacity (bpy) Direct Material

Direct Labor Utilities

1 50% 3960000 $238,985,7

47.69 $363,432

.84 $7,228,034

.36 $102,353,16

8 $348,930,382.43

2 70% 5544000 $334,580,0

46.76 $508,805

.98 $10,119,24

8.10 $102,353,16

8 $447,561,268.38

3 90% 7128000 $430,174,3

45.84 $654,179

.12 $13,010,46

1.84 $102,353,16

8 $546,192,154.34

4~20 100% 7920000 $477,971,4

95 $726,866 $14,456,06

9 $102,353,16

8 $595,507,597.32

PRODUCT SELLING PRICE

TCI/barrel 1.396 PC/barrel $97.64 Jet Fuel Price without profit $99.03 Expected profit 20%

Year Capacity Jet Fuel Production (bpy)

Jet Fuel Price (per barrel)

Annual Jet Fuel Sales Revenue

1 50% 3,960,000 $118.84 $470,596,424 2 70% 5,544,000 $119.66 $663,369,774 3 90% 7,128,000 $120.54 $859,241,727 4 100% 7,920,000 $122.20 $967,829,290 5 100% 7,920,000 $124.47 $985,782,980 6 100% 7,920,000 $123.21 $975,846,154 7 100% 7,920,000 $124.04 $982,433,504 8 100% 7,920,000 $124.05 $982,493,709 9 100% 7,920,000 $122.64 $971,293,433

10 100% 7,920,000 $124.40 $985,271,469 11 100% 7,920,000 $123.72 $979,891,168 12 100% 7,920,000 $122.72 $971,903,926 13 100% 7,920,000 $123.66 $979,358,538 14 100% 7,920,000 $124.57 $986,591,826 15 100% 7,920,000 $126.17 $999,246,801 16 100% 7,920,000 $125.49 $993,891,198 17 100% 7,920,000 $123.23 $975,956,315 18 100% 7,920,000 $121.16 $959,571,313 19 100% 7,920,000 $122.24 $968,176,472 20 100% 7,920,000 $121.10 $959,125,849

EQUITY!!

Year

Necessity Way to cover

Balance Exact need Bank Interest Payment

Investor Interest

Payment

Bank Payment Bank Investor Income

-1 $200,065,003 $120,039,002 $80,026,001 $0 0 $12,604,095 -$12,604,095 1 $526,696,844 $12,604,095 -$68,704,515 $470,596,424 $0 2 $629,107,439 $19,818,069 $14,444,266 $663,369,774 $0 3 $734,099,685 $18,301,421 $16,005,200 $174,299,251 $859,241,727 -$83,463,830 4 $795,472,130 $16,005,200 $967,829,290 $156,351,960 5 $810,433,539 $16,005,200 $985,782,980 $159,344,242 6 $802,152,850 $16,005,200 $975,846,154 $157,688,104 7 $807,642,308 $16,005,200 $982,433,504 $158,785,995 8 $807,692,479 $16,005,200 $982,493,709 $158,796,030 9 $798,358,916 $16,005,200 $971,293,433 $156,929,317

10 $810,007,279 $16,005,200 $985,271,469 $159,258,990 11 $805,523,695 $16,005,200 $979,891,168 $158,362,273 12 $798,867,660 $16,005,200 $971,903,926 $157,031,066 13 $805,079,837 $16,005,200 $979,358,538 $158,273,501 14 $811,107,576 $16,005,200 $986,591,826 $159,479,049 15 $821,653,389 $16,005,200 $999,246,801 $161,588,212 16 $817,190,387 $16,005,200 $993,891,198 $160,695,611 17 $802,244,651 $16,005,200 $975,956,315 $157,706,464 18 $788,590,482 $16,005,200 $959,571,313 $154,975,630 19 $795,761,448 $16,005,200 $968,176,472 $156,409,824 20 $788,219,262 $16,005,200 $959,125,849 $154,901,386

Bank 60% Investor 40%

CASH FLOW!

Year Gross Income Expense BTCF Depreciation Taxable Income Tax

2014 -1 $200,065,003 -$200,065,003 $0 $0 2015 0 $0 $0 $0 2016 1 $470,596,424 $526,696,844 -$56,100,420 $2,566,803 -$58,667,223 -$16,426,822 2017 2 $663,369,774 $629,107,439 $34,262,335 $2,333,758 $31,928,578 $8,940,002 2018 3 $859,241,727 $734,099,685 $125,142,042 $2,126,550 $123,015,492 $34,444,338 2019 4 $967,829,290 $795,472,130 $172,357,160 $1,941,853 $170,415,308 $47,716,286 2020 5 $985,782,980 $810,433,539 $175,349,442 $1,776,802 $173,572,639 $48,600,339 2021 6 $975,846,154 $802,152,850 $173,693,304 $1,628,936 $172,064,368 $48,178,023 2022 7 $982,433,504 $807,642,308 $174,791,196 $1,496,131 $173,295,065 $48,522,618 2023 8 $982,493,709 $807,692,479 $174,801,230 $1,376,554 $173,424,676 $48,558,909 2024 9 $971,293,433 $798,358,916 $172,934,517 $1,268,623 $171,665,894 $48,066,450 2025 10 $985,271,469 $810,007,279 $175,264,190 $1,170,969 $174,093,221 $48,746,102 2026 11 $979,891,168 $805,523,695 $174,367,473 $1,082,404 $173,285,069 $48,519,819 2027 12 $971,903,926 $798,867,660 $173,036,266 $1,001,899 $172,034,367 $48,169,623 2028 13 $979,358,538 $805,079,837 $174,278,701 $928,559 $173,350,143 $48,538,040 2029 14 $986,591,826 $811,107,576 $175,484,249 $861,603 $174,622,646 $48,894,341 2030 15 $999,246,801 $821,653,389 $177,593,412 $800,351 $176,793,061 $49,502,057 2031 16 $993,891,198 $817,190,387 $176,700,811 $744,207 $175,956,604 $49,267,849 2032 17 $975,956,315 $802,244,651 $173,711,664 $692,650 $173,019,014 $48,445,324 2033 18 $959,571,313 $788,590,482 $170,980,831 $645,223 $170,335,608 $47,693,970 2034 19 $968,176,472 $795,761,448 $172,415,024 $601,521 $171,813,503 $48,107,781 2035 20 $959,125,849 $788,219,262 $170,906,587 $561,190 $170,345,397 $47,696,711

Tax 28%

Year ATCF Payment of Interest

Payment of Loan

Payment of Investor Clean Income Acc

2014 -1 -$200,065,003 -$200,065,003 -$200,065,003 2015 0 $0 $12,604,095 -$12,604,095 -$212,669,098 2016 1 -$39,673,597 $12,604,095 -$68,704,515 $16,426,822 -$196,242,276 2017 2 $25,322,333 $19,818,069 $14,444,266 -$8,940,002 -$205,182,278 2018 3 $90,697,704 $18,301,421 $174,299,251 $16,005,200 -$117,908,168 -$323,090,445 2019 4 $124,640,874 $16,005,200 $108,635,674 -$214,454,772 2020 5 $126,749,103 $16,005,200 $110,743,903 -$103,710,869 2021 6 $125,515,281 $16,005,200 $109,510,081 $5,799,212 2022 7 $126,268,578 $16,005,200 $110,263,377 $116,062,589 2023 8 $126,242,321 $16,005,200 $110,237,120 $226,299,709 2024 9 $124,868,067 $16,005,200 $108,862,867 $335,162,576 2025 10 $126,518,088 $16,005,200 $110,512,888 $445,675,464 2026 11 $125,847,654 $16,005,200 $109,842,453 $555,517,917 2027 12 $124,866,643 $16,005,200 $108,861,443 $664,379,360 2028 13 $125,740,662 $16,005,200 $109,735,461 $774,114,822 2029 14 $126,589,908 $16,005,200 $110,584,708 $884,699,530 2030 15 $128,091,355 $16,005,200 $112,086,155 $996,785,684 2031 16 $127,432,962 $16,005,200 $111,427,762 $1,108,213,446 2032 17 $125,266,340 $16,005,200 $109,261,140 $1,217,474,586 2033 18 $123,286,860 $16,005,200 $107,281,660 $1,324,756,247 2034 19 $124,307,243 $16,005,200 $108,302,043 $1,433,058,289 2035 20 $123,209,875 $16,005,200 $107,204,675 $1,540,262,964

CASH FLOW!

CASH FLOW!

-‐$250

-‐$200

-‐$150

-‐$100

-‐$50

$0

$50

$100

$150

$200 20

14

2015

2016

2017

2018

2019

2020

20

21

2022

20

23

2024

20

25

2026

20

27

2028

20

29

2030

20

31

2032

20

33

2034

20

35

Millions

ATCF BTCF

1

2

3

4

PROFITABILITY!

37


7.8 Profitability 7.8.1 Return of Investment (ROI)

After the income taxes have been deducted from the gross income, the

remainder or net income is the amount that belongs free and clear to the corporation

and may be used for paying dividends, reinvesting or spent for any other purposes.

This amount is also the basis for determining the simplest measure of the profitability

of an investment, the rate of return that the investment is generating: net income per yeartotal investment = rate of return (after taxes) = ROI

Although this method is simple to use and relates to accepted accounting

methods, it has some serious disadvantages such as ignoring the time value of money,

a basic assumption in this method is that all projects are similar in nature to each

other, equal weight is given all income for all years and that is not always true.

ROI =average net incometotal investment =

$124,631,998.03$203,001,722 = 61%

Based on calculation, our product has 61% return on investment. Based on the ROI

value, we could conclude that our product is attractive enough for investors because

of its high ROI value.

7.8.2 Payback Period (PBP) The objective of this method is to calculate the amount of time that will be

required to recover the depreciable fixed capital investment from the accrued cash

flow of a project. Payout period is often used in conjunction with other measures of

profitability. It is defined as:

Payback period =depreciable fixed capital investment

after tax cash flow

= Last year with negative CCF +Absolute value of CCF in that year

Total cash flow in the following year

= 3 +$142,958,284.08$168,003,587.87 = 3,9 year

39


costs, the price of the product. Fixed costs are those which do not change with the

level of sales such as overhead. Variable costs are those which do change with the

level of sales. The price of the product has been set by the company through looking

at the wholesale cost of the product or the cost of manufacturing the product and

marking it up.

𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡 =𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡

𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 − 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡

𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡 =$92,197,239$120,4 − $62 = 1,567,319 𝑏𝑝𝑦

Breakeven point of our product is 1,567,319 bpy.

7.8.4 Internal Rate of Return (IRR)

The internal rate of return (IRR) is the interest rate that will make the present

worth of the cash proceeds expected from an investment equal to the present worth of

the required cash outlays required by the investment. Therefore, it is discount rate that

results when the net present worth is equal to zero. The internal rate of return is also

known as the discounted cash flow rate of return. In principle, the technique is similar

to the NPW method. However, in the IRR method, the result is the interest rate that

will produce an NPW of zero. Our internal rate of return reaches 30%.

7.8.5 Net Present Value (NPV)

The net present value is the algebraic sum of the discounted values of the cash

flows each year during the life of a project. In the net present value method, an

arbitrary time frame, time zero is selected as the basis of calculation. Time zero, the

present time, may occur when the first funds are spent on the project or alternatively

when project start-up commences. 𝑁𝑒𝑡 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑤𝑜𝑟𝑡ℎ (𝑁𝑃𝑊)

= 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑤𝑜𝑟𝑡ℎ 𝑜𝑓 𝑎𝑙𝑙 𝑐𝑎𝑠ℎ 𝑖𝑛𝑓𝑙𝑜𝑤 − 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑤𝑜𝑟𝑡ℎ 𝑜𝑓 𝑎𝑙𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑖𝑡𝑒𝑚𝑠

40


If the net present worth is positive, the project will earn more than the interest

(discount) rate used in the calculations. If the NPW is negative, then the project earns

less than that rate. The advantages of this method are that the timing of all cash flows

and capital recovery at the end of a project are considered properly.

To calculate the NPV of our product, firstly, we need to calculate MARR

(Minimum Acceptable Rate of Return) we will use in the calculation of NPV. We

assume that the MARR is equal to WACC (Weighted Average Cost of Capital).

The weighted average cost of capital (WACC) is the rate that a company is expected

to pay on average to all its security holders to finance its assets.The WACC is the

minimum return that a company must earn on an existing asset base to satisfy its

creditors, owners, and other providers of capital, or they will invest elsewhere.

𝑊𝐴𝐶𝐶 = 𝑊𝑒𝑖𝑔ℎ𝑡 𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 × 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 +𝑊𝑒𝑖𝑔ℎ𝑡 𝑜𝑓 𝐷𝑒𝑏𝑡 × 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐷𝑒𝑏𝑡

𝑊𝐴𝐶𝐶 = 9,08%

We will calculate the NPV with the result come up is $60,827,552.46. A

project as feasible if the NPV> 0, which means the project is profitable or provide

benefits if implemented. If NPV <0, the project is not eligible to run because it does

not generate profit. Based on the theory, we can conclude that the project is eligible to

run. Table 7.23 Profitability analysis

ROI 61% Payback period 3,9 Fixed Cost $92,197,239 Variable Cost per unit $62 Price per unit $120.40 BEP 1,567,319 bpy WACC 9,08% IRR 30% NPV $60,827,552.46

37













$124,631,998.03$203,001,722 = 61%









after tax cash flow



= 3 +$142,958,284.08$168,003,587.87 = 3,9 year

37













$124,631,998.03$203,001,722 = 61%









after tax cash flow



= 3 +$142,958,284.08$168,003,587.87 = 3,9 year

37













$124,631,998.03$203,001,722 = 61%









after tax cash flow



= 3 +$142,958,284.08$168,003,587.87 = 3,9 year

38


This method is simple, though it has disadvantages such as no consideration is

given to cash flows that occur after the capital is recovered; therefore, this method

cannot be considered as a true measure of profitability. This method makes no

provision for including land or working capital. The time value of money is also

ignored. In today’s economy, industry will require a 25-35% return after taxes for

low-risk ventures at the early stages of consideration, which have been fulfilled based

on ROI calculation before. As a secondary guide, a payout period of up to 4 years is

considered reasonable. Our payback period is 3.8 year which is still considered

reasonable. Payback period can be illustrated in Figure below.

Figure 7.4 Cumulative cash flow

7.8.3 Break Event Point (BEP)

Breakeven point is the point at which its sales exactly over its expenses. The

company sells enough units of its product to cover its expenses without making a

profit or taking a loss. If it sells more then it makes profit. On the other hand, if it

sells less, it takes a loss. To calculate breakeven point in sales volume, the values of

three variables should be identified. Those three variables are fixed costs, variable

-$500.00

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Cas

h flo

w

Mill

ions

Year

PROFITABILITY!

ROI 21% Payback Period 5.947044038 Breakevent Point 1,809,187.967 WACC 0.0887 IRR 20% NPV $41,745,783.73

-$500

$0

$500

$1,000

$1,500

$2,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Cum

mul

ativ

e c

ash

flo

w Mill

ions

Year

SENSITIVITY ANALYSIS!

Raw Material Ratio NPV Gap -0.16 $48,393,280 40 $6,647,497 -0.12 $46,731,406 30 $4,985,623 -0.08 $45,069,532 20 $3,323,748 -0.04 $43,407,658 10 $1,661,874 0.00 $41,745,784 0 $0 0.04 $40,083,910 -10 -$1,661,874 0.08 $38,422,035 -20 -$3,323,748 0.12 $36,760,161 -30 -$4,985,623 0.16 $35,098,287 -40 -$6,647,497

Electricity Ratio NPV Gap -0.03 $42,947,199 40 $1,201,415 -0.02 $42,646,845 30 $901,061 -0.01 $42,346,491 20 $600,707 -0.01 $42,046,137 10 $300,354 0.00 $41,745,784 0 $0 0.01 $41,445,430 -10 -$300,354 0.01 $41,145,076 -20 -$600,707 0.02 $40,844,723 -30 -$901,061 0.03 $40,544,369 -40 -$1,201,415

-$8

-$6

-$4

-$2

$0

$2

$4

$6

$8

-50 -40 -30 -20 -10 0 10 20 30 40 50

Mill

ions

Raw material sensitivity Electricity sensitivity Labor sensitivity

SENSITIVITY ANALYSIS!Labor

Ratio NPV Gap 0.00 $41,876,960 40 $131,176 0.00 $41,844,166 30 $98,382 0.00 $41,811,372 20 $65,588 0.00 $41,778,578 10 $32,794 0.00 $41,745,784 0 $0 0.00 $41,712,990 -10 -$32,794 0.00 $41,680,196 -20 -$65,588 0.00 $41,647,401 -30 -$98,382 0.00 $41,614,607 -40 -$131,176

PPT "Preliminary design of Jet Fuel production" asg4- Economic Analysis

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