Propylene production from methanol

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Propylene from

Methanol



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Technology Economics

Propylene Production from Methanol

2013

Abstract

Propylene has established itself as the second major member of the global olefins business, only after ethylene. Globally, the

largest volume of propylene is generated as by-product in steam crackers and through the fluid catalytic cracking (FCC) process.

With ethane prices falling in the USA, due to the exploration of shale gas reserves, the low price ethylene produced from this raw

material has given chemical producers in North America a feedstock advantage. Such change has put naphtha-fed steam crackers

at a disadvantageous position, with many of them shutting down or revamping to use ethane as feedstock. Nevertheless, the

propylene output rates from ethane-fed crackers are negligible. The result is a tight propylene market.

For this reason, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of high

interest to the petrochemical marketplace. Such processes include: Metathesis, Propane Dehydrogenation (PDH), Methanol-to-

Olefins/Methanol-to-Propylene (MTO/MTP), High Severity FCC, and Olefins Cracking. Among those, MTO/MTP and PDH stand outdue to the use of low-cost raw materials. The main raw material used in the MTP process is methanol that is produced from

synthesis gas which, in turn, can be obtained in large-scale from natural gas or coal. Natural gas extracted from shale gas has

become the fastest-growing source of gas in the USA, while China possesses large reserves of coal, making both countries

competitive when comparing to others with high-cost feedstock.

In this report, the production of propylene from methanol (MTP) is reviewed. Included in the analysis is an overview of the

technology and economics of a process similar to the Lurgi MTP® and JGC/Mitsubishi DTP® processes. Both the capital investment

and the operating costs are presented for a plant constructed in the US Gulf Coast and China.

The economic analysis presented in this report is based upon a plant fully integrated with a petrochemical complex and capable

of producing 557 kta of polymer-grade propylene. The estimated CAPEX for such a plant in US Gulf Coast is about USD 380 million.

China is the most attractive place to start-up a MTP plant, which justifies the fact that the only two existing MTP plants are locatedin China. However, with the advent of shale gas in the USA, natural gas prices are low, favoring the construction of a MTP plant

also in the country. This fact is proved by the calculated internal rate of return of above 25% per year in both regions.



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Contents

About this Study .............................................................................................................................................................. 8

Object of Study.............................................................................................................................................................................................................................8

Analysis Performed ............. ................ .............. ................. ................ .............. ................ .......... .............. .............. ................ .............. ............... ............... ........8

Construction Scenarios ..............................................................................................................................................................................................................8

Location Basis ...................................................................................................................................................................................................................................9

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

Study Background ........................................................................................................................................................ 10

About Propylene ............ ................ .............. .............. ............... ............... ............. ................. .............. .............. ................. ............. ............... .............. ...........10

Introduction.................................................................................................................................................................................................................................... 10

Applications.................................................................................................................................................................................................................................... 10

Manufacturing Alternatives ............. ................. ................ ............... ............. ............... .............. .............. ................ .............. .............. ................ .............11

Licensor(s) & Historical Aspects......................................................................................................................................................................................13

Technical Analysis............ ......... ......... .......... ......... .......... ......... ......... .......... ......... .......... ......... .......... ......... ......... .......... 14

Chemistry.......................................................................................................................................................................................................................................14

Raw Material ............. ............... ............... .............. ................ .............. .............. ................. ............. ................ ............... .............. .............. ............... ................ ...14

Technology Overview...........................................................................................................................................................................................................16Detailed Process Description & Conceptual Flow Diagram.......................................................................................................................17

Area 100: Reaction & Regeneration................................................................................................................................................................................17

Area 200: Quench & Compression..................................................................................................................................................................................18

Area 300: Product Fractionation.......................................................................................................................................................................................18

Key Consumptions..................................................................................................................................................................................................................... 19

Technical Assumptions ...........................................................................................................................................................................................................19

Labor Requirements.................................................................................................................................................................................................................. 19

ISBL Major Equipment List.................................................................................................................................................................................................23

OSBL Major Equipment List ............... ............... .............. ................. .............. .............. ............. ............... ................ .............. ............... .............. ..............26

Other Process Remarks .............. ................ ................ ................. .............. ................ ............. ................ .............. ................ .............. .............. .............. ......27

Technology Comparison........................................................................................................................................................................................................27

Integration with FCC & Naphtha Crackers...................................................................................................................................................................27

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

General Assumptions............................................................................................................................................................................................................29



3

Project Implementation Schedule...............................................................................................................................................................................30

Capital Expenditures..............................................................................................................................................................................................................30

Fixed Investment......................................................................................................................................................................................................................... 30

Working Capital............................................................................................................................................................................................................................ 33

Other Capital Expenses ...........................................................................................................................................................................................................34

Total Capital Expenses .............................................................................................................................................................................................................34

Operational Expenditures ............. ............... ................. ................ ................ ................. ......... .............. .............. .............. ............... ............... ............. ......34

Manufacturing Costs................................................................................................................................................................................................................. 34

Historical Analysis........................................................................................................................................................................................................................ 35

Economic Datasheet .............. ............... ................ ................ ............... ............... ................ ......... ............... ............... .............. ................ .............. ...............35

Regional Comparison & Economic Discussion.................................................................................................... 38

Regional Comparison............................................................................................................................................................................................................38

Capital Expenses.......................................................................................................................................................................................................................... 38

Operational Expenses...............................................................................................................................................................................................................38

Economic Datasheet.................................................................................................................................................................................................................38

Economic Discussion ............. .............. ............... ............... ............... ............... .............. .............. ............... ............... .............. ................ .............. ...............39

References....................................................................................................................................................................... 41

Acronyms, Legends & Observations....................................................................................................................... 42

Technology Economics Methodology........ ........ .......... ......... .......... ......... ......... ........... .......... ......... .......... .......... .. 43

Introduction.................................................................................................................................................................................................................................43

Workflow........................................................................................................................................................................................................................................43

Capital & Operating Cost Estimates............................................................................................................................................................................45

ISBL Investment............................................................................................................................................................................................................................ 45

OSBL Investment......................................................................................................................................................................................................................... 45

Working Capital............................................................................................................................................................................................................................ 46

Start-up Expenses ....................................................................................................................................................................................................................... 46


Manufacturing Costs.................................................................................................................................................................................................................47

Contingencies............................................................................................................................................................................................................................47

Accuracy of Economic Estimates..................................................................................................................................................................................48

Location Factor..........................................................................................................................................................................................................................48

Appendix A. Mass Balance & Streams Properties............................................................................................... 50

Appendix B. Utilities Consumption Breakdown ......... ......... ......... .......... ......... .......... .......... ......... .......... ........ .... 55

Appendix C. Carbon Footprint ................................................................................................................................. 56



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Appendix D. Equipment Detailed List & Sizing................................................................................................... 57

Appendix E. Detailed Capital Expenses................................................................................................................. 66

Direct Costs Breakdown......................................................................................................................................................................................................66

Indirect Costs Breakdown ............ ................ ............... ............... ............... .............. ............... .............. .............. ............... .............. ................ ................ ...67

Appendix F. Economic Assumptions...................................................................................................................... 68

Capital Expenditures..............................................................................................................................................................................................................68

Construction Location Factors ...........................................................................................................................................................................................68

Working Capital............................................................................................................................................................................................................................ 68


Operational Expenses .............. .............. .............. ............... .............. .............. .............. ................. .............. ................. .............. ............... ................ ...........69

Fixed Costs ...................................................................................................................................................................................................................................... 69

Depreciation................................................................................................................................................................................................................................... 69

Appendix G. Released Publications ........................................................................................................................ 70

Appendix H. Technology Economics Form Submitted by Client ................................................................. 71



5

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 – Major Propylene Consumers......................................................................................................................................................................................10

Table 5 - Raw Materials & Utilities Consumption (per ton of product)................................................................................................................19

Table 6 – Design & Simulation Assumptions.........................................................................................................................................................................19

Table 7 – Labor Requirements for a Typical Plant..............................................................................................................................................................19

Table 8 – Main Streams Operating Conditions and Composition..........................................................................................................................23

Table 9 – Inside Battery Limits Major Equipment List......................................................................................................................................................23

Table 10 - Outside Battery Limits Major Equipment List ...............................................................................................................................................27

Table 11 – Base Case General Assumptions...........................................................................................................................................................................29

Table 12 - Bare Equipment Cost per Area (USD Thousands)......................................................................................................................................30

Table 13 – Total Fixed Investment Breakdown (USD Thousands)..........................................................................................................................30

Table 14 – Working Capital (USD Million) ................................................................................................................................................................................33

Table 15 – Other Capital Expenses (USD Million) ...............................................................................................................................................................34

Table 16 – CAPEX (USD Million)......................................................................................................................................................................................................34

Table 17 – Manufacturing Fixed Cost (USD/ton) ................................................................................................................................................................34

Table 18 – Manufacturing Variable Cost (USD/ton)..........................................................................................................................................................35

Table 19 – OPEX (USD/ton)................................................................................................................................................................................................................35

Table 20 – Technology Economics Datasheet: Propylene Production from Methanol on the US Gulf Coast.......................37

Table 21 – Technology Economics Datasheet: Propylene Production from Methanol in China ....................................................40

Table 22 – Project Contingency......................................................................................................................................................................................................47

Table 23 – Criteria Description.........................................................................................................................................................................................................47

Table 24 – Accuracy of Economic Estimates .........................................................................................................................................................................48

Table 25 – Detailed Material Balance & Streams Properties........................................................................................................................................50

Table 26 – Utilities Consumption Breakdown ......................................................................................................................................................................55

Table 27 – Assumptions for CO2e Emissions Calculation.............................................................................................................................................56

Table 28 – CO2e Emissions (ton/ton prod.)............................................................................................................................................................................56

Table 29 – Compressors .......................................................................................................................................................................................................................57

Table 30 – Heat Exchangers ..............................................................................................................................................................................................................57

Table 31 – Pumps......................................................................................................................................................................................................................................61

Table 32 – Columns.................................................................................................................................................................................................................................62



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Table 33 – Utilities Supply...................................................................................................................................................................................................................63

Table 34 – Vessels & Tanks..................................................................................................................................................................................................................63

Table 35 – Indirect Costs Breakdown for the Base Case (USD Thousands)......................................................................................................67

Table 36 – Detailed Construction Location Factor............................................................................................................................................................68

Table 37 – Working Capital Assumptions (Base Case) ....................................................................................................................................................68

Table 38 – Other Capital Expenses Assumptions (Base Case) ...................................................................................................................................68

Table 39 – Other Fixed Cost Assumptions ..............................................................................................................................................................................69

Table 40 – Depreciation Value & Assumptions ....................................................................................................................................................................69



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List of Figures

Figure 1 – Construction Scenarios Assumptions (Based on Degree of Integrations)..................................................................................8

Figure 2 – Propylene from Multiple Sources .........................................................................................................................................................................12

Figure 3 – MTP Reaction Diagram.................................................................................................................................................................................................14

Figure 4 – US Natural Gas Production History and Forecast (Trillion Cubic Feet)........................................................................................15

Figure 5 – Process Block Flow Diagram.....................................................................................................................................................................................16

Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram.....................................................................................................................20

Figure 7 – MTP Integrated with FCC/Naphtha Cracker Units ....................................................................................................................................28

Figure 8 – Project Implementation Schedule .......................................................................................................................................................................29

Figure 9 – Total Direct Cost of Different Integration Scenarios (USD Thousands)......................................................................................32

Figure 10 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) ....................................................................32

Figure 11 – Total Fixed Investment Validation (USD Million).....................................................................................................................................33

Figure 12 – OPEX and Product Sales History (USD/ton) ................................................................................................................................................36

Figure 13 – EBITDA Margin & IP Indicators History Comparison..............................................................................................................................36

Figure 14 – CAPEX per Location (USD Million).....................................................................................................................................................................38

Figure 15 – Operating Costs Breakdown per Location (USD/ton) .........................................................................................................................39

Figure 16 – Methodology Flowchart...........................................................................................................................................................................................44

Figure 17 – Location Factor Composition...............................................................................................................................................................................49

Figure 18 – ISBL Direct Costs Breakdown by Equipment Type (Base Case) .....................................................................................................66

Figure 19 – OSBL Direct Costs by Equipment Type (Base Case) ..............................................................................................................................66



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I n t r a t e c | A b o u t t h i s S t u d y

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”.

Object of Study This assignment assesses the economic feasibility of an

industrial unit for propylene production from methanol,

implementing technology similar to the Lurgi MTP® and

JGC/Mitsubishi DTP® processes.

The current assessment is based on economic data

gathered on Q3 2011 and a chemical plant’s nominal

capacity of 557 kta (thousand metric tons per year).

Raw Materials

Storage

ISBL Unit

Products Storage

Raw Materials

Provider

ISBL Unit

Products Storage

Raw Materials

Provider

ISBL Unit

Products

Consumer

Petrochemical Complex


Analysis Performed

Construction Scenarios

The economic analysis is based on the construction of a

plant inside a petrochemical complex, in which methanol

feedstock is locally provided and propylene product is

consumed by a nearby polypropylene unit. Therefore, no

storage for product or raw material is required. Additionally,

the petrochemical complex supplies most utilities.

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 adecisive role in the decision as to whether or not to invest.

Thus, in this study three distinct OSBL configurations are

compared. Those scenarios are summarized in Figure 1 and

Table 1

About this Study

Figure 1 – Construction Scenarios Assumptions (Based on Degree of Integrations)

Non-Integrated


Raw Materials

Storage

ISBL Unit

Products Consumer


Partially Integrated Fully Integrated

Raw Materials

Provider

ISBL Unit

Products Consumer

Raw Materials

Storage

ISBL Unit

Products Storage

Grassroots unit Unit is part of a petrochemical complex Most infrastructure is already installed

Source: Intratec – www.intratec.us



9

I n t r a t e c | A b o u t t h i s S t u d y

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 China.

The assumptions that distinguish the two regions analyzed

in this study are provided in Table 2.

Design Conditions

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 andOSBL facilities.

The design assumptions employed are depicted in Table 3.

Cooling water temperature 24 °C

Cooling water range 11 °C

Steam (High Pressure) 28 bar abs

Steam (Medium Pressure) 11 bar abs

Steam (Low Pressure) 7 bar abs

Refrigerant (Propylene) -45 °C

Wet Bulb Air Temperature 25 °C

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

Storage Capacity (Base Case for Evaluation)

Feedstock & Chemicals 20 days of operation 20 days of operation Not included

End-products & By-products 20 days of operation Not included Not included

Utility Facilities Included All All Only refrigeration unit

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

Control room and labs


Table 2 – Location & Pricing Basis


Table 3 – General Design Assumptions




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I n t r a t e c | S t u d y B a c k g r o u n d

About Propylene

Introduction

Propylene is an unsaturated organic compound having the

chemical formula C3H6. It has one double bond, is the

second simplest member of the alkene class of

hydrocarbons, and is also second in natural abundance.

Propylene 2D structure

Propylene is produced primarily as a by-product of

petroleum refining and of ethylene production by steam

cracking of hydrocarbon feedstocks. Also, it can be

produced in an on-purpose reaction (for example, in

propane dehydrogenation, metathesis or syngas-to-olefins

plants). It is a major industrial chemical intermediate that

serves as one of the building blocks for an array of chemical

and plastic products, and was also the first petrochemical

employed on an industrial scale.

Commercial propylene is a colorless, low-boiling,

flammable, and highly volatile gas. Propylene is traded

commercially in three grades:

Polymer Grade (PG): min. 99.5% of purity.

Chemical Grade (CG): 90-96% of purity.

Refinery Grade (RG): 50-70% of purity.

Applications

The three commercial grades of propylene are used fordifferent applications. RG propylene is obtained from

refinery processes. The main uses of refinery propylene are

in liquefied petroleum gas (LPG) for thermal use or as an

octane-enhancing component in motor gasoline. It can

also be used in some chemical syntheses (e.g., cumene or

isopropanol). The most significant market for RG propylene

is the conversion to PG or CG propylene for use in the

production of polypropylene, acrylonitrile, oxo-alcohols and

propylene oxide.

While CG propylene is used extensively for most chemical

derivatives (e.g., oxo-alcohols, acrylonitrile, etc.), PG

propylene is used in polypropylene and propylene oxide

manufacture.

PG propylene contains minimal levels of impurities, such as

carbonyl sulfide, that can poison catalysts.

Thermal & Motor Gasoline Uses

Propylene has a calorific value of 45.813 kJ/kg, and RG

propylene can be used as fuel if more valuable uses are

unavailable locally (i.e., propane – propene splitting to

chemical-grade purity). RG propylene can also be blended

into LPG for commercial sale.

Also, propylene is used as a motor gasoline component for

octane enhancement via dimerization – formation of

polygasoline or alkylation.

Chemical Uses

The principal chemical uses of propylene are in the

manufacture of polypropylene, acrylonitrile, oxo-alcohols,

propylene oxide, butanal, cumene, and propene oligomers.

Other uses include acrylic acid derivatives and ethylene –

propene rubbers.

Global propylene demand is dominated by polypropylene

production, which accounts for about two-thirds of total

propylene demand.

Polypropylene Mechanical parts, containers, fibers, films

Acrylonitrile Acrylic fibers, ABS polymers

Propylene oxidePropylene glycol, antifreeze,

polyurethane

Oxo-alcohols Coatings, plasticizers

Cumene Polycarbonates, phenolic resins

Acrylic acidCoatings, adhesives, super absorbent

polymers

Study Background

Table 4 – Major Propylene Consumers




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Manufacturing Alternatives

Propylene is commercially generated as a co-product, either

in an olefins plant or a crude oil refinery’s fluid catalytic

cracking (FCC) unit, or produced in an on-purpose reaction

(for example, in propane dehydrogenation, metathesis or

syngas-to-olefins plants).

Globally, the largest volume of propylene is produced in

NGL (Natural Gas Liquids) or naphtha steam crackers, which

generates ethylene as well. In fact, the production of

propylene from such a plant is so important that the name

“olefins plant” is often applied to this kind of manufacturing

facility (as opposed to “ethylene plant”). In an olefins plant,

propylene is generated by the pyrolysis of the incoming

feed, followed by purification. Except where ethane is used

as the feedstock, propylene is typically produced at levels

ranging from 40 to 60 wt% of the ethylene produced. The

exact yield of propylene produced in a pyrolysis furnace is afunction of the feedstock and the operating severity of the

pyrolysis.

The pyrolysis furnace operation usually is dictated by

computer optimization, where an economic optimum for

the plant is based on feedstock price, yield structures,

energy considerations, and market conditions for the

multitude of products obtained from the furnace. Thus,

propylene produced by steam cracking varies according to

economic conditions.

In an olefins plant purification area, also called separationtrain, propylene is obtained by distillation of a mixed C3

stream, i.e., propane, propylene, and minor components, in

a C3-splitter tower. It is produced as the overhead

distillation product, and the bottoms are a propane-

enriched stream. The size of the C3-splitter depends on the

purity of the propylene product.

The propylene produced in refineries also originates from

other cracking processes. However, these processes can be

compared to only a limited extent with the steam cracker

for ethylene production because they use completely

different feedstocks and have different production

objectives.

Refinery cracking processes operate either purely thermally

or thermally – catalytically. By far the most important

process for propene production is the fluid- catalytic

cracking (FCC) process, in which the powdery catalyst flows

as a fluidized bed through the reaction and regeneration

areas. This process converts heavy gas oil preferentially into

gasoline and light gas oil.

The propylene yielded from olefins plants and FCC units is

typically considered a co-product in these processes, which

are primarily driven by ethylene and motor gasoline

production, respectively. Currently, the markets have

evolved to the point where modes of by-product

production can no longer satisfy the demand for propylene.

A trend toward less severe cracking conditions, and thus to

increase propylene production, has been observed in steam

cracker plants using liquid feedstock. As a result, new and

novel lower-cost chemical processes for on-purpose

propylene production technologies are of high interest to

the petrochemical marketplace. Such processes include:

Olefin Metathesis. Also known as disproportionation,

metathesis is a reversible reaction between ethylene

and butenes in which double bonds are broken and

then reformed to form propylene. Propylene yields of

about 90 wt% are achieved. This option may also be

used when there is no butene feedstock. In this case,

part of the ethylene feeds an ethylene-dimerization

unit that converts ethylene into butene.

Propane Dehydrogenation. A catalytic process that

converts propane into propylene and hydrogen (by-

product). The yield of propylene from propane is

about 85 wt%. The reaction by-products (mainly

hydrogen) are usually used as fuel for the propane

dehydrogenation reaction. As a result, propylene

tends to be the only product, unless local demand

exists for the hydrogen by-product.

Methanol-to-Olefins/Methanol-to-Propylene. A

group of technologies that first converts synthesis gas

(syngas) to methanol, and then converts the methanol

to ethylene and/or propylene. The process also

produces water as by-product. Synthesis gas is

produced from the reformation of natural gas or by the

steam-induced reformation of petroleum products

such as naphtha, or by gasification of coal. A large

amount of methanol is required to make a world-scale

ethylene and/or propylene plant.

High Severity FCC. Refers to a group of technologies

that use traditional FCC technology under severe

conditions (higher catalyst-to-oil ratios, higher steam

injection rates, higher temperatures, etc.) in order to

maximize the amount of propylene and other light

products. A high severity FCC unit is usually fed with



12


gas oils (paraffins) and residues, and produces about

20-25 wt% propylene on feedstock together with

greater volumes of motor gasoline and distillate by-

products.

Olefins Cracking. Includes a broad range of

technologies that catalytically convert large olefins

molecules (C4-C8) into mostly propylene and small

amounts of ethylene. This technology will best be

employed as an auxiliary unit to an FCC unit or steam

cracker to enhance propylene yields.

These on-purpose methods are becoming increasingly

significant, as the shift to lighter steam cracker feedstocks

with relatively lower propylene yields and reduced motor

gasoline demand in certain areas has created an imbalance

of supply and demand for propylene.

Figure 2 – Propylene from Multiple Sources

Steam Cracker

Refinery FCC Unit

PDH

Metathesis

MTO/MTP

High Severity FCC

Olefins Cracking

Naphtha

NGL

RG Propylene CG/PG Propylene

Gas Oil

Propane

Ethylene/

Butenes

Methanol

C4 to C8

Olefins

Gas Oil




13


Licensor(s) & Historical Aspects

The continuous rise in petroleum prices in addition to the

increase in world demand for propylene led to innovation

by the chemical industry in the development of production

routes other than those involving oil. Thus, the economic

and environmental benefits arising from the use of naturalgas encouraged an alternative route for olefins production

by using inexpensive methanol, which is deemed to be a

readily stored and managed intermediate product

generated from the natural gas.

Since the 1980s, hydrocarbons production from methanol

over a zeolite (especially of the ZSM-5 type) catalyst has

been known. It was found that methanol could be

converted into olefins ranging from C2 to C8, depending on

the reaction conditions. However, at that time, the

commercialization of routes such as MTG (methanol-to-

gasoline) by Mobil (now ExxonMobil) and the first tests of methanol into olefins conversion conducted by Lurgi, were

not possible on a commercial scale due to the high price of

methanol and the complexity of the required reactor

systems.

Propylene production from methanol started to become

technically feasible in 1999, when Lurgi made the choice of

a proper zeolite as the catalyst and started a pilot plant for

optimization tests. A demonstration unit was then built in

Norway in order to prove that the catalyst life under realistic

conditions was long enough to make the process

economically feasible. The main objective wasaccomplished and PG propylene production through

methanol-to-propylene (MTP) was also proved.

A similar technology that converts dimethyl-ether into

propylene, named as DTP® (Dominant Technology for

Propylene), has been jointly developed by the Japanese

corporations JGC and Mitsubishi Chemicals since 2007. This

technology can be considered a Lurgi MTP® competitor. A

demonstration plant was built in Mitsubishi Chemical’s

Mizushima Plant, Japan, and started the operations in

August 2010. However, till the present date, there is no

commercial unit in operation of the DTP® technology.



14

I n t r a t e c | T e c h n i c a l A n a l y s i s

Chemistry

The process of converting methanol into propylene can be

put in simpler form by splitting it into two reactions. The

first reaction, which occurs in a pre-reactor (DME reactor),

partially converts methanol into dimethyl-ether (DME) and

following equation shows the reaction:

Methanol DME Water

The reaction is exothermic, and the reaction equilibrium is

nearly independent of the operating pressure. The licensors

claim catalysts with high activity and high selectivity,

achieving almost thermodynamic equilibrium.

In the main reactor, dimethyl-ether and unconverted

methanol mixture from the DME reactor are converted on

zeolite-based catalyst (of type ZSM-5) with a high selectivity

toward low-molecular-weight olefins ranging from C2 to C8

and with the peak for propylene. The main reactions are

summarized in the following equation:

DME C2-C8 Olefins Water

Relatively high operating temperatures and low operating

pressures favor the high selectivity toward olefins. Also, in

MTP processes, olefins are recycled to the main reactor in

order to increase the propylene yield by the conversion of

olefins by-products. A simplified scheme, Figure 3,

illustrates the typical reactions that occur in the MTP reactor.

The balance between “Generated” and “Consumed”

indicates the reaction’s equilibrium and the thickness of the

arrow indicates the amount of compound produced.

Raw Material

As previously explained, the raw material for the production

of propylene via MTP is methanol.

Methanol, CH3OH, also termed methyl alcohol or carbinol, is

one of the most important chemical raw materials. About

85% of the methanol produced is used in the chemical

industry as a starting material or solvent for synthesis. The

remainder is used in the fuel and energy sector.

Technical Analysis

Figure 3 – MTP Reaction Diagram

Methanol / DME

Paraffins

Aromatics

Saturated Naphthenes

C6+

C4 and C5

C3

C2Consumed

Generated




15


Methanol is currently produced on an industrial scale

exclusively by catalytic conversion of synthesis gas.

Processes are classified according to the pressure used:

High-pressure process: 250 – 300 bar abs.

Medium-pressure process: 100 – 250 bar abs.

Low-pressure process: 50 – 100 bar abs.

The main advantages of the low-pressure process are lower

investment and production costs, improved operational

reliability and greater flexibility in the choice of plant size.

Industrial methanol production can be subdivided into

three main steps: production of synthesis gas; synthesis of

methanol; and processing of crude methanol.

All carbonaceous materials such as coal, coke, natural gas,

petroleum, and fractions obtained from petroleum (asphalt,gasoline, and gaseous compounds) can be used as starting

materials for synthesis gas production. Economy is of

primary importance with regard to choice of raw materials.

Long-term availability, energy consumption, and

environmental aspects must also be considered.

Natural gas is generally used in the large-scale production

of synthesis gas for methanol synthesis. In a few processes

(e.g., acetylene production), residual gases are formed

which have roughly the composition of the synthesis gas

required for methanol synthesis.

Natural gas extracted from shale gas has become the

fastest-growing source of gas in the United States and

could become a significant new global energy source. This

will enable the United States to consume a predominantly

domestic supply of gas for many years and produce more

natural gas than it consumes.

According to the forecast from the US Energy Information

Administration (EIA), in 2035, about half of the natural gas

production in the US will be from shale gas. Figure 4 shows

the US natural gas production history and forecast.

MTP technology has a favorable outlook for end-users who

have access to cost-advantaged feedstocks.

Figure 4 – US Natural Gas Production History and

Forecast (Trillion Cubic Feet)

Source: US Energy Information Administration (EIA) AOE2012

0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Non-associated onshore Associated with oil

Coalbed methane Alaska

Non-associated offshore Tight gasShale gas

ForecastHistory



16


Technology Overview

The MTP technology is based on the efficient combination

of two main features:

Fixed-bed reactor system, selected as the most suitable

reaction system from a technological and economicpoint of view;

Highly selective and stable zeolite-based fixed-bed

catalyst commercially manufactured.

In the process, methanol fed to the MTP plant is first

converted to DME and water in a DME pre-reactor. Using a

highly active and selective catalyst, thermodynamic

equilibrium is achieved, resulting in the methanol-water-

DME mixture at appropriate operating conditions.

Hydrocarbon recycle and steam generated from waterrecycle are added to this mixture before it enters the first

MTP reactor of the multi-stage adiabatic reactor system.

The methanol/DME conversion rate exceeds 99%, with

propylene as the essential compound. Additional reaction

proceeds in the downstream reactor stages.

The product mixture leaving the reactor system consists of

product gas, organic liquid and water. This mixture is

cooled and compressed.

After product gas compression, traces of water and DME are

removed and the gas is further processed, yielding polymer-

grade propylene. Several hydrocarbon-containing streams

are recycled to boost the propylene yield. Propylene is the

single main product, as shown in the simplified flow

diagram. Gasoline, LPG, fuel gas and water are by-products.

To avoid accumulation of inert materials in the system, a

small purge is required for light- and heavy-ends. The

excess water resulting from the methanol conversion is also

purged. It can be used as raw water or for irrigation after

inexpensive standard treatment. It can even be processed

to potable water.

Occurrence of coke formed on the active catalyst surfaces is

a crucial issue and inherent in catalytic conversion to olefins

due to inevitable side reactions. The amount of coke

formed is decisive for choosing the most adequate reactor

operation mode and catalyst. For this reason, propylene

synthesis is conducted in a semi-continuous manner, with

one or two reactor systems effectively conducting the

reactions, while the other or a third one is in regeneration or

on stand-by mode.

Regeneration is conducted by burning the coke with a

nitrogen/air mixture, after a cycle of approximately 500-600

hours of operation. The regeneration is carried out at

temperatures similar to the reaction itself, hence the catalyst

particles do not experience any unusual temperature stress

during the in-situ catalyst regeneration procedure.

Figure 5 – Process Block Flow Diagram

Methanol

Water RecycleGasoline

PG PropyleneArea 100

Reaction

Area 200

Quench &

Compression

Area 300

Fractionation

Olefins Recycle

Water

LPG

Fuel Gas




17




18




19


Key Consumptions

Labor Requirements

Table 5 - Raw Materials & Utilities Consumption (per ton

of product)


Table 7 – Labor Requirements for a Typical Plant




20


Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram




21


Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram (Cont.)




22


Figure 6 – Inside Battery Limits Conceptual Process Flow Diagram (Cont.)




23


Table 8 presents the main streams composition and

operating conditions. For a more complete material

balance, see the “Appendix A. Mass Balance & Streams

Properties.”

Information regarding utilities flow rates is provided in

“Appendix B. Utilities Consumption Breakdown.” For further

details on greenhouse gas emissions caused by this process,

see “Appendix C. Carbon Footprint.”

ISBL Major Equipment List Table 9 shows the equipment list by area. It also presents a

brief description and the main materials used.

Find main specifications for each piece of equipment in

“Appendix D. Equipment Detailed List & Sizing.”



24




25




26


OSBL Major Equipment List

The OSBL is divided into three main areas: storage (Area700), energy and water facilities (Area 800), and support &

auxiliary facilities (Area 900).

Table 10 shows the list of tanks located in the storage area

and the energy facilities required in the construction of a

non-integrated unit.



27




28


Figure 7 – MTP Integrated with FCC/Naphtha Cracker Units

Hydrogenation

Reactor

MTP Reactor

C4 and C5

Hydrocarbons

from FCC or

Naphtha Cracker

Quenching,

Compression &

Fractionation

DME

Fuel Gas

PG Propylene

LPG

Gasoline

WaterRecycled Olefins




29

I n t r a t e c | E c o n o m i c A n a l y s i s

General Assumptions

The general assumptions for the base case of this analysis

are outlined below.

In Table 11, the IC Index stands for Intratec chemical plant

Construction Index, an indicator, published monthly by

Intratec, to scale capital costs from one time period to

another.

This index reconciles prices trends of fundamental

components of a chemical plant construction such as labor,

material and energy, providing meaningful historical and

forecast data for our readers and clients.

The assumed operating hours per year indicated does not

represent any technology limitation; rather, it is an

assumption based on usual industrial operating rates

Additionally, Table 11 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.”

Economic Analysis

Table 11 – Base Case General Assumptions


Figure 8 – Project Implementation Schedule




30


Project Implementation

Schedule

The main objective of knowing upfront the project

implementation schedule is to enhance the estimates for

both capital initial expenses and return on investment.

The implementation phase embraces the period from the

decision to invest to the start of commercial production.

This phase can be divided into five major stages: (1) Basic

Engineering, (2) Detailed Engineering, (3) Procurement, (4)

Construction, and (5) Plant Start-up.

The duration of each phase is detailed in Figure 8.

Capital Expenditures

Fixed Investment

Table 12 shows the bare equipment cost associated with

each area of the project.

Table 13 presents the breakdown of the total fixedinvestment (TFI) per item (direct & indirect costs and project

contingencies). For further information about the

components of the TFI please see the chapter “Technology

Economics Methodology”.

Fundamentally, the direct costs are the total direct material

and labor costs associated with the equipment (including

installation bulks). The total direct cost represents the total

bare equipment installed cost.

“Appendix E. Detailed Capital Expenses” provides a detailed

breakdown for the direct expenses, outlining the share of

each type of equipment in total.

After defining the total direct cost, the TFI is established by

adding field indirects, engineering costs, overhead, contract

fees and contingencies.

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."

The indirect project expenses are further detailed in

“Appendix E. Detailed Capital Expenses”

Table 12 - Bare Equipment Cost per Area (USD

Thousands)


Table 13 – Total Fixed Investment Breakdown (USD

Thousands)




31


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.

For example, if there are nearby facilities consuming a unit’s

final product or supplying a unit’s feedstock, the need for

storage facilities significantly decreases, along with the total

fixed investment required. This is also true for support

facilities that can serve more than one plant in the same

complex, such as a parking lot, gate house, etc.

This study analyzes the total fixed investment for three

distinct scenarios regarding OSBL facilities:

Non-Integrated Plant

Plant Partially Integrated

Plant Fully Integrated

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 9 and in Figure 10.



32


Figure 9 – Total Direct Cost of Different Integration Scenarios (USD Thousands)


Figure 10 – Total Fixed Investment of Different Integration Scenarios (USD Thousands)




33


Working Capital

Working capital, described in Table 14, 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.”

Figure 11 – Total Fixed Investment Validation (USD Million)


Table 14 – Working Capital (USD Million)




34


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.).

Initial costs are not addressed in most studies on estimating

but can become a significant expenditure. For instance, the

initial catalyst load in reactors may be a significant cost and,

in that case, should also be included in the capital

estimates.

The purchase of technology through paid-up royalties or

licenses is considered to be part of the capital investment.

Other capital expenses frequently neglected are land

acquisition and site development. Although these are small

parts of the total capital expenses, they should be included.

Assumptions used to calculate other capital expenses are

provided in “Appendix F. Economic Assumptions.”

Total Capital Expenses

Table 16 presents a summary of the total Capital

Expenditures (CAPEX) detailed in previous sections.

Operational Expenditures

Manufacturing Costs

The manufacturing costs, also called Operational

Expenditures (OPEX), are composed of two elements: a fixed

cost and a variable cost. All figures regarding operational

costs are presented in USD per ton of product.

Table 17 shows the manufacturing fixed cost.

To learn more about the assumptions for manufacturing

fixed costs, see the “Appendix F. Economic Assumptions.”

Table 15 – Other Capital Expenses (USD Million)


Table 16 – CAPEX (USD Million)


Table 17 – Manufacturing Fixed Cost (USD/ton)




35


Table 18 discloses the manufacturing variable costs.

Historical Analysis

Figure 12 depicts Sales and OPEX historic data. Figure 13

compares the project EBITDA trends with Intratec

Profitability Indicators (IP Indicators). The Basic Chemicals IPIndicator represents basic chemicals sector profitability,

based on the weighted average EBITDA margins of major

global basic chemicals producers. On the other hand, the

Chemical Sector IP Indicator reveals the overall chemical

sector profitability through a weighted average of the IP

Indicators calculated for three major chemical industry

niches: basic, specialties and diversified chemicals.

Economic Datasheet

The Technology Economic Datasheet, presented in Table

20, is an overall evaluation of the technology's production

costs in a US Gulf Coast based plant.

The expected revenues in products sales and initialeconomic indicators are presented for a short-term

assessment of its economic competitiveness.

Table 18 – Manufacturing Variable Cost (USD/ton)


Table 19 – OPEX (USD/ton)




36


Figure 12 – OPEX and Product Sales History (USD/ton)


Figure 13 – EBITDA Margin & IP Indicators History Comparison




37




38

I n t r a t e c | R e g i o n a l C o m p a r i s o n & E c o

n o m i c D i s c u s s i o n

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 theaforementioned items. For further information about

location factor calculation, please examine the chapter

“Technology Economics Methodology”. In addition, the

location factors for the regions analyzed are further detailed

in “Appendix F. Economic Assumptions.”

Figure 14 summarizes the total Capital Expenditures

(CAPEX) for the locations under analysis.

Operational Expenses

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 Table21, is an overall evaluation of the technology's capital

investment and production costs in the alternative location

analyzed in this study.

Regional Comparison & Economic Discussion

Figure 14 – CAPEX per Location (USD Million)




39



Figure 15 – Operating Costs Breakdown per Location (USD/ton)




40





41

I n t r a t e c | R e f e r e n c e s

References



42

I n t r a t e c | A c r o n y m s , L e g e n d s & O b s e r v a t i o n s

AACE: American Association of Cost Engineers

AOE2012: US Energy Information Administration's AnnualEnergy Outlook 2012

C: Distillation, stripper, scrubber columns (e.g., C-101 would

denote a column tag)

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

atoms

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

CAPEX: Capital Expenditures

CC: Distillation column condenser

CG: Chemical grade

CP: Distillation column reflux pump

CR: Distillation column reboiler

CT: Cooling tower (e.g., CT-801 would denote an

equipment tag)

CV: Distillation column accumulator drum

CW: Cooling water

DME: Dimethyl-ether

DTP: Dominant Technology for Propylene

E: Heat exchangers, heaters, coolers, condensers, reboilers

(e.g., E-101 would denote a heat exchanger tag)

EBIT: Earnings before Interest and Taxes

EBITDA: Earnings before Interests, Taxes, Depreciation and

Amortization

F: Furnaces, fired heaters (e.g., F-101 would denote a

furnace tag)

FCC: Fluid catalytic cracking

HP ST: High-pressure steam

IC Index: Intratec Chemical Plant Construction Index

IP Indicator: Intratec Chemical Sector Profitability Indicator

IRR: Internal Return Rate

ISBL: Inside battery limits

K: Compressors, blowers, fans (e.g., K-101 would denote a

compressor tag)

kta: thousands metric tons per year

LP ST: Low-pressure steam

LPG: Liquefied petroleum gas

MP ST: Medium-pressure steam

MTG: Methanol-to-Gasoline

MTO: Methanol-to-Olefins

MTP: Methanol-to-Propylene

NGL: Natural gas liquids

NPV: Net Present Value

OPEX: Operational Expenditures

OSBL: Outside battery limits

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

PDH: Propane Dehydrogenation

PG: Polymer grade

R: Reactors, treaters (e.g., R-101 would denote a reactor tag)

RF: Refrigerant (Flowsheet) or Refrigeration Unit (e.g., RF-

801 would denote an equipment tag)

RG: Refinery grade

SB: Steam boiler (e.g., SB-801 would denote an equipment

tag)

ST: Steam

Syn-gas: Synthesis gas

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

TFI: Total Fixed Investment

TPC: Total process cost

V: Horizontal or vertical drums, vessels (e.g., V-101 would

denote a vessel tag)

WD: Demineralized water (Flowsheet) or Demineralizer

(e.g., WD-801 would denote an equipment tag)

WP: Process water

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

equipment tag)

Obs.: 1 ton = 1 metric ton = 1,000 kg

Acronyms, Legends & Observations



43

I n t r a t e c | T e c h n o l o g y E c o n o m i c s M e t h o d o l o g y

Intratec Technology Economics methodology

ensures a holistic, coherent and consistenttechno-economic evaluation, ensuring a clear

understanding of a specific mature chemical

process technology.

Introduction

The same general approach is used in the development of

all Technology Economics assignments. To know more

about Intratec’s methodology, see Figure 16.

While based on the same methodology, all TechnologyEconomics 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. Patent and technical literature research

b. Non-confidential information provided by technology

licensors

c. Intratec's in-house database

d. 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.

From this simulation, material balance calculations are

performed around the process, key process indicators are

identified and main equipment listed.

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.

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

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.

Technology Economics Methodology



44

I n t r a t e c | T e c h n o l o g y E c o n o m i c s M e t

h o d o l o g y

Figure 16 – Methodology Flowchart

Intratec Internal Database

Non-Confidential

Information from

Technology Licensors orSuppliers

Aspen Plus, Aspen Hysys

Aspen Exchanger Design &

Rating, KG Tower, Sulcol

and Aspen Energy Analyzer

Bibliographical Research

Material & Energy Balances, Key

Process Indicators, List of

Equipment & Equipment Sizing

Capital Cost (CAPEX)

& Operational Cost (OPEX)

Estimation

Patent and Technical

Literature Databases

Pricing Data Gathering: Raw

Materials, Chemicals,

Utilities and Products

Aspen Process Economic

Analyzer, Aspen Capital

Cost Estimator, Aspen In-

Plant Cost Estimator &

Intratec In-House Database

Construction Location

Factor

(http://base.intratec.us)

Project Development Phases

Information Gathering / Tools

Vendor Quotes

Study Understanding -Validation of Project Inputs

Technical Validation –Process Description &

Flow Diagram

Final Review &

Adjustments

Economic Analysis

Analyses of

Different Construction

Scenarios and Plant Location




45


Capital & Operating Cost

Estimates

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.

In addition, no matter how much time and effort are

devoted to accurately estimating costs, errors may occur

due to the aforementioned factors, as well as cost and labor

changes, construction problems, weather-related issues,

strikes, or other unforeseen situations. This is partially

considered in the project contingency. Finally, it must

always be remembered that an estimated project cost is not

an exact number, but rather is a projection of the probable

cost.

ISBL Investment

The ISBL investment includes the fixed capital cost of the

main processing units of the plant necessary to the

manufacturing of products. The ISBL investment includes

the installed cost of the following items:

Process equipment (e.g., reactors and vessels, heat

exchangers, pumps, compressors, etc.)

Process equipment spares

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

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



46


h o d o l o g y

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).

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).

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).

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.

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 one-

time expenses related to this activity. From a time

standpoint, a variable undefined period exists between the

nominal end of construction and the production of quality

product in the quantity required. This period is commonly

referred to as start-up.

During the start-up period expenses are incurred for

operator and maintenance employee training, temporary

construction, auxiliary services, testing and adjustment of

equipment, piping, and instruments, etc. Our method of

estimating start-up expenses consists of four components:

Labor component. Represents costs of plant crew

training for plant start-up, estimated as a certain

number of days of total plant labor costs (operators,

supervisors, maintenance personnel and laboratory

labor).

Commercialization cost. Depends on raw materials

and products negotiation, on how integrated the plant

is with feedstock suppliers and consumer facilities, and

on the maturity of the technology. It ranges from 0.5%

to 5% of annual manufacturing expenses.

Start-up inefficiency. Takes into account those

operating runs when production cannot be

maintained or there are false starts. The start-up

inefficiency varies according to the process maturity:

5% for new and unproven processes, 2% for new and

proven processes, and 1% for existing licensed

processes, based on annual manufacturing expenses.

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 specificationsrequired by the market. As a result, equipment

modifications or additions may be required.



47


Other Capital Expenses

Prepaid Royalties. Royalty charges on portions of the

plant are usually levied for proprietary processes. A

value ranging from 0.5 to 1% of the total fixed

investment (TFI) is generally used.

Site Development. Land acquisition and site

preparation, including roads and walkways, parking,

railroad sidings, lighting, fencing, sanitary and storm

sewers, and communications.

Manufacturing Costs

Manufacturing costs do not include post-plant costs, which

are very company specific. These consist of sales, general

and administrative expenses, packaging, research and

development costs, and shipping, etc.

Operating labor and maintenance requirements have been

estimated subjectively on the basis of the number of major

equipment items and similar processes, as noted in the

literature.

Plant overhead includes all other non-maintenance (labor

and materials) and non-operating site labor costs for

services associated with the manufacture of the product.

Such overheads do not include costs to develop or market

the product.

G & A expenses represent general and administrative costs

incurred during production such as: administrative

salaries/expenses, research & development, product

distribution and sales costs.

Contingencies

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

Intratec’s definitions in relation to complexity and maturity

are the following:

Complexity

SimpleSomewhat simple, widely known

processes

Typical Regular process

Complex

Several unit operations, extreme

temperature or pressure, more

instrumentation

Maturity

New &

ProvenFrom 1 to 2 commercial plants

Licensed 3 or more commercial plants

Table 22 – Project Contingency

Plant Complexity Complex Typical Simple

Project Contingency 25% 20% 15%


Table 23 – Criteria Description




48


h o d o l o g y

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.

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, bothfor 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.

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 F igure 17 in which the

four major indexes are presented, along with some of their

components.

Table 24 – Accuracy of Economic Estimates

Reliability Low Moderate HighVery

High

Accuracy+ 30%

- 20%

+ 22%

- 18%

+ 18%

- 14%

+ 10%

- 10%




49


Figure 17 – Location Factor Composition

Infrastructure FactorLabor Index

Location Factor

Material IndexBusiness Environment

Factor

Local Labor Index

Relative Salary

Productivity

Expats Labor

Domestic Material Index

Relative Steel Prices

Labor Index

Taxes and Freight

Rates

Spares

Imported Material

Taxes and Freight

Rates

Spares

Ports, Roads, Airports

and Rails (Availability

and Quality)

Communication

Technologies

Warehouse

Infrastructure

Border Clearance

Local Incentives

Readiness of

Bureaucratic

Procedures

Legal Protection of

Investors

Taxes




50

I n t r a t e c | A p p e n d i x A . M a s s B a l a n c e &

S t r e a m s P r o p e r t i e s



51

I n t r a t e c | A p p e n d i x A . M a s s B a l a n c e & S t r e a m s P r o p e r t i e s



52





53

I n t r a t e c | A p p e n d i x A . M a s s B a l a n c e & S t r e a m s P r o p e r t i e s



54





55

I n t r a t e c | A p p e n d i x B . U t i l i t i e s C o n s u m p t i o n B r e a k d o w n



56

I n t r a t e c | A p p e n d i x C . C a r b o n F o o t p r i n t

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:

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.

The assumptions for the process carbon footprint

calculation are presented in Table 27 and the results are

provided in Table 28

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 basedon data provided by the Environment Protection Agency

(EPA) Climate Leaders Program.

Appendix C. Carbon Footprint

Table 27 – Assumptions for CO2e Emissions Calculation


Table 28 – CO2e Emissions (ton/ton prod.)




57

I n t r a t e c | A p p e n d i x D . E q u i p m e n t D e

t a i l e d L i s t & S i z i n g

Actual gas flow rate

Inlet (m3/h)5,825 77,898 30,080 6,417 1,679 2,151

2nd DME

Cooler



58

I n t r a t e c | A p p e n d i x D . E q u i p m e n t D e t a i l e d L i s t & S i z i n g



59





60




61





62


Design gauge pressure

(barg)



63





64




65





66

I n t r a t e c | A p p e n d i x E . D e t a i l e d C a p i t a

l E x p e n s e s

Direct Costs Breakdown

Appendix E. Detailed Capital Expenses

Figure 18 – ISBL Direct Costs Breakdown by Equipment Type (Base Case)


Figure 19 – OSBL Direct Costs by Equipment Type (Base Case)




67

I n t r a t e c | A p p e n d i x E . D e t a i l e d C a p i t a l E x p e n s e s



68

I n t r a t e c | A p p e n d i x F . E c o n o m i c A s s u

m p t i o n s

Capital Expenditures

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.”

Construction Location Factors

Working Capital

Supplies and

Stores

Appendix F. Economic Assumptions

Table 36 – Detailed Construction Location Factor


Table 37 – Working Capital Assumptions (Base Case)


Table 38 – Other Capital Expenses Assumptions (Base

Case)




69

I n t r a t e c | A p p e n d i x F . E c o n o m i c A s s u

m p t i o n s

Operational Expenses

Fixed Costs

Fixed costs are estimated based on the specific

characteristics of the process. The fixed costs, like operating

charges and plant overhead, are typically calculated as apercentage of the industrial labor costs, and G & A expenses

are added as a percentage of the operating costs.

The goal of depreciation is to allow a credit against

manufacturing costs, and hence taxes, for the non-

recoverable capital expenses of an investment. The

depreciable portion of capital expense is the total fixed

investment.

Table 40 shows the project depreciation value and the

assumptions used in its calculation.

Table 39 – Other Fixed Cost Assumptions

Source: Intratec –www.intratec.us

Table 40 – Depreciation Value & Assumptions




70

I n t r a t e c | A p p e n d i x G . R e l e a s e d P u b l i c a t i o n s

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.

Sodium Hypochlorite Chemical Production: Sodium

hypochlorite (bleach) production, in a widely used

industrial process, similar to that employed by Solvay

Chemicals, for example.


Dehydrogenation, Part 2: Propane dehydrogenation

(PDH) in fixed bed reactors, in a process is similar to

Lummus CATOFIN®.


Dehydrogenation, Part 3: Propane dehydrogenation

(PDH) by applying oxydehydrogenation, in a process

similar to the STAR PROCESS® licensed by Uhde.

CONCEPTUAL DESIGN

Membranes on Polyolefins 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 G. Released Publications



Appendix H.

Technology Economics Form

Submitted by Client

Appendix H. Technology Economics FormSubmitted by Client



Chemical Produced by the Technology to be Studied

Define the main chemical product of your interest. Possible choices are presented below.

Choose a Chemical Acetic Acid Acetone Acrylic Acid

Acrylonitrile Adipic Acid Aniline

Benzene Butadiene n-Butanol

Isobutylene Caprolactam Chlorine

Cumene Dimethyl Ether (DME) Ethanol

Ethylene Bio-Ethylene Ethylene Glycol

Ethylene Oxide Formaldehyde HDPE

Isoprene LDPE LLDPE

MDI Methanol Methyl Methacrylate

Phenol Polypropylene (PP) Polybutylene Terephthalate

Polystyrene (PS) Polyurethanes (PU) Polyvinyl Chloride (PVC)

Propylene Propylene Glycol Propylene Oxide (PO)

Terephthalic Acid Vinyl Chloride (VCM)

If the main chemical product of your target technology is not found above, please check the "Technology Economic Form - Specialties".

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 ona commercial scale plant.

Technology Description

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 serviceat www.intratec.us/advisory/research-potential/overview

Industrial Unit Description

Plant Nominal Capacity Operating Hours

Inform the plant capacity to be considered in the study. Provide

the main product capacity in kta (thousands of metric tons peryear of main chemical product).

Inform the assumption for the number of hours the plant

operates in a year.

Plant Capacity 150 kta

300 kta

Other (kta)

Operating Hours 8,000 h/year

Other (h/year)

Methanol-to-propylene similar to Lurgi MTP

Ningxia, China

557



Analysis Date

Define the date (quarter and year) that will be considered in the analysis. Our databases can provide consolidated values from the year 2000up to the last closed quarter, quarter-to-date values are estimated.

Quarter Year

Storage Facilities

Define the assumptions employed for the storage facilities design.

Products 20 days

Other

By-Products 20 days

Other

Raw Materials 20 days

Other

Utilities Supply Facilities

The construction of supply facilities for the utilities required (e.g. cooling tower, boiler unit, refrigeration unit) impacts the capital investmentfor 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 economicperformances 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) to be considered.

E.g. Louisiana (USA), China or Saudi Arabia. Please define only one location.

Plant Location DataProvider

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 the Custom Location topic below.

Q3 2011

0 0 0

China



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 RU1 RP1

Raw2 RU2 RP2

Raw3 RU3 RP3

E.g. Propane USD/metric ton 420

C) Product Prices. Describe the products prices to be considered in the custom location.


Prod1 PU1 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.


Electricity UP1

Steam (Low Pressure) UP2

Steam (High Pressure) UP3

Fuel UP4

Clarified Water UP5

Util6 UU6 YP6

Util7 UU7 UP7

Util8 UU8 UP8

E) Labor Prices. Describe the labor prices to be considered in the custom location.


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.


Other1 OU1 OP1

Other2 OU2 OP2

Other3 OU3 OP3

E.g. Catalyst USD/metric ton 5000

Methanol USD/ton

PG Propylene USD/ton

Gasoline USD/ton

USD/kWh

USD/ton

USD/ton

USD/MMBtu



Other Remarks

If you have any other comments, feel free to write them below:

Comments:

Complementary Files

Along with this form, you may also upload any other chemical document deemed relevant for the description of the project, such asarticles, 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 anagreed 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 Price

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Pay Less! Benefit From a 5% Discount

Inform us the email address of the Intratec Agent that introduced you to our advisory services you will benefit from a 5% discount on the totalprice of your service. To know more about Intratec New Business Development Agents, please visit www.intratec.us/be-our-agent.

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v.1-mar-13

I provided the main prices I would like to include in my analysis. Please, use Intratec's prices for China in the other fields I havenot filled.







Technology Economics

Standardized advisory services developed

under Intratec’s Consulting as

Publications pioneer approach.

Technology Economics studies answermain questions surrounding process

technologies:

- How is the technology? What are the

main pieces of equipment required?

- 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?

Propylene production from methanol

Documents