4/2/2010

Team Members: Eric Busch

Kevin Chrapkowski

Brandon Kussow

Aaron Ritthaler

1

• Introduction

• Business Objectives

• Available Production Methods

• Market Survey

• Model Production Plant/PFD

• Mass and Energy Balances

• Safety and Environmental Considerations

• Economic Feasibility/Cash Flow Analysis

• Conclusions

• Recommendations2

• FCC proposed new vinyl acetate production plant within the United States

• Performed extensive analysis:

• Available Production Methods

• Market Survey

• Model Proposed Plant

• Safety and Environmental Considerations

• Optimizations

• Economic Feasibility/Risk Analysis

3

• Plant Capacity of 30,000 tons per year

• Accounts for 2.25% of global market

• VAM product 99.6 wt% pure

• Location for feed stock

• Minimal downtime

• Minimal waste generation

• ROI>MARR

4

Ethylene – Acetic Acid method was the best choice based on characteristic parameters

MethodAvailability

Cost Hazards

Operating Cost and

ComplexityByproducts and waste

Competitors and Business

Objectives Risk Totals

Ethylene-Acetic Acid 1 2 1 2 1 1 8 Winner

Ethylene-Acetylene 3 3 2 1 2 2 13 Loser

Methanol-CO2 2 1 3 3 3 3 15 Loser

5

2005 2006 2007 2008 2009

VAM (cts/lb)

55 72 88 58 45

Ethylene (cts/lb)

50 51 40 38 37.25

Acetic Acid

(cts/lb)51 52 60 68 68

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007 2008 2009 2010

Ce

nts

pe

r lb

Year

Price History

VAM

Ethylene

Acetic Acid

• VAM prices have fallen

• Ethylene prices have leveled off

• Acetic Acid prices have risen6

7

Component Flow Rates (lbs/hr) Inlet Streams Outlet Streams

Acetic Acid 8,816 2,007

Ethylene 3,188 0

Oxygen 4,263 2,424

Glycerol 0 0

Vinyl Acetate 0 9,761

Water 85 2,137

Ethane 1,391 1,391

Carbon Dioxide 0 22

Total 17,743 17,743

8

Inlet Energy Outlet Energy

SourceEnergy Flow

(MMBTU/s-hr) % of Total SourceEnergy Flow

(MMBTU/s-hr) % Total

Reactions Stream Energy

Reactor 8.1 16.5% Outlet Streams 0.9 1.8%

Heaters Coolers

E-100 7.3 14.9% E-101 4.1 8.4%

E-103 0.4 0.8% E-102 9.7 19.7%

Reboiler Absorber 2.2 4.4% Reactor 8.1 16.5%

Distillation Column 1 14.6 29.7% Distillation Column 1 14.6 29.7%

Distillation Column 2 3.8 7.8% Distillation Column 2 3 6.2%

Distillation Column 3 8.7 17.8% Distillation Column 3 8.7 17.7%

Subtotal 36.9 75.4% Subtotal 48.2 98.2%

Pumps and Compressors

P-100 0 0.0%

Compressor 1 4 8.1%

Subtotal 4 8.1%

Overall Inlet Energy 49 100.0%Overall Outlet Energy: 49.1 100.0%9

• Highly Exothermic Reaction• “Runaway” possible• Deluge system

• Combustible Chemicals• Nitrogen inerting

• Oxidizing Agents• Asphyxiation Hazards

• Nitrogen, CO2• Polymerization Hazards

• Hydroquinone added to VAM

10

• CO2 Emissions

• Plant emits 173 tons of CO2 each year

• Scrubber using monoethanolamine

• Some states have adopted more strict VOC regulations• 100 g/L VOC’s for flat coatings

• 150 g/L VOC’s for non-flat coatings

• 250 g/L VOC’s for non-flat “high gloss” coatings

• 340 g/L VOC’s for industrial maintenance coatings

11

• Fixed Capital Investment

12

• FCI was calculated by the following equation:

FCI = PEC-delivered * Lang Factor

• Lang Factor for fluids plant = 5.82

FCI = $8,136,000

13

• Fixed Capital Investment

• Income

14

• Income = Production Rate * Sales Price

Product: Flow (lbs/hr):Total

(lbs/c-yr): Cost ($/lb):Total Cost ($/c-yr):

Vinyl Acetate 7,144 60,008,000 0.97 58,208,000

* 60 million pounds per year = 30,000 tons per year

15

• Fixed Capital Investment

• Income

• Expenses

16

Raw Materials: Flow (lbs/hr): Start up (lbs/hr): Total (lbs/c-yr): Cost ($/lb): Total Cost ($/c-yr):

Acetic Acid 8,156 6,575 68,516,000 0.68 46,591,000

Ethylene 3,188 47,510 26,826,000 0.3725 9,993,000

Oxygen 4,263 0 35,810,000 0.05711 2,045,000

MEA 4,650 0 4,650 1.13 5,255

Glycerol 0 5,000 5,000 0.5 2,500

Total: 58,628,000

VCOP for Raw Materials = $58,600,00 / yr.

17

Utility Use Price

Equipment Cold Water Steam Electricity Catalyst Dollars/yr. (odd yrs.) Dollars/yr. (even yr.)

Fixed Bed Reactor 1.59E+09 19670 1,590,000 1,885,000

Reboiler Absorber 2.13E+07 149,000 149,000

Distillation Column 1 3.06E+09 1.43E+08 4,063,000 4,063,000

Distillation Column 2 6.41E+08 3.73E+07 902,000 902,000

Distillation Column 3 1.42E+09 9.09E+07 2,143,000 2,143,000

E-100 5.72E+07 400,000 400,000

E-101 8.15E+08 815,000 815,000

E-102 6.32E+08 632,000 632,000

E-103 1.91E+09 1,906,000 1,906,000

Compressor 1 1.08E+07 1,731,000 1,731,000

Pump 1 1.34E+03 214 214

Total 14,332,000 14,627,000

18

Operating Labor:

Labor Rate 60,000

Number of posts 3.8

Total Cost 684,000

Supervisory Labor:% of OL 25

Total Cost 171,000

Salary Overhead:

% of OL 50

% of SL 100

Total Cost 513,000

Maintenance:% of ISBL 4

Total Cost 179,000

Property Taxes:% of ISBL 1.5

Total Cost 67,000

Rent of Land/Building:%of FCI 1.5

Total Cost 122,000

General Overhead:

% of TL 65

% of maintanence 100

Total Cost 735,000

Allocated Environmental Charge:

% of FCI 1

Total Cost 81,000

Total FCOP: 2,552,00019

• CCOP = VCOP + FCOP

CCOP Odd yrs ($/yr.) 75,512,000

CCOP Even yrs ($/yr.) 75,807,000

20

• Fixed Capital Investment

• Income

• Expenses

• Base Case Cash Flow Analysis

21

Inputs Profitability MeasuresFCI = 8.14 $ ROI = - % avg. profit / TCIINC = 58.21 $/c-yr Payback Pr. = - years TCI / avg. ICF

EXP1 = 75.51 $/c-yr NPV (inf.) = -46 $ Sum DICF

EXP2 = 75.81 $/c-yr NPV (true) = -39 $ Sum DCCF

SV = 0 $ IRR (inf.) = 0 % if when NPV = 0

Tax Rate = 35 % IRR (inf.) = 0 % if = I + f + (I *f)Tax Credit = 0 % IRR (true) = 0 % I when NPV (true) = 0

MAR = 20 % B/C Ratio = - (DCCF from 1 to n)/-(DCCF at yr. 0)INFL = 3 % EUAW = -9 $/c-yr NPV (true)*(A/P, I,n)WC = 15 % of FCI

n = 10 yrs.m = yrs.

Depr. Met. 4 1=SL, 2=DDB, 3=SOYD, 4=MACRS, 5=MEX

year FCI WC INC EXP Depreciation Profit BFIT Tax ICF CCF DF DICF DCCF0 2.44 0 --- --- --- 0 0 -2 -2 1.000 -2 -21 4.07 0 0 0 1.16 -1.16 0 -4 -4 0.833 -3 -32 1.63 0 0 0 1.99 -1.99 0 -2 -2 0.694 -1 -13 --- 1.22 17.46 24.44 1.42 -8.40 0 -8 -8 0.579 -5 -44 --- 0 40.75 53.83 1.02 -14.10 0 -13 -12 0.482 -6 -65 --- 0 58.21 75.81 0.73 -18.33 0 -18 -15 0.402 -7 -66 --- 0 58.21 75.51 0.73 -18.03 0 -17 -14 0.335 -6 -57 --- 0 58.21 75.81 0.73 -18.33 0 -18 -14 0.279 -5 -48 --- 0 58.21 75.51 0.36 -17.67 0 -17 -14 0.233 -4 -39 --- 0 58.21 75.81 0 -17.60 0 -18 -13 0.194 -3 -3

10 --- -1.22 58.21 75.51 0 -17.30 0 -16 -12 0.162 -3 -2

Total 8.14 0 -46 -39

* All values in millions 22

• Vinyl Acetate prices affect NPV the most

• Ethylene prices affect NPV the least

-70

-60

-50

-40

-30

-20

-10

0

-20 -15 -10 -5 0 5 10 15 20

NPV ($MM)

% Change in Price

Acetic Acid

Ethylene

Vinyl Acetate

23

• Vinyl Acetate formation produces a large amount of energy

• For Base Case, this energy is “swept” away by cooling water

• Steam could be created to use in other units throughout the plant

24

Inputs Profitability MeasuresΔFCI = 0.00 $ ROI = - % avg. profit / TCI

ΔINC = 0.00 $/c-yr Payback Pr. = - years TCI / avg. ICF

ΔEXP = -2.32 $/c-yr NPV (inf.) = 3.63 $ Sum DICF

SV = 0 $ NPV (true) = 3.06 $ Sum DCCF

Tax Rate = 35 % IRR (inf.) = - % if when NPV = 0

Tax Credit = 0 % IRR (inf.) = - % if = I + f + (I *f)

MAR = 20 % IRR (true) = - % I when NPV (true) = 0

INFL = 3 % B/C Ratio = - (DCCF from 1 to n)/-(DCCF at yr. 0)

WC = 15 % of FCI EUAW = $0.73 $/c-yr NPV (true)*(A/P, I,n)

n = 10 yrs.

m = yrs.

Depr. Met. 4 1=SL, 2=DDB, 3=SOYD, 4=MACRS, 5=MEX

year FCI WC INC EXP Depreciation Profit BFIT Tax ICF CCF DF DICF DCCF

0 0.00 0 --- --- --- 0 0 0 0 1.000 0 0

1 0.00 0 0 0 0.00 0.00 0.00 0.00 0.00 0.833 0 0

2 0.00 0 0 0 0.00 0.00 0.00 0.00 0.00 0.694 0 0

3 --- 0.00 0.00 -1.10 0.00 1.10 0.38 0.71 0.65 0.579 0.41 0.38

4 --- 0 0.00 -2.56 0.00 2.56 0.89 1.66 1.48 0.482 0.80 0.71

5 --- 0 0.00 -2.32 0.00 2.32 0.81 1.51 1.30 0.402 0.61 0.52

6 --- 0 0.00 -2.32 0.00 2.32 0.81 1.51 1.26 0.335 0.50 0.42

7 --- 0 0.00 -2.32 0.00 2.32 0.81 1.51 1.23 0.279 0.42 0.34

8 --- 0 0.00 -2.32 0.00 2.32 0.81 1.51 1.19 0.233 0.35 0.28

9 --- 0 0.00 -2.32 0 2.32 0.81 1.51 1.16 0.194 0.29 0.22

10 --- 0.00 0.00 -2.32 0 2.32 0.81 1.51 1.12 0.162 0.24 0.18

Total 0.00 6.147379 3.63 3.06

* Incremental Analysis, all values in millions of dollars 25

• Acetic Acid accounts for more than half of the expenses

• Acetic Acid produced by Methanol Carbonylation

• Transfer Price based off of Methanol and Carbon Monoxide feedstock prices

• A transfer price of $ 0.30/lb. estimated

26

Inputs Profitability MeasuresΔFCI = 0.00 $ ROI = - % avg. profit / TCI

ΔINC = 0.00 $/c-yr Payback Pr. = - years TCI / avg. ICF

ΔEXP2 = -26.09 $/c-yr NPV (inf.) = 28.41$ Sum DICF

SV = 0 $ NPV (true) = 23.24$ Sum DCCF

Tax Rate = 35 % IRR (inf.) = - % if when NPV = 0

Tax Credit = 0 % IRR (inf.) = - % if = I + f + (I *f)

MAR = 20 % IRR (true) = - % I when NPV (true) = 0

INFL = 3 % B/C Ratio = - (DCCF from 1 to n)/-(DCCF at yr. 0)

WC = 15 % of FCI EUAW = $5.54$/c-yr NPV (true)*(A/P, I,n)

n = 10 yrs.

m = yrs.

Depr. Met. 4 1=SL, 2=DDB, 3=SOYD, 4=MACRS, 5=MEX

year FCI WC INC EXP Depreciation Profit BFIT Tax ICF CCF DF DICF DCCF

0 0.00 0 --- --- --- 0 0 0 0 1.000 0 0

1 0.00 0 0 0 0.00 0.00 0.00 0.00 0.00 0.833 0 0

2 0.00 0 0 0 0.00 0.00 0.00 0.00 0.00 0.694 0 0

3 --- 0.00 0.00 -1.10 0.00 1.10 0.38 0.71 0.65 0.579 0.41 0.38

4 --- 0 0.00 -2.56 0.00 2.56 0.89 1.66 1.48 0.482 0.80 0.71

5 --- 0 0.00 -26.09 0.00 26.09 9.13 16.96 14.63 0.402 6.82 5.88

6 --- 0 0.00 -26.09 0.00 26.09 9.13 16.96 14.20 0.335 5.68 4.76

7 --- 0 0.00 -26.09 0.00 26.09 9.13 16.96 13.79 0.279 4.73 3.85

8 --- 0 0.00 -26.09 0.00 26.09 9.13 16.96 13.39 0.233 3.94 3.11

9 --- 0 0.00 -26.09 0 26.09 9.13 16.96 13.00 0.194 3.29 2.52

10 --- 0.00 0.00 -26.09 0 26.09 9.13 16.96 12.62 0.162 2.74 2.04

Total 0.00 56.07 28.41 23.24

* Incremental Analysis, all values are in millions of dollars 27

Inputs Profitability Measures

FCI = 8.14 $ ROI = - % avg. profit / TCI

INC = 58.21 $/c-yr Payback Pr. = - years TCI / avg. ICF

EXP1 = 53.95 $/c-yr NPV (inf.) = -4 $ Sum DICF

EXP2 = 54.25 $/c-yr NPV (true) = -3 $ Sum DCCF

SV = 0 $ IRR (inf.) = 9.51 % if when NPV = 0

Tax Rate = 35 % IRR (inf.) = 9.51 % if = I + f + (I *f)

Tax Credit = 0 % IRR (true) = 6.32 % I when NPV (true) = 0

MAR = 20 % B/C Ratio = - (DCCF from 1 to n)/-(DCCF at yr. 0)

INFL = 3 % EUAW = -1 $/c-yr NPV (true)*(A/P, I,n)

WC = 15 % of FCI

n = 10 yrs.

m = yrs.

Depr. Met. 4 1=SL, 2=DDB, 3=SOYD, 4=MACRS, 5=MEX

year FCI WC INC EXPDepriciati

on Profit BFIT Tax ICF CCF DF DICF DCCF

0 2.44 0 --- --- --- 0 0 -2 -2 1.000 -2 -2

1 4.07 0 0 0 1.16 -1.16 0 -4 -4 0.833 -3 -3

2 1.63 0 0 0 1.99 -1.99 0 -2 -2 0.694 -1 -1

3 --- 1.22 17.46 18.83 1.42 -2.79 0 -3 -2 0.579 -1 -1

4 --- 0 40.75 40.32 1.02 -0.59 0 0 0 0.482 0 0

5 --- 0 58.21 54.25 0.73 3.23 1 3 2 0.402 1 1

6 --- 0 58.21 53.95 0.73 3.53 1 3 3 0.335 1 1

7 --- 0 58.21 54.25 0.73 3.23 1 3 2 0.279 1 1

8 --- 0 58.21 53.95 0.36 3.89 1 3 2 0.233 1 1

9 --- 0 58.21 54.25 0 3.96 1 3 2 0.194 0 0

10 --- -1.22 58.21 53.95 0 4.25 1 4 3 0.162 1 0

Total 8.14 7.74 -3 -4

* All values in millions28

• Probability that the NPV will be greater than zero

• Flexible values are FCI, Expenses, and Income

RESULTS: MONTE CARLO METHOD NPV=BETA DISTRIBUTION

Mean NPV -23.25

Median -20.74

Standard Deviation 15.84

High Low

95.44% Confidence for NPV 15.07 -63.81

Confidence interval difference -24.90 -28.22

Probability NPV > 0 0.084 8.4 %

29

Plant Production

Purity of 99.6%

Annual Production of 30,000 tons/yr

Profitability NPV of negative $39 MM

Optimized NPV of negative $4 MM

Risk Analysis

8.4% possibility of a positive NPV

30

Plant construction

Not recommended at current time

Changes needed for feasible plant

Acetic Acid costs fall

VAM sale prices increase

Less strict VOC’s regulations

Construct and produce overseas

31

Busch, Chrapkowski, Kussow, and Ritthaler. “Design and Feasibility of Building a new Vinyl Acetate Monomer Production Plant in the United States.” Fictitious Chemical Company. March 19, 2010.

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