technology economics: ethylene via ethanol dehydration

Ethylene

via Ethanol

Dehydration

Copyrights © 2013 by Intratec Solutions LLC. All rights reserved. Printed in the United States of America.

#TEC009A

Technology Economics

Ethylene via Ethanol Dehydration

2013

Abstract

One of the most important petroleum-derived products, ethylene is known as a key building block for the petrochemical industry.Ethylene is most frequently produced via steam cracking of petroleum-based feedstock. However, rising oil prices coupled withglobal concerns about sustainability and global warming have motivated research into ethylene manufacture from renewablesources.

In this context, green alternatives are the world’s focus of attention. Among them, fermentation-derived ethanol has become asuccessful commodity that has been largely used as fuel and as raw material for renewable ethylene production, presenting theprimary advantage of being made from CO2 removed from the atmosphere, reducing greenhouse gas lifetime emissions from theethylene manufacture process. In Brazil, Braskem SA already produces ethylene from bioethanol

This study provides a review of the production of ethylene via ethanol dehydration. Included in the analysis is an overview of thetechnology and economics of a method similar to the Chematur and Petron processes. Both the capital investment and theoperating costs are presented for plants constructed on the US Gulf Coast and in Brazil.

The economic analysis presented in this report is based on a plant that is partially integrated with a green polyethylene complexand capable of producing 300 kta of polymer-grade ethylene. The estimated CAPEX for such a plant on the US Gulf Coast is aboutUSD 260 million, while in Brazil, it is about USD 345 million. Additionally, in order to have a profitable venture, this analysisconsidered a premium for green ethylene of 30% over conventional ethylene leading to ethylene sales prices of about USD 1,580and 2,030 per ton in US and Brazil, respectively.

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Clearly identify the economics behind leading companies’ technology developmentefforts and the feasibility of emerging and commercial chemical processes is the first stepfor major investment decisions and planning activities.

Keep you and your organization well informed by understanding in an unbiased manner:

1) The Research Economics potential behind BP Chemical Bets on ReactiveDistillation to Reduce Ethanol Dehydration Plants Capital Costs,

2) The Improvement Economics proposed by IFP and Total Chemical to SaveEnergy on Traditional Ethylene-to-Ethanol Dehydration Units,

3) The Technology Economics of Braskem’s Green Ethylene Production from Ethanol,

4) The Research Economics behind Dow Chemical’s possible Ethanol DehydrationTechnology,

5) The Technology Economics hidden on Scientific Design Approach to ProduceEthylene Glycol from Bio-Ethanol,

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Contents

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

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

Analyses Performed ...........................................................................................................................................................................................................8

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

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

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

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

About Ethylene..................................................................................................................................................................................................................10

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

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

Manufacturing Alternatives .......................................................................................................................................................................................10

Licensor(s) & Historical Aspects ...............................................................................................................................................................................12

Technical Analysis ............................................................................................................................................................. 13

Chemistry ..............................................................................................................................................................................................................................13

Raw Material ........................................................................................................................................................................................................................13

Technology Overview ...................................................................................................................................................................................................14

Detailed Process Description & Conceptual Flow Diagram...................................................................................................................15

Area 100: Reaction...................................................................................................................................................................................................................... 15

Area 200: Quench, Compression, Caustic Washing & Drying .........................................................................................................................15

Area 300: Purification ................................................................................................................................................................................................................ 15

Key Consumptions ..................................................................................................................................................................................................................... 16

Technical Assumptions ........................................................................................................................................................................................................... 16

Labor Requirements.................................................................................................................................................................................................................. 16

ISBL Major Equipment List ..........................................................................................................................................................................................19

OSBL Major Equipment List .......................................................................................................................................................................................21

Other Process Remarks .................................................................................................................................................................................................21

Technology Comparison........................................................................................................................................................................................................ 21

Economic Analysis ............................................................................................................................................................ 23

Project Implementation Schedule.........................................................................................................................................................................24

Capital Expenditures.......................................................................................................................................................................................................24

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Fixed Investment......................................................................................................................................................................................................................... 24

Working Capital ............................................................................................................................................................................................................................ 27

Other Capital Expenses ........................................................................................................................................................................................................... 27

Total Capital Expenses ............................................................................................................................................................................................................. 27

Operational Expenditures ...........................................................................................................................................................................................27

Manufacturing Costs................................................................................................................................................................................................................. 27

Historical Analysis........................................................................................................................................................................................................................ 28

Economic Datasheet ......................................................................................................................................................................................................28

Regional Comparison & Economic Discussion....................................................................................................... 31

Regional Comparison ....................................................................................................................................................................................................31

Capital Expenses.......................................................................................................................................................................................................................... 31

Operational Expenditures......................................................................................................................................................................................................31

Economic Datasheet................................................................................................................................................................................................................. 31

Economic Discussion .....................................................................................................................................................................................................32

References............................................................................................................................................................................ 35

Acronyms, Legends & Observations .......................................................................................................................... 36

Technology Economics Methodology ...................................................................................................................... 37

Introduction.........................................................................................................................................................................................................................37

Workflow................................................................................................................................................................................................................................37

Capital & Operating Cost Estimates ......................................................................................................................................................................39

ISBL Investment............................................................................................................................................................................................................................ 39

OSBL Investment ......................................................................................................................................................................................................................... 39

Working Capital ............................................................................................................................................................................................................................ 40

Start-up Expenses ....................................................................................................................................................................................................................... 40


Manufacturing Costs................................................................................................................................................................................................................. 41

Contingencies ....................................................................................................................................................................................................................41

Accuracy of Economic Estimates............................................................................................................................................................................42

Location Factor ..................................................................................................................................................................................................................42

Appendix A. Mass Balance & Streams Properties.................................................................................................. 44

Appendix B. Utilities Consumption Breakdown .................................................................................................... 49

Appendix C. Process Carbon Footprint..................................................................................................................... 50

Appendix D. Equipment Detailed List & Sizing...................................................................................................... 51

Appendix E. Detailed Capital Expenses .................................................................................................................... 58

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Direct Costs Breakdown...............................................................................................................................................................................................58

Indirect Costs Breakdown ...........................................................................................................................................................................................59

Appendix F. Economic Assumptions ......................................................................................................................... 60

Capital Expenditures.......................................................................................................................................................................................................60

Construction Location Factors............................................................................................................................................................................................60

Working Capital ............................................................................................................................................................................................................................ 60


Operational Expenditures ...........................................................................................................................................................................................61

Fixed Costs ...................................................................................................................................................................................................................................... 61

Depreciation................................................................................................................................................................................................................................... 61

EBITDA Margins Comparison...............................................................................................................................................................................................61

Appendix G. Released Publications............................................................................................................................ 62

Appendix H. Technology Economics Form Submitted by Client.................................................................... 63

Appendix I. Related Study Opportunities ................................................................................................................ 68

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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 Ethylene Consumers...................................................................................................................................................................................10

Table 5 – Raw Materials & Utilities Consumption (per ton of Product) ...........................................................................................................16

Table 6 – Design & Simulation Assumptions...................................................................................................................................................................16

Table 7 – Labor Requirements for a Typical Plant ........................................................................................................................................................16

Table 8 – Main Streams Operating Conditions and Composition .....................................................................................................................19

Table 9 – Inside Battery Limits Major Equipment List ................................................................................................................................................19

Table 10 – Outside Battery Limits Major Equipment List .........................................................................................................................................22

Table 11 – Base Case General Assumptions.....................................................................................................................................................................23

Table 12 – Bare Equipment Cost per Area (USD Thousands)................................................................................................................................24

Table 13 – Total Fixed Investment Breakdown (USD Thousands)......................................................................................................................24

Table 14 – Working Capital (USD Million) ..........................................................................................................................................................................27

Table 15 – Other Capital Expenses (USD Million)..........................................................................................................................................................27

Table 16 – CAPEX (USD Million) ...............................................................................................................................................................................................27

Table 17 – Manufacturing Fixed Cost (USD/ton) ..........................................................................................................................................................28

Table 18 – Manufacturing Variable Cost (USD/ton) ....................................................................................................................................................28

Table 19 – OPEX (USD/ton).........................................................................................................................................................................................................28

Table 20 – Technology Economics Datasheet: Ethylene via Ethanol Dehydration at US Gulf .........................................................30

Table 21 – Technology Economics Datasheet: Ethylene via Ethanol Dehydration in Brazil ..............................................................34

Table 22 – Project Contingency...............................................................................................................................................................................................41

Table 23 – Criteria Description..................................................................................................................................................................................................41

Table 24 – Accuracy of Economic Estimates ...................................................................................................................................................................42

Table 25 – Detailed Material Balance and Stream Properties................................................................................................................................44

Table 26 – Utilities Consumption Breakdown.................................................................................................................................................................49

Table 27 – Assumptions for CO2e Emissions Calculation........................................................................................................................................50

Table 28 – CO2e Emissions (ton/ton prod.)......................................................................................................................................................................50

Table 29 – Agitators.........................................................................................................................................................................................................................51

Table 30 – Compressors................................................................................................................................................................................................................51

Table 31 – Heat Exchangers .......................................................................................................................................................................................................52

Table 32 – Pumps .............................................................................................................................................................................................................................55

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Table 33 – Columns.........................................................................................................................................................................................................................56

Table 34 – Utilities Supply ...........................................................................................................................................................................................................56

Table 35 – Vessels & Tanks...........................................................................................................................................................................................................56

Table 36 – Indirect Costs Breakdown for the Base Case (USD Thousands)...................................................................................................59

Table 37 – Detailed Construction Location Factor ......................................................................................................................................................60

Table 38 – Working Capital Assumptions for Base Case...........................................................................................................................................60

Table 39 – Other Capital Expenses Assumptions for Base Case ..........................................................................................................................60

Table 40 – Other Fixed Cost Assumptions ........................................................................................................................................................................61

Table 41 – Depreciation Value & Assumptions ..............................................................................................................................................................61

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List of Figures

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

Figure 2 – Ethylene from Multiple Sources.......................................................................................................................................................................11

Figure 3 – Ethanol Dehydration Reaction Network....................................................................................................................................................13

Figure 4 – Process Block Flow Diagram..............................................................................................................................................................................14

Figure 5 – Inside Battery Limits Conceptual Process Flow Diagram.................................................................................................................17

Figure 6 – Project Implementation Schedule .................................................................................................................................................................23

Figure 7 – Total Direct Cost of Different Integration Scenarios (USD Thousands)...................................................................................26

Figure 8 – Total Fixed Investment of Different Integration Scenarios (USD Thousands).....................................................................26

Figure 9 – OPEX and Product Sales History (USD/ton)..............................................................................................................................................29

Figure 10 – EBITDA Margin & IP Indicators History Comparison .........................................................................................................................29

Figure 11 – CAPEX per Location (USD Million)...............................................................................................................................................................31

Figure 12 – Operating Costs Breakdown per Location (USD/ton) .....................................................................................................................32

Figure 13 – Methodology Flowchart ....................................................................................................................................................................................38

Figure 14 – Location Factor Composition.........................................................................................................................................................................42

Figure 15 – ISBL Direct Costs Breakdown by Equipment Type for Base Case.............................................................................................58

Figure 16 – OSBL Direct Costs Breakdown by Equipment Type for Base Case ..........................................................................................58

Figure 17 – Historical EBITDA Margins Regional Comparison ..............................................................................................................................61

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This study follows the same pattern as all TechnologyEconomics studies developed by Intratec and is based onthe same rigorous methodology and well-defined structure(chapters, type of tables and charts, flow sheets, etc.).

This chapter summarizes the set of information that servedas input to develop the current technology evaluation. Allrequired data were provided through the filling of theTechnology 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 anindustrial unit for ethylene production via ethanoldehydration implementing technology similar to that ofChematur and Petron processes.

The current assessment is based on economic datagathered on Q4 2012 and a chemical plant’s nominalcapacity of 300 kta (thousand metric tons per year).

Analyses Performed

Construction Scenarios

The economic analysis is based on the construction of aplant partially integrated with a green polyethylenecomplex, in which ethanol feedstock is externally providedand ethylene product is consumed by the nearbypolyethylene unit. Therefore, no storage for product isrequired. Additionally, all utilities are supplied from withinthe new plant.

However, since the Outside Battery Limits (OSBL)requirements– storage and utilities supply facilities –significantly impact the capital cost estimates for a newventure, they may play a decisive role in the decision as towhether or not to invest. Thus, this study also performs ananalysis of the OSBL facilities impact on the capital costs.Three distinct OSBL configurations are compared. Thosescenarios are summarized in Figure 1and Table 1.

About this Study

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

Non-Integrated

Petrochemical Complex

Raw MaterialsStorage

ISBL Unit

Products Consumer

Petrochemical Complex

Partially Integrated Fully Integrated

Raw MaterialsProvider

ISBL Unit

Products Consumer

Raw MaterialsStorage

ISBL Unit

Products Storage

Grassroots unit Unit is part of a Petrochemical Complex Most infrastructure is already installed

Source: Intratec – www.intratec.us

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Location Basis

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 units

Support & Auxiliary Facilities

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


Regional specific conditions influence both constructionand operating costs. This study compares the economicperformance of two identical plants operating in differentlocations: the US Gulf Coast and Brazil.

The assumptions that distinguish the two regions analyzedin this study are provided in Table 2.

Design Conditions

The process analysis is based on rigorous simulation modelsdeveloped on Aspentech Aspen Plus and Hysys, whichsupport 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 (Low Pressure) 7 Bar abs

Refrigerant (Propylene) -45 °C

Table 3 – General Design Assumptions


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About Ethylene

Introduction

Ethylene is an unsaturated organic compound with thechemical formula C2H4. It has one double bond and is thesimplest member of the alkene class of hydrocarbons.

Ethylene 2D structure

Ethylene is primarily produced by the pyrolysis ofhydrocarbons and by recovery from some refinery products.It can also be produced in other reactions, for example, inethanol dehydration or methanol-to-olefins plants.

Ethylene is one of the largest volume petrochemicalsworldwide and the first in natural abundance, being aleading industrial chemical intermediate that serves as oneof the building blocks for an array of chemical and plasticproducts.

Commercial ethylene is a colorless, low-boiling, flammablegas with a sweet odor. It is commercially traded in polymergrade (min. 99.9% of purity).

Applications

Commercial ethylene major application in the chemicalindustry is as a raw material for the production ofpolyethylene and other organic chemicals that are mainlyutilized in consumable end uses, especially in packaging.

The principal use of ethylene is in the manufacture ofplastics such as polyethylene, which accounts for about60% of the global ethylene demand. The main class ofpolyethylene produced in the world is high densitypolyethylene (HDPE), which is responsible for theconsumption of a third of the available ethylene, followedby low density (LDPE) and linear low density (LLDPE)varieties.

Other important products derived from ethylene areethylene oxide, an intermediate to ethylene glycolsynthesis, ethylene dichloride, styrene, and vinyl acetate.

With such a diverse range of derivative products, ethylenedemand is very sensitive to economic cycles. Therefore, it isoften used as a reference in the performance evaluation ofthe petrochemical industry.

Polyethylene Adhesives, packaging, bags, piping

Ethylene oxideEthylene glycol, ethoxylates (non-ionic

surfactants)

Ethylene glycolPolyester, polyethylene terephthalate,

automotive antifreeze

Ethylene

dichlorideVinyl chloride (monomer for PVC)

StyrenePolystyrene, ABS, rubbers, plastics,

fiberglass, pipes

Vinyl acetatePolyvinyl acetate, emulsion polymers,

resins

Manufacturing Alternatives

Ethylene is mainly produced by steam cracking of oilfractions, as NGL, and LPG, but, mainly as naphtha.Additionally, research efforts have been made to createalternatives to manufacture less energy-consuming oil-independent ethylene. However, researchers have not yetfound better options to the cracking process.

In steam cracking, the oil fraction diluted with steam is fedinto a radiant tube reactor, where fire is externally providedin order to supply the energy required for the reactioncompletion. This process enables the utilization of differenttypes of coils, radiation tubes, and furnaces.

The main difference between thermal and steam cracking isthat the latter uses high temperatures and low pressures,favoring olefins production. In this sense, dilution of the

Study Background

Table 4 – Major Ethylene Consumers


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feed stream with steam reduces the partial pressure ofreactants and helps to avoid coke formation in the reactionsystem, which is also prevented by slow residence times.

As the reaction occurs within this furnace, variousmechanisms are assumed to represent the process. In thevery beginning (with a low conversion rate), a free-radicaldecomposition is assumed for the system. Once theconversion increases, the more acceptable mechanismincludes condensation reactions to form cycliccomponents.

Another technique is also being employed:

Methanol-to-Olefins. A group of technologies thatfirst converts synthesis gas (syngas) to methanol, andthen converts the methanol to ethylene and/orpropylene. The process also produces water as a by-product. Synthesis gas is produced from thereformation of natural gas or by the steam-inducedreformation of petroleum products such as naphtha, orby gasification of coal. A large amount of methanol isrequired to make a world-scale ethylene and/orpropylene plant.

Figure 2 – Ethylene from Multiple Sources

Steam Cracker

EthanolDehydration

MTO/MTP

NaphthaNGLLPG

PG Ethylene(Green)Ethanol

Methanol


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Licensor(s) & Historical Aspects

The continuous rise in petroleum prices, in addition to theincrease in global concerns about sustainability and globalwarming, has led the chemical industry to innovate in thedevelopment of production routes utilizing sources otherthan oil.

The thermal cracking of oil fractions, which was furtherimproved to the steam cracking, has been practiced sincethe beginning of the 20th century. Currently, the recentdiscoveries of the shale gas and its exploitation in the USand other countries are playing a key role in the shift ofnatural gas as a feed resource to olefins production.

Also, the recent demands of the market for renewablechemicals have led to several initiatives towards theproduction of green ethylene.

In this context of environmentally friendly production, therecent advances of biotechnology in developing new,genetically modified microorganisms capable of fermentingsugar (from sugarcane, corn starch, sugar-beet, andagricultural residues) have enabled the production of greenethanol in large quantities at low cost.

Therefore, green ethylene has become an option incountries where there is a lack of oil resources or anoverabundance of fermentable renewable sugars. Brazil isan example of country that presents favorable conditionsfor culturing sugarcane and producing fermentation-derived ethanol.

Not for coincidence, the first commercial scale greenethylene plant in the world was erected in the country byBraskem SA. It is capable of producing 200,000 metric tonsof ethylene per year. A joint venture formed by Dow &Mitsui has plans to construct a unit in the near future.

The main ethanol dehydration technologies weredeveloped by the following companies:

Braskem

Chematur Technologies

Petron Scientech

Scientific Design

However, Braskem does not license its technology to thirdparties. Dow Chemicals has also been researching theethylene production by ethanol dehydration.

The main differences between those technologies centeron the reactor and furnaces design, the catalysts’ type andthe purification method (e.g., CO removal through strippingor selective oxidation).

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Chemistry

Ethanol dehydration equilibrium reaction is carried out inthe presence of a metallic catalyst such as activatedaluminum or zinc. The following equation shows thereaction:

Ethanol Ethylene Water

About 99 wt% of ethanol is converted to ethylene. Theethylene conversion is favored by high temperatures andlow pressures.

Since the dehydration reaction is endothermic, temperaturecontrol plays a key role in ethylene yields since both high orlow operating temperatures can provoke side reactions thatgenerate undesirable by-products, such as aldehydes athigh temperatures and ethers at low temperatures, leadingto an increase on purification costs.

In order to avoid by-products formation and maximizeethylene formation, reaction operating temperatures mustrange from 300°C to 500°C, while absolute pressures shouldrange from 5 to 8 bar. Therefore, the process is based onfour reaction steps which operate with a partial conversionrate to avoid high temperature drops in each pass. Thus,the completion of the reaction is only reached at the lastreactor.

Raw Material

Ethanol, CH3CH2OH, also known as ethyl alcohol, performsseveral functions. It may work as a solvent, a germicide, afuel, and as a chemical intermediate for other organicchemicals. Currently, ethanol is mostly produced viafermentation of sugars, which can be obtained from crops,such as sugarcane and starch.

Although the availability of green ethanol depends onseasonal resources, tropical countries with access tofarmable land during the entire year may have regularproduction. In order to produce huge quantities of it, a

country must have substantial agricultural production and araw material surplus (e.g., sugar or starch).

However by relying on the sugar and starch content of foodcrops, ethanol production competes with food production.Therefore, recent research focus on the use of low-valuebiomass, often deemed “waste”, to produce ethanol. Thatlow-value biomass is lignocellulosic material found in wood,sugarcane bagasse or grain crop stubbles.

Lignocellulosic biomass could represent a new fermentableraw material if hydrolysis of this material is performed.Technological advances in this reaction still need to beachieved in order to make it economically feasible andrender this usage of the agricultural residues competitivewith respect to others, such as heat generation by burn.

Being one of the world major ethanol producers, the USbases their fermentation process on corn starch, whichrequires a previous hydrolysis step. Other tropical countries,as Brazil and India, use sugarcane juice and molassesrespectively as raw material for the fermentation. As aresult, their processes tend to be less expensive as nohydrolysis step is necessary.

Further, since the 1970’s, the Brazilian governmentalprogram Pro-Alcohol has promoted the production ofethanol. This mandate has given Brazilian researchers theopportunity to develop new technologies and dominatethe ethanol fermentation process. In this context, Brazilianethanol has established itself as one of the major players onthe ethanol market.

Ethanol prices are somewhat related to fuel and cropsproduction. While Brazilian and Indian sugarcane-derivedethanol are less affected due to the ability to adjust theproduction of ethanol/sugar according to market demands,corn starch alcohol is much more sensitive to externalfactors, while corn is the principal American feed grain.

Technical Analysis

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Technology Overview

The ethanol-to-ethylene process comprises three differentareas: the reaction area; the quench, compression, causticwashing and drying area; and the purification area. Theprocess block flow diagram presented in Figure 4summarizes the process.

In this process, ethanol from feedstock is vaporized and fedto the furnace, where it is heated. This stream is then fedinto the first reactor, where ethanol is partially converted.The resulting stream is fed back to the furnace, where it isreheated and sent directly to the next reactor. Thiscontinues until the fourth reactor, where ethanol reaches99% of conversion. Then, the product stream is cooled,generating steam, before being sent to the subsequentarea.

In the second area, the cooled stream is fed into a quenchcolumn, where most of the water is condensed. Next, theproduct passes by a three-stage compression and issubmitted to a caustic washing column to reduce the CO2content. The bottom product is sent to waste treatmentwhile the overhead product goes to the ethylene dryingsystem and then follows to purification.

In the purification area, the gas stream is submitted to twocryogenic columns that share a single condenser. In thefirst, heavy impurities are removed, in the second column,the remaining CO is removed. The resulting bottom streamcorresponds to the PG ethylene product.

Figure 3 – Process Block Flow Diagram

Area 100:Reaction &Quenching

EthanolArea 200:

Compression, CausticWashing & Drying

PG EthyleneArea 300:

Purification

Fuel Gas


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Key Consumptions

Simulation Software

Labor Requirements

Table 5 – Raw Materials & Utilities Consumption (per

ton of Product)


Table 6 – Design & Simulation Assumptions


Table 7 – Labor Requirements for a Typical Plant


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Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram


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Figure 5 – Inside Battery Limits Conceptual Process Flow Diagram (Cont.)


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Table 8 presents the main streams composition andoperating conditions. For a more complete materialbalance, see the “Appendix A. Mass Balance & StreamsProperties”

Detailed information regarding utilities flow rates isprovided in “Appendix B. Utilities ConsumptionsBreakdown”. For further details on greenhouse gasemissions caused by this process, see “Appendix C. ProcessCarbon Footprint”.

ISBL Major Equipment List

Table 9 shows the equipment list by area. It also presents abrief description and the construction materials used.

Find main specifications for each piece of equipment in“Appendix D. Equipment Detailed List & Sizing”.

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OSBL Major Equipment List

The OSBL is divided into three main areas: storage (Area700), energy & water facilities (Area 800), and support &auxiliary facilities (Area 900).

Table 10 shows the list of tanks located on the storage areaand the energy facilities required in the construction of apartially integrated unit.

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The general assumptions for the base case of this study areoutlined below.

In Table 11, the IC Index stands for Intratec chemical plantConstruction Index, an indicator, published monthly byIntratec, to scale capital costs from one time period toanother.

This index reconciles price trends of the fundamentalcomponents of a chemical plant construction such as labor,material and energy, providing meaningful historical andforecast data for our readers and clients.

The assumed operating hours per year indicated does notrepresent any technology limitation; rather, it is anassumption based on usual industrial operating rates.

Additionally, Table 11 discloses assumptions regarding theproject complexity, technology maturity and data reliability,which are of major importance for attributing reasonablecontingencies for the investment and for evaluating theoverall accuracy of estimates. Definitions and figures forboth contingencies and accuracy of economic estimatescan be found in this publication in the chapter “TechnologyEconomics Methodology.”

Economic Analysis

Table 11 – Base Case General Assumptions


Figure 5 – Project Implementation Schedule


Start-up

Total EPC Phase

Construction

Procurement

Detailed Engineering

Basic Engineering

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Project ImplementationSchedule

The main objective of knowing upfront the projectimplementation schedule is to enhance the estimates forboth capital initial expenses and return on investment.

The implementation phase embraces the period from thedecision to invest to the start of commercial production.This phase can be divided into five major stages: (1) BasicEngineering, (2) Detailed Engineering, (3) Procurement, (4)Construction, and (5) Plant Start-up.

The duration of each phase is detailed in Figure 6.

Capital Expenditures

Fixed Investment

Table 12 shows the bare equipment cost associated witheach area of the project.

Table 13 presents the breakdown of the total fixedinvestment (TFI) per item (direct & indirect costs andprocess contingencies). For further information about thecomponents of the TFI, please see the chapter “TechnologyEconomics Methodology.”

Fundamentally, the direct costs are the total direct materialand labor costs associated with the equipment (including

installation bulks). In other words, the total direct expensesrepresent the total equipment installed cost.

“Appendix E. Detailed Capital Expenses” provides a detailedbreakdown for the direct expenses, outlining the share ofeach type of equipment in total.

After defining the total direct cost, the TFI is established byadding field indirect costs, engineering costs, overhead,contract fees and contingencies.

Table 12 – Bare Equipment Cost per Area (USD

Thousands)


Table 13 – Total Fixed Investment Breakdown (USD

Thousands)


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Indirect costs are defined by the American Association ofCost Engineers (AACE) Standard Terminology as those"costs which do not become a final part of the installationbut which are required for the orderly completion of theinstallation."

The indirect project expenses are further detailed in“Appendix E. Detailed Capital Expenses”

Alternative OSBL Configurations

The total fixed investment for the construction of a newchemical plant is greatly impacted by how well it will beable to take advantage of the infrastructure already installedin that location.

For example, if there are nearby facilities consuming a unit’sfinal product or supplying a unit’s feedstock, the need forstorage facilities significantly decreases, along with the totalfixed investment required. This is also true for supportfacilities that can serve more than one plant in the samecomplex, such as a parking lot, gate house, etc.

This study analyzes the total fixed investment for threedistinct scenarios regarding OSBL facilities:

Non-Integrated Plant

Plant Partially Integrated

Plant Fully Integrated

The detailed definition, as well as the assumptions used foreach scenario is presented in the chapter “About thisStudy.”

The influence of the OSBL facilities on the capitalinvestment is depicted in Figure 7 and in Figure 8.

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Figure 6 – Total Direct Cost of Different Integration Scenarios (USD Thousands)


Figure 7 – Total Fixed Investment of Different Integration Scenarios (USD Thousands)


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Working Capital

Working capital, described in Table 14, is another significantinvestment requirement. It is needed to meet the costs oflabor; maintenance; purchase, storage, and inventory offield materials; and storage and sales of product(s).

Assumptions for working capital calculations are found in“Appendix F. Economic Assumptions”.

Other Capital Expenses

Start-up costs should also be considered when determiningthe total capital expenses. During this period, expenses areincurred for employee training, initial commercializationcosts, manufacturing inefficiencies and unscheduled plantmodifications (adjustment of equipment, piping,instruments, etc.).

Initial costs are not addressed in most studies on estimatingbut can become a significant expenditure. For instance, theinitial catalyst load in reactors may be a significant cost and,in that case, should also be included in the capitalestimates.

The purchase of technology through paid-up royalties orlicenses is considered to be part of the capital investment.

Other capital expenses frequently neglected are landacquisition and site development. Although these are smallparts of the total capital expenses, they should be included.

Assumptions used to calculate other capital expenses areprovided in “Appendix F. Economic Assumptions.”

Total Capital Expenses

Table 16 presents a summary of the total CapitalExpenditures (CAPEX) detailed in this section.

Operational Expenditures

Manufacturing Costs

The manufacturing costs, also called OperationalExpenditures (OPEX), are composed of two elements: a fixedcost and a variable cost. All figures regarding operationalcosts are presented in USD per ton of product.

Table 14 – Working Capital (USD Million)


Table 15 – Other Capital Expenses (USD Million)


Table 16 – CAPEX (USD Million)


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Table 17 shows the manufacturing fixed cost. To learn moreabout the assumptions for manufacturing fixed costs, seethe “Appendix F. Economic Assumptions”

Table 18 discloses the manufacturing variable costbreakdown.

Table 19 shows the OPEX of the presented technology.

Historical Analysis

Figure 9 depictures Sales and OPEX historic data, with thesales history based on 30% premium ethylene prices.Figure 10 compares the project EBITDA trends with IntratecProfitability Indicators (IP Indicators). The Basic Chemicals IPIndicator represents basic chemicals sector profitability,based on the weighted average EBITDA margins of majorglobal basic chemicals producers. Alternately, the ChemicalSector IP Indicator reveals the overall chemical sectorprofitability, through a weighted average of the IP Indicatorscalculated for three major chemical industry niches: basic,specialties and diversified chemicals.

Economic Datasheet

The Technology Economic Datasheet, presented in Table20, is an overall evaluation of the technology's productioncosts in a US Gulf Coast based plant.

The expected revenues in products sales and initialeconomic indicators are presented for a short-termassessment of its economic competitiveness.

Table 17 – Manufacturing Fixed Cost (USD/ton)


Table 18 – Manufacturing Variable Cost (USD/ton)


Table 19 – OPEX (USD/ton)


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Figure 8 – OPEX and Product Sales History (USD/ton)


Figure 9 – EBITDA Margin & IP Indicators History Comparison


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Regional Comparison

Capital Expenses

Variations in productivity, labor costs, local steel prices,equipment imports needs, freight, taxes and duties onimports, regional business environments and localavailability of sparing equipment were considered whencomparing capital expenses for the different regions underconsideration in this report.

Capital costs are adjusted from the base case (a plantconstructed on the US Gulf Coast) to locations of interest byusing location factors calculated according to the itemsaforementioned. For further information about locationfactor calculation, please examine the chapter “TechnologyEconomics Methodology.” In addition, the location factorsfor the regions analyzed are further detailed in “Appendix F.Economic Assumptions.”

Figure 11 summarizes the total Capital Expenditures(CAPEX) for two locations.


Specific regional conditions influence prices for rawmaterials, utilities and products. Such differences are thusreflected in the operating costs. An OPEX breakdownstructure for the different locations approached in this studyis presented in Figure 12.

Economic Datasheet

The Technology Economic Datasheet, presented in Table21, is an overall evaluation of the technology's capitalinvestment and production costs in the alternative locationanalyzed in this study.

Regional Comparison & Economic Discussion

Figure 10 – CAPEX per Location (USD Million)


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Figure 11 – Operating Costs Breakdown per Location (USD/ton)


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AACE: American Association of Cost Engineers

ABS: Acrylonitrile butadiene styrene

B: Boiler

C: Distillation, stripper, scrubber columns (e.g., C-101 woulddenote a column tag)

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

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

CAPEX: Capital expenditures

CR: Distillation column reboiler

CT: Cooling tower

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 andAmortization

F: Furnaces, fired heaters (e.g., F-101 would denote afurnace tag)

FBD: Fluidized Bed Dehydration

HDPE: High Density Polyethylene

IC Index: Intratec Chemical Plant Construction Index

IP Indicator: Intratec Chemical Sector Profitability Indicator

ISBL: Inside battery limits

K: Compressors, blowers, fans (e.g., K-101 would denote acompressor tag)

KPI:

kta: thousands metric tons per year

LDPE: Light Density Polyethylene

LLDPE: Linear Light Density Polyethylene

LP: Low Pressure (for steam)

LPG: Liquefied petroleum gas

MTO: Methanol-to-Olefins

MTP: Methanol-to-Propylene

NGL: Natural gas liquids

OPEX: Operational Expenditures

OSBL: Outside battery limits

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

PG: Polymer grade

PVC: Polyvinyl Chloride

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

RF: Refrigerant

RG: Refinery grade

STAR: Steam Active Reforming

Syngas: 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 woulddenote a vessel tag)

WD: Demineralized water

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

Acronyms, Legends & Observations

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Intratec Technology Economics methodologyensures a holistic, coherent and consistenttechno-economic evaluation, ensuring a clearunderstanding of a specific mature chemicalprocess technology.

Introduction

The same general approach is used in the development ofall Technology Economics assignments. To know moreabout Intratec’s methodology, see Figure 13.

While based on the same methodology, all TechnologyEconomics studies present uniform analyses with identicalstructures, containing the same chapters and similar tablesand charts. This provides confidence to everyone interestedin Intratec’s services since they will know upfront what theywill get.

Workflow

Once the scope of the study is fully defined andunderstood, Intratec conducts a comprehensivebibliographical research in order to understand technicalaspects involved with the process analyzed.

Subsequently, the Intratec team simultaneously developsthe process description and the conceptual process flowdiagram based on:

a. Patent and technical literature research

b. Non-confidential information provided by technologylicensors

c. Intratec's in-house database

d. Process design skills

Next, all the data collected are used to build a rigoroussteady state process simulation model in Aspen Hysysand/or Aspen Plus, leading commercial processflowsheeting software tools.

From this simulation, material balance calculations areperformed around the process, key process indicators areidentified and main equipment listed.

Equipment sizing specifications are defined based onIntratec's equipment design capabilities and an extensiveuse of AspenONE Engineering Software Suite that enablesthe integration between the process simulation developedand equipment design tools. Both equipment sizing andprocess design are prepared in conformance with generallyaccepted engineering standards.

Then, a cost analysis is performed targeting ISBL & OSBLfixed capital costs, manufacturing costs, and overall workingcapital associated with the examined process technology.Equipment costs are primarily estimated using AspenProcess Economic Analyzer (formerly Aspen Icarus)customized models and Intratec's in-house database.

Cost correlations and, occasionally, vendor quotes of uniqueand specialized equipment may also be employed. One ofthe overall objectives is to establish Class 3 cost estimates1

with a minimum design engineering effort.

Next, capital and operating costs are assembled in MicrosoftExcel spreadsheets, and an economic analysis of suchtechnology is performed.

Finally, two analyses are completed, examining:

a. The total fixed investment in different constructionscenarios, based on the level of integration of the plantwith nearby facilities

b. The capital and operating costs for a second differentplant location

1 These are estimates that form the basis for budget authorization,appropriation, and/or funding. Accuracy ranges for this class ofestimates are + 10% to + 30% on the high side, and - 10 % to - 20 %on the low side.

Technology Economics Methodology

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Figure 123 – Methodology Flowchart

Intratec Internal Database

Non-ConfidentialInformation from

Technology Licensors orSuppliers

Aspen Plus, Aspen HysysAspen Exchanger Design &

Rating, KG Tower, Sulcoland Aspen Energy Analyzer

Bibliographical Research

Material & Energy Balances, KeyProcess Indicators, List of

Equipment & Equipment Sizing

Capital Cost (CAPEX)& Operational Cost (OPEX)

Estimation

Patent and TechnicalLiterature Databases

Pricing Data Gathering: RawMaterials, Chemicals,Utilities and Products

Aspen Process EconomicAnalyzer, Aspen Capital

Cost Estimator, Aspen In-Plant Cost Estimator &

Intratec In-House Database

Construction LocationFactor

(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 ofDifferent Construction

Scenarios and Plant Location


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Capital & Operating CostEstimates

The cost estimate presented in the current study considersa process technology based on a standardized designpractice, typical of a major chemical company. The specificdesign standards employed can have a significant impacton capital costs.

The basis for the capital cost estimate is that the plant isconsidered to be built in a clear field with a typical largesingle-line capacity. In comparing the cost estimate herebypresented with an actual project cost or contractor'sestimate, 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 consideredmay invalidate comparisons with the estimated costpresented.

Industrial plants may be overdesigned for particularobjectives and situations.

Rapid fluctuation of equipment or construction costsmay invalidate cost estimate.

Equipment vendors or engineering companies mayprovide goods or services below profit margins duringeconomic downturns.

Specific locations may impose higher taxes and fees,which can impact costs considerably.

In addition, no matter how much time and effort aredevoted to accurately estimating costs, errors may occurdue to the aforementioned factors, as well as cost and laborchanges, construction problems, weather-related issues,strikes, or other unforeseen situations. This is partiallyconsidered in the project contingency. Finally, it mustalways be remembered that an estimated project cost is notan exact number, but rather is a projection of the probablecost.

ISBL Investment

The ISBL investment includes the fixed capital cost of themain processing units of the plant necessary to themanufacturing of products. The ISBL investment includesthe installed cost of the following items:

Process equipment (e.g., reactors and vessels, heatexchangers, pumps, compressors, etc.)

Process equipment spares

Housing for process units

Pipes and supports within the main process units

Instruments, control systems, electrical wires and otherhardware

Foundations, structures and platforms

Insulation, paint and corrosion protection

In addition to the direct material and labor costs, the ISBLaddresses indirect costs, such as construction overheads,including: payroll burdens, field supervision, equipmentrentals, tools, field office expenses, temporary facilities, etc.

OSBL Investment

The OSBL investment accounts for auxiliary items necessaryto the functioning of the production unit (ISBL), but whichperform a supporting and non-plant-specific role. OSBLitems considered may vary from process to process. TheOSBL investment could include the installed cost of thefollowing items:

Storage and packaging (storage, bagging and awarehouse) 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 andequipment of: maintenance, stores warehouse,laboratory, garages, fire station, change house,cafeteria, medical/safety, administration, etc.

General utilities including plant air, instrument air, inertgas, stand-by electrical generator, fire water pumps,etc.

Pollution control, organic waste disposal, aqueouswaste treating, incinerator and flare systems

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Working Capital

For the purposes of this study,2 working capital is defined asthe funds, in addition to the fixed investment, that acompany must contribute to a project. Those funds mustbe adequate to get the plant in operation and to meetsubsequent obligations.

The initial amount of working capital is regarded as aninvestment item. This study uses the followingitems/assumptions for working capital estimation:

Accounts receivable. Products and by-productsshipped but not paid by the customer; it representsthe extended credit given to customers (estimated as acertain period – in days – of manufacturing expensesplus depreciation).

Accounts payable. A credit for accounts payable suchas feedstock, catalysts, chemicals, and packagingmaterials received but not paid to suppliers (estimatedas a certain period – in days – of manufacturingexpenses).

Product inventory. Products and by-products (ifapplicable) in storage tanks. The total amount dependson sales flow for each plant, which is directly related toplant conditions of integration to the manufacturing ofproduct‘s derivatives (estimated as a certain period – indays – of manufacturing expenses plus depreciation,defined by plant integration circumstances).

Raw material inventory. Raw materials in storagetanks. The total amount depends on raw materialavailability, which is directly related to plant conditionsof integration to raw material manufacturing(estimated as a certain period – in days – of rawmaterial delivered costs, defined by plant integrationcircumstances).

In-process inventory. Material contained in pipelinesand vessels, except for the material inside the storagetanks (assumed to be 1 day of manufacturingexpenses).

Supplies and stores. Parts inventory and minor spareequipment (estimated as a percentage of totalmaintenance materials costs for both ISBL and OSBL).

2 The accounting definition of working capital (total current assetsminus total current liabilities) is applied when considering theentire company.

Cash on hand. An adequate amount of cash on handto give plant management the necessary flexibility tocover unexpected expenses (estimated as a certainperiod – 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 timestandpoint, a variable undefined period exists between thenominal end of construction and the production of qualityproduct in the quantity required. This period is commonlyreferred to as start-up.

During the start-up period expenses are incurred foroperator and maintenance employee training, temporaryconstruction, auxiliary services, testing and adjustment ofequipment, piping, and instruments, etc. Our method ofestimating start-up expenses consists of four components:

Labor component. Represents costs of plant crewtraining for plant start-up, estimated as a certainnumber of days of total plant labor costs (operators,supervisors, maintenance personnel and laboratorylabor).

Commercialization cost. Depends on raw materialsand products negotiation, on how integrated the plantis with feedstock suppliers and consumer facilities, andon the maturity of the technology. It ranges from 0.5%to 5% of annual manufacturing expenses.

Start-up inefficiency. Takes into account thoseoperating runs when production cannot bemaintained or there are false starts. The start-upinefficiency varies according to the process maturity:5% for new and unproven processes, 2% for new andproven processes, and 1% for existing licensedprocesses, based on annual manufacturing expenses.

Unscheduled plant modifications. A key fault thatcan happen during the start-up of the plant is the riskthat the product(s) may not meet specificationsrequired by the market. As a result, equipmentmodifications or additions may be required.

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Other Capital Expenses

Prepaid Royalties. Royalty charges on portions of theplant are usually levied for proprietary processes. Avalue ranging from 0.5 to 1% of the total fixedinvestment (TFI) is generally used.

Site Development. Land acquisition and sitepreparation, including roads and walkways, parking,railroad sidings, lighting, fencing, sanitary and stormsewers, and communications.

Manufacturing Costs

Manufacturing costs do not include post-plant costs, whichare very company specific. These consist of sales, generaland administrative expenses, packaging, research anddevelopment costs, and shipping, etc.

Operating labor and maintenance requirements have beenestimated subjectively on the basis of the number of majorequipment items and similar processes, as noted in theliterature.

Plant overhead includes all other non-maintenance (laborand materials) and non-operating site labor costs forservices associated with the manufacture of the product.Such overheads do not include costs to develop or marketthe product.

G & A expenses represent general and administrative costsincurred during production such as: administrativesalaries/expenses, research & development, productdistribution and sales costs.

Contingencies

Contingency constitutes an addition to capital costestimations, implemented based on previously availabledata or experience to encompass uncertainties that mayincur, to some degree, cost increases. According torecommended practice, two kinds of contingencies areassumed and applied to TPC: process contingency andproject contingency.

Process contingency is utilized in an effort to lessen theimpact of absent technical information or the uncertainty ofthat which is obtained. In that manner, the reliability of theinformation gathered, its amount and the inherentcomplexity of the process are decisive for its evaluation.Errors that occur may be related to:

Uncertainty in process parameters, such as severity ofoperating 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 thematurity of the technology, and is usually a value between5% and 25% of the direct costs.

The project contingency is largely dependent on the plantcomplexity and reflects how far the conducted estimation isfrom the definitive project, which includes, from theengineering 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 byweather

Intratec’s definitions in relation to complexity and maturityare the following:

Table 22 – Project Contingency

Plant Complexity Complex Typical Simple

Project Contingency 25% 20% 15%


Table 23 – Criteria Description

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


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Accuracy of Economic Estimates

The accuracy of estimates gives the realized range of plantcost. The reliability of the technical information available isof major importance.

The non-uniform spread of accuracy ranges (+50 to – 30 %,rather than ±40%, e.g.) is justified by the fact that theunavailability of complete technical information usuallyresults in under estimating rather than over estimatingproject costs.

Location Factor

A location factor is an instantaneous, total cost factor usedfor converting a base project cost from one geographiclocation to another.

A properly estimated location factor is a powerful tool, bothfor comparing available investment data and evaluatingwhich region may provide greater economic attractivenessfor a new industrial venture. Considering this, Intratec hasdeveloped a well-structured methodology for calculatingLocation Factors, and the results are presented for specificregions’ capital costs comparison.

Intratec’s Location Factor takes into consideration thedifferences in productivity, labor costs, local steel prices,equipment imports needs, freight, taxes and duties onimported and domestic materials, regional businessenvironments and local availability of sparing equipment.For such analyses, all data were taken from internationalstatistical organizations and from Intratec’s database.Calculations are performed in a comparative manner, takinga US Gulf Coast-based plant as the reference location. Thefinal Location Factor is determined by four major indexes:Business Environment, Infrastructure, Labor, and Material.

The Business Environment Factor and the InfrastructureFactor measure the ease of new plant installation indifferent countries, taking into consideration the readinessof bureaucratic procedures and the availability and qualityof ports or roads.

Table 24 – Accuracy of Economic Estimates

Reliability Low Moderate HighVery

High

Accuracy+ 30%

- 20%

+ 22%

- 18%

+ 18%

- 14%

+ 10%

- 10%


Figure 13 – Location Factor Composition

Infrastructure FactorLabor Index

Location Factor

Material Index Business Environment

Factor

Local Labor IndexRelative SalaryProductivity

Expats Labor

Domestic Material IndexRelative Steel PricesLabor IndexTaxes and FreightRatesSpares

Imported MaterialTaxes and FreightRatesSpares

Ports, Roads, Airportsand Rails (Availabilityand Quality)CommunicationTechnologiesWarehouseInfrastructureBorder ClearanceLocal Incentives

Readiness ofBureaucraticProceduresLegal Protection ofInvestorsTaxes


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Labor and material, in turn, are the fundamentalcomponents for the construction of a plant and, for thisreason, are intrinsically related to the plant costs. Thisconcept is the basis for the methodology, which aims torepresent the local discrepancies in labor and material.

Productivity of workers and their hourly compensation areimportant for the project but, also, the qualification ofworkers is significant to estimating the need for foreignlabor.

On the other hand, local steel prices are similarly important,since they are largely representative of the costs ofstructures, piping, equipment, etc. Considering thecontribution of labor in these components, workers’qualifications are also indicative of the amount that needsto be imported. For both domestic and imported materials,a Spare Factor is considered, aiming to represent the needfor spare rotors, seals and parts of rotating equipment.

The sum of the corrected TFI distribution reflects the relativecost of the plant, this sum is multiplied by the Infrastructureand the Business Environment Factors, yielding the LocationFactor.

For the purpose of illustrating the conducted methodology,a block flow diagram is presented in Figure 14 in which thefour major indexes are presented, along with some of theircomponents.

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The process’ carbon footprint can be defined as the totalamount of greenhouse gas (GHG) emissions caused by theprocess operation.

Although it is difficult to precisely account for the totalemissions generated by a process, it is possible to estimatethe major emissions, which can be divided into:

Direct emissions. Emissions caused by process wastestreams combusted in flares.

Indirect emissions. The ones caused by utilitiesgeneration or consumption, such as the emissions dueto using fuel in furnaces for heating process streams.Fuel used in steam boilers, electricity generation, andany other emissions in activities to support processoperation are also considered indirect emissions.

In order to estimate the direct emissions, it is necessary toknow the composition of the streams, as well as theoxidation factor.

Estimation of indirect emissions requires specific data,which depends on the plant location, such as the localelectric power generation profile, and on the plantresources, such as the type of fuel used.

The assumptions for carbon footprint calculation and theresults are provided in Table 27 and Table 28.

Equivalent carbon dioxide (CO2e) is a measure thatdescribes the amount of CO2 that would have the sameglobal warming potential of a given greenhouse gas, whenmeasured 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. Process Carbon Footprint

Table 27 – Assumptions for CO2e Emissions Calculation


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


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Table 31 – Heat Exchangers


(barg)

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Shell material

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Table 35 – Vessels & Tanks (Cont.)

Design gauge

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Direct Costs Breakdown

Appendix E. Detailed Capital Expenses

Figure 14 – ISBL Direct Costs Breakdown by Equipment Type for Base Case


Figure 15 – OSBL Direct Costs Breakdown by Equipment Type for Base Case


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Capital Expenditures

For a better description of working capital and other capitalexpenses components, as well as the location factorsmethodology, see the chapter “Technology EconomicsMethodology”

Construction Location Factors

Working Capital

Raw Materials

Inventory

days of raw materials cost +

depreciation

In-process

Inventory

Supplies and

Stores

Appendix F. Economic Assumptions

Table 37 – Detailed Construction Location Factor


Table 38 – Working Capital Assumptions for Base Case


Table 39 – Other Capital Expenses Assumptions for

Base Case


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Fixed Costs

Fixed costs are estimated based on the specificcharacteristics of the process. The fixed costs, like operatingcharges and plant overhead, are typically calculated as apercentage of the industrial labor costs, and G & A expensesare added as a percentage of the operating costs.

The goal of depreciation is to allow a credit againstmanufacturing costs, and hence taxes, for the non-recoverable capital expenses of an investment. Thedepreciable portion of capital expense is the total fixedinvestment.

Table 41 shows the project depreciation value and theassumptions used in its calculation.

Table 40 – Other Fixed Cost Assumptions


Figure 16 – Historical EBITDA Margins Regional Comparison


Table 41 – Depreciation Value & Assumptions


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The list below is intended to be an easy and quick way toidentify Intratec reports of interest. For a more completeand up-to-date list, please visit the Publications section onour website, www.intratec.us.

TECHNOLOGY ECONOMICS

Propylene Production via Metathesis: Propyleneproduction 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 aprocess similar to UOP OLEFLEX™.

Propylene Production from Methanol: Propyleneproduction from methanol, in a process is similar toLurgi MTP®.

Polypropylene Production via Gas Phase Process: Agas phase type process similar to the Dow UNIPOL™ PPprocess to produce both polypropylene homopolymerand random copolymer.

Polypropylene Production via Gas Phase Process,

Part 2: A gas phase type process similar to LummusNOVOLEN® for production of both homopolymer andrandom copolymer.

Sodium Hypochlorite Chemical Production: Sodiumhypochlorite (bleach) production, in a widely usedindustrial process, similar to that employed by SolvayChemicals, for example.


Dehydrogenation, Part 2: Propane dehydrogenation(PDH) in fixed bed reactors, in a process is similar toLummus CATOFIN®.


Dehydrogenation, Part 3: Propane dehydrogenation(PDH) by applying oxydehydrogenation, in a processsimilar to the STAR PROCESS® licensed by Uhde.

Ethylene via Ethanol Dehydration: Ethyleneproduction via ethanol dehydration, in a process similarto that used by Chematur and Petron.

IMPROVEMENT ECONOMICS

Membranes on Polypropylene Plants Vent Recovery:

The Report evaluates membrane units for theseparation of monomer and nitrogen in PP plants,similar to the VaporSep® system commercialized byMTR.

Use of Propylene Splitter to Improve Polypropylene

Business: The report assesses the opportunity ofpurchasing the less valued RG propylene to producethe PG propylene raw material used in a PP plant.

RESEARCH ECONOMICS

Green Ethylene from Ethanol: The report evaluatesthe ethylene production via ethanol dehydration in aprocess based in a patent published by BP Chemicals.

Appendix G. Released Publications

Appendix H.

Technology Economics Form

Submitted by Client

Appendix H. Technology Economics FormSubmitted by Client

Technology Economics Request Form

Process Technology of Interest

Is it a commercial process technology? Yes No

Industry Sector

Specify Chemical Produced:

Technology Description

Study Assumptions

Please provide the assumptions that will support the techno-economic evaluation of your target mature technology.

Analysis Date Change inputs

Quarter / Year /

Plant Nominal Capacity Change inputs

Plant Capacity 300 kta (661.4 million lb/yr)

Operating Hours Change inputs

Operating Hours 8,000 h/year (91.3% of the year)

Storage Facilities Requirements Change inputs

Products days of operation

By-Products (if applicable) days of operation

Raw Materials days of operation

Utilities Supply Facilities Change inputs

Account for the Erection of Utilities Facilities? Yes

Chemicals Production

Ethylene

Ethanol catalytic dehydration ( similar to Petron’s ETE Process )

Q4 2012

0

Not Applicable

20

Plant Location Add another location

Capital and operating costs estimation will be based on Intratec's Internal Database default prices for:

1) United States (US Gulf Coast) Add comments

2) Second Location:

Select a Country

Economic Assumptions Change inputs

Income Tax 37 %

Sales Tax 7 %

Value Added Tax (VAT) 0 %

Depreciation Method Straight Line (10 years)

Perpetuity (EBITDA Multiple) 5 times the EBITDA value in the last year of the economic cycle

Prices Escalation 1 % per year

General Design Conditions Check process design assumptions used by Intratec

Change inputs

Attach Files

Attach any other documents deemed relevant for the project description. Multiple files may be uploaded:

- Articles- Brochures- Book sections- Patents- Block flow diagrams

Choose among countries available on Intratec's Database.

Brazil

The list below presents many examples of processes eligible for technology economics studies, to know more about this serviceand request your own custom study please access www.intratec.us/tec.

Production Processes for

ABS Resins High Density Polyethylene (HDPE) Phenol

Acetic Acid Hydrogen Phosphoric Acid

Acetone Hydrogen Peroxide Phthalic Anhydride (PAN)

Acrylic Acid Isobutanol Polyacrylamide

Acrylonitrile Isobutylene Polyacrylate

Adipic Acid Isooctane Polybutadiene Rubber (PBR)

Ammonia Isoprene Polybutylene Terephthalate (PBT)

Aniline Isopropanol Polycarbonate

Benzene Lactic Acid Polyethylene Terephthalate (PET)

Biodiesel Linear Alkylbenzene Polypropylene (PP)

Bisphenol A Liquefied Natural Gas (LNG) Polystyrene (PS)

Butadiene Linear Low Density Polyethylene (LLDPE) Polyvinyl Acetate (PVA)

Butylene Low Density Polyethylene (LDPE) Polyvinyl Chloride (PVC)

Butyraldehyde Maleic Acid Propylene

Caprolactam Maleic Anhydride (MAN) Propylene Glycol

Carbon Dioxide Melamine Propylene Oxide

Chlorine Methanol Sodium Hydroxide

Cumene Methyl Ethyl Ketone (MEK) Styrene

Dimethyl Ether Methyl Isobutyl Ketone (MIBK) Succinic Acid

Diphenylmethane Diamine Methyl Methacrylate (MMA) Succinic Anhydride

Ethanol Methyl Tert-Butyl Ether (MTBE) Sulfur

Ethanolamine Methylamine (MA) Sulfuric Acid

Ethyl Acetate Methylene Diphenyl Diisocyanate (MDI) Synthesis Gas (Syngas)

Ethylbenzene Naphtalene Terephthalic Acid (PTA)

Ethylene Nitrobenzene Toluene

Ethylene Dichloride (EDC) n-Butanol Urea

Ethylene Glycol Nitrogen / Oxygen Vinyl Acetate Monomer (VAM)

Ethyleneamine Nylon 6 Vinyl Chloride Monomer (VCM)

Formaldehyde Nylon 6,6

Glycerin P-xylene

Assess any Process with Technology Economics

Oil Refining Processes

Alkylation Hydrotreating Visbreaking

Crude Distillation Hydrocracking Vacuum Distillation

Catalytic Cracking Isomerization

Catalytic Refining Sulfur Recovery

Gas Treatment Processes

Dehydration NGL Recovery Sulfur Recovery

Appendix I. Related Study Opportunities

Appendix I.

Related Study Opportunities

PET from Coca-Cola’s PlantBottle Relies on Green MEG Produced via ScientificDesign Process

The first ever recyclable plastic bottle made partially from plants, Coca-Cola’s PlantBottle relies on polyethyleneterephthalate (PET) produced from terephthalic acid and green monoethylene glycol (MEG) derived from bioethanol.

EthanolSteam

CausticWater

CO2Removal

Oxygen

DehydrationReactor

Scrubber EO Stripper

EthyleneOxide Reactor

WaterRemoval

MEG

DEGTEG

PEG

GlycolReactor

The use of green MEG in the production of PET was enabled by Scientific Design (SD), which developed an integratedprocess comprising the ethanol dehydration and the MEG production steps. This integration requires minimumethylene purification and takes advantage of heat integration opportunities.

According to SD, ethanol is dehydrated to ethylene in a single reactor. The reactor effluent is cooled, washed with analkaline water solution, compressed and purified. Then, ethylene reacts with oxygen, generating ethylene oxide. Thestream is purified and sent to the glycols reactor, where a non-catalytic reaction of ethylene oxide and watergenerates ethylene glycol (EG). The glycols are separated by vacuum distillation to produce MEG, DEG and TEG.

Intratec’s Technology Economics advisory service makes a critical analysis of the process. Based on publicly availableinformation, the complete study evaluates the economics surrounding the technology, providing:

Process SimulationEstimation of Key Performance Indicators and list of equipmentPlant capital cost estimates developed using Aspen Process Economic AnalyzerEvaluation of the costs related to plant operation (raw materials, utilities, labor and other fixed costs, etc)

Review our Technology Economics advisory service at www.intratec.us/tec and order the service online:

1. Indicate the commercial technology to be economically evaluated;

2. Select the pricing and payment options that best fit your budget;

3. Submit your order.

Main Reference

Touch Briefings 2010 – Hydrocarbon World, Volume 5, Issue 2 – Scientific Design’s Ethanol to Monoethylene Glycol Technology(http://www.touchoilandgas.com/ebooks/A1qfzp/hydro52/resources/14.htm)

Braskem Operates the First Commercial-Scale Green Ethylene Plant in the World

Ethylene is certainly one of the most important petroleum derivatives, known as the raw material for the production ofnumerous chemicals. Ethylene is most frequently produced via steam cracking of petroleum-based feedstock.

Growing global concerns about sustainability and globalwarming, along with rising oil prices have motivatedresearch into ethylene manufacture from renewablesources.

Brazilian petrochemical company Braskem operates thefirst large-scale ethylene project to use 100% renewableraw materials. The plant, inaugurated in September2010 in Triunfo, Rio Grande do Sul state of Brazil, usesethanol produced from sugarcane as the feedstock.

Through Intratec’s Technology Economics advisory service, it is possible to assess the economics of this process. Frompublicly available data, Intratec develops a complete study for the economic evaluation of the technology,encompassing:

Simulation of the mature processEstimation of process consumptions and equipment requirementsCapital cost estimation for a commercial scale plantOperating costs evaluation (including raw materials, utilities, labor and other fixed costs)





Main Reference

Braskem Ethanol-to-Ethylene Plant, Brazil (http://www.chemicals-technology.com/projects/braskem-ethanol/)

Ethanol EthanolVaporizer

DehydrationReactors

Steam

Quench Water

Compressor

CausticWashDryerEthylene

PurificationEthylene

Dow Suggests Different Ethylene Purification to Reduce Bioethylene Plant Costs

A patent issued by Dow Global Technologies (Application WO 2011/087478) reveals the research on an alternativeethylene purification scheme in the ethanol dehydration process which may reduce the required capital investment.

Ethylene purification inconventional ethanol dehydrationprocesses uses cryogenicseparation to remove methane,hydrogen (H2) and carbonmonoxide (CO). The costs ofcryogenic distillation appear to beparticularly high when it is usedmerely for removal of the relativelylow concentration of CO produced

by dehydrating ethanol, especially when the concentrations of methane and hydrogen are already below thespecification for ethylene.

In this context, Dow proposes the use of selective oxidation of CO to carbon dioxide (CO2) as a way to achieve theethylene CO specification. In addition, H2 is also selectively oxidized and converted to water, which further reduces theamount of H2 in the ethylene stream to be purified. In order to check if the suggested layout is advantageous incomparison to prior art, it is necessary to assess the required reactor size, and the impact of CO concentration reductionin the capital costs of ethylene cryogenic purification step.

Through Intratec’s Research Economics advisory service, it is possible to assess the economics of the invention.Intratec’s methodology ensures a critical analysis of the research, based on:

Simulation model of the process described in the patentPlant capital cost estimates developed using Aspen Process Economic AnalyzerManufacturing expenses detailed breakdownProcess economic performance sensitivity on raw materials and utilities pricing

Review our Research Economics advisory service at www.intratec.us/rec and order the service online:

1. Indicate a patent to be economically analyzed;



Main Reference

Patent App. WO 2011/087478 – Dow Global Technologies (http://www.google.com/patents/WO2011087478A1)

Ethanol EthanolVaporizer

DehydrationReactors Quench Compressor

Selective CO/H2 Oxidation

CausticWash and

Drying

Water

EthylenePurificationPolymer Grade Ethylene

BP Bets on Reactive Distillation to Reduce Ethanol Dehydration Plants Capital Costs

A patent issued by BP Chemicals (Application US 2008/0275283) reveals the research on alternatives to reduceequipment requirements of ethanol dehydration process. According to the core concept proposed by BP, ethanolfeedstock is converted in a reactive distillation column into a product comprising ethylene and diethyl-ether (DEE). Thereactive distillation column top product (ethylene and diethyl-ether) is sent to further purification for PG Ethylenerecovery.

According to BP, compared to traditional Methanol-to-Olefins (MTO)process, higher selectivity can be achieved using milder reactionconditions (temperature and pressure). By converting ethanol to ethylene(and/or diethyl-ether) in a single reactive distillation column, it is possibleto suppress some unit operations in comparison to regular ethanoldehydration process (furnaces, reactors, etc).

In order to evaluate the economic feasibility of the invention, it isnecessary to assess the reaction conversion, the reflux streams rates, andthe need for further unit operations.

Intratec’s Research Economics advisory service enables a critical analysis ofthe topic. From the patent, Intratec develops a complete study for the

economic evaluation of the concept, encompassing:

Synthesis of a commercial scale process configuration based on patent dataCapital cost estimation for a commercial scale plant relying on this conceptOperating costs estimationEconomic sensitivity analysis over the key technical parameters regarding the invention

Review our Research Economics advisory service at www.intratec.us/rec and order the service online:

1. Upload the patent you would like to be assessed;

2. Define the pricing and payment options according to your needs;


Main Reference

Patent App. US 2008/0275283 – BP Chemicals Limited (http://www.freepatentsonline.com/y2008/0275283)

Ethanol

EthyleneDiethyl Ether

Ethylene

Diethyl Ether

Water

Ethanol Dehydration(Reactive Distillation)

IFP and Total Propose an Energy Saving Process Change in a Typical Ethanol Dehydration Unit

A recent patent application (WO 2013011208 A1) jointly proposed by IFP and Total disclose the research on anapparently simple process modification in conventional ethanol-to-ethylene dehydration facilities to save energy.According to the concept suggested by IFP and Total, two heat exchangers and one compressor system (see the greenhighlights on the figure below) are added to favor the heat transfer between the product stream exiting the reactorsystem and the feedstock stream entering the same reactor system.

It appears that the addition of a compressor system tothe facility might imply in an increase of capitalexpenditures and electric power consumption, butOPEX reduction related to natural gas savings mightoffset both capital and operating costs increase. Theclaimed energy gains are about 4 GJ equivalent permetric ton of ethylene produced.

To evaluate the economic feasibility of the invention, itis necessary to properly size the two new heatexchangers and compressor system, evaluate thetrade-off between the rise in electric powerconsumption and reduction in natural gasrequirements, check the possibility of eliminating the

water quench column, which is typically used, and assess the need for further unit operations.

Intratec’s Improvement Economics advisory service enables a critical analysis of IFP and Total solution. From the patent,Intratec develops an in-depth and unbiased study of the economic evaluation of the concept, encompassing:

Synthesis and design of a commercial scale process modified according to patent dataCapital cost estimation for the layout changes suggested in the patentReductions and increases in process consumptions as well as operating costs estimationEconomic sensitivity analysis over the key parameters regarding the invention

Check Improvement Economics advisory service at www.intratec.us/ime and order the service online:

1. Indicate the patent to be economically evaluated;



Main Reference

Patent App. WO 2013011208 A1 – IFP & Total (http://www.google.com/patents/WO2013011208A1)

Ethanol Pre-treatment

EthyleneWater

Ethanol

Lights

Purge

DehydrationReactors

Furnaces

American Process` Technology for Ethanol Production Upgrades The Value of Cellulosic Biomass

The extensive use of fossil fuels and its associated risks of global warming have led to the production of alternative fuelssuch as sugarcane- or starch-derived ethanol. However, the increasing use of crops for ethanol production has raisedconcerns about competition between biofuels production and food supply. These concerns have motivated research onthe use of low-value biomass, often deemed “waste”, as an alternative route for producing ethanol. That biomass is thelignocellulosic material found in wood, sugarcane bagasse or grain crop stubbles.

In this context, American Process hasdeveloped an integrated process for theco-production of lignocellulosic ethanoland energy from residual biomass that isnot used for food purposes.

In this process, the hemicellulose isextracted from lignocellulosic biomass.Mild sulfuric acid is then used to hydrolyzethe hemicellulose to sugars that are then

converted to ethanol. The remaining moist biomass is dewatered and burned to generate the energy required for theethanol production process. Any fermentation residuals are sent to the boiler. American Process claims that this processresults in a low CAPEX, low cost ethanol and a high overall IRR project.

Through Intratec’s Technology Economics advisory service, it is possible to assess the economics of the suggestedprocess. Intratec’s methodology ensures a critical analysis of the technology, based on:

Simulation of the mature processEstimation of process consumptions and equipment requirementsCapital cost estimation for a commercial scale plantOperating costs evaluation (including raw materials, utilities, labor and other fixed costs)





Main Reference

American Process Website (http://www.americanprocess.com/GreenPowerPlus.aspx)

Other References

Patent App. US 2012/0009632 A1 – American Process Inc. (http://www.freepatentsonline.com/y2012/0009632.html)

Biomass ExtractionReactor Washing Biomass

Dewatering

ThermalConversion to

Energy

Low-SolidsEvaporator

HydrolisisReactor

Steam

PostHydrolisis

Evaporator

Fermentation& Distillation

StillageConcentrator

Ethanol

CO2

Brazilian Success in Sugarcane-Based Ethanol Is an Example for Biofuels Production

Brazil is the world's largest exporter of ethanol and the world's second largest producer, only after the United States.Together, Brazil and the US lead global ethanol production, accounting for nearly 70% of the world's production.

The success of sugarcane-based ethanol in Brazil is explained by an integrated production chain, allowing industrialethanol production as well as energy generation.

Large-scale production of sugar and ethanolincludes milling, fermentation, distillation ofethanol, and dehydration. After cleaning, sugarcane is pressed to extract the juice (10-15%sucrose). The fiber residue, called bagasse, isused as fuel, allowing the plant to be self-sufficient in terms of energy. The cane juice istreated with chemicals and filtered before theevaporation step. Yeast is added to the molassesfor fermentation, which generates wine

containing 7-10% alcohol. The yeast is recovered from the wine using a centrifuge. The alcohol is distillated, resulting inhydrous ethanol. Anhydrous ethanol is obtained through a further dehydration step.

Through Intratec’s Technology Economics advisory service, it is possible to assess the economics of the process.Intratec’s methodology ensures a critical analysis of the technology, based on:

Process SimulationEstimation of Key Performance Indicators and list of equipmentPlant capital cost estimates developed using Aspen Process Economic AnalyzerEvaluation of the costs related to plant operation (raw materials, utilities, labor and other fixed costs, etc)





Main Reference

SugarCane.org (http://sugarcane.org/sugarcane-products/ethanol)

Sugarcane Cleaning Extraction ofSugars

JuiceTreatment

JuiceEvaporation

Fermentation CentrifugationDistillation

andRectification

Dehydration

YeastTreatment

AnhydrousEthanol

Bagass

Technology Economics

Standardized advisory services developed under Intratec’s Consulting as Publications innovative approach. Technology Economics studies answer main questions surrounding process technologies:

- What is the process? What equipment is necessary?

- What are the raw materials and utilities consumption rates?

- What are the capital and operating expenses breakdown?

- What are the economic indicators?

- In which regions is this technology more profitable?