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“Thereby declare that this report is the result of my own work except for quotation
and summaries which have been duly acknowledge”
i
SUPERVISOR’S CERTIFICATION
“Thereby declare that I have read this thesis and in my own opinion this project
report is sufficient in terms of scope and quality for the award of the Bachelor in
Chemical Engineering (Hons).”
Signature : ………………………………….
Name : Siti Fatimah Abdul Halim
Date : ………………………………….
ii
TABLE OF CONTENTS
TITLE PAGE
DECLERATION i
SUPERVISOR’S CERTIFICATION ii
TABLE OF CONTENTS iii
LIST OF TABLES iv
LIST OF FIGURES v
LIST OF PLATES vi
LIST OF SYMBOLS vii
LIST OF ABBREVIATIONS viii
EXECUTIVE SUMMARY ix
iii
LIST OF TABLES
PAGE
Table 2.1: Summary of Total Fixed Capital Investment ...............................................4
Table 2.2: Number of operator based on equipment for main process ........................6
Table 2.3: Number of operator based on equipment for utilities ..................................6
Table 2.4: List of the price and sale for raw material and product ...............................8
Table 2.5: Summary of Total Manufacturing Cost by using CAPCOST .......................8
Table 2.6: Purchase Equipment................................................................................14
Table 2.7: List of Purchased Utilities Equipment .......................................................15
Table 2.8: List of Estimation of Operating Labor .......................................................16
Table 2.9: List of power used by main process equipment ........................................17
Table 2.10: List of power used by utilities equipment ................................................17
Table 2.11: Non-discounted Profitability Criteria .......................................................17
iv
LIST OF FIGURES
PAGE
Figure 2.1: World Consumption of Phthalic Anhydride ................................................1
Figure 2.2: World regional demand on Phthalic Anhydride on 2016 ............................2
Figure 2.3: Global demand on Maleic Anhydride on 2004-2016..................................3
Figure 2.4 Cash Flow Diagram for Phthalic Anhydride Plant .....................................11
v
LIST OF PLATES
vi
LIST OF SYMBOLS
vii
LIST OF ABBREVIATIONS
MA Maleic Anhydride
PA Phthalic Anhydride
P Sale Price
Q Breakeven Point
VC Variable Cost
viii
EXECUTIVE SUMMARY
ix
CHAPTER 2
MARKET ANALYSIS
The demand for phthalic anhydride has been driven by strong global demand
for phthalate plasticizers. The phthalate plasticizers market dominated the demand for
PA and accounted for 52% of the global volume consumed in 2016. Asia is the largest
consumer of phthalic anhydride for the production of plasticizers, accounting for about
61% of consumption [1]. China is the world’s largest consumer of phthalic anhydride
for phthalate plasticizers. The next-largest markets for phthalic anhydride outside of
Asia are in Europe and North America. The growth of the industries such as
construction, automotive and marine in Asia make India, Taiwan, South Korea and
Malaysia to have the highest growth rate of phthalic anhydride.
1
2.1.2 Demand and Supply for Phthalic Anhydride
Demand for phthalic anhydride in alkyd resins is expected to grow at about 5.0
– 10% per year for the next eight years. Above average growth is expected in Asia,
particularly in India, China, and Southeast Asia [1]. World consumption of phthalic
anhydride is forecast to grow at an average annual rate of 4.0-4.5% per year for the
next five years to 2024 [1]. During this time, world growth in the consumption of phthalic
anhydride is expected to vary greatly by application and region.
2
Figure 2.3: Global demand on Maleic Anhydride on 2004-2016 [2]
3
2.2 BREAK EVEN ANALYSIS
The capital cost pertains to the costs associated with construction of a new
plant of chemical manufacturing plant. The cost estimated to design the 100, 000
tonnes per annum of phthalic anhydride production. All the data generated by
CAPCOST by using (CEPCI 2018 = 609.28) [3] [4]
4
- Contractor’s Fee 313, 228
4. TOTAL CONTINGENCY AND FEE 1, 505, 938
Auxiliary Facilities
- Site Development
i. Purchase Land Cost (50,000 m2) 350, 000
ii. Repair and Modification (10% Land Cost) 35, 000
- Auxiliary Building
i. Construction Building
ii. Equipment (10% Building Cost) 248, 150
- Off-sites and utilities 24, 815
i. Utilities Purchase Equipment Cost (UPE)
(Refer Table 2.7 Appendix) 1, 199, 025
ii. Utilities Installation (3% UPE) 35, 970
5. TOTAL AUXILIARY FACILITIES 1, 892, 960
FIXED CAPITAL INVESTMENT COST (3+4+5) 25, 622, 601
Typical values for the working capital are between 15% - 20% of the fixed capital
investment. Assume working capital is 15% of fixed capital investment;
5
The number of operators needed to fill 730 shifts is
(730 shifts/294 shift) = 2.5 operators ≈ 3 operators
The number of non-particulate steps in the phthalic anhydride plant:
Nnp = Σ equipment =
6
*13 Operator for integer yield need to double up as a backup if the person in charge
have an emergency and need to replace by others operator in order to make sure the
operation run smoothly.
The amount of power used by utilities equipment used were presented in Appendix
The amount of electricity for process equipment for major uses
= 19.75 hp
i. Amount of electricity needed by utilities unit.
= 207.5 hp
Total Electricity used: 19.75 + 207.5 = 227.25
The amount of electricity needed for instrumentation purposes and control is estimated
at 10% of the need for process tools and utilities.
Then the need for electricity for instrumentation and control = 22.73
*Refer to the sample calculation.
Generate from CAPCOST. From the given information:
7
2.2.4 Estimation of Manufacturing Cost
In this section, manufacturing cost will explain about the cost associated with
day-to-day operation of a chemical plant. There are many elements that influence the
manufacturing cost of chemical production plant especially in petrochemical industry.
There are three cost items need to be evaluate in order to general manufacturing cost
and total manufacturing cost per year. The three important items or categories for
manufacturing cost are direct manufacturing costs (DMC), fixed manufacturing costs
(FMC) and general manufacturing expenses (GME).
Table 2.4: List of the price and sale for raw material and product
Price Flowrate
Material Name Classification ($/kg) (kg/h) Annual Cost
O-Xylene Raw Material $ 0.35 10828.93 $ 31,541,424
Vanadium
Oxide Raw Material $ 3.30 198.63 $ 5,742,096
Phthalic
Anhydride Product $ (1.20) 11537.49 $ (115,217,990)
Maleic
Anhydride Product $ (0.90) 594.55 $ (4,453,061)
8
- Maintenance and repair 0.06FCI 1, 537,356
- Operating Supplies 0.009FCI 230, 603
- Laboratory charges 0.15COL 149,130
- Patents and royalties 0.03COM 2, 696, 560
TOTAL DMC $ 55, 701, 119
Fixed Manufacturing Cost (FMC)
- Depreciation 0.1FCI 2, 562, 260
- Local taxes and insurance 0.032FCI 819, 923
- Plant overhead cost 0.708COL + 1, 626, 307
0.036FCI
TOTAL FMC 5, 008, 490
General Manufacturing Expenses (GME)
- Administration costs 0.177COL + 406, 576
0.009FCI
- Distribution and selling costs 0.11COM 6, 678, 056
- Research and development 0.05COM 3, 035, 480
TOTAL GME 4, 120, 112
TOTAL MANUFACTURING COST $ 64, 829, 721
$ 50,908,514/year
Total Variable Cost =
100 000 tonne/year
9
= $ 509.09 tonne
Breakeven analysis is one of the most common tools used in evaluating the
economic feasibility of a new enterprise or product. The breakeven point is where the
revenue is exactly equal to costs. Therefore,
TR = TC
PQ = FC +VC
Since VC = VQ then,
PQ - VQ = FC
Q(P-V) = FC
FC
Q=
P−VC
Where;
Thus, from the value achieved, the breakeven analysis can thus be calculated by using
equation as follows;
FC
Q=
P−VC
25,622,601
$
year
= 1,196.71 509.09 = 37, 475.87 tonne/year
$ −$
tonne tonne
From the analysis, the breakeven point occurs at the production of 32, 475.87 tonne
per annum. The total production of phthalic anhydride plant is 100,000 tonne per
annum. Hence, it can be concluded that this project is feasible.
10
2.2.8 Cash Flow Analysis
The cash flow was used to determine the timing of the cash flows in the plant.
It also the movement of money whether gives profit or loss of some production plant.
It is usually measures by using limited period of time or project life year. In the
construction of plant, 10,12 and 15 are commonly used. This project life year was
directly related to profitability. This is depending on the value of income earned during
the time the plant generated whether smaller or greater at the beginning of the project.
(Refer to Table 2.11 Appendix) for non-discounted cash flow table.
The payback period determined is within 2.3 years of operation. However, period may
be change due to the economic condition. This is because the price of raw materials
is cheaper, and the product price is higher and, taxes or equipment can be changed
over years.
11
Discounted Profitibility Criterion Non-Discounted Profitibility Criteria
Net Present Value (millions) 38.94 Cumulative Cash Position (millions) 103.34
Discounted Cash Flow Rate of Return 31.20% Rate of Return on Investment 35.08%
Payback
Cumulative Cash Flow 3rd Year−(Cost of Land+Working Capital)
Period (PBP) = 2 +
Cumulative Cash Flow for 3rd year−Cumulative Cash for 4th Year
−$ 7,538,000−$ 4,193,390
=2+
−$ 7,538,000+$ 5,460,000
= 2 + 0.3
= 2.3 years
CONCLUSION
Break Even Point (BEP) is 32, 475.87 tonne per annum, already in the
reasonable range is in the range of 40-60%. Moreover, Payback Period within 2.3 year
because of the cheaper the raw material and high sale price of product.
From the results of economic analysis above can be concluded that Phthalic Plant
Anhydride from o-xylene and air with a capacity of 100,000 tons / year feasible and
need to be studied further for other improvement.
12
LIST OF REFERENCES
[1] ITA Conference, No Title, in: Phthalic Anhydride, ITA Conference, Prague,
2017.
[2] Merchant Research and Consulting, Phthalic Anhydride Market, (2016).
[3] Matche.com, Chemical Engineering Equipment Cost, (n.d.). matche.com
(accessed January 1, 2017).
[4] J. Richard Turton, Bailie, Wallace, Analysis, Synthesis and Design of Chemical
Process, Fourth Edi, Pearson, United States, 2014.
13
APPENDICES
14
Table 2.7: List of Purchased Utilities Equipment
15
Table 2.8: List of Estimation of Operating Labor
No of
Position US$/Month Total US$/Year
Worker
CEO 1 6,000 72,000
COO 1 5,000 60,000
HR
Manager 1 2,000 24,000
Assistance 2 1,600 19,200
Sales, Marketing & Finance
Manager 1 1,100 13,200
Assistance 2 1,600 19,200
Business Development &
Admin 1 1,100 13,200
Manager 1 800 9,600
Assistance
QC & QA
Supervisor 1 700 8,400
Technician 2 1,200 14,400
Operation
Manager 1 3,500 42,000
Engineer 2 4,000 48,000
Operator 118 35,400 424,800
HSE
Manager 1 3,000 36,000
Assistance 3 3,000 36,000
Maintenance
Engineer 1 2,000 24,000
Technician 3 1,500 18,000
Logistic
Manager 1 1,400 16,800
Assistance 3 2,400 28,800
Lab
Engineer 1 2,000 24,000
Chemist 2 1,600 19,200
Assistance 2 1,200 14,400
Security Guard 3 750 9,000
994,200
TOTAL
16
Table 2.9: List of power used by main process equipment
Power (Hp)
No. Equipment Amount
Power/Unit Total Power
1. Pump (P-701) 1 5.00 5.00
2. Pump (P-702) 1 1.50 1.50
3. Reflux Pump (T-701) 1 0.25 0.25
4. Reflux Pump (T-702) 1 0.25 0.25
5. Reflux Pump (T-703) 1 0.75 0.75
6. Compressor (C-701) 1 7.50 7.50
7. Discharge Pump 1 1.50 1.50
8. Belt Conveyor 1 1.75 1.75
9. Bucket Elevator 1 0.25 0.25
10. Recycle Pump 1 1.00 1.00
Total 19.75
No Equipment Power, hp
17
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