Techonology Economics: Polypropylene via Gas Phase Process

Polypropylene via Gas Phase

Process

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Technology Economics

Polypropylene Production via Gas Phase Process

2013

Abstract

Polypropylene is a thermoplastic polymer with low specific gravity, high stiffness, relatively high temperature resistance and goodresistance to chemicals and fatigue. These exceptional properties, combined with this material’s versatility have made it one of themost widely used polymers, second only to polyethylene in terms of global demand. The global market for polypropylene wasover 50 million metric tons in 2011 as it was utilized in a broad and diverse range of end-uses from injection molding applicationsto film and sheet, raffia and fiber, among others.

Growth in polyolefin consumption will be largely driven by the rapid economic development of numerous transition countries inthe Asia Pacific region, Central Europe, the Middle East and South America. On the supply side, the shift in global steam crackerproduction toward lighter, natural gas-based feedstock is increasingly limiting by-product propylene output. The resulting tightsupply of propylene has led to higher propylene and polypropylene prices, which are encouraging investments in alternatepropylene sources, as the on-purpose technologies. High propylene feedstock prices also rendered the construction of stand-alone polypropylene plants infeasible, making upstream integration indispensable for most of the new polypropylene projects.

Gas phase polypropylene production technology is the fastest growing route for producing polypropylene homopolymers andrandom copolymers. In this report, the production of polypropylene through the polymerization of propylene via a gas phaseprocess is reviewed. Included in the analysis is an overview of the technology and economics of a method similar to the DowUNIPOL TM process. Both the capital investment and the operating costs for plants erected on the US Gulf Coast are presented.

The economic analysis presented in this study is based on a 400 kta polypropylene plant. Two scenarios are analyzed: a stand-alone unit, obtaining feedstock at market prices and a plant integrated upstream with a propylene source, acquiring feedstock at atransfer price, below market average. The economic feasibility of both scenarios is presented and the actual market conditions forpolypropylene production are discussed.

Propylene elevated market prices in the USA make it unprofitable to operate a stand-alone PP unit in that country. However, when

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Contents

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

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

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

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

Location Basis ...................................................................................................................................................................................................................................8

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

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

About Polypropylene............................................................................................................................................................................................................10

Types of Polypropylene Resins ...........................................................................................................................................................................................10

Applications.................................................................................................................................................................................................................................... 11

Polypropylene Manufacturing........................................................................................................................................................................................11

Types of Process........................................................................................................................................................................................................................... 11

The Role of Catalyst in Process ........................................................................................................................................................................................... 12

Licensor & Historical Aspects ...........................................................................................................................................................................................13

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

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

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

Technology Overview...........................................................................................................................................................................................................15

Detailed Process Description & Conceptual Flow Diagram.......................................................................................................................16

Area 100: Purification & Reaction .....................................................................................................................................................................................16

Area 200: Resin Degassing & Pelleting .........................................................................................................................................................................17

Area 300: Vent Recovery........................................................................................................................................................................................................ 17

Key Consumptions ..................................................................................................................................................................................................................... 18

Technical Assumptions ........................................................................................................................................................................................................... 18

Labor Requirements.................................................................................................................................................................................................................. 18

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

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

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

Improvements in Fluidized-Bed Polymerization Technology ........................................................................................................................27

Propylene-Polypropylene Integration Alternatives ...............................................................................................................................................28

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

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

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

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

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

Working Capital............................................................................................................................................................................................................................ 32

Other Capital Expenses ........................................................................................................................................................................................................... 32

Total Capital Expenses ............................................................................................................................................................................................................. 33

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

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

Historical Analysis........................................................................................................................................................................................................................ 34

Economic Datasheet .............................................................................................................................................................................................................34

Regional Comparison & Economic Discussion.................................................................................................... 37

Regional Comparison............................................................................................................................................................................................................37

Capital Expenses.......................................................................................................................................................................................................................... 37

Operational Expenditures...................................................................................................................................................................................................... 37

Economic Datasheet................................................................................................................................................................................................................. 37

Economic Discussion ............................................................................................................................................................................................................38

References....................................................................................................................................................................... 40

Acronyms, Legends & Observations....................................................................................................................... 41

Technology Economics Methodology................................................................................................................... 42

Introduction.................................................................................................................................................................................................................................42

Workflow........................................................................................................................................................................................................................................42

Capital & Operating Cost Estimates ............................................................................................................................................................................44

ISBL Investment............................................................................................................................................................................................................................ 44

OSBL Investment ......................................................................................................................................................................................................................... 44

Working Capital............................................................................................................................................................................................................................ 45

Start-up Expenses ....................................................................................................................................................................................................................... 45


Manufacturing Costs................................................................................................................................................................................................................. 46

Contingencies ............................................................................................................................................................................................................................46

Accuracy of Economic Estimates..................................................................................................................................................................................47

Location Factor..........................................................................................................................................................................................................................47

Appendix A. Mass Balance & Streams Properties............................................................................................... 49

Appendix B. Utilities Consumption Breakdown ................................................................................................. 54

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Appendix C. Process Carbon Footprint ................................................................................................................. 55

Appendix D. Equipment Detailed List & Sizing................................................................................................... 56

Appendix E. Detailed Capital Expenses................................................................................................................. 62

Direct Costs Breakdown......................................................................................................................................................................................................62

Indirect Costs Breakdown ..................................................................................................................................................................................................63

Appendix F. Economic Assumptions...................................................................................................................... 64

Capital Expenditures..............................................................................................................................................................................................................64

Construction Location Factors ...........................................................................................................................................................................................64

Working Capital............................................................................................................................................................................................................................ 64


Operational Expenses ...........................................................................................................................................................................................................65

Fixed Costs ...................................................................................................................................................................................................................................... 65

Depreciation................................................................................................................................................................................................................................... 65

Appendix G. Latest & Upcoming Reports ............................................................................................................. 66

Appendix H. Technology Economics Form Submitted by Client ................................................................. 67

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List of Tables

Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration) ......................................................................................9

Table 2 – Locations & Pricing Basis ..................................................................................................................................................................................................9

Table 3 – General Design Assumptions .......................................................................................................................................................................................9

Table 4 – Polypropylene End-uses................................................................................................................................................................................................11

Table 5 – Catalyst Advances..............................................................................................................................................................................................................12

Table 6 - Raw Materials & Utilities Consumption (per ton of product)................................................................................................................18

Table 7 – Design & Simulation Assumptions.........................................................................................................................................................................18

Table 8 – Labor Requirements for a Typical Plant ..............................................................................................................................................................18

Table 9 – Main Streams Operating Conditions and Composition..........................................................................................................................23

Table 10 – Inside Battery Limits Major Equipment List...................................................................................................................................................23

Table 11 - Outside Battery Limits Major Equipment List ...............................................................................................................................................26

Table 12 – Base Case General Assumptions...........................................................................................................................................................................29

Table 13 - Bare Equipment Cost per Area (USD Thousands)......................................................................................................................................30

Table 14 – Total Fixed Investment Breakdown (USD Thousands) ..........................................................................................................................30

Table 15 – Working Capital (USD Million) ................................................................................................................................................................................32

Table 16 – Other Capital Expenses (USD Million) ...............................................................................................................................................................33

Table 17 – CAPEX (USD Million) ......................................................................................................................................................................................................33

Table 18 – Manufacturing Fixed Cost (USD/ton) ................................................................................................................................................................34

Table 19 – Manufacturing Variable Cost (USD/ton)..........................................................................................................................................................34

Table 20 – OPEX (USD/ton)................................................................................................................................................................................................................34

Table 21 – Technology Economics Datasheet: Polypropylene via Gas Phase Process on the US Gulf Coast.........................36

Table 22 – Technology Economics Datasheet: Polypropylene via Gas Phase Process in Client-Defined Location ...........39

Table 23 – Project Contingency......................................................................................................................................................................................................46

Table 24 – Criteria Description.........................................................................................................................................................................................................46

Table 25 – Accuracy of Economic Estimates .........................................................................................................................................................................47

Table 26 – Detailed Material Balance & Stream Properties ..........................................................................................................................................49

Table 27 – Utilities Consumption Breakdown ......................................................................................................................................................................54

Table 28 – Assumptions for CO2e Emissions Calculation.............................................................................................................................................55

Table 29 – CO2e Emissions (ton/ton prod.)............................................................................................................................................................................55

Table 30 – Compressors .......................................................................................................................................................................................................................56

Table 31 – Heat Exchangers ..............................................................................................................................................................................................................56

Table 32 – Pumps......................................................................................................................................................................................................................................57

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Table 33 – Separation Equipment.................................................................................................................................................................................................58

Table 34 – Special Equipment .........................................................................................................................................................................................................58

Table 35 – Utilities Supply...................................................................................................................................................................................................................58

Table 36 – Reactor ....................................................................................................................................................................................................................................59

Table 37 – Columns.................................................................................................................................................................................................................................59

Table 38 – Vessels & Tanks ..................................................................................................................................................................................................................59

Table 39 – Indirect Costs Breakdown for the Base Case (USD Thousands) ......................................................................................................63

Table 40 – Detailed Construction Location Factor............................................................................................................................................................64

Table 41 – Working Capital Assumptions (Base Case) ....................................................................................................................................................64

Table 42 – Other Capital Expenses Assumptions (Base Case) ...................................................................................................................................64

Table 43 – Other Fixed Cost Assumptions ..............................................................................................................................................................................65

Table 44 – Depreciation Value & Assumptions ....................................................................................................................................................................65

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List of Figures

Figure 1 – OSBL Construction Scenarios .....................................................................................................................................................................................8

Figure 2 – Polypropylene from Multiple Sources ...............................................................................................................................................................13

Figure 3 – Process Block Flow Diagram.....................................................................................................................................................................................15

Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram.....................................................................................................................19

Figure 5 – Project Implementation Schedule .......................................................................................................................................................................29

Figure 6 – Total Direct Cost of Different Integration Scenarios (USD Thousands) ......................................................................................31

Figure 7 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) .......................................................................32

Figure 8 – Total Fixed Investment Validation (USD Million) ........................................................................................................................................33

Figure 9 – OPEX and Product Sales History (USD/ton) ...................................................................................................................................................35

Figure 10 – EBITDA Margin & IP Indicators History Comparison..............................................................................................................................35

Figure 11 – CAPEX per Location (USD Million).....................................................................................................................................................................37

Figure 12 – Operating Costs Breakdown per Location (USD/ton) .........................................................................................................................38

Figure 14 – Methodology Flowchart...........................................................................................................................................................................................43

Figure 15 – Location Factor Composition ...............................................................................................................................................................................47

Figure 16 – ISBL Direct Costs Breakdown by Equipment Type (Base Case).....................................................................................................62

Figure 17 – OSBL Direct Costs by Equipment Type (Base Case) ..............................................................................................................................62

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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 homopolymer polypropylene (PP)production via gas phase process, implementingtechnology similar to the Dow UNIPOL process.

The current assessment is based on economic datagathered on Q3 2011 and a chemical plant’s nominalcapacity of 400 kta (thousand metric tons per year).

Analysis Performed

Construction Scenarios

The economic analysis is based on the construction of aplant partially integrated to a petrochemical complex. Anearby unit continuously provides polymer-grade (PG)propylene. Thus, no storage for propylene is required.However, since there are no polypropylene consumers inthe complex, the product must be stored in warehousesand silos. Facilities for supplying the required utilities arealso included in the analysis.

Since the Outside Battery Limits (OSBL) requirements–storage and utilities supply facilities – significantly impactthe capital cost estimates for a new venture, they may play adecisive role in the decision as to whether or not to invest.Thus, in this study two distinct OSBL configurations arecompared. Those scenarios are summarized in Figure 1 andTable 1.

Location Basis

The regional comparison analysis is performed for twosimilar units operating on the US Gulf Coast. The maindifference between the two units is the price assumptionfor PG propylene.

While the base case considers a stand-alone polypropyleneplant, obtaining PG propylene at average market prices,available at Intratec database, the alternative scenariodefined by the client (referred as “Client-Defined”)approaches a unit, which is integrated to an upstreampropylene plant, obtaining feedstock at a transfer price,provided by the client, lower than market price.

The remaining prices are assumed to be the same. Theassumptions that distinguish the two scenarios analyzed inthis study are provided in Table 2.

About this Study

Figure 1 – OSBL Construction Scenarios

Non-Integrated Partially Integrated

Raw MaterialsStorage

ISBL Unit

Products Storage

Raw MaterialsProvider

ISBL Unit

Products Storage

Petrochemical Complex

Source: Intratec – www.intratec.us

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Supervisor

Salaries

USD/man-

hour

USD/man-

hour

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

Wet Bulb Air Temperature 25 °C

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

Storage Capacity (Area 700)

Feedstock & Chemicals 20 days of operation Not included

End-products & By-products 20 days of operation 20 days of operation

Utility Facilities Included (Area 800) All required All required

Support & Auxiliary Facilities

(Area 900)

Control room, labs, gate house,

maintenance shops, warehouses, offices,

change house, cafeteria, parking lot

Control room, labs, maintenance shops,

warehouses


Table 2 – Locations & Pricing Basis


Table 3 – General Design Assumptions


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About Polypropylene

Polypropylene (PP) is a thermoplastic material formed bythe reaction of polymerization of propylene, resulting in amacromolecule that contains from 10,000 to 20,000monomer units. As a thermoplastic, PP is capable ofmelting and flowing (in a reversible physical transformation)when subjected to increases in temperature and pressure,assuming a specified form when those conditions cease.Based on its exceptional mechanical and thermalproperties, it is suitable for applications in fibers, injectionmolding, thermoforming, film and blow molding.

In a qualitative approach, PP is a colorless, translucent totransparent solid with a glossy surface, with very goodresistance to chemicals (except for hydrocarbons andchloride compounds), greater scratch resistance than otherpolyolefins, good environmental stress cracking resistance,good processability via injection molding and extrusion,and a low moisture absorption rate.

Polypropylene annual consumption worldwide exceeds 50million tons, with an expanding market in its coreapplications as well as in inter-material substitution. Theuse of polypropylene has increased at rates slightly fasterthan one of its main competitor materials, polyethylene;while linear low and high density polyethylene are growingfaster than polypropylene, low density polyethylene dragsdown overall polyethylene growth.

The discovery of polypropylene homopolymer is generallycredited to the independent work of Karl Ziegler and GiulioNatta, in 1954. The organometallic catalyst system usedbecame known as Ziegler-Natta catalysts, still one of themost remarkable components of PP production. Natta wasable to synthesize polypropylene and, additionally,associate the resulting polymer high melting point with thedistribution of methyl groups along the carbon chain.

Phillips Petroleum was developing the polypropylenetechnology concurrently with Natta’s work and Phillips wasawarded the composition of matter patent in the US in1983. Polypropylene producers around the worldcelebrated on March 1, 2000 – the day the Phillips’ patentexpired.

Unlike the symmetrical ethylene molecule, for example, theway each propylene monomer unit links to the othergenerates polymers with distinct characteristics. Thosestructural chains can be summarized as follow:

Atactic. The pendant methyl groups are attached in arandom manner on the polymer backbone chain. Atroom temperature, atactic polypropylene is a waxy andtacky solid.

Isotactic. All the methyl groups are on the same sideof the winding spiral chain molecule. Since it isdifficult to completely control the polymerizationreaction, isotactic polypropylene always presentsatactic content. It is important to keep such content toa minimum, to provide a higher stiffness and a widerspectrum of applications.

Syndiotactic. The pendant methyl groups areattached in an alternating pattern on the polymerbackbone chain. It is soft and clear, in addition tohaving a good gloss, but its production costs are highwhen compared to the other existing structural chains.

Only isotactic polypropylene has the requisite properties ofa useful commodity plastic material. Compared with HDPEor LDPE, its higher stiffness at lower density and superiorworking temperature when not subjected to mechanicalstress are key factors to isotactic polypropylene’spreferential use in certain applications. However, recently,technological improvements in the catalyst system allowedthe synthesis of crystalline syndiotactic polymer.Commercially, this kind of polypropylene is produced with ametallocene catalyst system. Companies involved insyndiotactic PP production claim that it has enhancedproperties, but a more detailed evaluation is yet to be madefor a proper comparison with isotactic PP. This kind ofinformation will be fundamental to determining the realcompetitiveness of such material, through the balance ofbetter properties and its higher cost. Until now, the lowmolecular mass atactic PP had only a few commercialoutlets for adhesives and roofing materials.

Types of Polypropylene Resins

Polypropylene production advances in both themanufacturing process and catalyst allowed the creation of

Study Background

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three major types of resins: homopolymers, randomcopolymers and impact (or block) copolymers. All PPprocesses are capable of producing homopolymer andrandom copolymer PP, and all require one or moreadditional reactors to produce impact copolymer.

Homopolymers. Produced through polymerization ofpropylene in the presence of a stereospecific catalyst,homopolymers have an isotactic index in the range of92-99%. As stiffness and resistance to impact aredirectly dependent on the equilibrium between theatactic and isotactic fractions, they are more rigid andhave better resistance to high temperatures thancopolymers, but with inferior impact strength below0°C. Thus, this kind of polymer is indicated for hightemperature applications such as hair dryer, sterilizers,irons, coffee makers and toasters. Woven bags, finedenier fibers, windshield washer tanks and shrouds forfans toasters can also use homopolymers.

Random copolymers. Random copolymers areobtained by copolymerization of propylene withethylene or higher olefins (e.g. butene-1), whichrepresents from 1.5 to 6 wt% of the product. Thosemolecules are randomly dispersed along the carbonchain by their addition during the reaction; theresulting product offers improved impact strength andclarity, as well as a softer feel. Typical applications ofrandom copolymer are films, injection-molding andblow-molding. Typical applications are battery cases,blow-molded bottles, bumper filler supports, interiortrim, glove boxes, package trays and windowmoldings, video cassette boxes, office furniture,disposable containers, boxes and appliance housings.

Impact copolymers. Similar to random copolymers,impact copolymers use olefins other than propylenefor polymerization. The main difference is thatpolymerization of those olefins occurs in anotherreactor, forming a dispersed phase within the PPmatrix. Copolymers content in this kind of materialranges from 5-25% and its large rubber content servesto improve impact strength. This characteristic suitsimpact copolymer for use in automotive and applianceparts, industrial products and as compoundsblendstocks. It’s used by automakers for door panels,quarter-panel trim, lower trim, doors, seat shields,pillars, headers, rib cartridges, head impact and airbags.

Applications

This combination of physical, chemical, mechanical, thermaland electrical properties explains polypropylene’simmediate industrial application and continuous growth. Interms of current global representativeness, polypropylene isthe second largest consumed plastic material afterpolyethylene (PE) and before polyvinyl chloride (PVC).

Furthermore, PP processes are able to improve polymerproperties through orientation, i.e., the previouslymentioned methyl groups’ distribution. This unique aspectis only found in a limited number of the other major plastics(e.g. PET), and contributes to expanding the range ofpolypropylene applications.

Table 4 lists polypropylene end-uses, as well as respectiveexamples, considering all the spectrum of grades that canbe produced – varying methyl groups’ distribution,copolymers and additives employed.

Film and sheet Food packaging

Injection molding Automotive components

Fibre Medical garment and carpets

Blow molding Bottles

Extrusion and piping Civil piping

Raffia Sports fabrics and bags

Polypropylene Manufacturing

Types of Process

In order to properly explain the technology involved in PPmanufacturing it is useful to define some concepts aboutthe forms in which propylene polymerization is conducted.Traditionally, the following are the most representative:

Hydrocarbon Slurry or Suspension. Consists of usinga liquid inert hydrocarbon diluent in the reactor tofacilitate transfer of propylene to the catalyst, theremoval of heat from the system, thedeactivation/removal of the catalyst as well as

Table 4 – Polypropylene End-uses


Gas Phase. Uses gaseous propylene in contact withthe solid catalyst, resulting in a fluidized-bed medium.

Bulk (or Bulk Slurry). Uses liquid propylene instead ofliquid inert hydrocarbon diluent. The polymer doesnot dissolve into a diluent, but rather rides on theliquid propylene. The formed polymer is withdrawnand any unreacted monomer is flashed off.

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dissolving the atactic polymer. The range of gradesthat could be produced was very limited. (Thetechnology had fallen into disuse).

Hybrid. Uses a slurry loop reactor followed by a gasphase reactor, combining the bulk slurry and gasphase processes.

The Role of Catalyst in Process

Technology for polypropylene manufacturing has kept pacewith the catalysts’ evolution. Traditionally, because of thetechnical breakthrough that each one represented,polypropylene catalysts are divided into generations. Table5 depicts those advances, although this division may vary,since the recognition of a breakthrough is, to some extent,subjective. The plants built in the 1960s and 1970s usinghydrocarbon slurry process (based on the first generationcatalyst) were very cost-intensive because of the largeamount of equipment required for handling the solventrelated steps, the large space and complicated plot plans.

Also, labor requirements, energy inefficiency and catalystpoor activity (1kg of polypropylene produced per gram ofcatalyst) made production costs very high. In addition, PPproduced had very narrow range of applications due to itspoor properties.

Despite such high production costs, hydrocarbon slurryprocess remained economically feasible in the followingyears due to the advances in catalyst (second generation).However, the introduction of the third generation enabledthe production of polypropylene via bulk slurry and via gasphase in the late 1970`s.

Both processes presented much lower capital andoperating costs, since the steps related to hydrocarbonsolvent became unnecessary, simplifying plot plans andsignificantly reducing space required. Third generationcatalyst provided yields of 12-15 kg of polypropylene pergram of catalyst.

The fourth generation took polypropylene production tothe level of about 30kg of PP produced per gram of catalystemployed. Such catalysts are currently the most popular inthe industry and have already achieved mileages as high as120 kg of PP per gram of catalyst. The fifth and sixthgenerations of catalysts are not still fully developed andconsiderable effort is being to enable them to be fullycommercialized. Meanwhile, fourth generation catalysts arestill the most widely used in polypropylene production

.

Table 5 – Catalyst Advances

1st (1957-1970) 3TiCl3AlCl3/AlEt2Cl 0.8–1.2 88–91

2nd (1970-1978) TiCl3/AlEt2Cl 3–5 95

3rd (1978-1980) TiCl4/Ester/MgCl2 + AlEt3/Ester 5–15 98

4th (1980) RGT

TiCl4/Diester/MgCl2 + AlEt3/silane three

dimensional catalyst granule architecture20–60 99

TiCl4/Diether/MgCl2 + AlEt3 three dimensional

catalyst granule architecture50–120 99

Metallocenes Zirconocene + MAO 5–9 x 103 (on Zr) 90–99

Multicatalyst RGT (Reactor

Granule Technology)

Mixed catalysis: ZN + radical initiators, ZN +

single site (catalysts)5–9 x 103 (on Zr) 90–99


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Licensor & Historical Aspects

Olefin polymerization in gas phase fluidized-bed reactorshas been recognized as being among the most economicalmethods of manufacturing commodity polymers, includingpolyethylene (PE), polypropylene (PP) and ethylene-propylene rubber (EPR). In the 1960s, BASF developed a gasphase, mechanically stirred polymerization process formaking PP. In that process, the particle bed in the reactorwas either not fluidized or not fully fluidized.

In 1968, the first gas phase fluidized-bed polymerizationprocess, i.e., the UNIPOL™ Process, was commercialized byUnion Carbide to produce polyethylene. This process wasquickly licensed to other manufacturers. In the mid-1980s, itwas further extended to produce polypropylene.

The features of the fluidized-bed process, including itssimplicity and superior product quality, made it widelyaccepted all over the world. As of today, the fluidized-bedprocess is the dominant means of producing PE (especiallyLLDPE), as is one of the two most widely used technologiesfor producing PP.

Figure 2 – Polypropylene from Multiple Sources

Bulk Phase Processes

Hybrid Process

Gas Phase Process:Multi-zone Circulation

Reactor

Gas Phase Process:Stirred Bed Reactor

Gas Phase Process:Fluidized Bed Reactor

Propylene Polypropylene

(PP)

Borealis Borstar

Dow Unipol™

LummusNovolen®

INEOS Innovene™

JPP Horizone

LyondellBasellSpheripol

Mitsui HYPOL II

ExxonMobil PPProcess

LyondellBasellSpherizone


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Chemistry

The main reaction that occurs in the polymerization ofpropylene to polypropylene is shown in the following.

Propylene Polypropylene

A Ziegler-Natta catalyst is utilized to achieve this. Theoriginal catalyst for propylene polymerization wasaluminum alkyl and titanium trichloride, but much work hasbeen done to find better catalysts. The main objective is toenable a controlled polymerization reaction with a narrowmolecular weight distribution of the product and enhancedproperties, as well as an increase in the catalyst productivity(or mileage), defined as the kilograms of PP produced pergram of catalyst.

The continuous back-mixed reactor operates at about 33 –35 bara and contains a fluidized bed of granularpolypropylene with a trace of catalyst. Temperature is mild(65 – 80ºC) and is controlled by adjusting the temperatureof the cycle gas returned to the reactor. An overall yield ofabout 99+ wt% of propylene is expected.

Raw Material

In terms of raw materials, polypropylene is the largestdownstream derivative made from propylene. Typically, PPmanufacturers use polymer grade (PG) propylene, with 99.5wt% purity, as feedstock. Due to the high cost related totransport of highly pressurized or refrigerated liquids,propylene produced or purchased from local steamcrackers, FCC units or even on-purpose plants tends to bemost cost-effective. In some cases, propylene is refined toachieve a purity compatible with the sensitivity of thecatalyst system and/or to avoid the accumulation of inertsubstances.

The major PG propylene feed impurity is propane. Similarto other inert components such as methane, nitrogen,ethane and other higher alkanes, propane works as adiluent to reduce polymerization rate, not having any other

adverse effect. Thus, the use of the propylene feed aspolymerization monomer is more impacted by the levels oftrace impurities, which affect the activity andstereospecificity of propylene polymerization catalysts,rather than specifically by the propane content.

The polymerization catalysts are sensitive to certainimpurities, including the oxygen, carbon monoxide, carbondioxide, water, and alcohols potentially present in thevarious feed streams.

Based on the typical purity of raw materials available on theUS Gulf Coast, the following topics summarize the rawmaterials and respective purification facilities required toprotect the catalyst against the effects of impurities.

Ethylene, Nitrogen, and Hydrogen: Filtration

Propylene: Two fixed bed dryers, one operating, oneon standby, for removal of water and other polarimpurities.

The purification steps included in the process are primarilyconsidered to be guard beds for spike protection. Bed lifebetween regenerations is relatively long (measured inmonths, not days).

Technical Analysis

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Technology Overview

The process is separated into three different areas:purification & reaction; resin degassing & pelleting; and ventrecovery.

Fresh propylene and the other raw materials fed to the unitare passed through the purification facilities, in which tracequantities of impurities are removed. The purified rawmaterials are then fed to the reaction system.

Only one reaction system, consisting of a fluidized bedreactor, a cycle gas compressor and cooler, and productdischarge tanks, is required to produce homopolymer andrandom copolymer. The raw materials and a recycle streamfrom the vent recovery system are fed continuously to thereactor. The cycle gas compressor circulates reaction gasupward through the reactor, providing the agitationrequired for fluidization, backmixing, and heat removal. Nomechanical stirrers or agitators are needed in the processreactors. The cycle gas leaving overhead from the reactorpasses through the cooler that removes the heat ofreaction. Catalyst is continuously fed to the reactor.

Resulting granular polypropylene is removed from thereactor by the discharge tanks and sent to a purge binwhere residual hydrocarbons are stripped with nitrogenfrom the resin and are sent to the vent recovery system.The purged resin is sent to the pelleting system.

The vent gas is processed to separate hydrocarbons andnitrogen purge gas, which is returned to the process. Thecondensed components are separated into a propylenestream, which is returned to the reaction system, and apropane stream.

Solid additives are metered and sent to the pelletingsystem. The resin and the additives are mixed, melted andpelleted in the pelleting system. The pellets are dried,cooled and sent to product blending and storage.

Figure 3 – Process Block Flow Diagram

Polypropylene

PG Propylene

Catalyst &Chemicals

Area 100Purification &

Reaction

Area 200Resin Degassing &

Pelleting

Area 300Vent Recovery

Recovered Propylene

UnreactedMonomer

Recycled Nitrogen

Fresh Nitrogen


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Key Consumptions

Labor Requirements

Non-Integrated Plant 7 1

Partially Integrated Plant 7 1

Table 6 - Raw Materials & Utilities Consumption (per ton

of product)


Table 7 – Design & Simulation Assumptions


Table 8 – Labor Requirements for a Typical Plant


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Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram


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Figure 3 – Inside Battery Limits Conceptual Process Flow Diagram (Cont.)


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P-303A/B


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Table 9 presents the main streams composition andoperating conditions. For a more complete materialbalance, see the “Appendix A. Mass Balance & StreamsProperties.”

Information regarding utilities flow rates is provided in“Appendix B. Utilities Consumption Breakdown.” For furtherdetails on greenhouse gas emissions caused by this process,see “Appendix C. Process Carbon Footprint.”

ISBL Major Equipment List

Table 10 shows the equipment list by area. It also presentsa brief 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 and water facilities (Area 800), and support &auxiliary facilities (Area 900).

Table 11 shows the list of tanks located in the storage areaand the energy facilities considered in the construction of anon-integrated unit.

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General Assumptions

The general assumptions for the base case of this analysisare outlined below.

In Table 12, 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 prices trends of 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 do notrepresent any technology limitation; rather, it is anassumption based on common industrial operating rates.

Additionally, Table 12 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 12 – 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 Implementation

Schedule

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 5.

Capital Expenditures

Fixed Investment

Table 13 shows the bare equipment cost associated witheach area of the project.

Table 14 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). The total direct cost represents the totalbare equipment installed cost.

Table 14 shows the breakdown of the total fixed investment(TFI) per item (direct & indirect costs and processcontingencies).

“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 indirects, engineering costs, overhead, contractfees and contingencies.

Table 13 - Bare Equipment Cost per Area (USD

Thousands)


Table 14 – Total Fixed Investment Breakdown (USD

Thousands)


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It is important to emphasize that capital expenditures forthe propylene plant are not included in the present study.

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 twodistinct scenarios regarding OSBL facilities:

Non Integrated Plant

Plant Partially 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 6 and in Figure 7.

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


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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.).

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


Table 15 – Working Capital (USD Million)


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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.

A summary of other capital expenses is presented in Table16. Assumptions used to calculate them are provided in“Appendix F. Economic Assumptions.”

Total Capital Expenses

Table 17 presents a summary of the total CapitalExpenditures (CAPEX) detailed in previous sections.

Figure 8 – Total Fixed Investment Validation (USD Million)


Table 16 – Other Capital Expenses (USD Million)


Table 17 – CAPEX (USD Million)


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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 18 shows the manufacturing fixed cost, while Table 19details the manufacturing variable cost breakdown.

To learn more about the assumptions for manufacturingfixed costs, see the “Appendix F. Economic Assumptions.”

Table 20 shows the OPEX of the presented technology.

Historical Analysis

Figure 9 depicts Sales and OPEX historic data. Figure 10compares 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 Table21, 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 18 – Manufacturing Fixed Cost (USD/ton)


Table 19 – Manufacturing Variable Cost (USD/ton)


Table 20 – OPEX (USD/ton)


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


Figure 10 – 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 the locations under analysis.

Operational Expenditures

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 Table22, is an overall evaluation of the technology's capitalinvestment and production costs in the alternative locationanalyzed in this study.

Regional Comparison & Economic Discussion

Figure 11 – CAPEX per Location (USD Million)


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


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AACE: American Association of Cost Engineers

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

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

CAPEX: Capital expenditures

CC: Distillation column condenser

CP: Distillation column reflux pump

CR: Distillation column reboiler

CT: Cooling tower

CV: Distillation column accumulator drum

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

EPR: Ethylene-propylene rubber

F: Filter(e.g., F-101 would denote a filter tag)

FCC: Fluid catalytic cracking

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)

kta: thousands metric tons per year

LDPE: Low Density Polyethylene

LLDPE: Linear Low Density Polyethylene

OPEX: Operational Expenditures

OSBL: Outside battery limits

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

PDH: Propane dehydrogenation

PE: Polyethylene

PG: Polymer grade

PP: Polypropylene

PSA: Pressure swing adsorption

PVC: Polyvinyl chloride

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

ROCE: Return on the capital employed

SB: Steam boiler

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

TFI: Total Fixed Investment

TPC: Total process capital

V: Horizontal or vertical drums, vessels (e.g., V-101 woulddenote a vessel tag)

VOC: Volatile organic compounds

WD: Demineralized water

X: Special equipment (e.g., X-101 would denote a specialequipment tag)

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 14.

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 estimates 1

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 13 – 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 Cost

Estimates

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:

Complexity

SimpleSomewhat simple, widely known

processes

Typical Regular process

Complex

Several unit operations, extreme

temperature or pressure, more

instrumentation

Maturity

New &

ProvenFrom 1 to 2 commercial plants

Licensed 3 or more commercial plants

Table 23 – Project Contingency

Plant Complexity Complex Typical Simple

Project Contingency 25% 20% 15%


Table 24 – Criteria Description


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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 (+30 to – 20 %,rather than ±25%, 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 25 – Accuracy of Economic Estimates

Reliability Low Moderate High Very

High

Accuracy+ 30%

- 20%

+ 22%

- 18%

+ 18%

- 14%

+ 10%

- 10%


Figure 14 – Location Factor Composition

Relative SalaryProductivity

Relative Steel PricesLabor IndexTaxes and FreightRatesSpares

Taxes 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 15 in which thefour major indexes are presented, along with some of theircomponents.

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Gas Heat Capacity

(kJ/kg K)

Liquid Thermal

Conductivity (W/m K)

Liquid Heat Capacity

(kJ/kg K)

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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 the process carbon footprintcalculation are presented in Table 28 and the results areprovided in Table 29.

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 28 – Assumptions for CO2e Emissions Calculation


Table 29 – CO2e Emissions (ton/ton prod.)


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Table 39 – Vessels & Tanks (Cont.)

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Appendix E. Detailed Capital Expenses

Figure 15 – ISBL Direct Costs Breakdown by Equipment Type (Base Case)


Figure 16 – OSBL Direct Costs by Equipment Type (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

days of all labor

costs

Appendix F. Economic Assumptions

Table 40 – Detailed Construction Location Factor


Table 41 – Working Capital Assumptions (Base Case)


Table 42 – Other Capital Expenses Assumptions (Base

Case)


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Operational Expenses

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.

Table 43 – Other Fixed Cost Assumptions


Table 44 – 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.


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

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


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

CONCEPTUAL DESIGN

Membranes on Polyolefins Plants Vent Recovery:

The Report evaluates membrane units for theseparation of monomers 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.

Appendix G. Latest & Upcoming Reports

Appendix H.

Technology Economics Form

Submitted by Client

Chemical Produced by the Technology to be Studied

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

Choose a Chemical Acetic Acid Acetone Acrylic Acid

Acrylonitrile Adipic Acid Aniline

Benzene Butadiene n-Butanol

Isobutylene Caprolactam Chlorine

Cumene Dimethyl Ether (DME) Ethanol

Ethylene Bio-Ethylene Ethylene Glycol

Ethylene Oxide Formaldehyde HDPE

Isoprene LDPE LLDPE

MDI Methanol Methyl Methacrylate

Phenol Polypropylene (PP) Polybutylene Terephthalate

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

Propylene Propylene Glycol Propylene Oxide (PO)

Terephthalic Acid Vinyl Chloride (VCM)

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

Chemical Process Technology to be Studied

Identify the mature chemical process technology you would like us to assess. Intratec considers mature technologies the ones already used ona commercial scale plant.

Technology Description

E. g. technology for propylene production from methanol - similar to Lurgi MTP

Commercial Scale Unit. Inform the exact location of one commercial scale plant under operation.

Plant Location: I don't know

I know the location of a commercial plant:

If there is no commercial scale plant based on the technology of your interest, you are referred to Intratec's Research Potential advisory serviceat www.intratec.us/advisory/research-potential/overview

Industrial Unit Description

Plant Nominal Capacity Operating Hours

Inform the plant capacity to be considered in the study. Providethe main product capacity in kta (thousands of metric tons peryear of main chemical product).

Inform the assumption for the number of hours the plantoperates in a year.

Plant Capacity 150 kta

300 kta

Other (kta)

Operating Hours 8,000 h/year

Other (h/year)

Gas phase technology - similar to Dow UNIPOL

New Jersey, USA

400

Analysis Date

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

Quarter Year

Storage Facilities

Define the assumptions employed for the storage facilities design.

Products 20 days

Other

By-Products 20 days

Other

Raw Materials 20 days

Other

Utilities Supply Facilities

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

Consider construction of supply facilities ? Yes No

General Design Conditions

General utilities and environmental conditions that may be relevant to the process simulation are presented below. Provide other assumptions ifyou deem necessary.

Specification Unit Default Value User-specified value

Cooling water temperature ºC 24 DSPEC1

Cooling water range ºC 11 DSPEC2

Steam (Low Pressure) bar abs 7 DSPEC3

Steam (Medium Pressure) bar abs 11 DSPEC4

Steam (High Pressure) bar abs 28 DSPEC5

Refrigerant (Ethylene) ºC -100 DSPEC6

Refrigerant (Propane) ºC -40 DSPEC7

Refrigerant (Propylene) ºC -45 DSPEC8

Dry Bulb Air Temperature ºC 38 DSPEC9

Wet Bulb Air Temperature ºC 25 DS10

Industrial Unit Location

The location of an industrial unit influences in prices for both construction and operation of the unit. In this study, the economicperformances of TWO similar units erected in different locations are compared.

The first plant is located in the United States (US Gulf Coast) and the second location is defined by YOU.

Plant Location I would like to keep the plant location confidential.

Country (or region) to be considered.

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

Plant Location DataProvider

I will use Intratec's Internal Database containing standard chemical prices and location factors(only for Germany, Japan, China or Brazil).

I will provide location specific data. Please fill the Custom Location topic below.

Q3 2011

0 0

United States

Custom Location Description. Describe both capital investment and prices at your custom location.

A) Capital Investment. Provide the relative capital cost at your custom location in comparison to the United States (U.S. Gulf Coast)

Custom Location Relative Cost (%)

130% means that the capital costs in the custom location are 30% higher than the costs in the United States.

B) Raw Materials Prices. Describe the raw material prices to be considered in the custom location.

Item Description Price Unit Price

Raw1 RU1 RP1

Raw2 RU2 RP2

Raw3 RU3 RP3

E.g. Propane USD/metric ton 420

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


Prod1 PU1 PP1

Prod2 PU2 PP2

Prod3 PU3 PP3

E.g. Polypropylene USD/metric ton 1700

D) Utilities Prices. Describe the utilities prices to be considered in the custom location.


Electricity UP1

Steam (Low Pressure) UP2

Steam (High Pressure) UP3

Fuel UP4

Clarified Water UP5

Util6 UU6 YP6

Util7 UU7 UP7

Util8 UU8 UP8

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


Operating Labor USD/operator/hour LP1

Supervision Labor USD/supervisor/hour LP1

F) Others. Describe any other price you deem necessary to be considered in the custom location.


Other1 OU1 OP1

Other2 OU2 OP2

Other3 OU3 OP3

E.g. Catalyst USD/metric ton 5000

1

Polymer grade Propylene USD/metric ton

Other Remarks

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

Comments:

Complementary Files

Along with this form, you may also upload any other chemical document deemed relevant for the description of the project, such asarticles, brochures, book sections, patents, etc. Multiple files may be uploaded.

If you are filling this form offline please upload this form and any complementary files at www.intratec.us/advisory/technology-economics/order-commodities

Non-Disclosure Period & Pricing

You can keep your study confidential or get discounts, by allowing Intratec to disclose it to the market as a publication, after anagreed non-disclosure period, starting at the date you place your order.

Choose an Option 6 months 24 months 36 months Never Disclosed

Non-Disclosure Period Price

6 months $8,000 (9 x $899) Save 84% - Payment of our advisory service is conducted

24 months $28,000 (9 x $3,111) Save 44% automatically, in equal and pre-defined installments

36 months $40,000 (11 x $3,636) Save 20% - Every 15 days, an installment will be charged to your

Never Disclosed $50,000 (13 x $3,846) credit card or PayPal account.

Pay Less! Benefit From a 5% Discount

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

Intratec Agent Email

Evaluate our Intratec Agent. Your opinion will be kept confidential.

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Knowledge about Intratecofferings and presentation skills

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DOWNLOAD EXAMPLES OF FILLED FORMS HERE.

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NEED ASSISTANCE ? SEND AN EMAIL TO [email protected].

v.1-mar-13

I have filled just the propylene price field, because a propylene source already exists and may provide propylene at prices belowmarket average. Regarding the reamining prices, please use the same of your internal database for the US Gulf.

Technology Economics

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

- How is the technology? What are the main pieces of equipment required?

- What are the raw materials and utilities consumption rates?

- What are the capital and operating expenses breakdown?

- What are the economic indicators?

- In which regions is this technology more profitable?

Techonology Economics: Polypropylene via Gas Phase Process

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Transcript of Techonology Economics: Polypropylene via Gas Phase Process