PROC2089 Process Plant Design

Course co-ordinator: Dr. Raj Parthasarathy

What is this course about?
(Objectives)
1. Process Plant Economics
Economic analysis
Helps to determine whether a project is profitable or not
Estimation of fixed and operating costs (expenses)
Estimation of revenue (income)
Estimation of profits (=income expenses) for many years
Overall profitability
2. Design (Process equipment design)
Column design
Plate column design
Detailed design of columns with plates
More than diameter and height calculations (which is known as sizing)
Plate design
Packed column design
Detailed design of column with packing materials
Diameter and height calculations
Height is calculated using empirical correlations ( not using theoretical or graphical
methods)
Easy for computer (spreadsheet calculations)
Heat exchanger design
More than heat exchanger surface area calculation
Shell and tube heat exchangers
Shell and tube diameters are calculated
Number of tubes are calculated
Number of tube passes are calculated
Assessment
Assessment Components % of Overall
Marks
1. Individual assignment 1 ( Week 4 - Economic analysis
using spreadsheet calculations)
7.5%
2. Week-in-industry (Week 7 whole week) 10%
3. Test (Week 8 Closed-book) 15%
4. Individual assignment 2 ( Week 9 Plate column design
using Hysys simulation and spreadsheet calculations)
7.5%
5. Final examination ( 2 hours, all topics in the course are
included, open-book examination)
60%
Prescribed text book
Sinnott, R. K. and Towler, G., Chemical Engineering Design, 2009, Butterworth-
Heinemann.
Copies available in RMIT Bookshop
Required definitely for the open-book final examination
Useful for your future courses and career as a design reference book
Other useful references:
1. Brennan, D., (1998), Process Industry Economics - An international perspective,
IChemE.
2. Turton, R., Bailie, R.C., Whiting, W.B. and Shaeiwitz, J .A., Analysis , Synthesis, and
Design of Chemical Processes, 2009, Prentice Hall. N.J ., U.S.A.
3. Peters, M.S., Timmerhaus, K.D., and West, R.E., (2003), Plant Design and Economics
for Chemical Engineers, McGraw Hill.
Process Plant Economics
(Weeks 1 to 3)
Topics to be covered:
1) Fixed capital estimation- (Week 1)
2) Time value of money- (Week 1)
3) Operating cost and working capital estimation- (Week 2)
4) Depreciation - (Week 2)
5) Cash flow analysis - (Week 3)
Estimation of fixed capital cost
Source: The Australian, Dec 2011
Capital investment in process industries is required for
new projects
sustaining existing plants during their operating life
modifying an existing plant to accommodate changes in
feedstocks, product quality, specifications, available technology
and operating cost structure
Purposes of detailed capital cost estimate
to decide whether or not to proceed with a new plant or plant
modification
to support the allocation of funds to an approved project and
then to control their subsequent disbursement
Sources of capital
Equity funds - Funds owned by the company derived from
shareholders or retained earnings
Loan funds - Funds borrowed from financial institutions such as
banks and insurance companies
Whatever be the source of capital, these funds have
a cost (such as interest) which is known as cost of
capital .
Capital requirements for process plants
Land costs
Fixed and capital investment into plant and buildings
Start-up capital
Working capital
Total investment = Land cost + Fixed capital + Start-up capital + Working capital
Land costs
Depends on whether the land is an existing site or a new site
For existing site, no cash flow
For a new site, land cost is a function of size and location
New sites are also termed as greenfield sites
Existing sites are known as brownfield sites
Land cost is usually negligible when compared with fixed capital
costs of plant and buildings
Fixed Capital
Total cost of the plant before start-up
Cost paid to the contractors
Unrecoverable
Fixed capital investment is estimated for
1. Battery limits
2. Offsites
Battery Limits:
Geographical boundary, real or imaginary, around the
processing plant which converts raw material into finished
products
Inside battery limits (IBL) - processing plant
Outside battery limits (OBL) - also known as offsites, includes
storage, utilities, effluent treatment facilities, service facilities
IBL and OBL
Ref: Wilson, B. (2008),Detail Engineering and Lay-out of Piping Systems, 1
st
edition
Inside battery limits
Outside battery
limits or offsites
Start-up capital
Includes all nonrecurring costs between the completion of plant
and commencement
Within 1% to 10% of fixed capital
Higher costs, if technology is new
Working capital
Additional investment needed over and above the fixed capital
Capital required to start the plant and operate it until income is
earned
IBL Plant Cost Estimate
Types and classification of capital cost estimates
1. Order of magnitude estimate
2. Study estimate
3. Preliminary estimate
4. Definitive estimate
5. Detailed estimate
Classification of capital cost estimates
Nomenclature Probable range of
accuracy
Cost as % of
project
expenditure
Detailed estimate 2 to 5% 5 to 10%
Definitive estimate 5 to 15% 1 to 3%
Preliminary estimate 10 to 25% 0.4 to 0.8%
Study estimate 20 to 30% 0.1 to 0.2%
Order of
magnitude
estimate
30 to 50% 0 to 0.1%
What you do
in your
University
courses
Capital cost estimating methods
1. Using historical costs (order-of -magnitude estimate or
exponential method)
Involves extrapolation from known plant cost data and has a
potential accuracy of 30 to 50%
2. Factorial method (study estimate)
Involves applying factors to PEC (Purchased Equipment Cost)
Accuracy 20 to 30%
- Bare module factor method
Capital cost estimation using historical costs
(Order-of-magnitude estimate)
Performed at the preliminary stage
No flowsheet is required
Exponential method
(Capital cost estimation by extrapolation from known plant cost data)
Order-of-magnitude estimate, approximate and applicable over a limited
range
where
I
P
= investment for a proposed plant
I
R
= investment for a reference plant
Q
P
, Q
R
= capacities of proposed and reference plants, respectively
b = exponent, usually 0.5 to 0.6
F
p
, F
R
= cost inflation index values for the proposed and reference years,
respectively
L = Location factor
I
I
=
Q
Q
F
F
L
P
R
P
R
b
P
R

Cost indices (or) Inflation indices (F

p
and F
R
)
Published in the journal Chemical Engineering Published by
McGraw-Hill
www.che.com
Chemical Engineering Plant Cost Index (CEPCI):
Weighs numerous components of plant, equipment and constructions
costs
Includes engineering costs as well as those for materials,
manufacturing and installation
There are two chemical engineering indices
i) plant
ii) purchased equipment
CEPCI can be found
Using RMIT libraraydatabase Proquest (choosing Proquest science journals)
Using Google search bythe key word Chemical Engineering Plant Cost Index
Chemical Engineering Plant Cost Index (CEPCI)
Ref: Chemical Engineering, J anuary, 2012
Ref: Chemical Engineering, J anuary 2012
Marshall & Swift cost
index values are
another popular cost
indices used widely in
the US
Influence of location on capital cost estimate
L = location factor
Note that both costs are expressed in the same currency
L values vary from 0.8 to 1.8
L values vary with time
country reference in plant of Cost
country proposed in plant of Cost
L =
Location factors
Sinnott, R.K. and Towler, G., (2012), Chemical Engineering Design, Page 338
Tutorial question on Fixed capital cost estimation using
exponential method
Bare module cost method
(Reference: Turton, R., Bailie, R.C., Whiting, W.B. and Shaeiwitz, J .A., Analysis , Synthesis, and
Design of Chemical Processes, 2009, Prentice Hall. N.J ., U.S.A.)
Bare module cost = direct costs + indirect costs involved in purchasing
and installing equipment
(or)
Bare module cost = Purchased equipment cost + installation cost
Base conditions for bare module cost for equipment:
1. Unit is fabricated fromcarbon steel
2. Unit is operated at near ambient pressure
(i.e., P =1 bar)
Bare module cost method
Bare module cost (installed cost) for each piece of equipment C
BM
:
C
BM
= C
p
o
F
BM
where
C
BM
= Bare module equipment cost (= direct + indirect costs)
C
P
o
= Purchased cost for base conditions
F
BM
= Bare module cost factor (= multiplication factor to account
for the installation etc. (or) installation cost)
Total module cost C
TM
(or ) Fixed capital cost
C 18 . 1 C
1
i BM, TM

=
=
n
i
where
n = total number of process equipment
C
TM
includes 15% contingency and 3% contractors fee
Grass roots cost C
GR
C 35 . 0 C C
1
i BM, TM GR

+ =
=
n
i
C
GR
is for greenfield project
It includes costs for land, site development, auxiliary buildings,
and off-sites and utilities
Example:
Estimate the bare module cost for a heat exchanger with the following
specifications:
- Horizontal shell and tube heat exchanger
- Area = 20 m
2
- Design pressure < 10 bar
- Carbon steel
- Two-pass, internally bolted, floating head
Solution:
C
BM
= C
o
P
F
BM
= C
o
P
(B
1
+ B
2
F
M
F
p
)
where
F
M
= material factor
F
p
= pressure factor
B
1
and B
2
= constants
Estimation of purchase cost (C
p
) for heat exchangers
These graphs give
purchase cost based on
heat exchanger surface
area
But they are for carbon
steel heat exchangers
operating at 1 bar
Determination of installation factor C
BM
Material factor, F
M
Material factor F
M
Pressure factor F
p
where
P = pressure, barg
C
1
, C
2
, and C
3
= constants.
Feed preheater
Area =20 m
2
P =10 bar
MOC =Carbon Steel
Floating head type
Bare module factor method Tutorial question
Tutorial question on Fixed capital cost estimation using
exponential method