Capital cost selection

After the process heat recovery is done, the next design step is to determine the utility supply in terms of heating and cooling, and power based on the needs and characteristics of process energy demand. In this step, the means of heat supply for the reaction and separation system will be addressed. For example, a choice for the reboiling mechanism must be made for a separation column between a fired heater and steam heater. Similarly, a choice of process driver between steam turbine and motor will be determined. Selection is made based on operation considerations, reliability and safety limits, and capital cost. Selection of process utility supply defines the basis for the design of a steam and power system. 

If k-2 increases faster than kx, operate at low temperature (but beware of capital cost, since low temperature, although increasing selectivity, also increases reactor size). Here there is an economic tradeoff between decreasing byproduct formation and increasing capital cost. 

The Tradeoffs Between Process Changes, Utility Selection, Energy Cost, and Capital Cost... 

The cost of the capital depends on its source. The source of the capital often will not be known during the early stages of a project, and yet there is a need to select between process options and carry out preliminary optimization on the basis of both capital and operating costs. This is difficult to do unless both capital and operating costs can be expressed on a common basis. Capital costs can be expressed on an annual basis if it is assumed that the capital has been borrowed over a fixed period (usually 5 to 10 years) at a fixed rate of interest, in which case the capital costs can be annualized according to... 

A suitable maintenance strategy should be developed for equipment by considering the criticality and failure mode, and then applying a mixture of the forms of maintenance described above. In particular, the long-term cost of maintenance of an item of equipment should be estimated over the whole life of the project and combined with its capital cost to select both the type of equipment and form of maintenance which gives the best full lifecycle cost on a discounted basis), while of course meeting the technical, safety and environmental specifications. 

Future Methanol Processes. The process route for methanol synthesis has remained basically unchanged since its inception by BASF in 1923. The principal developments have been in catalyst formulation to increase productivity and selectivity, and in process plant integration to improve output and energy efficiency while decreasing capital cost. 

In an economic comparison of these three common abatement systems, a 1991 EPA study (58) indicates extended absorption to be the most cost-effective method for NO removal, with selective reduction only matching its performance for small-capacity plants of about 200—250 t/d. Nonselective abatement systems were indicated to be the least cost-effective method of abatement. The results of any comparison depend on the cost of capital versus variable operating costs. A low capital cost for SCR is offset by the ammonia required to remove the NO. Higher tail gas NO... 

The same four operating steps are used with the complex batch reactor as with the simple batch reactor. The powerhil capabiUties of the complex batch reactor offset their relatively high capital cost. These reactors can operate at phenol to alkene mole ratios from 0.3 to 1 and up. This abiUty is achieved by designing for positive pressure operation, typically 200 to 2000 kPa (30 to 300 psig), and for the use of highly selective catalysts. Because these reactors can operate at low phenol to alkene mole ratios, they are ideal for production of di- and trialkylphenols. 

The most volatile product (myristic acid) is a small fraction of the feed, whereas the least volatile product (oleic—stearic acids) is most of the feed, and the palmitic—oleic acid split has a good relative volatility. The palmitic—oleic acid split therefore is selected by heuristic (4) for the third column. This would also be the separation suggested by heuristic (5). After splitting myristic and palmitic acid, the final distillation sequence is pictured in Figure 1. Detailed simulations of the separation flow sheet confirm that the capital cost of this design is about 7% less than the straightforward direct sequence. 

Order-of-Magnitude Estimates. Unit capital cost data (dollars per aimual ton of product) are occasionally reported for chemical plants. These data can be multiphed by a selected plant capacity to estimate a capital cost. This is, however, feasible only if the reference process, conditions, and capacity are similar. 

Because each effect of an evaporator produces almost as much vapor as the amount it condenses, the total evaporation accompHshed per unit of prime steam, or steam economy, iacreases ia almost direct proportioa to the number of effects used. The total heat load is also spHt up betweea the effects so that each effect has a much lower heat duty than a single effect for the same total evaporation load. However, the total available AT is also spHt up similarly so that each effect of a multiple effect requites about as much heating surface as a single effect operating over the same total temperature difference. Thus ia selecting the number of effects to use ia any iastallatioa, steam cost savings and capital cost of effects have to be balanced. Even before... 

The estimated (DCFRR) and the estimated (NPV) are both functions of the estimated cumulative revenue from annual sales X As, the estimated cumulative total annual cost or expense X Ate, and the estimated fixed capital cost Cfc of the plant. The revenue from annual sales for each year is in turn the product of the sales price and sales volume. Initially it is desirable to select those values from the distribution cui ves of X As, X Ate, and Cfc which enable the maximum and minimum (DCFRR) and (NPV) to be calculated. 

Types and Accuracy of Estimates Capital-cost estimates may be required for a variety of reasons, among others to enable feasibility studies to be carried out, to enable a manufacturing company to select from alternative investments, to assist in selection from alternative designs, to provide information for planning the appropriation of capital, and to enable a contractor to bid on a new project. It is therefore essential to achieve the greatest accuracy of estimation with a minimum expenditure of time and money. 

The final design should meet process requirements (within reasonable expectations of error) at lowest cost. The lowest cost should include operation and maintenance costs and credit for ability to meet long-term process changes, as well as installed (capital) cost. Ex(mangers should not be selected entirely on a lowest-first-cost basis, which frequently results in future penalties. 

The guidelines are quite general, but will at least act as introduction to the types of turbines available to the process designer. Sometimes the decision on which type turbine to select is not obvious. The back pressure turbine is most frequently selected. It has lower capital cost, simple construction, is the most suitable turbine for high speeds, and is generally more reliable. 

Applications listed in Table 1 are typical, but not inclusive. This is a workhorse piece of equipment used in a wide variety of versatile applications. Its high capital cost requires careful consideration of design and selection as the means of control. 

Three types of flare systems are commonly used the elevated flare, the ground flare, and the burning-pit flare. Although the three basic designs differ considerably in required capital and operating costs, selection is based primarily on pollution/public relations considerations such as smoke, luminosity, air pollution, noise and spacing factors. Table 1 summarizes the advantages and... 

To simplify the evaluation, it is to the advantage of the purchaser to advise the manufacturer of the dollar cost per installed horsepower in his plant and the operating costs for power. The manufacturer can select, from a wide combination of units, the size and number that are the most economical. Otherwise, the bids should be requested as based on lowest operating cost or lowest capital cost, neither being the best in itself except for certain purposes. 

The selection of the discount factor depends on the financial policy of the business, but is usually 2-3 per cent above the current interest rates. Use of discounting methods will determine whether the project cost will produce a better return than by simply investing the capital involved at the highest compound interest rate or, if the capital cost has to be borrowed, whether the rate of return is much higher than the cost of borrowing. 

As an example, the reputable cooling tower designer would establish most of the above parameters from his own experience. In addition, he could determine with his client the economic factors which could influence his selection, i.e. low capital cost with high mnning costs, or a higher capital cost with more acceptable power costs (a 12-month or a 5-year payback period). Turnkey contractors often understandably ignore this particular factor, and end users should always obtain alternative designs to make their own selection. 

A simple cell design is required to reduce capital costs. The cost of the raw materials, HF and electricity, are not negligible, but they are minor. The pilot plant cell design shown in Fig. 16 is derived from the callandria cell developed for the Phillips ECF process.14 The cell body and internals are of mild steel pipe selected to be resistant to hydrogen embrittlement. Figure 17 is a horizontal section through the working part of the cell. 

Various criteria were proposed for the optimal selection of the equipment configuration and the number and sizes of units. In grass-root design, the capital cost of equipment is mostly used as the optimization criterion. In retrofit design a more appropriate objective function seems to be the net profit, which has to be maximized. Papageorgaki and Reklaitis (1993) formulated the criterion as follows ... 

When a metallic material of construction (MOC) is selected to contain, transport, and/or to be exposed to a specific chemical, unless we make a correct, viable, and optimum MOC selection, the hfe expectancy of those facihties, in a given chemical exposure, can be very short. For the inexperienced in this field, the direct capital costs of the MOC facet of the production of chemicals, the funds spent to maintain these facilities (sometimes several times those initial capital costs), the indirect costs that are associated with outages and loss of production, off-quahty product (because of equipment and facility maintenance) as well as from contamination of the product, etc., are many times not even considered, let alone used as one of the major criteria in the selection of that MOC as well as its costs to keep the plant running, i.e., a much overlooked cost figure in the CPI. To emphasize the magnitude and overall economic nature of the direct and indirect (nonproductive) costs/losses that result from the action of corrosion of our metallic facihties, equipment, and the infrastructures, within the United States, Congress has mandated that a survey of the costs of corrosion in the United States be conducted periodically. 

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