Capital-Related Costs

The reliability of estimates varies from 30% for the ratio estimate to +5% for the final estimate. The cost of estimates ranges from less than 0.1% to as much as 5 or 10% of final project costs.  

Example of a Predesign Estimate for Producing Glyoxylic Acid by the Electrolytic Reduction of Oxalic Acid 

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The method is based on relating electricity price to both the capital related cost and the recurrent cost of production (fuel and maintenance of plant) ... 

The cost estimates presented here are based on existing technology. This implies that capital-related cost may come down in the future as technology develops. We note, however, that many of the main capital items, from SMR plants to hydrogen compressors, are essentially mature technology, and the scope for further cost reduction is relatively small. The case may be different for forecourt reformers and forecourt electrolyzers, but, as will be elaborated below, the effect thereof is relatively limited. 

Figure 13. Manufacturing cost of ethanol by enzyme hydrolysis. Yearly production 25 million gallons (95%). Includes capital related costs, raw materials ir chemicals, utilities, labor, maintenance. Feed ...

Capital-related costs The capital costs are determined mainly by the required membrane area for a certain plant capacity and feed and required product concentration. Other items such as pumps and process control equipment are considered as a fraction ofthe required membrane area. This fraction depends on the plant capacity. The same is true for the required land that also depends on the location of the plant. 

The DOE attempt at standardized analyses as done by C. F, Braun is not the complete answer. Only the five processes in the DOE/AGA development program plus Lurgi dry-bottom were included and C. F. Braun s caveat on the capital cost estimates is significant since capital related costs are a substantial portion of the synthetic fuel product costs. 

I think most of us try to look at our economics with the Braun guidelines. I think the bigger problem probably exists in the estimate of the capital costs and the capital-related costs are a large portion of the economics that go into the price of the product. I don t know the answers to that, except perhaps to have one completely unbiased, well-experienced organization do a capital cost analysis for all the processes. Even that is a problem in that process designs are in different degrees of development. 

Stream Factor Changes We assumed that for stream factors of 30%, 50%, and 70%, the raw materials requirement would be reduced proportionately, but capital-related costs do not change from the base case. We calculated the hydrogen price the same way as in the base case. 

Figure 122 shows an estimate of ammonia production costs at various locations. In this figure the capital-related costs are based on a debt/equity ratio of 60/40. With 6 % depreciation of fixed assets and spare material, 8 % interest on debts and 16 % ROI on equity, corresponding to a total of about 16.5 % of the total capital involved. The total capital includes the LSTK price for plant and storage, cost of the off-sites for an industrialized site, in-house project costs, spare parts and catalyst reserves, working capital. 

The world s only large scale SNG from coal plant is economical only because most of the original capital related costs have been abandoned. Current natural gas prices are so low that it is difficult to keep operating costs below SNG sales revenues. Nevertheless, the plant is able to continue operation through the dedicated efforts of both the individuals and organizations involved to increase production, increase revenues from chemical by-products, and further reduce operating cost. 

Two drivers are at work in spurring supply chain partnerships. The first, and the more obvious tactical one, is cost. For many companies, purchased goods and services are their largest cost. It is common for these costs to exceed other categories such as labor, interest, and capital-related costs. Outside material includes not only material items used in products but also office supplies and services like accounting and information services development. 

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