Cost estimations

All eleven references in this category relate directly to Section 6.1, the Economic Evaluation of this project. They contain capital costing methods, cost correlations, typical plant and equipment costs, and economic indicators to account for cost changes with time. 

Reference CE8 contains the economic indicators including the M S Equipment Costing Index and the CE Plant Cost Index. These indices and their component values are listed from 1977 to 1985. 

Peters and Timmerhaus (Ref. CE9) was the most used book in this category. It explains the ratio method and factored cost method of capital cost estimation. It also contains nomographs and correlations so that many plant equipment items can be costed. There are tables of typical values for costs such as insurance, depreciation and engineering. 

Hignett (Ref. CEI 1) is an excellent source for the determination of production and operating costs specific to nitric acid manufacture. It contains tabulated data for the typical production cost components and capital cost details of a 1700 tonnes/day plant. These figures could be compared with those presented in Ref. PTI for determination of an accuratevalue for the 280 tonne/day plant in this project. 

The other references in this section all contain useful nomographs and correlations for the estimation of capital and equipment costs. 

Capital investment is the total amount of money needed to supply the plant and manufacturing facilities plus the amount of money required as working capital for operation of the fecilities. To estimate a fixed-capital investment it is necessary to consider the following costs  

The cost of purchased equipment is the basis for estimating the capital investment. The various types of equipment can be divided conveniently into  

Of course, the most accurate method of determining process equipment cost is to obtain bids fi om the supplier. When a dryer unit must be evaluated, the following have to be considered. 

Hastelloy is used where structural strength and good corrosion resistance are necessary under conditions of high temperatures. Compared to stainless steel, the price of a Hastelloy dryer is approximately double. Other less expensive alloys can be used, such as Inconel, 77 pereent nickel and 15 percent chromium. Nickel exhibits high corrosion resistance to most alkalies. 

Internal Finishing (GMP). For pharmaceutical purpose the internal finishing must be at least 220 grit and the dryer manufactured according to GMP standards. This makes the price of the dryer some 20 to 3 0 percent (%) higher than the standard design. 

TABLE 7.2 Comparison of RO Permeate Quality for Reclamation and Desalination 

Parameter Units Seawater Biologically Treated Sewage  

ZeeCost is ZENON s proprietary design and costing program for ZeeWeed-immersed membrane systems. Total plant costs were considered, including land to reflect the benefit provided by smaller footprint, except where indicated. While the cost estimations presented in this chapter allow comparing options and drawing conclusions on a relative basis, the absolute precision is considered to be 25%. 

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Thus, if film transfer coefficients vary significantly, then Eq. (7.6) does not predict the true minimum network area. The true minimum area must be predicted using linear programming. However, Eq. (7.6) is still a useful basis to calculate the network area for the purposes of capital cost estimation for the following reasons ... 

It should be emphasized that capital cost estimates using installation factors are at best crude and at worst highly misleading. When preparing such an estimate, the designer spends most of the time on the equipment costs, which represent typically 20 to 40 percent of the total installed cost. The bulk costs (civil engineering, labor, etc.) are factored costs which lack definition. At best, this type of estimate can be expected to be accurate to 30 percent. 

Lang, H. J., Cost Relationships in Preliminary Cost Estimation, Chem. Engg., 54 117, 1947. 

Hand, W. E., From Flowsheet to Cost Estimate, Petrol. Refiner, 37 331, 1958. 

Guthrie, K. M., Data and Techniques for Preliminary Capital Cost Estimating, Chem. Engg., 76 114, 1969. 

Having defined and gathered data adequate for an initial reserves estimation, the next step is to look at the various options to develop the field. The objective of the feasibility study is to document various technical options, of which at least one should be economically viable. The study will contain the subsurface development options, the process design, equipment sizes, the proposed locations (e.g. offshore platforms), and the crude evacuation and export system. The cases considered will be accompanied by a cost estimate and planning schedule. Such a document gives a complete overview of all the requirements, opportunities, risks and constraints. 

At the stage of field development planning, reservoir simulation would normally be used to generate production profiles and well requirements for a number of subsurface development options, for each of which different surface development options would be evaluated and costs estimated. 

When an oil or gas field has just been discovered, the quality of the information available about the well stream may be sparse, and the amount of detail put into the process design should reflect this. However, early models of the process along with broad cost estimates are needed to progress, and both design detail and cost ranges narrow as projects develop through the feasibility study and field development planning phases (see Section 12.0 for a description of project phases). 

Cost estimates can usually be broken into firm items, and items which are more difficult to assess because of associated uncertainties or novelty factor. For example, the construction of a pipeline might be a firm item but its installation may be weather dependent, so an allowance could be included to cover extra lay-barge charges if poor sea conditions are likely. 

The capital cost estimates are generated by the Engineering function, often based on 50/50 estimates (equal probability of cost overrun and underrun). It is recommended that the operating expenditure is estimated based on the specific activities estimated during the field lifetime (e.g. number of workovers, number of replacement items, cost of forecast manpower requirements). In the absence of this detail it is common, though often inaccurate, to assume that the opex will be composed of two elements fixed opex and variable opex. 

As discussed in Section 13.2, the technical, fiscal and economic data gathered to construct a project cashflow carry uncertainty. An economic base case is constructed using, for example, the most likely values of production profile and the 50/50 cost estimates, along with the best estimate of future oil prices and the anticipated production agreement and fiscal system. 

Cosmetics industry Cosmic radiation Cosmid vectors Cosmocil CQ CoS04 7H20 Cosorb process Cost estimates... 

A key factor in obtaining binding support for aquaculture is development of a sound business plan. The plan needs to demonstrate that the prospective culturist has identified all costs associated with estabhshment of the faciUty and its day-to-day operation. One or more suitable sites should have been identified and the species to be cultured selected before the business plan is submitted. Cost estimates should be verifiable. Having actual bids for a specific task at a specific location eg, pond constmction, well drilling, building constmction, and vehicle costs helps strengthen the business plan. 

Process costs for the methanolysis and glycolysis of PET to produce monomers are similar. Cost estimates are summarized in Table 8. 

Alcohol Production. Studies to assess the costs of alcohol fuels and to compare the costs to those of conventional fuels contain significant uncertainties. In general, the low cost estimates iadicate that methanol produced on a large scale from low cost natural gas could compete with gasoline when oil prices are around 140/L ( 27/bbl). This comparison does not give methanol any credits for environmental or energy diversification benefits. Ethanol does not become competitive until petroleum prices are much higher. 

Produced from a.tura.1 Ga.s, Cost assessments of methanol produced from natural gas have been performed (13—18). Projections depend on such factors as the estimated costs of the methanol production faciUty, the value of the feedstock, and operating, maintenance, and shipping costs. Estimates vary for each of these factors. Costs also depend on the value of oil. Oil price not only affects the value of natural gas, it also affects the costs of plant components, labor, and shipping. 

Cost estimates of producing ethanol from com have many uncertainties (11). Most estimates fall into the range of 0.26 to 0.40 per Hter ( 1 to 1.50/gal), after taking credits for protein by-products, although some estimates are lower. These estimates do not make ethanol competitive with oil until... 

The use and effective costs of various energy alternatives are shown in Table 2. Use or internal costs include production, transportation, and distribution. Effective costs take into account the use costs estimated external costs, which include costs associated with damage to the environment caused by utili2ation of various fossil fuels and fuel utili2ation efficiencies, ie, the efficiency of converting fuels into mechanical, electrical, or thermal energy. The effective costs are expressed as /GJ of fossil fuel equivalent (15). The overall equation for the effective cost is... 

R. E. Billings, Hydrogen From Coal A Cost Estimation Guidebook, PennWeU Publishing Co., Tulsa, OHa., 1983. 

Table 4. Pilot-Plant Cost Estimating Techniques...

E. A. Peters, P. W. Johnson, Cost Estimates for Producing Mlumina from Domestic Raw Materials, Information Circular 8648, U.S. Bureau of Mines, Washington, D.C., 1974. 

Eig. 18. Cost estimate curves for three types of pumps A, chemical end suction ANSI iron option (iron) B, spHt-case between-bearings type (iron) and C,... 

Spreadsheet Applications. The types of appHcations handled with spreadsheets are a microcosm of the types of problems and situations handled with fuU-blown appHcation programs that are mn on microcomputers, minis, and mainframes and include engineering computations, process simulation, equipment design and rating, process optimization, reactor kinetics—design, cost estimation, feedback control, data analysis, and unsteady-state simulation (eg, batch distillation optimization). 

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