Costs of production

The economic lifetime was introduced in Section 13.3, and was defined as the point at which the annual cashflow turned permanently negative. This is the time at which income from production no longer exceeds the costs of production, and marks the point when decommissioning should occur, since it does not make economic sense to continue to run a loss-making venture. Technically, the production of hydrocarbons could continue beyond this point but only by accepting financial losses. There are two ways to defer decommissioning ... 

The first criterion was associated with improved secondary and tertiary petroleum recovery processes. This is the justification for the patent appHcations issued to the Dow (50) and Exxon (51) corporations. The additional costs of production and the increased adsorption of such modified water-soluble polymers are detrimental to the commercial appHcation of such polymers and even the academic studies in this area have decreased in recent years. 

Estimated production capacity for the Japanese producers is 77,000 t/yr for the American producers, about 70,000 t/yr and for the European producers about 50,000 t/yr (104). The Hst prices for the monomer have increased dramatically over the past 15 years, according to the ChemicalM.arketing Reporter (105). In 1975 the price for 50% solution was 0.903/kg, compared to 1.68/kg in December 1990 (100% basis, FOB plant). The sohd crystalline monomer always demands a premium price because of the added cost of production, and sold in December 1990 for 2.27/kg compared to 1.09/kg in 1975. There are at least 35 supphers of acrylamide monomer most of them obviously are repackagers. 

Potassium nitrate is being used increasingly on intensive crops such as tomatoes, potatoes, tobacco, leafy vegetables, citms, and peaches. The properties that make it particularly desirable for these crops are low salt index, nitrate nitrogen, favorable N K20 ratio, negligible CU content, and alkaline residual reaction in the soil. The low hygroscopicity of KNO (Table 9) leads to its use in direct appHcation and in mixtures. It is an excellent fertilizer but the high cost of production limits its use to specialty fertilizers. 

Because most fuel ethanol manufactured ia the United States is made from com, price plays a cmcial role ia determining the competitive position of ethanol ia an open market. With com priced at about 2.50/bu, the embedded feedstock cost of product ethanol is about 0.14—0.23/L ( 0.52—0.87 gal), depending on over-all yield and by-products ignored (125). Euel ethanol plants may have contingency plans to close if com prices rise to a certain level, eg, 3.50/bu or above (126). 

Prices. The price of commodity chemicals is based on cost of production, capital needs for expansion, and the ratio of supply to demand. Profit margins can drop under changing conditions, and unit price tends to be low. Specialty chemical prices vary widely. They are based on the value of a product or system to the customer. Profit margins can usuaHy be maintained, and unit price is higher than for commodity chemicals. 

The nameplate capacity of worldwide methanol plants is given by country in Table 2 (27). A significant portion of this capacity is based on natural gas feedstock. Percent utilization is expected to remain in the low 90s through the mid-1990s. A principal portion of this added capacity is expected to continue to come from offshore sources where natural gas, often associated with cmde oil production, is valued inexpensively. This has resulted in the emergence of a substantial international trade in methanol. In these cases, the cost of transportation is a relatively larger portion of the total cost of production than it is for domestic plants. 

Perhaps the biggest contribution that technological advancement in petroleum production will make is bringing large volumes of unconventional petroleum resources, eg, heavy oil and tar sands, into a viable economic realm by lowering the unit cost of production. Compared to the inventory of conventional petroleum reserves and undiscovered resources, the physical inventories of such unconventional petroleum resources are extremely large for example, the Athabasca tar sands in Alberta, Canada, are estimated to contain 360 x 10 m (2250 x 10 bbl) of in-place petroleum (19). This volume is equivalent to the total inventory, ie, the combined cumulative production, reserves, and undiscovered resources, of world conventional cmde petroleum. In... 

Worldwide, approximately 85% of acetone is produced as a coproduct with phenol. The remaining 17% is produced by on-purpose acetone processes such as the hydration of propylene to 2-propanol and the dehydrogenation of 2-propanol to acetone. The cost of production of 2-propanol sets the floor price of acetone as long as the acetone demand exceeds the coproduct acetone supply. However, there is a disparity in the growth rates of phenol and acetone, with phenol demand projected at 3.0%/yr and acetone demand at 2.0%/yr. If this continues, the coproduct supply of acetone will exceed the total acetone demand and on-purpose production of acetone will be forced to shut down the price of acetone is expected to fall below the floor price set by the on-purpose cost production. Projections indicate that such a situation might occur in the world market by 2010. To forestall such a situation, companies such as Mitsui Petrochemical and Shinnippon (Nippon Steel) have built plants without the coproduction of acetone. 

The key elements of the cost of production of phenol are feedstock cost and capital cost. For phenol produced on the U.S. Gulf Coast in a 200,000 t/yr phenol plant built in 1994, the cumene feedstock cost represents 70% of the net cost of production, after allowance for acetone coproduct value. Depreciation of equipment represents 14% of the net cost and utilities approximately 7.6%. The remaining 8.4% covers all other expenses, including plant labor, maintenance, insurance, adininistration, sales, etc. 

Whereas the manufacturing cost is strongly influenced by energy prices, cost of money, and capital investment, ammonia selling prices are usually deterrnined by supply and demand. Therefore, the profitabiUty of ammonia plants is deterrnined by the margin between cost of production and ammonia price. 

The production of steel is of great importance in most countries because modem civilization depends heavily on steel, the raw material for many industries. As a result, most countries have an active steel industry, which at one time was heavily subsidized but as of this writing is increasingly privatized. The world trade in steel was frequently a source of hard currency where the United States was the main contributor. Trade is much more at market prices that reflect the real cost of production. Under these conditions, the United States in its own market is very often the low cost producer following massive cost reduction in the 1980s. The United States can export a few million tons per year at a profit. 

Table 8 summarizes the Chem Systems analysis of the cost of production of BTX from these feeds, resulting ia a recommendation of the best-suited technology for each feedstock. 

Resource estimates are divided into separate categories reflecting different levels of confidence in the quantities reported, and further separated into categories based on the cost of production. A listing of uranium resources by country is given in Table 3. 

In a modem operation the cost of production is made up of the factors shown in Table 3. The feedstocks account for more than 90% of the cost. Other operating costs, such as utihties, labor, and capital charges, make up the difference. 

Ethane feed gives the lowest cost of production and the lowest capital investment. As the feeds become successively heavier, cost of production increases as well as the capital investment required. Depending on the cost of feedstock and the value of the co-products, processing heavier feedstocks can lead to lower returns on investment. Table 13 shows the effect on capital investment for various feedstocks as well as for a range of capacities. 

Table 13. Ethylene Plant Investment and Cost of Production as a Function of Feedstock and Plant Capacity ...

In general, cost data will be available for multiple units. Typically, the cost of production for 1 week or of a specific order is computed and an average cost per unit obtained. This average value Y for the batch should be plotted against the corresponding learning-cuive value X calculated oy Eq. (9-66) ... 

Economic Yield Both in a high-value protein separation and in a low-value commodity concentration, economic yield is vital. Economic yield is defined as the fraction of useful product entering the process that leaves it in salable form. The yield equations used in the industry focus on retention, so they deal only with direct losses through the membrane. These losses result both in direct (product not sold) and indirect costs from a waste stream whose disposal or subsequent use may be more expensive when it is contaminated by macrosolute. There are additional indirec t losses, mainly product left in the equipment, particularly that left adhering to the membrane. Costs of cleaning and disposal or this indirect loss, while hard to measure, are usually higher than the cost of product lost through the membrane. 

In the cubicle construction of a switchgear assembly the busbar chamber is normally located at the top of the assembly and runs through the length of it. It is usually suitable for extension, through fish joints at either end, if required at a later date. For installations having top cable entry, the busbar chamber may also be located at the bottom of the assembly or the depth of the panel increased, with an additional shroud between the top busbar chamber and cable chamber. From these main busbars are tapped the vertical buses for each vertical panel. Manufacturers may adopt different practices for horizontal and vertical busbar arrangements to economize on their cost of production. We illustrate the most common types of busbar arrangements. 

If such fasteners are stove-enamelled (which is normally not done), the trapped hydrogen is removed automatically while being stoved. Since the fasteners are used only for the assembly of switchgear or busbar systems, they are used at room temperature only. Therefore, if they are electroplated, they must be tampered, which is time consuming and adds to the cost of production. Moreover this has no technical advantage. The HT hardware must therefore be used as they are. When it is absolutely necessary to electroplate them, tampering will be essential. 

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