Economical analysis

The production profile for oil or gas is the only source ofrevenueior most projects, and making a production forecast is of key importance for the economic analysis of a proposal (e.g. field development plan, incremental project). Typical shapes of production profile for the main drive mechanisms were discussed in Section 8.2, but this section will provide some guidelines on how to derive the rate of build-up, the magnitude and duration of the plateau, the rate of decline, and the abandonment rate. 

The economics of the arc-coal process is sensitive to the electric power consumed to produce a kilogram of acetylene. Early plant economic assessments indicated that the arc power consumption (SER = kwh/kgC2H2) must be below 13.2. The coal feedcoal quench experiments yielded a 9.0 SER with data that indicated a further reduction to below 6.0 with certain process improvements. In the propane quench experiment, ethylene as well as acetylene is produced. The combined process SER was 6.2 with a C2H2/C2H4 production ratio of 3 to 2. Economic analysis was completed uti1i2ing the achieved acetylene yields, and an acetylene price approximately 35% lower than the price of ethylene was projected. 

C. A. Carter, An Economic Analysis of a Single North American Tarley Market, Grains and Oilseeds Branch, Agriculture Canada, Winnepeg, Manitoba, Canada, 1993. 

Department of Commerce, Bureau of Economic Analysis, Washington, D.C., 1988. 

Economic Analysis. Costs of ms/ms instmmentation remain at the high end of the scale for hyphenated systems. Because more powerhil computer systems are becoming available at lower cost and improvements are being made in the less expensive ms hardware, the trend in instmmental cost is downward. The current range for ms/ms systems extends from about 350,000 to about 1.4 million where the ms components are equipped with higher mass and resolution capabiUties. 

Economic Analysis. The economic success of recycling programs is subject to the following inequaUty where X = the cost to recover recyclable materials, Y = the cost of disposal, and Z = the value of the resource recovered. 

Capital investment, capital costs, operating costs, return on investment, and energy conservation have all been discussed (6). In the economic analysis, the speed of each type of pump considered is normalized to 1 m /s as a common basis. 

Water can seldom be reused directiy. The treatment required depends on the intended second use. Disposal costs of the wastewater must be included in any economic analysis, and additional treatment for reuse may be justified when this expense is included. Costs of reclamation depend on the location, water scarcity, availabiUty of pubHc water suppHes, and the intended reuse. 

The economics of the various methods that are employed to sequence multicomponent columns have been studied. For example, the separation of three-, four-, and five-component mixtures has been considered (44) where the heuristics (rules of thumb) developed by earlier investigators were examined and an economic analysis of various methods of sequencing the columns was made. The study of sequencing of multicomponent columns is part of a broader field, process synthesis, which attempts to formalize and develop strategies for the optimum overall process (45) (see Separation systems synthesis). 

The problem is defined during process development as information becomes available and decisions are made. Initially, the definition is limited, vague, and brief and economic analysis involves a high level of uncertainty. As the project evolves, the definition becomes more complete, more highly specific, and lengthier. At the same time, the economic assessment tends to exhibit less uncertainty. 

These find wide appHcation in general business analysis but are less widely used in engineering economic analysis. 

J. Couper and W. Rader, Applied Finance and Economic Analysis for S dentists and Engineers, Van Nostrand Reinhold, New York, 1986. 

D. G. Newman, Engineering Economic Analysis, 2nd ed.. Engineering Press, San Jose, Calif., 1983. 

J. A. White, M. H. Agree and K. Case, Prindples of Engineering Economic Analysis, 3rd ed., John Wiley Sons, Inc., New York, 1989. 

A. Chauvel and co-workers. Manual of Economic Analysis of Chemical Processes Feasibility Studies in Eefining and Petrochemical Processes, McGraw-Hid Book Co., Inc., New York, 1980. 

Equipment Selection Ideally, selection of equipment to produce a gas-in-hquid dispersion should be made on the basis of a complete economic analysis. The design engineer and especially the pilot-plant engineer seldom have sufficient information or time to do... 

Robotics The introduction of robotics has given a new dimension to packaging in that it is now possible to do repetitive tasks with speed and accuracy at notably lower cost than if done by people. The manufacture of robots is well established with corporations of substantial resources providing a quality product with continuity of service, supply, and software support. There is also a specialty industry which is available to supply both accessory hardware and software which are custom designed to handle specific user situations. Economic analysis needs to be done before making the decision as to whether to automate using robots, fixed automation, or the labor of people aided by work aids. 

Factors that enter into any economic analysis of handhng-warehousing systems are (1) expected mechanical and economic life of the system (2) annual maintenance cost (3) capital requirements and expected return on investment (4) building-construction cost and land v ue (5) detailed analysis of each work position (to determine trade-offs of labor and equipment expected future costs and availability of labor are important) (6) relation of system control and personnel used in system (trade-offs of people versus mechanical control) (7) type of information system (computerized or manual) and (8) expected changed in product, container, unit pallet loads, and customer preferences during the life of the system. 

The purpose of this subsection is to outhne the basic elements of a pollution-prevention cost-accounting system that incorporates both traditional and less tangible economic variables. The intent is not to present a detailed discussion of economic analysis but to help identify the more important elements that must be considered to properly quantify pollution-prevention options. 

The main problem with the traditional type of economic analysis is that it is difficult—nay, in some cases impossible—to quantify some of the not-so-obvious economic merits of a pollution-prevention program. Several considerations have just recently surfaced as factors that need to be taken into account in any meaningful economic analysis of a pollution-prevention effort. What follows is a summary listing of these considerations, most which have been detailed earher. 

Proper economic analysis will allow comparison of alternatives on a sound basis. Detailed calculations are beyond the scope of this section. The reader should review the material in the NACE Publication 3CI94, Item No. 24182, "Economics of Corrosion, Sept., 1994. 

When maldug any economic analysis, care should be taken to be certain that the efficiency ratings of all motors being considered are on the same basis. While this should not be a problem for motors rated 1 to 500 horsepower as covered by the NEMA Standards for efficiency marldug, it is common practice for several different test methods to be used when measuring the efficiency of motors rated over 500 horsepower. A particular test method may need to be selected by the test facility on the basis of available test equipment and power supply. All test methods that may be used to test any one motor will not necessarily give the same result for efficiency. 

Once the economic analysis has been completed, the project should be analyzed for unexpected as well as expected impacts on the economics. This is usually done through a set of what if calculations that test the project s sensitivity to missed estimates and changing economic environment. As a minimum, the DCF rate of return should be calculated for 10% variations in capital, operating expenses, and sales volume and priee. 

The team should also undertake a comparative economic analysis of the P2 options and the existing situation. Where it cannot quantify benefits or changes (e.g., reduction in future liability, worker health and safety costs, etc.), it should make some form of qualitative assessment. 

To answer the above-mentioned questions, one can envision so many alternatives they cannot be enumerated. Typically, an engineer charged with the responsibility of answering these questions examines few process options based on experience and corporate preference. Consequently, the designer develops a simulation model, performs an economic analysis and selects the least expensive alternative from the limited number of examined options. This solution is inappropriately designated as the optimum. Normally it is not Indeed, the true optimum may be an order of magnitude less expensive. 

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