Moneyness

The purpose of chemical processes is not to make chemicals The purpose is to make money. However, the profit must he made as part of a sustainable industrial activity which retains the capacity of ecosystems to support industrial activity and life. This means that process waste must be taken to its practical and economic minimum. Relying on methods of waste treatment is usually not adequate, since waste treatment processes tend not so much to solve the waste problem but simply to move it from one place to another. Sustainable industrial activity also means that energy consumption must be taken to its practical and economic minimum. Chemical processes also must not present significant short-term or long-term hazards, either to the operating personnel or to the community. 

Working capital is what must be invested to get the process into productive operation. This is money invested before there is a product to sell and includes... 

Money to carry accounts receivable (i.e., credit extended to customers) less accounts payable (i.e., credit extended by suppliers)... 

Theoretically, in contrast with fixed investment, this money is not lost but can be recovered when the process is closed down. 

As stated previously, the source of capital is often not known, and hence it is not known whether or not Eq. (A. 10) is appropiiate to represent the cost of capital. Equation (A. 10) is, strictly speaking, only appropriate if the money for capital expenditure is to be borrowed over a fixed period at a fixed rate of interest. Moreover, if Eq. (A. 10) is accepted, then the number of years over which the capital is to be annualized is unknown, as is the rate of interest. However, the most important thing is that even if the source of capital is not known, etc., and uncertain assumptions are necessary, Eq. (A. 10) provides a common basis for the comparison of competing projects. 

Net present value (NPV). Since money can be invested to earn interest, money received now has a greater present value than money received at some time in the future. The net present value of a project is the sum of the present values of each individual cash flow. In this case, the present is taken to be the start of a project. 

The higher the value of the DCFRR for a project, the more attractive it is. The minimum acceptable value of the DCFRR is the market interest rate. If the DCFRR is lower than market interest rate, it would be better to put money in the bank. For a DCFRR value greater than this, the project will show a profit for a lesser value, it will show a loss. 

The Money Machine How the City Works Philip Coggan... 

How are the big deals made Which are the institutions that really matter What causes the pound to rise or interest rates to fall This book provides clear and concise answers to these and many other money-related questions. 

The objective of any exploration venture is to find new volumes of hydrocarbons at a low cost and in a short period of time. Exploration budgets are in direct competition with acquisition opportunities. If a company spends more money finding oil than it would have had to spend buying the equivalent amount in the market place there is little Incentive to continue exploration. Conversely, a company which manages to find new reserves at low cost has a significant competitive edge since it can afford more exploration, find and develop reservoirs more profitably, and can target and develop smaller prospects. 

Not surprisingly, costs are several times higher than conventional wells. Nevertheless, overall project economics may favour ERD over other development options. For example, BP developed the offshore part of the Wytch Farm Oilfield (which is located under Poole Harbour in Dorset, UK) from an onshore location. The wells targeted the reservoir at a vertical depth of 1,500 meters with a lateral displacement of over 8,000 meters (Fig. 3.20). The alternative was to build a drilling location on an artificial island in Poole Bay. ERD probably saved a considerable amount of money and advanced first oil by several years. 

From an overall economic viewpoint, any investment proposal may be considered as an activity which initially absorbs funds and later generates money. The funds may be raised from loan capital or from shareholders capital, and the net (after tax and costs) money generated may be used to repay interest on loans and loan capital, with the balance being due to the shareholders. The shareholders profit can either be paid out as dividends, or reinvested in the company to fund the existing venture or new ventures. The following diagram indicates the overall flow of funds for a proposed project. The detailed cash movements are contained within the box labelled the project . 

Within the project box, the cashflow oi the project (or other investment opportunity) is the forecast of the funds absorbed and the money generated during the project lifetime. Take, for example, the development of an oil field as the investment opportunity. Initially the cashflow will be dominated by the capital expenditure (capex) required to design, construct and commission the hardware for the project (e.g. platform, pipeline, wells, compression facilities). 

From the oil company s point of view, the balance of the money absorbed by the project (capex, opex) and the money generated (the oil company s after-tax share of the profit) yields the project cashflow. 

The project cashflow s constructed by performing the calculation for every year of the project life. Atypical project cashflow is shown in Figure 13.9, along with a cumulative cashflow showing how cumulative revenue is typically split between the capex, opex, the host government (through tax and royalty) and the investor (say the oil company). The cumulative amount of money accruing to the company at the endof the project is the cumulative cash surplus or field life net cash flow. 

The most negative point on the cumulative cashflow indicates the maximum cash exposure of the project. If the project were to be abandoned at this point, this is the greatest amount of money the investor stands to lose, before taking account of specific contractual circumstances (such as penalties from customers, partner claims, contractors claims). 

The project cashflow discussed so far follows a pattern typical of E P projects a number of years of expenditure (giving rise to cash deficits) at the beginning of the project, followed by a series of cash surpluses. The annual cashflows need to be evaluated to incorporate the timing of the cash flows, to account for the effect of the time value of monef. The technique which allows the values of sums of money spent at different times to be consistently compared is called discounting. 

What we have calculated is the present value (at a particular reference date) of a future sum of money, using a specified discount rate. In any discounting calculation, it is important to quote the reference date and the discount rate. 

If you were offered 7,130 today, or 10,000 in exactly 5 years time, you should be indifferent to the options, unless you could find an alternative investment opportunity which yielded a guaranteed interest rate better than the bank (in which case you should accept the money today and take the alternative investment opportunity). 

In the above example, the discount rate used was the annual compound interest rate offered by the bank. In business investment opportunities the appropriate discount rate is the cost of capital to the company. This may be calculated in different ways, but should always reflect how much it costs the oil company to borrow the money which it uses to invest in its projects. This may be a weighted average of the cost of the share capital and loan capital of a company. 

Once the concept of discounting is accepted, the procedure becomes mechanical. The general formula for discounting a flow of money cooccurring in tyears time to its present value Cq assuming a discount rate r is... 

The cashflow discussed in Section 13.2 did not take account of the time value of money, and was therefore an undiscounted cashflow. The discounting technique discussed can now be applied to this cashflow to determine the present value of each annual cashflow at a specified reference date. 

It is often more useful to use the discounted values, to allow for the time effect of money, hence... 

During the producing life, most of the money spent on the field will be on operating expenditure. This includes costs such as... 

The Supplement B (reference) contains a description of the process to render an automatic construction of mathematical models with the application of electronic computer. The research work of the Institute of the applied mathematics of The Academy of Sciences ( Ukraine) was assumed as a basis for the Supplement. The prepared mathematical model provides the possibility to spare strength and to save money, usually spent for the development of the mathematical models of each separate enterprise. The model provides the possibility to execute the works standard forms and records for the non-destructive inspection in complete correspondence with the requirements of the Standard. 

This presentation will highlight some NDT applications whereby NDT can be transformed from a "necessary evil" into a situation that is "of beneficial value" to the user. From an activity that has to be done because it is required by the code, to a solution to a problem that can improve safety, enhance quality and save money. 

In maintenance practice, we base our decisions on NDT that is performed during shutdowns. A significant amount of money could be saved if we would have NDT methods that minimise the time required for that shutdown, or, a step further, avoid it by performing inspections onstream. 

The onus for the organisation of any inspection programme beyond that required by Class rests with the owner or operator of the ship. Under certain circumstances, for example, when the propagation of cracks could lead to pollution through the loss of cargo, an owner of an oil tanker operating in US coasted waters may spend a considerable amount of money on preventative inspections. 

A great deal of tax money is spent in support of fundamental research, and this is often defended as having an intrinsic virtue. To take the present topic as an example, however, the study of just how molecules adsorb and react on a surface is fascinating and challenging, yet the tax-paying public should not be asked merely to support the esoteric pleasures of a privileged few. The public should expect the occasional major practical advance whose benefits more than pay for the overall cost of all research. The benefits in the present case come from the discovery and development of catalytic processes of major importance to an industrial society. 

The initial step is to identify which database, from a few thousands worldwide (about 10 000 in 2002), provides the requested information. The next step is to determine which subsection of the topic is of interest, and to identify typical search terms or keywords (synonyms, homonyms, different languages, or abbreviations) (Table 5-1). During the search in a database, this strategy is then executed (money is charged for spending time on some chemical databases). The resulting hits may be further refined by combining keywords or database fields, respectively, with Boolean operators (Table 5-2). The final results should be saved in electronic or printed form. 

The analogous procedure for a multivariate problem is to obtain many experimental equations like Eqs. (3-55) and to extract the best slopes from them by regression. Optimal solution for n unknowns requires that the slope vector be obtained from p equations, where p is larger than n, preferably much larger. When there are more than the minimum number of equations from which the slope vector is to be extracted, we say that the equation set is an overdetermined set. Clearly, n equations can be selected from among the p available equations, but this is precisely what we do not wish to do because we must subjectively discard some of the experimental data that may have been gained at considerable expense in time and money. 

The Nobel Prizes also come with a monetary award, which that year amounted to close to a million dollars. Besides paying taxes on it (the U.S. is the only country that taxes the Nobel Prizes), we donated part of it to help endow a chair in chemistry at USC as well as a chemistry prize 111 Hungary. The balance was shared with our children. It was thus not difficult to dispose of the prize money, but money, of course, is really not the essential part of the Nobel. 

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