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Production of Fluorescent

Backbone Molecule
CME 431-1 Group 5
Bradley Siefker, RJ Schratz, David Devlin, Trevor Langton
April 12th, 2017
Table 1: Equipme nt De sign Progress Table

De taile d
Unit Ene rgy Mate rials of
Unit Mass Sizing Costing
ID Balance s Construction
Balance s
Spray Drying Complete Complete Complete
R1 Complete Complete
Reactor
DPCM Production Complete Complete Complete
R2 Complete Complete
Reactor
Catalytic TPE Complete Complete Complete
R3 Complete Complete
Production Reactor
Distillation Column D1 Complete Complete Complete Complete Complete

Magnetic Separator S1 Complete Complete Complete Complete Complete

Centrifuge S2 Complete Complete Complete Complete Complete

Phosphorous
Oxychloride Heat H1 Complete Complete Complete Complete Complete
Exchanger
DPCM Heat Complete Complete Complete Complete Complete
H2
Exchanger
Economics
In this section, the economic viability of the production of 10,000 tons of Formatted: Indent: First line: 0.5"

tetraphenylethylene (TPE) is explored. This analysis centers on estimationssestimations of the


purchase costs of major unit operations. These costs are used to project the total, fixed, and
working capital investments. Heuristics associated with the capital costs and labor, as well as raw
material costs, were used to calculate the total product cost. The flow rate and cost of all unit
operation utilities are summarized. Lastly, the investment attractiveness of a 20 year project life
is analyzed by several metrics: return on investment (ROI), net profits, and net present worth
(NPW)W.

Purchased Equipment Cost


The purchase cost of each unit operation has a semi-log plots to estimate equipment costs
in 2002 dollars [1]. Each piece of equipment was was initially costed using carbon steel. Heat
exchangers were are sized according to total heat transfer area. Due to low heat transfer area,
shell and tube heat exchangers were are sized using semi-log relationships for double pipe heat
exchangers. The fuel fire reboilers for the distillation column reboiler and Commented [RJ1]: Revise since this was changed.

dichlorodiphenylmethane (DPCM) reactor heater were are sized based on operation heating
demands. The packed distillation column was is costed based on the total height of the column.
The volumetric flow rate of solids into the centrifuge providedprovidesed information to cost the
centrifuge. Reactor volumes arewere used to estimate the costs of reaction vessels. Tables to
adjust the cost of materials from carbon steel arewere used to provide final cost estimations on
all unit operations. Table 2 below provides the figures and tables used in costing all equipment in
2002 dollars.
Table 2: Purchased Equipment Cost Estimation Tables Used
Equipment Cost Type Costing Source
General Figure 14-15 Carbon Steel 4135 kPa [1]
Heat Exchangers
Material Adjustment Table 14-8 [1]
Distillation General Figure 15-16 Carbon Steel [1]
Column Material Adjustment Material Cost Adjustment [2]
Centrifuge General Figure 15-43 Carbon Steel [1]
General Figure 13-15 Stainless Steel [1]
Reactor
Material Adjustment Material Cost Adjustment [2]
Reboiler/Heater General Figure 14-38 [1]
The table above includes all major unit operations except for the magnetic drum separator.
Information on the purchase cost of a magnetic drum separator was is provided from consultation
with Puritan Magnetics Inc. The magnetic separator quote is cost was quotcosted according to
the mass flow of solids into the magnetic drum.
Equipment information and relevant figures and tables were are used to estimate the cost
of for the proposed TPE production route in 2002 dollars. To adjust costs to 2017 dollars,
Chemical Engineering Plant Cost Indices (CEPCI) for 2002 [3] and 2017 [4] were iares
usedresearched. Appendix A provides the 2002 and 2017 CEPCI values and the equation
necessary to adjust cost. Table 3 below provides the final equipment cost for TPE production in
2017 dollars.
Table 3: Purchased Equipment Cost of Unit Operations
Unit Operation 2017$ Cost
POCl3 HXN $ 61,000
DC Reboiler $ 49,000
Condenser, Sensible $ 61,000
Condenser, Latent $ 104,000
Heating Tubes, DPCM Rxtor $ 81,000
Vapor Condensor, DPCM Rxtor $ 61,000
TPE Reactor Heating Coils $ 30,000
DPCM Reactor $ 1,490,000
PCl5 Reactor $ 18,000
TPE Reactor $ 35,000
Distillation Column $ 140,000
Packing, Distillation Column $ 460,000
Centrifuge $ 137,000
Magnetic Separator $ 10,000
Total Cost $ 2,730,000

Capital Costs
Heuristics [1][] suggest cost ranges of each component of the Fixed Capital Investment Formatted: Indent: First line: 0.5"

(FCI). Each of the selected percentages lies within these ranges. The purchased equipment cost
was ischosen to be 25 percent of the costs, and each cost was is calculated in proportion to this
expense. These estimations are listed in table 43.
Table 43: Fixed Capital Investments
Component Percent of FCI Estimated Cost
Direct Costs
Purchased Equipment 25 $ 2,730,000
Purchased Equipment Installation 8 $ 880,000
Instrumentation and Controls (Installed) 6 $ 660,000
Piping (Installed) 9 $ 990,000
Electrical Systems (Installed) 5 $ 550,000
Buildings (Including Services) 2 $ 220,000
Yard Improvements 2 $ 220,000
Service Facilities (Installed) 10 $ 1,100,000
Land 1 $ 110,000
Indirect Costs
Engineering and Supervision 10 $ 1,100,000
Construction Expenses 8 $ 880,000
Legal Expenses 1 $ 110,000
Contractor's Fee 3 $ 330,000
Contingency 10 $ 1,100,000
Total 100 $ 11,000,000
The sum of the fixed capital investments (FCI) is $11 million. Assuming working capital (WC)
to be 20 percent of the FCI, this cost is $2.2 million. The total capital investment (TCI) is $13.2
million.

Utilities
Utility flow rates, temperatures, and demands are listed in table 54. Formatted: Indent: First line: 0.5"

Table 54: Utility Stream Conditions


Description Mass Flow Rate (kg/hr) Temp In (C) Temp Out (C) Utility (kW)
Cooling Water, Condenser (Latent) 6812 25 40 118.7
Cooling Water, Condenser (Sensible) 285 25 40 4.96
Cooling Water, DPCM Reactor 4717 25 40 79.2
Cooling Water, PCL5 Reactor 52028 25 40 97.5
Cooling Water, POCl3 HEX 1032 25 40 18
Electricity, Centrifuge N/A N/A N/A 11.2
Electricity, Magnetic Separator N/A N/A N/A 0.373
Natural Gas, Distillation Col 7 N/A N/A 85.5
Natural Gas, DPCM Reactor 21 N/A N/A 258.3
Total 673.7
Description Mass Flow Rate (kg/hr) Temp In (C) Temp Out (C) Utility (kW)
Cooling Water, Condenser (Latent) 6812 25 40 118.7
Cooling Water, Condenser (Sensible) 285 25 40 5
Cooling Water, DPCM Reactor 4717 25 40 79.2
Cooling Water, PCL5 Reactor 52028 25 40 97.5
Cooling Water, POCl3 HEX 1032 25 40 18
Electricity, Centrifuge N/A N/A N/A 11.2
Electricity, Magnetic Separator N/A N/A N/A 0.37
Natural Gas, Distillation Col 6.778 N/A N/A 85.5
Natural Gas, DPCM Reactor 20.478 N/A N/A 258.3
Total 673.8

The unit and annual costs of each utility are listed in table 65. Annual costs assume 8760
operating hours each year. The heating value of natural gas in this process is 45.4 MJ/kg.
Table 65: Unit Operation Utility Demands
Description Mass Flow Rate (kg/hr) Utility (kW) Unit Costs Units, Unit Cost Cost
Cooling Water, Condenser (Latent) 6812 118.7 0.00005 $/kg $ 2,990
Cooling Water, Condenser (Sensible) 285 4.96 0.00005 $/kg $ 125
Cooling Water, DPCM Reactor 4717 79.2 0.00005 $/kg $ 2,100
Cooling Water, PCL5 Reactor 52028 97.5 0.00005 $/kg $ 22,900
Cooling Water, POCl3 HEX 1032 18 0.00005 $/kg $ 452
Electricity, Centrifuge N/A 11.2 0.250 $/kW*hr $ 24,500
Electricity, Magnetic Separator N/A 0.373 0.250 $/kW*hr $ 817
Natural Gas, Distillation Col 7 85.5 0.132 $/kg $ 8,100
Natural Gas, DPCM Reactor 21 258.3 0.132 $/kg $ 24,300
Total - 673.7 - - $ 86,300

Formatted: No underline

Total Product Cost


The total product cost is the sum of direct production costs, fixed charges, and general Formatted: Indent: First line: 0.5"

expenses. Heuristics for elements of these costs are provided in table 6-18 [1] as a range of
percentages of other cost categoriess.costs. Selected percentages and the corresponding cost
basis for each are provided in table 7X below.
Table 7X: Selected Heuristic Percentages
Heuristic % Selected Cost Basis
Supervisory and Clerical Labor 15 Operating Labor
Maintenance and Repairs 6 FCI
Operating Supplies 12.5 Maintenance and Repairs
Laboratory Charges 20 Operating Labor
Patents and Royalties 3 Total Product Cost
Local Taxes 4 FCI
Insurance 1 FCI
Rent 12 Rented Property
Financing 10 TCI
Plant Overhead Costs 50 Labor, Supervision, & Maintenance
Adminstrative Costs 20 Labor, Supervision, & Maintenance
Distribution 10 TPC
R&D 3 TPC
Costs which cannot be estimated by heuristic include raw materials cost, operating labor cost,
utility cost and depreciation. Depreciation and utility costs are computed in their respective
sections. Raw materials costs are the sum of annual chemical costs, which is given by equation
1x below.
= [ ] [ ] (1)()
Nickel-glyme catalyst is recycled continuously, but will be replaced each year to ensure it
remains fresh. This is a financing costing precaution, as there is no indication of catalyst
poisoning in the process. Additionally, trace amounts of chlorine may be needed to supplement
make up chlorine. The raw materials cost of each chemical is provided in table 8x below.
Table 8X: Raw Material Cost
Species Flow Rate Hours/yr Total Cost
Benzophenone 6.22 8760 $ 9,900,000
Cl2 0.01 8760 $ 2,000
PCl3 6.22 8760 $ 8,200,000
Ni-Glyme 6.28 1 $ 140,000
Total - - $ 18,300,000
The operating labor requirement of each unit operation was given by table 6-13 of Peters, Formatted: Indent: First line: 0.5"

Timmerhaus, and West [1]. Table 9 below gives the labor requirement for each type of unit
operation.
Table 9X: Operating Laborers Required
Equipment Type Workers/Unit/Shift Number of Units Number of Shifts Total Workers
Heat Exchangers 0.1 9 3 2.7
Reactors 0.5 3 3 4.5
Distillation Column 0.5 1 3 1.5
Centrifugal Separator 0.5 1 3 1.5
Magnetic Drum Separator 0.1 1 3 0.3
Total 11
Labor for the process is assumed to be skilled, given the significant number of hazards in the
process; labor rates for such employees is $33.67 in 2002 dollars [1]. Using data from thetThe
Bureau of Labor Statistics, wages states, wages increases for unionized works have increased
approximately 30 percent from 2005 to 2016 .[53]. ThisProportionally, thisThis translates to
roughly a 40% in wage increases since 2002. Based on this increase, employees are paid $47 per
hour. With 88 labor hours per day, labor cost is $1.52 million. The eEach of the aforementioned Formatted: Font: Not Highlight

costs and the total product cost are listed in table 10X below.

Table X:10: Total Product Cost


Cost Type Percentage Cost
Manufacturing Cost 85 $ 25,750,000
Direct Production Costs 73 $ 22,100,000
Raw Materials 60 $ 18,300,000
Operating Labor 5 $ 1,520,000
Supervisory and Clerical Labor 1 $ 228,000
Utilities 0.3 $ 87,000
Maintenance and Repairs 2 $ 660,000
Operating Supplies 0.3 $ 82,000
Laboratory Charges 1 $ 304,000
Patents and Royalties 3 $ 910,000
Fixed Charges 8 $ 2,440,000
Depreciation 2 $ 550,000
Local Taxes 1 $ 440,000
Insurance 0.4 $ 110,000
Rent 0.1 $ 14,000
Financing 4 $ 1,320,000
Plant Overhead Costs 4 $ 1,210,000
General Expenses 15 $ 4,500,000
Adminstrative Costs 2 $ 490,000
Distribution 10 $ 3,100,000
R&D 3 $ 910,000
Total Product Cost 100 $ 30,250,000

At 60% of the total product cost, the largest driver is raw materials. Raw material cost is Formatted: Indent: First line: 0.5"

mostly due to the purchase of the chemicals benzophenone and phosphorus trichloride.
Distribution and marketing costs are also a significant portion of the product cost, as the product
is still an emerging market. Table 6-18 Table 6-18 of Peters and Timmerhaus and. Commented [RJ2]: Page 273. a brief statement explaining how
elements of the total product cost were estimated . A concise
discussion of the total product cost of your process

Formatted: Highlight
Revenues
Formatted: Highlight
Two products are sold from this process TPE and phosphorus oxychloride (POCl3). Formatted: Highlight
Formatted: No underline
Each year, 7.48 million kg of POCl3 sells for $1.1 per kg [6], with revenues of $8.2 million. With
Formatted: Indent: First line: 0.5"
a selling price of $4002.79/kg and an annual production rate of 9.05 million kg, TPE generates
$25.33.62 billion million in annual revenue. This selling price reflects the point at which the
discounted cash flow rate of return (DCFROR) is zero. Each year, 7.48 million kg of POCl3 sells
for $1.1 per kg, with revenues of $8.2 million. Total revenues from this process are $33.5$3.64 mbillion.
Depreciation
A 20 year, straight-line depreciation schedule was is applied to all components of FCI Formatted: Indent: First line: 0.5"

except land. The value of these investments, V, is depreciated evenly over each n year as shown
in equation 2sn years.

=
(2)()

The gross annual profits are given by is the net value of revenues and the total product cost, as in
equation 3.
= ` (3)()
The federal income tax is a fraction of the difference between gross profits and the depreciation
allowance, shown in equation 4.. The tax rate used was 35%.
= [ ] (4)()
The corresponding depreciation allowance, revenues and federal taxes are listed in table 116. Commented [RJ3]: Federal Taxes will be dependent upon the
selling price.
Table 611: Depreciation Allowance and Taxes Paid Commented [RJ4]: An estimate of the depreciation allowance
and annual taxes paid by your company, with appropriate tables and
Depreciable Assets $ 10,820,000 discussion.
Depreciation Allowance $ 541,000
TPC $ 30,250,000
Revenues $ 33,500,000
Gross Profits $ 3,250,000
Fed Income Tax $ 1,140,000
Depreciable Assets $ 82,000,000
Depreciation Allowance $ 4,100,000
TPC $ 69,800,000
Revenues $ 3,630,000,000
Gross Profits $ 3,560,000,000
Fed Income Tax $ 1,250,000,000
Formatted: No underline

Profitability Measures
Equation 5x below is used to calculate the net annual profit (NAP) of the proposed TPE
production route.
= (5)()
The estimated NAP of this process is $2.3133.5 mbillion per year. Four metrics additional metrics were
calculated to highlight the financial viability of the proposed TPE production route. The payout
time and the return on investment (ROI) were calculated from equations 6x and 7x respectively.

=
(6)()

= (7)()

The payout time and ROI are 0.04 years and 2300%5.2 years and 16%, respectively. With such
thea low payout time and an ROI above 15%%, the financial viability is promising. The last two
calculated financial metrics are the net present worth (NPW) and of the project and the
discounted cash flow rate of return (DCFROR). The NPW calculates project profitability
releativerelative to other investments yielding a 15% return. The DCFROR calculates the
interest an alternative investment would have to be torate required to break even on the over the
life of the project. The interest rate which makes the NPW equal to 0 is the DCFROR. Table 12x
below provides the cash flows necessary to calculate the NPW and DCFROR.
Table 12X: Annual Cash Flows
Year(s) Cash Flows Value
0 -TCI $ (13,200,000)
1 - 19 NAP $ 2,110,000
20 NAP, WC $ 4,310,000
Year(s) Cash FlowsValue
0 -TCI -$99,360,000
1 - 19 NAP $ 2,310,000,000
20 NAP, WC $ 2,320,000,000.0
Equations 8x and 9x below are used to calculate the NPW and DCFROR.
+
= + =19
=1 ((1+)) + (1+)20
(8)()
+
0 = + =19
=1 ((1+) ) + (1+) 20 (9)()

With an interest rate () of 15% the NPW of the project over 20 years is $12.5 billion $125,000.
The calculated DCFROR of the project is 152325%. These measures further underscore the
financial viability and attractiveness of this project.
Formatted: No underline

Financial Conclusions
All cost estimations of total capital investments and net annual profits indicate this project
is financially feasible. Producing over 9 million kg of TPE per year at a price of $400 2.79 per kg
allowsforannualprofitsof2.31b2.11miliondolars.AthispriceandproductionratetheNPWof$12.5bilionandDCFRORof2325%wouldmaketheprojectatractivetoanyinvestor.Thispricegeneratesadiscountedcashflowrate
of return of 15%. The current market value of TPE is much greater, selling for roughly $650 per
kg [7]. Primary target markets for TPE are florescent backbone, OLED televisions, and solar
panelmanufacturers.Severalissuesmayexistwithsomeofthesefinancialestimates.Medicalcompaniesproducingfluorescentbackbonesmaybewilingtopaythe$400perkgpriceselected
more than other markets, due to higher purity requirements in drug manufacturing.
One concern regarding the financial attractiveness of this project is the demand for TPE. , Formatted: Indent: First line: 0.5"

but it would be possible the global fluorescent demand for TPE would not be 9 million kg for the
entire life of the project. Since TPE is a new market, demand may lag behind supply during early
years of production.The remaining TPE produced could be purchased by companies producing
solar panels and OLED TVs to utilize all 9 million kg produced annually. However, these
companies may not need the 99.5% purity supplied from this production route and may be
unwilling to pay $400 per kg. To allow for yearlong production to continue the TPE may need to
be sold different prices to accommodate all markets using TPE. Initial sale prices may need to be
held low in early years of the project to encourage demand, particularly in markets such as
OLEDs and solar panels.Despite the potential price adjustment, on the basis ofbased on TPE
sale alone, this project is financially viable and attractive even at a lower price. While it is
unlikely the current market price would be maintained across all markets, the process remains
profitable, even with a large price cut. Sale at 1% of the current market value would produce a
positive net present worth, highlighting the financial attractiveness of this project.
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References Formatted: Space After: 0 pt

[1] M. Peters, K. Timmerhaus and R. West, Plant Design and Economics for Chemical
Engineers, 1st ed. Boston [u.a.]: McGraw-Hill, 2002 Formatted: Indent: First line: 0.5", Space After: 0 pt

[2] Steel Tank Institute.2017.[Online.]


http://www.steeltank.com/Portals/0/Pressure%20Vessels/SSWseminarOct2012/Relative Field Code Changed
Formatted: No underline
%20Cost%204%2015%202012.pdf
Formatted: Indent: First line: 0.5"
%20Cost%204%2015%202012.pdf. [Accessed: April 6, 2017] Formatted: No underline

[3]"Economic Indicators", Chemical & Engineering News, no. 5, p. 110, 2002. Formatted: No underline

[4] "Economic Indicators", Chemical and Engineering News, 2017.


http://www.chemengonline.com/issues/2017-03 [Access March 31, 2017]. Formatted: Indent: First line: 0.5", Add space between
paragraphs of the same style, Allow hanging punctuation,
[5] "COMPENSATION (NOT SEASONALLY ADJUSTED): Employment Cost Index for total Adjust space between Latin and Asian text, Adjust space
between Asian text and numbers, Font Alignment: Auto
compensation, for private industry workers, by bargaining status, census region, census Formatted: Font: Font color: Black

divisions, and area", Bls.gov, 2017. [Online]. Formatted: Space After: 0 pt, Line spacing: 1.5 lines
Formatted: Indent: First line: 0.5", Space After: 0 pt, Line
https://www.bls.gov/news.release/eci.t06.htm. [Accessed: 07- Apr- 2017]. spacing: 1.5 lines
Formatted: Font: Italic
[6]"Export Data and Price of pocl3 | Zauba", Zauba.com, 2017. [Online].
https://www.zauba.com/export-pocl3-hs-code.html. [Accessed: March 2, 2017]. Formatted: Indent: First line: 0.5", Space After: 0 pt, Line
spacing: 1.5 lines
[7]"CAS No. 632-35-9, TETRAPHENYLETHYLENE Price _ CAS Number", Molbase.com, Formatted: Font: Font color: Black

2017. [Online]. http://www.molbase.com/en/cas-632-35-9.html. Formatted: Line spacing: 1.5 lines

[Accessed: April 3, 2017].


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Appendix A: CEPCI Cost Adjustment Factors Formatted: Centered

Equation 10 is used to convert chemical engineering process prices to account for inflation from
2002 to 2017. Formatted: No underline

2017
( 2017 ) = 2002
( 2002 ) (10)

Table 13 lists each of the indices by equipment type.


Table 13: CEPCI 2002 and 2017 Indices Formatted: No underline
Formatted: Centered
2002 CEPCI [3] 2017 CEPCI [4] Multiplier
Equipment 429.9 654.1 1.522
HEX and Tanks 351.4 567.6 1.615
Process Machinery 437.8 663.5 1.516
Pipes, Valves, Fittings 534.2 818.9 1.533
Process Instruments 359.4 394 1.096
Pumps & Compressors 699.7 966 1.381
Electrical Equipment 341.9 510.7 1.494
Structural Supports & Misc 409.2 707.9 1.730
Construction Labor 300.9 326.1 1.084
Buildings 385.2 546 1.417
Engineering & Supervision 346.3 313.5 0.905