Site Selection March 2010

Lecture Outline Introduction The factors affecting site selection Sites screening

Introduction The geographical location of the final plant can have strong influence on the success of an industrial venture. Primarily, the plant should be located where the minimum cost of production and distribution can be obtained, but other factors, such as room for expansion and safe living conditions for plant operation as well as the surrounding community, are also important.

The factors affecting site selection 1. Raw materials availability 2 . Markets 3 . Energy availability 4 . Climate 5 . Transportation facilities 6 . Water supply 7 . Waste disposal 8 . Labor supply 9. Taxation and legal restrictions 1 0 . Site characteristics 11. Flood and fire protection . 1 2 . Community factors

1. Raw materials Locate the plant near raw material source for: Plants that produce bulk (Product shipping < feed shipping). Ex: Ethylene factories are in the Middle East, close to supplies of cheap ethane from natural gas.

2. Markets The location of markets or intermediate distribution centers affects the cost of product distribution and the time required for shipping. Buyer usually finds it advantageous to purchase from nearby sources. Markets are also needed for by-products Oil refineries, on the other hand, tend to be located close to major population centers, as an oil refinery produces many grades of fuel, which are expensive to ship separately.

2. Markets (cont.) Locate the plant near the market (primary) in the following cases: materials that are produced in bulk quantities cost of the product per metric ton is relatively low the cost of transport is a significant fraction of the sales price Ex: cement, mineral acids, and fertilizers Oil refineries tend to be located close to major population centers (?) Less important for low-volume/high price (?)

3. Energy Power, steam, and fuel. Electrolytic processes are often located near large hydroelectric installations. The local cost of power can help determine whether power should be purchased or self-generated.

4. Climate Cold climate  construction of protective shelters around the process equipment, special heating for equipment and pipe runs. Hot weather  special cooling towers or air-conditioning equipment. Stronger structures at locations subject to high winds (cyclone/hurricane areas) or earthquakes.

5. Transportation facilities Water, railroads, and highways Depend on the kind and amount of products and raw materials. If possible, the plant site should have access to all three types( or at least two). Effective transportation facilities for the plant personnel are necessary.

6. Water supply Uses? Large river or lake (deep wells if the amount of water is not too great). The temperature, mineral content, silt or sand content, bacteriological content, and cost for supply and purification treatment.

7. Waste disposal Adequate capacity and facilities for correct Cost of waste disposal EIA ?

8. Labor supply Prevailing pay scales, restrictions on number of hours worked per week, competing industries that can cause dissatisfaction among the workers, and variations in the skill and productivity of the workers. Construction workers may be from outside, but skilled operation workers must be considered.

9. Taxation and legal restrictions Tax rates Required permits ( easy??) in terms of cost and time delays.

10. Site Characteristics The topography and the soil structure (construction costs). The cost of the land , local building costs and living conditions. Future expansion.

11. Flood and Fire Protection Risks of flood or hurricane damage. Assistance from outside fire departments should be available

12. Community factors ESIA? Be acceptable to the local community safe location of the plant so that it does not impose a significant additional risk to the local population. Plants should generally be sited so as not to be upwind of residential areas under the prevailing wind.

12. Community Factors (cont.) Water consumption and discharge. Local traffic New jobs and economic prosperity Minimum number of facilities for satisfactory living of plant personnel.

Sites Screening 1st: raw materials, markets, energy supply, and climate. 2nd: transportation facilities and water supply. 3rd: all the factors. 4th: detailed analysis of the remaining sites.

Center-of-Gravity Method North-South East-West 120 – 90 – 60 – 30 – – | | | | | | 30 60 90 120 150 Arbitrary origin (30, 120) (1) (130, 130) (4) (90, 110) (3) (60, 40) (2)

Center-of-Gravity Method Number of Containers Store Location Shipped per Month 1- (30, 120) 2,000 2- (90, 110) 1,000 3- (130, 130) 1,000 4- (60, 40) 2,000 x-coordinate = (30)(2000) + (90)(1000) + (130)(1000) + (60)(2000) 2000 + 1000 + 1000 + 2000 = 66.7 y-coordinate = (120)(2000) + (110)(1000) + (130)(1000) + (40)(2000) 2000 + 1000 + 1000 + 2000 = 93.3

Center-of-Gravity Method North-South East-West 120 – 90 – 60 – 30 – – | | | | | | 30 60 90 120 150 Arbitrary origin (30, 120) (1) (130, 130) (4) (90, 110) (3) (60, 40) (2) Center of gravity (66.7, 93.3) +

References M.S. Peters and K.D. Timmerhaus , “Plant Design and economics for chemical chemical engineers”, 4th edition, 1991. G.TOWLER and R. SINNOTT, “Chemical engineering Design: Principles, practice and Economics of plant and Process design”, 2008. PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e.