Profitability Analysis Our client is evaluating a number of scenarios How does our process compare with the others?

Basis of Comparison Cost a demo unit, not a world scale plant Include both the syngas section and the methanol section (from natural gas to methanol) The syngas plant contributes $10M to capital cost, $7M to annual operating cost – exclusive of natural gas cost

CapCost Available on the CD Covers everything from equipment cost estimation to profitability analysis CD also contains a tutorial which describes how to run the program It is strongly recommended that you view this (requires a computer with sound) Where parameters are not given in the notes, use the defaults in CapCost

Sheet “User Options” is used to set various parameters

Sheet “Equipment Summary” is used to estimate equipment costs Change the names to something reasonable e.g. “Compressor Drive”

Sheet “Utilities Summary” is used to estimate costs of steam, cooling water etc. Click on the “Unspecified” cells to enter type and rate of utility (it knows the unit cost)

Sheet “COM Summary” is used to enter costs of raw materials and revenue from products COM is Cost Of Manufacturing“

Sheet “COM Summary”also allows enter of various economic parameters

Sheet “Cash Flow Analysis” displays the calculations

Sheet “Monte Carlo Simulation” does a sensitivity analysis Most probable value of NPV is $5M 25% chance that it is worse than -7M 25% chance that it is better than 18M

Cost Data CapCost has data on utilities, waste disposal, manpower requirements (take these as current costs) The waste (mixed alcohols) is classified as hazardous The “Course Description” on the web site has references to costs of chemicals and commodities

More Cost data Natural gas prices are normally quoted in $ per million BTU’s – assume a heat value of 23,000 BTU’s/pound With long term contracts we can expect to get natural gas at 80% of the spot price CO 2 is a waste product we will get at zero cost Purge gas streams have heating value but contain components that are not good for the furnaces. Overall they have zero value.

Catalyst Cost Include the cost of initially filling the reactors in the capital cost Calculate the annual operating cost by assuming a lifetime of two years The cost is $24 per litre of reaction space This includes a disposal fee (the manufacturer takes it back)

Additional Documentation See the CD sections “Profitability Analysis” and “Wrap-up Session” The workshop on “Economic Analysis” also contains information on the concepts behind profitability assessment You will want a copy of the HYSYS Costing Version case to get rates, reactor volumes etc.

Material to Submit Paper: A three page executive summary The group notebook In folder “Final Report” in group folder: Copy of CapCost spreadsheet (this will cover both my Profitability assignment, and Dave Mody’s Capital Cost assignment) By 11:00 AM on December 5

Wrap-up Session Three of the reports will be selected, and the groups asked to discuss their findings No slides, but be prepared to stand up and talk about your report for 5-10 minutes

Content of Report State our objectives and the capital cost Give a brief description of the process Identify any issues of concern in the design (e.g. designs or costs on shaky grounds) Summarize the groundrules for the economic analysis Answer the three questions at the end of the CD document “Profitability Analysis”