1. by Pınar Özbay Nihal Payza Zeynep Pekişen Deniz Uğurlar
ISOPROPYL ALCOHOL PRODUCTION PLANT CHIPA
by Pınar Özbay
Nihal Payza
Zeynep Pekişen
Deniz Uğurlar

2. Information about... Isopropyl Alcohol IPA Manufacturing Processes
Process Selection
Market Research
Design Capacity of IPA
Process Flow Diagram
Economical Evaluation
Purchased Equipment Cost
Capital Investment Calculations
Total Product Cost Calculations
Cash Flow Calculations
Profitability Analysis
Break-Even Point
Assumptions
Summary

3. Isopropyl Alcohol C3H7OH
Flammable , colorless liquid with a strong and pleasant odor
Miscible with water , ethanol , acetone and benzene
Applications
Pharmaceuticals ,pesticides ,coatings
As cleaning agents used on electronic devices
Anti-freeze agent in fuel
C3H7OH

4. IPA Manufacturing Processes
Direct Hydration
combination of water and propylene with acidic cation exchange resin catalyst
Indirect Hydration
Reaction of propylene with sulfuric acid with a heterogenous polymeric acid catalyst
Acetone
Hydrogenation of acetone
Advantages of Direct Hydration
Thermally stable polymeric catalyst
High product quality improvement
Cost effective
Environmental friendly
High selectivity of IPA

5. Process Selection
Process for producing isopropyl alcohol, US 5,763,693
COMPARED
PROPERTIES
Section 3.2.1
Patent no:
US 4,352,945
Section 3.2.2
US 6,833,483
Section 3.2.3
US 4,760,203
Section 3.2.4
US 5,763,693
Raw materials (4) 10 9
End product (10) 7
Conversion (8) 3
Reactor Type (5)
Catalyst type (6)
Purity of products (7) 5
Environmental Effects (6)
Operating Conditions (6)
10 
Data Availability (10)
Energy Consumption (6) 8
Complexity of the proces(9)
Economic aspects (8)
Total
626
597
631
728

6. Market Research
Largest producers around the world : Shell, ExxonMobil, Sasol and Dow (72%)
ARKEM KİMYA in Turkey : %34 of total market share

7. Design Capacity of IPA Reasons of fluctuation TUIK DATA
Decrease in demand for IPA
Economis crisis
New substitute chemicals as ethyl alcohol
Consumption data taken from ARKEM Kimya consistent with TUIK data

8. Design Capacity of IPA Year difference calculation between countries
Population, GDP, growth rates and consumption of countries
Calculation of future population and GDP of Turkey
reference year: 2005
Calculation of consumption of Turkey per capita
Final design capacity of Turkey

9. Design Capacity of IPA The best fit Logaritmic model
Consumption Projections of IPA
3 year investment ( )
2 year ramp up ( )
1st year  0.5 * capacity
2nd year 0.9 * capacity
3rd year  full capacity
14 year operation ( )
The best fit Logaritmic model
full capacity of IPA in  43,000 tons/year

10. Process Flow Diagram Direct Hydration Unit (Packed Bed) Distillation
No side reaction
X = 0.75
adiabatic rxn at 80atm
T : 418  423
Sulfonated ion exchange resin
Distillation
Ttop:337K
Tbottom:348
Propylene recycle to mixer
Bottom: propane
Process Flow Diagram
96% propylene
4% propane
Mixer
Centrifugal Compressors
Efficiency : 0.75
Pumps
Efficiency :0.7
propane
propane
Gas-Liquid Separator
T: 354 K
Top: Propane
Bottom: IPA + 10% water
propane
Extraction
T: 410K
Extraction agent: propane
Top: Isopraponal, water, propane
Bottom: Water recycle to mixer
water
90% IPA
10% water

11. Purchased Equipment Cost
Heat exchangers  Type of material-Carbon Steel
Heat transfer area-500.8m2
Type factor for fixed tube sheet
Compressors & Expanders  Required power
Type-Centrifugal
Pumps  Volumetric flow rate
Pressure & Pressure adjustment factor
Material adjustment factor (cast iron)
Reactor  Type-Fixed bed jacketed type
Construction material-Stainless Steel
atm
Distillation  Diameter- 0.8m
Number of stages-50
Type of material-Carbon Steel
Extraction  Diameter-1.5m
Height-8m
Mixer  Type-Rotary,Double Cone
Volume-7m3
Valve  Nominal Diameter-0.13m
Type-Pressure regulators for gases and liquids
Storage Tanks & Flash Drum  Volume-9.12m3
(for flash drum)
Chemical Engineering
Plant Cost Index

12. Purchased Equipment Cost
Example for Heat Exchanger
Construction material-Carbon Steel, Total heat transfer area-500.8m2,
Pressure adjustment factor- 1.5 ( for operating pressure 80atm)
Type factor-0.8 (for fixed tube sheet)
Figure 6.3b (from Sinnott)
Purchased Cost is read as 100,000$
Sınnot grafık bak!!!

13. Total Purchased Equipment Cost

14. Capital investment calculations
Fraction of delivered purchased equipment cost for fluid processing plant
Multiplication of fractions with purchased equipment cost (million $)
Direct Costs
Delivered purchased equipment cost
1.100
6.887
Purchased equipment installation
0.470
3.560
Instrumentation&Controls(installed)
0.360
2.727
Piping (installed)
0.680
5.151
Electrical systems (installed)
0.110
0.833
Buildings (including services)
0.180
1.364
Yard improvements
0.100
0.758
Service facilities (installed)
0.700
5.303
Total direct costs
27.271
Indirect Costs
Engineering and supervision
0.330
2.500
Construction expenses
0.410
3.106
Legal expenses
0.040
0.303
Contractor's fee
0.220
1.667
Contingency
0.440
3.333
Total indirect costs
10.908
Fixed capital investment
(direct cost + indirect costs)
38.179
Working capital investment
0.890
6.742
Total capital investment
44.921
Capital investment calculations
Fixed capital investment : Direct costs + Indirect costs
Total capital investment : Fixed capital investment + Working capital investment
Direct, Indirect costs and Working capital investment are calculated by multipyling with a certain fraction of purchased equipment cost

15. Total product cost without depreciation
TOTAL PRODUCT COST WITHOUT DEPRECIATION
Item
Default Factor
Basis
Basis Cost (million$/y)
Cost (million$/y)
Raw materials
9,688
Operating labor
0,825
Operating supervision
0,150
operating labor
0,124
Utilities
1,231
Maintenance and repairs
0,060
FCI
38,599
2,316
Operating supplies
maintenance&repair
0,347
Laboratory charges
oprating labor
Royalties
0,010
TPC
20,471
0,205
Catalysts
1,281
Variable Cost
16,140
Taxes(property)
0,020
0,772
Financing(interest)
0,000
Insurance
0,386
Rent
Fixed Charges
1,158
Plant overhead
0,600
lab&sprvision&main
3,264
1,959
Mnufacturing Cost
19,256
Administration
0,200
labor&sprvision&main
0,653
Distribution&Selling
0,050
1,024
R&D
0,040
0,819
General Expense
2,495
Total Product Cost without Depreciation
Total product cost without depreciation
TPC = Manufacturing cost + General Expenses
Utility Facilities
Range (%)
Typical Unit
Real Cost ($)
Fixed-Capital Investment
100
38,179
Steam Generation 3
1,145
Steam Distribution 1
0,382
Water Supply, Cooling & Pumping
1,800
0,687
Water Treatment
1,300
0,496
Water Distribution
0,800
0,305
Electric Substitution
Electric Distribution
Gas Supply & Distribution
0,300
0,115
Air Compression & Distribution
Refrigeration & Distribution
Process Waste Disposal
1,500
0,573
Domestic Waste Disposal
0,400
0,153
Communication
0,200
0,076
Raw Material Storage
0,500
0,191
Final Product Storage
Fire Estinguishing System
Safety Installation
Total Utility Cost
39951
1,231
Variable cost + Fixed charges + Plant overhead
Administration
Distribution & selling
Research & Development
Raw materials
Operating labor
Operating supervision
Utilities
Maintenance and repairs
Operating supplies
Laboratory charges
Royalties (if not on lump-sum basis)
Catalysts and solvents
Taxes (property)
Financing (interest)
Insurance
Rent
Depreciation
= Price($/kg)* Annual amount
Unit price $/kg
Total catalyst cost during the roduction life: million $

16. Cash Flow Calculation FCI2009=FCI*0.15*construction inflation rate0
5-year MACRS depreciation method is used
The investments at the beginning of 2009, 2010 and 2011 are calculated
FCI2009=FCI*0.15*construction inflation rate0
FCI2010=FCI*0.35* construction inflation rate1
FCI2011=FCI*0.50* =construction inflation rate2
WCI value is calculated with respect to the sum of these FCI values including inflation
Total Capital Invesment = FCI + WCI
Total Annual Value of IPA = price ($/kg) * annual amount(kg/y)
= 1.17 * (43*10^6) = 50.31*10^6 $/y
1st and 2nd years -> operating rates are 0.5 and 0.9 respectively
Lastly, Annual TPC is calculated

17. Total Product Cost Evaluation
Plant Age
Land
FCI
WC+Startup
TCI
Operating Rate
Annual Sales
TPC w/o deprn
2009 -2
-0.73
-5.73
-6.45
2010 -1
0.00
-13.36
-13.63
2011
-19.09
-6.93
-26.79
2012 1
-3.92
0.50
25.16
-13.09
2013 2
0.90
45.28
-20.32
2014 3
1.00
50.31
-22.50
2015 4
-4.30
2016 5
2017 6
2018 7
2019 8
2020 9
2021 10
2022 11
2023 12
2024 13
2025 14
0.73
6.93
SUM
-46.87
674.15

18. dj = FCI * depreciation factor j
Total Cash Flow
In order to find annual cash flow, 5 years MACRS depreciation method is used
After calculating depreciation values, cash flow can be obtained with corresponding equations
dj = FCI * depreciation factor j
Gross Profit = Annual Sales – TPC w/o dep’n – dep’n –startup costs
Net Profit = Gross Profit * (1- tax rate)
Cash flow = Net Profit + Depreciation
Total Cash Flow = Annual Cash Flow – Planned Investments(0)

19. Cumulative Cash Flow Evaluation
Date
Plant
age
Annual
depr’n
Annual Gross
Profit
Annual Net
Annual operating
cash flow
Total annual
Cumulative
cash position
factor 1/y
106 $/y
2009 -2
-6.45
2010 -1
-13.63
-20.08
2011
-26.79
-46.87
2012 1
0.20
7.84
0.30
0.19
8.04
-38.83
2013 2
0.32
12.55
12.41
8.07
20.62
-18.21
2014 3
7.53
20.28
13.18
20.71
2.50
2015 4
0.12
4.52
22.85
14.85
19.37
21.87
2016 5
22.39
14.55
19.07
40.94
2017 6
0.06
2.26
24.18
15.72
17.97
58.91
2018 7
25.96
16.87
75.78
2019 8
25.47
16.56
92.34
2020 9
24.97
16.23
108.57
2021 10
24.47
15.90
124.48
2022 11
23.95
15.57
140.05
2023 12
23.42
15.23
155.27
2024 13
22.89
14.88
170.15
2025 14
22.34
14.52
184.67
SUM
1.00
39.22
295.87
192.32
231.53

20. Graphical representation shows that in 2014 the plant starts to make profit

21. Profitability Analysis
Time Value of Money not included
Return on Investment (ROI)
 mar= ROI=29% > mar=15%
Payback Period (PBP)
PBP=2.37 < PBPref=3.99
Net Return (NR)
NR= 6.406*106 > 0

22. Present worth of annual
Profitability Analysis
Date
Plant Age
Present worth factor
Total annual cash flow
Present worth of annual
106$
cash flows, 106$
2008 -3
1.521
2009 -2
1.323
-6.452
-8.533
2010 -1
1.15
-13.63
2011 1
2012
0.87
8.037
6.989
2013 2
0.756
20.618
15.591
2014 3
0.658
20.714
13.62
2015 4
0.572
19.367
11.073
2016 5
0.497
19.069
9.481
2017 6
0.432
17.974
7.771
2018 7
0.376
16.873
6.343
2019 8
0.327
16.556
5.412
2020 9
0.284
16.233
4.615
2021 10
0.247
15.904
3.931
2022 11
0.215
15.568
3.346
2023 12
0.187
15.225
2.846
2024 13
0.163
14.876
2.418
2025 14
0.141
14.519
2.052
Net present worth 106$
44.492
Time Value of Money included with Discrete Cash Flows and Discounting
Net Present Value
interest rate, i= NPW= > 0
Discounted Cash Flow Rate of Return (DCFR)
by trial error DCFR 29 % > 15%.
Time Value of Money included with Continuous Cash Flows and Discounting
PROFITABLE
> rm= 0.14

23. Break-Even Point Break-Even Capacity  41,517 tons/year
Production Capacity  43,000 tons/year
Production Capacity > B.E Capacity  Profit

24. Assumptions for Economic Evaluation
Investment in 3 years  2009 – 15%
2010 – 35%
2011 – 50%
No additional planned investment such as plant replacement
Salvage value is taken as zero
Start-up expense  10% of FCI
Construction inflation rate  2%
Product price inflation rate  0%
TPC inflation rate  2%
Two-year ramp-up production rates  2012 – 0.5
2013 – 0.9
2014 – 1.0
5-year MACRS Depreciation Method
mar = 0.15

25. As a summary . . . CHIPA Isopropyl Alcohol
Total annual Cash Flow
184.67million $
90% IPA as end product
CHIPA
Break-Even Capacity 41,517 tonnes/year
Pay Back Period
2.37 years
43,000 tonnes per year
Isopropyl Alcohol
Result  A profitable IPA Manufacturing Plant

26. THANK
YOU
FOR YOUR
ATTENTION