Propylene Production via Metathesis

Propylene via Metathesis

#TEC001C Technology Economics Propylene via Metathesis 2013

Abstract Propylene is the raw material for a wide variety of products, and has established itself as the second major member of the global olefins business, only after ethylene.

Globally, the largest volume of propylene is produced in steam crackers and through the fluid-catalytic cracking (FCC) process.

The propylene is typically considered a co-product in these processes, which are primarily driven by ethylene and motor gasoline production respectively.

As a result, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of high interest to the petrochemical marketplace. Such processes include: Metathesis, Propane Dehydrogenation, Methanol-toOlefins/Methanol-to-Propylene, High Severity FCC, and Olefins Cracking.

In this report, the production of propylene via metathesis from ethylene and butenes is reviewed. Included in the analysis is an overview of the technology and economics of a process similar to the CB&I Lummus OCT process. Both the capital investment and the operating costs are presented for a plant constructed in 2011 in the US Gulf and Germany.

Also, alternative ways to produce propylene via butenes-only metathesis, called self-metathesis, as well as via ethylene-only metathesis, through the use of an ethylene dimerization unit together with a metathesis plant, were presented. Discussions regarding the integration of a metathesis unit with an olefin plant are also presented.

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Contents About this Study...................................................................................................................................................................8 Object of Study.....................................................................................................................................................................................................................8 Analysis Performed.............................................................................................................................................................................................................8 Construction Scenarios ..............................................................................................................................................................................................................8 Location Basis ...................................................................................................................................................................................................................................9

Design Conditions ..............................................................................................................................................................................................................9

Study Background ............................................................................................................................................................ 10 About Propylene...............................................................................................................................................................................................................10 Introduction.................................................................................................................................................................................................................................... 10 Applications.................................................................................................................................................................................................................................... 10

Manufacturing Alternatives .......................................................................................................................................................................................11 Licensor(s) & Historical Aspects ...............................................................................................................................................................................13

Technical Analysis ............................................................................................................................................................. 14 Chemistry ..............................................................................................................................................................................................................................14 Raw Material ........................................................................................................................................................................................................................14 Ethylene ............................................................................................................................................................................................................................................ 15 2-Butenes ......................................................................................................................................................................................................................................... 15

Technology Overview ...................................................................................................................................................................................................16 Detailed Process Description & Conceptual Flow Diagram...................................................................................................................17 Area 100: Purification & Reaction ......................................................................................................................................................................................17 Area 200: Separation ................................................................................................................................................................................................................. 17 Key Consumption..................................................................................................................................................................................................................... 18 Technical Assumptions ...........................................................................................................................................................................................................18 Labor Requirements.................................................................................................................................................................................................................. 18

ISBL Major Equipment List ..........................................................................................................................................................................................20 OSBL Major Equipment List .......................................................................................................................................................................................21 Other Process Remarks .................................................................................................................................................................................................22 Typical Complete Process Scheme..................................................................................................................................................................................22 Other Process Scenarios ......................................................................................................................................................................................................... 22

Economic Analysis ............................................................................................................................................................ 25 2

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General Assumptions.....................................................................................................................................................................................................25 Project Implementation Schedule.........................................................................................................................................................................26 Capital Expenditures.......................................................................................................................................................................................................26 Fixed Investment......................................................................................................................................................................................................................... 26 Working Capital............................................................................................................................................................................................................................ 29 Other Capital Expenses ........................................................................................................................................................................................................... 30 Total Capital Expenses ............................................................................................................................................................................................................. 30

Operational Expenditures ...........................................................................................................................................................................................30 Manufacturing Costs................................................................................................................................................................................................................. 30 Historical Analysis........................................................................................................................................................................................................................ 31

Economic Datasheet ......................................................................................................................................................................................................31

Economic Discussion........................................................................................................................................................ 34 Regional Comparison ....................................................................................................................................................................................................34 Capital Expenses.......................................................................................................................................................................................................................... 34 Operational Expenditures......................................................................................................................................................................................................34 Economic Datasheet................................................................................................................................................................................................................. 34

Remarks...................................................................................................................................................................................................................................35

References............................................................................................................................................................................ 37 Acronyms, Legends & Observations .......................................................................................................................... 38 Technology Economics Methodology ...................................................................................................................... 39 Introduction.........................................................................................................................................................................................................................39 Workflow................................................................................................................................................................................................................................39 Capital & Operating Cost Estimates......................................................................................................................................................................41 ISBL Investment............................................................................................................................................................................................................................ 41 OSBL Investment......................................................................................................................................................................................................................... 41 Working Capital............................................................................................................................................................................................................................ 42 Start-up Expenses ....................................................................................................................................................................................................................... 42 Other Capital Expenses ........................................................................................................................................................................................................... 43 Manufacturing Costs................................................................................................................................................................................................................. 43

Contingencies ....................................................................................................................................................................................................................43 Accuracy of Economic Estimates............................................................................................................................................................................44 Location Factor..................................................................................................................................................................................................................44

Appendix A. Mass Balance & Streams Properties.................................................................................................. 46 Appendix B. Utilities Consumption Breakdown .................................................................................................... 48

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Appendix C. Process Carbon Footprint..................................................................................................................... 49 Appendix D. Equipment Detailed List & Sizing...................................................................................................... 50 Appendix E. Detailed Capital Expenses .................................................................................................................... 54 Direct Costs Breakdown ...............................................................................................................................................................................................54 Indirect Costs Breakdown ...........................................................................................................................................................................................55

Appendix F. Economic Assumptions ......................................................................................................................... 56 Capital Expenditures.......................................................................................................................................................................................................56 Construction Location Factors............................................................................................................................................................................................56 Working Capital............................................................................................................................................................................................................................ 56 Other Capital Expenses ........................................................................................................................................................................................................... 56

Operational Expenditures ...........................................................................................................................................................................................57 Fixed Costs ...................................................................................................................................................................................................................................... 57 Depreciation................................................................................................................................................................................................................................... 57 EBITDA Margins Comparison...............................................................................................................................................................................................57

Appendix G. Released Publications............................................................................................................................ 58 Appendix H. Request Submitted to Intratec........................................................................................................... 59 Subject of the Publication...........................................................................................................................................................................................59 Remarks and Comments .............................................................................................................................................................................................59

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List of Tables Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration) ......................................................................................9 Table 2 – Location & Pricing Basis ....................................................................................................................................................................................................9 Table 3 – General Design Assumptions .......................................................................................................................................................................................9 Table 4 – Major Propylene Consumers......................................................................................................................................................................................10 Table 5 – Metathesis Reactions for Propylene......................................................................................................................................................................14 Table 6 – Isobutene Side Reactions .............................................................................................................................................................................................14 Table 7 – Typical Crude C4 Stream from an Olefins Plant ............................................................................................................................................15 Table 8 – Raw Materials & Utilities Consumption (per ton of Product)...............................................................................................................18 Table 9 – Design & Simulation Assumptions.........................................................................................................................................................................18 Table 10 – Labor Requirements for a Typical Plant ...........................................................................................................................................................18 Table 11 – Main Streams Operating Conditions and Composition.......................................................................................................................20 Table 12 – Inside Battery Limits Major Equipment List...................................................................................................................................................20 Table 13 – Outside Battery Limits Major Equipment List ..............................................................................................................................................21 Table 14 – Integration of a Metathesis Unit with a Naphtha Steam Cracker ..................................................................................................22 Table 15 – Butenes Auto-Metathesis Reactions ..................................................................................................................................................................24 Table 16 – Base Case General Assumptions...........................................................................................................................................................................25 Table 17 – Bare Equipment Cost per Area (USD Thousands).....................................................................................................................................26 Table 18 – Total Fixed Investment Breakdown (USD Thousands) ..........................................................................................................................26 Table 19 – Working Capital (USD Million) ................................................................................................................................................................................29 Table 20 – Other Capital Expenses (USD Million) ...............................................................................................................................................................30 Table 21 – CAPEX (USD Million)......................................................................................................................................................................................................30 Table 22 – Manufacturing Fixed Cost (USD/ton) ................................................................................................................................................................30 Table 23 – Manufacturing Variable Cost (USD/ton)..........................................................................................................................................................31 Table 24 – OPEX (USD/ton)................................................................................................................................................................................................................31 Table 25 – Technology Economics Datasheet: Propylene via Metathesis at US Gulf..............................................................................33 Table 26 – Technology Economics Datasheet: Propylene via Metathesis in Germany ...........................................................................36 Table 27 – Project Contingency......................................................................................................................................................................................................43 Table 28 – Criteria Description.........................................................................................................................................................................................................43 Table 29 – Accuracy of Economic Estimates .........................................................................................................................................................................44 Table 30 – Detailed Material Balance Stream Properties...............................................................................................................................................46 Table 31 – Detailed Material Balance Stream Properties...............................................................................................................................................47 Table 32 – Utilities Consumption Breakdown ......................................................................................................................................................................48

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Table 33 – Assumptions for CO2e Emissions Calculation.............................................................................................................................................49 Table 34 – CO2e Emissions (ton/ton prod.)............................................................................................................................................................................49 Table 35 – Reactors..................................................................................................................................................................................................................................50 Table 36 – Heat Exchangers ..............................................................................................................................................................................................................50 Table 37 – Pumps......................................................................................................................................................................................................................................51 Table 38 – Columns.................................................................................................................................................................................................................................52 Table 39 – Utilities Supply...................................................................................................................................................................................................................52 Table 40 – Vessels & Tanks Specifications ................................................................................................................................................................................53 Table 41 – Indirect Costs Breakdown for the Base Case (USD Thousands) ......................................................................................................55 Table 42 – Detailed Construction Location Factor............................................................................................................................................................56 Table 43 – Working Capital Assumptions for Base Case................................................................................................................................................56 Table 44 – Other Capital Expenses Assumptions for Base Case...............................................................................................................................56 Table 45 – Other Fixed Cost Assumptions ..............................................................................................................................................................................57 Table 46 – Depreciation Value & Assumptions ....................................................................................................................................................................57

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List of Figures Figure 1 – OSBL Construction Scenarios .....................................................................................................................................................................................8 Figure 2 – Propylene from Multiple Sources .........................................................................................................................................................................12 Figure 3 – Process Block Flow Diagram.....................................................................................................................................................................................16 Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram.....................................................................................................................19 Figure 5 – Typical Integration Between Olefin Plant and Metathesis Unit.......................................................................................................23 Figure 6 – Metathesis Technology Alternatives ..................................................................................................................................................................24 Figure 7 – Project Implementation Schedule.......................................................................................................................................................................25 Figure 8 – Total Direct Cost of Different Integration Scenarios (USD Thousands) ......................................................................................28 Figure 9 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) .......................................................................28 Figure 10 – Total Fixed Investment Validation (USD Million).....................................................................................................................................29 Figure 11 – OPEX and Product Sales History (USD/ton) ................................................................................................................................................32 Figure 12 – EBITDA Margin & IP Indicators History Comparison..............................................................................................................................32 Figure 13 – CAPEX per Location (USD Million).....................................................................................................................................................................34 Figure 14 – Operating Costs Breakdown per Location (USD/ton) .........................................................................................................................35 Figure 15 – Methodology Flowchart...........................................................................................................................................................................................40 Figure 16 – Location Factor Composition...............................................................................................................................................................................44 Figure 17 – ISBL Direct Costs Breakdown by Equipment Type for Base Case ................................................................................................54 Figure 18 – OSBL Direct Costs Breakdown by Equipment Type for Base Case..............................................................................................54 Figure 19 – Historical EBITDA Margins Regional Comparison ...................................................................................................................................57

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About this Study This study follows the same pattern as all Technology Economics studies developed by Intratec and is based on the same rigorous methodology and well-defined structure (chapters, type of tables and charts, flow sheets, etc.).

Analysis Performed

The subject of this assessment was defined by a major player in the chemical and allied industries sector through Intratec’s website. The submitted request is presented in “Appendix H. ”

The economic analysis is based on the construction of a plant partially integrated to a petrochemical complex, in which feedstock is locally provided but propylene product must be stored to be sent outside the complex. Therefore, storage is only required for the product. Utilities supply facilities must also be built, since there is no utility supply from the existing petrochemical complex.

Construction Scenarios

In this chapter you will find a summary of all inputs and assumptions used to develop the current technology evaluation. All required data were gathered by our team of specialists from publicly available information, Intratec’s inhouse databases, and process design standards.

Since the Outside Battery Limits (OSBL) requirements– storage and utilities supply facilities – significantly impact the capital cost estimates for a new venture, they may play a decisive role in the decision as to whether or not to invest.

Thus, in this study three distinct OSBL configurations are compared. Those scenarios are summarized in Figure 1 and Table 1.

Object of Study This assignment assesses the economic feasibility of an industrial unit for propylene production via metathesis from ethylene and butenes implementing technology similar to the CB&I Lummus OCT process.

The current assessment is based on economic data gathered on Q3 2011 and a chemical plant’s nominal capacity of 350 kta (thousand metric tons per year).

Intratec | About this Study

Figure 1 – OSBL Construction Scenarios

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Non-Integrated

Partially Integrated

Fully Integrated

Products Storage

Products Storage

Products Consumer

ISBL Unit

ISBL Unit

ISBL Unit

Raw Materials Storage

Raw Materials Provider

Raw Materials Provider

Petrochemical Complex

Petrochemical Complex

Unit is part of a petrochemical complex

Most infrastructure is already installed

Grassroots unit

Source: Intratec – www.intratec.us

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Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration)

Storage Capacity

(Base Case for Evaluation)

Feedstock & Chemicals

20 days of operation

Not included

Not included

End-products & By-products

20 days of operation

20 days of operation

Not included

All required

All required

Only refrigeration units

Utility Facilities Included

Control room, labs, gate house, Support & Auxiliary Facilities

maintenance shops,

(Area 900)

warehouses, offices, change house, cafeteria, parking lot

Control room, labs, maintenance shops,

Control room and labs

warehouses

Source: Intratec – www.intratec.us

Location Basis The assumptions that distinguish the two regions analyzed in this study are provided in Table 2.

Table 2 – Location & Pricing Basis

Design Conditions

Basis: Q3-2011

US Gulf

Germany

Location Factor

1.00

1.32

Pricing

The process analysis is based on rigorous simulation models developed on Aspentech Aspen Plus and Hysys, which support the design of the chemical process, equipment and OSBL facilities.

PG Propylene

USD/ton

1690

1294

Raffinate-2

USD/ton

1043

962

Ethylene

USD/ton

1304.7

1246.7

Cooling Water

USD/m3

0.0005

0.0016

LP Steam

USD/ton

15.4

50.2

Inert Gas

USD/Nm3

0.10

0.15

Cooling water temperature

24 °C

Electricity

USD/kWh

0.07

0.12

Cooling water range

11 °C

Fuel

USD/MMBtu

4.4

14.4

Steam (Low Pressure)

7 bar abs

Operator Salaries

USD/man-hour

56.8

75.8

Refrigerant (Propylene)

-45 °C

Supervisor Salaries

USD/man-hour

85.3

113.7

Wet Bulb Air Temperature

25 °C

The design assumptions employed are depicted in Table 3.

Source: Intratec – www.intratec.us

Regional specific conditions influence both construction and operating costs. This study compares the economic performance of two identical plants operating in different locations: the US Gulf Coast and Germany.

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Intratec | About this Study

Source: Intratec – www.intratec.us

Table 3 – General Design Assumptions

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Study Background About Propylene

While CG propylene is used extensively for most chemical derivatives (e.g., oxo-alcohols, acrylonitrile, etc.), PG propylene is used in polypropylene and propylene oxide manufacture.

Introduction Propylene is an unsaturated organic compound having the chemical formula C3H6. It has one double bond, is the second simplest member of the alkene class of hydrocarbons, and is also second in natural abundance.

PG propylene contains minimal levels of impurities, such as carbonyl sulfide, that can poison catalysts.

Thermal & Motor Gasoline Uses Propylene has a calorific value of 45.813 kJ/kg, and RG propylene can be used as fuel if more valuable uses are unavailable locally (i.e., propane – propene splitting to chemical-grade purity). RG propylene can also be blended into LPG for commercial sale.

Propylene 2D structure Propylene is produced primarily as a by-product of petroleum refining and of ethylene production by steam cracking of hydrocarbon feedstocks. Also, it can be produced in an on-purpose reaction (for example, in propane dehydrogenation, metathesis or syngas-to-olefins plants). It is a major industrial chemical intermediate that serves as one of the building blocks for an array of chemical and plastic products, and was also the first petrochemical employed on an industrial scale.

Commercial propylene is a colorless, low-boiling, flammable, and highly volatile gas. Propylene is traded commercially in three grades:

Also, propylene is used as a motor gasoline component for octane enhancement via dimerization – formation of polygasoline or alkylation.

Chemical Uses The principal chemical uses of propylene are in the manufacture of polypropylene, acrylonitrile, oxo-alcohols, propylene oxide, butanal, cumene, and propene oligomers.

Other uses include acrylic acid derivatives and ethylene – propene rubbers.

Global propylene demand is dominated by polypropylene production, which accounts for about two-thirds of total propylene demand.

Polymer Grade (PG): min. 99.5% of purity.

Chemical Grade (CG): 90-96% of purity.

Refinery Grade (RG): 50-70% of purity.

Table 4 – Major Propylene Consumers

Intratec | Study Background

Applications

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The three commercial grades of propylene are used for different applications. RG propylene is obtained from refinery processes. The main uses of refinery propylene are in liquefied petroleum gas (LPG) for thermal use or as an octane-enhancing component in motor gasoline. It can also be used in some chemical syntheses (e.g., cumene or isopropanol). The most significant market for RG propylene is the conversion to PG or CG propylene for use in the production of polypropylene, acrylonitrile, oxo-alcohols and propylene oxide.

Polypropylene

Mechanical parts, containers, fibers, films

Acrylonitrile

Acrylic fibers, ABS polymers

Propylene oxide

Propylene glycol, antifreeze, polyurethane

Oxo-alcohols

Coatings, plasticizers

Cumene

Polycarbonates, phenolic resins

Acrylic acid

Coatings, adhesives, super absorbent polymers

Source: Intratec – www.intratec.us

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phases. This process converts heavy gas oil preferentially into gasoline and light gas oil.

Propylene is commercially generated as a co-product, either in an olefins plant or a crude oil refinery’s fluid catalytic cracking (FCC) unit, or produced in an on-purpose reaction (for example, in propane dehydrogenation, metathesis or syngas-to-olefins plants).

Globally, the largest volume of propylene is produced in NGL (Natural Gas Liquids) or naphtha steam crackers, which generates ethylene as well. In fact, the production of propylene from such a plant is so important that the name “olefins plant” is often applied to this kind of manufacturing facility (as opposed to “ethylene plant”). In an olefins plant, propylene is generated by the pyrolysis of the incoming feed, followed by purification. Except where ethane is used as the feedstock, propylene is typically produced at levels ranging from 40 to 60 wt% of the ethylene produced. The exact yield of propylene produced in a pyrolysis furnace is a function of the feedstock and the operating severity of the pyrolysis.

The propylene yielded from olefins plants and FCC units is typically considered a co-product in these processes, which are primarily driven by ethylene and motor gasoline production, respectively. Currently, the markets have evolved to the point where modes of by-product production can no longer satisfy the demand for propylene.

A trend toward less severe cracking conditions, and thus to increase propylene production, has been observed in steam cracker plants using liquid feedstock. As a result, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of high interest to the petrochemical marketplace. Such processes include:

The pyrolysis furnace operation usually is dictated by computer optimization, where an economic optimum for the plant is based on feedstock price, yield structures, energy considerations, and market conditions for the multitude of products obtained from the furnace. Thus, propylene produced by steam cracking varies according to economic conditions.

In an olefins plant purification area, also called separation train, propylene is obtained by distillation of a mixed C3 stream, i.e., propane, propylene, and minor components, in a C3-splitter tower. It is produced as the overhead distillation product, and the bottoms are a propaneenriched stream. The size of the C3-splitter depends on the purity of the propylene product.

The propylene produced in refineries also originates from other cracking processes. However, these processes can be compared to only a limited extent with the steam cracker for ethylene production because they use completely different feedstocks and have different production objectives.

Refinery cracking processes operate either purely thermally or thermally – catalytically. By far the most important process for propene production is the fluid- catalytic cracking (FCC) process, in which the powdery catalyst flows as a fluidized bed through the reaction and regeneration

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Olefin Metathesis. Also known as disproportionation, metathesis is a reversible reaction between ethylene and butenes in which double bonds are broken and then reformed to form propylene. Propylene yields of about 90 wt% are achieved. This option may also be used when there is no butene feedstock. In this case, part of the ethylene feeds an ethylene-dimerization unit that converts ethylene into butene.

Propane Dehydrogenation. A catalytic process that converts propane into propylene and hydrogen (byproduct). The yield of propylene from propane is about 85 wt%. The reaction by-products (mainly hydrogen) are usually used as fuel for the propane dehydrogenation reaction. As a result, propylene tends to be the only product, unless local demand exists for the hydrogen by-product.

Methanol-to-Olefins/Methanol-to-Propylene. A group of technologies that first converts synthesis gas (syngas) to methanol, and then converts the methanol to ethylene and/or propylene. The process also produces water as by-product. Synthesis gas is produced from the reformation of natural gas or by the steam-induced reformation of petroleum products such as naphtha, or by gasification of coal. A large amount of methanol is required to make a world-scale ethylene and/or propylene plant.

High Severity FCC. Refers to a group of technologies that use traditional FCC technology under severe conditions (higher catalyst-to-oil ratios, higher steam injection rates, higher temperatures, etc.) in order to maximize the amount of propylene and other light products. A high severity FCC unit is usually fed with

Intratec | Study Background

Manufacturing Alternatives

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gas oils (paraffins) and residues, and produces about 20-25 wt% propylene on feedstock together with greater volumes of motor gasoline and distillate byproducts.

These on-purpose methods are becoming increasingly significant, as the shift to lighter steam cracker feedstocks with relatively lower propylene yields and reduced motor gasoline demand in certain areas has created an imbalance of supply and demand for propylene.

Olefins Cracking. Includes a broad range of technologies that catalytically convert large olefins molecules (C4-C8) into mostly propylene and small amounts of ethylene. This technology will best be employed as an auxiliary unit to an FCC unit or steam cracker to enhance propylene yields.

Figure 2 – Propylene from Multiple Sources

Naphtha NGL

Steam Cracker

Refinery FCC Unit

Gas Oil

RG Propylene

Propane

PDH

Ethylene/ Butenes

Metathesis

Methanol

MTO/MTP

Intratec | Study Background

Gas Oil

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High Severity FCC

C4 to C8 Olefins

Olefins Cracking

Source: Intratec – www.intratec.us

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CG/PG Propylene

Licensor(s) & Historical Aspects By the 1960s, Phillips Petroleum developed the first commercial process of olefin metathesis. The focus, at that time, was to convert propylene into ethylene and 2-butene.

This technology was developed in an effort to increase ethylene and butene production from “low value” crackerderived propylene to meet the growing market demand for polyethylene and polybutadiene. A plant based on the Phillips Triolefin technology was operational from 1965 to 1972 by Shawinigan Chemicals, in Canada, until its shutdown due to economic reasons. The plant had the capacity to process 50 thousand tons of propylene per year (kta), that was obtained from a naphtha steam cracker, producing 15 kta of ethylene and 30 kta of butenes.

The fact that metathesis is a reversible reaction, and that the demand for polymer grade (PG) propylene grew from the 1970s on, led to the use of the Phillips Triolefin process in a reverse way. This reverse process is known as Olefin Conversion Technology (OCT), and is now offered for license by Lummus Technology, a CB&I Company. Lummus OCT was first used in 1985 by Equistar (now a wholly owned subsidiary of LyondellBasell industries), in the United States, to produce propylene by using ethylene and butenes. The unit's capacity was expanded in 1992.

Intratec | Study Background

The Institut Français du Pétrole (IFP) and the Chinese Petroleum Corporation (CPC) have jointly worked to develop a process for the production of propylene, called Meta-4. This technology is currently being developed by France’s Axens, a subsidiary of IFP, formed in 2001 through the merger of IFP’s licensing division with Procatalyse Catalysis & Adsorbents; however, until April 2012 Meta-4 was not commercialized.

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Technical Analysis Chemistry Metathesis is a general term for a reversible reaction between two olefins, in which the double bonds are broken and then reformed to form new olefin products. In order to produce propylene by metathesis, a molecule of 2-butene and a molecule of ethylene are combined in the presence of a tungsten oxide catalyst to form two molecules of propylene.

Table 6 – Isobutene Side Reactions

Isobutene + 2-butene

propylene + 2-methyl 2-

butene Isobutene + 1-butene

ethylene + 2-methyl 2-

pentene

Fast

Slow

Source: Intratec – www.intratec.us

Ethylene

2-Butene

Propylene

The following table summarizes the reactions that occur in the metathesis reactor. All reactions are essentially isothermal.

The reaction of isobutene with ethylene is also nonproductive. If neglected, the concentration of this nonreactive species in the metathesis unit builds up, due to process recycles, reducing capacity.

Raw Material Table 5 – Metathesis Reactions for Propylene As previously explained, the raw materials for the production of propylene via metathesis reaction are ethylene and 2-butenes. Both components are mainly supplied from steam cracker units (olefins plants). FCC units can also be used as a source of such olefins.

2-butene + ethylene

2 propylene

Fast

1-butene + 2-butene

propylene + 2-pentene

Fast

1-butene + 1-butene

ethylene + 3-hexene

Slow

Source: Intratec – www.intratec.us

Intratec | Technical Analysis

The reaction of 1-butene with ethylene is non-productive, occupying catalyst sites but producing no product. So a magnesium oxide co-catalyst is added to the metathesis reactor to induce double bond isomerization reaction causing the shift from 1-butene to 2-butene and allows continued reaction.

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When isobutene is present in the metathesis reactor, side reactions occur, as presented in Table 6 – Isobutene Side Reactions.

Steam cracker units are facilities in which a feedstock such as naphtha, liquefied petroleum gas (LPG), ethane, propane or butane is thermally cracked through the use of steam in a bank of pyrolysis furnaces to produce lighter hydrocarbons.

The products obtained depend on the composition of the feed, the hydrocarbon-to-steam ratio, and on the cracking temperature and furnace residence time.

Light hydrocarbon feeds such as ethane, LPGs, or light naphtha produce lighter products, mainly ethylene, propylene, and butadiene, with smaller amounts of heavier by-products. Heavier hydrocarbon feeds such as naphtha produce these lighter products, but also produce aromatic hydrocarbons, and hydrocarbons suitable for inclusion in gasoline or fuel oil.

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Table 7 – Typical Crude C4 Stream from an Olefins Plant

After the pyrolysis process, the olefins are separated from the other by-products by distillation.

C4 acetylenes

Traces

Butadiene

33

Ethylene

1-butene

15

2-butenes

9

Isobutene

30

Iso-/normal- butanes

13

High-purity ethylene (min. 99.5 wt% purity) can be obtained from olefins plants. The use of PG ethylene in metathesis processes is desired because it requires minimal pretreatment for trace components, while other sources of ethylene typically require more rigorous pretreatment.

Although PG ethylene prices are higher, capital expenditure for the metathesis unit is lower because no investment in pretreatment is required.

Besides steam crackers, other common sources of ethylene are FCC off-gas and vents from polyethylene units. FCC offgas is an inexpensive source of ethylene, because this stream is usually valued at fuel gas cost. Pretreatment, fractionation and refrigeration are necessary for recovery of the ethylene product; however, an FCC off-gas recovery system typically has an attractive internal rate of return (IRR).

Polyethylene unit vents may not normally provide the quantity of ethylene necessary to supply metathesis units; consequently, other sources of ethylene would supplement any deficit. These vents must be treated to remove water and oxygen and a compressor is usually required to boost the vent streams to a metathesis processing pressure.

2-Butenes The 2-butenes used as feedstock for the metathesis process are obtained from the crude C4 stream produced in olefins plants. This C4 stream consists of C4 acetylenes, butadiene, iso-/n-butenes, and iso-/n-butane. A typical composition is provided in Table 7.

The desired C4 stream in a metathesis process consists of nbutenes (mainly 2-butenes), low amounts of isobutene (to avoid excess capacity due to excess recycling) and is almost devoid of butadiene (to avoid rapid catalyst fouling) and acetylenes. Iso-/n-butanes are inert to the metathesis process.

Source: Intratec – www.intratec.us

Before feeding a metathesis process, the C4 stream from olefins plants must be treated.

Usually, the butadiene and C4 acetylenes are removed first to produce the designated raffinate-1. Such removal can be accomplished through either hydrogenation or extractive distillation.

The components remaining in the mixture consist of 1butene, 2-butene, isobutene, and iso-/n-butanes from the original feed, in addition to what was produced in the hydrogenation steps, as well as a small quantity of unconverted or unrecovered butadiene.

Isobutene can be removed through fractionation of raffinate-1, reaction with methanol, reaction with water, or reaction with itself. In all cases, the resulting mixture may contain both normal and iso-paraffins.

The product from isobutene removal is designated raffinate-2, and it consists primarily of normal olefins and paraffins and minimal iso-olefins and iso-paraffins.

Raffinate-2 is the most common source of butenes used in metathesis reactions.

The paraffin components present in raffinate-2 are essentially inert and do not react in the metathesis process.

Such paraffins are typically removed from the process via a purge stream in the separation system that follows the metathesis reactor.

1 The components in a refinery or FCC based C4 cut are similar, with the exception that the percentage of paraffins is considerably greater.

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Intratec | Technical Analysis

The higher cracking temperature (also referred to as severity) favors the production of ethylene and benzene, whereas lower severity produces higher amounts of propylene, C4-hydrocarbons and liquid products.

15

Technology Overview The reactor product is cooled and fractionated to remove ethylene for recycle. A small portion of this recycle stream is purged to remove methane, ethane, and other light impurities from the process. The ethylene column bottom is fed to the propylene column where butenes are separated for recycle to the reactor, and some is purged to remove butanes, isobutylenes, and heavies from the process. The propylene column overhead is high-purity, PG propylene product.

The Lummus OCT process for propylene consists of two main areas: purification & reaction, and separation. The simplified block flow diagram in Figure 3 summarizes the process.

Ethylene feed plus recycled ethylene are mixed with the butenes feed plus recycled butenes and heated prior to

The catalyst promotes the reaction of ethylene and butene2 to form propylene, and simultaneously isomerizes butene1 to butene-2. A small amount of coke is formed on the catalyst, so the beds are periodically regenerated using nitrogen-diluted air. The ethylene-to-butene feed ratio to

This process description is for a stand-alone metathesis unit complex. The utility requirements – which include cooling water, steam, electricity, fuel gas, nitrogen, and air – are typically integrated with the existing complex.

and maintain the per-pass butene conversion above 60%.

Typical butene conversions range between 60 to 75%, with about 90% selectivity to propylene.

Figure 3 – Process Block Flow Diagram

Ethylene Recycle

Ethylene Feed

Butene Feed

Area 100 Purification & Reaction

Area 200 Separation

Butene Recycle

Intratec | Technical Analysis

Source: Intratec – www.intratec.us

16

Light Ends Fuel Gas

FREE SAMPLE

PG Propylene

Heavy Ends Fuel Gas

Detailed Process Description & Conceptual Flow Diagram

(WO3/SiO2). Also, the co-catalyst magnesium oxide (MgO) is used to perform a double bond isomerization of 1-butene to 2-butene.

This section describes the process for production of propylene via metathesis in detail. This description refers to a process similar to Lummus OCT process; however, some differences may be found, as all of the information herein presented is based on publicly available information.

The raffinate-2 stream used in the metathesis unit is typically free of butadiene and has low isobutene content.

Butadiene is typically removed below 50 wt ppm level and it is done to minimize fouling of the catalyst. Isobutene is removed to reduce the size of the metathesis unit.

Isobutene is not a poison to the catalyst, but it reacts in the metathesis reactor at low conversion, which results in buildup of this molecule in the internal butenes recycle stream and increases hydraulic requirement and sizes of the equipment. Commercial units are in operation with about 7 wt% isobutene in the raffinate-2 feed stream.

For a better understanding of the process, please refer to the Inside Battery Limits Conceptual Process Flow Diagram; the Main Streams Operating Conditions and Composition; and the Inside Battery Limits Major Equipment List, presented in the next pages.

Area 100: Purification & Reaction First, fresh ethylene from ISBL storage tank and recycled ethylene are mixed with fresh and recycled butenes, and are fed through reactor feed treaters. The treaters consist of guard beds to remove potential catalyst poisons for the metathesis reaction, such as oxygenates, sulfur, alcohols, carbonyls, and water. The guard beds have a cyclic operation. One is normally in operation, while the other is regenerating.

After treating, the stream is vaporized in a heat exchanger and superheated in a fired heater to the reaction temperature, typically between 280-320째C. The reactor feed contains ethylene and n-butenes, mainly 2butenes, at the desired reaction ratio.

Although the theoretical molar ratio between ethylene and butenes is 1:1, it is common to employ significantly greater ethylene/butene ratios to minimize undesirable side reactions, and to minimize C5+ olefin formation. The perpass butene conversion is between 60 and 75%.

The metathesis reaction occurs in a fixed bed catalytic reactor. The main reaction that occurs is between ethylene and 2-butenes, to produce propylene. Side reactions also occur, producing by-products, primarily C5-C8 olefins. The reactor exit stream is cooled prior to the separation area.

The process selectivity to propylene is typically about 90%.

The catalyst used is tungsten oxide supported on silica

Coke, a by-product of the reaction, is deposited on the catalyst throughout the process. During regeneration the coke is burned in a controlled atmosphere. Systems required for regeneration include a fired regeneration gas heater and a supply of inert gas (usually nitrogen), compressed air, and hydrogen. Each reactor can run for about 30 days before requiring regeneration.

Area 200: Separation The reactor exit stream contains a mixture of propylene, unconverted ethylene and butenes, butane, and some C5+ components from side reactions.

Propylene purification is carried out in two columns. The first column separates unreacted ethylene for reuse in the reactor. The second column produces PG propylene as an overhead product and a bottom heavies stream.

The stream leaving the reactor is first cooled against the reactor feed stream in an exchanger, and then cooled against cooling water before being sent to the deethylenizer column.

The column is re-boiled by low pressure (LP) steam, and uses propylene refrigeration in the top condenser.

Cryogenic temperatures exist due to the presence of unconverted ethylene in the top of the column. Pressure of the column is dependent upon the available refrigeration.

The deethylenizer column overhead (unconverted ethylene) is recycled back to the reaction area through the column reflux pumps. The recycled ethylene stream is mixed with fresh ethylene, fresh butenes (raffinate-2) stream and recycled butenes stream. A small vent stream containing light paraffins and a small amount of

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Intratec | Technical Analysis

For the purpose of this report, n-butenes, with a purity of 80%, will be considered raffinate-2. The process is divided into two main areas: purification & reaction, and separation.

17

unconverted ethylene leaves the overhead of the deethylenizer reflux vessel as a lights purge stream. This stream can be returned to the ethylene cracker for recovery.

Table 9 – Design & Simulation Assumptions

The bottom stream of the deethylenizer column is sent to the depropylenizer column for propylene recovery. The depropylenizer column separates PG propylene in the overhead from a heavies product stream (C4+) in the bottoms. PG propylene and heavies streams are sent to the product ISBL storage tank and C4+ purge storage tank respectively. LP steam is used in the reboiler and cooling water in the top condenser.

A side-stream from the bottoms of the column is sent back as butenes recycled stream to the fresh/recycle C4 tank.

This rate is set to maintain a high overall n-butenes conversion in the metathesis reactors. The column’s bottoms can be sent to another column for recovery of gasoline and fuel oil.

Key Consumption

Simulation Software

Aspen Hysys

Thermodynamic Model

Peng-Robinson

Ethylene

99.9 wt%

Butenes on C4 stream

80 wt%

Temperature

304 oC

Pressure

30 bar abs

Conversion (of Butenes)

67%

Selectivity (Butenes to Propylene)

90%

Ethylene: Butene Molar Feed Ratio

2 MgO and

Catalyst

WO3/SiO2

Source: Intratec – www.intratec.us

Table 8 – Raw Materials & Utilities Consumption (per ton of Product)

Labor Requirements Raffinate-2

0.97

ton

Ethylene

0.32

ton

Cooling Water

68.3

m3

LP Steam

1.0

ton

Inert Gas

32.1

Nm3

Electricity

286

kWh

Fuel

0.5

MMBtu

Fuel By-Product

12.8

MMBtu

Table 10 – Labor Requirements for a Typical Plant

Non-Integrated Plant

5

1

Partially Integrated Plant

5

1

Fully Integrated Plant

3

1

Source: Intratec – www.intratec.us

Source: Intratec – www.intratec.us

Intratec | Technical Analysis

Technical Assumptions

18

All process design and economics are based on world-class capacity units that are competitive globally. Assumptions regarding the thermodynamic model used, reactor design basis and the raw materials composition are shown in Table 9. All data used to develop the process flow diagram was based on publicly available information.

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Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram

Ethylene from OSBL T-102 Butenes (Raffinate-2) from OSBL

19

1

For Disposal 11

7

2 P-101A/B

10

V-101B

P-102A/B

6

F-101

V-101A

E-101

8

4

R-102B

R-102A

9

Fuel 5

Nitrogen, Hydrogen, Air

P-103A/B T-101

F-102 Fuel

13 23 Butenes Recycle

Ethylene Recycle CW

CW

E-201

E-203

14 RF (C3=)

Lights Purge

CR-201

CW

CR-202

24 CV-201

CV-202 CP-201A/B

CP-202A/B

#1

18

P-202A/B

C-201

#1

C-202

#30

PG Propylene to OSBL

T-201

#62

#60 LP ST

16 P-201A/B

#34 #65 LP ST

CC-201

CC-202

15 21

25

CW

T-202

E-202

Heavies Purge

Intratec | Technical Analysis

P-203A/B

Source: Intratec – www.intratec.us

FREE SAMPLE

19

Table 11 – Main Streams Operating Conditions and Composition

Phase

L

L

G

L/G

L

L

G

L

Temperature (°C)

-29

30

304

53

-25

107

-25

113

Pressure (bar abs)

22

6.0

30

30

22

17

22

17

Mass Flow (kg/h)

12,940

38,950

161,520

161,490

33,820

75,800

120

11,760

Ethylene (wt%)

99.9

21.0

21.0

100.0

100.0

Ethane (wt%)

0.1

traces

traces

traces

traces

24.9

24.9

traces

40.1 5.0

Propene (wt%) Butane (wt%)

20.0

C5+ (wt%)

0.5

0.1

39.9

75.1

63.5

5.1

7.4

22.4

Source: Intratec – www.intratec.us

ISBL Major Equipment List

Table 11 presents the main streams composition and operating conditions. For a more complete material balance, see the “Appendix A. Mass Balance & Streams Properties.”

Table 12 shows the equipment list by area. It also presents a brief description and the construction materials used.

Information regarding utilities flow rates is provided in “Appendix B. Utilities Consumption Breakdown.” For further details on greenhouse gas emissions caused by this process, see “Appendix C. Process Carbon Footprint.”

Find main specifications for each piece of equipment in “Appendix D. Equipment Detailed List & Sizing.”

Intratec | Technical Analysis

Table 12 – Inside Battery Limits Major Equipment List

20

Area 100

E-101

Feed Vaporizer

CS

Area 100

F-101

Reactor Feed Heater

Cr-Mo

Area 100

F-102

Regeneration Gas Heater

Cr-Mo

Area 100

P-101A/B

Ethylene Feed Pumps

CS

Area 100

P-102A/B

Raffinate-2 Feed Pumps

CS

Area 100

P-103A/B

C4 Tank Pumps

CS

Area 100

R-102A/B

Metathesis Reactor

SS

Area 100

T-101

Fresh/Recycle C4 Tank

CS

Area 100

T-102

Ethylene ISBL Storage

CS

Area 100

V-101A/B

Reactor Feed Treaters

CS

Area 200

C-201

Deethylenizer Column

CS

Source: Intratec – www.intratec.us

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Table 12 – Inside Battery Limits Major Equipment List (Cont.)

Area 200

C-202

Depropylenizer Column

CS

Area 200

CC-201

Deethylenizer Condenser

CS

Area 200

CC-202

Depropylenizer Condenser

CS

Area 200

CP-201

Deethylen. Reflux Pumps

CS

Area 200

CP-202

Depropylen. Reflux Pumps

CS

Area 200

CR-201

Deethylenizer Reboiler

CS

Area 200

CR-202

Depropylenizer Reboiler

CS

Area 200

CV-201

Deethylenizer Accumulator

CS

Area 200

CV-202

Depropylen. Accumulator

CS

Area 200

E-201

Deethylenizer Feed Cooler

CS

Area 200

E-202

C4+ Purge Cooler

CS

Area 200

E-203

Butenes Recycle Cooler

CS

Area 200

P-201A/B

Propylene Pumps

CS

Area 200

P-202A/B

Ethylene Recycle Pumps

CS

Area 200

P-203A/B

C4+ Pumps

CS

Area 200

T-201

Product ISBL Storage

CS

Area 200

T-202

C4+ Purge Storage

CS

Source: Intratec – www.intratec.us

OSBL Major Equipment List

Table 13 shows the list of tanks located on the storage area and the energy facilities required in the construction of a non-integrated unit.

The OSBL is divided into three main areas: storage (Area 700), energy & water facilities (Area 800), and support & auxiliary facilities (Area 900).

Area 700

T-701

Ethylene Storage

CS

Area 700

T-702

Raffinate Storage

CS

Area 700

T-703

Propylene Storage

CS

Area 700

T-704

Demin. Water Tank

CS

Area 700

T-705

Clarified Water Tank

CS

Area 800

U-802

Refrigerator

CS

Area 800

U-803

Cooling Tower

CS

Area 800

U-804

Steam boiler

CS

Area 800

U-805

Water Demineralizer

CS

Source: Intratec – www.intratec.us

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Intratec | Technical Analysis

Table 13 – Outside Battery Limits Major Equipment List

21

steam crackers. The lower energy consumption also improves the operating margin.

Other Process Remarks Typical Complete Process Scheme Currently, most of the propylene produced is a by-product from steam cracking units that primarily produce ethylene, or a by-product from FCC units that primarily produce gasoline. With the maturity of olefin plants technology, improvements downstream of the steam cracker are more economically promising than improvements in the cracking technology itself.

In this context, the use of a metathesis unit downstream of an olefin plant can bring benefits such as reducing the energy used and the carbon emissions, as well as increasing propylene production.

The impact of a metathesis unit to an olefin plant material balance to achieve a conventional, low severity, propyleneto-ethylene ratio of 0.67 is analyzed in Table 14. Two cases are presented: a standalone steam cracker unit, without metathesis, and a steam cracker integrated with a metathesis unit. As shown in the table, at a constant overall net ethylene and propylene production of 1 million ton/year and 670,000 ton/year respectively, the steam cracker integrated with a metathesis unit considerably improves the overall plant material balance.

Intratec | Technical Analysis

Compared to the standalone steam cracker, the integrated case consumes about 2% less fresh feedstock, while producing 50% more benzene and only 60% of the remaining, lower-valued pyrolysis gasoline. In addition, the energy consumption of the integrated case is about 13% lower. The reason for this reduction is that fewer olefins are produced by thermal cracking in the integrated case, thereby lowering the fired duty of the cracking heaters and the energy consumed in the recovery area.

22

In the standalone steam cracker case, 1.67 million ton/year of ethylene and propylene are produced by thermal cracking. In the integrated case, 1.49 million ton/year of ethylene and propylene are produced by thermal cracking, with the remaining propylene (0.18 million ton/year) being produced by the metathesis unit. The 13% reduction in energy consumption results in a 13% reduction in greenhouse gas emissions.

This level of reduction is significant and, as such, could be one of the major contributing routes to meeting olefin industry goals of lower greenhouse gas emissions from

Table 14 – Integration of a Metathesis Unit with a Naphtha Steam Cracker

Cracker C3=/C2= ratio

0.67

0.47

Overall C3=/C2= ratio

0.67

0.67

Material balance (1,000 ton/year) Naphtha feed

3,094

3,047

Net ethylene

1,000

1,000

Net propylene

670

670

Benzene

207

312

Pyrolysis gasoline

654

396

Energy consumption

Base = 100

87

Total investment

Base = 100

94

Source: Intratec – www.intratec.us

Investment costs are also lower. As shown in Table 14, capital costs are reduced by about 6%. The investment costs associated with the ISBL ethylene plant are reduced due to lower plant throughput (individual ethylene plant system loadings), lower fired duty, and a significant reduction in the size of the propylene fractionator system, which is the single most costly tower system in the ethylene plant.

Finally, OSBL costs are reduced due to the minimization in energy consumption. The savings associated with these units more than offset the investment costs associated with the metathesis unit.

Figure 5 shows the most typical integration arrangement between a metathesis unit and a naphtha steam cracker.

Other Process Scenarios Figure 6 illustrates propylene production alternatives via metathesis using only one feedstock: ethylene or butenes.

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Ethylene as the Only Feedstock

Butene as the Only Feedstock

In some cases, there is not enough butene to use in a metathesis unit to achieve the desired propylene production, as in the case when the feedstocks producer is an ethane steam cracker, which, while it makes large volumes of ethylene, makes insufficient butene for the metathesis reaction. Ethane crackers are the most common crackers used in the Middle East.

In some regions, the supply of ethylene is tight and/or ethylene is expensive, making the building of a conventional metathesis unit unfeasible without subsidies.

Other disadvantages of conventional metathesis are:

For such cases an ethylene dimerization unit can be added upstream of the metathesis process as a butene-2 source.

Dimerization of ethylene to butenes occurs in a liquid phase loop reactor according to the following reaction:

Ethylene

2-Butene

Intensive Use of Energy. Conventional metathesis reactions take place with ethylene, which requires an intensive use of energy in the ethylene recirculation loop by using cryogenic refrigeration.

Feedstock Loss. Removing butadiene by hydrogenation from the butenes feed before its use in a conventional metathesis results in the hydroisomerization of the butenes to paraffins, representing a feedstock loss of 10%+. Furthermore, removing isobutene by fractionation of the butenes feed before its use in a conventional metathesis results in an additional loss of butenes, since 1-butene is difficult to separate from isobutene without an expensive fractionation tower.

Figure 5 – Typical Integration Between Olefin Plant and Metathesis Unit

Naphtha

PG Ethylene

Naphtha Steam Cracker

Metathesis Unit

Crude C4s

Butadiene Extraction

PG Propylene

C4+ Purge

Raffinate-2

Raffinate-1

Butadiene

Isobutene Extraction

Isobutene

Source: Intratec – www.intratec.us

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Intratec | Technical Analysis

PG Propylene

23

Although the yield of propylene is high in the conventional metathesis process, the aforementioned disadvantages motivated the development of a different process, in which a metathesis reaction occurs with butenes as the only feedstock. This process is called butenes auto-metathesis, or self-metathesis.

In the process, a stream comprised of 1-butene plus 2butene is admixed with recycled butenes and pentenes in the metathesis reactor. The stream leaving the reactor is sent to a separation unit, composed of distillation columns.

The stream can contain C4 paraffins, but the amount of isobutene should not exceed 2% of the feed mixture. Table 15 shows the reactions that can occur in the process.

The reactions (1) and (2) are the main auto-metathesis reactions. Reactions (3), (4) and (5) occur while the 2pentenes formed through the main reaction are recycled back to the reactor.

In 2003, a semi-commercial unit owned by Sinopec in Tianjin (China), was built to demonstrate auto-metathesis and 1-hexene production. This facility maximizes the 1butene/1-butene metathesis reaction to produce 3-hexene, and then isomerizes the 3-hexene to 1-hexene. The plant has the capacity to produce 2 kta of 1-hexene.

Table 15 – Butenes Auto-Metathesis Reactions (1)

1-butene + 2-butene

propylene + 2-pentene

(2)

1-butene + 1-butene

ethylene + 3-hexene

(3)

2-pentene + 1-butene

(4)

2-pentene

(5)

1-pentene + 2-butene

propylene + 3-hexene

1-pentene (isomerization) propylene + 2-hexene

Source: Intratec – www.intratec.us

Figure 6 – Metathesis Technology Alternatives

Butenes

Metathesis

Ethylene

Dimerization

Metathesis

Intratec | Technical Analysis

Source: Intratec – www.intratec.us

24

FREE SAMPLE

CG/PG Propylene

Economic Analysis General Assumptions

In Table 16, the IC Index stands for Intratec chemical plant Construction Index, an indicator, published monthly by Intratec, to scale capital costs from one time period to another.

The general assumptions for the base case of this analysis are outlined below.

This index reconciles prices trends of fundamental components of a chemical plant construction such as labor, material and energy, providing meaningful historical and forecast data for our readers and clients.

Table 16 – Base Case General Assumptions Engineering & Construction Location

US Gulf

Analysis Date

Q3 2011

IC Index

158.1

OSBL Scenario

Partially Integrated

Nominal Capacity

350 kta

Operating Hours per Year

8,000

Annual Production

320 kta

Project Complexity

Simple

Technology Maturity

Licensed

Data Reliability

High

The assumed operating hours per year indicated does not represent any technology limitation; rather, it is an assumption based on usual industrial operating rates Additionally, Table 16 discloses assumptions regarding the project complexity, technology maturity and data reliability, which are of major importance for attributing reasonable contingencies for the investment and for evaluating the overall accuracy of estimates. Definitions and figures for both contingencies and accuracy of economic estimates can be found in this publication in the chapter “Technology Economics Methodology.”

Source: Intratec – www.intratec.us

Figure 7 – Project Implementation Schedule

Basic Engineering Detailed Engineering Procurement Construction

Start-up 0

1

2

3

4 Quarters

Source: Intratec – www.intratec.us

FREE SAMPLE

5

6

7

8

Intratec | Economic Analysis

Total EPC Phase

25

Project Implementation Schedule

“Appendix E. Detailed Capital Expenses” provides a detailed breakdown for the direct expenses, outlining the share of each type of equipment in total.

The main objective of knowing upfront the project implementation schedule is to enhance the estimates for both capital initial expenses and return on investment.

After defining the total direct cost, the TFI is established by adding field indirects, engineering costs, overhead, contract fees and contingencies.

The implementation phase embraces the period from the decision to invest to the start of commercial production.

This phase can be divided into five major stages: (1) Basic Engineering, (2) Detailed Engineering, (3) Procurement, (4) Construction, and (5) Plant Start-up.

Table 18 – Total Fixed Investment Breakdown (USD Thousands) Bare Equipment

92,990

The duration of each phase is detailed in Figure 7.

Equipment Setting

330

Piping

7,060

Civil

3,930

Steel

3,610

Instrumentation & Control

2,590

Electrical

2,140

Insulation

2,360

Paint

670

Engineering & Procurement

5,840

Construction Material & Indirects

18,140

G & A Overheads

4,020

Contract Fee

3,620

Project Contingency

22,095

Capital Expenditures Fixed Investment Table 17 shows the bare equipment cost associated with each area of the project.

Table 17 – Bare Equipment Cost per Area (USD Thousands) ISBL Area 100

6,440

Area 200

5,400

OSBL Area 700

67,910

Area 800

8,760

Process Contingency

4,480 Other - Scaling Exponent

Intratec | Economic Analysis

Source: Intratec – www.intratec.us

26

Table 18 presents the breakdown of the total fixed investment (TFI) per item (direct & indirect costs and process contingencies). For further information about the components of the TFI please see the chapter “Technology Economics Methodology”.

Fundamentally, the direct costs are the total direct material and labor costs associated with the equipment (including installation bulks). The total direct cost represents the total bare equipment installed cost.

Up

0.87

Down

0.79

Source: Intratec – www.intratec.us

Indirect costs are defined by the American Association of Cost Engineers (AACE) Standard Terminology as those "costs which do not become a final part of the installation but which are required for the orderly completion of the installation."

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The indirect project expenses are further detailed in “Appendix E. Detailed Capital Expenses.”

Alternative OSBL Configurations The total fixed investment for the construction of a new chemical plant is greatly impacted by how well it will be able to take advantage of the infrastructure already installed in that location.

For example, if there are nearby facilities consuming a unit’s final product or supplying a unit’s feedstock, the need for storage facilities significantly decreases, along with the total fixed investment required. This is also true for support facilities that can serve more than one plant in the same complex, such as a parking lot, gate house, etc.

This study analyzes the total fixed investment for three distinct scenarios regarding OSBL facilities: Non-integrated Plant Plant Partially Integrated Plant Fully Integrated The detailed definition, as well as the assumptions used for each scenario is presented in the chapter “About this Study”

Intratec | Economic Analysis

The influence of the OSBL facilities on the capital investment is depicted in Figure 8 and in Figure 9.

FREE SAMPLE

27

Figure 8 – Total Direct Cost of Different Integration Scenarios (USD Thousands)

Area 100

Area 200

Area 700

Area 800

Area 900

200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Non-Integrated

Partially Integrated

Fully Integrated

Source: Intratec – www.intratec.us

Figure 9 – Total Fixed Investment of Different Integration Scenarios (USD Thousands)

Direct Expenses

Indirect Expenses

Project Contingency

300,000 250,000 200,000 150,000 100,000 50,000 0 Intratec | Economic Analysis

Non-Integrated

28

Partially Integrated

Source: Intratec – www.intratec.us

FREE SAMPLE

Fully Integrated

Fixed Investment Discussion

Working Capital

Figure 10 compares and validates the total fixed investment estimated in the previous section. Each point depicted in the chart represents a different plant TFI value announced in the international press during the last few years. All of the total fixed investments announced are adjusted to the same basis (date and location of the analysis) and compared to the TFI curves estimated by Intratec for different OSBL integration scenarios.

Working capital, described in Table 19, is another significant investment requirement. It is needed to meet the costs of labor; maintenance; purchase, storage, and inventory of field materials; and storage and sales of product(s).

Assumptions for working capital calculations are found in “Appendix F. Economic Assumptions.”

TFI differences are primarily driven by how integrated the plant will be with respect to raw material suppliers and product consumers.

Table 19 – Working Capital (USD Million)

In fact, the metathesis unit is usually constructed near a steam cracker or FCC unit not only because of synergistic economies in their capital costs, but for the easy access to feedstock.

Raw Materials Inventory

0.7

Products Inventory

30.4

In-process Inventory

1.5

Supplies and Stores

0.3

Cash on Hand

22.1

Accounts Receivable

45.6

Accounts Payable

(44.2)

Source: Intratec – www.intratec.us

Figure 10 – Total Fixed Investment Validation (USD Million)

500 450 400 350 300 250 200 150 100 50 0 100

200

300

400

500

600

Plant Capacity (kta) TFI (Announced in Press)

Fully Integrated

Source: Intratec – www.intratec.us

FREE SAMPLE

Partially Integrated

Non-Integrated

700 Intratec | Economic Analysis

0

29

Other Capital Expenses Start-up costs should also be considered when determining the total capital expenses. During this period, expenses are incurred for employee training, initial commercialization costs, manufacturing inefficiencies and unscheduled plant modifications (adjustment of equipment, piping, instruments, etc.).

Table 21 – CAPEX (USD Million) Total Fixed Investment

169

Working Capital

56

Other Capital Expenses

22

Initial costs are not addressed in most studies on estimating but can become a significant expenditure. For instance, the initial catalyst load in reactors may be a significant cost and, in that case, should also be included in the capital estimates.

Source: Intratec – www.intratec.us

The purchase of technology through paid-up royalties or licenses is considered to be part of the capital investment.

Manufacturing Costs

Other capital expenses frequently neglected are land acquisition and site development. Although these are small parts of the total capital expenses, they should be included.

Operational Expenditures

The manufacturing costs, also called Operational Expenditures (OPEX), are composed of two elements: a fixed cost and a variable cost. All figures regarding operational costs are presented in USD per ton of product.

Table 22 shows the manufacturing fixed cost.

Table 20 – Other Capital Expenses (USD Million) Initial Catalyst Load

To learn more about the assumptions for manufacturing fixed costs, see the “Appendix F. Economic Assumptions.”

0.1

Start-up Expenses Operator Training

1.3

Commercialization Costs

5.4

Start-up Inefficiencies

5.4

Unscheduled Plant Modifications

3.4

Prepaid Royalties

1.7

Land & Site Development

4.2

Table 22 – Manufacturing Fixed Cost (USD/ton)

Source: Intratec – www.intratec.us

Operating Labor Cost

7.1

Supervision Labor Cost

2.1

Maintenance Cost

8.5

Operating Charges

2.3

Plant Overhead

8.9

G and A Cost

30.1

Source: Intratec – www.intratec.us

Intratec | Economic Analysis

Assumptions used to calculate other capital expenses are provided in “Appendix F. Economic Assumptions.”

30

Total Capital Expenses

Table 23 discloses the manufacturing variable cost breakdown.

Table 21 presents a summary of the total Capital Expenditures (CAPEX) detailed in previous sections.

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Economic Datasheet Table 23 – Manufacturing Variable Cost (USD/ton) Raffinate-2

1,015.3

Ethylene

422.2

Cooling Water

0.03

LP Steam

15.6

Inert Gas

0.1

Electricity

20.9

Fuel

2.2

The Technology Economic Datasheet, presented in Table 25, is an overall evaluation of the technology's production costs in a US Gulf Coast based plant.

The expected revenues in products sales and initial economic indicators are presented for a short-term assessment of its economic competitiveness.

Source: Intratec – www.intratec.us

Table 24 shows the OPEX of the presented technology.

Table 24 – OPEX (USD/ton) Manufacturing Fixed Cost

59.1

Manufacturing Variable Cost

1,476.2

Source: Intratec – www.intratec.us

Figure 11 depictures Sales and OPEX historic data. Figure 12 compares the project EBITDA trends with Intratec Profitability Indicators (IP Indicators). The Basic Chemicals IP Indicator represents basic chemicals sector profitability, based on the weighted average EBITDA margins of major global basic chemicals producers. Alternately, the Chemical Sector IP Indicator reveals the overall chemical sector profitability, through a weighted average of the IP Indicators calculated for three major chemical industry niches: basic, specialties and diversified chemicals.

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Intratec | Economic Analysis

Historical Analysis

31

Figure 11 – OPEX and Product Sales History (USD/ton)

OPEX (Cash Cost)

2,500

Product Sales

2,000

1,500

1,000

500

0 Q1-07

Q3-07

Q1-08

Q3-08

Q1-09

Q3-09

Q1-10

Q3-10

Q1-11

Q3-11

Source: Intratec – www.intratec.us

Figure 12 – EBITDA Margin & IP Indicators History Comparison

EBITDA Margin

25%

Basic Chemicals IP Indicator

Chemical Sector IP Indicator

20%

15%

10%

5%

0% Intratec | Economic Analysis

Q1-07

32

Q3-07

Q1-08

Q3-08

Q1-09

Q3-09

Source: Intratec – www.intratec.us

FREE SAMPLE

Q1-10

Q3-10

Q1-11

Q3-11

Table 25 – Technology Economics Datasheet: Propylene via Metathesis at US Gulf

350 kta unit (Production: 320 kta)

TFI

Working Capital

Other Capital Exp.

IC Index: 158.1

169

57

22

Raffinate-2

0.97

ton/ton prod.

1,043

USD/ton

324.9

1,015.3

Ethylene

0.32

ton/ton prod.

1,304

USD/ton

135.1

422.2

Cooling Water

68.3

m3/ton prod.

0.0005

USD/m3

0.01

0.03

LP Steam

1.0

ton/ton prod.

15.3

USD/ton

5.0

15.6

Inert Gas

32.1

Nm3/ton prod.

0.004

USD/Nm3

0.04

0.1

Electricity

286

kWh/ton prod.

0.1

USD/kWh

6.7

20.9

Fuel

0.5

MMBtu/ton prod.

4.4

USD/MMBtu

0.7

2.2

Operating Labor Cost

5

operators/shift

56.8

USD/oper./h

2.3

7.1

Supervision Labor Cost

1

supervisors/shift

85.3

USD/sup./h

0.7

2.1

2.7

8.5

Maintenance Cost Operating Charges

25%

of Operating Labor Costs

0.7

2.3

Plant Overhead

50%

of Operating Labor and Maint. Costs

2.8

8.9

G and A Cost

2%

of Operating Costs

9.6

30.1

Depreciation Annual Value

10%

of TFI

16.9

52.9

PG Propylene

1

ton/ton prod.

540.8

1,690

Fuel By-Product

13

MMBtu/ton prod.

17.6

54.9

1690 4.29

USD/ton USD/MMBtu

EBITDA Margin

12.0%

Chemical Sector IP Indicator

15.5%

EBIT Margin

9.0%

Source: Intratec – www.intratec.us

FREE SAMPLE

Intratec | Economic Analysis

2011

33

Economic Discussion Regional Comparison

Figure 13 summarizes the total Capital Expenditures (CAPEX) for the locations under analysis.

Capital Expenses

Operational Expenditures

Variations in productivity, labor costs, local steel prices, equipment imports needs, freight, taxes and duties on imports, regional business environments and local availability of sparing equipment were considered when comparing capital expenses for the different regions under consideration in this report.

Capital costs are adjusted from the base case (a plant constructed on the US Gulf Coast) to locations of interest by using location factors calculated according to the items aforementioned. For further information about location factor calculation, please examine the chapter “Technology Economics Methodology.” In addition, the location factors for the regions analyzed are further detailed in “Appendix F. Economic Assumptions.”

Specific regional conditions influence prices for raw materials, utilities and products. Such differences are thus reflected in the operating costs. An OPEX breakdown structure for the different locations approached in this study is presented in Figure 14.

Economic Datasheet The Technology Economic Datasheet, presented in Table 26, is an overall evaluation of the technology's capital investment and production costs in the alternative location analyzed in this study.

Figure 13 – CAPEX per Location (USD Million)

Total Fixed Investment

Other Capital Expenses

Working Capital

350 300 250 200 150 100

Intratec | Economic Discussion

50

34

0 US Gulf

Germany

Source: Intratec – www.intratec.us

FREE SAMPLE

Figure 14 – Operating Costs Breakdown per Location (USD/ton)

Net Raw Materials Costs

Main Utilities Consumption

Fixed Costs

1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1,200 US Gulf

Germany

Source: Intratec – www.intratec.us

Remarks Ethylene costs range from USD 400 to USD 420 per ton of propylene representing about 27% of the total manufacturing expenses both at the US Gulf Coast and in Germany, while butene costs, between USD 937 and 1,015 per ton (as raffinate-2), represent from 62% to 66% of those costs. Together, these raw materials account for more than 90% of the total manufacturing expenses.

Historically, the US and Europe have exhibited low EBITDA margins and therefore projects of Lummus OCT units in such regions are less commonplace. However, installing a metathesis unit inside a petrochemical complex requires low capital investment. That, coupled with special market and price conditions can make projects in these, and other, regions more economically appealing.

Furthermore, the process is fed with a butene-ethylene mass ratio of approximately 3:1 (butene as raffinate-2). As a result, the valuation of butene becomes crucial in the overall economics of the process.

Producers that have access to cheap sources of such materials can operate with improved competitiveness.

Ethylene feedstocks for metathesis can be supplied from either steam crackers or off-gas extraction from FCC units.

Butene feedstocks may be supplied from either steam cracker crude C4 or refinery FCC mixed butenes.

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Intratec | Economic Discussion

The values at which ethylene and butene feedstocks are acquired will consequently play a decisive role in the economic feasibility of a metathesis unit. While ethylene prices are between USD 1,240 and 1,750 per ton, butene values range from USD 960 to 1,040.

35

Table 26 – Technology Economics Datasheet: Propylene via Metathesis in Germany

350 kta unit (Production: 320 kta)

TFI

Working Capital

Other Capital Exp.

IC Index: 158.1

223

56

25

Raffinate-2

0.97

ton/ton prod.

962

USD/ton

299.8

936.8

Ethylene

0.32

ton/ton prod.

1,247

USD/ton

129.1

403.4

Cooling Water

68

m3/ton prod.

0.0016

USD/m3

0.04

0.1

LP Steam

1.0

ton/ton prod.

50.2

USD/ton

16.4

51.4

Inert Gas

32.1

Nm3/ton prod.

0.15

USD/Nm3

1.5

4.7

Electricity

286

kWh/ton prod.

0.12

USD/kWh

10.9

34.1

MMBtu/ton prod.

14.4

USD/MMBtu

2.3

7.1

75.8

USD/oper./h

3.0

9.5

113.7

USD/sup./h

0.91

2.8

3.6

11.2

Fuel

0.5

Operating Labor Cost

5

operators/shift

Supervision Labor Cost

1

supervisors/shift

Maintenance Cost Operating Charges

25%

of Operating Labor Costs

1.0

3.1

Plant Overhead

50%

of Operating Labor and Maint. Costs

3.8

11.8

of Operating Costs

9.4

29.5

22.3

69.7

414.1

1,294.0

58.9

184.1

G and A Cost

Depreciation Annual Value

PG Propylene

Intratec | Economic Discussion

Fuel By-Product

36

2%

10%

1 12.8

of TFI

ton/ton prod.

MMBtu/ton prod.

1294 14.4

USD/ton USD/MMBtu

EBITDA Margin

-1.9%

Chemical Sector IP Indicator

15.5%

EBIT Margin

-6.6%

Source: Intratec – www.intratec.us

FREE SAMPLE

References Carter, C. O., 1980.

4,242,531.

Lummus Technology, 2010.

US, Patent No.

s.l.:Provided by Lummus on August, 24th 2010.

Carter, C. O., 1985.

Lummus Technology, 2010. s.l.:Provided by Lummus on August, 24th, 2010.

Chodorge, J. A., Cosyns, J., Commereuc, B. & Torck, B., 1997.

Propylene Production from Butenes and Ethylene. , Spring.

Delaude, L. & Noels, A. F., 2007. Metathesis Section. In: s.l.:WileyInterscience.

Drake, C. A. & Reusser, R. E., 1986.

US, Patent No. 4,575,575.

Mol, J. C., 2004. Industrial Applications of Olefin Metathesis.

213(1), pp. 39-45.

Network China Industrial Information, n.d.

[Online] Available at: www.chyxx.com [Accessed 10 March 2012].

Senetar, J. J. & Glover, B. K., 2010.

Dwyer, C. L., 2006. Metathesis of Olefins. In: G. P. Chiusoli & P. M. Maitlis, eds. s.l.:Royal Society of Chemistry, pp. 201-217.

Stanley, S., 2009. Cover Story – Ethylene Enhancement. , February.

Eisele, P. & Killpack, R., 2002. Propene Section. In: s.l.:Wiley-Interscience.

Sumner, C., 2009.

Gartside, R. J. & Greene, M. I., 2007.

No. 7,525,007 B2.

US, Patent US, Patent No. 7,214,841 B2.

Takai, T. & Kubota, T., 2010.

Patent No. 2010/0145126 A1.

US,

Gartside, R. J., Greene, M. I. & Jones, Q. J., 2004.

US, Patent No. 6,777,582 B2.

Gartside, R. J. & Ramachandran, B., 2010.

Weidert, D. J., 2000. s.l., AIChE 2000 Spring Meeting.

Zinger, S., 2005. One-purpose propylene production. , Q3.

Hildreth, J. M., Dukandar, K. N. & Venner, R. M., 2009.

Hydrocarbon Processing, 2005. s.l.:Gulf Publishing.

Intratec | References

Lummus Technology, 2009.

[Online] Available at: www.cbi.com/images/uploads/tech_sheets/Olefins.pdf [Accessed 20 March 2012].

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37

Acronyms, Legends & Observations AACE: American Association of Cost Engineers

kta: thousands metric tons per year

C: Distillation, stripper, scrubber columns (e.g., C-101 would denote a column tag)

LP ST: Low pressure steam LPG: Liquefied petroleum gas

C2, C3, ... Cn: Hydrocarbons with "n" number of carbon atoms

MP ST: Medium pressure steam

C2=, C3=, ... Cn=: Alkenes with "n" number of carbon atoms

NGL: Natural gas liquids

CAPEX: Capital Expenditures

OCT: Olefin Conversion Technology

CC: Distillation column condenser

OPEX: Operational Expenditures

CG: Chemical grade

OSBL: Outside battery limits

CP: Distillation column reflux pump

P: Pumps (e.g., P-101 would denote a pump tag)

CR: Distillation column reboiler

PG: Polymer grade

CV: Distillation column accumulator drum

R: Reactors, treaters (e.g., R-101 would denote a reactor tag)

CW: Cooling water

RF: Refrigerant

E: Heat exchangers, heaters, coolers, condensers, reboilers (e.g., E-101 would denote a heat exchanger tag)

RG: Refinery grade ST: Steam

EBIT: Earnings before Interest and Taxes Syngas: Synthesis gas EBITDA: Earnings before Interests, Taxes, Depreciation and Amortization

T: Tanks (e.g., T-101 would denote a tank tag) TFI: Total Fixed Investment

F: Furnaces, fired heaters (e.g., F-101 would denote a furnace tag)

TPC: Total process cost

Intratec | Acronyms, Legends & Observations

FCC: Fluid-catalytic cracking

38

HP ST: High pressure steam

V: Horizontal or vertical drums, vessels (e.g., V-101 would denote a vessel tag)

IC Index: Intratec Chemical Plant Construction Index

WD: Demineralized water

IP Indicator: Intratec Chemical Sector Profitability Indicator

WP: Process water

ISBL: Inside battery limits

X: Special equipment (e.g., X-101 would denote a special equipment tag)

K: Compressors, blowers, fans (e.g., K-101 would denote a compressor tag)

Obs.: 1 ton = 1 metric ton = 1,000 kg

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Technology Economics Methodology

Introduction The same general approach is used in the development of all Technology Economics assignments. To know more about Intratec’s methodology, see Figure 15.

While based on the same methodology, all Technology Economics studies present uniform analyses with identical structures, containing the same chapters and similar tables and charts. This provides confidence to everyone interested in Intratec’s services since they will know upfront what they will get.

Workflow Once the scope of the study is fully defined and understood, Intratec conducts a comprehensive bibliographical research in order to understand technical aspects involved with the process analyzed.

Subsequently, the Intratec team simultaneously develops the process description and the conceptual process flow diagram based on: a.

Patent and technical literature research

b.

Non-confidential information provided by technology licensors

c.

Intratec's in-house database

d.

Process design skills

From this simulation, material balance calculations are performed around the process, key process indicators are identified and main equipment listed.

Equipment sizing specifications are defined based on Intratec's equipment design capabilities and an extensive use of AspenONE Engineering Software Suite that enables the integration between the process simulation developed and equipment design tools. Both equipment sizing and process design are prepared in conformance with generally accepted engineering standards.

Then, a cost analysis is performed targeting ISBL & OSBL fixed capital costs, manufacturing costs, and overall working capital associated with the examined process technology.

Equipment costs are primarily estimated using Aspen Process Economic Analyzer (formerly Aspen Icarus) customized models and Intratec's in-house database.

Cost correlations and, occasionally, vendor quotes of unique and specialized equipment may also be employed.

Next, capital and operating costs are assembled in Microsoft Excel spreadsheets, and an economic analysis of such technology is performed.

Finally, sensitivity analyses are conducted to assess the impact of key economic variables on capital and operating expenses.

According to the demand of the client who requests the Technology Economics study, the publication may also include additional analyses. Among other possibilities, the study may include sensitivity assessments to evaluate the impact of technical parameters on capital and manufacturing costs, as well as a regional comparison evaluating the economic performance of similar industrial units operating in different world regions.

Next, all the data collected are used to build a rigorous steady state process simulation model in Aspen Hysys and/or Aspen Plus, leading commercial process flowsheeting software tools.

FREE SAMPLE

Intratec | Technology Economics Methodology

Intratec Technology Economics methodology ensures a holistic, coherent and consistent techno-economic evaluation, ensuring a clear understanding of a chemical process technology.

39

Figure 15 – Methodology Flowchart

Study Understanding Validation of Project Inputs Patent and Technical Literature Databases

Intratec Internal Database

Intratec | Technology Economics Methodology

Non-Confidential Information from Technology Licensors or Suppliers

40

Bibliographical Research

Technical Validation – Process Description & Flow Diagram

Vendor Quotes

Material & Energy Balances, Key Process Indicators, List of Equipment & Equipment Sizing

Pricing Data Gathering: Raw Materials, Chemicals, Utilities and Products

Capital Cost (CAPEX) & Operational Cost (OPEX) Estimation

Construction Location Factor (http://base.intratec.us)

Economic Analysis

Final Review & Adjustments

Project Development Phases Information Gathering / Tools

Source: Intratec – www.intratec.us

FREE SAMPLE

Aspen Plus, Aspen Hysys Aspen Exchanger Design & Rating, KG Tower, Sulcol and Aspen Energy Analyzer

Aspen Process Economic Analyzer, Aspen Capital Cost Estimator, Aspen InPlant Cost Estimator & Intratec In-House Database

Process equipment (e.g., reactors and vessels, heat exchangers, pumps, compressors, etc.)

Capital & Operating Cost Estimates

Process equipment spares The cost estimate presented in the current study considers a process technology based on a standardized design practice, typical of a major chemical company. The specific design standards employed can have a significant impact on capital costs.

Housing for process units Pipes and supports within the main process units Instruments, control systems, electrical wires and other hardware

The basis for the capital cost estimate is that the plant is considered to be built in a clear field with a typical large single-line capacity. In comparing the cost estimate hereby presented with an actual project cost or contractor's estimate, the following must be considered: Minor differences or details (many times, unnoticed) between similar processes can affect cost noticeably.

The omission of process areas in the design considered may invalidate comparisons with the estimated cost presented.

Industrial plants may be overdesigned for particular objectives and situations.

Rapid fluctuation of equipment or construction costs may invalidate cost estimate.

Foundations, structures and platforms Insulation, paint and corrosion protection In addition to the direct material and labor costs, the ISBL addresses indirect costs, such as construction overheads, including: payroll burdens, field supervision, equipment rentals, tools, field office expenses, temporary facilities, etc.

OSBL Investment The OSBL investment accounts for auxiliary items necessary to the functioning of the production unit (ISBL), but which perform a supporting and non-plant-specific role. OSBL items considered may vary from process to process. The OSBL investment could include the installed cost of the following items:

Equipment vendors or engineering companies may provide goods or services below profit margins during economic downturns.

Specific locations may impose higher taxes and fees, which can impact costs considerably.

Storage and packaging (storage, bagging and a warehouse) for products, feedstocks and by-products Steam units, cooling water and refrigeration systems Process water treating systems and supply pumps

ISBL Investment The ISBL investment includes the fixed capital cost of the main processing units of the plant necessary to the manufacturing of products. The ISBL investment includes the installed cost of the following items:

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Boiler feed water and supply pumps Electrical supply, transformers, and switchgear Auxiliary buildings, including all services and equipment of: maintenance, stores warehouse, laboratory, garages, fire station, change house, cafeteria, medical/safety, administration, etc.

General utilities including plant air, instrument air, inert gas, stand-by electrical generator, fire water pumps, etc.

Pollution control, organic waste disposal, aqueous waste treating, incinerator and flare systems

Intratec | Technology Economics Methodology

In addition, no matter how much time and effort are devoted to accurately estimating costs, errors may occur due to the aforementioned factors, as well as cost and labor changes, construction problems, weather-related issues, strikes, or other unforeseen situations. This is partially considered in the project contingency. Finally, it must always be remembered that an estimated project cost is not an exact number, but rather is a projection of the probable cost.

41

Working Capital For the purposes of this study,2 working capital is defined as the funds, in addition to the fixed investment, that a company must contribute to a project. Those funds must be adequate to get the plant in operation and to meet subsequent obligations.

The initial amount of working capital is regarded as an investment item. This study uses the following items/assumptions for working capital estimation: Accounts receivable. Products and by-products shipped but not paid by the customer; it represents the extended credit given to customers (estimated as a certain period – in days – of manufacturing expenses plus depreciation).

Accounts payable. A credit for accounts payable such as feedstock, catalysts, chemicals, and packaging materials received but not paid to suppliers (estimated as a certain period – in days – of manufacturing expenses).

Cash on hand. An adequate amount of cash on hand to give plant management the necessary flexibility to cover unexpected expenses (estimated as a certain period – in days – of manufacturing expenses).

Start-up Expenses When a process is brought on stream, there are certain onetime expenses related to this activity. From a time standpoint, a variable undefined period exists between the nominal end of construction and the production of quality product in the quantity required. This period is commonly referred to as start-up.

During the start-up period expenses are incurred for operator and maintenance employee training, temporary construction, auxiliary services, testing and adjustment of equipment, piping, and instruments, etc. Our method of estimating start-up expenses consists of four components:

Intratec | Technology Economics Methodology

Product inventory. Products and by-products (if applicable) in storage tanks. The total amount depends on sales flow for each plant, which is directly related to plant conditions of integration to the manufacturing of product‘s derivatives (estimated as a certain period – in days – of manufacturing expenses plus depreciation, defined by plant integration circumstances).

42

Labor component. Represents costs of plant crew training for plant start-up, estimated as a certain number of days of total plant labor costs (operators, supervisors, maintenance personnel and laboratory labor).

Commercialization cost. Depends on raw materials and products negotiation, on how integrated the plant is with feedstock suppliers and consumer facilities, and on the maturity of the technology. It ranges from 0.5% to 5% of annual manufacturing expenses.

Raw material inventory. Raw materials in storage tanks. The total amount depends on raw material availability, which is directly related to plant conditions of integration to raw material manufacturing (estimated as a certain period – in days – of raw material delivered costs, defined by plant integration circumstances).

Start-up inefficiency. Takes into account those operating runs when production cannot be maintained or there are false starts. The start-up inefficiency varies according to the process maturity: 5% for new and unproven processes, 2% for new and proven processes, and 1% for existing licensed processes, based on annual manufacturing expenses.

In-process inventory. Material contained in pipelines and vessels, except for the material inside the storage tanks (assumed to be 1 day of manufacturing expenses).

Unscheduled plant modifications. A key fault that can happen during the start-up of the plant is the risk that the product(s) may not meet specifications required by the market. As a result, equipment modifications or additions may be required.

Supplies and stores. Parts inventory and minor spare equipment (estimated as a percentage of total maintenance materials costs for both ISBL and OSBL).

2

The accounting definition of working capital (total current assets minus total current liabilities) is applied when considering the entire company.

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Other Capital Expenses

Uncertainty in process parameters, such as severity of operating conditions and quantity of recycles

Prepaid Royalties. Royalty charges on portions of the plant are usually levied for proprietary processes. A value ranging from 0.5 to 1% of the total fixed investment (TFI) is generally used.

Site Development. Land acquisition and site preparation, including roads and walkways, parking, railroad sidings, lighting, fencing, sanitary and storm sewers, and communications.

Manufacturing Costs Manufacturing costs do not include post-plant costs, which are very company specific. These consist of sales, general and administrative expenses, packaging, research and development costs, and shipping, etc.

Addition and integration of new process steps Estimation of costs through scaling factors Off-the-shelf equipment Hence, process contingency is also a function of the maturity of the technology, and is usually a value between 5% and 25% of the direct costs.

The project contingency is largely dependent on the plant complexity and reflects how far the conducted estimation is from the definitive project, which includes, from the engineering point of view, site data, drawings and sketches, suppliers’ quotations and other specifications. In addition, during construction some constraints are verified, such as:

Operating labor and maintenance requirements have been estimated subjectively on the basis of the number of major equipment items and similar processes, as noted in the literature.

Plant overhead includes all other non-maintenance (labor and materials) and non-operating site labor costs for services associated with the manufacture of the product.

Such overheads do not include costs to develop or market the product.

G & A expenses represent general and administrative costs incurred during production such as: administrative salaries/expenses, research & development, product distribution and sales costs.

Project errors or incomplete specifications Strike, labor costs changes and problems caused by weather

Table 27 – Project Contingency Plant Complexity

Complex

Typical

Simple

Project Contingency

25%

20%

15%

Source: Intratec – www.intratec.us

Intratec’s definitions in relation to complexity and maturity are the following:

Contingency constitutes an addition to capital cost estimations, implemented based on previously available data or experience to encompass uncertainties that may incur, to some degree, cost increases. According to recommended practice, two kinds of contingencies are assumed and applied to TPC: process contingency and project contingency.

Process contingency is utilized in an effort to lessen the impact of absent technical information or the uncertainty of that which is obtained. In that manner, the reliability of the information gathered, its amount and the inherent complexity of the process are decisive for its evaluation.

Errors that occur may be related to:

Table 28 – Criteria Description

Simple

Complexity

Typical

Somewhat simple, widely known processes Regular process Several unit operations, extreme

Complex

temperature or pressure, more instrumentation

New & Maturity

Proven Licensed

From 1 to 2 commercial plants 3 or more commercial plants

Source: Intratec – www.intratec.us

FREE SAMPLE

Intratec | Technology Economics Methodology

Contingencies

43

Accuracy of Economic Estimates The accuracy of estimates gives the realized range of plant cost. The reliability of the technical information available is of major importance.

Table 29 – Accuracy of Economic Estimates

Reliability

Accuracy

Very

Low

Moderate

High

+ 30%

+ 22%

+ 18%

+ 10%

- 20%

- 18%

- 14%

- 10%

High

Source: Intratec – www.intratec.us

The non-uniform spread of accuracy ranges (+50 to – 30 %, rather than ±40%, e.g.) is justified by the fact that the unavailability of complete technical information usually results in under estimating rather than over estimating project costs.

Location Factor Economic regional comparisons eventually presented in Technology Economics studies are based on location factors. A location factor is an instantaneous, total cost factor used for converting a base project cost from one geographic location to another.

A properly estimated location factor is a powerful tool, both for comparing available investment data and evaluating which region may provide greater economic attractiveness for a new industrial venture. Considering this, Intratec has developed a well-structured methodology for calculating Location Factors, and the results are presented for specific regions’ capital costs comparison.

Intratec’s Location Factor takes into consideration the differences in productivity, labor costs, local steel prices, equipment imports needs, freight, taxes and duties on imported and domestic materials, regional business environments and local availability of sparing equipment.

For such analyses, all data were taken from international statistical organizations and from Intratec’s database.

Calculations are performed in a comparative manner, taking a US Gulf Coast-based plant as the reference location. The final Location Factor is determined by four major indexes: Business Environment, Infrastructure, Labor, and Material.

The Business Environment Factor and the Infrastructure Factor measure the ease of new plant installation in different countries, taking into consideration the readiness of bureaucratic procedures and the availability and quality of ports or roads.

Figure 16 – Location Factor Composition

Intratec | Technology Economics Methodology

Location Factor

44

Material Index Domestic Material Index Relative Steel Prices Labor Index Taxes and Freight Rates Spares Imported Material Taxes and Freight Rates Spares

Labor Index Local Labor Index Relative Salary Productivity Expats Labor

Infrastructure Factor Ports, Roads, Airports and Rails (Availability and Quality) Communication Technologies Warehouse Infrastructure Border Clearance Local Incentives

Source: Intratec – www.intratec.us

FREE SAMPLE

Business Environment Factor Readiness of Bureaucratic Procedures Legal Protection of Investors Taxes

Labor and material, in turn, are the fundamental components for the construction of a plant and, for this reason, are intrinsically related to the plant costs. This concept is the basis for the methodology, which aims to represent the local discrepancies in labor and material.

Productivity of workers and their hourly compensation are important for the project but, also, the qualification of workers is significant to estimating the need for foreign labor.

On the other hand, local steel prices are similarly important, since they are largely representative of the costs of structures, piping, equipment, etc. Considering the contribution of labor in these components, workers’ qualifications are also indicative of the amount that needs to be imported. For both domestic and imported materials, a Spare Factor is considered, aiming to represent the need for spare rotors, seals and parts of rotating equipment.

The sum of the corrected TFI distribution reflects the relative cost of the plant, this sum is multiplied by the Infrastructure and the Business Environment Factors, yielding the Location Factor.

For the purpose of illustrating the conducted methodology, a block flow diagram is presented in Figure 16 in which the four major indexes are presented, along with some of their components.

Intratec | Technology Economics Methodology

.

FREE SAMPLE

45

Appendix A. Mass Balance & Streams Properties Table 30 – Detailed Material Balance Stream Properties

Phase

L

L

L

L

L

L

L

G

G

G

Temperature (°C)

-29

-28

30

50

52

25

25

260

304

304

Pressure (bar abs)

22

30

6.0

6.0

30

30

30

30

30

30

Mass Flow (kg/h)

12,940

12,940

38,950

114,750

114,750

161,520

161,520

161,520

161,520

161,520

Ethylene (wt%)

99.9

99.9

28.9

28.9

28.9

28.9

21.0

Ethane (wt%)

0.1

0.1

traces

traces

traces

traces

traces

Propene (wt%)

0.3

0.3

0.3

0.3

24.9

80.0

38.3

38.3

27.2

27.2

27.2

27.2

9.0

Butane (wt%)

20.0

56.4

56.4

40.1

40.1

40.1

40.1

40.1

4.9

4.9

3.5

3.5

3.5

3.5

5.0

Molar Flow (kmol/h)

461

461

689

1,988

1,988

3,654

3,654

3,654

3,654

3,654

MW

28.1

28.1

56.5

57.7

57.7

44.2

44.2

44.2

44.2

44.2

438.9

439.6

588.3

555.1

557.9

510.9

510.9

32.2

29.1

29.2

335

335

-233

-392

-391

-180

-180

13

41

41

29

29

66

207

206

316

316

5,015

5,546

5,538

0.11

0.11

0.09

0.09

0.09

0.09

0.09

0.05

0.05

0.05

3.5

3.4

2.4

2.6

2.5

2.7

2.7

2.6

2.7

2.7

0.06

0.06

0.14

0.12

0.12

0.10

0.10

0.02

0.02

0.02

4.2

4.1

12.3

9.7

9.4

6.9

6.9

0.0

0.0

0.0

11,280

11,280

10,820

10,870

10,870

10,990

10,990

10,990

10,990

10,990

Mass Density (kg/m3) Mass Enthalpy (kcal/kg) Volume Flow (m3/h) Thermal Conductivity (W/m K) Mass Heat Capacity Intratec | Appendix A. Mass Balance & Streams Properties

0.4

Butenes (wt%)

C5+ (wt%)

46

0.4

(kJ/kg °C) Viscosity (cP) Surface Tension (dyne/cm) LHV (kcal/kg)

Source: Intratec – www.intratec.us

FREE SAMPLE

Table 31 – Detailed Material Balance Stream Properties

Phase

L/G

L/G

L

L

L

L

L

L

G

L

Temperature (°C)

53

45

89

39

-25

-24

107

60

-25

113

Pressure (bar abs)

30

30

22

16

22

30

17

17

22

17

Mass Flow (kg/h)

161,490

161,490

127,560

40,000

33,820

33,820

75,800

75,800

120

11,760

Ethylene (wt%)

21.0

21.0

traces

0.1

100.0

100.0

100.0

Ethane (wt%)

traces

traces

traces

traces

traces

traces

traces

Propene (wt%)

24.9

24.9

31.5

99.5

traces

traces

Butenes (wt%)

9.0

9.0

11.4

Butane (wt%)

39.9

39.9

C5+ (wt%)

5.1

Molar Flow (kmol/h)

0.5

0.5

0.1

0.1

16.9

16.9

14.1

50.6

0.3

75.1

75.1

63.5

5.1

6.5

traces

7.4

7.4

22.4

3,654

3,654

2,444

950

1,205

1,205

1,298

1,298

4

196

MW

44.2

44.2

52.2

42.1

28.1

28.1

58.4

58.4

28.1

60.1

Mass Density (kg/m3)

210.1

332.6

458.7

482.4

428.6

429.4

462.6

541.1

42.6

468.5

Mass Enthalpy (kcal/kg)

-152

-163

-285

35

339

340

-441

-474

413

-393

Volume Flow (m3/h)

769

486

278

83

79

79

164

140

3

25

Thermal Conductivity (W/m K)

0.00

0.00

0.07

0.10

0.11

0.10

0.00

0.08

0.02

0.06

Mass Heat Capacity (kJ/kg °C)

2.9

2.9

3.4

3.0

3.7

3.6

3.4

2.6

2.2

3.4

Viscosity (cP)

0.00

0.00

0.07

0.06

0.06

0.06

0.00

0.12

0.01

0.07

Surface Tension (dyne/cm)

5.3

5.6

3.4

5.1

3.7

3.5

3.7

8.5

0.0

3.8

LHV (kcal/kg)

10,990

10,990

10,910

10,950

11,280

11,280

10,900

10,900

11,280

10,870

Intratec | Appendix A. Mass Balance & Streams Properties

Source: Intratec – www.intratec.us

FREE SAMPLE

47

Appendix B. Utilities Consumption Breakdown Table 32 – Utilities Consumption Breakdown

Cooling Water

Deethylenizer Feed Cooler

144

m3/h

Cooling Water

C4+ Purge Cooler

47

m3/h

Cooling Water

Butenes Recycle Cooler

193

m3/h

Cooling Water

Depropylenizer Condenser

773

m3/h

Cooling Water

Refrigeration System

1576

m3/h

LP Steam

Deethylenizer Reboiler

21

ton/h

LP Steam

Depropylenizer Reboiler

20

ton/h

Inert Gas

Catalyst Regeneration

1283

Nm3/h

Intratec | Appendix B. Utilities Consumption Breakdown

Source: Intratec – www.intratec.us

48

FREE SAMPLE

Appendix C. Process Carbon Footprint The process’ carbon footprint can be defined as the total amount of greenhouse gas (GHG) emissions caused by the process operation.

The assumptions for carbon footprint calculation and the results are provided in

Although it is difficult to precisely account for the total emissions generated by a process, it is possible to estimate the major emissions, which can be divided into:

Table 34 – CO2e Emissions (ton/ton prod.)

Direct emissions. Emissions caused by process waste streams combusted in flares.

Stream #24

0.009

Indirect emissions. The ones caused by utilities generation or consumption, such as the emissions due to using fuel in furnaces for heating process streams.

Fuel used in steam boilers, electricity generation, and any other emissions in activities to support process operation are also considered indirect emissions.

Electricity Generation

0.163

Steam Generation

0.114

Heat Generation

0.031

In order to estimate the direct emissions, it is necessary to know the composition of the streams, as well as the oxidation factor.

Estimation of indirect emissions requires specific data, which depends on the plant location, such as the local electric power generation profile, and on the plant resources, such as the type of fuel used.

Source: Intratec – www.intratec.us

Equivalent carbon dioxide (CO2e) is a measure that describes the amount of CO2 that would have the same global warming potential of a given greenhouse gas, when measured over a specified timescale.

All values and assumptions used in calculations are based on data provided by the Environment Protection Agency (EPA) Climate Leaders Program.

Oxidation factor

100%

Waste streams

Stream #24

Electric power profile

Texas

Fuel used in steam boiler

Natural Gas

Steam boiler efficiency

85%

Fuel used in furnaces

Natural Gas

Furnaces efficiency

85%

Intratec | Appendix C. Process Carbon Footprint

Table 33 – Assumptions for CO2e Emissions Calculation

Source: Intratec – www.intratec.us

FREE SAMPLE

49

Appendix D. Equipment Detailed List & Sizing Table 35 – Reactors

Description

Metathesis Reactor

Design gauge pressure (barg)

1.0

Design temperature (deg C)

340

Liquid volume (m3)

68

Shell material

SS

Source: Intratec – www.intratec.us

Table 36 – Heat Exchangers

Description

Reactor Feed

Regeneration

Heater

Gas Heater

Design gauge pressure (barg)

32.4

32.4

Design temperature (deg C)

334

334

Duty (MW)

6

6

Heat transfer area (m2) Item type

Furnace

Furnace

Material

Cr-Mo

Cr-Mo

Shell design gauge pressure

Intratec | Appendix D. Equipment Detailed List & Sizing

(barg)

50

Shell design temperature (deg C) Shell material Tube design gauge pressure (barg) Tube design temperature (deg C) Tube material

Depropylenizer

Deethylenizer

C4+ Purge

Condenser

Feed Cooler

Cooler

2175

1978

158

36

Shell & Tube

Shell & Tube

Shell & Tube

Shell & Tube

32.4

16.7

32.4

25.4

334

125

125

144

CS

CS

CS

CS

32.4

10.8

21.3

16.6

334

125

125

144

CS

CS

CS

CS

Feed Vaporizer

Source: Intratec – www.intratec.us

FREE SAMPLE

Table 36 – Heat Exchangers (Cont.)

Butenes Recycle

Deethylenizer

Deethylenizer

Depropylenizer

Cooler

Condenser

Reboiler

Reboiler

Heat transfer area (m2)

79

1245

195

270

Item type

Shell & Tube

Shell & Tube

Shell & Tube

Shell & Tube

Shell design gauge pressure (barg)

17.6

24.4

24.4

17.7

Shell design temperature (deg C)

137

-55

125

143

Shell material

CS

CS

CS

CS

Tube design gauge pressure (barg)

11.4

16.0

16.0

11.5

Tube design temperature (deg C)

137

-55

194

194

Tube material

CS

CS

CS

CS

Description Design gauge pressure (barg) Design temperature (deg C) Duty (MW)

Material

Source: Intratec – www.intratec.us

Ethylene

Raffinate-2

C4 Tank

Deethylen.

Depropylen.

Propylene

Feed Pumps

Feed Pumps

Pumps

Reflux Pumps

Reflux Pumps

Pumps

Casing material

CS

CS

CS

CS

CS

CS

Design gauge pressure (barg)

32.4

6.7

32.4

24.4

16.7

25.4

Design temperature (deg C)

18

125

125

18

125

125

Liquid flow rate (m3/h)

32

73

227

313

307

91

Description

Source: Intratec – www.intratec.us

FREE SAMPLE

Intratec | Appendix D. Equipment Detailed List & Sizing

Table 37 – Pumps

51

Table 37 – Pumps (Cont.)

Description

Ethylene Recycle Pumps

C4+ Pumps

Casing material

CS

CS

Design gauge pressure (barg)

32.4

25.4

Design temperature (deg C)

18

144

Liquid flow rate (m3/h)

87

28

Source: Intratec – www.intratec.us

Table 38 – Columns

Description

Deethylenizer Column

Depropylenizer Column

Design gauge pressure (barg)

24.4

17.7

Design temperature (deg C)

125

140

Number of trays

60

65

Shell material

CS

CS

Tray material

CS

CS

Tray spacing (mm)

610

610

Vessel diameter (m)

2.7

2.6

Source: Intratec – www.intratec.us

Intratec | Appendix D. Equipment Detailed List & Sizing

Table 39 – Utilities Supply

52

Description

Cooling Tower

Refrigerator

Boiler flow rate (kg/h)

Steam boiler

Water Demineralizer

47200

Material

CS

Water flow rate (m3/h)

3384

CS

CS

CS 6

Source: Intratec – www.intratec.us

FREE SAMPLE

Table 40 – Vessels & Tanks Specifications

Description

Reactor Feed Treaters

Deethylenize r Accumulator

Depropylen.

Ethylene ISBL

Ethylene

Raffinate

Accumulator

Storage

Storage

Storage

Design gauge pressure (barg)

32.4

24.4

16.7

25.5

25.5

6.7

Design temperature (deg C)

125

18

125

-30

-30

125

Liquid volume (m3)

35.6

30.0

30.0

370

5000

11200

Shell material

CS

CS

CS

CS

CS

CS

Source: Intratec – www.intratec.us

Table 40 – Vessels & Tanks Specifications (Cont.)

Propylene

Demin. Water

Clarified

Product ISBL

C4+ Purge

Fresh/Recycle

Storage

Tank

Water Tank

Storage

Storage

C4 Tank

Design gauge pressure (barg)

26.5

0.004

0.004

26.5

3.5

17.6

Design temperature (deg C)

120

20

20

125

120

125

Liquid volume (m3)

13900

3

1700

1050

260

835

Shell material

CS

CS

CS

CS

CS

CS

Description

Intratec | Appendix D. Equipment Detailed List & Sizing

Source: Intratec – www.intratec.us

FREE SAMPLE

53

Appendix E. Detailed Capital Expenses Direct Costs Breakdown Figure 17 – ISBL Direct Costs Breakdown by Equipment Type for Base Case

Vessels & Tanks

Columns

Heat Exchangers

Pumps, Compressors & Turbines

Reactors

Furnaces

10%

35%

14%

10%

13%

18%

ISBL Total Direct Cost: USD 21.2 Million

Source: Intratec – www.intratec.us

Figure 18 – OSBL Direct Costs Breakdown by Equipment Type for Base Case

Vessels & Tanks

Steam Boiler

Refrigeration Units

Intratec | Appendix E. Detailed Capital Expenses

9.28% 1.11%

54

Cooling Tower

Water Treatment

Buildings

0.04% 1.42% 0.41%

87.76% OSBL Total Direct Cost: USD 94.5 Million Source: Intratec – www.intratec.us

FREE SAMPLE

Indirect Costs Breakdown

Home Office Const Suppt

352

Field Const Supv

1,533

Start-up, Commissioning

129

Fringe Benefits

1,209

Burdens

1,381

Consumables, Small Tools

173

Misc (Insurance, Etc)

435

Scaffolding

173

Equipment Rental

1,308

Field Services

439

Temp Const, Utilities

96

Other Freight

4,398

Materials Taxes

6,871

Basic Engineering

1,393

Detail Engineering

3,366

Material Procurement

731

G and A Overheads

4,015

Contract Fee

3,617

FREE SAMPLE

Intratec | Appendix E. Detailed Capital Expenses

Table 41 – Indirect Costs Breakdown for the Base Case (USD Thousands)

55

Appendix F. Economic Assumptions Capital Expenditures

Working Capital

For a better description of working capital and other capital expenses components, as well as the location factors methodology, see the chapter “Technology Economics Methodology.”

Table 43 – Working Capital Assumptions for Base Case Raw Materials

Construction Location Factors

Inventory Products Inventory

Table 42 – Detailed Construction Location Factor

In-process Inventory Supplies and

Labor Index

Stores

Local Labor Index

1.00

1.34

Cash on Hand

% of Local Labor

100%

100%

Accounts

Expats Labor Index

1.35

1.35

Receivable

% of Expats

0%

0%

Accounts Payable

Material Index Domestic Material Index

1.00

1.30

% of Domestic Material

100%

90%

Imported Material Index

1.00

1.13

% of Imported Material

0%

10%

Spare Factor

1.00

1.02

Intratec | Appendix F. Economic Assumptions

Material & Labor Weights

56

Labor

30%

Material

70%

Infrastructure Factor

1.00

1

Business Environment Factor

1.00

1

0.5

20

1

5% 15 30

30

days of raw materials cost days of raw materials cost + depreciation day of total oper. cost of total oper. labor and maint. cost days of total oper. cost days of total oper. cost + depreciation days of total oper. cost

Source: Intratec – www.intratec.us

Other Capital Expenses

Table 44 – Other Capital Expenses Assumptions for Base Case

Operator Training

150

Commercialization Costs

1%

Start-up Inefficiencies

1%

Material/Labor Distribution in TFI Labor

30%

30%

Material

70%

70%

Source: Intratec – www.intratec.us

Unscheduled Plant

days of all labor costs of annual oper. costs of annual oper. costs

2%

of TFI

Prepaid Royalties

1%

of TFI

Land & Site Development

3%

of TFI

Modifications

Source: Intratec – www.intratec.us

FREE SAMPLE

Operational Expenditures Fixed Costs Fixed costs are estimated based on the specific characteristics of the process. The fixed costs, like operating charges and plant overhead, are typically calculated as a percentage of the industrial labor costs, and G & A expenses are added as a percentage of the operating costs.

Table 45 – Other Fixed Cost Assumptions

The goal of depreciation is to allow a credit against manufacturing costs, and hence taxes, for the nonrecoverable capital expenses of an investment. The depreciable portion of capital expense is the total fixed investment.

Table 46 shows the project depreciation value and the assumptions used in its calculation.

Table 46 – Depreciation Value & Assumptions

Operating Charges (% of Operating Labor Costs)

25%

Depreciation Method

Straight Line

Plant Overhead (% of Oper. Labor and Maint. Costs)

50%

Economic Life of Project

10 years

G and A Expenses (% of Subtotal Operating Costs)

2%

Depreciation Annual Value

10% of TFI

Source: Intratec – www.intratec.us

Source: Intratec – www.intratec.us

Depreciation

EBITDA Margins Comparison

Depreciation, while not a true manufacturing cost, is considered to be a manufacturing cost for tax purposes.

Figure 19 presents a 5-year analysis, comparing EBITDA margins estimates for the regional scenarios presented in this study.

Figure 19 – Historical EBITDA Margins Regional Comparison

US Gulf

25%

Germany

20%

10%

5%

0% Q4-06

Q2-07

Q4-07

Q2-08

Q4-08

Q2-09

Source: Intratec – www.intratec.us

FREE SAMPLE

Q4-09

Q2-10

Q4-10

Q2-11

Intratec | Appendix F. Economic Assumptions

15%

57

Appendix G. Released Publications The list below is intended to be an easy and quick way to identify Intratec reports of interest. For a more complete and up-to-date list, please visit the Publications section on our website, www.intratec.us.

IMPROVEMENT ECONOMICS

TECHNOLOGY ECONOMICS Propylene Production via Metathesis: Propylene production via metathesis from ethylene and butenes, in a process similar to Lummus OCT. Propylene Production via Propane Dehydrogenation: Propane dehydrogenation (PDH) process conducted in moving bed reactors, in a process similar to UOP OLEFLEX™.

Propylene Production from Methanol: Propylene production from methanol, in a process is similar to Lurgi MTP®.

Polypropylene Production via Gas Phase Process: A gas phase type process similar to the Dow UNIPOL™ PP process to produce both polypropylene homopolymer and random copolymer.

Polypropylene Production via Gas Phase Process, Part 2: A gas phase type process similar to Lummus NOVOLEN® for production of both homopolymer and random copolymer.

Intratec | Appendix G. Released Publications

Sodium Hypochlorite Chemical Production: Sodium hypochlorite (bleach) production, in a widely used industrial process, similar to that employed by Solvay Chemicals, for example.

58

Propylene Production via Propane Dehydrogenation, Part 2: Propane dehydrogenation (PDH) in fixed bed reactors, in a process is similar to Lummus CATOFIN®.

Propylene Production via Propane Dehydrogenation, Part 3: Propane dehydrogenation (PDH) by applying oxydehydrogenation, in a process similar to the STAR PROCESS® licensed by Uhde.

FREE SAMPLE

Membranes on Polypropylene Plants Vent Recovery: The Report evaluates membrane units for the separation of monomer and nitrogen in PP plants, similar to the VaporSep® system commercialized by MTR. Use of Propylene Splitter to Improve Polypropylene Business: The report assesses the opportunity of purchasing the less valued RG propylene to produce the PG propylene raw material used in a PP plant.

Appendix H. Request Submitted to Intratec A major player in the chemical arena made the request for this publication at www.intratec.us (section “Ask for a New Publication�).

Please find below the request submitted to Intratec.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subject of the Publication Please describe the technology to be approached in the assessment: Point to a URL of reference

Main Product(s):

Propylene

Feedstock:

Ethylene and Butene

Upload files

Describe the technology by yourself

Technology Brief Description (Provide any additional information you might have about the process you want to asses, like: Chemical Route, Process Technology, Technology Licensor, etc.):

The raw materials are converted to propylene through a metathesis reaction.

Remarks and Comments

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FREE SAMPLE

Intratec | Appendix H. Request Submitted to Intratec

Please provide any other information that may be relevant for the project description:

59

About Intratec Intratec is an independent research and leading advisory firm for the Chemical and Allied Industries, composed by a mix of consulting professionals, market researchers and skilled engineers with extensive industry experience.

Established in 2002, Intratec has already provided more than 200 reliable, in-depth evaluations of process technologies for the Oil & Gas, Petrochemical, Chemical, Renewable and Energy industries.

From this expertise, Intratec developed a consistent work methodology, continuously tested and proven by our clients.