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Cost estimating for chemical engineering plant design
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access)

Cost estimating advice
Chapter 9 in Perry's Chemical Engineers' Handbook (library at Ref
660.2021 C517) Includes capital costs for several plants, equations
for some equipment, etc.
Oil & Gas Journal (search plant costs, chemical prices, Nelson-Farrar
refinery construction index, refinery operating costs)
Quizzes, glossary, equipment cost estimator
Handbook of Petrochemicals Production Processes, Robert A.
Meyers, editor, McGraw-Hill (2005), 665.538 H236. Requirements for
capital investment, raw materials and utilities for many common
petrochemicals.
Chemicals, raw materials and products: CAUTION: Prices for
laboratory quantities are much higher than for the commercial quantities
that you would use for plant design economic calculations. Don't use
the costs of raw materials and products given in the text. If you search
the internet, use price rather than cost.
Wilson Web: on campus; (Search price OR cost AND chemicals
name). Includes the following three:
Chemical Week:
at iMirus (See particularly the weekly CW Price Report of commodity
petrochemicals and plastics.)
at Proquest (Search to find articles about particular chemicals, such
as manufacturers, production rates, prices)
Chemistry and Industry (Click on one issue, and then Find to search for
news about particular chemicals from many sources).
ICIS Chemical Business (formerly Chemical Market Reporter); Student
site; Costs of many chemicals (~1-year old); Reports; Article archive (Click
on one issue, and then Find to search for news about particular chemicals
from many sources.) Chemical price reports (not free) Magazine: TP1.c37.
Purchasing.com/
Chemical & Engineering News. See Facts and Figures for the Chemical
Industry, usually in June or July issue. Production rates of common
chemicals versus time. Magazine: TP1 .C35
Noble metals (silver, platinum, rhodium, iridium) as used in small
percentages in catalysts: use google or similar search engine to find price
on line for quantity needed. Platinum compounds
Producer Price Indices U.S. Government statistics for price movement (but
not actual prices): The Producer Price Index (PPI) program measures the
average change over time in the selling prices received by domestic
producers for their output.
Polymer prices
Oxygen costs
Search chemical name price at http://findarticles.com/ (unfortunately with
annoying popups that may not be prevented)
Directory of engineering products and supplies Laboratory chemical
suppliers often provide prices. Suitable for rough estimation of catalyst
costs. Alsogoogle chemical suppliers.
Utilities costs
Lower costs than those found below may be negotiated with local
suppliers when large quantities are to be used. To obtain the costs
per GJ required by CAPCOST, it is necessary to use the higher
heating value (HHV), which is also known as Energy content, Btu
content, Heating value, and Calorific Value. Basically, it is the
heat of combustion with liquid water as the product. For natural
gas the HHV depends on composition, and is approximately 1030
Btu/ft
3
(at 30 Torr and 60
o
F). Fuel oil #2 is about 140,000 Btu/gal and
bituminous coal is ~30 MJ/kg. See Conversion factors between
energy units.
Energy Information Agency
Natural gas prices ; Industrial price versus time
Coal (heating values are per pound)
#2 fuel oil (Same as #2 distillate.)
Electricity costs by sector and state (best site for large industrial usage)
Electricity, fuel oil, natural gas for consumers
Historical data for commodities
Consumer price index since 1913
Credits for steam or electricity produced should be deducted from the Cost
of Manufacturing and not included in sales of product(s).
Cost estimation: fuels, electricity, waste treatment
Plot of $/GJ from 1970 through 2006 for natural gas, gasoline, fuel oils,
wood & solid wastes, coal and nuclear. Shows recent inflation rates.
Fuel Value Calculator giving net heating value for natural gas, propane,
wood, fuel oil, coal, switchgrass, shelled corn and electricity.
Waste treatment costs
Methods and costs of treating waste water and gas.
Waste gas: Take a credit for a combustible (fuel) waste gas that is at a
concentration above the upper flammability limit as the cost of an
equivalent amount of natural gas based on its lower heating value
(LHV). (Tabulations of data.) The same can be done if the combustible
components are present below the lower flammability limit, but sufficient
oxygen is present for catalytic combustion to recover the LHV. HYSYS
gives the LHV for a stream under the Properties tab. If the gas is below the
lower flammability limit and consists of components that can be burned to
CO
2
and H
2
O, assume that these components are eliminated in a flame at a
cost of $0.005/kg. Any products not permitted to be exhausted (such as
SO
2
in many places) must be removed before the gas is released. Charge
$0.20 per kg of materials that must be removed. Assume these are 2001
prices; update the burning cost using the price of natural gas and the
waste treatment cost by the price of electricity.
Waste water: Charge $0.25 per kg of components that must be removed
before discharge of the water. This cost is for 2001, so update using the
cost of electricity.
Wages and benefits
Bureau of Labor Statistics: Main Site; Statistics download (Chemical
equipment operators and tenders are category 51-9011 in these Excel
tables, which give hourly and annual wages, and do not include Employer
Costs for Employee Compensation, i.e. fringe benefits)
ENR: Magazine, formerly Engineering News-Record: TA1 .E6
Oil & Gas Journal: TN860 .O4
Salary.com Click on Benefits to see total pay package. Data probably from
the U.S. Bureau of Labor Statistics (see above).
Equipment sizing: Before the cost of equipment can be estimated its
size must be determined. Similarly, the utilities requirements must be
calculated. Note that HYSYS/UniSim uses inappropriate default values
when the units are first entered, e.g. tower diameter and heat exchanger
area. Do not use these default values for cost estimation.
Sizing heat exchangers Warning: The part of HYSYS/UniSim installed at
Clarkson University does not calculate heat transfer coefficients
correctly. It only calculates q/T
avg
and gives this as UA (i.e., it sets F=1)
. The shell area sometimes shown under the Sizing tab is calculated from
the default dimensions of the heat exchanger, and the U given by
HYSYS/UniSim is calculated by dividing UA by this meaningless A. (Make
certain you know how HYSYS/UniSim calculates UA.)
Sizing condensers & reboilers using HYSYS/UniSim For heat exchangers
that condense steam or boil water fed at saturation, the temperature of the
water-steam is fixed by the pressure and would be constant if its pressure
drop in the heat exchanger were 0. The flow rate of the water-steam is
calculated by dividing the Q by the latent heat of evaporation at that
pressure. If the boiler feed water (bfw) is below saturation, calculation of
the heat exchanger should be broken into two parts -- one to heat
the bfw up to the saturation temperature and a second to evaporate all of
it. Similarly, if superheated steam is fed, for calculation purposes break the
heat exchanger into one that cools the steam to saturation and a second
that condenses it to saturated water.
Fired heaters: Everything you need to cost fired heaters is in most design
texts, CPC texts, and Perrys. The cost depends on the duty and the
process stream heated. The utility (fuel) cost is determined by dividing the
duty by the lower heating value of the fuel and the efficiency.
Alternate heating methods, temperatures, costs
When a reactor is either heated or cooled, cost it as the sum of the cost of
a heat exchanger plus that of a vessel. For a plug flow reactor, you
calculate the area from the tube diameter, length and numbers. For a
fluidized bed reactor use the Q and Ts to calculate the area as for other
heat exchangers.
Do not forget to have spare pumps, as they tend to require maintenance
more often than other units.
Make certain to select the type of compressor required for your conditions,
e.g. do not use a blower or fan unless the pressure increase is very
small. Spare compressors are not advised.
Equipment and capital investment
Comparison of cost estimating software (Double-click to enlarge image)
Chapter 20 in Walas (pre 1990)(copied into Appendix C of Process
Engineering Economics)
"Conceptual Cost Estimating Manual" (many graphs of cost versus size as
of January 1, 1996)
On-line equipment cost estimator courtesy of Peters, Timmerhaus and
West (2003)
On-line estimator with useful references, from Matche
Materials selection and costs
All costs should be for the present time, or estimated for the proposed
construction time. Use the Chemical Engineering Plant Cost Index (CE
index, or CEPCI) or another cost index to update equipment costs: last
page of each issue of Chemical Engineering: TP1 .C3. For recent data on
line, Chemical Engineering. Alternatives are the ENR cost indices, the
Marshall & Swift Equipment Cost Index (at the Chemical Engineering link
above), and the Nelson-Farrar Refinery Cost Index (search Nelson-Farrar or
Economics at the Oil & Gas Journal, TN860 .O4). Chemical Engineering
magazine and the Oil & Gas Journal also include cost indices for individual
types of equipment.
Plots of CE, Nelson-Farrar refinery cost and Marshall & Swift indices from
1970 through 2006.
Richardson Process Plant Construction Cost Estimating
Standards: The Richardson Rapid System, Cost Data On Line, Inc.
(CD &www.costdataonline.com)(2009). Excellent source of cost
estimating methods. 1999 edition in the Clarkson Library at Ref
692.5 R522p
Definitions of terms in Turton et al. chapter 5
Separation cost versus concentration (Sherwood plots)
Use pie charts to show graphically what the major cost items are to help
you decide where to work on improving the economics of the plant. It is
recommended to have one pie chart for equipment and another for
manufacturing costs. Rather than include the entire raw material cost as a
manufacturing expense, include only the portion that is not converted to
sellable product. If you are having difficulty showing a profit, it is probably
because you are converting an insufficient fraction of the raw material to
sellable product because of poor selectivity in your reactor and/or because
of poor separations. Take a particular look at compressors, as they are
expensive to purchase and to operate. Could a pump be used instead, e.g.
by first condensing the stream? Should two compressors be used with a
heat exchanger in between?
Optimization: Before adjusting the operating parameters of individual units
to cut costs, first consider rearranging, adding or subtracting units in your
pfd. Consider using more than one reactor in series and more than one
heat exchanger in series. For example, if you want to cool a stream to
below 0
o
C, you can cool it part way by boiling water in one exchanger,
some more with cooling water in a second exchanger, and finally with
refrigerant in a third.
Capital Costs Quickly Estimated
Calculation of NPV, DCFRR and payback period.
Example spreadsheet & plot for cash flow profitability analysis. Simple
example of use of Excels goal seek to calculate interest rate from
periodic (annuity) payments.
Make certain you do your MACRS depreciation, cash flow, and discounted
cash flow calculations correctly. Note that a 5-year MACRS takes place
over a 6-year period, because the first and last years are considered half
years. At the end of 6 years of production, the book value should be 0.
MACRS recovery period for chemical manufacturing ; MACRS depreciation
rates (from IRS publication 946)
Do not show depreciation as a cost or expense, except for calculation of
income tax.
Corporate income tax rate (for corporate taxable incomes over
$18,333,333) If a state is not shown, that state does not tax corporate
income, in an effort to attract industry.
Do not forget to estimate reasonable values for land and working capital,
and indicate how you arrived at these numbers. Remember to recover
these costs in the last year of operation.
It is a serious mistake to calculate the sum of the discounted cash flows by
dividing the sum of the cash flows by (1+i)
n
.
Instructions on use of Turton et al.s Excel program CAPCOST.

Clarkson University's Department of Chemical and Biomolecular
Engineering

Disclaimer: The material on this page is intended for instructional
purposes by Clarkson University students only. Neither Clarkson
University nor Professor Wilcox is responsible for problems caused by
using this information.

W.R. Wilcox. Last updated September 15, 2012.

Wilcox home ChE design home Professional General Properties Equipment Separation HYSYS &
UniSim Costs Safety Case studies Excel MATLAB Data Analysis