3.

2 Manufacturing cost per year

3.3.1 Cost for utilities, CUT

The function of utilities are to assist the main process stream to complete. In
industries, the most typical utilities used are electrically, mainly for pumps, compressor
and drives, cooling water, saturated steam and boiler feed water. Every each of these
utilities has their own cost to bare. True cost of utilities can be complicated to calculate,
thus this section will shows the calculations for the cost of supply of the utility.

1. Heat Exchanger Utility Streams

The medium used for heat transfer from or to the main process stream in heat
exchangers are cooling water, boiler feed water and saturated steam. Fired heaters, use
fuel gases to help heat up the main process stream directly. In the production of maleic
anhydride from benzene process, a total of six heat exchangers and one fired heater is
used. The utility costs for all of these equipment are calculated in the table below. The
formula for calculating cost is:

24ℎ𝑟 365 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 = 𝑄 ∗ 𝐶𝑜𝑠𝑡𝑈𝑡𝑖𝑙𝑖𝑡𝑦 𝑆𝑡𝑟𝑒𝑎𝑚 ∗ ( . )
1 𝑑𝑎𝑦 1 𝑦𝑒𝑎𝑟

Where:

- Q is heat duty of heat exchanger or fired heater in GJ/hr, or flowrate of boiler

feed water in kg/hr
- Costutilitystream is the standard cost of the utility stream supply per GJ, or per
1000 kg for boiler feed water
Equipment Type of Utility Used Cost of Utility ($ per Heat Duty/ Yearly Cost
GJ)/ ($ per 1000kg) Flowrate (in $)

E-101 Low Pressurized Steam 14.05 $ per GJ 1.750 215,386.5

(lps) GJ/hr
E-102 Boiler Feed Water (bfw) 2.45 $ per 1000 kg 7295 kg/hr 156,565.3

E-101 Boiler Feed Water (bfw) 2.45 $ per 1000 kg 13717 294,394.3
kg/hr
E-102 Cooling Water (cw) 0.354 $ per GJ 86.9 GJ/hr 269,480.4

E-103 Hot Pressurized Steam 17.70 $ per GJ 19.15 2,969,245.8

(hps) GJ/hr
E-104 Cooling Water (cw) 0.354 $ per GJ 3.05 GJ/hr 9,458.17

Ʃ of cost 3,914,530.47

CHE = $3,914,530.47 x (RM 4.08/$ 1.00) = RM 15,971,284.32

2. Electricity

Most of the equipment in the plant requires work, for instance compressors, pumps and
drives. Thus, the amount of work, or power is required to run these equipment is used as
a base for calculation of electricity utility. Electric cost for the usage of those equipment
used in the process are shown in table below. The formula used:

𝑊 24ℎ𝑟 365 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 = 𝜀
∗ 𝐶𝑜𝑠𝑡𝑒𝑙𝑒𝑐𝑡𝑟𝑖𝑐 ∗ (1 𝑑𝑎𝑦 .1 𝑦𝑒𝑎𝑟
)

Where:

- W is power used by equipment in kW

- ɛ is the efficiency of the equipment
- Costelectric is the cost of electric in $ per kWh
 Equipment Work, W in kW Efficiency, ɛ Cost of electric (RM cents Yearly cost
per kWh)
P-101 14.2 0.75 72,976.64
P-102 3.2 0.50 24,668.16
P-101 14.2 0.75 0.44 72,976.64
C-101 49.1 0.75 252,334.72

Ʃ of cost 422,956.16

Therefore, the total utility cost, CUT is the total cost of electric summed up with
cost of heat exchanger and fired heater stream utilities.

CUT = RM 15,971,284.32 + RM 422,956.16= RM 16,394,240.48

3.3.2 Cost for labour, COL

Alkayat and Gerrard has correlated the technique used to calculate operating labor
requirements. Based on this method, the equation for the operating labor requirement for
a chemical processing plant is given by:
NOL= (6.29 + 31.7P2 + 0.23Nnp)0.5
Where ;

NOL is the number of operators per shift,

P is the number of processing step involving the handling of particulate solids,

Nnp is the number of nonparticulate processing steps handling steps includes compression,
heating and cooling, mixing, and reaction.

Nnp = ∑ 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡

Equipment type Number of equipment Nnp

Compressor 1 1

Tower 2 2

Reactor 1 1

Heater 1 1

Heat Exchanger 6 6

Vessel 3 -

Pump 3 -
Total 12 11

Hence, when Nnp is equal to 11, the number of operating labor requirement is
NOL = [6.29 + 31.7(0)2 + 0.23(11)]0.5

NOL = 2.97

The value of NOL is the number of operators required to run the process unit per shift. A
single operator works on the average 49 weeks (3 week time off for vacation and sick
leave) a year, five 8-hour shift a week. = 49 week/year × 5 shift/week

= 245 shifts per operator/year

A chemical plant operates 24 hours per day. This requires (365 days/year × 3 shift/day)
1095 operating shifts per year. The number of operators needed to provide this number of
shifts is

The number of operators = 1095 shift/year ÷ 245 shifts per operator/year

= 4.5 operators

Hence,

The operating labor = NOL × 4.5 operators

= 2.97 × 4.5

= 13.36 ≈ 14

The cost of operating labor, COL is equal to the salary given to each of operator yearly
which in this case the yearly salary given is $ 20 000

COL = $ 20 000 × 14

= $ 280 000.00

COL = $ 280 000 × (RM 4.08/$ 1.00)

= RM 1 142 400.00
3.3.3 Cost for raw material, CRM

Raw Material: Benzene

According to Platts Global Petrochemical Index, the latest global Benzene index is
$785.52 per metric ton (/mt) in October 2017.

So,
$785.52 / mt = 785.52 * 1 mt/1000 kg

= $ 0.785 / kg

Total Benzene used in this process: 2974.13 kg/hr = 26,053,378.8 kg / year

Stream factor (SF) is assumed to be 0.93,

CRM = $ 0.785 / kg x 26,053,378.8 kg / year x 0.93

= $ 19,020,269.19 / year

= RM 76,081,076.77/ year
3.4 Land cost approximation

Industrial land located at Bukit Raja, Klang Selangor currently cost at RM

160.00/ft2. The estimated land size required for construction of this plant is
16145.87 ft2 based on 26000 ton production per year.
Land cost = area × price
= RM 160.00/ft2 × 16145.87 ft2
= RM 2,583,339.20

3.5 Working capital calculation

Total capital investment = Fixed capital + Working capital (20% from fixed capital investment)

Fixed capital = Grassroots cost + land cost

= RM 5,293,704.47 + RM 2,583,339.20
= RM 7,877,043.67

Total capital investment = RM 7,877,043.67 + (0.2 × RM 7,877,043.67)

= RM 9,452,452.40

3.6 Revenue per year and salvage value approximation

Revenue per year is estimated to be RM 150,000,000.

Salvage value is assumed to be zero.