EH2207CC

COVER PAGE

DESIGN PROJECT I (OCTOBER 2020)

PRODUCTION OF 50,000 METRIC TONNES

OF BUTADIENE PER YEAR

CHAPTER 1: PROCESS BACKGROUND AND

SELECTION

GROUP MEMBERS

MUHAMAD SYAHMI BIN SUMAIRI 2018299938

MUHAMMAD IRFAN HILMAN B. HAZALI 2017631998
MYRA AUDREY EVE NORIM 2018227208
NOORUL SA’ADAH QURAISYAH M.ALI 2018657138
NOR HAMIZAH BINTI HASSAN 2018224476
NUR AQILAH BINTI ANUA 2017631924

SUPERVISOR:
DR. NAJMIDDIN BIN YAAKOB

FACULTY OF CHEMICAL ENGINEERING

UNIVERSITI TEKNOLOGI MARA
SHAH ALAM

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 COV
Design Project

FAKULTI KEJURUTERAAN KIMIA UNIVERSITI TEKNOLOGI MARA

CORRECTION FORM - DESIGN PROJECT

Project Title : PRODUCTION OF 50,000 METRIC TONNES OF BUTADIENE PER YEAR

Supervisor’s Name : DR. NAJMIDDIN BIN YAAKOB
Course Code : CPE 644 GROUP ID: EH220 7CC

List of Correction:

Topic Correction

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 Design Project

Topic Correction

Name of panel:

Signature:

Da

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Process Flow Diagram of Butadiene Production

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 Stream Table of Butadiene Production
Stream Number 1 2 3 4 5 6 7 8 9 10
Temperature
(⁰C) 25 25 679.7 129.7 229.2 40.27 40.27 40.35 40.27 88.83
Pressure (bar) 1 1 1 1 4.6 4.5 4.5 1 4.5 12.5
Vapor Fraction 1 1 1 1 1 0 0 0 1 0
Mass Flow 7294.30 2080.00 9374.30 9374.30 9374.30 9374.30 1949.40 1949.40 7422.91 7422.91
(kg/hr) 00 00 00 00 00 00 63 63 40 40
Mole Flow 130.000 250.250 250.250 250.250 250.250 108.180 108.180 142.069 142.069
(kmol/hr) 0 65.0000 0 0 0 0 2 2 9 9
Component Molar Flowrate (kmol/hr)
110.500 110.500 110.500 110.500
1,3-Butadiene
0.0000 0.0000 0 0 0 0 0.0000 0.0000 110.5 110.5
130.000
1-Butene
0 0.0000 19.5000 19.5000 19.5000 19.5000 0.0000 0.0000 19.5000 19.5000
Oxygen 0.0000 65.0000 9.7500 9.7500 9.7500 9.7500 0.0000 0.0000 9.7500 9.7500
110.500 110.500 110.500 110.500 108.180 108.180
Water
0.0000 0.0000 0 0 0 0 2 2 2.31985 2.31985
Furfural 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

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Stream Number 11 12 13 14 15 16 17 18 19 20 21
Temperature (⁰C) 35.07 35.07 35.07 -14.93 -14.93 -14.93 -21.03 33.91 21.74 30 29.99
Pressure (bar) 12 12 12 12 12 12 1 12 3.5 1 1
Vapor Fraction 0 0 1 0 0 1 1 1 1 0 0
7422.914 6993.453 431.440 431.440 196.124 235.602 235.602 7187.311 7187.311 1.921 19222.363
Mass Flow (kg/hr)
0 5 2 2 5 9 9 2 2 7 7
Mole Flow 0.020
(kmol/hr) 142.0699 131.2945 10.7754 10.7754 3.9358 6.8555 6.8555 135.6553 135.6553 0 200.0478
Component Molar Flowrate (kmol/hr)
0.000
1,3-Butadiene
110.5000 107.1850 3.3150 3.3150 2.9760 0.3390 0.3390 110.1610 110.1610 0 0.0000
0.000
1-Butene
19.5000 18.9150 0.5850 0.5850 0.2185 0.3665 0.3665 19.1335 19.1335 0 0.0000
0.000
Oxygen
9.7500 2.9250 6.8250 6.8250 0.6820 6.1430 6.1430 3.6070 3.6070 0 0.0000
0.000
Water 0.0028
2.3199 2.2695 0.0504 0.0504 0.0593 0.0070 0.0070 2.7538 2.7538 0
0.020
Furfural 200.0250
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0

Stream Number 22 23 24 25 26 27 28 29 30
Temperature (⁰C) 30.06 24.93 -164 31.32 31.39 48.41 190.8 167.5 29.99
Pressure (bar) 3.5 3.5 1 2 4 1.8 2.2 1.2 1
Vapor Fraction 0 0 1 0 0 1 0 0 0
Mass Flow (kg/hr) 19222.3637 26409.6353 1193.8897 25215.7456 25215.7456 6012.6411 19221.1958 19221.1958 19221.1958
Mole Flow (kmol/hr) 200.0478 335.7003 22.8315 312.8688 312.8688 112.8410 200.0277 200.0277 200.0277
Component Molar Flowrate (kmol/hr)
1,3-Butadiene 0.0000 110.1610 0.1102 110.0508 110.0508 110.0508 0.0000 0.0000 0.0000
1-Butene 0.0000 19.1335 19.1144 0.0191 0.0191 0.0191 0.0000 0.0000 0.0000
Oxygen 0.0000 3.6070 3.6070 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Water 0.0028 2.7538 0.0000 2.7538 2.7538 2.7510 0.0028 0.0028 0.0028
Furfural 200.0450 200.0450 0.0000 200.0450 200.0450 0.0200 200.0250 200.0250 200.0250

6
Table of Contents
COVER PAGE .............................................................................................................. 1

CORRECTION FORM - DESIGN PROJECT ................................................................ 2

Process Flow Diagram of Butadiene Production............................................................ 4

Stream Table of Butadiene Production .......................................................................... 5

LIST OF FIGURES ........................................................................................................ 9

LIST OF TABLES .......................................................................................................... 9

EXECUTIVE SUMMARY .................................................................................................11

CHAPTER 1 ....................................................................................................................13

PROCESS BACKGROUND AND SELECTION ...............................................................13

1.0 Introduction ............................................................................................................13

1.1 Physical and Chemical Properties of Butadiene .....................................................14

1.2 Process Selection...................................................................................................15

1.2.1 Steam Cracking of Naphtha ................................................................................16

1.2.2 Catalytic Dehydrogenation of n-Butane and n-Butene .........................................19

1.2.3 Oxidative Dehydrogenation of 1-Butene ..............................................................22

1.3 Proposed Process Flow Diagram ...........................................................................29

1.4 Process Details ......................................................................................................30

1.4.1 Rate law ..............................................................................................................31

1.4.2 Rate Constant .....................................................................................................32

1.4.3 Stoichiometry ......................................................................................................33

1.4.4 Catalytic Reaction ...............................................................................................35

1.4.5 Thermodynamics .................................................................................................37

1.4.5.1 Temperature of Reaction ..................................................................................38

1.4.5.2 Standard Enthalpy of Formation .......................................................................38

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1.4.5.3 Gibbs Free Energy ...........................................................................................39

1.4.5.4 Potential Energy ...............................................................................................40

1.4.5.5 Extent of Reaction ............................................................................................41

1.5 Market Analysis ......................................................................................................43

1.5.1 Industrial Butadiene Market Overview .................................................................43

1.5.2 Demand and Supply of 1,3-Butadiene .................................................................44

1.5.3 Potential Buyers in Malaysia................................................................................47

1.5.4 Demand and Supply of Raw Materials .................................................................48

1.5.4.1 Butene ..............................................................................................................48

1.5.5 Demand and Supply of Catalyst ..........................................................................50

1.6 Capital Cost Estimation and Break-Even Analysis ..................................................51

1.6.1 Fixed Capital Cost ...............................................................................................51

1.6.2 Variable Cost…………………………………………………………………………………………………………………..53

1.6.3 Estimation of Manufacturing Cost…………………………………………………………………………………..58

1.6.4 Estimation of Revenue……………………………………………………………………………………………………59

1.6.5 Break-Even Analysis………………………………………………………………………………………………………..59

REFERENCES.............................................................................................................65

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LIST OF FIGURES
Figure 1 – Process Flow Diagram for Butadiene Production................................................11
Figure 2 – Butadiene’s Structural Formula and Ball & Stick Model Structure .......................13
Figure 3 – Block Flow Diagram of Steam Cracking of Naphtha for the Production of Ethylene
(By-product Butadiene) .......................................................................................................16
Figure 4 – Process Flow Diagram of Steam Cracking of Naphtha for the Production of
Butadiene ............................................................................................................................17
Figure 5– Block Flow Diagram for the Catalytic Dehydrogenation of n-butane ....................19
Figure 6 – Process Flow Diagram of Catalytic Dehydrogenation of n-butane ......................20
Figure 7 – Block Flow Diagram of Oxidative Dehydrogenation of 1-Butene .........................22
Figure 8 – Process Flow Diagram of Oxidative Dehydrogenation of n-Butene .....................23
Figure 9 - Process Flow Diagram of Oxidative Dehydrogenation of 1-Butene .....................29
Figure 10 – Layered Structure of Bismuth Molybdate Based-Catalyst .................................30
Figure 11 – Schematic View of Oxidative Dehydrogenation Cycle Following MvK Mechanism
............................................................................................................................................35
Figure 12 – Energy Diagram ...............................................................................................40
Figure 13 - Butadiene Market Volume by Application on 2019 (Source: Mordor Intelligence)
............................................................................................................................................43
Figure 14 - Global Butadiene Demand by Region (Source: Research Nester).....................44
Figure 15 - Asia Pacific Butene Consumption by Country in 2017 (Source: Prismane
Consulting) ..........................................................................................................................48
Figure 16 - Graph of Non-Discounted Cashflow ..................................................................64

LIST OF TABLES
Table 1 – Properties of Butadiene .......................................................................................14
Table 2 - Comparison of Processes Used in The Production of Butadiene ..........................25
Table 3 - Scoring indicator used in scoring concept ............................................................27
Table 4 - Concept scoring for process routes ......................................................................28
Table 5 - Complete Stochiometric Table..............................................................................34
Table 6 - Physical properties of 1-Butene, Oxygen, Butadiene and Water at Standard
Conditions ...........................................................................................................................37
Table 7 - Potential Buyers for Butadiene in Malaysia...........................................................47
Table 8 - Cost of each equipment........................................................................................51
Table 9 - Fixed Capital Investment of project.......................................................................52

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Table 10 - Annual price of raw material ...............................................................................53
Table 11 - Number of operators required for each equipment .............................................55
Table 12 - The cost of catalyst ............................................................................................56
Table 13 - Estimation of Manufacturing Costs .....................................................................58
Table 14 - Yearly Income ....................................................................................................59
Table 15 - Data for Payback Period Calculation ..................................................................62
Table 16 - Table of Payback Period ....................................................................................63

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 EXECUTIVE SUMMARY

The main purpose of this report is to design a plant with the maximum production of
50,000 tonnes per year of Butadiene with 97% purity. Three processes were proposed which
were steam cracking of naphta, catalytic dehydrogenation of n-butane and n-butene, and
oxidative dehydrogenation of 1-butene. A scoring method was used to determine the best
process route for the production of butadiene in which oxidative dehydrogenation of 1-butene
obtained the highest score as compared to the other two processes. In order to reduce side
reactions as well as side effects, 1-butene and pure oxygen are used as raw materials. The
reaction is highly exothermic and it occurs in a reactor with the help of a molybdenum-based
catalyst, hence fluidized bed reactor is chosen as it has high efficiency in controlling
temperature. Figure below shows the process flow diagram for butadiene production.

Figure 1 – Process Flow Diagram for Butadiene Production

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 The basis of 1-butene and oxygen fed to a reactor are 130kmol/hr and 65 kmol/hr,
respectively. The reaction occurs in a fluidized bed reactor forming crude butadiene and water
with the help of molybdenum-based catalyst. This exothermic process occurs at high
temperature, approximately 600-700oC. The vapour phase reactor effluent then is fed into a
cooler to cool down the gas prior entering compressor. The compressor effluent then is sent
to a phase separator where excess water is removed from the process and sent to a water
storage tank for another usage. Meanwhile, the top product is fed to another phase separator
which separating crude butadiene and excess oxygen. Top products of V-102 that contains
excess oxygen as well as butadiene and 1-butene are then fed to V-103, where excess
oxygen is discarded as off gas. Both crude butadiene from V-102 and V-103 are mixed prior
entering distillation column. In this column, a furfural is also fed as a medium in separating
butadiene and unreacted 1-butenes. During distillation, an amount of 1-butene and butadiene
escaped top column in liquid form and is directed to a recovery process. Then, the column
effluent is fed to another distillation column to separate furfural and butadiene. The obtained
butadiene is in gas form with 97% purity while furfural is recycled back into the process.

Molybdenum based catalyst is used in this process as it gives high selectivity of

desired product formed and, in this case, butadiene. This reaction is considered exothermic
spontaneous reaction as the obtained values of enthalpy of formation and Gibb’s energy are
negative which are -175.55kJ/kmol and -149.23 kJ/kmol, respectively.

As for market analysis, butadiene is considered as an essential product especially in the

manufacturing of synthetic rubbers. Its market is primarily driven by the end-use industries
such as automobile and plastics. More than half of the yearly global butadiene production is
demanded in the Asia Pacific region which is roughly around 2.1 million tonnes. Composition
of butadiene is assumed to be average of 82.5% for every SBR produced. Butadiene
production in Asia pacific region is calculated by multiplying the average butadiene
composition in SBR with the annual demand of styrene in Asia pacific region resulting in 2.15
mil tonnes. The actual consumption is estimated to be 0.97 mil tonnes per year. Therefore, a
butadiene plant will be designed to produce 50 000 tonnes per year, which contributes to
about 5.16% of the entire market demand. Based on the calculation made for our breakeven
analysis, it has been discovered that it would take us 2 years for us to recover our initial
investment cost.

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 CHAPTER 1
PROCESS BACKGROUND AND SELECTION
1.0 Introduction
According to [1], global butadiene extraction stood at approximately 14.8 million
tonnes/annum in the year 2016 and half of them was contributed by the Asia-Pacific region.
In the same year, the demand for butadiene went up to 10.9 million tonnes/annum and
expected to reach around 12.2 million tonnes/annum by the year 2020. Due to the increasing
worldwide demand for butadiene, petrochemical companies are competing against each other
in order to produce high quality purified butadiene that can meet the growing global
consumption.

Butadiene is an organic compound with a chemical formula of C4H6. It has a carbon-

carbon double bond and can be categorized as alkene in terms of functional group. Butadiene
is also known as vinyl ethylene, divinyl and diethylene. Further purification of butadiene leads
to the production of 1,3-Butadiene which is a colorless and flammable gas known for its
pungent and aromatic odor. Its physical properties include a boiling point between -4 and -
5⁰C but condenses into liquid easily. Other than that, butadiene is also a union of two vinyl
groups which is the simplest conjugated diene. Butadiene also takes the form of an isomer,
1,2-butadiene because of the combination of diene H2C=C=CH=CH3. Butadiene is usually
applied in petrochemical industries as an intermediate and monomer for the manufacturing of
polymers and the production of synthetic rubbers or elastomers.

Polymers from butadiene is also used in the manufacturing of styrene-butadiene

rubber (SBR), polybutadiene rubber (PBR) and nitrile rubber (NR) which are then used to
produce gaskets, rubber hoses and tires.

Figure 2 – Butadiene’s Structural Formula and Ball & Stick Model Structure

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1.1 Physical and Chemical Properties of Butadiene

Butadiene is a colorless gas and has a gasoline-like odor. It is slightly soluble in water
and soluble in ethanol, ether, acetone, benzene and in organic solvents. Butadiene is
extremely flammable gas. Exposure of butadiene may cause genetic defects and causes
cancer. Butadiene needs to store in a tightly closed container and in well-ventilated place [2].

Table 1 – Properties of Butadiene

Properties Butadiene
Chemical Formula C4H6
CAS Number 106-99-0
Colour Colourless gas
Physical state Gas
Odour Gasoline-like or mildly aromatic
Odour threshold (mg/l) 0.0014
Density (kg/m3) 615
Melting Point (0C) -108.9
0
Boiling Point ( C) -4.49
Flash Point (0C) -85
Vapour Pressure at 250C (mm/Hg) 2100
Molar Mass (g/mol) 54.0916
Solubility Soluble in water and alcohol
Explosive Limit 12%
Henry’s Law Constant (atm m3/ mol) 0.74

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1.2 Process Selection

Butadiene is an organic compound that contains two carbon-carbon double bonds and
is classified as an alkene in terms of functional groups.

Production of butadiene processes will be evaluated based on the basic criteria which
are the cost efficiency that introduced to high yield and ideal production cost in designing the
butadiene plant. The processes will also be evaluated on the raw material used, including its
availability, its cost, the operating conditions (i.e. temperature, pressure, or phase) required
for the process, the waste produced and the equipment for the plant capacity. Besides, the
safety and environmental aspect need to be considered too as minimal risk of fire, explosion
and spillage is desired and the flexibility in terms of safety, maintenance, and cost.

There are several methods used in the production of butadiene. These three
processes required different raw materials, techniques, equipment, and the catalyst used.
Eventually, the main objective is to obtain the butadiene. The butadiene is commercially
produced by three major processes [3] which are:

1. Steam Cracking of Naphtha

2. Catalytic Dehydrogenation of n-Butane and n-Butene
3. Oxidative Dehydrogenation of 1-Butene
Each of the processes has their own advantages and disadvantages. From the
characteristics of the processes, screening and scoring method will be used to evaluate the
most efficient process for the butadiene production.

15
1.2.1 Steam Cracking of Naphtha

Naphtha is a complex mixture of hydrocarbon where it is produced by distillation of

crude oil. In Malaysia, the production of naphtha is recorded to be 2.4 million mtpa in 2018
[4]. The downside of this method is it is a production of ethylene and butadiene is the by-
product of it. This method was included in this report as it is the predominant method around
the globe. Global butadiene source approximately 95% of butadiene production come from
Steam Cracking of Naphtha which originally produce ethylene. There are several companies
that involve in manufacturing of naphtha in Malaysia including Petronas Penapisan
(Terengganu) Sdn Bhd, Petronas Penapisan (Melaka) Sdn Bhd, Malaysia Refinery Company
Sdn Bhd, Heng Yuan Refinery Company (FOM) Bhd, and Esso (Malaysia) Bhd [5]. The
current price of naphtha as of 30th October 2020 is RM 2434.64/ton.

Figure 3 – Block Flow Diagram of Steam Cracking of Naphtha for the Production of
Ethylene (By-product Butadiene)

Steam cracking of naphtha process is classified as the process that between complex
process and simple process. The process does require a lot of equipment such as steam
cracker, quench tower, primary fractionator, separator and 4 distillation columns but it also
produces a lot of valuable co-product along with the production of ethylene such as butadiene
and propene as well as the usable ethane and propane which could be recycle to the process
to achieve high purity of product. The selling price the of ethylene and propene is
RM3868.8/ton and RM 3438.24, respectively.

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Figure 4 – Process Flow Diagram of Steam Cracking of Naphtha for the Production of
Butadiene

Steam cracking of naphtha requires the feed liquid naphtha to be pre-heated by heat
exchanger, mixed with steam, and heated to its incipient cracking temperature at about 600 -
700⁰C, then later will be heated to cracking temperatures of 750 - 830⁰C. The residence time
inside the furnace is important as it could results in the production of targeted product.
Depending on the plant operation, the butadiene content of the crude butadiene is typically
between 40 and 50% but can be as high as 75% [6].

This steam cracking produces a pyro lysate composed of hydrogen, ethylene,

propylene, butadiene, and other important olefins plant co-products. The pyro lysate is
quenched to remove the high-boiling components; compressed to remove the C5 and higher
components as a raw pyrolysis gasoline and then dried. The resulting material (predominantly
hydrogen and C1–C4 components) are taken through a series of distillation steps to separate
the hydrogen, methane, ethylene (and other C2 components) and propylene (and other C3
components), leaving the crude C4(s) or crude butadiene [7].

17
 The production of ethylene via steam cracking is a rather complicated process due to
the number of raw materials required and the successive reactions that take place throughout
the entire process. The reaction scheme proceeds in the following manner:

𝐶2 𝐻6 → 𝐶2 𝐻4 + 𝐻2
𝐸𝑡ℎ𝑎𝑛𝑒 → 𝐸𝑡ℎ𝑦𝑙𝑒𝑛𝑒 + 𝑊𝑎𝑡𝑒𝑟
2𝐶2 𝐻6 → 𝐶3 𝐻8 + 𝐶𝐻4
𝐸𝑡ℎ𝑎𝑛𝑒 → 𝑃𝑟𝑜𝑝𝑎𝑛𝑒 + 𝑀𝑒𝑡ℎ𝑎𝑛𝑒
𝐶3 𝐻6 → 𝐶2 𝐻2 + 𝐶𝐻4
𝑃𝑟𝑜𝑝𝑒𝑛𝑒 → 𝐴𝑐𝑒𝑡𝑦𝑙𝑒𝑛𝑒 + 𝑀𝑒𝑡ℎ𝑎𝑛𝑒
𝐶2 𝐻2 + 𝐶2 𝐻4 → 𝐶4 𝐻6
𝐴𝑐𝑒𝑡𝑦𝑙𝑒𝑛𝑒 + 𝐸𝑡ℎ𝑦𝑙𝑒𝑛𝑒 → 𝐵𝑢𝑡𝑎𝑑𝑖𝑒𝑛𝑒

As steam cracking for ethylene production (results in the formation of butadiene as a

by-product) is a process that involves pyrolysis, there is bound to be concerns regarding safety
issue. This is due to the fact that pyrolysis is always accompanied by coke formation on the
walls of the reactor. Coke deposits on the wall causes the reduction in overall heat transfer
coefficient and increases the pressure drop across the reactor resulting in periodic shutdown
of reactors for the purpose of decoking. Decoking affects the overall usage of fuel and
increases utility cost [8].

Furthermore, fluctuating fuel gas composition correlated with poor combustion control
affects energy management and increases energy cost. In order to reduce the energy cost,
combustion control can be improved by tightly controlling stack O¬2 and improved response
to fuel disturbances. Issue on control variability on feed, steam, and coil outlet temperature
(COT) and steam/hydrocarbon ratio imbalance can reduce unit availability. Optimize the
decoking cycle through tighter control and temperature stability to improve furnace
performance and run length are the best solution that can be induced to solve these matters.

18
1.2.2 Catalytic Dehydrogenation of n-Butane and n-Butene

The production of butadiene via this route uses the technology known as the Houdry
Catadiene Process. This technology employs the usage of fixed bed reactors operating under
vacuum. Catalytic dehydrogenation involves a two-step endothermic processes where n-
butane is initially dehydrogenated with the presence of chromium oxide supported on alumina
catalyst. The price for n-butane can go as high as RM 5100 per tonne and it is supplied by
Petronas Gas Berhad that is located in Gebeng, Pahang [9]. The reaction scheme for catalytic
dehydrogenation of n-butane can be expressed in the following equations:

𝐶𝑟𝑂𝑥 /𝐴𝑙2 𝑂3
𝐶4 𝐻10 → 𝐶4 𝐻8 + 𝐻2
𝐶𝑟𝑂𝑥 /𝐴𝑙2 𝑂3 𝑐𝑎𝑡𝑎𝑙𝑦𝑠𝑡
𝑛 − 𝐵𝑢𝑡𝑎𝑛𝑒 → 𝑛 − 𝐵𝑢𝑡𝑒𝑛𝑒 + 𝐻𝑦𝑑𝑟𝑜𝑔𝑒𝑛
𝐶4 𝐻8 → 𝐶4 𝐻6 + 𝐻2
𝑛 − 𝐵𝑢𝑡𝑒𝑛𝑒 → 𝐵𝑢𝑡𝑎𝑑𝑖𝑒𝑛𝑒 + 𝐻𝑦𝑑𝑟𝑜𝑔𝑒𝑛

Figure 5– Block Flow Diagram for the Catalytic Dehydrogenation of n-butane

19
 In this process, the catalyst must be frequently regenerated hence, more reactors are
necessary to allow continuous production. As can be seen in figure 5, a few reactors are
applied in order to simulate continuous working operation. They operate with working
conditions at 0.15 – 0.20 bar and at approximately 600 – 680 ℃. Each reactor alternates
between dehydrogenation, purging, regeneration, reduction and evacuation steps. The overall
cycle takes about 15 – 30 minutes [10]. As the endothermic reaction continues, the
temperature of the catalyst bed declines, and a small amount of coke is then disposed. During
the regeneration cycle, the said coke is burned with preheated air which will provide enough
heat to bring the temperature of the reactor up to its preferred reaction temperature.

The effluent will then be quenched, compressed and fed to an absorber for further
purification [11]. After further purification, the purity of butadiene will reach about 30 – 50%
with a yield of up to 60 – 65%. As can be seen in figure 5, a few reactors are applied in order
to simulate continuous working operation. They operate with working conditions at 0.15 – 0.20
bar and at approximately 600 – 680 ℃. Each reactor alternates between dehydrogenation,
purging, regeneration, reduction and evacuation steps. The overall cycle takes about 15 – 30
minutes [10]. As the endothermic reaction continues, the temperature of the catalyst bed
declines, and a small amount of coke is then disposed. During the regeneration cycle, the said
coke is burned with preheated air which will provide enough heat to bring the temperature of
the reactor up to its preferred reaction temperature. The effluent will then be quenched,
compressed and fed to an absorber for further purification.

Figure 6 – Process Flow Diagram of Catalytic Dehydrogenation of n-butane

20
 The by-product of this process is off gas obtained from the recovery section and is
normally burned as fuel. A significant portion of the hydrogen from off-gas can also be
recovered at high purity. Like any other processes in the production of petrochemicals, there
are safety issues that exist within this method. For instance, there is a potential risk for air to
mix with hydrocarbon in the reactor during the regeneration cycle. Another issue concerns the
usage of catalyst where residual chromium that remains on the catalyst is considered as toxic
and has a significant environmental impact [12].

21
1.2.3 Oxidative Dehydrogenation of 1-Butene

This process provides an attractive route for the production of butadiene as there are
lower to no concentrations of undesirable compounds that need to be removed i.e. isobutane
or isobutylene making the separation costs dropped slightly due to fewer similar boiling points
of compounds. Oxidative dehydrogenation is an exothermic process of dehydrogenation of 1-
butene by contacting the paraffin with a catalyst. 1-butene is retailed as high as RM 5400 –
RM 7000 per tonne and it can be obtained from Pengerang Integrated Complex that is located
in Pengerang, Johor. This process also avoids some of thermodynamics constraints of non-
oxidative dehydrogenation processes by forming water as by-product, hence carbon
deposition is minimized or eliminated thus creating more stable process [13].

Figure 7 – Block Flow Diagram of Oxidative Dehydrogenation of 1-Butene

The reactants used in this process are oxygen and 1-butene. These reactants are fed
into the fluidized bed reactor continuously. The feed rate of air is such that an oxygen/ butene
molar ratio of approximately 0.55 is maintained and the oxygen is totally consumed. The ratio
of steam to butene is 10:1 is necessary to absorb the heat of reaction and to avoid the
temperature rise.

22
 Figure 8 – Process Flow Diagram of Oxidative Dehydrogenation of n-Butene

As this method using pure oxygen, there is no side reaction are detected. The oxidative
dehydrogenation of 1-butenes proceeds through the following primary reaction:

1
𝐶𝐻2 = 𝐶𝐻−𝐶𝐻2 −𝐶𝐻3 + 𝑂 → 𝐶𝐻2 = 𝐶𝐻 − 𝐶𝐻 = 𝐶𝐻2 + 𝐻2 𝑂
2 2
1 − 𝑏𝑢𝑡𝑒𝑛𝑒 + 𝑂𝑥𝑦𝑔𝑒𝑛 → 𝐵𝑢𝑡𝑎𝑑𝑖𝑒𝑛𝑒 + 𝑊𝑎𝑡𝑒𝑟

23
 This method has replaced many older processes for butadiene production. As butenes
are much more reactive, they require much less severe operating conditions. The intake of
1.1 to 1.3kg of 1-butenes per a kilogram of butadiene formed are correlates to its high single
pass conversion which is approximately 85% with overall yields of 80-90%. Based on figure
7, 1-butene and oxygen are preheated and passed through fluidized bed reactor at 600-
700oC. Fluidized bed reactor was used as it was found out that the reaction occurs at the inlet
of the reactor resulting in rapid increment of temperature and it was proven that fluidized bed
reactor is an excellent reactor type for highly exothermic processes [14]. This type of reactor
also offers significantly higher efficiency in terms of heat exchange, temperature control as
well as rapid circulation. However, the temperature inside the reactor needs to be maintained
to maximize yield as well as avoiding thermal runaway behavior [15].

1-butene and oxygen is fed to a reactor forming crude butadiene and water. Significant
quantities of water from the formation of water in the reaction are present. The water is
removed prior entering the second phase separator. As the bottom effluent of phase separator
is solely water without any contaminants, the water is then sent into water storage tank for
another usage. During second separation, crude butadiene is separated from excess oxygen.
The excess oxygen and tiny amount of 1-butene and butadiene are discharge as off gas. The
effluent of phase separator is then fed to a distillation operation, where butadiene is separated
from the unreacted 1-butenes with the help of furfural as medium. Top product of column one,
which is in liquid form is directed to a recovery process for further separation in order to reuse
the unreacted 1-butene. Then, the bottom stream is fed to another distillation column where
butadiene is separated from furfural. The furfural is recycled back to the first column. The
purity of butadiene is found to be 97%. The stream containing butadiene from the distillation
process is then routed to a pressurized storage tank.

Safety issue regarding oxidative dehydrogenation of 1-butene is mostly focused on

the nature of 1-butene as a raw material. As 1-butene is known to be highly flammable, the
presence of oxygen can be a source for ignition. Prolonged contact between oxygen and
hydrocarbons may cause an explosive atmosphere [6]. Hence, extra care is necessary when
handling 1-butene.

24
 Table 2 - Comparison of Processes Used in The Production of Butadiene

Process Steam Cracking of Naphtha Catalytic Dehydrogenation of N- Oxidative Dehydrogenation of 1-

butane butene
Characteristics
Reaction scheme for steam N-butane is initially dehydrogenated Primary reaction in this process:
Overall reaction 1
cracking: over chromium/alumina catalyst to 𝐶4 𝐻8 (𝑔) + 𝑂 (𝑔) → 𝐶4 𝐻6 (𝑔) +
2 2
𝐶2 𝐻6 → 𝐶2 𝐻4 + 𝐻2 produce n-butene:
𝐻2 𝑂(𝑔)
2𝐶2 𝐻6 → 𝐶3 𝐻8 + 𝐶𝐻4 𝐶𝑟𝑂𝑥 /𝐴𝑙2 𝑂3
𝐶4 𝐻10 → 𝐶4 𝐻8 + 𝐻2
𝐶3 𝐻6 → 𝐶2 𝐻2 + 𝐶𝐻4 N-butene is then converted to 1,3 –
𝐶2 𝐻2 + 𝐶2 𝐻4 → 𝐶4 𝐻6 butadiene:
𝐶4 𝐻8 → 𝐶4 𝐻6 + 𝐻2

Raw materials Ethane, Propane, Butane, N-butane, air 1-butene, oxygen

Naphtha, Gas Oil

Type of reaction Endothermic Endothermic Exothermic

Temperature = 790 – 830 ℃ Temperature = 600 – 680 ℃ Temperature = 600 – 700 ℃
Process condition
Pressure = 34 kPa Pressure = 15 – 20 kPa Pressure = 1 – 12 bar

Catalyst - Chromium/Alumina Bismuth Molybdate

By-products Hydrogen, Flue Gas, Off-gas -

Butadiene, Propylene

25
Product yield 4 – 6% (Butadiene) 60 – 65% 70 – 90%

Product purity 40 – 50% 30 – 50% 97%

• Coke deposits on • Residual chromium that • 1- Butene is extremely
Safety issue
reactor wall increase remains on the catalyst is flammable.
pressure drop across toxic. • Gas or air mixture are
reactor which will result • Potential risk of air mixing with explosive
in periodic shutdown of hydrocarbon in the reactor • On contact with liquid n-
reactors. during the regeneration cycle. Butene causes frostbite.
• High value by-products. • Low operating pressure. • Process is rather
Advantages
• Plenty of supplier for • Catalyst is thermally stable. straightforward and not
raw materials. • High value by-product that complex.
could be burned as fuel oil. • Butadiene produced is of high
purity.
• High capital cost. • Process can be costly due to • High temperature process.
Disadvantages
• Butadiene produced is its separation complexity.
of low purity. • Due to the deposition of coke,
chromium-based catalyst
loses their activity faster and
require regeneration

26
1.2.4 Scoring Process

Scoring concept was done in order to evaluate each process that have been proposed
and to choose the best process route for the production of butadiene. The important criteria
that were taken into consideration for scoring concept include raw material availability, cost of
raw material, cost of catalyst, product yield, product purity, and number of major equipment.
Table 3 shows the scoring indicator applied in concept scoring. The criteria for each process
routes are assigned values ranging from 1-5 with 1 being the worst and 5 being the best.

Table 3 - Scoring indicator used in scoring concept

Very bad Bad Moderate Good Very good

1 2 3 4 5

Raw Material
0 Sources 1 Sources 2 Sources 3 Sources 4 Sources
availability

Cost of RM RM6000 RM4000

>RM10000 <RM4000
Raw Material 8000- RM9999 - RM7999 - RM5999

Cost of RM6000 - RM4000 - RM2000 -

>RM 8000 <RM2000
Catalyst RM7999 RM5999 RM3999

Product yield <10% 10-29% 30-59% 60-89% >90%

Product purity <10% 10-29% 30-59% 60-89% >90%

Number of
major >9 8 7 6 <5
equipment

27
 Table 4 - Concept scoring for process routes

Process
Catalytic Oxidative
Weightage Steam Cracking
Criteria Dehydrogenation Dehydrogenation

Raw material
15 5 2 2
availability

Cost of raw material 15 5 5 4

Cost of catalyst 15 - 4 3

Product yield 20 1 4 4

Product purity 20 3 3 5

Number of major
15 1 3 4
equipment

Total score 100 245 350 375

Rank 3 2 1

As can be seen in table 4, the cumulative score for oxidative dehydrogenation is the
highest compared to the other two processes which resulted in it being chosen as the best
process route to produce butadiene.

28
1.3 Proposed Process Flow Diagram

Figure 9 - Process Flow Diagram of Oxidative Dehydrogenation of 1-Butene

29
1.4 Process Details
Butadiene has drawn so much attention these past years as raw material to a lot off
petrochemical industries including styrene butadiene rubber, polybutadiene rubber,
polychloroprene and nitrile rubber. Due to pandemic COVID-19 the rubber demand has
increase rapidly. This section will discuss further on chemical kinetics that happens in this
process, specifically in the fluidized bed reactor where reaction will take place. Butadiene is
produced by dehydrogenation of 1-butene with the help of bismuth molybdenum-based
catalyst. This catalyst is the most extensive studied and has been highly selected as today’s
commercial catalyst system [16].

Figure 10 – Layered Structure of Bismuth Molybdate Based-Catalyst

30
1.4.1 Rate law
The general equation for oxidative dehydrogenation of 1-butene is as follow:

1
𝐶4 𝐻8 (𝑔) + 𝑂 (𝑔) → 𝐶4 𝐻6 (𝑔) + 𝐻2 𝑂(𝑔)
2 2
1 − 𝑏𝑢𝑡𝑒𝑛𝑒 + 𝑂𝑥𝑦𝑔𝑒𝑛 → 𝐵𝑢𝑡𝑎𝑑𝑖𝑒𝑛𝑒 + 𝑊𝑎𝑡𝑒𝑟

The equation notation is simplified to A for C4H8, B for O2, C for C4H6, and D for H2O. The
simplified equation can be written as:

A+½B→C+D

While an elementary reaction and the rate law is as follow:

-rA = kCACB

Where,

-rA = Rate of disappearance of 1-butene (mol/dm3.s)

k = Rate constant of 1-butene (s-1)(mol/dm3)-1

CA = Final concentration of 1-butene (mol/dm3)

CB = Final concentration of oxygen (mol/dm3)

According to the rate law, the reaction can be concluded as second order reaction.

31
1.4.2 Rate Constant
A rate constant, k, can be defined as proportionality constant for a given reaction. It is
also used as the function of temperature. Oxidative dehydrogenation of 1-butene reactions
occur more rapidly at high temperature. It is common knowledge that as the temperature rises,
molecules move faster and collide more vigorously, then increase the likelihood of bond
cleavages and rearrangements. In 1899, a rate constant equation was developed known as
Arrhenius Equation by the Swedish chemist, Svante Arrhenius by combining the concepts of
activation energy and the Boltzmann distribution law. The formula is written as below:

𝐸
𝑘(𝑇) = 𝐴𝑒 (−𝑅𝑇)

Where,

A = Pre-exponential factor

E = Activation energy (J/mol)

R = Gas constant (8.314 J/mol.K)

T = Absolute temperature (K)

32
1.4.3 Stoichiometry
Stoichiometry is an equation that consists of relationships between reactants and
products to determine the quantitative data. In this process, 1-butene, C4H8 is the limiting
reactant, given the reaction:

1
𝐶4 𝐻8 (𝑔) + 𝑂 (𝑔) → 𝐶4 𝐻6 (𝑔) + 𝐻2 𝑂(𝑔)
2 2

Based on this equation and as the reaction takes place in fluidized bed reactor, the rate of
disappearance is as follow:

𝑑𝐶𝐴 𝐶𝐵
−𝑟𝐴 = 𝐹𝐴𝑂
𝑑𝑡

Where,

-rA = rate of disappearance of 1-butene (mol/dm3.s)

CA = Final concentration of 1-butene (mol/dm3)

CB = Final concentration of oxygen (mol/dm3)

t = Time (s)

Given that the reaction is gas phase reactant, temperature and pressure need to be
considered. Thus, the volumetric flowrate needs to be determined from the concentration of
reactants. The equation is as follow:

𝐹𝐴
𝐶𝐴 =
𝑣
𝑃𝑂 𝑇𝑂
𝑣 = (1 + ɛ𝑋) ( )( )
𝑃 𝑇

Where,

v = Volumetric flowrate

P = Pressure

T = Temperature

𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑡𝑜𝑡𝑎𝑙 𝑜𝑓 𝑚𝑜𝑙𝑒𝑠 𝑡𝑜 𝑎𝑡𝑡𝑎𝑖𝑛 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑒 𝑐𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑜𝑓 𝐴

ɛ=
𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑙𝑒𝑠 𝑜𝑓 𝑎𝑙𝑙 𝑠𝑝𝑒𝑐𝑖𝑒𝑠 𝑓𝑒𝑑 𝑡𝑜 𝑟𝑒𝑎𝑐𝑡𝑜𝑟

33
 Table 5 - Complete Stochiometric Table

Initial Change Concentrations

Species Remaining (mol/time)
(mol/time) (mol/time) (gas phase)

(1−𝑋𝐴 ) 𝑃 𝑇
1-butene (A) FAO -FAOXA FA = FAO(1-XA) CA = 𝐶𝐴𝑂 (1−ɛ ( 𝑃𝑂 ) ( 𝑇𝑂 )
𝐴 𝑋𝐴 )

1
(𝜃𝐵 − 𝑋𝐴 ) 𝑃 𝑇
Oxygen (B) FBO -1/2FAOXA FB = FAO(θB-1/2XA) CB = 𝐶𝐴𝑂 (1−ɛ 2𝑋 ) ( 𝑃𝑂 ) ( 𝑇𝑂 )
𝐴 𝐴

(𝑋 ) 𝑃 𝑇
Butadiene (C) - FAOXA FC = FAOXA CC = 𝐶𝐴𝑂 (1+ɛ 𝐴 ( 𝑃𝑂 ) ( 𝑇𝑂 )
𝐴 𝑋𝐴 )

(𝑋 ) 𝑃 𝑇
Water (D) - FAOXA FD = FAOXA CD = 𝐶𝐴𝑂 (1+ɛ 𝐴 ( 𝑃𝑂 ) ( 𝑇𝑂 )
𝐴 𝑋𝐴 )

34
1.4.4 Catalytic Reaction
One of many ways to produced Butadiene is by the oxidative dehydrogenation of 1-
butene using bismuth molybdate based as catalyst in fluidized bed reactor. Bismuth
molybdates have been broadly studied as efficient catalyst for this process, oxidative
dehydrogenation of n-butene [17]. The influence of light hydrocarbons such as n-butane, 1-
butene, isobutane, isobutene, trans-2-butene, cis-2-butene, dimethyl acetylene, and
vinylacetylene from this process reaction over bismuth molybdate catalyst has been studied
using isothermal fluidized bed reactor. According to [18], the selective oxidation of alkenes
with high selectivity may possibly occur by utilizing Mars and van Krevelen (MvK) mechanism.
Figure 9 shows the oxidation reduction cycle which consists of three key steps:

Figure 11 – Schematic View of Oxidative Dehydrogenation Cycle Following MvK

Mechanism

35
1. Chemisorption of alkenes on catalyst surface through the abstraction of the alpha-
hydrogen to generate activated allylic intermediates.
2. The activated intermediates react with the lattice oxygen coming from the catalyst and
consequently produce desired product which is butadiene. Thus, the M1 cation is
reduced at this point.
3. The active site and the cation, M1 are re-oxidized by the migration of a lattice oxygen
from another site (M2). The lattice oxygen migrates from the catalyst bulk to the active
site surface. Finally, the remaining oxygen vacancies are recovered by the supplied
gaseous oxygen. When the reduced catalyst surface is replaced by the gas phase
oxygen, the surface is enhanced with the O- and O2- oxygen species. It has been
studied that the electrophilic species are responsible for the unselective oxidation of
the reactant, while the nucleophilic lattice species is associated with selective oxidation
generating the desired butadiene product.

36
1.4.5 Thermodynamics
Thermodynamics include all the changes in phase that occurred to the reactants in
order to produce the desired products. Physical properties of both reactants and products such
as temperature, enthalpy, Gibbs-free energy, potential energy, and extent of reaction will be
discussed in this section. Table 6 values was obtained from a chemical properties handbook
[19].

Table 6 - Physical properties of 1-Butene, Oxygen, Butadiene and Water at Standard

Conditions

Properties 1-Butene Oxygen Butadiene Water

Molecular weight
56.11 32.00 54.09 18.02
(kg/kmol)

Melting Point (℃) -185.33 -218.75 -109.10 0.00

Boiling Point (℃) -6.252 -183 -4.45 100.00

Critical Temperature
146.5 -118.4 151.9 374.1
(℃)

Heat of Vaporization
22.44 6.74 22.48 40.66
(kJ/mol)

Standard Enthalpy of
-0.13 0 110.16 -285.84
Formation (kJ/mol)

Standard Gibbs
Energy of Formation 71.30 0 150.67 -228.60
(kJ/mol)

Standard Entropy of
-239.577 0 -135.871 69.95
Formation (kJ/mol)

37
1.4.5.1 Temperature of Reaction
Production of butadiene from oxidative dehydrogenation of 1-butene has
approximately 450-550oC temperature reaction in reactor. The purity of butadiene after
finishing distillation process is about 97%. Although this method is not the predominant method
for butadiene production, it has gain so much attention these past years especially during
pandemic COVID-19 as rubber demand is increasing rapidly. This process operated at low
pressure and high temperature in reactor, but the temperature is dropped rapidly during
quenching process. The reaction happened in reactor are assumed to be at chemical
equilibrium state.

1.4.5.2 Standard Enthalpy of Formation

The standard enthalpy of formation can be defined as the change in enthalpy when
one mole of a substance in the standard state which are at 1 atm pressure and 298K
temperature, is formed from its pure elements. Equation below is measured by energy
released/consumed when one mole of substance is formed under standard conditions.

𝑜
∆𝐻𝑅𝑒𝑎𝑐𝑡𝑖𝑜𝑛 = Ʃ∆𝐻𝑓𝑜 (𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠) − Ʃ∆𝐻𝑓𝑜 (𝑟𝑒𝑎𝑐𝑡𝑎𝑛𝑡𝑠)

Where,

Δ = Change in enthalpy

o
= A degree signifies that it’s a standard enthalpy change

f = Indicates that the substance is formed from its elements

This equation states that the standard enthalpy of change of formation is equal to the
sum of standard enthalpies of formation of the products minus the sum of standard enthalpies
of formation of reactants. The calculation is as follow:

𝑜 𝑘𝐽
∆𝐻𝑅𝑒𝑎𝑐𝑡𝑖𝑜𝑛 = [110.16 + (−285.84)] − (−0.13 + 0) = −175.55
𝑘𝑚𝑜𝑙

The negative value obtained shows that the reaction occurs exothermically. This is due
to the amount of energy to break the bond is less than the amount of energy to form the bond.

38
1.4.5.3 Gibbs Free Energy
This equation was developed in 1870 but officially released in 1873 by Josiah Willard
Gibbs that stated Gibbs free energy, G is a sum of enthalpy and entropy into a single value.
The change in free energy, is equal to the sum of enthalpy plus the product of the temperature
and entropy of the system. This change in free energy can be predicted under two conditions
of chemical reaction which are constant temperature and constant pressure.

𝐺 = 𝐻 − 𝑇𝑆
𝐺 = 𝑈 + 𝑃𝑉 − 𝑇𝑆

Where,

U = Internal energy (J)

P = Pressure (Pa)

V = Volume (m3)

T = Temperature (K)

S = Entropy (J/K)

H = Enthalpy (J)

Meanwhile, Gibbs energy in reactions indicate that when the changes of G is negative,
then the reaction if spontaneous reaction and vice versa. In chemical reactions involving
thermodynamics quantities, reaction below is often used:

𝑘𝐽
𝛥𝐺°𝑟𝑒𝑎𝑐𝑡𝑖𝑜𝑛 = [150.67 + (−228.6)] − [71.3 + 0] = −149.23
𝑘𝑚𝑜𝑙
As the sign of free energy indicates the direction of the chemical reaction as well as
determine that state of the reaction, it can be concluded that based on the calculated value, it
shows that the reaction occurs spontaneously in the direction written.

39
1.4.5.4 Potential Energy
The energy changes during a chemical reaction can be shown in the diagram below.
The figure shows the basic energy diagram for both endothermic (A) and exothermic (B).
oxidative dehydrogenation of 1-butene undergone exothermic reaction, so it can be seen that
the potential energy for exothermic reaction (B) is decreasing as the system release energy
to the surroundings [20].

Figure 12 – Energy Diagram

40
1.4.5.5 Extent of Reaction
Extent of reaction is a method of quantifying how many times a reaction has occurred.
It also can be defined as the potential of the reaction to convert reactants into products. The
formula for extent of reaction is as follow:

𝑁𝑖 = 𝑁𝑖𝑜 𝑉𝑖 𝜉

Where,

Ni = Molar amount of remaining species i

Nio = Initial amount

Vi = Stoichiometric coefficient

ξ = Extent of reaction

The general equation of this process is as follow:

1
𝐶4 𝐻8 (𝑔) + 𝑂 (𝑔) → 𝐶4 𝐻6 (𝑔) + 𝐻2 𝑂(𝑔)
2 2

Where,

1-butene (a) + Oxygen (b) → Butadiene (c) + Water (d)

(𝑛𝑛−𝑏𝑢𝑡𝑒𝑛𝑒𝑠 )𝑜𝑢𝑡 = (𝑛𝑛−𝑏𝑢𝑡𝑒𝑛𝑒𝑠 )𝑖𝑛 − ξ

(𝑛𝑜𝑥𝑦𝑔𝑒𝑛 )𝑜𝑢𝑡 = (𝑛𝑜𝑥𝑦𝑔𝑒𝑛 )𝑖𝑛 − ξ

(𝑛𝑏𝑢𝑡𝑎𝑑𝑖𝑒𝑛𝑒 )𝑜𝑢𝑡 = (𝑛𝑏𝑢𝑡𝑎𝑑𝑖𝑒𝑛𝑒 )𝑖𝑛 + ξ

(𝑛𝑤𝑎𝑡𝑒𝑟 )𝑜𝑢𝑡 = (𝑛𝑤𝑎𝑡𝑒𝑟 )𝑖𝑛 + ξ

41
The basis of reactor feed is 130 kmol/hr 1-butene and 65 kmol/hr oxygen. Diagram below
shows the illustration of reactor feeds and effluent.

1-butene
1 mol butene
n (butadiene) (mol/mol)
Oxygen n (water) (mol/mol)
1 mol oxygen n (1-butene) (mol/mol)
n (oxygen) (mol/mol)

1 𝑚𝑜𝑙 𝑜𝑓 1 − 𝑏𝑢𝑡𝑒𝑛𝑒
𝑛1− 𝑏𝑢𝑡𝑒𝑛𝑒 = 130 𝑥 = 130 𝑚𝑜𝑙 𝑜𝑓 1 − 𝑏𝑢𝑡𝑒𝑛𝑒
𝑚𝑜𝑙

The 1-butene conversion is assumed to be 85% conversion, give:

𝑛1−𝑏𝑢𝑡𝑒𝑛𝑒,𝑜𝑢𝑡 = 0.15(130𝑚𝑜𝑙) = 19.5 𝑚𝑜𝑙 𝑜𝑓 1 − 𝑏𝑢𝑡𝑒𝑛𝑒

Based on the formula of extent of reaction, the result can be expressed as:

𝑁𝑖 = 𝑁𝑖𝑜 − 𝑉𝑖 ξ

19.5 = 130 − (1)ξ

ξ = 110.5 𝑚𝑜𝑙

Hence, the extent of reaction is 110.5 mol.

42
1.5 Market Analysis

1.5.1 Industrial Butadiene Market Overview

Butadiene (BD) is considered as one of the most important intermediates where it acts
as a predecessor for numerous chemicals and processing materials. 95% of global production
of BD comes from ethylene plants that undergo steam cracking of paraffinic hydrocarbons.
The other industrial production of BD is through catalytic dehydrogenation of n-butane and
oxidative dehydrogenation of n-butene [11].

Butadiene is an essential product in most chemical industry, it is highly being used in

manufacturing of synthetic rubbers. Different types of polymers and monomers can be
produced such as chloroprene, nitril rubber (acrylonitrile butadiene NBR), SB latex,
acrylonitrile butadiene styrene (ABS), adiponitrile, sulfolane, ethylidene norbornene and
majorly used in production of styrene-butadiene rubber (SBR) and polybutadiene rubber
(PBR) as shown in figure 1. About 28% butadiene produced globally is used for production of
SBR, where SBR is a primary component of tire products [5]. On the other hand, PBR
consumed 26% of butadiene where it is used as a raw material for tires, an intermediate in
production of ABS resins and as an impact modifier for plastics [5].

Figure 13 - Butadiene Market Volume by Application on 2019

(Source: Mordor Intelligence)

Butadiene market is primarily driven by the end-use industries such as automobile and
plastics. This gives the opportunity for the market to expand especially in the growing
automobile industries in countries such as India, China and Brazil. This also driven by the
increase in population which could be related to the use of products that related to consumers.

43
1.5.2 Demand and Supply of 1,3-Butadiene

From Research Nester, the demand of 1,3-Butadiene is led by Asia Pacific region and
is expected to behold this position over the forecast period until 2020. Asia pacific alone
consumes a share of 45.6% in the global BD market share in 2016. From the analysis, China
and India are two countries that contribute largest in the Asia pacific region market share. As
mention above, the largest use of butadiene is in the production of styrene butadiene rubber
(SBR) and polybutadiene rubber (PBR) which mostly are used to manufacture automobile
tires and plastics. The Asia pacific butadiene demand is expected to grow at Compounded
Annual Growth Rate (CAGR) of 5.5% from 2009 to 2020 [21].

Figure 14 - Global Butadiene Demand by Region (Source: Research

Nester)
In Asia pacific region, 48% market share is consumed by SBR alone [22]. Styrene-
butadiene rubber (SBR) is a highly random copolymer of BD and 10–25% styrene, produced
by free-radical solution polymerization or by emulsion polymerization [23]. Along with that,
SBR have unique characteristics such as abrasion resistance, perfect impact strength, good
resilience, high tensile strength, that are permitting it suitable for high-end tire manufacturing.
The SBR market is expected to grow at a compound annual growth rate (CAGR) of more than
4% during the forecast period of 2020-2025 [24] which the major factor in the growth of the
market is the increased use of SBR as a key element in tire manufacturing.

44
51% of SBR global production is produced in the Asia Pacific region. Hence,

51% x 5.1 mil tonnes per year (global) = 2.601 mil tonnes per year SBR(Asia Pacific)

As SBR is a random co-polymer of butadiene and about 10-25% is taken as an

average for the production of 17.5% styrene. Therefore, the remaining 82.5% used for the
production of SBR. The butadiene production in Asia Pacific can then be calculated,

82.5% x 2.601 mil tonnes per year SBR = 2.15 mil tonnes per year butadiene

By taking into consideration of the other uses of butadiene in the market where 48% is
used as for the production of SBR in the Asia Pacific region,

2.15 mil tonnes per year butadiene

= 4.48 mil tonnes per year of butadiene
48%
The market for butadiene is expected to register a CAGR of around 4% during the
forecast period. The estimation for butadiene demand can then be calculated in this manner:

1
EV n
CAGR = ( ) − 1
BV

Where,

EV = Ending value

BV = Beginning value

n = Number of years
1
x 5
4%=( ) − 1
4.48 mil tonnes per year of butadiene

x = 5.45 mil tonnes per year of butadiene (2025)

Demand (2025) − Production (2020) = 5.45 mil tonnes − 4.48 mil tonnes

Demand (2025) − Production (2020) = 0.97 mil tonnes per year

45
 Based on the information on SBR as one product of butadiene, rough calculation is
made on the butadiene production in Asia pacific. According to [25], more than half of 5.1
million tonnes global production is demanded in Asia pacific region which was assume to be
51% of global production equivalent to 2.601 million tonnes per year. SBR is random
copolymer of butadiene and 10 – 25% styrene according to [23]. Therefore, composition of
butadiene is assumed to be average of 82.5% for every SBR produced. Butadiene production
in Asia pacific region is calculated by multiplying the average butadiene composition in SBR
with the annual demand of styrene in Asia pacific region resulting in 2.15 mil tonnes. This
result is only 48% of butadiene because as stated in [22]. Thus, the actual consumption is
estimated to be 0.97 mil tonnes per year. Therefore, a butadiene plant will be designed to
produce 50 000 tonnes per year, which contributes to about 5.16% of market demand.

46
1.5.3 Potential Buyers in Malaysia

As mention above, a butadiene plant is designed to fulfill 5.27% of butadiene import

which equivalent to 50 metric tonnes per year. Therefore, the market for the plant to strive is
the local company that use butadiene as a feedstock to produced synthetic rubber and
polymer in Malaysia. For example, the production of styrene-butadiene rubber (SBR) and
polybutadiene rubber (PBR). Table 1 shows the potential buyer for butadiene in Malaysia.

Table 7 - Potential Buyers for Butadiene in Malaysia

Company Butadiene Based Products

Mepcom Polymer Sdn Bhd
http://www.mepcom.com.my
Ultimate Polymer Sdn Bhd
https://ultimatepolymer.en.ecplaza.net/
GSE Online Sdn Bhd
https://www.gserubber.com/
Uni Gloves
https://www.uni-gloves.com/
Pearl Glove
https://pearlglove.com.my/
PTTCorp
https://www.pttcorp.com.my/
1. Acrylonitrile Butadiene Styrene (ABS
Tray)
1. Crushed Polycarbonate / Acrylonitrile
Butadiene Styrene
1. Extrusion NBR Solid Rubber
2. Moulded NBR Rubber
1. Chloroprene Examination Glove
2. Chloroprene Surgical Glove
1. Nitrile coated gloves
2. Knitted polyamide glove coated with
nitrile micropores
1. Sulfolane

47
1.5.4 Demand and Supply of Raw Materials

1.5.4.1 Butene

Oxidative dehydrogenation process that has been chosen for production of butadiene
is butene. Butene or also known as butylene is an alkene with chemical formula of C4H8.
Butene is obtained by catalytic cracking of long-chain hydrocarbons left during refining of
crude oil. Cracking produces a mixture of products, and the butene is extracted from this by
fractional distillation. The key applications of butene-1, the segment of polyethylene co-
monomers account for over 65% of the overall market. In Malaysia, the catalytic cracking
process of hydrocarbons is being done in by Petronas’ refinery and petrochemical integrated
development (RAPID) project, making it to be the sole supplier of butene.

Prismane Consulting have analyzed the butene market in Asia Pacific which include
China that have a biggest demand of butene-1, followed by South Korea, India and Thailand.
Butene-1 is mainly use as co-monomer in production of linear low-density polyethylene
(LLDPE) and high-density polyethylene (HDPE) [26]. The butene-1 demand in the Asia-Pacific
region in 2017 was estimated to be around 550 kilo tons. It is forecast to grow at a CAGR of
8.0% between 2018 and 2025 to reach 1011.7 kilo tons in 2025. The growth can be attributed
to the increase in polyethylene demand in the region for various applications including
packaging, like plastic wrapping, food container, plastic bottle, films and construction &
infrastructure applications like piping.

Asia Pacific Butene Consumption, (%) By Country,

2017

23.34% 41%

11.48%

11.08%
13.10%

China South Korea Thailand India Others

Figure 15 - Asia Pacific Butene Consumption by Country in 2017 (Source:

Prismane Consulting)

48
 Based on data from Prismane Consulting, in Asia Pacific region alone, total of 550000
tonnes of butene has been consumed for majorly production of polyethylene. China is
contributing of 41% equivalent of 225500 kilo tons of the regional demand. South Korea
market on the other hand has become the second largest market in Asia Pacific by 13.1% in
2017. The consumption of butene in India has recorded to be 11.48% which equivalent to
63140 tonnes followed by Thailand at 60940 tonnes. All of other countries like Vietnam,
Malaysia, Thailand, Singapore and other Rest of Asia-Pacific individually consume between
10000 tonnes to 25000 tonnes each.

49
1.5.5 Demand and Supply of Catalyst

Among the composite oxide catalysts used in the oxidative dehydrogenation of n-

butene, pure bismuth molybdate-based catalyst is suitable for the process. This catalyst is a
mixed oxide constituted from Bismuth trioxide (Bi2O3) and Molybdenum trioxide (MoO3) at
specified ratio. The pure bismuth molybdate catalysts exist in three phases such as α-bismuth
molybdate (Bi2Mo3O12), β-bismuth molybdate (Bi2Mo2O9) and γ-bismuth molybdate
(Bi2MoO6), can be practically used [27] [28] [29].

Bismuth is a white, crystalline, brittle metal that has a slightly pinkish tinge. The key
features this element is its diamagnetism, high electrical resistance and extremely low thermal
conductivity. Bismuth is majorly found in Mexico, Japan, Bolivia, Peru, and Canada and the
market is analyzed across China, Mexico, Canada, Bolivia, Russia, Vietnam, and others with
valued at $210 million in 2017.

Molybdenum trioxide is formed through molybdenum disulfide process and have a

yellow or light blue solid. Based on Mordor Intelligence, China is the largest producer of
molybdenum in the world. Major producers of molybdenum in the country are China
Molybdenum Co., Ltd., Rio Tinto, and Jjinduicheng Molybdenum group co. ltd. Some of the
resource locations for molybdenum are in Henan, operated by China Molybdenum Company
Limited, Shaanxi, operated by Jinduicheng Molybdenum Group Co. Ltd, and Liaoning,
operated by Yangjiazhangzi Molybdenum Mine.

There is no record of the bismuth molybdate exported from Malaysia by Trend

Economy, the butadiene plant must recognize the supplier for the catalyst. purchase must be
made through source is will be the international company that provide bismuth molybdate
catalyst. For example, Sajan Overseas Private Limited based in India have a capacity of 100
kilogram per month.

50
1.6 Capital Cost Estimation and Break-Even Analysis

1.6.1 Fixed Capital Cost

Fixed capital cost is defined as the total capital expenditure that is invested in assets such as
property, plant and equipment that are needed to start-up and conduct a business. The assets
are fixed because they are not consumed during the actual production of a product, but they
have a long-lasting worth. In this production of ethanol, the cost of equipment, land and other
facilities are the direct costs, while the indirect costs are considered as the unaccountable
costs in an economically feasible manner. All of the calculation and values obtained to
calculate the cost is referred from the Analysis, Synthesis, and Design of Chemical Processes
[30].

1.6.1.1 Equipment Cost

The cost of each piece of equipment is just a rough estimation based on the type of equipment,
materials of construction and also the size. The prices listed in table 8 are estimated roughly
from Alibaba.com [31]–[34].

Table 8 - Cost of each equipment

Equipment Unit Cost/Unit (RM) Total Cost (RM)

Reactor 1 RM824,700.00 RM824,700.00
Heat Exchanger (Cooler) 5 RM26,390.00 RM131,950.00
Compressor 2 RM26,802.00 RM53,604.00
Separator 3 RM5,000.00 RM304,536.00
Membrane Distillation Column 2 RM40,000.00 RM80,450.00
Pump 2 RM500.00 RM20,708.00
Mixing Valve 3 RM1,484.00 RM4,452.00
Control Valve 4 RM138.00 RM560.00
Reboiler 2 RM51,543.00 RM103,086.00
Condenser 2 RM123,705.00 RM247,410.00
Total RM1,771,456.00

51
1.6.1.2 Land Cost
The required size to build a plant is 100 acres, which is around 4,356,000 square feet. The
site selection to building this butadiene plant is made at Pengerang Industrial Area, Johor.

Pengerang land price is RM32.14/ft2. Therefore, the total cost of the land is RM140,001,840
per square foot.

Table 9 - Fixed Capital Investment of project

Component Estimation Cost (RM)

Direct Cost
Total Equipment Cost From Table 1 1,771,456.00
Total Equipment Installation 40% of total equipment cost 708,582.40
Piping Installation 50% of total equipment cost 885,728.00
Instrumentation and Control
20% of total equipment cost 354,291.20
System
Electrical System Installation 15% of total equipment cost 265,718.40
Facilities 50% of total equipment cost 885,728.00
Building and Auxiliaries 40% of total equipment cost 708,582.40
Land 140,001,840.00

Total Direct Cost 145,581,926.40

Indirect Cost
Engineering and Supervision 10% of total direct cost 14,558,192.64
Construction Expenses 10% of total direct cost 14,558,192.64
Legal Expenses 10% of total direct cost 14,558,192.64
Contractor Expenses 5% of total direct cost 7,279,096.32
Contingencies 10% of total direct cost 14,558,192.64
Total Indirect Cost 65,072,864.30

Total Fixed Cost (Direct + Indirect Cost) 211,093,793.28

52
1.6.2 Variable Cost
Variable cost is the cost that represents plant operation annually and is dependent on the
production rate of the plant. Variable cost varies with the quantity of production output. These
costs include the following:
i. Raw Material Cost
ii. Catalyst Cost
iii. Utility Cost
iv. Operating Labor Cost
v. Wastewater Cost

1.6.2.1 Annual Raw Material Cost

The production of 97% purity of butadiene is targeted to be 50,000 metric tons (MT)/year. Table
10 shows the estimated cost of all raw materials used. The prices are obtained from various
sources such as Ali Baba [35].

Table 10 - Annual price of raw material

Yearly Cost
Raw Material Input (Kg/hour) Cost (RM/kg)
(RM/year)

1-Butene 14,027.5 4.0515 472,939,983.93

Total 472,939,983.93

53
1.6.2.2 Operating Labor Cost
The cost of operating labor is estimated based on data obtained from 5 different chemical
companies and correlated by Alkhayat and Gerrard [36]. According to this method, the operating
labor condition for chemical processing plants is given by equation 1.46.

𝑁𝑂𝐿 = (6.29 + 31.7𝑃2 + 0.23𝑁𝑛𝑝)0.5 (Eqn. 1.46)

Where,
𝑁𝑂𝐿 = Number of Operators per shift
𝑃 = Number of process steps involving the handling of particulate solids – such as
transportation and distribution, particulate size control, and particulate removal.
𝑁𝑛𝑝 = Number of non-particulate processing steps that include compression, heating, and
cooling, mixing and also reaction. In general, for the processes considered in this context,
the P-value is zero and Nnp is given by equation 1.47.

𝑁𝑛𝑝 = ∑ 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 (Eqn. 1.47)

The equipment represents compressors, towers, reactors, heaters and exchangers. Equation
1.46 is the number of operators needed to operate the processing unit per shift. A single operator
works on the average 49 weeks a year, five 8-hour shifts a week that include 3 weeks off day for
vacation and sick leave. Therefore,

5 shifts 49 weeks 245 shifts

× =
week year operator ∙ year

A chemical plant operates 24 hours per day, and the estimation for plant maintenance and
cleaning for this ethanol production will be 20 days per year [37].

3 shifts 345 days 1035 shifts

× =
day year year

54
Therefore, the number of operators required for 1 equipment are:

1035 shifts operator ∙ year

× = 4.22 operators
year 245 shifts

By using equation 1.47, an estimation of the number of operators required per shift based on
PFD is made and shown in table 11.

Table 11 - Number of operators required for each equipment

Equipment Type Number of Equipment Nnp

Compressors 2 2

Exchangers 5 5

Heaters/Furnaces 0 0

Pumps 2 -

Reactors 1 1

Towers 2 2

Vessels 3 -

Total 10

55
The number of operators per shift:
𝑁𝑂𝐿 = (6.29 + 31.7𝑃2 + 0.23𝑁𝑛𝑝)0.5
= (6.29 + 31.7(0)2 + 0.23(10))0.5
= 2.93 operators per shift

The total number of operators required for all major equipment based on the calculation is:

Number of operators = 2.93 (4.22) = 12.3683 ≈ 13 operators

The average salary for an operator is RM 1,448 per month in Malaysia [38]. Therefore, the total
labor cost for 14 operators:

Cost of Operating Labor (COL) = (Operating Labor)(Salary of Operators in a year)

= (13 operators) (RM 1,448/month) (12 months/year)

= RM225,888.00per year

1.6.2.3 Annual Catalyst Cost

The catalyst used for the oxidative dehydrogenation of n-Butenes is Bismuth-Molybdate (Mo-Bi),
which is being mainly unsupported metal oxides containing two or more transition metal
components. Bismuth molybdate catalysts show good catalytic performance for the oxidative
dehydrogenation reaction of butene in the Bi/Mo range of 2/1–2/3 [39]. The estimated cost for the
catalyst annually is shown in table 12.

Table 12 - The cost of catalyst

Catalyst Amount (kg/year) Cost (RM/kg) Total Cost (RM/year)

Bismuth-Molybdate
6,087.17 411.52 2,379,742.59
(Mo-Bi)

Total 2,379,742.59

56
1.6.2.4 Cost of Waste Treatment
The cost for the waste treatment is estimated roughly based on the equipment used for the
process of treating the waste in the plant since no specific calculation is made. Therefore, the
estimated cost is RM 1,000,000.00.

1.6.2.5 Estimation of Utilities Cost

Utility cost estimate = 1% x Total Equipment Cost
= 1% x RM1,771,456.00

= RM17,714.56

1.6.2.6 Estimation of Total Variable Cost

Total Variable Cost
= Raw Material Cost + Catalyst Cost + Labor Cost + Waste Treatment
+ Utilities Cost

Total Variable Cost

= RM 472,939,983.93 + RM2,379,742.59 + RM225,888 + RM1,000,000
+ RM17,714.56

Total Variable Cost = RM476,563,329.08

57
1.6.3 Estimation of Manufacturing Costs

Table 13 - Estimation of Manufacturing Costs

Component Multiplying Range Cost (RM)

Direct Manufacturing Cost
Raw material CRM 472,939,984
Waste treatment CWT 1,000,000
Utilities CUT 17,714.56
Operating labor COL 225,888
Direct supervisory and
0.18 COL 40,660
clerical labor
Maintenance and repair 0.06FCI 12,665,627.60
Operating supplies 0.009FCI 1,899,844.14
Laboratory charges 0.15COL 33,883
Patent and royalties 0.03COM 19,280,727.17
Total 508,104,328.43
Fixed manufacturing cost
Depreciation 0.1FCI 21,109,379.33
Local taxes and insurance 0.032FCI 6,755,001.38
Plant overhead cost 0.708 COL + 0.036FCI 7,759,305.26
Total 35,623,685.98
General expenses
Administration cost 0.177 COL + 0.009FCI 1,939,826.32
Distribution and selling cost 0.11COM 70,695,999.61
Research and development 0.05COM 32,134,545.28
Total 104,770,371.20
Total manufacturing cost 648,498,386

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔, 𝐶𝑂𝑀 = 0.28𝐹𝐶𝐼 + 2.73𝐶𝑂𝐿 + 1.23(𝐶𝑈𝑇 + 𝐶𝑊𝑇 + 𝐶𝑅𝑀 )

𝐶𝑂𝑀 = 0.28(𝑅𝑀 211,093,793.28) + 2.73(𝑅𝑀 225,888)

+ 1.23(𝑅𝑀 17,714.56 + 𝑅𝑀1,000,000 + 𝑅𝑀 472,939,984)

𝐶𝑂𝑀 = 𝑅𝑀642,690,905.50

58
1.6.4 Estimation of Revenue
The selling item from this production is 1,3-butadiene (97% purity). The yearly income from
product sales is shown in Table 14.

Table 14 - Yearly Income

Selling Item Selling Price Production Rate Income

(RM/kg) (kg/year) (RM/year)
1,3-Butadiene 81.2 101,878,800.00 RM8,272,558,560.00
Total RM8,272,558,560.00

1.6.5 Break-Even Analysis

A break-even analysis is a financial implement that helps a newly developed company to
determine its capability to gain profit. In simpler words, it means the financial calculation to
determine the number of products a company should market to cover the costs. The break-even
analysis comes in handy for the following reasons:

• Once the break-even is achieved, the remaining or unused capacity of the concern will be
determined, and the maximum profit on the specific products that can be generated will
be shown.
• The determination of the influence on profits if the variable cost is replaced by fixed cost.
• The determination of the profit changes when the price of a product is modified.
• If there’s any sales downturn, the break-even analysis will determine the total losses that
can be sustained.

As in this context, break-even analysis is very useful because it is crucial for every chemical plant
to have a production process that is capable of reaching maximum profit under an optimum
operation. Capital investment is needed as it pertains to the costs associated with the construction
and operation of a chemical process. The cost involves for a chemical plant is divided into 2
categories; fixed capital cost and variable cost that has been calculated in the previous sub-
chapter.

59
1.6.5.1 Break-Even Estimation
Total Product Cost (TC)

𝑇𝐶 = 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡, 𝐹𝐶 + 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡, 𝑉𝐶

𝑇𝐶 = 𝑅𝑀 211,093,793.28 + 𝑅𝑀476,563,329.08

𝑇𝐶 = 𝑅𝑀 687,657,122.36

Annual Profit (P)

𝑃 = 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒, 𝑅 − 𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝐶𝑜𝑠𝑡, 𝑇𝐶

𝑃 = 𝑅𝑀 8,272,558,560.00 − 𝑅𝑀 687,657,122.36

𝑃 = 𝑅𝑀7,584,901,437.64

Variable Cost per Metric Tonnes (v)

𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡, 𝑉𝐶
𝑣=
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒

𝑅𝑀 476,563,329.08
𝑣=
50,000 𝑀𝑇/𝑦𝑟

𝑣 = 𝑅𝑀9,531.27 𝑝𝑒𝑟 𝑀𝑇

Revenue per unit, R

𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒, 𝑟
𝑅=
𝑇𝑜𝑡𝑎𝑙𝑈𝑛𝑖𝑡

𝑅𝑀8,272,558,560
𝑅=
50,000 𝑀𝑇/𝑦𝑟

𝑅 = 𝑅𝑀165,451,17 𝑝𝑒𝑟 𝑀𝑇

60
Break Even Point, BEP

𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡, 𝐹𝐶
𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑃𝑜𝑖𝑛𝑡, 𝐵𝐸𝑃 =
𝑅−𝑣

𝑅𝑀211,093,793.28
𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑃𝑜𝑖𝑛𝑡, 𝐵𝐸𝑃 =
(𝑅𝑀165,451.17 − 𝑅𝑀9,531.27)

𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑃𝑜𝑖𝑛𝑡, 𝐵𝐸𝑃 = 𝑅𝑀1353.86

61
1.6.5.2 Payback Period
This plant is estimated to have a project life of 10 years, and the plant start-up end after two years
of operation. The data for the calculation of the payback period is shown in table 15. The payback
period is defined as the length of time required to recover the initial investment outlay, whether in
terms of savings or profits. The calculation made can be referred to in table 16.

Table 15 - Data for Payback Period Calculation

Component Data

Land Cost RM 140,001,840

Fixed Capital Investment (FCI) RM211,093,793.28

FCI during 1st year (1/2 FCI) RM105,546,896.64

nd
FCI during 2 year (1/2 FCI)) RM105,546,896.64

Working Capital (20% of FCI) RM42,218,758.66

Total Selling Price (Revenue) RM8,272,558,560.00

Total Variable Cost RM476,563,329.08

Taxation Rate 35%

Depreciation Use 5 years MACRS

62
 Table 16 - Table of Payback Period

Non-
Cumulative
Investment Depreciation, (FCI - dk) Revenue, R (R-COMd- discounted
Year COMd (RM) Cash Flow
(RM) dk (RM) (RM) (RM) dk)×(1- cash flow
(RM)
tax)+dk (RM) (RM)
- - -
RM211,093,
0 RM140,001, RM0.00 RM140,001 RM140,001,
793.28
840 ,840 840
- - -
RM211,093,
1 RM105,546, RM0.00 RM105,546 RM245,548,
793.28
896.64 ,897 737
- - -
RM211,093,
2 RM147,765, RM0.00 RM147,765 RM393,314,
793.28
655.30 ,655 392
RM42,218,758 RM168,875, RM8,272,558, RM476,563, RM5,082,173, RM5,082,1 RM4,688,85
3
.66 034.62 560.00 329.08 465.63 73,466 9,074
RM67,550,013 RM101,325, RM8,272,558, RM476,563, RM5,091,039, RM5,091,0 RM9,779,89
4
.85 020.77 560.00 329.08 404.95 39,405 8,479
RM40,530,008 RM60,795,0 RM8,272,558, RM476,563, RM5,081,582, RM5,081,5 RM14,861,4
5
.31 12.46 560.00 329.08 403.01 82,403 80,882
RM24,318,004 RM36,477,0 RM8,272,558, RM476,563, RM5,075,908, RM5,075,9 RM19,937,3
6
.99 07.48 560.00 329.08 201.84 08,202 89,083
RM24,318,004 RM12,159,0 RM8,272,558, RM476,563, RM5,075,908, RM5,075,9 RM25,013,2
7
.99 02.49 560.00 329.08 201.84 08,202 97,285
RM12,159,002 RM8,272,558, RM476,563, RM5,071,652, RM5,071,6 RM30,084,9
8 RM0.00
.49 560.00 329.08 550.97 52,551 49,836
RM8,272,558, RM476,563, RM5,067,396, RM5,067,3 RM35,152,3
9 RM0.00
560.00 329.08 900.10 96,900 46,736
RM8,272,558, RM476,563, RM5,067,396, RM5,067,3 RM40,219,7
10 RM0.00
560.00 329.08 900.10 96,900 43,637
RM8,272,558, RM476,563, RM5,067,396, RM5,067,3 RM45,287,1
11 RM0.00
560.00 329.08 900.10 96,900 40,537
RM182,220, RM8,272,558, RM476,563, RM5,067,396, RM5,249,6 RM50,536,7
12 RM0.00
598.66 560.00 329.08 900.10 17,499 58,035

63
 Non-Discounted Cash Flow
RM60,000,000,000

RM50,000,000,000

RM40,000,000,000
Cumulative Cash Flow

RM30,000,000,000

RM20,000,000,000

RM10,000,000,000

RM0
0 2 4 6 8 10 12 14

(RM10,000,000,000)
Year

Figure 16 - Graph of Non-Discounted Cashflow

Based on the calculation made, the payback period of this plant is about 2 years to recover back the investment cost.

64
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