Scale, capacity and feedstock: which chemical plants get built: Key terms, quiz and sources

Understanding Chemicals / Module 7: Scale, capacity and feedstock: which chemical plants get built Wrap-up

Scale, capacity and feedstock: which chemical plants get built: review

Key terms

Economies of scale: The fall in cost per tonne as plant capacity rises, coming from capital and staffing, not from raw materials.
Scale exponent (six-tenths rule): The power b in I = k x Q^b linking plant capital to capacity; about 0.6 for many single-stream plants.
Single-train plant: A plant with one line of equipment at each process step, cheap to build but stopped entirely by one failure.
Scale-out: Adding identical units in parallel once equipment reaches its practical size limit.
BATS plant: A new plant using the best available technology at the largest available scale.
Equivalent availability: The days per year a plant can effectively run at its maximum daily rate after outages and restrictions.
Capacity utilisation: The share of a plant's annual capacity that is actually used.
Debottlenecking: Raising a plant's output by removing the step that limits capacity.
Cash cost: The operating cost actually paid out per tonne, excluding depreciation; the price below which a plant should shut.
Net present value (NPV): The value today of a project's future cash flows, discounted at the cost of capital.
Import parity: The landed cost of an imported product, which caps what a local producer can charge.
Experience (learning) curve: A relation in which real cost falls by a set fraction with each doubling of cumulative production.
S-curve: The pattern of slow start, rapid growth and maturity in a technology's performance over time.
High-value chemicals (HVCs): The IEA's term for ethylene, propylene and the aromatics benzene, toluene and xylenes.
Ethane rejection: Leaving ethane in the natural gas stream because it is worth more as fuel than as cracker feed.
Vertical integration: Owning or linking upstream raw material supply and downstream processing of a product.
Inherent safety: Designing out hazards, for example by holding less hazardous material, instead of adding controls.
E-factor: The mass of waste produced per unit mass of desired product.
Atom economy: The share of the atoms in the reactants that end up in the desired product.

Try it in the table

Open the Ethylene tile and compare the regions where ethane and naphtha are the main cracker feed. Using Part 4, explain which regions sit at the low end of the cost curve and why.
Open the Ammonia tile and find the main producing and exporting countries. Check whether they match the cheap-gas regions, and use Kent's 40-50 multiplier to estimate the cost gap between a $3 and an $8 gas price.
Open the Sulphuric acid tile and note where acid comes from as a smelter or refinery by-product. Relate this to Brennan's point that acid from remote smelters is hard to sell, so phosphoric acid, diammonium phosphate or superphosphate are considered instead.
Open the Urea tile and compare its trade with that of Ammonia. Use the IEA's figure that urea trade was over three times ammonia trade in 2016 to explain why producers move down the chain before exporting.
Open the Methanol tile and look for coal-based production in China. Weigh the IEA's points about coal's higher equipment cost against its feedstock cost advantage and the low utilisation of coal-based plants.
Open the Chlorine and Caustic soda tiles and look at how the two co-products are balanced. Use the Pilbara case to explain why a caustic soda market alone could not justify a new chlor-alkali plant.

Final quiz

A single-stream plant of 200,000 t/year costs $100 million. Using b = 0.6, what would a 400,000 t/year plant of the same design cost?

2^0.6 = 1.52, so about $152 million. Capital per tonne falls by 24%, from $500 to about $379 per annual tonne.

Kent says doubling a single-train ammonia plant cuts capital-related cost per tonne by about 20%. What scale exponent does that imply?

Capital per tonne scales as 2^(b-1). Setting 2^(b-1) = 0.80 gives b - 1 of about -0.32, so b is about 0.68.

Which of these is NOT one of Brennan's reasons that a small plant can be justified?

Raw material use per tonne does not change with scale. The other three, plus capital-cutting innovation, are Brennan's justifications for small plants.

In Brennan's LNG regasification estimate, what happens to unit cost when utilisation halves?

Some costs (utilities, selling) fall with throughput, so total cost drops from $50 million to $42 million, but spread over half the gigajoules it rises to $0.84/GJ.

What does Wittcoff mean by 'The Old Paradigm' in the chemical industry?

Firms invest on high profits, capacity arrives years later in a downturn, prices fall, plants close and the cycle repeats every four to five years.

Why did Middle East ethane crackers have the lowest cost of high-value chemicals in both 2010 and 2017?

Associated gas had no alternative local use and almost zero wellhead value; Wittcoff cites Saudi ethane extraction at $0.50-0.75 per million Btu in 2001.

Why does Brennan see value in building two smaller gas plants even though one large plant has the higher NPV?

The phased scheme keeps flexibility, a kind of option, and lets the second plant incorporate design, operating and technology improvements.

The classical caprolactam process makes 5 kg of ammonium sulphate per kg of product, the DSM process 1.8 kg. What does this mainly illustrate?

Co-product and waste per tonne are set by the chemistry and route. Scale shrinks capital and labour per tonne but not the E-factor.

Next module: Colour and protection: dyes, pigments, paints and coatings →

Sources for this module

Brennan, D., Process Industry Economics: Principles, Concepts and Applications, 2nd ed., Elsevier, 2020 · pdf pp. 24-26, 35-42, 66-75, 125-127, 156-174, 179-209 (Ch 7), 210-243 (Ch 8), 244-257 (Ch 9)
IEA, The Future of Petrochemicals: Towards more sustainable plastics and fertilisers, OECD/IEA, 2018 · pdf pp. 11-13, 29-43, 69, 75-80, 92-99, 110-112
Wittcoff, H.A., Reuben, B.G. & Plotkin, J.S., Industrial Organic Chemicals, 2nd ed., Wiley, 2004 · pdf pp. 48-66 (Ch 1), 627-631 (Ch 17)
Kent, J.A. (ed.), Handbook of Industrial Chemistry and Biotechnology, 12th ed., Springer, 2012 · pdf pp. 62, 71, 114-115 (Ch 2); 168-176 (Ch 5); 385 (Ch 10); 886-908 (Ch 22); 1012-1017 (Ch 25)
Austin, G.T., Shreve's Chemical Process Industries, 5th ed., McGraw-Hill, 1984 · pdf pp. 323-325 (Ch 18), 345-358 (Ch 19)
Pollak, P., Fine Chemicals: The Industry and the Business, 2nd ed., Wiley, 2011 · pdf pp. 74, 91-92, 102