K02 Group 2 Production of Methanol

SEMESTER 2 SESSION 2020/2021
COLLEGE OF ENGINEERING
BKF3142 PROCESS ENGINEERING ECONOMICS
MINI PROJECT
PRODUCTION OF 20,000 MTPA METHANOL FROM EMPTY FRUIT BUNCH
LECTURER’S NAME: DR SUMAIYA BT ZAINAL ABIDIN@ MURAD

SECTION: 02
NO. NAME ID NUMBER
1 NUR FARISAH BINTI AKMAL KA17161
2 ANIS AFIFAH BINTI AMRAN KA17060
3 NADHIRAH AQILAH BINTI AZIZUDDIN KA17129
4 SITI MAISARAH BINTI MOHAMAD KA17058
5 THANASANGARI A/P LATCHUMANAN KA19177

TABLE OF CONTENTS
1.0 INTRODUCTION .................................................................................................................... 3

1.1 LITERATURE REVIEW ...................................................................................................... 3
1.2 METHANOL APPLICATION ............................................................................................. 4
1.1.1 Methanol to dimethyl ether............................................................................................. 4
1.1.2 Hydrogen production ...................................................................................................... 5
2.0 EQUIPMENT COST ................................................................................................................ 6
3.0 FIXED CAPITAL EQUIPMENT COST.................................................................................. 8
4.0 MANUFACTURING COST .................................................................................................... 9
5.0 CASH FLOW ANALYSIS ..................................................................................................... 16
5.1 Cumulative Non-Discounted Cash Flow Analysis.............................................................. 17
6.0 FINANCIAL RATIOS............................................................................................................ 21
6.1 OPERATING MARGIN RATIO ................................................................................... 21
6.2 GROSS PROFIT MARGIN ........................................................................................... 22
6.3 NET PROFIT MARGIN ................................................................................................ 22
6.4 RATE OF INVESTMENT (ROI) .................................................................................. 22
7.0 SUMMARY ............................................................................................................................ 23
REFERENCES ............................................................................................................................. 24
APPENDIX ................................................................................................................................... 26
APPENDIX A: EQUIPMENT COST CALCULATIONS ........................................................... 26
APPENDIX B: MANUFACTURING COST CALCULATIONS ............................................... 65
APPENDIX C: CASH FLOW DIAGRAM .................................................................................. 68
APPENDIX D: FINANCIAL RATIOS ........................................................................................ 70
1.0 INTRODUCTION
1.1 LITERATURE REVIEW

Methanol contain molecular formula CH3OH where it’s also called as methyl alcohol and
wood alcohol. Methanol is the simplest of a long series of organic compounds that called alcohol
where it consisted of methyl group CH3 that link with the hydroxy group (OH) as in Figure 1.
Methanol formerly produced from the destructive distillation of wood. The modern method to
synthesis methanol basically is from direct combination of carbon monoxide gas and hydrogen in
the presence of catalyst. Therefore, the increasing of syngas that contain a mixture of hydrogen
and carbon monoxide that derived from biomass was used in the production of methanol.
Figure 1: chemical structure of methanol

One of the Biomass is fruit bunch. Biomass from Empty Fruit Bunch (EFB) has high
potential to be employed as raw material for renewable energy sources in Malaysia. Empty Fruit
Bunch can be efficiently converted into the valuable fuel products through gasification to produce
syngas (R Herdayi et al., 2019). Syngas is a suitable basis for added value products development.
Syngas is a raw material for most other chemical products, such as methanol. Therefore, one of
type biomass that has big potential to be utilized is palm Empty Fruit Bunch biomass (R Herdayi
et al., 2019).
Methanol is a good example for the syngas valorisation. Methanol has chemical formula
CH3OH and often abbreviated MeOH. As mentioned before, methanol is toxic, light, colourless,
volatile, and flammable liquid with a distinctive odour similar to ethanol subsequently have many
applications that can be apply in many ways (R Herdayi et al., 2019).
1.2 METHANOL APPLICATION
Methanol demand in chemical market was about 35% of it is consumed for formaldehyde
production. Meanwhile, the remaining volumes are consumed for the production of fuel additives,
acetic acid, methyl and vinyl acetates, and other chemicals. Recently, methanol synthesis
interestingly become the second source of hydrogen consumption after ammonia production
(Dalena et al., 2018). There are several applications that methanol can be converted into useful
product such as methanol to dimethyl ether, in hydrogen production and methanol fuel cells.
1.1.1 Methanol to dimethyl ether
In the last 10 years, the use of methanol as a C1 building block in the petrochemical
industry is one of the most promising technologies and a wide part of its production has been
consumed in the manufacturing of dimethyl ether as an alternative fuel. Dimethyl ether contain
octane number and ignition temperature that close to that of diesel fuel. It contributed to lower
NOX emissions, less smoke, and less engine noise than conventional diesel engines and,
furthermore, can be easily transported (Dalena et al., 2018).
Other than that, dimethyl ether also can be used as a chemical feedstock for manufacturing many
products. For examples, short olefins (ethylene and propylene), gasoline, hydrogen, acetic acid,
and dimethyl sulphate. The current dimethyl ether manufacturing process was double-step
(indirect) synthesis, in which methanol synthesis, carried out by one of the above-mentioned
technologies, is followed by dehydration, according to Eq. (1.1).
2CH3OH → CH3OCH3 + H2O (1.1)

1.1.2 Hydrogen production
Methanol considered as an excellent liquid H2 source due to the low toxicity and low chain-
alcohols (Liu et al., 2012). For this reason, several research groups were developing various
technologies that can utilize methanol in the production of hydrogen. Hydrogen was considered as
a clean energy source that has an important role in refining, the chemical industry, and the
electronic industry. But hydrogen is difficult to store and transport. Its production from an easily
transported liquid feedstock can be an efficient alternative (Dalena et al., 2018). The hydrogen
production from methanol is via methanol decomposition. It is endothermic reaction where
contribute to the formation of hydrogen and carbon monoxide (Dalena et al., 2018). Beside that,
hydrogen also can be formed through methanol steam reforming (MSR) (Dalena et al., 2018).
Lastly, hydrogen production through methanol-water solution electrolysis. The purity of hydrogen
production from this synthesis route is excellent around 95.5-97.2mol% (Dalena et al., 2018).
2.0 EQUIPMENT COST
‘Grass root’ is a term used to refer a completely new facility in which the construction is
started on essentially undeveloped grass field. The estimated grass root capital cost of methanol
plant is calculated by using the module cost technique. The bare module cost is calculated based
on the equipment size. It is also the sum of direct and indirect cost for each unit equipment.
The equipment module costing technique is a common technique to estimate the cost of a new
chemical plant. It is generally accepted as the best for making preliminary coat estimates and is
used extensively in this text. This approach, introduced by Guthrie in the late of 1960s and early
1970s, forms the basis of many of the equipment module techniques in use today. This costing
techniques relates all costs back to the purchased cost of equipment evaluate for some base
conditions. Deviations from these base conditions are handled by using multiplying factors that
depend on the following:
1. The specific equipment types

2. The specific system pressures
3. The specific materials of construction
Equation below is used to calculate the bare module cost for each piece of equipment.
CBM = Cp o FBM
Table 2.1 shows the summary of bare module cost for all equipment used in the methanol
production plant.
Table 2.1: Summary of the bare module cost for all equipment involved
Equipment Code Cp (RM) CBM (RM)

Reactor R-101 331,997.55 1,327,990.18
R-102 1,093,058.09 4,372,232.38
R-103 324,670.71 1,298,682.83
Cyclone V-101 17,728.08 50,702.29
Flash Drum V-102 48,524.99 197,496.71
V-104 43,445.42 176,882.91
CO2 Absorption V-103 48,875.45 337,357.59
Stripper T-101 196,123.02 1,641,764.12
Distillation Column T-102 52,123.21 455,194.57
Compressor C-101 140,340.46 785,963.97
C-103 462,231.35 2,588,499.10
Expander C-102 117,303.53 656,899.35
C-104 449,269.90 2,515,911.45
Pump P-101 A/B 34,732.69 168,800.88
P-102 A/B 820,078.26 3,985,580.99
P-103 A/B 21,744.18 105,676.71
P-104 A/B 820,078.26 3,985,580.99
P-105 A/B 16,250.43 78,977.07
P-106 A/B 18,945.92 92,077.19
Mixer M-101 25,145.65 34,701.00
Tank ST-103 347,072.51 347,072.51
ST-104 374,122.27 374,122.27
Heat Exchanger E-101 119,299.67 748,963.34
E-102 117,266.33 736,198.00
E-103 141,425.22 887,863.14
E-104 170,466.87 1,070,191.04
E-105 119,336.22 749,192.79
E-106 206,248.00 678,555.94
E-107 117,326.35 736,574.82
E-108 126,497.89 794,153.78
TOTAL (RM) 31,979,859.91
Total cost of the module (CTM)
𝑪𝑪𝑪𝑪𝑪𝑪 = 𝟏𝟏.𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏
= 1.18 (RM 31,979,859.91)
= RM 37,736,234.69
Grass-root capital cost (CGR)
𝑪𝑪𝑪𝑪𝑪𝑪 = 𝑪𝑪𝑪𝑪𝑪𝑪 + 0.5𝑪𝑪𝑪𝑪𝑪𝑪
= 37,736,234.69 + (0.5) (31,979,859.91)
= RM 53,726,164.65
Table 2.2 shows the summary of cost.
Table 2.2: Summary of Cost
Item Cost (RM)

Total bare module cost (CBM) 31,979,859.91
Total module cost (CTM) 37,736,234.69
Grass roots capital cost (CGR) 53,726,164.65
3.0 FIXED CAPITAL EQUIPMENT COST
Fixed capital investment (FCI) is the total capital cost of assisted process equipment. This
includes direct and indirect land-free costs. Direct costs indicate manufacturing fixed capital
investment, whereas indirect costs represent non-manufacturing fixed capital investment. The
capital required for the process equipment installed, such as piping, tools, foundations and
auxiliary facilities is known as the direct cost. An indirect cost is the cost of land and construction
overhead. The total project expenses include all indirect costs, contingency and fees, and auxiliary
facilities are the total capital investment (TCI). CGR is assumed to be the fixed capital investment
(FCI) and the working capital is 14.74% of the FCI (Lohrey, 2017).
Total Capital Investment (TCI) = Fixed Capital Cost + Working Capacity
= RM 53,726,164.65+ 0.1474 (RM 53,726,164.65)
= RM 61,645,401.32
4.0 MANUFACTURING COST
Manufacturing cost is concerned with establishing the monetary worth of inputs, also
known as the total cost of production, which aids in identifying the most efficient level of
production. For the most part, manufacturing costs are sensitive to fluctuations in production
volume. As production increases, so do the total manufacturing costs. The Total Manufacturing
Cost (COM) comprises of Direct Manufacturing Cost (DMC), Fixed Manufacturing Cost (FMC)
and also General Expenses (GE).
These are the costs that are calculated in this sub-chapter:
1. Labour Cost (COL)

2. Raw Material Cost (CRM)
3. Utilities Cost (CUT)
By calculating these costs, the DMC, FMC, and GE are able to be computed using each cost’s
respective multiplying factor.
4.1 LABOUR COST (COL)
The cost of labour includes all wages paid to employees, as well as the cost of employee
benefits and employer payroll taxes. The cost of operating labour for this plant is estimated based
on equipment as displayed in Table 4.1.
Table 4.1: Number of Required Operators
Equipment Type Quantity Operators per Operator

Equipment per Shift
Reactors 3 0.50 1.5
Vessels 4 0.00 0.0
Distillation Columns 2 0.35 0.7
Compressors 4 0.15 0.6
Pumps 6 0.00 0.0
Mixers 1 0.00 0.0
Storage Tanks 2 0.00 0.0
Heat Exchangers 8 0.1 0.8
Total 3.6
For a single operator, approximately 3.6 operators are employed for each operator required in the
plant based on an average of 49 weeks per year and 7 days of 8-hour shifts a week. The average
monthly salary for each operator is assumed to be RM1,800. Therefore, the calculation for
estimated labour cost is as follows:
Since 4.5 operators are hired for each operator needed in the plant at any time,
Operating labour = 3.6 x 4.5 = 16.2 ≈ 17 operators
RM1,800 12 months
Annual operating labour cost = 17 operators x x = 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟐𝟐𝟐𝟐𝟐𝟐
month year
4.2 RAW MATERIAL COST (CRM)
The cost of the components that go into a final manufactured product is referred to as raw
material costs. In order to avoid shortages, a manufacturer calculates the amount of direct raw
materials it will require for specific periods. An entity can eliminate needless inventory stock,
potentially minimise ordering costs, and lessen the danger of material obsolescence by closely
controlling the amount of direct raw materials acquired and consumed. Raw materials are
classified as direct expenses on an income statement because they are used directly in the
production of a product or the delivery of a service. Raw material costs are considered variable
costs because they fluctuate with production volumes. The raw materials used for the production
of methanol include empty fruit bunch and water, and the calculated costs are displayed in Table
4.2 below. The detailed calculation is attached in Appendix B.
Table 4.2: Cost of Raw Material

Raw Material Cost (RM/MT) Flowrate (kg/hr) Yearly Cost (RM/year)
Empty Fruit Bunch (EFB) 7.06 14,872.68 839,168.96
Water 1.80 2,778.84 39,975.28
Total Raw Material Cost 879,144.24
4.3 UTILITIES COST (CUT)
Utilities cost is known as the cost of using utilities such as water, electricity, waste disposal,
heating, and sewage. The expenses are incurred throughout the reporting period, calculated, and
accrued for, or payment is made. The utilities that were used in this plant include cooling water,
coolant which is ethylene glycol, and also electricity. Table 4.3 shows the calculated yearly cost
of utilities used. The detailed calculation is attached in Appendix B.
Table 4.3: Cost of Utilities
Utilities Cost Consumption Yearly Cost

(RM/year)
Cooling Water RM 3.30/m3 17,044 m3/year 56,245.2
Coolant (Ethylene Glycol) RM 4,049/MT 52.1 MT/year 210,952.9
First 200 kWh RM0.38/kWh
Electricity 508.9544 kWh 2,546.99
201 kWh onwards RM0.441/kWh
Total Utilities Cost 269,745.09
4.4 TOTAL MANUFACTURING COST (COM)
The total manufacturing cost include all costs associated with all resources used in the
process of a finished product. Calculating total manufacturing costs necessitates a thorough
examination of a company’s or a plant’s various departments in order to determine how they
contribute to the manufacturing process and the costs associated with it. Since the labour cost, raw
material cost, and utilities cost were previously calculated, the Direct Manufacturing Cost (DMC),
Fixed Manufacturing Cost (FMC), and General Expenses (GE) can be computed. Table 4.4 shows
the yearly cost of DMC, FMC, and GE based on their respective multiplying factor.
Table 4.4: Total Manufacturing Cost
Component Multiplying Factor Yearly Cost

(RM/year)
Estimated COM 0.280FCI + 2.73COL + 1.23(CUT + RM 17,458,915.98
CWT + CRM)
Direct Manufacturing Cost (DMC) CRM + CWT + CUT + 1.33COL + RM 5,868,138.17

0.069FCI + 0.03COM
Fixed Manufacturing Cost (FMC) 0.708COL + 0.168FCI RM 9,285,973.261
General Expenses (GE) 0.177COL + 0.009FCI + 0.16COM RM 3,341,956.44
Total Manufacturing Cost (COM) RM 18,496,067.87
Estimated Cost of Manufacturing (COM)
First, the manufacturing cost was estimated using the following equation:
Estimated COM = 0.280FCI + 2.73COL + 1.23(CUT + CWT + CRM)
Where: COM = Estimated Manufacturing Cost
FCI = Fixed Capital Investment or CGR (previously calculated in Equipment Cost)
COL = Labour Cost
CUT = Utilities Cost
CWT = Waste Treatment Cost
CRM = Raw Material Cost
Since this plant does not include a waste treatment plant, the waste treatment cost, CWT, is
considered RM 0.
Therefore,
Estimated COM = 0.280(RM 53,726,164.65) + 2.73(RM 367,200) + 1.23(RM 269,745.09 + RM
0 + RM 879,144.24)
= RM 17,458,915.98
Direct Manufacturing Cost (DMC)
The DMC was calculated using the below equation as follows:
DMC = CRM + CWT + CUT + 1.33COL + 0.069FCI + 0.03COM
= RM 879,144.24 + RM 0 + RM 269,745.09 + 1.33(RM 367,200) + 0.069(RM
53,726,164.65) + 0.03(RM 17,458,915.98)
= RM 5,868,138.17
Fixed Manufacturing Cost (FMC)
The FMC was calculated using the below equation as follows:
FMC = 0.708COL + 0.168FCI

= 0.708(RM 367,200) + 0.168(RM 53,726,164.65)
= RM 9,285,973.261
General Expenses (GE)
The GE was calculated using the below equation as follows:
GE = 0.177COL + 0.009FCI + 0.16COM

Where, COM = Estimated Manufacturing Cost. Therefore,
GE = 0.177(RM 367,200) + 0.009(RM 53,726,164.65) + 0.16(RM 17,458,915.98)
= RM 3,341,956.44
Total Manufacturing Cost
The Total Manufacturing Cost can be calculated using the equation below:
COM = DMC + FMC + GE

= RM 5,868,138.17 + RM 9,285,973.261 + RM 3,341,956.44
= RM 18,496,067.87
Therefore, the Total Manufacturing Cost for this plant is valued at RM 18,496,067.87.
4.5 SALES REVENUE
Revenue is the amount of money a company keeps after selling its products and paying
indirect taxes. Revenue is also the amount of money a company requires to meet its production
costs and make a profit. Profit can be distributed to the owners, or shareholders, or it can be
reinvested in the company to buy new capital assets or enhance its technology. Table 4.5 below
shows the total sales revenue for this methanol producing plant.
Table 4.5: Total Sales Revenue
Product Amount (MT/yr) Price (RM/MT) Total Revenue (RM/yr)

Methanol 20,000 2,373.30 47,466,000
Total Sales Revenue 47,466,000
5.0 CASH FLOW ANALYSIS
Cash flow analysis is an economic evaluation, which is carried out to determine whether the
process generate money and whether the process is attractive, compared with other processes. Cash
flow analysis is an effective way to track the transactions involve several investments and payment
made at different time. It provides a clear, unambiguous record of the value, type and timing of
each transaction occurring during the life of the plant. In economic analysis, the following
assumptions have been made:
• The new land purchases required are done at the start of the project. The purchase cost of
land is assumed to be RM 100 million.
• The plant lifetime has been chosen as 20 years including 2 years of start-up.
• 2 years for the time from project initiation to the start-up of the plant.
• At the end of second year, construction is finished and additional expenditure for working
capital is required to float the first few months of operation.
• The revenue for the first year after start-up is less than 50% of the subsequent year due to
teething problem in the plant.
• The income tax imposed on this project is 20% of the net profit for the first 5 years and
30% for the following years.
The manufacturing cost without depreciation (COMd) can be obtained by using:
COMd = 0.180FCI + 2.73COL+ 1.23 (CUT + CWT + CRM) (without depreciation)
= 0.180(RM 53,726,164.65) + 2.73(RM 367,200) + 1.23(RM 269,745.09 + RM 0 +
RM 879,144.24)
= RM 12,086,299.51
5.1 Cumulative Non-Discounted Cash Flow Analysis
The cumulative non-discounted cash flow for 20 years of project life is shown in Figure
5.1 and the detailed calculation are calculated in excel (Appendix C). From Figure 5.1, the non-
discounted payback period is estimated to be 9 years after commissioning of plant.
Graph of Cumulative Non-discounted Cash Flow against Years

400,000,000
300,000,000
200,000,000 Payback period =

Cumulative Cash Flow
9 years
100,000,000
(RM)
0
0 5 10 15 20 25
-100,000,000
-200,000,000
-300,000,000
Years
Figure 5.1: Cumulative non-discounted cash flow along the project life
5.2 Cumulative Discounted Cash Flow Analysis
Discounted cash flow is the cash flow analysis, which the yearly cash flow is discounted
back to time zero. This is done by multiplying each cash flow by the discount factor (P/F, i, n)
where n is the number of years after the start of the project and i is the discount rate (Turton, 2013).
The resulting discounted cumulative cash flow is then used to evaluate profitability. The
cumulative cash flow discounted (CDCF) at discount rate of 20%, 25%, 30%, 35%, 40% and 45%
are tabulated in excel (Appendix C). The CDCF are plotted in Figure 5.2 and the Net Present Value
(NPV) at different discount rate is shown in Figure 5.3. From Figure 5.3, the rate of return is
estimated at 25%.
Graph of Cumulative Discounted Cash Flow Against Years

0
0 5 10 15 20 25
Cumulative Discounted Cash Flow (RM)
-100,000,000
-200,000,000
20%
-300,000,000 25%
30%
-400,000,000 35%
40%
-500,000,000
45%
-600,000,000
-700,000,000
Years
Figure 5.2: Cumulative discounted cash flow along the project life
Graph of Net Present Value against Interest
0
20 25 30 35 40 45 50
-100,000,000
Net Present Value (RM)
-200,000,000
-300,000,000
-400,000,000
-500,000,000
-600,000,000
Interest (%)
Figure 5.3: Net present value at different discount rate
The summary of the economic analysis is listed in Table 5.1.
Table 5.1: Summary of economic analysis
Economic Parameter Value

Grass Root Cost RM 53,726,164.65
Plant Life Time 20 years
Start-up Operations 2 years
Total Capital Investment RM 61,645,401.32
Total Manufacturing Cost RM 18,496,067.87
Annual Sales Income after Taxes RM 22,534,775
Payback Period 9 years
Rate of Return 25%
The payback period, which is the time required to recover the fixed capital investment for
the project is determined to be 9 years. The discounted cash flow rate of return, which is the
interest, or discount rate for which the net present value of the project is equal to zero is estimated
to be 25%. It represents the highest after-tax interest at which the project can just break even. It
can be expected that this project will have a relatively good payback period with high rate of return
after considering approximately 2% interest rate of bank and 2% of annual inflation in the future.
6.0 FINANCIAL RATIOS
Financial ratio analysis is a quantitative analysis that used in business firm to gather valuable
insights of business profitability, solvency, efficiency, liquidity, coverage and market value. It is
invaluable to manager in order to make financial decisions for the business and to external parties,
like investors so that they may evaluate the financial health of the business. There are 6 categories
of financial ratios that normally used in business analysis (Carlson, 2020).
i. Liquidity ratio
ii. Efficiency ratio
iii. Solvency ratio
iv. Coverage ratio
v. Profitability ratio
vi. Market value ratio
In the current financial situation, operating margin ratio, gross profit margin and net profit margin
are calculated.
6.1 OPERATING MARGIN RATIO
Operating margin measure of company`s overall profitability from operations and illustrate
the company efficient in its operations and is good at turning sales onto profits. It measures how
much profit a company makes on a dollar of sales after paying for variable costs of production,
such as wages and raw materials, but before paying interest or tax (Hayes, 2021). The operating
margin ratio equation is shown as below:
Revenue − DMC
Operating Margin Ratio = × 100% = 87.64%
Revenue
6.2 GROSS PROFIT MARGIN
Gross profit margin is a metric analysts use to assess a company's financial health by
calculating the amount of money left over from product sales after subtracting the cost of goods
sold (COGS). It also expressed as a percentage of sales (Bloomenthal, 2021). The gross profit
margin equation is shown as below:
Revenue − DMC − FMC

Gross Profit Margin = × 100% = 68.07 %
Revenue
6.3 NET PROFIT MARGIN
The net profit margin illustrates how much of each dollar in revenue collected by a
company translates into profit. It measures how much net income or profit is generated as a
percentage of revenue. It is the ratio of net profits to revenues for a company or business segment
(Murphy, 2021). The net profit margin equation is shown as below:
Revenue − Net profit after tax

Net Profit Margin = × 100% = 52.50%
Revenue
6.4 RATE OF INVESTMENT (ROI)
ROI is financial metric that is widely used to measure the probability of gaining a return
from an investment. It is a ratio that compares the gain or loss from an investment relative to its
cost. It is also known as minimum acceptable rate of return (MARR). The ROI equation is shown
as below:
Net profit after tax Net profit after tax

ROI = × 100% = × 100% = 16.83%
Total investment cost TCI + COM + CGR
7.0 SUMMARY
In conclusion, grass root cost of RM53.73 million is needed for the Methanol production
plant. It is expected that there is as much as 25% of rate of return with 9 years of payback
period. The project life is assumed to be 20 years with 2 years of start-up duration with feasible
yearly revenue of RM 26.55 million.
REFERENCES
ABDULLAH, N., SULAIMAN, F., & GERHAUSER, H. (2011). Characterisation of Oil Palm
Empty Fruit Bunches for Fuel Application. Journal of Physical Science, 22(1), 1–24.
Retrieved from http://web.usm.my/jps/22-1-11/22.1.1.pdf
CORPORATE FINANCE INSTITUTE. (2019, August 22). Utilities Expense. Retrieved May 26,
2021, from Corporate Finance Institute website:
https://corporatefinanceinstitute.com/resources/knowledge/accounting/utilities-
expense/#:~:text=Utilities%20expense%20is%20the%20cost,for%2C%20or%20payment
%20is%20rendered.
COST OF LABOR DEFINITION. (2021). Retrieved May 26, 2021, from Investopedia website:
https://www.investopedia.com/terms/c/cost-of-labor.asp
MELANIE. (2020, September). The Complete Guide To Calculating Total Manufacturing Costs -
Unleashed Software. Retrieved May 26, 2021, from Unleashed Software website:
https://www.unleashedsoftware.com/blog/how-to-calculate-the-total-manufacturing-cost-
of-your-
business#:~:text=Total%20manufacturing%20cost%20is%20the,process%20and%20the%
20associated%20costs.
WHAT ARE RAW MATERIAL EXPENSES. (2021). Retrieved May 26, 2021, from BDC.ca
website: https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-
guides/glossary/raw-material-
expenses#:~:text=Raw%20material%20expenses%20refer%20to,of%20goods%20sold%2
0(COGS).&text=As%20raw%20material%20costs%20change,considered%20to%20be%2
0variable%20costs.
WHAT IS COST ANALYSIS? definition and meaning - Business Jargons. (2016, May 5).
Retrieved May 26, 2021, from Business Jargons website: https://businessjargons.com/cost-
analysis.html#:~:text=In%20other%20words%2C%20the%20cost,the%20optimum%20lev
el%20of%20production.
Dalena, F. S. (2018). Methanol Production and Applications: An Overview. Methanol,.
Heryadi, R. U. (2019). Biomass to methanol plant based on gasification of palm empty fruit
bunch. . IOP Conference Series: Earth and Environmental Science,, (p. 293).
Lu, Y. Y. (2012,40(6)). Hydrogen production by methanol decomposition using gliding arc gas
discharge. jounal fuel chemical technology, 698-706.
APPENDIX
APPENDIX A: EQUIPMENT COST CALCULATIONS
Steam Gasifier (R-101)
Based on reference (Turton et al., 2008), the cost is calculated as below:

The calculation steps for reactor’s costing were done as shown below.
Type of reactor: Jacketed Agitated
Construction material: Stainless Steel
Volume of Reactor: πr 2 h = π × 1.0232 × 6.14 = 20.1869m3
Table A.1: Equipment cost data for reactor based on year 2001 (Turton, 2009
Equipment Description 𝑲𝑲𝑲𝑲 𝑲𝑲𝑲𝑲 𝑲𝑲𝑲𝑲
Reactor (R-101) Jacketed Agitated 4.1052 0.4680 0.0005
log10 CP O = K1 + K 2 log10 (A) + K 3 [log10 (A)]2
Where A is the capacity or size parameter for the equipment (m2).

For R-101, the volume is 20.1869m3 .
log10 CP O = 4.1052 + 0.4680log10 (20.1869) + 0.0005[log10 (20.1869)]2
CP O =$52,092.19
By using equation CBM for Reactor which is,

CBM = Cp o FBM
From Figure A.7, FBM value for Jacketed Agitated reactor is 4.0
CBM = Cp o FBM = $52,092.19 × 4.0
CBM = $208,368.76
The formula below is to calculated for purchased equipment cost in year 2020. The Chemical
Engineering Plant Cost Index (CEPCI) for year 2020 is predicted to be 607. As for the CEPCI for
the base year 2001 is 394.3. By using the current exchange of $1 equivalent to RM4.14,
I2020
C2020 = C2001 � �
I2001
Where 𝐶𝐶=𝐶𝐶𝐵𝐵𝐵𝐵 and I represent cost index.
607
CBM = $208,368.76 × × RM4.14 = RM78,045.78
394.3
Therefore, cost for reactor, R-101 is 𝐑𝐑𝐑𝐑𝐑𝐑, 𝟑𝟑𝟑𝟑𝟑𝟑, 𝟗𝟗𝟗𝟗𝟗𝟗. 𝟏𝟏𝟏𝟏
Steam Methane Reformer (R-102)
Volume of Reactor: πr 2 h = π × 2.28752 × 13.7248 = 225.6203 m3

For R-102, the volume is 225.6203 m3 .
log10 CP O = 4.1052 + 0.4680log10 (225.6203) + 0.0005[log10 (225.6203)]2
CP O =$171,506.66

CBM = Cp o FBM
From Figure A.7, FBM value for Jacketed agitated reactor is 4.0
CBM = Cp o FBM = $171,506.66 × 4.0
CBM = $686,026.64
I2020
C2020 = C2001 � �
I2001
607
CBM = $686,026.64 × × RM4.14 = RM4,372,232.38
394.3
Therefore, cost for reactor, R-102 is 𝐑𝐑𝐑𝐑𝐑𝐑, 𝟑𝟑𝟑𝟑𝟑𝟑, 𝟐𝟐𝟐𝟐𝟐𝟐. 𝟑𝟑𝟑𝟑
Methanol Reactor (R-103)

Volume of Reactor: πr 2 h = π × 0.91492 × 7.3192 = 19.2469 m3

For R-103, the volume is 𝟏𝟏𝟏𝟏. 𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐 𝐦𝐦𝟑𝟑 .
log10 CP O = 4.1052 + 0.4680log10 (19.2469) ∓ 0.0005[log10 (19.2469)]2
CP O =$50,942.57
CBM = Cp o FBM
From Figure A.7, FBM value for Jacketed Agitated reactor is 4.0
CBM = Cp o FBM = $50,942.57 × 4.0
CBM = $203,770.28
I2020
C2020 = C2001 � �
I2001
607
CBM = $203,770.28 × × RM4.14 = RM1,298,682.83
394.3
Therefore, cost for reactor, R-103 is 𝐑𝐑𝐑𝐑𝐑𝐑, 𝟐𝟐𝟐𝟐𝟐𝟐, 𝟔𝟔𝟔𝟔𝟔𝟔. 𝟖𝟖𝟖𝟖
Cyclone (V-101)
The calculation steps for cyclone’s costing were done as shown below.
Volume of the cyclone: 0.1426 m3
Table A.4: Equipment cost data for cyclone based on year 2001 (Turton, 2009
Cyclone (V-101) Cyclone Scrubber 3.6298 0.4491 0.0411

For V-101, the volume is 𝟎𝟎. 𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏 𝐦𝐦𝟑𝟑 .
log10 CP O = 3.6298 − 0.4491log10 (0.1426) + 0.0411[log10 (0.1426)]2
CP O =$2,781.63
By using equation CBM for Cyclone which is,

CBM = Cp o FBM
From Figure A.7, FBM value for Cyclone scrubber is 2.86
CBM = Cp o FBM = $2,781.63 × 2.86
CBM = $7,955.46
I2020
C2020 = C2001 � �
I2001
607
CBM = $7,955.46 × × RM4.14 = RM50,702.29
394.3
Therefore, cost for cyclone, V-101 is 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟕𝟕𝟕𝟕𝟕𝟕. 𝟐𝟐𝟐𝟐
Flash Drum (V-102)

The calculation steps for vessel’s costing were done as shown below.
Type of vessel: Vertical
Construction material: Carbon Steel
Volume of the vessel: 5.362 m3
Table A.5: Equipment cost data for vessel based on year 2001 (Turton, 2009
Flash Drum (V-102) Vertical vessel 3.4974 0.4485 0.1074

For V-102, the volume is 𝟓𝟓. 𝟑𝟑𝟑𝟑𝟑𝟑 𝐦𝐦𝟑𝟑 .
log10 CP O = 3.4974 + 0.4485log10 (5.362) + 0.1074[log10 (5.362)]2
CP O =$7,613.83
By using equation CBM for vessel which is,
CBM = Cp o FBM = CP O (B1 + B2 FM FP )
Since it is using carbon steel as the material for vessel, FM= 1, FP=1, B1=2.25 and B2=1.82.
CBM = $7,613.83(2.25 + 1.82)
CBM = $30,988.29
I2020
C2020 = C2001 � �
I2001
607
CBM = $30,988.29 × × RM4.14 = RM197,496.71
394.3
Therefore, cost for flash drum, V-102 is 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟒𝟒𝟒𝟒𝟒𝟒. 𝟕𝟕𝟕𝟕
CO2 Absorption (V-103)

Absorption Column (V-103) Vertical vessel 3.4974 0.4485 0.1074

For V-103, the volume is 𝟓𝟓. 𝟒𝟒𝟒𝟒𝟒𝟒𝟒𝟒 𝐦𝐦𝟑𝟑 .
log10 CP O = 3.4974 + 0.4485log10 (5.4264) + 0.1074[log10 (5.4264)]2
CP O =$7,668.82

Then, to calculate the Pressure Factor, FP, ,

(P + 1)D
+ 0.00315
2[850 − 0.6(P + 1)]
FP,Vessel =
0.0063
Where P=1barg and D=1.7360 m,
(1 + 1)1.7360
+ 0.00315
2[850 − 0.6(1 + 1)]
FP,Vessel =
0.0063
FP,Vessel = 0.8246
Since it is using stainless steel as the material for vessel, FM= 1,B1=2.25 and B2=1.82.
From Table A.3, identification number for V-103 is 20 and FM value is 3.1 from Figure A.19.
Since it is using stainless steel as the material for vessel, B1=2.25 and B2=1.82.
CBM = CP O (B1 + B2 FM FP )
CBM = $7,668.82(2.25 + (1.82 × 3.1 × 0.8246)
CBM = $52,933.21
I2020
C2020 = C2001 � �
I2001
607
CBM = $52,933.21 × × RM4.14 = RM337,357.59
394.3
Therefore, cost for vessel, V-103 is 𝐑𝐑𝐑𝐑𝐑𝐑𝟑𝟑𝟑𝟑, 𝟑𝟑𝟑𝟑𝟑𝟑. 𝟓𝟓𝟓𝟓
Flash Drum (V-104)

Flash Drum (V-104) Vertical vessel 3.4974 0.4485 0.1074

For V-102, the volume is 𝟒𝟒. 𝟒𝟒𝟒𝟒𝟒𝟒𝟒𝟒 𝐦𝐦𝟑𝟑 .
log10 CP O = 3.4974 + 0.4485log10 (4.4544) + 0.1074[log10 (4.4544)]2
CP O =$6,816.82

Since it is using carbon steel as the material for vessel, FM= 1, FP=1, B1=2.25 and B2=1.82.
CBM = $6,816.82(2.25 + 1.82)
CBM = $27,744.46
I2020
C2020 = C2001 � �
I2001
607
CBM = $27,744.46 × × RM4.14 = RM176,822.91
394.3
Therefore, cost for flash drum, V-104 is 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟖𝟖𝟖𝟖𝟖𝟖. 𝟗𝟗𝟗𝟗
Stripper (T-101)

Type of vessel: Tray Column
Orientation: Vertical
For the Column,
Distillation Column (T-101) Vertical vessel 3.4974 0.4485 0.1074

For T-101, the volume is 𝟑𝟑𝟑𝟑. 𝟔𝟔𝟔𝟔 𝐦𝐦𝟑𝟑 .
log10 CP O = 3.4974 + 0.4485log10 (39.60) + 0.1074[log10 (39.60)]2
CP O =$30,772.75
By using equation CBM for column which is,

Since it is using carbon steel as the material for column, FM= 1, FP=1, B1=2.25 and B2=1.82.
CBM = $30,772.75(2.25 + 1.82)
CBM = $125,245.09
I2020
C2020 = C2001 � �
I2001
607
CBM = $125,245.09 × × RM4.14 = RM798,220.66
394.3
Therefore, cost for stripper, T-101 is RM798,220.66.
For the Sieve Tray,

Table A.9: Equipment cost data for sieve tray based on year 2001 (Turton, 2009
Distillation Column (T-101) Sieve Tray 2.9949 0.4465 0.3961

For T-101, the area is 𝟏𝟏𝟏𝟏. 𝟎𝟎𝟎𝟎𝟎𝟎𝟎𝟎 𝐦𝐦𝟐𝟐 .
log10 CP O = 3.4974 + 0.4485log10 (10.0323) + 0.1074[log10 (10.0323)]2
CP O =$11,329.95
By using equation CBM for sieve tray which is,

CBM = Cp o NFBM Fq
To find the quantity Fq and N is the number of trays,
log10 Fq O = 0.4771 + 0.08516log10 (N) + 0.3473[log10 (N)]2
log10 Fq O = 0.4771 + 0.08516log10 (12) + 0.3473[log10 (12)]2
F𝑞𝑞 = 0.9735
Material factor,FBM=1.0
CBM = Cp o NFBM Fq
CBM = $11,329.95 × 12 × 1.0 × 0.9735
CBM = $132,356.48
I2020
C2020 = C2001 � �
I2001
607
CBM = $132,356.48 × × RM4.14 = RM843,543.46
394.3
Therefore, cost for tray, is RM843,543.46
Total Bare Module Cost of Stripper, T-101,
Distillation column,T-102 = Cost of vessel + Cost of tray
= RM843,543.46 − RM798,220.66
= 𝐑𝐑𝐑𝐑𝐑𝐑, 𝟔𝟔𝟔𝟔𝟔𝟔, 𝟕𝟕𝟕𝟕𝟕𝟕. 𝟏𝟏𝟏𝟏
Distillation Column (T-102)

Type of vessel: Sieve Tray Column
Orientation: Vertical
Volume of the vessel: πr 2 h = π × 0.522 × 7.09 = 6.0229 m3
For the Column,
Distillation Column (T-102) Vertical vessel 3.4974 0.4485 0.1074

For T-102, the volume is 𝟔𝟔. 𝟎𝟎𝟎𝟎𝟎𝟎𝟎𝟎 𝐦𝐦𝟑𝟑 .
log10 CP O = 3.4974 + 0.4485log10 (6.0299) + 0.1074[log10 (6.0229)]2
CP O =$8,178.41
By using equation CBM for column which is,

Since it is using carbon steel as the material for column, FM= 1, FP=1, B1=2.25 and B2=1.82.
CBM = $8,178.41(2.25 + 1.82)
CBM = $33,286.13
I2020
C2020 = C2001 � �
I2001
607
CBM = $33,286.13 × × RM4.14 = RM212,141.46
394.3
Therefore, cost for distillation column, T-102 is RM212,121.46.
For the Sieve Tray,
Table A.11: Equipment cost data for sieve tray based on year 2001 (Turton, 2009
Distillation Column (T-102) Sieve Tray 2.9949 0.4465 0.3961

For T-102, the area is 𝟎𝟎. 𝟖𝟖𝟖𝟖𝟖𝟖𝟖𝟖 𝐦𝐦𝟐𝟐 .
log10 CP O = 3.4974 + 0.4485log10 (0.8495) + 0.1074[log10 (0.8495)]2
CP O =$2,925.03
By using equation CBM for sieve tray which is,

CBM = Cp o NFBM Fq
To find the quantity Fq and N is the number of trays,
log10 Fq O = 0.4771 + 0.08516log10 (N) + 0.3473[log10 (N)]2
log10 Fq O = 0.4771 + 0.08516log10 (13) + 0.3473[log10 (13)]2

F𝑞𝑞 = 1.0030
Material factor,FBM=1.0
CBM = Cp o NFBM Fq
CBM = $2,925.03 × 13 × 1.0 × 1.0030
CBM = $38,139.47
I2020
C2020 = C2001 � �
I2001
607
CBM = $38,139.47 × × RM4.14 = RM243,073.11
394.3
Therefore, cost for sieve tray, is RM243,073.11
Total Bare Module Cost of Distillation Column T-102,
Distillation column,T-102 = Cost of vessel + Cost of sieve tray
= RM212,121.46 + RM243,073.11
= 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟏𝟏𝟏𝟏𝟏𝟏. 𝟓𝟓𝟓𝟓
Compressor (C-101)
The calculation steps for compressor’s costing were done as shown below.
Type of compressor: Centrifugal
Table A.12: Equipment cost data for compressor based on year 2001 (Turton, 2009
Compressor (C-101) Centrifugal 2.2897 1.3604 -0.1027

For C-101, the fluid power is 54.5671 kW.
log10 CP O = 2.2897 + 1.3604log10 (54.5671) − 0.1027[log10 (54.5671)]2
CP O =$22,020.17
By using equation CBM for Compressor which is,

CBM = Cp o FBM
From Table 1.6, identification number for C-101 is 2 and FBM value is 5.6 from Figure A.19.
CBM = Cp o FBM = $22,020.17 × 5.6
CBM = $123,312.95
I2020
C2020 = C2001 � �
I2001
607
CBM = $123,312.95 × × RM4.14 = RM785,963.97
394.3
Therefore, cost for compressor, C-101 is 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟗𝟗𝟗𝟗𝟗𝟗. 𝟗𝟗𝟗𝟗
Expander (C-102)
Expander (C-102) Centrifugal 2.2897 1.3604 -0.1027

log10 CP O = 2.2897 + 1.3604log10 (45.6999) − 0.1027[log10 (45.6999)]2
CP O =$18,405.55

CBM = Cp o FBM
CBM = Cp o FBM = $18,405.54 × 5.6
CBM = $103,071.02
I2020
C2020 = C2001 � �
I2001
607
CBM = $103,071.02 × × RM4.14 = RM656,899.35
394.3
Therefore, cost for expander, C-102 is 𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑𝐑, 𝟖𝟖𝟖𝟖𝟖𝟖. 𝟑𝟑𝟑𝟑
Compressor (C-103)
Compressor (C-103) Centrifugal 2.2897 1.3604 -0.1027

For C-103, the fluid power is 191.9983.
log10 CP O = 2.2897 + 1.3604log10 (191.9983) − 0.1027[log10 (191.9983)]2
CP O =$72,526.67

CBM = Cp o FBM
CBM = Cp o FBM = $72,526.67 × 5.6
CBM = $406,149.35
I2020
C2020 = C2001 � �
I2001
607
CBM = $406,149.35 × × RM4.14 = RM2,588,499.10
394.3
Therefore, cost for compressor, C-103 is 𝐑𝐑𝐑𝐑𝐑𝐑, 𝟓𝟓𝟓𝟓𝟓𝟓, 𝟒𝟒𝟒𝟒𝟒𝟒. 𝟏𝟏𝟏𝟏
Expander (C-104)
Expander (C-104) Centrifugal 2.2897 1.3604 -0.1027

log10 CP O = 2.2897 + 1.3604log10 (185.9999) − 0.1027[log10 (185.9999)]2
CP O =$70,492.85

CBM = Cp o FBM
CBM = Cp o FBM = $70,492.85 × 5.6
CBM = $394,759.96
I2020
C2020 = C2001 � �
I2001
607
CBM = $394,759.96 × × RM4.14 = RM2,515,911.45
394.3
Therefore, cost for expander, C-104 is 𝐑𝐑𝐑𝐑𝐑𝐑, 𝟓𝟓𝟓𝟓𝟓𝟓, 𝟗𝟗𝟗𝟗𝟗𝟗. 𝟒𝟒𝟒𝟒
Pump (P-101 A/B)

The calculation steps for pump’s costing were done as shown below.
Type of pump: Centrifugal
Table A.16: Equipment cost data for pump based on year 2001 (Turton, 2009)
Pump (P-101 A/B) Centrifugal 3.3892 0.0536 0.1538
Where A is the capacity or size parameter for the equipment.

For P-101, the shaft power is 21.7515 kW.
log10 CP O = 3.3892 + 0.0536log10 (21.7515) + 0.1538[log10 (21.7515)]2
CP O = $5445.26
Identification number = 39 (PEE Handbook page 28)
FM = 2.2, (PEE Handbook page 26) Fp= 1, B1= 1.89, B2= 1.35 (PEE Handbook page 29)
CBM = Cp o (B1 + B2 (FM ) (FP )) = $5445.26 × (1.89 + 1.35 (2.2)(1))
CBM = $26,463.96
607.5
CBM = $26,463.96 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟏𝟏𝟏𝟏𝟏𝟏, 𝟖𝟖𝟖𝟖𝟖𝟖. 𝟖𝟖𝟖𝟖
394.3
Pump (P-102 A/B)


log10 CP O = 3.3892 + 0.0536log10 (0.0003) + 0.1538[log10 (0.0003)]2
CP O = $128,568.76
CBM = Cp o (B1 + B2 (FM ) (FP )) = $128,568.76 × (1.89 + 1.35 (2.2)(1))
CBM = $624,844.27
607.5
CBM = $624,844.27 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟑𝟑, 𝟗𝟗𝟗𝟗𝟗𝟗, 𝟓𝟓𝟓𝟓𝟓𝟓. 𝟗𝟗𝟗𝟗
394.3
Pump (P-103 A/B)


log10 CP O = 3.3892 + 0.0536log10 (0.0699) + 0.1538[log10 (0.0699)]2
CP O = $3408.97
CBM = Cp o (B1 + B2 (FM ) (FP )) = $128,568.76 × (1.89 + 1.35 (2.2)(1))
CBM = $16,567.59
607.5
CBM = $16,567.59 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟏𝟏𝟏𝟏𝟏𝟏, 𝟔𝟔𝟔𝟔𝟔𝟔. 𝟕𝟕𝟕𝟕
394.3
Pump (P-104 A/B)


log10 CP O = 3.3892 + 0.0536log10 (0.0003) + 0.1538[log10 (0.0003)]2
CP O = $128,568.76
CBM = Cp o (B1 + B2 (FM ) (FP )) = $128,568.76 × (1.89 + 1.35 (2.2)(1))
CBM = $624,844.27
607.5
CBM = $624,844.27 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟑𝟑, 𝟗𝟗𝟗𝟗𝟗𝟗, 𝟓𝟓𝟓𝟓𝟓𝟓. 𝟗𝟗𝟗𝟗
394.3
Pump (P-105 A/B)


log10 CP O = 3.3892 + 0.0536log10 (1.5872) + 0.1538[log10 (1.5872)]2
CP O = $2547.68
CBM = Cp o (B1 + B2 (FM ) (FP )) = $2547.68 × (1.89 + 1.35 (2.2)(1))
CBM = $12,381.72
607.5
CBM = $12,381.72 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟕𝟕𝟕𝟕, 𝟗𝟗𝟗𝟗𝟗𝟗. 𝟎𝟎𝟎𝟎
394.3
Pump (P-106 A/B)

log10 CP O = 3.3892 + 0.0536log10 (0.1170) + 0.1538[log10 (0.1170)]2
CP O = $2970.27
CBM = Cp o (B1 + B2 (FM ) (FP )) = $2970.27 × (1.89 + 1.35 (2.2)(1))
CBM = $14,435.51
607.5
CBM = $14,435.51 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟗𝟗𝟗𝟗, 𝟎𝟎𝟎𝟎𝟎𝟎. 𝟏𝟏𝟏𝟏
394.3
Mixer (M-101)
The calculation steps for mixer’s costing were done as shown below.
Type of mixer: Impeller
Table A.22: Equipment cost data for mixer based on year 2001 (Turton, 2009)
Mixer (M-101) Impeller 3.8511 -0.2991 -0.0003

For M-101, the power is 7.1289 kW.
log10 CP O = 3.8511 − 0.2991log10 (7.1289) − 0.0003[log10 (7.1289)]2
CP O = $3942.24
FBM = 1.38 (PEE Handbook page 34)
CBM = Cp o FBM = $3942.24 x 1.38
CBM = $5440.29
607.5
CBM = $5440.29 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟑𝟑𝟑𝟑, 𝟕𝟕𝟕𝟕𝟕𝟕. 𝟎𝟎𝟎𝟎
394.3
Tank (ST-103)
The calculation steps for tank’s costing were done as shown below.
Table A.23: Equipment cost data for tank based on year 2001 (Turton, 2009)
Tank (ST-103) Fixed roof 4.8509 -0.3973 0.1445

For ST-103, the volume is 263.06 m3
log10 CP O = 4.8509 − 0.3973log10 (263.06) + 0.1445[log10 (263.06)]2
CP O = $54,412.71
Where, from Figure A.19 (Turton et al, 2013), for stainless steel storage tank, FBM = 1
CBM = Cp o FBM =$54,412.71 x 1
CBM = $54,412.71
607.5
CBM = $54,412.71 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟑𝟑𝟑𝟑𝟑𝟑, 𝟎𝟎𝟎𝟎𝟎𝟎. 𝟓𝟓𝟓𝟓
394.3
Tank (ST-104)
The calculation steps for tank’s costing were done as shown below.
Table A.24: Equipment cost data for tank based on year 2001 (Turton, 2009)
Tank (ST-104) Fixed roof 4.8509 -0.3973 0.1445

For ST-104, the volume is 333.34 m3
log10 CP O = 4.8509 − 0.3973log10 (333.34) + 0.1445[log10 (333.34)]2
CP O = $58,653.47
Where, from Figure A.19 (Turton et al, 2008), for stainless steel storage tank, FBM = 1
CBM = Cp o FBM =$58,653.47 x 1
CBM = $58,653.47
607.5
CBM = $58,653.47 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟑𝟑𝟑𝟑𝟑𝟑, 𝟏𝟏𝟏𝟏𝟏𝟏. 𝟐𝟐𝟐𝟐
394.3
Cooler (E-101)
The calculation steps for cooler’s costing were done as shown below.
Type of cooler: Split Ring Floating Head
Table A.25: Equipment cost data for cooler based on year 2001 (Turton, 2009)
Cooler (E-101) Floating Head 4.8306 -0.8509 0.3187

For E-101, the area is 14.60 m2.
log10 CP O = 4.8306 − 0.8509log10 (14.60) + 0.3187[log10 (14.60)]2
CP O = $18,703.35
CBM = Cp o (B1 + B2 (FM ) (FP )) = $18,703.35 × (1.63 + 1.66 (2.8)(1))
CBM = $117,419.63
607.5
CBM = $117,419.63 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟕𝟕𝟕𝟕𝟕𝟕, 𝟗𝟗𝟗𝟗𝟗𝟗. 𝟑𝟑𝟑𝟑
394.3
Heater (E-102)
The calculation steps for heater’s costing were done as shown below.
Type of heater: Split Ring Floating Head
Table A.26: Equipment cost data for heater based on year 2001 (Turton, 2009)
Heater (E-102) Floating Head 4.8306 -0.8509 0.3187

log10 CP O = 4.8306 − 0.8509log10 (18.18) + 0.3187[log10 (18.18)]2
CP O = $18,384.57
CBM = Cp o (B1 + B2 (FM ) (FP )) = $18,384.57 × (1.63 + 1.66 (2.8)(1))
CBM = $115,418.33
607.5
CBM = $115,418.33 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟕𝟕𝟕𝟕𝟕𝟕, 𝟏𝟏𝟏𝟏𝟏𝟏. 𝟎𝟎𝟎𝟎
394.3
Heater (E-103)
The calculation steps for heater’s costing were done as shown below.
Type of heater: Shell & Tube
Table A.27: Equipment cost data for heater based on year 2001 (Turton, 2009)
Heater (E-103) Floating Head 4.8306 -0.8509 0.3187

log10 CP O = 4.8306 − 0.8509log10 (6.67) + 0.3187[log10 (6.67)]2
CP O = $22,172.11
CBM = Cp o (B1 + B2 (FM ) (FP )) = $22,172.11 × (1.63 + 1.66 (2.8)(1))
CBM = $139,195.82
607.5
CBM = $139,195.82 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟖𝟖𝟖𝟖𝟖𝟖, 𝟖𝟖𝟖𝟖𝟖𝟖. 𝟏𝟏𝟏𝟏
394.3
Reboiler (E-104)
The calculation steps for reboiler’s costing were done as shown below.
Type of reboiler: Shell & Tube
Table A.28: Equipment cost data for reboiler based on year 2001 (Turton, 2009)
Reboiler (E-104) Floating Head 4.8306 -0.8509 0.3187

log10 CP O = 4.8306 − 0.8509log10 (4.14) + 0.3187[log10 (4.14)]2

CP O = $26,725.15
CBM = Cp o (B1 + B2 (FM ) (FP )) = $26,725.15 × (1.63 + 1.66 (2.8)(1))
CBM = $167,780.49
607.5
CBM = $167,780.49 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟏𝟏, 𝟎𝟎𝟎𝟎𝟎𝟎, 𝟏𝟏𝟏𝟏𝟏𝟏. 𝟎𝟎𝟎𝟎
394.3
Cooler (E-105)

log10 CP O = 4.8306 − 0.8509log10 (32.12) + 0.3187[log10 (32.12)]2
CP O = $18,709.08
CBM = Cp o (B1 + B2 (FM ) (FP )) = $18,709.08 × (1.63 + 1.66 (2.8)(1))

CBM = $117,455.60
607.5
CBM = $117,455.60 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟕𝟕𝟕𝟕𝟕𝟕, 𝟏𝟏𝟏𝟏𝟏𝟏. 𝟕𝟕𝟕𝟕
394.3
Condenser (E-106)
The calculation steps for condenser’s costing were done as shown below.
Type of condenser: Kettle Reboiler
Table A.30: Equipment cost data for condenser based on year 2001 (Turton, 2009)
Condenser (E-106) Kettle Reboiler 4.4646 -0.5277 0.3955

log10 CP O = 4.4646 − 0.5277(25.99) + 0.3955[log10 (25.99)]2
CP O = $32,334.78
FM = Fp= 1, B1= 1.63, B2= 1.66 (PEE Handbook page 29)
CBM = Cp o (B1 + B2 (FM ) (FP )) = $32,334.78 × (1.63 + 1.66 (1)(1))
CBM = $106,381.43
607.5
CBM = $106,381.43 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟔𝟔𝟔𝟔𝟔𝟔, 𝟓𝟓𝟓𝟓𝟓𝟓. 𝟗𝟗𝟗𝟗
394.3
Reboiler (E-107)
The calculation steps for reboiler’s costing were done as shown below.
Type of reboiler: Shell & Tube
Table A.31: Equipment cost data for reboiler based on year 2001 (Turton, 2009)
Reboiler (E-107) Floating Head 4.8306 -0.8509 0.3187

log10 CP O = 4.8306 − 0.8509log10 (25.99) + 0.3187[log10 (25.99)]2
CP O = $18,393.98
CBM = Cp o (B1 + B2 (FM ) (FP )) = $18,393.98 × (1.63 + 1.66 (2.8)(1))
CBM = $115,477.41
607.5
CBM = $115,477.41 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟕𝟕𝟕𝟕𝟕𝟕, 𝟓𝟓𝟓𝟓𝟓𝟓. 𝟖𝟖𝟖𝟖
394.3
Cooler (E-108)

log10 CP O = 4.8306 − 0.8509log10 (46.24) + 0.3187[log10 (46.24)]2
CP O = $19,831.86
CBM = Cp o (B1 + B2 (FM ) (FP )) = $19,831.86× (1.63 + 1.66 (2.8)(1))
CBM = $124,504.42
607.5
CBM = $124,504.42 × × RM4.14 = 𝐑𝐑𝐑𝐑 𝟕𝟕𝟕𝟕𝟕𝟕, 𝟏𝟏𝟏𝟏𝟏𝟏. 𝟕𝟕𝟕𝟕
394.3
APPENDIX B: MANUFACTURING COST CALCULATIONS
Calculations for Raw Material Cost (CRM)
Table B.1: Price of Raw Material

Components RM/MT References
Empty Fruit Bunch (EFB) 7.06 (FGV Felda Global, 2017)
(Malaysia Water Industry
Water 1.80
Guide, 2017)
Since the given flowrate was in kmol/hr, the molecular weight of EFB was assumed as 564
kg/kmol (Abdullah et al., 2011).
To calculate flowrate of EFB (kg/hr):
Given flowrate of EFB = 26.37 kmol/hr
26.37 kmol 564 kg

Flowrate of EFB = x = 14,872.68 kg/hr
hr kmol
To calculate yearly cost of EFB (RM/yr):
RM 7.06 14,872.68 kg 1 MT 24 hr 333 d

Yearly cost of EFB = x x x x = RM 839,168.96/yr
MT hr 1000 kg 1 d yr
To calculate flowrate of water (kg/hr):
Given flowrate of water = 154.38 kmol/hr
To calculate yearly cost of water (RM/yr)
RM 1.80 154.38 kmol 18 kg 1 MT 24 hr 333 d

Yearly cost of EFB = x x x x x
MT hr kmol 1000 kg 1 d yr
= RM 39,975.28/yr
Calculations for Utilities Cost (CUT)
1. Cooling Water
Table B.2: Given Cooling Water Price and Consumption
Water Price (RM/m3) 3.30

Water Consumption After Integration (m3/yr) 17,044
Days of Facility Operation (days/year) 330
To calculate yearly cost of cooling water (RM/yr):
RM 3.30 17,044 𝑚𝑚3

Yearly cost of cooling water = x = RM 56,245.2/yr
𝑚𝑚3 yr
2. Coolant (Ethylene Glycol)
Table B.3: Given Coolant Price and Consumption
Water Price (RM/MT) 4,049

Ethylene Glycol Consumption (g/s) 1.8109
Days of Facility Operation (days/year) 333
To calculate yearly cost of coolant (RM/yr):
RM 4,049 1.8109 g 1 MT 1 kg 86,400 𝑠𝑠 333 d

Yearly cost of EFB = x x x 𝑥𝑥 𝑥𝑥
MT s 1000 kg 1000 g d yr
= RM 210,952.9/yr
3. Electricity
Table B.4: Given Electricity Monthly Rate
Tariff Category Current Rate

TARIFF D – LOW VOLTAGE INDUSTRIAL TARIFF
For the first 200 kWh (1-200 kWh) per month RM 0.38/kWh
For the next kWh (201 kWh onwards) per month RM 0.441/kWh
To calculate yearly cost of electricity used (RM/year):
Given equipment power consumption = 508.9544 kWh
200 kWh RM 0.38 12 months

1st 200 kWh = x x = RM 912/yr
month kWh 1 yr
(508.9544 − 200) kWh RM 0.441 12 months

201 kWh onwards = x x = RM 1,634.99/yr
month kWh 1 yr
Yearly electricity cost = 912 + 1,634.99 = RM 2,546.99/yr

APPENDIX C: CASH FLOW DIAGRAM
1. Calculation for Cumulative non-discounted cash flow in Excel

2. Calculation for Cumulative discounted cash flow at different discount rate in Excel
APPENDIX D: FINANCIAL RATIOS
1. Operating margin ratio
RM47,466,000 − RM5,868,138.17
Operating margin ratio = × 100% = 87.60 %
RM47,466,000
2. Gross profit margin
RM47,466,000 − RM5,868,138 − RM9,285,973

Gross profit margin = × 100%
RM47,466,000
= 68.07 %
3. Net profit margin
RM47,466,000 − RM22,534,775
Net profit margin = × 100% = 52.5%
RM47,466,000
4. Rate of investment (ROI)
net profit after tax

ROI = × 100%
total investment cost
Net profit after tax

= × 100%
TCI + COM + CGR
RM22,534,775
× 100% = 16.8 %
RM61,645,401.32 + RM18,496,067.87 + RM 53,726,164.65

K02 Group 2 Production of Methanol

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

K02 Group 2 Production of Methanol

Uploaded by

Copyright:

Available Formats

SEMESTER 2 SESSION 2020/2021

BKF3142 PROCESS ENGINEERING ECONOMICS

LECTURER’S NAME: DR SUMAIYA BT ZAINAL ABIDIN@ MURAD

NO. NAME ID NUMBER

1 NUR FARISAH BINTI AKMAL KA17161

2 ANIS AFIFAH BINTI AMRAN KA17060

3 NADHIRAH AQILAH BINTI AZIZUDDIN KA17129

4 SITI MAISARAH BINTI MOHAMAD KA17058

5 THANASANGARI A/P LATCHUMANAN KA19177

1.0 INTRODUCTION .................................................................................................................... 3

1.1 LITERATURE REVIEW

Figure 1: chemical structure of methanol

1.2 METHANOL APPLICATION

1.1.1 Methanol to dimethyl ether

2CH3OH → CH3OCH3 + H2O (1.1)

1. The specific equipment types

Equipment Code Cp (RM) CBM (RM)

= 1.18 (RM 31,979,859.91)

𝑪𝑪𝑪𝑪𝑪𝑪 = 𝑪𝑪𝑪𝑪𝑪𝑪 + 0.5𝑪𝑪𝑪𝑪𝑪𝑪

= 37,736,234.69 + (0.5) (31,979,859.91)

Table 2.2 shows the summary of cost.

Table 2.2: Summary of Cost

Item Cost (RM)

3.0 FIXED CAPITAL EQUIPMENT COST

These are the costs that are calculated in this sub-chapter:

1. Labour Cost (COL)

4.1 LABOUR COST (COL)

Equipment Type Quantity Operators per Operator

Operating labour = 3.6 x 4.5 = 16.2 ≈ 17 operators

Table 4.2: Cost of Raw Material

4.3 UTILITIES COST (CUT)

Utilities Cost Consumption Yearly Cost

4.4 TOTAL MANUFACTURING COST (COM)

Table 4.4: Total Manufacturing Cost

Component Multiplying Factor Yearly Cost

Direct Manufacturing Cost (DMC) CRM + CWT + CUT + 1.33COL + RM 5,868,138.17

Estimated COM = 0.280FCI + 2.73COL + 1.23(CUT + CWT + CRM)

Where: COM = Estimated Manufacturing Cost

FCI = Fixed Capital Investment or CGR (previously calculated in Equipment Cost)

COL = Labour Cost

CUT = Utilities Cost

CWT = Waste Treatment Cost

CRM = Raw Material Cost

Estimated COM = 0.280(RM 53,726,164.65) + 2.73(RM 367,200) + 1.23(RM 269,745.09 + RM

Direct Manufacturing Cost (DMC)

The DMC was calculated using the below equation as follows:

DMC = CRM + CWT + CUT + 1.33COL + 0.069FCI + 0.03COM

= RM 879,144.24 + RM 0 + RM 269,745.09 + 1.33(RM 367,200) + 0.069(RM

53,726,164.65) + 0.03(RM 17,458,915.98)

The FMC was calculated using the below equation as follows:

FMC = 0.708COL + 0.168FCI

General Expenses (GE)

The GE was calculated using the below equation as follows:

GE = 0.177COL + 0.009FCI + 0.16COM

Total Manufacturing Cost

COM = DMC + FMC + GE

Table 4.5: Total Sales Revenue

Product Amount (MT/yr) Price (RM/MT) Total Revenue (RM/yr)

The manufacturing cost without depreciation (COMd) can be obtained by using:

COMd = 0.180FCI + 2.73COL+ 1.23 (CUT + CWT + CRM) (without depreciation)

= 0.180(RM 53,726,164.65) + 2.73(RM 367,200) + 1.23(RM 269,745.09 + RM 0 +

Graph of Cumulative Non-discounted Cash Flow against Years

200,000,000 Payback period =