an evaluation of tonnage oxygen plants

8/14/2019 AN EVALUATION OF TONNAGE OXYGEN PLANTS

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- 99 -AN EVALUATION OF TONNAGE OXYGEN PLANTS

Sidney Katell and Paul WellmanBureau of Mines

U Departmen t of the Inter iorMorgantown, West Virginia

SUMMARYTonnage oxygen plants have increased in si ze and are available today in the 100- to

1,400-ton-p er-day range. The capital investment requir emen ts and estimated sellingprice a r e investigated in this study.

INTRODUCTIONInter es t in the production of synthetic liquid and gaseous fuels has intensified s that

sev era l syst ems have reach ed the point where prototype plants are being installed o r ar ebeing considered fo r instal lation . In many of these sy ste ms high-purity oxygen is a require-ment, whether it be in the direct gasification of coal, oil, o r shale, or fo r the production ofhydrogen fo r the hydrogasification o r hydrogenation of such raw m ate ri als .

DISCUSSION1A previous paper explored the subject of oxygen plant costs; however, a maj or change

ha s occu rred since then--the si ze of the oxygen plant that can be built today is much larg er.The presen t study takes into account the capital investm ent requireme nts and the productioncos ts of these la rg er units and updates the data contained in the ea rl ie r study.

The param eters of the presen t study a r e as follows:1. Location of plant: Ohio Valley.2 . Size of plant: 100 to 1,400 tons p e r day.3 Purity: 99 .5 percent.4. Pre ssu re specification: atm ospheric and 450 psig.5. Process employed: low pressure cycle.6 . Type of com presso rs: electr ic drive .7 Cost of available power: 0.00675 per kilowatt-hour.Figure 1 shows the relationship between power r equirement s and plant capacity f o r thetwo pressu res set up as a par am eter . Since the production pro ces s is the same, the dif-

feren ce in the two curves is the power required to com press the oxygen to 450 psig dischargepressure.

Figure 2 presen ts the capital investment re quirem ents for the plants ranging in si zefrom 100 to 1,400 tons pe r day.1 Katell, Sidney, and John H Faber . Cost of Tonnage-Oxygen. BuMines Inf. Circ. 7939,

1960, 6 pp.


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Table 1 presents the method used in determ ining the cost of operation on an annualbasis fo r a 500-ton-per-day plant with the oxygen produced a t a discharge pressure of450 psig . The calculation is typical of the se veral made to establish the curves shown infigure 3 A s noted direct labqr costs ar e assumed at $4 pe r hour, annual onstrea m timeas 350 days per year , and depreciation at 15 years on a straight-line basis

Using the discounted cash flow ra te of re tu rn of 12 percent as a criterion for returnon investment, the typical calplation is shown ip table 2 and the values obtained areplotted in figure 4


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TABLE 1

Oxygen Plant500 Tons Per Day. Oxygen Compressed t o 450 PSIG

Operating Cost

Annual cost,do l la r sDirect costs:Power.. .....8,670 kwhrlhr x 8,400 h r /y r x 0.00675/kwhrCooling water....135 M gal/hr x 8,400 hr/yr x

0.020/M gal... .......................Dir ect labor : 60 hr/day a t 4 per hour.................Supervision 15 percent................................Pl an t maintenance 2 percent of investment.............Operating sup pli es 20 perc ent of pl an t maintenance....

Tot a l d i r e c t cost.............................

Pa yr ol l overhead 25 perc ent of payroll........ ........Indirect costs:40 percent of la bo r, maintenance, and sup pli es..........Fixed costs:Taxes and ins ura nc e 2 pe rce nt of investment...........Depreci ation 6.66 percent of investment...............

Total annual operating cost...................

Annual production = 500 x 350 = 175,000 tons

491,60022, 0087, 0013,10088,00038, 0017,600

758,800

82,500

88,000293,3001,222,600

Cost, dol lar s per ton of oxygen = 1,222,600 f 175,000 = 6.99


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TABLE 2

Oxygen PlantOxygen Compressed t o 450 PSIG500 Tons Per Day

Fi n an c ia l Ana lysis , DCF a t 12 Percent

Discounted cash f low, n = 15 y e a rs ( l i f e o f p l a n t )i = 1 2 p e r c e n t p e r y e a r

1 + i> 1( 1 + i)R

P / R = 4.4733510.656826 = 6.81086R = 4,400,000/6.81086 = 646,000

N e t p r o f i t = R - Deprec i a t i on = 352,700With Federal Income Tax 50 p e r c e n t ,Gross p r o f i t = x 352,700 = 705,400Sales 5 G r o s s p r o f i t - o p e r a t i ng c o s t = 1,928,000S e l l i n g p r i c e , d o l l a r s p e r t o n oxygen = 1,928,0001175,000 = 11.02C a p i t a l i n v es t m e nt = P = 4,400,000S a l e s 175,000 tpy x 11.02 p e r t o nO p e r a t i n g c o s t

Federal Income Tax a t 50 p e r c e n tGross p r o f i tNet p r o f i t

Cash flow:D e p r e c i a t i o nNet p r o f i tT o t a l p o s i t i v e c as h flow = R =

1,92 001,222,600705,4OO352,700352,700

293,300352,700646,000


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1 1 1 1 1 1 lA-Discharge pressure 0.5 Io 5 pslg camorerredEDis c h a rg e pressure- 0.5 Io 5 psig - 99.5 0 28oo - Io 450 ping 99.5 02

>. -6

c . ,: . .. - ' .y:3w1_ 5 2 -z -~. . , .

. ,I I I I I I I

400 8 I 2

FIGURE 2 - Oxygen Plant. Capital Investment vs.Daily Production.


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4a

2- & Low p res s u re - 0 5 t o 5 ps i g d i s c ha rge c ompres s ed- 6 - L o w p r e s s u r e 0 5 t o p s ig d i s c h a r g e 99 5 2

-- t 450 PSlg 99 5% 2 -I I I I I I I I I I I I I

-

A I I I I I I I I l l --&Low pressure 0 5 t o 5 0118 d ischarge. comp ressed& L o w p r e s s u r e - 0 5 to 5 PSI^ d i sch a rg e - 99 5 02t o 450 ps lg - 99 5 2 -----

------

a --

-6 1 1 1 1 1 1 1 1 1 1 1 1 l

-0 200 400 600 800 1 000 1.200 1.400

FIGURE 4 - Oxygen Plant. Selling Price v sDaily Production.

an evaluation of tonnage oxygen plants

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