Document jy027ZmRBLr8J8KavYD3mwwvR

Interoffice Communication to R. d. Gamblin From D. C. Skokna Date May 2, 1974 subject Economics Of VCM Emission Control Alternatives Future pollution control and health standards may require the plant to incinerate all plant vents. This possibility has been enhanced by the onset of the VCM health problem. The present plant hydrocarbon compliance plan calls for installation of separate vent recovery units at the dock and rail car areas. These vent recovery units would not be necessary if an incinerator were installed assuming incinerator installation occurred prior to June 1, 1975 or a temporary variance was obtained on hydrocarbon emissions. A significant quantity of VCM is vented during the rail car and ship loading. This quantity is estimated at 2.2 MM lbs./yr. of VCM. The recovery of a portion of this VCM may represent a viable economic project even if in cineration is a necessity. The economic benefits of the various combinations of vent recovery systems have been calculated assuming incineration is necessary. The six specific cases are: Case I - No dock recovery system. No rail car recovery system. The dock vent is transferred to the plant via a 4-inch pipeline and both vents are subsequently incinerated. This is used as the base case for comparisons. Case II - A new compressor and air coolers are installed at the dock for partial recovery. This represents a partial dock recovery system. No rail car recovery system. The dock vent is returned to the plant through a 3-inch pipeline. Case III - The full dock vent recovery system is installed. No rail car system is installed. The dock vent returned to the plant with a 2-inch pipe!ine. Case IV - The rail car vent recovery system is installed. The dock vent is returned to the plant from the existing dock recovery unit through a 6-inch pipeline. Case V - The rail car vent recovery system is installed. The dock vent is returned to the plant via a 6-inch pipeline into our spheres. The spheres are depressured through the rail car vent recovery unit to recover VCM. VVC 000010403 R. D. Gamblin Page 2 May 2, 1974 Case VI - Both the dock recovery system and the rail car recovery system are installed. The dock vent is returned to the plant in a 2-inch pipeline. The economics for the five alternative cases (Case II to Case VI) were compared to the base case (Case I). The required capital for the recovery units and pipelines were determined. An incremental incinerator cost was also determined as the specific case required. These investment requirements are tabulated on Table I. The DCF return was then calculated on the incremental investment be tween each alternate and the base case. The best alternate is Case V (installation of rail car system and piping of dock vent into the spheres). This case has a 68.9% DCF on an incremental investment of $264,000. The required investments and calculated returns are tabulated on Table II. Table III lists the calculated revenues and expenses for each case. Case V is clearly the best alternative. However, certain operating and sequencing problems exist in Case V which will limit VCM storage and trans ferring flexibility. A separate letter describing these problems and pro posing solutions to minimize the difficulties will be issued shortly. An incineration system cannot be designed and installed in time to meet the compliance plan deadline of June 1, 1975. As a result, the installation of the dock and rail car vent recovery units may be required. In addition, the incinerator unit may be required by future OSHA regulations. These re quirements would result in a cost to the company of $650,000 compared to the best alternative case of Case V. The $650,000 cost is based on present value calculations using a 10% time value for capital. The cash flows and present values for all cases are shown in Table IV. The installation of an incinerator may not be required. If this situation occurs it is still desirable to transfer the dock vent to the plant into the vinyl storage spheres and then depressure through the new rail car vent re covery system. This method of dealing with the dock vent will, with proper operating controls, comply with the ambient air standards. A preliminary estimate of $260,000 for the pipeline compares to an estimated $750`,000 for the dock recovery unit (see Table I). The investment for the pipeline is still attractive (20% DCF) up to a capital requirement of $550,000 (compared to the estimated $260,000 investment). In addition, this system offers the intangible advantages or removing the VCM vent from the dock area and removing the operation of the rather complex equipment from the dock operators. / fi fi D. C. Skokna is Enc CC + enc: RHG-GGO-JCL-DEM-JSR-PLF-CEG-JRH Reviewed: Approved: yL~ VVC 000010404 TABLE I Capital Estimates 1) Tank car vent recovery unit Investment = $280,000 (by LNW) 2) Dock recovery compressor and air cooler (Case II) Major Equipment Costs: 1) Compressor 2) Air Coolers 3) Separator Drums Sub Total $ 137,000 50,000 9,200 $ 196,200 Field Materials Field Labor Freight, Taxes, etc. Indirect Costs Site Preparation Allowance Piping Allowance Instrumentation Allowance Contingency - Total 83,900 82,400 11,900 62,300 10,000 25,000 15,000 i 290,500 ' 103,300 .590,000 3) Complete dock recovery unit Major Equipment Costs: 15-Ton Refrigeration Unit Heat Exchangers Separator Drums Sub Total Field Materials Field Labor Freight, Taxes, etc. Indirect Costs Site Preparation Allowance Piping Allowance Instrumentation Allowance Contingency Capital from Case II Total $ 25,000 30.000 4,600 $ 59,600 18,200 17,200 3,000 13.000 5.000 7.000 5.000 $ 68,400 32.000 % 160,oO(J 590,000 $ 750,000 vVC 000010405 Pipeline Capital Basis: $350,000 for the 8" ethylene transfer line from the ethylene terminal. The capital was estimated using a direct ratio of line size. Case # Line Size Capital 1 4" $ 175,000 2 3" 131.000 3 2 88,000 4 4" 175.000 5 6" 263.000 6 2" 88,000 Incremental Incinerator Investment Basis: $1,653,000 for the MCI purification section of the incinerator project. This base case burns 6,025 lbs./hr. of (Cl). Capital was scaled up by ratioing the additional (Cl) load from the dock or tank car vent to the 0.6 power (6,025 + X)0.6 l.e. Investment = 6,025 x 1,653,000 where X is the additional (Cl) load. The larger of the dock or tank car load was used to calculate the incremental investment. The load was taken at one-third the maximum instantaneous rate, because the HC1 purification section has surge capacity. Case Additional Cl Load Incremental Capital For Incinerator 1 663 #/hr. $ 107,000 2 314 #/hr. 50,000 3 314 #/hr. 50,000 4 663 #/hr. 107,000 5 19 #/hr. 3,000 6 19 #/hr. 3,000 VVC 000010406 vvc 000010407 TABLE II SUMMARY OF VCM EMISSION CONTROL ALTERNATE ECONOMICS Case Dock I0 II 590,000 III 750,000 IV 0 V0 VI 750,000 Investment Rail Car Pipeline Incinerator Total Investment 0 0 0 280,000 280,000 280,000 175,000 131 ,000 88,000 175,000 263,000 88,000 107,000 50,000 50,000 107,000 3,000 3,000 282,000 771 ,000 888,000 562,000 546,000 1,121,000 Incremental Investment 0 489,000 606,000 280,000 264,000 839,000 Incremental Return DCF Return 0.0% 15.1% 14.3% 0 68.9% 8.9% TABLE III Revenues Basis: a) N2 purged ship loadings of 300 MM pounds per year. b) H9 purged tank car loadings of 28 MM pounds per year. c) VCM value = 10 */lb. d) HC1 value = $50/ton In each case there are incremental HC1 recovery credits. The amount used in the evaluation was the difference between the subject case and the base case. Costs Basis: a) Maintenance = 6% of investment for recovery systems. b) Taxes and Insurance = 1.25% of investment for recovery systems. c) Depreciation per the Investment Appraisal Manual. d) Incinerator operating expenses at 1.4 <t/lb. of HC1. In each case the difference between the incinerator operating expenses of the base case and subject case was used. VVC 000010408 Case 1 2 3 4 5 6 VCM Credit 0# 1 ,561 ,000# 1 ,881 ,000# 292,000# 2,139,00 0# 2,173,000# REVENUES HC1 Credit $o ( 23,000) ( 27,000) ( 4,000) ( 31 ,000) ( 31 ,600) Operating Cost Credit $0 12,000 15,000 2,000 16,500 16,800 Total $0 145,100 176,100 27,200 199,400 202,500 Case 1 2 3 4 5 6 Maintenance $ 35,400 45,000 16,800 16,800 61 ,800 COSTS T&I $ 7,400 9,400 3,500 3,500 12,900 Depreciation $ 48,300 61 ,400 22,900 22,900 84,300 Total $ 91 ,100 115,800 43,200 43,200 159,000 VVC 000010409 orn+> or>> fD fCDO ID <+ co <OD. 3 ncu CO o 3QaJ CO CO CO c3+" a) 3 n -f3Ds fD a> 3 < foDn c+ 3 fD 3 - cr fD S fD fD 3 pt3* fD CO c cr C_i. fD O pt- O O) co fD CD 3 CL cn cn -P Co ho oCD (CD/l 05 W ro cri (=> u> cn CD o Co co -P o ouo o o --' 45 --' O CO **0 o o s*j co --co -e o -- <3 PROJECT CASH FLOWS AND PRESENT VALUES IN $M -- -p. -- o co -o o o -"J co co ^ o r\5 --I 4= -- o CO O O "J co --1 CO -P O --* O CO --M' O-P O--1MOOCO --* CO -P O --1 O -e -J-P-*OCO -*J O O --J co --1 co -p o --1 o cn --si*O-P*O--N* OCOCO --* co -p o --1 o cn --< JP --i O CO -o o o co --1 co -p. 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