W2.1_Musallam Al-Awaid_Catalyst Replacement Feasibilty Study


1.Problem Definition

Nowadays, many plants are designed to run for long periods, exceeding 3 years with no turnarounds. In methanol plant, we had 1st turnaround in last April 2014, after 4 years of operation, where we replaced the methanol reactor catalyst.

Before catalyst replacement, we had considered more than a single option. The most feasible option was selected which is replacement.

2. Feasible options Identification

The feasible alternatives are:

  1. Catalyst replacement.
  2. No catalyst replacement
  3. Replacement for the more exhausted catalyst, which was the top layer of the catalyst.

3. Development of the outcome for the alternative

The plant, anyhow, would be shut-down for regular 4 years turnaround. However, catalyst would stretch the shutdown period with the high possibility to become critical path depending on the option chosen. No catalyst replacement had been excluded as the catalyst vendor confirmed that the catalyst cannot run continuously for the next four years.

The production rate was compared for the three options as following:

Production in MT/Day
Alternative No change out Top layer change Complete change
1-Apr-12 1452 1452 1452
1-Apr-14 1406 1424 1485
1-Apr-16 1344 1362 1423
1-Apr-18 1269 1287 1348
Average 1340 1358 1419
Increase in Production/Day NA as it is the benchmark 18 79

Net present value NPV [1] was used to compare the two remaining alternatives. The NPV of the complete replacement is 4 times the top layer replacement.

Payback calculations [2] indicated that investment on complete and partial change outs pay back in less than a year even at the lowest netback envisaged. However, the profitability of the plant increases by complete change out due to increased plant availability and excess revenue due to enhanced production.

4. Selection of acceptable criteria 

As in most feasibility studies [3], the alternative with higher NPV and shorter payback period is the preferred option.

5. Analysis and Comparison of the Alternative.

The comparison between the options is shown in the table below [4].

No change out option is excluded as the catalyst cannot survive for 4 years more.

Production in MT/Day
Alternative No change out Top layer change Complete change
NPV NA X 4X
Payback period NA Less than year Less than year

6. Selection of the preferred option

Complete replacement of catalyst is the preferred alternative.

7. Performance Monitoring and the Post Evaluation of Result.

The new catalyst should be utilized well in the coming 4 year to get it exhausted just in a cycle of 4 year without any design excursions.

References

  1. mathsisfun.com (14th June 2014).  “Net Present Value NPV” retrieved from http://www.mathsisfun.com/money/net-present-value.html
  2. financeformulas.net (14th June 2014). “ Payback Period” retrieved from http://www.financeformulas.net/Payback_Period.html
  3. extension.iastate.edu (14th June 2014). “What is a feasibility study” retrieved from http://www.extension.iastate.edu/agdm/wholefarm/html/c5-65.html
  4. Salalah Methanol Process Engineers (2013). “Catalyst Replacement” retrieved from Internal  Reports.
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One thought on “W2.1_Musallam Al-Awaid_Catalyst Replacement Feasibilty Study

  1. OK Musallam, you picked a really GREAT case study and I am accepting this posting but I don’t understand why you didn’t show the NPV calculations? What MARR did you use and how did you justify or rationalize the use of that value?

    What I would like to see in your W3 blog posting is how you calculated the MARR used in the NPV calculations. Use the wrong or inappropriate MARR and your decisions may very well be faulty.

    This paper explains how to calculate the MARR for Oman- http://pmworldjournal.net/article/using-analytical-hierarchy-process-determine-appropriate-minimum-attractive-rate-return-oil-gas-projects-indonesia/

    Also, there is something wrong with your citations. Those are still not totally correct and I don’t understand why? This explains what your online references SHOULD look like- https://owl.english.purdue.edu/owl/resource/560/10/

    Looking forward to a higher quality posting with your W3 blog and citations which look more like the example shown.

    BR,
    Dr. PDG, AACE Symposium, New Orleans, LA

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