Methanol Magic, LLC Methanol Plant Feasibility Study
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Type
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Thesis
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Author
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Marco
Barrera
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Author
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Adrian
Barry
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URL
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Date
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2015
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University
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University
of Texas at Austin
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Abstract
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Methanol
Magic, LLC explored the feasibility of a shale gas methanol plant – producing
Grade AA methanol – built near the Bakken shale play and drawing from four
gas wells, each with different hydrocarbon compositions. The projected life
of the plant was 10 years, lasting from January 1, 2017, with a 2-year
construction and 330 day/year operating time. The tax rate is 40% with a
MACRS depreciation of 7 years. The process – from purchasing the shale gas to
methanol production – can be separated into three units: natural gas
processing, synthesis gas (syngas), and methanol production.
Process modeling and economics analysis were done in ASPEN and Excel. In the current market climate, the proposed methanol process has 0% chance of making a profit, with a Net Present Value (NPV) of -$223 MM ± $40 MM and an Internal Rate of Return (IRR) of 15.0% ± 1.8%. There is a 90% probability of having 12.05-18.02% IRR and methanol price is the determining factor of the final NPV. To meet the Internal Rate of Return (IRR) of 25%, a break-even analysis indicated needing a methanol output increase of 29% (165,811,670 gal/yr to 213,251,194 gal/yr), a wellhead price decrease of 57% ($3.03/ 1000 SCF to $1.30/ 1000 SCF), or a methanol sale price (year 2017) increase of 25% ($1.79/gal to $2.40/gal). Process downsizing via Fixed Capital Investment (FCI) alone cannot break even at 25% IRR, even without considering the loss in methanol production. Thus, Methanol Magic, LLC recommends against the construction of the proposed methanol plant, although the economics might be sustainable with a lower IRR hurdle. |
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#
of Pages
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99
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