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Revision No.: 0 Date: 7 June 2018

UEMK4324 Process and Plant Design I

Production of Toluene

Assignment 2: Feasibility Study on Process Plant Group No: 16 Name

Student ID

Chang Kai Yan

1403527

Chin Wei Cheng

1402045

Oh Keat Hou

1405216

Tiang Hock Yu

1505212

Wong King Xuan

1402696

2.1.1: Background of the process design

Figure 2.1.1: Chemical structure of toluene

Figure 2.1.2: Sample of toluene Toluene (C7H8 or C6H5CH3) is an aromatic hydrocarbon that commonly used in industry. Toluene is also known as methylbenzene, toluol, and phenyl methane (as Depositor-Supplied Synonyms). Due to having similar physical properties and production method, toluene will often be mentioned in form of BTX (benzene, toluene, and xylene) which all of three belong to aromatic compounds. It is an aromatic hydrocarbon that exists as a colorless and water-insoluble liquid with pungent and benzene-like odor under atmospheric condition. It is also having a density of 867

at 25 ºC,

which is lower than water. Toluene is considered a highly flammable and toxic chemicals (Pubchem.ncbi.nlm.nih.gov, 2018).

It was first discovered by a polish chemist named Filip Walter in 1837 through the distillation of pine oil. It also found that a native plant from Colombia named Myroxylon balsamum also contain the toluene naturally that can be used after extracting out from the plant. For the modern production of the toluene, it mostly can be obtained from production of the gasoline by catalytic reformer as a byproduct. Ever since the toluene has become an indispensable chemical compound used in industry (Clegg, 2015). 2.1.1.1 Application The application of toluene mainly related to industrial uses, for instance, it can act as the raw material for benzene, a precursor for some chemical compound, solvent, fuel, and niche application. The applications of toluene are as the following. Producing benzene Toluene can be converted to benzene through hydrodealkylation process. In this process, toluene is reacting hydrogen gas in the presence of the combination of platinum, chromium, or molybdenum oxide catalyst at 500 °C to 600 °C and 30 to 40 atm. The chemical formula for this process is as follows.

𝐶 𝐻 𝐶𝐻 + 𝐻 → 𝐶 𝐻 + 𝐶𝐻 (Toluene) (hydrogen) (benzene) (methane) The process also normally have a high yield rate of 95%. This process is generally popular for producing benzene because of the large availability and low price of the toluene on the market. A precursor to other chemicals Toluene also serves as an important precursor to other chemicals such as Polyurethane foam Trinitrotoluene (TNT) and synthetic drug. Common industrial solvent Toluene cannot dissolve in water but it has the ability to dissolve a lot of organic compounds. These unique properties combine its accessibility and pricing make it as a perfect solvent for a lot of application for instance paints, printing ink, paint thinner, glues, rubber, lacquers, chemical reactant, disinfectant, and so on

Fuel Toluene is still fundamentally a hydrocarbon, it can be oxidized through complete combustion to produce energy (heat), carbon dioxide and water. Toluene shares a lot similarity with gasoline which makes it an alternative fuel source for the vehicles. In fact, toluene has higher octane rating and denser than gasoline which can yield more energy per volume. However, the engine of vehicles will experience a difficulty to start the engine when toluene or high concentration of the toluene is using as main fuel. So, the gasoline will be mixed with around 30 percent of toluene in order to raise the octane rating and have better driving experience. (noted: the formula one race cars using a high concentration of toluene like more than 80 percent of toluene in their engine)

2.1.1.2 Process technologies Production of the toluene is mostly relied on the fossil fuel for the feedstock, alternatives to production of toluene, like chemical processing of certain tropical plants such as Myroxylon balsamum are insignificant in quantity if compared with the production of toluene by petrochemical process. The catalytic reforming of the naphtha that produces BTX aromatics (benzene, toluene, xylene) is inarguably the most popular method in the industry to produce toluene. The naphtha is a petroleum product during the fractional distillation. The boiling point of the naphtha is around 30 to 200°C Steam cracking of the naphtha and coal carbonization making out the rest of the market share. Recently, the collaboration of two petroleum companies, BP and UOP of Canada have been able to produce toluene with a brilliant process named Cyclar which converting the propane and butane in the liquefied petroleum gas to toluene, though only one commercial chemical plant that using this process in Saudi Arabia.

2.1.1.2.1

Coal carbonization/pyrolysis

Pyrolysis of coal is often used to yield coke or black carbon which is important for the steel industry (Austin, 1984). Coal itself contains a lot of the volatile chemical such as tar, ammonia, benzoyl. Whereby the benzoyl can be further distilled to produce aromatics. Carbonization or pyrolysis is required to release the volatile compound from the fossil rock. The carbonization or pyrolysis is a process in which the compound is being oxidized or combust in limited or no oxygen environment. The carbonization of coal is operating at the temperature around 950-1000°C and last for 16-17 hours. In this condition, the volatile compound in the coal will distill out and become the pyro gas that will be collected for recovery of the volatile compounds (Cypres,1987).

Figure 2.1.3: A schematic diagram of a typical coal pyrolysis plant

2.1.1.2.2

Steam cracking of naphtha

The steam cracking method uses heavy naphtha that has boiling point around 90 to 200°C as the feedstock. The process composed of two section or sub-reaction which are pyrolysis and primary fractionation. The process begins with the heavy naphtha feed into the pyrolysis furnace where the furnace itself is preheated by heat exchangers to 650°C. The superheated steam will be introduced to vaporize the naphtha. Pyrolysis will happen after the temperature of the furnace reaching 900 to 1000°C. The naphtha will be break into small molecules by the free radical and producing light olefin gas. After that, the gas mixture will be rapidly cooled down to 300°C to avoid the degradation by other reactions. In the primary fractionation, the hot gas mixture will be further cooling down to allow the gas to condense. The condensate that contains the BTX can be sent for further distillation to extract out from the toluene. (Ren, Patel and Blok, 2006)

Figure 2.1.4: A schematic diagram for a typical steam cracking plant where pyrolysis gasoline is separated at the end of the process.

2.1.1.2.3

Catalytic reforming

This process is also known as the dehydrogenation of the naphtha due to the release of the hydrogen gas from the naphtha bonding during the process. It is usually employed to produce gasoline of higher octane numbers because aromatics will increase the gasoline’s octane number (Rahimpour, Jafari and Iranshahi, 2013). The process begins by feeding naphtha into an adiabatic reactor with the combination of platinum, rhenium, and alumina. Heating is required as the process is endothermic. The source of the heating is normally come from the other exothermic reactions that are ongoing during the production, thus reducing the energy cost. After some time of heating, the naphtha will be converted into aromatics and hydrogen gas. The products from the reactor will be fed into the separator and undergo solvent extraction (Parkash, 2010). The product from the lower tray of the separator is reformate which is the desirable products that contain BTX, while the off gases which leave from the top part of the separator. The BTX will proceed to further distillation to extract the toluene from the aromatics.

Figure 2.1.5: Schematic diagram of a conventional naphtha reforming process. (Meidanshahi et al., 2011)

2.1.1.2.4

Cyclar Process

In this process, the liquefied petroleum gases will be converted to the aromatics compounds. The technical chemical route for this process is better known as dehydrocyclodimerization which is the term that represents the mechanism that comprises dehydrogenation, oligomerization, and cyclization in the process. This method is very attractive to the industry because it uses the low value LPG and converts them into aromatics and hydrogen without any subsequent purification process (Gianetto et al., 2006). The process is said to be best to carry out at 425°C. This process can be separated into three main parts: reaction, regenerations, and product recovery sections. The overall process is shown as below:

Figure 2.1.6: Overall process flow diagram of Cyclar Process

The reactor is designed for the continuous production of aromatics and hydrogen with the continuous regeneration of catalyst. This is done by carrying out the reaction in a few adiabatic stacked reactors. The function of these stacked reactors is to facilitate the circulation of catalyst

for its regeneration. The catalyst first flowing in the reactor due to the gravity pulls into the next reactor. The catalyst is then move from the last reactor into the regeneration section by lift gas. The catalyst is then flowing in the regeneration section by gravity and finally circulates back to the first reactor by lift gas. For the feed section, it consists of LPG and part of unconverted reactants circulated back from the process. The effluents are compressed and separated in the product recovery section.

2.1.2 Reaction Pathways 1. Coal carbonization/pyrolysis Pyrolysis is thermal decomposition of a substance in an oxygen free environment. During pyrolysis, a gaseous stream, often denoted as pyrolysis gasoline or Py-Gas, is collected and used as a source of fuel as it is rich in hydrocarbons. BTX is often found in Py-Gas and are often extracted for sale. A modification of the process, known as hydropyrolysis, uses hydrogen to create an oxygen free environment and gives a better yield for BTX aromatics [2]. Some researchers recommend passing the Py-Gas through a catalyst to obtain more BTX aromatics [3]. Coal pyrolysis is a very complex reaction in terms of its reaction mechanism and kinetics [2-5]. An exact reaction pathway is hard to formulate. An over simplification of the reaction pathway can be constructed in terms of mass balance based on Figure 2.1.6 so that we can get an idea on how much we could potentially profit from this process:

Coal  0.6963C(s) + 0.1792 Coke Oven Gas + 0.0277 Tar + 0.098 BTX + 0.005 S(s)

As discussed earlier, the amount of toluene obtained from this process is too small for this process to be considered for producing toluene. Therefore, gross profit from just BTX in general would be close to 0.

Table 2.2.1: Typical products of a coal pyrolysis plant (Razzaq, Li and Zhang, 2013) Energy input (42.7 GJ/t coke)

Percentage (%)

Coal

91.44 %

Electric power

0.37 %

Fuel gas (firing gas)

7.61 %

Steam

0.58 %

Energy output (42.7 GJ/t coke)

Percentage (%)

Coke

69.63 %

COG

17.92 %

Tar

2.77 %

BTX

0.98 %

Sulfur

0.05 %

Energy loss

8.65 %

Table 2.2.2: A summary of important process parameters [1, 4] Temperature(℃) Pressure(atm) Catalyst Feedstock

900 1 to 50 No Coal

Yield (wt% of total products)

0.98% of BTX

Gross profit based on toluene

0

Table 2.2.3: Advantages and disadvantages of coal pyrolysis pathway Advantages

Disadvantages

Produces other valuable products such as Toluene is not the major product coke and lighter hydrocarbons. Relatively simple process

Hard to control selectivity for toluene Difficult to achieve oxygen free environment for pyrolysis process. High temperature needed

Table 2.2.4: Gross profit calculation (Coal carbonisation) Reaction: Number of Mole (Kg-mole) Molecular weight Mass (Kg) Mass required to produce 1 kg of toluene (Kg/Kg C6H5CH3) Price ($/Kg)

Coal

Coke

Coke oven gas

Tar

C6H6

C6H5CH3

C8H10

S

1

0.6963

0.1792

0.0277

0.033

0.033

0.033

0.005

520

-

-

-

78

92

106

-

520 156

-

-

-

2.574 0.8

3.036 1

3.498 1.2

-

0.115

-

-

-

0.95

0.9

0.95

-

The coke, coke oven gas and tar would not sell as product as as the calculation is to determine the economic feasibility of aromatics production especially toluene ,the other can be ignore in this calculation. The sulfur would become sulfate in the process, so it does not include in the calculation.

Gross profit = (0.90 x 1) + (1.2 x 0.95) + (0.8 x 0.95) - (156 x 0.115) + (7.0 x 0.28) - (20.7 x 0.75) = - 15.14USD/kg

2. Steam cracking of naphtha Naphtha is mixed with steam and thermally decomposed or cracked at 850℃. It is a type of pyrolysis process where water is used to create the oxygen free environment. The major product of this process is ethylene and propylene. For an increased aromatics yield, heavy naphtha instead of light naphtha should be used as the feedstock. Again, similar to coal pyrolysis, BTX is present in Py-Gas which is produced from the process. This stream is often sent to be hydrogenated and the aromatics are then extracted. The stream can also be catalytically reformed using a catalyst to increase the aromatics yield. Kinetics of steam cracking is studied by numerous researchers [6-8]. It is a very complex system of reactions with a plethora of reactions taking place simultaneously. An abstract from Wang et al’s work is given below to show the sheer complexity of the reaction.

Table 2.2.5: Reactions involved in steam cracking. (Wang et al, 2010) No.

Reaction equation

1

𝑁𝑎𝑝ℎ𝑡ℎ𝑎 → 0.216 𝐻 + 0.476 𝐶𝐻 + 1.631 𝐶 𝐻 + 0.221 𝐶 𝐻 + 0.665 𝐶 𝐻 + 0.168 𝐶 𝐻 + 0.005 𝑡 − 𝐶 𝐻 + 0.002 𝐶 𝐻

𝐸 (

𝑘𝐽 ) 𝑚𝑜𝑙

𝐴(𝑠

)

+

0.280 𝐶 𝐻 + 0.072𝐶 𝐻 + 0.003 𝐶 𝑠

2

𝐶 𝐻 →𝐶 𝐻 +𝐻

247.26

3.557 x 1012

3

𝐶 𝐻 +𝐻 → 𝐶 𝐻

238.30

(1.087 𝑥 10 )

4

𝐶 𝐻 → 𝐶 𝐻 + 𝐶𝐻

261.86

9.854 x 1013

5

𝐶 𝐻 + 𝐶𝐻 → 𝐶 𝐻

137.75

(1.802 𝑥 10 )

6

𝐶 𝐻 +𝐶 𝐻 → 𝐶 𝐻

193.20

(2.700 𝑥 10 )

7

2𝐶 𝐻 → 𝐶 𝐻 + 𝐶𝐻

268.94

(2.032 𝑥 10 )

8

𝐶 𝐻 + 𝐶 𝐻 → 𝐶 𝐻 + 𝐶𝐻

262.81

(9.773 𝑥 10 )

9

𝐶 𝐻 → 𝐶 𝐻 + 𝐶𝐻

214.99

3.394 x 1013

10

𝐶 𝐻 +𝐻 → 𝐶 𝐻

153.18

(1.881 𝑥 10 )

11

𝐶 𝐻 → 𝐶 𝐻 + 𝐶𝐻

221.51

4.979 x 1011

a

12

𝐶 𝐻 +𝐶 𝐻 → 𝐶 𝐻 +𝐶 𝐻

242.40

(1.649 𝑥 10 )

13

2𝐶 𝐻 → 3𝐶 𝐻

269.55

(2.912 𝑥 10 )

14

𝐶 𝐻 →𝐶 𝐻 +𝐻

209.55

6.419 x 109

15

𝐶 𝐻 +𝐻 → 𝐶 𝐻

287.78

(2.090 𝑥 10 )

16

𝐶 𝐻 →𝐶 𝐻 +𝐻

204.29

2.359 x 109

17

𝐶 𝐻 +𝐻 → 𝐶 𝐻

257.51

(1.822 𝑥 10 )

18

2𝐶 𝐻 → 0.105𝐶 𝐻 + 0.487𝐶

235.18

(5.372 𝑥 10 )

19

𝐶 𝐻 + 𝐶 𝐻 → 1 − 𝐶 𝐻 + 𝐶𝐻

246.42

(1.767 𝑥 10 )

20

𝑛 𝐶𝐻

→ 𝐶 𝐻 + 𝐶𝐻

238.70

2.518 𝑥 10

21

𝑛 𝐶𝐻

→ 2𝐶 𝐻 + 𝐻

291.02

6.698 𝑥 10

22

𝑛 𝐶𝐻

→𝐶 𝐻 +𝐶 𝐻

251.82

2.604 𝑥 10

23

𝑛 𝐶𝐻

→1 𝐶 𝐻 +𝐻

280.36

5.814 𝑥 10

24

1 𝐶 𝐻 +𝐻 → 𝑛−𝐶 𝐻

154.71

(2.694 𝑥 10 )

25

1 𝐶 𝐻 →2−𝐶 𝐻

69.47

5.149 𝑥 10

26

2 𝐶 𝐻 →1 𝐶 𝐻

72.21

1.727 𝑥 10

27

𝑡 𝐶𝐻

213.22

2.927 𝑥 10

28

𝑡 𝐶 𝐻 +𝐻 →𝑡 𝐶 𝐻

230.08

(4.663 𝑥 10 )

29

𝐶 𝐻 + 𝐻 → 𝐶 𝐻 + 𝐶𝐻

211.57

(2.249 𝑥 10 )

30

𝑡 𝐶𝐻

→ 𝐶 𝐻 + 𝐶𝐻

229.70

5.118 𝑥 10

31

𝑡 𝐶 𝐻 → 0.105𝐶 𝐻 + 0.466𝐶

215.28

1.752 𝑥 10

32

1 𝐶 𝐻 →𝐶 𝐻 +𝐻

209.36

9.046𝑥 10

33

𝐶 𝐻 +𝐻 → 1 𝐶 𝐻

113.73

(1.425 𝑥 10 )

34

𝐶 𝐻 + 𝐶 𝐻 → 𝐵 + 2𝐻

144.29

(6.804 𝑥 10 )

35

𝐶 𝐻 + 𝐶 𝐻 → 𝑇 + 2𝐻

144.32

(9.722 𝑥 10 )

36

𝐶 𝐻 + 1 𝐶 𝐻 → 𝐸𝐵 + 𝐻

243.84

(4.286𝑥 10 )

37

𝐶 𝐻 + 𝐶 𝐻 → 𝑆𝑇 + 2𝐻

125.09

(2.177 𝑥 10 )

38

𝐶 𝐻 + 2 𝐶 𝐻 → 𝑋 + 2𝐻

114.67

(1.858 𝑥 10 )

+ 2.009𝐶𝐻

→1 𝐶 𝐻 +𝐻

The stoichiometric coefficient for Nap-1: the stoichiometric coefficient for Nap-2 are 0.318, 0.643, 1.900,

0.179, 0.721, 0.139, 0.005, 0.004, 0.314, 0.102 and 0.052 respectively. b

Units:

: B: benzene, T: toluene, EB: ethylbenzene, ST: styrene, X: xylene

By referring to the Table 2.2.4, we formulate an over simplified reaction equation as below by listing out the major product of the pyrolysis of gasoline:

Naphtha  Ethylene + Propylene+ other hydrocarbons + Hydrogen + Aromatics Components composition

Primary gasoline (naphtha)

Mass

Butadiene (50k tons/year)

Ethylene (500k tons/year)

34.0 %

Propylene (209k tons/year)

14.2 %

Methane + 𝐻 (240k tons/year)

16.3 %

C4 (138k tons/year)

9.4 %

Gas oil (56k tons/year)

3.8 %

Losses (19k tons/year)

1.3 %

Pyrolysis gasoline (308k tons/year)

21.0 %

Isobutene (44k tons/year) Butene (30k tons/year) Butane (14k tons/year)

Benzene (93k tons/year) Toluene (71k tons/year) Cs – CH (29k tons/year) Rest (115k tons/year)

Figure 2.2.1: Mass balances in the pyrolysis process of gasoline for capacity of 500,000 t ethylene per year Table 2.2.6: A summary of important process parameters Temperature(℃) Pressure(atm) Catalyst Feedstock Yield (wt% of total products) Gross Profit ($/ton)

850 1 to 50 No Naphtha 16% of toluene -

Table 2.2.7: Advantages and disadvantages of steam cracking Advantages

Disadvantages

Relatively simple process

Low toluene yield High reaction temperature Energy intensive

Even though the primary product of the previous 2 products are not toluene, it is included in a part of our assessment as they are both major sources of toluene and is mentioned a lot in other literatures and sources. The processes we are going to review next is are primarily focused on BTX production.

Table 2.2.8: Gross profit calculation (Steam reforming) Reaction: Number of moles (Kg-mole) Molecular weight

Naphtha 1

C2H4 1

C3H6 1

28

42

Other hydrocarbon 1

H2 1

C6H6 1

C6H5CH3 1

2

78

92

Mass (Kg)

1470

500

209

477

120

93

71

Mass required to produce 1 kg of Toluene (Kg/Kg C6H5CH3)

20.7

7.0

2.9

6.7

1.7

1.3

1

Price ($/Kg)

0.75

0.28

1.26

0

1.55

0.95

0.90

The composition and usage of the chemical in this process is based on Wang et al. This other hydrocarbon that stated in the Wang et al such as gas oil, methane, butadiene, isobutene, butene and butane would not sell as product as the calculation is to determine the economic feasibility of aromatics production especially toluene ,the other hydrocarbon can be ignore in this calculation.

Gross profit = (0.90 x 1) + (1.3 x 0.95) + (1.7 x 1.55) + (2.9 x 1.26) + (7.0 x 0.28) - (20.7 x 0.75) = - 5.141USD/kg

3. Catalytic reforming of naphtha With the increasing demand for BTX aromatics, the industry had been developing and researching on increasing the aromatics yield for the process. According to Meidanshahi et al, a typical plant can obtain around 57.7% conversion of naphtha to BTX aromatics. Furthermore, experimental data suggest that a yield of 15 to 25 wt% of toluene can be obtained from catalytic reforming (Hashimoto, 1970). Table 2.9: A table showing the potential yield of BTX from a conventional reforming process (Bender, 2013). Component

Mass wt%

Benzene

3-12 %

Toluene

12-25 %

Xylene

15-30 %

Total

35-65 %

According to most literatures, there are 4 dominant reactions which is studied in terms of its mechanisms and kinetics (Meidanshahi et al., 2011). 1. Dehydrogenation of naphthenes to aromatics These series of reactions are the ones that produce BTX aromatics C6H12  C6H6 + 3H2 C7H14  C6H5CH3 + 3H2 C8H16  C6H4(CH3)2 + 3H2 2. Dehydrocyclization of naphthenes to paraffins These reactions are not desired as they will decrease the amount of naphthenes available for dehydrogenation into aromatics. Adjusting process parameters and decreasing the partial pressure of hydrogen helps in reducing this reaction (Meidanshahi et al., 2011). C6H12 + H2  C6H14 C7H14 + H2  C7H16 C8H16 + H2  C8H18

3. Hydrocracking of naphthenes to light paraffins This reaction is again undesirable for the same reason mentioned above and the same steps can be utilised to reduce its rate. 4. Hydrocracking of heavy paraffins to light paraffins This reaction could be useful as it reduces the composition of heavy alkanes and converts them into lighter ones (C1 to C5) which is a lot easier to separate. However, if we want to recycle hydrogen back into the feed stream, this can be a hindrance. Again, constructing an overall reaction equation with the correct stoichiometric is difficult as it is difficult to determine selectivity of each reaction and also the complex nature of our feed (Rahimpour, Jafari and Iranshahi, 2013). Thus we use the same method as before, by performing an oversimplified mass balance based on Figure 2.1.6. Naphtha + Hydrogen  Aromatics + Light Paraffins + Heavy Paraffins + Naphthenes + Olefins

Taking figures from Hashimoto’s experiment, we compiled the following: Table 2.2.10: Relative conversion after catalytic reforming at 490℃ with an 8 hydrogen to hydrocarbon ratio (adapted from Hashimoto, 1970).

Relative conversion and yields T=490℃

Naphtha A

Naphtha B

Naphtha C

Naphtha D

Light Paraffins

+47.91

+18.09

+51.32

+86.21

Heavy Paraffins

-31.02

-3.85

-12.32

-81.21

Naphthenes

-40.13

-42.40

-59.52

-4.28

Aromatics

+48.24

+31.15

+46.84

+23.75

Olefins

+0.10

0.00

+0.13

+0.21

From the Table 2.2.10, we realised that heavy paraffins and naphthenes are consumed during the process because the conversion sign is negative. Also, olefins can be omitted since it is basically nonexistent. As a result:

Naphtha + Hydrogen  Aromatics + Light Paraffins

Figure 2.2.2: Summary of the reaction pathways in the catalytic reforming process

Based on literature from various sources, we assume the composition of our naphtha feedstock to be: Component

Mass wt%

Heavy Paraffins

30wt%

Naphthenes

60wt%

Aromatics

10wt%

Here we make another ideal assumption that Heavy Paraffins only consists of hexane, heptane and octane, naphthenes only consist of cyclohexane, cycloheptane and cycloctane and finally 5% benzene and 5% toluene.

Based on our assumption, the mass weightage of the components in feedstock will be:

Heavy Paraffin

Mass weightage

Hexane

10 wt%

Heptane

10 wt%

Octane

10 wt%

Naphthene Cyclo-hexane

20 wt%

Cyclo-heptane

20 wt%

Cyclo-octane

20 wt%

Aromatics Benzene

5 wt%

Toluene

5 wt%

Since we are producing toluene as its main product, our plant will be focusing on increasing the aromatics yield which we can achieve by adjusting the process parameters. For the sake of simplicity, we will assume that all naphthenes will be converted into aromatics. Based on the discussion earlier, we assumed that all other intermediate products are converted to light paraffin are present in the product stream. Assuming a 100 mol naphtha basis;

Heavy Paraffin

Mol%

Mol (kg-mol)

Mass (kg)

Hexane

10

10

860

Heptane

10

10

960

Octane

10

10

1140

Cyclo-hexane

20

20

1680

Cyclo-heptane

20

20

1880

Naphthene

Cyclo-octane

20

20

2240

Benzene

5

5

390

Toluene

5

5

460

Total

100

100

9610

Aromatics

Also gathering the molecular weight of the constituents and the prices from various sources

Table 2.2.11: Molecular weight and price of the required hydrocarbons Molecular Weight

USD/ton (source)

Naphtha

-

750 (100ppi.com,2018)

LPG

-

650 (sunsirs, 2018)

Hydrogen

2

1550(Bhagyashri Corp, 2018)

Cyclo-hexane

84

Cyclo-heptane

94

Price are calculated as bulk naphtha

Cyclo-octane

112

Naphthene

Aromatics Benzene

78

950 (sunsirs,2018)

Toluene

92

900 (sunsirs, 2018)

Xylene

106

950 (sunsirs, 2018)

Table 2.2.12: Gross Profit Calculation for production of toluene through Catalytic reforming of naphtha

𝑪 𝟔 𝑯𝟏𝟐 + 𝑪𝟕 𝑯𝟏𝟒 +

𝑪𝟖 𝑯𝟏𝟔

→

𝑪𝟔 𝑯 𝟔

Mole (Kg-mole)

20

20

20

25

Molecular Weight

84

94

112

78

Mass (Kg)

1680

1880

2240 -

Kg/kg 𝐶 𝐻 𝐶𝐻

-

-

Price ($/kg)

-

-

-

+

𝑪𝟔 𝑯𝟓 𝑪𝑯𝟑 +

92

10

2

1950

2300

2120

360

0.8478

1

0.9217

0.1565

0.95

1.55

0.90

Naphtha used per kg of toluene produced = 4.178kg/kg Gross profit = (0.9x1) + (0.95x0.8478) + (0.95x0.9217) + (1.55x0.1565) - (0.75x4.178) = -0.310USD/kg Assuming no mass is lost during the process, we will obtain around 2960kg of LPG

Gross profit = 0.65 x 1.287 - 0.310 = 0.527USD/kg

𝟗𝑯𝟐

180

Naphtha cost 0.75 USD/kg

LPG cost 0.65USD/kg

+

20

0.95

25

𝑪𝟔 𝑯𝟒 (𝑪𝑯𝟑 )𝟐

Table 2.2.13: A summary of important process parameters.

Temperature (℃)

400 to 550

Pressure (atm)

1 to 50

Catalyst

Yes

Feedstock

Naphtha

Yield (wt% of total products)

15 to 25% of toluene

Gross Profit (USD/kg toluene)

0.527

Table 2.2.14: Advantages and disadvantages of catalytic reforming Advantages

Disadvantages

High yield for BTX

Sulfur in the feedstock will poison the catalyst. Therefore, the feedstock needs to be pretreated.

Lower temperature for reaction

Catalyst is prone to coking

Produces hydrogen which can reduce raw Potential hazard in using hydrogen is material cost as hydrogen can be recycled to extremely flammable the feed Produces other valuable products such as benzene and xylene which can generate extra profit.

4. Cyclar Process Cyclar process is a process that converts liquefied petroleum gas (LPG) into aromatics products. It all starts from dehydrogenation of the light compound or paraffin in the liquefied petroleum gases, for instance, propane and butane. The result of the dehydrogenation will convert the paraffin to olefin (alkene). The olefin is then processed to the oligomerization to form oligomers. At this point, oligomers are highly reactive and proceed to cyclization straight away to form naphthenes. The whole dehydrocyclodimerization relies on the zeolite which an acid-catalyzed (Hocking, 2005). At last, the naphthenes can be dehydrogenated to produce the aromatics. Dehydrogenation 1. Oligomerization of Olefins 2. Cracking 3. Olefin Alkylation 4. Cyclization 5. Aromatization

Figure 2.2.3: Reaction pathway of propane aromatization (Hocking, 2005).

The Chemical Equation of the process is shown as below:

𝑪 𝟑 𝑯𝟖 + 𝑪𝟒 𝑯𝟏𝟎

→ 𝑪𝟑 𝑯𝟔 + 𝑪𝟒 𝑯𝟖 + 𝟐𝑯𝟐

𝑪𝟑 𝑯𝟔 + 𝑪𝟒 𝑯𝟖 + 𝑯𝟐 → 𝑪𝟔 𝑯𝟏𝟐 + 𝑪𝑯𝟒 𝑪𝟔 𝑯𝟏𝟐

→ 𝑪𝟔 𝑯𝟔 + 𝟑𝑯𝟐

𝑪𝟔 𝑯𝟔 + 𝑪𝑯𝟒

→ 𝑪𝟔 𝑯𝟓 𝑪𝑯𝟑 + 𝑯𝟐

𝑪 𝟑 𝑯𝟖 + 𝑪𝟒 𝑯𝟏𝟎

→ 𝑪𝟔 𝑯𝟓 𝑪𝑯𝟑 + 𝟓𝑯𝟐

This process can yield high percentage of BTX (Benzene, Toluene and Xylene) through the aromatization of propane. With the feed of 100% propane, the BTX can yield around 63.1wt % while the Hydrogen is 5.9wt %. Yet, the ethane and methane (side product) produced for this process is 75mol % of methane and 25 mol% of ethane (Gianetto et al., 2006).

Table 2.2.15: Gross Profit Calculation for production of toluene using Cyclar process Assuming a feed of LPG containing 50 mol % of Propane and 50 mol % of Butane. Using a basis of 100kg-mol feed Reaction:

𝑪 𝟑 𝑯𝟖

Mole (Kg-mole)

50

+

𝑪𝟒 𝑯𝟏𝟎 50

→

𝑪𝟔 𝑯𝟓 𝑪𝑯𝟑 50

+

𝟓𝑯𝟐 250

Molecular Weight

44.1

58.12

92.14

2.016

Mass (Kg)

2205

2906

7371.2

504

Kg/kg 𝐶 𝐻 𝐶𝐻

0.2991

0.3942

-

-

Price ($/kg)

Mass of feed = 2205+2906 = 5111kg Kg-feed/kg-toluene= 0.6934 Gross profit = (0.90 × 1) + (1.55× 0.0684) – (0.65x 0.6934) = 0.555USD/kg

1

0.0684

0.90

1.55

Table 2.2.16: Summary of process parameters Temperature(℃)

>425

Pressure(atm)

<7

Catalyst

Yes

Feedstock

LPG

Yield

60%

Gross Profit (USD/kg toluene)

0.555

Table 2.2.17: Advantages and disadvantages of Cyclar process

Advantages

Disadvantages

Price of Feed-Stock is low

Large amount of fuel gases is produced

Catalyst can be regenerated and reused

Gas separation unit is costly

continuously Large amount of Hydrogen Gas will be

Short catalyst lifetime which requires a

produced

FCC reactor.

Conclusion Pathway 1 and 2 are not suitable for toluene production because the amount of toluene that they are capable in producing are too little to earn profits based on toluene sales. Pathway 1 more suited for producing coke while pathway 2 is mostly focused on producing ethylene and propylene, both of which have a greater market and better pricing when compared with toluene. This leaves us with pathway 3 (catalytic reforming) and pathway 4 (Cyclar process). It is tight between these 2 as both can give high yields of BTX. Since we are focusing in toluene sales, pathway 3 would be more advantageous as most literature report catalytic reforming produces more toluene in comparison to the cycler process which mostly yields benzene (Hashimoto, 1970). Other than that, there are a lot of accomplished as well as on-going researches regarding catalytic reforming when compared with the cycler process. This will ensure that pathway 3 will be continuously improving as new technologies emerge from the researches they have done. Literature regarding aromatization of LPG is not as common as literature about catalytic reforming. (Rahimpour, Jafari and Iranshahi, 2013).

Furthermore, the lifetime of the catalyst used are different for both processes. For pathway 3, even though the catalyst is prone to coking by carbonaceous deposits and poisoning due to sulphur, both can be resolved with relative ease. Hydrogen can be passed through the catalyst to reduce the rate of coking and sulphur can be removed by hydrotreating the feed beforehand, which are actually a common sight in the industry. However, for pathway 4, the lifetime of the catalyst is very short, in terms of days. Fortunately, they are easy to regenerate and recover by employing a FCC reactor. However, an FCC reactor is difficult to operate and monitor when compared with a fluidized bed reactor. There are also many safety hazards surrounding an FCC reactor such as the risk of static build up on the reactor wall (Rahimpour, Jafari and Iranshahi, 2013).. Finally, the gross profit of pathway 3 is just slightly lower than pathway 4, taking into consideration on the advantage of pathway 3 over pathway 4, it is very clear that catalytic reforming of naphtha should be chosen as our main reaction pathway in producing toluene.

2.1.3 Problem Statement Recently, there is a huge demand of the toluene in global market. Toluene is used to produce benzene, solvent for higher profit. It is especially highly demanded from China. There are a few production methods being studied in this paper: Catalytic Reforming, Thermal Cracking and Cyclar process. After comparing among the three methods based on several criteria, catalytic reforming has been chosen. There are a few problems faced by the industry for the past years of operating time. For example, due to most of its components such as benzene and toluene are volatile organic components, they are very harmful and dangerous to the workers in the plant as they are carcinogenic (US EPA, 2018). Besides, these components can cause potential hazard to the workers and the plant because they are flammable. In terms of catalyst, the catalyst poisoning is easily occurring in this process due to the presence of sulphur. This will greatly reduce the life of the catalyst which will increase the operating cost of the plant. Besides, there will be extra expenses being spent in order to replace the catalyst. The whole reaction process might need to stop for the changing of fresh catalysts

2.1.4 Assignment Objectives During the design of this plant for the production of toluene, there are a few aspects being aimed to be achieved in order to maximize the production capacity, maximize profit, fulfil market demand and the potential use and hazard towards the workers and the users. The objectives for this project are listed as below: 1. To perform literature review on the production pathways that being used or under research to determine the most suitable and promising way of producing toluene. 2. To make literature review on the chemical and physical properties of the entire chemical involved in the production process by studying the Material Safety Data Sheet of the entire chemical. 3. To perform material and energy balance to identify the operating condition including the pressure, temperature and flow rate in all the operation units and streams. 4. To perform literature review to determine the most suitable plant location to build the plant in order to obtain the maximum profit with relatively lower cost. 5. To perform study on the global market of toluene to identify the most suitable location and optimum amount of toluene being produced in the plant 6. To perform literature review to identify the most suitable units including reactor system and separation units being used in the production of toluene. 7. To perform study on the working principle all the selected units to be used in the plant design. 8. To perform HAZOP analysis to identify the potential hazard of all the operation units. 9. To prepare a detailed plan including the Process Flow Diagram, block flow diagram and stream table for the toluene production.

2.1.5 Marketing and business studies In order to find out the feasibility and profitability of toluene production, we carried out some marketing and business studies to collect some data to aid with the decision making. The aims of these studies are to: 1) Identify the global, regional and national supply and demands of the toluene. 2) Identify the global, regional and national supply and demands of the raw materials for toluene production. 3) Identify the main competitors that produce toluene and main suppliers of the raw materials globally and regionally. 4) Identify the most suitable location for the setup of plant 5) Estimate the overall financial requirement for the setup, operation and maintenance of toluene plant.

2.1.5.1 Consumption (demand) for toluene As mentioned, toluene is a useful chemical that can be used for the manufacturing of benzene, pxylene which is capable to produce the resin for polyethylene terephthalate (PET) resins, toluene diisocyanates (TDI) for polyurethane applications or used as solvent.

GLOBAL CONSUMPTION OF TOLUENE IN 2015 Middle East 11%

Americas (South, middle and North) 24%

Asia 54%

Europe 11%

Figure 2.5.1: Global consumption of toluene in 2015 (METI Japan, 2018)

Table 2.5.1 Global consumption of toluene from 2008 to 2015 (METI Japan, 2018) Demand (thousand ton) Country Asia Total Korea Taiwan Singapore China(including HK) Thailand Indonesia India Philippines Malaysia Vietnam Japan Australia Europe East Europe Middle East Saudi Arabia Africa CIS America North Total USA Canada South and Central Total Mexico Brazil Others

Year 2008 6,651 1,142 271 0 2,914 568 121 250 40 80 49 1,215 62 2,152 1,518 1,038 0 37 339

2009 7,600 1,351 166 0 3,666 784 127 255 40 80 55 1,076 60 2,090 1,483 1,110 0 37 271

2010 8,633 1,567 243 0 4,282 618 135 350 157 107 59 1,116 61 2,149 1,550 1,190 0 37 275

Actual 2011 2012 9,974 9,675 1,567 1,342 184 251 0 0 5,577 5,199 646 713 143 122 370 394 160 157 78 110 63 67 1,185 1,320 61 50 2,260 2,034 1,809 1,589 1,648 1,698 345 345 37 37 278 316

3,292 2,492 00 1,044 348 426 270

3,325 2,517 808 1,054 352 430 272

3,358 2,542 816 1,067 357 434 276

3,392 2,568 824 1,109 390 438 281

3,426 2,594 832 1,117 390 442 285

2013 10,381 1,406 379 0 5,626 706 124 460 157 110 72 1,341 30 2,151 1,716 1,698 345 37 348

2014 11,004 1,870 245 0 6,022 699 140 480 154 70 76 1,247 27 2,150 1,718 1,698 345 37 307

2015 10,703 1,670 140 0 5,920 739 142 480 163 90 82 1,277 24 2,140 1,649 2,094 345 26 351

2016 10,866 1,700 170 0 5,865 750 143 490 173 90 87 1,398 24 1,949 1,521 2,255 488 26 349

2017 11,420 1,800 170 0 6,257 750 145 523 183 90 92 1,410 24 2,026 1,557 2,277 493 26 352

3,460 2,620 840 1,130 395 446 289

3,507 2,646 861 1,147 404 450 293

3,580 2,710 870 1,163 415 450 298

3,633 2,753 880 1,155 424 435 296

3,711 2,814 897 1,172 434 437 301

Projected 2018 2019 11,887 12,377 1,800 1,800 170 170 0 0 6,669 7,102 750 750 147 149 558 595 194 206 90 90 98 104 1,410 1,410 24 24 2,197 2,227 1,726 1,753 2,300 2,323 498 503 26 26 356 363 3,790 2,876 914 1,197 446 444 307

3,868 2,936 932 1,225 459 453 313

2020 12,856 1,800 170 0 7,563 750 149 595 218 90 110 1,410 24 2,232 1,754 2,346 508 26 368

2021 13,354 1,800 170 0 8,054 750 149 595 218 90 117 1,410 24 2,157 1,677 2,370 513 26 374

3,937 2,987 950 1,256 473 462 321

4,004 3,036 968 1,288 487 471 330

growth rate (%) Actual Projected 08~15 16~21 7.0 3.8 5.6 1.3 -9.0 3.3 10.7 5.3 3.8 0.2 2.3 0.8 9.8 3.7 22.3 5.0 1.7 0.0 7.6 6.1 0.7 1.7 -12.7 0.0 -0.1 0.1 1.2 0.3 10.5 2.1 6.8 -4.9 0.0 0.5 1.0 1.2 1.2 1.2 1.6 2.5 0.8 1.4

1.9 1.9 1.8 1.7 2.7 0.8 1.7

2.1.5.1.1

Global consumption of toluene:

Based of Forecast of Global Supply and Demand Trends for Petrochemical Products (for the period 2008 to 2021) by the Ministry of Economy, Trade and Industry of Japan (METI), the global consumption for toluene is 20.1 million tons in year 2015. Asia is the largest consumer of toluene in the world, which consumed 10.7 million tons of toluene, comprised of 54% of the global toluene consumption in year 2015. Americas consumed 4.7 million tons of toluene in year 2015, which comprised of 24% of the global toluene consumption. Both Europe and Middle East have the same amount of demand for toluene in 2015, which is 2.1 million tons, comprised of 11% of the global toluene demand in 2015. From the report, METI predicted as the demand for toluene will increase to 23.6 million tons from 20.1 million tons in 2021. The demand is contributed by the strong demand for the polyester products for example PET specially in China. As the benzene and p-xylene are the raw materials for the production of resin for the polyethylene terephthalate (PET), the demand for the benzene and p-xylene increases and prompts the surge in production capacity of benzene and p-xylene. As the extra production capacity of benzene and p-xylene will demand a strong supply of their raw materials, in which toluene is one of them, we can expect an increment in demand as well as price for the toluene in the near future. (Ihsmarkit.com, 2018). This statement can be support by the data from the METI report (refer to Table 2.5.1). From the data, in 2008 the global demand for toluene was 14.6 million tons. This figure had shoot up to 20.1 million tons in 2015, with an average annual increment of 4.6 %. If we analyse the growth of toluene demand according to their regions, we found out that Asia is responsible for the progressive growth for the demand of the toluene, having an average annual growth of 7.0%. At the meantime, growth of toluene demand in Europe is considered stagnant as their annual consumption is maintained at about 2.15 million tons per year, having an average growth of 0.1% from 2008 to 2015. For Middle East, they are having the highest annual growth in toluene demand, which is 10.5 % per year from 2008 to 2015, their demand in 2015, 2.1 million tons is double of the consumption in 2008, which is only 1.04 million tons per year. For Americas continents, the situation is similar to the Europe, which their demand for toluene is having slow growth, which is only 1.2% per year. Based on the data and analysis above, we could safely conclude that the demand for toluene in the world is still strong due to the strong demand in Asia and Middle East countries.

2.1.5.1.2

Regional consumption of toluene

Based on the data from Figure 2.5.1, Asia is the largest consumer of toluene among all of the continents in the world, consuming 10.7 million tons of toluene, or 54% of the global total consumption of toluene in 2015. In Asia, China is the largest consumer which consumed 5.9 million tons of toluene in 2015. Based on the data in Table 2.5.1, we observed that the consumption of toluene in China had increased drastically at a rate of 10.7 % per year. Back in 2008, the consumption of toluene was 2.9 million tons per year, this figure had doubled up to 5.9 million tons of toluene in 2015. METI estimated that the growth of demand for toluene will continue in the future and the projected consumption of toluene in China will reach 8.1 million tons in 2021, with an annual growth rate of 5.3 %. This estimation is further supported by the reports from S&P Global Platts. From the reports, robust demand of downstream product and a balanced-to-tight market could prompt the strong benzene margin sustained throughout the year and this trend would boost the price for the toluene during the same period. As the supply of toluene is considered balance-to-tight in Asia, we would be able to share the market with the existing suppliers of toluene, who will be our main competitors. However, there is a slight concern over the ample supply of toluene in Asia as China ramp up the domestic production capacity of toluene to fight against the overdependency on imports to obtain toluene, and even aimed to be an exporting country of toluene. To prove this statement, China had increased their production capacity of toluene by 1 million tons per day back in 2017. (S&P Global Platts, 2018) In 2018, there are plans to increase the production capacity by 500 to 600 thousand tons per year, which means that the increment in the production capacity of the toluene will be 1.5-1.6 million tons per year including the newly added capacity during 2017. (S&P Global Platts, 2018). This might cause a supply glut in China or even the whole Asia. The newly added toluene production facilities in China can be viewed in Table 2.5.2. From Table 2.5.1, we also noticed that India still require an additional 400 thousand tons of toluene to meet with their domestic demand as it lacks of the capability to sustain its demand by the domestic production. Thus, India can be seen as a potential importer of toluene. The China new toluene plants from 2016 to 2019 is shown in Table 2.5.2.

Table 2.5.2: China new toluene plants from 2016 until 2019 (S&P Global Platts, 2018) Plant

Location

CNOOC Daxie Petrochemical No.1 and No.2 Hongrun Petrochemicals CNOOC Huizhou No.2 CNOOC Huizhou No.1 + No.2 Petrochina Yunnan Sinopec Jinling

Zhejiang & Danshan Shandong Huizhou

Jingbo Petrochemicals Sinopec Luoyang Petrochemicals Haishunde Petro China Hebei

Shandong Henan Zhangzhou Hebei

2.1.5.1.3

Kunming Nanjing

Year 2016-2017

Capacity/year (metric tons/year) Combined 420,000

2017 2017

120,000 Combined 450,000

Sep-17 Nov-17

250,000 310,000 (combined 610,000) 120,000 100,000 184,000 150,000-200,000

Q1 2018 Q1 2018 2018 2018-2019

National consumption of toluene

Based on data in Table 2.5.1, when it comes to national consumption of Malaysia, the consumption of toluene in Malaysia is around 90 thousand tons per year. The growth of toluene consumption in Malaysia is stagnant, which is maintained within 80 to 110 thousand ton per year, so it is considered to be insignificant relative to other big consumers in Asia (METI Japan, 2018) This is because the petrochemical industry in Malaysia is more focused on exporting rather than importing, as Malaysia is a petroleum rich country. Thus, the demand for toluene is low in Malaysia and it will be difficult to sell toluene within Malaysia. (S&P Global Platts, 2018)

2.1.5.2 Production of Toluene Table 2.5.3: Global production capacity for toluene from 2008 to 2015 (METI Japan, 2018)

Capacity (thousand ton)

Year Actual

Country Asia Total Korea Taiwan Singapore China(including HK) Thailand Indonesia India Philippines Malaysia Vietnam Japan Australia Europe East Europe Middle East Saudi Arabia Africa CIS America North Total USA Canada

Projected

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

13,677 3,074 93 285 6,426 1,088 100 280 0 60 0 2,271 58 3,503 2,554 1,470 0 33 350

14,732 3,129 93 285 7,333 1,135 100 280 0 60 0 2,317 58 4,105 2,224 1,486 0 33 350

15,698 2,537 93 285 8,838 1,136 100 181 150 60 0 2,318 58 3,389 2,224 1,470 0 33 345

16,567 2,802 93 285 9,393 1,136 100 230 150 60 0 2,318 20 3,599 2,434 2,438 375 33 345

16,696 2,802 107 285 9,468 1,136 100 270 150 60 0 2,318 20 3,055 2,434 2,470 375 33 345

17,186 2,802 107 285 9,929 1,136 100 270 150 60 0 2,347 20 3,056 2,435 2,438 375 33 345

18,833 2,802 345 285 11,018 1,136 100 270 150 60 0 2,667 20 3,046 2,435 2,438 375 33 345

18,840 2,805 345 285 11,083 1,136 100 270 150 60 0 2,606 20 3,041 2,420 2,438 375 33 345

18,840 2,805 345 285 11,083 1,136 100 270 150 60 0 2,606 10 3,041 2,420 2,498 435 33 345

18,840 2,805 345 285 11,083 1,136 100 270 150 60 0 2,606 10 3,041 2,420 2,738 675 33 345

18,840 2,805 345 285 11,083 1,136 100 270 150 60 0 2,606 10 3,041 2,420 2,738 675 33 345

18,840 2,805 345 285 11,083 1,136 100 270 150 60 0 2,606 10 3,041 2,420 2,738 675 33 345

19,023 2,805 345 285 11,083 1,136 100 270 150 60 183 2,606 10 3,041 2,420 2,738 675 33 345

19,169 2,805 345 285 11,083 1,136 170 270 226 60 183 2,606 10 3,041 2,420 2,738 675 33 345

7,766 6,879 887

7,766 6,879 887

7,766 6,879 887

7,766 6,879 887

7,676 6,789 887

6,554 5,667 887

6,621 5,734 887

6,621 5,734 887

6,621 5,734 887

6,621 5,734 887

6,621 5,734 887

6,621 5,734 887

6,621 5,734 887

6,621 5,734 887

growth rate (%) Actual Projected 08~15 16~21 4.7 0.3 -1.3 0.0 20.6 0.0 0.0 0.0 8.1 0.0 0.6 0.0 0.0 9.2 -0.5 0.0 7.1 0.0 0.0 -14.1 -10.9 -2.0 0.0 -0.8 0.0 7.5 2.0 10.3 0.0 0.0 -0.2 0.0 -2.3 -2.6 0.0

0.0 0.0 0.0

South and Central Total Mexico Brazil Others

1,532 524 601

1,532 524 601

1,373 365 601

1,373 365 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

1,383 375 601

407

407

407

407

407

407

407

407

407

407

407

407

407

407

-1.5 -4.7 0.0 0.0

Table 2.5.4: Global production for toluene from 2008 to 2015(METI Japan, 2018)

Production (thousand ton)

Year

growth rate (%)

Actual Country Asia Total Korea Taiwan Singapore China(including HK) Thailand Indonesia India Philippines Malaysia Vietnam Japan Australia Europe East Europe Middle East Saudi Arabia Africa

2008 6,682 1,534 16 185 2,608 682 29 140 0 55 0 1,433 20 2,984 2,221 1,088 0 5

2009 7,540 2,051 39 93 2,853 877 17 135 0 60 0 1,415 47 2,689 1,968 1,180 0 5

2010 8,522 2,143 167 210 3,421 806 32 140 150 60 0 1,393 54 2,645 1,972 1,190 0 5

2011 9,820 2,143 23 193 4,897 874 0 140 150 60 0 1,340 20 2,414 1,911 2,070 345 5

2012 9,701 2,357 27 188 4,511 877 0 140 150 60 0 1,391 20 2,191 1,741 2,070 345 5

Projected 2013 10,291 2,290 76 283 4,780 829 0 140 150 60 0 1,683 20 2,372 1,927 2,070 345 5

2014 10,716 2,054 285 285 5,042 894 0 140 150 60 0 1,806 20 2,074 1,626 2,070 345 5

2015 10,756 1,652 335 285 5,134 976 0 140 150 60 0 2,024 9 2,335 1,852 2,070 345 5

2016 10,573 1,700 280 249 5,058 950 0 140 150 60 0 1,986 9 2,176 1,753 2,121 400 5

2017 11,272 1,800 280 251 5,542 950 0 240 150 60 0 2,000 9 2,242 1,780 2,325 621 5

2018 11,274 1,800 280 253 5,542 950 0 240 150 60 0 2,000 9 2,403 1,941 2,325 621 5

2019 11,472 2,000 280 251 5,542 950 0 240 150 60 0 2,000 9 2,434 1,971 2,325 621 5

Actual 2020 11,478 2,000 280 257 5,542 950 0 240 150 60 0 2,000 9 2,378 1,912 2,325 621 5

2021 11,508 2,000 280 249 5,542 950 0 240 188 60 0 2,000 9 2,339 1,872 2,325 621 5

08~15 7.0 1.1 54.4 6.4 10.2 5.3 0.0 1.3 5.1 -10.8 -3.4 -2.6 9.6 0.0

Projected 16~21 1.1 3.2 -2.9 -2.2 1.3 -0.5 9.4 3.8 0.0 -0.2 0.0 0.0 0.2 2.0 10.3 0.0

0.0 0.0 0.0 0.0

CIS America North Total USA Canada South and Central Total Mexico Brazil Others

330

271

275

278

316

348

307

351

349

352

356

363

368

374

0.9

1.0

3,450 2,650 800 1,295 494 531 270

3,450 2,650 800 1,309 499 536 274

3,500 2,650 850 1,184 360 544 280

3,448 2,650 798 1,201 360 553 288

3,448 2,650 798 1,187 330 560 297

3,448 2,650 798 1,185 330 550 305

3,448 2,650 798 1,195 330 550 315

3,448 2,650 798 1,204 330 550 324

3,455 2,657 798 1,256 330 550 376

3,447 2,649 798 1,256 330 550 376

3,471 2,673 798 1,256 330 550 376

3,498 2,700 798 1,256 330 550 376

3,498 2,700 798 1,256 330 550 376

3,498 2,700 798 1,256 330 550 376

0.0 0.0 0.0 -1.0 -5.6 0.5 2.6

0.2 0.3 0.0 0.7 0.0 0.0 2.5

PRODUCTION CAPACITY OF TOLUENE (%) Middle East 8%

Americas 25%

Asia 58% Europe 9%

Figure 2.5.2: The global production capacity of toluene in 2015 (METI, Japan, 2018)

GLOBAL TOLUENE PRODUCTION IN 2015 Middle East 10%

Americas 24% Asia 54%

Europe 12%

Figure 2.5.3: The global production of toluene in 2015 (METI, Japan, 2018)

2.1.5.2.1

Global Toluene production

Based on the data from Table 2.5.4, in 2015, the production capacity of toluene in the world is about 32.7 million tons per year. Asia countries have the capacity to produce 18.8 million tons of toluene, which comprised of 58% of the world toluene production capacity. Americas are the second largest producer of toluene, producing 8 million tons of toluene per year, 25% of the global toluene production capacity. Europe and Middle East have similar abilities in toluene production, which produced 3 million tons and 2.4 million tons per year, 9% and 8% of the global toluene production capacity respectively. The proportion of the global production capacity of toluene in 2015 in shown in Figure 2.5.2. METI had foresighted that the global toluene production capacity will growth slightly to 33.3 million tons per year in 2021, which having an average annually growth of 0.3%. However, the production is only running at around 60% throughout the year. Toluene production in 2015 in the world reached 20.2 million tons per year. 10.8 million tons production come from Asia continent, 2.3 million tons comes from Europe, 4.7 million tons from Americas and 2.1 million tons from Middle East. The proportional of the global production of toluene in 2015 can be seen in Figure 2.5.3. For the details data of the global production capacity and global production in 2015 and the projected value in 2021, please refer to the data shown in Table 2.5.1. From these informations, we could deduce that Asia responsible for most of the world toluene production, followed by Americas continent.

2.1.5.2.2

Regional Toluene Production:

Based on the data from Table 2.5.4, Asia aromatics producers were able to produce 10.8 million tons of toluene in 2015. While being the largest consumer of toluene, China is also the largest producer of toluene in Asia. Toluene production in China had grown drastically over the years. Back in 2008, the production of toluene in China was only 2.6 million tons per year. The amount of production had doubled in just 7 years, which reached 5.1 million tons per year in 2015. The 10.3% growth of toluene production per year is mainly due to the increasing demand for toluene in China, South Korea and Japan. For South Korea, it managed to produce 1.65 million tons of toluene in 2015, decline significantly if compared with the production in 2012, which is 2.36 million tons per year. It is notable that Japan had increased its production from 1.4 million tons of toluene in 2008 to 2 million tons in 2015, with a steady growth rate of 5.1 % per year. For Taiwan, it managed to produce 285 thousand tons of toluene per year since 2013 until now as Taiwan had increased its production capacity to 345 thousand tons per year for toluene in 2013. In 2015, India produced 140 thousand tons of toluene, remained unchanged since 2008.

In the ASEAN region, Thailand is the largest toluene producer. Back in 2008, it managed to produce 682 thousand tons of toluene. This figure continued to escalated with a growth rate of 5.3% per year. In 2015, the production of toluene in Thailand reached 976 thousand tons. Singapore is the second largest toluene producer in the ASEAN region which produced 285 thousand tons of toluene in 2015. Philippines able to produce 150 thousand tons of toluene per year since 2010. For Malaysia, the production of toluene maintained at 60 thousand tons per year since 2009. 2.1.5.2.3

National toluene production

Petroleum and petrochemical industries play an important role in industrial and economical sector in Malaysia. It is the second largest contributor to the Malaysia total exports and toluene is one of it. Toluene manufacturing in Malaysia is considered small if compared with other Asia countries like Thailand, Japan, South Korea and Japan as toluene production is considered as secondary production from the separation of BTX, as the main product will be benzene which hold a higher value than toluene. Malaysia toluene production is being dominated by Lotte Chemical Titan Holding Sdn Bhd and PETRONAS Chemicals Aromatics Sdn Bhd. For Lotte Chemical, it managed to produce 60 thousand tons of toluene per year. The production of toluene is basically used to fulfil the domestic demand of toluene and exportation to Asia countries like Singapore, Japan, South Korea and China which has high demand for it (Ministry of International Trade and Industry Malaysia, 2017).

2.1.5.2.4

Raw Material supply

Naphtha will be the raw material to produce toluene. According to data provided by the United Nations, Netherlands is the largest exporter of naphtha in the world, followed by United Arab Emirates, Saudi Arabia, Algeria, Kuwait, India and etc. The list can be referred in Figure 2.5.4. As the demand of toluene is mainly in Asia, China especially, we will focus on the suppliers of Naphtha that located within Asia continent. For India, the main naphtha suppliers are Reliance Industries, Oil and Natural Gas Corp (ONGC), Vitol and Indian Oil Corp (IOC). For South Korea, the main suppliers are S-Oil, SK Global Chemical and GS Caltex. For Malaysia, the main Naphtha supplier are Petronas Penapisan (Terengganu) Sdn Bhd, Petronas Penapisan (Melaka) Sdn Bhd, Malaysia Refinery Company Sdn Bhd, Shell Refinery Company (FOM) Bhd and Esso (Malaysia) Bhd.

Figure 2.5.4: Top Naphtha exporter in the world (Factfish.com, 2018)

Current price and its trend: Toluene: For the price of toluene in China, in 20th of March in 2018, the price of toluene per ton was 5272 CNY. The price rose sharply until the midst of May 2018, which the price peaked at 6436 CNY / ton. Then, the price declined slightly to around 6100 in the beginning of June 2018. The price had rebounded slightly to 6200 CNY / tons and remained stagnant until today. Despite there are slight decline of the price of toluene recently, we can still observe that the price of toluene in China still remained strong. The details of the price can be observed from Figure 2.5.5.

Price (CNY/ metric ton)

Date Figure 2.5.5: The price trend of toluene from 2018-03-20 to 2018-06-18 in China (CNY/ metric ton) (Sunsirs.com, 2018) Naphtha: Price (USD/ metric ton)

Figure 2.5.6: The global price trend of naphtha from 1st January 2017 to 19th June 2018 (USD/ metric ton) (Tradingeconomics.com, 2018)

Price (CNY/ metric ton)

Date Figure 2.5.7: The price trend of naphtha from 2018-03-21 to 2018-06-19 in China (CNY/metric ton) (100ppi.com, 2018)

From Figure 2.5.6, we could have observed that the global price of naphtha had increased sharply since July 2017 until the end of the May 2018. The price had rose sharply from around 400 USD/ ton in July 2017 to around 680 USD/ton in the end of May 2018. The price had dropped slightly to 632 USD/ ton in 19th June 2018. However, the drop in price is not significant if compared to the sharp increase in price as this change might just due to a temporary ample supply of naphtha in the global market. Figure 2.5.7 shows the price trend of the Naphtha in China from 21st March of 2018 to 19th June of 2018. From the figure we could see that the price of the naphtha in China rose drastically at the beginning of May until the end of May, which the price increased from around CNY RMB/ton to CNY RMB/ton. The price of the Naphtha declined slightly since the beginning of June and the price now is stabilized between 6100-6200 CNY/ton. From the data, we could observe that the price of naphtha had increased considerably in the recent time. We might face the issue of high raw material price which will decrease our gross profit. 2.1.6 Plant capacity and location selection 2.1.6.1 Plant capacity By comparing the data from Table 2.5.1 and Table 2.5.4, which shows the global supply and demand of toluene from 2008 to 2015, as well as the forecast for demand and supply of toluene up to the incoming 2021, we could observe that China is currently dependent on importing toluene to

sustain its domestic demand as China is not able to produce sufficient amount of toluene to meet with its own demand, despite being the largest toluene manufacturer in the world. Other than that, Japan and South Korea are sole leaders in benzene and xylene production, which would require constant and surplus supply of toluene as the raw material. Thus, we can expect stable-to-good demand of toluene within the China-Japan-South Korean circle. Before deciding how much is our projected production capacity for our new plant, we should evaluate the current toluene production capacity available in the world.

2.1.6.1.1

List of Toluene producing companies across the global (Only Showing

Dominant Companies):

Table 2.6.1: Toluene producing companies in Europe (METI Japan, 2018) Nationalities

Company name

Production

Capacity

(thousand tons/year) Belgium France Germany

Italy Netherlands

Ruetgerswerke

10

Ineos Styrenics

20

AP Feyzin

40

Total PC

56

Arsol Aromatics

30

BASF SE

107

BP

55

Deutsche Shell

140

Dow

75

Trinseo

11

Ineos

110

PCK Schwedt

52

Raffinerie Heide

125

Ruhr Oel

180

Shell & DEA Oil

100

Aquila

15

Versalis

264

ExxonMobil

260

Trinseo

20

Spain

CEPSA

325

United Kingdom

Phillips 66

100

Essar Energy

80

Portugal

PETROGAL

245

Slovakia

Slovnaft

86

Hungary

MOL Group

110

Poland

PKN ORLEN

180

Z.C. Blachownia

40

Synthos Dwory

4

Table 2.6.2: Toluene producing companies in Asia (METI Japan, 2018) Nationalities

Company Name

Production Capacity (Thousand Tons/year)

China

Korea

Sinopec

3460

Petrochina

1503

Dragon Aromatics

635

Others

519

SK Global Chemical

890

SK Incheon Petrochem

100

Hanwha Total Petrochemicals

230

Lotte Chemical

220

LG Chem

100

GS Caltex

830

OCI

30

S-Oil

350

Korea Petro Chemical Ind Co

55

Ltd Taiwan

CPC Corporation

325

Formosa Chemicals & Fibre

20

Corporation

Table 2.6.3: Toluene producing companies in ASEAN countries (METI Japan, 2018) Nationalities

Company Name

Production Capacity (Thousand Tons/year)

Thailand

PITAR

140

DITTO

460

IPRC

132

Esso Thailand

100

ROC

160

TPX

144

Malaysia

Lotte Chem. (Titan)

60

India

Reliance (Hazira)

110

IOC (Baroda)

100

OSWAL (Mumbai)

60

Petron

150

JG summit

76

Vietnam

Vung Ro Refinery

183

Australia

Vitol

20

Singapore

PCS

135

ExxonMobil

150

TPPI

100

Philippines

Indonesia

Table 2.6.4: Toluene producing companies in Middle East (METI Japan, 2018) Nationalities

Company Name

Production Capacity (Thousand tons/year)

Saudi Arabia

Sadara Chemical

60

Petro- Rabigh

240

Table 2.6.5: Toluene producing companies in CIS (METI Japan, 2018) Nationalities

Company Name

Production Capacity (Thousand tons/year)

Russia

Slavneft-

55

Yaroslavnefteorgsintez KINEF (Surgutneftegaz)

30

Gazpromneftkhim Salavat

50

Omsk

85

refinery

(Gazprom

Neft) Ufaneftekhim

25

Ryazan refinery (Rosneft)

50

LUKOIL-

40

PERMNEFTEORGSINTEZ Belarus

Naftan

10

Table 2.6.6: Toluene producing companies in North America (METI Japan, 2018) Nationalities

Company Name

Production Capacity (Thousand tons/year)

United States of America

America Styrenics

38

BASF Total LLC

40

Chalmette LLC

158

Cosmar

55

Citigo

388

Dow

200

Equister

131

ExxonMobil

1,330

Flint Hills Resources

666

HollyFrontier Corp.

39

Husky Oil

343

Marathon

Petrol.

1,015

PBF Energy Partners

32

Philadelphia Energy

165

Phillips 66

360

Canada

Shell

98

Styrolution

53

Totledo Refining LLC

165

Total PC

200

Velero

250

Westlake

8

Imperial Oil

80

Petro-Canada

240

Shell Canada

407

Suncor

160

Table 2.6.7: Toluene producing companies in Middle and South America (METI Japan, 2018) Nationalities

Company Name

Production Capacity (thousand tons/year)

Mexico

Pemex

375

Brazil

Braskem

550

Petrobras

30

Innova

8

Unigel-CBE

5

Unigel-EDN

6

Videolar-Innova S.A.

3

DGFM

3

Argentina

Petrobras Energia

129

YPF

150

Colombia

Ecopetrol

25

Venezuela

Pequiven

100

Table 2.6.1 to 2.6.7 shows the list of the toluene manufacturing companies in the world. From Table 2.6.2, we could observe that Sinopec is the largest toluene manufacturer in China, responsible for 3.46 million tons of toluene production in China, followed by Petrochina which able to produce 1.5 million tons of toluene per year. Dragon aromatics able to produce 635 thousand tons of toluene per year and the rest will be covered by others toluene manufacturing companies in China, which accounted for 519 thousand tons of toluene per year. If we decided to

set our plant in China, they will be our main competitors. For Korea, SK Global Chemical, GS Caltex and S-Oil are the main manufacturers of toluene. When comes to the national production of toluene, Malaysia toluene production industry is being dominated by Lotte Chemical Titan and Petronas Chemicals Aromatics Sdn Bhd, which able to produce 60 thousand tons of toluene per year. As Malaysia Toluene market is considered stagnant due to low demand and it is being dominated by Lotte Chemical Titan and Petronas Chemicals Aromatics Sdn Bhd, Malaysia toluene market will not be our target. China is the largest consumer of Toluene in Asia, consumed 5.9 million tons in 2015, double of the consumption in 2008. Estimated to reach 8.1 million tons per year. This drastic increment in demand of toluene is driven by the increasing production of its downstream products, such as benzene, xylene and toluene diisocyanate (S&P Global Platts, 2018). From Figure 2.5.3, we knew that there will be few additions of new toluene manufacturing plants which will be capable to produce extra 1.6 million tons of toluene in the near future. As METI estimated that China will still demand extra 2.5 million tons of toluene per year in 2021, we could estimate that there will be 900 thousand tons of toluene demand remained for us and others competitors to occupied in 2021. Based on the supply and demand of toluene in China as well as the newly added toluene manufacturing plants in Asia region (Refer to Table 2.5.1, 2.5.2 & 2.5.3), the optimum amount of production capacity for our new plant will be 10 thousand tons per year, which is 1.67% of the remaining toluene demand by China to need meet their consumption. This production capacity will be a sweet spot as we can fill in the remainder demand capacity and avoid from producing too much of toluene, causing supply glut that caused the price of toluene to decrease. The operating rate of the plant should be based on the actual demand at that time to prevent overproducing. For instance, if the demand is weak in the first year of the establishment of the plant, we can choose to operate at lower operating rate. This can help us to control our resources optimally and prevent wastage. If the demand increased in the coming years, we could step up our operating rate.

2.1.6.2 Plant Location Selection of plant location:

1) Pasir Gudang Industrial Estate, Pasir Gudang, Johor, Malaysia

Figure 2.6.1: Close up map of Pasir Gudang Industrial estate

Figure 2.6.2: Strategic view of Pasir Gudang industrial estate in Asia

Available Infrastructures: 1) 5.9 km to Pasir Gudang Expressway that lead to North-South Expressway (NSE) 2) 1 km to Johor Bahru East Coast Highway that connect to Asian Highway route 2 (AH2) 3) 16.5 km to Tanjung Langsat Port 4) 2.8 km to Johor Port, a port with a 1,000-metre berth and a hazardous cargo jetty. It has three hazardous liquid bulk terminals to handle LPG, chemicals and petrochemicals which is ideal for Toluene transportation 5) 55.2 km to Tanjung Pelepas Port which has world class facilities 6) Within the coverage of Peninsular Gas Utilisation (PGU) project- The longest pipeline in Malaysia. 7) Tank farms are developed for storage of petrochemical liquids Available Incentives for Chemical and Petrochemical Industry: (Ministry of International Trade and Industry Malaysia, 2017) Local and foreign companies are subjected to cooperate tax of 24% 1) Pioneer Status: A company with pioneer status will only need to pay 30% of the tax on its statutory income (70% tax exemption) for five years. 2) Investment Tax Allowance: Company with Investment tax allowance status may be granted an allowance of 60% the capital expenditure that meet with the requirement for five years. The company may utilize this allowance to offset against 70% of the statutory income and the remaining 30% statutory income will be taxed according to the taxation rate. 3) Reinvestment Allowance: Qualifying capital expenditure can be given a reinvestment allowance of 60% for 15 years. 70% or 100% of the statutory income can be offset by the allowance. The Reinvestment Allowance begins from the year the first reinvestment is made for a period of 15 years. 4) Accelerated Capital Allowance: a. Reinvestment for promoted activities or products Accelerated Capital Allowance (ACA) only eligible for companies that reinvest the manufacture of promoted products after the 15-period of the Reinvestment allowance. This

ACA allowance will write off the capital expenditure within three years with an initial allowance of 40% and an annual allowance of 20%. b. Waste Recycling: ACA on plant and machinery that exclusively used for waste recycling or further processing of waste in finished products can be claimed by Manufacturing company which incurred Qualifying Expenditure. ACA of 20% for the initial allowance (IA) and 40% for the annual allowance (AA) can be claimed by the companies that fulfilled the criteria. 5) Incentive for Industrial Building System: Industrial Building System (IBS) aims to improve the quality of construction, create a conducive working environment and cut down the dependency on foreign labours. Purchase of moulds for production of IBS components enable companies to claim Accelerated Capital Allowance (ACA) which have an initial allowance of 40% and 20% for Annual Allowance. This incentive starts with effect from year of assessment 2006 6) Other Incentives: a) Incentives for R&D b) Industrial Building Allowance c) Infrastructure Allowance d) Tariff Related Incentives

Table 2.6.8: Advantages and disadvantages of setting plant in Pasir Gudang, Malaysia: Advantages

Disadvantages



Well established incentives system.



Local toluene demand is small



Pasir Gudang located at a strategic



Strong local competition

location.1 

Easy access to ports and highways which ensure effective transportation of products



Abundant of trained personnel for petrochemical industries in Malaysia



Easy access to raw materials as Malaysia produces a significant amount of naphtha.

1 2

3



Lower land cost2



Lower labour cost3



Free from natural disasters

Pasir Gudang is able to act as a gateway to ASEAN Free Trade Area (AFTA). RM 60-100 per square ft with quit rent of RM 2400 per annum.

A project manager in Malaysia earns around 120 to 240 thousand MYR per year. (Walters, 2018)

2) Huangdao district, QingDao, Shandong, China

Figure 2.6.3: Close up view of Huangdao district, Qingdao, Shandong, China

Figure 2.6.4: Strategic view of Qingdao Industrial area

Available infrastructure in Huangdao district: 1) 2km to Huangdao oil port 2) 8km to Qingdao port, the fifth largest port in China, Tenth largest port in the world. 3) Interconnected to Qingdao Qianwangang No.1 Shugang Expressway. 4) Linked to Jiaozhou-Huangdao Railway 5) Close to Lianwanhe Water Purification Plant Available incentives for Chemical and Petrochemical industry in China: As Qingdao is a special economic zone in China, we can enjoy some special benefits for setting up toluene plant in Qingdao. 1) Corporate tax of 15% 2) Benefit of 2+3 years, which the cooperate will enjoy two years of tax holidays (Exemption of tax) and will only need to pay 50% of the normal tax rate for the rest 3 years. The company will only need to pay taxes start from the sixth year of incoming generating year. 3) 50% of the actual expenses incurred in R&D for new technology, new products, or new craftsmanship can be deducted from the tax. 4) Enterprises purchasing and using equipment specified by the state for environmental protection, energy and water conservation, or production safety purposes are eligible for a tax credit of 10% of the investment in such equipment. If the amount is unutilized, it can be carried forward and creditable in the following five years. 5) If the non-prohibited and non-restricted products are produced with the raw material specified by the state government, taxation can only apply onto 90% of the income derived from the product sales.

Table 2.6.9: Advantages and disadvantages of setting plant in Huangdao District, Qingdao, China. Advantages 

Easy access to Qingdao Port which

Disadvantages 

facilitates transporting and exporting

Higher labour cost compared to Malaysia1

of toluene. 

Close proximity with potential buyers2



Strong competition in China



Well-established incentives system



Have to pay for Green tax.3



Existence of Qingdao Special



Risk of storm surges and sea waves

Economic Zone4

that can cause economic and structural damage.



Near to the source of raw materials.5



Large domestic demand for toluene in China



Lower land cost to build the plant.56

1

According to a report by Walters, 2018, a project manager in China earns at around 250 to 500 thousand RMB per year (154 to 309 thousand MYR) 2

Qingdao is located close to South Korea and Japan, which provides a large potential market for us.

3

Green Tax, which is a tax that collected in the aims to reduce the level of pollution in the region and fund the environment recovery activities in China, is now mandatory in China. 4

Equipped with integrated facilities and well-connected transportation system which can ease our effort to distribute our product and obtain the raw material. 5

6

As Shangdong province is a major producer of naphtha.

The cost required to purchase the land in Shandong Province is RMB 480/ m 2 (RM27.89/sq ft), with an annual increment of price of 18%.

3) Kandla, Gujarat, India

Figure 2.6.5: Close up view of Kandla, Gujarat, India

Figure 2.6.6: Strategic view of Kandla, Gujarat, India

Available infrastructure in Kandla, Gujarat, India: 1) 9 km away from Deendayal Port which is an all weather modern port. This enable effective importation and exportation via the Deendayal port. 2) Assured water and electricity supply in Kandla special economic zone (Kandla SEZ). 3) Several of bank branches open within the Kandla SEZ. Available incentives: As Kandla is a Special Economic Zone in India, setting plant at Kandla will be able to enjoy incentive like: 1) Under Section 10 AA of IT Act in India, companies in India can enjoy 15 years of Corporate Tax holiday on export profit which classify into three stages: 

For the first five years, 100% tax exemption on export profit



For the next five years, 50% tax exemption on export profit



For the balance five years, up to 50% of the export profit can be exemption if the profit is ploughed back for investment.

2) Special economic zone is a chosen duty-free enclave which is treated as foreign territory when comes to trading, duties and tariffs. 3) Draw back and DEPB benefit are eligible for the sales to SEZ. SEZ units are exempted from Central Sales Tax and service tax. 4) Cost of imported capital goods are allowed to be capitalize by SEZ units. 5) Industrial License Requirement, which is crucial for items set aside for SSI sector can be exempted. 6) Capital Goods imported by SEZ companies are able to capitalize uniformly for 10 years. 7) Customs duty on import of capital goods, raw materials, consumables supplies and etc by SEZ Units can be exempted. 8) Exemption from Central Excise duty on procurement of capital goods, raw materials, consumables supplies from domestic market. 9) Exemption from Customs/Excise duty on goods (all construction & office materials) for setting up and maintenance of units in Zone is also available. 10) Import and export transactions are on self-certification basis.

The advantages and disadvantages of setting up a plant in India is summarised in the table below:

Table 2.6.10: Advantages and Disadvantages of setting up a plant in India. Advantages

Disadvantages

Good toluene market within India

Poor infrastructure and facilities compared to China and Malaysia

Numerous of incentive and bonus for foreign Located far away from China which is the investment.

dominant importer of toluene in the world.

Easy access to marine route

Sales of toluene will be dependent on the local demand

Cheap land price1 Lower

employment

Prone to cyclones cost

to

employ

professionals.2 Easy to secure naphtha supply3

1

which ranges between 610 – 910 rupee/sqft (9 – 13.37 USD/sqft)

2

A petrochemical engineer will only require an annual salary of 830k – 1.3 mil rupee (RM49,000- 76,500) to employ while it will take an annual salary of RM 100,000 to hire a petrochemical engineer in Malaysia. 3

India is the sixth largest exporter of Naphtha in the world and Kandla is close to UAE and Saudi Arabia

which is the second and third largest exporter of Naphtha in the world.

Table 2.6.11: Summarization of the location selection for plant setup Location Available

Pasir Gudang 

infrastructure and facilities

Within the coverage of Peninsular

Huangdao District 

Gas Utilisation (PGU) project 

Tank farms are developed for



storage of petrochemical liquids 

Well established area with world

Kandla 

class facilities

supply in Kandla special

Close to Lianwanhe Water

economic zone (Kandla SEZ).

Purification Plant



Several of bank branches open within the Kandla SEZ.

Close to Power Center Sultan 

Iskandar Johor Transportation Close to:

Assured water and electricity

Lack of first class facilities

Close to:

Close to: 



Pasir Gudang Expressway



Huangdao oil port



JB East Coast Highway



Qingdao port



Tanjung Langsat Port



Interconnected to Qingdao



Johor Port

Qianwangang No.1 Shugang



Tanjung Pelepas

Expressway. 

Deendayal Port

Lack of access to expressway.

Linked to Jiaozhou-Huangdao Railway

Labor cost



Moderate labor cost



High labor cost



Low labor cost

Land cost



High land cost



Moderate land cost



Low land cost

Incentives



Cooperate tax fixed at 25%



Corporate tax of 15%

regardless of local or foreign



Benefit of 2+3 years, which the

on export profit- 100% for first 5

cooperate will enjoy two years of tax

years, 50% for the next 5 years

holidays (Exemption of tax) and will

and up to 50% for the balance 5

Pioneer Status:

only need to pay 50% of the normal

years equivalent to profits

Income tax exemption of 70% or

tax rate for the rest 3 years. The

ploughed back for investment.

100% on the statutory income for

company will only need to pay taxes

These benefits is governed by

five years.

start from the sixth year of incoming

section 10 AA of IT Act.

companies. 

generating year. 

Investment Tax Allowance:



For R&D expenses incurred for new

Investment tax allowance of 60%

technology, new products, or new

or 100% on the qualifying capital

craftsmanship, an extra 50% of the

expenditure for five years. The

actual expenses incurred are also tax-

allowance can be utilised to offset

deductible as an incentive.

against 70% or 100% of the statutory income. .



15 years Corporate Tax holiday

Decision on the final location for the setup of toluene plant. By evaluating and analyzing all of the marketing data we had gathered, we had decided that Huangdao district which located in Qingdao, China will be the best location for us to setup our new toluene plant. Firstly, China has the largest market for the toluene which we will not worry about the sales of toluene in China as the demand for toluene should be strong. Huangdao district is also located close to South Korea and Japan which can also be the potential buyer of our product. Other than that, Huangdao district has well established facilities to facilitate our production and distribution of toluene. Other than that, the transportation system in Huangdao district is wellestablished. Although Huangdao district has limited aviation access, toluene exportation will not be affected as aviation transportation is not available for flammable product. Besides, setting up plant in SEZ enable us to enjoy several incentives which is beneficial for a newly established plant. Low land cost is also a plus for us to choose Huangdao district as the location to build our plant even though the labor cost will be one of the challenge for us to overcome.

2.1.7 Material Safety Data Sheet The MSDS of all the chemicals and intermediates that included in the reaction pathways and the summarized contents are listed below: 

Benzene: Science Lab. (2005). Material Safety Data Sheet Benzene MSDS Section 1: Chemical Product and Company Identification, 1(1), 1–6.



Toluene: Science Lab. (2005). Material Safety Data Sheet: Toluene, 4, 3–8.



Xylene: Science Lab. (2013). Material Safety Data Sheet: Xylene, 3, 1–6.



Naphtha: Tesoro. (2011). Material Safety Data Sheet Naphtha.



Methane: Elements, G. H. S. L. (n.d.). Material Name: Strain, 6358.



Ethane: Explode, M. A. Y., & Heated, I. F. (2015). Ethane Safety Data Sheet.



Propane: Praxair. (2016). Praxair Material Safety Data Sheet, 1–8.



Butane: Praxair. (2016). Butane Material Safety Data Sheet, Butane Canada.



Pentane: Science Lab. (n.d.). 4 1 Material Safety Data Sheet, 4–9.



Hexane: Equipment, S. L. co. C. & L. (2013). Material Safety Data Sheet Hexanes, 1–6.



Heptane: Science Lab. (2010). Material Safety Data Sheet. Heptane MSDS, 1–6.



Octane: Identification, C. (n.d.). Material Safety Data Sheet Octane MSDS, 1–5.



Cyclohexane: Science Lab. (2015). 3 1 0 Material Safety Data Sheet Cyclohexane.



Cycloheptane: Way, N. (2016). Safety data sheet, (1907), 1–9.



Cyclooctane: Mo, S. L. (2012). SIGMA-ALDRICH, 4–9.



Hydrogen: Way, N. (2016). Safety data sheet, (1907), 1–9.



Water: Science Lab. Chemicals and Laboratoy Equipment. (2013). Material Safety Data Sheet Water MSDS

Table 2.7.1: Summarized Chemical data for the catalytic reforming. Chemicals

Physical Properties

Benzene

Boili ng Point (°C) 80.1

Flash Point (°C) -11.1

Auto Ignition Temperatu re (°C) 497.78

HMIS rating

Health Hazard:2 Fire Hazard:3 Reactivity:0

Fire and Explosion Flammability

Flammability /Explosive Limit (%)

DOT Classification: CLASS 3 : Flammable liquid

LFL: 1.2 UFL:7.8

Toxicology

Others

TWA: 0.5ppm STEL: 2.5ppm

Highly reactive with oxidizing agent, acid

Absorbed through skin. Dermal contact. Eye contact. Inhalation.

Produce carbon oxides when burned.

Carcinogenic effect: A1

May form explosive mixtures with other chemicals.

Mutagenic effect: Possible Developmental toxicity: Classified Reproductive system/toxin/female Toluene

110.6

4.44

480

Health Hazard:2 Fire Hazard:3 Reactivity:0

DOT Classification: CLASS 3 : Flammable liquid

LFL: 1.1 UFL:7.1

TWA: 200ppm STEL: 500ppm LDL:50mg/kg

Reactive with oxidizing agents.

Absorbed through skin. Dermal contact. Eye contact. Inhalation. Ingestion.

Produce carbon oxides when burned.

Carcinogenic effect: A4

Xylene

Naphtha

Methane

138.5

30205

-162

24

43

-223

464

276.67

537

Health Hazard:2 Fire Hazard:3 Reactivity:0

Health Hazard:2 Fire Hazard:3 Reactivity:-

Health Hazard:2 Fire Hazard:4 Reactivity:0

DOT Classification: CLASS 3 : Flammable liquid

CFR Classification: CLASS 3 : Flammable

DOT Classification: CLASS 2.1 : Flammable gas

LFL: 1.0 UFL:7.0

LFL: 1.1 UFL:8.2

LEL: 5.0 UEL:15.0

TWA: 100ppm STEL: 150ppm LDL:50mg/kg

Explosive when vapor mix with air.

Absorbed through skin. Dermal contact. Eye contact. Inhalation.

Explosion of container when heated.

Carcinogenic effect: 3 TWA: 350ppm STEL: 500ppm LDL:-mg/kg

Contains petroleum hydrocarbon and may release hydrogen sulfide which is highly toxic and flammable.

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Explosive in the presence of open flames, sparks, heat and static discharge.

May cause cancer and reproductive harm.

Avoid contact with oxidizers or strong acids

TWA:1000ppm

Keep away from heat, sparks, open flame and hot surface. Severe fire and explosion hazard

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Contains gas under pressure, explode when heated Ethane

-88

-135

515

Propane

42.03

-104

450

Butane

-0.51

-60

405

Pentane

36.1

-49

260

Health Hazard:1 Fire Hazard:4 Reactivity:0

DOT Classification: CLASS 2.1 : Flammable gas

LFL: 3.0 UFL:12.5

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Forms explosive mixture with air.

Health Hazard:1 Fire Hazard:4 Physical Hazard:2 Health Hazard:0 Fire Hazard:4 Physical Hazard:2

DOT Classification: CLASS 2.1 : Flammable gas

LFL: 2.1 UFL:9.5

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Forms explosive mixtures with air and oxidizing agent.

DOT Classification: CLASS 2.1 : Flammable gas

LFL: 1.8 UFL:8.5

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Forms explosive mixtures with air and oxidizing agent.

Health Hazard:2 Fire Hazard:4 Reactivity:0

DOT Classification: CLASS 3 : Flammable liquid

LFL: 1.5 UFL:7.8

Store under 52°C and avoid from sparks, open flame.

TWA: 600ppm STEL: 750ppm Absorbed through skin. Eye contact. Inhalation. Ingestion.

Store under 52°C and avoid from sparks, open flame. Keep away from heat, source of ignition. Keep away from incompatibles such as oxidizing agents.

Hexane

68

-22.5

225

Health Hazard:2 Fire Hazard:3 Reactivity:0

DOT Classification: CLASS 3 : Flammable liquid

LFL: 1.15 UFL:7.5

TWA: 500ppm STEL: 1000ppm

Keep away from heat, source of ignition.

Absorbed through skin. Dermal contact. Inhalation. Ingestion.

Store in approved area, keep container in a cool, well ventilated area.

Very hazardous in case of ingestion, of inhalation. Heptane

Octane

98.4

125.6

-4

13.33

203-223

206

Health Hazard:1 Fire Hazard:3 Reactivity:0

Health Hazard:2 Fire

DOT Classification: CLASS 3 : Flammable liquid

DOT Classification: CLASS 3 :

LFL: 1.05 UFL:6.7

LFL: 1.0 UFL:6.5

TWA: 400ppm STEL: 500ppm

Highly flammable in presence of open flames and sparks, of heat.

Absorbed through skin. Inhalation.

Vapors may form explosive mixtures with air and travel considerable distance to source of ignition and flash back. Keep away from heat, source of ignition.

TWA: 300ppm CEIL: 375ppm

Keep away from heat, source of ignition.

Hazard:3 Reactivity:0

Flammable liquid

Eye contact. Inhalation. Ingestion.

Flammable in presence of open flames and sparks. Slightly flammable to flammable in presence of oxidizing materials. Flammable materials should be stored in a separate safety storage cabinet or room.

Cyclohexane

80.7

-18

245

Health Hazard:1 Fire Hazard:3 Reactivity:0

DOT Classification: CLASS 3 : Flammable liquid

LFL: 1.3 UFL:8.4

TWA:300ppm

Highly flammable in presence of open flames and sparks, of heat.

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Keep away from heat, source of ignition.

Passes the placental barrier, detected in maternal milk. May affect genetic material (mutagenic) Cycloheptane

118.4

6

-

Health Hazard:3 Fire Hazard:3 Reactivity:0

Highly flammable liquid and vapor

-

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Keep away from heat, source of ignition.

Cyclooctane

Hydrogen

Water

151

-253

100

28

-

-

-

500-571

-

Health Hazard:0 Fire Hazard:3 Reactivity:0

DOT Classification: CLASS 3 : Flammable liquid

LEL:0.95

Health Hazard:0 Fire Hazard:4 Reactivity:0

DOT Classification: CLASS 2.1 : Flammable gas

LFL: 4.0 UFL:76.0

Health Hazard:0 Fire Hazard:0 Reactivity:0

Nonflammable

Absorbed through skin. Eye contact. Inhalation. Ingestion.

Vapors may form explosive mixture with air. Avoid from heat, flames, sparks and strong oxidizing agent.

Absorbed through skin. Eye contact. Inhalation. Ingestion.

May form explosive mixtures with air. Keep away from heat, hot surfaces, sparks, open flames and other ignition sources.

-

Non-corrosive, nonirritant for skin.

Protect from sunlight. Store in a well-ventilated place. No specific safety measure.

For the reaction pathway 3, the possible causes to the hazard and also the consequences for the hazards are summarized in table 7.2 with safety measures.

Potential Hazard Benzene Leakage

Toluene Leakage

Xylene Leakage

Possible Consequences

Safety Measure

Acute health effects: Irritation of eyes, skin upon contact. Inflammation of eyes. Chronic health effect: Possible mutagenic effect on human. Contain toxin that damage human organs, blood, central nervous system and reproductive system. Symptoms: Depression, loss of coordination, dizziness, headache, weakness, pallor, flushing. Explosive in the presence of oxidizing agents and acids.

Handle with splash goggles, lab coat, gloves, vapor respirator and safety boots. Provide exhaust ventilation or other engineering controls to keep the airborne concentrations of vapors below their respective threshold limit value. Remove the spilled or leakage through absorption with dry earth, sand, inert materials or other noncombustible material.

Benzene vapor may cause flash fire.

Application of smoke and heat detector to eliminate fire. No action shall be taken involving any personal risk or without suitable training. Handle with splash goggles, lab coat, gloves, vapor respirator and safety boots. Provide exhaust ventilation or other engineering controls to keep the airborne concentrations of vapors below their respective threshold limit value. Remove the spilled or leakage through absorption with dry earth sand, inert materials or other noncombustible material.

Store in a segregated, approved, cool, well-ventilated area and avoid all possible sources of ignition.

Acute health effects: Irritation of eyes, skin upon contact. Inflammation of eyes. Chronic health effect: May be toxic to blood, kidneys, the nervous system, liver, brain, central nervous system (CNS). Repeated or prolonged contact may cause defatting dermatitis, cardiovascular symptoms similar to that of acute inhalation and ingestion as well weight loss, pigmented or nucleated red blood cells, changes in white blood cell count, bone marrow changes, electrolyte imbalances (Hypokalemia, Hypophostatemia), severe, muscle weakness and Rhabdomyolysis Flammable in presence of open flames and sparks, of heat. Application of smoke and heat detector to eliminate fire. Keep away from incompatibles such as oxidizing agents. No action shall be taken involving any personal risk or without suitable training. Acute health effects: Irritation on eyes, skin, respiratory tract Handle with splash goggles, lab coat, gloves, vapor respirator and and mucous membrane upon contact. safety boots. Provide exhaust ventilation or other engineering

Chronic health effect: Affect urinary system (kidneys), blood (anemia), bone marrow (hyperplasia of bone marrow), brain/behavior/Central Nervous system, liver and metabolism. Symptoms: Headache, weakness, memory loss, irritability, dizziness, giddiness, nausea, vomiting, shivering, and possible coma and death

Naphtha Leakage

controls to keep the airborne concentrations of vapors below their respective threshold limit value. Remove the spilled or leakage through absorption with dry earth sand or other non-combustible material.

Highly flammable and slightly explosive in presence of open Cool containing vessels with water jet in order to prevent pressure flames and sparks, of heat. build-up, auto-ignition or explosion. Application of smoke and heat detector to eliminate fire. Keep away from incompatibles such as oxidizing agents. No action shall be taken involving any personal risk or without suitable training. Acute health effects: Irritation and discomfort on eyes, skin, Handle with splash goggles, lab coat, gloves, vapor respirator and respiratory tract and lungs upon contact. Aspiration may result safety boots. Once exposed, take off all contaminated clothing in chemical pneumonia, severe lung damage, respiratory immediately and thoroughly wash material from skin. Seek medical failure and even death. advice if symptoms persist or develop. Chronic health effect: Long-term exposure may cause effects to specific organs, such as to the liver, kidneys, blood, nervous system, and skin. Contains benzene, which can cause blood diseases. Disorders associated with skin, liver, respiratory system, and central nervous system. Risk of cancer depends on duration and level of exposure. May form ignitable vapor-air tanks or other containers.

mixtures

in

storage Use water spray, alcohol-resistant foam, dry chemical or carbon dioxide. Do not use a solid water stream as it may scatter and spread fire. No action shall be taken involving any personal risk or without suitable training.

Alkanes leakage

Acute health effects: Slightly irritation of eyes, skin upon contact. Contact with liquid may cause frostbite. High concentration will cause suffocation. Asphyxiant, headaches, dizziness, vomiting if inhaled. Chronic health effect: Alkanes may be toxic to lungs, peripheral nervous system, upper respiratory tract, skin, central nervous system (CNS). High carbon number substances may be toxic to peripheral nervous system, skin, central nervous system (CNS). Highly flammable in presence of open flames and sparks, of heat. Vapors may form explosive mixtures with air. Vapor may travel considerable distance to source of ignition and flash back.

Handle with splash goggles, lab coat, gloves, vapor respirator and safety boots. Provide exhaust ventilation or other engineering controls to keep the airborne concentrations of vapors below their respective threshold limit value.

Application of smoke and heat detector to eliminate fire. Make sure the concentration of this chemical is not beyond the TLV.

No action shall be taken involving any personal risk or without suitable training. Cycloalkanes leakage

Hydrogen leakage

Acute health effects: May cause skin, eyes and respiratory tract irritation. Unconsciousness and death may occur at high exposures. Inhalation of high vapor concentrations may cause symptoms like headache, dizziness, tiredness, nausea and vomiting. May be fatal if swallowed and enters airways.

Handle with splash goggles, lab coat, gloves, vapor respirator and safety boots. Provide exhaust ventilation or other engineering controls to keep the airborne concentrations of vapors below their respective threshold limit value.

Chronic health effect: May cause drying, cracking and chapping of exposed areas and damage on kidneys and liver. Vapor may travel considerable distance to source of ignition Store in a segregated, approved, cool, well-ventilated area and avoid and flash back. all possible sources of ignition. No action shall be taken involving any personal risk or without suitable training. Contact with rapidly expanding gas may cause burns or Handle with splash goggles, lab coat, gloves, vapor respirator and frostbite. May displace oxygen and cause rapid suffocation. safety boots. Away from the emission source unless no risk.

Risk of explosion if heated and pressure generated.

Avoid all possible sources of ignition. Handle with explosive proof equipment. No action shall be taken involving any personal risk or without suitable training.

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