Jack D. Hilbert, SME, and Colin Barbeau, guest co-author | Hatch
In past “Pneumatic points to ponder…” articles, we’ve focused more on the technology aspects of pneumatic conveying components and system design instead of looking at the bigger economic picture of choosing a conveying system. We provided you with information, tools, and recommendations to optimize a system’s performance and help evaluate a vendor’s proposal. However, minus a few isolated columns, we haven’t provided you with information about the economics of pneumatic conveying in regard to how this method compares with alternative forms of material conveying.
In focusing on the economic advantage of one conveying system over another, keep in mind that every project comes with different processes, design criteria, conditions, and technical advantages and disadvantages, all of which affect the total project cost and operational cost. Because of these variables as well as others, each project should be evaluated on a case-by-case basis.
Technology’s financial considerations
Common practice during a technology trade-off study is to calculate the approximate capital expenses (CAPEX) of the different technology being evaluated. The CAPEX are the funds that will be used to acquire, install, and commission technology should it be implemented in the process. Calculating the CAPEX is a typical early project phase step and is necessary to determine an estimated total project implementation cost, which will lead to getting the funds approved for the project’s execution. Operational expenses (OPEX) are rarely evaluated in the early project phases but can sometimes allow an owner to make a better-informed decision on the best technology for an application. The OPEX are recurring costs that will affect the plant’s bottom line year after year, and we believe that the OPEX should be part of a complete trade-off study.
Determining the OPEX
The costs of the equipment’s spare parts, associated labor, annual power consumption, and production time lost typically account for the majority of the OPEX and should be part of the evaluation.
Spare parts. Obviously, the first thing that comes to mind when thinking about operational costs are spare parts. Discussions with suppliers and other end users with similar applications should be had to benchmark the frequency of spare part changes and repairs per year. Keep in mind that if a spare part is a long lead item, buying the part as CAPEX to have the part ready for commissioning and the first year of operations might be necessary.
Labor. Different items must be considered to correctly estimate labor costs. Try to estimate the required workhours in regard to the accessibility of each part of the system, any productivity loss in a brownfield environment (a contaminated environment that has developmental potential), local labor rate, and special rental equipment if required. Ideally, 3D models of the different system options should be available to execute your reviews with plant maintenance personnel. Their input is crucial in this part of the process, as they will bring valuable experience to optimize access to critical parts and input on estimates. Personnel can also help to identify access areas that will need to be reworked for the project implementation costs that will need to be included in the CAPEX estimate.
Equipment’s annual power consumption. Some equipment is more energy intensive than other equipment for the same duty. This power consumption obviously impacts OPEX and should be evaluated considering local energy costs. As a side note, make sure your electrical room and grid can sustain the additional loads and include the financial cost of necessary upgrades in the project CAPEX.
Lost production time. If the spare parts can be changed during a scheduled shutdown, this is less of a problem, but some applications will require frequent changes in spare parts, causing unscheduled downtime that will need to be considered in annual profit loss. Some process equipment needs additional ramp-up time after a shutdown before the equipment becomes productive again, and this should be considered in the evaluation as well.
Technology trade-off case study
Now that we’ve presented the backbone for the OPEX evaluation, we’ll present a case study to illustrate how the determined OPEX can affect the technology selection in a real-life scenario. Note that the numbers presented here are representative of a specific project process, design criteria, and conditions. Numbers will be different from project to project, so they need to be studied on a case-by-case basis. The important point to focus on here is the process and not the individual numbers.
This case study involves a new process plant that needed a conveying system that would receive a hot and extremely abrasive material from two vibratory feeders and carry the material to a silo. The application’s process data is broken down in Table I. As you can see, the material was conveyed at 95 short tons per hour (stph), contained particles up to 1⁄8 of an inch in size, and contained silica dust, which had to be controlled as silica is hazardous.
Two different conveying options were considered and their respective block flow diagrams are shown in Figures 1 and 2.
Option 1. The mechanical conveying system consisted of two air-supported belt conveyors that received material from two vibratory feeders and one chain bucket elevator that carried the material into a high-pressure grinding roll (HPGR) feed silo, as shown in Figure 1. Air-supported belt conveyors were selected given the material’s abrasiveness, the required capacity, and the layout, which was a relatively long transport for in-plant equipment. Additionally, this option was a good fit because of the equipment’s ability to control dust emissions since the material contained toxic silica fumes. This conveying system was also studied to standardize or increase commonality of equipment throughout the plant, which is always an important factor to keep in mind. Lastly, given the very high material temperature, a chain bucket elevator was required with a specialized extreme abrasion-resistance chain, which can withstand higher temperatures than belt elevators.
Option 2. The dilute-phase pneumatic conveying system consisted of a positive-displacement blower, two vibratory feeders feeding the material into two extreme abrasion-resistant rotary airlocks, and the subsequent pipeline, as shown in Figure 2. This option also carried the material into the same HPGR feed silo from option 1. This system was selected because the material capacity and plant layout were in the “sweet spot” range (the optimal design parameter range) for pneumatic conveying technology. This system also allowed for better dust emission control than option 1, and while maintenance would be required on the system’s parts due to the material’s abrasive nature, the maintenance would be localized to a few specific components that are relatively quick to change.
The OPEX estimate details for both options were gathered, as shown in Tables II and III. For this project, the assumption that all maintenance would be scheduled was made, which is why extra downtime for maintenance isn’t shown in either of the tables. The CAPEX estimates are also presented in Tables II and III and represent the total installed project cost, including direct costs, indirect costs, and contingencies.
A summary and comparison of the two options’ OPEX and CAPEX estimates are shown in Figure 3. Comparing the two options’ OPEX and CAPEX evaluations to one another showed that the pneumatic option (the blue bar) had a lower CAPEX than the mechanical option (the orange bar) — roughly half the cost — but that the pneumatic option had approximately double the OPEX.
Traditionally, the decision to select the option with the lowest CAPEX could rapidly be made when comparing the two systems in Figure 3. However, different financial tools are available that highlight the importance of including a system’s OPEX in the decision-making process. One tool that we feel is relevant for comparing technological options is the net present cost (NPC), which allows you to compare the options’ total life cycle costs, also shown in Figure 3. This method uses an escalation rate for the OPEX and a nominal discount rate to bring the options’ life cycle CAPEX and OPEX costs to an NPC in “money of today” or how much it’s worth right now. This is a detailed subject though and can’t be discussed in-depth in this article.
Nevertheless, an NPC for both options was calculated over 10 years based on the initial CAPEX and recurring OPEX values presented in this study while accounting for a 10 percent discount factor and 2.5 percent OPEX escalation. The mechanical option’s NPC was approximately $2.5 million, while the pneumatic option’s NPC was approximately $2.4 million, as shown in Figure 3. Over a 10-year period, the pneumatic option would cost $100,000 less than the mechanical option in current money value. A $100,000 cost difference is relatively small considering a 10-year project life cycle and the estimating precision of this early project phase. Technological changes could be made to the two system options to try to reduce their NPC’s and hopefully get a stronger financial argument for one over the other. This case study’s financial evaluation didn’t make a strong statement in favor of one option over the other, so weighing the two options’ technical aspects against each other would be really important to consider in selecting the best one.
Technology trade-off case study 2
Finally, we took the same case study but altered the material’s properties from extremely abrasive to nonabrasive and hot temperature to ambient temperature before running our estimates again. We did this alternative case study to further illustrate this article’s main objective, which is to show that for every project, the technical advantages and disadvantages and CAPEX and OPEX estimates will be different and should be evaluated on a case-by-case basis.
With the altered material properties, the cost estimates for the pneumatic conveying system and mechanical conveying system are shown in Figure 4. The case study 2 CAPEX estimates for both mechanical and pneumatic systems come in below the case study 1 CAPEX estimates by approximately $200,000 and $100,000 respectively, but the mechanical system CAPEX is still greater. However, the case study 2 OPEX estimates are level for the two systems with the pneumatic OPEX estimate dropping by approximately $100,000. Under these altered conditions, the NPC estimate in case study 2 makes a much stronger argument for the pneumatic option as the cost between the two is obviously greater.
Author’s note: This column was primarily written by guest author Colin Barbeau, who specializes in comparative assessments of different conveying system types.
For further reading
Jack D. Hilbert, PE (610-657-5286) is an expert bulk solids pneumatic conveying consultant for Hatch in Schnecksville, PA. Prior to that, he was the principal consultant for Pneumatic Conveying Consultants. He holds a BS and MS in mechanical engineering from Penn State University, State College, PA. He has more than 45 years of experience in the application, design, detailed engineering, installation, and operation of pneumatic conveying systems.
Colin Barbeau, P. Eng. (438-806-4298, www.hatch.com) is the Eastern North America bulk material handling engineer lead for Hatch, based in Montreal, QC. He graduated from Ecole Polytechnique de Montreal with a bachelor’s degree in materials engineering. He has more than 13 years of experience working exclusively in the bulk materials handling field, both as a bulk materials equipment handling supplier and a consultant.
Copyright CSC Publishing Inc.