Economic evaluation and sensitivity analysis of some fuel oil upgrading processes

Abstract

Seven upgrading schemes, identified as high distillate production schemes have been proposed for upgrading of 3.50×106t/y atmospheric residues. The seven schemes were evaluated using the discounting cash flow method. Economic parameters such as internal rate of return, IRR, payback period, PBP and net present value, NPV have been calculated for each option.All studied schemes proved profitable with IRR ranging between 25.2 and 33.7% with option 7 having the highest NPV, IRR and payback period. Sensitivity analyses were performed on this option. The parameters investigated are: sales price (Revenue); production rate (feed weight); feed cost; utilities cost; direct and indirect costs; tax% and discount rate%. Their impact on NPV and %IRR has been evaluated. Tornado diagrams were constructed to illustrate the effect of variation of different cost parameters on NPV and IRR. The single most effective input variable is Revenue on both NPV and IRR. With two-factor sensitivity analysis, the two most important input variables for NPV and IRR are revenue and utilities.Spider charts for option 7 have been created to show how the model’s outputs depend on the percentage changes for each of the model’s input variables.