Inevitably, in a point in time when you are handling world scale petrochemical projects, it will be necessary to select the technology required by your project.
Technology selection is not an easy task; the most common life like example is to try to pick only one fruit up from a basket full of delicious, juicy looking fruits. In the example, you may try two or more of the fruits, but in technology selection you have only one chance to select the right one.
Your selection not only has to make you happy but also the project owners/sponsors that are likely to demand an optimal investment (Capital expenditure - CAPEX) and operating cost (Operating expenditure - OPEX). Also, the future maintenance and operating team would like a reliable plant and easy to operate and maintain. Additionally, government and environmental bodies will be having one (or two) eyes on you to ensure the regulations compliance of the plant. Now you can see that making everybody happy is not going to be easy.
To accomplish the difficult task of selecting the proper technology a methodic approach must be adopted. Evaluation and comparison among the options on measurable criteria will be the key to the optimal technology selection.
Following, I will give some guidelines to make a methodic technology evaluation. There are several ways to approach the evaluation, but I think that this approach is methodic enough and covers most of the points important in the technology evaluation and selection.
To start, find the list of licensor offering the latest technology and shortlist 3 to 5 of them (if available). Too many technologies can bring excessive complexity, time and cost to the evaluation process. The pre-selection criteria can be their market share, or latest licensing developments. Some owners/sponsors are ready to select new technologies, others prefer proven and widely used. This is an important criterion to apply to the first cut of shortlisted technologies.
Now that you have pre-selected a group of 3 to 5 technologies, you can request technical and commercial information from the licensor. Your company likely would have to execute Non-disclosure Agreements (NDA) with all licensor to protect secrecy of both, your project and the licensor information.
You should request to all the licensor the information in the same manner; the same information and, as much as possible, in the same format. Some project could request only the Technical Information Packages (TIPs) and later a commercial offer after the technical part’s scope is fully defined and understood.
The technological issues to be studied and compared depend a lot on the type of plant or process, in general the request of information to licensors should include:
Keep in mind that your source of information will not only be from licensors; Your will need to visit some operating plants, search in public domain and consult colleagues working with the shortlisted technologies if your team does not have experience with them. Typically you can find trough the plants visit and other interactions a more realistic picture than the one given by the licensors.
In a petrochemical project it is of utmost importance safety and environmental compliance. For this reason the environmental impact of the technologies should be evaluated and compared. Issues like total emission; cost of treatment should be evaluated.
The operability of the processes should be assessed based in the simplicity of flowsheeting, equipment count, typical on stream factors, and how fast and safe the process can be recovered from an unexpected shutdown. Also, Manning required can be analyzed to assess the complexity of the processes and an partial view of the direct fixed cost.
An important aspect to be evaluated and compared is the reliability of the technologies. Instrument dependency and general maintenance requirements in term of frequency, time and resources are part of reliability aspects to be analyzed.
The capability of the licensor to keep the technology up-to-date and to constantly improve in the technology are parameters that should be seriously considered. You don’t want to end selecting a technology that can become obsolete in a short period.
Also, the pro-activeness and willingness of the licensor to provide affordable and prompt technical support during project execution as well as during the commercial operation of the plant is a very important parameter to evaluate and compare licensors.
Last, but not least at all, is the initial estimate of CAPEX and OPEX. Typically, OPEX can be estimated with great amount of accuracy with the information given on consumption by licensor and some homework done to get the pricing. Some licensor can provide even to some extend the operating cost but the best is to estimate it yourself.
On the other hand, CAPEX is one of the parameters most difficult to estimate at this early stage of the project. Comparing CAPEX estimates given by different licensors becomes an activity with a lot of uncertainty. Firstly, as the estimated given by licensor is not binding, their calculation use to be too optimistic. It required a lot of work to bring all of the estimates from all of the licensor to a meaningful comparative stage. In some cases it results a better option to look for third party independent evaluation to get a better inside on the CAPEX of each technology. As mention earlier, this parameter will be very important to owners/sponsors, so it needs special care.
Technology selection is not an easy task; the most common life like example is to try to pick only one fruit up from a basket full of delicious, juicy looking fruits. In the example, you may try two or more of the fruits, but in technology selection you have only one chance to select the right one.
Your selection not only has to make you happy but also the project owners/sponsors that are likely to demand an optimal investment (Capital expenditure - CAPEX) and operating cost (Operating expenditure - OPEX). Also, the future maintenance and operating team would like a reliable plant and easy to operate and maintain. Additionally, government and environmental bodies will be having one (or two) eyes on you to ensure the regulations compliance of the plant. Now you can see that making everybody happy is not going to be easy.
To accomplish the difficult task of selecting the proper technology a methodic approach must be adopted. Evaluation and comparison among the options on measurable criteria will be the key to the optimal technology selection.
Following, I will give some guidelines to make a methodic technology evaluation. There are several ways to approach the evaluation, but I think that this approach is methodic enough and covers most of the points important in the technology evaluation and selection.
To start, find the list of licensor offering the latest technology and shortlist 3 to 5 of them (if available). Too many technologies can bring excessive complexity, time and cost to the evaluation process. The pre-selection criteria can be their market share, or latest licensing developments. Some owners/sponsors are ready to select new technologies, others prefer proven and widely used. This is an important criterion to apply to the first cut of shortlisted technologies.
Now that you have pre-selected a group of 3 to 5 technologies, you can request technical and commercial information from the licensor. Your company likely would have to execute Non-disclosure Agreements (NDA) with all licensor to protect secrecy of both, your project and the licensor information.
You should request to all the licensor the information in the same manner; the same information and, as much as possible, in the same format. Some project could request only the Technical Information Packages (TIPs) and later a commercial offer after the technical part’s scope is fully defined and understood.
The technological issues to be studied and compared depend a lot on the type of plant or process, in general the request of information to licensors should include:
- Process Description
- Description of the advantage points of the proposed technology.
- Process flow diagram including the operating conditions of major equipment.
- Raw Material and Products specification
- Overall Material balance.
- Emission and effluent quantities and composition.
- Utility consumption normal, peak and guaranteed specific consumption
- Summary of catalysts and chemicals required for the processes. Indicating the first fill quantity, consumption, design life, costs per unit, recommended suppliers etc.
- List of proprietary chemicals and processes. Budgetary pricing.
- Reference list and information on licensor’s market share.
- Sized equipment list with enough details for estimating budgetary cost.
- Total Installed Cost (TIC +/-30% accuracy)
- Technical Service Agreements (TSAs) Modalities and cost
- Training / Technology transfer Plan
- Typical Project schedule
- Approved Engineering Procurement and Construction (EPC) contractors.
Keep in mind that your source of information will not only be from licensors; Your will need to visit some operating plants, search in public domain and consult colleagues working with the shortlisted technologies if your team does not have experience with them. Typically you can find trough the plants visit and other interactions a more realistic picture than the one given by the licensors.
In a petrochemical project it is of utmost importance safety and environmental compliance. For this reason the environmental impact of the technologies should be evaluated and compared. Issues like total emission; cost of treatment should be evaluated.
The operability of the processes should be assessed based in the simplicity of flowsheeting, equipment count, typical on stream factors, and how fast and safe the process can be recovered from an unexpected shutdown. Also, Manning required can be analyzed to assess the complexity of the processes and an partial view of the direct fixed cost.
An important aspect to be evaluated and compared is the reliability of the technologies. Instrument dependency and general maintenance requirements in term of frequency, time and resources are part of reliability aspects to be analyzed.
The capability of the licensor to keep the technology up-to-date and to constantly improve in the technology are parameters that should be seriously considered. You don’t want to end selecting a technology that can become obsolete in a short period.
Also, the pro-activeness and willingness of the licensor to provide affordable and prompt technical support during project execution as well as during the commercial operation of the plant is a very important parameter to evaluate and compare licensors.
Last, but not least at all, is the initial estimate of CAPEX and OPEX. Typically, OPEX can be estimated with great amount of accuracy with the information given on consumption by licensor and some homework done to get the pricing. Some licensor can provide even to some extend the operating cost but the best is to estimate it yourself.
On the other hand, CAPEX is one of the parameters most difficult to estimate at this early stage of the project. Comparing CAPEX estimates given by different licensors becomes an activity with a lot of uncertainty. Firstly, as the estimated given by licensor is not binding, their calculation use to be too optimistic. It required a lot of work to bring all of the estimates from all of the licensor to a meaningful comparative stage. In some cases it results a better option to look for third party independent evaluation to get a better inside on the CAPEX of each technology. As mention earlier, this parameter will be very important to owners/sponsors, so it needs special care.
There are some other qualitative kind of parameters that can be analyzed and compared, like some special technical features, execution schedule, EPC availability that add to the evaluation the final touches and make it deeper.
Finally, your may like try to give a more quantitative look to the evaluation by assigning weightage to each evaluation criteria and marking each technology according to a ranking. The outcome of this exercise can be very interesting and can show you how sensitive is your selected technology to changes on view on the evaluation criteria.
I hope these guidelines help you in your next technology evaluation. I am quite sure that you would agree that choosing what fruit to eat is much easier.
Good luck.
Finally, your may like try to give a more quantitative look to the evaluation by assigning weightage to each evaluation criteria and marking each technology according to a ranking. The outcome of this exercise can be very interesting and can show you how sensitive is your selected technology to changes on view on the evaluation criteria.
I hope these guidelines help you in your next technology evaluation. I am quite sure that you would agree that choosing what fruit to eat is much easier.
Good luck.
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