Estimation of the cost impacts of retrofit biorefinery implementation using perationsdriven costing

摘要

Increased competition from low cost pulp and paper producer nations and decreasedmarket demand of pulp and paper products have made it imperative for North Americanforestry companies to enhance the cost competitiveness of their production facilities. An efforthas been made to achieve this by planning to change and diversify the product portfolio withbiorefinery products such as biofuels and bio-chemicals either through mill retrofit orrepurposing. Risk-adjusted financial justification of many of these strategies is challenging,partly due to uncertainties in the market place for both existing and new products, rawmaterials in the longer term, and technological viability of potential new biorefining processesin the short term.We introduce a novel early-stage process design method targeted at estimating thechanges in cost-efficiency of existing processes in different retrofit biorefinery implementationscenarios, for screening out non-promising alternatives. The method uses process-based data,process simulation and cost estimation based on the principles of activity-based costing toderive transparent and understandable direct and indirect cost information of an integratedsystem of continuous processes. Stochastic risk analysis (Monte Carlo) is integrated into thecost modelling framework to be able to analyse the effect of price and performanceuncertainties on the cost-efficiency.Several kraft pulp mill retrofit strategies, including mill modernization and biorefineryimplementation projects with different production capacities are evaluated using the proposedmethod, and the results are presented. Because the method first allocates the costs toactivities based on resource consumption and then to end products, the true costs ofproduction can be better estimated. This leads to an understanding of the impacts of processintegration on the individual product production costs in the integrated system. Differences –and the reasons for these differences – in cost-reduction potential and overall marginimprovement, and therefore also in project profitability and mill’s economic performance can beseen and analysed between retrofit strategies. The difference in the level of uncertainty,analysed in a systematic manner, shows that screening out retrofit strategies requires the useof multiple decision making criteria.