industrial chemistry for teachers
K. M. REESE
Although 70% of all students trained in chemistry and 90% of all those trained in chemical engineering will earn their livings in industry, students often are little exposed in school to the realities of industrial employment. For the industrial chemist or engineer, economics is a pervasive consideration, and the purpose of this article is to examine some few facets of the interplay of economics with the basic science and technology of the chemical industry. The topics covered here are not fully interrelated in an obvious way. But taken together they will provide a degree of insight into how the chemical industry goes about its business, and why, and how the industry relates to other industries and to the national economy. Brief background material precedes treatment, in varying depth, of these subjects The economics and the industrial chemistry and engineering of two important commercial chemicals, ammonia. and ethylene, and the impact of these compounds on certain other commercial chemicals. Brief profiles of four additional commercial chemicals, aspirin, nylon, DDT, and a fluorocarbon propellant for spray cans, including the reactions used to make them and the volume m d value of their production. A brief profile of the chemical industry as a whole, including total sales, a ranking of the 10 largest companies, and the relationship of the industry to the national economy, ss illustrated by such means as the Standard Industrial Classification, the Wholesale Price Index, and the Index of Industrial Production.
Background
A chemical company cannot survive unless it earns a profit, and profit in any industry is a function of that industry's economics. The dictionary defines "economics" in part as "the science that investigates the conditions and laws affecting. . .the material means of satisfying human desires." It will become c1es;r a hit later that the chemical industry does satisfy human desires, and the chemist or engineer who is working on a new product or process is thus by definition involved in economics. Economics in the chemical industry reflects the interplay of many parameters, including research and deThis paper has been prepared under the sponsomhip of the Education Activities Committee, Manufacturing Chemists Association, 1825 Connecticut Ave., N.W., Washington, D.C., 20009, from whom reprints me available.
Economics in the Chemical Industry, Part I velopment, raw materials, labor, productivity, price, and sales volume. The impact of new technology is but one of many factors that the chemicals producer must consider when he decides whether to make a given product. To make any chemical he must invest capital, and often he must elect to invest in one of several alternative chemicals. His decision rests on estimates of sales volume, plant
Table 1.
Profit for Plant Operating a t 100To of Capacity Cents ner ib of product
$/yr
Net sales: 50 million 1b/yr 30.0 15,000,000 Production costs Raw materials Raw material A:O.7lb @ 101/lb 7.0 3,500,000 R a w m a t e n a l B : 0 . 4 l b @ 5 ~ / l b 2.0 1,000,000 Catalvst and chemicals 10 500.000 Labop Operators: 6 men/shift @ $3.25/hr Supervisors: 7 men @ $10,00O/yr Indirect labor: 10% of cost for operatars and s$ervisors Labor overhead: 15% of foregoing labor costs Utilities Steam: 570 million b / y r a t 35t per 1000 lb Fuel gas: 600 million standard cubic feet per year a t 256 per 1000 standard cubic feet Electricity: 10 mdlion kwh a t It/kwh Cooling water: 5 billion gal/yr a t 11/1000 -~ a l Mnintenanee 600,000 Plant overhead 400,000 Depreciation: 6.7%/yr of $15 1,000,000 million fixed capltal Total production cost 7,800,000 Profit at plant level 7,200,000 Marketing, research, administration 1,000,000 Corporate profit before taxes 6,200,000 Corporate profit after taxes 3,200,000 Source: "Encyclopedia of Chemical Technology," (2nd Ed.), John Wiley & Sons, Inc., New York, 1965, Vol. 7, D. 642.
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Table 2.
Position 14.59
1. Ammonia. 2. Phosphoric acid" 3. Sulfuric acid 4. Aluminum oxide 5. Chlorine 6. Sodium hydroxide 7. Titanium dioxide 8. Ammonium phosphatesb 9. Nitric soid 10. Ammonium nitrate a
U.S. in 1965 and Comparison with 1959
The Top Inorganic Chemicals in the
2nd 7th 1st 6th 5th 4th 3rd 8th 10th
Production value (million dollars) 1965 1959
Production (million pounds) 1965 1959
Average unit value (dollars per pound) 1965 1959
$591.3 435.7 415.4 366.7 359.2 32.5.4 309.9 290.7 264.4 249.7
Phosphoric acid listed as 50% HaPo, jn 1959 and as Ammonium phosphates not m top 10 1n 1959.
Source: "Chemical Origins and Markets," Stanford Research Institute, Menlo Perk, Calif., (3rd Ed.) 1962; (4th Ed.) 1967.
Table 3.
The Top Primary Organic Chemicals in the U.S. in 1965 and Comparison with 1959 Position 1959
Production value (million doll%rs) 1965 1959
Production (mjllion pounds) 1960 1959
1. Ethylene 1st $370.4 $245.1 9,260 4,902 Benzene 3rd 198.5 98.3 6,053 2,482 Acetylene 4th 166.4 95.6 1,140 708 Propylene 8th 99.9 44.2 4,757 2,453 Toluene 6th 93.9 56.3 3,957 2,030 N-Butenes" 64.4 2,300 Xylenes (total mixed) 7th 60.0 53.1 2,401 1,763 Naphthalene 9th 28.6 21.3 811 425 Isobutylenem 26.5 530 Cresols' 13.5 71 ,?I-Butenes and isobutylene were combined in 1959, and comparison would be invalid. 6 Cresols not in top 10 in 1959.
2. 3. 4. 5. 6. 7. 8. 9. 10.
Average unit value (dollam per pound) 1965 1959 $0.04 0.033 0.146 0.021 0.024 0.028 0.025 0.035 0.05 0.19
$0.05 0.04 0.135 0.018 0.028 0.03 0.05
Source: "Chemied Origins and Markets," Stanford Research Institute, Menlo Park, Calif., (3rd Ed.) 1962 ; (4th Ed.) 1967.
performance, and other factors, and such estimates are perforce imprecise. Thus enters the element of risk. Market research and commercial development men, who generally are chemists or engineers, can do much to reduce the risk in developing and introducing new chemical products. They cannot eliminate it, however. When a chemicals producer decides to make a particular product, his selection ideally will combine maximum profit potential with minimum risk. Whether it does so can rarely he known with assurance when he makes the decision. To realize the profit potential of his product, the producer must set a proper price on it, since price determines in part the amount of the product that he will be able to sell. I n addition to profit, moreover, the money brought in by the product must pay for the materials, labor, and energy required to make it. That money must pay also for research and development, marketing, administration, depreciation of plant and equipment, and taxes. The costs incurred by each of these factors may change over the life of the product, and the price, sales volume, and profit may change as well. The determination of price is thus both a technical and an economic problem, one of the most complex that the producer must solve. (A generalized calculation of profit on a specific product appears in Table 1.) H u m a n Desires: Ammonia, Ethylene
A man who works in industry must recognize that profit is basic to the chemical industry's involvement with economics, "the material means of satisfying hu726
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man desires." Subject to that constraint, the chemical industry does satisfy many human desires, and among the most basic of them is the desire for food. The synthetic ammonia made by the chemical (and petroleum) industry, and some of its derivatives, are basic ingredients in the fertilizer used in modern agriculture, the source of the hulk of man's food and, incidentally, of much of his fiber. Ethylene and its derivatives (which will he discussed in the second part of this arti'cle), also made by the chemical (and petroleum) industry, are the source of other products that fill a numher of man's needs. Among those products are antifreeze for automobiles, synthetic detergents, synthetic fibers for clothing, and magnetic tape for tape recorders and computers. I n 1965 in the United States, ammonia was the leading inorganic chemical in dollar value of production, and ethylene was the leading primary organic chemical (Tables 2 and 3). Agricultural A m m o n i a
Agricultural ammonia today is the basis of the world's nitrogen fertilizer industry. It contains 82.4% nitrogen and is thus the most concentrated source of that primary nutrient for growing plants. Although it is a gas at normal temperature and pressure, ammonia can he injected directly into the soil. It is used to make nitric acid, which is used in turn to make ammonium nitrate and nitric phosphate fertilizers. It is used to make urea and ammonium sulfate, both of which also serve as fertilizers.
Nitrogen delivered to the soil in any of these compounds is one of three primary plant nutrients. The other two are phosphorus and potassium. These materials, used singly and in various combinations, are growing increasingly important in a world whose population is predicted to rise from 3.5 billion today to 4.5 billion by 1980 and 7.5 billion by the year 2000. People must eat, and fertilizer is one of the chief means of producing more food at lower cost. The rising world output of fertilizer reflects what is happening. I n 1965-66, world-wide production of nitrogen for use in fertilizer, most of it originating in synthetic ammonia, was about 22 million tons. The figure is expected to rise to 36.5 million tons in 1969-70 and to 49 million tons in 1975. World-wide capacity to produce ammonia is expected to rise to more than 50 million tons per year by 1970, about 20 million of it in the U.S. Production of ammonia in this country alone rose from 3.9 million tons in 1958 to 12.5 million tons in 1967. Industry consumes about 20% of the US. output of ammonia, which, with its derivatives, hay some 2500 end uses. Ammonia furthermore is well into a major technological revolution, whose most obvious manifestation is very big plants-1000 tons per day and more. The results of this revolution include lower costs and new economic bases for selecting plant sites. Parallel developments include new methods of storage and transportation. The history of agricultural ammonia is a good exaniple of the interplay of science, technology, and economics. For centuries farmers relied on local, natural sources of nitrogen, such as manure, to keep their lands productive. When the urban pressures that we feel so heavily today began to develop in Europe, farm land became scarcer and local sources of nitrogen became inadequate. Europe then began to import guano (bird droppings) from islands off the coast of Peru. Later came sodium nitrate mined from huge deposits in South America west of the Andes. This sodium nitrateChile saltpeter-was the world's primary source of chemically-combined nitrogen before World War I. Scientists had known long before 1914, of course, that the air was an immense reservoir of nitrogen. Research on nitrogen fixation-inducing the gas to form a usable compound-goes as far back as the experiments of Cavendish in the late 18th century. I n 1895-98, in Germany, Frank and Caro developed a process in which pure nitrogen, from an air separation plant, was passed over calcium carbide a t 900-llOO°C to form calcium cyanamide. Modifications of this process are still used. Calcium cyanamide is the preferred fertilizer for certain crops and soils. I t is a good weed killer, and the calcium it contains helps to neutralize acidic soils. In 1904, in a small plant in Norway, Birkeland and Eyde used an electric arc process to make nitric oxide from the nitrogen and oxygen in the air. I n a second step the process produced nitrogen dioxide, which was absorbed in water to form nitric acid. The acid was then reacted with lime to form calcium nitrate. The Birkeland-Eyde process was in use a t a dozen plants in the world by 1918, but it is no longer economic and is not used today. Meanwhile, although fixation of nitrogen had become
a commercial reality, scientists were still dreaming of combining the gas directly with hydrogen to form the simple, high-nitrogen compound, ammonia. The reaction was considered "impossible" as late as 1880 and "not commercially feasible" by around 1907. In 1909 in Germany Fritz Haber developed a unit that combined hydrogen and nitrogen into 80 g of ammonia per hour. The process used a catalyst based on osmium. Haher's reaction was reversible. Although it was rapid above 700°C, the equilibrium a t that temperature was such that ammonia was not produced a t a high enough rate to make the process economical. The equilibrium was more favorable below 500°C. The problem was to find a catalyst that would give a commercially significant rate of reaction a t less than 500°C, and it was solved by Alwin Rlittasch a t Badische Anilin- & Soda Fabrik. He developed an iron catalyst whose action was intensified by incorporating metallic oxides in it. Carl Bosch designed a 30 ton-per-day ammonia plant, which went on stream a t BASF in 1913. It was the world's first commercial synthetic ammonia plant. Modern Ammonia Technology. Since that time, a great deal of research and development has been done to reduce the cost of making ammonia. Most of today's ammonia synthesis processes remain, nevertheless, variations on the Haber-Bosch process. Reaction pressure generally lies between 200 and 300 atm (30004400 lb/in2). Reaction temperature is around 500°C. I n recent years very little change has occurred in the basic synthesis unit (converter). Technological progress, however, has led to larger and larger units. Converter production capacities normally were around 120 tons of ammonia per day in 1950. In plants operating today, they run from 600 tons per day to 1000 tons and higher. The hydrogen used in the ammonia synthesis unit can be obtained from natural gas, naphtha, and other liquid fractions from petroleum refineries, coke-oven gas, electrolysis of water, and by gasification of coal and other solid fuels. Also, after World War 11, petroleum refiners in the U.S. rapidly expanded their use of catalytic reforming to convert low-octane naphthas to highoctane blending stocks. Catalytic reforming produces large amounts of hydrogen, which in some cases hecame a raw material for ammonia plants. Today, however, refining processes such as hydrocracking consume most of the hydrogen produced in refineries. The most widely used sources of hydrogen today are natural gas and naphtha. The composition of natural gas varies widely, but in the U.S. it generally contains 85% to 95% methane. It also contains other hydrocarbons, such as ethane, propane, and butane. Naphtha is a cheap liquid fraction of petroleum that contains a wide range of hydrocarbon compounds. The most widely used process for making hydrogen from natural gas or naphtha is steam reforming. A second important process is partial oxidation, in which a hydrocarbon feed, which can range from natural gas through fuel oil, is partially burned with oxygen to produce a synthesis gas that contains hydrogen and carbon monoxide. Choosing between natural gas and naphtha as a source of hydrogen is an economic matter. In the U S . (and world-wide), natural gas is the popular choice because it is cheap and plentiful. I n Europe, naphtha is Volume 46, Number 1 I, November
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duce the cost of the process. One result has been that the very large converters that can be built today make it possible to use centrifugal compressors, instead of reciprocating compressors, to raise the nitrogen-hydrogen mixture to synthesis pressure. The power required to operate compressors is an important part of the cost of the overall process. Centrifugal compressors cost less to buy and to operate than do reciprocating compressors, but they do not begin to gain an economic advantage until a converter size of about 600 tons of ammonia per day is reached. When ammonia converters that large became feasible, centrifugal compressors began to be used with them instead of t,he reciprocating equipment used in smaller plants. .. Such changes can rarely be made independently in a chemical process plant, and this one was no exception. Centrifugal compressors suffer from design problems a t gas pressures much higher than 200 atm, whereas ammonia converters were operating a t around 300 atm. The economic balance dictated that synthesis pressures be dropped to just over 200 atm, and that centrifugal compressors be used, and that was what was done. The ultimate measure of the performance of a synthetic ammonia plant is how much it costs to make a ton of ammonia. Within certain limits, this cost tends to decrease as the size of the plant increases. One large manufacturer of ammonia plants estimates that ammonia can be produced for $32.55 per ton in a 333 ton-per-day plant using reciprocating compressors (Table 4). The cost per ton falls to $19.36 in a 1000 ton-per-day plant using cent,rifugal compressors. Both cost figures are for plants in the US. based on natural gas. Overall, technological evolution, which has involved storage and transportation developments as well as manufacturing improvements, has steadily lowered the price of agricultural ammonia to the farmer. The U S . Department of Agriculture surveys prices of fertilizer to the farmer each April 15 and Sept. 15. The price of anhydrous ammonia on April 15, 1955, was $166 per ton. By April 15, 1965, it had fallen to $91.40 per ton.
generally the choice. I t is relatively cheap there, whereas natural gas was relatively rare and costly until the discovery in the past few years of the large gas deposits in the North Sea geological formations. Gas from these deposits is now coming into use to make chemicals, including ammonia, in Europe. The extent to which i t will displace naphtha will be, as in this country, a question of economics. To make hydrogen from natural gas, the latter is reacted with steam in a reformer to produce a synthesis gas consisting of carbon monoxide and hydrogen. The carbon monoxide is converted to carbon dioxide and more hydrogen by the water gas shift reaction, and the carbon dioxide is removed by scrubbing. The two basic reactions can be shown simply by considering only the methane in the natural gas CH,
+ H10
-
+
CO 3H9 Initial resetion
+
+
CO H1O cop Hz Water gas shift reaction
In a modern ammonia plant, about 70% of the methane is converted to carbon monoxide and hydrogen in a primary reformer, and the remainder is converted in a secondary reformer. Air is added in the secondary reformer, and the oxygen in it is destroyed by combustion, leaving the nitrogen for synthesis later in the process. Gas from the secondary reformer goes to the shift converter, where the water gas shift reaction takes place. From the shift converter, the mixture of carbon dioxide, hydrogen, and nitrogen goes to a scrubber, where the carbon dioxide is removed. The hydrogen-nitrogen mixture is then compressed to synthesis pressure before entering the ammonia converter. As a result of efforts to solve the problems involved with high temperature work, primary reformers today operate at 1400-1500°F, with tube wall temperatures as high as 1900°F. Operating pressure is as high as 500 lb/inz. The trend to higher pressure also helped to bring on the use of the secondary reformer, which makes the overall conversion of methane more efficient. The same sort of development took place earlier in the ammonia converter. Again, the object was to re-
Table 4.
Ammonia Production Capacity versus Manufacturing Cost
Plant capacity, tan/day Compressolidriver Investment Working capital
333 Reeiprocating/motor $ 7.5 million $ 1.1 million
Tots1 Direct operating costs, $/ton Natural gas @ 256 per million BTU Utilities Catalysts and chemicals Labor
$
$ 7.42
6.66 0.55 $ 2.70
Subtotal Indirect operating costs, $/tan Maintenance, depreciation, interest, taxes, insuranie Total Source: AXELROD, L., DAZE, R. E., (1968).
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AND
8.6 million
1000 Centrifugal/turbine $14 million $ 2.1 million $16.1 million $
8.00 0.56 0.70 0.90
-
-
$17.33
$10.16
$15.52
$
-
-
9.20
$32.85
$19.36
WICKHAM,H. P., "The Laxge Plant Concept," Chemical Engineering Progress, 64, 7, 17
