Chapter 1

CHAPTER 1
1.1 PROCESS BACKGROUND AND ANALYSIS
1.1.1 INTRODUCTION
Polyethylene Glycol (PEG) is a polymer of ethylene oxide with a structure of HO

(CH2CH2O)nH where n represents the number of ethylene oxide units contained in the
PEG polymer as shown in Figure 1.1.1 below.
HO
OH x4
Ethylene Glycol
HO O OH
O O
Polyethylene Glycol (PEG4)
Figure 1.1.1: Polyethylene Glycol (PEG) structure

Source:PEG (Polyethylene Glycol) Reagents
PEG is known as polyethylene oxide (PEO) or polyoxyethylene (POE),

depending on the molecular weight (Mehvaret al., 2000). PEG is also known as
‘macrogols’ in the European pharmaceutical industry. Normally ‘macrogols’ contains
very high molecular weight (WHO Geneva, 1980). PEG is soluble in most organic
solvents such as benzene, carbon tetrachloride, chloroform, dimethyl formamide (DMF),
acetonitrile. PEG is perfectly soluble in water but solubility decreases with increasing
molecular weight. PEG is generally non-toxic, odourless, colorless, noniritating and
2
does not evaporate easily. PEG is inert thus it does not react with other material
(Henning, 2002)
Since, the products of PEG posses their mean molecular weight of 200 to 35000
‘polyethylene glycol’ is normally technical name polyethylene oxides. Product that made
by polymerization of EO with molecular weight up to several million will be known as
polyethylene oxide (Henning, 2002).
Basically, the ethylene glycol, 1, 2-ethylenediol or glycol is the simplest diol.

Therefore, polymerization process is the main method to produce PEG. The monomer
of PEG is normally produced from the hydrolysis of ethylene oxide. The following
polymerization to obtain PEG then, takes place usually under alkaline catalyst
(Henning2002).
Products are designed based on mean molecular weight of the polymer such as
PEG 200, PEG 400, PEG 600, PEG 1500 and PEG 4000. The lower molecular weight
of PEG contains 2 - 4 ethylene glycol units per polymer and exists as clear liquid. While,
PEG containing up to 700 ethylene glycol units per polymeric product are clear, thick
liquids and PEG having 1,000 or more ethylene glycol units per polymeric product are
waxy solids (Siegfried Rebsdat and Dieter Mayer, 1992).The physical and chemical
properties were shown in Table 1.1.1.
Table 1.1.1 Chemical and physical properties of Polyethylene Glycol
Moisture
Types of Molecular Specific
Appearance Content pH Viscosity
PEG Weight Gravity
%
PEG 200 190-210 Clear liquid 0.2 5-7 1.12-1.13 50 cp @ 25 °c

3
135 cp @ 25
PEG 600 570-630 Clear liquid 0.2 5-7 1.12-1.13
°c
20 cp (50%
PEG
950-1050 White paste 0.1 5-7 1.08-1.09 aqueous
1000
solution)
40 cp (50%
PEG 1800-
White flake 0.1 5-7 1.08-1.09 aqueous
2000 2200
solution)
100 cp (50%
PEG 3500-
4000 4500
solution)
100 cp (50%
PEG 5000-
6000 7000
solution)
Continuation of table 1.1.1
Source: chemicalland
Table 1.1.2 Chemical and physical properties of Mono, Di, Tri, Tetra ethylene Glycol
Monoethylene Diethylene Triethylene Tetraethylene

Physical
Glycol Glycol Glycol Glycol
Properties
(MEG) (DEG) (TEG) (TREG)
Formula C2H802 C4H10O3 C6H14O4 C8H1805
Molecular Weight
62 106.12 150 194.2
(g/mol)
Boiling Point @
329 (625)
760 mmHg, °C 197 (387) 245 (473) 288 (550)
Decomposes
(°F)
Vapor Pressure
at 20°C (68 °F) 0.06 0.002 <0.01 <0.01
mmHg
Density (g/cc) @
1.115 1.118 1.125 1.124
20°C (68°F)
4
Density (g/cc) @
60°C (140°F) 1.085 1.087 1.093 1.096
1.096
Pounds Per
Gallon @ 25°C 9.26 9.27 9.35 9.37
(77° F)
Freezing Point,
-13.4 (7.9) -9.0(16) -4.3(24) -4(25)
°C (°F)
Pour Point , °C
<-59 (<-75) -54(-65) -58(-73) -41(-42)
(°F)
Viscosity , cp @
16.9 35.7 49.0 58.3
25°C (68°F)
Viscosity , cp @
5.2 7.3 10.3 11.4
60°C (140°F)
Surface Tension
dynes/cm @ 48 44.8 45.5 44.0
25°C (77°F)
Refractive Index
1.430 1.447 1.455 1.459
@ 20°C (68°F)
Specific Heat @
25°C 0.58 0.55 0.52 0.52
(77°F)Btu/Ib/°F
Flash point, °C
116 (241) (2) 154 (310)(2) 177 (350)(2) 202 (395) (2)
(°F) 116 (241)
Thermal
Conductivity,
0.1490 0.1175 0.1133 0.1106
Btu hr-1 ft-1 °F-1
25°C (77°F)
Continuation of table 1.1.2
Source: Ethylene Glycol Properties
5
1.1.2 PRODUCTION OF ETHYLENE GLYCOL: HISTORY AND BACKGROUND
As mentioned earlier, monoethylene glycol is the ‘starting material’ for the

polymerization process in the manufacturing of PEG. Here, the history of ethylene
glycol production is therefore presented.
Ethylene glycol was first prepared in 1859 by the Frenchchemist Charles-

Adolphe Wurtzfrom ethylene glycol diacetate via saponification with potassium
hydroxide and, in 1860, from thehydrationofethylene oxide. There appears to have been
no commercial manufacture or application of ethylene glycol prior toWorld War I, when
it was synthesized fromethylene dichloridein Germany and used as a substitute for
glycerolin theexplosivesindustry (Hollis et al.,2002) .
In the United States, semi commercial production of ethylene glycol via ethylene
chlorohydrins started in 1917. The first large-scale commercial glycol plant was erected
in 1925 atSouth Charleston, West Virginia, by Carbide and Carbon Chemicals Co.
which now known asUnion Carbide Corp. In 1929, ethylene glycol was being used by
almost alldynamitemanufacturers and in 1937Carbide started up the first plant based on
Lefort's process for vapor-phase oxidation of ethylene to ethylene oxide. Then, Carbide
maintained a monopoly on the direct oxidation process until 1953, when the Scientific
Design process was commercialized and offered for licenses(Hollis et al., 2002).
The polymerization exists in 1863 by Wurtz, who heated the oxide with water in
a sealed tube. Prior to that, Laurenco had obtained the polymer from ethylene glycol
and ethylene bromide. Then, Staudinger and Lehmann had prepared the polymer with
variety of catalyst like alkali and alkaline earth metals in seven decades
later(A.Wurtz.Ann, 1859).
Although ethylene glycol has been known since 1859, it was not produced
industrially until World War I. Its synthesis was then based on the hydrolysis of ethylene
oxide produced by the chlorohydrins process (S.A. Miller, 1969). Production from
formaldehyde and carbon monoxide was used commercially from 1940 to 1963. Direct
oxidation of ethylene to ethylene glycol was also employed commercially for a short
time, but was abandoned, probably due to problems caused by corrosion
6
(A.M.Brownstein, 1975). Nowadays, the common practice in the industry to produce

PEG is from the polymerization of ethylene glycol which was first produced from the
hydrolysis of ethylene oxide.
1.1.3 USES OF PEG
Polyethylene glycols (PEG) with varying molecular masses find numerous uses in the
pharmaceutical industry such as in ointments, liquids and tableting. Due to the, fast
growth of cosmetic industry, PEG becomes a vital compound in manufacturing process
of cream, lotions, pastes and soaps. It is also used in the textile industry as a cleaning
or dyeing aids and widely used in rubber and ceramic industriesas lubricants and
bonding agent (Henning et al., 2007).
PEG also findsa large number of applications in medical application due to its
interesting properties of making superficial contact with the skin of living creatures
especially humans or being administered orally or parentally to human. In this
applications, PEG used as a solvent for active ingredients, flavouring or fragrance in
medicinal drop (Henning et al., 2007). Different types of PEG and their uses are given
in Table 1.1.3 below (Henning et al., 2007).
Table 1.1.3 the usage of PEG

Types of PEG Usage
- In brake fluid and intermediate for esterification in ceramic
PEG 200
industries.
PEG 400 - Base for pharmaceuticals syrup and intermediate for esterification
PEG 600 - Toiletries and intermediates.
PEG 1500 - Base for creams and ointments & toothpaste.
PEG 4000 - Base for cream and ointments.
PEG 8000 - Cosmetics, clinical purposes, research work
Source: aasthashubh.tradeindia.com
7
1.1.4 PROCESS SELECTION
Generally, there are three most common ways to produce Ethylene glycol (EG):
 Hydrolysis of Ethylene Oxide (EO) ( Bhawan and Nagan, 2008)
 Transesterification of Methanol and Ethylene Carbonate (Duranleauet

al.,1987)
 Hydrolysis Ethylene Carbonate to Ethylene Glycol (Becker et al., 1985)
Then, in order to produce polyethylene glycol, the polymerization process takes

place where it is manufactured by polymerization of ethylene oxide (EO) with either
water, monoethylene glycol, diethylene glycol or triethylene glycol as starting material,
under alkaline catalysis (Henning, 2002).
1.1.4.1 Hydrolysis of Ethylene Oxide (EO) to Ethylene Glycol
Introduction
In this process, the main step involved is a reaction between ethylene oxide (EO) and
water to produce Monoethylene glycol (MEG). Hydrolysis of ethylene oxide isthe most
widely used method in the industry for the production of ethylene glycol due to its
simplicity and reliability of the process. Also it is observed as the most common method
applied in the integrated plants that produce ethylene oxide and glycol simultaneously
(Bhawan and Nagar, 2008).
Process Description
Ethylene Glycol is produced industrially by the uncatalyzed hydrolysis of ethylene oxide.

The reaction of ethylene oxide (EO) with molecular formula (C2H4O) and water (H2O) is
carried out in a plug flow reactor. Generally, the reaction of ethylene oxide and water in
a plug flow reactor produces three types of main products which are Monoethylene
glycol (MEG), Diethylene glycol (DEG) and Triethylene glycol (TEG). There is
presenceof heavier residual products but are usually found in very small quantity. In
order to maximize the production of MEG and reduce the production of DEG and TEG,
8
large amounts of water are used. The ratio of feed water/ethylene oxide is manipulated
in order to determine the selectivity of the process (Bhawan and Nagar, 2008).The
MEG produced from this process is then used as the starting material for the
polymerization process to produce PEG. The chemical reactions involve in this
manufacturing are:
C2H4O + H2O  C2H6O2

Ethylene oxide (EO) + water monoethylene glycol (MEG)
C2H6O2 + C2H4O  C4H10O3

MEG + EO Diethylene glycol (DEG)
3C4H10O3 + C2H4O  C6H14O4

DEG + EO Triethylene glycol (TEG)
Although the process is typically run without catalyst, the hydrolysis is done with
a considerable molar excess of water which therefore needs to be separated from the
monoethylene glycol (MEG) product, usually by multiple-effect evaporators, and
recycled. In some process designs, the quality of the water used for hydrolysis is
critically important and these processes therefore incorporate ion exchange systems to
remove impurities that would otherwise recycle with the process water. The separation
process is needed to separate the MEG from other by-products which are DEG and
TEG. The process is carried out with greater than 20 times molar excess of water in
order to minimize higher glycol by product. The distillation column is used in order to
purify the MEG up to 99.99 wt%. The block diagram of hydrolysis process to produce
MEG is shown in figure 1.1.2.
9
Figure 1.1.2: Block Diagram for Production of Ethylene Glycol via Hydrolysis
Source: (Duranleauet al., 1987)
1.1.4.2 Transesterification of Methanol and Ethylene Carbonate
Introduction
Ethylene glycol can also be manufactured by the transesterification of ethylene

carbonate. In transesterification method, the monomer (i.e. ethylene glycol) is first
produced by the reaction between ethylene carbonate and methanol. As previous
method, in order to produce polyethylene glycol (PEG), the produced ethylene glycol is
later undergoes a polymerization step.
10
Process Description
During the transesterification process, methanol and ethylene carbonate are reacted
and producing ethylene glycol and dimethyl carbonate. In order to proceed, the reaction
needs the presence of a series of various heterogeneous catalyst systems such as ion
exchange resins with tertiary amine, quaternary ammonium, sulfonic acid and
carboxylic acid functional groups, alkali and alkaline earth silicates impregnated into
silica and ammonium exchanged zeolites (Duranleauet al, 1987).
The chemical reaction involve in transesterification process is:
2CH4O + C3H4O3 C2H6O3 + C3H6O3
Methanol + ethylene carbonate ethylene glycol + dimethyl carbonate
Figure 1.1.3: Diagram of process for simultaneously making ethylene glycol and
dimethyl carbonate
Source: Duranleau et al, 1987

11
Recovery of the desired ethylene glycol and dimethyl carbonate can be carried
out by distillation and crystallization. Besides, the by product of the process is
Diethylene glycol and Dimethyl ether. Normally in this method, to produce polyethylene
glycol usually Diethylene glycol will become the starting material for the polymerization
step. There are several advantages of the process. One of them is that it requires only
low concentration of methanol in the methanol-ethylene carbonate feed. Another
advantage of this method is the catalysts used can be recovered and recycled. It is also
reported that with this method, corrosion of metal equipment can be avoided. However,
this process is not suitable for PEG production as Diethylene glycol only produced as a
by-product and the process does not focus on producing the required starting material.
Therefore, it is not worth to use the transesterification process in producing
polyethylene glycol. Furthermore, the needs of heterogeneous catalyst system suitable
for the practice of this invention generally comprise an insoluble acid or base system
(Duranleauet al, 1987).
1.1.4.3 Hydrolysis of Ethylene Carbonate to Ethylene Glycol
Introduction
Preparation of ethylene glycol from ethylene carbonate has received an attention

because of its possibility to produce higher glycols with reduced utility cost.In this
method, ethylene oxide is converted to an intermediate, ethylene carbonate by reaction
with carbon dioxide, which is then hydrolyzed by water to give up ethylene glycol. This
process was applied in the late 1970s, but nowadays this process has been replaced
bythe ethylene oxide-glycol integrated plant.
Process Description
Theprocess consists of two parts which are:
1) Production of ethylene carbonate from ethylene oxide. In this part ethylene

carbonate is formed from the reaction of ethylene oxide with carbon dioxide in the
presence of catalyst. The catalysts for this reaction are alkali halides, quaternary
12
ammonium halides and quaternary phosphonium halides. The chemical reactionof

this process is :
O
O KI C
CH2 CH2 + CO2 O O
Ethylene oxide + carbon dioxide ethylene carbonate
2) The second part involvesthe reaction of ethylene carbonate and water in the
presence of catalyst to produce ethylene glycol. In this part, ethylene carbonate
will be hydrolysed by adding a suitable amount of water. The normally used
catalyst for this reaction is potassium carbonate:
O
C Na2CO3
O O + H2O HOCH2CH2OH + CO2
Ethylene carbonate + water ethylene glycol
In this method ethylene carbonate is formed as an intermediate, some of

ethylene carbonate could present in the product.This is undesirable because ethylene
carbonate can decompose into ethylene oxide and carbon dioxide. Therefore a
purification process is required to reduce ethylene carbonate to the desired level.
(Becker et al, .1985).
The reaction is carried out in a suitable vessel such as the plug flow reactor or
continuously mixed reactor. The product mixture is withdrawn and refined by using
distillation column to produce purified ethylene glycol by removing water, catalyst,
unreacted ethylene carbonate and higher glycols. However it is difficult to remove
ethylene carbonate, since it forms a low boiling point azeotrope with ethylene glycol.
Various methods might be considered for merely removing unreacted ethylene
carbonate such as decomposing ethylene carbonate to ethylene oxide or providing
additional residence time in hydrolyzer. The sufficient separation of ethylene glycol from
13
higher glycols and the catalyst can be made by merely heating and flashing at lower
pressure on the hydrolysis reactor effluent (Becker et al., 1985).
1.1.5 SELECTION PROCESS
All the processes described earlier are summarized and the comparison is given in
Table 1.1.4 below.
Table 1.1.4: Comparison process
Process Information Advantages Disadvantages

Hydrolysis of Raw Mat(s): Produce additional ethylene The presences of certain
Ethylene Ethylene Carbonate glycol during completely amount of unhydrolyze
Carbonate Catalyst(s): Organic hydrolyzing of ethylene ethylene carbonate in
Phosphonium carbonate process and ethylene glycol which can
Halides remove completely decompose to ethylene
unreacted ethylene oxide and carbon dioxide.
carbonate.
Existing of low boiling
Sufficient separation with low azeotrope to separate
pressure by heating or unhydrolyzed ethylene
flashing carbonate by distillation is
difficult.
Additional time added to

hydrolyzer in order to
remove unreacted
ethylene carbonate thus
having a longer time to
produce ethylene glycol.
Need to consume high
temperature in separation
of unreacted ethylene
carbonate
14
Transesterification  Little of diethylene

of Methanol and glycol and higher glycol
Ethylene Raw Mat(s):  recycling the recovered produced
Carbonate ethylene carbonate solid catalysts for reuse  Existing of azeotrope
and methanol  excellent selectivity of condition at distillation
Catalyst(s): ethylene glycol achieve where an overhead
heterogeneous  lack of corrosion of metal comprising an
catalyst equipment azeotrope of ethylene
carbonate and ethylene
glycol is produced
Hydrolysis of Raw Mat(s):  Commercially use due to  require capital
Ethylene oxide ethylene oxide and simplicity and reliability investment in
water  No catalyst used that will evaporators
Catalyst(s): None cut the cost  energy intensive in
 Purity up to 99.9 wt% distillation column
 No azeotrope conditions
exist in separation
process.
1.1.5 CONCLUSION
1.1.5.1 Selection of Ethylene Glycol Process
Comparing all the processes stated above (see Table 1.1.4), it can be seen that the
hydrolysis of ethylene oxide is the most suitable process to manufacture ethylene
glycol. Furthermore,this method is by far the most widely used method for the
production of ethyleneglycol. This process has been selected in the following Project
and will hence be dealt in detail.The hydrolysis process is chosen since no catalyst is
utilizedand thus it reduces the cost. Catalyst are not advice to use as this process is
very simple where hydrolysis is a reaction where water is one of the reactants, and a
larger molecule is split into two smaller molecules, one of which has the hydrogen from
the water and the other has the OH group from the water as the structure of ethylene
glycol shown in figure 1.1.1 (ILKnunyants, 1988). The chemical reaction of this process
is:
15
(CH2CH2)O + H2O → HOCH2CH2OH

Ethylene oxide +Water → Monoethylene Glycol
The advantage of using hydrolysis of ethylene oxide isdue to its simplicity of the
reactions involved in the process. This includes the advantage of lower production cost
as no catalyst is needed during the reaction. The reliability of this method contributes
excellent reputation of this process compared to other process. This process provide
cost effective for operations cost. Another significant advantage of using hydrolysis of
ethylene oxide compared to the other two processes that the formation of azeotrope at
distillation can be eliminated. Separation process is difficult during azeotrope condition
because special technique is required and an infinite number of stages above the feed
would be required to approach azeotropic concentrations(Turton et al, 1998). Another
upside to this process is the by-product which DEG that can be sold to make profit.
Thus, this will turn down the drawback of requiring capital investment inrequire capital
investment in evaporator.All these reasons can bring down the total costs of this
process exponentially when compared to the other processes.
1.1.5.2 Polymerization Process
The second part of manufacture of PEG is the polymerization process which the
liquid of ethylene oxide can formpolyethyleneglycols. MEG produced from the
hydrolysis process will be polymerized to PEG. The polymerization process is via chain-
reaction polymerization, sometimes calledaddition polymerization and requires
aninitiatorto start the growth of the reaction (Principle of Polymerization, 2004). Prior to
polymerization process, MEG produced from the first step has to be separated in a
separation unit from other glycols. The chemical reaction of the polymerization process
is:
C2H6O2 + C2H4O  HO-(C2H4O) n-H
MEG + EO polyethylene glycol (PEG)

16
1.1.5.3 Batch Process Descriptions
The polymerization of MEG to PEG is carried out in batch reactor.Monoethylene

glycol was utilized to be raw material in polymerization. MEG is chosen over the other
oligomers (DEG and TEG) as it is easier to maximize the selectivity as compared to the
other two (Bhawan and Nagan, 2008).
The catalyst used for the polymerization process can be anionic and cationic. In
this process anionic mechanism is more preferable as its mechanism allows the
production of PEG with low poly dispersity. The polymerization process involved in the
method is addition type and it is an exothermic process. There are several acids that
can be used as catalyst such as sulphuric acid, phosphoric acid and acetic acid.
Looking at thecost of these acids, sulphuric acid appears to have the lowest price
compared to others but it is too dangerous to apply in this industry. Considering the less
reactivity of a weak acid compared to strong acid like sulphuric acid and the production
safety as a whole, phosphoric acid has been chosen as the catalyst in this project.
There are two important aspects with regard to the control of molecular weight in
polymerization. In the synthesis of polymers, it is usually interested in obtaining a
product of very specific molecular weight, since the properties of the polymer will
usually be highly dependent on molecular weight. Molecular weights higher or lower
than the desired weight are equally undesirable. Since the degree of polymerization is a
function of reaction time, the desired molecular weight can be obtained by quenching
the reaction at the appropriate time. The quenching is via cooling water to lower the
temperature. However, the polymer obtained in this manner is unstable in that it leads
to changes in molecular weight because the ends of the polymer molecule contain
functional groups that can react further with each other. Thus, as for the neutralization
part, sodium hydroxide is going to be used to stop the reaction. The neutralizer is only
added to the reactor once the viscosity of the product reached the required value of the
desired molecular weight. A viscosity controller is therefore crucial and need to be used.
Another method is avoided by adjusting the concentrations of the two monomers

so that they are slightly nonstoichiometric. One of the reactants is present in slight
excess. The polymerization then proceeds to a point at which one reactant is
17
completely used up and all the chain ends possess the same functional group of the
group that is in excess. Further polymerization is not possible, and the polymer is stable
to subsequent molecular weight changes. The problem with this neutralization process
is precipitation of salt resulting from the formation of insoluble salt when catalyst (acidic
form) reacts with neutralizer (basic form). Therefore, the filtration process will be used
to separate the polyethylene glycol (PEG) and the existing salt.
Over all series of PEG, the PEG 400 was selected due to high demand in this
world. In addition, this compound has many uses for industry. PEG - 400 is harmless
towards skin, easily soluble in water and faintly sweet in taste. This makes it an
attractive ingredient in cosmetics such as creams, jellies and lotions. Other uses of
PEG - 400 are as lubricant in tyre manufacturing, plasticiser for sponges and synthetic
leather, paper softener, anti curl agent, flux for soldering and intermediate in resin
manufacturing. Other than that, PEG - 400 also find uses in toothpaste to remove dirt
on the teeth and in cosmetics soaps as a wetting agent preventing the soap from
cracking. So, this product has high chance to make profit.
1.1.5.4 Process Flow Diagram and Process Description
The Process Flow Diagram for the production of Polyethylene Glycol process is
attached in Appendix. The process begins with pumping P-100 liquid of ethylene oxide
initially at 10°C and 240kPa from storage tank to a mixer MIX-101in which it is
combined with water and heated to 26.37°C and 1800kPa in liquid phase. Then
entering the condenser E-100 to condense the mixture and leaving at 52.9°C and
1750kPa.Leaving the condenser, the mixture is sent to the reactor R-100 where
ethylene oxide is then reacted with water to produce ethylene glycol. The main reaction
that occurs in the reactor is:
C2H4O + H2O  C2H6O2

Ethylene oxide (EO) + water monoethylene glycol (MEG)
However, the side reactions between the produced ethylene glycol with ethylene oxide
will also occur as shown below:
23
C2H6O2 + C2H4O  C4H10O3

MEG + EO Diethylene glycol (DEG)
C4H10O3 + C2H4O  C6H14O4
DEG + EO Triethylene glycol (TEG)
In order to maximize the production of MEG and reduce the production of DEG
and TEG, a large amount of water will be used as described earlier (Bhawan and
Nagar, 2008). The reactor effluent at 205.5 °C and 1700 kPa which consist of MEG,
DEG, and TEG is then fed into the multi effect evaporators, V-100-V103 to remove
water. The overhead streams contain water at the first evaporator (separator) V-100, is
condensed in E102 at 158.6 °C and 595kPa which then enters the tank before it
condense to E-100. The bottom stream is then entering the second evaporator V-101 at
160.6 °C and 600 kPa which consist of portion MEG, DEG, TEG and TREG. The
overhead consist of water remove to condenser E103 at 135.4°C and 300 kPa. The
process is repeated in the third and fourth evaporators, V-102 and V-103 then, the
overhead streams contains water which will remove by condenser E104 and E105
before stored in tank. The bottom stream consist a mixture of MEG, DEG, TEG TREG
and small amount of water were then purified by distillation column T-100 at 48.6°C and
10 kPa.
A series of distillation columns will be used to achieve 99.5% purity before being
fed to the batch polymerization process. Here, this overhead water which then recycles
back to the feed water by pumping at 32.89 °C and 101.3kPa via pump P103 whereas
the bottom line consist of Monoethylene glycol, Diethylene glycol, Triethylene glycol and
higher glycol at 136.5 °C and 10 kPa. Separating and purifying the mixture of MEG,
DEG, TEG, TREG via T-100 ends up with MEG in the overhead stream, which later
isstored in TK-100 before being polymerized in batch process to produce PEG. DEG,
the major component in the bottom stream will be purified from TEG and TREG by
column T-102. Purified DEG is the by product that can be sold.
In order to produce PEG, the monoethylene glycol (MEG) produced from this
process is then used in the second part of the plant which is the polymerization
process. The addition type polymerization process begins with the reaction of MEG and
24
EO in three batch reactor R-101,102,103 in parallel. Then, in the batch reactor, the
batch is running with 9 cycles per day which 1 cycle consists of 5 hour running
operation and approximates to produce 10 tonne of PEG per cycle. The acidic catalyst,
phosphoric acid (H3PO4) is added to increase the reaction between MEG and EO once
the required PEG with the desired molecular weight is achieved.The quenching process
needed via cooling water to lower the temperature. The PEG form from this reaction is
hold in a tank and the neutralizer of sodium hydroxide (basic form) is added to this
process to stop the reaction and PEG is completely produced.Thus, there are many
types of PEG due to its molecular weight and each type has its own value of viscosity.
Thus, the reaction will stop due to its viscosity by neutralization step. For example, the
value of viscosity for PEG-400 is at 90 cP at 25 0C thus, the chemical reaction of
polymerization is:
C2H6O2 + C2H4O  HO-(C2H4O) n-H
MEG + EO polyethylene glycol (PEG)
The problem with this neutralization process is the precipitation of salt resulting
from the reaction between acidic catalyst and basic neutralizer. Therefore, a filtration
process F100 will be used to separate the polyethylene glycol (PEG) and the existing
salt. Finally the end product, Polyethylene Glycol (PEG 400) will be collected and stored
in a storage tank, TK107 before transported to the customer.
25
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S.A Miller (1969) Ethylene and its Industrial Derivatives. London:

Benn Limited Publisher
Siegfried Rebsdat and Dieter Mayer (1992) Ethylene Glycol A10:108-111

The Astro Physical Journal: 571
The usage of Polyethylene Glycol, http//www.aasthahubh.tradeindia.com

Retrieve on October 13, 2011
Torsten Henning (2002) Polyethylene Glycols (PEG) and The Pharmaceutical Industry:
57
Turton, R., Bailie, R. C., Whiting, W. B. &Shaeiwitz, J. A. 1998. Analysis, Synthesis,

Design of Chemical Processes.Prentice Hall Publisher.
27
1.2 MARKET ANALYSIS
1.2.1 INTRODUCTION
The petrochemical industry in Malaysia has grown rapidly from early 1990s and now
become the leading industry compared to oleochemical (MPA, 2011). The rapid growth
of petroleum industry is due to the government’s positive and flexible policies (MPA,
2011) and other important factors such as the availability of the feedstock, good
infrastructure, a strong base of supporting services, the country’s cost competitiveness
and strategic location within ASEAN (MIDA, 2011). Furthermore, Malaysian
Government and Petroleum National Berhad (PETRONAS) who has support a lot the
petrochemical industry determined to make Malaysia the regional hub and base for
petrochemicals in ASEAN market (MPA, 2011).
1.2.2 SUPPLY AND DEMAND OF POLYETHYLENE GLYCOL
1.2.2.1 Production of polyethylene glycol worldwide
Polyethylene glycol (PEG) is commonly used in pharmaceutical, cosmetics, polymer,

detergents and rubber industries. It consist of many type of PEG depends on its
molecular weight. For this plant, PEG 400 is chosen as main product as it is widely use
in pharmaceutical industry (Advance Petro, 2011) as it is used in ointment production
and it is expected to increase in demand for the future. The first company that
commercializes the production of PEG was The Dow Chemical Company which is in
1940 (Dow Chemical, 2008). The PEG plant of Dow Chemical Company is located at
Hahnville, Louisiana (Dow Chemical, 2008).
Nowadays, there are several PEG plants built all over the world. However most
of these plants produce PEG as by-product rather than main product. The information
on production and consumption of PEG worldwide is difficult to obtain because many of
producers consume the output for internal feedstock for other chemicals products. From
the production of ethylene oxide worldwide, it is about 2% of ethylene oxide used for
polyethylene glycol industry in 2007 (IARC MONOGRAPHS, 2008). Figure 1.2.1 below
shows the percentage of ethylene oxide use in 2007:
28
Industrial products made from ethylene oxide

Diethylene and Ethoxylates
triethelene glycols 13%
7%
Ethanolamines
6%
Glycol ethers
4%
Polyols
3%
Polyethylene glycols
Monoethylene glycol 2%
65%
Figure 1.2.1: Industrial products made from ethylene oxide
Source: (Devanney, 2007; IARC MONOGRAPHS, 2008)
Based on the report by Sriconsulting (2011), the global consumption of ethylene

oxide is increased to 21 millions tonnes per annum in 2010. It is assume that, the
percentage is nearly constant or did not much changes from 2007 untill 2010. Therefore
the use of ethylene oxide for PEG industry is 420,000 tonnes per annum. Since the
production of PEG worlwide is unknown, therefore the production of PEG from Optimal
Chemical Sdn Bhd is use as the guideline. Optimal Chemical Sdn Bhd produce
ethylene oxide (385k tonnes/annum) for various of their products such as ethylene
glycol (365k tonnes/annum), polyethylene glycol (25k tonnes/annum), diethylene glycol
(20k tonnes/annum), ethoxylates (30k tonnes/annum) and ethonolamines (75k
tonnes/annum) (Optimal, 2008). As reported by Wolfgang et al., (1987), 84% of
ethylene oxide use to produce ethylene glycol. Therefore for Optimal, 84% (322,440
tonnes/annum) of ethylene oxide use to produce ethylene glycol. So, the other 62,560
29
tonnes/annum ethylene oxide will be used for other products. Figure 1.2.2 below is the
pie chart show the production percentage by Optimal Sdn Bhd:
Polyethylene glycol Diethylene glycol Ethoxylates Ethonolamines
17%
13%
50%
20%
Figure 1.2.2: Production rate percentage by Optimal Sdn Bhd
From the pie chart above, it is about 10 427 tonnes/annum ethylene oxide use
for PEG production. The ratio of PEG production to ethylene oxide production is 2.4 :1.
Then, the ratio times the worldwide ethylene oxide production for PEG which gives 1,
007, 001 tonnes/annum PEG. Since the demand of PEG will not deviate so far from the
production of PEG, therefore, the value of 1, 007, 001 tonnes/annum is assumed as the
demand of PEG in that year. The PEG 400 demand is estimated proportional to
pharmaceutical industry demand due to the use of PEG 400 as the raw material for
pharmaceutical product. The growth rate of pharmaceutical industry is expected at
4.4% from 2011 to 2013 (Lin and Izatulshima, 2008). The growth rate will expected to
be at the same rate for 2014. Table 1.2.1 below show the expected consumption of
PEG from 2010 to 2014.
30
Table 1.2.1: The Estimation of Worldwide Consumption for PEG
Year Consumption (million tonnes)

2010 1.01
2011 1.04
2012 1.09
2013 1.14
2014 1.19
We expected to built our plant in 2012 and after two years we will start to produce PEG.
Therefore, the expected consumption of PEG will be 1.19 million tonnes on 2014.
1.2.2.2 Polyethylene glycol in Malaysia
In Malaysia, the well known company that has a PEG plant is Optimal Malaysia Sdn
Bhd. The company produces many types of PEG that gives the total about 25 kilo
metric tonnes per annum at Kertih, Terengganu (Optimal, 2008).
Figure 1.2.3 shows that China has the largest demand on Malaysia PEG which
accounts 96% of the percentage followed by Taiwan, Korea and Germany. This also
shows that Malaysia exports most of PEG to Asian countries. It shows that the market
of PEG is not only in Malaysia but also include Asian countries depending on different
types of PEG.
31
Export of Polyethylene Glycol in 2010

Taiwan
2% Germany
Korea 1%
1%
China
96%
Figure 1.2.3: Export of Polyethylene Glycol in 2010

Source: MATRADE, 2011
Based on the global market study of PEG as well as in Malaysia, the capacity of
this plant have been decided. Optimal Chemical Sdn Bhd produce about 25k
tonnes/annum PEG for 2010 as compare to the world which is around 1.01 million
tonnes. Therefore, the percentage of PEG production by Optimal Chemical Sdn Bhd to
the world is about 2.5%. It is assumed that there will maybe not much difference of
Malaysia’s PEG contribution to the world in 2014. Therefore the capacity for this plant is
about 30k tonnes/annum of PEG 400.
1.2.2.3 Price of PEG
The average export price of overall type of PEG is RM 3.39/kg in 2010 while the
average import price is RM 10.50/kg (Matrade, 2010). The high difference of price is
due to the different type of PEG that being exported or imported. Besides, it maybe due
to the tax cost that incurred during the import of PEG. However, the market price for
PEG 400 is RM 21.98/kg (Buychemicaldirect, 2011). The price is higher than the
Matrade’s price maybe because it is specific price for PEG 400 or it is a retail price. For
this plant, the decided selling price for PEG 400 is RM9.12 which is much lower than
the market price.
32
1.2.3 ETHYLENE OXIDE (RAW MATERIAL)
Ethylene oxide is the main raw material for producing ethylene glycol (monoethylene
glycol, diethylene glycol and triethylene glycol) as well as polyethylene glycol. From
Sriconsulting (2011), the production and consumption of ethylene oxide in 2010 globally
were both around 21 million metric tons. The consumption of ethylene oxide in 2010 is
increased from 2009 by 8.7% and it is forecast to grown by 3.4% per year from 2010 to
2015, and around 3.1% per year from 2015 to 2020 (Sriconsulting, 2011).
From Figure 1.2.4, ethylene oxide is mostly used in the manufacture of (mono) ethylene
glycol, which accounted for more than 70% of total Ethylene Oxide consumption in
2010. Production of ethoxylates consumes 9.7%, and smaller amounts are used to
make higher glycols, ethanolamines, glycol ether, and polyols.
Figure 1.2.4: World consumption of Ethylene Oxide in 2010

Source: www.sriconsulting.com
33
The production of ethylene oxide worldwide is summarized in the Table 1.2.2:
Table 1.2.2 Production of ethylene oxide by region

Region Production (thousand tones)
North America 5443
South America 394
Europe 3905
Middle East 2332
Asia /Pacific 4991
Source: Anon (2004); IARC MONOGRAPHS (2008)
In Malaysia, Optimal Malaysia Sdn Bhd is the main producer of ethylene oxide. They
produce about 385 000 tonnes of ethylene oxide per year (Optimal, 2008). The export
of ethylene oxide is increased from 2008 to 2010. Figure 1.2.5 shows the export of
ethylene oxide in Malaysia:
The Export of Ethylene Oxide by Year

250000
200000
Quantity,kg
150000
100000
50000
0
2008 2009 2010
Year
Figure 1.2.5: The Export of Ethylene Oxide by Year

34
From Figure 1.2.5, there was a sudden increase of export in 2009 to 2010 from
81, 271 to 229, 905 kg translated in 283% increment. This increase is due to the
increased of ethylene glycol demand in the world for polyethylene terepthalate and
polyester fiber in China (Chemicalweek, 2011). Before that, the decreased of export in
2008 and 2009 is because of global economic recession (Chemicalweek, 2011).
Malaysia has exported the ethylene oxide to Sri Lanka, United States, Germany, South
Korea, Hong Kong and Belgium (Matrade, 2011).
The Import of Ethylene Oxide in 2010

Bulgaria
1%
Hong Kong
3% Australia
China
Germany 0%
2%
4%
spain
5%
United states Japan
8% 46%
France
9%
Belgium
22%
Figure 1.2.6: Import of Ethylene Oxide in 2010

From figure 1.2.6, the country that imports most ethylene oxide is Japan which
accounted 46% and the second is Belgium, 22%. Other countries import less than 10%
of ethylene oxide to Malaysia.
Manufacturer and supplier of ethylene oxide in Asian Region
Since the production of PEG needs ethylene oxide as the raw material, the supplier of
ethylene oxide need to be identified. Table 1.2.3 shows the manufacturers of ethylene
oxide in Asian countries which may be the potential supplier for this new plant.
35
Table 1.2.3: Potential Manufacturer and supplier of ethylene oxide in Asian Region
Country (supplier) Company Average Price (RM)/kg
Indonesia  Prima Ethycolindo PT 6.06
Singapore  Ethylene Glycols 5.47
Singapore PTE Ltd
Thailand  TOC Glycol Co Ltd 6.32
China  CNOOC and Shell 5.72
Petrochemicals Co Ltd -
(CSPCL)
 Jilin Petrochemicals Ltd -
(JLPL)
 Shanghai Petrochemical
Co Ltd - (SPC)
 Sinopec Sabic Tianjin
Petrochemical Co
Source:UN Comtrade, 2011
From this information, after assuming the ethylene oxide is not being banned in
Malaysia, ethylene oxide from Ethylene Glycols Singapore PTE Ltd is chosen to supply
the raw material for this plant. Ethylene Glycol Singapore PTE Ltd seems to be the best
ethylene oxide supplier for this new plant because it is near to the plant site which cost
less in transportation and it is more lowers in price than the other company. Although
Optimal Chemical Sdn Bhd has the potential to become one of the suppliers,
unfortunately they did not sell the ethylene oxide produce as it is for internal use only.
Price of ethylene oxide
The price of ethylene oxide is actually varies from year to year. The price of ethylene
oxide for 2008 is RM 5.47 (Icis, 2011) and is estimated not change much for 2011 until
2014.
36
1.2.4 WATER (RAW MATERIAL)
Water is another raw material required in PEG 400 plant. Water is used in the
hydrolysis process where it will be reacted with ethylene oxide. The use of water in the
process is also high as the ratio of water to ethylene oxide is 20:1.
Since the phase of water for the hydrolysis process is in liquid form, therefore
the supplier of water is come from the local company. Laku Manegement Sdn Bhd is
the wholly owned company of State Government of Sarawak that responsible for the
production, distribution of portable water and collection of water revenue in Miri, Bintulu
and Limbang (Laku Management, 2009). Therefore, Laku Management is chosen to
supply the water where the rate is under the industrial rate which is RM 1.21/1000 liters
(Laku Management, 2009).
1.2.5 DIETHYLENE GLYCOL (BY-PRODUCT)
Diethylene glycol is produce as by-product in polyethylene glycol plant. Diethylene

glycol is used in the tobacco industry, the treatment of paper, cork, glue, and
cellophane and it is utilised as a dehydrant in the natural gas industry where it removes
the water from the gas pipelines. It is also used as a chemical intermediate in the
manufacture of unsaturated polyester resins, plasticisers, acrylate and methacrylate
resins, and urethanes (Solventis, 2011). Production of diethylene glycol is generally
based on the demand as it is produce as a by-product. Figure 1.2.7 show the export of
diethylene glycol to the world.
37
Export of diethylene glycol

140,000
120,000
100,000
Quantity, kg
80,000
60,000
Quantity, kg
40,000
20,000
0
2002 2003 2004 2005 2006 2007 2008
Year
Figure 1.2.7: The export of diethylene glycol

Source: UN.Comtrade, 2011
Figure 1.2.7 indicates that export of diethylene glycol is drastically decreased

from 2003 to 2006. However, it is slightly increased in 2007. The market price of
diethylene glycol is RM 3.92/kg (Icis, 2008). For this plant, the selling price of diethylene
glycol is RM 2.00/kg.
1.2.6 PHOSPHORIC ACID (CATALYST)
Phosphoric acid is been used as a catalyst in production of PEG. The specification of

phosphoric acid needed in this plant is about 99% in purity.
Supplier of phosphoric acid
There are several supplier of phosphoric acid in Malaysia and Asian region. Table 1.2.4
shows the list of suppliers for phosphoric acid.
38
Table 1.2.4: Potential Supplier for Phosphoric Acid

Country Company Average price (RM/kg)
China Guangxi Qinzhou Esum Industry&Trade 2.61
CO.,LTD, Guangxi
Guangxi Mingli Phosph-Chemicals Co.,

LTD, Guangxi
Malaysia Huntsman chemical, Kedah 2.77

Obetech Pacific Sdn Bhd, Kuching,
Sarawak
Source: UN Comtrade, 2011
The Obetech Pacific Sdn Bhd is chosen as the supplier of phosphoric acid for the new
plant. Although the price is higher than companies in China, however the cost of
transportation is taking into consideration as Obetech Pacific Sdn Bhd is near to the
plant site. Furthermore, the company produces high purity phosphoric acid that meet
the company needs. The price of phosphoric acid is RM 2.77/kg (Matrade, 2011).
1.2.7 SODIUM HYDROXIDE
Sodium hydroxide (NaOH) is used as neutralizer in order to stop the polymerization

reactions in the batch process. Actually NaOH has a lot of uses. For neutralizing agent,
it contributes about 54% of consumption. It includes pulp and paper production 24%,
soaps and detergents 10 %, alumina 6 %, petroleum 7 %, textiles 5%, water treatment
5%, miscellaneous 43 %. The other uses of NaOH are for organic chemical (35%) and
inorganic chemical (11%). Figure 1.2.8 is the pie chart of sodium hydroxide uses:
39
11%
Neutralizing agent
Organic Chemical
35% 54%
Inorganic Chemical
Figure 1.2.8: Uses of sodium hydroxide

Source: www.the-innovation-group.com
Suppliers of sodium hydroxide

There are several potential sodium hydroxide suppliers for the proposed PEG plant.
They are listed as below in Table 1.2.5.
Table 1.2.5: Potential Supplier of Sodium Hydroxide in Asian
Country Company Average Price (RM)/kg
Malaysia Mey Chern Chemicals Sdn 2.15
Bhd, Port Klang,Selangor
Centre West Chemicals
Sdn Bhd Selangor
Taiko Marketing Sdn. Bhd.
Shah Alam, Selangor
Premier Chemicals
Engineering (M) Sdn Bhd
Kuching, Sarawak
China Zhengzhou Goldenstar 0.81
Chemicals Co., Ltd,
Zhengzhou, Henan
Shijiazhuang Long Cheng
Chemicals Co.,Ltd, Hubei
40
Premier Chemicals Engineering (M) Sdn Bhd is the chosen company to supply
the sodium hydroxide for the PEG plant since it is near to the plant site and can
decrease the transportation cost. The sodium hydroxide is in liquid form with high purity
(99%) which can achieve the specification for the neutralization process. The price of
sodium hydroxide is RM 2.15/ kg (Matrade, 2011).
1.2.8 POLYETHYLENE GLYCOL MARKET POTENTIAL
The market for PEG 400 is mostly in pharmaceutical and textile industry (Advance
Petrochemical, 2011). However, we want to focus in pharmaceutical industry as PEG
400 is widely used in ointment production. The market study for pharmaceutical industry
globally as well as market in Malaysia is an essential in order to capture the demand.
Lin and Izatulshima (2008) in their report on Malaysian Pharmaceutical Industry Outlook
2008 stated that the pharmaceutical market for global is estimated to reach $818 billion
by 2013. Below is the trend of global pharmaceutical industry based on Annual sales
value.
Figure 1.2.9: Global pharmaceutical industry based on Annual sales value

Source: Lin and Izatulshima (2008)
From Figure 1.2.9, the growth rate of pharmaceutical industry decreased from
2001 to 2002. Then the rate increase back to 9% and constant until 2004 before
dropped to 6.9%, 7% and 4% from 2005, 2006 and 2007 respectively. The growth rate
41
slightly increase in 2009 and constant in 2010. Then the growth rate is expected to be
at 4.4% for the coming 3 years (2011, 2012, 2013). In overall, the figure shows as year
increasing the sales increase with maintained growth rate. From this, it can be
concluded that PEG 400 has brighter future as it is use as raw material in
pharmaceutical industry. The positive trend of pharmaceutical industry will also help in
PEG market to grow.
1.2.9 BREAKEVEN ANALYSIS
The goal of built a company is to make money or profit. It is necessary for any plant
design to achieve its goal to yield profits by evaluating different types of cost involved
for the plant operation and establishment. Breakeven point is the point at which the
product stops costing money to produce and sell, and starts to generate a profit for
company. In order to determine the breakeven point, the fixed cost, variable cost and
total revenue must be calculated. The breakeven point is equal to equation 2.1:
(2.1)
Source: http://bizfinance.about.com/od/pricingyourproduct/a/Breakeven_Point.htm
1.2.9.1 Estimation of Fixed Capital Investment
Grass-root cost
Fixed capital is the capital investments that are needed to start up and conduct
business, even at a minimal stage (Investopedia, 2011). For a new plant, the total grass
root cost is the sum of purchased equipment cost, contingency, fee and auxiliary
(Ulrich, 1984). Table 1.2.6 shows the cost of equipment:
42
Table 1.2.6 Cost of Equipment

Equipment Unit Cost per Unit Total Purchased Cost Bare
(RM) (RM) Cop,i Module
Cost (RM)
CBMi
Reactor 3 300,000 900,000 1,145,420
Mixer 1 82,000 82,000 519,000
Distillation Column 3 590,000 1,770,000 4,600,00
Pumps 19 29,000 551,000 2,430,300
Storage tank 8 170,000 1,360,000 1,500,000
Heat Exchanger 5 82,000 410,000 888,000
4-Multieffect 1 789,000 789,000 2,280,000
evaporater
Total 13,364,470
The values of purchased cost were estimated by using Capcost software with
CEPCI (Chemical Engineering Plant Cost Index) 2009 due to lack of information on
equipment sizing and also the cost of equipments of a real plant. CEPCI is use to adjust
the process plant construction costs from one period to another.
For this plant, the estimated value is calculated by using the latest CEPCI (2010) which
is 550.8. The bare module cost, CBMi for every equipment is calculated by using
equation 2.2 below (Richard et al., 2009):
CBM= CopFBM (2.2)
Where:
CBM=bare module equipment cost: direct and indirect cost for each unit
FBM=bare module cost factor: multiplication factor to account for the items needed in
table 7.6 (page 191) in Analysis, Synthesis, and Design of Chemical Processes plus the
specific materials of construction and operating pressure
= purchased cost for base conditions: equipment made of the most common
material, usually carbon steel and operating at near ambiet pressures
43
Usually the estimation of bare module cost is at base conditions. The conditions
specified for the base case are (Richard et al., 2009):
 Unit fabricated from most common material, usually carbon steel (CS)
 Unit operated at near-ambient pressure
The bare module cost is calculated as below:
Example of Reactor cost:
Bare Module Factor, FBM
From Capcost software in Analysis, Synthesis, and Design of Chemical Processes by

Richard et al., (2009), the bare module factor FBM for jacketed agitated reactor is 1.5.
Purchase Cost,
The purchased cost from the capcost software when the volume of reactor is 20m3 is
$78, 800.
Therefore the Bare Module Cost, CBM
=$ 78,800 x 1.5= $118, 200
For 3 reactors, total bare module cost:
=$118, 200 x 3
= $354, 600 (RM 1, 145, 420)
Therefore, the bare module cost in 2010 is,
Bare Module cost (2010) = Bare Module Cost (2009) x
= RM 13, 364, 470x 550.8/500

= RM 14, 700, 000
44
Contingency and fee
Contingency and fee is the cost as protection against the oversights and faulty
information. The values of 15% for contingency cost and 3% for fee from bare module
cost give the total of 18% of total bare module cost (Richard et al., 2009).
Contingency and fee = Total Bare Module Cost x 18% (Ulrich, 1984)
= RM 14, 700, 000 x 0.18
= RM 2,650, 000
Auxiliary facilities
Auxiliary facilities cost is the cost that include the site development, auxiliary buildings,
and off-sites and utilities. Auxiliary cost is 30% of total bare module cost and
contingency fee.
Auxiliary facilities = (Total Bare Module Cost + Contingency and fee) x 30% (Ulrich,
1984)
= (RM 14, 700, 000 + RM 2,650, 000) x 0.3
= RM 5, 210, 000
So, the grass- root cost = RM 14, 700, 000 + RM 2,650, 000 + RM 5, 210, 000
= RM 22, 600, 000
Fixed Capital Investment
Fixed capital is the capital for the installment of equipments and auxiliaries in a new
plant. Since this is a new built plant, fixed capital investment can be estimated as grass
root cost (Ulrich, 1984).
Fixed capital investment, FCI = RM 22, 600, 000

45
Fixed cost
Fixed costs are the cost that are incurred but not change with plant production rate
(Sinnott and Towler, 2009). Fixed cost is the total of operating labor cost, maintenance
and repair cost, insurance cost, overhead cost, operation supplies, research and
development (R&D), direct supervising and clerical labor, laboratory charges, patent
and royalties and local taxes (Sinnott and Towler, 2009).
Operating labor cost
Operating labor cost (COL) is the costs of personnel required for operating a plant
(Richard et al., 2009). Operating labor cost is the operator hired for each operator
needed in a plant (NON) times the number of operators per shift (NOL) times the wages
rate of operator (semi-skilled) per year, Po (Richard et al., 2009).
NOL= [6.29 + 31.7 P2 + 0.23 NNP] 0.5 2.2
Assumptions:
Plant performed (shift) = 3 shifts per day
Plant running in a day = 24 hour
Maintenance work per year = 15 days
Operation days per year = 350 days
Minimum an operator rest in a year = 21 days (Average operator works in a year is 49

weeks)
Working days of an operator in a year = 329 days
Shift needed for a plant in a year = (3 shifts)/(1 day) x (350 days)/(1 year) = 1050 shift
An operator can obtain shift = (1 shifts)/(1 day) x (5 days)/(1 week) x (50 weeks)/(1
year) /operator = 250 shift/year.operator
46
Operator hired for each operator needed in a plant, NON = (1050 shifts)/year x
(year.operator)/(250 shifts)
= 4.2
Wages rate of operator (semi-skilled) per month = RM 1547
Wages rate of operator (semi-skilled) per year, Po = RM 18564
Table 1.2.7 below shows the number of nonparticulate processing steps (NNP).
Nonparticulate process includes compression, heating, cooling, mixing, and reaction.
Table 1.2.7: Number of nonparticulate processing steps (NNP)
Equipment type Number of equipment Nnp

Heat exchanger 5 5
Reactors 3 3
Distillation column 3 3
Total 11
NOL = [6.29 + 31.7 (0)2 + 0.23 (11)] 0.5
= 3.008
COL = NOL x NON x Po = RM 235, 000
Direct supervisory and clerical labor, DS& CL
The estimation of direct supervisory and clerical labor is based on operating labor. It is
falls within the range of 10% to 20% depending on process complexity. The more
complex the process the higher fraction will be used. However, for a general estimation,
15% of operating labor is acceptable (Ulrich, 1984).
15% of COL = 0.15 x RM 235, 000
= RM 35, 250
47
Maintenance and repairs, MNR
Maintenance and repair cost is cost of necessary budget item for a healty
manufacturing operation (Ulrich, 1984). It is between 2 to 10% of fixed capital. The
higher percentage is assumed for unconventional or speculative processes while the
lower percentage shows for the relatively simple process. 6% is a reasonable and most
estimates (Ulrich, 1984).
6% of FCI = 0.06 x RM 22, 600, 000
= RM 1, 360, 000
Operation supplies, OS
Operation supplies is the cost of replaceable materials such as instrument charts,

lubricants, custodial supplies and other item that not considered as part of regular
maintenance. The value is recommended from 10 to 20% where 15% is a relevant
estimation (Ulrich, 1984).
15% of MNR = 0.15 x RM 1, 360, 000
= RM 203, 000
Laboratory charges, LC
Laboratory charges cost is necessary to control the quality of the product produce in
order to get the desire purity and also to identify the fault in the process. It is depend on
the complexity and sophistication of the process as well as operating labor. Therefore,
typical laboratory cost range from 10 to 20% of operating labor. 15% of operating labor
cost is a reasonable estimation (Ulrich, 1984).
15% of COL = 0.15 x RM 235, 000
= RM 35, 250
48
Pattern and royalties, PR
The cost is including the licensed from other firm when there is use of any process from
that firm. The fee usually based on the sales income and may represent 3% of the total
expenses (Ulrich, 1984)
3% Total of product cost = 0.03x
X= Total product cost
Overhead cost, OVH
The overhead cost include fringe benefits, social security, unemployment insurance,
and other compensation paid indirectly to plant personnel. The range of 50 to 70% of
the sum of operating labor cost, direct supervisory and clerical labor and maintenance
and repair represent the overhead cost. 60% for the overhead cost is quite reasonable.
60% of sum COL, DS&CL and MNR = 0.6 x (RM 235, 000+ RM 35, 250+ RM 1,360,
000)
= RM 975, 000
Local taxes and insurance, LTI
The local taxes and insurance also important in built a plant. The value usually falls on
2% of fixed capital (Ulrich, 1984).
Local taxes
1.5% of FCI = 0.015 x RM 22, 600, 000
= RM339, 000
Insurance
0.5% of FCI = 0.005 x RM 22, 600, 000
= RM 113, 000
Total fixed cost = RM3, 290, 000 + 0.03x

49
1.2.9.2 Estimation of variable cost
Variable cost is proportional to the plant output. It is the sum of raw material cost,
utilities cost, consumables (acids and bases) and effluent disposal.
Price
Ethylene oxide = RM 5.47 / kg (Icis, 2008)
H2O = RM 0.00121 / kg (Laku Management, 2009)
Phosphoric acid = RM 2.77 / kg (Matrade, 2010)
Sodium hydroxide = RM 2.15 / kg (Matrade, 2010)
Utilities
Electricity = RM 0.288 / kW (TNB, 2011)
Water = RM 1.21/m3 (Laku Management, 2009)
Rate
Ethylene oxide = 502.2361 kg/hr
H2O = 4109.1006 kg/hr
Polyethylene glycol 400 = 30000000 kg/year
Phosphoric acid = 35 kg/batch
Sodium hydroxide = 35 kg/batch
The value is taken from Mass Balance (Analysis in Chapter 5)
Raw material Costs
Ethylene oxide = RM 5.47/kg x 502.2361 kg/hr x 24 hr/day x 350day/year
= RM 23, 100, 000/year
H2O = RM 0.00122 / kg x 4109.1006 kg/hr x 24 hr/day x 350 day/year

= RM 42, 100/year
Phosphoric acid = RM 2.77 / kg x 35kg/batch x 2100 batch/year

= RM 203,595/year
Sodium hydroxide = RM 2.15 / kg x 72kg/batch x 2100 batch/year
= RM 325,080/year
Total cost of raw material = RM 23, 600, 000/year
50
Utilities Cost
Electricity = RM 0.288 / kWh x 6700 kWh x 350 day/year (TNB, 2011)
= RM 676, 000
Water = RM 1.21/m3 x 30m3 x 350 day/year (Laku Management, 2009)
= RM 12, 710
Total utilities cost = RM 688, 000/year
Waste Disposal
Waste disposal produce from this proposed plant is salt (Natrium phosphate) which in
solid form. The salt is produce from the reaction of sodium hydroxide and phosphoric
acid in order to stop the polymerization process. The equation 2.4 below represents the
reaction:
H2PO4 + 2NaOH Na2PO4 + 2H2O (2.4)
From (Mida, 2011) the value for inorganic waste is RM 450/tonne. Therefore, the waste
disposal cost become,
6 batch produce/day = 35kg salt produce x 6 = 210kg/day
For a year,
= 350 day x 210 kg/day x RM450/1000kg
= RM 33, 075
Total variable cost = RM 24, 400,000

51
1.2.9.3 Estimation of General expenses
General expenses are the sum of administrative cost, distribution and selling and
research and development cost.
Administrative cost, AD
The costs are proportional to the plant staff and approximately 25% of overhead cost is
a reliable estimation (Ulrich, 1984).
25% Overhead cost = 0.25 x RM 975,000
= RM 244, 000
Distribution and selling cost, D&S
The distribution and selling cost usually based on product value includes cost of sales
and marketing to sell chemical products. 10% of total product cost is a relevant value of
estimation (Ulrich, 1984).
10% of Total product cost = 0.1x
X= represent the total product cost
Research and development cost, R&D
Research and development cost is the cost of research related to the process involves
and product (Richard et al., 2009). Research and development cost comprises 5% of
total product cost (Ulrich, 1984).
5% of Total product cost =0.05x
Total general expenses = RM 244, 000 + 0.15x

52
1.2.9.4 Total Product Cost
Total Product Cost, x =Total fixed cost +Total variable cost +Total general expenses
x = RM3, 290, 000 + 0.03x + RM 24, 400,000+ RM 244, 000 + 0.15x
x= RM 27, 934,000 + 0.18x
x = RM 34, 000, 000
Total Fixed Cost = RM3, 290, 000 + 0.03x = RM 4, 310, 000
Total Variable Cost = RM 24, 400, 000
Total General Expenses = RM244, 000+ 0.15x = RM 5, 350, 000
1.2.9.5 Total Revenue
Selling price for Polyethylene glycol 400 (SP)
Since diethylene glycol is by-product, the production rate of diethylene glycol will be
added to production of PEG in a year in order to get the selling price of PEG 400 and
also diethylene glycol. The production rate of diethylene glycol is about 113 kg/hr or 940
tonnes/annum.
Total production cost = Total fixed cost + Total variable cost
=RM 4, 310, 000 + RM 24, 400, 000
= RM 28, 700, 000
Gross price = Total production cost/Production rate
= RM 28, 700, 000/ 30, 940 tonnes
= RM 927/tones or RM 9.27/kg
RM 9.27/kg means the gross price for both PEG 400 and diethylene glycol. The market
price for PEG is around RM 10.50/kg (Matrade, 2011) and RM 3.92/kg (Matrade, 2011)
for diethylene glycol. Therefore, the total market prices for both products are RM 14.42.
53
In order to estimate the selling price of product and by –product, it is an essential step
to calculate the margin. Margin calculation is important to determine the profit of the
company. It is also as a safe step when the selling price going down, the company still
can produce the product in low cost.
Take the margin 10%,
10% x RM 9.27 = RM 0.93
So, the selling price would be = RM 9.27 + RM 0.93 = RM 10.20
20% x RM 9.27 = RM 1.85
30% x RM 9.27 = RM 2.78
40% x RM 9.27 = RM 3.71
50% x RM 9.27 = RM 4.64
So, the selling price would be = RM 9.27 + RM4.64 = RM 13.91
60% x RM 9.27 = RM 5.56
So, the selling price would be = RM 9.27 + RM 5.56= RM 14.83
From these calculations, the percentage margins from 10% until 50% are under the
market price. While at 60% of margin the price has exceed the market price. Therefore,
it is a must to estimate the selling price under the market price. It is decided to take the
price with 20% margin (RM 11.12/kg), with PEG 400 price is about RM 9.12/kg while
54
diethylene glycol is RM 2.00/kg. This is because as a new plant the selling price should
be lower than the market price in order to capture the demand.
Total revenue = RM 11.12 x 30, 940, 000
= RM34, 405, 280
2.9.7 Breakeven point calculation
Total variable cost/tonne = RM 24, 400, 000/ year x 1/30940 tonne/year
= RM 788/tonne
Breakeven point = FC/ (SP-VC)
= RM 4, 310, 000/ (RM 1112/tonne - RM 788/tonne)
=13, 275 tonne per annum

55
Table 1.2.8 Breakeven analysis
Total cost,
Variable TC Total revenue, TR
Capacity, Q (tonne) Fixed cost, FC cost, VC (FC+VC) (P x Q)
0 4.31E+06 0.00E+00 4.31E+06 0
2000 4.31E+06 1.58E+06 5.89E+06 2224000
4000 4.31E+06 3.15E+06 7.46E+06 4448000
6000 4.31E+06 4.73E+06 9.04E+06 6672000
8000 4.31E+06 6.30E+06 1.06E+07 8896000
10000 4.31E+06 7.88E+06 1.22E+07 11120000
12000 4.31E+06 9.45E+06 1.38E+07 13344000
14000 4.31E+06 1.10E+07 1.53E+07 15568000
16000 4.31E+06 1.26E+07 1.69E+07 17792000
18000 4.31E+06 1.42E+07 1.85E+07 20016000
20000 4.31E+06 1.58E+07 2.01E+07 22240000
27000 4.31E+06 2.13E+07 2.56E+07 30024000
30000 4.31E+06 2.36E+07 2.79E+07 33360000
35000 4.31E+06 2.76E+07 3.19E+07 38920000
*The example of calculation is shown in Appendix B.

56
Breakeven Graph
4.50E+07
4.00E+07
3.50E+07
3.00E+07
2.50E+07
Fixed cost, FC
RM
Variable cost, VC
2.00E+07
Total cost, TC (FC+VC)
1.50E+07 Total revenue, TR (P x Q)
1.00E+07
5.00E+06
0.00E+00
0 5000 10000 15000 20000 25000 30000 35000 40000
Quantity, tonnes
Figure 1.2.9: Breakeven graph

57
1.2.10 CONCLUSION
From the market analysis, the fixed capital investment is about RM22.6 millions. The
total product cost consists of total fixed cost which is RM 4.31 million and total variable
cost is RM 788/tones or RM 24.4 million. The selling price of PEG 400 is RM 9.12/kg
and RM 2.00/kg for diethylene glycol which gives 20% margin. Based on the breakeven
calculation, the breakeven point is 13, 275 tonnes.
58
REFERENCES
Advance petrochemical (2011), Polyethylene Glycol,
http://www.advancepetro.com/peg.htm, retrieved on 27/11/2011 2
Bizfinance (2011), Breakeven Point,
http://bizfinance.about.com/od/pricingyourproduct/a/Breakeven_Point.htm, retrieved on
20/1/2012
Carbowax, http://www.dow.com, retrieved on 10/10/2011
Caustic soda market, http://www.the-innovation-group.com, retrieved on 9/10/2011
Chemical week (2011), Ethylene Glycol Market Firms,
http://www.meglobal.biz/news/2011/08/09, retrieved on 24/1/2012
Ethylene oxide consumption,
http://monographs.iarc.fr/ENG/Monographs/vol97/mono97-7A.pdf retrieved on
29/11/2011
Ethylene oxide market, http://www.sriconsulting.com/CEH/Public/Reports,
retrieved on 10/10/2011
Ethylene oxide price, www.icis.com, retrieved on 10/10/2011
Fixed cost, http://www.investopedia.com/terms/f/fixed-capital.asp#ixzz1gHg2bkc3,
Petrochemical industry, http://www.mpa.org.my/business.htm, retrieved on
Lin Hui Tham and Izatulshima Yahya (2008), Malaysian Pharmaceutical Industry
Outlook 2008, http://www.frost.com/prod/servlet/market-insight-

top.pag?docid=126369590, retrieved on 28/10/2011 at 2p.m
Malaysia Petrochemicals Report 2011,

59
http://www.reportlinker.com/p0172318/Malaysia-Petrochemicals-
Report.html#ixzz1BOeLZqY8 retrieved on 29/10/2011
Petrochemical and Polymer Industry,
http://www.mida.gov.my/env3/index.php?page= petrochemical, retrieved on

29/10/2011
Polyethylene glycol price, www.buychemicaldirect.com,
retrieved on 25/10/2011 at 3 p.m

Product Capacity & Market Applications, http://www.optimal.com.my,
Richard Turton, Richard C. Bailie, Wallace B. Whiting, Joseph A. Shaeiwitz (2009)
Analysis, synthesis and Design of Chemical Process. Third Edition. United States.
Pearson International Editon.
Scale of Charges for Bintulu Water Supply,
http://www.lakumanagement.com.my, retrieved on 25/10/2011
Ulrich, G.D. (1984) A guide to chemical Engineering Process Design and Economics.
New York. John Wiley and Sons.
UnComtrade (2011), United Nations Commodity Trade Statistics Database,
http://comtrade.un.org/, retrieved on 27/1/2012
Wolfgang G., YamamotoY.S., Lydia K., James F.R. and Gail S.(1987) Ethylene Glycol.
In: Siegfried R. Ullmann’s Encylopedia of Industrial Chemistry. German. VCH. 101-115

60
1.3 PLANT LOCATION AND SITE SELECTION
1.3.1 Plant Location and General Site Selection Criteria
Generally, the selection of the location of the plant can have a crucial effect on the
profitability of a project and the scope for future expansion. A good location is required
to optimize the production of the plant (Sinnott, 2005). A few sites have been studied in
order to determine the best place to set up the poly ethylene glycol plant. The studied
areas are Senawang Industrial Park in Negeri Sembilan, Gebeng Industrial Estate in
Pahang, Tanjung Kidurong Industrial Park Bintulu, Sarawak, Pulau Indah Industrial
Park in Selangor and Pasir Gudang Industrial Park in Johor. The study has been made
based on the following consideration:
1.3.1.1 Location with respect to the marketing area
Marketing plays major roles in presenting the product. This consideration will be less
important for low volume production high-priced products such as pharmaceuticals. In
addition, with the trend toward just-in-time production, suppliers want to locate near
customer to speed deliveries. Thus, the location of the plant should be located near to
customer or immediate agencies. If the plant is located near to customer, the
transportation period and payment can be reduced. (Sinnott and Towler ,2009)
1.3.1.2 Raw Material Supply
The availability and price of suitable raw materials will often determine the site location.
Without sufficient supply of raw material, the plant will not be able to run accordingly.
The raw material used in order to produce polyethylene glycol is ethylene oxide.
Therefore, when the plant location is located close to the raw material sources the
transportation fees can be reduced and raw material can be obtained easily. (Sinnott
and Towler ,2009)
61
1.3.1.3 Transport Facilities
There are four major forms of transport that should be close to a site selected which are
road, rail, waterway and air. Road transport is suitable for local distribution from a
central warehouse. Rail transport will be cheaper for the long-distance transport of bulk
chemicals. Air transport is convenient and efficient for the movement of personnel and
essential equipment and supplies and the proximity of the site to a major airport should
be considered. So, the site selected should have good transportation lines to smooth
the operation and reduce the cost. These will increase the import and export business.
(Sinnott and Towler , 2009)
1.3.1.4 Availability of labour
Labour will be needed for construction of the plant and its operation. Skilled
construction workers will usually be brought in from outside the site area but they
should train or share their experience and knowledge with unskilled workers, which
available locally. This action will provide the availability and inexpensive manpower
from surrounding area and subsequently reduce the operating cost for the plant.
1.3.1.5 Availability of Utilities: Water, Fuel, Electricity
Utilities such as electric supply, water supply and steams are one of the main key to run
a plant. Electricity is necessary to run unit operations, generate heats and a few more
tasks while water is needed in scrubbing, washing and cooling processes. Chemical
plant usually requires a large volume of water for cooling and other processes use
should be investigate for water reservoirs before the selection of plant. By having
sufficient water and electricity supply, the plant is ensured to operate smoothly. (Sinnott
and Towler ,2009)
1.3.1.6 Reasonable Land Price
Reasonable land cost can reduce the investment cost and the total capital cost. It is
important to choose the lowest land price to build a new plant in order to gain the
highest economic value for the plant. (Sinnott and Towler ,2009)
62
1.3.1.7 Environmental impact and effluent disposal
All industrial processes produce waste products and full consideration must be given to
the difficulties and cost of the disposal. The disposal of toxic and harmful effluents will
be covered by local regulations and the appropriate authorities must be consulted
during the initial site survey to determine the standards that must be met. (Sinnott and
Towler , 2009)
1.3.1.8 Local Communities Consideration
At different locations, different community may have different characters and facilities.
Therefore, community factors will have a significant effect on proposed plant since the
site location is different. The plant organizer shall give full consideration to the safety of
the plant so that it does not bring any significant risk or hazard to the community.
1.3.1.9 Climate
The climate, especially the extreme weathers may influence the economic operation of
the plant. Since the site locations are in Malaysia, there are not many factors to be
considered since Malaysia has uniform temperature throughout the year. (Malaysian
Meteorological Department, General Climate of Malaysia, Retreived on 25 Oct 2011)
1.3.1.10 Political and Social Stability
The most important in starting a business is earning profit. Therefore, a company needs
to consider how much the government or state government can offer the opportunities
for their business. Most state governments that have at least an industrial area where
offer attractive incentives. These incentives can influence foreign and local investors to
invest their money at stake in the designated area. If more incentives are offered, then it
will give more feasibility for the plant to be built.
63
1.3.2 Summary of the study
Assuming there is no act saying that no ethylene oxide shall be import or export in
Malaysia, the poly ethylene glycol plant was set to build in Malaysia. Below is the result
from the study performed on the site location. Basically, there are five locations that had
been identified to have potential to build the plant. Ranking method has been used in
order to determine the best site location to set up the poly ethylene glycol plant. The
local regulations and the appropriate authorities have been consulted during the initial
site survey to determine the standards that must be met in order to determine the most
suitable site selection. The score has been determined by the number 1 to 5 where 1
indicate the poor rating and 5 indicate the best rating.
Table 1.3.1: Score for site selection
Senawang, Gebeng, Bintulu, P. Indah, P.Gudang,

N.Sembilan Pahang Sarawak Selangor Johor
Industrial
3 4 5 1 2
land price
Facilities 2 3 3 5 3
Utilities 3 5 4 2 1
Effluent
4 4 5 4 4
treatment
Land
0 0 5 0 0
Incentives
Total 12 16 22 12 10
For the availability of industrial land, the summarized information in the Table
1.3.1 indicated the available land for every industrial area. The area of the required land
for this project has been estimated by the comparison with other medium scale industry
plant area. Since our production is 30000 tonne per annum, the required area for
setting up the plant was estimated to be 10 acres where the entire five sites have
excessive land than the required area. The actual required area for the plant set up is 8
acres but 10 acres of land will be required for the purpose of future development
planning.
64
Table 1.3.2: Table of available industrial land and the price
Site Location Senawang, Gebeng, Bintulu, P. Indah, P.

N.Sembilan Pahang Sarawak Selangor Gudang,
Johor
Available Industrial 13 acres 3777acre 240 acres 3870 acres 1000
land s acres
Industrial land RM19.00 RM11.00 RM 7.20 RM38 RM 20
price (psf)
Price for 10 acres RM8.28 mil RM4.80 RM3.14 mil RM16.55mi RM 8.7
mil l mil
Second criteria that has been studied for the site location selection is the
industrial land price. Tanjung Kidurong Industrial Park, Bintulu has the highest score as
the price is the lowest compared to the other site’s price which is RM 7.20 psf. It is
important to get the suitable land with reasonable price in order to control the cost of the
project. The available land in Tanjung Kidurung Industrial Park, Bintulu does not only
offer low land price, the geographic condition of the land is also good. Geographic
condition should be considered to ensure that the plant is suitable to be set up at the
area. Sarawak Shell Bintulu Plant (SSBP) formerly known as Bintulu Crude Oil Terminal
(BCOT) was the first major industrial project to go off the ground Tanjung Kidurong in
1979. Asean Bintulu Fertilizer (ABF) also one of the most important industry that been
set up in this industrial area. Since there is a lot of other industries have been
developed around this area, it is convinced that Tanjung Kidurong Industrial Park is a
very suitable place for this project.
Table 1.3.3: Available facilities in the studied site locations
Site Senawan Gebeng, Bintulu, Pulau Indah, Pasir Gudang,

Locatio g, N Pahang Sarawak Selangor Johor
n Sembilan
Facilitie -Highways -East Coast -Highways and -Highways and -Highways and
s and Road Highway Road Links Road Links Road Links
Links -The Sultan -Bintulu Port -Railway Facilities -Senai International
-Nilai Ahmad -Bintulu Airport -KLIA Airport
Inland Shah Airport -Subang Airport -Pasir Gudang Port
Port -Kuantan -Klang Port -Port of Tanjung
Port Pelepas
65
Four major forms of transportation that should be close to a selected site include
road, rail, waterway and air. So, the site selected should have good transportation lines
to smooth the operation and reduce the cost. Table 3.4 indicates the available facilities
in every site locations. The reason for Pulau Indah Industrial Park ranked with the
highest score is due to the transportation facilities including highways and road links,
railway facilities, Kuala Lumpur International Airport, Subang Airport and Klang
Port facilities.
The scores given were based on the availability of the facilities and the distance
between the site and the facilities. The nearer the distance between the site and the
facilities will be credit with higher score. Tanjung Kidurong Industrial Park has good
highways and road links, port and airport but lacking in the railway facilities compared to
the Pulau Indah Industrial Park. From the study, the unavailability of the railway facilities
will not give high impact for the operation since our plant is easy to reach by the road
links. So, highways and road links are more preferable.
Table 1.3.4: Score given based on the water tariff
Water Price Range (per m3) <1.00 1.00-1.50 1.51-2.00 2.01-2.50 >2.50
RM
SCORE 5 4 3 2 1
Table 1.3.5: Score for water utilities for each site location
Site Location Senawang, Gebeng, Bintulu, P.Indah, P.Gudang,

N Pahang Sarawak Selangor Johor
Sembilan
Industrial tariff (per RM1.60 RM 0.84 RM 1.21 RM 2.28 RM2.96
m3)
Rating Score 3 5 4 2 1
Utilities are focused on electricity and water supply. The score were given based
on the industrial tariff. Tanjung Kidurong Industrial Park, Bintulu has been rated with the
second highest score for the water utilities study. Electric is necessary in order to
supply energy to run unit operations, generate heats and a few more tasks .Electricity
rate for all site is same for the four site location except for Bintulu since electricity in
Bintulu is supplied by Syarikat SESCO Sdn Bhd with a lower tariff rate. Water is the raw
66
material for our process, and also needed in scrubbing, washing and cooling processes.
Selecting the lowest facilities charge rate will contribute in reducing the operation costs.
For the effluent treatment, it is well known that all industrial processes produce
waste products. Full consideration must be given for the disposal difficulties and the
disposal cost. The local regulations and the appropriate authorities must be consulted
during the initial site survey to determine the standards that must be met in order to
deal with the disposal of toxic and harmful effluents. The scoring was made based on
five criteria consist of waste transportation availability, waste analysis service,
government incentives, state incentive and the service charge, Tanjung Kidurong
Industrial Park, Bintulu is rated with the highest rate in the effluent treatment due to the
effluent treatment facility of scheduled waste offered by Trienekens (Sarawak) Sdn.
Bhd.
Attractive incentives offered by the state government will influence foreign and
local investors to invest their money at stake in the designated area. Tanjung Kidurong
Industrial Park, Bintulu has the highest score during the land incentives study because
only government of Sarawak offered land incentives compared to other state. These
incentives will give more feasibility for the plant to be built. Overall result of the site
location study showed that Tanjung Kidurong Industrial Park ranked with the highest
score .The description of the Tanjung Kidurong Industrial Park, Bintulu will be discussed
in detail in the next section.
1.3.3 Tanjung Kidurong Industrial Park, Bintulu
1.3.3.1 Available Industrial land:
Tanjung Kidurong Industrial Area is the latest efforts of Sarawak government to

encourage developments of heavy, sea related, petrochemical, steel production and
offshore industry in Bintulu, Sarawak. Total available industrial land in Tanjung
Kidurong Industrial Park is 97.3 hectares (240.434 acres). (Bintulu Development
Authority,Sarawak Land Development Board, Malaysian Industrial Development
Authority, 2011)
67
Figure 1.3.1: Map of Malaysia (Google earth , retrieved on 23rd Jan 2012)
Figure 1.3.2: Tanjung Kidurong Industrial Park (Google earth, 23rd Jan 2012)
68
Figure 1.3.3: Selected land in Tanjung Kidurong Industrial Park (Google earth, 23rd Jan
2012)
1.3.4 Manpower Supply
In Sarawak, there is free mobility of labour among the districts and labour can be easily
attracted into Bintulu from other districts. This is so as survey has revealed that over
half of the populations in Bintulu are migrants who migrated to Bintulu for economic and
related reason especially during the first boom period. (www.dba.gov.my,retreived on
25th Oct 2011)
Sarawak maintains an excellent standard of education centred on high quality

schools, colleges, polytechnics and universities. The English language is widely used,
and educational and training institutions are continually developed to meet the growing
needs of industry. Sarawak’s labour force can provide educated, skilled, semi-skilled,
and young workers to meet the needs of a high-technology business environment
(www.sarawak.gov.my, retrieved on 25th Oct 2011).
69
1.3.4.1 Resident area
The estimated population of Sarawak in 2000 was 2.013 million. In 2000, Bintulu
Division has an estimated population of 161,134 which Bintulu District has 138,269 and
Tatau District 22,865. The 1999 census for Malaysia showed that the total population of
Bintulu Division was 142,400. The significant increase in population in Bintulu can be
attributed to the discovery of gas reserves and other resources which resulted in
unprecedented industrial development in the area. In 2010, the estimated population in
Bintulu is about 200000, which is the fourth largest urban in Sarawak.
(www.bda.gov.my, retrieved on 25th Oct 2011).Besides, the resident area is far from the
plant location and out from the buffer zone set by the Department of Environment
which is set to be 250m.
1.3.4.2 Raw material supply
The raw material for the production of the poly ethylene glycol is ethylene oxide which is
known as a highly reactive substance and the supply should be as near as possible
with the plant. Since our plant is located in Bintulu, Sarawak, raw material supply
selection was made on the transportation time and the cost .Due to the business
strategy, the raw material was decided to be imported from Singapore .With the
excellent and modern transportation facilities, the raw material supplying process will be
safe and easier.
1.3.4.3 Facilities
Bintulu Port
Bintulu port is one of the most modern and efficient multipurpose port in South East
Asia located strategically along the busy sea lanes. Bintulu Port is not far away from
Tanjung Kidurong Industrial Park. It provides complete and modern facilities for both
international and coastal vessels. The port is well equipped with dedicated berths and
state of the art facilities to handle variety of cargo and ship efficiently. A wide range of
cargo handling equipment and ancillary facilities to meet the expanding and demanding
70
requirements of the trade at the port are also available. (www.bpa.gov.my, retreived on
25th Oct 2011)
Bintulu Airport
Bintulu Airport is located 5.5 km southwest of Bintulu and is able to handle aircrafts
as large as the Boeing 747 and Boeing 737. It also services the needs of the local
community living and working in the center of Sarawak's main coastal region.
(www.malaysiaairports.com.my, retrieved on 26th Oct 2011)
1.3.4.4 Utilities
The Sarawak SESCO Berhad is the main supplier of electricity in the State. SESCO
Berhad provides ample electricity for industrial, commercial and residential use. SESCO
Berhad offers competitive industrial tariffs for its electricity supply.
Table 1.3.6: Industrial electricity tariff in Sarawak, (Syarikat SESCO Berhad -

www.sesco.com.my October 2011)
TARIFF I1 - INDUSTRIAL RATE PER UNIT

For the first 100 units per month 40 sen
For the next 2900 units per month 30 sen
For each additional unit per month 27 sen
Minimum monthly charge RM 10.00
ARIFF I2 - INDUSTRIAL DEMAND RATE PER UNIT
For each kilowatt of maximum demand per month RM 16.00
For each unit 22.2 sen
Minimum monthly charge RM 16.00 per kW X Billing
Demand
TARIFF I3 - INDUSTRIAL PEAK/OFF-PEAK RATE PER UNIT
DEMAND
For each kilowatt of maximum demand per month RM 20.00
during the peak period
71
For each unit during the peak period 23.4 sen

For each unit during the off peak period 14.4 sen
Minimum monthly charge RM 20.00 per kilowatt X Billing
Demand
1.3.5 Political and strategic consideration
The State government strongly supports business-friendly and customer-

focused policies and also encourages economic activities that enhance economic
growth and investment potential. There are strong cooperation and collaborative efforts
by both the Federal and State governments on industrial and investment policies. This
provides long term security that is conducive to business profitability for investors. The
stable political environment is a major factor that lures foreign investors to this land of
great potential. (www.mids.sarawak.gov.my, www.mida.gov.my, www.sarawak.gov.my ,
retrieved on 25 Oct 2011)
Procedures for obtaining licenses and permits are transparent and not burdensome.
In general, Sarawak has put in place clear policies, efficient and transparent
government machinery and effective mechanisms to facilitate investors' participation in
its economy. (www.dba.gov.my, www.mids.sarawak.gov.my, www.sarawak.gov.my,
retrieved on 25th Oct 2011)
1.3.6 Effluent treatment
All discharges and emissions shall meet the relevant Environmental Quality Regulations
as stipulated in the Environmental Quality Act, 1974 and using appropriate control
measures. Among the incentives given by the government for the industrial treatment
and disposal systems including:(Department of Environment Ministry of Natural
Resources and Environment, Eleventh Edition , 25 Oct 2010)
72
 Incentives for the storage, treatment and disposal or toxic and hazardous
wastes
To encourage proper industrial waste management, the following incentives are
currently available:
(a) Pioneer Status incentive for 5 years to companies which are principally engaged
in an integrated operation for the storage, treatment and disposal of toxic and
hazardous wastes;
(b) As a further incentive for both the above categories of companies, the
Government also extends the current import duty and sales tax exemption scheme for
machinery, equipment, raw materials and components. All facilities for storage,
treatment and disposal of toxic and hazardous wastes must be approved by the
Department of Environment before the application is made for the incentives.
 Incentives for the installation of pollution control equipment
Under Income Tax Act 1967, Income Tax (Qualifying Plant Allowances) (Control
Equipment) Rules 1998, the Government has provided special capital allowance
incentive for the Companies which install pollution control equipment in the setting up of
the plants. This allowance is at initial rate 40% and an annual rate of 20% for the
qualifying plants stipulate under Schedule 3 of Income Tax Act 1997.
Trienekens (Sarawak) Sdn. Bhd.
Sarawak Wastes Management Sdn. Bhd. (SWM) appointed Trienekens (Sarawak) Sdn.
Bhd. as the operator to develop, implement and operate Sarawak’s Integrated Solid
Waste Management System (ISWMS).In Kuching and Bintulu, Trienekens covers the
service scope of municipal waste collection services for the majority of the population,
besides also providing collection, treatment and disposal services for scheduled and
hazardous waste throughout Sarawak, Labuan and Sabah. All Trienekens’ scheduled
waste operations and facilities are licensed by the Department of Environment,
Malaysia (DOE). Trienekens’ collection, transportation, treatment and disposal
procedures comply with the Environmental Quality Regulations (Scheduled Waste) Act
1989. (http://trienekens.com.my, retrieved on 2nd Nov 2011)
73
1.3.7 Incentives
Sarawak state government also gives incentives for high technology companies. The
incentives are such as full tax exemption at statutory income level for a period of a year,
or investment Tax Allowance of 60% on qualifying capital expenditure incurred within a
period of 5 years. The allowance can be off-set against the statutory income for each
assessment year without any restriction. (www.mida.gov.my, www.sarawak.gov.my,
retrieved on 25th Oct 2011)
Some incentive includes pioneer status i.e. partial exemption from payment of
income tax; investment tax allowance; incentive for research and development and
training; incentive for high technology industries. Incentive such as paying 30 % of the
cost of industrial land within 2 weeks upon recipient of offer letter and then pay the
remaining 70% within 6 month from the date of offer letter. (www.mids.sarawak.gov.my,
www.mida.gov.my, www.sarawak.gov.my, retrieved on 25th Oct 2011)The additional
benefits that Sarawak enjoys from the Federal Government under the Eastern Corridor
Package are summarised as follows:
Table 1.3.7: Additional Incentives for Manufacturing Sector Given by Federal

Government, (www.mida.gov.my, retrieved on 25th Oct 2011)
Peninsular Malaysia Added Incentive for Sarawak
Pioneer Status 70% tax exemption on statutory 100% tax exemption on statutory
(PS) income for 5 years. income for 5 years.
Investment Tax 60% allowance on the qualifying 100% allowance on the qualifying
Allowance capital expenditure incurred within 5 capital expenditure incurred within a
(ITA) years. period of 5 years.
The allowance could be utilized to The allowance could be utilized to

offset 70% of statutory income for offset against 100% of statutory
each year of assessment. income for each year of
assessment.
Reinvestment 60% allowance on qualifying capital Free to offset RA against 100% of
Allowance expenditure incurred, and could be statutory income.
(RA) utilized to offset against 70% of
statutory income.
74
Other Infrastructure Allowance of 85% of Infrastructure Allowance of 100% of

Incentives statutory income in the year of the qualifying expenditure.
assessment.
Double deduction on freight charges
incurred for exporting rattan and
wood-based products (excluding
sawn timber and veneer).
Double deduction on sea freight

charges incurred for shipping goods
from Sarawak to Peninsular
Malaysia via ports in Peninsular
Malaysia.
The State Government gives the following additional incentives:
Table 1.3.8: Additional incentives given by State Government, (www.mida.gov.my, and

www.sarawak.gov.my, retrieved on 25th Oct 2011)
Incentives
30-50% rebate for industrial land if project is satisfactorily
Industrial Land
completed and started operation within 36 months from date of
alienation of land. (exclude for Samajaya Free Industrial Zone)
75
1.3.8 Conclusion
The selected site location for this project is the Tanjung Kidurong Industrial Area
which is the latest efforts of Sarawak government to encourage developments of heavy,
sea related, petrochemical, steel production and offshore industry in Bintulu, Sarawak.
Sarawak can easily accessible from the major cities of the world such as Hong Kong,
Japan, Australia, Indonesia, Singapore and Brunei.
The selling price of Tanjung Kidurung Industrial Park is RM7.20 per Square Feet
which is cheaper than the other studied land prices. The required land for this project is
only 10 acres with the price estimation of RM3.14 million. Sarawak offered attractive
incentive which is 30% to 50% rebate for industrial land if project is satisfactorily
completed and started operation within 36 months from date of alienation of land. The
State Government does not only offers generous incentives in term of the competitive
price of land, but also low down payment for the purchase of industrial land; cheap
electricity and other facilities to ensure that start-up and operating costs for companies
are competitive.
Water charges for industrial usage are very reasonable. SESCO Berhad offers
competitive industrial tariffs for its electricity supply. Sarawak state government also
gives incentives for high technology companies. In Sarawak, labour can be easily
attracted into Bintulu from other districts who migrated to Bintulu for economic reason.
Sarawak’s labour force can provide educated, skilled, semi-skilled, and young workers
to meet the needs of a high-technology business environment.
Excellent highways and road links, Bintulu port and Bintulu Airport are the
available facilities offered in this industrial area. The State government strongly
supports business-friendly and customer-focused policies and also encourages
economic activities that enhance economic growth and investment potential. In order to
facilitate investors' participation in its economy, Sarawak has put in place clear policies,
efficient and transparent government machinery and effective mechanisms.
76
REFERENCES
Bintulu Development Authority, http://www.bda.gov.my/ ( 25 Oct 2011)
Bintulu Port Holding Berhad, http://www.bpa.gov.my/ ( 25 Oct 2011)
Department of Environment Ministry of Natural Resources and Environment, Eleventh

Edition (25 Oct 2011)
Malaysia Airports, http://www.malaysiaairports.com.my/ ( 26 Oct 2011)
Malaysian Industrial Development Authority, http://www.mida.gov.my/ ( 25 Oct 2011)
Malaysian Meteorological Department, http://www.met. gov. my/?lang=english , (25 Oct

2011)
Official portal of Sarawak Government, http://www.sarawak.gov.my/ ( 25 Oct 2011)
Official site of Trienekens (Sarawak) Sdn. Bhd, http://trienekens.com.my/ (2 Nov 2011)
Ray Sinnott and Gavin Towler(2009), Chemical Engineering Design, Fifth Edition, 1068-
1070
Sarawak Land Development Board, http://www.mlds.sarawak.gov.my/ (25 Oct 2011)
Syarikat Sesco Berhad, http://www.sesco.com.my/sesco/english/(25 October 2011)

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1.1 PROCESS BACKGROUND AND ANALYSIS

Polyethylene Glycol (PEG) is a polymer of ethylene oxide with a structure of HO

Figure 1.1.1: Polyethylene Glycol (PEG) structure

PEG is known as polyethylene oxide (PEO) or polyoxyethylene (POE),

Basically, the ethylene glycol, 1, 2-ethylenediol or glycol is the simplest diol.

Table 1.1.1 Chemical and physical properties of Polyethylene Glycol

PEG 200 190-210 Clear liquid 0.2 5-7 1.12-1.13 50 cp @ 25 °c

PEG 300 280-320 Clear liquid 0.2 5-7 1.12-1.13 70 cp @ 25 °c

PEG 400 380-420 Clear liquid 0.2 5-7 1.12-1.13 90 cp @ 25 °c

Monoethylene Diethylene Triethylene Tetraethylene

1.1.2 PRODUCTION OF ETHYLENE GLYCOL: HISTORY AND BACKGROUND

As mentioned earlier, monoethylene glycol is the ‘starting material’ for the

Ethylene glycol was first prepared in 1859 by the Frenchchemist Charles-

(A.M.Brownstein, 1975). Nowadays, the common practice in the industry to produce

1.1.3 USES OF PEG

Table 1.1.3 the usage of PEG

1.1.4 PROCESS SELECTION

 Hydrolysis of Ethylene Oxide (EO) ( Bhawan and Nagan, 2008)

 Transesterification of Methanol and Ethylene Carbonate (Duranleauet

 Hydrolysis Ethylene Carbonate to Ethylene Glycol (Becker et al., 1985)

Then, in order to produce polyethylene glycol, the polymerization process takes

1.1.4.1 Hydrolysis of Ethylene Oxide (EO) to Ethylene Glycol

Ethylene Glycol is produced industrially by the uncatalyzed hydrolysis of ethylene oxide.

C2H4O + H2O  C2H6O2

C2H6O2 + C2H4O  C4H10O3

3C4H10O3 + C2H4O  C6H14O4

1.1.4.2 Transesterification of Methanol and Ethylene Carbonate

Ethylene glycol can also be manufactured by the transesterification of ethylene

The chemical reaction involve in transesterification process is:

2CH4O + C3H4O3 C2H6O3 + C3H6O3

Methanol + ethylene carbonate ethylene glycol + dimethyl carbonate

Source: Duranleau et al, 1987

1.1.4.3 Hydrolysis of Ethylene Carbonate to Ethylene Glycol

Preparation of ethylene glycol from ethylene carbonate has received an attention

Theprocess consists of two parts which are:

1) Production of ethylene carbonate from ethylene oxide. In this part ethylene

ammonium halides and quaternary phosphonium halides. The chemical reactionof

Ethylene oxide + carbon dioxide ethylene carbonate

Ethylene carbonate + water ethylene glycol

In this method ethylene carbonate is formed as an intermediate, some of

1.1.5 SELECTION PROCESS

Process Information Advantages Disadvantages

Additional time added to

Transesterification  Little of diethylene

1.1.5.1 Selection of Ethylene Glycol Process

(CH2CH2)O + H2O → HOCH2CH2OH

1.1.5.2 Polymerization Process

MEG + EO polyethylene glycol (PEG)

1.1.5.3 Batch Process Descriptions

The polymerization of MEG to PEG is carried out in batch reactor.Monoethylene

Another method is avoided by adjusting the concentrations of the two monomers

1.1.5.4 Process Flow Diagram and Process Description

C2H4O + H2O  C2H6O2

C2H6O2 + C2H4O  C4H10O3

C4H10O3 + C2H4O  C6H14O4

DEG + EO Triethylene glycol (TEG)

C2H6O2 + C2H4O  HO-(C2H4O) n-H

MEG + EO polyethylene glycol (PEG)

A.M.Brownstein (1975) Hydrocarbon Process, 71: 72-76

A.Wurtz Ann (1859) Chemical Pharmaceutical. 55: 406

Chemical and Physical Properties of Polyethylene Glycol, http//www.chemicalland.com,

Daniel A.Crowl/Joseph F.Louvar, Chemical Process Safety Fundamentals with