Feedstock Ammonia is produced from nitrogen and hydrogen gas. Costs for each of these gases were obtained from previous projects and also distributor estimates. (Note: SCF is Standard Cubic Feet) Nitrogen (1kg = 30.42 SCF)

Per 1,000 SCF: $11.28, $8.26, $10.01, $6.85, $11.75, $5.79, $6.02, $6.78, $0.54, $13.36, $10.10, $6.94, $13.16

Hydrogen (1kg = 423 SCF)

Per 1,000 SCF: $11.28, $8.26, $10.01, $6.85, $11.75, $5.79, $6.02, $6.78, $0.54, $13.36, $10.10, $6.94, $13.16

Losses

Gasses are hard to contain and losses due to off-gassing should be considered. We can assume that we lose an average of 5% with a standard deviation of 1.75%. Losses cannot be less than 0.

Energy Costs We are considering natural gas as an energy source. The average energy required to produce ammonia is 32GJ/ton, but we would like you to include some uncertainty in this value using a standard deviation of 1.5 GJ/ton. Current gas prices in the US fluctuate based on season and market. For this analysis assume a mean price of $7/GJ and a standard deviation of $0.50/GJ.

CapEx Capital expenses will be considered a constant of $500,000,000.00. You should consider a 15 year period of operation for this plant.

Additional Operating Costs We will not consider additional operating costs in this analysis. If the results of this study warrant further consideration we will consult human resources and facilities experts to improve our cost estimate.

Operating Conditions

Assume that the reactor has a 15% fractional conversion of nitrogen and that the reactants are fed in stoichiometric proportions. Any unused reactants are recycled with perfect separation.

Our goal is to produce 1,000,000 tons of ammonia per year. Using a basic Monte-Carlo simulation, please estimate the cost of production of ammonia on a per ton basis. You may assume that all unused reactants are recycled except for those lost to off-gassing. Please report the following:

• The 95% confidence interval for the cost of each reactant.
• The distribution of production costs per ton of ammonia for at least 10,000 scenarios (This should be a histogram).
• The break-even price which covers 95% of those scenarios.