Acetic acid production via the selective oxidation of ethane was studied. The feed composition and mode of dilution was taken as a major parameter in reactor and process simulation. The concentration of water (as a component improving acetic acid selectivity) in the reaction feed was varied. Heat and mass balances were predicted. Finally, the ethane direct oxidation process was compared to acetic acid production by methanol carbonylation and the investment and production costs are discussed. (C) 2004 Elsevier B.V. All rights reserved.