ABSTRACT
This chapter describes the factors that impact capital and operating cost and the normalization procedures required in cost estimation. There is no universal reporting standard for refinery construction cost, but costs are normally limited to equipment inside the battery limits of each process and categorized according to materials and labor; design, engineering, and contractor’s fees; overheads; and expense allowance. Historically, the US Gulf Coast was considered baseline cost for the US because of the widespread availability of contractors and high levels of competition in the region, access to river transportation, and competitive labor markets. Projects are typically grouped according to process technology, and differences in feedstock type or process operation may be important factors in construction cost. Actual project costs are strongly preferred in evaluation because of their certainty, but estimated costs may be reliable enough to include in assessment. All costs are time-, location-, and project-specific and must be normalized prior to evaluation.
