How long does it take to build an oil refinery – quora arkla gas phone number

A company needs to formulate an idea for a new refinery. The amount of time depends on the company. They will need to identify a site on which the refinery can be built. A suitable site usually will have reasonable access to port facilities or other external logistics, needs suitable topography and other attributes. Building on an existing industrial or refining site is relatively easy and quick while building on a green field site will take considerably longer. Greenfield sites will need to be acquired and evaluated for environmental attributes. The Equator Principles to which most large international banks adhere will require many aspects including dealing with neighbors particularly if they are residential communities rather than industrial installations.

A good market study needs to be developed that identifies where the various refinery products can be marketed, the qualities of products that will be required, and the prices likely to be available for the products. The project sponsor usually has some idea of crude oil source and type. The availability and laid in cost of crude oils of various types need to be evaluated.

Then an initial technical evaluation/feasibility study should be done that will identify the optimal configuration for the refinery and provide a first cut at the economics of building and operating the plant. A study might evaluate several hundred configuration alternatives but with only rough, curve-type estimates of capital costs, typically plus of minus 50%. The result of that study is a concept of a refinery as well as the financial or economic parameters that are reasonable to expect from operations.

Assuming management moves forward an engineering firm should be retained to do more detailed design and economics. Sometimes the engineering firm will have done the initial work though some sponsors feel such an arrangement tends to bias the preliminary work in favor of construction rather than providing a neutral view. The engineering firm can improve the accuracy of the capital cost estimates by considering more site-specific details such as soil conditions, using more detailed assessments of local labor cost and productivity, and securing vendor quotes for some major equipment. At that point th expected accuracy of,the estimates still will be around plus or minus 30–35%.

Many project sponsors will require project financing from international banks. The lead bank will have been brought on board far earlier but at the stage when permits are available and feasibility work is complete, the lead bank will be ready to make a go/no go decision either to commit to the project or send it back for more work. The credit decisions of major banks are complex and can be time consuming. Usually such loans are syndicated and many banks will invest. Large projects likely will require syndication before serious construction begins to avoid the lead bank being exposed to risk of the entire project. Loan syndication likely will take months as banks prepare documentation and proposed term sheets and prepare legal work to support the debt. Sometimes loans can be secured from only domestic lenders and loan approval time is short but large projects are more likely to be financed internationally.

Once financing is secured the purely engineering and construction activity can commence. But all the preceding steps, many undertaken in parallel, some recycled to improve the project, can be very time consuming. Two years would be a pretty rapid project but smaller projects on established sites by credit worthy sponsors could be done that fast. More ambitious projects in more challenging locations with less certain equity support could take much longer.

A very large number of projects are announced and efforts of varying intensity undertaken that never secure financing. Such projects may stay on the books for years undergoing some degree of effort to find suitable partners or otherwise overcome obstacles to construction. Perhaps 80% of announced major projects are never completed. Of those that are ultimately completed some may take a decade or more to get to this point of financial approval. Refining is generally not such a high margin business that these approvals are easy to acquire.

Once financial approval is secured construction time depends on the scale of the project as well as the state of the industry at the time. Some projects require very high pressure vessels for which there are very few manufacturers wide wide. If their shops are busy, very long delivery times may be quoted. Large rotating equipment likewise can require long lead times. Allowing a year for detailed engineering and three more years for construction is reasonable. Some projects take longer and very astute managers can cut the time within limits.