9/1/22, 12:46 PM Adjusting to the Market Your engineering group has just finished the preliminary design of a small

a small refinery. The estimated cost is $19M for a…

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CHAPTER 16
Q. 16.5 Engineering Economy – Applying Theory to Practice [EXP-44572]
(https://holooly.com/sources/engineering-economy-applying-theory-to-practice-exp-44572/)

Adjusting to the Market

Your engineering group has just finished the preliminary design of a small refinery. The
estimated cost is $19M for a capacity of 2M barrels per year. Your management has asked you
for order- of-magnitude estimates for facilities with capacities of 1M and 3M barrels per year.
The managers also want a comparison of cost per barrel of capacity.

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From Exhibit 16.10:

EXHIBIT 16.10 Capacity exponents

Exponent Facility Exponent Facility

0.07 LP gas recovery in refineries 0.65 Oxygen plants

0.73 Polymerization, small plants 0.65 Styrene plant

0.91 Polymerization, large plants 0.98 Ammonia, and nitric acid or

urea

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9/1/22, 12:46 PM Adjusting to the Market Your engineering group has just finished the preliminary design of a small refinery. The estimated cost is $19M for a…

0.61 Steam generation, large, 200 0.75 Chlorine plants, electrolytic

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psi 

0.81 Steam generation, large, 1000 0.57 Refineries, small

psi

0.88 Power generation, 2,000– 0.67 Refineries, large

20,000 kW

0.5 Power generation, oil field, 20– 0.55 Hydrogen sulfide removal
200 kW

0.64 Sulfur from H2 S ​

the coefficient is .57 for small refineries.

Cx = Ck (Sx /Sk )n
​ ​ ​ ​

C1 = C2 (1/2)57 = 19M(.6736) = $12.8M,  or $13M

​ ​

C3 = C2 (3/2)57 = 19M(1.26) = $23.9M,  or $24M

​ ​

In tabular form, this is:

Capacity (barrels)                1M            2M             3M

Cost                                       $13M        19M            24M

Cost/Bbl Capacity              $12.8        9.50            8.0

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9/1/22, 12:46 PM Adjusting to the Market Your engineering group has just finished the preliminary design of a small refinery. The estimated cost is $19M for a…

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