Oil and Gas opportunity: Start Your Own Private Petroleum Refinery

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Part 2

FACTORS TO CONSIDER FOR OIL AND GAS REFINRY CONSTRUCTION

 Permits and Approvals
Oil and Gas refining requires a lot of resources to record success. Depending on your configuration, you need to secure land, anywhere between 50-200 MW of electricity, steam, water and other utilities. At the same time, you will also need to seek regulatory body approvals depending on the jurisdiction. This varies wildly depending on which country, which company and other factors.

 Configuration
 Depending on your demand and supply balances (which in turn depends on the geographic location of your refinery), you will have to choose which refinery configuration works best for you. Oil refining has long moved on from simple crude distillation and now is an incredibly integrated complex comprising several upgrading & treating units. 


Products Quality and refinery efficiency
The Quality of products and output you need from Refinery production should be considered to determine your efficiency.

 Feedstock Supply
 The content and analysis of the feed stock is significant in the Oil and Gas production. Also, availability of raw materials is of great importance; access to good raw materials should be put into consideration. Usually, Oil and Gas refineries are designed around a basket of "design-crudes", crude oil grades that are in abundant supply and can be reliably sourced in the medium term horizon while you are still recovering your investment in the business. I believe you have this safe and sound.

Process Technology
In the Oil and Gas industry, the process Technology and what kind of chemical process you would use are vital. These would contribute to the cost of production.  When you construct refinery without advanced technology, you may bring indirect costs to the economy such as environmental pollution that reflects in your project such as tax or fine or other indirect expenses.

Complexity and Products
Refinery complexity and which products you want to extract from Feed Stock is important to put into consideration.

The financial Institution

The Financing Structure that will be used for financing the project should be considered because large volume of money is required in the oil and gas business.

Project Contractors
The project contractor and project delivery time to enter into operation should be put into consideration so as to avoid delay and wasting of resources.

Project Risks
Project Risk Factors such as Political Risks and Country Corruption Ranking, Securities etc. For example, in the oil and gas business, because of corruption inside governments over 3 years can be wasted for  just arranging their commission with investor and during this period, all of the prices can be changed, including Crude Oil price, Construction prices, Currency prices, Fuel Price etc.

The Scale
The project scale, if it is small, the Investment unit price is very high. Economies of scale are critical to maintaining a practicable business.

With this understanding in the oil and gas sector, building a complex, hydrocracking, hyrdroskimming, catalytic cracking refinery, can cost anywhere between 5-15 billion USD. The throughput (processing capacity) of this refinery should be between 250-500,000 barrels per day.
About 20 years ago Standard cost estimation for normal Refinery was US $25,000 per barrel capacity
Nothing is constant, things are changing, for instance construction of SHELL Pearl GTL Plant in Qatar the final cost was more than US $93,000 / Barrel per day.
 Some Biofuel or Green Refineries could costs even more.
There are some low quality Refineries constructed with lower than US $10,000 per barrel capacity per day.
Duration from breaking ground to achieving full complexity & throughput can range between 3-8 years depending on the scope of the project.  
You would be smart if you can start to run your oil and gas refinery on some basic infrastructure as rest of the units start to come online.
These are examples of Refineries in Nigeria:
•              Port Harcourt refining company (PHRC)
•              Warri refining & petrochemical company limited (WRPC)
•              Kaduna refining & petrochemical company limited (KRPC)


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