How much does an oil refinery cost to build?

Answer 1

two to four billion, depending on.....

Actually, the answer is a lot like "how high is up?" Crude oil comes in many forms, with the chief variables being how heavy the crude is (larger molecules are more dense), how much sulfur it contains, how acidic it is, and what other contaminants (e.g. - metals) come along for the ride. On top of that, the products that a refinery produces are also many, including LPG, butane, gasoline (in various forms - multiple octane grades, lower vapor pressure gasoline is required by regulation in the summer months; sulfur standards vary, etc.), diesel fuel (again, in multiple forms), jet fuel, military spec jet fuel, asphalt, coke, and others. To know what it will cost to build a refinery, one has to specify what types of crude it will start with, and what products it is designed to produce, and what the level of throughput will be.

It takes a lot more processing, for example, to convert heavy, sour, high-acid Canadian tar sands crude into saleable products than it does to convert light sweet West Texas crude, and therefore the cost of a refinery to do that will be a lot higher. Once the infrastructure is in place (real estate, maintenance suppliers, pipelines, employees, etc.), it is far more efficient to modify an existing refinery than to build a new one from scratch. The last oil refinery built in the US was started in the 1970's, though there are rumors of new ones popping up to handle the boom in wet shale gas. Since that time, expansion of total refining capacity has come at existing refineries, even as most of the smaller ones (e.g. - less than 100,000 barrel/day throughput) have shut down. Therefore, calculating the cost of a new refinery is mostly an exercise in fantasizing.

Delta Airlines recently (April, 2012) announced that it was buying a closed 185,000 bbl/day Phillips refinery in the Philadelphia area for $180 million, and will spend $100 million to get it back up and running. (The deal is designed to help Delta control the cost of its jet fuel.) They value the asset at $1 billion.

For comparison, the BP refinery in Whiting, Indiana is in the process of being upgraded to handle more Canadian tar sands crude. That 405,000 bbl/day refinery has announced it is spending $4 billion to increase its capacity for Canadian crude from 80,000/day to 350,000 bbl/day, with startup of the new units targeted for 2013. Total throughput is not changing, according to the press information. Rather, they are changing the types of crude that can be processed at the plant.

So the answer to the question is: "How much do you want to spend??"