Infographic: US ethane cracker project costs rise 1.75% in Q2 2016

Total project cost estimates for a typical 1.5 million tonne per annum (mtpa) ethane cracker on the U.S. Gulf Coast are up 1.75% in the second quarter of 2016 compared with the previous quarter, according to Petrochemical Update’s U.S. Ethylene Plant Construction Costs Quarterly Update Q2 2016.

Total project costs for a 1.5 mtpa ethane cracker are estimated to range between about $1.79 billion in a low-case scenario, $2.11 billion in a base-case scenario and $2.42 billion in a high-case scenario, with construction costs making up 84% of the total.

The total project cost escalation rate is above the average United States Inflation Rate for the second quarter of the year, at 1.03%.

Total major equipment cost estimates for Q2 2016 are up 1.78% and total bulk material costs are up 1.93% from the previous quarter.

Out of that, concrete costs rose 2.87% and piping systems increased 2.59% on the back of both higher associated labor rates (up 2%) and material costs (up 3%). Meanwhile, continuing global steel oversupply has cut down Structural Steel/Platforms costs by 1.1% despite higher associated man-hour rates (up 2%), making this the only bulk material line item in the study that has registered a decrease in the time period.

Source: U.S. Ethylene Plant Construction Costs Quarterly Update Q2 2016.

Total indirect costs are up 1.40% from Q1 on the back of labor rates escalation, while total construction costs – comprising total major equipment, bulk material and indirect costs – are up 1.71%. Detailed Design & Engineering and "Other" costs – including Project Management & Controls, Procurement - Subcontracts & P.O.'s, EPC Warranty and EPC Fees – are both up by 2%.

The cost estimates are based on Q2 2016 data. Source: U.S. Ethylene Plant Construction Costs Quarterly Update Q2 2016.

The highest costs for bulk materials for a 1.5 mtpa cracker on the U.S. Gulf Coast are associated with piping systems, which have the highest materials cost, as well as the highest labor cost. Of the major equipment costs, columns c/w trays make up almost 53% of the total.

Of the indirect costs, the majority are associated with labor expenses, but heavy lift cranes and other construction equipment still carry a significant materials cost. 

These cost estimates exclude extensive site preparation and logistics for a greenfield location – such as rail sidings and rail cars – as they greatly depend on the topography of the site.

Indirect costs comprise contingency costs, contractor fees, equipment rental, freight, field supervision, overtime, temporary field support and scaffolding, among others. Major equipment costs include compressors, electrical, heat exchangers, instrumentation, pumps, reactors, tanks, towers and vessels, among others.

Bulk material costs consist of buildings, concrete, demolition/removals, insulation, piling, piping, site preparation, structural steel/platforms, painting and miscellaneous items.

In the U.S. Gulf Coast cost model, the study has used current Open-Shop (Non-Union) labor rates from the Houston, Galveston and Freeport areas. Bulk materials were also used from this region of Texas, supplemented with RS Means & Richardson Engineering unit values.