US ethane cracker project costs rise 2.5% year to date
Total project cost estimates for a typical 1.5 million ton-per-annum ethane cracker on the U.S. Gulf Coast rose 2.5% in the first nine months of 2016, according to Petrochemical Update’s third-quarter U.S. Ethylene Plant Construction Costs Quarterly Update.
As of September 30, 2016, the base-case cost estimate for a 1.5 mtpa cracker in Texas or Louisiana stands at $2.13 billion, the low-case scenario $1.81 billion, and the high-case scenario $2.44 billion. The base-case scenario rose 0.7% in the third quarter.
Costs in the Northeast continue to grow at a quicker pace than on the Gulf Coast. The base-case estimate for a 1.25 mtpa cracker in the Northeast has risen 4.3% year to date to $1.90 billion. On the Gulf Coast, the base case for a 1.25 mtpa cracker has risen 2.7% to $1.78 billion, and the base case for a 1.0 mtpa cracker has risen 1.9% to $1.43 billion.
By comparison, the U.S. inflation rate rose 1.83% in the first eight months of the year.
The Northeast (defined for the purposes of this report as Pennsylvania, Ohio, West Virginia, and North Dakota – where at least six projects are being planned or considered) remains the more expensive region to build a cracker, with a base-case engineering, procurement and construction cost of $1,523.80 per ton.
On the Gulf Coast, estimated EPC costs for a 1.5 mtpa cracker stand at $1,417.55/ton, while a 1.25 mtpa project comes in at $1,425.40/t and a 1.0 mtpa project at $1,427.60/t. Seven projects are under construction in the Gulf Coast, five of which are on track for start-up during 2017, and at least five more crackers are in planning or under consideration.
The cost of materials and labor rose at roughly the same pace across all categories on the Gulf Coast between January and September. Using a 1.5 mtpa cracker as the benchmark, materials rose 2.47% and labor rose 2.45%. In the Northeast, the cost of materials rose at 4.9% in the first nine months of 2016, while labor rose at 4.0%.
Staying with 1.5 mtpa crackers on the Gulf Coast, total major equipment costs have risen 2.3% year to date, bulk material costs have risen 2.8%, and indirect costs have climbed 1.9%. Detailed design and engineering costs have risen 3.0%, and other non-construction costs have also climbed 3.0%.
Plenty of variation was found between the different types of bulk materials in the first nine months of the year. The cost of structural steel platforms actually fell 3%, while the cost of both piping systems and concrete rose 4.5%. Costs for other materials rose from as low as 0.9% for earthmoving to 3.0% for electrical and instrumentation.