Infographic: US ethane cracker construction costs rise 1-2% year on year
Total construction costs for a typical 1.5 mtpa ethane cracker on the US Gulf Coast range between about $1.48 billion in a low-case scenario, $1.74 billion in a base case scenario and $2 billion in a high-case scenario, according to Petrochemical Update estimates.
These costs are 47.9% higher than for a 1.0 mtpa project on the Gulf Coast vis-à-vis a 50% production capacity increase, and 676% higher than for a 200 KTA ethane cracker expansion vis-à-vis a 650% capacity increase (see figure below).
There are currently seven ethane crackers under construction on the US Gulf Coast, five of which are slated to come on stream by the end of 2017.
Ten more ethylene facilities have been proposed for the Gulf Coast and the US Northeast, most of which are in various stages of development. In addition, five ethane cracker expansions have been announced for the first wave of petrochemical plant construction (2016-2021).
Total construction costs on the US Gulf Coast are up 1-2% compared to Q1 2015. Current cost estimates reflect Q1 2016 values. Source: Petrochemical Update’s US Ethylene Plant Construction Costs Report 2016-2020 (June 2016).
The highest costs for bulk materials for a 1.5 mtpa cracker on the US Gulf Coast are associated with piping systems, which have the highest materials cost, as well as the highest labor cost. 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.
Source: Petrochemical Update’s US Ethylene Plant Construction Costs Report 2016-2020 (June 2016).
Total labor costs, including design, engineering, procurement and construction, for a 1.5 mtpa project on the US Gulf Coast vary between about 49% and 51% of the overall capital project spending in the three different cost scenarios.
Total labor costs for a 1.5 mtpa ethane cracker on the Gulf Cost in a base case scenario are estimated at slightly over $1 billion, representing a total of about 11,714,245 man-hours (see figure below).
Breakdown of total project labor costs (1.5 mtpa USGC)
The labor cost estimates are based on current open-shop (non-union) labor rates from the Houston, Galveston and Freeport area. Source: Petrochemical Update’s US Ethylene Plant Construction Costs Report 2016-2020 (June 2016).
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. Assuming that there are no major impediments, the site development could add another $1 billion to the project cost and would require a substantially higher labor pool.
The cost estimates have been developed using a bottom-up analysis of four major components: major equipment, bulk materials, indirect costs and detailed design.
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 include buildings, concrete, demolition/removals, insulation, piling, piping, site preparation, structural steel/platforms, painting and miscellaneous items.