MANUAL Published: 29 April 2013

A Review of Refinery Markets and Cost Estimation


A refinery is an installation that manufactures finished petroleum products from crude oil, unfinished oils, natural gas liquids, and other hydrocarbons using heat, pressure, catalyst, and chemicals. Early refineries were simple, batch distillation units that processed hundreds of barrels of crude oil per day from one or a small collection of fields. Today, refineries are complex, highly integrated facilities that may contain as many as a dozen or more process units capable of handling numerous crude oils from around the world with a capacity up to one million barrels per day or more. Refineries perform the same chemical and physical transformations worldwide, but they differ greatly in their complexity and nature of the political and regulatory market environment in which they operate. The purpose of this chapter is to provide a general overview of the refining industry, covering domestic and international markets, industry characteristics, refinery economics, and cost estimation. We classify basic refinery processes and operations and describe product demand and supply and market statistics. We summarize 2005 U.S. Gulf Coast investment cost curves and describe the methodological framework, data sources, and normalization procedures used in estimation. Unit descriptions and cost functions are summarized for the main refinery process units.

Author Information

Kaiser, Mark, J.
Center for Energy Studies, Louisiana State University, Baton Rouge, LA, US
Gary, James, H.
Dept. of Chemical Engineering, Colorado School of Mines, Golden, CO, US
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Developed by Committee: D02
Pages: 597–630
DOI: 10.1520/MNL5820131213624
ISBN-EB: 978-0-8031-8681-1
ISBN-13: 978-0-8031-7022-3