Has Donald Trump Accidentally Hit Upon His Own Contract With America?
Donald Trump’s wildly changing positions on many issues may have more of a design than we’d realized, and that design may have its roots in the Contract With AmericaRead More »
This is quite an interesting article about Sasol’s planned GTL plant near Lake Charles, LA. http://tinyurl.com/SasolGTL The video clip at the end of the article is informative to those who think ONLY of natural gas and oil as “energy.”
The point is that any refinery which only considers making “energy” products during market analysis, may well go bankrupt rather quickly. There is very little profit margin (low single digit percentages) in making refineries, in a great year, to start with. Supplying only gasoline, diesel and kerosene (jet fuel) only reduces already low margins.
Planning to build a new facility requires several, not so inexpensive, steps. Process simulations have to be run for different (even slight variations) of feedstock stream, then for a variety of products, which means that different process units with differing design capacities for each unit in each “jigsaw puzzle” configuration. Millions of dollars has to be spent to get to this point just to have a WAG within 25% of end capital investment for each proposed plant configuration. Markets of potential product slate then have to be analyzed and forecast for a decade, if not decades out.
Then we get into real process engineering cost, the actual sizing of individual pieces of process equipment and the more narrower “WAG” which gets you into 10% within actual capital investment.
Then the final process engineering and construction firm has to be selected. Only morons go with low bid. These are negotiated contracts.
After contracts are awarded, there will be change orders during construction. Unknowns always exist, regardless of time spent in planning.
It costs a lot of money even before permitting starts. Being an ‘energy’ plant often does not make a refinery or GTL facility worth building.