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HERVE BARON Cost estimate of Oil & gas facilities

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Welcome to this presentation. It explains how the investment cost for an Oil & Gas facility is

estimated. After a short introduction, the 3 common methods of cost

estimate are shown. Common ratios, such as $/kg for equipment, pipe etc. are given. Please download this file so that you can see my trainers notes in

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Cost estimate of Oil & gas facilities


2013 Herv Baron


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Agenda Introduction The different estimation methods: Capacity factored Equipment factored Analytical



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What will be the overall cost of this facility?


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Cost = Quantities * item costs

How would you determine quantities?

All items


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Quantities estimates:

Ratio from past projects

Material Take-Off


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Cost = Quantities * item costs

How would you determine quantities?

What is an item cost made of?

All items


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Item cost = Supply cost + installation cost

How would you each one?


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Item cost estimates:

Supply + installation

In-house data from past projects

Inquiries


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Inquiries

Sensitivity to:

Raw materials


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Inquiries

Sensitivity to:

Raw materials

Steel, alloy steel, copper, cement, iron


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Inquiries

Sensitivity to:

Raw materials

Construction market


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Sensitivity to:

Raw materials

Construction market


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Purpose of estimate: Concept screening Study of feasibility Decision to invest Estimate type: Capacity factored Equipment factored Analytical


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Capacity factored C1/C2 = (P1/P2)e e ~ 0.6 Ci: Cost of facility with production capacity Pi


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Exercise: what is the increase in cost for +50% capacity increase?


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Exercise: what is the increase in cost for +50% capacity increase? In your opinion, what is the limit of such estimate?


PrsentateurCommentaires de prsentationDoes not take into account market conditions


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Exercise: what is the increase in cost for +50% capacity increase? In your opinion, what is the limit of such estimate? It takes into account neither market conditions nor plant location (labour cost)



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Equipment factored C = f M C: total installed cost of facility M: cost of main equipment f: factor


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Equipment factored C = f M C: total installed cost of facility M: cost of main equipment f: factor Note: Typical figures for Petrochemical Plant


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Whats the main equipment?

Equipment factored C = f M C: total installed cost of facility M: cost of main equipment f: factor


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How is the cost of main equipment evaluated?


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Process design

PFDs

H&M balance


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Equipment factored C = f M f: factor f depends on

type of facility (petrochemical, refining, LNG, off-shore) Size


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Equipment factored C = f M f: factor f depends on

type of facility (petrochemical, refining, LNG, off-shore) Size

Typical figures for a chemical plant

In your opinion, how can we refine the estimate?


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Equipment factored C = fi Mi Mi Cost of all type i Main equipment fi: factor


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Equipment factored C = fi Mi Mi Cost of all type i Main equipment fi: factor Why do you think justifies such an approach?


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Equipment factored C = fi Mi Mi Cost of all type i Main equipment fi: factor Why do you think justifies such an approach?

PrsentateurCommentaires de prsentationStandard arrengements


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Equipment factored C = fi Mi Mi Cost of all type I Main equipment fi: factor

In your opinion, what is the limit of such estimate?

PrsentateurCommentaires de prsentationIncorporates market conditions for supply only, not for labour no localization


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Analytical Main equipment supply + install Piping supply + install Electrical supply + install Instrumentation & Control system supply + install Civil Works Steel structures Painting, Insulation Temporary construction facilities Engineering & Project Management Miscellaneous


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Analytical Establish the bill of quantities (BOQ) in each trade: equipment,

civil, piping, structural steel etc. BOQ = Material Take-Off (what is measured from available

drawings at this stage) + allowances for design development + allowances for what is not yet on drawings + contingencies

Apply ratios to get supply + installation cost Installation cost = qty * manhours/ton ratio * labour cost Labour cost is all in, i.e., includes construction equipment (crane,

scaffolding) The ratio is based on standard manhours, i.e., home country, Localization factor (productivity) to be applied, i.e., actual

installation manhours = ratio * productivity Example: piping installation cost, ratio: 250 std h / ton

Western Europe, labour cost $100/hr yields $20k/ton Middle East, labour cost $18/hr, productivity 2.5 yeilds $16k/ton


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Main equipment supply + install Supply


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Main equipment supply + install Supply: eqt list (dimensions) => weight


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Process design

PFDs

H&M balance


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Main equipment supply + install Supply: eqt list (dimensions) => weight Rate?


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Main equipment supply + install Supply: eqt list (dimensions) => weight Rate:

USD 4/kg for CS depends on eqt size: 4 (large) 10 (small) USD12/kg for SS USD 300-500 /m2 for Shell&Tube / Air-coolers USD 1000/kW for pumps

Important note: the above ratios and the following ones - are the ones obtained by large EPC Contractors ordering large quantities (USD 1bln jobs). Higher ratios must be used on smaller jobs!


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Main equipment supply + install Supply: eqt list, dimensions/capacity/weight Installation


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Main equipment supply + install Supply: eqt list, dimensions/capacity/weight Installation ratios: % supply cost, typ. 8%


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Main equipment supply + install Supply: eqt list, dimensions/capacity/weight Installation ratios: % supply cost, typ. 8%

30 std manhours/ton (includes labour and equipment)


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Piping supply + install Qty: ratio (eqt weight), typ. 40%


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Piping supply + install Qty: ratio f (eqt number)


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Piping supply + install Qty: ratio f (eqt number)

Remark: Unit vs Interconnection


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Piping supply + install Qty: ratio (eqt number, eqt weight)

MTO


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Process design

PFDs

H&M balance

P&IDs


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PFDs

H&M balance P&IDs

Process design

Plot Plan

Equipment list


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P&IDs

Plot Plan

Piping Layout


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A unique synthesis for the busy Project professional 270 pages 300 illustrations

For more information on Engineering, refer to:


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Table of Contents

HERVE BARON

The Oil & Gas Engineering Guide 2nd edition

Order direct on the publisher website:

http://www.editionstechnip.com/en/catalogue-detail/1111/oil-gas-engineering-guide-the.html


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Piping supply + install Qty: MTO


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Item count: P&IDs Lengths: Piping Layout


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Item count: P&IDs Lengths: Piping Layout Both Process & Utility lines Both Above Ground & Underground lines, Fire water


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Item count: P&IDs Lengths: Piping Layout Both Process & Utility lines Both Above Ground & Underground lines, Fire water Allowances added for:


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Item count: P&IDs Lengths: Piping Layout Both Process & Utility lines Both Above Ground & Underground lines Allowances added for: what is not taken-off, e.g., small diameter and design

development (P&ID completion) to obtain quantities to erect


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Item count: P&IDs Lengths: Piping Layout Both Process & Utility lines Both Above Ground & Underground lines Allowances added for: what is not taken-off, e.g., small diameter and design

development (P&ID completion) to obtain quantities to erect

cut and losses to obtain quantities to be supplied


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Piping supply + install Qty: ratio (eqt number, eqt weight) MTO Rate Supply


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Piping supply + install Qty: ratio (eqt number, eqt weight) MTO Rate Supply $ /kg, typ. USD 3 /kg for CS


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Install

PrsentateurCommentaires de prsentationAnswer: 200*2.5*16 = $ 8000 / ton


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Install std mhrs/ton, typ. 200-250 in unit, 100 on interconnecting pipe-racks, applied to the total piping weight, including fittings & valves.

PrsentateurCommentaires de prsentationAnswer: 200*2.5*16 = $ 8000 / ton


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Electrical supply + install Price ratio % Main equipment, typ. 15-20%


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Electrical supply + install Price ratio % Main equipment, typ. 15-20% Quantities: Consumers list Rate (supply+install): USD 50k / consumer (w/o

generation) USD 520 / installed kW


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Plot Plan

Single Line Diagram Consumers list


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120%


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120% Qties


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120% Qties nb equiv. loops (CV, 0.5 ON/OFF, Analyser)


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120% Qties nb equiv. loops (CV, 0.5 ON/OFF, Analyser) Rate


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120% Qties nb equiv. loops (CV, 0.5 ON/OFF, Analyser) Rate supply: $ /equivalent control loops, typ. 90k

install: hrs / equivalent control loops, typ. 750


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120% Qties Instrument list


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Instrumentation & Control system supply + install Price ratio % Main equipment, range: 40-120% Qties Instrument list Rate Supply+install: $ / I/O, typ. 1000


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Civil Works Price Ratio % Main equipment cost, typ. 15-20%


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Civil Works Price Ratio % Main equipment cost, typ. 15-20% Qty


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Civil Works Price Ratio % Main equipment cost, typ. 15-20% Qty Dimensions/Weight of equipment &

structure => size of foundations (m3)


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structure => size of foundations (m3) Rate


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structure => size of foundations (m3) Rate all-in (materials & labour) rate $/m3, typ. 1000


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Civil Works Price Ratio % Main equipment cost, typ. 15-20% Qty MTO: excavation, formwork, rebar, etc.


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Civil Works Price Ratio % Main equipment cost, typ. 15-20% Qty MTO: excavation, formwork, rebar, etc. Rate Mhrs/operation + labour cost


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Steel structures Price Ratio % Main equipment cost, typ. 10-30%


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Steel structures Price Ratio % Main equipment cost, typ. 10-30% Qty Ratio


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Steel structures Price Ratio % Main equipment cost, typ. 10-30% Qty Ratio pipe-racks: 90% of piping weight

platforms: 10% of equipment weight


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platforms: 10% of equipment weight Rate


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platforms: 10% of equipment weight Rate Supply USD 2/kg

Erection 20 std manhours/t


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Analytical Main equipment supply + install Piping supply + install Electrical supply + install Instrumentation & Control system supply + install Civil Works Steel structures Painting, Insulation


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Painting, Insulation Price ratio % eqt, piping, str cost, typ. 5% each


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Painting, Insulation Price ratio % eqt, piping, str cost, typ. 5% each Qty MTO


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Painting, Insulation Price ratio % eqt, piping, str cost, typ. 5% each Qty MTO Rate supply + install h / m2

typ. 0,5 for painting 1,5 for (hot) insul.


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Temporary Construction facilities Ratio % total cost, typ. 5% for new site Detailed


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Engineering & Project Management = all Project services Price ratio % total cost, typ. 15%


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Engineering & Project Management = all Project services

Price ratio % total cost, typ. 15% Qty ratio

PrsentateurCommentaires de prsentationEqt item PA/B counts for 2Hrs exclude field supervision


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Price ratio % total cost, typ. 15% Qty ratio hrs / eqt item, typ. 1800 for Refining,

2500 for gas, 4000 for LNG

PrsentateurCommentaires de prsentationEqt item PA/B counts for 2Hrs exclude field supervision


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Price ratio % total cost, typ. 15% Qty


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Price ratio % total cost, typ. 15% Qty home office: tasks list + std manhours

field supervision: ratio to labour, typ. 1/7


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Analytical Main equipment supply + install Piping supply + install Electrical supply + install Instrumentation & Control system supply + install Civil Works Steel structures Painting, Insulation Temporary construction facilities Engineering & Project Management Miscellaneous Contractors cost


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Miscellaneous Earthworks: always specific Special foundations Infrastructures: roads, buildings Spare parts, typ. 5% main equipment cost First fill (catalyst, lubes, chemicals)


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Analytical Main equipment supply + install Piping supply + install Electrical supply + install Instrumentation & Control system supply + install Civil Works Steel structures Painting, Insulation Temporary construction facilities Engineering & Project Management Miscellaneous Contractors cost


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Contractors cost profit, risks, sales cost,


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Contractors cost profit, typ. 7% risks, sales cost, typ. 10-15%


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Main equipment supply + install Piping supply + install Electrical supply + install Instrumentation & Control system

supply + install Civil Works Steel structures Painting, Insulation Temporary construction facilities Engineering & Project Management Miscellaneous: catalysts etc. Contractors cost


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Main features: Different level of Cost estimate accuracy

Feasibility study +/-30% accuracy Final Investment Decision (FID) +/- 10%

Which of the methods we have seen would you use for each case?

PrsentateurCommentaires de prsentationRatio for +/-30% and detailed (MTO) for +/-10%


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Main concepts: Different level of Cost estimate accuracy Factored / Detailed Qty estimate: allowances for design development Rates:

In-house historical data similar Plant Cost estimate: Contingencies for cost escalation Inquiries + provisions for cost adders (supplies),

additional works/re-works (construction) Direct costs / Indirect costs

PrsentateurCommentaires de prsentationEqt item PA/B counts for 2


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Historical evolution: + Increased instrumentation & control costs - Engineering low cost centers - Low cost sourcing 20% cheaper - Increase in productivity (3D model) + Additional requirements: safety, environment


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A unique synthesis for the busy Project professional 270 pages 300 illustrations


HERVE BARON

The Oil & Gas Engineering Guide - 2nd edition

Discipline presentation: activities and deliverables

Table of Contents

The overall process

Methods & tools

HERVE BARON


Table of Contents

Discipline presentation: activities and deliverables

HERVE BARON

The work of each

Engineering discipline is described

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Design activities are explained, e.g., Plant

Equipment layout

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Complex activities, such as

QRA, are explained through a practical

example.

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How are materials of

construction selected ?

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How and when are Piping

Materials ordered?

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A sample of all common Engineering documents is

included

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A sample of all common Engineering documents is

included

Use this to specify what

you want to your Engineering supplier !

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Verify the contents of

engineering documents with check lists.

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Difference between

Engineering and Shop drawings

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Understand the main

technical aspects, e.g., DCS vs ESD

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The common 2 types of

package control

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The different Plant drainage systems

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The dynamic forces to

which an Off-Shore Plant is subject

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Table of Contents

The overall process

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Use this as standard, question deviations.

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Understand the new 3D-model centered engineering process

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Know the interfaces

between disciplines... and with Vendors

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Understand what drives the Project

schedule

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Table of Contents

Methods & tools

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Use these methods as

standard, question deviations.

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Implement powerful

procedures

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Request meaningful

progress reports

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Implement effective

Project Control

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This book is destined to both:

Oil & Gas companies Project execution personnel

Oil & Gas contractors Project execution personnel

HERVE BARON


If your are on the Client side, i.e., contracting Engineering services, this book will help you to:

Specify to an Engineering supplier what you want: what deliverables and with what contents,

Set a standard in Engineering execution that you and your supplier can adhere to: design stages/gates, methods to be used, etc.

Specify the progress report you want, with the meaningful indicators,

Ask the right questions to assess the true progress,

HERVE BARON


If your are on the Contractor side, i.e., performing Engineering activities, this book will help you to:

Understand the work of each discipline and the overall picture,

Challenge what one discipline tells you,

Understand the critical areas,

Put in place the right methods to be successful,

HERVE BARON


Order direct on the publisher website:

http://www.editionstechnip.com/en/catalogue-detail/1111/oil-gas-engineering-guide-the.html

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