How much does it cost to build a 1,000 bbl per day oil

refinery?
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4 Answers

Al Jones, Have learned some things in cost allocation over hundreds of real businesses
Answered Feb 14
It wouldn’t be worth it unless the market was too far from seaports, railroad service, and
roads/bridges able to hand heavy trucks (which would also make it extremely expensive to build
since components, steel, piping, power, etc. would be very challenging to get there and require
the sort of infrastructure connections to make gasoline and diesel fuel much easier to bring in.

It’s called a teapot refinery based on that sort of size, an old friend built one in the 1920’s for less
than $30,000 then (now it would be a multi-million dollar project.) For a tiny refinery that’s
generally going to be very simple so only diesel fuel, asphalt, propane, and maybe some gasoline
are going to be refined out of the light sweet crude oil (if it’s a higher sulphur “sour” crude this is
even less economic as it requires considerably more distillation and piping.) Those are all low
priced products so it only makes sense if you have a lot of diesel demand next to an oil field
(often) and no other refining.

So not knowing a specific location, the available infrastructure like sufficient electrical power, oil
pipelines, etc. any estimate is going to be far more likely to be wildly low than useful. Call it
$20–50 million. Contact a firm like Worley-Parsons Engineering or Bechtel Construction to get
a more useful and accurate estimate if this isn’t just curiosity. Hydrocarbon Processing
magazine tracks all refineries built worldwide annually with their general construction costs
listed along with volume, location, main contractor, owner, etc. .

It also depends greatly on what sort of regulations are present at the site, “first world
regulations” will increase costs by 30–200% in emission controls, water treatment, flaring off
natural gas, construction costs, etc. and new ideas (often unmeasurable by current technologies)
will keep popping up, which is a key reason why small refineries haven’t survived the
environmental movement.

Now a small refinery is 25,000–100,000 barrels per day and often considered a training
refinery or marginal one while the biggest do 500,000–1,000,000 barrels per day.

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John Vautrain, Consultant and Engineer at Oil and Gas Consulting (1972-present)
Answered May 12
That is under typical economic size. Works scale for new construction these days is more than
250,000 barrels per day and up to about double that. For something that small to make sense
you’d need an oilfield in an interior area, very difficult to ship, with some market close by. There
is, or was, a plant around that size in central Australia, one I know of in central Thailand and
another near Cepu oil field in Indonesia. I have seen similar facilities repurifiying “transmix”
from pipelines carrying multiple product grades as well as reprocessing waste oils such as in a
shipyard.

Plants that small typical are “factory-built” on skids for final assembly to be completed at the
refinery location rather than “field-erected”. That technology works up to at least 10,000 barrels
per day. The skids can be shipped by truck but you need decent roads. You may need ten to
thirty skids or more depending on your situation.

I could be way off and the list of processes to be included matters a lot, as does the extent of
tankage and the like but I would estimate costs at $10,000–15,000 per daily barrel for such
equipment, maybe $10–15 million for your plant size. There is a strong economy of scale in
petroleum equipment such as oil refineries and this size is miniscule. There are suppliers in the
US who will design and fabricate the equipment for you. One major cost will be delivery and
import duties depending on where you want to build the plant.

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Scott Oliver, Chemical Engineer and MBA at Chevron

Answered Apr 3
It’s unlikely anyone would build a 1,000 bpd refinery, because that’s too small to be competitive.
To be competitive in the world market and to recoup the required capital costs in a reasonable
time period, a new refinery would need to have a capacity of at least 500,000 bpd. Expect
building a facility that size to cost about $5 billion.

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John Roubal, MSt International Business Law & Oil and Gas Industry, The University of Texas at Austin
Answered May 8
There is a lot of variables in that question! And location location location for the sales or
shipping of your product.

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