Potential Production Cost Benefit of Constructing and Operating First-of-a-Kind Synthetic Fuel Plants

This Note documents an analysis of the extent to which the "learning" associated with pioneer (first-of-a-kind) synthetic fuel plants can be applied to possible future production expansions. It develops approximations of the magnitude of cost improvement that might reasonably be expected to result from the construction and operation of pioneer synthetic fuel facilities. The results show that, subject to a number of important qualifications, the potential cost improvement attributable to the construction and operation of a pioneer synthetic fuel plant can be substantial (in some instances, up to 30 percent). A companion document, Review of Cost Improvement Literature with Emphasis on Synthetic Fuel Facilities and the Petroleum and Chemical Process Industries, N-2273-SFC, documents a review of the publicly available literature on cost improvement.