The Relative Cost Factor

A Method of Comparing Petroleum Refinery Investment

by John Birkler, William Micklish, Edward W. Merrow

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Major refinery projects are complex endeavors that span many years and require the integration of many activities and groups. A simple model could not capture all these facets. The Relative Cost Factor model does not demand more specialized or detailed knowledge than would be readily available during the concept formulation phase. It is accurate enough to permit comparison of many refinery projects. Relationships are provided for only the major refining processes, but equations for other processes may be easily derived. Any project to be evaluated by the techniques developed must be consistent with the basic assumptions under which these relationships were developed. Development and pricing policies must be similar to those of the 1970s and early 1980s.

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