UK and International Plant Cost Indices

First appearing in Process Engineering in 1973, our long-running UK and International Plant Cost Indices provide important data for process design and project engineers.

For the benefit of new readers, a brief explanation of the background to the indices might help. Like most such economic indices, the UK ’Predict’ Plant Cost Index is a composite figure, made up from four components, carefully weighted to take into account most activities involved in construction projects. In these terms, the composite index, C, is given by: All international PE indices are to the base 2005avr = 100, but as the OECD raw data has also recently been revised to this same base, some of the International figures have been revised. Therefore, please consider all figures given below as having been ’revised’.

Light at the end of oil & gas tunnel, but from where?

After a challenging 2009 that saw plummeting demand and a collapse in oil prices, there is light at the end of the tunnel, believes ARC Advisory Group, which predicts an upturn in demand for energy and refined products over the next five years.

Refiners will, therefore, need to increase capacity and/or their refining agility, according to a new ARC study of the market. This, it said, will benefit suppliers: not least the automation sector, where expenditure by the refining sector is tipped to show a 5% CAGR (compounded annual growth rate) to 2015.

Oil majors adjusted to the downturn by stepping back from some large projects. Refiners still plan to make major investments in coming years to build capacity for an inevitable increase in demand over the long term. But, said ARC, the question is when and where.

“The global economic downturn accelerated changes that have been underway for years. Developing regions want to build new refiners, while refiners in North America and Europe face shrinking margins and under-utilisation of their assets,” said report writer, ARC’s vice president Dick Hill.

Oil majors have up to recently being earmarking most investment for oil and gas exploration and production, rather than for refinery projects. However, national oil companies in emerging economies see huge demand ahead for energy and refined petroleum products in their domestic markets and abroad. Therefore, they are likely to invest heavily in large and complex capital refinery projects.

Hill, however, warns that bringing new refining capacity on line too far ahead of increased demand could cause a return to the “boom and bust” era in the refining sector.

“Currently, refiners in North America and Europe feel the pressure of reduced margins,” the market analyst commented. “There is uncertainty on the shape, timing, and location of the recovery curve fuel risk for refiners.”