Petroleum industry, 92 capital

The Hydrocarbon Processing Industry (HPI), has traditionally been reluctant to invest capital where an immediate direct return on the investment to the company is not obvious, as would any business enterprise. Additionally financial fire losses in the petroleum and related industries were relatively small up to about the 1950 s. This was due to the small size of facilities and the relatively low value of oil and gas to the volume of production. Until 1950, a fire or explosion loss of more than 5 million U. S. Dollars had not occurred in the refining industry in the USA. Also in this period, the capital intensive offshore oil exploration and production industry were only just beginning. The use of gas was also limited early in the century. Consequentially its value was also very low. Typically production gas was immediately flared or the well was capped and considered as an uneconomical reservoir. Since gas development was limited, large vapor explosions were relatively rare and catastrophic destruction from petroleum incidents was essentially unheard of. The outlays for petroleum industry safety features were traditionally the absolute minimum required by governmental regulations. The development of loss prevention philosophies and practices were therefore not effectively developed within the industry. 

The petroleum industry requires very large, capital-intensive process equipment. Expected lifetimes of process equipment are measured in decades. This limits economic incentives to make capital-intensive process modifications to reduce wastes generation. Reductions in waste generation can be accomplished by process modifications ... 

I would rather say they would be a basis for individual companies to project more accurately the cost increments for their own situation. In fluidized bed, for example, it might be a little different in the chemical industry from the petroleum industry and from the steel industry, and it might be wise to have a typical working example in each because various companies have different sizes and operating conditions that would have to be satisfied. Also, estimates in capital cost and all the other things I mentioned this morning could be adequately assessed. 

The CPI is among the nation s heaviest investors in capital equipment. Several of the major chemical companies make annual capital expenditures in the 500 million to 2000 million range. Many oil companies have annual capital expenditures in excess of 1 billion. In terms of capital invested per production worker, the petroleum industry far outranks all others (Table 8.9) with nearly 775,000 assets per employee in 1996 compared with the all-industry average of 284,000 for all manufacturing industries. The chemical industry ranks fourth, after mining and railroads, with 406,650 assets per employee. 

Various industries differ greatly in the relative use of capital and labor from the very labor-intensive garment industry to the very capital-intensive petroleum industry (Table 8.9). If we assume that the reported values of capital investment per production worker for the various industries are the optimal ones, the ratio of a/b can be estimated by... 

It is also pertinent to note that the capital, income, sales, and R D figures on which these relations are based do not include that portion of the petroleum industry which went to petrochemical production, as noted above, but the exact data are difficult to break out. It is known from McGraw-Hill data that the petrochemical section of the petroleum industry spent 1.4 billion of capital in 1977, and in that year the petroleum industry spent 913 million on R D of all kinds, butitisnotknown how much of this figure was solely for... 

It is characteristic that traditional industries which maintain older plants (metal fabrications, polymer fiber, rubber plastics, wood furniture, organic chemicals) contribute more to releases and transfers of solvents (as measured by releases plus transfers per 1000 sales), than industries which invest capital in the improvement of equipment, safety, and research and development (e.g., printing, motor vehicle assembly). This suggests that the avoidance of cost of the required investment is one reason for pollution. This reason was illustrated in the discussion of the petroleum industry where one manufacturer almost eliminated pollution by fixing leaking valves. 

Alternative Processes for Aluminum Production. In spite of its industrial dominance, the HaH-HAroult process has several inherent disadvantages. The most serious is the large capital investment requited resulting from the multiplicity of units (250 —1000 cells in a typical plant), the cost of the Bayer aluniina-puriftcation plant, and the cost of the carbon—anode plant (or paste plant for Soderberg anodes). Additionally, HaH-HAroult cells requite expensive electrical power rather than thermal energy, most producing countries must import alumina or bauxite, and petroleum coke for anodes is in limited supply. 

The petroleum transportation and distribution network constitutes a major portion of the industry s total infrastructure and represents a large capital expenditure for producers. This means that production often outpaces demand. 

The PAW expected private industry and the United States Bureau of Mines to capitalize on Germany s considerable experience in synthetic petroleum production. With the 30 million that Congress authorized in 1944 for a five-year synthetic petroleum... 

Flow sheets of the chemical plant were prepared with a pre-design of the main equipment. For the capital cost assessment, the factored estimate has been chosen because it considers characteristics of the process corrosive products, high temperature (up to 850°C for Section II) and high pressure (up to 50 bar for the helium coolant). The factored method is essentially based upon charts and formulas developed over 30 years in the petroleum and chemical industries in France (Chauvel, 2000). It consists of estimating costs of basic equipment (generally carbon steel) and correcting them for materials factors. 

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