Calculation period for petrochemical projects

In the 1980s, there was a standard for the duration of construction projects in the petrochemical industry, which provided detailed schedules for the various tasks and construction times for many typical projects (such as 300,000-ton ethylene plants and 5 million-ton atmospheric and vacuum distillation units). Today, with the enlargement of petrochemical projects, improvements in process technology, advancements in construction techniques, and the growth in size of construction equipment, many processes and project timelines have fallen behind. Therefore, the construction timeline for petrochemical projects is usually determined by referring to the timelines of similar projects carried out recently. It is advisable to choose projects from Sinopec or Shenhua, as the projects of these two groups offer valuable examples in terms of scientific organization and effective management. It’s best not to follow foreign projects as a model.

As a supplementary note, the project calculation period referred to is the one used in economic evaluations, including both the construction period and the operation period. Relevant books state that the operation period generally should not exceed 20 years; however, there are some cases where this limit is exceeded. Therefore, I would like to ask what the industry standards are in this regard, as I have not found any books that specify such a calculation period.

Generally speaking, the design life of process equipment is at most 20 years; therefore, from a design perspective, the maximum limit for the normal production cycle of such equipment is 20 years. Of course, there are also many projects that do not last 20 years – they either can no longer operate properly or are displaced by new technologies and market trends ； Some have been used for over 20 years after undergoing repeated technical improvements, upgrades, and modifications. The earliest batch of small ethylene and small refineries are typical examples of this.

The last edit to this post was made by Nini on 2012-6-13 at 15:50. As far as I know, there seems to be no clear regulations regarding the calculation period. However, one thing to keep in mind when determining it is that the calculation period includes both the construction period and the production period; the production period must be greater than or equal to the depreciation period of the fixed assets. Yet, the depreciation periods for different installations, equipment, buildings, factories, and so on vary. When conducting cost calculations for chemical engineering projects, a compromise period is usually chosen to simplify the calculations. For example, if the construction period of a project is 3 years and I select a depreciation period for fixed assets of 15 years, then the production period will be at least 15 years (it’s possible to increase this by one or two years artificially). Thus, the total calculation period for the project is 18 years (this value is commonly used in our calculations). Sometimes, to make the return look better, you can set it at 20 years as well. PS: The depreciation period for fixed assets is available for reference.

I’ve learned that if the project lifespan is set at 20 years, and the design life of the equipment is also 20 years. So the calculation period for this project is also 20 years, right?

The construction of chemical plants generally takes 3 years, with the depreciation period for fixed assets being 15 years before the residual value is recovered; typically, an evaluation period of 18 years is used for the economic analysis of such projects.