Technological and Economic Perspective to the Modular Refinery Alternative

Many countries have employed effective refinery planning for profitability and efficient utilization. In an attempt to stimulate similar achievements in Nigeria, the modular refinery alternative (MRA) was proposed. This study identified the critical technological factors influencing MRA in Southwestern Nigeria, assessed its engineering economy viability and determined the appropriate site location for the MRA in the region. This was with a view to achieving sustainable petroleum refining in Southwestern Nigeria. The study obtained data from thirty purposively selected energy industry experts’ from academic institutions, commercial banks, government energy management agencies and energy management advisory firms in Southwestern Nigeria. Data obtained include technological specifications for modular refinery installation like refinery output capacity, refinery configurations, and crude oil specifications. Data for techno-economic feasibility of the project included capital, operating costs, interest rates, time and product selling prices. Data for the project location included locational factors, initial investment, raw materials and utility expenses, and other expenses. The data obtained were analyzed using energy planning and engineering economy methodology. The results showed that the most critical technology issues influencing MRA development in Southwestern Nigeria include refinery configuration, crude oil input characteristics, storage capacity, refiner’s/investor’s margin, and government incentives. These were all ranked 8 out of 10 on a 10-point Likert-like scale. The three modular plant sizes analysed (20,000, 40,000 and 60,000 barrels per day, respectively) gave positive Net Present Values (NPVs) of $5.96 Million, $39.48 Million, and $60.82 Million showing that the three options were economically viable. The Break-even Periods were estimated to be 14, 9, and 8 years, respectively, with Returns on Investment of 8.5, 37.2 and 37.3% respectively. Estimated plant site distances from the crude oil supply in Delta State were Ekiti (309.98 Km); Ondo (247.93 Km); Osun (388.7 Km); Oyo (408.46 Km); Lagos (424.51 Km) and Oyo (309.98 Km). The study concluded that 60,000 barrels per day MRA located in Ondo State was the most appropriate for Southwestern Nigeria (NPV = $60.82M, Break-even Period = 8 years, ROI = 27.2%).