Critical success factors for locating proposed modular refineries in the Niger Delta region

With the recent government impetus and incentives for the construction of modular refineries in the Niger Delta Region, it becomes imperative for potential investors to consider key success factors in regard to the location of these refineries.

Typically, a refinery should be located near demand source.

This mainly applies to the medium to large scale refineries. The reason is that crude oil is cheaper to move than products, so refineries tend to be located near demand source. However, for smaller scale refineries, it is more economical to locate them closer to the source of feedstock.

Site has to be able to take delivery of large pieces of equipment (e.g. crude distillation towers, reactors, and other conversion units). Some bridges and roads are unable to take heavy payloads. Therefore, refineries should be located for ease of transporting plants and equipment.

For ease of product evacuation, a refinery should be easy to connect to existing depot system either by rail or pipeline. A map of the PPMC depot network needs to be studied carefully by prospective investors.

For ease of crude oil supply, there should be availability of berth for sea-borne crude oil transport or crude oil transport pipelines. Again, it is crucial for intending investors to study the location of crude oil flow stations, and the network of crude oil pipelines for more effective and cost-saving location of a modular refinery project.

A typical refinery requires at least 1 x 3 km of square area of land for process units, storage tanks, packing lot for trucks, and administrative areas. There should be ample land availability for current and projected capacity additions.

Refining requires significant amounts of water mainly for steam generation and cooling. So, projects should be located where there is adequate water supply or where a water borehole could be drilled.

Ideal locations should have or be able to attract a skilled workforce especially for operations and maintenance. You do not want to locate a refinery in crisis-prone or crisis-ridden areas!

Refineries can use fuel oil (a by-product of crude oil refining) as a source of fuel. However, as a ‘plan B’ connections to alternative sources of power e.g. natural gas, may required.

All these factors, put together, are necessary for a successful location and operation of a small-scale refinery in order to minimize cost and curtail revenue risks.