Replies to post #396 on Blue Dolphin Energy Company (BDCO)

[56Chevy]

In the Valero example the expenditure to build a 70,000bpd topping unit is $350MM or $5,000 per barrel. For the 90,000bpd topping unit the cost to build comes out to be $4,444 per barrel.

The average expenditure between the two ADU's is $4,722 per barrel.

If we were to apply these numbers to the Nixon facility the costs to replace it would be $4,722 X 15,000bpd capacity = $70,830,000

Is this an apples to apples comparison?? Probably not because the Nixon plant is not brand new its got some miles on it...depreciation...so I honestly can't say. I don't have an MBA in finance from SMU but I know a guy who does. Perhaps he'll chime in. Another consideration is the smaller the plant the higher the expenditure per barrel to build. It may be more in the neighborhood of $5,500 per barrel to build a Nixon clone.

Another big unknown in these Valero examples is do these reported expenditures include the cost of new land it would require to build these ADU's on. ?? My assumption is it does not. I'm assuming they have space at the existing refinery site(s) to add these ADU's.

Therefore if I were to wag an estimate on the value of the Nixon plant I don't think the $70.8MM is an unplausible place to start.

[jmjjw]

Does this article give any clues to a possible range of valuation costs for an ADU? Or is it completely not applicable?

https://www.reuters.com/article/us-valero-energy-topper-startup/valero-starting-up-new-crude-topping-unit-at-tx-refinery-idUSKBN0TX2DX20151214

Indeed, this is useful in the valuation process - as a proxy for replacement-cost-new, and using the press release data, you get a figure of $4,722/bbl of throughput.

The hidden information is related to standard vs. modular unit construction - which don't scale exactly relative to one another. A modular unit in the 10,000bbl range is generally about $3,000bbl in raw cost - this bumps around which other factors are included - it is best considered a "floor cost."

It is reasonable to project a range for Nixon against these figures, using a throughput of 15,000bbl, at the low end, Nixon's RCN is about $45M - at the higher end, about $71M.

RCN is used in decision-making for expansion/upgrade vs. a new unit.