Downstream cost index reaches record high

By OGJ editors
HOUSTON, June 30
-- Design and construction costs for refining and petrochemical projects rose for the fourth consecutive 6-month period to a record high, according to the IHS CERA Downstream Capital Costs Index.

The proprietary index, which uses 2000 as the base year with a value of 100, rose to 192 in the first quarter of 2011 from 180 in the third quarter of 2010 (OGJ, Nov. 29, 2010, Newsletter).

The 6% increase was the largest rise since the previous peak in third-quarter 2008.

A 12% rise in steel costs strongly influenced the recent surge and helped push up equipment costs.

Other cost increases included construction labor 8% and engineering and project management 5%.

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