Nelson complexity index
Encyclopedia
The Nelson complexity index was developed by Wilbur L. Nelson in a series of articles in Oil & Gas Journal in 1960-61 (Mar. 14, p. 189; Sept. 26, p. 216; and June 19, p. 109). In 1976, he elaborated on the concept in another series of articles, again in Oil & Gas Journal (Sept. 13, p. 81; Sept. 20, p. 202; and Sept. 27, p. 83). The term describes a measure of the secondary conversion capacity of a petroleum refinery relative to the primary distillation capacity.
The Nelson complexity index assigns a complexity factor to each major piece of refinery equipment based on its complexity and cost in comparison to crude distillation, which is assigned a complexity factor of 1.0. The complexity of each piece of refinery equipment is then calculated by multiplying its complexity factor by its throughput ratio
as a percentage of crude distillation capacity. Adding up the complexity values assigned to each piece of equipment, including crude distillation, determines a refinery’s complexity on the Nelson Complexity Index.
The Nelson complexity index indicates not only the investment intensity or cost index of the refinery but also its potential value addition
. Thus, the higher the index number, the greater the cost of the refinery and the higher the value of its products.
In the second edition of the book Petroleum Refinery Process Economics (2000), author Robert Maples notes that US refineries rank highest in complexity index, averaging 9.5, compared with Europe's at 6.5. The Jamnagar refinery belonging to India-based Reliance Industries Limited is now one of the most complex refineries in the world with a Nelson complexity index of 14. The new refinery began trial production on December 25, 2008.
The Oil and Gas Journal calculates refinery complexity as measured by the Nelson Complexity Index annually.
The Nelson complexity index assigns a complexity factor to each major piece of refinery equipment based on its complexity and cost in comparison to crude distillation, which is assigned a complexity factor of 1.0. The complexity of each piece of refinery equipment is then calculated by multiplying its complexity factor by its throughput ratio
Throughput (business)
Throughput is the movement of inputs and outputs through a production process. Without access and assurance of a supply of inputs, a successful business enterprise would not be possible....
as a percentage of crude distillation capacity. Adding up the complexity values assigned to each piece of equipment, including crude distillation, determines a refinery’s complexity on the Nelson Complexity Index.
The Nelson complexity index indicates not only the investment intensity or cost index of the refinery but also its potential value addition
Value added
In economics, the difference between the sale price and the production cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases...
. Thus, the higher the index number, the greater the cost of the refinery and the higher the value of its products.
In the second edition of the book Petroleum Refinery Process Economics (2000), author Robert Maples notes that US refineries rank highest in complexity index, averaging 9.5, compared with Europe's at 6.5. The Jamnagar refinery belonging to India-based Reliance Industries Limited is now one of the most complex refineries in the world with a Nelson complexity index of 14. The new refinery began trial production on December 25, 2008.
The Oil and Gas Journal calculates refinery complexity as measured by the Nelson Complexity Index annually.