Residual Value Estimate methods for Refinery Units

[osna]

Dear friends,

Do you have any suggestion how to estimate residual values for Refinery Process Units that are approaching the end date of their useful life(according to literature data).
Can depreciation be taken as a straight line method?
The salvage (scrap) value of the equipment should be zero?
I will highly appreciate your suggestions.

Best regards

 

[owg]

Residual value should be based on what the equipment is doing for you today and estimated into the future. Expect increased expenses as equipment ages. There may be capital costs to deduct to bring the units into compliance with environmental and safety requirements. Some pieces of equipment may need to be replaced.
Depreciation is an accounting question. The plant accountant once told me to use my license plate number for the estimated refinery depreciation. Usually the depreciation method is set by company policy and may need to be consistent with local tax laws.
The scrap value could well be less than zero depending on the proposed use of the real estate.
Typically after 25 years, various studies need to be done to determine options for extending the life of equipment.

HAZOP at

http://www.curryhydrocarbons.ca

 

[osna]

Dear owg,
Thank you for your help.