Brownfield refers to project of expansion or revamping or services on an existing facility
By opposition greenfield is the common word to describe a new project.
This is one strategy used in foreign-direct investment
Brownfield word is not a quote reserved to the oil and gas and petrochemical industry, but it finds in this sector some fundamental reasons to be used more than elsewhere.
The oil and gas and petrochemical plants are running outdoor and therefore are exposed to local weather conditions.
Most of the constructions are based on steel structures to support kilometers of pipes and tonnes of tanks and receivers.
In addition the processes are handling with very corrosive chemical agents.
It means that even if all the measures are taken to maintain an oil and gas and petrochemical plant as safe and clean as possible this industry combines all the parameters to turn brown any piece of metal.
In the oil and gas and petrochemical industry it is admitted that the capital expenditure to decommission a plant and decontaminate the site may be very close to the construction costs.
This ratio gives an idea of the constraints to consider a brownfield project.
If we stick to the brownfield strict definition, such a project is about expansion only.
But the reality is that any expansion work cannot be performed without including revamping operations, for example for the utilities, and upgrading existing processes to leverage the whole investement.
Brownfield projects should be reserved to existing facilities to be expanded, revamped or upgraded while greenfield project will still be used in the case of adding a new production unit in the existing plant.
That is a typical situation when oil and gas companies build a large integrated refinery and petrochemical complex where new units will be added regularly on the downstream side to produce new derivatives.
In the oil and gas and petrochemical industry, brownfield applies mainly in the downstream activities, not only because of the color of the structure but also because the development plan is in not the same as in upstream.
Any upstream project is thought from day one to be developed in the allocated block over a period of 20 years or 30 years.
In downstream a plant is designed to fit in a certain space far more restricted than a block with many construction constraints due to the site location, therefore a brownfield project shall be considered only when extreme situations are reached.
Greenfield projects take years to come on stream and require a lot of capital expenditure, while the brownfield projects normally go on fast track, but may be disruptive for running operations and face a lot of constraints.