Abstract
Abstract The economic viability of a liquefied natural gas (LNG) project is evaluated using industry-wide data. The range of expenditure figures (both capital and operating) obtained from the literature is synchronized into a unit energy basis across the value chain – liquefaction, shipping and re-gasification. A Base Case is adopted based on a single train of 4.2 million metric ton per annum (MMTPA) capacity for a round-trip distance of 6200 miles (from Nigeria to the U.S. Gulf Coast), taking one (1) month round-trip voyage. It is assumed that the plant requires a 4-year construction period and it operates for 350 days a year in evaluating the economics of the project. Two measures of profitability are used in assessing the economic viability of the LNG project, namely rate of return (ROR) and undiscounted pay-out-time (POT). A Base Case is performed using a Base Case Capital Expenditure (Base Case CAPEX), 15% discount rate and 3.00$/MMBtu raw gas price. In addition, sensitivity analyses are carried out on CAPEX (using -20%, -10%, Base Case CAPEX, +10%, and +20%), on discount rates (using 10%, 15%, 20% and 25%), on raw gas prices (using 1.00, 2.00, 3.00, 4.00, and 5.00$/MMBtu) and on overall operating expenditures (OPEX) ranging between 4.7% and 14.7% of CAPEX. The pay-out-times for the various scenarios considered at discount rates of 10, 15, 20 and 25% are 7.82, 5.18, 3.68 and 2.76 years after startup/commissioning, respectively. The break-even prices range between 3.00$/MMBtu (at Base Case CAPEX less 20%, 10% discount rate and 1.00$/MMBtu raw gas price) and 12.10$/MMBtu (at Base Case CAPEX plus 20%, 25% discount rate and 5.00$/MMBtu raw gas price). The corresponding mark-ups range between 2.00 and 7.15$/MMBtu, respectively. The break-even and mark-up prices increase linearly with increasing raw gas prices yielding slopes of 1.17 and 0.17, respectively. These relationships hold true with all 100 cases considered in the sensitivity analysis. A general survey of LNG liquefaction processes is also included.
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