Techno-economic analysis of flexible AP-X LNG production process under risks and uncertainties

Abstract

Natural gas liquefaction has been deployed in different countries to produce liquefied natural gas (LNG) for the economic transportation to distant markets. However, when assessing a natural gas monetisation technology, the profitability of the project is evaluated using the economic performance indicator, net present value (NPV), under deterministic conditions. This does not reflect the real-life scenario since the risks associated with exogenous uncertainties arising from emergence of new suppliers, and changes in contractual structures are not captured under deterministic analysis. Consequently, risks associated with investing in a mega LNG plant shall be considered in the design stages to decide on an optimal strategy for dealing with possible uncertainties throughout the lifetime of the project. In this study, a techno-economic analysis is conducted for the flexible AP-X LNG production technology licensed by Air Products. A three-steps methodology is considered to assess the AP-X technology: (1) technical assessment; (2) economic evaluation; and (3) techno-economic risk assessment and management. In the technical assessment, an LNG production plant model is developed and simulated using the Aspen HYSYS software, and evaluated under deterministic conditions using the NPV. The process is then evaluated under stochastic conditions using Monte Carlo Simulation to understand the impact of different uncertainties on the profitability of the plant. A proactive mode of response strategy to deal with risks is tested to increase the responsiveness of the project to exogenous changes through embedding flexibility in production in the early design stages of the project. The results indicate that a flexible system demonstrates a better economic performance than a rigid system.