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Additional Myths About LNG



Christopher Caswell, Technology Manager LNG and FLNG
Charles Durr, LNG and FLNG Technology
Heinz Kotzot, Technology Manager LNG
David Coyle, Technology Manager LNG

KBR

ABSTRACT

At Gastech 2011, we introduced Myths about LNG, a list of misconceptions or innocent
mistakes perpetuated in the industry. With the potential slate of new LNG developments
around the world, additional myths need to be uncovered and discussed. If
unchallenged, these LNG design and execution myths could derail the momentum
needed to develop the next generation of LNG projects.

This paper will review additional Myths about LNG which continue to haunt exhibition
halls and conference rooms around the world. While any myth may have a shade of
truth, a full review of the idea is needed to separate the myth from the facts.

By openly discussing these issues, we can stimulate healthy debate on the technical and
economic challenges facing current and future projects. Some of these lingering myths
include:

Shale gas or pipeline gas is of liquefaction quality
Process technology first, equipment second
A standard (or generic) plant is the future of LNG
The LNG train is the primary driver of the total plant cost
New Process Technologies offer Step Changes in Improving Plant Efficiency and
Reducing Costs
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Introduction

Since introducing Current Myths about LNG, the number of potential new LNG export
projects continues to grow. In addition to potential projects, current projects in
development continue to face and solve technical challenges. Collectively, all projects
need to be successful in order to grow our LNG industry. In continuing to share
knowledge with new members of the LNG community, additional issues about developing
LNG projects need to be discussed to reduce technical and commercial risks.

Many potential new projects are based on the monetization of shale gas assets (e.g.
North America) or are located in new regions such as Eastern Africa or the Eastern
Mediterranean. Participants in these new projects, often their first LNG project or largest
capital project investment, would benefit from learning the stories behind how past
projects were developed by the veterans of the industry. Since each project has a story
and each project is unique, it is not obvious why projects have certain configuration
differences. Without the benefit of this understanding of the past, intelligent people will
question the decisions made in the past.

While understanding the past is important, we need to address the issues that face new
projects. Today, many new candidates for offshore LNG have been identified, some of
which are proposed in established gas export regions. With the sanctioning of the first
offshore LNG projects, the future of offshore LNG is being made today. Small to mid-
scale LNG, economically discounted for decades, is now considered for locations such as
China, Indonesia, and in North America. In sum, the current wide range of project
opportunities requires more open communication about how projects are configured.
This paper shall continue on the path to dispel additional myths about LNG.


Additional Myths About LNG

The first chapter of Current Myths about LNG, covered the following areas in detail:

Modular construction saves cost and schedule
Floating LNG (Liquefaction) is cheaper and faster than onshore LNG
Lean feed gas is best as it results in simple LNG plants

These areas covered topics that are still highly relevant: whether or not to modularize
LNG in regions such as Australia and Canada; deciding between offshore LNG and
onshore LNG for mid-sized reserves; and designing plants based on newer lean feed gas
sources. In reviewing these issues, many more myths and misconceptions were
uncovered that need to be openly discussed by project developers, LNG marketers,
engineering contractors, and equipment and technology suppliers.

Since developing the foundation of spreading facts about facility development by
debating myths, there are several more misunderstandings that can be reviewed:

Shale gas and/or pipeline gas is of liquefaction quality
Process technology first, equipment second
A standard (or generic) plant is the future of LNG
The LNG train is the primary driver of the total plant cost
New Process Technologies offer Step Changes in Improving Plant Efficiency and
Reducing Costs

As a continuation of the previous work Myths about LNG, this paper shall debate the list
above and offer a realistic viewpoint for each subject.


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Myth: Shale Gas and/or Pipeline Gas is of Liquefaction Quality

One of the drivers for North American liquefaction projects is the potential of having an
ample supply of low cost feed gas that can be exported as LNG. For the United States,
the feed gas can be sourced from an extensive network of gas pipelines that cover the
Atlantic, Pacific, and Gulf of Mexico which can be resupplied by shale gas. For Canada,
there are recent finds of gas reserves in regions like British Columbia looking for gas
markets with reductions in the net gas exports to the United States. In both locations,
the low cost of the source gas and the allure of high value gas markets drives the desire
to export natural gas as LNG.

The basis of this myth is a misunderstanding on the treated quality of pipeline gas.
Since pipeline gas is often treated at its source (e.g. removal of heavy hydrocarbons and
dew point control) and is often part of a large pipeline network, the belief is that this gas
requires little to no additional processing at a liquefaction plant. Shale gas that is not in
proximity to the coastline would require a new dedicated pipeline or connection to a
distant network along the route to the LNG plant. In order to debate this myth, we need
to review examples of pipeline gas specifications. Even dedicated pipelines supporting a
single reservoir to an LNG plant may be integrated with new pipelines over time.

Pipeline gas for residential and industrial applications, is regulated by a regional
specification (spec) to control the gross heating value and limit the amount of
undesirable components. These specs ensure that liquids do not accumulate in the
pipeline and that corrosive or toxic elements are kept below acceptable thresholds. In
addition, the spec will ensure the delivery of a consistent gas product while allowing
supply from many sources. While it may seem reasonable to assume that regional
pipeline specs are equivalent to each other, the reality is that each spec will have
different limits on individual components, even within the same country. A country like
the United States does not have a single set of impurity specs although it has highly
developed pipeline infrastructure crossing many states or sub-regions. As a result of
these different specs in different regions, an LNG plant may have to design for
contaminants that may or not be present in the pipeline feed gas.

Potential Range of
Pipeline Trace
Components
Acceptable Treated
Concentrations in Feed
Gas or in LNG Product
Carbon Dioxide 2 - 3 vol% 50 ppm
Nitrogen 1 - 3 vol% < 1 vol%
Oxygen 0.1 - 1 vol% nil
Water
7 lbs per million ft
3
(150 ppm)
< 1 ppm
Mercury 0 - 200 ng/m3 10 ng/m3
Benzene 0 - 60 ppm 1 - 5 ppm
Hydrogen Sulfide
0 - 16 mg/m
3
2 - 5 mg/m
3

Table 1. Example of Pipeline Specifications vs. Liquefaction Requirements

Designing for a conservative range of regional pipeline specs will result in a wide variety
in the ranges of trace components, some of which may not be present in the feed gas
[Table 1 & Ref 1,2]. Even if the probability of certain contaminants is low, the plant
design still needs to allow for the possibility of these components. Accounting for the
removal of these components in an LNG plant adds to overall complexity and increases
capital cost (CAPEX). For example, oxygen is rarely present in natural gas reservoirs but
may inadvertently be present through transportation, processing, storage and
distribution or by air blending to reduce the gas heating value. Oxygen, when combined
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with items such as CO
2
, H
2
S, and water can result in corrosion or the creation of
elemental sulfur in the upstream processing units of the plant. Therefore, proper
accounting for oxygen in the feed gas for an LNG plant adds equipment for a trace
component that may never be present in the source gas.

Even a liquefaction plant that may be supplied by a dedicated pipeline may have to
design for trace components that would potentially be present in future pipeline
expansions and supply well developments. If future pipelines were tied into that initial
line, it is possible that trace components, up to the limit of the regional spec, could be
present at the LNG plant inlet. Additionally, it is often very difficult to design for the full
range of component compositions specified in the feed gas, especially if the expected
concentrations (as compared to the upper range) are on the low side. For example,
designing sulfur removal for a wide range of sulfur components can be very inefficient if
only a small amount of sulfur actually arrives in the plant feed.

Pipeline gas can actually be more difficult to process than gas received from an offshore
production facility. One common challenge is the removal of aromatics such as benzene.
The gas received from offshore often contains LPG (i.e. propane and butane) that
provide the liquids needed to scrub benzene out of the natural gas stream. On the other
hand, pipeline gas often contains aromatics and no LPG; therefore, it is difficult to scrub
out contaminants such as benzene. Shale gas, which can be rather lean, can be equally
as difficult to scrub out aromatics; for example, when the aromatics are introduced via
mixing with other shale sources, pipeline tie-ins, or other lean gases. Another common
example of defensive protection from possible contaminants is the inclusion of a mercury
removal unit in nearly all LNG plants. This unit, often reviewed in cost evaluation
workshops, protects the plant against the risk of mercury corrosion in cryogenic
(aluminum) equipment.

The net result is that there is too much risk to assume that pipeline feed gas supply is of
liquefaction quality. In essence, all gas must be treated prior to liquefaction, either for
known impurities or to protect from future levels of impurities should they occur. The
design challenge is mitigating the size and complexity of the required gas processing
units in order to protect the LNG plant from potential hazards while mitigating growth in
CAPEX for these risk reduction scenarios.

Myth: Shale gas and/or pipeline gas is of liquefaction quality

Truth: Liquefaction quality gas does not exist as some gas treatment is always
necessary to reliably make on-spec LNG


Myth: Process Technology First, Equipment Second

This myth covers the idea that the key plant equipment is secondary to liquefaction
process technology selection and the accompanying process design package from the
licensor. While it may seem logical that process technology selection is one of the first
key decisions when developing an LNG train configuration, the decisions involving
technology and equipment selection are not mutually exclusive.

There is an outdated adage that with high-quality definition and engineering, one can
find suppliers to build equipment to suit the process design. This philosophy was upheld
by projects using well known and repeatable technology without exceeding proven size
and scale. While there are many reputable equipment suppliers for the key items in an
LNG train (e.g. refrigerant compressors, power drivers, heat exchangers, and hydraulic
turbines), this equipment is some of the largest in its class. For example, the gas
turbines that mechanically drive the refrigerant compressors are similar to the largest
gas turbines that run in power generation service. If we ignore the size and scale of
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todays large LNG trains, this philosophy is similar to: let the suppliers figure out the
problems.

Standard equipment, like pressure vessels, columns, and drums, are always customized
to suit the process conditions. The only limitation for this genre of equipment is the size
and scale of manufacturer capability (e.g. diameter and height). On the other hand,
pumps, compressors, drivers and hydraulic turbines have much more limited allowances
for customization. Pumps often have fixed casing diameters, but can accommodate a
limited number of impeller sizes. Compressors have similar flexibility with internals, but
infinite customization to suit the process is not practical or cost effective. Even if this
key equipment could be exceptionally customized, it may not work efficiently to exact
standards outside their intended design envelope. In the end, it is best to use proven
equipment from reputable suppliers within their range of successful experience; any
step-out technology or change in size/scale would have to be technically qualified and
tested.

Process technology selection is important, but a process design that cannot be built (or
must be supported by multiple parallel equipment and piping) is not an optimal design.
In addition, a mismatch between process design and equipment selections could lead to
a design that either cannot be built or greatly increases technical risk and CAPEX. As a
result, the design contractor works hand-in-hand with the process licensor and
equipment suppliers to develop the overall configuration of a plant that meets the
intended performance within the bounds of available and proven equipment. The
intended performance is customer and site dependent which is why no two LNG plants
are exactly alike. In some cases step-outs in technology are part of the overall solution,
in which case a risk management plan is developed by the EPC contractor and customer
to mitigate the risk.

During the 1970s, KBR established a design practice that all equipment must have at
least two years of proven experience in similar service. This design practice has evolved
into a rule of thumb to evaluate the suitability of new equipment for LNG projects. Even
with this practice in place, the development of new equipment and technologies is
strongly encouraged. New equipment without two years of similar service can be used if
the proper testing and risk management processes are followed to advance the technical
designs. The rule of thumb is meant to be a way to identify what risk management must
be done to assure a good and reliable plant design.

In summary, the configuration of an LNG plant is not developed in a linear fashion. The
liquefaction process licensor, design contractor, and key equipment suppliers work
together to develop a sound configuration that can be carried through the project
development process. Any new technical risks are identified early in the design so that
adequate testing can be done to assure the plant will meet the intended performance.
This joint development reduces the need for relying on suppliers to figure out the
problems.

Myth: Process technology first, equipment second

Truth: Process technology must work hand-in-hand with existing equipment and apply
incremental improvements to equipment that can be properly tested before installation


Myth: A Standard (or Generic) Plant is the Future of LNG Plant Design

It would be attractive to have a standard LNG facility that has a one size fits all
approach. Standard plants appear attractive due to expected lower development costs
and shorter schedules to first LNG. Current plant designs seem highly complicated and
customized; this level of complexity may potentially be linked to a higher risk of cost
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escalation and late delivery during the execution phase. This myth assessment
addresses the idea that standard or generic plants will be commonplace in the future.

One of the ideas behind this myth is that a standard plant can be developed in a much
shorter time than traditional projects while having the flexibility to sell a varied product
slate (LNG, LPG, and condensate) to multiple markets. The normal way of configuring a
plant is to integrate the process and utility units to reduce energy consumption, improve
efficiency, and make on-spec products all while achieving a low life cycle cost. One way
of trying to improve upon that work process is to standardize equipment and systems
and rate the plant for the new conditions.

Using a standardized work process requires accepting whatever results the standard
plant provides in the new location, even with changes in ambient temperature and gas
composition [5]. For some site specifics, there is no standard solution. Examples
include seismic criteria where a standard is either not sufficient to protect the plant from
an event, or much more expensive than what is needed for a mild seismic site. Another
example is working in countries where specific voltage levels and frequencies (e.g. 50 Hz
vs. 60 Hz) are required for electrical systems.

Another strategy would be to customize all the plant elements from a standard template
which may be less effective than starting anew. Experience with customization of a
reference plant has shown that certain locations and gas compositions require nearly as
much rework to the reference case as starting from a blank sheet of paper. The key to
using a reference plant is having a good fit to the new conditions which results in
minimal changes while meeting performance expectations.

An improved solution is to separate the plant into standard and customized elements
keeping the high-cost and schedule critical items standard while customizing the more
flexible units that have the greatest impact on optimizing the facility design. An ideal
solution with this approach is a customized upstream NGL plant with a relatively
standard downstream liquefaction plant. In this scenario, the feed gas from the
upstream plant will have relatively consistent conditions when entering the standard
plant. An additional benefit allows the upstream NGL plant to be built either adjacent or
remote to the liquefaction plant when decoupling the two is beneficial. Decoupling of
upstream processing could also be an option for offshore designs where a separate
structure (e.g. a semi-submersible platform) could handle the upstream facilities while
the liquefaction takes place on a separate unit.

The development of floating LNG (FLNG) once embraced this thought of generic floating
LNG designs which could be towed from one field to the next. The developers of FLNG
quickly realized that a generic plant was far from ideal offshore, especially when reduced
throughput or efficiency has a large impact on a modest offshore product slate. While
the concept of repeatability in highly skilled fabrication yards was attractive, what was
believed to be suitable for a wide range of conditions actually matches none. The
offshore LNG industry has now embraced alternate strategies that seem more viable:

Fully customized plant with repeatable execution elements (e.g. repeat use of
equipment suppliers, design contractors, and fabrication yards)
A combination of standard and customized topsides modules, some of which
can be replaced for new sites and feed gas conditions

The reality behind generic plants is that while they could be theoretically built more
rapidly than custom designs, what is believed to be suitable for a wide range of
conditions actually matches none. As a result, the return on investment using generic
designs is not optimized. Rapidly customized plants based on proven configurations
(equipment and machinery) and lessons learned can improve cost and schedule over
designing from scratch.
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Myth: A standard (or generic) plant is the future of LNG plant design

Truth: Plants with common elements, which can be quickly customized for site-specific
conditions, will shape the future of LNG plant design.


Myth: The LNG Train is the Primary Driver of the Total Plant Cost

It would seem intuitive that the LNG train, which is often the most engineered unit of an
LNG complex, would be the primary driver of total plant cost. The train, a blend of
reliable process technology, machinery, heat exchangers, and auxiliaries has well defined
quantities of equipment, pipe, concrete, cabling, and structural steel. These quantities
are the fuel for estimators to develop plant costs.

For grassroots projects, the LNG train is only one of many defined areas required for a
full LNG complex. In previous years, where LNG plants were configured in established
ports, on prime soils, or with access to cheap industrial labor, the LNG train was used as
the basis to factor the total plant cost. However, current projects are often located in
challenging areas which requires more development of the OSBL units (outside of
battery limit units) to support the LNG production train.

As discussed in other publications [3, 6], plant costs are highly dependent on site
specific factors. When papers and publications compare one LNG development to
another, the comparison often uses the metric of US dollars per ton of annual LNG
production. This metric fails to capture site specific factors that may either reduce or
increase CAPEX cost over the typical, reference, or ideal plant. An extreme example of
the misuse of unit costs would be to compare the cost of the single train Darwin LNG
plant in NT, Australia to the in construction Prelude LNG floating liquefaction project
offshore WA, Australia. Just because these projects have similar train capacities does
not mean that the projects will be of similar cost.

In fact, what is believed to be todays typical LNG plant is actually a plant constructed
in previous generations. Years ago, the liquefaction and refrigeration units were
estimated to comprise 42% of the total plant cost. When civil and infrastructure costs
rise well above previous benchmarks (as has happened since 2000), the contribution of
the LNG train to total plant cost reduces significantly. While the process train is certainly
important, civil and infrastructure costs far outweigh the cost for the battery limits of the
LNG production train.

Some examples of civil and infrastructure costs include:
Soil improvement: blasting rock, clearing land, and driving piles
Seismic protection for LNG tanks, equipment, structures, and buildings
Marine terminal development: jetty length, dredging, and tug support
Accommodation villages: permanent and temporary housing support

In the end, not one of the costs categories listed above makes an additional drop of
LNG; however, they all define the total plant cost and determine the overall rate of
return for a given production capacity.

Accepting the principle of not all plants are created equal, one may ask: does the LNG
train, which is the most technically defined area of the overall facility, drive the total
plant cost or does the total plant cost drive the target LNG capacity? When reviewing
the trains built in nearly all the LNG exporting countries, these facilities are nearly
always comprised of multiple trains. In general, the overall facility capacity (all trains)
must be large enough that parts of the overall facility (LNG trains) must make enough
LNG revenue to overcome the cost of the non-revenue producing parts of overall facility.
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This relationship of LNG revenue to non-revenue producing assets will vary from project
to project.

In some developments, the total plant capacity is increased over time, by the addition of
one or more trains, to improve the overall project economics. The cost of expansion
projects, separate from constructing the initial LNG complex, is certainly driven by the
cost of the LNG train along with the incremental increase in utilities and expanded
infrastructure. While a single LNG train is a significant investment, multiple trains are
usually desired to offset expenses in other areas of the facility.

Myth: The LNG train is the primary driver of the total plant cost

Truth: While the LNG train is an important component of plant cost, civil and
infrastructure costs make the greatest contribution to total plant cost


Myth: New Process Technologies offer Step Changes in Improving Plant
Efficiency and Reducing Costs

Process efficiency is a passionate subject to debate. Reputable process licensors
consistently deliver reliable technology while making improvements to their cycles over
time. Process licensors make claims on a process efficiency, reliability, cost, and
maintainability, but it is the EPC contractors that configure, design, and construct a
project based on this licensed technology. As we saw in the myth about process
technology and equipment, the process licensor works hand-in-hand with the EPC
contractor to develop the overall configuration of a plant that meets the intended
performance. That intended performance is customer and site dependent which is why
no two LNG plants are exactly alike. This myth concerns new process technology that
claims to account for step changes that improve overall plant efficiency and reduce costs
over traditional technologies.

An immediate question is: what is traditional technology? Lets assume that traditional
technology is comprised of the three process cycles with the highest market share.
Depending on the definition of market share, those three cycles cover approximately
80% of projects, trains, or LNG tonnage. Any process improvements offered by a non-
traditional technology would have to overcome decades of experience from these
market leaders. In addition, many non-traditional licensor technologies have never been
commercialized in a baseload LNG plant.

Thermal integration and equipment efficiency form the basis for most of the claims of
vastly improved process technologies. The key element of the myth is that only certain
licensor technology will allow for designing for thermal integration; this technology
relationship to thermal integration is clearly not true. Step changes in improving plant
efficiency and drastic reductions in fuel consumption sound like a great idea so, why
doesnt everyone sign up immediately? New proposed technologies reveal a grey area
among what is deemed to be licensor technology and what is engineered by the design
contractor. In general, the process licensor is responsible for defining how much power
is required for the refrigerant compressors and the EPC contractor is responsible for
determining how much fuel is required to provide this power. In many cases, these two
issues become intermingled, and the suggested new technology is compared to a base
case with low comparable efficiency. In other situations, elements of the total facility
are omitted from the comparisons to create the appearance of substantial
improvements. These base cases, viewed to be the least efficient offering, may have
been the preferred arrangement for certain site and client specific reasons but not
necessarily for the new plant under evaluation.

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Thermal efficiency can be improved over a base case through a reduction in the amount
of fuel required to make a unit quantity of LNG. Therefore, thermodynamic differences
among technologies are affected by overall plant configuration (process and utilities) and
not solely the refrigerant compositions and heat exchangers defined in a licensor
package. If you compare a configuration with an aggressive amount of heat recovery
over a basic plant with no heat recovery, it is obvious which plant is more fuel efficient.
Aggressive heat recovery will increase CAPEX, but what is the net value associated with
those improvements?

Fuel consumption can be reduced by recovering and reusing thermal energy from the
gas turbine exhausts in the process train and/or the power generation plant. This
energy (heat) can be used to generate steam to drive equipment, supply process heat,
or generate electric power. Combined cycle power plants (CCPP) and heat recovery
steam generators (HRSGs) are proven concepts, but adding thermal integration
components raises the CAPEX of the plant. In addition, maximizing heat recovery and
steam generation may require multiple pressure level steam, increased piping
complexity, and high alloy metallurgy. The increase in CAPEX must be weighed against
the value of reduced fuel consumption and the ability to increase LNG production over
the expected life of the plant. One cannot make a singular claim that maximum thermal
integration results in the lowest cost or best LNG plant. In sum, improved plant
efficiency by utilizing heat recovery is a well known concept that is independent of
licensor technology; the optimal level of heat recovery is based on a full economic
evaluation for the specific site.

Another element of the myth of improved licensor technology involves the refrigerant
compressor drivers. New offerings promote aeroderivative gas turbines (a.k.a. aeros)
with inlet air chilling/cooling to augment power over industrial gas turbine drivers (a.k.a.
Frame machines) without air chilling. Aeros have combustion efficiencies that are higher
than Frame machines. The aeros will have less fuel consumption per unit power, but
the aeros are supplied in smaller fixed power increments than Frame machines. This
higher unit fuel efficiency must be reviewed against the need for more aeros for an
equivalent LNG train using Frame machines (the base case). Inlet air chilling allows an
increase in mass flow of air entering the turbine which increases its available power and
mitigates the fluctuation of the turbine performance with ambient temperature. What is
important to note is that the aeros can be used as drivers for all process technologies
and inlet air chilling can apply to both aeros and Frame machines (to improve the base
case); therefore, these claimed improvements are open for all potential technologies and
projects and are not technology-specific as sometimes represented.

Another concept that influences this myth is that certain claims may cover certain parts
of the plant while ignoring others. The overall energy consumption on an LNG plant is a
function of the complete configuration of the plant (process and utilities). This
configuration is based on, but not a direct correlation of the process licensor design
package. The plant owners and EPC contractors (EPCs) make decisions on the level of
thermal integration as a function of CAPEX and operating (OPEX) expenses.

When it comes to defining energy efficiency, how you draw the box around process units
versus utilities allows you to arrange the statistics in your favor (see Figure 1).
Excluding items from the whole plant oversimplifies the economic evaluation and can
lead to misleading conclusions. For example, if electric power is supplied from a nearby
utility (and not self-generated), the cost to provide electric power has moved from
CAPEX to OPEX. In this scenario, the plant requires less fuel gas per unit LNG and the
CAPEX has been reduced is that a process improvement or an expensive means of
outsourcing utilities like electric power? In addition, what is the guarantee of a large
quantity of stable electric power for the LNG plant?

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P
r
o
c
e
s
s

T
r
a
i
n
O
f
f
s
i
t
e
s
U
t
i
l
i
t
i
e
s
Inlet Stabilization AGRU
Dehydration
& Mercury
Removal
Liquefaction Fractionation Precooling MR Refrig.
Product
Storage
Refrigerant
Storage
Loading
Inhibitor
Recovery
SRU & AG
Enrichment
Power
Generation
Fuel Gas Heat
Medium
Diesel
Storage
Air &
Nitrogen
Sea Water Water
System
BFW/Steam/
Condensate
Waste Water
Effluents
Fire
Protection
Flare & Liq.
Burner

Figure 1. Where do you draw the line when calculating plant efficiency?

In sum, developers, owners, technology providers, and EPCs must work together and
use a common basis to predict the plant performance, estimate the cost of the facility,
and review the net benefits of process improvements. Addressing thermal integration
vs. CAPEX can only be reviewed by experienced plant operators and contractors with the
know-how to build these mega-projects. Aspects such as driver selection, waste heat
recovery, combined cycle power generation, and inlet air chilling are decisions made
during the definition phase of a project based on evaluations to maximize the rate of
return for the specific site conditions. EPCs are evaluated based on delivering the plant
on budget and on schedule, along with efficiency and production guarantees. It is not a
goal to make inefficient plants, but to analyze the relevant factors in order to develop
the optimal plant configuration.

Well established licensed technologies, which are constantly undergoing improvements,
are well established for a reason the process design is reliable and results in a scheme
that can be consistently built by experienced LNG EPC contractors. In the development
phase, it is the contractors responsibility to design the overall facility by integrating
process licensor technology with proven or tested equipment in order to optimize the
total plant cost. Understanding the balance between improved fuel efficiency and the
net effect on project economics will result in optimal plant designs. Untested
technologies and equipment cannot offer an exclusive advantage in developing the next
generation of LNG plants.

Myth: New Process Technologies offer Step Changes in Improving Plant Efficiency and
Reducing Costs

Truth: Efficiency can be greatly improved with aggressive changes in heat recovery, with
benefits that must be evaluated versus increased CAPEX these improvements are not
exclusive to any existing or emerging technology.


Summary

Discussing myths about LNG will continue to bring technical and commercial specialists
together. History has shown that there are no shortcuts to LNG project development.
Project improvements can be made with a full understanding of the technical and
commercial issues and risks. Our intent in discussing these issues is to offer guidance to
projects in the development phase: dont believe the hype and challenge all myths.
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References

1. International Gas Union, Programme Committee D1 Report: LNG QUALITY &
INTERCHANGEABILITY, 2006-2009 Triennium

2. CenterPoint Energy Mississippi River Transmission, LLC, FERC Gas Tariff, Fifth
Revised Volume No. 1, issued Jan 14, 2011.

3. Christopher Caswell, Charles Durr, Heinz Kotzot, and David Coyle, KBR, Current
Myths about LNG, Gastech2011, 21-24 March, 2011.

4. Heinz Kotzot, Charles Durr, David Coyle, Christopher Caswell, KBR, LNG Liquefaction
Not All Plants Are Created Equal, LNG 15, 24-27 April, 2007.

5. Heinz Kotzot, Charles Durr, and Chris Caswell, KBR, A Plant for All Reasons
Standardized or Customized?, Gastech 2011,21-24 March, 2011.

6. Heinz Kotzot, Charles Durr, Chris Caswell, and Steven Borsos, KBR, LNG Liquefaction
Not All LNG Plants Are Created Equal The Sequel, GasTech 2009, 25-28 May,
2009.