(Re: A letter by Avidan and Hernandez, OGJ, June 30, 2003, p. 10.)
Merlin Associates concurs that benchmarking competitive LNG projects is difficult; however, we had sufficient detailed data for existing projects to make an accurate and, most importantly, neutral study. For this study our client, one of the major participants in the LNG industry, also provided additional data.
We clearly stated that the ALNG project was a single-train project. The EPC contract value we used as a starting point for the ALNG project was approximately $600 million.
We adjusted the projects to reflect processing requirements resulting from significant differences in hydrocarbon feed gas compositions and acid-gas contents. We adjusted all the projects to include minimal fractionation facilities, but not ethylene for ALNG, to support refrigerant requirements.
Some process technologies include gas processing capabilities that are not specifically needed to produce LNG. We reviewed these areas and made adjustments or concluded that they were not a factor that would impact capital cost comparisons. This is a cost benchmarking study, not one of the quality of installed technology.
All the projects used the same type and capacity of LNG storage, loading, and marine facilities to simplify the comparison. We also did not include costs for LPG export-import facilities, sulfur removal and recovery, and marine dredging costs due to their inherent site specificity. We evaluated all projects using initial nameplate capacity to maintain the study's accuracy.
We concur that fuel efficiencies and emissions vary with the particular gas turbines each plant uses. We compared fuel efficiencies and emissions based on manufacturer data for the plant's specific installed equipment.
Finally, we adjusted all costs to a common basis of Jan. 1, 2000, and a Middle East location. These adjustments reflected escalation to a common basis and to reflect a common labor rate and labor productivity. These adjustments clearly were larger on some projects than on others.
Chuck Yost
Bob DiNapoli
Merlin Associates, Houston