(30d) Monte Carlo Simulation-Based Evaluation of LNG Plant Economics

Probabilistic Design of LNG Liquefaction Facilities

Vinod Rajkumar, Benjamin Gross, Bechtel Corp.

Life-cycle cost analysis is commonly used by the LNG industry to analyze total cost of facility ownership. A well-developed life-cycle model can be used to compare various design choices based on economic considerations.   For example, the selection of concept of waste heat recovery to reduce the facility carbon foot print involves several decisions as to the extent and depth of the heat recovery and Life-cycle analysis of the various waste heat recovery choices is likely to be based on the location of the facility, applicable environmental regulations, required overall thermal efficiency amongst others and other key economic variables.   The results from such a model are only as good as the quality of the input parameters, which for the most part are considered to be fixed for the life of the facility. In reality, many of these parameters are variable and can vary to provide different outcomes.  This paper provides a methodology to address this issue.

The use of a stochastic method such as Monte Carlo simulation adds another dimension to the life-cycle analysis where uncertain input parameters such as carbon taxes, natural gas price etc. can be treated as probabilistic distributions based on industry projections. The modeling effort involves generating a distribution of life-cycle costs by sampling the uncertain inputs over and over again. Results show total cost of ownership coupled with a certainty of positive cash flows after factoring the uncertainties.  While this paper focuses on the waste heat recovery dimension, the techniques proposed can be of value for several key decisions made during the design of LNG liquefaction plants.

The concept of Monte Carlo simulation in modeling LNG plant economics is discussed in this paper with a case-study to evaluate the various design choices typically considered in reducing greenhouse gas emissions from an LNG facility.