Economic Analysis of Liquefied Natural Gas Floating Production Storage and Offloading Plant (LNG FPSO) Using Probabilistic Approach
Abstract
The global yearning for clean and safe environment coupled with the need of monetizing stranded gas fields to meet the growing demand of Natural gas in the world today has called for understanding of the range of potential for commercial realization of Liquefied Natural Gas Floating Production Storage and Offloading Plant (LNG FPSO). This places a heavy burden on the economic evaluation process which will give the maximum insight into the basis for a decision to invest or not to invest in the LNG FPSO. An economic analysis of 5.2 million tonnes per annum (MTPA) LNG FPSO plant was undertaken. A Monte Carlo simulation method was adopted in this study through the use of Crystal Ball Software. The key uncertainties were represented and their respective impacts on economic viability defined. The deterministic model results obtained from the studies were very impressive with Net Present Value of $2.3 billion at a discount value of 15% and Internal Rate of Return at 32.68%. Probabilistically, 74.96% certainty of having a positive net present value (NPV) and good IRR values far above the hurdle rate for investment in Nigeria was obtained. These clearly showed that LNG FPSO is profitable. Certainty of payback period of not exceeding 5 years was obtained to be 55.89%.
Key words: LNG FPSO; Offshore LNG liquefaction; Probabilistic approach; Sensitivity analysis; Economic yardstick
Keywords
Full Text:
PDFReferences
[1] Adenikinju, A., & Oderinde, L. O. (2009). Economics of Offshore Oil Investment Projects and Production Sharing Contracts: A Meta Modeling Analysis (Doctoral dissertation). Department of Economics, University of Ibadan, Nigeria
[2] Adrian J F, Grant L. J., & Terry R. T. (2004). LNG Technology for Offshore and Mid-Scale Plants. Manchester, UK: Costain oil, Gas & Process Limited.
[3] Argus Median Ltd (2010). Argus Monthly Global LNG, IV(11).
[4] Augustin, L., Birch, V., Grulich, A., Gutierrez, S., Pasternak, J., & Shelton, J. (2005). Design of a Floating, Production, Storage and Offloading Liquefied Natural Gas Facility for Offshore West Africa. Design of Ocean Engineering Facility Ocean Engineering Program, Texas A&M University, USA.
[5] Barclay, M. A., & Yang, C. C. (2006). Offshore LNG: The Perfect Starting Point for the 2-Phase Expander? Offshore Technology Conference, Texas, USA.
[6] Barclay, M., & Shukri, T. (2007). Single Mixed Refrigerant Process Has Appeal for Growing Offshore Market. LNG Consultants, Foster Wheeler Energy, USA.
[7] Charnes, J. M. (2007). Financial Modeling with Crystal Ball and Excel. New Jersey, USA: John Wiley & Sons, Inc.
[8] Chiu, C. H. (2006). Commercial and Technical Considerations in the Developments of Offshore Liquefaction Plant. 23rd World Gas Conference, Amsterdam, UK.
[9] Chiu, C. H., & Quillen, L. D. (2008). A New Frontier! Offshore Natural Gas Liquefaction. Gastech., March 10 -13, Thailand.
[10] CH·IV International (2006). Safety History of International LNG Operations. Hanover, Maryland, USA: The LNG Specialists.
[11] CompactGTL plc (2010). Modular GTL as an Offshore Associated Gas Solution. Deep Offshore Technology Conference, Amsterdam.
[12] Cornot-Gandolphe, S., Appert, O., Dickel, R., Chabrelie, M., & Rojey, A. (2003). The Challenges of Further Cost Reductions for New Supply Options (Pipeline, LNG, GTL). 22nd World Gas Conference, Tokyo, Japan.
[13] Dong, L., Wei, S., Tan, S., & Zhang, H. (2008). A Techno-Economic Comparison of GTL with LNG. China: Chongging University.
[14] Ekekpe, J., & Onyekonwu, M. (2007). Economics of Gas to Liquid Technology. Petroleum Training Journal, Abuja, Nigeria.
[15] Foss, M. M. (2007). Introduction to LNG. Centre for Energy Economics, Bereau of Economic Geology, University of Texas, USA.
[16] Foss, M. M. (2004). The Role of LNG in North American Natural Gas Supply And Demand. Centre for Energy Economics, Bereau of Economic Geology, University of Texas, USA.
[17] Foss, M. M. (2009). Gas Monetization in Nigeria. Centre for Energy Economics, Bureau of Economic Geology, University of Texas, USA.
[18] Ikoku, C. U. (1985). Economic Analysis and Investment Decisions. USA: John Wiley & Sons Inc.
[19] Jensen, J. T. (2002). LNG and Pipeline Economics. Chicago, USA: The Geopolitics of Gas Meeting.
[20] Kerbers, I., & Hartnell, G. (2008). Breakthrough for Floating LNG. New York, USA: Poten & Partners, Inc.
[21] Linde Engineering. Retrieved from www.linde.com
[22] Mian, M. A. (2002). Project Economics and Decision Analysis, Vol 1: Deterministic Models. Tulsa, Oklahoma, USA: PennWell Publishing Co.
[23] Mian, M. A. (2002). Project Economics and Decision Analysis, Vol 2: Probabilistic Models. Tulsa, Oklahoma, USA: PennWell Corporation.
[24] Mamora, D. D. (2005). Fundamentals of Oil and Gas Economic Evaluations and Risk Management. Texas, USA: Texas A&M University College Station.
[25] Nexant Inc. (2009). Floating LNG Production. New York, USA: Chemsystems Perp Program.
[26] Tusiani, M. D., & Shearer, G. (2007). LNG, A Non Technical Guide. Tulsa, USA: Pennwell Corporation.
[27] Wilngaarden, W. V., & Meek, H. J. (2008). The Generic LNG FPSO—A Quick & Cost-Effective Way to Monetize Stranded Gas Fields. SPE Asia Pacific Oil & Gas Conference and Exhibition, Australia.
[28] Gray, W. M., Chiappe, A., & Koosh, V. H. (2007). A Probabilistic Approach to Shale Gas Economics. SPE Hydrocarbon Economics and Evaluation Symposium, Texas, USA.
[29] David, W. (2009). Floating Gas liquefaction: Competing Technologies Make Progress. Lincoln, UK: E&P Magazine.
[30] Wood, D., & Mokhatab, S. (2007). Offshore Natural Gas Liquefaction Process Selection and Development Issues. SPE Annual Technical Conference and Exhibition, California, USA.
[31] World Bank. (2004). Taxation and State Participation in Nigeria’s Oil and Gas. Retrieved From Http: www.esmap.org/filez/pubs/05704NigeriaTaxationMcPherson.pdf
DOI: http://dx.doi.org/10.3968/j.aped.1925543820130501.1007
Refbacks
- There are currently no refbacks.
Copyright (c)
Share us to: 
Reminder
We are currently accepting submissions via email only.
The registration and online submission functions have been disabled.
Please send your manuscripts to [email protected]，or [email protected] for consideration. We look forward to receiving your work.
We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases:
[email protected]; [email protected]; [email protected]
Articles published in Advances in Petroleum Exploration and Development are licensed under Creative Commons Attribution 4.0 (CC-BY).
ADVANCES IN PETROLEUM EXPLORATION AND DEVELOPMENT Editorial Office
Address:1055 Rue Lucien-L'Allier, Unit #772, Montreal, QC H3G 3C4, Canada.
Telephone: 1-514-558 6138
Website: Http://www.cscanada.net
Http://www.cscanada.org
E-mail:[email protected]; [email protected]
Copyright © 2010 Canadian Research & Development Centre of Sciences and Cultures 
