LNG Plant Cost Reduction 2014–18

Since the highs of 2010–14 the cost of liquefaction plants has fallen significantly – in some cases by up to a third for a similar scope. This paper reviews the costs of 25 plants constructed in the last 4 years and determines the reasons for these reductions. The reported project costs (CAPEX) are divided into upstream and liquefaction to determine the unit costs of liquefaction ($/tpa).

These unit costs are classified by the key drivers of plant scope, plant complexity and plant location to determine factors that could be applied to prepare preliminary estimates for future projects to account for whether they are a brownfield expansion or new grassroots plant, processing rich associated gas or lean gas and if located in an industrialised area, remote location or Australia. Operating costs (OPEX) are evaluated and added to provide indicative production costs expressed as $/mmbtu again for different plant scopes, complexities and locations.

Areas for future cost reduction are also proposed including industry standard specifications, new enabling technologies and EPC contract strategies. Some of these are already being applied but many upcoming projects could probably benefit from them.

By: Brian Songhurst

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